Document

DEF 14A 1 a2023proxy-annualmeeting14a.htm DEF 14A Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:


						Preliminary Proxy Statement
						Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2))
						Definitive Proxy Statement
						Definitive Additional Materials
						Soliciting Material Pursuant to Section 240.14a-12

FLOTEK INDUSTRIES, INC.

(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):


			No fee required.
			Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)Title of each class of securities to which transaction applies:

(2)Aggregate number of securities to which transaction applies:

(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)Proposed maximum aggregate value of transaction:

(5)Total fee paid:


			Fee paid previously with preliminary materials.
			Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)Amount Previously Paid:

(2)Form, Schedule or Registration Statement No.:

(3)Filing Party:

(4)Date Filed:

TABLE OF CONTENTS


Notice			1
Proxy Statement Summary			2
General Information About the Annual Meeting			6
Corporate Governance			9
Item 1: Election of Directors			17
Director Nominees			18
Director Compensation			22
Security Ownership of Certain Beneficial Owners, Executive Officers and Directors			23
Item 2: Advisory Vote on Named Executive Compensation			26
Compensation Overview and Strategy			27
Executive Officers			28
2022 Executive Officer Compensation			30
Employment Agreements; Terminations and Change-in Control			30
Other Policies, Guidelines & Practices Related to Executive Compensation			34
Summary Compensation Table			36
Outstanding Equity Awards			37
Pay Versus Performance (PVP)			39
Item 3: Ratification of Independent Registered Accounting Firm			42
Item 4: Approval of the Issuance of Common Stock Underlying the Pre-Funded Warrant held by ProFrac Holdings II, LLC			45
Item 5: Approval of A mendment s to the Flotek Industries, Inc. 2018 Long-Term Incentive Plan			48
Other Matters			60
Appendix A – Securities Purchase Agreement, form of Pre-Funded Warrant and Registration Rights Agreement Amendment			i
Appendix B – 2018 Long-Term Incentive Plan			xxvii

Notice of Annual Meeting of Shareholders

To be Held Wednesday, June 7, 2023 at 10a.m. Central Time

Fellow Shareholders,

The 2023 Annual Meeting of Shareholders (the “Meeting”) of Flotek Industries, Inc. (“Flotek,” “we,” “our,” “us,” or the “Company”) will be held at 10:00 a.m., Central Time, on June 7, 2023 at the Company’s headquarters, located at 8846 North Sam Houston Pkwy West, Suite 150, Houston, TX 77064. At the Meeting, shareholders will be asked to consider and vote on the following matters:

1.The election of six directors to serve until the next annual meeting of shareholders;

2.An advisory vote to approve the compensation of the Company’s named executive officers;

3.Ratification of the appointment of KPMG LLP as the Company’s independent auditor for 2023;

4.Approval of the issuance of common stock underlying the pre-funded warrant held by ProFrac Holdings II, LLC;

5.Approval of amendments to the Flotek Industries, Inc. 2018 Long-Term Incentive Plan; and

6.Any other business which may be properly brought before the Meeting.

These items are more fully described in the following pages, which are made part of this notice. Shareholders of record at the close of business on April 11, 2023 are entitled to notice of and to vote at the Meeting or any adjournments, postponements or continuation thereof.

We are furnishing proxy materials to our shareholders over the Internet. We intend to mail a Notice of Internet Availability of Proxy Materials (the “Notice”) on how to access proxy materials and our 2022 Annual Report on Form 10-K (the “2022 Annual Report”), how to vote, and how to obtain a paper copy of the proxy materials on or about April 28, 2023. You will need the control number printed on your Notice, proxy card or voting instruction card in order to vote. A list of shareholders of record will be available during the Meeting for inspection by shareholders for any legally valid purpose relating to the Meeting.

Your vote is very important. We urge you to review the proxy materials and vote as soon as possible, whether or not you plan to attend the Meeting. This Notice of Annual Meeting of Shareholders, the Proxy Statement and the 2022 Annual Report are available free of charge at the “Investor Relations” section of our website at www.flotekind.com/index.php/investor-relations.

On behalf of the Board and the executive team of the Company, I thank you for your support and participation.

By Order of the Board of Directors,

s/ Bond Clement

Bond Clement

Chief Financial Officer

April 27, 2023

Proxy Statement Summary

PROXY STATEMENT SUMMARY

This summary highlights information that is contained elsewhere in this proxy statement (the “Proxy Statement”). This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. This Proxy Statement and the related proxy materials were first released to shareholders and made available on the Internet on or about April 28, 2023.

Annual Meeting of Shareholders

When: June 7, 2023 at 10:00 a.m., Central Time

Where: The Company’s headquarters located at 8846 North Sam Houston Pkwy West, Suite 150, Houston, TX 77064

Who: Shareholders of record at the close of business on April 11, 2023 will be eligible to vote.

What: We are asking shareholders to vote on the following five items:


Item up for Vote	Board’s Voting Recommendation	Page Reference
Election of director candidates, to serve until the 2024 Annual Meeting of Shareholders (Item 1)	FOR EACH CANDIDATE	17
An advisory vote to approve the compensation of the Company’s named executive officers (Item 2)	FOR	26
Ratification of the appointment of KPMG LLP as the Company’s independent auditor for 2023 (Item 3)	FOR	42
Approval of the issuance of common stock underlying the pre-funded warrant held by ProFrac Holdings II, LLC (Item 4)	FOR	45
Approval of amendments to the Flotek Industries, Inc. 2018 Long-Term Incentive Plan (Item 5)	FOR	48

Proxy Statement Summary

Board and Board Committees

There are currently six positions on our Board. Our Board is not classified, and all positions stand for election at each annual meeting of shareholders. Our current Board members are listed below. The standing committees for our Board are the Audit, Compensation, Corporate Governance & Nominating, and Risk & Sustainability Committees, designated by A, C, G and R in the chart below, respectively. Mr. Nierenberg serves as our Independent Chairman of the Board.

Name and Principal Occupation

Age

Independent

Director Since

Committee Membership

Harsha V. Agadi

2020

Interim CEO of Flotek Industries, Inc.

Evan Farber

2022

General Counsel, Cranemere

Michael Fucci

2020

Director, Acadia Healthcare

Lisa Mayr

2021

CFO, Internap Holdings LLC

David Nierenberg(1)

2018

President, Nierenberg Investment Management Company, Inc.

Matt D. Wilks

Executive Chairman and President, ProFrac Holding Corp.

2022

1 Independent Chairman of the Board Chair of Committee Member of Committee

For additional information on our directors and their qualifications, please see the section entitled Director

Nominees beginning on page 18.

Proxy Statement Summary

Board Overview


Independence			Tenure

67% of our directors are independent			83% of our directors have a tenure of less than 5 years, with an average tenure of 2.5 years

Director Skills and Experience

Proxy Statement Summary

Cautionary Statements

This Proxy Statement contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are not historical facts, but instead represent the current assumptions and beliefs regarding future events of the Company, many of which, by their nature, are inherently uncertain and outside the Company’s control. The forward-looking statements contained in this Proxy Statement are based on information available as of the date of this Proxy Statement. The forward-looking statements relate to future industry trends and economic conditions, forecast performance or results of current and future initiatives and the outcome of contingencies and other uncertainties that may have a significant impact on the Company’s business, financial condition, future operating results and liquidity. These forward-looking statements generally are identified by words including but not limited to, “anticipate,” “believe,” “estimate,” “commit,” “budget,” “aim,” “potential,” “schedule,” “continue,” “intend,” “expect,” “plan,” “forecast,” “project” and similar expressions, or future-tense or conditional constructions such as “will,” “may,” “should,” “could” and “would,” or the negative thereof or other variations thereon or comparable terminology. The Company cautions that these statements are merely predictions and are not to be considered guarantees of future performance. Forward-looking statements are based upon current expectations and assumptions that are subject to risks and uncertainties that can cause actual results to differ materially from those projected, anticipated or implied. A detailed discussion of potential risks and uncertainties that could cause actual results and events to differ materially from forward-looking statements include, but are not limited to, those discussed in Part I, Item 1A — “Risk Factors” of our 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 22, 2023 (the “2022 Annual Report”) and periodically in subsequent reports filed with the SEC. The Company has no obligation, and we disclaim any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information or future events, except as required by law.

General Information About the Annual Meeting

GENERAL INFORMATION ABOUT THE ANNUAL MEETING

Solicitation of Proxies

We are providing this Proxy Statement in connection with the solicitation of proxies by our Board for use at the Meeting.

Date, Place and Time of Meeting

The Meeting will be held on June 7, 2023 at 10:00 a.m., Central Time. The Meeting will be held at the Company’s headquarters located at 8846 North Sam Houston Pkwy West, Suite 150, Houston, TX 77064.

Record Date

The record date for the Meeting is April 11, 2023. Shareholders of record at the close of business on April 11, 2023 will be entitled to vote at the Meeting. At of the close of business on April 11, 2023, we had 88,006,506 shares of common stock outstanding. Each share of common stock is entitled to one vote on each item. Shareholders may not cumulate votes.

Attending the Meeting

The Meeting will be held at the Company’s headquarters located at 8846 North Sam Houston Pkwy West, Suite 150, Houston, TX 77064. Please allow ample time for check-in by arriving at the Meeting fifteen minutes early. If a bank, brokerage firm or other nominee holds your shares, you should contact that organization for additional information.

Delivery of Proxy Materials – Notice-And-Access

We are making these proxy materials available to you on the Internet. On or about April 28, 2023, we will mail the Notice to our shareholders containing instructions on how to access the proxy materials at www.proxyvote.com and vote online. In addition, shareholders may request proxy materials to be sent to them by mail or email by contacting the Company at 8846 North Sam Houston Pkwy West, Suite 150, Houston, TX 77064, Attention: Andrew Carter or ir@flotekind.com.

Items of Business

There are five items scheduled to be voted on at the Meeting:

1.The election of six directors;

2.An advisory vote to approve the compensation of the Company’s named executive officers;

General Information About the Annual Meeting

3.Ratification of the appointment of KPMG LLP as the Company’s independent auditor for 2023;

4.Approval of the issuance of common stock underlying the pre-funded warrant held by ProFrac Holdings II, LLC; and

5.Approval of amendments to the Flotek Industries, Inc. 2018 Long-Term Incentive Plan.

Quorum and Voting Requirements

A quorum is required to conduct business at the Meeting. The holders of a majority of the Company’s issued and outstanding shares that are entitled to vote are required to be present, or represented by proxy, in order to constitute a quorum at the Meeting. Abstentions and broker non-votes will be counted towards the quorum requirement.

Each of the six director nominees will be elected by a majority of the votes cast with respect to the nominee so long as the number of nominees for election equals the number of directors to be elected (an “Uncontested Election”). For the purpose of an Uncontested Election, a majority of votes cast means that the number of votes “for” a nominee’s election must exceed 50% of the votes cast “for” or “against” with respect to that nominee’s election, excluding abstentions. Broker non-votes will not count as votes cast with respect to that nominee’s election. If the number of nominees for director at a meeting of shareholders exceeds the number of directors to be elected at such meeting, directors shall be elected by a plurality of the votes cast at such meeting.

The proposal regarding the compensation of our named executive officers must receive an affirmative vote of a majority of the total votes cast with respect to this proposal at the Meeting. This means that the votes that our shareholders cast "for" this proposal must exceed the votes that our shareholders cast “against” this proposal. Abstentions and broker non-votes will not be taken into account in determining the outcome of this proposal.

The proposal regarding the appointment of KPMG LLP as our independent auditor must receive an affirmative vote of a majority of the total votes cast with respect to this proposal at the Meeting. This means that the votes that our shareholders cast "for" this proposal must exceed the votes that our shareholders cast “against” this proposal. Abstentions and broker non-votes will not be taken into account in determining the outcome of this proposal.

The proposal regarding the approval of the issuance of common stock underlying the pre-funded warrant held by ProFrac Holdings II, LLC must receive an affirmative vote of the holders of at least a majority of the outstanding shares, whether or not present in person or represented by proxy at the Meeting, other than any such shares held by ProFrac Holdings II, LLC and its affiliates. Abstentions and broker non-votes will have the same effect as a vote “against” this proposal.

The proposal regarding the approval of amendments to the Flotek Industries, Inc. 2018 Long-Term Incentive Plan must receive an affirmative vote of a majority of the total votes cast with respect to this proposal at the Meeting. This means that the votes that our shareholders cast "for" this proposal must exceed the votes that our shareholders cast “against” this proposal. Abstentions and broker non-votes will not be taken into account in determining the outcome of this proposal.

General Information About the Annual Meeting

Broker non-votes occur when nominees, such as brokers and banks holding shares on behalf of the beneficial owners, are prohibited from exercising discretionary voting authority for beneficial owners who have not provided voting instructions. If you do not give instructions to your bank, brokerage firm or other agent, the bank, brokerage firm or other agent will nevertheless be entitled to vote your shares of common stock in its discretion on “routine matters” and may give or authorize the giving of a proxy to vote the shares of common stock in its discretion on such matters. Items 1, 2, 4 and 5 are considered “non-routine matters” and Item 3 is considered a “routine matter.”

The vote for Item 2, the “say on pay,” is non-binding, but the Board will consider the results of the vote in making future decisions.

Voting Procedures

Holders of our common stock may hold shares either beneficially through a broker or bank, or directly in their own name. If your shares are registered directly in your name with our transfer agent, you are considered the shareholder of record of those shares. As a shareholder of record, you may vote directly at the Meeting in person, by proxy, by Internet at www.proxyvote.com, by telephone or by mail by following the instructions provided on the proxy card or on the Internet site. If a bank, brokerage firm or other nominee holds your shares, you should contact that organization for additional information.

Proxy Solicitation Costs

We will pay the cost of printing and mailing proxy materials, but we will not pay a fee to any of our officers or employees as compensation for soliciting proxies. In addition to the solicitation of proxies by mail, proxies may also be solicited by phone, email or personally.

Revoking your Proxy

If you are a shareholder of record, whether you give your proxy over the Internet, by telephone or by mail, you may revoke it at any time before it is exercised. You may enter a new vote by voting in person at the Meeting, electronically, by mail or by telephone so long as it is received prior to the Meeting. If you hold your shares beneficially, you must follow the instructions provided by your broker or nominee as to whether and how you may revoke your proxy. Attending the Meeting alone will not revoke your proxy.

Voting Results

We will announce preliminary voting results during the Meeting and report the final voting results within four business days of the Meeting on a Current Report on Form 8-K. You can access that Current Report on Form 8-K and our other the Securities and Exchange Commission (“SEC”) filings at our website at https://www.flotekind.com/index.php/investor-relations/itemlist/category/92-sec-filings or at the SEC’s website at www.sec.gov. The information provided on those websites is for information purposes only and is not incorporated by reference in this Proxy Statement.

Corporate Governance

CORPORATE GOVERNANCE

We are committed to conducting our business in accordance with the highest level of ethical and corporate governance practices. From time to time, we review our governance practices and take actions to address changes related to regulatory requirements and best practices. Below is a description of some of the key matters related to our corporate governance practices.

Corporate Governance Guidelines

We have adopted Corporate Governance Guidelines to promote the healthy function of our Board and its committees, and to set forth a common set of expectations on Board performance. A copy of these guidelines is available on our website at www.flotekind.com. The information on our website is not a part of this Proxy Statement.

Code of Business Conduct and Ethics

We are committed to conducting our business legally and ethically and have adopted a Code of Business Conduct and Ethics that governs the behavior of our directors, officers and employees and sets forth standards for conflict of interest, compliance with laws, methods for reporting, and other corporate activities. A copy of our Code of Business Conduct and Ethics is available on our website at www.flotekind.com. The information on our website is not a part of this Proxy Statement.

Board Structure

The Board’s size and makeup is intended to facilitate meaningful discussion and allow for diverse perspectives. The balance of these perspectives on our Board is more important than any specific size target.

Our Board is currently comprised of six directors. The Board has determined, as of the record date that four of our six directors are independent, as defined by the New York Stock Exchange (the “NYSE”) and SEC (see “Director Independence” below).

In conjunction with the departure of our former Chairman, Chief Executive Officer and President John Gibson in January 2023, the Board unanimously approved the separation of the roles of Chairman of the Board and Chief Executive Officer. In connection with that separation of roles, the Board determined that the Chairman of the Board role will only be filled by an independent, non-management director.

