DEF 14A of Natural Gas Services Group Inc, Apr 29, 2024

DEF 14A of Natural Gas Services Group Inc

Filed Apr 29, 2024 · FY20230001084991-24-000023

Open on EDGAR

  1. PROPOSAL 1 - ELECTION OF DIRECTORS

    PROPOSAL 1 - ELECTION OF DIRECTORS Our Board of Directors is divided into three classes, each class to be as nearly equal in number as possible. At each Annual Meeting of Shareholders, members of one of the classes, on a rotating basis, are elected for a three-year term. We currently have six Directors serving on our Board. Our Board may fill vacancies if a qualified candidate is vetted. The following table sets forth, by class, the members of our Board of Directors as of the date of this Proxy Statement:

  2. PROPOSAL 1 - ELECTION OF DIRECTORS

    | Terms Expiring at the 2024 Annual Meeting | Terms Expiring at the 2025 Annual Meeting | Terms Expiring at the 2026 Annual Meeting | | David L. Bradshaw | Donald J. Tringali | Justin C. Jacobs | | Nigel J. Jenvey | Georganne Hodges* | Stephen C. Taylor | | Georganne Hodges* | | |

  3. PROPOSAL 1 - ELECTION OF DIRECTORS

    *On October 26, 2023, our Board of directors was expanded and Ms. Hodges was appointed to the Board to fill the newly created vacancy. Although Ms. Hodges was placed in the class of director whose term expires at the 2025 annual meeting in order to comply with Colorado law in connection with staggered Boards, our Bylaws require that directors who are appointed by the Board to fill a vacancy must be submitted for election at the next annual shareholders’ meeting. Shareholders will be electing three Directors at the Annual Meeting. The Board is recommending the re-election of David L. Bradshaw and Nigel J. Jenvey to the Board of Directors to serve a three-year term expiring at the Annual Meeting of Shareholders in 2027. The Board is also recommending the election of Georganne Hodges to serve a one-year term expiring at the Annual Meeting of shareholders in 2025. The person named in our form of proxy will vote the shares represented by such proxy for the election of the nominees for Director named above unless other instructions are shown on the Proxy Card. If, at the time of the meeting, the nominee becomes unavailable for any reason, which is not expected, the persons entitled to vote the proxy will vote for such substitute nominee, if any, as they determine in their sole discretion, or we may reduce the size of the Board. Biographical information and qualifications for the persons nominated as a Director, and for each person whose term of office as a Director will continue after the 2024 Annual Meeting, is set forth below.

  4. Nominees for Director

    Nominees for Director

  5. David L. Bradshaw

    David L. Bradshaw David L. Bradshaw, 69, joined our board in December of 2011. On May 17, 2022, Mr. Bradshaw was appointed as the Lead Independent Director and served in that role until May 2023. Since 2005, Mr. Bradshaw has acted as a consultant in the oil and gas exploration and production sector and has overseen his investments in this area. From August 2007 through November 2009, Mr. Bradshaw served as a Director and Audit Committee Chairman for Triangle Petroleum, a publicly traded company listed on the American Stock Exchange. From November 2007 through November 2008, Mr. Bradshaw served as a Director for Comet Ridge Limited, an Australian company listed on the Australian Securities Exchange. From 1986 to 2005, Mr. Bradshaw worked for Tipperary Corporation, a U.S. public company listed on the American Stock Exchange. During his tenure at Tipperary, the company was involved in oil and gas exploration and production, and natural gas processing and transportation. He held the positions of Chief Executive Officer from 1996 to 2005, Chairman of the Board from 1997 to 2005, Chief Financial Officer from 1990 to 1996 and Chief Operating Officer from 1993 to 1996. From 1999 to 2005, Mr. Bradshaw also served as Chief Executive Officer and Chairman of Tipperary Oil & Gas (Australia) Pty Ltd, a subsidiary of Tipperary, which explored for and produced natural gas in Queensland, Australia. From 1983 to 1986, Mr. Bradshaw was an owner and officer of Bradcorp, Inc., a private exploration and production company. Prior to this, Mr. Bradshaw spent six years in public accounting serving predominantly oil and gas clients. Mr. Bradshaw graduated from Texas A&M University with a B.B.A. in Accounting in 1976 and an M.B.A. in 1977, and is also a Certified Public Accountant. Mr. Bradshaw's educational and professional training and achievements as a Certified Public Accountant and MBA, along with his past experience as both a Chief Financial Officer and Chief Executive Officer of a public company involved in the natural resources industry, provides us with considerable accounting and corporate finance skills. In addition, Mr. Bradshaw's career has spanned over forty years in the oil and gas industry and as a public accountant. His executive management positions in both private and public companies bring us significant leadership, planning and management skills and background.

  6. Nigel J. Jenvey

    Nigel J. Jenvey Nigel. J. Jenvey, 51, was appointed as a Director of Natural Gas Services Group in April 2021. Mr. Jenvey is currently Executive - Strategy & Growth Initiatives at Baker Hughes and serves as a board member for its interests in a hydrogen production technology company called Ekona Power and the Long Duration Energy Storage Council, and previously held the position of Global Head of Carbon Management at their consultancy Gaffney, Cline & Associates. Prior to joining Baker Hughes, Mr. Jenvey spent eight years at British Petroleum as the company’s head of Carbon, Capture, Use and Storage (CCUS) and carbon solutions manager. He also led similar efforts at Maersk Oil as Technical Director of carbon & climate, and served in various managerial and project leadership roles at Royal Dutch Shell, including Shell’s global Enhanced Oil Recovery (EOR) Center of Expertise and European operating business. He began his career as a petroleum engineer at Texaco in 1995 supervising offshore oil and gas production operations in the North Sea. Mr. Jenvey is an industry leader in Carbon Management and expert in CCUS having been involved in leading projects across the world since 2004. These have included providing study leadership to the National Petroleum Council, industry capability development in the Society of Petroleum Engineers, and providing advice to various major energy companies in the US and Canada. Mr. Jenvey is the Editor of the annual Decarbonization feature in the SPE Journal of Petroleum Technology and has been a peer reviewer to the International Energy Agency. Mr. Jenvey has also provided testimony to Congress on CO2 Capture technologies. Mr. Jenvey holds a Bachelor degree (Hons.) in Mining Engineering from the University of Leeds and both a Diploma and a Master of Science degree in Petroleum Engineering from Imperial College in London. Mr. Jenvey brings significant carbon management, sustainability and Environmental, Social and Governance (“ESG”) experience to our Board. His experience of working with companies, investors, governments, academia, and non-governmental organizations provides us a wealth of knowledge and insight regarding the challenges and solutions that exist for the oil and gas industry, and adds to our Board’s capabilities to successfully guide the Company through these matters that are impacting our business and industry.

