OTHER
CORPORATE GOVERNANCE MATTERS
All of the members of the Board are
independent within the meaning of SEC regulations and the NASDAQ listing
standards, with the exception of Michael J. Caliel. Mr. Caliel is considered an
inside director because of his employment as an executive of the Company. During
Mr. Browns service as interim President and CEO,
he was not considered independent. Following such service, which did not last
longer than a year, the Board of Directors determined that he is independent
under applicable SEC regulations and the NASDAQ listing standards.
Layne Christensen Company
|
|
19
|
Table of
Contents
TRANSACTIONS WITH MANAGEMENT/RELATED-PARTY
TRANSACTIONS
The Company considers any transaction that
would require disclosure under Item 404(a) of Regulation S-K to be a
related-party transaction. The Company has an Employee Conflict of Interest
Policy that requires employees to identify potential conflicts of interest,
including related-party transactions, to the Compliance Department. Furthermore,
the Companys Audit Committee must review and approve all related-party
transactions that are required to be disclosed pursuant to Item 404(a) of
Regulation S-K.
The Company was not a party to any
transactions with any directors or executive officers of the Company during the
last fiscal year requiring disclosure under the regulations of the Securities
and Exchange Commission.
The Company has a Code of Business Conduct
and Ethics that applies to all directors and employees of the Company, including
the chief executive officer, chief financial officer and the chief accounting
officer. The Code of Business Conduct and Ethics is available free of charge on
the Companys website under the heading Governance on the Investor Relations
page (http://investor.laynechristensen.com/governance.cfm).
Table of
Contents
|
COMPENSATION
DISCUSSION AND ANALYSIS
|
The following is a discussion and analysis
of the compensation arrangements of our named executive officers (our NEOs or
Executives) for fiscal 2017. We recommend that it be read together with the
compensation tables and related disclosures below.
EXECUTIVE SUMMARY WHO WE ARE AND HOW WE PAY OUR
EXECUTIVES
Each of Laynes business units is a leader
in its industry:
Our Strategy to
Unlock Value for our Shareholders
|
Laynes management is rapidly executing a
strategy to transform Layne:
FY16
|
|
|
FY18
|
|
|
|
Strategic Review
|
|
|
|
Business Performance
Improvement
|
|
|
|
Unlock Value
|
|
|
●
Initiated strategic
focus to streamline portfolio
●
Addressed
operational issues
●
Identified growth
opportunities
|
|
|
●
Cost
reductions
●
Procurement
savings
●
Enhanced working
capital management
|
|
|
●
Investing in core
offerings and capabilities
●
Leverage and expand
leading market positions
|
|
Layne Christensen Company
|
|
21
|
Table of
Contents
COMPENSATION DISCUSSION AND
ANALYSIS
|
|
|
|
Fiscal 2017
Performance Highlights
|
Our Divisions
|
Inliner
|
|
Mineral Services
|
|
Water Resources
|
|
Heavy Civil
|
|
|
Revenue: $196.8M
Backlog: $117.4M
|
|
Revenue: $63.8M
|
|
Revenue: $204.6M
Backlog: $49.2M
|
|
Revenue: $137.2M
Backlog: $193.4M
|
|
|
●
Liner tube manufacturing
●
Cured-in-place pipe (CIPP) construction
●
Program management
|
|
●
Exploratory and mine site drilling
●
Borehole services
●
Mine water management
|
|
●
Drilling
●
Repair and maintenance
●
Treatment and water management
|
|
●
Pipeline installation
●
Treatment plants
●
Wastewater collection
●
Marine, biogas, tunneling and water
supply
|
|
|
|
|
|
|
|
|
|
|
* Revenues
are for FY17; Backlog as of 1/31/17
Fiscal 2017 Stock Price
Performance
* Monthly
average closing price data from Yahoo Finance
Executive
Compensation Objectives
|
Our compensation program for our
Executives is designed to:
●
|
attract and retain top-quality
executives;
|
●
|
tie annual and long-term equity
incentives to achievement
of measurable
corporate, strategic, business unit, safety
and individual performance objectives; and
|
●
|
align the Executives incentives
with stockholder value
creation.
|
Pay for
Performance Philosophy
|
Our executive compensation program seeks
to achieve these objectives and to implement our commitment to a strong
pay-for-performance philosophy by emphasizing
performance-based incentive compensation under our Executive Short-Term
Incentive Plan (the STI Plan) and our Long-Term Incentive Plan (the LTI
Plan).
CEO and Other NEOs Target Compensation
Mix
Table of
Contents
|
COMPENSATION DISCUSSION AND
ANALYSIS
|
|
|
The Board and Compensation Committee
engage in robust oversight of Laynes executive compensation program. Below is a
summary of the key features of our executive compensation program:
We Do:
●
Pay for Performance
using a compensation structure that includes performance-based annual and
LTI awards that are aligned with stockholder interests
●
Use a mix of cash
and equity incentives tied to short-term financial performance and
long-term value creation
●
Maintain share
ownership guidelines for the Companys CEO, CFO and General
Counsel
●
Have a Clawback
policy
●
Provide limited and
modest benefits to Executives on the same terms as all Company
employees
●
Have an independent
compensation consultant that reports directly to the Compensation
Committee
|
We Do
Not:
●
Offer supplemental
executive retirement plan benefits to our Executives
●
Provide any material
perquisites to executives
●
Engage in option
backdating or re-pricing
●
Permit executive
officers and directors to engage in certain types of activity, such as
short sales or buying or selling put or call options of any of our
securities
●
Encourage excessive
risk or inappropriate risk taking through our incentive
programs
|
At our 2016 Annual Meeting, our Say on Pay
proposal received support from 82% of votes cast. The board believes the
percentage of votes cast for the Companys named executive officer
compensation reflects the Committees continued focus on ensuring that the total
short- and long-term incentive
compensation for
the Companys executive officers is linked to the Companys performance as
discussed elsewhere in this Proxy Statement.
We continue to pay close attention to the
views of Laynes shareholders regarding executive compensation and other
matters.
NAMED
EXECUTIVE OFFICERS
The following Executives are the Named
Executive Officers included in the Summary Compensation Table on page 33:
Name
|
|
Title
|
Michael J.
Caliel
|
|
President and Chief Executive Officer
|
J. Michael
Anderson
|
|
Chief Financial Officer and Senior Vice
President
|
Steven F.
Crooke
|
|
Senior Vice President, Chief Administrative Officer and
General Counsel
|
Kevin
Maher
|
|
Senior Vice President of Water & Mineral
Services
|
Larry
Purlee
|
|
President of Inliner
|
To assist in achieving the goals outlined
above, our compensation program is designed to provide competitive compensation
that rewards both short-term results and long-term strategic contributions that
reinforce sustained business performance and discourage excessive risk-taking.
The program consists of the following four core components:
Layne Christensen Company
|
|
23
|
Table of
Contents
COMPENSATION
DISCUSSION AND ANALYSIS
|
|
|
|
These components are described below,
together with the decisions made under each component for fiscal 2017. We also
pay discretionary bonuses if the Committee determines such awards are necessary
to appropriately reward performance.
The following sections also contain
information on the performance targets for the various compensation components,
the extent to which they were achieved, and how the compensation under each
component was determined.
Our compensation plans tie a significant
portion of the Executives total compensation to our financial performance. The
Committee believes that the Companys target total compensation program should
ideally be set at, or near, the 50th percentile of the market. Based on the most
recent benchmarking study provided by the Committees compensation consultant,
the aggregate target total compensation of our Executives is slightly below the
50th percentile of the benchmark data. However, due to the decrease in the
Companys stock price and related performance challenges, the Company believes
that the Executives realized total
compensation for the past three fiscal years has likely been significantly below
the 50th percentile.
The Committee annually reviews base
salaries, and recommends adjustments from time to time to realign our salaries
with market levels paid by other companies for similar positions after taking
into account individual performance, responsibilities, experience, autonomy,
strategic perspectives and marketability, as well as the recommendation of the
Chief Executive Officer.
For fiscal 2017, the Committee, with input
from Mr. Caliel (for Executives other than himself), recommended to the Board
that no changes be made to the base salaries
for
Messrs. Caliel, Anderson and Crooke. In making this recommendation, the
Committee noted that the salaries for Messrs. Caliel, Anderson, Crooke and
Purlee had been either recently established or adjusted. The Committee, with
input from Mr. Caliel, recommended to the Board that Mr. Mahers salary be
increased from $265,250 to $300,000 in connection with his promotion to Senior
Vice President, Water and Mineral
Services.
The table below lists the Executives
annual base salaries for fiscal 2017.
Executive
|
|
Base Salary
|
Michael J. Caliel
|
|
$660,000
|
J.
Michael Anderson
|
|
$400,000
|
Steven F. Crooke
|
|
$400,000
|
Kevin Maher
|
|
$300,000
|
Larry Purlee
|
|
$264,000
|
Short-Term
Incentive Plan
|
The STI Plan is designed to annually
reward participants for their performance and contributions to the Companys
overall financial and operational performance. Participants may receive awards
based on the extent to which they meet pre-established annual performance goals
approved by the Committee in the first quarter of each fiscal year. In general,
performance goals relate to both corporate-level and individual performance, and
in the case of division presidents, division-level performance.
Consistent with a strong
pay-for-performance philosophy, the STI Plan is structured to generally provide
increases in short-term incentive compensation (expressed as
a percentage of base salary) if the Executive exceeds
established targets and decreases in short-term incentive compensation if the
Executive fails to meet established targets.
Bonus opportunities for each Executive are
expressed as a percentage of base salary
and are based on the executives position and
scope of responsibilities. Consistent with our pay-for-performance philosophy,
Executives may earn up to twice their target based on the degree of achievement
relative to the pre-established annual performance goals.
Table of
Contents
|
COMPENSATION DISCUSSION AND
ANALYSIS
|
|
|
The total target annual incentive award
opportunities of each participating Executive under the STI Plan for fiscal 2017
are listed below.
Target Annual Incentive Award
Opportunity
(as a % of base
salary)
Executive
|
|
If Threshold
Achieved (1)
|
|
If Target
Achieved
|
|
If Maximum
Achieved
|
Michael J. Caliel
|
|
74.0%
|
|
100%
|
|
200%
|
J.
Michael Anderson
|
|
55.5%
|
|
75%
|
|
150%
|
Steve F. Crooke
|
|
44.4%
|
|
60%
|
|
120%
|
Kevin Maher
|
|
40.8%
|
|
60%
|
|
120%
|
Larry Purlee
|
|
44.4%
|
|
60%
|
|
120%
|
(1)
|
In general, an Executive will
receive a payout of 80% of the target annual incentive award opportunity
related to a particular performance goal (i.e., Adjusted EBTIDA, safety,
individual performance) if the threshold for that goal is achieved.
However, the payout percentage is 50% for achieving the threshold for
individual performance and Minerals division Adjusted EBITDA. The
thresholds detailed above are based on the weighted payouts for each
Executive and range from 44% to 74%.
|
Setting Fiscal
2017 Targets
|
General.
In
setting the fiscal 2017 targets, the Committee considered information in the
Companys business plans and preliminary recommendations from Mr. Caliel (for
Executives other than himself; see Role of Executive Officers below). The
goals for fiscal 2017 for our Corporate Executives (Messrs. Caliel, Anderson and
Crooke) were a combination of Company Adjusted EBITDA, safety and individual
performance goals. These Executives also had an additional Company financial
goal of enhancing the Companys balance sheet. For the division presidents
(Messrs. Maher and Parlee), the fiscal 2017 goals were a combination of Division
Adjusted EBITDA, Company Adjusted EBITDA, safety and individual performance
goals.
Safety.
The
safety goals were based on an improvement in the Total Recordable Incident Rate
(TRIR) and Lost Time Incident Rate (LTIR) on a consolidated basis for Messrs.
Caliel, Anderson and Crooke or for the applicable division(s) for Mr. Maher and
Mr. Purlee. The threshold, target and maximum safety goals were equal to
improvements of 5%, 10% and 15%, respectively, in the TRIR and LTIR from the
prior year. For Messrs. Caliel, Anderson and Crooke, they had an additional
Company safety goal of strengthening the Companys safety culture.
Individual.
The
individual performance goals were related to the achievement of various goals
set forth in the business plan for each participating Executives respective
corporate function or division.
Adjusted
EBITDA.
The table below lists the Adjusted EBITDA goals for fiscal 2017
(in thousands). Adjusted EBITDA is generally defined as net income or loss from
continuing operations before net interest expense, income taxes, restructuring
costs and non-cash items (such as depreciation, amortization and share-based
compensation) and excluding equity in earnings and losses from minority
investments, but including cash dividends or distributions received from
minority investments.
Entity
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Layne Christensen Company
|
|
|
$23,274
|
|
|
|
$29,093
|
|
|
|
$36,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inliner Division
|
|
|
$19,135
|
|
|
|
$23,919
|
|
|
|
$29,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water Resources Division
|
|
|
$22,506
|
|
|
|
$32,151
|
|
|
|
$40,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral Services Division
|
|
|
$4,103
|
|
|
|
$8,206
|
|
|
|
$12,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Layne Christensen Company
|
|
25
|
Table of
Contents
COMPENSATION
DISCUSSION AND ANALYSIS
|
|
|
|
The table below lists for fiscal 2017, the
relative weighting of the performance goals for the Executives:
Weighting of Performance
Goals
Executive
|
|
Company
Financial Goals
|
|
Division
Adjusted EBITDA
|
|
Safety
|
|
Individual
|
|
|
|
|
|
|
|
|
|
Michael J. Caliel
|
|
|
70%
|
|
|
|
|
|
10%
|
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Michael
Anderson
|
|
|
70%
|
|
|
|
|
|
10%
|
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve F.
Crooke
|
|
|
70%
|
|
|
|
|
|
10%
|
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Maher
(1)
|
|
|
20%
|
|
|
40%
|
|
|
20%
|
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry
Purlee
|
|
|
20%
|
|
|
40%
|
|
|
20%
|
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For Mr. Maher, the Division
Adjusted EBITDA and Safety weightings were split 60% for the Water
Resources division and 40% for the Mineral Services
division.
|
Awards for Fiscal 2017
In considering fiscal 2017 awards under
the STI Plan, the Committee considered the following factors:
●
|
The Inliner division achieved 134%
of its Adjusted EBITDA target; the Adjusted EBITDA targets for the other
divisions and Corporate were not met.
|
●
|
Made significant progress towards
the goal of enhancing Laynes balance sheet. In particular, our Executives
worked to reduce working capital, improve the Companys cash position,
eliminate certain covenants in the Companys ABL credit facility and
reduce SG&A expenses. As a result, the Committee awarded to Messrs.
Caliel, Anderson and Crooke a payout of 20% of the targeted amount related
to the achievement of these financial goals.
|
●
|
The Minerals and Inliner divisions
achieved 200% and 92%, respectively, of their safety
targets.
Although the Company on a
consolidated basis did not achieve the numerical safety threshold, the
Committee determined that Messrs. Caliel, Anderson and Crooke had met
certain other safety goals by evolving Laynes safety culture and
establishing a strong foundation for improved safety performance. As a
result, the Committee awarded to Messrs. Caliel, Anderson and Crooke a
payout of 20% of the targeted amount related to these safety
goals.
|
●
|
Each Executive achieved all of his
individual performance goals, and the Committee awarded 100% of the
portion of the targeted STI Plan bonus based on individual performance to
Messrs. Caliel, Anderson, Crooke and Maher and 139% of the portion of the
targeted STI Plan bonus based on individual performance to Mr.
Purlee.
|
Despite strong performance relative to
several key goals, particularly within our Inliner division, we did not meet our
goals for Company Adjusted EBITDA for fiscal 2017. As a result, the Committee
recommended, and the Board approved, the payment of the following STI Plan
bonuses well below target levels for most of the participating
Executives:
Executive
|
|
Payout
|
|
% of Target
Awards
|
Michael J. Caliel
|
|
$
|
237,000
|
|
36%
|
J.
Michael Anderson
|
|
$
|
108,000
|
|
36%
|
Steve F. Crooke
|
|
$
|
86,400
|
|
36%
|
Kevin Maher
|
|
$
|
64,800
|
|
36%
|
Larry
Purlee
|
|
$
|
200,000
|
|
126%
|
Table of
Contents
|
COMPENSATION DISCUSSION AND
ANALYSIS
|
|
|
Equity
Compensation (Long-Term Incentive Plan)
|
The Committee believes that aligning the
interests of stockholders and its Executives is supported through the grant of
stock-based awards, which expose the Executives to the risks of declining stock
prices and provide an incentive for Executives to maximize stockholder value.
2006 Equity Incentive
Plan.
Awards under the Companys 2006 Equity Incentive Plan are designed
to encourage Executives to acquire a proprietary and vested interest in the
growth and performance of the Company, as well as to assist the Company in
attracting and retaining Executives by providing them with the opportunity to
participate in the success and profitability of the Company. The 2006 Plan
permits the grant of stock options, stock appreciation rights, restricted stock,
restricted stock units, performance shares and performance units.
The Board and the Committee adopted the
LTI Plan for the purpose of making equity grants on an annual basis to certain
key employees. Under the LTI Plan, the Board has historically established an
equity pool (the LTI Pool) within the first 90 days of each fiscal year. The
size of the LTI Pool in any year will generally be limited to 2% of the average
market capitalization (the number of outstanding shares multiplied by the market
price) of the Company during the 30-day period ending on January 31st of the
award year. However, due to the Companys low stock price on January 31, 2017,
the 2% limit was waived by the Board and the Committee for fiscal 2017, as
permitted under the 2006 Plan. Within the limits of the LTI Pool, the Board will
make awards to participants based on recommendations made by the Compensation
Committee.
A participants award from the LTI Pool
(i.e., the participants LTI Target Opportunity) is expressed as a percentage
of the participants current base salary, which will vary depending on the
participants position in the Company. Under the LTI Plan, the percentages range
from 200% of base salary for the Companys Chief Executive Officer to 60% of
base salary for the Companys division and senior vice-presidents. A percentage
of each participants LTI Target Opportunity, as determined by the Committee, is
granted in the form of time-vested restricted stock units (RSUs) and
performance shares. The Committee has sole discretion to increase or decrease
these percentages, recognizing that circumstances surrounding annual LTI grants
will change from year to year.
Fiscal 2017 Grants
Under LTI Plan.
Under the LTI Plan for fiscal 2017, the Committee
recommended and the Board approved equity awards consisting of a combination of
time-vested restricted stock units and performance shares. The percentages for
the time-vested RSUs and performance shares were set at 40% and 60%,
respectively, of each participants LTI Target Opportunity. Due to the limited
number of shares available under the 2006 Plan, the awards for fiscal 2017 were
reduced to 95% of the LTI Target Opportunities authorized under the LTI Plan.
Awards were made to participating Executives that were employed by the Company
on April 1, 2016.
Time-Vested Restricted
Stock Units.
The Committee recommended, and the Board approved, grants of
time-vested RSUs determined by dividing the RSU amount set forth in the table
below by the closing price of our Common Stock as of April 1, 2016 (the date of
grant).
Name of
Executive
|
|
RSU Amount
|
|
Number of
RSUs
|
Michael J.