The duties of the Independent Chairman of the Board include serving as a liaison between the non-management directors and the Chief Executive Officer. During January 2023, David Nierenberg was appointed as the Independent Chairman of the Board and Harsha Agadi was appointed interim Chief Executive Officer. Because the Chairman of the Board is an independent, non-management director, the Board is not required to designate a Lead Director.

Corporate Governance

Our Board is not classified, which means that every director stands for election at every annual meeting of shareholders.

Director Nominations Process

The Board as a whole is responsible for selecting nominees for the Board. The Corporate Governance and Nominating Committee is responsible for screening and recommending candidates. The Corporate Governance and Nominating Committee identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members with qualifications and skills that are consistent with the Corporate Governance and Nominating Committee's criteria for Board service will be considered for re-nomination by the Board but the Board is not obligated to do so. These criteria may include includes factors such as independence, age, integrity, skills, expertise, breadth of experience, knowledge about the Company's business or industry and willingness to devote adequate time and effort to Board responsibilities in the context of the existing composition and needs of the Board and its committees. Diversity in personal background, race, gender, age and nationality, for the Board as a whole may be taken into account in considering individual candidates. As to new candidates, the Corporate Governance and Nominating Committee generally polls the Board members and members of management for their recommendations and will review candidates properly proposed by stockholders in accordance with the guidelines described below. The Corporate Governance and Nominating Committee may also review the composition and qualification of the boards of directors of the Company's competitors or other companies, and may seek input from industry experts or analysts. The Corporate Governance and Nominating Committee reviews the qualifications, experience and background of the candidates. Final candidates are interviewed by the independent directors and executive management. In making its determinations, the Corporate Governance and Nominating Committee evaluates each individual in the context of the Board as whole, with the objective of assembling a group that can best perpetuate the success of the Company and represent stockholder interests through the exercise of sound judgment. After review and deliberation of all feedback and data, the Committee makes its recommendation to the Board. Recommendations received by stockholders in accordance with guidelines described below will be reviewed and are subject to the same criteria as are candidates selected by the Corporate Governance and Nominating Committee.

The Corporate Governance and Nominating Committee may engage a third-party search firm to identify candidates in those situations where particular qualifications are required or where existing contacts are not sufficient to identify appropriate candidates.

Sections 14 and 15 of Article II of the Bylaws of the Company, entitled "Notice of Nominations for Election to the Board of Directors" and “Additional Requirements for Valid Nomination of Candidates to Serve as Director, and If Elected, to Be Seated as Directors”, respectively, set out a detailed procedure for stockholder proposed candidates and this procedure will be followed by the Company.

ProFrac Holdings Directors

Pursuant to that certain Master Transaction Agreement dated February 2, 2022, between the Company and ProFrac Holdings, LLC (“ProFrac Holdings”), ProFrac Holdings was granted the right to designate two designees to serve on the Board. Pursuant to this right, Mr. Wilks was nominated and elected to serve on the Board at the Company’s 2022 Annual Meeting of Shareholders. Pursuant to that certain Securities Purchase Agreement dated February 16, 2022 (the “SPA”), between the Company and ProFrac

Corporate Governance

Holdings, ProFrac Holdings was granted the right to designate two additional designees to serve on the Board. Pursuant to this right, Mr. Farber was appointed to the Board on October 11, 2022. The SPA provides that at least three of the four directors that may be appointed by ProFrac Holdings (the “ProFrac Holdings Directors”) are required to be independent (as defined under applicable NYSE listing standards) and eligible and qualified to serve on the Audit and Compensation Committees of the Board (such eligibility determined in accordance with the rules and regulations of the SEC and the applicable NYSE listing standards).

In addition, the SPA further provides that until such time as ProFrac Holdings and its affiliates hold less than 40% of the shares of common stock outstanding as of the closing date of the SPA, the Board will (i) replace any vacancy created by the departure of a ProFrac Holdings Director with a nominee by ProFrac Holdings and (ii) ensure that the chairperson of the Corporate Governance and Nominating Committee is a ProFrac Holdings Director, subject to the rules and requirements of the NYSE. Any time that ProFrac Holdings and its affiliates hold (i) less than 40%, but at least 30%, of the shares of common stock outstanding, ProFrac Holdings will have the right to designate (and replace due to vacancy) three directors, (ii) less than 30%, but at least 20%, of the shares of common stock outstanding, ProFrac Holdings will have the right to designate (and replace due to vacancy) two directors, and (iii) less than 20%, but at least 10%, of the shares of common stock outstanding, ProFrac Holdings will have the right to designate (and replace due to vacancy) one director. In the event that ProFrac Holdings and its affiliates hold less than 10% of the shares of common stock outstanding, ProFrac Holdings will not have the right to designate or replace due to vacancy any directors; provided, however, that if ProFrac Holdings holds less than 10%, but greater than 5%, of the shares of common stock outstanding, ProFrac Holdings may designate one individual to be an observer of the Board on usual and customary terms.

See “Corporate Governance - Certain Relationships and Related Party Transactions,” the table and related footnotes presented in “Security Ownership of Certain Beneficial Owners, Executive Officers and Directors” and “Item 4: Approval of the Issuance of Common Stock Underlying the Pre-Funded Warrant held By Profrac Holdings II, LLC” for additional information.

Risk Management

The Board has an active role in overseeing management of the Company’s risks. The Board regularly reviews information regarding the Company’s operations, liquidity and associated risks. The Risk and Sustainability Committee is tasked with oversight of the general risk and sustainability programs of the Company. In addition, the Compensation Committee is responsible for overseeing the management of risks related to the Company’s executive compensation programs, the Audit Committee oversees the management of financial risks and SEC reporting, and the Corporate Governance and Nominating Committee manages risks associated with director independence and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of those risks, the entire Board is regularly informed through committee reports.

Board Committees

Our Board currently has four standing committees, each of which has specific responsibilities as described below:

Corporate Governance


Audit Committee			Chair: Lisa Mayr
			Members: Evan Farber, David Nierenberg
			Meetings in 2022: 6
PRIMARY RESPONSIBILITIES •Overseeing the Company’s financial reporting process and financial risk •Discussing significant financial reporting issues and judgments with the Company’s management and independent auditors •Appointing, overseeing, and determining payment for the Company’s independent registered public accounting firm •Overseeing the Company’s internal audit function •Preapproving all audit services and all permissible non-audit services provided by the Company’s independent registered public accounting firm •Reviewing the Company’s financial statements included in its Form 10-K, Form 10-Q and other SEC filings •Discussing earnings releases and guidance with Company management •Overseeing the compliance program of the Company and the hotline for reporting concerns with the Company’s financial or other practices


Corporate Governance & Nominating Committee			Chair: Evan Farber
			Members: Lisa Mayr, David Nierenberg
			Meetings in 2022: 5
PRIMARY RESPONSIBILITIES •Reviewing the structure, skills and experience of the Board •Recommending candidates to the Board to fill vacancies as they occur •Recommending a slate of nominees for election to the Board at the annual meeting •Identifying qualified individuals to serve as potential Board members, including candidates recommended by shareholders •Engaging and approving the fees for third-party director search firms •Reviewing the composition of committees and giving the Board recommendations on rotations of chairpersons •Overseeing, reviewing and recommending the Company’s Corporate Governance Guidelines and Code of Business Conduct and Ethics •Reviewing potential conflicts of interest and related party transactions •Reviewing executive succession plans

Corporate Governance


Compensation Committee			Interim Chair: Michael Fucci
			Members: Evan Farber, Lisa Mayr
			Meetings in 2022: 8
PRIMARY RESPONSIBILITIES •Reviewing and approving goals of the CEO and other executive officers •Determining, in conjunction with senior management, a compensation strategy for the CEO and other executive officers, including base salary •Awarding equity-based awards to the CEO, other executive officers and other employees of the Company •Making recommendations to the Board on Board compensation •Overseeing benefit programs applicable to all employees of the Company


Risk & Sustainability Committee			Chair: Michael Fucci
			Members: David Nierenberg, Harsha Agadi
			Meetings in 2022: 0
PRIMARY RESPONSIBILITIES •Identification and assessment of risk in the organization by the executive management team •Oversight of strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, and other risks of the Company, in conjunction with other committees of the Board where applicable •Oversight of the division of risk-related responsibilities between the Board, the standing committees of the Board, and management •Approval of the Company’s risk management framework and reporting •Approval of the Company’s sustainability plans

The charters adopted for the Audit, Compensation, Corporate Governance and Nominating, and Risk and Sustainability Committees are available on our website, www.flotekind.com. These charters describe each committee’s resources, responsibilities and authority in greater detail. The information on our website is not part of this Proxy Statement.

Director Independence

The NYSE, SEC and our Corporate Governance Guidelines require that a majority of our directors, and that all of the members of our Audit, Compensation and Corporate Governance and Nominating Committees, are independent, using the criteria established by the NYSE and the SEC. The Board makes a determination annually about the independence of each director. For 2023, the Board has determined that all nominees other than Mr. Wilks and Interim CEO, Mr. Agadi, are independent using the criteria established by the NYSE and the SEC.

Meetings and Director Attendance

During 2022, the Board met sixteen times, the Audit Committee met six times, the Compensation Committee met eight times, and the Corporate Governance and Nominating Committee met five times. All directors attended at least 75% of the Board meetings and the meetings of committees of which they

Corporate Governance

were a member. The Company does not have a formal policy requiring members of the Board to attend the annual meeting of shareholders. Six members of the Board attended last year’s annual meeting.

Board Observer

In December 2020, the Company added Brian Miller as a non-voting board observer. Mr. Miller is the President of North Sound Management, Inc., the general partner of one of the Company’s largest shareholders. Mr. Miller is entitled to attend the Company’s board meetings and receive board materials, subject to certain limitations relating to, among other things, confidentiality, fiduciary requirements, attorney-client privilege and applicable legal requirements. The Company believes that this has enhanced shareholder communication and provided better corporate governance. For a full description of the board observer arrangement, please see the Company’s Current Report on Form 8-K filed with the SEC on December 2, 2020.

Certain Relationships and Related Party Transactions

Flotek generally does not engage in transactions or relationships involving a related person which would require disclosure under Item 404(a) of Regulation S-K of the rules and regulations of the SEC unless approved through the proper procedures. Any such transaction requires the approval of the Corporate Governance and Nominating Committee. No director may participate in the review or voting of any transaction in which he or she is a related party.

On February 2, 2022, Flotek entered into a Private Investment in Public Equity transaction (the “PIPE Transaction”) with a consortium of investors to secure growth capital for the Company. Pursuant to the PIPE Transaction, Flotek issued $21.2 million in aggregate initial principal amount of 10% convertible PIK notes (the “Convertible Notes”) for net cash proceeds of approximately $20.1 million. The Convertible Notes accrue paid-in-kind interest at a rate of 10% per annum, have a maturity of one year, and are converted into common stock of Flotek or pre-funded warrants to purchase common stock of Flotek, (a) at the holder's option at any time prior to maturity, at a price of $1.088125 per share, (b) at Flotek's option, if the volume-weighted average trading price of Flotek's common stock equals or exceeds $2.50 for 20 trading days during a 30 consecutive trading day period, or (c) at maturity, at a price of $0.8705. ProFrac Holdings and certain funds associated with David Nierenberg, the Company’s Independent Chairman, participated in the PIPE transaction and were issued $10 million and $3 million, respectively, in aggregate initial principal amount of Convertible Notes in exchange for cash. The PIPE transaction and the participation by the funds related to Mr. Nierenberg were reviewed and approved in advance by disinterested directors on the Board during deliberations at which Mr. Nierenberg was not present and did not take part.

On February 2, 2022, the Company entered into a long-term supply agreement with ProFrac Services, LLC (the “Initial ProFrac Agreement”), a subsidiary of ProFrac Holdings II, LLC, in exchange for $10 million in aggregate principal amount of Convertible Notes, under the same terms as the Convertible Notes issued in the PIPE Transaction described above, including the paid-in-kind interest at a rate of 10% per annum and conversion features.

On May 17, 2022, the Company entered into an amendment to the Initial ProFrac Agreement (the “Amended ProFrac Agreement” and collectively the “ProFrac Agreement”) upon issuance of $50 million in

Corporate Governance

aggregate principal amount of Convertible Notes to ProFrac Holdings LLC. The Convertible Notes have the same terms as the Convertible Notes issued in the PIPE Transaction described above, including the paid-in-kind interest at a rate of 10% per annum and conversion features.

On June 21, 2022, ProFrac Holdings II, LLC paid $19.5 million for prefunded warrants of the Company (the “PreFunded Warrants”). Subject to (i) the Company obtaining the approval of such issuance from the holders of a majority of the issued and outstanding shares of the Company’s common stock, other than any such shares held by ProFrac Holdings II, LLC or any of its affiliates (as contemplated by “Item 4: Approval of the Issuance of Common Stock Underlying the Pre-Funded Warrant Held by Profrac Holdings II, LLC” of this Proxy Statement) and (ii) ProFrac Holdings II, LLC paying an additional $4.5 million to the Company, the Prefunded Warrants permit ProFrac Holdings II, LLC to purchase 13,104,839 shares of the Company’s common stock at an exercise price equal to $0.0001 per share.

The issuance of the PreFunded Warrants to ProFrac Holdings II, LLC was reviewed and approved in advance by disinterested directors on the Board during deliberations at which Mr. Wilks was not present and did not take part.

During the years ended December 31, 2022 and 2021, the Company’s revenues from ProFrac Services LLC under the ProFrac Agreement were $80.4 million and zero, respectively. Cost of sales attributable to these revenues were $84.5 million and zero, respectively, for the years ended December 31, 2022 and 2021. As of December 31, 2022 and 2021 our accounts receivable from ProFrac Services, LLC was $22.7 million and zero, respectively.

See “Corporate Governance – ProFrac Directors,” the table and related footnotes presented in “Security

Ownership of Certain Beneficial Owners, Executive Officers and Directors” and “Item 4: Approval of the

Issuance of Common Stock Underlying the Pre-Funded Warrant Held By Profrac Holdings II, LLC” for

additional information.

Ted D. Brown was a director of the Company beginning in November of 2013 and is the President and CEO of Confluence Resources LP (“Confluence”), a private oil and gas exploration and production company. Mr. Brown stepped down from being a director of the Company effective June 9, 2022 and Confluence ceased being considered a related party. The Company’s revenues and related cost of sales for product sales to Confluence were $1.4 million and $1.4 million, respectively, through June 9, 2022. The accounts receivable balance from Confluence as at December 31, 2021 was $1.3 million. The Company’s revenues and related cost of sales from chemical sales to Confluence for the year ended December 31, 2021 were $3.6 million and $3.4 million, respectively.

Communication with the Board

Shareholders and other persons who wish to communicate with the Board, or with any individual director, may do so by calling Lighthouse Services Inc., a third-party call center, at (800) 785-1003, or by correspondence addressed to the Board, or to an individual director, at our principal executive offices located at 8846 North Sam Houston Pkwy West, Suite 150, Houston, TX 77064. These communications are sent directly to the appropriate Board member.

Stock Ownership Guidelines

Corporate Governance

Our directors and executive officers are subject to certain stock ownership guidelines. Directors are required to own stock equal to at least 5x the current annual retainer. Executive officers are required to own stock equal to at least 6x base salary in the case of the Chief Executive Officer, and 2x base salary in the case of all other executive officers. Each director or executive officer has five years from the date he or she was appointed to achieve the appropriate stock ownership ratio. Directors or executive officers that do not meet the prescribed ratio must retain at least 25% of the net shares from the exercise of options or vesting of shares until they meet the applicable ratio.

As of December 31, 2022, all directors and executive officers were in compliance with the stock ownership guidelines.

Insider Trading Policy; Anti-Hedging and Pledging

We have adopted an Insider Trading Policy governing the purchase, sale, and/or other dispositions of our securities by directors, officers and employees that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to us. Directors, officers and employees are prohibited by our Insider Trading Policy from hedging transactions related to our securities. This includes prohibitions on short-selling, options (other than those granted as compensation), puts or calls, swaps, collars, forwards, futures and other similar derivative transactions. Directors, officers and employees are also prohibited from pledging our securities or engaging in margin transactions related to our securities.

None of the Company’s current executive officers or directors have pledged or hedged any common stock of the Company.

