Document

DEF 14A 1 a2021proxy.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 x

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))
x						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):


x			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
Prox y Statement Summary			2
General Information About the Annual Meeting			7
Corporate Governance			10
Item 1: Election of Directors			16
Director Nominees			17
Director Compensation			21
Security Ownership			21
Item 2: Advisory Vote on Named Executive Compensation			24
Compensation Overview and Strategy			25
Named Executive Officers			27
2020 Executive Officer Compensation			27
Employment Agreements			31
2021 Outlook			34
Other Compensation Elements			39
Summary Compensation Tables			40
Item 3: Approval of an Amendment to the 2018 Long-Term Incentive Plan			43
Other Matters			54
Annex A - Proposed A mended 2018 Long-Term Incentive Plan			A-1

Notice of Annual Meeting of Shareholders

To be Held June 3, 2021

Fellow Shareholders,

The 2021 Annual Meeting of Shareholders (the “Meeting”) of Flotek Industries, Inc. (“Flotek,” “we,” “our,” “us,” or the “Company”) will be held on June 3, 2021. The Meeting will be conducted virtually via webcast at 10:00 a.m. Central Time at www.virtualshareholdermeeting.com/FTK2021. At the Meeting, shareholders will be asked to consider and vote on the following matters:

1.The election of six directors

2.An advisory vote to approve the compensation of the Company’s named executive officers for 2020

3.Approval of an amendment to the Company’s 2018 Long-Term Incentive Plan

4.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 8, 2021 are entitled to notice of and to vote at the Meeting or any adjournments, postponements or continuation thereof.

We intend to mail a Notice of Internet Availability of Proxy Materials (the “Notice”) on how to access proxy materials and our 2020 Annual Report (which includes our 2020 Annual Report on Form 10-K), how to vote, and how to obtain a paper copy of the proxy materials. We expect our 2020 Annual Report and proxy materials to be available on or about April 22, 2021.

In light of the ongoing COVID-19 pandemic, the Board of Directors (the “Board”) has decided to hold the Meeting entirely virtually in order to safely allow shareholders to attend and participate from any location at no cost. You will be able to attend the Meeting virtually, vote electronically, and submit questions during the Meeting. You will need the control number printed on your Notice, proxy card or voting instruction card. A list of shareholders of record will be available during the virtual 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 2020 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,

Nicholas J. Bigney

Senior Vice President, General Counsel & Chief Compliance Officer

April 22, 2021

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 22, 2021.

Annual Meeting of Shareholders

When: June 3, 2021 at 10:00 a.m., Central Time

Where: The Meeting will be conducted virtually via live webcast. This is designed to increase shareholder access, reduce environmental impact, save time and money, and allow safe participation during the ongoing COVID-19 pandemic. Shareholders will be able to hear all portions of the official Meeting, submit written questions, and vote online during the open poll section of the Meeting. You are invited to attend the live webcast, vote your shares and submit questions at www.virtualshareholdermeeting.com/FTK2021. To join the Meeting, you will need the control number printed on your Notice. Please allow ample time for online check-in by joining the meeting fifteen minutes early. If a bank, brokerage firm or other nominee holds your shares, you should contact that organization for additional information. Please see page 7 for further instructions on attending and voting at the Meeting.

Who: Shareholders of record at close of business on April 8, 2021 will be eligible to vote.

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


Item up for Vote	Board’s Voting Recommendation	Page Reference
Election of director candidates, to serve until the 2022 Annual Meeting of Shareholders (Item 1)	FOR EACH DIRECTOR NOMINEE	16
Advisory vote to approve the compensation of the Company’s named executive officers for 2020 (Item 2)	FOR	24
Approval of an amendment to the Company’s 2018 Long-Term Incentive Plan (Item 3)	FOR	43

Proxy Statement Summary

Board and Board Committees

There are currently seven 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 and Sustainability Committees, designated by A, C, G and R in the chart below respectively. Mr. Gibson serves as our Chairman and Mr. Nierenberg serves as our Lead Independent Director.

Name and Principal Occupation

Age

Ind.

Director Since

Committee Membership

Michelle M. Adams

2017

Chief Revenue Officer, Algolia

Harsha V. Agadi

2020

CEO of GHS Holdings, LLC

Ted D. Brown

2013

CEO, Confluence Resources, LP

Michael Fucci

2020

Chairman, Deloitte US (retired)

John W. Gibson, Jr.¹

2020

President, Chief Executive Officer & Chairman, Flotek Industries

Paul W. Hobby

2019

Managing Partner, Genesis Park LP

David Nierenberg²

2018

President, Nierenberg Investment Management Company, Inc.

1 Chairman of the Board 2 Lead Independent Director « Chair of Committee l Member of Committee

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

Candidate Biographies beginning on page 17.

Proxy Statement Summary

Board Overview


Independence			Tenure

86% of our directors are independent			86% of our directors have a tenure of less than 5 years, with an average tenure of 2.7 years


Director Skills and Experience

Corporate Governance/Legal					5

Industry Experience				4

ESG				4

Finance/Accounting					5

M&A Strategy/Execution						6

Human Capital						6

Public Board Experience					5

Public C-Suite Experience				4

Technology & Innovation				4

Philanthropy Leadership							7

Military Service	1

Gender/Ethnic Diversity		2

International Experience			3

Proxy Statement Summary

Corporate Governance Highlights

Board Practices

Shareholder Interaction

Other Policies

•Each director attended 75% or more of meetings

•Frequent executive sessions in meetings

•Held weekly board and management conversations during the early stages of the COVID-19 pandemic

•Created the Risk and Sustainability Committee

•Directors took a 20% cut in compensation due to the COVID-19 pandemic

•Performed annual board self-review with third party assistance

•Added expertise to the Board in accounting, human capital and commercial products

•Added a representative of the Company’s largest shareholder as a board observer

•Non-staggered Board, so all positions are up for election every year

•Majority voting standards for uncontested director elections

•Held discussions with shareholders representing a significant portion of Company ownership

•Meaningful stock ownership guidelines for directors and officers

•Hedging and pledging of stock by directors, officers and employees prohibited

Compensation Highlights

Executive Compensation

Talent Development

Human Capital

•All executives took a 10% cut in cash pay (20% in the case of Mr. Gibson) in exchange for restricted stock in light of the COVID-19 pandemic

•Executive contracts reworked and standardized to bring in line with market practices

•Short-term and long-term incentive programs reworked to better align with shareholder interests and reflect transitional nature of the Company

•Mr. Gibson declined a bonus to honor his commitment not to take a bonus for 2020 if the Company did not reach break even

•The Company hired a new Chief Financial Officer, President of Global Business and General Counsel to address key needs

•Beginning in 2021, instituted a mentoring program, assigning a director to mentor each executive other than Mr. Gibson one-on-one to develop executive talent

•The Company formed a COVID-19 task force to manage the needs and challenges of the COVID-19 pandemic and its effect on employees

•Work-from-home, social distancing, mask and hand sanitization measures taken to enhance worker safety

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

Proxy Statement Summary

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 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 16, 2021 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

We are providing this Proxy Statement in connection with the solicitation of proxies by our Board for use at the Meeting. We plan to mail instructions on how to access the proxy materials and our 2020 Annual Report on Form 10-K (the “Annual Report”), how to vote, and how to obtain a paper copy of our proxy materials. Our Annual Report and proxy materials are first being made available on or about April 22, 2021.

Date, Place and Time of Meeting

The Meeting will be held on June 3, 2021 at 10:00 a.m. Central Time. The Meeting will be held virtually via webcast.

