DEF 14A of ProPetro Holding Corp., Mar 21, 2024

DEF 14A of ProPetro Holding Corp.

Filed Mar 21, 2024 · FY20230001104659-24-037294

Open on EDGAR

  1. Samuel D. Sledge Chief Executive Officer and Director

    | 46 | Summary Compensation Table | | 48 | Grants of Plan-Based Awards Table | | 49 | Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table | | 49 | Outstanding Equity Awards at Fiscal Year End | | 50 | 2022 Options Exercises and Stock Vested | | 50 | Pension Benefits | | 50 | Nonqualified Deferred Compensation | | 51 | Potential Payments Upon Termination or Change in Control | | 56 | Pay Versus Performance | | 60 | CEO Pay Ratio | | 60 | Equity Compensation Plan Information | | 61 | AUDIT MATTERS | | 61 | Proposal 3―Ratification of Appointment of Independent Registered Public Accounting Firm | | 63 | Auditor Fees for Fiscal Years 2023 and 2022 | | 63 | Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Registered Public Accounting Firm | | 63 | Report of the Audit Committee | | 65 | STOCK OWNERSHIP INFORMATION | | 65 | Security Ownership of Certain Beneficial Owners and Management | | 67 | ADDITIONAL INFORMATION | | 67 | Information about the Annual Meeting and Voting | | 72 | Information about Stockholder Proposals | | 72 | Annual Report on Form 10-K | | 73 | Other Matters |

  2. Director Nominees

    Director Nominees The Board of Directors (the “Board”) has nominated the nine director nominees shown below for a one-year term.

  3. Director Nominees

    | | | | | | Committee Memberships | | | | Nominees | | Independent | Age | Director Since | Audit | Compensation | Nominating & Corporate Governance | | | Spencer D. Armour III | | 70 | 2013 | * | | | | | Mark S. Berg | | 65 | 2019 | | | | | | Anthony J. Best | | 74 | 2018 | | | | | | Phillip A. Gobe | | 71 | 2019 | | | | | | G. Larry Lawrence | | 72 | 2020 | * | | |

  4. Director Nominees

    | | | | | | Committee Memberships | | | | Nominees | | Independent | Age | Director Since | Audit | Compensation | Nominating & Corporate Governance | | | Jack B. Moore | | 70 | 2017 | * | | | | | Samuel D. Sledge | | 37 | 2021 | | | | | | Mary P. Ricciardello | | 68 | 2023 | * | | | | | Michele Vion | | 64 | 2020 | | | | | | Meetings in 2023 | | | Board—7 | 9 | 7 | 4 |

  5. Director Nominees

    | | Committee Chair | | Committee Member | | Chairman of the Board | | Lead Independent Director | | * Audit Committee financial expert | | | | | | | |

  6. Nominees

    Nominees All of the current members of the Board being nominated for reelection at the 2023 annual meeting are listed in the following table, and certain information concerning those directors follows the table:

  7. Nominees

    | | | | | ProPetro Board Committees | | | | Name | Age | Director since | Independent | Audit | Compensation | Nominating & Corporate Governance | | Phillip A. Gobe(1) | 71 | 2019 | | | | | | Samuel D. Sledge(2) | 37 | 2021 | | | | | | Spencer D. Armour III | 70 | 2013 | | * | | | | Mark S. Berg | 65 | 2019 | | | | | | Anthony J. Best(3) | 74 | 2018 | | | | | | G. Larry Lawrence | 72 | 2020 | | * | | | | Jack B. Moore | 70 | 2017 | | * | | | | Mary P. Ricciardello | 68 | 2023 | | * | | | | Michele Vion | 64 | 2020 | | | | | | Number of Meetings in 2023 | | Board—7 | | 9 | 7 | 4 |

  8. Nominees

    | | Committee Chair | | Committee Member | | * Audit Committee financial expert | | | |

  9. Nominees

    (1) Chairman of the Board (2) Chief Executive Officer (3) Lead Independent Director

  10. Nominees

    | PHILLIP A. GOBE | Phillip A. Gobe began serving as our Chairman of the Board in July of 2019 and as Executive Chairman in October 2019. Mr. Gobe was appointed as our Chief Executive Officer on March 13, 2020 and served in that role until August 31, 2021, at which point he was re-appointed as Executive Chairman. Mr. Gobe stepped down as Executive Chairman on March 31, 2022, and continues serving the Company as Chairman of the Board. Mr. Gobe has served as a director of Pioneer since July 2014. Mr. Gobe previously served as Chairman of the Board for Pantheon Resources plc until his June 2023 retirement. He also previously served as a director of Scientific Drilling International and Pioneer Southwest Energy Partners L.P. Mr. Gobe joined Energy Partners, Ltd. as Chief Operating Officer in December 2004 and became President in May 2005, and served in those capacities until his retirement in September 2007. Mr. Gobe also served as a director of Energy Partners, Ltd. from November 2005 until May 2008. Prior to that, Mr. Gobe served as Chief Operating Officer of Nuevo Energy Company from February 2001 until its acquisition by Plains Exploration & Production Company in May 2004. Prior to that time, he held numerous operations and human resources positions with Vastar Resources, Inc. and Atlantic Richfield Company (“ARCO”) and its subsidiaries. Mr. Gobe has a Bachelor of Arts degree from The University of Texas and a Master of Business Administration degree from the University of Louisiana in Lafayette. Mr. Gobe’s extensive experience in the energy industry, including service as a director to public corporations in the industry, makes him well suited to serve as Chairman of the Board. | | AGE 71 CHAIRMAN OF THE BOARD DIRECTOR AND CHAIRMAN OF THE BOARD since July 2019 | |

  11. Nominees

    | SAMUEL D. SLEDGE | Samuel D. Sledge has served as our Chief Executive Officer and as a member of our Board since August 31, 2021. Mr. Sledge previously served as the Company’s President from April 2021 to August 2021, and prior to that, he served as Chief Strategy and Administrative Officer beginning in March 2020. Mr. Sledge has significant experience with ProPetro having joined the Company in 2011. Mr. Sledge has served in various capacities throughout his tenure such as a Frac Technical Specialist and Technical Operations Manager where his duties included quality control, planning and logistics, and the development of the engineering program. Mr. Sledge has also served as ProPetro’s Vice President of Finance, Corporate Development, and Investor Relations where his responsibilities included financial planning and analysis, strategic initiatives, and investor relations. Mr. Sledge received a Bachelor of Business Administration and a Masters of Business Administration from Baylor University. We believe Mr. Sledge’s experience in the energy industry and his significant experience in management roles at the Company make him well suited to serve as a director. | | AGE 37 CEO AND DIRECTOR since August 2021 | |

  12. Nominees

    | SPENCER D. ARMOUR III | Spencer D. Armour III has served as a member of our Board since February 2013. Mr. Armour has over 30 years of executive and entrepreneurial experience in the energy services industry. Mr. Armour served as President of PT Petroleum LLC in Midland, Texas from 2011 to 2018. He was the Vice President of Corporate Development for Basic Energy Services, Inc. from 2007 to 2008, which acquired Sledge Drilling Corp., a company Mr. Armour co-founded and served as Chief Executive Officer from 2005 to 2006. From 1998 through 2005, he served as Executive Vice President of Patterson-UTI Energy, Inc., which acquired Lone Star Mud, Inc., a company Mr. Armour founded and served as President from 1986 to 1997. Mr. Armour also served on the board of Patterson-UTI Energy, Inc. from 1999 to 2001. He currently serves on the boards of Viper Energy, Inc. and CES Energy Solutions Corp and is a partner at Geneses Investments. Mr. Armour received a B.S. in Economics from the University of Houston in 1977 and served on the University of Houston System Board of Regents from 2011 until 2018. We believe that Mr. Armour’s extensive experience in the energy services industry and his deep knowledge of industry dynamics within the Permian Basin make him well suited to serve as a director. | | AGE 70 DIRECTOR since February 2013 INDEPENDENT DIRECTOR since March 2020 COMMITTEES • Nominating and Corporate Governance | |