Item 1: Election of Directors

ITEM 1: ELECTION OF DIRECTORS

Our Board is not divided into classes, so all director positions are up for election every year. The Board has nominated the following candidates for director:


Name	Board Member Since	Primary Occupation	Age
Harsha V. Agadi	2020	Interim CEO of Flotek Industries, Inc.	60
Evan Farber	2022	General Counsel Cranemere	50
Michael Fucci	2020	Director, Acadia Healthcare	64
Lisa Mayr	2021	Chief Financial Officer, Internap Holdings LLC	55
David Nierenberg	2018	President, Nierenberg Investment Management Company Inc.	69
Matt D. Wilks	2022	Executive Chairman and President, ProFrac Holding Corp.	39

In recommending this slate of candidates, the Board and the Corporate Governance and Nominating Committee has taken into account the nominees’ experience, their expertise, their ethics and standards, and the diversity of views that this slate of candidates represents. A description of the candidates’ individual qualifications is below.

Each nominee has indicated approval of his or her nomination, and his or her willingness to serve if elected. If any nominee for election becomes unable to serve before the Meeting (which we do not expect), the persons named as proxies may vote for a substitute nominee or nominees, as may be designated by the Board prior to the Meeting.

Vote Required

Each of the six director nominees in this Item 1 will be elected by a majority of the votes cast with respect to the nominee so long as the number of nominees for election equals the number of directors to be elected. A majority of votes cast means that the number of votes “for” a nominee’s election must exceed 50% of the votes cast “for” or “against” with respect to that nominee’s election, excluding abstentions. Broker non-votes will not count as votes cast with respect to that nominee’s election.

Recommendation

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES LISTED IN ITEM 1.

Item 1: Election of Directors

DIRECTOR NOMINEES

Six of the nominees for directors are incumbents that are up for reelection. Highlights of their background and service on our board to date are described below:

Harsha V. Agadi

Age: 60

Director Since 2020

EXPERIENCE

•Interim CEO of Flotek Industries, Inc.*

•Chairman and CEO of GHS Holdings, LLC*

•Board member and former President and CEO of Crawford & Company (NYSE: CRDA)*

•Board member of Diversified Foodservice Supply, Inc.

•Chairman of Quiznos, LLC

•Chairman, The Krystal Company

•Chairman and CEO of Friendly’s Ice Cream, LLC

•President and CEO of Church’s Chicken

PHILANTHROPY & PUBLIC SERVICE

•Chairman and Managing Trustee, GHS Charitable Foundation, Inc.*

•Chairman and Managing Trustee SKSVMA Charitable Trust*

•Board Member Emeritus of Fuqua School of Business, Duke University*

EDUCATION

•Master of Business Administration, Fuqua School of Business at Duke University

•Bachelor of Commerce, University of Mumbai

BOARD ROLES

•Former Chairman of the Compensation Committee from 2020 to 2023

•Former member of the Audit Committee from 2021 to 2023

•Member of the Risk and Sustainability Committee since 2021

•Former Independent Director

•Former Audit Committee Financial Expert

The Board believes that Mr. Agadi’s experience as an executive, board member and in the consumer products sector make him a valuable member of the Board.

*Current Role


Evan Farber		Age: 50
		Director Since 2022
	EXPERIENCE •General Counsel Cranemere* •Chief Legal Officer of The Advisory Board Company •Partner at Hogan & Hartson LLP (now Hogan Lovells US LLP) PHILANTHROPY & PUBLIC SERVICE •Emeritus Board of the Children’s Law Center* •Board of Trustees of Concord Hill School	EDUCATION •Bachelor of Arts from State University of New York at Binghamton •J.D – The George Washington University Law School BOARD ROLES •Chair of the Corporate Governance and Nominating Committee since 2022 •Audit Committee since 2022 •Independent Director since 2022

The Board believes that Mr. Farber’s extensive experience as an executive, including at a public company, make him a valuable member of the Board.

*Current Role

Item 1: Election of Directors

Michael Fucci

Age: 64

Director Since 2020

EXPERIENCE

•Director, Acadia Healthcare (NASDAQ: ACHC)*

•Executive Chairman/Chairman Emeritus of Deloitte U.S. LLP

•Member of the Global Board of Deloitte

•Chief Operating Officer of Deloitte Consulting

PHILANTHROPY & PUBLIC SERVICE

•Supporter of Montclair State University Business School*

•Involved in various community educational initiatives*

EDUCATION

•Bachelor of Science in Mathematics, Montclair State University

BOARD ROLES

•Chairman of the Risk and Sustainability Committee since 2021

•Member of the Compensation Committee since 2021; Interim Chairman since 2023

•Independent Director

The Board believes that Mr. Fucci’s extensive experience as an executive, board member and in the human capital and accounting sectors make him a valuable member of the Board.

*Current Role

Lisa Mayr

Age: 55

Director Since 2021

EXPERIENCE

•Chief Financial Officer, Internap Holding LLC*

•Chief Financial Officer, MicroStrategy Incorporated (NASDAQ: MSTR)

•Chief Financial Officer, EverFi

•Chief Financial Officer, Blackboard

•Board Observer and Member of the Audit Committee, WorldStrides

•Certified Public Accountant

PHILANTHROPY & PUBLIC SERVICE

•Advisory Council Member, STEM for Her

EDUCATION

•MBA, Georgetown University

•Bachelor of Arts in International Studies and Economics, American University

BOARD ROLES

•Member of the Audit Committee since 2021; Chairman since 2023

•Member of the Corporate Governance and Nominating Committee since 2021

•Member of the Compensation Committee since 2023

•Independent Director

•Audit Committee Financial Expert

The Board believes that Ms. Mayr’s extensive financial expertise and her experience as a board member and an executive make her a valuable member of the Board.

*Current Role

Item 1: Election of Directors

David Nierenberg

Age: 69

Director Since 2018

EXPERIENCE

•Founder and President, Nierenberg Investment Management Company*

•Director of Riverview Bancorp (NASDAQ: RVSB)

•Director of Houston Wire and Cable Company (NASDAQ: HWCC)*

•Director of Rosetta Stone (NYSE: RST)

•Partner, Bain & Company Inc.

•Chair for the Advisory Board of the Ira M. Millstein Center for Global Markets and Corporate Ownership at Columbia Law School*

•Chair of the Research Advisory Council of Glass, Lewis & Co.*

•Member of the Washington State Investment Board*

PHILANTHROPY & PUBLIC SERVICE

•Member of the board of The National WWII Museum*

•Member of the board of STAND for Children*

•Member of the board of Peace Health Southwest Washington Medical Center Foundation*

EDUCATION

•Juris Doctorate, Yale Law School

•Bachelor of Arts in History, summa cum laude, Yale University

BOARD ROLES

•Lead Independent Director from 2020 to 2023

•Chairman of the Board for 2019 and 2023

•Member of the Audit Committee since 2020; Chairman from 2020 to 2023

•Member of the Corporate Governance and Nominating Committee since 2018

•Member of the Risk and Sustainability Committee since 2021

•Independent Director

•Audit Committee Financial Expert

The Board believes that Mr. Nierenberg’s extensive experience on public company boards and his corporate governance experience make him a valuable member of the Board.

*Current Role

Item 1: Election of Directors


Matt D. Wilks		Age: 39
		Director Since 2022
	Matt D. Wilks has served as the Executive Chairman of the Board of Directors for ProFrac Holding Corp. since August 2021. Mr. Wilks has been the President of ProFrac since 2018 and previously served as the Chief Financial Officer from May 2017 to August 2021. Mr. Wilks also serves as Vice President of Investments for Wilks Brothers since January 2012. From 2010 to 2012, Mr. Wilks served as Vice President of Logistics for FTSI. Additionally, Mr. Wilks served as a member of the Board of Directors of Approach Resources, Inc., an upstream oil and gas company focused on the exploration, development and production of unconventional oil and gas resources in the United States.

The Board believes that Mr. Wilks’ connection to ProFrac Services, LLC and his extensive executive experience in the oil and gas services space make him a valuable addition to the Board.

The above biographical and other information for the six director nominees is current as of April 13, 2023.

The Board is committed to ensuring that the composition of the Board reflects the appropriate level of diverse viewpoints, taking into account gender, race, ethnicity, experience and background.

Item 1: Election of Directors

DIRECTOR COMPENSATION

Board members receive an annual retainer of $52,000 and additional retainers for serving as a chair or member of a Board committee. Directors may elect to receive their annual retainer in stock of the Company in lieu of cash. The Audit Committee chair receives an annual retainer of $32,000, and Audit Committee members receive an annual retainer of $8,000. The Compensation Committee chair receives an annual retainer of $20,000 and Compensation Committee members receive an annual retainer of $8,000. The Corporate Governance and Nominating Committee chair receives an annual retainer of $16,000 and Corporate Governance and Nominating Committee members receive an annual retainer of $4,000. The former Lead Independent Director received an annual retainer of $24,000. The Independent Chairman receives an annual retainer of $24,000.

The members of the Board also receive an annual grant of restricted stock equal to a market value of $100,000. The restricted stock vests on the one-year anniversary of the grant or on the date of the annual meeting of shareholders following the grant, whichever is earlier. Directors do not receive fees for attending Board or committee meetings.

Mr. Wilks does not receive any compensation for being a member of the Board.

Beginning in 2021, directors were permitted to receive the cash portion of their compensation in common stock of the Company. Mr. Agadi and Mr. Nierenberg elected to receive the cash portion of their compensation in common stock of the Company.

The following table provides the 2022 compensation of the non-employee directors:


Name	Fees earned or paid in cash	Stock awards(5)(6)	Non-equity incentive plan compensation	All other compensation	Total
Evan R. Farber(1)	$16,000	$ 66,097	$ —	$ —	$82,097
Harsha V. Agadi	$6,667	$187,999	$ —	$ —	$194,666
Michael Fucci	$75,000	$62,264	$ —	$ —	$137,264
Matt Wilks(2)	$ —	$ —	$ —	$ —	$ —
Lisa Mayr	$83,333	$62,264	$ —	$ —	$145,597
David Nierenberg	$8,333	$136,981	$ —	$ —	$145,314
Ted D. Brown(3)	$ —	$ —	$ —	$ —	$ —
Paul W. Hobby(4)	$ —	$ —	$ —	$ —	$ —

(1)Mr. Farber was elected as a director on October 11, 2022.

(2)Mr. Wilks was elected as a director on June 9, 2022.

(3)Mr. Brown ceased being a director on June 9, 2022.

(4)Mr. Hobby ceased being a director on June 9, 2022.

(5)These amounts reflect the aggregate grant date fair value, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation (ASC 718), of awards pursuant to the Flotek Industries, Inc. 2019 Non-Employee Director Incentive Plan]. Assumptions used in the calculation of these amounts are included in “Note 15 — Stock-Based Compensation and Other Benefit Plans” to our audited financial statements, included in our 2022 Annual Report on Form 10-K filed with the SEC on March 23, 2023. Awards were not vested as of December 31, 2022, and vest on the one-year anniversary of the grant, or on the date of the annual meeting of shareholders following the grant, whichever is earlier.

(6)As of December 31, 2022, Mr. Farber had 56,980 stock awards outstanding, Mr. Agadi had 148,760 stock awards outstanding, Mr. Fucci had 82,645 stock awards outstanding, Mr. Wilks had zero awards outstanding, Ms. Mayr had

Item 1: Election of Directors

82,645 stock awards outstanding, Mr. Nierenberg had 165,289 stock awards outstanding, Mr. Brown had zero awards outstanding and Mr. Hobby had zero awards outstanding.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, EXECUTIVE OFFICERS AND DIRECTORS

The following table provides the beneficial ownership of Common Stock as of March 21, 2023 for (i) each named executive officer set forth in the Summary Compensation Table below, (ii) each of the Company’s directors (including each nominee), (iii) all of the Company’s current executive officers and directors as a group, and (iv) each person known by the Company to be a beneficial owner of more than 5% of our outstanding Common Stock based solely on our review of the statement of beneficial ownership filed by these persons or entities with the SEC as of the date of such filing.


Name	Shares Beneficially Owned(1)	Percent of Class(2)
Executive Officers and Directors
John W. Gibson, Jr.(3)	529,021	0.6%
Ryan Ezell	506,996	*
Michael E. Borton(4)	403,979	*
James Silas(5)	412,076	*
Harsha V. Agadi	419,939	*
Michael Fucci	144,308	*
Lisa Mayr	129,815	*
David Nierenberg(6)	7,968,241	9.04%
Evan R. Farber	56,980	*
Matt Wilks(8)	—	*
All executive officers and directors as a group (8 persons)	9,574,213	10.86%
5% Beneficial Owners
North Sound Trading, L.P.(7)	5,573,036	6.32%
David Nierenberg(6)	7,968,241	9.04%
ProFrac Holdings, LLC	88,904,715 (8)(10)	50.64% (9)(10)

* Less than 1%.

(1) Except as otherwise disclosed, the persons named in the table have sole voting and investment power of all shares of common stock which are beneficially owned by them. None of the current executive officers or directors have pledged shares.

(2) Based on 88,170,936 shares of common stock outstanding as of March 21, 2023.

(3) Mr. Gibson’s employment with the Company ended on January 19, 2023.

(4) Mr. Borton’s employment with the Company ended on May 17, 2022.

(5) Mr. Silas’ employment with the Company ended on February 16, 2023.

(6) Information based upon Form 4 filed with the SEC on January 24, 2023 by David Nierenberg. Includes shares of common stock beneficially owned by The D3 Family Fund, LP (2,647,383), The D3 Family Bulldog Fund, LP (4,894,730), and Haredale Ltd. (247,660), and 178,648 shares held by Mr. Nierenberg directly. Mr. Nierenberg is the sole owner of Nierenberg Investment Management Company, Inc. Nierenberg Investment Management Company, Inc. is the investment manager with respect to the shares held by each of The D3 Family Fund, LP, The D3 Family Bulldog Fund, LP, and Haredale Ltd. Each of The D3 Family Fund,

Item 1: Election of Directors

LP, The D3 Family Bulldog Fund, LP, Haredale Ltd., Nierenberg Investment Management Company, Inc. and Mr. Nierenberg has disclaimed ownership of these securities except to the extent of its pecuniary interest therein. The address of the foregoing is 19605 NE 8th St., Camas, Washington 98607.

(7) Information based upon the Schedule 13D/A filed with the SEC on December 28, 2022 by North Sound Management, Inc., Brian Miller, and North Sound Trading, LP. Each of Brian Miller, North Sound Management, Inc., and North Sound Trading, L.P. have has sole voting and dispositive power with respect to the shares. The address of North Sound Trading, L.P. is Edward E. Murphy, c/o North Sound Management, Inc, 115 East Putnam Avenue, Greenwich, Connecticut 06830. In the event of conversion, North Sound Trading, L.P. is limited to no more than 9.99% voting percentage by contract.

(8) Information based upon the Schedule 13D/A filed with the SEC on March 2, 2023 by ProFrac Holding Corp. (“Pubco”), ProFrac Holdings, LLC (“ProFrac Holdings”), and ProFrac Holdings II, LLC (“ProFrac Holdings II”). Consists of (i) 48,933,315 shares of common stock issuable to ProFrac Holdings upon conversion of the $53,245,563 in aggregate principal amount and PIK Interest thereunder as of December 31, 2022 of the Convertible Notes, (ii) 13,104,839 shares of common stock issuable to ProFrac Holdings II upon exercise of the prefunded warrants issued to ProFrac Holdings II on June 21, 2022 (the “June 2022 Prefunded Warrants”), subject to (a) the Company obtaining the approval of such issuance from the holders of a majority of the issued and outstanding shares of common stock, other than any such shares held by ProFrac Holdings II or any of its affiliates (as contemplated by “Item 4: Approval of the Issuance of Common Stock Underlying the Pre-Funded Warrant Held by Profrac Holdings II, LLC” of this Proxy Statement) and (b) ProFrac Holdings II paying an additional $4.5 million to the Company; provided, however, that ProFrac Holdings II may exercise the June 2022 Prefunded Warrants immediately prior to the sale of the shares of common stock subject to such exercise to a non-affiliate of ProFrac Holdings II, (iii) 25,366,561 shares of common stock issuable to ProFrac Holdings II upon exercise of the prefunded warrants issued to ProFrac Holdings II on February 2, 2023 (the “February 2023 Prefunded Warrants”), provided that the number of shares of common stock that may be acquired by ProFrac Holdings II upon any exercise of the February 2023 Prefunded Warrants will be limited to the extent necessary to ensure that, following such exercise, the total number of shares of common stock then beneficially owned by ProFrac Holdings II and its affiliates does not exceed 19.99% of the total number of then issued and outstanding shares of common stock, and (iv) 1,500,000 shares of common stock directly owned by ProFrac Holdings II. Each of Pubco, ProFrac Holdings and ProFrac Holdings II has shared voting and dispositive power with respect to the shares. PubCo is the sole managing member of ProFrac Holdings. ProFrac Holdings is the sole member of ProFrac Holdings II. As a result, each of PubCo and ProFrac Holdings may be deemed to have shared voting and dispositive power over, and to share beneficial ownership of, the securities owned by each of ProFrac Holdings and ProFrac Holdings II. The address of the foregoing is 333 Shops Blvd., Suite 301, Willow Park, Texas 76087. Matt D. Wilks is the Executive Chairman of Pubco.

