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SEC Filings

10-K
KEY ENERGY SERVICES INC filed this Form 10-K on 02/28/2018
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One-third of each Performance RSU Award will be earned based on the Adjusted EBITDA-based performance goals achieved over each of the one-year performance periods with respect to the 2018, 2019, and 2020 calendar years, and the earned portion of the entire Performance RSU Award will settle following the end of the performance period with respect to the 2020 calendar year. Upon a termination of the holder’s employment for any reason, any portion of the Performance RSU Award which remains unvested will be forfeited.


2017 Compensation Results and Decisions

Cash Bonus Plan Results for the Year Ended December 31, 2017

For 2017, the compensation committee gave greater weight to the financial performance metrics compared to 2016 to further align management with the shareholders. For 2017, each NEO had a bonus opportunity as a percentage of base salary as follows:

 
 
Minimum Payout (% of base salary)
 
Target Payout (% of base salary)
 
Maximum Payout (% of base salary)
Participant
 
 
 
Robert Drummond
0%
 
125%
 
151%
J. Marshall Dodson
0%
 
80%
 
97%
David Brunnert
0%
 
80%
 
97%
Scott P. Miller
0%
 
80%
 
97%
Katherine I. Hargis
0%
 
80%
 
97%

Payment under the 2017 AIP for each NEO was determined based on achievement of each of three performance metrics for each of four quarterly performance periods. The performance metrics were Adjusted EBITDA (80%), Safety (10%) and Free Cash Flow (10%) with the First and Second quarterly performance periods each weighted 12.5% of the total 2017 AIP and the Third and Fourth Performance Periods (as adjusted in August 2017) each weighted 25% of the total 2017 AIP. (As a result of the compensation committee’s adjustments in August 2017, including the elimination of the annual measurement period, the aggregate weighting of all measurement periods was reduced from 100% to 75%. Accordingly, the target and maximum payouts for Mr. Drummond were reduced to 94% and 113% of base salary, respectively, and the target and maximum payout for each other NEO were reduced to 60% and 72% of base salary, respectively.)3 The results of these performance metrics were as follows:

Adjusted EBITDA. The compensation committee determined that the Adjusted EBITDA metric would emphasize the Company’s business goals and reorganizational goals of focusing on cash management, seeking revenue growth and reducing expenses. The Adjusted EBITDA targets for the First, Second, Third and Fourth Performance Periods, as adjusted in August 2017, were ($9.8) million, $5.4 million, $1.6 million and $0.9 million, respectively. Actual Adjusted EBITDA results for the First, Second, Third and Fourth Performance Periods were ($8.6) million, $32,000, $1.9 million and $2.0 million, respectively, which resulted in achievement of 70% of the target, Adjusted EBITDA goal, giving effect to the weighting of each performance period and capping the percentage at 100% for each period.

Safety. The Company achieved 6% of its total goal for 2017 which qualified for 6% payment under the 2017 AIP.

Free Cash Flow. The Company achieved 0% of its total goal for 2017 which did not qualify for payment under the 2017 AIP.

The compensation committee used negative discretion to cap Adjusted EBITDA earnings at 100%, reduce the actual bonus paid to the CEO by 5% and reduce the actual bonus paid to each of the other NEOs by 3%. This decision was largely driven by the understanding that overall profitability was still negative. Based on these results, the bonus opportunities with respect to each performance metric (as adjusted in August 2017) and the payments earned by each NEO in 2017 under the 2017 AIP were as set forth in the tables below. Bonuses under the 2017 AIP will be paid out in March 2018 in a lump sum.



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