Record Date

The record date for the Meeting is April 8, 2021. Shareholders of record at the close of business on April 8, 2021 will be entitled to vote at the Meeting. At of the close of business on April 8, 2021, we had 72,685,562 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 conducted virtually via live webcast. This is designed to increase shareholder access, reduce environmental impact, save time and money, and allow safe participation during the ongoing COVID-19 pandemic. Shareholders will be able to hear all portions of the official Meeting, submit written questions, and vote online during the open poll section of the Meeting. You are invited to attend the live webcast, vote your shares and submit questions at www.virtualshareholdermeeting.com/FTK2021. To join the Meeting, you will need the control number printed on your Notice. Please allow ample time for online check-in by joining 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

We are mailing a Notice of Internet Availability of Proxy Materials instead of a paper copy of the proxy materials. We believe that this expedites receipt of our proxy materials by shareholders and lowers the costs and reduces the environmental impact of the Meeting. All shareholders will have the ability to access the proxy materials over the Internet, and shareholders may request a paper copy by mail or an electronic copy by e-mail by following the instructions in the Notice.

Items of Business

There are three 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 for 2020

3.Approval of an amendment to the Company’s 2018 Long-Term Incentive Plan

General Information About the Annual Meeting

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 (as described below) are counted as present and entitled to vote for purposes of determining a quorum.

Each of the six director nominees will be elected by a majority of the votes cast with respect 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 an amendment to the Company’s 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. For this proposal, this means that the votes that our shareholders cast “for” this proposal must exceed the aggregate of votes that our shareholders cast “against” this proposal plus abstentions. Broker non-votes will not be taken into account in determining the outcome of this proposal.

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. None of the proposals described herein are considered to be “routine.”

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, by proxy, by internet, by telephone or by mail by following the instructions provided in our proxy materials. If a bank, brokerage firm or other nominee holds your shares, you should contact that organization for additional information.

General Information About the Annual Meeting

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 online at the virtual 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 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

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 seven directors. Six of our seven directors are independent, as defined by the New York Stock Exchange (the “NYSE”) and SEC (see “Director Independence” below). John W. Gibson, Jr. serves as the Chairman of the Board, and David Nierenberg serves as the Lead Independent Director of the Board. The role of Lead Independent Director is to facilitate the communication between the independent directors and the Chairman, President and Chief Executive Officer.

Our Board is not classified, which means that every director stands for election at every annual meeting of shareholders. Our former directors, L. Melvin Cooper, L.V. “Bud” McGuire and Kevin W. Brown were each independent directors prior to leaving the Board. John W. Chisholm, our former Chairman, President and Chief Executive Officer, was not independent.

Our Corporate Governance and Nominating Committee is committed to ensuring that the Company recruits directors from a diverse pool of candidates. In addition to experience and background, the Corporate Governance and Nominating Committee considers ethics and standards and the diversity of views the directors represent.

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 newly-created 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

Corporate Governance

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 risk 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:

Audit Committee

Chair: David Nierenberg

Members: Harsha Agadi, Ted Brown

Meetings in 2020: 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

Compensation Committee

Chair: Harsha Agadi

Members: Michelle Adams, Michael Fucci, Paul Hobby, David Nierenberg

Meetings in 2020: 5

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

Corporate Governance

Corporate Governance & Nominating Committee

Chair: Ted Brown

Members: Michelle Adams, Paul Hobby, David Nierenberg

Meetings in 2020: 4

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

In February 2021, after a review of the Company’s corporate governance structure and ongoing needs, the Board created the Risk and Sustainability Committee as a fourth standing committee. The Risk and Sustainability Committee is chaired by Michael Fucci and its members are Harsha Agadi, John Gibson, Paul Hobby and David Nierenberg. The committee is tasked with oversight of the Company’s risk and its sustainability programs. A charter for the new committee is under development and will be posted to the Company’s website once approved by the Board.

The charters adopted for the Audit, Compensation and Corporate Governance and Nominating 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.

The Board and each of its committees are required to review their performance at least annually. This process is overseen by the Corporate Governance and Nominating Committee in consultation with the Chairman of the Board. In 2020, the Corporate Governance and Nominating Committee engaged Heidrick & Struggles to help facilitate the Board’s self-review of its effectiveness.

Director Independence

The NYSE, SEC and our Corporate Governance Guidelines require that 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 of the independence of each director. For 2021, the Board has determined that all nominees other than Mr. Gibson are independent using the criteria established by the NYSE and the SEC.

Meetings and Director Attendance

During 2020, the Board met 11 times, the Audit Committee met six times, the Compensation Committee met five times, and the Corporate Governance and Nominating Committee met four times. All directors attended at least 75% of the Board meetings and the meetings of committees of which they were a member. The Company does not have a formal policy requiring members of the Board to attend the Meeting, although all directors are strongly encouraged to attend. All directors attended the last annual meeting of our shareholders.

Corporate Governance

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 the Company’s largest shareholder. 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 will enhance shareholder communication and provide 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.

Related Party Transactions

Flotek generally does not engage in transactions in which our executive officer or directors, any of their immediate family members, or any shareholders holding 5% or more of our outstanding common stock have a material interest. 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.

There were no related party transactions during 2020 that are required to be reported in this Proxy Statement.

Independent Registered Public Accounting Firm

BDO USA, LLP (“BDO”) served as our independent registered public accounting firm beginning 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 they determine 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. The Audit Committee is currently evaluating whether any change in the Company’s registered independent public accounting firm for the 2021 fiscal year is appropriate.

BDO and Moss Adams LLP, 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 audit of the Company’s 2020 and 2019, respectively, annual financial statements, (ii) the reviews for 2020 and 2019 respectively of quarterly financial statements and review of other documents filed with the SEC, and (iii) other work performed by BDO or Moss Adams LLP, as applicable. The Audit Committee reviews and pre-approves both audit and all permissible non-audit services provided by our independent registered public accounting firm, and, accordingly, all services and fees in the 2020 fiscal years were pre-approved by the Audit Committee.


	2020		2019
Audit fees	$	1,203,486	$	737,000
Audit-related fees	$	108,702	$	10,500
Tax fees	$	353,565	$	—
All other fees	$	10,310	$	—
Total	$	1,676,063	$	747,500

Corporate Governance

The Audit Committee engaged BDO as the Company’s independent registered public accounting firm on April 9, 2020. Fees included in “audit fees” in the table above are fees associated with the annual audit, including reviews of the Company’s 10-Q filings. Fees included in “audit-related fees” are associated with due diligence and internal review services performed by BDO in 2020, primarily related to the acquisition of JP3, as well as work performed related to the Company’s S-3 and S-8 filings. Fees in “tax fees” include tax return preparation, review and filing, as well as other tax advisory services, performed by BDO. Fees in the “all other fees” category includes work done by BDO on executive compensation valuation. Representatives of BDO are expected to be at the Meeting with the opportunity to make a statement if they desire, and to take questions from shareholders.

None of Moss Adams’ reports on the Company’s financial statements for the fiscal years ended December 31, 2019 and December 31, 2018 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 on the effectiveness of internal control over financial reporting for the year ended December 31, 2019. During the fiscal years ended December 31, 2019 and December 31, 2018 and the subsequent period preceding Moss Adams’ declining to stand for re-election, there were (i) no disagreements between the Company and Moss Adams 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 Moss Adams, would have caused Moss Adams 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, except Moss Adams’ report for the fiscal year ended December 31, 2019 expressed an opinion that the Company had not maintained effective internal controls over financial reporting.

Moreover, during the fiscal years ended December 31, 2018 and December 31, 2019 and the subsequent interim period from January 1, 2020 to April 9, 2020, neither the Company nor anyone on its behalf consulted with BDO regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, with the exception of preparing the income tax provision and tax compliance services for fiscal years ended December 31, 2018 and 2019, (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 BDO to the Company that BDO 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).

Audit Committee Report

The independent auditors 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 Standards of the PCAOB, including those described in Auditing Standard No. 1301.

The Audit Committee reviewed the Company’s audited financial statements as of and for the year ended December 31, 2020, 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

Corporate Governance

included in its Annual Report on Form 10-K for the year ended December 31, 2020, for filing with the SEC.

David Nierenberg (Chair)

Harsha V. Agadi

Ted D. Brown

April 22, 2021

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 Securities Exchange Act of 1934, as amended (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.

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 N. Sam Houston Parkway W., Houston, TX 77064. These communications are sent directly to the appropriate Board member.

