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KEY ENERGY SERVICES, INC. (OTCMKTS:KEGXQ) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Approval of 2019 Equity and Cash Incentive Plan
On May1, 2019, Key Energy Services, Inc. (the Company) held its 2019 Annual Meeting of Stockholders (the Annual Meeting). At the Annual Meeting, the Companys stockholders approved the 2019 Equity and Cash Incentive Plan (the 2019 Plan). As more fully described in the Companys proxy statement filed with the Securities and Exchange Commission on March15, 2019, upon the recommendation of the Companys Compensation Committee, the Companys board of directors (the Board) adopted the 2019 Plan, subject to approval by the Companys stockholders at the Annual Meeting.
Upon approval by the Companys stockholders at the Annual Meeting, the 2019 Plan became effective and replaced the Companys 2016 Equity and Cash Incentive Plan (the 2016 Plan). Subject to adjustments provided for in the 2019 Plan, the total number of shares of the Companys common stock available for the grant of under the 2019 Plan is the sum of (i) 1,500,000 shares of common stock plus (ii)the number of authorized shares of common stock remaining available for grant under the 2016 Plan as of May1, 2019 and any additional shares that become available for issuance under the 2016 Plan in accordance with the 2019 Plan. Unless terminated sooner, the 2019 Plan will remain in effect until May1, 2029.
The foregoing description of the 2019 Plan is not complete and is qualified in its entirety by reference to the 2019 Plan, which is incorporated herein by reference to AnnexA of the Companys Schedule14A Proxy Statement filed on March15, 2019 (File No.001-08038).
Appointment of Director
On May1, 2019, the Board appointed Paul T. Bader to the Board and as chairperson of the audit committee of the Board (the Audit Committee). Both appointments were effective immediately.
Mr.Bader, age 60, has served as an adjunct professor at the Leventhal School of Accounting at the University of Southern California since January 2018. He was a partner in the New York office of Ernst Young LLP until his retirement in 2016. Mr.Bader held several roles at Ernst Young over the course of his career, including Partner in Charge of the NY International Tax Practice, Managing Partner of the NY Tax Practice, Managing Partner of Metro NY area, Vice Chair of the Americas MA practice, Americas Private Equity practice and the Americas Director of Strategy. Mr.Bader spent the last seven years of his career at Ernst Young consulting with digital media companies on their global operations. He has also served on the boards of Carnegie Hall, the Citizens Budget Commission and the American Red Cross. Mr.Bader received his B.S. in accounting and his M.A. in taxation from the University of Southern California.
Mr.Bader will receive the standard director compensation that the Company provides to independent directors and an additional amount for his service as chairperson of the Audit Committee, both as described in the Companys Proxy Statement on Schedule 14A filed on March15, 2019. In addition, Mr.Bader and the Company have entered into an indemnification agreement on the same terms as the Company has previously entered into with other directors, a form of which has been previously filed as Exhibit 10.6 to the Companys Annual Report on Form 10-K for the fiscal year ended December31, 2016.
There are no agreements or understandings between Mr.Bader and any other person to which he was appointed to the Board, and there are no transactions between Mr.Bader and the Company that would be reportable under Item 404(a) of Regulation S-K.
Amendments to Employment Agreement
On Wednesday, May 1, 2019, the Compensation Committee of the Board (the Committee) approved certain amendments to the terms of the employment agreement between the Company and Katherine Hargis, the Companys Senior Vice President, General Counsel and Corporate Secretary (the Hargis Employment Agreement), dated as of December 4, 2017, and authorized the amendment and restatement of such employment agreement to reflect the approved amendments. The amendments to Hargis Employment Agreement that were approved by the Compensation Committee include an increase in annual base salary from $310,000 to $375,000 and an increase in Ms. Hargis target annual long-term incentive compensation award from $500,000 to $650,000, with such amended target long-term incentive award amount to be effective as of the Companys next annual long-term incentive grant cycle for fiscal year 2020.
The approved amendments to the Hargis Employment Agreement also provide for elimination of the existing gross-up for any excise taxes incurred in connection with a change in control of the Company and provide for amended treatment upon a termination of Ms. Hargis employment under certain circumstances. Specifically, in the event that Ms. Hargis employment is terminated by the Company without cause or by Ms. Hargis for good reason, whether before or after a change in control of the Company, Ms. Hargis will be eligible to receive (x) a lump sum severance payment equal to two times annual base salary, (y) reimbursement for up to 12 months of medical and dental coverage, and (z) accelerated vesting of all outstanding equity awards, with the vesting of any performance-based awards determined by the Board (or a committee thereof). In addition, in the event of a qualifying termination of employment within one year following a change in control of the Company, Ms. Hargis will also be eligible to receive any unpaid prior year bonus and a pro-rata annual bonus for the year of termination (determined at target).
The Hargis Employment Agreement, as amended and restated, will be filed as an exhibit to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019.
Item 5.02. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting, holders of 18,690,947 shares of the Companys common stock were present in person or by proxy, constituting 91.74% of the outstanding shares of common stock as of the record date for the Annual Meeting. The matters voted upon at the Annual Meeting are described below.