  7. Georganne Hodges

    Georganne Hodges Georganne Hodges, age 58, was appointed as a Director of Natural Gas Services Group in October 2023. Ms. Hodges has more than 30 years of wholesale and retail energy experience, including national public accounting firm experience and extensive experience across the energy industry value chain. She was most recently Executive Vice President of Supply, Trading & Logistics at Motiva Enterprises, LLC, until January 2023. Prior to joining Motiva, she held the position of CFO with Spark Energy, where she successfully completed the company’s initial public offering as well as several acquisitions. She also held the position of CFO with Direct Energy, as well as other senior financial roles since beginning her career with Arthur Andersen in 1987. Since March 2023, she has served as a member of the board of directors and Audit Committee of PBF Energy (NYSE:PBF). Since 2022, she has served as a member of the board of directors of BWC Terminals LLC, where she serves on the Audit Committee and the Nominating and Corporate Governance Committee. Beginning in May 2021, she served as a member of the board of directors of TransAlta Renewables Inc. (formerly (TSX: RNW)) where she was the Chair of the Audit Committee until her resignation from the Board in early October 2023 in connection with an acquisition of that company. Ms. Hodges holds a B.B.A. in Accounting and Finance from the Hankamer School of Business at Baylor University. Ms. Hodges brings significant public company accounting and disclosure experience, along with public company Board and related committee experience to the Company. In addition, her significant experience as a CFO and other senior financial roles in the energy industry adds significant value to our Board and management.

  8. Required Vote for This Proposal

    Required Vote for This Proposal The election of each Director nominee requires the affirmative vote of a majority of the votes cast at the Annual Meeting with respect to the nominee. The number of shares voted “for” each Director nominee must exceed the number of votes cast “against” that nominee for the nominee to be elected as a Director to serve until his or her term expires or until his or her successor has been duly elected and qualified. Abstentions and broker non-votes are not counted as votes cast in the election of directors and therefore will not have any effect on the outcome of the vote. Pursuant to the resignation policy adopted by our Board and further described in our Corporate Governance Guidelines, any nominee for Director who is not elected shall promptly tender his or her resignation to our Board following certification of the shareholder vote. The Nominating and Corporate Governance Committee (“Nominating Committee”) will consider the resignation offer and recommend to our Board the action to be taken with respect to the offered resignation. In determining its recommendation, the Nominating Committee shall consider all factors it deems relevant. Our Board will act on the Nominating Committee's recommendation within 90 days following certification of the shareholder vote and will publicly disclose its decision with respect to the Director's resignation offer (and the reasons for rejecting the resignation offer if applicable). Any Director who tenders his or her resignation pursuant to the resignation policy shall not participate in the Nominating Committee's recommendation or Board action regarding whether to accept the resignation offer. If the number of members of the Nominating Committee are required to tender their resignations pursuant to the resignation policy in the same election so that a quorum of the committee cannot be achieved, then the other independent Directors of our Board of Directors who are not required to tender a resignation pursuant to the resignation policy shall consider the resignation offers and make a recommendation to our Board. To the extent that one or more Directors' resignations are accepted, our Board, in its discretion, may determine either to fill such vacancy or vacancies or to reduce the size of the Board within the authorized range.

  9. Continuing Directors Whose Term Expires in 2025

    Continuing Directors Whose Term Expires in 2025

  10. Donald J. Tringali

    Donald J. Tringali Donald J. Tringali, 66, serves as the Chief Executive Officer of Augusta Advisory Group, a boutique financial and business consulting firm providing a full range of executive, operations and corporate advisory services to companies, a position he has held since founding the firm in 2001. Prior to founding Augusta Advisory Group, Mr. Tringali served as the Executive Vice President of Telemundo Group, Inc., a major media company serving the Hispanic population in the United States, from 1996 to 2001. Mr. Tringali has extensive experience serving on the boards of directors of public and private companies, including service as chairman, as well as on the audit, compensation, and nominating and governance committees of those companies. He currently serves on the boards of directors of Wavedancer, Inc., a Nasdaq-traded provider of information technology consulting and software development services for the government and the private sector, Swiss Water Decaffeinated Coffee, Inc., a green coffee decaffinator traded on the Toronto Stock Exchange, and POSaBIT Systems Corporation, a point-of-sale payments company focusing on the cannabis industry that is traded on the Canadian Stock Exchange. Mr. Tringali served as a director, and later as the Chairman of the Board, of National Technical Systems, Inc., a Nasdaq-traded international testing and engineering firm, from 1999 through its sale to a private equity firm in 2013. He is the former Executive Chairman of the Board of Cartesian, Inc., a Nasdaq-traded international telecommunications consulting company that was sold to a private equity group in 2018. Mr. Tringali began his career as a corporate attorney in Los Angeles, where he represented public and private companies in general business matters and mergers and acquisitions transactions. Mr. Tringali holds a Bachelor of Arts in Economics from UCLA and a Juris Doctor from Harvard Law School. Mr. Tringali’s extensive board experience, including as a member or chairman of audit, compensation, and nominating and governance committees, combined with his experience as a public company executive, will enable him to contribute valuable insights into effective governance and oversight systems at the Company that will improve value for all shareholders. Mr. Tringali was appointed to the Board pursuant to a Cooperation Agreement entered into by and among the Company and entities affiliated with Mill Road Capital Management LLC. Georganne Hodges — See above for Ms. Hodges' biographical information and qualifications.