Stock Ownership Guidelines

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, 2020, all directors and executive officers have met the stock ownership guidelines.

Anti-Hedging and Pledging

Directors, officers and employees are prohibited by our Insider Trading Policy from hedging transactions related to our securities. This include 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.

ITEM 1: ELECTION OF DIRECTORS

Our Board is not divided into classes, so all director positions are up for election every year. The Board currently has seven positions, but intends to reduce to six positions at the time of the Meeting due to the departure of Ms. Adams, as previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on March 15, 2021 and discussed below. The Board has nominated the following candidates for director:


Name	Board Member Since	Primary Occupation	Age
Harsha V. Agadi	2020	CEO of GHS Holdings, LLC	57
Ted D. Brown	2013	CEO, Confluence Resources, LP	66
Michael Fucci	2020	Chairman, Deloitte US (retired)	62
John W. Gibson, Jr.	2020	Chairman, President and CEO, Flotek Industries, Inc.	63
Paul W. Hobby	2019	Managing Partner of Genesis Park LP	60
David Nierenberg	2018	President of Nierenberg Investment Management Company, Inc.	68

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.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES LISTED ABOVE.

Item 1: Election of Directors

DIRECTOR NOMINEES

Harsha V. Agadi

Age: 57

Director Since 2020

EXPERIENCE

•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 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

•Chairman of the Compensation Committee since 2020

•Member of the Audit Committee since 2021

•Member of the Risk and Sustainability Committee since 2021

•Independent Director

•Audit Committee Financial Expert

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

*Current Role

Ted D. Brown

Age: 66

Director Since 2013

EXPERIENCE

•President and CEO of Confluence Resources, LP*

•Senior Vice President and Advisor to the CEO and President of Noble Energy, Inc. (NYSE: NBL)

•Chairman and member of the Executive Committee of the Colorado Oil & Gas Association

•Chairman of Coloradans for Responsible Energy Development

PHILANTHROPY & PUBLIC SERVICE

•Former board member and ongoing volunteer for the Tennyson Center for Children*

•Active volunteer in local and national faith-based organizations*

EDUCATION

•Bachelor of Science, Mechanical Engineering, University of Wyoming

BOARD ROLES

•Chairman of the Corporate Governance & Nominating Committee since 2018

•Member of the Audit Committee since 2018

•Independent Director

•Financially Literate

The Board believes that Mr. Brown’s extensive experience across all phases of oil and gas exploration and production, as well as his understanding, execution and leadership of large capital programs, makes him a valuable member of the Board.

*Current Role

Item 1: Election of Directors

Michael Fucci

Age: 62

Director Since 2020

EXPERIENCE

•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

•Independent Director

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

*Current Role

John W. Gibson, Jr.

Age: 63

Director Since 2020

EXPERIENCE

•Chairman, CEO and President of Flotek Industries, Inc.*

•Director of Orocobre Limited (ASX: ORE)*

•Director of BluWare, Inc.*

•Member of the Strategic Board of Advisors of Houston Mechatronics, Inc.*

•Senior Advisor, Tudor, Pickering Holt and Company*

•Chairman, Energy Technology of Tudor, Pickering, Holt & Company

•President and CEO of Tervita Corporation

•Director of Tervita Corporation

•Director of I-Pulse Inc.

•President and CEO of Paradigm B.V.

•Honorary Consul to Texas of Kazakhstan*

PHILANTHROPY & PUBLIC SERVICE

•National Board Member of Kickstart Kids*

•Benefactor of Christian Thinkers Society*

EDUCATION

•Master of Science in Geology, University of Houston

•Bachelor of Science in Geology, Auburn University

BOARD ROLES

•Chairman of the Board since 2020

•Member of the Risk and Sustainability Committee since 2021

The Board believes that Mr. Gibson’s extensive experience as an executive and director in the oil and gas services sector makes him a valuable member of the Board.

*Current Role

Item 1: Election of Directors

Paul W. Hobby

Age: 60

Director Since 2019

EXPERIENCE

•Founding Chairman and Managing Partner of Genesis Park LP*

•CEO and Director of Genesis Park Acquisition Company (NYSE: GNPK)*

•Director of NRG Energy, Inc. (NYSE: NRG)*

•Director of Stewart Information Services Corporation

•Director of Coastal Banc

•Director of Amegy Bank

•CEO of Alpheus Communications, L.P.

•Chairman of CapRock Services, Inc.

•Chairman of the Houston Branch of the Federal Reserve Bank of Dallas

•Assistant U.S. Attorney for the Southern District of Texas

•Chief of Staff to Bob Bullock, Lieutenant Governor of Texas

PHILANTHROPY & PUBLIC SERVICE

•Chairman, Texas Ethics Commission*

•Chairman, Greater Houston Partnership*

•Chairman, Texas General Services Commission*

EDUCATION

•Juris Doctorate, University of Texas Law School

•Bachelor of Arts in History, University of Virginia

BOARD ROLES

•Member of the Compensation Committee since 2019

•Member of the Corporate Governance and Nominating Committee since 2019

•Member of the Risk and Sustainability Committee since 2021

•Independent Director

The Board believes that Mr. Hobby’s experience as an executive, board member and in the legal and ethics sector makes him a valuable member of the Board.

*Current Role

Item 1: Election of Directors

David Nierenberg

Age: 68

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 Electro Scientific Industries, Inc. (NASDAQ: ESIO)

•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 since 2020

•Chair of the Audit Committee since 2020

•Member of the Compensation Committee since 2018

•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 makes him a valuable member of the Board.

*Current Role

The above biographical and other information for the six director nominees is current as of April 19, 2021.

As previously announced, Michelle Adams informed the Board that she would not be standing for reelection at the Meeting due to other time commitments. The Board wishes to express its deep appreciation for Ms. Adams’ service to the Company, including her time as chairwoman of the Compensation Committee. Also as previously announced, the Corporate Governance and Nominating Committee has engaged Heidrick & Struggles to assist with a search for a replacement for Ms. Adams. Our Corporate Governance and Nominating Committee is committed to actively seeking women and minority candidates for the pool from which Ms. Adams’ replacement is chosen. The Board expects that a replacement for Ms. Adams will not be join the Board until after the Meeting, and that the replacement director will stand for election at the 2022 annual meeting of shareholders.

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, and expects to have restored gender diversity prior to the 2022 annual meeting of shareholders.

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 Lead Independent Director 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.

As previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2020, on April 3, 2020 the Board voted to temporarily reduce all compensation received by the non-employee directors by 20%, in light of the ongoing COVID-19 pandemic and volatility in the oil and gas markets. The amounts in the tables below reflect this reduction.

Mr. Gibson is not compensated for serving on the Board.

The following table provides the 2020 compensation of the non-employee directors:


Name	Fees earned or paid in cash		Stock awards(5)		Non-equity incentive plan compensation		All other compensation		Total
Michelle M. Adams	$	61,350	$	80,000	$	—	$	—	$	141,350
Harsha V. Agadi	$	24,000	$	54,900	$	—	$	—	$	78,900
Ted D. Brown	$	64,600	$	80,000	$	—	$	—	$	144,600
Kevin W. Brown(1)	$	25,600	$	80,000	$	—	$	—	$	105,600
L. Melvin Cooper(2)	$	30,123	$	—	$	—	$	—	$	30,123
Michael Fucci	$	6,240	$	33,334	$	—	$	—	$	39,574
Paul W. Hobby	$	54,400	$	80,000	$	—	$	—	$	134,400
L.V. “Bud” McGuire(3)	$	11,787	$	—	$	—	$	—	$	11,787
David Nierenberg(4)	$	41,939	$	121,600	$	—	$	—	$	163,539

(1)Mr. Brown passed away on January 26, 2021.

(2)Mr. Cooper ceased being a director on May 5, 2020.

(3)Mr. McGuire ceased being a director on May 5, 2020.

(4)Mr. Nierenberg elected to receive the annual retainer in stock of the Company in lieu of cash.