(9) Percent is calculated based on (i) 88,170,936 shares of common stock outstanding as of March 21, 2023, plus (ii) 48,933,315 shares of common stock issuable to ProFrac Holdings upon conversion of $53,245,563 in aggregate principal amount and PIK Interest thereunder as of December 31, 2022 of the Convertible Notes, based upon conversion of the Convertible Notes at a price of $1.088125 per share (the “Conversion Price”), and not including the conversion of any subsequent accrued but unpaid interest thereon, plus (iii) 13,104,839 shares of common stock issuable to ProFrac Holdings II upon exercise of the June 2022 Prefunded Warrants, subject to (a) the Company obtaining the approval of such issuance from the holders of a majority of the issued and outstanding shares of common stock, other than any such shares held by ProFrac Holdings II or any of its affiliates (as contemplated by “Item 4: Approval of the Issuance of Common Stock Underlying the Pre-Funded Warrant Held by Profrac Holdings II, LLC” of this Proxy Statement) and (b) ProFrac Holdings II paying an additional $4.5 million to the Company; provided, however, that ProFrac Holdings II may exercise the June 2022 Prefunded Warrants immediately prior to the sale of the shares of common stock subject to such exercise to a non-affiliate of ProFrac Holdings II, plus (iv) 25,366,561 shares of common stock issuable to ProFrac Holdings II upon exercise of the February 2023 Prefunded Warrants, provided that the number of shares of common stock that may be acquired by ProFrac Holdings II upon any exercise of the February 2023 Prefunded Warrants shall be limited to the extent necessary to ensure that, following such exercise, the total number of shares of common stock then beneficially owned by ProFrac Holdings II and its affiliates does not exceed 19.99% of the total number of then issued and outstanding shares of common stock. The number The Convertible Notes would be mandatorily converted and payable in shares of Common Stock at the lesser of the Conversion Price and $0.8705 per share (except in limited circumstances where cash settlement would occur).

(10) The Convertible Notes described in footnotes (8) and (9) above are mandatorily converted and payable in shares of common stock at the lesser of the Conversion Price and $0.8705 per share (except in limited circumstances where cash settlement would occur) on the maturity date of May 17, 2023 (the “Maturity Date”). Assuming that the aggregate principal amount (including PIK interest) outstanding of the Convertible Notes is approximately $55,191,000 at the Maturity Date and that the Convertible Notes are mandatorily converted and payable in shares of common stock at $0.8705 per share at the Maturity Date, the number of shares of common stock beneficially owned by ProFrac Holdings, LLC and the percentage ownership would be increased to approximately 103,373,000 shares and 54.5%, respectively.

Item 1: Election of Directors

Change of Control

As discussed under “Corporate Governance – ProFrac Directors,” “Corporate Governance – Certain Relationships and Related Party Transactions,” “Item 4: Approval of the Issuance of Common Stock Underlying the Pre-Funded Warrant Held By Profrac Holdings II, LLC” and footnotes 8 , 9 and 10 to the table above, since February 2, 2022, ProFrac Holdings and ProFrac Holdings II have acquired Convertible Notes, the June 2022 Prefunded Warrants, the February 2023 Prefunded Warrants and shares of the Company’s common stock. In addition, ProFrac Holdings has the right to designate up to four of the directors on the Company’s Board of Directors. As a result of these transactions, a change of control of the Company may have occurred. The number of shares of the Company’s common stock beneficially owned by ProFrac Holdings and its affiliates and their percentage ownership of the Company’s common stock is reflected in the table and associated footnotes above.

Item 2: Advisory Vote on Executive Compensation

ITEM 2: ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

We are providing our shareholders with an opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K and in accordance with the SEC’s rules. This proposal, which may be referred to as a “say-on-pay” proposal, is required by Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which was put in place by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. We must provide this opportunity to our shareholders at least once every three years. The Board has determined to provide this opportunity on an annual basis.

The Board is asking our shareholders to approve the compensation of our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers. Though this proposal calls for a non-binding advisory vote, our Board and Compensation Committee value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.

In view of the foregoing, our shareholders will vote on the following resolution at the Meeting: “RESOLVED, that the Company’s shareholders hereby approve, on an advisory basis, the compensation of the named executive officers of the Company as disclosed in the Company’s Proxy Statement for the 2023 Annual Shareholders Meeting in accordance with the Securities and Exchange Commission’s compensation disclosure rules.”

Vote Required

Approval of Item 2 requires the affirmative vote of a majority of the total votes cast with respect to this item at the Meeting. This means that the votes that our shareholders cast "for" this proposal must exceed the votes that our shareholders cast “against” this proposal. Abstentions and broker non-votes will not be taken into account in determining the outcome of this item.

Recommendation

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RESOLUTION APPROVING THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.

Item 2: Advisory Vote on Executive Compensation

Compensation Overview and Strategy

Executive Officer Transition

We have undergone significant changes in our management team during the last twelve months. During May 2022, former Chief Financial Officer Michael E. Borton departed the Company. In January 2023, former Chairman, Chief Executive Officer and President John Gibson and former Senior Vice President - Research and Innovation James Silas ended their employment with the Company. All three departures were considered terminations without cause pursuant to their respective employment agreements with the Company.

In December 2022, Bond Clement was named as the Company’s Chief Financial Officer. In January 2023, Director Harsha Agadi was appointed interim Chief Executive Officer, and former Chief Operating Officer Ryan Ezell was promoted to President. The Board of Directors is currently conducting a search for the Company’s next Chief Executive Officer.

Named Executive Officer Compensation

Our executive compensation program is designed to ensure that we are successful in attracting and retaining talented and experienced executive officers, motivate and reward both individual and team efforts, enhance accountability of the executive officers to the Board, and align incentives of our executive officers with our shareholders’ interests.

Our Compensation Committee is responsible for establishing, implementing and monitoring our compensation program. Each year the Compensation Committee evaluates the design of executive compensation within the context of Company performance, strategic priorities and market expectations. Through this process, it determines the appropriate mix of cash and non-cash compensation and short- and long-term incentive compensation for our executive officers in order to reward near-term performance and to encourage commitment to our long-range goals. The Compensation Committee may form and delegate authority to subcommittees as appropriate. Historically, the Compensation Committee has considered input from the CEO regarding the compensation program for the non-CEO executive officers. However, the Compensation Committee makes the final determination of all elements of named executive officer compensation. Our CEO makes no recommendations regarding his own compensation.

Historically, Flotek has placed a strong emphasis on both short-term and multi-year performance, with substantial weighting of total compensation based upon variable compensation. Performance-based metrics include achievement of short- and long-term Company goals. As it relates to the Company’s performance, during 2022 we successfully accomplished the following:

•Executed a long-term supply agreement with ProFrac Services, LLC contributing to a 215% growth in revenues versus 2021;

•Issued approximately $38 million in convertible notes and warrants and sold certain non-core assets to provide liquidity to execute our business plan, and

•Maintained an outstanding safety record in conjunction with significant operational growth.

Item 2: Advisory Vote on Executive Compensation

After considering these accomplishments, in conjunction with assessing the Company’s liquidity, no payments were approved under the 2022 short-term incentive program. In addition, during 2022 limited awards were made under our long-term incentive program. Please refer to the discussion regarding 2022 executive officer compensation for further details.

In the future we would expect our compensation program to return to the more traditional elements highlighted below:


Compensation Element	Objective	Key Features
Base Salary	Provides regular income, reflecting scope of responsibilities, job characteristics, leadership skills and experience.	Reviewed annually based on individual performance. While base salary is not performance-based, annual increases are not guaranteed.
Short-Term Incentives	Rewards contributions to achievement of annual targets and individual performance, with a focus on key financial indicators.	Compensation Committee determines performance measures to align incentives with short-term goals.
Long-Term Incentives	Correlates pay with shareholder value and aligns executives with value increases; helps to retain executives in the competitive energy market.	Gives incentive for performance over long period, with a combination of staggered vesting and cliff vesting over three years.

Named executive officers are eligible to participate in our employee benefit plans, including medical, dental, and vision care programs, Company-paid accidental death, dismemberment, and life insurance, and our 401(k) plan, on the same basis as other employees. We have historically matched 401(k) contributions at certain percentage levels.

Executive officers are not permitted to participate in our employee stock purchase plan.

Independent Compensation Consultant

The Compensation Committee periodically utilizes the services of compensation consultants related to matters of executive compensation. In 2022, Pay Governance provided market pay analyses and initial annual and long-term incentive design concepts to the Compensation Committee. Pay Governance also provided guidance on matters related to the CEO’s contract and compensation. In compliance with SEC rules, the Compensation Committee has assessed the independence of Pay Governance and concluded that no conflict of interest exists that would prevent Pay Governance from independently representing the Compensation Committee. Pay Governance periodically provides certain administrative services, the value of which is less than $120,000.

Executive Officers

The following are the biographies of each of our current executive officers as of April 9, 2023. To find the biography of Harsha Agadi, please see “Director Nominees” above:

Item 2: Advisory Vote on Executive Compensation

Bond Clement

Chief Financial Officer

Age: 51

EXPERIENCE & QUALIFICATIONS

•Executive Vice President and Chief Financial Officer at PetroQuest Energy from 2009 to 2021

•Chief Financial Officer of Donovan Marine, Inc. from 2021 to December 2022

•CPA (inactive)

EDUCATION

•Bachelor of Science in Accounting, Cum Laude, Louisiana State University

COMPANY ROLES

•Chief Financial Officer since December 2022

Dr. Ryan Ezell

President

Age: 44

EXPERIENCE & QUALIFICATIONS

•Vice President, Baroid Drilling Fluids, Halliburton from May 2006 to July 2019

•Published scientist

•Author on more than 26 patents

EDUCATION

•Ph. D. in Polymer Science, University of Southern Mississippi

•Bachelor of Science in Chemistry, Millsaps College

COMPANY ROLES

•President of the Company since January 2023

•Chief Operating Officer since March 2022

•President, Chemistry Technologies since August 2020

•Senior Vice President, Operations from March 2020 to August 2020

•Vice President, Operations from August 2019 to March 2020

Item 2: Advisory Vote on Executive Compensation

2022 Executive Officer Compensation

Named Executive Officers

Our named executive officers for 2022 were as follows:

•John W. Gibson, Jr., former President, Chief Executive Officer and Chairman

•Ryan Ezell, President

•James Silas, former Senior Vice President - Research and Innovation

•Michael E. Borton, former Chief Financial Officer

Base Salary

The Compensation Committee reviews base salaries annually for the named executive officers considering several factors including the relationship of base salaries paid within the Company, individual experience and the range of base salaries for similar positions contained within published survey data. During 2022, the Compensation Committee approved base salaries for the named executive officers of $600,000 for Mr. Gibson, $360,000 for Mr. Borton, $425,000 for Dr. Ezell and $325,000 for Mr. Silas.

2022 Short-Term Incentive Program

Historically the short-term incentive program has included financial and individual performance metrics intended to reward named executive officers for either Company or individual performance as determined by the Compensation Committee. Each named executive officer had a target bonus equal to 100% of base salary.

After considering the Company’s performance during 2022, in conjunction with assessing the Company’s liquidity, the Compensation Committee determined that no awards would be made pursuant to the 2022 short-term incentive program.

2022 Long-Term Incentive Program

The long-term incentive program for 2022 included limited equity awards focused on incentivizing long-term performance and aligning executive compensation with shareholder returns. Under the 2022 long-term incentive program, Dr. Ezell and Mr. Silas were granted restricted stock awards valued at $150,000 and $100,000, respectively. These awards vest ratably over three years and are not tied to any performance metric. Mr. Gibson and Mr Borton were not granted awards under the 2022 long-term incentive program.

Employment Agreements; Terminations and Change-in Control Arrangements

A brief summary of the employment agreements of our 2022 named executive officers is as follows:

Item 2: Advisory Vote on Executive Compensation

John W. Gibson, Jr. - Employment Agreement and Separation Agreement and General Release

Mr. Gibson entered into an employment agreement with the Company on December 21, 2019. Under the terms of the agreement, Mr. Gibson was paid a base salary of $500,000 annually (which amount was subsequently increased by the Board on March 8, 2022 to $600,000 annually) and was eligible for an annual bonus with a target amount of 100% of base salary. In connection with the entry into the agreement, Mr. Gibson was granted (i) 570,000 restricted stock units that were scheduled to vest ratably in five installments beginning on December 22, 2020 and on each of the next four anniversaries thereof, (ii) options to purchase up to 1,000,000 shares of the Company’s common stock that were scheduled to vest ratably over five years and (iii) options to purchase up to 2,000,000 shares of the Company’s common stock that were scheduled to vest based on the Company’s common stock achieving the following prices for a 20-consecutive trading day period through December 31, 2024: 33% of the options would vest at a price of $3.60, an additional 33% of the options would vest at a price of $5.40, and all of the options would vest at a price of $7.20. The exercise price of the options was $1.93, the closing price of the Company’s common stock on December 21, 2019. In addition, Mr. Gibson had the right, during the 90-day period following December 21, 2019, to purchase up to the lesser of: (i) 0.99% of the number of shares of the Company’s common stock outstanding immediately before such issuance, and (ii) $500,000 of the Company’s common stock, in each case at the then-current market price of the Company’s common stock on the date or dates of purchase.

The term of Mr. Gibson’s employment agreement was scheduled to end on December 31, 2024. In the event that Mr. Gibson’s agreement was terminated for any reason, the Company would pay Mr. Gibson the amount of salary earned but unpaid through the date of termination, together with any other earned but unpaid compensation. In addition, if Mr. Gibson’s employment was terminated as a result of his death or disability, without “cause” or for “good reason”, upon execution and delivery of a suitable release agreement, all of Mr. Gibson’s time-based equity awards would vest and all performance-based equity awards would vest to the extent the performance goals have been reached, and in the case of termination without “cause” or for “good reason,” Mr. Gibson would have an exercise period of the earlier of approximately 36 months and the 10th anniversary of grant for any vested stock options. Further, if Mr. Gibson’s employment was terminated without “cause” or for “good reason” within 24 months following a change of control, subject to execution and delivery of a suitable release agreement, Mr. Gibson would be entitled to receive severance equal to his base salary plus target annual bonus, and all unvested equity awards would vest other than performance-based equity awards, which would vest only if the performance criteria have been met.

In connection with Mr. Gibson’s separation from the Company, effective January 19, 2023, Mr. Gibson entered into a separation agreement and general release with the Company, pursuant to which Mr. Gibson received $1,500,000 as consideration to settle any disputes between the parties. Under the agreement, the $1,500,000 settlement payment was made in four installments, with the first installment of $600,000 paid on January 27, 2023 and the remaining three equal installments paid on the successive monthly anniversary dates of the first installment. As part of the settlement, Mr. Gibson agreed to forfeit all of his outstanding options and unvested restricted stock units, and to a six-month lock up period with respect to 250,000 shares of the Company’s common stock owned by Mr. Gibson that prohibits Mr. Gibson from selling those shares during the lock up period. Consistent with his employment agreement,

Item 2: Advisory Vote on Executive Compensation

the Company will reimburse Mr. Gibson for his COBRA premiums paid and provide access to the Company’s Group Health Plan through December 31, 2024.

For full descriptions of Mr. Gibson’s employment agreement and separation agreement and general release, please see the Company’s Current Reports on Form 8-K filed with the SEC on December 27, 2019 and January 19, 2023, respectively.