  11. Continuing Directors Whose Term Expires in 2026

    Continuing Directors Whose Term Expires in 2026

  12. Justin C. Jacobs

    Justin C. Jacobs Justin C. Jacobs, 49, currently serves as Chief Executive Officer of the Company, effective as of February 12, 2024. Prior to this time, Mr. Jacobs was a Managing Director and a member of the Management Committee at Mill Road Capital Management LLC, where he had worked since 2005. Mill Road Capital Management is an investment firm focused on investments in small, publicly traded companies. The firm manages multiple funds with approximately $1.0 billion of assets under management. Prior to Mr. Jacob's appointment as our CEO, he resigned all of his positions with Mill Road Capital and its affiliated entities. From 1999 to 2004, Mr. Jacobs was employed at LiveWire Capital, an investment and management group backed primarily by The Blackstone Group and Thomas Lee Partners that focused on operationally intensive buyouts of middle market companies. While employed at LiveWire, he held various operational positions in numerous portfolio companies, including interim Chief Operating Officer, in addition to investment responsibilities. Before joining LiveWire, Mr. Jacobs was an investment professional in the private equity group at The Blackstone Group from 1996 to 1999. Mr. Jacobs is currently a member of the Board of Directors of Swiss Water Decaffeinated Coffee, Inc. He previously served as a member of the Boards of Directors of several public companies, including Ecology and Environment, Inc., Galaxy Nutritional Foods, Inc., National Technical Systems, Inc., and School Specialty, Inc., as well as numerous private companies, including Lignetics, Inc., Mother’s Market & Kitchen, Inc., PRT Growing Services LTD and Rubios Restaurants, Inc. Mr. Jacobs holds a B.S. from the McIntire School of Commerce at the University of Virginia with concentrations in accounting and finance. Mr. Jacobs provides the Board with more than 25 years of experience as a public investor, private equity investor, operator, and member of Board of Directors; he also has significant experience in turnaround situations. He has expertise in capital markets transactions, mergers and acquisitions, capital allocation and strategic reviews, as well as significant experience with executive compensation, shareholder communications and the development of both short-and long-term strategic growth plans. In addition, he has significant experience in both operational and oversight roles, particularly with small, publicly traded companies, as well as with corporate governance practices and shareholder value creation. Mr. Jacobs was appointed to the Board in 2023 pursuant to a Cooperation Agreement entered into by and among the Company and entities affiliated with Mill Road Capital Management LLC, prior to becoming CEO of the Company in February 2024.

  13. Stephen C. Taylor

    Stephen C. Taylor Stephen C. Taylor, 70, was President and Chief Executive Officer of Natural Gas Services Group from January 2005 until his retirement from the positions effective May 17, 2022. In connection with the resignation of John W. Chisholm, who was appointed as our Interim Chief Executive Officer upon Mr. Taylor’s retirement, on November 11, 2022, the Board appointed Mr. Taylor to serve as Interim President and Chief Executive Officer until such time as a permanent President and Chief Executive Officer could be hired. Mr. Taylor continued in his role as Interim President until October 9, 2023, at which point Brian Tucker joined the Company as President and Chief Operating Officer. Subsequent to that date, Mr. Taylor continued in his role of Interim Chief Executive Officer of the Company until February 12, 2024. Mr. Taylor currently serves as the Chairman of our Board of Directors. Mr. Taylor was elected as a Director of Natural Gas Services Group at the Annual Meeting of Shareholders in June 2005. Effective January 1, 2006, he was appointed Chairman of the Board. Immediately prior to joining Natural Gas Services Group, Mr. Taylor held the position of General Manager − US Operations for Trican Production Services, Inc. from 2002 through 2004. Mr. Taylor joined Halliburton Resource Management in 1976, becoming its Vice President − Operations in 1989. Beginning in 1993, he held multiple senior level management positions with Halliburton Energy Services until 2000 when he was elected Senior Vice President/Chief Operating Officer of Enventure Global Technology, LLC, a joint-venture deep water drilling technology company owned by Halliburton Company and Shell Oil Company. Mr. Taylor elected early retirement from Halliburton Company in 2002 to join Trican Production Services, Inc. where he held the position of General Manager — U.S. Operations until 2024. Mr. Taylor holds a Bachelor of Science degree in Mechanical Engineering from Texas Tech University and a Master of Business Administration degree from the University of Texas at Austin. Mr. Taylor’s senior management experience in the natural resources industry provides the Board and our company with significant insight into our business. Mr. Taylor’s engineering and advanced business training uniquely qualifies him to provide leadership, technical expertise and financial acumen to our Board.