(5)Awards were not vested as of December 31, 2020, and vest at the earlier of the Meeting or the anniversary of the 2020 annual meeting of shareholders.

Item 1: Election of Directors

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, EXECUTIVE OFFICERS AND DIRECTORS

The following table provides the beneficial ownership of Common Stock as of April 8, 2021, 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 other person known by the Company to be a beneficial owner of more than 5% of our outstanding Common Stock.


Name	Shares Owned(a)	Percent of Class(b)
Named Executive Officers and Directors and Nominees
John W. Gibson, Jr.	838,760	1.15%
John W. Chisholm(c)	1,180,095	1.62%
Elizabeth T. Wilkinson(d)	299,277	*
Michael E. Borton	250,841	*


Denise Allen	284,307	*
Michelle M. Adams	179,295	*
Harsha V. Agadi	92,500	*
Kevin W. Brown(e)	103,755	*
Ted D. Brown	199,432	*
L. Melvin Cooper(f)	170,763	*
Michael Fucci	14,493	*
Paul W. Hobby	175,955	*
L.V. “Bud” McGuire(g)	208,217	*
David Nierenberg(h)	4,840,969	6.66%
All executive officers and directors as a group (13 persons)(i)	7,646,954	10.52%
5% Beneficial Owners
North Sound Trading, L.P.(j)	7,000,000	9.63%
David Nierenberg(h)	4,840,969	6.66%

* Less than 1%.

(a)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.

(b)Based on 72,685,562 shares of common stock outstanding as of April 8, 2021.

(c)Mr. Chisholm ceased to be an officer and a director of the Company effective January 5, 2020. Stock information taken from Mr. Chisholm’s Form 4 filed on January 3, 2020.

(d)Ms. Wilkinson ceased to be an officer of the Company effective June 15, 2020. Stock information taken from Ms. Wilkinson’s Form 4 filed on April 3, 2020.

(e)Mr. Brown ceased to be a director of the Company effective January 26, 2021. Stock information taken from Mr. Brown’s Form 4 filed on November 4, 2020.

(f)Mr. Cooper ceased to be a director of the Company effective May 5, 2020. Stock information taken from Mr. Cooper’s Form 4 filed on May 29, 2019.

(g)Mr. McGuire ceased to be a director of the Company effective May 5, 2020. Stock information taken from Mr. McGuire’s Form 4 filed on May 29, 2019.

(h)Includes 4,684,632 shares of common stock owned by The D3 Family Fund, LP, The D3 Family Bulldog Fund, LP, and Haredale Ltd. 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. Mr. Nierenberg has disclaimed

Item 1: Election of Directors

ownership of these securities except to the extent of his pecuniary interest therein. The address of the foregoing is 19605 NE 8th St., Camas, WA 98607.

(i)Includes shares held by Ryan Ezell, the Company’s President, Chemistry Technologies, TengBeng Koid, the Company’s President, Global Business, Nicholas J. Bigney, the Company’s Senior Vice President, General Counsel & Chief Compliance Officer, and James Silas, the Company’s Senior Vice President, Research & Innovation.

(j)The address of North Sound Trading, L.P. is Edward E. Murphy, c/o North Sound Management, Inc, 115 East Putnam Avenue, Greenwich, CT 06830. Ownership information originated from the Schedule 13D/A filed with the SEC by Brian Miller, North Sound Management, Inc. and North Sound Trading, L.P. on December 3, 2020. Brian Miller, North Sound Management, Inc. and North Sound Trading, L.P. have voting and investment power with respect to these shares.

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 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 2021 Annual Shareholders Meeting in accordance with the Security and Exchange Commission’s compensation disclosure rules.”

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

Our executive compensation program has been designed to ensure that Flotek is able to attract and retain 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.

In 2020, Flotek introduced new leadership with the hiring of John W. Gibson, Jr. as the Company’s Chief Executive Officer, President and Chairman of the Board. As a component of the Company’s focus on improving shareholder returns, the Company evaluated and redesigned its executive compensation practices to more closely align with shareholder 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, they determine 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.

Flotek places a strong emphasis on both short-term and multi-year performance, with substantial weighting of total compensation based upon variable compensation as compared to our peers. Performance-based metrics include achievement of short- and long-term Company goals. In addition to evaluating financial performance, as well as total shareholder return compared to its peers, in 2020, the Company introduced new performance metrics related to the Company’s stock price performance. The Company believes this approach ensures the strongest outcomes for the Company and its shareholders.

The table below highlights compensation practices we have implemented because we believe they drive performance, as well as compensation practices we have not implemented because we do not believe they would serve our shareholders’ long-term interests.


What We Do			What We Do Not Do
We pay our named executive officers based on achievement of strategic goals and Company results by making a significant portion of compensation target-based			We do not reprice performance-based incentives to pay out in the event that the Company does not meet its compensation goals
We emphasize long-term equity incentives to align our executive compensation with shareholder interests			We do not maintain compensation programs that we believe motivate behavior or risk taking that is contrary to shareholder interest
We have employment contracts that include double-trigger change of control provisions			We do not provide significant benefits to named executive officers that are different from those we provide to other employees
We have stock ownership and retention guidelines designed to align management with shareholder interests			We do not permit our officers, directors or employees to hedge, pledge, or use margin accounts related to the Company’s stock

Our 2020 executive compensation program consisted of base salary, short-term incentives and long-term incentives, as described below:

Item 2: Advisory Vote on Executive Compensation


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 Flotek’s 401(k) plan, on the same basis as other employees. Flotek has historically matched 401(k) contributions at certain percentage levels; however, during 2020, the Company suspended matching of 401(k) contributions in light of the economic impacts of COVID-19. The Company does not offer pension or retirement benefits other than the 401(k) plan. The Company’s international employees may have slightly different employee benefit plans than those offered to domestic employees, typically as a result of legal requirements of the specific country.

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

Peer Group Comparison

Our Compensation Committee considered data from a group of similar publicly-traded energy services companies and chemical companies (the “Peer Group”) to evaluate our executive compensation in 2020. During 2020, we worked with Meridian Compensation Partners, LLC to define our Peer Group and compare our executive compensation. We evaluated each element of compensation (base salary, short-term incentives, and long-term incentives), as well as the total of all compensation elements, to assess the competitiveness against our Peer Group.

The Compensation Committee also considered data from published survey sources and information from our directors, management, and compensation consultant to evaluate our executive compensation.

The companies in our Peer Group for 2020 were as follows:


Advanced Emission Solutions, Inc.						Hornbeck Offshore Services, Inc.
Aspen Aerogels, Inc.						Intrepid Potash, Inc.
CARBO Ceramics, Inc.						ION Geophysical Corporation
Energy Recovery, Inc.						Natural Gas Services Group, Inc.
Era Group Inc.						NCS Multistage Holdings, Inc.
Graham Corporation						Nuverra Environmental Solutions, Inc.
Gulf Island Fabrication, Inc.						RigNet, Inc.

Item 2: Advisory Vote on Executive Compensation

Named Executive Officers

Our named executive officers for 2020 were as follows:

Name and Age

Positions

Since

John W. Gibson, Jr. (63)(1)

President, Chief Executive Officer and Chairman

2020

John W. Chisholm (66)(2)

Chief Executive Officer

2012

President and Chairman of the Board

2010

Interim President

2009

Michael E. Borton (61)(3)

Chief Financial Officer

2020

Elizabeth T. Wilkinson (63)(4)

Chief Financial Officer

2018

Denise Allen (46)

Senior Vice President, Chief of Staff

2020

Senior Vice President, Global Communications & Technology Commercialization

2017

(1)Mr. Gibson began service as President, Chief Executive Officer and Chairman on January 6, 2020.

(2)Mr. Chisholm ceased to be a director, officer and employee effective January 5, 2020.

(3)Mr. Borton began service as Chief Financial Officer on August 3, 2020.

(4)Ms. Wilkinson ceased to be an officer and employee effective June 15, 2020.