Ryan Ezell - Employment Agreement

Dr. Ezell entered into an employment agreement with the Company on January 1, 2021. Under the terms of the agreement, Dr. Ezell is paid a base salary of $350,000 annually and is eligible for an annual bonus with a target amount of 100% of base salary. On March 8, 2022, the Board subsequently promoted Dr. Ezell to Chief Operating Officer and approved an increase of Dr. Ezell’s base salary to $425,000. In the event that Dr. Ezell’s employment is terminated without “cause” or for “good reason,” Dr. Ezell, upon execution and delivery of a suitable release agreement, will be eligible to receive severance equal to Dr. Ezell’s base salary (payable over 12 months) plus a pro-rata portion of Dr. Ezell’s annual bonus for the year of termination (determined and paid in the normal bonus cycle), and reimbursement of the difference between the amount Dr. Ezell pays for COBRA premiums and the amount similarly situated employees of the Company would pay for such coverage for up to 12 months. In addition, if such termination occurs within 18 months of a “change of control,” all unvested equity awards shall become fully vested immediately prior to such termination.

For a full description of Dr. Ezell’s employment agreement, please see the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2021.

Michael E. Borton - Employment Agreement and Separation and Release Agreement

Mr. Borton entered into an employment agreement with the Company on October 15, 2021. Under the terms of the agreement, Mr. Borton was paid a base salary of $340,000 annually (which amount was subsequently increased by the Board on March 8, 2022 to $360,000 annually) and was eligible for an annual bonus with a target amount of 100% of base salary. In the event that Mr. Borton’s employment was terminated without “cause” or for “good reason,” Mr. Borton, upon execution and delivery of a suitable release agreement, was eligible to receive severance equal to Mr. Borton’s base salary (payable over 12 months) plus a pro-rata portion of Mr. Borton’s annual bonus for the year of termination (determined and paid in the normal bonus cycle), and reimbursement of COBRA premiums necessary to continue Mr. Borton and his covered dependents’ health insurance coverage in effect for a period of up to 12 months. In addition, if such termination occurred within 18 months of a “change of control,” all unvested equity awards would have become fully vested immediately prior to such termination.

In connection with Mr. Borton’s separation from the Company, effective June 3, 2022, Mr. Borton entered into a separation and release agreement with the Company, pursuant to which Mr. Borton received and will receive the following payments and benefits: (i) $360,000 in severance in 12 equal monthly payments payable at the end of each month with the first payment commencing July, 2022, (ii) a pro-rata portion of Mr. Borton’s annual bonus for 2022, (iii) full vesting of all unvested equity awards and (iv) reimbursement of COBRA premiums necessary to continue Mr. Borton and his covered dependents’ health insurance coverage in effect for a period of 18 months.

Item 2: Advisory Vote on Executive Compensation

For a full description of Mr. Borton’s employment agreement, please see the Company’s Current Report on Form 8-K filed with the SEC on October 15, 2021.

James Silas – Employment Agreement and Separation Agreement and General Release

Mr. Silas entered into an employment agreement with the Company on January 1, 2021. Under the terms of the agreement, Mr. Silas was paid a base salary of $285,000 annually (which amount was subsequently increased by the Board on March 8, 2022 to $325,000 annually) and was eligible for an annual bonus with a target amount of 100% of base salary. In the event that Mr. Silas’ employment was terminated without “cause” or for “good reason,” Mr. Silas, upon execution and delivery of a suitable release agreement, was eligible to receive severance equal to Mr. Silas’ base salary (payable over 12 months) plus a pro-rata portion of Mr. Silas’ annual bonus for the year of termination (determined and paid in the normal bonus cycle), and reimbursement of the difference between the amount Mr. Silas pays for COBRA premiums and the amount similarly situated employees of the Company would pay for such coverage for up to 12 months. In addition, if such termination occurred within 18 months of a “change of control,” all unvested equity awards would have become fully vested immediately prior to such termination.

In connection with Mr. Silas’ separation from the Company, effective February 16, 2022, Mr. Silas entered into a separation agreement and general release with the Company, pursuant to which Mr. Silas received and will receive the following payments and benefits: (i) $325,000 in severance in 12 equal monthly payments payable at the end of each month with the first payment commencing, May 2023, (ii) a pro-rata portion of Mr. Silas’ annual bonus for 2023 (determined and paid in the normal bonus cycle) and (iii) reimbursement of the difference between the amount Mr. Silas pays for COBRA premiums and the amount similarly situated employees of the Company would pay for such coverage for up to 12 months. As part of the settlement, Mr. Silas agreed that all unvested equity awards and stock options were forfeited other than 32,469 shares of restricted stock.

Item 2: Advisory Vote on Executive Compensation

Other Policies, Guidelines and Practices Related to Executive Compensation

Stock Ownership Guidelines

The Company has stock ownership guidelines for its executive officers to help further align compensation incentives with shareholders. Each executive has five years from the date appointed to his or her position (or within five years of the adoption of the guidelines, if the guidelines were adopted after the executive was appointed) to achieve the stock ownership ratio for his or her position.


Role						Ratio
Chief Executive Officer						6 times base salary
Other Executive Officers						2 times base salary

Executives that do not meet the above ownership ratio must retain 25% of the net shares acquired from exercising stock options or vesting of shares until they reach the applicable stock ownership ratio.

As of December 31, 2022, all executive officers were in compliance with the stock ownership guidelines.

Insider Trading Policy; Hedging and Pledging of Company Securities

None of the Company’s current executive officers or directors have pledged or hedged any common stock of the Company.

Claw-back Policy

Each executive that participates in the short-term incentive plan and long-term incentive plan agrees to abide by any compensation recovery, recoupment or other similar plan as may be approved by the Board or a committee thereof, or as may be required by applicable law. In addition, our executive contracts allow the Company to enact claw back policies with retroactive effect (applicable to all forms of compensation) and are subject to any claw back policies enacted by applicable law or a securities exchange.

Tax Gross-Ups on Severance

There are no tax gross-ups on any payments to executives, including severance payments.

Accounting for Stock-Based Compensation

The Company accounts for stock-based payments in accordance with the requirements of Accounting Standards Codification (ASC) Topic 718, “Stock Compensation.” Equity-based compensation is expensed

Item 2: Advisory Vote on Executive Compensation

over the requisite service period pursuant to the grant award terms. The Company considers the expense associated with stock-based incentive awards when granting such awards.

Section 409A

To the extent we permit executives to defer compensation or we commit to deliver compensation at a later date than when earned and vested, we make every attempt to meet the requirements of Section 409A of the Internal Revenue Code (the “Code”). Failure to satisfy the Section 409A requirements could subject the executives receiving deferred compensation to a 20% excise tax.

Item 2: Advisory Vote on Executive Compensation

Summary Compensation Table

The following table provides information concerning compensation earned in our fiscal years 2022 and 2021 by our named executive officers:


Name and Principal Position	Year	Salary	Bonus	Stock	Option	Non-Equity Incentive Plan Compensation	All Other	Total
				Awards(4)	Awards(4)		Compensation
John W. Gibson, Jr. – Former Chairman, President and Chief Executive Officer(1)	2022	$580,385	$ —	$ —	$ —	$ —	$16,438	$596,823
	2021	$498,462	$ —	$ —	$ —	$ —	$16,567	$515,029
Ryan Ezell – Chief Operating Officer	2022	$410,288	$ —	$150,000	$ —	$ —	$ —	$560,288
	2021	$349,077	$ —	$280,000	$256,668	$ —	$ —	$885,745
Michael E. Borton – Former Chief Financial Officer(2)	2022	$167,023	$ —	$ —	$ —	$ —	$156,876(5)	$323,899
	2021	$340,000	$ —	$272,000	$249,334	$ —	$ —	$861,334
James Silas – Former SR VP of R&I(3)	2022	$317,154	$ —	$100,000	$ —	$ —	$ —	$417,154

(1) Mr. Gibson’s employment with the Company ended on January 19, 2023.

(2) Mr. Borton’s employment with the Company ended on May 17, 2022.

(3) Mr. Silas’ employment with the Company ended on February 16, 2023.

(4) The amounts shown represent the aggregate grant date fair value for stock and option awards granted to the named executive officers pursuant to the 2018 Long Term Incentive Plan computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation (ASC 718). Assumptions used in the calculation of these amounts are included in “Note 15 — Stock-Based Compensation and Other Benefit Plans” to our audited financial statements, included in our 2022 Annual Report on Form 10-K filed with the SEC on March 23, 2023.

(5) Represents severance payments. See “Employment Agreements; Terminations and Change in Control Arrangements” above.

Item 2: Advisory Vote on Executive Compensation

Outstanding Equity Awards

The following table provides information relating to outstanding equity-based awards held by each named executive officer as of December 31, 2022:


	Option Awards						Stock Awards
Name	Year of Grant	Number of underlying unexercised securities exercisable	Number of securities underlying unexercised options unexercisable	Equity incentive plan awards: Number of securities underlying unexercised unearned options	Option Exercise Price	Option Expiration Date	Number of shares or units of stock that have not vested	Market value of shares of units of stock that have not vested	Equity Incentive plan awards: Number of shares, units or other rights that have not vested	Equity Incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested
John W. Gibson, Jr.	2019(1)	—	2,000,000	—	$1.93	12/31/2026	—	$ —	—	$ —
	2019(2)	600,000	400,000	—	$1.93	1/21/2029	—	$ —	—	$ —
	2019(3)	—	—	—	—	—	228,000	$ —	—	$ —
Ryan Ezell	2021(4)	—	—	145,834	$1.44	4/19/2031	—	$ —	—	$ —
	2021(5)	—	—	145,834	$1.44	4/19/2031	—	$ —	—	$ —
	2022(6)	—	—	—	—	—	86,705	$ —	—	$ —
	2021(7)	—	—	—	—	—	145,833	$ —	—	$ —
	2020(8)	—	—	—	—	—	34,178	$ —	—	$ —
	2019(9)	—	—	—	—	—	4,167	$ —	—	$ —
Michael E. Borton	2021(7)	—	—	—	—	—	141,666	$ —	—	$ —
	2021(4)	—	—	141,667	$1.44	4/19/2031	—	$ —	—	$ —
	2021(5)	—	—	141,667	$1.44	4/19/2031	—	$ —	—	$ —
	2020(12)	—	—	—	—	—	80,000	$ —	—	$ —
	2020(13)	60,000	—	—	$1.42	12/31/2022	—	$ —	—	$ —
James Silas	2022(10)	—	—	—	—	—	57,803	$ —	—	$ —
	2021(11)	—	—	—	—	—	89,061	$ —	—	$ —
	2021(14)	—	—	89,063	$1.44	4/19/2031	—	$ —	—	$ —
	2021(15)	—	—	89,063	$1.44	4/19/2031	—	$ —	—	$ —
	2020(8)	—	—	—	—	—	32,469	$ —	—	$ —


(1) Vests ratably at share prices of $3.60, $5.40 and $7.20. Award forfeited upon employment termination January 19, 2023.
(2) Vests ratably over a five year period on each anniversary of the grant date of December 22, 2019. Award forfeited upon employment termination January 19, 2023.
(3) Vests ratably over a five year period on each anniversary of the grant date of December 22, 2019. Award forfeited upon employment termination January 19, 2023.
(4) Vests ratably at share prices of $3, $4, $5 and $7.
(5) Vests based on percentage of revenue from new products developed over a three-year period. Vesting is ratable at revenue percentages of 15%, 20% and 25%, and is determined on 12/31/24.
(6) Vests ratably over a four year period on each anniversary of the grant date of March 8, 2022.
(7) Vests ratably over a four year period on each anniversary of the grant date of April 19, 2021.
(8) Vests ratably over a three year period on each anniversary of the grant date of March 3, 2020.
(9) Vests ratably over a three year period on each anniversary of the grant date of November 25, 2019.

Item 2: Advisory Vote on Executive Compensation


(10) Vests ratably over a three year period on each anniversary of the grant date on March 8, 2022. Award forfeited upon termination of employment on February 16, 2023.
(11) Vests ratably over a four year period on each anniversary of the grant date of April 19, 2021. Award forfeited upon termination of employment on February 16, 2023.
(12) Vests ratably over a three year period on each anniversary of the grant date on August 3, 2020.
(13) Vests ratably at share prices of $2.00, $5.00 and $7.00.
(14) Vests ratably at share prices of $3, $4, $5 and $7. Award forfeited upon termination of employment on February 16, 2023.
(15) Vests based on percentage of revenue from new products developed over a three-year period. Vesting is ratable at revenue percentages of 15%, 20% and 25%, and is determined on 12/31/24. Award forfeited upon termination of employment on February 16, 2023.

Item 2: Advisory Vote on Executive Compensation

PAY VERSUS PERFORMANCE (PVP)

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between compensation actually paid to our Named Executive Officers (NEOs) and certain financial performance metrics of the Company using a methodology that has been prescribed by the SEC.


Fiscal Year	Summary Compensation Table Total for PEO(1)	Compensation Actually Paid to PEO(2)	Average Summary Compensation Table Total for non-PEO NEOs(1)	Average Compensation Actually Paid to non-PEO NEOs(2)	Value of Initial Fixed $100 Investment Based On: Total Shareholder Return	Net Loss
(a)	(b)	(c)	(d)	(e)	(f)	(g)
2022	$596,823	$381,403	$433,781	$246,334	$53.08	($42,305,000)
2021	$515,029	($2,512,464)	$873,540	$299,965	$53.55	($30,526,000)

(1) Mr. Gibson served as principal executive officer (PEO) for 2022 and 2021. Our non-PEO named executive officers (NEOs) included Messrs. Ezell, Borton, and Silas for 2022 and Messrs. Ezell and Borton for 2021.

(2) The following amounts were deducted from / added to Summary Compensation Table (SCT) total compensation in accordance with the SEC-mandated adjustments to calculate Compensation Actually Paid (CAP) to our principal executive officer (PEO) and average CAP to our non-PEO named executive officers. The fair value of equity awards was determined using methodologies and assumptions developed in a manner substantively consistent with those used to determine the grant date fair value of such awards.

PEO SCT Total to CAP Reconciliation


Fiscal Year	2021	2022
SCT Total	$515,029	$596,823
- Grant Date Fair Value of Stock Awards Granted in Fiscal Year	$0	$0
± Fair Value at Fiscal Year-End of Outstanding Unvested Stock Awards Granted in Fiscal Year	$0	$0
± Change in Fair Value of Outstanding Unvested Stock Awards Granted in Prior Fiscal Years	($2,581,160)	($210,280)
± Fair Value at Vesting of Stock Awards Granted in Fiscal Year That Vested During Fiscal Year	$0	$0
± Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year	($446,333)	($5,140)
- Fair Value as of Prior Fiscal Year-End of Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year	$0	$0
+ Dividends or Other Earnings Paid on Stock or Option Awards in the Fiscal Year Prior to the Vesting Date that are not otherwise included in the Total Compensation for the Fiscal Year	$0	$0
Compensation Actually Paid	($2,512,464)	$381,403

Item 2: Advisory Vote on Executive Compensation

Non-PEO NEO Average SCT Total to Average CAP Reconciliation


Fiscal Year	2021	2022
Average SCT Total	$873,540	$433,781
- Grant Date Fair Value of Stock Awards Granted in Fiscal Year	($529,001)	($83,333)
± Fair Value at Fiscal Year-End of Outstanding Unvested Stock Awards Granted in Fiscal Year	$394,833	$53,950
± Change in Fair Value of Outstanding Unvested Stock Awards Granted in Prior Fiscal Years	($435,228)	($113,457)
+ Fair Value at Vesting of Stock Awards Granted in Fiscal Year That Vested During Fiscal Year	$20,349	$0
± Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year	($24,528)	($27,006)
- Fair Value as of Prior Fiscal Year-End of Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year	$0	($17,600)
+ Dividends or Other Earnings Paid on Stock or Option Awards in the Fiscal Year Prior to the Vesting Date that are not otherwise included in the Total Compensation for the Fiscal Year	$0	$0
Average Compensation Actually Paid	$299,965	$246,334

CHARTS OF CAP VERSUS PERFORMANCE METRICS

The chart below illustrates the relationship between the PEO and average Non-PEO CAP amounts and the Company’s TSR during the period 2021-2022.

Item 2: Advisory Vote on Executive Compensation

The chart below illustrates the relationship between the PEO and Non-PEO CAP amounts and the Company’s Net Loss during the period 2021-2022.