Caliel
|
|
$
|
501,600
|
|
71,250
|
J. Michael
Anderson
|
|
$
|
152,000
|
|
21,591
|
Steven F. Crooke
|
|
$
|
152,000
|
|
21,591
|
Kevin Maher
|
|
$
|
85,500
|
|
12,145
|
Larry Purlee
|
|
$
|
60,192
|
|
8,550
|
Each RSU grant vests and is payable on the
third anniversary of the grant date, or, if earlier, upon the participants
retirement from the Company, which can occur only if the participant is age 60
and has been employed with the Company for at least five years. The participant
is required to hold and not sell any shares issued in connection with the
settlement of a vested RSU until the participants separation from the Company.
See Executive Compensation and Other InformationPotential Payments Upon Change
of Control, Retirement, Death or Disability below for descriptions of the amounts Executives may receive upon a
change in control, retirement, death or disability.
Performance
Shares.
The Committee also recommended, and the Board approved, grants of
performance shares of Company Common Stock determined by dividing the
Performance Share amount set forth in the table below by the value of such
shares determined by the Companys performance share valuation method as of
April 1, 2016 (the date of grant).
Name of Executive
|
|
Performance Share
Amount
|
|
Number of
Performance Shares
|
Michael J. Caliel
|
|
$
|
752,400
|
|
160,085
|
Michael Anderson
|
|
$
|
228,000
|
|
48,511
|
Steven F. Crooke
|
|
$
|
228,000
|
|
48,511
|
Kevin Maher
|
|
$
|
128,250
|
|
27,287
|
Larry Purlee
|
|
$
|
90,288
|
|
19,210
|
Layne Christensen Company
|
|
27
|
Table of
Contents
COMPENSATION DISCUSSION AND
ANALYSIS
|
|
|
|
If the trailing average closing price of
the Companys Common Stock during any 30 consecutive trading-day period is at or
above any of the following stock price goals during the period commencing on
April 1, 2016 and ending on April 1, 2019, then the performance shares will vest
as follows: 33% will vest if at or above $10.56 per share; 67% will vest if at
or above $12.32 per share and 100%
will vest if
at or above $14.08 per share. See Executive Compensation and Other
InformationPotential Payments Upon Change of Control, Retirement, Death or
Disability below for descriptions of the amounts Executives may receive upon a
change in control, retirement, death or disability.
ROLE OF
COMPENSATION CONSULTANTS
To assist in carrying out its
responsibilities, the Committee has from time to time retained independent
consultants to provide advice on executive compensation and to perform specific
tasks as requested by the Committee. Any consultant retained by the Committee
reports directly to the Committee. On an annual basis, the Committee reviews and
assesses the independence and performance of any consultant then engaged in
order to confirm that the consultant is independent, free of any potential
conflicts and meets all applicable regulatory requirements.
For most of fiscal 2017, the Committee
engaged the independent compensation consulting firm of Frederic W. Cook &
Co. (F.W. Cook) on a limited basis to assist with specific situations,
including a review of the Companys compensation peer group. The Compensation
Committee
assessed the independence of F.W. Cook pursuant to applicable SEC rules
and concluded that no conflict of interests existed preventing F.W. Cook from
independently advising the Compensation Committee. The Committee did not retain
F.W. Cook to perform an in-depth market analysis for fiscal 2017. Instead, the
Committee relied on the most recent market analysis prepared by F.W. Cook four
years ago and the market analysis prepared by F.W. Cook for the Chief Executive
Officer and Chief Financial Officer in connection with the hiring of Mr. Caliel
in fiscal
2015 and Mr. Anderson in fiscal 2016.
The Committee determined that it was not necessary to update the market analysis
given the absence of significant increases in base salaries and lack of
significant changes to the compensation program.
In addition, F.W. Cook provided advice to
the Committee in connection with a review of the compensation program for the
Companys independent directors.
In late fiscal 2017, the Compensation
Committee engaged Meridian Compensation Partners, LLC (Meridian) as its new
independent compensation consultant.
Meridian
provided an objective perspective as to the reasonableness of our executive
compensation programs and practices and their effectiveness in supporting our
strategic and compensation objectives. Meridian advised the Compensation
Committee with respect to compensation trends and best practices, incentive plan
design, competitive pay levels, proxy disclosure, and individual pay decisions
with respect to our Executives. The Compensation Committee has assessed the
independence of Meridian pursuant to applicable SEC rules and concluded that no
conflict of interests exists that would prevent Meridian from independently
advising the Compensation Committee.
BENCHMARKING
DATA
From time to time, the Committee directs
its consultant to review the base salary and short- and long-term incentive
levels of our Executives. In connection with these reviews, the Committees
consultant analyzes and matches the position and responsibilities of each
Executive to proxy statement data from a peer group of companies in order to
ensure that our compensation programs are market-based.
Peer groups require periodic review to
ensure that the peers continue to provide an appropriate benchmark for executive
pay and company performance. At the beginning of fiscal 2014, based on the
recommendation of F.W. Cook, the Committee selected a peer group of companies
based on similar industry classifications, organizational scope and size,
financial metrics and comparable business operations. The Committee believed
that the peer group consisted of those companies for which executive
compensation information was publicly available that was most comparable to the
Companys various businesses. The Committee also used general industry survey
data for benchmarking purposes.
At the beginning of fiscal 2017, the
Committee requested F.W. Cook to undertake a review of the Companys peer group
due to changes in the Companys business strategy and recent divestitures. As
part of its review, F.W. Cook noted that creating a representative peer group
for the Company was difficult because several of the Companys direct
competitors are principally either privately held and/or incorporated in foreign
jurisdictions that do not require public disclosure of executive compensation.
Also, the uniqueness of the Companys businesses results in a large number of
companies in the peer group that are only tangentially related to the Company or
focused only on one of the Companys lines of business. As a result, F.W. Cook
recommended that the Committee should rely more on general industry survey data.
The Compensation Committee adopted F.W. Cooks recommendation to rely on general
industry survey data and for fiscal 2017 did not utilize a peer group for
executive compensation purposes.
Table of
Contents
|
COMPENSATION DISCUSSION AND
ANALYSIS
|
|
|
ROLE OF EXECUTIVE
OFFICERS
Michael J. Caliel, our Chief Executive
Officer, regularly attended meetings of the Committee during fiscal 2017 but was
not a member of the Committee and did not vote on Committee matters. Mr. Caliel
was not present for certain portions of Committee meetings, such as when the
Committee held executive sessions or discussed CEO compensation.
In early fiscal 2017, Mr. Caliel submitted
compensation recommendations to the Committee for each of the Executives (other
than himself). In March 2018, Mr. Caliel also recommended to the Committee the
amount of STI Plan bonuses to be paid to each of the Executives (other than
himself) for fiscal 2017.
BENEFITS
Our Executives who meet minimum service
requirements are entitled to receive medical, dental, life and short-term and
long-term disability insurance benefits and may participate in a capital
accumulation plan, as described
below. Such
benefits are provided equally to all Company employees, other than where
benefits are provided pro-rata based on the respective Executives salary (such
as the level of disability insurance coverage).
Capital Accumulation Plan
|
Each of the Companys executive officers,
including the Executives, and substantially all other employees of the Company
are eligible to participate in the Capital Accumulation Plan. The Capital
Accumulation Plan is a defined contribution plan qualified under Section 401,
including Section 401(k), of the Internal Revenue Code of 1986, as
amended.
The Capital Accumulation Plan provides for
two methods of Company contributions: (i) a Company matching contribution tied
to and contingent upon participant deferrals and (ii) a Company profit sharing
contribution that is not contingent upon participant deferrals. The amount, if
any, of Company paid contributions, both matching and profit sharing, for each
fiscal year under the Capital Accumulation Plan is determined by the Board of
Directors in its discretion. Each eligible employee meeting certain service
requirements and electing to defer a portion of his or her compensation under
the Capital Accumulation Plan participates in the Companys matching
contribution program pursuant to a formula as designated by the Board of
Directors.
Currently, the Company makes a matching
contribution that is equal to 100% of a participants salary deferrals that do
not exceed 3% of the participants compensation
plus 50% of a participants salary deferrals between 3% and 5% of the
participants compensation. This form of matching contribution qualifies as what
is known as a safe harbor matching contribution under the Employee Retirement
Income Security Act of 1974. In addition, each eligible employee meeting certain
service requirements participates in Company profit sharing contributions to the
Capital Accumulation Plan in the proportion his or her eligible compensation
bears to the aggregate compensation of the group participating in the Capital
Accumulation Plan. At the option of the Board of Directors, all or any portion
of Company contributions to this plan may be made in the Companys Common Stock.
Furthermore, each participant can voluntarily contribute, on a pre-tax basis, a
portion of his or her compensation (which cannot exceed $18,000 for participants
who are 49 or younger, or $24,000 for participants who are 50 or older, for the
calendar year 2016) under the Capital Accumulation Plan. A participants account
will be placed in a trust and invested at the participants direction in any one
or more of a number of available investment options. Each participant may
receive the funds in his or her Capital Accumulation Plan account upon
termination of employment.
For services rendered in fiscal 2017,
total Company contributions under the Capital Accumulation Plan were as
follows:
Name of Executive
|
Company Contributions under the
Capital
Accumulation Plan
|
Michael J. Caliel
|
$
|
10,600
|
Michael Anderson
|
$
|
10,600
|
Steven F. Crooke
|
$
|
10,600
|
Kevin Maher
|
$
|
10,707
|
Larry Purlee
|
$
|
10,600
|
Layne Christensen Company
|
|
29
|
Table of
Contents
COMPENSATION DISCUSSION AND
ANALYSIS
|
|
|
|
The Companys Key Management Deferred
Compensation Plan was designed to provide additional retirement benefits and
income tax deferral opportunities for a select group of management and highly
compensated employees. The plan allows such key executives, including the
Executives, to defer the receipt of up to 50% of base salary and 100% of
performance-based awards. The Company may match contributions to this plan in an
amount determined annually by the Committee, generally based on recommendations
from Company management. Currently, the Company is not making a matching
contribution under the plan. In addition, the Company may make contributions on
a discretionary basis.
Company contributions to the plan are
subject to a five-year vesting schedule, with 50% of all such contributions
becoming vested after three years of completed plan participation and 100% of
all such contributions becoming vested after five years of completed plan
participation or upon a participant turning 60 years of age. However, Company
contributions become fully vested if a participant is involuntarily terminated
by the Company within one
year after a change of
control of the Company. If a plan participant is not employed by the Company as
of the last day of the plan year other than by reason of his or her retirement,
death or disability, the Company contributions, if any, for such plan year shall
be zero. In the event of an Executives retirement, disability or death, he or
she is credited with the Company contribution, if any, for such plan
year.
The deferred compensation plan is a
nonqualified and unfunded plan, and participants have only an unsecured promise
from the Company to pay the amounts when they become due from the general assets
of the Company. The Committee offers this benefit to provide Executives with an
opportunity to save, on a tax-deferred basis, amounts in addition to what they
can save under the Companys qualified retirement plans for retirement or future
dates. The Committee believes this plan is important as a retention and
recruitment tool because most of the companies with which the Company competes
for executive talent provide a deferral plan for their executives.
PERQUISITES
The Company believes its executive
compensation program described above is generally sufficient for attracting
talented executives and that providing other significant perquisites
is generally neither necessary nor in the
stockholders best interests. No Executives received perquisites with a value in
the aggregate in excess of $10,000 during fiscal 2017.
CLAWBACK
POLICY
The Board has adopted a policy that gives
the Board, or if designated by the Board, the Committee, the ability to recoup
cash and equity-based incentive compensation due to misconduct resulting in the
Companys material noncompliance with any financial reporting requirement under
the securities laws. For purposes of the clawback policy, incentive compensation
does not include compensation, in any form, for which vesting, payment,
delivery, or exercisability is not based on goal
or performance achievement. The Board, or the Committee, has discretion to seek
recovery of any amount that it determines was received
by any Executive during the
three-year period preceding the date on which the Company is required to prepare
an accounting restatement; other than payments of amounts that were earned and
deferred by the Executive more than three years prior to such date.
STOCK OWNERSHIP
GUIDELINES
The Company has stock ownership guidelines
for certain executive officers as follows:
CEO
|
|
3x
base salary
|
|
|
|
CFO
|
|
equal to
base salary
|
|
|
|
General
Counsel
|
|
equal to
base salary
|
Executive officers subject to these
guidelines are required to achieve the applicable ownership level within five
years of the later of the effective date of the policy (April 15, 2015) or the
date an individual becomes subject to the stock ownership guidelines. If an
individual becomes subject to a greater ownership amount for any reason (e.g.,
due to promotion or increase in base salary), the individual is expected to meet
the higher ownership amount within the later of the original period of becoming
subject to the stock ownership guidelines or five years from the effective date
of the increased requirement.
Table of
Contents
|
COMPENSATION DISCUSSION AND
ANALYSIS
|
|
|
HEDGING
POLICIES
We do not have a policy with respect to
hedging the economic risks of stock ownership. However, our policy statement
regarding Securities Trading and Handling of Nonpublic Information prohibits our
executive officers and
directors from engaging in
certain types of hedging activity, such as short sales or buying or selling put
or call options of any of our securities.
ADVISORY VOTE ON
EXECUTIVE COMPENSATION
The Company conducts an advisory vote on
executive compensation each year at its annual meeting. While the votes are not
binding on the Company, its Board, or the Committee, the Committee believes that
an annual advisory vote on executive compensation offers stockholders the
opportunity to express their views regarding the Companys compensation program
and the Committees decisions on executive compensation. The Board and the
Committee value the opinions of stockholders and each year the Committee closely
examines stockholders concerns and evaluates whether any actions are necessary
to address those concerns.
At last years annual meeting,
approximately 82% of the votes cast for and against the advisory vote on
executive compensation were voted for the Companys named executive officer
compensation as disclosed in the proxy statement. The board believes the
percentage of votes cast for the Companys named executive officer
compensation reflects the Committees continued focus on ensuring that the total
short- and long-term incentive compensation for the Companys executive officers
is linked to the Companys performance as discussed elsewhere in this Proxy
Statement.
TAX AND ACCOUNTING
TREATMENT OF COMPENSATION
Deductibility of Compensation
|
The Committee has taken, and it intends to
continue to take, reasonable steps necessary to assure the Companys ability to
deduct for federal income tax purposes compensation provided to senior
executives. However, such steps may not always be practical or consistent with
the Committees compensation objectives. Given that the earnings limit for
deductibility has remained fixed since 1993, and the value of
some compensation elements cannot be determined until
year-end, there are circumstances in which some executive compensation may not
meet tax deductibility requirements. The Company can deduct all of the
compensation shown in the Summary Compensation Table for fiscal 2017, excluding
the value of time-vesting RSUs, which are subject to taxation in a later
period.
Nonqualified Deferred
Compensation
|
Certain of the Companys nonqualified
compensation and benefits arrangements, incentive programs and corporate
practices (such as severance, relocation and expense reimbursements) are
considered nonqualified deferred compensation and subject to Section 409A of the
Internal Revenue Code of 1986, as amended, and
the related regulations. In general, Section 409A restricts the timing
and manner of payment (as well as the timing of participant elections) under
these types of taxable compensation programs. The Companys arrangements,
programs and practices comply with these statutory and regulatory
provisions.
Accounting for Stock-Based
Compensation
|
The Company accounts for stock-based
compensation in accordance with the requirements of ASC Topic 718, which
requires the Company to expense the estimated value of certain stock-based
compensation.
Layne Christensen Company
|
|
31
|
Table of
Contents
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
|
|
|
|
REPORT OF THE COMPENSATION
COMMITTEE
|
|
The Compensation Committee has
reviewed and discussed with management the Compensation Discussion and
Analysis included in this Proxy Statement beginning at page 21.
Based on the review and discussion
with management, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in
this Proxy Statement for the Companys 2017 Annual Meeting of Stockholders
and be incorporated by reference into the Companys Annual Report on Form
10-K for the fiscal year ended January 31, 2017.
Respectfully submitted by the
members of the Compensation Committee of the Board of
Directors:
|
|
|
|
|
John T. Nesser III,
Chairman
|
David A.B.
Brown
|
Robert R. Gilmore
|
|
|
|
J. Samuel
Butler
|
Nelson Obus
|
Alan Krusi
|
|
|
|
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
|
The members of the Compensation Committee
are set forth in the preceding section. During the most recent fiscal year, no
Layne Christensen executive officer served as (i) a member of the compensation
committee (or equivalent), or the board of directors, of another entity, one of
whose executive officers served on the Companys Compensation Committee or (ii)
a member of the compensation committee (or equivalent) of another entity, one of
whose executive officers served as a director of the Company.
Table of
Contents
|
EXECUTIVE
COMPENSATION AND OTHER INFORMATION
|
EXECUTIVE
COMPENSATION
The following table sets forth for the
fiscal years ended January 31, 2017, 2016 and 2015, respectively, the
compensation of the Companys named executive officers:
Summary Compensation
Table
Name and Principal
Position
|
|
Fiscal
Year
|
|
Salary
(3)
($)
|
|
Bonus
(4)
($)
|
|
Stock
Awards
(5)
($)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
Change in
Pension
Value
and
Nonqualified
Compensation
($)
|
|
All Other
Compensation
(6)
($)
|
|
Total
($)
|
Michael J.
Caliel
(1)
|
|
2017
|
|
$660,000
|
|
|
|
$1,254,000
|
|
|
|
$237,000
|
|
|
|
$15,670
|
|
$2,166,670
|
President,
Chief
|
|
2016
|
|
660,000
|
|
$198,000
|
|
1,320,002
|
|
|
|
132,000
|
|
|
|
17,848
|
|
$2,327,850
|
Executive
Officer
|
|
2015
|
|
53,308
|
|
54,247
|
|
499,997
|
|
499,999
|
|
|
|
|
|
|
|
$1,107,551
|
and Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Michael
Anderson
(2)
|
|
2017
|
|
400,000
|
|
|
|
380,000
|
|
|
|
108,000
|
|
|
|
13,636
|
|
$901,636
|
Chief Financial
Officer
|
|
2016
|
|
215,385
|
|
160,274
|
|
399,997
|
|
38,200
|
|
|
|
|
|
7,095
|
|
$820,951
|
and Senior
Vice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven F.
Crooke
|
|
2017
|
|
400,000
|
|
|
|
380,000
|
|
|
|
86,400
|
|
|
|
14,775
|
|
$881,175
|
Senior Vice
President-
|
|
2016
|
|
400,000
|
|
72,000
|
|
399,999
|
|
|
|
48,000
|
|
|
|
13,321
|
|
$933,320
|
Chief
Administrative
|
|
2015
|
|
368,058
|
|
|
|
253,584
|
|
158,775
|
|
|
|
|
|
13,611
|
|
$794,028
|
Officer and
General
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry
Purlee
|
|
2017
|
|
264,000
|
|
|
|
150,480
|
|
|
|
200,000
|
|
|
|
15,130
|
|
$629,610
|
President of
Inliner
|
|
2016
|
|
262,875
|
|
|
|
154,502
|
|
|
|
168,538
|
|
|
|
14,192
|
|
$600,107
|
|
|
2015
|
|
257,500
|
|
|
|
253,418
|
|
46,348
|
|
130,398
|
|
|
|
16,278
|
|
$703,942
|
Kevin
Maher
|
|
2017
|
|
300,000
|
|
|
|
213,750
|
|
|
|
64,800
|
|
|
|
14,110
|
|
$592,660
|
Senior Vice President
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water & Mineral Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
All amounts reported for Mr.