2020 Executive Officer Compensation

Base Salary

The Company reviews base salaries annually for the named executive officers. The Company includes several factors when reviewing base salaries, including base salaries paid for comparable positions in the Peer Group, published survey data, the relationship among base salaries paid within the Company, and individual experience and performance.

The Compensation Committee approved annual base salaries of $500,000 for Mr. Gibson and $340,000 for Mr. Borton upon their respective hiring. No salary increases were approved for any of the named executive officers during 2020.

In response to COVID-19 and volatile energy market conditions, on April 1, 2020, all of the named executive officers then at the Company, as well as all other executive officers, voluntarily took a reduction in their base salary in exchange for an equivalent amount of equity, with vesting one year from the award. Mr. Gibson took a reduction of 20%, and all other executive officers took a reduction of 10%. This reduction was effective through December 31, 2020.

2020 Short-Term Incentive

Under the terms of the 2020 short-term incentive program, executives could earn an annual cash bonus based on Company performance. The annual cash bonus program for 2020 was based on an Adjusted EBITDA (i.e., earnings before interest, taxes, depreciation and amortization) target. Each executive had a bonus target amount (expressed as a percentage of base salary) based on the Company’s achievement of Adjusted EBITDA targets for continuing operations in 2020. Adjusted EBITDA is a non-GAAP measure under which EBITDA is adjusted to exclude stock-based compensation and certain nonrecurring charges not directly related to the ongoing operations of the Company. The Compensation Committee determines Adjusted EBITDA for purposes of the cash bonus, taking into account recommendations from the

Item 2: Advisory Vote on Executive Compensation

Company’s Chief Financial Officer.

Executives receive 50% of their EBITDA bonus target amount for achievement of a minimum Adjusted EBITDA amount, 100% of the EBITDA bonus target amount for achievement of the target Adjusted EBITDA amount, and 150% of the EBITDA bonus target amount for achievement of a maximum Adjusted EBITDA amount. If Adjusted EBITDA is between these levels, the resulting EBITDA bonus percentage is calculated based on linear interpolation.

In addition to the EBITDA bonus, the Compensation Committee also retains the ability to award discretionary bonuses based on individual performances or in connection with completion of large transactions.

The total bonus percentage for each named executive officer was as follows for 2020:


Bonus Percentage Targets
John W. Gibson, Jr.			100%
John W. Chisholm(1)			*
Michael E. Borton			80%
Elizabeth T. Wilkinson(2)			75%



Denise Allen			75%

(1)Mr. Chisholm ceased to be a director, officer and employee effective January 5, 2020. As this was prior to the implementation of the 2020 short-term incentive program, Mr. Chisholm was not included in the program.

(2)Ms. Wilkinson ceased to be an officer and employee effective June 15, 2020.

2020 Short-Term Incentive Results

In 2020, the Company faced extremely challenging market conditions as a result of COVID-19, as well dramatic reductions in hydrocarbon demand and sharp decline in supply which impacted our core business. The Compensation Committee determined that the minimum Adjusted EBIDTA target had not been reached and therefore no cash bonuses had been earned based on the goal criteria. However, the Compensation Committee considered the Company’s favorable progress made against its strategic objectives for 2020 to advance its transformation and build a strong foundation for 2021 and beyond. In particular, the Compensation Committee recognized an improved Adjusted EBITDA result as compared to 2019 and a strong performance relative to peer companies.

After considering these achievements, the Compensation Committee awarded discretionary bonuses equal to approximately 38% of the target amounts and prorated for a partial year of service, where applicable. These bonuses were paid 50% in cash and 50% in restricted common stock of the Company with a vesting period of six months. These discretionary awards were intended to recognize the significant progress the Company made in an exceptionally challenging market, as well as to ensure the Company retains high-performing executives for sustained performance.

Mr. Gibson declined to take any bonus for 2020 in order to honor his promise not to take a bonus in 2020 unless the Company reached break-even results. As a result of Mr. Gibson’s request, no bonus was awarded by the Compensation Committee to Mr. Gibson.


	Adjusted
	EBITDA		Revenue		Goal		Discretionary(3)		Total
John W. Gibson, Jr.	$	—	$	—	$	—	$	—	$	—
John W. Chisholm(1)	$	—	$	—	$	—	$	—	$	—
Michael E. Borton	$	—	$	—	$	—	$	49,000	$	49,000



Elizabeth T. Wilkinson(2)	$	—	$	—	$	—	$	—	$	—
Denise Allen	$	—	$	—	$	—	$	82,500	$	82,500

Item 2: Advisory Vote on Executive Compensation

(1)Mr. Chisholm ceased to be a director, officer and employee effective January 5, 2020.

(2)Ms. Wilkinson ceased to be an officer and employee effective June 15, 2020.

(3)Paid half in cash and half in restricted stock with a vesting period of six months.

2020 Long-Term Incentives

In order to incentivize executives to work toward the long-term success of the Company, the Compensation Committee instituted a long-term incentive program under which executives can earn awards of the Company’s stock.

The 2020 long-term incentive program provided for a total stock award based on a dollar value determined by multiplying a factor by the annual salary of the applicable executive. For 2020, the factors were as follows:


Award Factor
John W. Gibson, Jr.(1)			*
John W. Chisholm(2)			*
Michael E. Borton(3)			*



Elizabeth T. Wilkinson(4)			1.35
Denise Allen			1.35

(1)Mr. Gibson did not participate in the 2020 long-term incentive program of the Company, but instead was granted certain options and rights to purchase stock of the Company pursuant to his employment agreement. For more detail, please see the description of Mr. Gibson’s employment agreement below.

(2)Mr. Chisholm ceased to be a director, officer and employee effective January 5, 2020, which was prior to the implementation of the 2020 long-term incentive program. As a result, Mr. Chisholm was not included in the program.

(3)Mr. Borton joined the Company after the implementation of the 2020 long-term incentive program and was not included in that program. In lieu of inclusion in the 2020 long-term incentive program, Mr. Borton was granted certain stock options pursuant to his employment agreement. For more detail, please see the description of Mr. Borton’s employment agreement below.

(4)Ms. Wilkinson ceased to be an officer and employee effective June 15, 2020.

Awards made under the long-term incentive program were of two general types: restricted stock subject to time vesting (“Restricted Stock”), and stock based on relative total shareholder return (“TSR Stock”).

Restricted Stock. Each executive was granted restricted stock equal to (a) the executive’s award factor multiplied by (b) the executive’s salary and (c) 40%, divided by (d) a deemed share price of $1.58. These shares vest ratably on the date that is one year after the grant, December 31, 2021 and December 31, 2022.

TSR Stock. TSR Stock awards are based on two types of notional “units” granted to the relevant executives. The first type of unit is intended to reward performance based on performance of the Company as compared to the Peer Group (“TSR Peer Group Units”). Each participating executive was granted a number of TSR Peer Group Units equal to (a) the executive’s award factor multiplied by (b) the executive’s base salary and (c) 30%, divided by (d) a deemed share price of $1.58.

After December 31, 2022, the performance of the Company will be compared to the performance of the companies in the Peer Group during the period from January 1, 2020 to December 31, 2022 (the “Performance Period”). This is done by calculating the “Total Shareholder Return” for the Company and each company in the Peer Group by subtracting (a) the average closing price of the common stock of the applicable company for the last 20 trading days of the Performance Period from (b) the average closing price of the common stock of the applicable company for the 20 trading days immediately preceding the Performance Period (the “Beginning Price”) and then dividing the resulting difference by (c) the Beginning Price.

The TSR Peer Group Units are converted to restricted stock in the Company by multiplying the number of TSR Peer Group Units by a conversion rate equal to (a) 200%, if the Total Shareholder Return of the

Item 2: Advisory Vote on Executive Compensation

Company is equal to the 75th percentile when compared to the Peer Group, and (b) 100%, if the Total Shareholder Return of the Company is equal to the 50th percentile when compared with the Peer Group. If the Total Shareholder Return of the Company is between the 50th and the 75th percentile when compared to the Peer Group, the percentage used to calculate the conversion of the TSR Peer Group Units will be determined by linear interpolation. If the Total Shareholder Return of the Company is less than the 50th percentile when compared to the Peer Group, no TSR Peer Group Units will convert to shares in the Company.

