In accordance with the SEC’s regulations, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company and certain of its peers for the years 2023, 2022, 2021 and 2020. For further information concerning the Company’s compensation philosophy see section titledCompensation Discussion and Analysis (CD&A).
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| · · · · · · · · · · · · · · Average · · Average · · · · · · · · · · · · |
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| · · · · · · · · · · · · · · Summary · · Summary · · Value of Initial Fixed $100 · · · · · · |
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| · · · · · · · · · · · · · · Compensation · · Compensation · · Investment Based On: · · · · · · |
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| · · Summary · · Summary · · · · · · · · Table Total · · Actually Paid · · · · · · · · · · · · Operating |
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| · · Compensation · · Compensation · · Compensation · · Compensation · · for Non-PEO · · to Non-PEO · · · · · Peer Group · · Net · · · Cash |
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| · · Table Total · · Table Total · · Actually Paid · · Actually Paid · · Named · · Named · · Total · · Total · · Income/ · · · Flow |
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| · · for first · · for second · · to first · · to second · · Executive · · Executive · · Shareholder · · Shareholder · · (Loss) · · · (OCF) (6) |
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| Year · PEO (1) · PEO (1) · PEO (2)(4) · PEO (2)(4) · Officers (1) · Officers (3) · Return · Return (5) · (in millions) · · (in millions) |
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| 2023 | $— | $2,391,450 | $— | $1,946,938 | $1,457,560 | $1,168,921 | $139.56 | $116.66 | $195 | $200 |
| 2022 | $2,138,360 | $2,272,390 | $3,327,790 | $3,062,704 | $819,670 | $819,320 | $167.00 | $113.26 | $218 | $208 |
| 2021 | $1,371,410 | $— | $1,913,830 | $— | $733,150 | $1,164,372 | $86.64 | $70.04 | $7 | $23 |
| 2020 | $1,275,559 | $— | $696,697 | $— | $818,133 | $875,186 | $60.11 | $58.01 | $(212) | $(62) |
| (1) | Amounts disclosed for the first Principal Executive Officer (PEO), second PEO and other Non-PEO Named Executive Officers relate to reported compensation as follows: |
| > | Richard A. Hubbell – was the President and Chief Executive Officer through May 17, 2022 and for the years 2021 and 2020. He has been Executive Chairman of the Board Officer since May 17, 2022. His total compensation for 2022, 2021 and 2020 has been disclosed as amounts related to first PEO. For 2023, his compensation has been included in amounts related to Non-PEO Named Executive Officers. |
| > | Ben M. Palmer – is named PEO for 2023 and been the President and Chief Executive Officer effective May 17, 2022, and was Vice President, Chief Financial Officer and Corporate Secretary prior. For 2022 and 2023, his total compensation has been disclosed as amounts related to second PEO. For 2021 and 2020, his compensation has been disclosed in amounts related to Non-PEO Named Executive Officers. |
| > | Michael L. Schmit – has been Vice President, Chief Financial Officer and Corporate Secretary effective May 17, 2022 and his compensation has been included in amounts related to Non-PEO Named Executive Officers for 2022 and 2023. |
| > | Randall R. Rollins – was the Executive Chairman of the Board until his passing in August 2020; his compensation until his death has been included in the amounts related to Non-PEO Named Executive Officers for that year. |
| (2) | The dollar amounts reported represent the amount of Compensation Actually Paid (CAP), computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our PEO during the applicable year. To calculate the amounts in the CAP to PEO column in the table above, the following amounts were deducted from or added to (as applicable) the Total compensation as reported in the Summary Compensation Table (SCT): |
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| · Reported · Reported · Reported · Reported · Equity · Equity · · · |
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| | | Summary | | Summary | | Value of | | Value of | | Award | | Award | | Pension | | | | |
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| | | Compensation | | Compensation | | Equity | | Equity | | Adjustments | | Adjustments | | Adjustments | | Compensation | | Compensation |
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| | | Table Total for | | Table Total for | | Awards to | | Awards to | | to first | | to second | | to First | | Actually Paid | | Actually Paid |
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| | | first PEO (a) | | second PEO (a) | | first PEO (b) | | second PEO (b) | | PEO (c) | | PEO (c) | | PEO (d) | | to first PEO | | to second PEO |
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| Year | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
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| 2023 | | — | | 2,391,450 | | — | | (998,400) | | — | | 553,888 | | — | | — | | 1,946,938 |
| 2022 | | 2,138,360 | | 2,272,390 | | (670,500) | | (804,600) | | 1,859,930 | | 1,594,914 | | — | | 3,327,790 | | 3,062,704 |
| 2021 | | 1,371,410 | | — | | (387,000) | | — | | 929,420 | | — | | — | | 1,913,830 | | — |
| 2020 | | 1,275,559 | | — | | (459,000) | | — | | (112,540) | | — | | (7,322) | | 696,697 | | — |
| (a) | The amounts disclosed represent the amounts reported as Total compensation in the SCT. |
| (b) | Represents the grant dare fair value of the equity awards reported in the Stock Awards column of the SCT. |
| (c) | Represents the year-over-year change in the fair value of equity awards, as shown below. For 2022, the change in fair value of equity awards has been attributed to the Named Executive Officer who was PEO as of December 31, 2022: |
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| 2024 ANNUALPROXY STATEMENT |
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| · 2023 · 2022 - First PEO · 2022 - Second PEO · 2021 · 2020 |
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| Fair Value of · ($) · · ($) · · ($) · · ($) · · ($) |
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| Equity awards granted in Current Fiscal Year (CFY) outstanding and unvested as of end of CFY | 757,120 | | 666,750 | | 800,100 | 454,000 | 315,000 |
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| Change in prior year awards outstanding and unvested as of end of CFY | (266,938) | | 1,096,200 | | 730,800 | 305,800 | (382,470) |
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| Change in prior year awards that vested in current year | 20,538 | | 83,900 | | 53,694 | 169,620 | (45,070) |
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| Dividends paid | 43,168 | | 13,080 | | 10,320 | — | — |
