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10-K
KEY ENERGY SERVICES INC filed this Form 10-K on 02/28/2018
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Safety (weighted 10%). The target safety goal for the Third Performance Period was a corporate-wide SPI of 100%. The SPI for the Third Performance Period was 50% resulting in attainment of 0% of the safety target for the period. 

Free Cash Flow (weighted 10%). The target Free Cash Flow goal for the Third Performance Period was to provide accurate and signed work tickets for invoicing in less than 12 days. Free Cash Flow for the Third Performance Period was 17 days resulting in 0% attainment of the Free Cash Flow target for the period.

2017 AIP Measurements (October - December 2017 “Fourth Performance Period”)

Adjusted EBITDA (weighted 80%). The Adjusted EBITDA target was originally set at $21.7 million and adjusted to $.94 million in August 2017. The Adjusted EBITDA results for the Fourth Performance Period was $2.0 million which was $1.06 million more than target. As discussed below, the compensation committee used negative discretion to cap Adjusted EBITDA earnings at 100% of target, which resulted in 100% attainment of the Adjusted EBITDA target for the period.

Safety (weighted 10%). The target safety goal for the Fourth Performance Period was a corporate-wide SPI of 100%. The SPI for the Fourth Performance Period was 50% resulting in attainment of 0% of the safety target for the period.

Free Cash Flow (weighted 10%). The target Free Cash Flow goal for the Fourth Performance Period was to provide accurate and signed work tickets for invoicing in less than 12 days. Free Cash Flow for the Fourth Performance Period was 17 days resulting in 0% attainment of the Free Cash Flow target for the period.

Long-Term Equity-Based Incentive Compensation

The purpose of our long-term incentive compensation is to align the interests of our executives with those of our stockholders and to retain our executives and other eligible employees over the long term. We want our executives to be focused on increasing stockholder value, and we use the 2016 ECIP as the long-term vehicle to encourage and establish this focus.

Our compensation committee may elect to grant equity-based awards under the 2016 ECIP to NEOs in connection with an employee’s initial hire, promotion and other events. The compensation committee granted option awards to certain employees, including each of the NEOs upon our emergence from bankruptcy (the "Emergence Awards"), and on December 20, 2016, the compensation committee granted additional time-based and performance-based restricted stock units and options to certain employees, including each of the NEOs (collectively with the Emergence Awards, the “December 2016 Awards”). On September 12, 2017, the compensation committee granted Ms. Hargis additional time-based and performance-based restricted stock units and options on the same terms as the December 2016 Awards in connection with her promotion from Vice President, Chief Legal and Secretary to Senior Vice President, General Counsel and Secretary (the “Hargis Awards”). The December 2016 Awards and the Hargis Awards are hereby referred to as the 2016 Awards.

On November 29, 2017, the compensation committee approved certain modifications to the 2016 Awards, which were determined to be appropriate and necessary for retention and incentive purposes. The compensation committee confirmed that the first tranche of the 2016 Awards, including both time-based awards and performance-based awards, would vest as scheduled in December 2017 subject to the satisfaction of the original vesting terms. The compensation committee also approved providing each holder of 2016 Awards with the option to either (i) continue to hold the remainder of their 2016 Awards that did not vest in December 2017 pursuant to their original terms, or (ii) forfeit the remainder of their 2016 Awards in exchange for a new grant made up of 50% time-vested restricted stock unit awards (a “Time RSU Award”) and 50% performance share awards (a “Performance RSU Award”). The Time RSU Awards and the Performance RSU Award are collectively referred to herein as the “Replacement Awards”. Each of the NEOs determined to forfeit the remainder of their 2016 Awards and accept the Replacement Awards, and the Replacement Awards were granted on December 31, 2017.

One-third of the Time RSU Awards will become vested on each anniversary of the date of grant. Upon a termination of the holder’s employment for any reason, any portion of the Time RSU Award which remains unvested will be forfeited; except that, if the holder’s employment is terminated by the Company without “cause” (as defined in the Time RSU Award) or by the holder for “good reason” (as defined in the Time RSU Award), in each case, within 12 months following a “change of control” (as defined in the Time RSU Award), then any portion of the Time RSU Award which remains unvested will become vested.


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