The second type of unit is intended to reward performance based on the performance of the Company as compared to the Oilfield Equipment Services and Oil and Gas Drilling Global Industry Classification constituent companies of the Russell 2000 Index (the “Index Group”) during the Performance Period (the “TSR Index Group Units”). Each participating executive was granted a number of TSR Index Group Units equal to (a) the executive’s award factor multiplied by (b) the executive’s base salary and (c) 30%, divided by (d) a deemed share price of $1.58.

At the end of the Performance Period, the performance of the Company is compared to the performance of companies in the Index Group in the same manner as for the TSR Peer Group Units. The TSR Index Group Units are converted to restricted stock in the Company by multiplying the number of TSR Index Group Units by a conversion rate equal to (a) 200%, if the Total Shareholder Return of the Company is equal to the 75th percentile when compared to the Index Group, and (b) 100%, if the Total Shareholder Return of the Company is equal to the 50th percentile when compared with the Index Group. If the Total Shareholder Return of the Company is between the 50th and the 75th percentile when compared to the Index Group, the percentage used to calculate the conversion of the TSR Index Group Units will be determined by linear interpolation. If the Total Shareholder Return of the Company is less than the 50th percentile when compared to the Index Group, no TSR Index Group Units will convert to shares in the Company.

For both the TSR Peer Group Units and the TSR Index Group Units, the conversion rate can never be greater than 100% if the Total Shareholder Return for the Company during the Performance Period is a loss greater than 5%.

Unvested Restricted Stock and/or the right to convert TSR Peer Group Units and TSR Index Group Units are forfeited in the event the executive is not employed with the Company at the end of the Performance Period, although the Compensation Committee has the right to determine vesting in the event an executive dies, becomes disabled or retires prior to vesting.

If there is a change of control of the Company during the Performance Period, the TSR Peer Group Units and TSR Index Group Units convert at a rate of 100%.

2020 Long-Term Incentive Results

The amount of Restricted Stock and notional units awarded to the 2020 named executive officers is detailed in the table below. As described above, Restricted Stock vests over three years, and TSR Peer Group Units/TSR Index Group Units are not actual awards of common stock, but rather the potential to convert into common stock if the Company meets certain performance objectives in future years.


	Restricted		TSR Peer		TSR Index
	Stock		Group Units		Group Units		Total(5)
John W. Gibson, Jr.(1)	$	—	$	—	$	—	$	—
John W. Chisholm(2)	$	—	$	—	$	—	$	—
Michael E. Borton(3)	$	—	$	—	$	—	$	—



Elizabeth T. Wilkinson(4)	$	189,000	$	141,750	$	141,750	$	472,500
Denise Allen	$	162,001	$	121,500	$	121,500	$	405,001

Item 2: Advisory Vote on Executive Compensation

(1)Mr. Gibson does not participate in the long-term incentive programs of the Company, but instead was granted certain options and rights to purchase stock of the Company pursuant to his employment agreement for his long-term incentives. For more detail, please see the description of Mr. Gibson’s employment agreement below.

(4)Ms. Wilkinson ceased to be an officer and employee effective June 15, 2020, at which time all restricted stock, TSR Peer Group Units and TSR Index Units granted under the 2020 long-term incentive program were forfeited.

(5)Amounts assume that the TSR Peer Group Units and the TSR Index Group Units convert at 100% and are valued as of the date of award.

Employment Agreements

A brief summary of the employment agreements of our 2020 named executive officers is as follows:

John W. Gibson, Jr. - Employment Agreement

Mr. Gibson entered into an employment agreement with the Company on December 21, 2019. Under the terms of the agreement, Mr. Gibson is paid a base salary of $500,000 annually and is eligible for an annual bonus with a target amount of 100% of base salary. Mr. Gibson was also granted 570,000 shares of restricted stock that vest ratably in five installments beginning on December 22, 2020 and each of the next four anniversaries thereafter. In lieu of participation in the Company’s long-term incentive programs, Mr. Gibson also received options to purchase up to 2,000,000 shares of common stock of the Company based on the performance of the Company through December 31, 2024. 33% of the options vest at a share price of $3.60, an additional 33% will vest at a share price of $5.40, and all options vest at a share price of $7.20. Mr. Gibson was also granted options to purchase up to 1,000,000 shares of common stock of the Company, which vest ratably over five years. In each case the exercise price of the options is the closing price of the Company’s common stock on December 21, 2019.

The term of Mr. Gibson’s employment agreement is until December 31, 2024. In the event that Mr. Gibson’s employment agreement is terminated, the Company will pay to 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 is terminated as a result of his death, 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 will vest and all performance-based equity awards will vest to the extent the performance goals have been reached, and in the case of termination without “cause” or for “good reason,” Mr. Gibson shall 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 is 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 shall be entitled to receive severance equal to his base salary plus target annual bonus, and all unvested equity awards will vest other than performance-based equity awards, which will vest only if the performance criteria have been met.

A full description of Mr. Gibson’s employment agreement is available on the Company’s Current Report on Form 8-K filed with the SEC on December 27, 2019.

John W. Chisholm - Employment Agreement

Mr. Chisholm entered into an employment agreement with the Company on May 20, 2019 which was amended on October 18, 2019. Under the terms of the employment agreement, Mr. Chisholm was paid a base salary of $550,000 annually and was eligible to participate in the short-term incentive program with a target of 110% and the long-term incentive program with a factor of 2.25.

Item 2: Advisory Vote on Executive Compensation

Upon execution of the employment agreement, Mr. Chisholm was granted 85,000 shares of restricted stock that vest on the earlier of Mr. Chisholm’s termination of employment or March 31, 2020.

The employment agreement was effective from April 1, 2019 until March 31, 2020. Upon resignation of employment by Mr. Chisholm for certain material reductions in salary, duties or certain relocations (“Good Reason”), Mr. Chisholm was entitled to (a) $3,612,000, paid over 24 equal monthly installments, (b) reimbursement for COBRA premiums for up to one year, (c) 123,750 shares of stock, matching his time-vesting restricted stock portion of the 2019 long-term incentive program and (d) any bonuses earned but not yet paid under the 2019 short-term incentive program. Upon resignation other than for Good Reason, Mr. Chisholm was to be paid only base salary through the date of termination.

Until May 20, 2019, Mr. Chisholm was primarily compensated as an independent contractor through two entities controlled by Mr. Chisholm (the “Chisholm Entities”). The Chisholm entities indemnified the Company for all liabilities for taxes, income tax withholding and other similar liabilities that might arise related to the arrangement, and Mr. Chisholm personally guaranteed the Chisholm Entities’ indemnification.

Mr. Chisholm resigned from the Company as of January 5, 2020. The Company is entitled to withhold and/or apply a right of offset against Mr. Chisholm’s severance to amounts that would be due under the guarantee, bonus or salary that was previously overpaid, or taxes underwithheld from Mr. Chisholm, including taxes relating to the payments to the Chisholm Entities. In September 2020, the Company informed Mr. Chisholm that it would be suspending further severance payments.

Michael E. Borton - Employment Agreement

Mr. Borton entered into an employment agreement with the Company on July 29, 2020. Under the terms of the Agreement, Mr. Borton is paid a base salary of $340,000 annually and is eligible for an annual bonus with a target amount of 80% of base salary. In lieu of participation of in the Company’s 2020 long-term incentive program, Mr. Borton also received 240,000 shares of restricted stock and 360,000 options to purchase shares of Company stock, with a strike price equal to the price of the Company’s stock on the option grant date. In the event that, within 12 months of a “change of control,” Mr. Borton’s employment is terminated other than for “cause”, or Mr. Borton terminates his employment for “good reason,” all unvested equity awards shall become fully vested immediately prior to termination. In addition, if Mr. Borton’s employment is terminated without “cause” or for “good reason,” Mr. Borton, upon execution and delivery of a suitable release agreement, shall be eligible to receive severance equal to 12 months of Mr. Borton’s base salary, plus 100% of the annual bonus for the year of termination (determined and paid in the normal bonus cycle), and COBRA payments for up to 18 months. Mr. Borton’s employment agreement expires on December 31, 2022 (with automatic 12 month extensions unless written notice of non-renewal is timely given).