Caliel for fiscal 2015 reflect the portion of the year that he was
employed by the Company. Mr. Caliels employment commenced on January 2,
2015.
|
|
(2)
|
All amounts reported for Mr.
Anderson for fiscal 2016 reflect the portion of each year that he was
employed by the Company. Mr. Andersons employment commenced on July 20,
2016.
|
|
(3)
|
Reflects salary earned for fiscal
2017, fiscal 2016 and fiscal 2015, respectively. There were no salary
deferrals in fiscal 2017.
|
|
(4)
|
A portion of the incentive
compensation paid to Messrs. Caliel and Crooke with respect to fiscal 2016
is reported in the Bonus column rather than the Non-Equity Incentive
Plan Compensation column since the Company did not meet the financial
performance goals set for those named executive officers under the
Executive Incentive Compensation Plan. However, the Compensation Committee
recommended, and the Board approved, discretionary bonuses for those named
executive officers for fiscal 2016 to recognize their efforts to improve
the Companys liquidity, make cost reductions and improvements in safety.
Also includes a prorated bonus for fiscal 2016 for Mr. Anderson under the
STI Plan of $160,274 (based on the number of days worked during fiscal
2016, a target incentive equal to 75% of base salary and assuming a 100%
of target level of achievement for fiscal 2016). This bonus is reported in
the Bonus column rather than the Non-Equity Incentive Plan
Compensation column since this amount was guaranteed to Mr. Anderson. For
fiscal 2015, includes a prorated bonus for Mr. Caliel under the STI Plan
of $54,247 (based on the number of days worked during fiscal 2015, a
target incentive opportunity equal to 100% of base salary and assuming a
100% of target level of achievement for fiscal 2015). This bonus is
reported in the Bonus column rather than the Non-Equity Incentive Plan
Compensation column since this amount was guaranteed to Mr.
Caliel.
|
|
(5)
|
Amounts reported in the Stock
Awards and Option Awards columns represent the aggregate grant date fair
value of such awards, computed in accordance with ASC Topic 718. Pursuant
to Securities and Exchange Commission rules, the amounts shown for the
fiscal 2017, fiscal 2016 and fiscal 2015 Stock Awards report the value at
the grant date based upon the probable outcome of the performance
conditions that
|
Layne Christensen Company
|
|
33
|
Table of
Contents
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
|
|
|
|
affect the vesting of such
awards. These amounts do not include an estimate of forfeitures related to
any time-based vesting conditions, and assume that the named executive
officer will perform the requisite service to vest in the award. For
assumptions used in determining these values, refer to Note 13 of the
Companys financial statements in the Companys Annual Report on Form 10-K
for the year ended January 31, 2017, as filed with the Securities and
Exchange Commission. For additional information regarding stock awards for
the named executive officers, refer to the Grants of Plan-Based Awards
during Fiscal 2017 and Outstanding Equity Awards at Fiscal Year-End
tables included in this Proxy Statement beginning on page 35.
|
|
(6)
|
Excludes perquisites and other
benefits, unless the aggregate amount of such compensation exceeds
$10,000. All Other Compensation for fiscal 2017 includes Layne Christensen
contributions in the amount of $10,600 for each of Messrs. Caliel,
Anderson, Crooke and Purlee, and in the amount of $10,707 for Mr. Maher,
which accrued during such fiscal year for the accounts of such named
executive officer, under the Companys Capital Accumulation Plan; the cost
of term life insurance paid by the Company for the benefit of Messrs.
Caliel, Anderson, Crooke, Purlee and Maher in the amounts of $3,148;
$1,036; $1,887; $3,430 and $1,261, respectively, and Company matching
contributions to the health savings accounts of Messrs. Caliel, Anderson,
Crooke, Purlee and Maher in the amounts of $1,922; $2,000; $2,288; $1,100
and $2,142, respectively.
|
GRANTS OF
PLAN-BASED AWARDS DURING FISCAL 2017
The following table sets forth information
with respect to each named executive officer concerning grants during the fiscal
year ended January 31, 2017, of awards under both the Companys equity and
non-equity plans.
|
|
|
|
|
Estimated Possible Payouts
Under
Non-Equity Incentive Plan Awards
|
|
Estimated Future Payouts
Under
Equity Incentive Plan Awards
|
|
All
Other
Stock
Awards:
Number
of Shares
of Stock
or
Units
(#)
|
|
Grant Date
Fair
Value of
Stock
and
Option
Awards (1)
($)
|
Name
|
|
Grant Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
Michael J.
Caliel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI
Opportunity
(2)
|
|
|
|
|
$488,400
|
|
$660,000
|
|
$1,320,000
|
|
|
|
|
|
|
|
|
|
|
Time
RSUs
|
|
04/01/16
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,250
|
|
$501,600
|
Performance
shares
|
|
04/01/16
|
(4)
|
|
|
|
|
|
|
|
52,828
|
|
107,257
|
|
160,085
|
|
|
|
752,400
|
J. Michael
Anderson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI
Opportunity
(2)
|
|
|
|
|
222,000
|
|
300,000
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
Time
RSUs
|
|
04/01/16
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,591
|
|
152,000
|
Performance
RSUs
|
|
04/01/16
|
(4)
|
|
|
|
|
|
|
|
16,009
|
|
32,502
|
|
48,511
|
|
|
|
228,000
|
Steven F.
Crooke
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI
Opportunity
(2)
|
|
|
|
|
177,600
|
|
240,000
|
|
480,000
|
|
|
|
|
|
|
|
|
|
|
Time
RSUs
|
|
04/01/16
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,591
|
|
152,000
|
Performance
shares
|
|
04/01/16
|
(4)
|
|
|
|
|
|
|
|
16,009
|
|
32,502
|
|
48,511
|
|
|
|
228,000
|
Larry
Purlee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI
Opportunity
(2)
|
|
|
|
|
117,216
|
|
158,400
|
|
316,800
|
|
|
|
|
|
|
|
|
|
|
Time
RSUs
|
|
04/01/16
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,550
|
|
60,192
|
Performance
shares
|
|
04/01/16
|
(4)
|
|
|
|
|
|
|
|
6,339
|
|
12,871
|
|
19,210
|
|
|
|
90,288
|
Kevin
Maher
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STI
Opportunity
(2)
|
|
|
|
|
122,400
|
|
180,000
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
Time
RSUs
|
|
04/01/16
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,145
|
|
85,500
|
Performance
shares
|
|
04/01/16
|
(4)
|
|
|
|
|
|
|
|
9,005
|
|
18,282
|
|
27,287
|
|
|
|
128,250
|
(1)
|
Amounts reported in the Grant
Date Fair Value of Stock and Option Awards column represent the aggregate
grant date fair value of such awards, computed in accordance with ASC
Topic 718. Pursuant to Securities and Exchange Commission rules, the
amounts shown for the Stock Awards report the value at the grant date
based upon the probable outcome of the performance conditions that affect
the vesting of such awards. The amounts shown for the Option Awards do not
include an estimate of forfeitures related to time-based vesting
conditions, and assume that the named executive officer will perform the
requisite service to vest in the award. For assumptions used in
determining these values, refer to Note 13 of the Companys financial
statements in the Companys Annual Report on Form 10-K for the year ended
January 31, 2017, as filed with the Securities and Exchange Commission.
For additional information regarding stock awards for the named executive
officers, refer to the Summary Compensation and Outstanding Equity
Awards at Fiscal Year-End tables included in this Proxy Statement on
pages 33 and 35, respectively.
|
|
(2)
|
The amounts reported under the
Threshold, Target and Maximum columns in this table are the possible
incentive compensation awards calculated in accordance with the provisions
set forth in the STI Plan. See Compensation Discussion and AnalysisNamed
Executive OfficersShort Term Incentive Plan for a discussion of the
performance goals and award opportunities for fiscal 2017. For fiscal
2017, the bonuses actually paid to the Companys named executive officers
under the STI Plan are reported in the Non-Equity Incentive Plan
Compensation column in the Summary Compensation
Table.
|
Table of
Contents
|
EXECUTIVE COMPENSATION AND OTHER INFORMATION
|
|
|
(3)
|
The grant of RSUs reported for this award will vest on
the third anniversary of each such awards grant date, or, if earlier,
upon the participants retirement from the Company, which can occur only
if the participant is age 60 and has been employed with the Company for at
least five years. See the discussion in the Compensation Discussion and
Analysis under the heading Named Executive Officers
Equity Compensation (Long-Term Incentive Plan)Time-Vested Restricted Stock
Units
on page 27 of this Proxy Statement for a complete
explanation of the vesting of the RSUs reported in this
table.
|
|
(4)
|
The grant of performance shares reported under the
Threshold, Target and Maximum columns for this award will vest, if at all,
in various percentages only if the trailing average closing price of the
Companys Common Stock during any 30 consecutive trading-day period is at
or above the certain stock price goals during the period commencing on
April 1, 2016 and ending on April 1, 2019. See the discussion in the
Compensation Discussion and Analysis under the heading Named Executive
Officers
Equity Compensation (Long-Term
Incentive Plan)Performance Shares
on
page 27 of this Proxy Statement for a complete explanation of the vesting
of the performance shares reported in this table. The Threshold column
reports the number of shares that will vest if a stock price at or above
$10.56 per share is achieved during the vesting period, the Target column
reports the number of shares that will vest if a stock price at or above
$12.32 per share is achieved during the vesting period and the Maximum
column reports the number of shares that will vest if a stock price at or
above $14.08 per share is achieved during the vesting
period.
|
OUTSTANDING EQUITY
AWARDS AT FISCAL YEAR-END
The following table lists all outstanding
equity awards held by our named executive officers as of January 31,
2017.
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or Units of
Stock that
Have
Not
Vested (#)
|
|
Market
Value of
Shares or
Units of
Stock
that
Have Not
Vested
($) (6)
|
|
Equity
Incentive
Plan Awards:
Number
of
Unearned
Shares,
Units or
Other Rights
that Have
Not
Vested
(#)
|
|
Equity
Incentive
Plan Awards:
Market Value
or
Payout
Value of
Unearned
Shares, Units
or Other
Rights
that
Have Not
Vested ($) (6)
|
Michael J. Caliel
|
|
|
|
|
109,409
|
(1)
|
|
|
|
|
$10.06
|
|
01/02/2025
|
|
121,536
|
|
$1,267,620
|
|
604,285
|
|
$6,302,693
|
J.
Michael Anderson
|
|
|
|
|
5,000
|
(2)
|
|
5,000
|
(2)
|
|
8.60
|
|
07/20/2025
|
|
21,591
|
|
225,194
|
|
110,239
|
|
1,149,793
|
Steven F. Crooke
|
|
13,125
|
(3)
|
|
|
|
|
|
|
|
42.26
|
|
06/07/2017
|
|
42,762
|
|
446,008
|
|
178,992
|
|
1,866,887
|
|
|
9,826
|
(3)
|
|
|
|
|
|
|
|
35.71
|
|
02/05/2018
|
|
|
|
|
|
|
|
|
|
|
21,277
|
(3)
|
|
|
|
|
|
|
|
15.78
|
|
02/01/2019
|
|
|
|
|
|
|
|
|
|
|
11,476
|
(3)
|
|
|
|
|
|
|
|
21.99
|
|
06/03/2019
|
|
|
|
|
|
|
|
|
|
|
8,569
|
(3)
|
|
|
|
|
|
|
|
27.79
|
|
02/19/2020
|
|
|
|
|
|
|
|
|
|
|
9,333
|
(3)
|
|
|
|
|
|
|
|
33.10
|
|
02/01/2021
|
|
|
|
|
|
|
|
|
|
|
15,430
|
(3)
|
|
|
|
|
|
|
|
24.32
|
|
02/01/2022
|
|
|
|
|
|
|
|
|
|
|
14,977
|
(3)
|
|
|
|
|
|
|
|
21.08
|
|
04/01/2023
|
|
|
|
|
|
|
|
|
|
|
9,979
|
(4)
|
|
4,990
|
(4)
|
|
|
|
|
17.19
|
|
05/01/2024
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(5)
|
|
5,000
|
(5)
|
|
|
|
|
8.22
|
|
12/12/2024
|
|
|
|
|
|
|
|
|
Kevin Maher
|
|
6,450
|
(3)
|
|
|
|
|
|
|
|
21.08
|
|
04/01/2023
|
|
20,643
|
|
215,306
|
|
78,849
|
|
822,395
|
|
|
4,297
|
(4)
|
|
2,149
|
(4)
|
|
|
|
|
17.19
|
|
05/01/2024
|
|
|
|
|
|
|
|
|
Larry Purlee
|
|
3,932
|
(3)
|
|
|
|
|
|
|
|
33.10
|
|
02/01/2021
|
|
16,967
|
|
176,966
|
|
70,277
|
|
732,989
|
|
|
6,267
|
(3)
|
|
|
|
|
|
|
|
24.32
|
|
02/01/2022
|
|
|
|
|
|
|
|
|
|
|
6,388
|
(3)
|
|
|
|
|
|
|
|
21.08
|
|
04/01/2023
|
|
|
|
|
|
|
|
|
|
|
4,256
|
(4)
|
|
2,128
|
(4)
|
|
|
|
|
17.19
|
|
05/01/2024
|
|
|
|
|
|
|
|
|
(1)
|
The options vest three years from
the January 2, 2015 grant date, which is January 2, 2018.
|
|
(2)
|
For vesting to occur, Mr.
Anderson must remain employed until July 20, 2018 and the award
performance conditions must be met. The performance conditions are met, if
at all, in whole or in part (in 25% increments), based upon achievement of
a Common Stock price of $9.37, $10.40, $13.00 and $15.00. The stock price
must remain at or above the specified price for at least ten consecutive
trading days during the three-year period commencing on July 20, 2015. The
stock price has exceeded $10.40 for ten consecutive trading days and
therefore, the performance criteria have been met for 50% of the option
award.
|
|
(3)
|
The options are fully vested and
exercisable.
|
|
(4)
|
The options vest in three annual
installments on May 1 of each year. If they have not yet been exercised,
the options in the grant were 67% vested and 33% unvested on January 31,
2017.
|
|
(5)
|
The options vest in three annual
installments on December 12 of each year. If they have not yet been
exercised, the options in the grant were 67% vested and 33% unvested on
January 31, 2017.
|
|
(6)
|
The market value of the shares of
restricted stock, RSUs and performance shares, either earned or unearned,
that have not vested was calculated by multiplying $10.43, which was the
closing market price of the Companys Common Stock on January 31, 2017, by
the number of unvested shares.
|
Layne Christensen Company
|
|
35
|
Table of Contents
EXECUTIVE COMPENSATION AND OTHER
INFORMATION
|
|
|
|
OPTION EXERCISES
AND STOCK VESTED
The following table sets forth information
with respect to each named executive officer concerning the exercise of options
and the vesting of stock during the fiscal year ended January 31,
2017.
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
Value Realized
on Exercise ($)
|
|
Number of Shares
Acquired on
Vesting (#)
|
|
Value Realized
on Vesting ($) (1)
|
Michael J. Caliel
|
|
|
|
|
|
|
|
|
J.
Michael Anderson
|
|
|
|
|
|
|
|
|
Steven F. Crooke
|
|
|
|
|
|
|
|
|
Kevin Maher
|
|
|
|
|
|
|
|
|
Larry Purlee
|
|
|
|
|
|
|
|
|
NONQUALIFIED
DEFERRED COMPENSATION
The following table sets forth the
contributions made by our named executive officers and the earnings accrued on
all such contributions under our Key Management Deferred Compensation Plan
during the fiscal year ended January 31, 2017.
Name
|
|
Executive
Contributions
in Last Fiscal
Year
($)
|
|
Registrant
Contributions
in Last Fiscal
Year
($)
|
|
Aggregate
Earnings
(Losses)
in
Last
Fiscal
Year (1) ($)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
Last Fiscal
Year
End
($)
|
Michael J. Caliel
|
|
|
|
|
|
|
|
|
|
|
|
J.
Michael Anderson
|
|
|
|
|
|
|
|
|
|
|
|
Steven F. Crooke
|
|
|
|
|
|
$
|
32
|
|
|
|
$206,006
|
Kevin Maher
|
|
|
|
|
|
|
1,182
|
|
|
|
9,409
|
Larry Purlee
|
|
|
|
|
|
|
34,947
|
|
|
|
206,701
|
(1)
|
The earnings reported in this column
are not included in the Summary Compensation Table as they are not above-market
or preferential.
|
POTENTIAL PAYMENTS
UPON CHANGE OF CONTROL, RETIREMENT, DEATH OR DISABILITY
The following section describes the
benefits that may become payable to certain Executives in connection with a
termination of their employment with the Company or a change in control of the
Company under arrangements in effect on January 31, 2017.
Executive Severance
Agreements
|
The Company has entered into severance
agreements with Messrs. Caliel, Anderson, Crooke and Maher. The severance
agreements subject these Executives to certain restrictive covenants including
covenants not to compete, confidentiality and non-solicitation of Company
employees, which run during the term of the severance agreement. If an Executive
fails to comply with these covenants (subject to a notice and right to cure
period), the Company will not have the obligation to pay the severance benefits
described in this section to the terminated Executive. The severance agreements
also contain covenants not to compete and non-solicitation provisions that apply
for 24 months after termination with respect to Messrs. Caliel, Anderson and
Crooke and for 12 months after termination with respect to Mr. Maher.
The severance agreements with Messrs.
Caliel, Anderson, Crooke and Maher generally provide:
●
|
If before a change of control or
after a two-year period following a change of control with respect to
Messrs. Caliel, Anderson, a three-year period following a change of
control with respect to Mr. Crooke and a one-year period following a
change of control with respect to Mr. Maher, the Company terminates the
Executives employment without cause or if the Company constructively
terminates such Executives employment (i.e., the Executive leaves for
good reason), the Executive is entitled to receive severance benefits
that include:
|
Table of Contents
|
EXECUTIVE COMPENSATION AND OTHER
INFORMATION
|
|
|
●
|
With respect to Messrs. Caliel and
Anderson: (i) 24 months of continued base salary paid in a lump sum, (ii)
continued vesting of service-based equity awards and a continued right to
exercise outstanding stock options during this 24-month severance period,
(iii) for any performance-based equity award that is exercisable, payable
or becomes vested only if the applicable performance-based criteria is
satisfied, such performance-based award will become exercisable, payable
or become vested at the time of and only if the underlying performance
criteria is satisfied; provided, that if the performance period ends after
the severance period, only a pro rata portion of the award shall become
exercisable, payable or become vested, (iv) for any performance-based
stock options that become exercisable after the end of the 24-month
severance period, such stock options will remain exercisable until the
earlier of the original expiration date of the option or 90 days after the
end of the 24-month severance period, (v) a lump-sum payment equal to 24
times the present monthly amount of Layne Christensens total premium cost
to cover Mr. Caliel or Mr. Anderson, as applicable, under Layne
Christensens health, vision and dental plans, as well as the cost of
coverage of any of his eligible dependents enrolled as of the date of his
termination; and (vi) payment of a pro-rata portion of any annual
incentive bonus Mr. Caliel or Mr. Anderson was eligible to receive during
the year of Mr. Caliels or Mr. Andersons termination assuming
performance was achieved at 100% of target.
|
●
|
With respect to Mr. Crooke: (i) 24
months of continued base salary paid in accordance with regular payroll
practices, (ii) continued vesting of service-based equity awards and a
continued right to exercise outstanding stock options during this 24-month
severance period, (iii) for any performance-based equity award that is
exercisable, payable or becomes vested only if the applicable
performance-based criteria is satisfied, such performance-based award will
become exercisable, payable or become vested at the time of and only if
the underlying performance criteria is satisfied, (iv) for any
performance-based stock options that become exercisable after the end of
the 24-month severance period, such stock options will remain exercisable
until the earlier of the original expiration date of the option or 90 days
after the end of the 24-month severance period, (v) with respect to Mr.
