DEF 14A of Flotek Industries Inc/CN/, Apr 24, 2024

DEF 14A of Flotek Industries Inc/CN/

Filed Apr 24, 2024 · FY20230000928054-24-000041

Open on EDGAR

  1. DIRECTOR NOMINEES

    DIRECTOR NOMINEES Each of the seven nominees for director is an incumbent that is up for reelection. Highlights of their respective backgrounds and service on the Board to date are described below:

  2. DIRECTOR NOMINEES

    | Harsha V. Agadi | | Age: 61 | | | | Director Since: July 2020 | | | EXPERIENCE •Chairman and CEO of GHS Holdings, L.L.C. (2000 to present)* •Interim CEO of Flotek Industries, Inc. (January 2023 to June 2023) •Board member (August 2010 to May 2021) and former President and CEO (August 2015 to May 2020) of Crawford & Company (NYSE: CRD-A) •Board member (March 2022 to present) of myKaarma* •Board member (May 2022 to present) of GLD Shop* •Former Board member of Diversified Foodservice Supply, Inc. (2016 to December 2022) •Former Chairman of Quiznos, LLC •Former Chairman, The Krystal Company •Former Chairman and CEO of Friendly’s Ice Cream, LLC •Former President and CEO of Church’s Chicken PHILANTHROPY & PUBLIC SERVICE •Chairman and Managing Trustee, GHS Charitable Foundation, Inc.* •Chairman and Managing Trustee SKSVMA Charitable Trust* •Board Member Emeritus of Fuqua School of Business, Duke University* •Member of the Board of Trustees of Babson College* •Member of the Board of Governors at the International Tennis Hall of Fame (ITHF)* | EDUCATION •Master of Business Administration, Fuqua School of Business at Duke University •Bachelor of Commerce, University of Mumbai BOARD ROLES •Non-Executive Chairman of the Board (June 2023 to present)* •Member and Chairman of the Compensation Committee (July 2020 to January 2023) •Member of the Audit Committee and Audit Committee Financial Expert (June 2021 to January 2023) •Member of the Risk and Sustainability Committee (June 2021 to June 2023) •Independent Director (July 2020 to January 2023) |

  3. DIRECTOR NOMINEES

    Mr. Agadi’s extensive experience serving on company boards, having served as a director of two public companies in addition to Flotek as well as several private companies, demonstrate his expertise in corporate governance. Furthermore, Mr. Agadi’s distinguished career as a five-time chief executive officer underscores his strong leadership capabilities. Mr. Agadi also possesses valuable international experience, having built several successful global brands throughout his highly accomplished career. We believe Mr. Agadi’s combination of expertise in corporate governance, executive leadership and international business make him a valuable member of our Board.

  4. DIRECTOR NOMINEES

    | Dr. Ryan G. Ezell | | Age: 45 | | | | Director Since: June 2023 | | | EXPERIENCE •Chief Executive Officer of Flotek Industries, Inc. (June 2023 to present)* •Chief Operating Officer of Flotek Industries, Inc. (March 2022 to June 2023) •Various increasing roles of responsibility at Flotek industries including, President of Chemistry Technologies, SVP, Operations, VP, Operations (August 2019 to March 2022) •Various global leadership roles at Halliburton, most recently serving as Vice President of Baroid Drilling Fluids (May 2006 to July 2019) •Published scientist •Author on more than 26 patents •Member of the American Association of Drilling Engineers, American Chemical Society, Society of Petroleum Engineers, National Association of Corporate Directors, Sustainability Accounting Standards Board, Vistage Advisory Board PHILANTHROPY & PUBLIC SERVICE •Neuhaus Education Center Advisory Board* •Volunteer at Houston Food Bank, Habitat for Humanity, Star of Hope Mission, Fellowship of Montgomery •Volunteer Coach i9 Sports, Montgomery Little League | EDUCATION •Ph.D. in Polymer Science, the University of Southern Mississippi •Bachelor of Science in Chemistry, Millsaps College BOARD ROLES •Member of the Board (June 2023 to present)* |

  5. DIRECTOR NOMINEES

    With his background as a published scientist, extensive patent portfolio and over two decades of energy industry experience, Dr. Ezell brings a wealth of expertise and knowledge to the Board. His international experience further broadens his perspective and provides valuable insight for the Company’s international operations. Dr. Ezell’s strategic and operational understanding of the chemistry and data analytics fields provides our Board with a unique perspective on the opportunities and challenges we face. Dr. Ezell has also demonstrated exceptional leadership skills over the last year in helping return the Company to profitability. We believe Dr. Ezell’s unique knowledge of our Company, industry expertise and exceptional leadership skills make him a valuable asset to our Board.