  13. Nominees

    | MARK S. BERG | Mark Berg currently serves as the Executive Vice President, Corporate Operations for Pioneer Natural Resources Company (“Pioneer”), where he serves on the Executive Committee and oversees Business Development, Strategy, Land, Water Management, and Facilities. Mr. Berg has almost nineteen years of experience with Pioneer in various roles, including as Executive Vice President & General Counsel from April 2005 to January 2014, Executive Vice President, Corporate from January 2014 to August 2015, and as Executive Vice President, Corporate/Vertically Integrated Operations until assuming his current role. He began his career in 1983 with the Houston-based law firm Vinson & Elkins L.L.P. and served as a partner from 1990 through 1997, focused on mergers, acquisitions and international project development. In 1997, he joined American General Corporation, a Fortune 200 diversified financial services company, as Executive Vice President, General Counsel and Secretary, and ultimately oversaw its merger with American International Group (“AIG”) in 2001. Following the AIG merger, Mr. Berg joined Hanover Compressor Company, a NYSE company specializing in natural gas compression and processing, as Senior Vice President, General Counsel and Secretary. Mr. Berg received his Juris Doctor, with honors, from the University of Texas School of Law, and graduated magna cum laude and Phi Beta Kappa with a Bachelor of Arts in Public Policy from Tulane University. Mr. Berg is the founding Vice Chairman of the Permian Strategic Partnership, established in 2019, a position in which he still serves, and he served as a member of the Board of Directors of HighPoint Resources Corporation from March 2018 to June 2020. Mr. Berg’s experience in significant management roles and his broad experience in the energy industry make him well suited to serve as a director. | | AGE 65 DIRECTOR since February 2019 Mr. Berg was appointed to the Board by Pioneer pursuant to the Investor Rights Agreement. | |

  14. Nominees

    | ANTHONY J. BEST | Anthony J. Best has served as a member of our Board since January 2018 and was elected to serve as Lead Independent Director in October 2019. Mr. Best has over 40 years of experience in the energy industry. Mr. Best retired as the Chairman of the board of Newpark Resources in May 2023. He was previously a director with Quantum Energy Partners’ (“Quantum”) portfolio companies, ExL Petroleum and Middle Fork Energy Partners, and also served as Senior Advisor for Quantum. Prior to joining Quantum, Mr. Best served in various roles with SM Energy Company, an oil and gas exploration company, commencing in 2006 as its President and Chief Operating Officer, and as its Chief Executive Officer from February 2007 through January 2015. From 2003 to 2005, Mr. Best served as President and Chief Executive Officer of Pure Resources, Inc., a Unocal development and exploration company. From 2000 to 2003, Mr. Best served as an independent consultant offering leadership and oil and gas consultation to energy companies and volunteer organizations, and from 1979 through 2000, Mr. Best served in various roles of increasing responsibility at Atlantic Richfield Company (“ARCO”), culminating in the position of President, ARCO Latin America. Mr. Best holds a Master of Science in Engineering Management degree from the University of Alaska and a Bachelor of Science degree in Mechanical Engineering from Texas A&M University. Prior to beginning his business career, Mr. Best served five years as an engineering officer in the United States Air Force. We believe that Mr. Best’s experience in significant management roles with companies operating in the Permian Basin and his broad experience in the energy industry make him well suited to serve as a director. | | AGE 74 INDEPENDENT DIRECTOR since January 2018 LEAD INDEPENDENT DIRECTOR since October 2019 COMMITTEES • Audit (Chair) • Compensation | |

  15. Nominees

    | G. LARRY LAWRENCE | G. Larry Lawrence was appointed to our Board in December 2020. Mr. Lawrence previously served as Audit Committee Chair of Legacy Reserves, LP’s Board of Directors, a role he held from 2006 to 2019. From January 2021 until June 2021, Mr. Lawrence served as the interim Chief Financial Officer of Natural Gas Services Group, a natural gas compression equipment provider, where he previously served as Chief Financial Officer for nine years. Prior to Natural Gas Services Group, Mr. Lawrence served as Chief Financial Officer for Lynx Operating Co. Inc., an oil and gas exploration company, for three years and as Chief Financial Officer for Pure Resources, Inc., an oil and gas E&P company, for two years. He has also held finance and management consulting positions for Parson Group, ARCO and Crescent Consulting. Mr. Lawrence earned his bachelor’s degree with an accounting major from Dillard University in New Orleans. We believe that Mr. Lawrence’s broad experience in the energy industry, including his service as a director and executive officer with various companies, makes him well suited to serve as a director. | | AGE 72 INDEPENDENT DIRECTOR since December 2020 COMMITTEES • Audit | |

  16. Nominees

    | JACK B. MOORE | Jack B. Moore has served as a member of our Board since March 2017. Mr. Moore most recently served as President and Chief Executive Officer of Cameron International Corporation (“Cameron”), an oil and gas industry equipment manufacturer and provider, from April 2008 to October 2015 and served as Chairman of the Board of Cameron from May 2011 until it was acquired by Schlumberger in April 2016. Prior to his employment with Cameron, Mr. Moore held various management positions at Baker Hughes Incorporated, where he was employed for 23 years. Mr. Moore currently serves on the Board of Directors of Occidental Petroleum Corporation, KBR Inc., and the University of Houston System Board of Regents. Mr. Moore previously served on the board of the American Petroleum Institute, the National Ocean Industries Association, Rowan Companies plc, and the Petroleum Equipment Suppliers Association. Mr. Moore received a Bachelor of Business Administration from the University of Houston and attended the Advanced Management Program at Harvard Business School. We believe that Mr. Moore’s wealth of experience in the oilfield service sector, including service as a director and executive officer to various public corporations in the sector, makes him well suited to serve as a director. | | AGE 70 INDEPENDENT DIRECTOR since March 2017 COMMITTEES • Compensation • Nominating and Corporate Governance (Chair) | |

  17. Nominees

    | MARY P. RICCIARDELLO | Ms. Ricciardello has served as a member of our Board since January 2023. Ms. Ricciardello currently serves as a director, Audit Committee member and Corporate Governance, Nominating and Sustainability Committee member at Eagle Materials Inc. Ms. Ricciardello previously served as a director at Devon Energy from 2008 to 2021, Noble Corporation from 2003 to 2020, Enlink Midstream from 2014 to 2018, Midstates Petroleum from 2010 to 2013 and U.S. Concrete from 2003 to 2010. Beginning in 1982, Ms. Ricciardello enjoyed a distinguished, two-decade career at Reliant Energy Inc. (“Reliant”) and its predecessor, Houston Lighting & Power Company, an electricity generation and retail services company, where she held several roles of increasing responsibility in the financial services and treasury functions. In 1996, Ms. Ricciardello was appointed as Reliant’s Vice President and Comptroller and she served as its Senior Vice President and Chief Accounting Officer from 1999 until her retirement in 2002. Ms. Ricciardello earned a Bachelor of Science degree in Business Administration from the University of South Dakota and an MBA from the University of Houston. She is also a Texas licensed Certified Public Accountant and earned a CERT Certificate in Cybersecurity from Carnegie Mellon University. We believe that Ms. Ricciardello is well suited to serve as a director based on her accounting and financial expertise and public company board and committee experience. | | AGE 68 INDEPENDENT DIRECTOR since January 2023 COMMITTEES • Audit • Nominating and Corporate Governance | |

  18. Nominees

    | MICHELE VION | Michele Vion was appointed to our Board in February 2020. Ms. Vion previously served as Vice President, Human Resources at HighPoint Resources Corporation, a successor to the Bill Barrett Corporation, an oil and gas E&P company, from August 2010 to September 2019. Ms. Vion was previously employed at Level 3 Communications, Inc., an international communications company, starting in 2006 and ultimately as Group Vice President of Human Resources up to January 2010. Ms. Vion also previously served as Vice President of Human Resources for Sun Microsystems, Inc., a computer networking company, for seven years. She also previously held senior human resource and client account management positions at Prudential Financial, Inc., an insurance and investment management company and JP Morgan, a global financial services firm. Prior to joining JP Morgan, Ms. Vion served in an accounting position as a Regional Controller for the Eastern Region at Sony Corporation of America. Ms. Vion previously served as Compensation Committee Chair and as a member of the Audit Committee of Boingo Wireless, Inc.’s Board of Directors, roles she held from 2018 until Boingo’s acquisition by Digital Colony Management, LLC in June 2021. Ms. Vion also served on the board and as Chair of the Compensation Committee and as member of the Audit Committee and Nominating and Corporate Governance Committee of Callidus Software Inc., a publicly-traded, cloud-based software company, from 2005 to 2016. Ms. Vion holds a Bachelor of Arts in East Asian Studies and Economics from Wesleyan University, has attended Stanford University’s Director’s College, and participated in the Financial Times’ Director Exchange. We believe that Ms. Vion is well suited to serve as a director based on her executive leadership experience in human resources and accounting and public company board and committee experience. | | AGE 64 INDEPENDENT DIRECTOR since February 2020 COMMITTEES • Compensation (Chair) • Nominating and Corporate Governance | |