Crooke, continued participation in the Companys welfare benefit plans (or
comparable arrangements) throughout the 24-month severance period; and
(vi) payment of any applicable COBRA premiums.
|
●
|
With respect to Mr. Maher: (i) 12
months of continued base salary paid in a lump sum, (ii) continued vesting
of service-based equity awards and a continued right to exercise
outstanding stock options during this 12-month severance period, (iii) for
any performance-based equity award that is exercisable, payable or becomes
vested only if the applicable performance-based criteria is satisfied,
such performance-based award will become exercisable, payable or become
vested at the time of and only if the underlying performance criteria is
satisfied; provided, that if the performance period ends after the
severance period, only a pro rata portion of the award shall become
exercisable, payable or become vested, (iv) for any performance-based
stock options that become exercisable after the end of the 12-month
severance period, such stock options will remain exercisable until the
earlier of the original expiration date of the option or 90 days after the
end of the 12-month severance period, and (v) a lump-sum payment equal to
12 times the present monthly amount of Layne Christensens total premium
cost to cover Mr. Maher, as applicable, under Layne Christensens health,
vision and dental plans, as well as the cost of coverage of any of his
eligible dependents enrolled as of the date of his
termination.
|
●
|
Following a change of control of the
Company and for a three-year period following the change of control with
respect to Mr. Crooke, a two-year period following the change of control
with respect to Messrs. Caliel and Anderson and a one-year period
following the change of control with respect to Mr. Maher, the Company or
its successor is obligated to both (i) continue to employ the Executive in
a substantially similar position (at an equal or greater base salary as
before the change of control) and (ii) provide the Executive with certain
welfare benefits and bonus compensation opportunities similar to those of
other similarly situated employees. Upon a change of control, all of
Messrs. Caliels and Crookes outstanding equity awards become immediately
vested, exercisable or payable, as the case may be. If Mr. Andersons
employment is terminated by Layne Christensen without cause or by Mr.
Anderson for good reason during the two-year period following a change of
control of Layne Christensen, all of Mr. Andersons outstanding equity
awards become immediately vested, exercisable or payable, as the case may
be. If Mr. Mahers employment is terminated by Layne Christensen without
cause or by Mr. Maher for good reason during the one-year period following
a change of control of Layne Christensen, all of Mr. Mahers outstanding
equity awards become immediately vested, exercisable or payable, as the
case may be.
|
●
|
If Mr. Caliels or Mr. Andersons
employment is terminated by Layne Christensen without cause or by Mr.
Caliel or Mr. Anderson for good reason during the two-year period
following a change of control of Layne Christensen, Mr. Caliel or Mr.
Anderson, as applicable, is entitled to (i) payment of any accrued but
unpaid base salary and payment of any benefits as required by the terms of
any employee benefit plan or
|
Layne Christensen Company
|
|
37
|
Table of Contents
EXECUTIVE COMPENSATION AND OTHER
INFORMATION
|
|
|
|
|
program of Layne Christensen, (ii) a
lump-sum severance payment equal to two times his base salary, (iii) a
lump-sum severance payment equal to two times the amount of his annual
incentive bonus for the year in which his termination occurred assuming
performance was achieved at 100% of target and (iv) a lump-sum payment
equal to 24 times the present monthly amount of Layne Christensens total
premium cost to cover Mr. Caliel or Mr. Anderson under Layne Christensens
health, vision and dental plans, as well as the cost of coverage of any of
his eligible dependents enrolled as of the date of his
termination.
|
●
|
If Mr. Crookes employment is
terminated by the Company or is constructively terminated (i.e., Mr.
Crooke leaves for good reason) during the three-year period following a
change of control of the Company, he is entitled to: (i) a special
lump-sum severance payment equal to the present value of the remaining
base salary he would receive if he remained an employee until the later of
the end of the third anniversary of the change of control or the second
anniversary of his termination date; and (ii) coverage under all employee
benefit plans (other than the Companys 401(k) retirement plan) that
covered him prior to termination until the later of the end of the third
anniversary of the change of control or the second anniversary of his
termination date. Mr. Crooke is additionally entitled to, with respect to
any payments made pursuant to the severance agreement that are subject to
the Internal Revenue Codes penalty tax provisions for excessive golden
parachute payments, reimbursement by the Company (on an after-tax basis)
for the amount of any such penalty tax.
|
●
|
If Mr. Mahers employment is
terminated by Layne Christensen without cause or by Mr. Maher for good
reason during the one-year period following a change of control of Layne
Christensen, Mr. Maher is entitled to (i) payment of any accrued but
unpaid base salary and payment of any benefits as required by the terms of
any employee benefit plan or program of Layne Christensen, (ii) a lump-sum
severance payment equal to one times his base salary and (iii) a lump-sum
payment equal to 12 times the present monthly amount of Layne
Christensens total premium cost to cover Mr. Maher under Layne
Christensens health, vision and dental plans, as well as the cost of
coverage of any of his eligible dependents enrolled as of the date of his
termination.
|
●
|
If the Executives employment is
terminated due to death, the Executives estate or his beneficiaries will
be entitled to receive (i) immediate acceleration of the vesting of the
Executives service-based equity awards and the right to exercise the
service-based stock options until the earlier of the original expiration
date of the options or 12 months after the Executives date of death, (ii)
for any performance-based equity award that is exercisable, payable or
becomes vested only if the applicable performance-based criteria is
satisfied, such performance-based award will become exercisable, payable
or become vested at the time of and only if the underlying performance
criteria is satisfied, (iii) for any performance-based stock option that
becomes exercisable due to the satisfaction of the underlying performance
criteria, the continued right to exercise the option until the earlier of
(a) with respect to Mr. Crooke, the options original expiration date or
12 months after the Executives date of death and (b) with respect to
Messrs. Caliel, Anderson and Maher, the options original expiration date
or the later of 12 months after the option first becomes exercisable or 12
months after the Executives date of death, and (iv) with respect to
Messrs. Caliel, Anderson and Maher, payment of a pro-rata portion of any
annual incentive bonus he was eligible to receive during the year of his
death, to the extent the underlying performance criteria were
met.
|
●
|
If the Executives employment is
terminated due to disability, the Executive will be entitled to (i)
payment of a lump sum disability benefit equal to 12 months base salary,
(ii) immediate acceleration of the vesting of his service-based equity
awards and a continuation of his right to exercise any service-based stock
options for a period of 12 months after the termination, (iii) for any
performance-based equity award that is exercisable, payable or becomes
vested only if the applicable performance-based criteria is satisfied,
such performance-based award will become exercisable, payable or become
vested at the time of and only if the underlying performance criteria is
satisfied, (iv) for any performance-based stock options that have become
exercisable due to the satisfaction of the underlying performance
criteria, the continued right to exercise the options until the earlier of
(a) with respect to Mr. Crooke, the options original expiration date or
12 months after the Executives termination due to disability and (b) with
respect to Messrs. Caliel, Anderson and Maher, the options original
expiration date or the later of 12 months after the option first becomes
exercisable or 12 months after the Executives date of disability, and (v)
with respect to Messrs. Caliel, Anderson and Maher, payment of a pro-rata
portion of any annual incentive bonus he was eligible to receive during
the year his employment was terminated, to the extent the underlying
performance criteria were met.
|
Table of Contents
|
EXECUTIVE COMPENSATION AND OTHER
INFORMATION
|
|
|
The Executives are parties to restricted
stock award, RSU award, stock option award, performance share and cash incentive
award agreements made pursuant to the Companys 2006 Equity Incentive Plan. The
award agreements and the 2006 Equity Incentive Plan provide in varying degrees,
as described in greater detail below, for acceleration of the vesting of the
awards in connection with a change of control, the Executives retirement and
the Executives death or disability.
Prior to May 31, 2017, the 2006 Equity
Incentive Plan provided that, unless otherwise specified in an award agreement
or other agreement approved by Laynes Compensation Committee to which a
participant is a party, upon a change of control of the Company each of the
Executives equity awards will become immediately vested. Under the 2006 Equity
Incentive Plan, as amended and restated effective May 31, 2017, unless otherwise
specified in an award agreement or other agreement approved by Laynes
Compensation Committee to which a participant is a party, awards will only
become vested if a participants employment is involuntarily termination
(without cause) during the two-year period following a change in control. Under
the terms of Mr. Andersons severance agreement, the 2006 Equity Incentive
Plans automatic change of control vesting provisions are not applicable to an
equity award held by Mr. Anderson unless otherwise specifically stated in the
equity award agreement.
Upon the retirement of an Executive,
which is defined under the equity award agreements as the Executives
termination from all employment after attaining the age of 60 after having been
employed by the Company or one of its affiliates for five years or more, the
award agreements provide for various treatment of the awards. Under the
restricted stock and performance share award agreements, the awards vest for the
portion of the period during the term of the award in which the Executive was
employed by the Company, subject to the satisfaction of the performance criteria
specified therein. With respect to the restricted stock award agreements, the
range of vesting varies from 0-150%. Under the RSU and option award agreements,
the awards are accelerated in full upon the Executives retirement.
Upon the death or disability of an
Executive, the award agreements provide for various treatment of the awards.
Under the restricted stock, RSU and option award agreements, the vesting of the
awards is accelerated. The restricted stock awards, while vested, become payable
only if the performance targets specified are achieved. Under the performance
share award agreements, the Executive is entitled to the fraction of the award
that would have been payable at the end of the quarter immediately preceding the
date on which the Executive ceased to be an employee. The amount of the award is
payable at the end of the performance period subject to the achievement of the
performance targets and is pro-rated based on the number of quarters during the
performance period that the Executive was employed.
Mr. Caliel also received a special
inducement grant (i) in the form of cash, which is performance-vesting, (ii)
stock options and (iii) RSUs, some units of which are time-vesting and some of
which are performance-vesting. These award grants are not governed by the terms
of his severance agreement. Mr. Caliel must be employed by the Company on the
third anniversary of his start-date for any of the inducement grant to vest.
Each inducement award agreement provides for the acceleration of the vesting of
the awards, regardless of the achievement of any performance criteria (with
respect to the stock option, RSU and cash incentive awards) upon the occurrence
of a change of control of the Company. Additionally, each inducement award
agreement provides for proportionate vesting or exercisability (with respect to
the stock option award) upon the occurrence of a Qualifying Involuntary
Termination (as defined under Mr. Caliels severance agreement) based on the
number of days he was employed in the vesting period. If Mr. Caliels employment
is terminated for any other reason, including his death, disability, Cause
(as defined under his severance agreement) or other voluntary resignation, the
award agreements each provide that he forfeits any unvested award amounts.
Mr. Anderson also received a special
inducement grant in the form of cash, stock options and RSUs, all of which are
performance-vesting. These award grants are not governed by the terms of his
severance agreement. Mr. Anderson must be employed by the Company on the third
anniversary of his start-date for any of the inducement grant to vest. Each
inducement award agreement provides for the acceleration of the vesting of the
awards, regardless of the achievement of any performance criteria (with respect
to the stock option, RSU and cash incentive awards) upon the occurrence of a
change of control of the Company. Additionally, each agreement provides for
proportionate vesting or exercisability (with respect to the stock option award)
upon the occurrence of a Qualifying Involuntary Termination (as defined under
Mr. Andersons severance agreement) based on the number of days he was employed
in the vesting period. If Mr. Andersons employment is terminated for any other
reason, including his death, disability, Cause (as defined under his
severance agreement) or other voluntary resignation, the award agreements each
provide that he forfeits any unvested award amounts.
Layne Christensen Company
|
|
39
|
Table of Contents
EXECUTIVE COMPENSATION AND OTHER
INFORMATION
|
|
|
|
Termination Without Cause or Constructive
Termination
|
The following table summarizes the
severance benefits due Messrs. Caliel, Anderson, Crooke and Maher under their
severance agreements and equity award agreements upon their termination by the
Company without cause, or their voluntary termination due to their constructive
termination (assuming such termination occurred on January 31, 2017):
Name
|
|
Base Salary
|
|
Unvested Equity
Compensation (1)
|
|
Benefits (2)
|
|
Annual
Incentive
Bonus (3)
|
|
Total
|
Michael J. Caliel
|
|
$1,320,000
|
|
$6,778,501
|
|
$48,389
|
|
$660,000
|
|
$8,806,890
|
J.
Michael Anderson
|
|
800,000
|
|
1,040,750
|
|
47,482
|
|
400,000
|
|
2,288,232
|
Steven F. Crooke
|
|
800,000
|
|
1,877,937
|
|
52,905
|
|
|
|
2,730,842
|
Kevin Maher
|
|
300,000
|
|
747,831
|
|
17,994
|
|
|
|
1,065,825
|
(1)
|
Represents value of unvested
awards at January 31, 2017 that would become vested in the 24-month period
following January 31, 2017. Stock options are valued based on the positive
difference, if any, between the closing stock price of the Companys
Common Stock on January 31, 2017 and the exercise price for such options.
With respect to performance shares granted on May 1, 2014, the Company
determined that as of January 31, 2017 there was a 100% likelihood that
the Company will achieve the performance conditions associated with such
shares. With respect to performance shares granted on April 10, 2015, the
Company has determined that as of January 31, 2017 there was a 100%
likelihood that the Company will achieve the performance conditions
associated with such shares. With respect to performance shares granted on
April 1, 2016, the Company has determined that as of January 31, 2017
there was a 100% likelihood that the Company will achieve the performance
conditions associated with such shares. Accordingly, shares of
performance-vesting restricted stock have been assigned a value that is
100% of the value of the closing stock price of the Companys Common Stock
on January 31, 2017 for each of the 2014, 2015 and 2016 grants of
performance-vesting restricted stock.
|
|
(2)
|
Assumes the executive earns the
maximum Company match with respect to his health savings account for each
year during the 24-month period.
|
|
(3)
|
Assumes performance was achieved
at 100% of the target.
|
The following table summarizes the
severance benefits due Messrs. Caliel, Anderson, Crooke and Maher upon their
death under their severance agreements and equity award agreements and the
benefits due Mr. Purlee upon his death under his restricted stock, stock option,
RSU and performance share award agreements (in each case assuming their death
occurred on January 31, 2017):
Name
|
|
Unvested Equity
Compensation (1)
|
|
Annual
Incentive
Bonus (2)
|
|
Total
|
Michael J. Caliel
|
|
$6,897,393
|
|
$660,000
|
|
$7,557,393
|
J.
Michael Anderson
|
|
749,464
|
|
400,000
|
|
1,149,464
|
Steven F. Crooke
|
|
2,323,944
|
|
|
|
2,323,944
|
Larry Purlee
|
|
903,800
|
|
|
|
903,800
|
Kevin Maher
|
|
1,031,488
|
|
|
|
1,031,488
|
(1)
|
These calculations represent the
value of unvested awards at January 31, 2017 that would become vested upon
their death. Stock options are valued based on the positive difference, if
any, between the closing stock price of the Companys Common Stock on
January 31, 2017 and the exercise price for such options. With respect to
performance shares granted on May 1, 2014, the Company has determined
there is a 100% likelihood that the Company will achieve the performance
conditions associated with such shares. With respect to performance shares
granted on April 10, 2015, the Company has determined that there is a 100%
likelihood that the Company will achieve the performance conditions
associated with such shares. With respect to performance shares granted on
April 1, 2016, the Company has determined that there is a 100% likelihood
that the Company will achieve the performance conditions associated with
such shares. Accordingly, shares of performance-vesting restricted stock
or performance shares, respectively, have been assigned a value that is
100% of the value of the closing stock price of the Companys Common Stock
on January 31, 2017 for each of the 2014, 2015 and 2016 grants of
performance-vesting restricted stock and performance shares.
|
|
(2)
|
Assumes performance was achieved
at 100% of the target.
|
Table of Contents
|
EXECUTIVE COMPENSATION AND OTHER
INFORMATION
|
|
|
The following table summarizes the
severance benefits due Messrs. Caliel, Anderson, Crooke and Maher upon their
disability under their severance agreements and equity award agreements and the
benefits due Mr. Purlee upon his disability under his restricted stock, stock
option, RSU and performance share award agreements (in each case assuming that
their disability occurred on January 31, 2017):
Name
|
|
Base Salary
|
|
Unvested Equity
Compensation (1)
|
|
Annual
Incentive
Bonus (2)
|
|
Total
|
Michael J. Caliel
|
|
$660,000
|
|
$6,897,393
|
|
$660,000
|
|
$8,217,393
|
J.
Michael Anderson
|
|
400,000
|
|
749,464
|
|
400,000
|
|
1,549,464
|
Steven F. Crooke
|
|
400,000
|
|
2,323,944
|
|
|
|
2,723,944
|
Larry Purlee
|
|
|
|
903,800
|
|
|
|
903,800
|
Kevin Maher
|
|
300,000
|
|
1,031,488
|
|
|
|
1,331,488
|
(1)
|
These calculations represent the
value of unvested awards at January 31, 2017 that would become vested upon
disability. Stock options are valued based on the positive difference, if
any, between the closing stock price of the Companys Common Stock on
January 31, 2017 and the exercise price for such options. With respect to
performance shares granted on May 1, 2014, the Company has determined
there is a 100% likelihood that the Company will achieve the performance
conditions associated with such shares. With respect to performance shares
granted on April 10, 2015, the Company has determined that there is a 100%
likelihood that the Company will achieve the performance conditions
associated with such shares. With respect to performance shares granted on
April 1, 2016, the Company has determined that there is a 100% likelihood
that the Company will achieve the performance conditions associated with
such shares. Accordingly, shares of performance-vesting restricted stock
or performance shares, respectively, have been assigned a value that is
100% of the value of the closing stock price of the Companys Common Stock
on January 31, 2017 for the each of the 2014, 2015 and 2016 grants of
performance-vesting restricted stock and performance shares.
|
|
(2)
|
Assumes performance was achieved
at 100% of the target.
|
The following table summarizes the
severance benefits due Mr. Purlee upon his retirement under his restricted
stock, stock option, RSU and performance share award agreements (assuming his
retirement occurred on January 31, 2017). Caliel, Anderson, Crooke and Maher are
not retirement-eligible under the terms of the 2006 Equity Incentive Plan.