  14. 2023 Say on Pay Vote and Shareholder Outreach

    | What We Heard | How We Responded | | Shareholders prefer that the compensation package for the permanent CEO be in line with market. | While not applicable for 2023 (because there was an interim CEO), the Company notes that the compensation package for Mr. Jacobs in his role as Chief Executive Officer is in line with market. | | Shareholders prefer to see more performance-based compensation. | In 2023, the Company redesigned its LTIP program to conform with market and compensation best practices. Accordingly, in early 2024, the Company granted long-term incentive awards to Mr. Jacobs and Mr. Tucker that are equally split between time-vesting and performance-based vesting awards, with the performance-based vesting awards being subject to relative TSR performance over the subsequent 3-year period |

  15. Compensation Governance Best Practices

    | Market Competitive Long-Term Incentive Practices The Company’s long-term incentive awards for permanent executives incorporate market prevalent best practices like the use of relative and absolute Total Shareholder Return as performance metrics, above median performance to achieve “target” awards, and 3 year vesting timelines. | No Related Party Transactions There are no related party transactions. | | Clawback Policy The Company maintains a compensation recoupment policy, or “clawback policy,” that applies to all NEOs and can result in the clawback of compensation, including performance- and time-based cash and/or equity awards. | No Guaranteed Salary Increases or Bonuses We do not provide for guaranteed salary increases or guaranteed, minimum bonus payouts for executives, unless part of a new hire package for the first year | | Share Ownership Guidelines The Company’s executive officers and Directors are subject to share ownership guidelines that ensure alignment of interests of both shareholders and Company leadership. | | | Engage an Independent Compensation Consultant The Compensation Committee retains an independent external compensation consultant that advises it on executive and board of director compensation matters. | |

  16. The Compensation Committee’s Approach to Executive Compensation Program in 2023

    The Compensation Committee’s Approach to Executive Compensation Program in 2023 Even though the interim CEO and interim CFOs for 2023 did not participate in the Company’s full executive compensation program in 2023, the Committee did have a full program in place for NEOs. The Compensation Peer Group and Its Role Our Compensation Committee examines competitive market compensation data derived from both a public company compensation peer group and relevant compensation survey sources, compiled by Zayla, as one of many factors that assist in making executive compensation decisions. In addition to this market data, the Compensation Committee considers factors such as individual performance, internal equity among executives and retention risk in determining total compensation for our NEOs. The Compensation Committee periodically benchmarks our executive compensation against the compensation paid to executives at a peer group of publicly-traded companies of similar size and industry to the Company (the “Compensation Peer Group”) to obtain a general understanding of current compensation practices. For fiscal 2023, the Compensation Peer Group consisted of the following 13 companies that the Committee’s membership at the time determined provided a useful comparison to the Company based on their similarity in size, revenues, market capitalization, EBITDA, scope of operations and service offerings, among other things. Where applicable and appropriate, the Compensation Committee sought to identify a group of companies that resulted in the Company being aligned near the median of the various financial criteria evaluated. The Compensation Committee believed that in doing so, benchmark data extracted from the Compensation Peer Group would better reflect compensation practices of companies that are similar in size and scope to the Company.

  17. The Compensation Committee’s Approach to Executive Compensation Program in 2023

    | Annual Cash Incentive | To focus executives on achieving critical short-term financial and operating targets and/or strategic initiatives. | Variable annual cash incentive with payout based on Company performance over the fiscal year. | Target award opportunities are set at a competitive level. Award payout is based on the achievement of the underlying performance criteria established at the beginning of the fiscal year. | | Long-Term Incentive | To align a significant portion of executive compensation to the Company's long-term performance and shareholder experience, mainly through the use of relative TSR performance criteria. Multi-year vesting provisions also support our executive talent retention objectives. | For annual awards, grants of performance share units restricted stock units (“RSUs”) conditioned on certain relative TSR achievement on a look-back basis. (Note: beginning 2024, this was changed to combination of time vesting RSUs and performance vesting share units (PSUs) based on 3-year forward looking relative TSR. | PSUs provide recipients rewards contingent upon the successful achievement of pre-determined performance objectives, namely TSR on both absolute and relative terms, using common stock as a currency that is strongly aligned with stockholder interests. RSUs support the Company's leadership retention objectives and reinforce an ownership mentality through enhanced equity stakes. |

  18. The Compensation Committee’s Approach to Executive Compensation Program in 2023

    Annual Incentive Bonus Plan (“IBP”) In 2006, the Committee adopted the IBP which provides guidelines for the calculation of annual non-equity incentive based compensation in the form of cash bonuses to our executives, subject to Committee oversight and modification. The IBP (sometimes referred to as the “Short Term Incentive Plan” or “STIP”) is based on performance metrics that are established early in the fiscal year. The program is designed to focus the NEOs on achieving critical short-term financial and operating targets and/or strategic initiatives that support annual Company objectives and are linked to the maximization of shareholder value. 2023 Target Bonus Opportunities The table below details the target bonus opportunities, shown as a percentage of annual base salary, that were applicable to each NEO in fiscal year 2023. Also illustrated are the threshold and stretch opportunities each NEO could earn subject to performance achievements. If the required minimum performance objectives are achieved, each NEO could earn 75% of the target award amount. If the stretch objectives are achieved, each NEO could earn 125% of their target award amount.

  19. The Compensation Committee’s Approach to Executive Compensation Program in 2023

    | Named Executive Officer | Target Award % of Salary | Threshold Payout % of Salary | Stretch Payout % of Salary | | Stephen C. Taylor | n/a 1 | n/a 1 | n/a 1 | | Brian Tucker | 75% | Per Contract2 | N/A | | James R. Hazlett | 75% | 56% | 94% |

  20. The Compensation Committee’s Approach to Executive Compensation Program in 2023

    (1) Mr. Taylor served in an interim capacity as CEO during 2023 and did not participate in the annual bonus plan. (2) Mr. Tucker was hired October 9, 2023, and pursuant to his Employment Agreement, for his first year received a pro rata portion (based on days worked in 2023) of the target bonus amount. 2023 Performance Goals and Results As noted above, the Compensation Committee approves performance metrics for the annual cash incentive opportunity early in the fiscal year. Shortly following the conclusion of the plan year, the Compensation Committee determines the degree of which the financial and operational goals have been met and approves cash awards based on the level of achievement. For 2023, following the Compensation Committee’s shareholder outreach and engagement program and a comprehensive review, the Compensation Committee approved certain performance metrics and hurdles. The table below details these metrics, their corresponding weight of value in the IBP, and the final performance achievements as approved by the Compensation Committee:

  21. The Compensation Committee’s Approach to Executive Compensation Program in 2023

    | Metric | Weighting | Threshold | Target | Stretch | Actual | Payout Factor (% of target weighting) | | Adjusted EBITDA1 | 35% | $40,546,284 | $42,823,832 | $44,465,878 | $45,779,000 | Stretch | | Total Revenues | 15% | $108,329,450 | $114,031,000 | $119,732,500 | $121,167,000 | Stretch |

  22. The Compensation Committee’s Approach to Executive Compensation Program in 2023

    | Named Executive Officer | 2023 Target % of Salary | 2023 Target $ Value | 2023 Performance - % of Target | 2023 Payout $ Value | | Brian Tucker1 | 75% | $68,219 | 100.0% | $68,219 | | James R. Hazlett 2 | 75% | $195,000 | 114.8% | $223,844 |

  23. The Compensation Committee’s Approach to Executive Compensation Program in 2023

    1.Mr. Tucker was hired on October 9, 2023 and his IBP target and payout amounts for the first year were fixed by his Employment Agreement. The amount paid for 2023 was the target amount prorated for the percentage of time he served with the Company during 2023. 2.Excludes cash retention bonus of $150,000 provided in connection with entry into Retention Agreement on September 19, 2023. The Compensation Committee will continue to review the metrics used in the IBP on an annual basis with an emphasis on both input from our shareholders received through our outreach and engagement program as well as trends ascertained from a review of relevant competitive market practices. The Committee believes this approach allows us to be responsive to the input of our shareholders as well as competitive with practices among our peers and the compression and oilfield services industry. For further information regarding the STIP plan, please see "Short-Term Incentives — Annual Incentive Bonus Plan" on page 34. Long-Term Equity Incentive Program As discussed above, throughout 2023, our CEO and CFO positions were filled on an interim basis and those individuals did not participate in the NEO Long Term Incentive Equity Program. In connection with his agreement to serve as Interim CEO beyond June 30, 2023, Mr. Taylor was granted a one-time RSU award valued at $100,000. President and Chief Operating Officer Brian Tucker was hired October 9, 2023, at which time he was granted 6,361 RSUs, valued at $90,962. Jim Hazlett, our Vice President of Technical Services and Chief Technical Officer, was the only NEO who participated in the LTIP. The terms of Mr. Hazlett's 2023 LTIP were: •Opportunity to receive RSU awards vesting ratable over the three years following the grant date; •Minimum relative TSR achievement must be satisfied for any awards to be granted; and •Target award (150% of base salary for 2023) is earned when relative TSR is at the 60th percentile of the identified peer group. The table below shows the Company's relative Total Shareholder Return performance as compared to its peer group

  24. The Compensation Committee’s Approach to Executive Compensation Program in 2023

    | Company | Ticker | Total Shareholder Return (1) | Relative Percentile Ranking | Relative TSR Rank | NGS Award Level - % of Target | | Geospace Technologies Corporation | GEOS | 207% | 100% | 1 | 200% | | Natural Gas Services Group, Inc. | NGS | 40% | 92% | 2 | 180% | | CSI Compressco LP | CCLP | 27% | 85% | 3 | 160% | | PrimeEnergy Resources Corporation | PNRG | 22% | 77% | 4 | 140% | | Smart Sand, Inc. | SND | 8% | 69% | 5 | 120% | | DMC Global Inc. | BOOM | -3% | 62% | 6 | 100% | | Ranger Energy Services, Inc. | RNGR | -6% | 54% | 7 | 80% | | Dawson Geophysical Company | DWSN | -7% | 46% | 8 | 60% | | Solaris Oilfield Infrastructure, Inc. | SOI | -16% | 38% | 9 | 40% | | Independence Contract Drilling, Inc. | ICD | -25% | 31% | 10 | 25% | | NCS Multistage Holdings, Inc. | NCSM | -29% | 23% | 11 | 0% | | KLX Energy Services Holdings, Inc. | KLXE | -35% | 15% | 12 | 0% | | Mammoth Energy Services, Inc. | TUSK | -48% | 8% | 13 | 0% | | Nine Energy Service, Inc. | NINE | -82% | 0% | 14 | 0% |

  25. Summary Compensation Table

    Summary Compensation Table

  26. Summary Compensation Table

    | Name and Principal Position | Year | Salary (2) | Bonus (3) | Stock Awards(4) | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation (5) | Total | | (a) | (b) | (c)($) | (d)($) | (e)($) | (f) | (g)($) | (h) | (i)($) | (j)($) | | Stephen C. Taylor, Chairman, Interim President & CEO (1) | 2023 | 612,000 | — | 200,000 | — | — | — | 2,773,243 | 3,585,243 | | | 2022(1) | 313,545 | — | 313,545 | — | 313,545 | — | 9,362 | 949,997 | | | 2021 | 612,000 | — | 722,160 | — | 397,800 | — | 17,319 | 1,749,279 | | James R. Hazlett, Vice President, Technical Services | 2023 | 260,000 | 150,000 | 389,996 | — | 223,844 | — | 34,930 | 1,058,770 | | | 2022 | 229,485 | — | 289,816 | — | 144,908 | — | 33,168 | 697,377 | | | 2021 | 225,100 | — | 184,025 | — | 73,158 | — | 30,726 | 513,009 | | Brian Tucker President and Chief Operating Officer | 2023 | 92,055 | — | 90,962 | — | 68,219 | — | 2,417 | 253,653 | | | 2022 | — | — | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — | — | — |

  27. Summary Compensation Table

    (1) Mr. Taylor retired from his position as President and CEO on May 17, 2022 and was later appointed Interim President and CEO by the Board on November 11, 2022 upon the resignation of Mr. Chisholm. In 2022, Mr. Taylor received $229,710 in base salary for his services as our President and CEO and $83,836 for his Interim CEO services. In addition, in 2022, Mr. Taylor received $612,000 in cash and $612,000 in equity consideration pursuant to his negotiated Retirement Agreement. In 2023, Mr. Taylor received $612,000 of salary and $200,000 of equity awards for his services as interim CEO and $2,754,000 in additional cash compensation paid pursuant to his Retirement Agreement which was negotiated and entered into in May, 2022. See "Compensation Agreements with Management" on page 44 for more information regarding Mr. Taylor's Retirement Agreement. (2) The amounts in column (c) include amounts deferred under our Deferred Compensation Plan and 401(k) Plan. The Company has not made any contributions to the Deferred Compensation Plan. (3) The amounts reflected in column (d) reflect discretionary bonus payments not covered under our Annual Incentive Bonus Plan. The amount shown for Mr. Hazlett in 2023 reflects a retention bonus paid to Mr. Hazlett after the conclusion of a minimum service period. (4) The amounts in column (e) reflect the grant date fair value of restricted stock/unit awards in accordance with FASB ASC Topic 718 Natural Gas Service Group, Inc. 2019 Equity Incentive Plan. (5) The amounts shown in column (i) include matching contributions made by Natural Gas Services Group to each named executive officer under our 401(k) plan and the aggregate incremental cost to Natural Gas Services Group of perquisites provided to our named executive officers as shown in the table below. With respect to Mr. Taylor, this column also includes payments under his Retirement Agreement as set forth in the table below.

  28. Grants of Plan-Based Awards for 2023

    Grants of Plan-Based Awards for 2023 The table below sets forth the estimated future payouts under non-equity incentive plan awards and restricted stock/unit awards granted and the grant date fair value of such awards.

  29. Grants of Plan-Based Awards for 2023

    | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | | | | | | Name | Grant Date | Threshold ($) | Target ($) | Maxi-mum ($) | Threshold (#) | Target | Maxi-mum ($) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Option (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | | Stephen C. Taylor | — | $— | $— | $— | $— | $— | $— | — | — | $— | $— | | James R. Hazlett | 3/14/2024(1) | — | — | — | — | — | — | 21,984 | — | — | 389,996 | | | 4/25/2024(2) | 146,250 | 195,000 | 243,750 | — | — | — | — | — | — | — | | Brian Tucker | 4/25/2024(2) | 225,000 | 300,000 | 375,000 | — | — | — | — | — | — | — |

  30. Grants of Plan-Based Awards for 2023

    (1) The amounts shown on these rows reflects the awards of restricted stock earned in 2023 and issued in March 2024. (2) The amounts on these rows assume, under the structure of our Annual Incentive Bonus Plan, that each of the metrics are achieved under threshold (75% payout), target (100% payout), and maximum / stretch (125% payout) levels. The actual payouts in April 2024 that were earned in 2023 were as follows: Mr. Hazlett - $223,843.75 and Mr. Tucker $68,219.18. Mr. Tucker's payout was limited by his contract and was prorated based on number of days worked during 2023. Short-Term Incentives - Annual Incentive Bonus Plan In 2006, the Compensation Committee adopted an Annual Incentive Bonus Plan (“IBP”) that provides guidelines for the calculation of annual non-equity incentive based compensation in the form of cash bonuses to our executives, subject to Committee oversight and modification. The bonuses awarded under the IBP are short-term awards in recognition of the overall performance and efforts made by certain of our executives during a particular year. Each year, the Committee approves the group of executives eligible to participate in the IBP and establishes target award opportunities for such executives. For 2023, 100% of an executive officer’s IBP award was based on achievement of Company financial and other objectives relating to: . •Adjusted gross margin(1); •Adjusted EBITDA(2); •Total revenues; and •Safety objectives IBP award components consist of adjusted gross margin - 35%; adjusted EBITDA - 35%; total revenues - 15%; and safety objectives - 15%. Each year, the Committee sets the performance levels for each component of the company objective portion of the IBP. The payment of awards under the IBP is based upon whether these performance levels are achieved for the year. Payout on each of the three financial objectives is as follows: •75% of the bonus amount attributable to a financial component will be paid if we achieve the "threshold" amount; •100% of the bonus amount attributable to a financial component will be paid if we achieve the "target" amount; and •125% of the bonus amount attributable to a financial component will be paid if we achieve the "stretch" amount.

  31. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table shows certain information about unvested restricted stock/units outstanding as of December 31, 2023 and held by our named executive officers.

  32. Outstanding Equity Awards at 2023 Fiscal Year-End

    Outstanding Equity Awards at 2023 Fiscal Year-End

  33. Outstanding Equity Awards at 2023 Fiscal Year-End

    | | Option Awards | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock That Have Not Vested (#) | Market Value of Shares of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Other Rights that Have Not Vested ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | | Stephen C. Taylor | — | — | — | — | — | 10,101 | $162,424 | — | — | | | — | — | — | — | — | — | — | — | — | | | — | — | — | — | — | — | — | — | — | | James R. Hazlett | — | — | — | — | — | 44,842 | 721,059 | — | — | | | — | — | — | — | — | 27,840 | 447,667 | — | — | | | — | — | — | — | — | 10,335 | 166,187 | — | — | | Brian Tucker | — | — | — | — | — | 6,361 | 102,285 | — | — |

  34. Option Exercises and Stock Vested in 2023

    Option Exercises and Stock Vested in 2023 In the table below, we show certain information about (i) the number of shares of common stock acquired upon exercise of stock options by each of the named executive officers in 2023 and the value realized on exercise of the stock options and (ii) stock awards.