  19. Director Compensation

    Director Compensation Our Amended and Restated ProPetro Holding Corp. Non-Employee Director Compensation Policy (the “Director Compensation Policy”) provides that each eligible non-employee director receives the following, effective as of July 1, 2023: The amendment and restatement of the Director Compensation Policy in July of 2023 provided for the following modest increases in compensation for our non-employee directors: (i) the annual cash retainer for the Chairperson of the Audit Committee was increased from $15,000 to $20,000; (ii) the annual cash retainer for the Chairperson for the Nominating and Corporate Governance Committee was increased from $10,000 to $15,000; and (iii) the annual equity retainer for all non-employee directors was increased from $140,000 to $155,000, which will be effective for awards granted in 2024 since this modification was approved after the date of the annual grant to directors in 2023. These changes were implemented in order to align our director compensation with that paid at companies with whom we compete for director talent. All equity retainers consist of awards of restricted stock units (“RSUs”) that will vest in full on the earliest to occur of: (i) the first anniversary of the grant date, (ii) the day immediately preceding the first annual meeting of stockholders following the grant date, and (iii) the occurrence of a Change in Control, subject, in each case, to continuous service through the applicable vesting date. The portion of the annual equity retainer that would have vested in the year following a non-employee director’s separation from service due to his or her death or disability will vest upon such separation from service. All annual retainers are pro-rated based on days of service for non-employee directors who join the Board during the applicable calendar year. The members of the Board are also entitled to reimbursement of expenses incurred in connection with attendance at Board and committee meetings in accordance with Company policy. The following table summarizes the compensation paid for services provided by our non-employee directors during 2023.

  20. Director Compensation

    | Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | Total ($) | | Spencer D. Armour III | 90,000 | 139,999 | 229,999 | | Mark S. Berg(3) | ― | ― | ― | | Anthony J. Best | 127,500 | 139,999 | 267,499 | | Phillip A. Gobe | 140,000 | 139,999 | 279,999 | | G. Larry Lawrence | 90,000 | 139,999 | 229,999 | | Jack B. Moore | 102,500 | 139,999 | 242,499 | | Mary P. Ricciardello | 85,700 | 139,999 | 224,999 | | Michele Vion | 105,000 | 139,999 | 244,999 |

  21. Director Compensation

    (1) Reflects annual cash retainer payments made pursuant to the Director Compensation Policy. (2) Reflects the grant date fair value of RSU awards on the date of grant computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). For information regarding assumptions underlying the valuation of equity awards, see Note 14 to the Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K. (3) In 2023, Mr. Berg has elected not to be compensated for his service as a director. Beginning in 2024, Mr. Berg will be compensated for his service as a director. The following table sets forth the aggregate number of outstanding stock awards held by each of our non-employee directors on December 31, 2023. With the exception of Mr. Sledge who held 21,750 stock options as of December 31, 2023, none of our directors held stock options as of December 31, 2023.

  22. Director Compensation

    | Name | Aggregate Number of Stock Awards (#) | | Spencer D. Armour III | 21,116 | | Mark S. Berg(1) | ― | | Anthony J. Best | 21,116 | | Phillip A. Gobe | 21,116 | | G. Larry Lawrence | 21,116 | | Jack B. Moore | 21,116 | | Michele Vion | 21,116 |

  23. Director Compensation

    (1) In 2023, Mr. Berg elected not to be compensated for his service as a director. Beginning in 2024, Mr. Berg will be compensated for his service as a director.

  24. CD&A Contents

    | 35 | III. ELEMENTS OF COMPENSATION AND 2023 DECISIONS IN DETAIL | | 36 | Base Salary | | 36 | Annual Cash Incentive Awards | | 40 | Long Term Incentive Awards | | 42 | Employee Benefits, Perquisites and Special Payments | | 42 | IV. OTHER COMPENSATION PRACTICES, POLICIES AND GUIDELINES | | 0 | Succession and Additional Agreements | | 42 | Executive Severance Plan | | 43 | Employee Compensation Claw-Back Policy | | 43 | Executive Stock Ownership Policy | | 43 | Prohibition on Hedging and Pledging | | 43 | No Tax Gross-Ups | | 44 | Regulatory Considerations | | 44 | Compensation Risk Assessment |

  25. Strong Financial Performance and Continued Strategic Execution

    Strong Financial Performance and Continued Strategic Execution 2022 was a transitional year for the Company. Our 2022 business plan focused on making capital investments to support the Company’s implementation of next generation Tier IV DGB and electric fleet equipment designed to increase the Company’s competitiveness and earning power. Following the Company’s investments in 2022, the Compensation Committee’s approach for 2023 was designed to align with the Company’s ongoing strategy to effectively implement its transformed, next generation fleet and continue to optimize its operations, an approach that supports the Company’s commitment to sustainability. In consideration of the Company’s ongoing transitional strategy and with a strong market outlook for 2023, the Compensation Committee designed the 2023 performance metrics for the Amended and Restated ProPetro Holding Corp. Executive Incentive Bonus Plan (the “Annual Bonus Plan”) to incentivize the achievement of improved financial and operating results that were expected to be achieved from the Company’s recent investments, strategic priorities and operational improvement initiatives. The Committee retained the core financial metrics of Adjusted EBITDA and free cash flow (“FCF”) and set robust goals to incentivize a focus on improving the Company’s financial performance in what was expected to be a strong market cycle. During the course of 2023, the market for the Company’s services did not meet the expectations used to set the Company’s Annual Bonus Plan goals. As a result, the Company adjusted its public financial guidance to address these changed circumstances but despite the macro challenges faced by the Company and the associated adjustments in public guidance, the Compensation Committee elected not to change the goals established in the 2023 Annual Bonus Plan. As a result, the Company’s performance under the 2023 Annual Bonus Plan with respect to Adjusted EBITDA was below target and our performance with respect to Free Cash Flow was below threshold. However, our actual Adjusted EBITDA and FCF performance was substantially improved from 2022. The definitions of Adjusted EBITDA and FCF and other details regarding the use of these and other metrics in the Annual Bonus Plan can be found in Section III under the discussion of Annual Cash Incentive Awards in the description of Performance Measures and Payout Results beginning on page 36 below. To recognize the ongoing importance of advancing the Company’s approach to sustainability and ESG, which is aligned with the Company’s core strategy and fleet transition approach, the Committee refined the Company’s Sustainability and ESG objectives to align with the Company’s operational, human capital development and stakeholder engagement strategy and to increase the specificity of such goals.

  26. Other NEOs Average(1)(2)

    Other NEOs Average(1)(2) (1) RSU and performance share unit (“PSU”) figures reflect the aggregate grant date fair value of the RSU and PSU awards granted in 2023, calculated in accordance with FASB ASC Topic 718. Annual Incentive Bonus figures represent the 2023 target award opportunity under our Annual Bonus Plan. Our long-term incentive program is designed to grant 50% RSUs and 50% PSUs on an annual basis. The grant date fair value of these awards calculated in accordance with FASB ASC Topic 718, which is what is reported above, can differ substantially from the method used by the Compensation Committee to evaluate value at the time of grant. Much like our Chief Executive Officer’s compensation, the percentage of compensation for our Named Executive Officers comprised of PSUs far exceeds the percentage of compensation comprised of RSUs for all of our Named Executive Officers except for Mr. Fietz when calculated in accordance with FASB ASC Topic 718. The average compensation composition was as follows for the non-CEO Named Executive Officers other than Mr. Fietz: Base Salary 20%; Annual Incentive Bonus 18%; PSUs 37%; RSUs 25%. Mr. Fietz received a substantial grant of RSUs in connection with his promotion, which resulted in the increased percentage of compensation comprised of RSUs reported above. We do not have a practice of granting a greater number or value of RSUs than PSUs as part of our normal annual grant practices.

