| Small & micro cap project

Flotek Industries (NYSE: FTK): Notable compensation for the new CEO

 

by | Jan 1, 2020

Basics

  • M. Cap: $116 million
  • Flotek develops and delivers prescriptive, reservoir-centric chemistry technologies to oil and gas clients, designed to address every challenge in the lifecycle of reservoirs, and maximize recovery from both new and mature fields.

Nierenberg Investment Management and BLR partners

  • Nierenberg joined the board as a director in June 2018. Nierenberg Investment has owned a stake in the company since April 2015 and currently owns 2.8%.
  • In March 2019, the company entered into a settlement agreement with BLR Partners pursuant to which Paul Hobby was appointed to Flotek’s board of directors. Moreover, the company agreed to separate the roles of chairman and CEO effective as of the company’s 2019 AGM.

Notable compensation structure: New CEO could end up owning stock worth $10.5 million

In December, 2019, the company appointed John W. Gibson, Jr. as chairman of the board of directors, CEO and president of the company.

The performance-based stock option award (PBSOA) is the one which caught our attention.

The company awarded Mr. Gibson a PBSOA of 2,000,000 shares of common stock.

Here is the vesting schedule-

Stock Price Hurdle

 

  

Percentage Vested

$1.93

 

 

0% vested

$3.60

 

 

33% vested

$5.40

 

 

66% vested

$7.20

 

 

100% vested

If the stock price reaches $7.2 per share, and assuming that Mr. Gibson does not sell the shares awarded to him, the value of the PBSOA would be a whopping $10.5 million, which is 20x his base salary.

https://www.sec.gov/Archives/edgar/data/928054/000119312519324919/0001193125-19-324919-index.htm

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