  35. Option Exercises and Stock Vested in 2023

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting(1) | Value Realized on Vesting(1) | | (a) | (b) | (c) | (d) | (e) | | Stephen C. Taylor | — | $— | 233,916 | $2,343,377 | | James R. Hazlett | — | — | 15,167 | 151,389 | | Brian Tucker | — | — | — | — |

  36. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation We adopted a Deferred Compensation Plan in December 2015, which permits eligible employees, including our NEOs, and our Directors to annually elect to defer a portion of their salary, commissions, cash bonus, Director fees and/or stock awards they would otherwise have received when earned. Under this plan, participants can defer up to 90% of their salary, commissions, cash bonus, Director fees and stock awards. Cash amounts deferred under the Deferred Compensation Plan are deemed invested in the investment funds selected by the participant with similar options as available under the Company’s 401(k) Plan. We have option to contribute but do not currently contribute to the Deferred Compensation Plan on behalf of its participants or match the deferrals made by participants. At the time of deferral, a participant must indicate whether he or she wishes to receive the amount deferred while in-service or upon separation of service. In either case, the payment will be in either a lump sum or in substantially equal annual installments. In-service installments cannot exceed five years, while installments elected to start upon separation of service cannot exceed ten years. If separation is due to a disability or a change in control, deferrals will be paid similar to deferrals paid upon separation of service, while deferrals related to death will be paid in a lump sum to the participant’s beneficiary. If a participant experiences an unforeseeable emergency during the deferral period, the participant may petition to receive a partial or full payout from the Deferred Compensation Plan. All distributions are made in cash, except for deferred stock awards which are settled in Company stock.

  37. Pay Versus Performance

    Pay Versus Performance In the table below, we show certain required information about Pay Versus Performance for our Principal Executive Officer (“PEO”) Stephen C. Taylor and our two other named executive officers Micah C. Foster and James R. Hazlett (“NEO”) for 2022 and 2021 and James R. Hazlett and Brian Tucker for 2023, reflecting executive compensation actually paid compared to Total Shareholder Return (“TRS”) for the years ended December 31, 2023, 2022 and 2021:

  38. Pay Versus Performance

    | | For PEO and Interim PEO Taylor | | For Interim PEO Chisholm | | | | | | | Year | Summary Compensation Table Total for Taylor | Compensation Actually Paid to Taylor | Summary Compensation Table Total for Chisholm | Compensation Actually Paid to Chisholm | Average Summary Compensation Table Total for non-PEO NEOs | Average Compensation Actually Paid to non-PEO NEOs | Value of initial fixed $100 investment based on TSR | Net Income (Loss) (in thousands) | | 2023 | $3,585,243 | $3,387,854 | $— | $— | $656,212 | $768,862 | $169.62 | $4,747 | | 2022 | 949,997 | 1,452,146 | 429,129 | 429,129 | 569,665 | 621,088 | 120.89 | (569) | | 2021 | 1,749,279 | 2,259,464 | — | — | 478,742 | 377,955 | 110.44 | (9,183) |

  39. Pay Versus Performance

    The following supplementary tables presents the adjustments necessary to determine the compensation actually paid to the named PEO and Interim PEO’s and Non-PEO NEO’s:

  40. Pay Versus Performance

    | Adjustments to Determine Compensation "Actually Paid" for PEO/Interim PEO Taylor | 2023 | 2022 | | Total amount per Summary Compensation Table | $3,585,243 | $949,997 | | Adjustments to determine compensation actually paid: | — | — | | Deduct amount reported under Stock Awards column for Taylor | (200,000) | (313,545) | | Deduct amount reported under Option Awards column for Taylor | — | — | | Increase for Fair Value of Awards Granted during the year that remain unvested at year end | 262,424 | 697,215 | | Increase/decrease for change in Fair Value from Prior Year-end to Current Year-end of Awards Granted Prior to year that were Outstanding and Unvested as of Year-end | | 103,144 | | Increase for Fair Value of Awards Granted during year that Vest during year | — | — | | Increase (deduction) for Change in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to year that Vested during year | (259,813) | 15,335 | | Increase based on Dividends or Other Earnings Paid during year prior to Vesting Date of Award. | — | — | | Deduct Fair Value of Awards Granted Prior to year that were Forfeited during year | — | — | | Total adjustments | (197,389) | 502,149 | | Compensation Actual Paid to PEO/Interim PEO Taylor (1) | $3,387,854 | $1,452,146 |

  41. Pay Versus Performance

    (1) As discussed elsewhere herein, $2,754,000 of compensation paid to PEO Taylor relates to amounts paid in 2023 pursuant to his Retirement Agreement negotiated during 2022.

  42. Pay Versus Performance

    | Adjustments to Determine Compensation "Actually Paid" for Interim PEO Chisholm | 2023 | 2022 | | Total amount per Summary Compensation Table | $— | $429,129 | | Adjustments to determine compensation actually paid: | | | | Deduct amount reported under Stock Awards column for Chisholm | — | — | | Deduct amount reported under Option Awards column for Chisholm | — | (59,635) | | Increase for Fair Value of Awards Granted during the year that remain unvested at year end | — | — | | Increase/decrease for change in Fair Value from Prior Year-end to Current Year-end of Awards Granted Prior to year that were Outstanding and Unvested as of Year-end | — | — | | Increase for Fair Value of Awards Granted during year that Vest during year | — | 59,635 | | Increase (deduction) for Change in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to year that Vested during year | — | — | | Increase based on Dividends or Other Earnings Paid during year prior to Vesting Date of Award. | — | — | | Deduct Fair Value of Awards Granted Prior to year that were Forfeited during year | — | — | | Total adjustments | — | — | | Compensation Actual Paid to Interim PEO Chisholm | $— | $429,129 |