  27. Compensation Policies and Practices

    | What We Do | What We Don’t Do | | At least 50% of Long Term Incentive Awards are performance-based for Named Executive Officers Use a mix of absolute and relative financial performance metrics (including relative total shareholder return (“TSR”)) in our incentive plans to avoid duplication of incentives across short- and long-term programs Use ESG / sustainability metrics in our Annual Bonus Plan Claw-back Policy Independent compensation consultant Independent Compensation Committee reviews and approves the compensation of our Named Executive Officers Annual Say-on-Pay vote Annual Compensation Committee assessment of compensation practices to eliminate any excessive risk Significant stock ownership requirements | Single-trigger change in control payments Tax gross-ups on severance or equity compensation Repricing of stock options Backdating of stock options Employment agreements with executive officers Derivative or hedging transactions or pledging of our securities by directors and executive officers |

  28. Stockholder Engagement in 2023

    Stockholder Engagement in 2023 We believe that discussions with a broad range of our stockholders help ensure that the Board and our management team understand our stockholders’ priorities and can work to address those priorities effectively. Accordingly, the Board and our management team undertook an extensive stockholder engagement effort in 2023, with a specific focus on reviewing our strategy and value proposition and getting feedback on the Company’s corporate governance structure, including our executive compensation program, approach to human capital management and sustainability matters. As part of our stockholder outreach, we engaged with stockholders representing 90% of our total shares outstanding. The stockholders with whom we interacted in 2023 represent holdings both large and small. Meetings with our stockholders occurred both before and following our 2023 Annual Meeting of Stockholders, though most occurred following the meeting. The chair of our Compensation Committee participated in meetings with stockholders representing 49% of our total shares outstanding. Our Board, Compensation Committee and management team take our stockholders’ concerns seriously and are committed to listening and incorporating changes to our compensation program when warranted. We asked for and received meaningful stockholder feedback on specific elements of our executive compensation program. The stockholders we spoke with almost universally indicated that they were supportive of our executive compensation program but would prefer not to see the Company accelerate the vesting of equity awards in the event of a retirement (or other voluntary departure) by our executives in future years. The Compensation Committee took this feedback and the results of the “Say-on-Pay” vote in account when evaluating the compensation of the Named Executive Officers in 2023 but did not make any material changes to our compensation program as a result since the decrease in support for our “Say-on-Pay” vote in 2023 appears to be almost entirely the result of a specific 2022 action and not as a result of the structure of our ongoing annual compensation program. We have continued, and plan to continue, engaging in ongoing stockholder outreach regarding corporate governance generally, including executive compensation programs.

  29. Philosophy and Guiding Principles of Our Compensation Program

    | 2 | Align Interests of Executives and Stockholders | Compensation for our Named Executive Officers should align their interests with those of our stockholders. Our compensation program aligns pay to performance by making a substantial portion of total executive compensation variable, or “at risk,” through an annual bonus program based on our performance goals and the granting of long-term incentive equity awards, which include time-vested RSUs and performance-based RSUs. As performance goals are met, not met, or exceeded, executives are rewarded commensurately. Our Stock Ownership Guidelines also require each Named Executive Officer to retain significant ownership in the Company’s common stock such that they are invested in our success over the long term along with our stockholders. |

  30. THE ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT

    THE ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT Pearl Meyer served as the Compensation Committee’s independent compensation consultant in 2023. The compensation consultant provides advice to and works with the Compensation Committee in designing and implementing the structure and mechanics of the Company’s executive compensation program, as well as other matters related to officer, senior management, and director compensation and corporate governance. For example, our compensation consultant regularly updates the Compensation Committee on regulatory changes impacting executive compensation, proxy advisor policies, and compensation-related risks. In addition, they provide the Compensation Committee with relevant data, including market and peer-company compensation and performance surveys and information and advice regarding trends and developments in executive and director compensation practices in our industry. This information assists the Compensation Committee in making executive and director compensation decisions based on market pay levels and best practices. Our compensation consultant reports directly and exclusively to the Compensation Committee and does not provide any other services to management, the Company, or its affiliates. While the Compensation Committee generally reviews and considers information and recommendations provided by the compensation consultant, they do not make compensation-related decisions for the Compensation Committee or otherwise with respect to the Company. The Compensation Committee has the discretion to allow our compensation consultant to work directly with management in preparing or reviewing materials for the Compensation Committee’s consideration. During 2023, and after taking into consideration the factors listed in Section 303A.05(c)(iv) of the “NYSE” Listed Company Manual, the Compensation Committee concluded that neither it nor the Company has any conflicts of interest with Pearl Meyer and that Pearl Meyer was independent from management. Other than Pearl Meyer, no other compensation consultants provided services to the Compensation Committee during 2023.

  31. Use of Peer Compensation Data

    Use of Peer Compensation Data The Company competes with business entities across multiple industries for top executive-level talent. To this end, the Compensation Committee evaluates, on an annual basis, industry-specific and general market compensation practices and trends to ensure that our program and Named Executive Officer pay opportunities remain appropriately competitive. As part of its evaluation, the Compensation Committee works with its independent consultant to validate that the companies included in its peer group are as comparable as possible to the Company in terms of operations, revenue, market capitalization, and geographic location. The 2023 peer group was determined by the Compensation Committee based on an in-depth review from its independent compensation consultant. This review included an assessment of potential comparators to evaluate the degree to which the current peers have kept pace with the Company’s growth and evolution, as well as an examination of the broader marketplace. Following such review and with input and support from the Company’s management, Pearl Meyer recommended, and the Compensation Committee agreed, that no modifications were necessary and that the 2023 peer group should remain the same as the 2022 peer group. In setting 2023 target compensation levels for the Named Executive Officers, as well as evaluating TSR performance for the PSUs granted in 2023, the Company used the 2023 peer group detailed below (such companies, the “2023 Peer Group”):

  32. Use of Peer Compensation Data

    In 2023, the comparative compensation data reviewed by the Compensation Committee was created by Pearl Meyer based on data from a blend of the 2023 Peer Group and survey data collected by Pearl Meyer from companies in the energy industry with corporate revenues of approximately $1 billion (the “Peer Data”). Data from both sources was used to provide the best mix of authorities for competitive positions and to help smooth volatility of changes in the peer group. The Compensation Committee generally targets total compensation for each of our Named Executive Officers and directors, as well as each element of compensation, at or about the 50th percentile of the Peer Data. However, the Compensation Committee also considers many other factors when establishing compensation levels, including but not limited to, internal pay equity at the Company, each executive’s experience and responsibility, succession planning, and recruiting and retention concerns. As a result, the compensation of our Named Executive Officers and directors may be higher or lower than the 50th percentile of the 2023 Peer Group or the Peer Data.

  33. Use of Peer Compensation Data

    | | | Element | Purpose | Changes for 2023 | | ◄ FIXED ► | Short-Term | BASE SALARY | • To provide a consistent, minimum level of pay that is sufficient to allow us to attract and retain executives with the appropriate skills and experience for their positions | • Increases as needed to reflect new position appointments or misalignment with market | | ◄ AT RISK ► | | ANNUAL CASH INCENTIVE BONUS | • To motivate and reward the achievement of our annual individual and operational performance goals • 70% was based on the achievement of quantitative performance goals and 30% was based upon a qualitative analysis of individual and operational performance for the fiscal year | • Further aligned bonus targets, including Sustainability and ESG performance, with the execution of the Company’s strategic transitional investments | | | Long- Term | LONG-TERM INCENTIVE AWARDS | • To ensure retention and drive performance, while aligning the interests of our Named Executive Officers with those of our stockholders • Generally, 50% RSUs that vest equally on each of the first three anniversaries of grant, and 50% PSUs that vest, if earned, following the completion of a three-year performance period, in each case subject to continued employment | • No material changes |

  34. Annual Cash Incentive Awards

    Annual Cash Incentive Awards The Annual Bonus Plan governs cash incentive awards made each year to our Named Executive Officers. Awards under the Annual Bonus Plan are tied to the achievement of performance goals, which may be based on qualitative or quantitative measures, or both, as determined by the Compensation Committee.