Item 3: Ratification of Appointment of KPMG as Independent Auditor

ITEM 3: RATIFICATION OF INDEPENDENT REGISTERED ACCOUNTING FIRM

The Audit Committee engaged KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm on June 29, 2021 and has approved retaining KPMG as the Company’s independent registered public accounting firm for the year ending December 31, 2023. Prior to the engagement of KPMG, BDO USA LLP (“BDO”) served as our independent registered public accounting firm for the year ended December 31, 2020 and provided certain tax and other services to us. The Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interests and those of our shareholders. The Audit Committee annually reviews the performance of our independent registered public accounting firm and the fees charged for their services. Based upon the Audit Committee’s analysis of this information, the Audit Committee will determine which registered independent public accounting firm to engage to perform our annual audit each year.

KPMG billed the Company and its subsidiaries fees as set forth in the table below for (i) the audit of the Company’s 2022 and 2021 annual financial statements, (ii) the reviews for second and third quarter 2021 quarterly financial statements, the first, second and third quarter 2022 quarterly financial statements and review of other documents filed with the SEC, and (iii) other work performed by KPMG. BDO, the Company’s former independent registered public accounting firm, billed the Company and its subsidiaries fees as set forth in the table below for (i) the reviews for the first quarter 2021 quarterly financial statements and review of other documents filed with the SEC, and (ii) other work performed by BDO.


	2022(1)		2021(2)
Audit fees	$	811,805	$	765,548
Audit-related fees	$	—	$	—
Tax fees	$	—	$	—
All other fees	$	—	$	10,000
Total	$	811,805	$	775,548

(1) Amounts for 2022 only include Audit fees as no audit-related, tax or other fees were paid to KPMG.

(2) Amounts for 2021 include $37,979 of audit fees, $76,865 of tax fees and $10,000 of other fees paid to BDO.

Fees included in “audit fees” in the table above are fees associated with the annual audit, including reviews of the Company’s Form 10-Q filings. Representatives of KPMG are expected to be at the Meeting with the opportunity to make a statement if they desire, and to take questions from shareholders.

The Audit Committee also reviewed and discussed the Company’s audited financial statements for the year ended December 31, 2022 (the “Audited Financial Statements”) with management and KPMG. KPMG informed the Audit Committee that the Company’s Audited Financial Statements are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. During the fiscal year ended December 31, 2022, there were (i) no disagreements between the Company and KPMG on any matter of accounting principles or practices, financial statement

Item 3: Ratification of Appointment of KPMG as Independent Auditor

disclosure or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference to the subject matter of the disagreement in their reports on the Company’s consolidated financial statements for such years, and (ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

None of BDO’s reports on the Company’s financial statements for the fiscal year ended December 31, 2020 contained an adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles, other than an adverse opinion issued by BDO on the effectiveness of internal control over financial reporting for the year ended December 31, 2020. During the fiscal year ended December 31, 2020 and the subsequent period preceding BDO’s dismissal, there were (i) no disagreements between the Company and BDO on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of BDO, would have caused BDO to make reference to the subject matter of the disagreement in their reports on the Company’s consolidated financial statements for such years, and (ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

Moreover, during the fiscal years ended December 31, 2020 and 2019 and the subsequent period prior to engaging KPMG, neither the Company nor anyone on its behalf consulted with KPMG regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, (ii) the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided by KPMG to the Company that KPMG concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue, or (iii) any matter that was subject to a disagreement (as described in Item 304(1)(a)(iv) of Regulation S-K) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).

Pre-Approval Policy

Under applicable SEC rules, except for the ability to designate a portion of this responsibility as described below, the full Audit Committee is required to pre-approve the audit and non-audit services performed by the independent registered public accounting firm in order to ensure that they do not impair the auditors’ independence from the Company. The Audit Committee may delegate pre-approval authority to a member of the Audit Committee, and if it does, the decisions of that member must be presented to the full Audit Committee at its next scheduled meeting. The SEC’s rules specify the types of non-audit services that an independent auditor may not provide to its audit client and establish the Audit Committee’s responsibility for administration of the engagement of the independent registered public accounting firm.

Consistent with the SEC’s rules, the Audit Committee Charter requires that the Audit Committee review and pre-approve all audit services and permitted non-audit services provided by the independent registered public accounting firm to Company or any of its subsidiaries, subject to the de minimus exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Committee prior the completion of the audit. During 2021 and 2022, all fees were pre-approved by the Audit Committee.

Audit Committee Report

Item 3: Ratification of Appointment of KPMG as Independent Auditor

KPMG provided the Audit Committee with a written statement describing all the relationships between the auditors and the Company that might bear on the auditors’ independence. The Audit Committee also discussed with the auditors any relationships that may impact the independence of the auditors. The Audit Committee reviewed and discussed with the independent auditors all communications required to be discussed by applicable requirements of the PCAOB and the SEC, including those described in PCAOB Auditing Standard No. 1301, “Communications with Audit Committees".

The Audit Committee reviewed the Company’s audited financial statements as of and for the year ended December 31, 2022, and discussed them with management and the independent auditors. Based on such review and discussions described in this report, the Audit Committee recommended to the Board, and the Board subsequently approved the recommendation, that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended December 31, 2022, for filing with the SEC.

Lisa Mayr (Chair)

David Nierenberg

Evan Farber

March 23, 2023

This report of the Audit Committee shall not be deemed “soliciting material,” or to be “filed” with the SEC or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically request that the information be treated as soliciting material or specifically incorporate it by reference into a document filed under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act. Further, this report will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent that we specifically incorporate this report by reference.

Vote Required

Approval of Item 3 requires the affirmative vote of a majority of the total votes cast with respect to this item at the Meeting. This means that the votes that our shareholders cast "for" this proposal must exceed the votes that our shareholders cast “against” this proposal. Abstentions and broker non-votes will not be taken into account in determining the outcome of this item.

Recommendation

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ITEM 3 TO RATIFY THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2023.

Item 4: Approval of the Issuance of Common Stock

ITEM 4: APPROVAL OF THE ISSUANCE OF COMMON STOCK UNDERLYING THE PRE-FUNDED WARRANT HELD BY PROFRAC HOLDINGS II, LLC

Item 4 is to approve the issuance of shares of the Company’s common stock underlying the Company’s pre-funded warrant (the “Pre-Funded Warrant”) issued to ProFrac Holdings II, LLC (“ProFrac Holdings”) in connection with that certain Securities Purchase Agreement, dated as of June 17, 2022, between the Company and ProFrac Holdings. Subject to (i) the Company obtaining the approval of such issuance from the holders of a majority of the issued and outstanding shares of the Company’s common stock, other than any such shares held by ProFrac Holdings or any of its affiliates and (ii) ProFrac Holdings paying an additional $4.5 million to the Company, the Pre-Funded Warrant permits ProFrac Holdings to purchase up to 13,104,839 shares of the Company’s common stock at an exercise price of $0.0001 per share, in each case as subject to adjustment from time to time, as further described below.

Background

Securities Purchase Agreement

On June 17, 2022, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with ProFrac Holdings pursuant to which (i) the Company received $19.5 million in cash and (ii) ProFrac Holdings received the Pre-Funded Warrant. The closing of the transactions contemplated under the Securities Purchase Agreement took place on June 21, 2022.

Concurrent with the closing of the transactions contemplated under the Securities Purchase Agreement, the Company and ProFrac Holdings also entered into an amendment to the Registration Rights Agreement (the “Registration Rights Agreement Amendment”) between the Company and ProFrac Holdings dated May 17, 2022 with respect to the resale of shares of the Company’s common stock that may be issued pursuant to the Pre-Funded Warrant.

Pre-Funded Warrant

General Terms

The Pre-Funded Warrant permits ProFrac Holdings to purchase up to 13,104,839 shares (the “Warrant Shares”) of the Company’s common stock at an exercise price of $0.0001 per share, in each case as subject to adjustment from time to time, representing a 20% premium to the 30-day volume average price of the Company’s common stock at the close of business on the day prior to the date of the Securities Purchase Agreement. All or any part of the Pre-Funded Warrant shall be exercisable by ProFrac Holdings at any time and from time to time on or after the original issue date and until the Pre-Funded Warrant is exercised in full, subject to the conditions and restrictions contained in the Pre-Funded Warrant. The

Item 4: Approval of the Issuance of Common Stock

exercise price and number of Warrant Shares issuable upon exercise of the Pre-Funded Warrant are subject to adjustment from time to time for stock dividends and splits, pro rata distributions and fundamental transactions, as described in the Pre-Funded Warrant.

Conditions to Exercise

Pursuant to the terms of the Pre-Funded Warrant, no Warrant Shares will be issued to ProFrac Holdings or any of its affiliates under the Pre-Funded Warrant (and neither ProFrac Holdings nor any of its affiliates shall have any voting or consent rights with respect to any such Warrant Shares) unless and until (i) the Company has obtained the approval thereof from the holders of a majority of the issued and outstanding shares of the Company’s common stock, other than any such shares held by ProFrac Holdings or any of its affiliates and (ii) ProFrac Holdings has paid an additional $4.5 million to the Company.

Entire Agreements

The foregoing description of the Securities Purchase Agreement, the Pre-Funded Warrant and the Registration Rights Agreement Amendment do not purport to be complete and is qualified in its entirety by reference to the complete text of the Securities Purchase Agreement, the Pre-Funded Warrant and the Registration Rights Agreement Amendment. The Securities Purchase Agreement, the form of Pre-Funded Warrant and the Registration Rights Agreement Amendment are attached hereto on Appendix A.

Effect upon Rights of Existing Stockholders

Our current stockholders will continue to own their existing shares of the Company’s common stock after the transaction described in this Item 4. If stockholders approve this Item 4, the Pre-Funded Warrant sold pursuant to the Securities Purchase Agreement may be exercised for shares of the Company’s common stock, pursuant to the terms thereof, without additional stockholder approval. If stockholders approve this Item 4, the principal effect upon the existing stockholders upon the exercise of the Pre-Funded Warrant would be dilution of their current percentage ownership in the Company.

No Appraisal Rights

None of Delaware law, our Amended and Restated Certificate of Incorporation, or our Second Amended and Restated Bylaws provide for appraisal or other similar rights for dissenting stockholders in connection with this Item 4. Accordingly, our stockholders will have no right to dissent and obtain payment for their shares, and we will not independently provide stockholders with any such right.

Interests of Directors, Officers, and Affiliates

None of our current directors, officers or affiliates has an interest in the Pre-Funded Warrant issued under the Securities Purchase Agreement, except for ProFrac Holdings and its affiliates, including Matt D. Wilks, as described in this Proxy Statement. See “Corporate Governance – ProFrac Directors,” “Corporate Governance – Certain Relationships and Related Party Transactions,” and the table and related footnotes presented in “Security Ownership of Certain Beneficial Owners, Executive Officers and Directors” for additional information.

Item 4: Approval of the Issuance of Common Stock

Consequences of Not Approving this Item 4

If we do not obtain stockholder approval of this Item 4, we will not issue the shares of the Company’s common stock underlying the Pre-Funded Warrant and will not receive the potential benefits of the transaction described above, including receiving an additional $4.5 million from ProFrac Holdings, which could be used to further fund the Company’s operations and growth.

Vote Required

The approval of this Item 4 requires the affirmative vote of the holders of at least a majority of the outstanding shares, whether or not present in person or represented by proxy at the Meeting, other than any such shares held by ProFrac Holdings and its affiliates. Abstentions and broker non-votes will have the same effect as a vote “against” this item.

Recommendation

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ITEM 4 TO APPROVE OF THE ISSUANCE OF COMMON STOCK UNDERLYING THE PRE-FUNDED WARRANT HELD BY PROFRAC HOLDINGS II, LLC

Item 5: Approval of an amendment to the Long-Term Incentive Plan

ITEM 5: APPROVAL OF AMENDMENTS TO THE FLOTEK INDUSTRIES, INC. 2018 LONG-TERM INCENTIVE PLAN

On April 13, 2023, our Board adopted amendments to the Flotek Industries, Inc. 2018 Long-Term Incentive Plan (the “2018 Plan” or the “Plan”), subject to shareholder approval.

Stockholder Vote

As of December 31, 2022, the 2018 Plan had approximately 2.7 million shares available for future issuance. Shares available for future issuance under the three active plans, at December 31, 2022, totaled approximately 2.8 million shares. As noted earlier in this Proxy Statement, we have experienced a transition among certain of our executive officers, including the Chief Executive Officer. We are requesting an increase in shares under the Plan to ensure there is sufficient availability to attract high caliber candidates to join the executive team, as well as to motivate and retain certain key members of management as we plan to expand equity grants deeper into the organization.

We are asking you to approve amendments to the 2018 Plan to increase the number of shares of our common stock available for the granting of awards under the 2018 Plan from 8,500,000 to 11,500,000, or an increase of 3,000,000 shares, and to further clarify that, as with options, the 2018 Plan does not permit the repricing or cash buyout of stock appreciation rights without shareholder approval. Based on our projected usage, the Compensation Committee estimates that the shares available under the 2018 Plan after this amendment will be sufficient to provide grants through 2025. However, we cannot predict these factors with certainty, and the share reserve under the 2018 Plan could last for a shorter or longer time. Only the number of available shares is amended by this amendment. The other terms and conditions of the 2018 Plan remain unchanged. A copy of the proposed amended 2018 Plan is attached to this Proxy Statement as Appendix B.

Purpose of the Plan

The purpose of the 2018 Plan is to assist us in (i) attracting and retaining the best available personnel for positions of substantial responsibility, (ii) motivating personnel by providing additional incentives to employees, non-employee directors, and individual consultants, including providing financial incentives for individual performance, and (iii) promoting the success of the Company’s business interests.

Equity Compensation Plan Information

The following table summarizes equity compensation plan information regarding equity securities authorized for issuance under the 2018 Plan, the 2019 Non-Executive Director Incentive Plan (the “2019 Plan), and the 2020 inducement equity plan (the “2020 Plan” and, together with the 2018 Plan and the 2019 Plan, the “Plans”) as of December 31, 2022:

Item 5: Approval of an amendment to the Long-Term Incentive Plan


Plan category(1)	Outstanding Options(4)	Full Value Awards Outstanding
Equity compensation plans approved by security holders(2)	3,921,875	2,407,676
Equity compensation plans not approved by security holders(3)	240,000	120,003
Total	4,161,875	2,527,679

(1) Our former CEO, Mr. Gibson, was granted certain options and restricted stock pursuant to his employment contract. These awards were granted in 2019, and were not made pursuant to any of the Plans. These long-term options and restricted stock awards, which vested ratably over five years or in connection with performance targets, were a material part of the inducement for Mr. Gibson to join the Company as CEO, and were in lieu of Mr. Gibson’s participation of any of the long-term incentive plans of the Company. Mr. Gibson’s inducement awards are accordingly not included in these calculations. For a more thorough description of the inducement grants to Mr. Gibson and their current status, please see the description of Mr. Gibson’s employment agreement above.

(2) Comprised of shares under the 2018 Plan and the 2019 Plan.

(3) Comprised of shares under the 2020 Plan instituted in connection with the acquisition of JP3 Measurement, LLC pursuant to the rules of the NYSE. Shares may only be used for inducement of new employees and cannot be granted to existing employees. For more detail on the 2020 Plan please see the Form S-8 Registration Statement filed with the SEC on June 18, 2020.

(4) The Outstanding Options have a weighted average exercise price of $1.19 and a weighted average remaining term of 3.4 years.

Usage of Shares for Awards

During 2020, 2021 and 2022, the grants of shares under the Plans and the “run rate,” a measure of annual equity compensation as a percentage of total equity, are shown in the table below. The three-year average run rate(1) for 2020, 2021 and 2022 was 4.29% when not taking into account forfeitures of awards.


Grant Year	Options	Time-Based Restricted Stock	Performance-Based Awards	Earned Performance-Based Awards	Total Full-Value Awards	Weighted-Average Common Shares	Run Rate(1)
2020	1,327,796	3,113,978	922,786	—	5,364,560	68,312,000	6.5	%
2021	1,448,959	1,702,289	—	—	3,151,248	73,361,000	4.3	%
2022	—	1,532,926	—	—	1,532,926	74,425,000	2.1	%

(1) Calculated as the sum of Options, Time-Based Restricted Stock and Earned Performance-Based Awards divided by Weighted- Average Common Shares.