Name
|
|
Unvested Equity Compensation (1)
|
Larry Purlee
|
|
$562,526
|
(1)
|
These calculations represent the
value of unvested awards at January 31, 2017 that would become vested upon
retirement. Stock options are valued based on the positive difference, if
any, between the closing stock price of the Companys Common Stock on
January 31, 2017 and the exercise price for such options. With respect to
performance shares granted on May 1, 2014, the Company determined there
was a 100% likelihood that the Company would achieve the performance
conditions associated with such shares. With respect to performance shares
granted on April 10, 2015, the Company has determined that there is a 100%
likelihood that the Company will achieve the performance conditions
associated with such shares. With respect to performance shares granted on
April 1, 2016, the Company has determined that there is a 100% likelihood
that the Company will achieve the performance conditions associated with
such shares. Accordingly, shares of performance-vesting restricted stock
and performance shares, respectively, have been assigned a value that is
100% of the value of the closing stock price of the Companys Common Stock
on January 31, 2017 for each of the 2014, 2015 and 2016 grants of
performance-vesting restricted stock and performance
shares.
|
Layne Christensen Company
|
|
41
|
Table of Contents
EXECUTIVE COMPENSATION AND OTHER
INFORMATION
|
|
|
|
The following table summarizes the
severance benefits due Messrs. Caliel, Anderson, Crooke and Maher under their
severance agreements and equity award agreements and the benefits due Mr. Purlee
under his restricted stock, stock option, RSU and performance share award
agreements
upon a change of control (assuming the
change of control occurred on January 31, 2017 and, for Messrs. Caliel,
Anderson, Crooke and Maher, the termination by the Company without cause, or
their voluntary termination due to their constructive termination, on such
date):
Name
|
|
Base Salary
and Bonus (1)
|
|
Unvested Equity
Compensation
(2)
|
|
Benefits (3)
|
|
Total
|
|
Michael J. Caliel
|
|
$
|
2,640,000
|
|
$
|
8,610,794
|
|
$
|
48,389
|
|
$
|
11,299,183
|
|
J.
Michael Anderson
|
|
|
1,600,000
|
|
|
1,793,287
|
|
|
47,482
|
|
|
3,440,769
|
|
Steven F. Crooke
|
|
|
1,073,201
|
|
|
2,323,944
|
|
|
51,422
|
|
|
4,932,171
|
(4)
|
Larry Purlee
|
|
|
|
|
|
909,955
|
|
|
|
|
|
909,955
|
|
Kevin Maher
|
|
$
|
300,000
|
|
|
1,037,702
|
|
|
17,994
|
|
|
1,355,695
|
|
(1)
|
For Mr. Crooke, this amount
represents the present value of three times his base salary as of January
31, 2017, paid out in bi-weekly installments over a three-year period
using a discount rate of 7.5%. For Mr. Caliel and Mr. Anderson, this
amount represents two times base salary as of January 31, 2017 and two
times annual incentive bonus amount (assuming performance goal achievement
at the target level) that would have been paid under the Companys annual
incentive bonus plan in a lump sum. Assumes performance was achieved at
100% of the target. For Mr. Maher, this amount represents one times his
base salary as of January 31, 2017.
|
|
(2)
|
Represents value of unvested
awards at January 31, 2017 that would become vested upon a change of
control, regardless of whether the Executives employment is terminated,
including all awards subject to performance conditions. Stock options are
valued based on the positive difference, if any, between the closing price
of the Companys Common Stock on January 31, 2017 and the exercise price
for such options.
|
|
(3)
|
Assumes the Executive earns the
maximum Company match with respect to his health savings account for each
year during the three-year period with respect to Mr. Crooke, two-year
period with respect to Messrs. Caliel and Anderson and one-year period
with respect to Mr. Maher.
|
|
(4)
|
Assumes Mr. Crooke would receive
a Section 280G gross-up payment in the amount of
$1,483,604.
|
Generally, all severance payments under
the agreements will begin following the Executives termination of employment.
However, as is provided for in the Severance Agreements, certain delays in
payment timing may occur in order to comply with Section 409A of the Internal
Revenue Code.
Table of Contents
|
OWNERSHIP OF
LAYNE CHRISTENSEN COMMON STOCK
|
The following table sets forth certain
information as of February 15, 2017, except as otherwise provided, regarding the
beneficial ownership of Layne Christensen Common Stock by each person known to
the Board of Directors to own beneficially 5% or more of the Companys Common
Stock, by each director or nominee for director of the Company, by each named
executive officer, and by all directors and executive officers of the Company as
a group. All information with respect to beneficial ownership has been furnished
by the respective directors, officers or 5% or more stockholders, as the case
may be.
Name
|
|
Amount and Nature of
Beneficial Ownership
(1)
|
|
Percentage of Shares
Outstanding (1)
|
Van
Den Berg Management I, Inc.
(2)
|
|
2,291,067
|
|
|
11.6%
|
Cetus Capital II, LLC
(3)
|
|
2,716,303
|
|
|
9.9%
|
Highbridge Capital Management, LLC
(4)
|
|
2,649,571
|
|
|
9.9%
|
Wynnefield Partners Small Cap Value LP
(5)
|
|
1,781,642
|
|
|
9.0%
|
Royce & Associates, LLC
(6)
|
|
1,781,529
|
|
|
9.0%
|
Rutabaga Capital Management
(7)
|
|
1,470,268
|
|
|
7.4%
|
Corre Partners Management, LLC
(8)
|
|
1,358,212
|
|
|
6.8%
|
GAMCO Investors, Inc.
(9)
|
|
1,210,100
|
|
|
6.1%
|
BlackRock, Inc.
(10)
|
|
1,209,588
|
|
|
6.1%
|
Dimensional Fund Advisors LP
(11)
|
|
1,038,708
|
|
|
5.2%
|
Michael J. Caliel
|
|
12,500
|
(12)
|
|
*
|
J.
Michael Anderson
|
|
6,000
|
(12)
|
|
*
|
Steven F. Crooke
|
|
127,850
|
(12)
|
|
*
|
Larry Purlee
|
|
27,989
|
(12)
|
|
*
|
Kevin Maher
|
|
10,747
|
(12)
|
|
*
|
Nelson Obus
|
|
1,839,539
|
(13)
|
|
9.3%
|
David A.B. Brown
|
|
218,558
|
(14)
|
|
1.1%
|
J.
Samuel Butler
|
|
75,635
|
(14)
|
|
*
|
Robert R. Gilmore
|
|
45,635
|
(14)
|
|
*
|
John T. Nesser III
|
|
29,279
|
(14)
|
|
*
|
Alan P. Krusi
|
|
32,874
|
(14)
|
|
*
|
All
directors and executive officers as a group (13 persons)
|
|
2,429,123
|
(15)
|
|
12.0%
|
*
|
Less than 1%
|
|
(1)
|
Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission which generally attribute beneficial ownership of securities to
persons who possess sole or shared voting power and/or investment power
with respect to those securities and includes shares of Common Stock
issuable pursuant to the exercise of stock options exercisable, or the
conversion of convertible notes, within 60 days of February 15, 2017.
Unless otherwise indicated, the persons or entities identified in this
table have sole voting and investment power with respect to all shares
shown as beneficially owned by them. Percentage ownership calculations are
based on 19,804,526 shares of Common Stock outstanding, plus for each
beneficial owner either options exercisable, performance shares or
performance-based RSUs that may vest, or convertible notes that are
convertible, within 60 days of February 15, 2017 by that beneficial
owner.
|
|
(2)
|
The ownership reported is based
on Amendment No. 2 to Schedule 13G filed with the Securities and Exchange
Commission on February 9, 2017 by Van Den Berg Management I, Inc., with a
principal business address of 805 Las Cimas Parkway, Suite 430, Austin, TX
78746. Van Den Berg Management I, Inc., an investment adviser, furnishes
investment advice to various investment advisory clients. In all cases,
persons other than Van Den Berg Management I, Inc. have the right to
receive, or the power to direct the receipt of, dividends from, or
proceeds from the sale of the shares. The securities reported in the
Schedule 13G are owned by Van Den Berg Management I, Inc. and investment
advisory clients. To the knowledge of Van Den Berg Management I, Inc., the
interest of any one such investment advisory client does not exceed 5% of
the class of securities.
|
|
(3)
|
The ownership reported is based
on the Schedule 13G filed with the Securities and Exchange Commission on
February 13, 2017 jointly by Cetus Capital II, LLC, Cetus Capital III,
L.P., Littlejohn Opportunities Master Fund LP and VSS Fund, L.P.
(collectively, the Cetus Funds), each with a principal business address
of 8 Sound Shore Drive, Suite 303, Greenwich, CT 06830. Cetus Capital II,
LLC owns 33,490 shares
|
Layne Christensen Company
|
|
43
|
Table of Contents
OWNERSHIP OF LAYNE CHRISTENSEN COMMON
STOCK
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of Common Stock and may be deemed
to beneficially own and has sole voting and dispositive power with respect
to 269,759 shares of Common Stock issuable upon conversion of convertible
notes of Layne that Cetus Capital II, LLC owns. Cetus Capital III, L.P.
owns 704,141 shares of Common Stock and may be deemed to beneficially own
and has sole voting and dispositive power with respect to 968,872 shares
of Common Stock issuable upon conversion of convertible notes of Layne
that Cetus Capital III, L.P. owns. Littlejohn Opportunities Master Fund LP
owns 89,929 shares of Common Stock and may be deemed to beneficially own
and has sole voting and dispositive power with respect to 269,060 shares
of Common Stock issuable upon conversion of convertible notes of Layne
that Littlejohn Opportunities Master Fund LP owns. VSS Fund L.P. owns
181,480 shares of Common Stock and may be deemed to beneficially own and
has sole voting and dispositive power with respect to 199,572 shares of
Common Stock issuable upon conversion of convertible notes of Layne that
VSS Fund L.P. owns. However, based upon the terms of the convertible
notes, the holders thereof may not convert such securities if on any date,
such holder would be deemed the beneficial owner of more than 9.9% of the
then outstanding shares of the Common Stock. Based on the number of shares
of Common Stock outstanding as of February 15, 2017, the Cetus Funds would
not be able to convert all of the convertible notes beneficially owned by
the Cetus Funds. Consequently, the Percentage of Shares Outstanding
listed in the table gives effect to the 9.9% ownership cap.
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(4)
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The ownership reported is based
on Amendment No. 2 to Schedule 13G filed with the Securities and Exchange
Commission on February 14, 2017, jointly by Highbridge Capital Management,
LLC and Highbridge International LLC, each with a principal business
address of 40 West 57th Street, 33rd Floor, New York, New York 10019. The
Schedule 13G reports that Highbridge International LLC may be deemed to
beneficially own and has shared voting and dispositive power with respect
to 2,042,734 shares of Common Stock issuable upon conversion of
convertible notes and that Highbridge Capital Management, LLC, as the
trading manager of Highbridge International LLC and Highbridge Tactical
Credit and Convertibles Master Fund, L.P. and STAR L.P. (a statistical
arbitrage strategy)(collectively, the Funds) may be deemed to
beneficially own and has shared voting and dispositive power with respect
to 2,649,571 shares of Common Stock upon conversion of the convertible
notes held by the Funds. However, based upon the terms of the convertible
notes, the holders thereof may not convert such securities if on any date,
such holder would be deemed the beneficial owner of more than 9.9% of the
then outstanding shares of the Common Stock. Based on the number of shares
of Common Stock outstanding as of February 15, 2017, the Funds would not
be able to convert all of the convertible notes beneficially owned by the
Funds. Consequently, the Percentage of Shares Outstanding listed in the
table gives effect to the 9.9% ownership cap.
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(5)
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The ownership reported is based
on Amendment No. 2 to Schedule 13D of Wynnefield Partners Small Cap Value,
L.P. (Partners), Wynnefield Partners Small Cap Value, L.P. I (Partners
I), Wynnefield Partners Small Cap Value Offshore Fund, Ltd. (Offshore
Fund), Wynnefield Capital Management, LLC (WCM), Wynnefield Capital,
Inc. (WCI), Wynnefield Capital, Inc. Profit Sharing Plan (Profit
Sharing Plan), Nelson Obus (Obus) and Joshua Landes (Landes) filed
with the Securities and Exchange Commission on January 19, 2016. Partners,
Partners I, the Offshore Fund, WCM, WCI, the Profit Sharing Plan, Obus and
Landes are collectively referred to herein as the Wynnefield Partners
Small Cap Value Funds. The Schedule 13D reports that as of January 19,
2016, Partners beneficially owned 534,657 shares of the Companys common
stock, Partners I beneficially owned 857,884 shares of the Companys
common stock, the Offshore Fund beneficially owned 308,401 shares of the
Companys common stock, WCM holds an indirect beneficial interest in the
1,392,541 shares held by Partners and Partners I, and the Profit Sharing
Plan beneficially owned 80,700 shares of the Companys common stock, for a
total of 1,781,642 shares. WCI holds an indirect beneficial interest in
the 308,401 shares held by the Offshore Fund and Obus and Landes, as a
result of their various positions with the Wynnefield Partners Small Cap
Value Funds, hold an indirect beneficial interest in the 1,781,642 held by
the various entities within the Wynnefield Partners Small Cap Value Funds.
The business address for the Wynnefield Partners Small Cap Value Funds is
450 Seventh Avenue, Suite 509, New York, New York 10123.
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(6)
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The ownership reported is based
on Amendment No. 4 to Schedule 13G filed with the Securities and Exchange
Commission on January 11, 2017, by Royce & Associates, LLC, with a
principal business address of 745 Fifth Avenue, New York, NY 10151.
Amendment No. 4 to Schedule 13G reports that Royce & Associates, LLC
has sole voting and dispositive power with respect to all of the shares it
beneficially owns.
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(7)
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The ownership reported is based
on Amendment No. 5 to Schedule 13G filed with the Securities and Exchange
Commission on February 15, 2017, by Rutabaga Capital Management, with a
principal business address of 64 Broad Street, 3rd Floor, Boston, MA
02109. Amendment No. 5 to Schedule 13G reports that Rutabaga Capital
Management has sole voting power with respect to 1,470,268 shares of
Common Stock, shared voting power with respect to 352,374 shares of Common
Stock and sole dispositive power with respect to all of the shares of
Common Stock that it beneficially owns.
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(8)
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The ownership reported is based
on Amendment No. 1 to Schedule 13G filed with the Securities and Exchange
Commission on January 31, 2017, jointly by Corre Opportunities Qualified
Master Fund, LP, Corre Opportunities II Master Fund LP, Corre
Opportunities Fund, LP, Corre Partners Advisors, LLC, Corre Partners
Management, LLC, John Barrett and Eric Soderlund (collectively, the
Reporting Persons), each with a principal business address of 1370
Avenue of the Americas, 29th Floor, New York, New York 10019. Amendment
No. 1 to Schedule 13G reports that the Reporting Persons may be deemed to
beneficially own and has shared voting and dispositive power with respect
to 1,358,212 shares of Common Stock issuable upon conversion of
convertible notes held by the Reporting Persons. Based upon the terms of
the convertible notes, the holders thereof may not convert such securities
if on any date, such holder would be deemed the beneficial owner of more
than 9.9% of the then outstanding shares of the Common Stock. Based on the
number of shares of Common Stock outstanding as of February 15, 2017, the
Funds would be able to convert all of the convertible notes beneficially
owned by the Funds. Consequently, the Percentage of Shares Outstanding
listed in the table gives the percentage that would be owned upon the
conversion of all the convertible notes held by the Reporting
Persons.
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(9)
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The ownership reported is based
on Form 13F filed with the Securities and Exchange Commission on January
27, 2016 by GAMCO Investors, Inc. (GBL), with a principal business
address of One Corporate Center, Rye, New York 10580-1435.
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(10)
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The ownership reported is based
on a Schedule 13G filed with the Securities and Exchange Commission on
January 30, 2017, by BlackRock, Inc., with a principal business address of
55 East 52nd Street, New York, New York 10022. The Schedule 13G reports
that BlackRock, Inc. has sole voting power with respect to 1,197,582
shares of Common Stock and sole dispositive power with respect to all
shares of Common Stock that it beneficially
owns.
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OWNERSHIP OF LAYNE CHRISTENSEN COMMON
STOCK
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(11)
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The ownership reported is based
on Amendment No. 5 to Schedule 13G filed with the Securities and Exchange
Commission on February 9, 2017 by Dimensional Fund Advisors LP, with a
principal business address of Palisades West, Building One, 6300 Bee Cave
Road, Austin, Texas, 78746. Amendment No. 5 to Schedule 13G reports that
Dimensional Fund Advisors LP has sole voting power with respect to
1,000,685 shares of Common Stock and sole dispositive power with respect
to all of the shares of Common Stock that it beneficially owns.
Dimensional Fund Advisors LP, an investment adviser registered under
Section 203 of the Investment Advisors Act of 1940, furnishes investment
advice to four investment companies registered under the Investment
Company Act of 1940, and serves as investment manager to certain other
commingled group trusts and separate accounts (such investment companies,
trusts and accounts, collectively referred to as the Funds). In certain
cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser
or sub-adviser to certain Funds. However, all securities reported in the
Schedule 13G/A are owned by the Funds. Dimensional disclaims beneficial
ownership of such securities. To the knowledge of Dimensional, the
interest of any one such Fund does not exceed 5% of the class of
securities.
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(12)
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Includes options for the purchase
of 123,992; 20,843 and 10,747 shares of the Companys Common Stock
exercisable within 60 days of February 15, 2017, granted to Messrs.
Crooke, Purlee and Maher, respectively.
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(13)
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Mr. Obus is president of
Wynnefield Capital, Inc. and a managing member of Wynnefield Capital
Management, LLC. Both companies have indirect beneficial ownership in
securities held in the name of Wynnefield Partners Small Cap Value, L.P.,
Wynnefield Partners Small Cap Value, L.P. I, Wynnefield Small Cap Value
Offshore Fund, Ltd., Channel Partnership II, L.P. and the Wynnefield
Capital, Inc. Profit Sharing & Money Purchase Plan, which, combined,
own 1,781,642 of the indicated shares. Also includes options for the
purchase of 39,885 shares of the Companys Common Stock exercisable within
60 days of February 15, 2017. Also includes 18,012 shares of common stock
of the Company held directly by Mr. Obus.
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(14)
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Includes options for the purchase
of 168,345; 64,960; 22,673; 6,444 and 32,874 shares of the Companys
Common Stock exercisable within 60 days of February 15, 2017, granted to
Messrs. Brown, Butler, Gilmore, Nesser and Krusi,
respectively.
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(15)
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Includes options for the purchase
of 490,763 shares of the Companys Common Stock exercisable within 60 days
of February 15, 2017, granted to all directors and executive officers of
the Company as a group.
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Layne Christensen Company
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45
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ADVISORY VOTE ON
EXECUTIVE COMPENSATION
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ITEM
2
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ADVISORY VOTE ON EXECUTIVE
COMPENSATION
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The Board recommends a vote
FOR
the approval of the compensation of our named executive
officers.
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The Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010, or the Dodd-Frank Act, enables our stockholders
to vote to approve, on a non-binding advisory basis, the compensation of our
named executive officers as disclosed in this Proxy Statement in accordance with
the SECs rules.
As described in detail under the heading
Compensation Discussion and Analysis, our executive compensation programs are
designed to attract and retain top-quality executives, tie annual and long-term
equity incentives to achievement of measurable corporate, business unit and
individual performance objectives, and align the executives incentives with
stockholder value creation. The overall compensation program is designed to
reward a combination of strong individual performance, strong performance by the
Company in meeting its long-term strategic goals and stock price
appreciation.
Our compensation package for executive
officers consists of a balance of base salary, annual bonuses under our
Executive Incentive Compensation Plan, performance-based equity grants and
certain employee benefits. To serve the best interests of stockholders, the
Compensation Committee follows an executive compensation philosophy that
emphasizes performance-based compensation, including stock options and
performance-vesting restricted shares. The Compensation Committee periodically
reviews our executive compensation practices to ensure they achieve our desired
goals.