  35. TARGET AWARD OPPORTUNITIES

    TARGET AWARD OPPORTUNITIES In February 2023, the Compensation Committee established the following target bonuses under the Annual Bonus Plan for each of the Named Executive Officers:

  36. TARGET AWARD OPPORTUNITIES

    | Name | 2023 Target Bonus Award Opportunity (% of base salary) | | Samuel D. Sledge(1) | 105% | | Adam Muñoz | 100% | | David S. Schorlemer(1) | 90% | | Shelby Fietz(1) | 90% | | John J. Mitchell | 75% |

  37. TARGET AWARD OPPORTUNITIES

    (1) The target bonuses for Messrs. Sledge, Schorlemer and Fietz were increased from 2022 targets of 100%, 80% and 60% to 2023 targets of 105%, 90% and 90%, respectively, to better align with market and to reflect Mr. Fietz’s promotion. Target bonus levels for each executive were established by the Compensation Committee after reviewing peer group data and considering each Named Executive Officer’s responsibility and experience.

  38. PERFORMANCE MEASURES AND PAYOUT RESULTS

    PERFORMANCE MEASURES AND PAYOUT RESULTS Each year, the Compensation Committee establishes performance metrics and threshold, target, and maximum goals for each such metric. Potential payouts under the Annual Bonus Plan depend on the actual performance level for each metric established by the Committee, as outlined below.

  39. PERFORMANCE MEASURES AND PAYOUT RESULTS

    | Performance Level | Payout (as a % of Target Bonus) | | Threshold | 50% | | Target | 100% | | Maximum | 200% |

  40. PERFORMANCE MEASURES AND PAYOUT RESULTS

    If performance falls between the specified performance levels, payments are generally determined via straight-line interpolation. If performance falls below the threshold performance level, no payments will be awarded. The Annual Bonus Plan provides the Compensation Committee or the Board with the discretion to increase or decrease actual payout amounts otherwise resulting from the pre-established metrics, as it may deem necessary. Under the 2023 Annual Bonus Plan, as in prior years, the Compensation Committee selected a mix of quantitative and qualitative performance metrics to incentivize achievement of specific pre-established financial and safety metrics, while enabling the Compensation Committee the ability to encourage performance with respect to areas that are important to the growth and success of the Company but are harder to measure. While the Compensation Committee values qualitative metrics as a tool, it felt that the vast majority of the annual bonus should be calculated based on quantitative metrics, with a significant emphasis on financial metrics. To that end, 70% of each Named Executive Officer’s annual bonus for 2023 was based on the achievement of quantitative metrics (Adjusted EBITDA, FCF and safety), with 60% of that 70% dedicated to financial performance. The remaining 30% of the annual bonus for 2023 was based upon a qualitative analysis of sustainability and ESG initiatives (10%) and individual and operational performance (20%). The Compensation Committee maintained consistency in the performance metrics because they remain important to the ongoing success of the Company and serve to focus executives on key objectives that position the Company for sustained growth and consistent operational performance. Specifically, the Compensation Committee continues to see Adjusted EBITDA and FCF as effective measures of the Company’s financial performance and capital discipline and measures that support the Company’s ability to generate enhanced shareholder returns, while total recordable incident rate (“TRIR”) is an important measure of safety. In 2022 the Committee adjusted the weighting of the FCF metric, expecting that FCF performance would be significantly impacted in 2022 as a result of the Company’s strategic capital reinvestment program driving a conversion of the Company’s fleets to electric and Tier IV DGB (dual fuel) equipment. This strategic fleet transition was designed to position the Company to provide a more competitive and sustainable service offering for its customers. The most significant capital investments associated with this program were successfully completed in 2022 and the Company now has an updated fleet of next generation Tier IV DGB equipment and a growing fleet of electric equipment, allowing it to maintain a strong competitive position in the market, pursue its sustainability goals and meet customer demand. With the capital reinvestment program complete, in 2023, the Adjusted EBITDA and FCF metrics were rebalanced to increase the weighting of the FCF metric. The qualitative component of the Annual Bonus Plan allows the Committee to assess the Company’s progress towards the achievement of strategic goals, each Named Executive Officer’s specific contribution to the achievement of those strategic goals, and progress towards selected sustainability and ESG goals, which continued to be refined.

  41. PERFORMANCE MEASURES AND PAYOUT RESULTS

    | | Measure | Weighting | | Threshold | Target | Maximum | Actual 2023 Performance | Payout as a Percentage of Target Bonus | | QUANTITATIVE MEASURE | Adjusted EBITDA(1)(3) | 40% | | $333MM | $477MM | $572MM | $404MM | 30% | | | FCF(2)(3) | 20% | | $126MM | $181MM | $217MM | $94MM | 0% | | | Safety—TRIR(4) | 10% | | 0.75 | 0.65 | 0.50 | 0.68 | 8.5% | | | Quantitative Total | 70% | | | | | | 38.5% | | QUALITATIVE MEASURE | ESG(5) | 10% | | | | | | 15% | | | Individual and Operational Performance(6) | 20% | | | | | | 34.1 − 39.5% | | | Qualitative Total | 30% | | | | | | 49.1 – 54.5% | | | Overall Total | 100% | | | | | | 87.6 – 93% |

  42. PERFORMANCE MEASURES AND PAYOUT RESULTS

    (1) We define EBITDA as earnings before (i) interest expense, (ii) income taxes, and (iii) depreciation and amortization. We define Adjusted EBITDA as EBITDA, plus (i) loss/(gain) on disposal of assets, (ii) loss/(gain) on extinguishment of debt, (iii) stock-based compensation, and (iv) other unusual or non-recurring (income)/expenses, such as impairment charges, severance, costs related to our IPO and costs related asset acquisition or one-time professional fees. For a more detailed definition of the non-GAAP financial measure of Adjusted EBITDA and reconciliation of Adjusted EBITDA to our most directly comparable financial measures calculated in accordance with GAAP, please read “How We Evaluation Our Operations” in our Form 10-K filed for the year ended December 31, 2023. (2) We define FCF as Adjusted EBITDA less Total Capital Expenditures, which are defined as costs incurred in connection with the growth and maintenance of our asset base. For a more detailed definition of Total Capital Expenditures please see Note 11—Reportable Segment Information in the Notes to Consolidated Financial Statements to our Form 10-K filed for the year ended December 31, 2023. (3) The Compensation Committee may provide for the manner in which actual performance and the performance goal(s) with regard to these metrics will reflect the impact of specified events or occurrences during the year, which may mean including or excluding the impact of one or more events or occurrences, as specified by the Compensation Committee, for the year. (4) TRIR stands for Total Recordable Incident Rate and is a measurement of workplace safety calculated as follows: (total number of recordable incidents amongst covered personnel in the applicable period (here, 2023) multiplied by 200,000) divided by the total man hours worked by covered personnel in the applicable period. TRIR is a commonly accepted and utilized metric for both workplace safety regulation and for making safety performance comparisons amongst companies. The Company uses an annual TRIR metric in our compensation program to reflect aggregate safety performance across the year being reviewed. We define ESG as Environmental, Social, and Governance. For 2023, the Compensation Committee established the following ESG goals: (i) publish the Company’s inaugural Sustainability Report in the third quarter of 2023; (ii) achieve reduced greenhouse gas (“GHG”) emissions through Tier IV DGB fleet equipment diesel displacement performance, measured over the last three quarters of 2023 as follows: threshold: 6.1% CO2e emissions reduction; target: 8.9% CO2e emissions reduction; maximum: 11.7% CO2e emissions reduction; and (iii) complete a company-wide employee engagement survey. The corporate strategic goals for 2023 were focused on execution on goals to advance the Company’s strategic priorities of (i) optimizing and industrializing operations; (ii) pursuing a more capital light asset profile and next generation fleet; (iii) implement and integrate innovative technologies, (iv) pursuing opportunistic strategic acquisitions; and (v) maintaining a strong balance sheet. After considering the Company’s performance with respect to all three ESG goals, in the aggregate, the Compensation Committee determined that the Company had performed above expectations with respect to the ESG metric, awarding a 15% payout percentage for this metric. In the Compensation Committee’s judgment, the Company exceeded its goals for the breadth of the initial report and the robust data and qualitative disclosures included in the report. The Committee noted that the report was issued before the Company’s third quarter earnings release and was well received during the Company’s fall investor engagement meetings. The Compensation Committee established a GHG reduction goal focused on the Company’s operational performance in diesel displacement utilizing its strategically important Tier IV DGB (dual fuel) fleet equipment. This equipment is designed to displace diesel with lower-emission, more cost effective natural gas, and, when operated effectively, allows the Company to provide a more competitive service offering while lowering the GHG and particulate emissions associated with its operations. In reviewing the Company’s accomplishments in connection with this goal, the Committee credited the Company’s success, noting that the Company displaced almost 19.5 million gallons of diesel over the measurement period, resulting in an 8.1% reduction in CO2e emissions for operations with this equipment. In assessing performance on this metric, the Committee recognized that the Company exhibited strong overall performance with a significant improvement from 2022 and consistent advancement over the measurement period with the best performance in the fourth quarter and a high-water mark in December to close the year. The Committee also considered the impact of several unanticipated challenges that it determined were outside the Company’s control related to customer fuel-type choices and equipment performance limitations in high ambient summer temperatures, as well as positive feedback from Company’s customers regarding its performance. Lastly, the Compensation Committee recognized successful execution of an initial Company-wide employee engagement survey, which resulted in key actions to improve job training and overall work environment. In connection with these achievements, the Compensation Committee certified one hundred fifty percent (150%) achievement of the Company’s 2023 ESG goals. The Committee determined that 2023 was a year of notable achievements towards the Company’s strategic operational performance objectives during what remains a transitional period for the Company. In particular, the Company saw significant improvement in its financial results and continued progress in the execution of its strategic priorities. During 2023, the Company achieved revenue of $1.6 billion and net income of $86 million, each representing significant improvements over 2022 results. The Company also deployed its first two FORCESM electric fleets, demonstrated improvement in the performance of its next generation Tier IV DGB hydraulic fracturing equipment, instituted a share repurchase plan that resulted in 5.8 million shares being repurchased and retired, representing approximately 5% of the shares outstanding when the program commenced, realized results from its internal optimization program, which supported the improved financial performance, completed the integration of Silvertip Completion Services (“Silvertip”), and closed an acquisition of Par Five Energy Services (“Par Five”), a cementing services company. These results were achieved despite a challenging macro market for the Company’s services with customers remaining disciplined and demand trending downwards in the second half of the year. The Compensation Committee determined that performance exceeded the target level for each Named Executive Officer. Mr. Sledge was credited with leadership in driving the improvement in the Company’s performance in 2023 when compared to 2022, the successful Silvertip integration and the Company’s progress in its fleet transition strategy; Messrs. Muñoz and Schorlemer were recognized for the continued success of the Company’s internal optimization program, which supported the Company’s significant increase in FCF. Messrs. Fietz, Mitchell and Muñoz were credited for the successful commercial negotiations and operational deployment related to the Company’s first two FORCESM electric fleets. Mr. Mitchell and Mr. Schorlemer were recognized for their leadership in executing the Par Five acquisition. The Committee also noted the leadership provided by Mr. Schorlemer in establishing the Company’s share repurchase plan and Mr. Mitchell in the development of the Company’s sustainability report and its corporate office relocation.