The recipients of the grants under the Plans for 2020, 2021 and 2022 were as follows:


	2020		2021		2022
Participant	Shares	%	Shares	%	Shares	%
Named Executive Officers	1,246,603	23.2	1,304,020	41.4	144,508	9.4
Other Executive Officers	1,761,008	32.8	1,035,410	32.9	570,167	37.2
Non-employee Directors	456,045	8.5	450,943	14.3	536,319	35.0
Other Employees	1,900,904	35.4	360,875	11.5	281,932	18.4
Service Providers	—	—	—	—	—	—
Total	5,364,560	100.0	3,151,248	100.0	1,532,926	100.0

Item 5: Approval of an amendment to the Long-Term Incentive Plan

Future Issuances Under the 2018 Plan

Under the 2018 Plan, shares are reserved in a number sufficient to satisfy the maximum shares that may be issued under an award. Shares awarded under the 2018 Plan that terminate by expiration, forfeiture, cancellation, or otherwise shall again be available for awards under the 2018 Plan, but shares that are used to cover tax withholding or option exercise prices cannot be reused under the 2018 Plan.

As of March 31, 2023, approximately 139 persons were eligible to receive awards under the 2018 Plan, including all of our executive officers and non-employee directors. Future grants under the 2018 Plan will be made at the discretion of our Board or the Compensation Committee, and, accordingly, future benefits under the 2018 Plan are not currently determinable. The 2022 Summary Compensation Table appearing elsewhere in this Proxy Statement shows the equity awards that were made under the 2018 Plan in 2021 and 2022 to our named executive officers.

On March 31, 2023, the last reported sale price of our common stock on the NYSE was $0.70.

Description of the 2018 Plan

The following summary of the material features of the Plan, as amended, is qualified in its entirety by reference to the full text of the Plan, which is incorporated herein by reference to Appendix B to this Proxy Statement.

Eligibility and Available Awards

The Plan provides for the grant of incentive stock options and non-qualified options (collectively, “stock options”), restricted stock, stock appreciation rights, performance shares and performance units, restricted stock units, and other stock-based awards (each, an “Award”). All employees and individual consultants of the Company or of any affiliate (as defined in the Plan) of the Company and non-employee directors of the Company are eligible to receive grants of Awards under the Plan. However, incentive stock options may be granted only to employees of the Company and certain of its affiliates. Further, non-qualified options and stock appreciation rights may only be granted to employees and consultants of the Company or entities in a chain of corporations in which the Company has a controlling interest and to non-employee directors of the Company. The selection of eligible individuals to whom Awards will be granted is within the discretion of the Administrator. It is currently expected that some of our employees will participate in the Plan, along with all non-employee directors who serve on the Company’s Board of Directors.

Administration

The Plan is administered by our Board of Directors and any of its committees (in such capacity, each the “Administrator”). Except as otherwise determined by the Board of Directors, the Compensation Committee of the Board of Directors shall serve as the Administrator. No member of the Compensation Committee shall vote or act upon any matter relating solely to himself or herself. Grants of Awards to members of the Compensation Committee must be ratified by the Board of Directors.

Item 5: Approval of an amendment to the Long-Term Incentive Plan

Subject to the provisions of the Plan, the Administrator will, among other things, (i) determine who are service providers; (ii) determine the fair market value of Awards; (iii) select the service providers to whom Awards may be granted; (iv) determine the number of shares to be covered by each Award; (v) determine when Awards are to be granted and the applicable date of grant; (vi) approve forms of Award agreements; (vii) determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award, including but not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance goals), any acceleration of vesting or waiver of forfeiture or repurchase restrictions (subject to any minimum vesting requirements), and any restriction or limitation regarding any Award or the shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; (viii) construe and interpret the terms of the Plan, Award agreements and Awards; (ix) prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to the creation and administration of sub-plans; (x) amend the terms of any outstanding Award Agreement or Award, including the discretionary authority to extend the post termination exercise period of Awards and accelerate the satisfaction of any vesting criteria or waiver of forfeiture or repurchase restrictions, provided that any amendment that would adversely affect a participant’s rights under an outstanding Award shall not be made without the participant’s written consent; (xi) allow participants to satisfy withholding tax obligations by electing to have the Company withhold from the shares or cash to be issued upon exercise or vesting of an Award; (xii) authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator; (xiii) allow a participant to defer the receipt of the payment of cash or the delivery of shares that would otherwise be due to the participant under an Award; (xiv) determine whether Awards shall be settled in shares, cash or in a combination thereof; (xv) determine whether Awards shall be adjusted for dividends or dividend equivalents; (xvi) create other stock-based awards for issuance under the Plan; (xvii) impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a participant or other subsequent transfers by the participant of any shares issued as a result of or under an Award, including without limitation, (A) restrictions under an insider trading policy, and (B) restrictions as to the use of a specified brokerage firm for such resales or other transfers; (xviii) establish one or more programs under the Plan to permit selected participants the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance goals, or other event that absent the election, would entitle the participant to payment or receipt of shares or other consideration under an Award; (xix) interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan, any Award agreement and any other instrument or agreement relating to an Award; and (xx) make all other determinations that the Administrator deems necessary or advisable for administering this Plan. The express grant in the Plan of any specific power to the Administrator shall not be construed as limiting any power or authority of the Administrator. However, the Administrator may not exercise any right or power reserved to the Board. Any action taken or determination made by the Administrator pursuant to the Plan will be binding on all parties. No member of the Board of Directors or one of its committees, in its capacity as Administrator, will be liable for any action or determination made in good faith with respect to the Plan or an Award granted thereunder.

The Board may amend, alter, suspend, or terminate the Plan at any time without prior notice to or consent of any person; provided, however, except as specifically permitted under the Plan in connection with a change of control, no amendment (other than any amendment the Board deems necessary in order to permit Awards to meet the requirements of the Code, or other applicable laws, or to prevent adverse tax consequences to the participants), suspension or termination of the Plan may, without the consent of the

Item 5: Approval of an amendment to the Long-Term Incentive Plan

holder of an Award, terminate such Award or adversely affect such person’s rights with respect to such Award in any material respect unless or to the extent specified in the Award itself. However, no amendment shall be effective prior to its approval by the stockholders, to the extent such approval is required by (i) applicable legal requirements or (ii) the requirements of any securities exchange on which the Company’s stock may be listed.

Stock Available for Issuance

Upon stockholder approval of the Plan and subject to adjustment as provided in the Plan, the maximum number of shares of common stock that may be issued under the Plan will be 11,500,000 shares, all of which may be issued pursuant to incentive stock options. Each share of common stock that is the subject of an Award granted under the Plan may be made available from authorized but unissued shares, treasury stock, or shares of common stock acquired in the open market. No fractional shares shall be issued under the Plan. Each share of common stock that is the subject of an Award, including each share underlying an Award that is measured by shares but that is intended to be settled in cash, shall be charged against the maximum share limitations at the time the Award is granted and generally may not again be made subject to Awards under the Plan pursuant to such limitations; provided, however, a share underlying an award may be made subject to Awards again under the Plan in certain limited circumstances, such as if the Award terminates by expiration, forfeiture, cancellation or otherwise without the issuance of the Shares.

Award Limits

The maximum number of shares of common stock subject to stock options and stock appreciation rights (combined) awarded to any one participant pursuant to the Plan in any calendar year shall not exceed 1,000,000 shares. The maximum number of shares of common stock which may be subject to Awards of restricted stock made to any one participant pursuant to the Plan in any calendar year shall be 1,000,000 shares. The maximum amount of compensation which may be paid to any participant in any calendar year pursuant to Awards of restricted stock units shall not exceed $10,000,000. The maximum amount of compensation that may be paid to any participant in any calendar year pursuant to other stock-based awards under the Plan, (i) if the compensation under the other stock-based awards is denominated under the award agreement only in terms of shares of common stock or a multiple of the fair market value per share of common stock, shall not exceed the fair market value (determined as of the date of vesting) of 1,000,000 shares of common stock; or (ii) in all other cases, shall not exceed $10,000,000. The foregoing limitations on the numbers of shares of common stock that may be issued and that may be subject to Awards are subject to adjustment, as provided in the Plan.

Adjustments Upon Changes in Capitalization or Reorganization

In the event of any change in the outstanding shares of common stock by reason of any stock split, stock dividend or other non-recurring dividends or distributions, recapitalization, merger, consolidation, spin-off, combination, repurchase or exchange of stock, reorganization, liquidation, dissolution or other similar corporate transaction that affects the common stock, an adjustment shall be made, as the Administrator deems necessary or appropriate, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. Such adjustment may include an adjustment to the number and class of shares which may be delivered under this Plan, the number, class and price of

Item 5: Approval of an amendment to the Long-Term Incentive Plan

shares subject to outstanding Awards, the number and class of Shares issuable pursuant to Options, and the numerical limits contained in the Plan. Notwithstanding the preceding, the number of Shares subject to any Award always shall be a whole number. Except as provided in the foregoing, the Plan does not permit the re-pricing or cash buyout of stock options or stock appreciation rights without stockholder approval.

Minimum Vesting

Awards shall be subject to a minimum vesting requirement of at least one year from the date the Award was granted, and no portion of any such Award may vest or become exercisable earlier than the first anniversary of the date such Award was granted; provided, however, that for purposes of Awards granted to non-employee directors, “one year” may mean the approximately one-year period from one regular

annual stockholder meeting to the immediately following regular annual stockholder meeting, as long as the period is not less than 50 weeks. The foregoing minimum vesting requirement shall not apply: (i) with respect to 5% of the share reserve of 11,500,000 shares (such amount set forth above) or (ii) to the vesting of an Award that is accelerated as a result of a change of control or termination of the participant due to his or her death or disability, in all cases under terms consistent with the Plan.

Types of Awards

Stock Options. Stock options entitle the holder to purchase a specified number of shares of common stock at an exercise price per share specified on the date of grant. The Administrator has the authority to grant stock options, specifying the terms and conditions of each stock option (including the time or times at which and the circumstances under which the stock option is exercisable), subject to the terms of the Plan. The Administrator will also have the authority to determine whether stock options granted to employees will be incentive stock options or non-qualified options.

The exercise price at which shares of common stock may be purchased upon the exercise of a stock option will not be less than 100% of the fair market value of our common stock on the date that the stock option is granted. In the case of incentive stock options granted to an employee owning more than ten percent (10%) of the total combined voting power of us and certain of our affiliates, the exercise price at which shares of common stock may be purchased upon the exercise of such incentive stock option shall not be less than 110% of the fair market value of our common stock on the date of grant. The aggregate fair market value of shares of common stock granted pursuant to stock options (determined as of the date the stock option is granted under the Plan (or any other stock option plan of ours or certain of our affiliates)) that become exercisable with respect to an employee for the first time as incentive stock options during any one calendar year cannot exceed $100,000.

Except for grants of incentive stock options to employees owning more than ten percent (10%) of the total combined voting power of us and certain of our affiliates (which stock options may not be exercised later than five years after the date of grant), no stock option may be exercised later than the date which is ten years after the date of grant. To exercise a stock option granted under the Plan, the person entitled to exercise the stock option must provide written notice to us, setting forth the number of shares of common stock with respect to which the stock option is to be exercised, accompanied by full payment for the shares being purchased and any required withholding taxes, unless other arrangements have been made with the Administrator. The payment must be in cash, check acceptable to the Company, by the Company

Item 5: Approval of an amendment to the Long-Term Incentive Plan

withholding shares otherwise issuable from the exercise of the stock option, or other method of payment at the Administrator’s discretion.

Restricted Stock. Restricted stock is common stock that is subject to forfeiture and such other restrictions as the Administrator may impose, including performance criteria, transfer, and repurchase restrictions. The Administrator has authority and discretion to determine what restrictions apply to the restricted stock and when and how the restrictions of one Award of restricted stock may differ from those of any other Award of restricted stock.

Unless otherwise provided in the Award agreement, holders of restricted stock have the right to vote and the right to receive dividends or other distributions paid or made with respect to such shares. All such dividends and distributions shall be held back by the Company and shall be subject to the same restrictions on transferability, vesting and forfeit-ability as the shares of restricted stock with respect to which they were paid. If for any reason the restrictions imposed by the Administrator are not met on the date set forth in the Award Agreement, the restricted stock for which restrictions have not lapsed shall automatically be forfeited by the participant and shall again be available for grant under this Plan.

Stock Appreciation Rights. A stock appreciation right entitles a participant to receive (either in cash, common stock, or a combination thereof), upon exercise of the stock appreciation right, the excess, if any, of (i) the fair market value per share of common stock on the date of exercise over (ii) the fair market

value per share of common stock on the date of grant. The Administrator may provide that the excess may not exceed a specified amount. Stock appreciation rights may be payable in cash, shares of common stock, or a combination thereof. The Administrator shall determine, at the date of grant, the number of shares of common stock to which the stock appreciation right applies, the time or times at which and the circumstances under which a stock appreciation right may vest and be exercised, the term of the stock appreciation right, subject to a ten year maximum term, and such other terms and conditions as the Administrator may determine. To exercise a stock appreciation right, the person entitled to exercise the stock appreciation right must provide written notice to us, setting forth the number of shares of common stock with respect to which the stock appreciation right is to be exercised, accompanied by full payment of any required withholding taxes, unless other arrangements have been made with the Administrator.

Performance Shares and Performance Units. Performance shares and performance units may be granted pursuant to performance share Award or performance unit Award at any time and shall be determined by the Administrator in its sole discretion. In the case of a performance share, a share will be issued pursuant to the award agreement. A performance unit is an unfunded and unsecured promise to deliver shares, cash or other securities equal to the value set forth in the award agreement. Each performance unit and performance share shall have an initial value established by the Administrator on or before the date of grant. Performance shares shall have an initial value equal to the fair market value of a share on the date of grant. The applicable award agreement will set forth performance goals and the extent to which those goals were met at the end of the performance period shall generally determine the payout or removal of restrictions. Performance units may be paid in cash, shares of common stock, or a combination of cash and stock. On a date set forth in the applicable award agreement, all unearned or unvested performance units and performance shares shall automatically be forfeited to the Company, and the shares subject to such awards (if any) shall again be available for grant under the Plan.

Item 5: Approval of an amendment to the Long-Term Incentive Plan

Performance goals may include, but are not limited to, the following: (i) stock price; (ii) earnings per share; (iii) increase in revenues; (iv) increase in cash flow; (v) cash flow per share; (vi) increase in cash flow return; (vii) return on net assets; (viii) return on assets; (ix) return on tangible assets; (x) return on investment; (xi) return on capital; (xii) return on equity; (xiii) return on invested capital; (xiv) return on capital employed; (xv) economic value added; (xvi) gross margin; (xvii) net income; (xviii) pretax earnings; (xix) pretax earnings before interest; (xx) pretax earnings before interest, taxes, depreciation and amortization; (xxi) pretax operating earnings after interest expense and before incentives, service fees and extraordinary or special items; (xxii) operating income; (xxiii) total stockholder return; (xxiv) debt reduction; (xxv) successful completion of an acquisition, initial public offering, private placement of equity or debt; (xxvi) reduction of expenses; or (xxvii) any combination or of a specified increase, decrease or change, as applicable, in any of the foregoing. The Administrator may set performance goals based upon the achievement of Company-wide, divisional, or individual goals (including solely continued service) or any other basis determined by the Administrator in its sole discretion.

Restricted Stock Units. An award of a restricted stock unit is a right, subject to satisfaction of terms and conditions as imposed by the Administrator, to receive upon vesting, the value of the number of notional shares vested. The right to receive payment of an award of restricted stock units may be conditioned upon continued employment or achievement of performance goals. The holder of a restricted stock unit Award shall have no rights of a stockholder and shall have no voting rights with respect to any restricted stock unit Award. Restricted stock unit awards may be payable in cash, shares of common stock, or a combination thereof. The Administrator has the authority to determine the periods of restriction, the amount payable under the award, and any other terms and conditions consistent with the Plan.

Other Stock-Based Awards. Other stock-based awards may be granted either alone, in addition to, or in tandem with, other awards granted under the Plan and/or cash awards made outside of the Plan. At the Administrator’s discretion, other stock-based awards may be payable in cash. The Administrator has the authority and discretion to determine the terms and conditions, if any, of other stock-based awards, including any dividend or voting rights.

