Business Context and Reporting Period
This Form 8-K Current Report was filed by Select Energy Services, Inc. (ticker: WTTR) on March 5, 2021, covering events occurring on March 1, 2021. The filing details the formalization of compensation arrangements for the Chief Executive Officer and an amended employment agreement for the Executive Vice President.
Key Financial Metrics
This filing does not contain revenue, profit, cash flow, margin, debt, or liquidity metrics. It focuses exclusively on executive compensation terms.
Material Changes and Executive Compensation
John D. Schmitz (CEO and President)
- Base Salary: Annualized base salary set at $600,000, scheduled to increase to $750,000 upon removal of temporary executive salary reductions.
- Short-Term Incentive: Eligible for a target annual bonus of 115% of base salary under the 2021 STI Plan.
- Equity Awards (Granted March 5, 2021):
- 600,000 restricted shares ("Special Restricted Stock Award") vesting in a single installment on the third anniversary.
- Restricted stock award with a grant date value of approximately $1,387,500 ("Annual Restricted Stock Award") vesting ratably over three years.
- Performance share units (PSUs) with an aggregate target value of $1,387,500, subject to performance conditions over a three-year period.
- Severance Provisions: Includes acceleration of unvested Annual Restricted Stock Awards and pro-rata vesting of Special Restricted Stock Awards upon termination without Cause or for Good Reason. Full vesting of Special Restricted Stock Awards may occur if the stock price exceeds $12.50 for 90 consecutive trading days.
Michael Skarke (Executive Vice President)
- Base Salary: Annualized base salary of $310,000, temporarily reduced to $263,500 via a letter agreement reflecting voluntary reductions previously agreed to in 2020.
- Term: Three-year initial term with automatic annual renewals.
- Severance Provisions: Upon termination without Cause, for Good Reason, or due to death, the executive is eligible for cash severance equal to 1x (or 1.5x within 15 months of a Change in Control) the sum of base salary and target bonus, paid over 12 months (or 18 months post-Change in Control).
Guidance, Outlook, and Risks
The filing does not provide financial guidance, outlook, or management commentary on operational performance. The primary risk disclosed relates to the potential dilution from equity awards and the financial impact of executive compensation obligations, particularly in the event of a Change in Control or termination without Cause.
Key Facts for Investor Verification
- Verify the current status of "temporary executive salary reductions" to determine if the CEO's salary has reverted to the $750,000 level.
- Confirm the vesting schedule and performance metrics for the $2.775 million in total equity value granted to the CEO.
- Monitor the stock price to assess the likelihood of the $12.50 threshold being met for 90 consecutive days, which would trigger full vesting of the CEO's Special Restricted Stock Award.
- Review the definition of "Change in Control" in the employment agreements to understand potential severance liabilities.