  6. DIRECTOR NOMINEES

    | Evan R. Farber | | Age: 51 | | | | Director Since: October 2022 | | | EXPERIENCE •General Counsel of The Cranemere Group, an industrial holding company (March 2019 to present)* •Acting General Counsel of NorthStar Anesthesia, an operating company of The Cranemere Group (July 2018 to March 2019) •Chief Legal Officer (September 2015 to April 2018), General Counsel (October 2007 to September 2015) of The Advisory Board Company (NASDAQ: ABCO) •Partner at Hogan & Hartson LLP (now Hogan Lovells US LLP) PHILANTHROPY & PUBLIC SERVICE •Emeritus Board of the Children’s Law Center* •Board of Trustees of Concord Hill School | EDUCATION •Juris Doctorate, The George Washington University Law School •Bachelor of Arts from State University of New York at Binghamton BOARD ROLES •Independent Director (October 2022 to present)* •Member and Chair of the Corporate Governance and Nominating Committee (October 2022 to present)* •Member of the Audit Committee (June 2023 to present)* •Member of the Risk and Sustainability Committee (June 2023 to present)* •Member of the Compensation Committee (October 2022 to June 2023) |

  7. DIRECTOR NOMINEES

    Mr. Farber has extensive senior executive experience, including at a public company. Mr. Farber brings valuable expertise to our Board relating to transformational change, corporate governance and risk management. We believe the combination of executive leadership and legal expertise makes Mr. Farber a valuable asset to our Board. Mr. Farber was appointed to our Board pursuant to certain contractual rights discussed more fully under “Corporate Governance — ProFrac Holdings Directors.”

  8. DIRECTOR NOMINEES

    | Michael Fucci | | Age: 65 | | | | Director Since: November 2020 | | | EXPERIENCE •Executive Chairman (March 2015 to June 2019), Chairman Emeritus (June 2019 to October 2020) of Deloitte U.S. LLP •Director, Acadia Healthcare Company, Inc. (October 2020 to present)(NASDAQ: ACHC)* •Member of the Global Board of Deloitte •Chief Operating Officer of Deloitte Consulting (2009 to 2015) 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 •Member and Chairman of the Risk and Sustainability Committee (June 2021 to present)* •Member of the Compensation Committee (June 2021-present); Chairman (June 2023 to present)* •Independent Director (November 2020 to present)* |

  9. DIRECTOR NOMINEES

    Mr. Fucci's extensive experience spanning over four decades as a senior leader and practitioner at Deloitte U.S. LLP underscore his remarkable multinational leadership capabilities. Mr. Fucci’s unique perspective on human resource transformation, corporate talent strategies and risk mitigation adds a valuable dimension to our Board’s expertise. We believe that Mr. Fucci’s extensive operational and corporate governance experience both in the United States and globally provide a unique perspective to our Board.

  10. DIRECTOR NOMINEES

    | Lisa Mayr | | Age: 56 | | | | Director Since: June 2021 | | | EXPERIENCE •Chief Financial Officer, Marigold (September 2023 to present)* •Chief Financial Officer, Internap Holding LLC (July 2020-August 2023) •Chief Financial Officer, MicroStrategy Incorporated (November 2019 to April 2020)(NASDAQ: MSTR) •Chief Financial Officer, EverFi (February 2018 to October 2019) •Chief Financial Officer, Blackboard •Board Observer and Member of the Audit Committee, WorldStrides •Certified Public Accountant* PHILANTHROPY & PUBLIC SERVICE •Advisory Council Member, STEM for Her* •Georgetown University MBA Advisory Counsel | EDUCATION •MBA, Georgetown University •Bachelor of Arts in International Studies and Economics, American University BOARD ROLES •Member of the Audit Committee (June 2021 to present); Chairman (June 2023 to present)* •Member of the Corporate Governance and Nominating Committee (June 2021 to present)* •Member of the Compensation Committee (June 2023 to present)* •Independent Director (June 2021 to present)* •Audit Committee Financial Expert (June 2021 to present)* |

  11. DIRECTOR NOMINEES

    Ms. Mayr brings valuable technological expertise to our Board with over two decades of experience in global technologies and software companies. Ms. Mayr, a certified public accountant, also has over 25 years of financial and accounting experience, having served in financial leadership roles at both public and private companies. We believe Ms. Mayr’s combined technological and financial knowledge enhance our Board’s ability to drive innovation and operational excellence in a financially prudent manner.

  12. DIRECTOR NOMINEES

    | David Nierenberg | | Age: 70 | | | | Director Since: June 2018 | | | EXPERIENCE •Founder and President, Nierenberg Investment Management Company (1996 to present)* •Director of Riverview Bancorp (May 2016 to February 2021)(NASDAQ: RVSB) •Director of Houston Wire and Cable Company (March 2020 to June 2021)(NASDAQ: HWCC) •Director of Rosetta Stone (April 2015 to October 2020)(NYSE: RST) •Partner, Bain & Company Inc. •Chair Emeritus 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* •Retired member of the Massachusetts state bar PHILANTHROPY & PUBLIC SERVICE •Member of the board of The National WWII Museum* •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 •Chairman of the Board (May 2019 to December 2019 and January 2023 to June 2023) •Member of the Audit Committee (May 2020 to present); Chairman (May 2020 to June 2023)* •Member of the Corporate Governance and Nominating Committee (June 2018 to present)* •Member of the Risk and Sustainability Committee (June 2021 to present)* •Member of the Compensation Committee (June 2023 to present)* •Independent Director (June 2018 to present)* •Audit Committee Financial Expert (May 2020 to present)* •Board Chairperson, twice •Lead Independent Director (2020 to 2023) |