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 July 29, 2020.

Elizabeth T. Wilkinson - Employment Agreement

Ms. Wilkinson entered into an amended and restated employment agreement with the Company on May 20, 2019. Under the terms of the employment agreement, Ms. Wilkinson was paid a base salary of $350,000 annually and is eligible to participate in the short-term incentive program with a target of 75% and the long-term incentive program with a factor of 1.35.

The employment agreement was effective from April 1, 2019 until December 31, 2020. Upon termination of Ms. Wilkinson’s employment other than for “cause,” or resignation of employment by Ms. Wilkinson for certain material reductions in salary, duties or certain relocations Ms. Wilkinson was entitled to 150% of

Item 2: Advisory Vote on Executive Compensation

Ms. Wilkinson’s base salary and target bonus, payable in nine monthly installments, and reimbursement for COBRA premiums for up to one year.

Ms. Wilkinson departed the Company on June 15, 2020. The Company considers Ms. Wilkinson’s departure as a termination without “cause.”

Denise Allen - Employment Agreement

Ms. Allen’s prior employment agreement expired on December 31, 2020. On January 1, 2021, Ms. Allen entered into a new employment agreement with the Company. Pursuant to the employment agreement, Ms. Allen is paid a base salary of $300,000 annually and is eligible for an annual bonus with a target amount of 100% of base salary. Ms. Allen is also eligible to participate in the long-term incentive programs of the Company.

In the event that Ms. Allen’s employment is terminated without “cause” or for “good reason,” upon execution and delivery of a suitable release agreement, Ms. Allen is eligible for severance equal to 12 months of her base salary plus a prorated annual bonus, determined and paid in the ordinary bonus cycle, and will be eligible for COBRA premium reimbursement for up to 12 months. In addition, if a termination without “cause” or for “good reason” occurs within 18 months of a “change of control,” all outstanding equity awards become fully vested immediately prior to termination.

Item 2: Advisory Vote on Executive Compensation

2021 Outlook

For 2021, the Company has instituted a number of changes in response to the evolving and transitional nature of both the Company and the macroeconomic environment as a whole. Both the short-term and long-term incentive program have been revised to properly reflect the goal of the Company to reach break-even results and to align the overall goals of the compensation program with those of the Company’s current shareholders.

In addition, each of the Company’s executive officers, other than Mr. Gibson, have been assigned an individual director of the Board to work with as a mentor on a one-on-one basis. Mentors have been designated to assist with existing skillsets or to help develop new abilities. Through the mentorship program, the Company aims to further develop the Company’s executive team and increase effective communications between individual executives and directors. The Company expects that mentorships will change in response to the growing needs of the Company.

2021 Executive Officers

The following are biographies of each of our executive officers as of April 19, 2021.

John W. Gibson, Jr.

Chairman, Chief Executive Officer and President

Age: 63

EXPERIENCE & QUALIFICATIONS

•Director of Orocobre Limited (ASX: ORE)*

•Director of BluWare, Inc.*

•Senior Advisor, Tudor, Pickering, Holt & Company*

•Member of the Strategic Board of Advisors of Houston Mechatronics, Inc.*

•Chairman, Energy Technology of Tudor, Pickering, Holt & Company from May 2016 to December 2019.

•President and CEO of Tervita Corporation

•Director of Tervita Corporation

•Director of I-Pulse Inc.

•President and CEO of Paradigm B.V.

•Honorary Consul to Texas of Kazakhstan*

EDUCATION

•Master of Science in Geology, University of Houston

•Bachelor of Science in Geology, Auburn University

COMPANY ROLES

•Chairman, Chief Executive Officer and President since January 2020

•Member of Risk and Sustainability Committee since February 2021

*Current Role

Item 2: Advisory Vote on Executive Compensation

Denise Allen

Senior Vice President, Chief of Staff

Age: 46

Board Mentor: Ted Brown

EXPERIENCE & QUALIFICATIONS

•Executive Vice President at Edelman from April 2005 to April 2017

•Communications Director and Whip Assistant for U.S. Congressman Max Sandlin

•Completed a Leadership and Business Development program at the University of Chicago Booth School of Business

•Graduate and on the Board of Directors of Leadership Houston

•Member of the Emerging Leaders at Rice University’s Baker Institute for Public Policy

•Holds a certificate from the Institute for Crisis Management

EDUCATION

•Bachelor of Arts in Journalism, University of Texas

COMPANY ROLES

•Senior Vice President, Chief of Staff since April 2020

•Senior Vice President, Global Communications & Technology Commercialization from April 2017 to April 2020

Nicholas J. Bigney

Senior Vice President, General Counsel & Chief Compliance Officer

Age: 43

Board Mentor: TBD

EXPERIENCE & QUALIFICATIONS

•Vice President, General Counsel & Secretary of Oiltanking North America from April 2018 to January 2020

•Assistant General Counsel, Nabors Industries from August 2010 to March 2018

•Associate, Skadden Arps Slate Meagher & Flom, Energy & Infrastructure Group

•Associate, Milbank Tweed Hadley & McCloy, Project Finance Group

•Admitted to practice law in New York and Texas

•Fluent in Japanese

EDUCATION

•Juris Doctorate, Columbia Law School

•Bachelor of Arts in Japanese, Brigham Young University

COMPANY ROLES

•Senior Vice President, General Counsel & Chief Compliance Officer since January 2021

•Senior Vice President, General Counsel & Corporate Secretary from February 2020 to December 2020

Item 2: Advisory Vote on Executive Compensation

Michael E. Borton

Chief Financial Officer

Age: 61

Board Mentor: Harsha Agadi

EXPERIENCE & QUALIFICATIONS

•Chief Financial Officer of Dynasty Sports and Entertainment from April 2019 to July 2020

•Chief Financial Officer of Wombat Security Technologies from February 2015 to August 2018

•Chief Financial Officer of Harmony Information Systems

•Certified Management Accountant

•Earned Certificate of Distinguished Performance from the Institute of Management Accounting

EDUCATION

•Masters of Business Administration in Finance, Indiana University, Bloomington

•Bachelor of Science, Business Administration, Major in Accounting, Valparaiso University

COMPANY ROLES

•Chief Financial Officer since August 2020

Dr. Ryan Ezell

President, Chemistry Technologies

Age: 42

Board Mentor: Michael Fucci

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, 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

TengBeng Koid

President, Global Business

Age: 57

Board Mentor: David Nierenberg

EXPERIENCE & QUALIFICATIONS

•President of Energy Solutions from December 2011 to June 2020

•CEO of Energy Solutions International, Inc.

•Vice President of IHS Markit

•President, International of SMT, Inc.

•Executive Vice President and Chief Operating Officer of ION Geophysical

•Vice President, Halliburton Company

•Vice President, Landmark Graphics

•Board member of irth Solutions, LLC

•Board member of LMK Resources

•Board member of Energy Solutions International, Inc.

EDUCATION

•Master of Business Administration, Bath University

•Bachelor of Science in Computer Science, University Science Malaysia

COMPANY ROLES

•President, Global Business since June 2020

•President of JP3 Measurement, LLC since November 2020

Dr. James A. Silas

Senior Vice President, Research & Innovation

Age: 46

Board Mentor: Paul Hobby

EXPERIENCE & QUALIFICATIONS

•Assistant Professor of Chemical Engineering, Texas A&M University

EDUCATION

•Ph. D. in Chemical Engineering, University of Delaware

•B.S.E. in Chemical Engineering, Princeton University

•Postdoctoral Fellow in Bioengineering at the University of Pennsylvania

COMPANY ROLES

•Senior Vice President, Research & Innovation since May 2016

•Vice President, Research & Innovation from May 2015 to May 2016

•Research Scientist from June 2013 to May 2015

As previously announced, John Chisholm ceased to be a director, officer and employee effective January 5, 2020, and Elizabeth Wilkinson ceased to be an officer and employee effective June 15, 2020.