We are generally required to withhold tax on the amount of income recognized by a participant with respect to an Award. The Administrator may make such provision for the withholding of taxes as it deems necessary. Withholding requirements may be satisfied by, among other ways, (a) tender of a cash payment to us or (b) withholding of cash payable or of shares of common stock otherwise issuable under an Award.

Amendment of Awards

The Administrator may amend an Award; provided, however, except in the case of a change of control, no amendment of an Award may, without the consent of the participant, adversely affect the participant’s rights with respect to such Award in any material respect.

Clawback

All compensation and Awards payable or paid under the Plan and any sub-plans shall be subject to the Company’s ability to recover incentive-based compensation from executive officers, as is or may be

Item 5: Approval of an amendment to the Long-Term Incentive Plan

required by the provisions of any clawback policy implemented by the Company, the Dodd-Frank Wall Street Reform and Consumer Protection Act, any regulations or rules promulgated thereunder, or any other “clawback” provision required by applicable law or the listing standards of any applicable stock exchange or national market system.

Term of the Plan

The Board originally approved the Plan to be effective on March 16, 2018 (the “Effective Date”), subject to the Company’s stockholders approving the Plan not more than one year after the date of the Plan’s adoption by the Board. The Company’s stockholders approved the Plan on April 27, 2018. The Plan was further amended effective as of May 24, 2019 and June 3, 2021. The Plan shall continue in effect for a term of 10 years from the Effective Date unless terminated earlier pursuant to the terms of the Plan.

Term of Awards

The term of each Award shall be for such period as may be determined by the Administrator; provided, however, that in no event shall the term of any such Award exceed a period of ten years (or such shorter terms as may be required in respect of an Incentive Stock Option under Section 422 of the Code).

Change of Control

Unless otherwise provided in an Award, upon the occurrence of a change of control (defined generally as certain reorganizations, mergers, consolidations, sales of all or substantially all of our assets, or liquidations), the Board may, but is not required to, take any one or more of the following actions with respect to Awards: (i) accelerate vesting and the time at which all stock options and stock appreciation rights then outstanding may be exercised; (ii) waive, alter, and/or amend the performance criteria and other restrictions and conditions of Awards then outstanding, with the result that the affected Awards may be deemed vested, and any applicable restricted period or other limitations on payment in full with respect thereto shall be deemed to have expired, as of the date of the change of control or such other date as may be determined by the Board; (iii) cause any acquirer to assume the Plan and the Awards or exchange the Awards for the acquirer’s stock; (iv) terminate the Plan; and (v) terminate and cancel all outstanding unvested or unexercised Awards as of the date of the change of control on such terms and conditions as it deems appropriate.

The Board will, in connection with a change of control, have the right to require all participants to transfer and deliver to us all Awards previously granted to the participants in exchange for an amount equal to the cash value of the Awards. The cash value of an Award will equal the sum of (i) the cash value of all benefits to which the participant would be entitled upon settlement or exercise of any Award that is not a stock option or restricted stock, and (ii) in the case of a stock option, stock appreciation right or restricted stock, the excess of the market value per share (as defined in the Plan) over the option price (in the case of an option), strike price (in the case of a stock appreciation right) or the market value per share of restricted stock, as applicable, multiplied by the number of shares as to which such Award is vested. If an Award is a stock option or stock appreciation right and no cash value exists with respect thereto, then such cash-out shall be effectuated with no cash (or other) payment to the party holding such Award.

Summary of Certain Federal Income Tax Considerations

Item 5: Approval of an amendment to the Long-Term Incentive Plan

The following summary is based on certain applicable provisions of the Code, as currently in effect, and the income tax regulations and proposed income tax regulations issued thereunder. This summary does not purport to cover all federal income tax consequences or any federal employment tax or other federal tax consequences that may be associated with the Plan, nor does it cover state, local, employment, foreign or other taxes.

Status of Stock Options. Stock options granted under the Plan may be either incentive stock options or non-qualified options. Under certain circumstances, an incentive stock option may be treated as a non-qualified option. The tax consequences, both to the option holder and to us, differ depending on whether a stock option is an incentive stock option or a non-qualified option.

Non-qualified Options. Generally, no federal income tax is imposed on the option holder upon the grant of a non-qualified stock option. If the shares of common stock received by an option holder upon the exercise of a non-qualified option are not subject to certain restrictions in the hands of the option holder, then the option holder will be treated as receiving compensation, taxable as ordinary income in the year of exercise. The amount recognized as ordinary income upon such an exercise is the excess of the fair market value of the shares of common stock at the time of exercise over the exercise price paid for such common stock.

Incentive Stock Options. No federal income tax is imposed on the option holder upon the grant or exercise of an incentive stock option. The option holder will recognize no ordinary income for federal income tax purposes upon disposition of stock acquired pursuant to the exercise of an incentive stock option, if the option holder (i) does not dispose of the shares of common stock acquired pursuant to the exercise of an incentive stock option within two years from the date the option was granted or within one year after the shares of common stock were transferred to the option holder (the “Holding Period”), and (ii) is an employee of either (a) the corporation granting the option, (b) the parent corporation or a subsidiary corporation of the granting corporation, or (c) a corporation (or the parent corporation or a subsidiary corporation of such corporation) that has assumed such option of another corporation as a result of a corporate reorganization, merger, or similar transaction. Such employment must continue for the entire time from the date the option was granted until three months before the date of exercise or twelve months before the date of exercise if employment ceases due to permanent and total disability (as defined in Section 22(e)(3) of the Code). If common stock received upon exercise of an incentive stock option is disposed of after completion of the Holding Period, any difference between the exercise price paid for such common stock and the amount realized on the disposition will be treated as a capital gain or loss. The gain, if any, realized upon such a disposition will be treated as a long-term capital gain. Any loss realized upon such a disposition will be treated as a long-term capital loss. In the case of disposition of shares of common stock following expiration of the Holding Period, we would not be entitled to any deduction in connection with the grant or exercise of the incentive stock option or the disposition of the shares of common stock so acquired.

If, however, an option holder disposes of shares of common stock acquired pursuant to the exercise of an incentive stock option before expiration of the Holding Period (a “Disqualifying Disposition”), the option holder would be treated as having received, at the time of disposition, compensation taxable as ordinary

income. The amount treated as compensation is the lesser of (i) the excess of the fair market value of the common stock at the time of exercise over the exercise price, or (ii) the excess of the amount realized on

Item 5: Approval of an amendment to the Long-Term Incentive Plan

disposition over the exercise price. The balance of the gain, if any, realized upon such a disposition will be treated as a long-term or short-term capital gain depending on the holding period. If the amount realized at the time of the disposition is less than the exercise price, the option holder will not be required to treat any amount as ordinary income, provided that the disposition is of a type that would give rise to a recognizable loss. In such event, the loss will be treated as a long-term or short-term capital loss depending upon the holding period. A disposition generally includes a sale, exchange, gift or a transfer of legal title, but does not include certain other transfers, such as by reason of death or a pledge or an exchange of shares described in Section 424(c) of the Code.

Although the exercise of an incentive stock option does not result in current taxable income, there are implications with regard to the Alternative Minimum Tax (“AMT”). The excess of the fair market value of shares of common stock acquired upon exercise of an incentive stock option over the exercise price paid for such shares of common stock is an adjustment to AMT income for the option holder’s taxable year in which such exercise occurs (unless the shares of common stock are disposed of in the same taxable year and the amount realized is less than the fair market value of the shares on the date of exercise, in which event the amount included in AMT income will not exceed the amount realized on the disposition over the adjusted basis of the shares).

Stock Appreciation Rights. Upon the exercise of a stock appreciation right, if shares are received in settlement of the stock appreciation right, the fair market value of those shares received is recognized as income for federal income tax purposes at the time of exercise. If a participant receives cash upon the exercise of a stock appreciation right, the amount of cash received is recognized as income for federal income tax purposes at the time of exercise.

Restricted Stock. Generally, the grant of restricted stock will not be a taxable event to the participant, and we will not receive a deduction. Absent an 83(b) election (described below), the participant will be taxed at ordinary income rates when the stock vests (an amount equal to the difference between the fair market value of the stock on the vesting date and the consideration paid, if any, for the shares), and we will receive a corresponding deduction. However, the participant may elect to make an 83(b) election not later than 30 days after the grant of the restricted stock. An 83(b) election is an election permitted under Section 83(b) of the Code that allows the participant to recognize compensation income on the restricted stock at the time of the grant equal to the difference between the fair market value of the stock on the date of grant and the amount paid, if any, for the shares. If the participant makes an 83(b) election, we receive a corresponding deduction at the time of the grant, and the participant is not taxed, nor do we receive any deduction, upon vesting of the shares.

When the participant sells the shares following vesting, he or she may realize a capital gain if the sales price is greater than his or her basis in the shares. The participant’s basis for this purpose is the fair market value at the time of vesting (if no 83(b) election is made) or at the time of grant (if an 83(b) election is made). We do not receive a deduction upon disposition of the stock by the participant. If, following vesting, the participant sells the shares and the amount realized is more than the participant’s basis in the stock, the participant will recognize a capital gain. If, following vesting, the participant sells the shares and the amount realized is less than the participant’s basis in the stock, the participant will recognize a capital loss. The capital gain or loss will be either short-term or long-term, depending on the holding period of the shares. The holding period commences upon vesting (if no 83(b) election is made) or upon grant (if an 83(b) election is made).

Item 5: Approval of an amendment to the Long-Term Incentive Plan

Restricted Stock Units. In general, a participant who receives a restricted stock unit award will not be taxed on receipt of the Award; instead, upon vesting (or potentially settlement, depending upon how the restricted stock unit is structured), the amount paid to the participant (whether in cash, shares, or a combination thereof) denominated in cash will be taxable as compensation to the participant.

Other Tax Considerations

In the event of a change of control of the Company, certain payments in the nature of compensation to certain individuals, if contingent on the change of control, could be nondeductible to us and subject to an additional 20% tax to the participant. Awards under the Plan that are made, vest, or become payable in connection with a change of control may be required to be taken into account in determining whether these penalties apply.

Some Awards granted under the Plan may be considered non-qualified deferred compensation that is subject to special rules and an additional 20% tax to the participant if not compliant with Section 409A of the Code. The Administrator intends to design and administer such Awards either to be exempt from or to comply with Section 409A of the Code and avoid the imposition of any additional tax under Section 409A of the Code, but is not required to do so. There is no commitment or guarantee that any federal, state, local, or foreign tax treatment will (or will not) apply or be available to any participant with respect to any Award.

Inapplicability of ERISA

Based on current law and published interpretations, we do not believe that the Plan is subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Notwithstanding the foregoing, the Plan expressly provides that there is no commitment or guarantee that any federal, state, or local tax treatment will (or will not) apply or be available to any person who participates or is eligible to participate in the Plan.

Vote Required

The approval of this Item 5 requires the affirmative vote of a majority of the total votes cast with respect to this item at the Meeting. This means that the votes that our shareholders cast "for" this proposal must exceed the votes that our shareholders cast “against” this item. Abstentions and broker non-votes will not be taken into account in determining the outcome of this item.

Recommendation

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ITEM 5 TO APPROVE THE AMENDMENTS TO THE FLOTEK INDUSTRIES, INC. 2018 LONG-TERM INCENTIVE PLAN.

Other Matters

OTHER MATTERS

The Board is not aware of any other matters that may come before the Meeting. However, the proxies may be voted with discretionary authority with respect to any other matters that may properly come before the Meeting.

Stockholder Communications

Stockholders and interested parties who wish to communicate with the Board, or with any individual director, may do so by (1) calling Lighthouse Services Inc., a third party call center, at (800) 785-1003 or (2) correspondence addressed to the Board, or to an individual director, at the principal executive offices of the Company at 8846 North Sam Houston Pkwy West, Suite 150, Houston, TX 77064. All such communications received from stockholders are sent directly to Board members.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires certain officers, directors and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC and further requires us to identify in this Proxy Statement those officers, directors and persons who failed to timely file such a report. Based solely on our review of these forms or written representations from such officers, directors and persons who own more than 10% of our common stock, we believe that all Section 16(a) filing requirements were met with respect to the 2022 fiscal year.

Householding of Proxy Materials

The SEC permits a single set of notices, annual reports, and proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses. A number of brokerage firms have instituted householding.

As a result, if you hold your shares through a broker and you reside at an address at which two or more stockholders reside, you will likely be receiving only one notice, annual report, and proxy statement unless any stockholder at that address has given the broker contrary instructions. However, if any beneficial stockholder residing at an address of which two or more stockholders reside wishes to receive a separate notice, annual report, or proxy statement in the future, or if any beneficial stockholder that elected to continue to receive separate notice, annual reports, or proxy statements wishes to receive a single notice, annual report, or proxy statement in the future, that stockholder should contact his or her broker or send a request to our Corporate Secretary at our principal executive offices, 8846 North Sam Houston Pkwy West, Suite 150, Houston, TX 77064, telephone number (713) 849-9911. We will deliver, promptly upon written or oral request to our Corporate Secretary, a separate copy of the notice, 2022 Annual Report on Form 10-K (the “2022 Annual Report”), and this Proxy Statement to a beneficial stockholder at a shared address to which a single copy of the documents was delivered.

Other Matters

Important Dates for 2024 Annual Meeting

Under the Exchange Act, the deadline for submitting shareholder proposals for inclusion in the proxy statement for an annual meeting of the Company is calculated in accordance with Rule 14a-8(e) of Regulation 14A to the Exchange Act. If the proposal is submitted for a regularly scheduled annual meeting, the proposal must be received at the Company’s principal executive offices not less than 120 calendar days before the anniversary date of the Company’s proxy statement released to the shareholders in connection with the previous year’s annual meeting. However, if the Company did not hold an annual meeting the previous year, or if the date of the current year’s annual meeting has been changed by more than 30 days from the date of the previous year’s meeting, then the deadline is a reasonable time before the Company begins to print and mail its proxy materials. Accordingly, unless the date of the 2024 annual meeting is changed by more than 30 days from the date of the 2023 annual meeting, the deadline for submitting shareholder proposals for inclusion in the proxy statement for the 2024 annual meeting will be December 30, 2023 Shareholder proposals to be presented in person at the 2024 annual meeting must be delivered to, or mailed and received at, the principal executive offices of the Company after February 8, 2024 but no later than March 9, 2024; provided, however, that if the date of the 2024 annual meeting is more than 30 days before or more than 60 days after the anniversary date of the 2023 annual meeting, notice must be so delivered, or mailed and received, not later than the 90th day prior to the 2024 annual meeting or, if later, the 10th day following the day on which public disclosure of the date of 2024 annual meeting was first made. Sections 13–15 of Article II of the Second Amended and Restated Bylaws of the Company sets out detailed procedures for shareholder proposals and shareholder proposed director candidates. In addition to satisfying the requirements of our Second Amended and Restated Bylaws, including the notice deadlines set out above and therein, to comply with the universal proxy rules, if you intend to solicit proxies in support of director nominees, other than the Company’s nominees, you must also comply with the additional requirements of Rule 14a-19 of the Exchange Act.

Appendix A

FLOTEK INDUSTRIES, INC.

Securities Purchase Agreement, form of Pre-Funded Warrant and Registration Rights Agreement Amendment

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of June 17, 2022 (“Effective Date”), is made and entered into by and among Flotek Industries, Inc., a Delaware corporation (the “Company”), and ProFrac Holdings II, LLC, a Texas limited liability company (the “Purchaser”) (each a “Party”, and collectively, the “Parties”).

RECITALS

WHEREAS, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase, as of the Closing and for the consideration and on the terms and conditions set forth herein, Pre-Funded Warrants of the Company, substantially in the form of Exhibit A attached hereto (the “Purchased Securities”), each exerciable into one share of common stock of the Company, par value $0.0001 per share (the “Common Stock”).

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained in this Agreement, the Parties agree as follows:

Article 1 CERTAIN DEFINITIONS

“Affiliate” of any Person means with respect to any Person, another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person. For purposes of this definition, the term “control” (including the correlative terms “controlling,” “controlled by,” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. Unless the context requires otherwise, for purposes of this Agreement, the Purchaser shall not be considered an “Affiliate” of the Company, and the Company shall not be considered an “Affiliate” of the Purchaser. For the avoidance of doubt, Purchaser, ProFrac, and their Affiliates shall not be A

SEC Form DEF 14A filed by Flotek Industries Inc.