  13. DIRECTOR NOMINEES

    Mr. Nierenberg brings a deep understanding of governance and best practices from his extensive public and private board service coupled with his leadership role at The Ira Millstein Center for Global Markets and Corporate Ownership at Columbia Law School, a world leader in corporate governance. Moreover, as the founder and president of Nierenberg Investment Management Company, a member of the Washington State Investment Board, which invests almost $200 billion of public employee retirement funds, and a former partner in consulting firm Bain & Company, Mr. Nierenberg has a wealth of investment knowledge. Mr. Nierenberg has also gained valuable energy industry experience through investments in the industry over the last two decades. We believe Mr. Nierenberg’s depth of corporate governance knowledge combined with his investment expertise enhance our Board’s ability to make sound decisions crucial to sustainable value creation.

  14. DIRECTOR NOMINEES

    | Matthew D. Wilks | | Age: 41 | | | | Director Since: June 2022 | | | Matt D. Wilks has served as the Executive Chairman of the Board of Directors for ProFrac Holding Corp. since August 2021. Mr. Wilks has been the President of ProFrac since October 2018 and previously served as the Chief Financial Officer from May 2017 to August 2021. Mr. Wilks also serves as Vice President of Investments for Wilks Brothers since January 2012. From 2010 to 2012, Mr. Wilks served as Vice President of Logistics for FTSI. Additionally, Mr. Wilks served as a member of the Board of Directors of Approach Resources, Inc. (NASDAQ: “AREX"), an upstream oil and gas company focused on the exploration, development and production of unconventional oil and gas resources in the United States, from January 2017 to November 2019. | |

  15. DIRECTOR NOMINEES

    As the Executive Chairman of ProFrac Holdings Corp., a technology-focused, vertically integrated energy services company, Mr. Wilks has developed extensive industry knowledge and valuable executive experience. We believe Mr. Wilks energy industry background and executive leadership skills allow our Board to better navigate the complexities of the energy industry and enhance our strategic decision-making. Mr. Wilks was appointed to our Board pursuant to certain contractual rights discussed more fully under “Corporate Governance — ProFrac Holdings Directors.” The above biographical and other information for the seven director nominees is current as of April 18, 2024. 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.

  16. DIRECTOR COMPENSATION

    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 Governance Committee chair receives an annual retainer of $16,000 and Governance Committee members receive an annual retainer of $4,000. The Risk Committee chair receives an annual retainer of $16,000 and Risk Committee members receive an annual retainer of $4,000. The Non-Executive Chairman receives an annual retainer of $60,000. Directors do not receive fees for attending Board or committee meetings. 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 date or on the date of the annual meeting of shareholders following the grant, whichever is earlier. We do not expect to pay our directors who are also our officers, such as Dr. Ezell, any additional amounts for their service to us in their capacities as directors. Accordingly, Dr. Ezell did not receive any additional compensation for his service as a member of the Board. Dr. Ezell’s compensation is reported below in “Item II. Advisory Vote on Executive Compensation – Summary Compensation Table.” Mr. Wilks did not receive any compensation for his service as a member of the Board in 2023. Beginning in 2021, directors were permitted to receive the cash portion of their compensation in common stock of the Company. For 2023, Mr. Nierenberg elected to receive the cash portion of his compensation in common stock of the Company. The following table presents the total compensation for each person who served as a non-employee member of the Board during 2023 (other than Mr. Agadi who served as our Interim Chief Executive Officer from January 2023 through June 2023). Beginning in June 2023, in connection with his transition once more to a non-employee director role, Mr. Agadi received compensation for his service on our Board. Total compensation for Mr. Agadi for his service during 2023 (including Mr. Agadi’s compensation as a non-employee director beginning in June 2023) is presented in “Item II. Advisory Vote on Executive Compensation – Summary Compensation Table.”

  17. DIRECTOR COMPENSATION

    | Name | Fees earned or paid in cash(1) | | Stock awards(2)(3) | | Non-equity incentive plan compensation | | All other compensation | | Total | | | Evan R. Farber | | 79,000 | | 100,000 | | — | | — | | 179,000 | | Michael Fucci | | 83,000 | | 100,000 | | — | | — | | 183,000 | | Lisa Mayr | | 99,000 | | 100,000 | | — | | — | | 199,000 | | David Nierenberg | | 3,000 | | 176,000 | | — | | — | | 179,000 | | Matthew D. Wilks | | — | | — | | — | | — | | — |

