Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Keith L. Schilling as President, Chief Executive Officer and Director
On December 19, 2019, the Board of Directors (the “Board”) of Basic Energy Services, Inc., a Delaware corporation (“Basic” or the “Company”), approved the appointment of Keith L. Schilling to serve as President, Chief Executive Officer and director of the Company. Mr. Schilling will perform the functions of the Company’s principal executive officer.
As previously announced, T.M. “Roe” Patterson notified the Board on September 13, 2019, of his decision to voluntarily resign as President and Chief Executive Officer of the Company and entered into a Separation and Release Agreement under which he would remain as President and Chief Executive Officer of the Company until (i) January 31, 2019, or (ii) such earlier time as chosen by the Board (the “Patterson Separation Date”). The Board designated January 2, 2020, as the Patterson Separation Date, and effective January 2, 2020, Mr. Schilling will serve as President, Chief Executive Officer and director of the Company.
Mr. Schilling, 47, was previously employed by Baker Hughes Company, where he served as President of Baker Hughes Canada since November 2018 and as Director, Sales and Commercial from July 2017 until November 2018. From October 2016 until June 2017, Mr. Schilling served as President - Surface for the North America Region. Prior to his work for Baker Hughes Company and its affiliates, Mr. Schilling served as Senior Vice President for TETRA Technologies, Inc. from December 2014 until October 2016. From 1995 to 2014, Mr. Schilling was employed by Schlumberger Limited in numerous capacities. Mr. Schilling received a B.S. in Chemical Engineering from Texas A&M University in 1995 and an M.B.A. from Rotterdam University in 2008. Mr. Schilling has over 20 years of extensive experience with major energy services companies.
Mr. Schilling has no family relationships with any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer of the Company. Mr. Schilling is not a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. Mr. Schilling has not been, and is not currently expected to be, appointed to any committees of the Board.
Keith L. Schilling Employment Agreement
On December 19, 2019, the Company entered into an employment agreement (the “Employment Agreement”) with Mr. Schilling. The Employment Agreement is effective through December 31, 2021, and will automatically renew for subsequent one-year periods unless notice of termination is properly given by the Company or Mr. Schilling. Pursuant to the Employment Agreement and his offer letter, Mr. Schilling is entitled to a base salary of $650,000 per year. Mr. Schilling will also be entitled to an annual performance bonus, with a target bonus equal to 90% of his base salary, if certain performance criteria are met. Under the Employment Agreement, Mr. Schilling is eligible from time to time to receive awards of long-term equity incentive compensation under the Company’s equity compensation plans. He will also receive a one-time signing bonus of $150,000 as well as one-time payments to compensate him for the loss of equity issued from his previous employment in the following amounts: (i) $50,000 on May 15, 2020, (ii) $100,000 on May 15, 2021, and (iii) $100,000 on May 15, 2022, in each case conditioned on his continued employment through the applicable payment date.
If Mr. Schilling’s employment is terminated for certain reasons, he would be entitled to a lump sum severance payment equal to 1.5 times the sum of his base salary plus his current annual incentive target bonus for the full year in which the termination of employment occurred. Additionally, if Mr. Schilling’s employment is terminated for certain reasons within the six months preceding or the twelve months following a change of control of the Company, he would be entitled to a lump sum severance payment equal to two times the sum of his base salary plus the higher of (i) his current annual incentive target bonus for the full year in which the termination of employment occurred or (ii) the highest annual incentive bonus received by him for any of the last three completed fiscal years. In the event that within the six months preceding or the twelve months following a change of control of the Company, Mr. Schilling’s Employment Agreement is not renewed by the Company and a new employment agreement has not been entered into, Mr. Schilling will be entitled to the same severance benefits described above, subject to certain conditions.
As consideration for the Company entering into the Employment Agreement, Mr. Schilling has agreed in his Employment Agreement that, for a period of six months following the termination of his employment by the Company without cause or by him for good reason, and for a period of two years following the termination of his employment for retirement or any other reason, he will not, among other things, engage in any business competitive with the Company’s business, render services to any entity who is competitive with the Company or solicit business from certain of the Company’s customers or potential customers. These non-competition restrictions shall not apply in the event that such termination is within twelve months of a change of control of the Company. Additionally, Mr. Schilling has agreed not to solicit any of the Company’s employees to terminate, reduce or adversely affect their employment with the Company for a period of two years from his date of termination, for whatever reason.
The above summary of the Employment Agreement and the offer letter is qualified in its entirety by reference to the full text of such agreements, which are filed as Exhibits 10.1 and 10.2 hereto, respectively, and incorporated herein by reference.
Resignation of T.M. “Roe” Patterson as Director
In connection with his resignation as President and Chief Executive Officer of the Company effective the Patterson Separation Date, Mr. Patterson also resigned as Director from the Board of Directors of the Company effective the Patterson Separation Date. Mr. Patterson’s resignation did not result from any disagreement with the Company regarding any matter related to the Company’s operations, policies or practices.