We are asking our stockholders to indicate
their support for our named executive officer compensation as described in this
Proxy Statement. This proposal, commonly known
as
a say-on-pay proposal, gives our stockholders the opportunity to express their
views on our named executive officers compensation. This vote is not intended
to address any specific item of compensation, but rather the overall
compensation of our named executive officers and the philosophy, policies and
practices described in this Proxy Statement. Accordingly, we will ask our
stockholders to approve, on an advisory basis, the following resolution:
RESOLVED, that the Companys stockholders
approve, on an advisory basis, the compensation of the named executive officers,
as disclosed in the Companys Proxy Statement for the 2017 Annual Meeting of
Stockholders pursuant to the compensation disclosure rules of the Securities and
Exchange Commission, including the Compensation Discussion and Analysis, the
compensation tables and related narrative disclosure.
The say-on-pay vote is advisory, and
therefore not binding on the Company, the Compensation Committee or our Board of
Directors. However, our Board of Directors and Compensation Committee value the
opinions of our stockholders and will consider the outcome of the vote when
making future executive compensation decisions.
The Companys next say-on-pay
vote after the 2017 Annual Meeting of stockholders is expected to occur at the
2018 Annual Meeting of stockholders and each year thereafter if the stockholders
approve, on an advisory basis, the recommendation of the Board of Directors in
Item 3 of this Proxy Statement that the frequency of say-on-pay votes should be
held every year.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE
FOR
THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION
DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
COMPENSATION DISCUSSION AND ANALYSIS, THE COMPENSATION TABLES AND RELATED
NARRATIVE DISCLOSURE.
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ADVISORY VOTE ON
THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE
COMPENSATION
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ITEM
3
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ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON
EXECUTIVE COMPENSATION
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The Board recommends a
vote
FOR
every
ONE
YEAR
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The Dodd-Frank Act also enables our
stockholders to indicate how frequently we should seek an advisory vote on the
compensation of our Named Executive Officers. By voting on this proposal,
stockholders may indicate whether they would prefer an advisory vote on Named
Executive Officer compensation once every one, two or three years.
After careful consideration, the Board of
Directors has determined that an advisory vote on executive compensation that
occurs every year (annual) is the most appropriate alternative for the Company,
and therefore, the Board of Directors recommends that you vote for a one-year
interval for the advisory vote on executive compensation.
Stockholders who have concerns about
executive compensation during the interval between say-on-pay votes are
welcome to bring their specific concerns to the attention of the Board of
Directors at any time, by mail, telephone or email. Information on how to
contact the Board of Directors can be found on page 3 of this Proxy Statement
under the heading Communications with the Board of Directors.
The proxy card provides stockholders with
the opportunity to choose among four advisory options (holding the vote every
one, two or three years, or abstaining) and, therefore, stockholders will not be
voting to approve or disapprove the Board of Directors recommendation. You may
cast your
advisory vote by choosing the option of
one year, two years, three years, or abstaining from voting in response to the
resolution set forth below:
RESOLVED, that the option of one year, two
years, or three years that receives the vote of the holders of a plurality of
the votes cast by the stockholders present in person or represented by proxy at
the Annual Meeting and entitled to vote on such matter for this resolution will
be determined to be the stockholders preferred frequency with which the Company
is to hold an advisory vote by stockholders to approve the compensation paid to
the Companys Named Executive Officers, as disclosed in the Companys proxy
statement pursuant to the compensation disclosure rules of the Securities and
Exchange Commission, including the Compensation Discussion and Analysis,
compensation tables and narrative disclosure.
The option of one year, two years or three
years, if any, that receives the approval by the affirmative vote of the holders
of a plurality of the votes cast by the stockholders present in person or
represented by proxy at the Annual meeting and entitled to vote on such matter
will be the frequency of the vote on the compensation of our Named Executive
Officers that has been approved by stockholders on an advisory basis. Although
this advisory vote on the frequency of the say-on-pay vote is non-binding, the
Board of Directors and the Compensation Committee will take into account the
outcome of the vote when considering the frequency of future advisory votes on
executive compensation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE ADVISORY
VOTE ON EXECUTIVE COMPENSATION BE CONDUCTED EVERY ONE
YEAR.
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Layne Christensen Company
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47
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APPROVAL OF 2006
EQUITY INCENTIVE PLAN, AS AMENDED AND
RESTATED
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ITEM
4
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APPROVAL OF 2006 EQUITY INCENTIVE PLAN, AS AMENDED AND
RESTATED
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The Board recommends a
vote
FOR
approval.
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We believe that equity compensation aligns
the interests of management and employees with the interests of other
stockholders. The Company adopted the 2006 Equity Incentive Plan (the 2006
Equity Plan) effective June 8, 2006. The Company last amended and restated the
2006 Equity Plan effective June 6, 2014 (the 2014 Restated Plan). On April 21,
2017, our Board of Directors adopted an amendment that amended and restated the
2014 Restated Plan effective May 31, 2017 (the 2017 Restated Plan), subject to
the approval of our stockholders. We are asking for stockholder approval of the
2017 Restated Plan.
In addition to requesting stockholder
approval of the 2017 Restated Plan, which reserves new shares for issuance, we
are also requesting that our stockholders approve the material terms of the
performance goals contained in the 2017 Restated Plan in order to allow certain
awards to be potentially eligible for exemption from the $1.0 million deduction
limit imposed by Section 162(m) of the Internal Revenue Code (the Code), as
discussed under Summary of the Material Features of the 2017 Restated Plan
General Terms and Awards - Performance Shares, Bonus Shares, Performance Units
and Performance Awards below. For purposes of Code Section 162(m), the
material
terms of the performance goals for
awards granted under the 2017 Plan include: (i) the employees eligible to
receive compensation; (ii) the description of the business criteria on which the
performance goals may be based; and (iii) the maximum amount, or the formula
used to calculate the maximum amount, of compensation that can be paid to an
employee under the arrangement. Each of these aspects is discussed in this Item
4, and stockholder approval of this Item 4 constitutes approval of each of these
aspects for purposes of the Code Section 162(m) stockholder approval
requirements.
If the stockholders fail to approve the
2017 Restated Plan, the existing plan will continue until the existing share
reserve is depleted. Due to the limited number of shares remaining in the Plans
current share reserve, we believe this will severely limit our ability to
motivate and retain experienced and highly qualified executives, key employees
and directors. In addition, if the stockholders fail to approve the 2017
Restated Plan, any awards made under the 2014 Restated Plan thereafter may not
qualify for the exemption from the limitation on deductible compensation under
Section 162(m) of the Code.
STRUCTURE OF THE 2017 RESTATED PLAN
Under this proposal, our stockholders are
being asked to approve the 2017 Restated Plan, which includes the following
material revisions from the 2014 Restated Plan:
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Increase
Share Reserve:
an increase of
600,000 shares in the total number of shares available for all awards
under the plan (from the 3,534,500 share limit under the 2014 Restated
Plan to a total of 4,134,500 shares under the 2017 Restated
Plan);
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Adjust Share
Counting Rules
:
shares that are withheld by or tendered to the Company
in order to pay the exercise price of a stock option or the tax
withholding amounts of an option or stock appreciation right and any
shares purchased by the Company with the proceeds from the exercise of a
stock option will not be available for re-issuance under the 2017 Restated
Plan.
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APPROVAL OF 2006
EQUITY INCENTIVE PLAN
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Impose Annual
Limit on Director Awards:
a
$250,000 annual limit on awards under the 2017 Restated Plan to each
non-employee director.
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Eliminate
Single Trigger Change in Control Vesting:
the 2017 Restated Plan does not require
single-triggered vesting upon a change in control and instead provides
for default double-trigger vesting if an award recipients employment is
involuntarily terminated during the two-year period following a change in
control.
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Impose
Minimum Vesting and Exercise Requirements:
awards granted under the 2017 Restated Plan will
generally be required to have a minimum vesting or exercise period of 12
months from the awards date of grant. Five percent of the 2017 Restated
Plans share reserve pool are exempt from this minimum vesting requirement
and the limit does not apply in certain situations such as if a
participant dies, becomes disabled, retires, or there is a change in
control.
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Impose
Clawback:
subjects all awards
granted under the 2017 Restated Plan to recoupment or clawback, to the
extent required by law, regulation or any company policy (including the
Companys current policy);
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Extend the
Plan:
the 2017 Restated Plan
would extend the duration of the 2006 Equity Plan until 2027;
and
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Prohibit
Dividends or Dividend Equivalents on Unvested Awards:
the 2017 Restated Plan expressly prohibits, for
all award types, the payment of dividends and dividend equivalents before
the vesting of the underlying award.
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These revisions continue our approach to
align the 2006 Equity Plan with the interests of our stockholders and with
evolving best practices in equity and incentive compensation.
BACKGROUND ON THE REQUEST FOR ADDITIONAL SHARES
We believe increasing the number of shares
available for issuance under the 2014 Restated Plan is necessary to ensure that
a sufficient reserve of shares is available for future grants of awards. We also
believe that the 2006 Equity Plan is a critical component of our executive
compensation program and that our Companys long-term success is dependent upon
our ability to attract, retain and motivate employees of high caliber and
potential. By increasing the number of shares authorized under the 2006 Equity
Plan, we believe we will have the flexibility to continue to provide equity
incentives in the amounts determined to be appropriate by our Board of
Directors.
In its determination to recommend that the
Board approve the 2017 Restated Plan, the Compensation Committee reviewed an
analysis prepared by Meridian Compensation Partners, LLC, its independent
compensation consultant, which included an analysis of certain burn rate and
overhang metrics, as well future share usage scenarios for the Company. In
weighing whether to propose an increase in the number of shares available under
the 2014 Restated Plan and how many shares to recommend to the Board of
Directors, the Compensation Committee considered many factors, including the
following:
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Compensation
Philosophy
As described above in
Compensation Discussion and Analysis, the Compensation Committee (the
Committee) views long-term equity awards as a key component of the
Companys executive compensation program, and believes that use of equity
awards helps align the interests of management with those of our
stockholders, and motivates our executives to make sound business
decisions focused on long-term stockholder value creation. In addition, as
described above under Compensation of Directors, our non-employee
directors currently receive a portion of their compensation in the form of
equity awards that are granted under the 2014 Restated Plan. The Company
has reviewed its anticipated award needs and determined that, based on
anticipated future usage rates of shares under its equity plans and the
current LTI Plan, the Company may not have sufficient shares available
under the 2014 Restated Plan to meet the anticipated current fiscal year
equity awards if a share reserve increase is not approved by the Companys
stockholders. Accordingly, the Company has granted some of the annual
awards provided for under the LTI Plan for fiscal 2018 such that, if there
are not enough shares available under the 2006 Equity Plan, the awards
will be settled with cash payments. Due to the 2014 Restated Plans mostly
depleted share reserve, the Company is unable to make additional off-cycle
new hire awards or other grants (other than inducement grants) as may be
needed throughout the remainder of the fiscal year. The inability to
utilize the Companys equity plan for the purpose of awarding shares
significantly hinders the Companys ability to manage its human capital
needs as, without any shares remaining available for use under the equity
plan, the Company is without an essential compensation tool designed to
align employee and executive compensation with stockholder
interests.
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Management of
Future Share Usage
The Company
is committed to prudently managing its use of equity incentives in
upcoming years to balance the benefits equity compensation provides to our
compensation program with the potential
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49
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Table of Contents
APPROVAL OF 2006 EQUITY INCENTIVE
PLAN
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dilution it causes our other
stockholders. The Company will manage long-term dilution by carefully
monitoring the number of equity awards granted annually, commonly referred
to as the burn rate, usage rate or run rate. Burn rate differs from
dilution as it does not account for equity awards that have been cancelled
and other shares returned to the reserve. In evaluating the proposed share
increase for the 2014 Restated Plan, the Committee reviewed the historical
usage rate of shares under the 2006 Equity Plan for fiscal 2017, 2016 and
2015.
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Overhang Percentage
The
Committee also considered the percentage that the number of shares
currently underlying outstanding awards under the 2014 Restated Plan
represents as a percentage of our Common Stock. The Committee reviewed
projected overhang percentages as of April 1, 2017 assuming an increase of
shares authorized under the 2017 Restated Plan of 600,000 shares. Based on
this assumed level of share increase, the fully diluted overhang was
14.13%. If the proposed 600,000 share increase is approved, the 999,626
shares remaining available under the 2017 Restated Plan for future grants
(which is calculated by increasing the shares available as of April 1,
2017 by the new shares authorized) would represent 3.97% of the fully
diluted Common Stock outstanding as of April 1, 2017. The dilution
represented by the 2,557,552 shares potentially issuable under outstanding
equity awards as of April 1, 2017 would be 10.16% of the fully diluted
Common Stock outstanding as of April 1, 2017. For purposes of this
paragraph, the fully diluted Common Stock outstanding as of April 1, 2017
has been computed by assuming the exercise of outstanding stock options
and vesting of all restricted stock units and performance shares and
excluding any shares of Common Stock issuable upon conversion of the
Companys convertible notes.
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Expected
Duration
The Board expects that
the shares available under the 2017 Restated Plan should be sufficient to
cover the Companys projected equity awards for the next several years.
Expectations regarding future share usage under the 2017 Restated Plan are
based on the Companys historical grant practices under the LTI Plan and a
number of other assumptions such as future growth in the population of
eligible participants, the rate of future compensation increases, the rate
at which shares are returned to the 2014 Restated Plan reserve upon
awards expiration, forfeiture or cash settlement, and the future
performance of our stock price. While the Board believes that the
assumptions it uses are reasonable, future share usage will differ from
current expectations to the extent that actual events differ from the
assumptions utilized. The Committee retains discretion, consistent with
the Companys overall compensation program as described in this Proxy
Statement, to make awards, from time to time, to executives, employees,
consultants, and directors and to change the terms of the LTI Plan. The
Committee may also determine it is appropriate to grant awards under the
2017 Restated Plan outside of the LTI Plan. The exact amount and timing
for future grants is not currently
known.
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The Committee also took into account a
proposed share increase submitted to the Companys stockholders in 2016, which
failed by a margin of less than two percent to receive the support of a majority
of the votes cast. That 2016 proposal provided for an increase of 1,500,000
shares. The Committee believes that the 600,000 additional shares requested in
connection with the 2014 Restated Plan, which request is for 60% fewer shares
than requested in 2016, is reasonable and appropriate and is hopeful that
stockholders will approve this lower share reserve increase. In light of the
factors described above, and the ability to continue to grant equity
compensation being vital to our efforts to continue to attract and retain
employees in the competitive labor markets in which we compete, the Company
believes that the size of the share reserve under the 2017 Restated Plan
represents a reasonable amount of potential equity dilution and allows the
Company to continue to award equity incentives, which are a critical component
of our overall compensation program as described above.
The principal features of the 2017
Restated Plan are summarized below. This summary does not contain all
information about the 2017 Restated Plan. A copy of the complete text of the
2017 Restated Plan is included in Appendix A to this Proxy Statement, and the
following description is qualified in its entirety by reference to the full text
of the appended 2017 Restated Plan. Stockholders are encouraged to read the 2017
Restated Plan in its entirety.
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APPROVAL OF 2006 EQUITY INCENTIVE PLAN
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SUMMARY
OF THE MATERIAL FEATURES OF THE 2017 RESTATED PLAN
The objectives of the 2017 Restated Plan
are to encourage the Companys employees and the employees of its affiliates to
acquire a proprietary and vested interest in the Companys growth and
performance and to assist the Company in attracting and retaining employees and
non-employee directors, by providing them with the opportunity to participate in
the Companys success and profitability.
The 2017 Restated Plan provides for grants
of incentive stock options (ISOs), which are entitled to special tax treatment
under Section 422 of the Code, and non-qualified stock options (NQSOs), which
are not entitled to such special tax treatment. The 2017 Restated Plan also
provides for grants of bonus shares, stock appreciation rights (SARs),
restricted stock, restricted stock units, performance shares and performance
units.
The 2017 Restated Plan is not subject to
any provisions of the Employee Retirement Income Security Act of 1974.
Either our Board of Directors or one or
more committees of our Board may administer the 2017 Restated Plan. Our Board
may delegate its discretionary authority over the 2017 Restated Plan to a
committee of the Board (the Committee), which consists of at least two
directors, each of whom is a non-employee director (within the meaning of Rule
16b-3(b)(3) under the Securities Act of 1934) and an outside director (within
the meaning of Code Section 162(m)). Members of the Committee may be removed at
the discretion of the Board.
The Committee is authorized to interpret
the 2017 Restated Plan and to adopt rules from time to time to carry out the
2017 Restated Plan. The Committee also has the authority to (i) select the
participants to whom awards will be granted, (ii) determine the types of awards
to be granted and the number of shares covered by each award, (iii) set
the terms and conditions of the awards, and (iv)
determine the circumstances under which awards may be cancelled, forfeited or
suspended. The Committee may also modify and amend the 2017 Restated Plan and
appoint agents for the proper administration of the 2017 Restated Plan and, with
the consent of an award holder, amend an outstanding award agreement under the
2017 Restated Plan, including waiving any restriction or vesting or exercise
condition applicable to an award. The Committee may also amend an outstanding
award agreement under the 2017 Restated Plan without the consent of an award
holder if (i) the Committee determines that such amendment does not materially
adversely affect the rights of the award holder, (ii) is necessary or advisable
to carry out the purposes of the award as a result of a new or modified law or
(iii) to the extent the award agreement specifically permits the amendment
without the award holders consent.
Shares
Reserved for Awards
|
If the 2017 Restated Plan is approved, the
2017 Restated Plan will authorize up to 4,134,500 shares of our Common Stock to
be used for awards, of which, as of April 1, 2017, 2,557,552 shares have already
been issued or are currently subject to outstanding awards. Accordingly, the
number of additional shares (600,000) that could be issued under the 2017
Restated Plan as of April 1, 2017 represents approximately 2.78% of the
Companys Common Stock outstanding as of such date on a fully diluted basis. The
shares issued under the 2017 Restated Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares, and to the extent any award
under the 2017 Restated Plan is exercised, terminates, expires or is forfeited
without payment being made in the form of Common Stock, the shares subject to
such award that were not issued will again be available for distribution under
the 2017 Restated Plan. Unless otherwise determined by the
Committee, stock options may be exercised by payment in cash
or tendering shares of Common Stock to us in full or partial payment of the
exercise, or by net exercise.
If shares are issued pursuant to an award
that was substituted in replacement of stock or stock-based awards held by
current and former employees or non-employee directors of another business that
is, or whose stock is, acquired by us or an affiliate in connection with a
corporate transaction, such shares would also not count against the authorized
limit of shares available for issuance under the 2017 Restated Plan.
The number of shares authorized for awards
is subject to adjustment due to changes resulting from payment of stock
dividends or other distributions, stock splits, spin-offs, extraordinary cash
dividends, subdivisions, consolidations, combinations, reclassifications,
recapitalizations and other corporate transactions as the Committee determines
to require an equitable adjustment.