  18. DIRECTOR COMPENSATION

    (1)Includes annual cash retainer fee, committee chair and committee membership fees, as applicable. (2)These amounts reflect the aggregate grant date fair value, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation (ASC 718), of awards pursuant to the Flotek Industries, Inc. 2018 Long-Term Incentive Plan. Assumptions used in the calculation of these amounts are included in “Note 14 — Stock-Based Compensation and Other Benefit Plans” to the Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K. Awards were not vested as of December 31, 2023, and vest on the one-year anniversary of the grant, or on the date of the annual meeting of shareholders following the grant, whichever is earlier. For 2023, Mr. Nierenberg elected to receive his cash compensation in common stock of the Company, which resulted in him receiving only one payment in cash and the reminder of his fees in common stock. (3)As of December 31, 2023, Mr. Farber had 22,831 stock awards outstanding, Mr. Fucci had 22,831 stock awards outstanding, Mr. Wilks had no stock awards outstanding, Ms. Mayr had 22,831 stock awards outstanding, and Mr. Nierenberg had 42,380 stock awards outstanding.

  19. Named Executive Officer 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 metrics to align awards with short-term goals. | | Long-Term Incentives | Correlates pay with shareholder value and aligns executives with value increases; promotes retention in the competitive energy market. | Gives incentive for performance over the long term with a combination of time vesting and vesting tied to performance conditions. |

  20. 2023 Short-Term Incentive Program

    2023 Short-Term Incentive Program After considering the Company’s performance during 2022, the Compensation Committee did not award any payments with respect to the 2022 short-term incentive program. In lieu of an award under the 2022 short-term incentive program, and in order to focus the Company’s resources on retaining and incentivizing certain named executive officers and other key employees, the Compensation Committee awarded a 2023 retention bonus that was paid in March 2023. The 2023 retention bonus required continuous service throughout 2023 and was subject to pro-rata repayment by the named executive officer if the service condition was not met. Dr. Ezell and Mr. Snoke were paid a retention bonus of $425,000 and $157,500, respectively, for continuous service in 2023. Historically the short-term incentive program has included financial and individual performance metrics intended to reward named executive officers for either Company or individual performance as determined by the Compensation Committee. For 2023, Dr. Ezell and Mr. Clement each had an annual target bonus equal to 100% of base salary. In connection with his promotion in August 2023, Mr. Snoke’s annual target bonus increased from 50% of base salary to 60%. For 2023, the Compensation Committee established the following quantitative performance metrics used as the primary determination of short-term incentive awards for Participating NEOs:

  21. 2023 Short-Term Incentive Program

    | | Weighting | | Performance of related party revenue | 25% | | Performance of non-related party revenue | 25% | | Achievement of positive annual adjusted EBITDA | 50% |

  22. 2023 Short-Term Incentive Program

    During 2023, related party revenue increased by 49% and revenue from non-related parties increased by 22%, each as compared to 2022. In addition, during 2023 the Company achieved the first annual positive adjusted EBITDA since 2017 representing a $27.7 million improvement from 2022. Adjusted EBITDA is a non-GAAP measure. For a description of how we calculate adjusted EBITDA and a reconciliation of adjusted EBITDA to net income, the most comparable GAAP measure, please see our March 12, 2024 press release filed as Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on March 12, 2024. In addition to the quantitative performance metrics above, the Compensation Committee also considered the following 2023 accomplishments in evaluating awards under the 2023 short-term incentive program: •Revenues, gross profit and net income increased by $52 million, $31 million and $67 million, respectively, from the year ended December 31, 2022; •Material weakness and going concern issues identified in connection with the 2022 audit were resolved; and •Safety first operational focus resulted in no injuries or lost time accidents. After considering the significant operational and financial accomplishments made during 2023 as outlined above, as well as results with respect to the three quantitative performance metrics, the Compensation Committee determined that the Company achieved a bonus award equal to 80% of the Participating NEOs’ target bonus. As a result, the Compensation Committee approved the following awards to Participating NEOs under the 2023 short-term incentive program:

  23. 2023 Short-Term Incentive Program

    | Name | Target Bonus | Actual Bonus | % of Target Bonus | | Dr. Ryan G. Ezell | $550,000 | $440,000 | 80% | | J. Bond Clement | $400,000 | $320,000 | 80% | | Nathan Snoke | $149,375 | $119,500 | 80% |

  24. 2023 Long-Term Incentive Program

    2023 Long-Term Incentive Program The long-term incentive program has historically included equity awards focused on incentivizing long-term performance and aligning executive compensation with shareholder returns. To provide long-term incentives to the Participating NEOs to build upon the success achieved during 2023, the Compensation Committee approved grants of time vested restricted stock units and performance-based stock options in connection with the 2023 long term incentive program. Performance based stock options are subject to a vesting condition tied to reaching long-term cumulative adjusted EBITDA thresholds. If the Company does not reach the adjusted EBITDA threshold over the measurement period, no stock options will vest. Time based restricted stock units vest evenly over three years from date of grant. The allocation of award values related to grants made to Participating NEOs under the 2023 long-term incentive program were as follows:

  25. 2023 Long-Term Incentive Program

    | Name | Time-Vested Awards | Performance-Based Awards | | Dr. Ryan G. Ezell | 25% | 75% | | J. Bond Clement | 25% | 75% | | Nathan Snoke | 100% | - |

  26. 2023 Long-Term Incentive Program

    During 2023, Dr. Ezell and Mr. Clement were granted 62,881 and 45,732 performance-based options, respectively. Additionally, Dr. Ezell and Mr. Clement were granted 13,974 and 10,163 time vested restricted stock units valued at $45,835 and $33,335, respectively, at the date of grant. Mr. Snoke was granted 36,585 time vested restricted stock awards valued at $120,000 at the date of grant. Mr. Snoke’s restricted stock awards were forfeited in connection with his departure from the Company in March 2024.