  43. PERFORMANCE MEASURES AND PAYOUT RESULTS

    As a result of its assessment of performance, the Compensation Committee certified a range of attainment of one hundred seventy and one-half percent (170.5%) to one hundred ninety-five percent (195%) achievement for the individual and operational performance metric. As a result, the Compensation Committee approved the following payments under the Annual Bonus Plan:

  44. PERFORMANCE MEASURES AND PAYOUT RESULTS

    | Name | 2023 Target Bonus Award Opportunity as a Percentage of Base Salary | Value of 2023 Target Bonus Award Opportunity ($) | Actual Payout as a Percentage of Target Bonus | Value of Actual 2023 Annual Bonus ($)(1) | | Samuel D. Sledge | 105% | 840,000 | 87.6% | 735,800 | | David S. Schorlemer | 90% | 463,500 | 87.6% | 406,200 | | Adam Muñoz | 100% | 572,000 | 87.6% | 501,100 | | Shelby Fietz(2) | 90% | 445,500 | 93% | 414,500 | | John J. Mitchell | 75% | 290,250 | 93% | 270,000 |

  45. PERFORMANCE MEASURES AND PAYOUT RESULTS

    (1) Bonus amounts were rounded up or down to the nearest hundred dollars. (2) The target bonus for Mr. Fietz for 2023 was adjusted in connection with his promotion, and his Base Salary and target bonus as of December 31, 2023 were utilized for determining his award under the 2023 Annual Bonus Plan.

  46. Long Term Incentive Awards

    Long Term Incentive Awards

  47. AWARDS GRANTED IN 2023

    AWARDS GRANTED IN 2023 Our mix of time- and performance-based awards is intended to achieve the twin goals of ensuring retention and driving performance, while aligning the interests of our Named Executive Officers with those of our stockholders by providing an opportunity for increased share holdings. Both RSUs and PSUs may be settled in shares of our common stock or in the cash equivalent of the same. In 2023, 50% of the value of each Named Executive Officer’s long term incentive awards were granted pursuant to the ProPetro Holding Corp. 2020 Long Term Incentive Plan (the “2020 LTIP”) in the form of RSUs that vest in three substantially equal annual installments commencing on the first anniversary of the grant date. The other 50% was granted in the form of PSUs that vest, if earned, following the completion of a three-year performance period, in each case subject to the Named Executive Officer’s continued employment through the end of such period. The PSUs granted in 2023 vest based on the Company’s TSR as compared to the TSR of the 2023 Peer Group. After careful review, the Compensation Committee chose to use the same 2023 Peer Group to set 2023 target compensation levels for our Named Executive Officers and evaluate TSR performance for the PSUs granted in 2023. Recipients of PSUs may earn between 0% and 200% of the target number of shares granted, as indicated in the following table. If performance falls between the specified performance levels, payouts will be determined via straight-line interpolation. If performance falls below the threshold performance level, no payouts will be awarded. If the Company’s TSR is below zero on an absolute basis for the performance period, the number of PSUs earned shall be reduced in accordance with the table below. For PSU awards granted in 2021, if the Company’s TSR was below zero, the awards would not vest in excess of the target number of PSUs granted. As illustrated in the table below, beginning in 2022, the Compensation Committee modified the approach for the PSU awards to provide the potential for an over target award if TSR is negative. The Committee’s goal was to ensure the Named Executive Officers will continue to be strongly motivated to outperform the Company’s peers, even in a negative TSR environment, while retaining a meaningful reduction in the number of PSUs settled if absolute TSR was negative for the performance period so that the Named Executive Officers’ continue to be motivated to achieve a positive absolute TSR.

  48. AWARDS GRANTED IN 2023

    | | | Payout (as a % of Target Number of PSUs Granted) | Payout (as a % of Target Number of PSUs Granted) if TSR is Below Zero | | Company’s Percentile Rank in Peer Group | ≥ 90th Percentile | 200% | 175% | | | 75th Percentile | 175% | 150% | | | 50th Percentile | 100% | 90% | | | 25th Percentile | 50% | 40% | | | < 25th Percentile | 0% | 0% |

  49. AWARDS GRANTED IN 2023

    The performance period for the 2023 PSU awards commenced on January 1, 2023 and ends on December 31, 2025. If a peer company is acquired by another peer company during the performance period, the acquirer will remain in the peer group but the acquired company will be excluded from the peer group entirely. If a peer company files for bankruptcy during the performance period, it will remain in the peer group but will be ranked last. Should a peer company cease to exist as a separate publicly traded company for any other reason during the performance period, it will be excluded from the peer group entirely. The annual value of each Named Executive Officer’s long-term incentive award is generally determined in conjunction with the Compensation Committee’s annual compensation analysis or, if later, in connection with the Named Executive Officer’s promotion or hire date following the Compensation Committee’s review of peer compensation data and consideration of each Named Executive Officer’s position and associated responsibilities. In 2023, the Compensation Committee granted the RSUs and PSUs included in the table below to our Named Executive Officers. Except as specified below, all awards were granted in February of 2023.

