Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 3, 2018, Alan Krenek, the Senior Vice President, Chief Financial Officer, Treasurer and Secretary of Basic Energy Services, Inc. (the “Company”), informed the Company that he intends to retire on or about July 1, 2018. In connection with Mr. Krenek’s retirement, the Company and Mr. Krenek have entered into a Transition Services Agreement (the “TSA”) pursuant to which Mr. Krenek will retire from the Company and his position as Senior Vice President, Chief Financial Officer, Treasurer and Secretary of the Company, to be effective on July 1, 2018, or such other date that the Chief Executive Officer of the Company and Mr. Krenek mutually agree, but which shall in no event be later than December 31, 2018 (the “Severance Date”). Mr. Krenek’s retirement does not involve any disagreement between him and the Company on any matter related to the Company’s operations, policies, practices or otherwise. The Compensation Committee of the Company approved the terms of the TSA on April 3, 2018.
In consideration of Mr. Krenek’s assistance in effectuating an orderly transition of his retirement and the training and mentorship of his future successor when selected by the Company, pursuant to the terms of the TSA, Mr. Krenek will receive (a) subject to Mr. Krenek executing a Waiver and Release Agreement (the “Release”) and not revoking such agreement during the revocation period under the Release, (i) a cash severance payment in the amount of $1,166,175, less required deductions, (ii) a pro rata portion of his 2018 target cash bonus (which amount will be $154,346 if the Severance Date is July 1, 2018, but will be adjusted accordingly should the Severance Date be earlier or later), less required deductions, each to be paid no later than five business days following the expiration of the revocation period under the Release; (b) a cash payment for accrued and unused paid time off in accordance with Company policy; and (c) acceleration of vesting on the Severance Date of all of Mr. Krenek’s outstanding unvested stock options, restricted stock and restricted stock units (collectively, the “Equity Awards”), with any applicable performance goals deemed met at the target levels and will be settled in accordance with the terms of the applicable award agreement.
The TSA also sets forth customary terms applicable to the departure of an executive of the Company, including provisions allowing the Company to clawback the Equity Awards or proceeds therefrom in the event of a breach of certain restrictive covenants currently set forth in Mr. Krenek’s employment agreement, which covenants will survive a termination of the employment agreement.
The foregoing description of the TSA in this Item 5.02 is qualified in its entirety by reference to the full text of the TSA, which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.