  27. Independent Compensation Consultant

    Independent Compensation Consultant The Compensation Committee periodically utilizes the services of compensation consultants related to matters of executive compensation. In 2023, Pay Governance provided market pay analyses and initial annual and long-term incentive design concepts to the Compensation Committee. Pay Governance also provided guidance on matters related to the CEO’s contract and compensation. In compliance with SEC rules, the Compensation Committee has assessed the independence of Pay Governance and concluded that no conflict of interest exists that would prevent Pay Governance from independently representing the Compensation Committee. Pay Governance periodically provides certain administrative services, the value of which was less than $120,000 during 2023, which services, if any, are approved by the Compensation Committee.

  28. Employment Agreements; Terminations and Change-in Control Arrangements

    Employment Agreements; Terminations and Change-in Control Arrangements A brief summary of the employment agreements of our 2023 named executive officers is as follows:

  29. Dr. Ryan G. Ezell - Employment Agreement

    Dr. Ryan G. Ezell - Employment Agreement In connection with his appointment to Chief Executive Officer, Dr. Ezell entered into an employment agreement with the Company on June 7, 2023. Under the terms of the agreement, Dr. Ezell is paid a base salary of $550,000 annually and is eligible for an annual bonus with a target amount of 100% of base salary. In the event that Dr. Ezell’s employment is terminated without “cause” or for “good reason,” Dr. Ezell, upon execution and delivery of a suitable release agreement, will be eligible to receive severance benefits equal to 18 months of Dr. Ezell’s base salary (payable over 18 months) plus a pro-rata portion of Dr. Ezell’s annual bonus for the year of termination (determined and paid in the normal bonus cycle), and reimbursement of the difference between the amount Dr. Ezell pays for COBRA premiums and the amount similarly situated employees of the Company would pay for such coverage for up to 18 months. In addition, if such termination occurs within 18 months of a “change of control,” all unvested equity awards shall become fully vested immediately prior to such termination. Dr. Ezell’s unvested equity awards will continue to vest if he is terminated without “cause” or for “good reason.” For a full description of Dr. Ezell’s employment agreement, please see the Company’s Current Report on Form 8-K filed with the SEC on June 8, 2023.

  30. J. Bond Clement - Employment Agreement

    J. Bond Clement - Employment Agreement Mr. Clement entered into an employment agreement with the Company on December 19, 2022. Under the terms of the agreement, Mr. Clement is paid a base salary of $400,000 annually and is eligible for an annual bonus with a target amount of 100% of base salary. Mr. Clement will be eligible to receive severance equal to Mr. Clement’s base salary (payable over 12 months) plus a pro-rata portion of Mr. Clement’s annual bonus for the year of termination (determined and paid in the normal bonus cycle), and reimbursement of the difference between the amount Mr. Clement pays for COBRA premiums and the amount similarly situated employees of the Company would pay for such coverage for up to 12 months. In addition, if such termination occurs within 18 months of a “change of control,” all unvested equity awards shall become fully vested immediately prior to such termination. For a full description of Mr. Clement’s employment agreement, please see the Company’s Current Report on Form 8-K filed with the SEC on December 19, 2022.