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| Total Equity Award Adjustments | 553,888 | | 1,859,930 | | 1,594,914 | 929,420 | (112,540) |
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| (3) | The dollar amounts reported represent the amount of CAP, computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our Non-PEO Named Executive Officers during the applicable year. To calculate the amounts in the CAP to Non-PEO Named Executive Officers column in the table above, the following amounts were deducted from or added to (as applicable) the Total compensation as reported in the SCT: |
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| | Average | Reported | Equity | Average Summary |
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| · · Summary Compensation · · Value of Average Equity · · Award Adjustments to · · Compensation Actually |
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| · · Table Total for Non- PEO · · Awards to Non-PEO Named · · Non-PEO Named · · Paid to Non- PEO Named |
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| · · Named Executive Officers (a) · · Executive Officers (b) · · Executive Officers (c) · · Executive Officers |
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| Year · · ($) · · ($) · · ($) · · ($) |
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| 2023 | 1,457,560 | (580,800) | 292,161 | 1,168,921 |
| 2022 | 819,670 | (312,900) | 312,550 | 819,320 |
| 2021 | 733,150 | (259,290) | 690,512 | 1,164,372 |
| 2020 | 818,133 | (383,265) | 440,318 | 875,186 |
| (a) | The amounts disclosed represent the average of the total amounts attributable to all non-PEO Named Executive Officers for the period each served, as included in the amounts reported as Total compensation in the SCT. |
| (b) | Represents the average grant date fair value of the equity awards reported in the Stock Awards column of the SCT. |
| (c) | Represents the average year-over-year change in the fair value of equity awards, as shown below. For 2020, awards granted and vested in same CFY represents restricted shares granted to R. Randall Rollins that vested immediately upon his death pursuant to the terms of the restricted stock grants. |
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| · 2023 · 2022 · 2021 · 2020 |
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| Fair Value of · · ($) · · ($) · · ($) · · ($) |
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| Equity awards granted in Current Fiscal year (CFY) outstanding and unvested as of end of CFY | 440,440 | | 311,150 | | 304,180 | | 263,025 |
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| Change in prior year awards outstanding and unvested as of end of CFY | (190,584) | | — | | 201,272 | | (122,474) |
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| Awards granted and vested in same CFY | — | | — | | — | | 173,000 |
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| Change in prior year awards that vested in current year | 13,685 | | — | | 185,060 | | 126,767 |
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| Dividends paid | 28,620 | | 1,400 | | — | | — |
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| Total Equity Award Adjustments | 292,161 | | 312,550 | | 690,512 | | 440,318 |
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| (4) | The actuarial present value of $7,322 attributable to Richard A. Hubbell and contained in the Change in Pension Value and Nonqualified Deferred Compensation Earnings Column of the SCT in 2020 has been deducted computing his CAP for that year. The Company’s defined benefit pension plan was frozen in 2002 and therefore no adjustments need to be made in computing the CAP. |
| (5) | Reflects cumulative total shareholder return of the Philadelphia Oil Services Sector (OSX) index, as of December 31, 2023, calculated over the measurement period beginning as of December 31, 2019 established by the market close on that day through and including the end of 2023. The OSX is the peer group used by the Company for purposes of Item 201(e) of Regulation S-K under the Exchange Act in its Form 10-K for the year ended December 31, 2023. |
| (6) | OCF is computed as EBITDA minus cash paid for capital expenditures, plus discretionary adjustments in 2023 totaling approximately $24.5 million related to pension plan termination, litigation settlement and expenses related to acquisitions for the year 2023.OCF for 2020 was calculated as EBITDA minus cash paid for capital expenditures pus discretionary adjustment totaling approximately $217 million related to impairment and other charges. There were no discretionary adjustments in computing OCF for the years 2022 and 2021. |
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| 2024 ANNUALPROXY STATEMENT |
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Financial Performance Measures:
The Company has used OCF as the primary performance measure for 2023. ROIC was used as the primary performance measurement for several years. ROIC is computed as the ratio of EBITDA to invested capital, for the years 2022, 2021 and 2020. Invested capital is equal to the aggregate average of stockholders’ equity, accumulated depreciation and long-term liabilities during each of the applicable years. See section titledCompensation Discussion and Analysis – Long Term Incentive Compensation for the performance goals used to grant PSUs in 2023. In addition, the Company also considers the following as important financial measures that may be used to link compensation actually paid to our Named Executive Officers:
| > | Free Cash Flow – calculated as net cash provided by operating activities less capital expenditures; and |
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| > | ROIC - calculated as the ratio of EBITDA to invested capital. |
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Relationship between CAP and financial measures reported in the table:
The Company’s TSR has performed better than the OSX peer group over the four-year period ending in 2023. The Company reported a slight decrease in net income in 2023 compared to the previous year; net income in 2023 was higher than net income for years 2021 and 2020. For 2023, the Company achieved strong OCF performance, slightly lower than OCF in 2022, but significantly higher than OCF achieve in 2021 and 2020.
The following graphs reflect the CAP paid to our PEOs and other Non-PEO Named Executive Officers over the four-year period ended December 31, 2023 and show the Company’s TSR, net income and ROIC results over the same period.
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| 2024 ANNUALPROXY STATEMENT |
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| 2024 ANNUALPROXY STATEMENT |
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