  50. AWARDS GRANTED IN 2023

    | Name | Number of RSUs Granted in 2023 | Value of RSUs Granted in 2023(1) ($) | Target Number of PSUs Granted in 2023 | Value of PSUs Granted in 2023(1) ($) | | Samuel D. Sledge | 174,358 | 1,699,991 | 174,358 | 2,510,755 | | David S. Schorlemer | 61,538 | 599,996 | 61,538 | 886,147 | | Adam Muñoz | 87,179 | 849,995 | 87,179 | 1,255,378 | | Shelby Fietz(2) | 354,536 | 3,297,018 | 10,615 | 152,856 | | John J. Mitchell | 34,564 | 336,999 | 34,564 | 497,722 |

  51. AWARDS GRANTED IN 2023

    (1) Amounts in these columns reflect the aggregate grant date fair value of the RSU and PSU awards granted in 2023 under the 2020 LTIP, calculated in accordance with FASB ASC Topic 718. Because the grant date fair value is calculated differently for time-based and performance-based awards under FASB ASC Topic 718, the value of the awards reported is different even though the number of RSUs and PSUs granted to each Named Executive Officer is the same. The number of awards granted by the Compensation Committee and the Board in 2023 were calculated based on the closing price on the date of grant, which is the standard practice, rather than the accounting grant date fair value. (2) Mr. Fietz was granted 10,615 RSUs and 10,615 PSUs during the annual grant cycle in February of 2023. He was also granted 30,769 RSUs as a special retention award in February of 2023. The retention RSUs Mr. Fietz received vest 33.33% on May 31, 2024 and 66.67% on May 31, 2025. This targeted award was granted before Mr. Fietz was promoted and was intended to recognize Mr. Fietz’s vital role in the Company’s leadership, strong contributions to the Company’s business development and supply chain functions, and to provide Mr. Fietz with a strong incentive to remain with the Company for several years. Mr. Fietz also received a grant of 313,152 RSUs in connection with his promotion to Chief Commercial Officer in November of 2023, which vest ratably over three years, consistent with the Company’s normal RSU vesting schedule. The number of RSUs awarded to Mr. Fietz in connection with his promotion and the determination that this award should consist of RSUs instead of a combination of RSUs and PSUs were made after reviewing (i) a market analysis by Pearl Meyer for awards made in connection with comparable commercial roles, (ii) the value of his unique skill set and relationships with the Company’s customers, and (iii) the competitiveness in our local market for similar executives. The special retention award and the award in connection with Mr. Fietz’s promotion were non-routine. Mr. Fietz’s annual equity grant for 2024 was substantially smaller than his aggregate grants in 2023 and consisted 50% of RSUs and 50% of PSUs. The Compensation Committee does not anticipate granting any special retention or other non-routine equity awards to named executive officers in 2024.

  52. AWARDS SETTLED FOLLOWING THE END OF 2023

    AWARDS SETTLED FOLLOWING THE END OF 2023 Much like the PSUs granted in 2023, the PSUs granted in 2021 vested based on performance over a three-year performance period. In accordance with the compensation philosophy and designs adopted by the Compensation Committee, the PSUs granted in 2021 resulted in an award of zero shares. Our philosophy is that these long-term incentive awards should drive strong alignment between our stockholders and executives and pay for positive performance. For this assessment period, performance was below expectations and the PSUs yielded a result reflective of this performance.

  53. Executive Severance Plan

    Executive Severance Plan The Board adopted the Second Amended and Restated ProPetro Services, Inc. Executive Severance Plan and subsequently (the “Executive Severance Plan”) because they and the Compensation Committee felt it was desirable to pivot away from individually negotiated employment agreements and towards a streamlined plan providing for more uniform treatment upon a termination of employment. Each of our Named Executive Officers is a participant in the Executive Severance Plan. We believe the Executive Severance Plan serves to maintain the focus of our senior executives and ensure that their attention, efforts and commitment are aligned with maximizing the success of the Company and stockholder value. Further, providing market severance benefits is an important element of compensation that allows us to attract and retain talented executives, ensuring continuity of management, stability of the Company, and efficient execution of our business goals. The amounts of the severance and benefits established for each “Tier” under the Executive Severance Plan were selected after the Compensation Committee received advice from its independent compensation consultant at the time of adoption regarding the types and amounts of severance that are market among the Company’s peers. The Compensation Committee also considered its members’ ample experience in the industry when making this determination. The Tier level assigned to each participant in the plan was determined based on each participant’s position and responsibility. No changes were made to the Tier levels for the Named Executive Officers in 2022, except that Messrs. Fietz and Mitchell both became Tier 2 participants in connection with their promotions in 2023. Mr. Fietz had previously been designated as a Tier 3 participant in the Severance plan. The Tier levels for each of the Named Executive Officers and the terms of the Executive Severance Plan are described in detail below in the section entitled “Potential Payments upon Termination and Change of Control―Executive Severance Plan.”

  54. Compensation Risk Assessment

    | | We pay a mix of compensation which includes short-term cash and long-term equity-based compensation. | | | We base the vesting and payment of our incentive compensation awards on several different performance metrics, which discourages our employees from placing undue emphasis on any one metric or aspect of our business at the expense of others. | | | We believe that our performance metrics are reasonably challenging yet should not require inappropriate risk-taking to achieve. | | | The performance metrics for awards under our Annual Bonus Plan include quantitative financial and operational metrics as well as qualitative metrics related to our operations, strategy, and other aspects of our business, as well as the individual performance of our executives, and our Compensation Committee retains discretion to modify payout amounts under the Annual Bonus Plan, as appropriate. | | | The performance periods under our PSUs overlap, and our time-vested RSUs generally vest over a three-year period. This mitigates the motivation to maximize performance in any one period at the expense of others. | | | Our Named Executive Officers are required to own our common stock at levels provided in our Executive Stock Ownership Guidelines. | | | We have instituted a claw-back policy, which allows us to claw-back compensation in the event of a financial restatement or certain misconduct. | | | We believe that we have an effective management process for developing and executing our short- and long-term business plans. | | | Our compensation policies and programs are overseen by the Compensation Committee. | | | The Compensation Committee retains an independent compensation consultant. |

  55. Executive Compensation Tables

    | SUMMARY COMPENSATION TABLE |

  56. Executive Compensation Tables

    | Name and Principal Position | Year | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation(4) ($) | All Other Compensation(5) ($) | Total ($) | | Samuel D. Sledge Chief Executive Officer | 2023 | 800,000 | ― | 4,210,746 | ― | 735,800 | 41,414 | 5,787,960 | | | 2022 | 700,000 | ― | 3,258,631 | ― | 1,036,000 | 33,663 | 5,028,294 | | | 2021 | 455,962 | ― | 2,216,599 | ― | 457,500 | 34,588 | 3,164,649 | | Shelby Fietz(6) Chief Commercial Officer | 2023 | 365,193 | ― | 3,449,874 | ― | 414,500 | 56,729 | 4,286,296 | | Adam Muñoz President and Chief Operating Officer | 2023 | 572,000 | ― | 2,105,373 | ― | 501,100 | 52,359 | 3,230,832 | | | 2022 | 550,000 | ― | 2,215,845 | ― | 864,000 | 58,608 | 3,688,453 | | | 2021 | 475,193 | ― | 1,796,100 | ― | 470,300 | 46,142 | 2,787,735 | | David S. Schorlemer Chief Financial Officer | 2023 | 515,000 | ― | 1,486,143 | ― | 406,200 | 72,509 | 2,479,852 | | | 2022 | 477,000 | ― | 1,564,132 | ― | 634,800 | 79,928 | 2,755,860 | | | 2021 | 450,000 | 75,000 | 1,342,668 | ― | 356,400 | 282,713 | 2,506,781 | | John J. “Jody” Mitchell(6) General Counsel | 2023 | 387,000 | ― | 834,721 | ― | 270,000 | 51,414 | 1,543,135 |