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

    John W. Gibson, Jr. - Employment Agreement and Separation Agreement and General Release Mr. Gibson entered into an employment agreement with the Company on December 21, 2019. Under the terms of the agreement, Mr. Gibson was paid a base salary of $500,000 annually (which amount was subsequently increased by the Board on March 8, 2022 to $600,000 annually) and was eligible for an annual bonus with a target amount of 100% of base salary. In connection with the entry into the agreement, Mr. Gibson was granted (i) 570,000 restricted stock units that were scheduled to vest ratably in five installments beginning on December 22, 2020 and on each of the next four anniversaries thereof, (ii) options to purchase up to 1,000,000 shares of the Company’s common stock that were scheduled to vest ratably over five years and (iii) options to purchase up to 2,000,000 shares of the Company’s common stock that were scheduled to vest based on the Company’s common stock achieving the following prices for a 20-consecutive trading day period through December 31, 2024: 33% of the options would vest at a price of $3.60, an additional 33% of the options would vest at a price of $5.40, and all of the options would vest at a price of $7.20. The exercise price of the options was $1.93, the closing price of the Company’s common stock on December 21, 2019. In addition, Mr. Gibson had the right, during the 90-day period following December 21, 2019, to purchase up to the lesser of: (i) 0.99% of the number of shares of the Company’s common stock outstanding immediately before such issuance, and (ii) $500,000 of the Company’s common stock, in each case at the then-current market price of the Company’s common stock on the date or dates of purchase. The term of Mr. Gibson’s employment agreement was scheduled to end on December 31, 2024. In the event that Mr. Gibson’s agreement was terminated for any reason, the Company was required to pay Mr. Gibson the amount of salary earned but unpaid through the date of termination, together with any other earned but unpaid compensation. In addition, if Mr. Gibson’s employment was terminated as a result of his death or disability, without “cause” or for “good reason,” upon execution and delivery of a suitable release agreement, all of Mr. Gibson’s time-based equity awards would vest and all performance-based equity awards would vest to the extent the performance goals have been reached, and in the case of termination without “cause” or for “good reason,” Mr. Gibson would have an exercise period of the earlier of approximately 36 months and the 10th anniversary of grant for any vested stock options. Further, if Mr. Gibson’s employment was terminated without “cause” or for “good reason” within 24 months following a change of control, subject to execution and delivery of a suitable release agreement, Mr. Gibson would be entitled to receive severance equal to his base salary plus target annual bonus, and all unvested equity awards would vest other than performance-based equity awards, which would vest only if the performance criteria have been met. In connection with Mr. Gibson’s separation from the Company, effective January 19, 2023, Mr. Gibson entered into a separation agreement and general release with the Company, pursuant to which Mr. Gibson received $1,500,000 as consideration to settle any disputes between the parties. Under the agreement, the $1,500,000 settlement payment was made in four installments, with the first installment of $600,000 paid on January 27, 2023 and the remaining three equal installments paid on the successive monthly anniversary dates of the first installment. As part of the settlement, Mr. Gibson agreed to forfeit all of his outstanding options and unvested restricted stock units, and to a six-month lock up period with respect to 250,000 shares of the Company’s common stock owned by Mr. Gibson, which prohibited Mr. Gibson from selling those shares during the lock up period. Consistent with his employment agreement, the Company will reimburse Mr. Gibson for his COBRA premiums paid and provide access to the Company’s Group Health Plan through December 31, 2024. For full descriptions of Mr. Gibson’s employment agreement and separation agreement and general release, please see the Company’s Current Reports on Form 8-K filed with the SEC on December 27, 2019 and January 19, 2023, respectively.

  32. Nathan Snoke – Employment Agreement

    Nathan Snoke – Employment Agreement Nathan Snoke entered into an employment agreement with the Company on August 15, 2023. Under the terms of the agreement, Mr. Snoke was paid a base salary of $300,000 annually and was eligible for an annual bonus with a target amount of 60% of base salary. Mr. Snoke was eligible to receive severance equal to his base salary (payable over 12 months) plus a pro-rata portion of Mr. Snoke’s annual bonus for the year of termination (determined and paid in the normal bonus cycle), and reimbursement of the difference between the amount Mr. Snoke pays for COBRA premiums and the amount similarly situated employees of the Company would pay for such coverage for up to 12 months. In addition, if such termination occurred due to a “change of control,” all unvested equity awards would have become fully vested immediately prior to such termination. Mr. Snoke departed the Company on March 29, 2024.

  33. Tax Gross-Ups on Severance

    Tax Gross-Ups on Severance There are no tax gross-ups on any payments to executives, including severance payments, except we provided a one-time de minimis tax gross up to Mr. Clement in connection with the reimbursement of his relocation expenses, which in the aggregate were less than half the amount Mr. Clement was entitled to receive under his employment agreement.

  34. Summary Compensation Table

    Summary Compensation Table The following table provides summary information regarding the total compensation awarded to, earned by, or paid to each of the named executive officers for services rendered to us for the years ended December 31, 2023 and 2022:

  35. Summary Compensation Table

    | Name and Principal Position | Year | Salary(1) | Bonus(2) | Stock | Option | All Other | Total | | | | | | Awards(3) | Awards(4) | Compensation(5) | | | Dr. Ryan G. Ezell – Chief Executive Officer (6) | 2023 | $494,712 | $865,000 | $45,835 | $161,604 | $8,194 | $1,575,345 | | | 2022 | $410,288 | $— | $150,000 | $— | $— | $560,288 | | J. Bond Clement - Chief Financial Officer | 2023 | $400,000 | $320,000 | $33,335 | $277,450 | $50,627 | $1,081,412 | | Harsha V. Agadi (7) | 2023 | $313,500 | $— | $365,500 | $— | $4,050 | $683,050 | | John W. Gibson, Jr. – Former Chairman, President and Chief Executive Officer (8) | 2023 | $48,283 | $— | $— | $— | $1,520,270 | $1,568,553 | | | 2022 | $580,385 | $— | $— | $— | $16,438 | $596,823 | | Nathan Snoke Former SVP – Global Business Lines (9) | 2023 | $271,269 | $277,000 | $120,000 | $— | $5,370 | $673,639 |

