ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
Terminations and Appointments of Executive Officers
On October 19, 2016, Mark A. Cox ceased to be employed as Vice President and Controller of Key Energy Services, Inc. (the
Company
), which was the Companys principal accounting officer position.
The Company appointed Mr. Eddie
Picard, age 51, as the Companys Vice President and Controller effective on October 20, 2016, which will continue to be the Companys principal accounting officer position. Mr. Picard most recently served as the Senior Director of
Finance, Drilling & Completions at C&J Energy Services (
C&J
) from January 2014 to June 2016. C&J is a provider of well construction, well completions and well services to the oil and gas industry. Prior to
his time at C&J Mr. Picard worked as a professional certified public accountant, consulting at companies within various industries from November 2011 to December 2013. From September 2010 until November 2011, Mr. Picard served as the Chief
Accounting Officer at BPZ Energy, which is an independent oil and gas exploration and production company which has license contracts covering areas in offshore and onshore Peru. Mr. Picard 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. Piccard is not a party to any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
The Company provided Mr. Picard with an offer letter that set forth his eligibility to receive a base salary of $235,000 per year (pro-rated
for the remainder of the 2016 year) and an annual discretionary cash incentive bonus in an amount up to fifty percent (50%) of Mr. Picards base salary. Mr. Picard will be eligible to participate in the Companys standard benefits
programs, including medical, dental and vision insurance, the Companys equity compensation plans and retirement plans.
The Company
and Mr. Picard entered into a Change of Control Agreement (the
COC Agreement
) on October 20, 2016. The initial term of the COC Agreement is for the two year period following the effective date, but it will be extended
for additional twelve (12) month periods if the Company does not take any action to modify, amend or terminate the agreement. In the event that Mr. Picard incurs an Involuntary Termination (defined below) within the one (1) year period
following a Change of Control (defined below), and Mr. Picard signs a separation and release agreement in favor of the Company, he is eligible to receive: (i) a cash severance amount equal to his annual base salary; and (ii) if he timely elects
coverage under the Consolidated Omnibus Budget Reconciliation Act (
COBRA
), the Company will reimburse Mr. Picard for the difference between the COBRA premium and the monthly active-employee premium rate for him and his
dependents for a period of six (6) months.
An
Involuntary Termination
is defined within the COC Agreement as a
termination by the Company without Cause, or a termination by Mr. Picard due to a Change in Circumstances.
Cause
is generally defined as the gross negligence in the performance of Mr. Picards duties; (ii) willful
and continued failure to perform his duties; or (iii) willful engagement in conduct which is materially injurious to the Company or its subsidiaries. A
Change in Circumstances
is generally defined as a material
diminution in Mr. Picards base compensation or his duties or responsibilities, a required relocation of more than fifty (50) miles from his original location, or any other action by the Company that constitutes a material breach of the COC
Agreement. A
Change of Control
will occur for purposes of the COC Agreement upon the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction or event involving the Company,
which results in any party (other than Platinum Equity and its affiliates) owning more than fifty percent (50%) of the combined voting power of the Company or the surviving company of the transaction, or if applicable, the ultimate parent company
that directly or indirectly has beneficial ownership of at least ninety-five percent (95%) of the Companys or the surviving companys voting securities; or the Companys stockholders approve a plan of complete dissolution or
liquidation of the Company. The definition of a Change of Control shall generally exclude any Chapter 11 proceeding except as otherwise approved in the Companys reorganization plan.
The foregoing description of the COC Agreement does not purport to be complete and is qualified in its entirety by reference to the full text
of the COC Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated by reference herein.
Amendment of Retention Agreements
On January 28, 2016, the Company granted retention bonus awards to certain key employees (the
Retention Awards
). The
original Retention Awards were described in the Companys Form 8-K filed on February 3, 2016. On October 17, 2016, the compensation committee (the
Committee
) of the Companys board of directors approved an
amendment to the Retention Awards held by certain key employees in order to address retention concerns. Two of the Companys current named executive officers were recipients of these amendments: Mr. Marshall Dodson, who is the
Companys Senior Vice President and Chief Financial Officer, and Mr. Jeff Skelly, who no longer serves in an executive officer position at the Company but was designated as a named executive officer in the Companys last
Summary Compensation Table filed in accordance with Item 402(c) of Regulation S-K.
The Retention Awards were originally designed to
become payable following the end of a retention period that ends on June 30, 2017. The Committee amended the Retention Awards for Messrs. Dodson and Skelly to provide for the immediate payment of one-third (1/3) of the original Retention Award
amount, subject to a clawback in the event that the executive resigns, provides notice of intent to resign, or is terminated by the Company for cause prior to June 30, 2017, the end of the original retention period. Neither the aggregate amount
of the Retention Award, nor the payment dates and general terms for the remaining two-thirds (2/3) of the Retention Award were amended.