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Eligibility and Limits on Awards
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Any non-employee director, key employee of
the Company or an affiliate of the Company is eligible to receive awards under
the 2017 Restated Plan. As of April 1, 2017, there were 6 non-employee
directors, 8 executive officers and approximately 18 employees other than
executive officers who are eligible to receive awards. Because the grant of
awards under the 2017 Restated Plan is within the discretion of the Committee,
the number and value of awards that will be granted under the 2017 Restated Plan
in the future cannot be determined at this time.
Individual Maximum Award Amounts
No participant may receive awards under the 2017 Restated Plan that cover
in the aggregate more than 600,000 shares in any one year. For purposes of Code
Section 162(m), this limit applies to any stock options or SARs that would be
granted to a single participant in a single calendar year. This limit is also
subject to adjustment for changes in our corporate or capital structure as
described above.
Non-Employee Director Sublimit
The 2017 Restated Plan includes a sublimit under which the maximum dollar
value of equity awards that can be granted to a director in a single calendar
year is $250,000, as measured by the grant date fair value of the awards
determined using applicable accounting principles.
Incentive Stock Option Limits
ISOs will not be granted to non-employee directors. In addition, the
aggregate fair market value (as of the grant date) of Common Stock with respect
to which ISOs are exercisable for the first time by a participant during any
calendar year (under this Plan or under any other plan of the Company or its
affiliates which qualifies as an incentive stock option plan under Code Section
422) may not exceed $100,000. To the extent such fair market value exceeds
$100,000 during any calendar year, amounts in excess of $100,000 are treated as
NQSOs.
Each award granted to a participant under
the 2017 Restated Plan is evidenced by an award agreement entered by the
participant and the Company. The award agreement specifies the terms and
conditions of the award, including the number of shares subject to the award,
the form of consideration payable upon exercise of the award, if applicable, the
effect on the award of a participants termination of employment, and all other
matters.
As appropriate, the Committee will also
establish the vesting conditions of awards. Vesting conditions may be based on a
participants service (time-based vesting) or based on the participants or the
Companys performance (performance-based vesting). Awards granted under the 2017
Restated Plan will generally be required to have a minimum vesting or exercise
period of twelve months from the awards date of grant. The limit will not apply
in certain situations, such as if a participant dies, becomes disabled, has a
qualifying retirement or if the Company experiences a change in control. Five
percent of the share reserve pool is exempt from the minimum vesting
requirement.
Unless otherwise specified in an award
agreement, if there is a change in control (as defined in the 2017 Restated
Plan), each award will, without regard to any vesting schedule, restriction or
performance target, automatically become fully exercisable, fully vested or
fully payable, as the case may be, following a participants involuntary
termination of employment (unless the participants employment is terminated for
cause) if such termination occurs during the two-year period following a change
in control. Additionally, upon a change in control, the Committee may take a
number of actions with respect to outstanding awards, including causing the
award to be assumed, or new rights substituted therefor, by the
acquiring or surviving corporation, accelerating the vesting or exercisability
of awards, modifying the performance requirements for the awards, or cancelling
outstanding awards in exchange for a payment (in cash, or in securities or other
property) in the amount that the participant would have received if such award
were vested or exercised and settled.
Awards granted under the 2017 Restated
Plan are not generally assignable or transferable by the participant except in
the event of the participants death or incapacity. Under certain conditions,
the Committee may permit awards to be transferred, exercised by and paid to
certain persons or entities related to a participant, including members of the
participants immediate family, charitable institutions, or trusts whose
beneficiaries are members of the participants immediate family or charitable
institutions. Notwithstanding the foregoing, ISOs are only transferable to the
extent permitted in Code Section 422.
Stock
Options
The Company may grant
participants one or more stock options, which will be designated as either ISOs
or NQSOs. Each option award allows the holder to purchase a specific number of
our shares at an established and fixed exercise price. The option exercise price
is determined in each case by the Committee, but in no event will the exercise
price of an option be less than the fair market value of the Companys stock on
the options grant date. Each option award agreement will also state the period
of time within which the option may be exercised and the periods of time, if
any, when incremental portions of each option will become exercisable. Subject
to certain exceptions, stock options must have a minimum vesting period of
twelve
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months. In no event may the term of an
option exceed ten years. Unless approved by our stockholders, the 2017 Restated
Plan prohibits amending a stock option, cancelling a stock option in exchange
for another stock award (including an option) or cash, or taking any other
action with respect to a stock option if such amendment, cancellation and
regrant or exchange would be considered a repricing of the option.
Stock
Appreciation Rights
SARs may be granted
to a participant at any time and in any number as determined by the Committee in
its sole discretion. SARs entitle the holder upon exercise to receive an amount
equal in value to the excess of the fair market value of the shares covered by
such right over the SAR exercise price. In no event may the SAR exercise price
be less than the fair market value of the Companys stock on the SARs grant
date. Payment upon a SAR exercise may be in whole shares of equivalent value,
cash or a combination of shares and cash.
Each SAR granted under the 2017 Restated
Plan will be evidenced by a SAR award agreement entered into between the Company
and the participant. The SAR award agreement will specify the exercise price per
share, the terms of the SAR, the conditions of the exercise and such other terms
and conditions as determined by the Committee. Subject to certain exceptions,
stock appreciation rights must have a minimum vesting period of twelve months.
In no event may the term of a SAR exceed ten years. Unless approved by our
stockholders, the 2017 Restated Plan prohibits amending a SAR, cancelling a SAR
in exchange for another stock award (including a SAR) or cash, or taking any
other action with respect to a SAR if such amendment, cancellation and regrant
or exchange would be considered a repricing of the SAR.
Restricted Stock and Restricted Stock Units
Awards of restricted stock and restricted stock units may be
granted to participants under the 2017 Restated Plan. The participants right to
retain shares of restricted stock or be paid with respect to restricted stock
units is subject to restrictions including, but not limited to, the participant
continuing to perform services for the Company or an affiliate of the Company
for a restriction period specified by the Committee or the attainment of
specified performance goals and objectives established by the Committee.
Restricted stock units may be granted in connection with or separate from a
grant of restricted stock. Upon the vesting of restricted stock units, the
holder will be entitled to receive the full value of the restricted stock units
payable in either shares or cash. Subject to certain exceptions, restricted
stock and restricted stock units must have a minimum vesting period of one year
from the date of grant.
With respect to shares of restricted
stock, participants will have all voting, dividend, liquidation and other
rights. Any dividends paid on shares of restricted stock or dividend equivalents
paid on restricted stock units prior to such
shares or RSUs becoming vested will be held in escrow and only paid if
the underlying restricted stock or RSUs become vested.
Performance Shares, Bonus Shares, Performance Units and
Performance Awards
Performance shares,
performance units and performance awards may be granted pursuant to terms such
that such award will only become vested, exercisable or payable (as the case may
be) if one or more applicable business criteria are satisfied. Subject to
certain exceptions, performance shares, performance units and performance awards
must have a minimum vesting period of one year from the date of grant. Bonus
shares may be granted in recognition of a participants past performance or
service (whether such performance is determined by reference to another employee
benefit or bonus plan of ours or otherwise) or as an incentive to become an
employee of Layne or one of our subsidiaries. Bonus shares are issued without
any cost to a participant and without restriction. However, the number of bonus
shares granted (plus the number of other awards granted with time-based vesting
terms under twelve months from an awards date of grant) may not exceed five
percent of the share reserve pool. If our Committee intends to qualify an award
under the 2017 Restated Plan as performance-based compensation under Code
Section 162(m), the performance goals selected by the Committee may be based on
the attainment of specified levels of one, or any combination, of the following
performance criteria (Business Criteria) for our company as a whole or any
affiliate or business unit (including relative to the performance of other
corporations), as reported or calculated by us:
●
|
Earnings measures (either in the
aggregate or on a per-Share basis), including or excluding one or more of
interest, taxes, depreciation, amortization or similar financial
accounting measurements and/or adjusted to exclude any one or more of the
following:
|
●
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stock-based compensation expense;
|
●
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income from discontinued operations;
|
●
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gain on cancellation of debt;
|
●
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debt extinguishment and related
costs;
|
●
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restructuring, separation and/or
integration charges and costs;
|
●
|
reorganization and/or
recapitalization charges and costs;
|
●
|
impairment charges;
|
●
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gain or loss related to investments
or the sale of assets;
|
●
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sales and use tax settlement; and
|
●
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gain on non-monetary
transaction.
|
●
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Operating profit, operating income
or operating margin (either in the aggregate or on a per-Share basis);
|
●
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Net earnings on either a LIFO or
FIFO basis (either in the aggregate or on a per-Share
basis);
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Net income or loss (either in the
aggregate or on a per-Share basis);
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●
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Cash flow provided by operations
(either in the aggregate or on a per-Share basis);
|
●
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Cash flow returns, including cash
flow returns on invested capital (cash flow from operating activities
minus capital expenditures, the difference of which is divided by the
difference between total assets and non-interest bearing current
liabilities);
|
●
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Ratio of debt to debt plus
equity;
|
●
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Net borrowing;
|
●
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Credit quality or debt
ratings;
|
●
|
Inventory levels, inventory turn or
shrinkage;
|
●
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Sales;
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●
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Revenues;
|
●
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Free cash flow (either in the
aggregate or on a per-Share basis);
|
●
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Reductions in expense levels,
determined either on a Company-wide basis or with respect to any one or
more business units;
|
●
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Operating and maintenance cost
management and employee productivity;
|
●
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Gross margin;
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●
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Return measures (including return on
assets, capital, investment, equity, or sales);
|
●
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Productivity
increases;
|
●
|
Share price (including attainment of
a specified per-Share price during the Incentive Period;
growth measures and total stockholder return or
attainment by the Shares of a specified price for a specified period of
time);
|
●
|
Growth or rate of growth of any of
the above Business Criteria;
|
●
|
Specified revenue, market share,
market penetration, business development, geographic business expansion
goals, objectively identified project milestones, production volume
levels, cost targets, customer satisfaction, and goals relating to
acquisitions or divestitures; and
|
●
|
Accomplishment of mergers,
acquisitions, dispositions, public offerings, or similar extraordinary
business transactions.
|
The applicable Business Criteria may be
applied on a pre- or post-tax basis, and the Committee may, when the applicable
performance goals are established, provide that the formula for such goals may
include or exclude items to measure specific objectives, such as losses from
discontinued operations, unusual or infrequently events or conditions, the
cumulative effect of accounting changes, acquisitions or divestitures, foreign
exchange impacts, and any unusual, nonrecurring gain or loss. The Committee may
also take into account any other unusual or non-recurring items, including (i)
asset write-downs; (ii) litigation or claim judgments or settlements; and (iii)
the charges or costs associated with restructurings of the Company, and,
further,
may take into account any other unusual
or infrequently occurring events or transactions affecting the Company, changes
in applicable tax laws or accounting principles or such other factors as the
Committee may determine reasonable and appropriate under the circumstances
(including any factors that could result in the Companys paying non-deductible
compensation to an employee or non-employee director). As established by the
Committee, the Business Criteria may include GAAP and non-GAAP financial
measures. The Business Criteria may also include any performance goals which are
set forth in any other Company bonus, incentive or other compensation-related
plan, if any, which has been approved by our stockholders.
Actual target levels for awards will be
determined by the Committee. Measurements of the Companys or a participants
performance against the performance goals established by the Committee must be
objectively determinable.
To the extent the award is intended as
Code Section 162(m) performance-based compensation, the Committee may adjust
the amount payable pursuant to an award under the 2017 Restated Plan downward
but not upward and the Committee may not waive the achievement of performance
goals related to an award except in the case of a participants death or
disability. Code Section 162(m) requires that the Committee certify that
performance goals were achieved before the payment of the performance-based
compensation. Although the Company generally will attempt to structure
performance-based awards so as to preserve deductibility, there may be
circumstances where the Companys best interests may be best served by
maintaining flexibility in the way compensation is provided even if it might
result in the non-deductibility of the compensation. In addition, because of the
uncertainties associated with the application and interpretation of Section
162(m) and the regulations issued thereunder, there can be no assurance that
compensation intended to satisfy the requirements for deductibility under
Section 162(m) will in fact be deductible.
Achievement of the maximum performance
target(s) entitles the holder to payment at the full maximum amount specified
with respect to the award; however, the Committee may establish an upper limit
on the amount payable. Following the conclusion of each performance period, the
Committee will determine to what extent the performance targets have been
attained, what payment, if any, is due with respect to an award and whether such
payment will be made in cash, stock or a combination of cash and stock. As
discussed above, subject to certain adjustments for changes in our corporate or
capital structure described above, no participant may be granted awards for more
than 600,000 shares in any calendar year period.
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Because of the uncertainties associated
with the application and interpretation of Section 162(m) and the regulations
issued thereunder, there can be no assurance that compensation intended to
satisfy the requirements for deductibility under Section 162(m) will in fact be
deductible. Moreover, our Board or Compensation Committee may elect to grant
performance-based awards that are not intended to satisfy all of the conditions
necessary for awards granted under the 2017 Restated Plan to qualify as
performance-based compensation under Section
162(m), even if all or less than all of the compensation resulting from the
exercise, vesting or settlement of such awards is non-deductible. The Company
has in the past granted a number of awards that are not eligible for
deductibility under Section 162(m) because such awards contained a service-based
component rather than a performance-based component.
Amendment and Termination of the 2017 Restated
Plan
|
Our Board of Directors or the Committee is
permitted to amend the 2017 Restated Plan or any outstanding award thereunder,
except that only our Board is permitted to amend the 2017 Restated Plan if
stockholder approval of the amendment is required by applicable law, regulation
or
stock exchange rule. Amendment of an
outstanding award generally may not materially adversely affect a participants
rights under the award without the participants consent, subject to certain
limited exceptions set forth in the 2017 Restated Plan.
Federal Income Tax
Consequences
|
Based on current provisions of the Code
and the existing regulations thereunder, the anticipated U.S. federal income tax
consequences of awards granted under the 2017 Restated Plan are as described
below. The following discussion is not intended to be a complete discussion of
applicable law and is based on the U.S. federal income tax laws as in effect on
the date hereof. State tax consequences may in some cases differ from those
described below.
Nonqualified Stock Options
A
participant generally will not recognize taxable income upon the grant or
vesting of a nonqualified stock option with an exercise price at least equal to
the fair market value of the Common Stock on the date of grant and no additional
deferral feature. When a nonqualified stock option is exercised, a participant
generally will recognize compensation taxable as ordinary income in an amount
equal to the difference between the fair market value of the shares underlying
the option on the date of exercise and the option exercise price. When a
participant sells the shares, the participant will have short-term or long-term
capital gain or loss, as the case may be, equal to the difference between the
amount the participant received from the sale and the tax basis of the shares
sold. The tax basis of the shares generally will be equal to the greater of the
fair market value of the shares on the exercise date or the option exercise
price.
Incentive Stock Options
A
participant generally will not recognize taxable income upon the grant of an
incentive stock option. If a participant exercises an incentive stock option
during employment or within three months after his or her employment ends (12
months in the case of permanent and total disability), the participant will not
recognize taxable income at the time of exercise for regular U.S. federal income
tax purposes (although the participant generally will have taxable income
for alternative minimum tax purposes at that time
as if the option were a nonqualified stock option). If a participant sells or
otherwise disposes of the shares acquired upon exercise of an incentive stock
option after the later of (a) one year from the date the participant exercised
the option and (b) two years from the grant date of the option, the participant
generally will recognize long-term capital gain or loss equal to the difference
between the amount the participant received in the disposition and the option
exercise price. If a participant sells or otherwise disposes of shares acquired
upon exercise of an incentive stock option before these holding period
requirements are satisfied, the disposition will constitute a disqualifying
disposition, and the participant generally will recognize taxable ordinary
income in the year of disposition equal to the excess of the fair market value
of the shares on the date of exercise over the option exercise price (or, if
less, the excess of the amount realized on the disposition of the shares over
the option exercise price). The balance of the participants gain on a
disqualifying disposition, if any, will be taxed as short-term or long-term
capital gain, as the case may be.
With respect to both nonqualified stock
options and incentive stock options, special rules apply if a participant uses
shares of Common Stock already held by the participant to pay the exercise
price.
Stock
Appreciation Rights
A participant
generally will not recognize taxable income upon the grant or vesting of an SAR
with a grant price at least equal to the fair market value of the Common Stock
on the date of grant and no additional deferral feature. Upon the exercise of an
SAR, a participant generally will recognize compensation taxable as ordinary
income in an amount equal to the difference between the fair market value of the
shares underlying the SAR on the date of exercise and the grant price of the
SAR.
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Restricted Stock Awards, Restricted Stock Units, Performance
Shares and Performance Units
A participant
generally will not have taxable income upon the grant of restricted stock,
restricted stock units, performance shares or performance units. Instead, the
participant will recognize ordinary income at the time of vesting or payout
equal to the fair market value (on the vesting or payout date) of the shares or
cash received minus any amount paid. For restricted stock only, a participant
may instead elect to be taxed at the time of grant.
Bonus
Shares
A participant will recognize
taxable income equal to the fair market value of the shares issued as bonus
shares at the time such shares are issued.
Tax
Consequences to the Company
In the
foregoing cases, we generally will be entitled to a deduction at the same time,
and in the same amount, as a participant recognizes ordinary income, subject to
certain limitations imposed under the Code, such as Code Section
162(m).
Code
Section 409A
We intend that awards granted
under the 2017 Restated Plan shall comply with, or otherwise be exempt from,
Code Section 409A, but make no representation or warranty to that
effect.
Tax
Withholding
We are authorized to deduct or
withhold from any award granted or payment due under the 2017 Restated Plan, or
require a participant to remit to us, the amount of any withholding taxes due in
respect of the award or payment and to take such other action as may be
necessary to satisfy all obligations for the payment of applicable withholding
taxes. We are not required to issue any shares of Common Stock or otherwise
settle an award under the 2017 Restated Plan until all tax withholding
obligations are satisfied.
If approved by the stockholders, the 2017
Restated Plan will be effective May 31, 2017, and will remain in effect, subject
to the right of the Board of Directors to amend or terminate the 2017 Restated
Plan, until all shares subject to it have been purchased or acquired according
to the 2017 Restated Plans provisions. No awards will be issued under the 2017
Restated Plan after May 31, 2027, unless the 2017 Restated Plan is re-approved
by the stockholders. Any awards granted before the 2017 Restated Plan is
terminated may extend beyond the expiration date.
The following persons and groups have
received grants of stock options to purchase the following number of shares
under the 2006 Equity Plan since its inception through April 1, 2017:
1.
|
the Named Executive
Officers:
|
●
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Michael J. Calieloptions to
purchase 0 shares
|
●
|
J. Michael Andersonoptions to
purchase 0 shares
|
●
|
Steven F. Crookeoptions to purchase
138,357 shares
|
●
|
Larry Purleeoptions to purchase
22,971 shares
|
●
|
Kevin Maher options to purchase
12,896 shares
|
2.
|
all current executive officers as a group (8 persons)options to purchase 185,384 shares;
|
3.
|
all current Directors who are not executive officers as
a group (6 persons)343,181;
|
4.
|
the nominees for
Director:
|
●
|
David A.B. Brownoptions to purchase
172,345 shares
|
●
|
Nelson Obusoptions to purchase
41,885 shares
|
●
|
J. Samuel Butleroptions to purchase
66,960 shares
|
●
|
Robert R. Gilmoreoptions to
purchase 22,673 shares
|
●
|
Alan Krusioptions to purchase
32,874 shares
|
●
|
John T. Nesser IIIoptions to
purchase 6,444 shares
|
5.
|
any associates of the Directors, NEOs or Nomineesoptions to purchase 0 shares; and
|
6.
|
all employees, including all current officers and
Directors, as a groupoptions to purchase 1,243,106
shares.
|
The amounts shown include shares subject
to options that may have been forfeited in whole or in part.