  36. Summary Compensation Table

    (1)Amounts reflected in this column include total annual salary paid during the applicable fiscal year. (2)The amounts reported in this column represent discretionary bonuses earned for fiscal 2023, irrespective of the year in which the discretionary bonus was paid. In addition, Dr. Ezell received a $425,000 retention bonus for his service during 2023 and Mr. Snoke received a $157,500 retention bonus for his service during 2023, which are included in the amounts reported in this column. The Company did not pay any discretionary cash bonuses in connection with service for fiscal 2022. For more information about our executive officers' discretionary bonuses and our Short-Term Incentive Plan, see the section entitled "—Compensation Overview Strategy—2023 Short-Term Incentive Program" above. (3)The amounts reported in this column reflect the aggregate grant date fair value of restricted stock and restricted unit awards granted during the applicable year, if any, computed in accordance with FASB ASC Topic 718, excluding estimated forfeitures. See Note 14, “Stock-Based Compensation and Other Benefit Plans,” to the Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K for additional detail regarding assumptions used to calculate these amounts. (4)The amounts reported in this column reflect the aggregate grant date fair value of option awards granted during the applicable year, if any, computed in accordance with FASB ASC Topic 718, excluding estimated forfeitures. See Note 14, “Stock-Based Compensation and Other Benefit Plans,” to the Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” in the Company’s 2023 Form 10-K for additional detail regarding assumptions used to calculate these amounts. (5) In fiscal 2023, “All Other Compensation” for Messrs. Ezell, Agadi and Snoke consisted of 401(k) matching contribution costs and group term life insurance costs, for Mr. Clement consisted of 401(k) matching contribution costs, group term life insurance costs, parking expense, $25,282 in apartment expense reimbursement and $16,518 in relocation expense reimbursement (including a tax gross up of $4,022), and for Mr. Gibson consisted of 401(k) matching contribution costs, group term life insurance costs, apartment expense reimbursement and $1,517,714 in severance payments. (6)Dr. Ezell was the Company's President and Chief Operating Officer during 2022 and through June 5, 2023. Effective June 6, 2023, Dr. Ezell was appointed Chief Executive Officer and in connection with his promotion, his base salary increased from $425,000 to $550,000. (7)Information presented in this table represents Mr. Agadi’s total compensation during 2023 in both his capacities as a non-executive director and as our interim Chief Executive Officer. Mr. Agadi served as our interim Chief Executive Officer from January 20, 2023 to June 5, 2023 and was paid $50,000 per month with respect to his service as our interim Chief Executive Officer, receiving $252,500 in total salary for his service as our interim Chief Executive Officer in 2023. Mr. Agadi also served as a non-executive director on our Board during 2023 and received $61,000 in compensation for his Board service while he was not acting as our interim Chief Executive Officer. Mr. Agadi received $150,000 in aggregate grant date fair value of restricted stock awards during 2023 for his service as our interim Chief Executive Officer. Mr. Agadi received $215,500 in aggregate grant date fair value of restricted stock awards for his service as a non-executive member of our Board during 2023. As of December 31, 2023, Mr. Agadi had 47,831 stock awards outstanding. (8)Mr. Gibson’s employment with the Company ended on January 19, 2023. The “All Other Compensation" amount for 2023 includes $1,517,714 in severance payments in connection with Mr. Gibson’s departure from the Company. In addition, in connection with his departure from the Company, Mr. Gibson agreed to forfeit all of his outstanding options and unvested restricted stock units. See “– Employment Agreements; Terminations and Change in Control Arrangements” above. (9)On August 15, 2023, Mr. Snoke was promoted from Vice President – Energy Chemistry to Senior Vice President – Global Business Lines and in connection with his promotion, his base salary increased from $255,000 to $300,000. Mr. Snoke departed the Company on March 29, 2024 and in connection with his departure he forfeited his 2023 stock awards.

  37. Outstanding Equity Awards

    Outstanding Equity Awards The following table provides information relating to outstanding equity-based awards held by each named executive officer as of December 31, 2023:

  38. Outstanding Equity Awards

    | | Option Awards | | | | | | Stock Awards | | | | | Name | Year of Grant | Number of underlying unexercised options exercisable | Number of securities underlying unexercised options unexercisable | Equity incentive plan awards: Number of securities underlying unexercised unearned options | Option Exercise Price | Option Expiration Date | Number of shares or units of stock that have not vested | Market value of shares of units of stock that have not vested (1) | 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 | | Dr. Ryan G. Ezell | 2023(2) | — | — | 62,881 | $3.28 | 12/5/2033 | — | — | — | — | | | 2023(3) | — | — | — | — | — | 13,974 | $54,778 | — | — | | | 2022(4) | — | — | — | — | — | 9,634 | $37,765 | — | — | | | 2021(5) | — | — | 24,306 | $8.64 | 4/19/2031 | — | — | — | — | | | 2021(6) | — | — | 24,306 | $8.64 | 4/19/2031 | — | — | — | — | | | 2021(7) | — | — | — | — | — | 16,204 | $63,519 | — | — | | J. Bond Clement | 2023(2) | — | — | 45,732 | $3.28 | 12/5/2033 | — | — | — | — | | | 2023(3) | — | — | — | — | — | 10,163 | $39,838 | — | — | | | 2023(8) | — | — | 61,984 | $3.72 | 6/7/2033 | — | — | — | — | | | 2022(9) | — | — | — | — | — | 8,334 | $32,669 | — | — | | | 2022(10) | — | — | — | — | — | 33,059 | $129,591 | — | — | | Harsha V. Agadi | 2023(12) | — | — | — | — | — | 22,831 | $89,498 | — | — | | | 2023(13) | — | — | — | — | — | 25,000 | $98,000 | — | — | | Nathan Snoke | 2023(11) | — | — | — | — | — | 36,585 | $143,413 | — | — | | | 2021(11) | — | — | — | — | — | 3,612 | $14,159 | — | — |

