Business Context and Reporting Period
This Form 8-K is a current report filed by Select Energy Services, Inc. (ticker: WTTR) on August 18, 2020, regarding events occurring on August 14, 2020. The filing addresses the departure of a senior executive and the terms of a subsequent consulting arrangement.
Key Financial Metrics
The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics. The only financial data disclosed relates to executive compensation:
- Consulting Fees: $17,500 per month for a 12-month period.
- Equity Vesting: Continued vesting of approximately 139,830 restricted shares and performance share units from 2018, 2019, and 2020.
- Benefits: 12 months of health and welfare benefits coverage reimbursement.
Material Changes
The primary material change is the departure of Mitchell M. Shauf, Executive Vice President of Water Solutions. His retirement is effective August 31, 2020, followed by a 12-month consulting agreement commencing September 1, 2020. This represents a change in senior management structure and a new contractual obligation for the company.
Outlook, Risks, and Contingencies
Management Commentary: The company states the agreement is designed to ensure a smooth transition of duties.
Contingencies: The payment of consulting fees and non-accrued benefits is contingent upon Mr. Shauf executing a general release of claims in favor of the Company and its affiliates. Payments are also subject to applicable tax withholding.
Risks/Covenants: Mr. Shauf is subject to customary non-competition and non-solicitation covenants for a period of three years.
Investor Verification Checklist
- Verify the exact number of performance share units granted in 2018, 2019, and 2020 to assess the total equity value retained by the departing executive.
- Confirm the pro-rated bonus calculation methodology to understand potential additional cash outflows.
- Review the specific scope of the "Water Solutions" division to gauge the operational impact of Mr. Shauf's departure.
- Check subsequent filings to confirm the execution of the general release of claims required for payment.