  43. Pay Versus Performance

    | Adjustments to Determine Average Compensation "Actually Paid" for Non-PEO NEOs | 2023 | 2022 | | Total average amount per Summary Compensation Table for Non-PEO NEO's | $656,212 | $569,665 | | Adjustments to determine average compensation actually paid: | — | — | | Deduct average amount reported under Stock Awards | (240,479) | (144,908) | | Deduct average amount reported under Option Awards | — | — | | Increase for Fair Value of Awards Granted during the year that remain unvested at year end | 364,342 | 183,589 | | Increase/decrease for change in Fair Value from Prior Year-end to Current Year-end of Awards Granted Prior to year that were Outstanding and Unvested as of Year-end | — | 9,900 | | Increase for Fair Value of Awards Granted during year that Vest during year | — | — | | Increase (deduction) for Change in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to year that Vested during year | (11,213) | 2,842 | | Increase based on Dividends or Other Earnings Paid during year prior to Vesting Date of Award. | — | — | | Deduct Fair Value of Awards Granted Prior to year that were Forfeited during year | — | — | | Total adjustments | 112,650 | 51,423 | | Average Compensation Actual Paid to Non-PEO NEOs | $768,862 | $621,088 |

  44. Pay Versus Performance

    Shareholder Return (“TSR”) for the years ended December 31, 2023 and 2022 is as follows:

  45. Pay Versus Performance

    | TSR - (P1-P0) + D | | 2023 | 2022 | 2021 | | P1 - Ending NGS stock price - December 31, | | $16.08 | $11.46 | $10.47 | | P0 = Initial stock price - December 31, 2021 | | $9.48 | $9.48 | $9.48 | | D = Dividends | | $— | $— | $— | | | TSR = | $6.60 | $1.98 | $0.99 | | TSR/P0 | TSR % | 69.62% | 20.89% | 10.44% | | TSR based on $100 investment | | $169.62 | $120.89 | $110.44 |

  46. Compensation of Directors

    Compensation of Directors We use a combination of cash and equity-based incentive compensation to attract and retain qualified candidates to serve on our Board of Directors. In setting compensation for our Directors, we consider the substantial amount of time that Directors expend in fulfilling their duties to us and our shareholders, as well as the skill-sets required to fulfill these duties. The following table discloses the cash, equity awards and other compensation earned, paid or awarded, as the case may be, to each of our non-employee Directors during the fiscal years ended December 31, 2023, 2022 and 2021:

  47. Compensation of Directors

    | Name | Year | Fees Earned or Paid ($) (1) | Stock Awards ($)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($)(3) | Total ($) | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | | Leslie A. Beyer | 2023 | $17,500 | $— | — | — | — | — | $17,500 | | | 2022 | 70,000 | 49,996 | — | $50,000 | — | — | 169,996 | | | 2021 | 66,250 | 50,003 | — | 50,000 | — | — | 166,253 | | David L. Bradshaw | 2023 | 70,000 | 100,003 | — | | — | — | 170,003 | | | 2022 | 70,000 | 49,996 | — | 50,000 | — | — | 169,996 | | | 2021 | 68,750 | 50,003 | — | 50,000 | — | — | 168,753 |

  48. Compensation of Directors

    | Nigel J. Jenvey | 2023 | 75,357 | 100,003 | — | | — | — | 175,360 | | | 2022 | 79,333 | 49,996 | — | 50,000 | — | — | 179,329 | | | 2021 | 52,500 | 50,000 | — | 50,000 | — | — | 152,500 | | John Chisholm(1)(2)(3) | 2023 | — | — | — | — | — | — | — | | | 2022 | 26,444 | 248,803 | — | 100,000 | — | 110,000 | 485,247 | | | 2021 | 68,750 | 50,003 | — | 50,000 | — | — | 168,753 | | Justin Jacobs | 2023 | 47,308 | 100,003 | — | — | — | — | 147,311 | | | 2022 | — | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — | — | | Don Tringali | 2023 | 47,308 | 100,003 | — | — | — | — | 147,311 | | | 2022 | — | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — | — | | Georganne Hodges | 2023 | 9,684 | 63,844 | — | — | — | — | 73,528 | | | 2022 | — | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — | — | | William F. Hughes, Jr. | 2023 | — | — | — | — | — | — | — | | | 2022 | — | — | — | — | — | — | — | | | 2021 | 16,250 | — | — | — | — | — | 16,250 |

  49. Compensation of Directors

    Cash Compensation Paid to Independent Directors (1) Our non-employee Directors are paid a quarterly cash fee. The cash fee payable to our non-employee Directors was $13,750 per quarter for 2023. In addition, the Committee Chairman were entitled to an additional quarterly cash fee in the amount of $3,750. Mr. Chisholm’s fees were pro-rated for time served as a director. (2) On December 29, 2022, Mr. Chisholm was granted 16,935 shares at $11.00 per share in connection with his Severance Agreement. (3) As part of Mr. Chisholm’s Severance Agreement, he also received a cash payment of $110,000 in 2022. Equity Based Compensation Paid to Independent Directors Our compensation policy for independent Directors is to grant an annual award of restricted shares based upon a review of equity award values paid by other public companies in the Company's peer group and the Company's market and financial performance in comparison to such peer group companies. For 2023, based upon the Company's performance compared to its peer group, the Compensation Committee recommended and the Board approved an equity award value of approximately $100,000 in restricted stock units. On April 25, 2022, the Compensation Committee recommended and the Board approved the continuation of its annual equity award policy of $100,000 in value of restricted stock and cash, for 2022. In connection therewith, four independent Directors were granted the following: •An award of $50,000 in cash (50% of the total) that vests one year from the date of grant; and •An award of 4,212 shares of restricted stock, which was calculated by dividing $50,000 by a deemed share price of $11.87. These awards of restricted stock vest one year from the date of grant and are subject to acceleration in certain events. Directors who are our employees do not receive any compensation for their services as Directors. Other All Directors are reimbursed for their expenses incurred in connection with attending meetings. We provide liability insurance for our Directors and officers. The cost of this coverage for 2023 was $288,466. We do not offer non-employee Directors travel accident insurance, life insurance, or a pension or retirement plan.