  57. Executive Compensation Tables

    | GRANTS OF PLAN-BASED AWARDS |

  58. Executive Compensation Tables

    | NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE |

  59. Executive Severance Plan

    | OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END |

  60. Executive Severance Plan

    | 2023 OPTION EXERCISES AND STOCK VESTED |

  61. Executive Severance Plan

    | PENSION BENEFITS |

  62. Executive Severance Plan

    | NONQUALIFIED DEFERRED COMPENSATION |

  63. Executive Severance Plan

    | POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |

  64. Pay versus Performance

    Pay versus Performance As required by Item 402(v) of Regulation S-K, the Company is providing the following information regarding the relationship between executive compensation and the Company’s financial performance for each of the four years in the period ended December 31, 2023. In accordance with the applicable SEC rules, the adjustments described and quantified below were made to the values reported in the Summary Compensation Table for each applicable year to determine the “actual” compensation paid to our Principal Executive Officers (“PEOs”) and the average “actual” compensation paid to our other Named Executive Officers (“NEOs”). The following table summarizes compensation values reported in the Summary Compensation Table for our PEO and the average for our other NEOs, as compared to “compensation actually paid” or “CAP” and the Company’s financial performance for the years ended December 31, 2023, 2022, 2021, and 2020:

  65. Pay versus Performance

    | Year | Summary Compensation Table Total for First PEO(1) | Summary Compensation Table Total for Second PEO(1) (2) | Compensation Actually Paid to First PEO(1) (2) | Compensation Actually Paid to Second PEO(1) (2) | Average Summary Compensation Table Total for Non-PEO NEOs(1) (2) | Average Compensation Actually Paid to Non-PEO NEOs(1) | Value of Initial Fixed $100 Investment Based On: | | Net Income (Loss) (in thousands) | Adjusted EBITDA (in thousands)(3) | | | | | | | | | TSR | Peer Group TSR(3) | | | | (a) | (b) | (b) | (c) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | N/A | $5,787,960 | N/A | $3,198,910 | $2,885,029 | $1,983,266 | $74.49 | $129.96 | $86,000 | $404,000 | | 2022 | N/A | $5,028,294 | N/A | $3,096,235 | $6,276,617 | $1,773,093 | $92.18 | $153.12 | $2,030 | $316,590 | | 2021 | $6,862,469 | $3,164,649 | $5,192,291 | $2,999,764 | $2,463,661 | $2,133,954 | $72.00 | $80.32 | $(54,185) | $135,007 | | 2020 | $5,095,728 | N/A | $7,962,437 | N/A | $2,129,704 | $370,329 | $65.69 | $64.05 | $(107,020) | $141,463 |

  66. Pay versus Performance

    (1) The first and second PEOs reflected in columns (b) and (c) represent Phillip Gobe and Samuel Sledge, respectively. The non-PEO Named Executive Officers reflected in column (d) and (e) represent the following individuals by year: 2023 – David S. Schorlemer, Adam Muñoz, Shelby Fietz, and John J. “Jody” Mitchell 2022 – Phillip Gobe, David S. Schorlemer, Adam Muñoz, and Newton W. Wilson III 2021 – David S. Schorlemer, Adam Munoz, and Newton W. Wilson III 2020 – Dale Redman, Darin G. Holderness, David S. Schorlemer, Jeffrey Smith, David Sledge, Adam Munoz, and Newton W. Wilson III (2) The Company deducted from and added to the Summary Compensation Table total compensation the following amounts to calculate compensation actually paid in accordance with Item 402(v) of Regulation S-K as disclosed in columns (c) and (e) for the PEO (Samuel Sledge) and Non-PEO NEOs in 2023. As the Company’s NEOs do not participate in any defined benefit plans, no adjustments were required to amounts reported in the Summary Compensation Table totals related to the value of benefits under such plans.

  67. Pay versus Performance

    | | 2023 | | PEO SUMMARY COMPENSATION TABLE TOTALS | $5,787,960 | | Add (Subtract): | | | Fair value of equity awards granted during the year from the Summary Compensation Table | (4,210,746) | | Fair value at year end of equity awards granted during the year | 3,216,905 | | Fair value of equity awards granted and vested during the year | — | | Change in fair value of equity awards granted in prior years that were unvested as of the end of the year | (622,690) | | Change in fair value of equity awards granted in prior years that vested during the year | (63,896) | | Equity awards granted in prior years that were forfeited during the year | (908,623) | | Dividends or other earnings paid on equity awards during the year | | | Total Equity Award Related Adjustments | (2,589,050) | | COMPENSATION ACTUALLY PAID TOTALS | $3,198,910 |

  68. Pay versus Performance

    | | 2023 | | NON-PEO NEOS SUMMARY COMPENSATION TABLE TOTALS | $2,885,029 | | Add (Subtract): | | | Fair value of equity awards granted during the year from the Summary Compensation Table | (1,969,028) | | Fair value at year end of equity awards granted during the year | 1,614,860 | | Fair value of equity awards granted and vested during the year | — | | Change in fair value of equity awards granted in prior years that were unvested as of the end of the year | (208,949) | | Change in fair value of equity awards granted in prior years that vested during the year | (22,445) | | Equity awards granted in prior years that were forfeited during the year | (316,201) | | Dividends or other earnings paid on equity awards during the year | — | | Total Equity Award Related Adjustments | (901,764) | | AVERAGE COMPENSATION ACTUALLY PAID TOTALS | $1,983,266 |

  69. Pay versus Performance

    The Peer Group in this column consists of Liberty Energy Inc., RPC, Inc., Calfrac Wells Services Ltd., Patterson-UTI Energy, Inc. and Mammoth Energy Services, Inc. Nextier Oilfield Solutions Inc. was included in last year’s Peer Group, but was omitted from this year because it merged with Patterson-UTI Energy, Inc. in September 2023. The Company defines EBITDA as earnings before (i) interest expense, (ii) income taxes, and (iii) depreciation and amortization. The Company defines Adjusted EBITDA as EBITDA, plus (a) loss/(gain) on disposal of assets, (b) loss/ (gain) on extinguishment of debt, (c) stock-based compensation, and (d) other unusual or non-recurring (income)/ expenses, such as impairment charges, severance, costs related to our IPO and costs related asset acquisition or one-time professional fees. For a more detailed definition of the non-GAAP financial measure of Adjusted EBITDA and reconciliation of Adjusted EBITDA to our most directly comparable financial measures calculated in accordance with GAAP, please read “How We Evaluation Our Operations” in our Form 10-K filed for the year ended December 31, 2023. The CAP for non-PEO NEOs for fiscal year 2020 is significantly lower than fiscal years 2021, 2022 and 2023 due to Dale Redman, the Company’s former Chief Executive Officer and an NEO for fiscal year 2020, forfeiting all outstanding and unvested equity awards in connection with his resignation on March 13, 2020. Pursuant to Item 402(v) of Regulation S-K, the fair value of such forfeited equity awards as of the end of the prior fiscal year is taken as a deduction in calculating CAP, which fair value was equal to $5,278,134.

  70. Pay versus Performance

    | NARRATIVE DISCLOSURE TO PAY VERSUS PERFORMANCE TABLE |

  71. CEO Pay Ratio

    CEO Pay Ratio As of December 31, 2023, the Company employed approximately 1,997 people, all in the United States. Using a consistently applied compensation measure, we determined as of December 31, 2023 the total annual cash compensation of each of our employees (excluding our Chief Executive Officer), and then identified the “median employee” within our employee population. To identify the median compensated employee, we used total annual cash compensation, including base salary, actual bonus paid and overtime and allowances, as applicable. Salaries were annualized for those full- and part-time employees who did not work for the full year. Reasonable estimates of cash compensation were made for those employees who were hired during 2023 using current base salary and target bonus amounts and any overtime or allowances paid during 2023. Once the median employee was identified, we determined his or her annual total compensation in accordance with Item 402(c)(2)(x) of Regulation S-K as required pursuant to SEC rules, which resulted in annual total compensation for the median employee equal to $106,876 for 2023. This calculation is the same calculation used to determine total compensation for purposes of the 2023 Summary Compensation Table with respect to each of the Named Executive Officers. Our Chief Executive Officer’s 2023 total compensation was $5,787,960. Therefore, the ratio of our Chief Executive Officer’s compensation to the median employee’s compensation was approximately 54 to 1 for 2023.

  72. CEO Pay Ratio

    | Employee | 2023 Annual Total Compensation ($) | Estimated Pay Ratio | | Chief Executive Officer | 5,787,960 | 54:1 | | Median employee, other than our CEO | 106,876 | |

  73. CEO Pay Ratio

    SEC rules do not specify a single methodology for identification of the median employee, and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to the Company’s pay ratio as disclosed above. Neither the Compensation Committee nor management of the Company used the pay ratio measure in making compensation decisions.