  39. Outstanding Equity Awards

    (1)The market value is based upon the applicable number of shares shown in the table multiplied by $3.92, the closing market price of our stock on December 29, 2023. (2)Seventy five percent (75%) of the shares subject to this option will vest if the Company achieves a specified performance target during the performance period (which is January 1, 2023 through December 31, 2026) and one hundred percent (100%) of the shares subject to the option will vest if the Company achieves a specified performance target during the performance period. (3)Vests ratably over a three-year period on each anniversary of the grant date of December 5, 2023. (4)Vests ratably over a three-year period on each anniversary of the grant date of March 8, 2022. (5)Twenty-five percent (25%) of the shares subject to this option will vest if the 90-day volume weighted average price (the “90 day VWAP”) reaches $18 per share during the performance period (which is April 19, 2021 through December 31, 2024), twenty-five percent (25%) of the shares subject to this option will vest if the 90 VWAP reaches $24 per share during the performance period, twenty-five percent (25%) of the shares subject to this option will vest if the 90 VWAP reaches $30 per share during the performance period, and twenty-five percent (25%) of the shares subject to this option will vest if the 90 VWAP reaches $42 per share during the performance period. (6)Vests based on percentage of revenue from new products developed over a three-year period. Vesting is ratable at revenue percentages of 15%, 20% and 25%, and was determined on December 31, 2023. (7)Vests ratably over a four-year period on each anniversary of the grant date of April 19, 2021. (8)Vests if the Company’s share price equals or exceeds $18 per share for thirty consecutive trading days at any point during the performance period (which is June 7, 2023 through June 7, 2033). (9)Vests ratably over a two-year period on each anniversary of the grant date of December 19, 2022. (10)Vests ratably over a five-year period on each anniversary of the grant date of December 19, 2022. (11)Award forfeited on March 29, 2024 in connection with Mr. Snoke’s departure from the Company. (12)Vests on the one-year anniversary of the July 1, 2023 grant date. (13)Vests on the one-year anniversary of the July 19, 2023 grant date.

  40. PAY VERSUS PERFORMANCE (PVP)

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

  41. PAY VERSUS PERFORMANCE (PVP)

    | Fiscal Year | Summary Compensation Table Total for Mr. Gibson | Summary Compensation Table Total for Mr. Agadi | Summary Compensation Table Total for Dr. Ezell | Compensation Actually Paid to Mr. Gibson | Compensation Actually Paid to Mr. Agadi | Compensation Actually Paid to Dr. Ezell | Average Summary Compensation Table Total for non-PEO NEOs(1) | Average Compensation Actually Paid to non-PEO NEOs(2) | Value of Initial Fixed $100 Investment Based On: Total Shareholder Return | Net Income (Loss) ($ millions) | | (a) | (b) | (b) | (b) | (c) | (c) | (c) | (d) | (e) | (f) | (g) | | 2023 | $1,568,553 | $683,050 | $1,575,345 | $305,193 | $531,423 | $1,539,071 | $877,526 | $836,275 | $30.96 | $24.7 | | 2022 | $596,823 | n/a | n/a | $381,403 | n/a | n/a | $433,781 | $246,334 | $53.08 | $(42.3) | | 2021 | $515,029 | n/a | n/a | $(2,512,464) | n/a | n/a | $873,540 | $299,965 | $53.55 | $(30.5) |

  42. PAY VERSUS PERFORMANCE (PVP)

    (1)Mr. Gibson served as principal executive officer (PEO) for 2021, 2022, and a portion of 2023. Mr. Agadi served as interim PEO for a portion of 2023 and Dr. Ezell served as PEO for the remainder of 2023. Our non-PEO named executive officers (NEOs) included Messrs. Clement and Snoke for 2023, Messrs. Ezell, Silas and Michael E. Borton for 2022, and Messrs. Ezell and Borton for 2021. (2)The following amounts were deducted from / added to Summary Compensation Table (SCT) total compensation in accordance with the SEC-mandated adjustments to calculate Compensation Actually Paid (CAP) to our principal executive officer (PEO) and average CAP to our non-PEO named executive officers. The fair value of equity awards was determined using methodologies and assumptions developed in a manner substantively consistent with those used to determine the grant date fair value of such awards.