The following table provides information
as of January 31, 2017 about Layne stock that may be issued under the 2006
Equity Plan upon the exercise of options, warrants and rights or pursuant to
stand-alone inducement grants made to certain individuals.
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Equity Compensation Plan
Information
Plan Category
|
|
Number of securities to
be issued upon
exercise
of outstanding options,
warrants and
rights
(a)
|
|
Weighted-average
exercise price
of
outstanding options,
warrants and rights
(b) (1)
|
|
Number of securities
remaining available for
future
issuance under
equity compensation
plans (excluding
securities
reflected in column (a))
(c)
|
Equity compensation plans approved
|
|
|
|
|
|
|
|
|
by
security holders
|
|
2,372,148
|
(2)
|
|
$
|
15.41
|
|
348,949
(3)
|
Equity compensation plans not
|
|
|
|
|
|
|
|
|
approved by stockholders
|
|
249,536
|
(4)
|
|
$
|
9.94
|
|
n/a
|
(1)
|
The weighted average exercise
price does not take into account the shares issuable upon the vesting of
outstanding awards of restricted stock units or performance shares, which
have no exercise price.
|
|
(2)
|
This number includes the
following: 630,635 shares subject to outstanding stock options, 406,354
shares subject to outstanding time-vesting restricted stock unit awards
and 1,335,159 shares subject to outstanding performance-vesting
restricted stock unit awards. The share numbers represented by
time-vesting restricted stock units and performance-vesting restricted
stock units awards the maximum amount of shares that may be awarded if the
Company meets its best-case performance targets. All awards were granted
under the 2006 Equity Incentive Plan.
|
|
(3)
|
All shares listed as issuable
pursuant to future awards under the 2006 Equity Incentive
Plan.
|
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(4)
|
Includes inducement grants made
to Messrs. Caliel and Anderson in connection with their respective
hirings. Mr. Caliel received an inducement grant consisting of (i) 109,409
stock options with an exercise price of $10.06 per share that will vest on
January 2, 2018, subject to satisfaction of certain conditions, and (ii)
68,399 performance-vesting restricted stock units that will vest in 25%
increments on or before January 2, 2018 if certain performance targets and
other conditions are met. Mr. Anderson received an inducement grant
consisting of (i) 10,000 stock options with an exercise price of $8.60 per
share that will vest in 25% increments on or before July 20, 2018 if
certain performance targets are met and (ii) 61,728 restricted stock units
that will vest in 25% increments on or before July 20, 2018 if certain
performance targets and other conditions are
met.
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REGISTRATION WITH
THE SEC
We intend to register the additional
shares to be issued under the 2017 Restated Plan by filing a Registration
Statement on Form S-8 relating to the issuance of our Common Stock under the
2017 Restated Plan with the SEC pursuant to the Securities Act of 1933, as
amended, as soon as practicable after approval of the 2017 Restated Plan by our
stockholders.
REQUIRED VOTES AND
BOARD RECOMMENDATIONS
The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock present or represented at the
meeting and entitled to vote thereon is required for the approval of the 2017
Restated Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR
THE APPROVAL OF THE 2006
EQUITY INCENTIVE PLAN, AS AMENDED AND RESTATED (EFFECTIVE MAY 31, 2017),
INCLUDING APPROVAL OF THE MATERIAL TERMS OF THE PERFORMANCE
GOALS.
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Layne Christensen Company
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57
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Table of Contents
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RATIFICATION OF
SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS
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ITEM
5
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RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS
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The Board recommends a
vote
FOR
approval of the selection of Deloitte & Touche
LLP.
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The Audit Committee of the Board of
Directors has selected the independent registered public accounting firm of
Deloitte & Touche LLP to audit the books, records and accounts of the
Company for the fiscal year ending January 31, 2018. Stockholders will have an
opportunity to vote at the Annual Meeting on whether to ratify the Audit
Committees decision in this regard.
Deloitte & Touche LLP has served as
the Companys independent registered public accounting firm since fiscal 1990.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting. Such representatives will have an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
PRINCIPAL
ACCOUNTING FEES AND SERVICES
During fiscal 2016 and 2017, Deloitte
& Touche LLP, the member firms of Deloitte Touche Tohmatsu Limited and their
respective affiliates (collectively, Deloitte & Touche) provided various
audit and non-audit services to the Company as follows:
(a)
Audit Fees:
Aggregate fees billed for professional services rendered for the audit of the
Companys annual financial statements and assessment of internal controls over
financial reporting, and review of financial statements included in the
Companys Form 10-Q reports, as well as statutory audits for international
entities and procedures for registration statements.
Fiscal 2017
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Fiscal 2016
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$2,157,691
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$3,511,746
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(b)
Audit-Related Fees
:
Audit-related fees include benefit plan audits and consultation on potential
acquisitions and various other matters.
Fiscal 2017
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Fiscal 2016
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$12,000
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(c)
Tax Fees
: Tax fees include
income tax consultation and assistance in filing income tax returns.
Fiscal 2017
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Fiscal 2016
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$162,141
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$304,300
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(d)
All Other Fees
: All other fees
relate to licensing of access to an on-line accounting research facility and
miscellaneous fees for services. The Company did not incur any fees relating to
the design and implementation of financial information systems in either fiscal
2016 or fiscal 2017.
Fiscal 2017
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Fiscal 2016
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$5,290
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$5,300
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The Audit Committee of the Board of
Directors has considered whether provision of the services described in sections
(b), (c) and (d) above is compatible with maintaining the registered public
accounting firms independence and has determined that such services have not
adversely affected Deloitte & Touches independence.
The Audit Committees Policy for the
Approval of Audit, Audit-Related, Tax and Other Services provided by the
Independent Auditor provides for the pre-approval of the scope and estimated
fees associated with the current year audit. The policy also requires
pre-approval of audit-related, tax and other services specifically described by
management on an annual basis and, furthermore, additional services anticipated
to exceed the specified pre-approval limits for such services must be separately
approved by the Audit Committee. Finally, the policy outlines nine specific
restricted services outlined in the SECs rule on auditor independence that are
not to be performed by the independent auditor. None of the services performed
by Deloitte & Touche, as described above, were approved by the Audit
Committee pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X.
All of the services described in sections
(b), (c) and (d) above were pre-approved by the Audit Committee.
Submission of the selection of the
independent registered public accounting firm to the stockholders for
ratification will not limit the authority of the Audit Committee to
Table of Contents
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SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
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appoint another independent registered
public accounting firm to serve as independent auditors if the present auditors
resign or their engagement otherwise is terminated. If the stockholders do not
ratify the selection of Deloitte & Touche at the Annual Meeting, the Company
intends to call a special meeting of stockholders
to be held as soon as practicable after the Annual Meeting to ratify the
selection of another independent registered public accounting firm as
independent auditors for the Company.
THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR
APPROVAL OF THE SELECTION OF
DELOITTE & TOUCHE LLP.
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SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
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Section 16(a) of the Securities Exchange
Act of 1934 (the Exchange Act) requires the Companys directors and executive
officers, and certain persons who own more than 10% of the Companys outstanding
Common Stock, to file with the Securities and Exchange Commission (SEC)
initial reports of ownership and reports of changes in ownership in Layne
Christensen Common Stock and other equity securities. SEC regulations require
directors, executive officers and certain greater than 10% stockholders to
furnish Layne Christensen with copies of all Section 16(a) reports they
file.
To the Companys knowledge, based solely
on review of the copies of such reports furnished to Layne Christensen and
written representations that no other reports were required, during the fiscal
year ended January 31, 2017, all Section 16(a) filing requirements applicable to
its directors, executive officers and greater than 10% stockholders were
met.
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OTHER BUSINESS
OF THE MEETING
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The Board of Directors is not aware of,
and does not intend to present, any matter for action at the Annual Meeting
other than those referred to in this Proxy Statement. If, however, any other
matter properly comes before the
Annual Meeting
or any adjournment, it is intended that the holders of the proxies solicited by
the Board of Directors will vote on such matters in their discretion in
accordance with their best judgment.
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ANNUAL
REPORT
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A copy of the Companys Annual Report to
Stockholders, containing financial statements for the fiscal year ended January
31, 2017, is being mailed with this Proxy Statement to all stockholders entitled
to vote at the Annual Meeting. Such Annual Report is not to be regarded as proxy
solicitation material.
A copy of the Companys Annual Report on
Form 10-K for the fiscal year ended January 31, 2017 (the Form 10-K),
excluding Exhibits, will be furnished without charge to any
stockholder of record as of April 12, 2017, upon written
request addressed to the attention of the Secretary of Layne Christensen Company
at 1800 Hughes Landing Boulevard, Ste. 800, The Woodlands, TX 77380. The
Companys Form 10-K is also available on its website at www.layne.com. Layne
Christensen will provide a copy of any exhibit to the Form 10-K to any such
person upon written request and the payment of the Companys reasonable expenses
in furnishing such exhibits.
Layne Christensen Company
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59
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Table of Contents
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ADVANCE NOTICE
PROCEDURES/STOCKHOLDER NOMINATION SUBMISSION
PROCESS
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Under the Companys bylaws, no business
may be brought before an annual meeting unless it is specified in the notice of
the meeting or is otherwise brought before the meeting by or at the direction of
the Board or by a stockholder entitled to vote who has delivered written notice
to the Companys Secretary (containing certain information specified in the
bylaws about the stockholder and the proposed action) not less than 120 or more
than 150 days prior to the first anniversary of the preceding years annual
meetingthat is, with respect to the 2018 annual meeting, between January 1,
2018 and January 31, 2018. In addition, any stockholder who wishes to submit to
the Board a potential candidate for nomination to the Board must deliver written
notice of the nomination within this time period. Such stockholders notice
shall set forth as to each person whom the stockholder proposes to nominate for
election or reelection as a director:
(a) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated;
(b) a representation that such stockholder
is a holder of record of stock of the Company entitled to vote in the election
of directors at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice;
(c) the name and address of such
stockholder, as it appears on the Companys books, and of the beneficial owner,
if any, on whose behalf the nomination is made;
(d) the class and number of shares of the
Company which are owned beneficially and of record by the nominating stockholder
and each nominee proposed by such stockholder;
(e) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder;
(f) such other information regarding each
nominee proposed by such stockholder as would have been required to be included
in a Proxy Statement filed pursuant to Regulation 14A (17 C.F.R. Section 240.14a-1 et seq.) as then in effect under the Securities Exchange Act of 1934, as
amended (Exchange Act), had the nominee been nominated, or intended to be
nominated, by the Board of Directors; and
(g) the consent of each nominee to serve
as a director of the Company if so elected.
The Company may require any proposed
nominee to furnish such other information as may reasonably be required by the
Company to determine the eligibility of such proposed nominee to serve as
director of the Company.
These requirements are separate from and
in addition to the SECs requirements that a stockholder must meet in order to
have a stockholder proposal included in the Companys Proxy
Statement.
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STOCKHOLDER
PROPOSALS FOR 2018 ANNUAL MEETING
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It is presently anticipated that the 2018
Annual Meeting of Stockholders will be held on June 1, 2018. Stockholder
proposals intended for inclusion in the Proxy Statement for the 2018 Annual
Meeting of Stockholders must be received at the Companys offices, located at
1800 Hughes Landing Boulevard, Ste. 800, The Woodlands, Texas 77380, no later
than December 29, 2017. Such proposals must also
comply with the other requirements of the proxy solicitation rules of the
Securities and Exchange Commission. Stockholder proposals should be addressed to
the attention of the Secretary or Assistant Secretary of Layne
Christensen.
Table of Contents
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HOUSEHOLDING
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If you and other residents at your mailing
address own shares in street name, your broker, bank or other nominee may have
sent you a notice that your household will receive only one annual report and
Proxy Statement for each company in which you hold shares through that broker,
bank or nominee. This practice is called householding. If you did not respond
that you did not want to participate in householding, you are deemed to have
consented to that process. If these procedures apply to you, your broker, bank
or other nominee will have sent one copy of our Annual Report to Stockholders
and Proxy Statement to your address. You may revoke your consent to householding
at any time by contacting your broker, bank or other nominee. If you did not
receive an individual copy of our Annual Report to Stockholders and Proxy
Statement, we will send copies to you if you contact us at 1800 Hughes Landing
Boulevard, Ste. 800, The Woodlands, Texas 77380, (281) 475-2600, Attention:
Corporate Secretary. If you and other residents at your address have been
receiving multiple copies of our Annual Report to Stockholders and Proxy
Statement and desire to receive only a single copy of these materials, you may
contact your broker, bank or other nominee or contact us at the above address or
telephone number.
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By Order of the Board of
Directors.
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Steven F.
Crooke
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Senior Vice
PresidentChief Administrative Officer,
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General Counsel and
Secretary
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April 28, 2017
The Woodlands, Texas
Layne Christensen Company
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61
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Table of Contents
Table of Contents
ANNUAL MEETING OF STOCKHOLDERS
OF
LAYNE CHRISTENSEN
COMPANY
May 31, 2017
GO GREEN
e-Consent makes it easy to go paperless. With e-Consent, you can quickly
access your proxy material, statements and other eligible documents online,
while reducing costs, clutter and paper waste. Enroll today via
www.astfinancial.com to enjoy online access.
NOTICE OF INTERNET AVAILABILITY OF
PROXY MATERIAL
:
The Notice of Meeting, proxy statement and proxy card
are
available at http://www.astproxyportal.com/ast/21286
Please sign, date and mail
your proxy
card in the
envelope provided as soon
as possible.
↓
Please detach along perforated line and mail in the
envelope provided.
↓
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2, 4 AND 5, AND FOR “1 YEAR” ON ITEM 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒
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FOR
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AGAINST
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ABSTAIN
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1. Election of Directors:
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Advisory vote to approve named executive officer compensation.
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NOMINEES:
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☐
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FOR
ALL NOMINEES
WITHHOLD AUTHORITY
FOR ALL
NOMINEES
FOR ALL
EXCEPT
(See instructions
below)
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O
David A.B. Brown
O
Michael J. Caliel
O
J. Samuel Butler
O
Nelson
Obus
O
Robert R. Gilmore
O
John T. Nesser III
O
Alan P. Krusi
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1
year
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2 years
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3
years
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ABSTAIN
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3.
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Advisory vote to approve the frequency of an advisory vote on named
executive officer compensation.
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FOR
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AGAINST
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ABSTAIN
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4.
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Proposal to approve an amendment to the
Company's 2006 Equity Incentive Plan, effective May 31, 2017.
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FOR
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AGAINST
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ABSTAIN
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5.
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Proposal to ratify the selection of the
accounting firm of Deloitte & Touche LLP as Layne Christensen's
independent auditors for the fiscal year ending January 31,
2018.
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In their
discretion, the proxies are authorized to vote upon such other business as
properly may come before the Annual Meeting.
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INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s), mark
FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to
withhold, as shown here: ●
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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Signature of
Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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Table of Contents
ANNUAL MEETING OF SHAREHOLDERS
OF
LAYNE CHRISTENSEN
COMPANY
May 31, 2017
PROXY
VOTING INSTRUCTIONS
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INTERNET
-
Access
www.voteproxy.com
and
follow the on-screen instructions or scan the QR code with your smartphone. Have
your proxy card available when you access the web page.
TELEPHONE
-
Call toll-free
1-800-PROXIES
(1-800-776-9437) in the United States or
1-718-921-8500
from foreign countries
from any touch-tone telephone and follow the instructions. Have your proxy card
available when you call.
Vote online/phone until 11:59
PM EST the day before the meeting.
MAIL
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Sign, date and mail your
proxy card in the envelope provided as soon as possible.
IN PERSON
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You may vote your shares
in person by attending the Annual Meeting.
GO GREEN
-
e-Consent makes it easy
to go paperless. With e-Consent, you can quickly access your proxy material,
statements and other eligible documents online, while reducing costs, clutter
and paper waste. Enroll today via www.astfinancial.com to enjoy online
access.
COMPANY
NUMBER
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ACCOUNT
NUMBER
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NOTICE OF INTERNET AVAILABILITY OF PROXY
MATERIAL
:
The Notice of
Meeting, proxy statement and proxy card
are available at
http://www.astproxyportal.com/ast/21286
↓
Please detach along
perforated line and mail in the envelope provided
IF
you are not voting via telephone or the
Internet.
↓
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2, 4 AND 5, AND
FOR “1 YEAR” ON ITEM 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN
BLUE OR BLACK INK AS SHOWN HERE ☒
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FOR
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AGAINST
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ABSTAIN
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1. Election of Directors:
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2.
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Advisory vote to approve named executive officer compensation.
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☐
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☐
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☐
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NOMINEES:
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☐
☐
☐
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FOR
ALL NOMINEES
WITHHOLD AUTHORITY
FOR ALL
NOMINEES
FOR ALL
EXCEPT
(See instructions
below)
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O
David A.B. Brown
O
Michael J. Caliel
O
J. Samuel Butler
O
Nelson
Obus
O
Robert R. Gilmore
O
John T. Nesser III
O
Alan P. Krusi
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1
year
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2 years
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3
years
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ABSTAIN
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3.
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Advisory vote to approve the frequency of an advisory vote on named
executive officer compensation.
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☐
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☐
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☐
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☐
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FOR
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AGAINST
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ABSTAIN
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4.
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Proposal to approve an amendment to the
Company's 2006 Equity Incentive Plan, effective May 31, 2017.
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FOR
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AGAINST
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ABSTAIN
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5.
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Proposal to ratify the selection of the
accounting firm of Deloitte & Touche LLP as Layne Christensen's
independent auditors for the fiscal year ending January 31,
2018.
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☐
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☐
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In their
discretion, the proxies are authorized to vote upon such other business as
properly may come before the Annual Meeting.
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INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s), mark
FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to
withhold, as shown here: ●
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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Signature of
Stockholder
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Date:
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Signature of Stockholder
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Date:
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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Table of Contents
LAYNE CHRISTENSEN
COMPANY
2017 ANNUAL MEETING OF
STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
The undersigned hereby appoints Michael J.
Caliel, J. Michael Anderson and Steven F. Crooke, and each of them, each with
the power to act alone and with full power of substitution and revocation, as
attorneys and proxies of the undersigned to attend the 2017 Annual Meeting of
Stockholders of Layne Christensen Company ("Layne Christensen") to be held at
Layne Christensens Corporate Headquarters, located at 1800 Hughes Landing
Blvd., Ste. 800, The Woodlands, Texas 77380, on Wednesday, May 31, 2017,
commencing at 10:00 a.m., local time, and at all adjournments thereof, and to
vote all shares of capital stock of Layne Christensen which the undersigned is
entitled to vote with respect to the matters on the reverse side, all as set
forth in the Notice of Annual Meeting of Stockholders and Proxy Statement, dated
April 28, 2017.
This Proxy, when properly executed, will be
voted in the manner directed herein by the undersigned stockholder(s).
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" ITEMS 1, 2, 4 and 5, and for 1 YEAR on ITEM 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
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(Continued and to be signed on
the reverse side.)
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