Changes to Compensation Programs

For 2021, the Company redesigned its compensation programs to further align with shareholder interests. as follows:

Short-Term Incentive Program

The short-term incentive program for 2021 includes both financial and individual performance metrics. All executives have a target bonus equal to 100% of base salary. Actual payouts are based on meeting

Item 2: Advisory Vote on Executive Compensation

financial, personal, individual and ESG goals approved by the Compensation Committee. Payout under the 2021 short-term incentive program is also subject to a liquidity test; if the Company does not meet the liquidity test, no amounts are paid in respect of the short-term incentive program, regardless of whether or not the goals were achieved.

Long-Term Incentive Program

The long-term incentive program for 2021 has been redesigned to include equity awards that incentivize long-term performance and to be more heavily weighted towards performance-based metrics. Under the 2021 long-term incentive program, executives other than Mr. Gibson are granted equity-based awards based on a multiplier to their base salary, with amount of shares determined by reference to a deemed share price of $1.44 (the closing price of the Company’s stock on the date of grant). As discussed above, Mr. Gibson was granted certain options and restricted stock under his employment agreement in lieu of participation in the Company’s long-term incentive programs.

40% of the equity awards are restricted stock that vest ratably over 4 years. This element of the program is designed to ensure that executives have a sufficient overall equity interest in the Company to align with shareholders generally.

30% of the equity awards are performance-based options with a strike price equal to the Company’s stock price on the award date. These options vest 1/4 each at share prices of $3, $4, $5 and $7 if those prices are achieved (based on a 90-day VWAP) on or before December 31, 2024. These options expire in 10 years. If the target share price is not reached before December 31, 2024, the options are forfeited. This element of the program is designed to incentivize executives to reach meaningful share price targets, with the 90-day VWAP measurement implemented to eliminate awards as the result of temporary spikes.

The remaining 30% of the equity awards are performance-based options with a strike price equal to the Company’s stock price as of the grant date, and vest based on the achievement of a percentage of revenue from newly-developed products measured over a three year period. Options vest 1/3 each at new product revenue percentages of 15%, 20% and 25%; otherwise they are forfeited. This element of the program is designed to encourage innovation and new products to ensure that the Company can remain competitive in the markets in which it competes.

Changes to Peer Group

The Company adjusted its Peer Group for 2021 to take into account change in the market and changes in the Company. The Peer Group for 2021 is as follows:


Advanced Emission Solutions, Inc.						Intrepid Potash, Inc.
Aspen Aerogels, Inc.						ION Geophysical Corporation
Energy Recovery, Inc.						Natural Gas Services Group, Inc.
FutureFuel Corp.						NCS Multistage Holdings, Inc.
Geospace Technologies Corporation						Nuverra Environmental Solutions, Inc.
Graham Corporation						Solaris Oilfield Infrastructure, Inc.
Gulf Island Fabrication, Inc.						Trecora Resources

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.

At December 31, 2020, all current executives have met or exceeded the guidelines.

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 clawback policies with retroactive effect (applicable to all forms of compensation) and are subject to any clawback 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 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 2020 and 2019 by our named executive officers:


Name and Principal Position	Year	Salary(6)		Bonus(5)		Stock Awards(6)(7)		Option Awards(7)		Non-Equity Incentive Plan Compensation		All Other Compensation		Total
John W. Gibson, Jr. - Chairman, President and Chief Executive Officer(1)	2020	$	435,385	$	—	$	74,074	$	—	$	—	$	3,544	$	513,003
	2019	$	—	$	—	$	1,100,100	$	3,660,000	$	—	$	—	$	4,760,100
John W. Chisholm – President, Chief Executive Officer and Chairman of the Board(2)	2020	$	33,357	$	—	$	—	$	—	$	—	$	711,673	$	745,030
	2019	$	626,238	$	—	$	668,013	$	—	$	116,161	$	—	$	1,410,412
Michael E. Borton - Chief Financial Officer(3)	2020	$	137,308	$	24,500	$	247,701	$	385,200	$	—	$	—	$	794,709
Elizabeth T. Wilkinson - Chief Financial Officer(4)	2020	$	180,693	$	—	$	483,053	$	—	$	—	$	510,417	$	1,174,163
	2019	$	337,671	$	—	$	277,998	$	—	$	92,728	$	—	$	708,397
Denise Allen - Senior Vice President, Chief of Staff	2020	$	289,269	$	41,250	$	455,298	$	—	$	—	$	—	$	785,817
	2019	$	337,524	$	33,750	$	270,855	$	—	$	79,480	$	—	$	721,609

(1)Mr. Gibson began service as Chairman, President & Chief Executive Officer on January 6, 2020. Mr. Gibson’s inducement equity grants pursuant to his contract took place in 2019 and are included in the 2019 compensation. These inducement grants consisted of 570,000 restricted shares, with pro-rata vesting over five years, and 3,000,000 options, with 1,000,000 of these options vesting ratably over five years and with the remaining 2,000,000 vesting based on achievement of certain share price targets. The strike price of the options is equal to the Company’s share price on the date of grant. Due to the inducement grants, Mr. Gibson does not participate in the other long-term incentive programs of the Company. For a more thorough discussion of Mr. Gibson’s inducement awards, please see the description of Mr. Gibson’s employment contract above. Amounts in “All Other Compensation” for Mr. Gibson includes the reimbursement of rent and utilities for an apartment near the Company’s home office, as approved by the Compensation Committee of the Board.

(2)Mr. Chisholm ceased to be a director, officer and employee effective January 5, 2020. Amounts in “All Other Compensation” includes severance paid to Mr. Chisholm. Pursuant to the employment agreement with Mr. Chisholm, the Company offset Mr. Chisholm’s severance payments in amounts that may become owed by the Company for which Mr. Chisholm has agreed to indemnify the Company. In September 2020, the Company suspended all severance payments to Mr. Chisholm.

(3)Mr. Borton began service as Chief Financial Officer on August 3, 2020. Pursuant to his employment contract, Mr. Borton was granted 240,000 shares of restricted stock that vest ratably over three years on the anniversary of his employment. Mr. Borton was also granted 360,000 options with a strike price equal to the Company’s share price on the date of grant. 180,000 of these options vest based on the achievement of certain share price targets, and 180,000 of these options vest based on the Company’s total shareholder return relative to its peer group as defined by the 2020 long-term incentive program.

(4)Ms. Wilkinson ceased to be an officer and employee effective June 15, 2020. Amounts in “All Other Compensation” includes severance paid to Ms. Wilkinson.

(5)Bonus amounts for Mr. Borton and Ms. Allen for 2020 only reflects cash portion of the discretionary bonus for the short-term incentive program. Restricted stock portion of the bonus is included in the Stock Awards figure for those years and individuals.

(6)Stock Awards amounts for 2020 include the fair market value of TSR Peer Group Units and TSR Index Group Units awarded during 2020. Stock Award amounts for 2020 for Mr. Gibson, Ms. Wilkinson and Ms. Allen include restricted shares in exchange for reduction in salary taken on April 1, 2020 as described in the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2020. Mr. Gibson took a 20% reduction in salary and Ms. Wilkinson and Ms. Allen took a 10% reduction in salary. For a discussion of the valuation methodology used for restricted stock, option and other equity grants, please see Note 18 in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2021.

(7)The amounts shown in the Stock Awards and the Option Awards columns reflect the full grant date fair value of restricted stock, options and other equity awarded calculated pursuant to FASB ASC Topic 718.

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, 2020:

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 unites 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.

2020(1)

—

SEC Form DEF 14A filed by Flotek Industries, Inc.