Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers
Retirement of Stephen C. Taylor & Entry into Retirement Agreement
On May 17, 2022, the Company and Mr. Taylor entered into a negotiated Retirement Agreement (the “Retirement Agreement”), pursuant to which Mr. Taylor resigned as Chief Executive Officer and President of the Company. Mr. Taylor will continue as an employee of the Company and as the Chair of the Board of the Company.
Pursuant to the Retirement Agreement Mr. Taylor has agreed that he will, during the period beginning on the date of the Retirement Agreement and ending on June 30, 2023 (the “Transition Period”), perform his duties as a member of the Board and its Chair and will assist in the transition of his duties to the other officers of the Company. In connection with the Retirement Agreement, except for any indemnification obligations that may arise, the Company’s financial obligations pursuant to the Amended and Restated Employment Agreement dated April 27, 2015 between the Company and Mr. Taylor (the “Employment Agreement”) have been extinguished.
The Company has agreed that unless Mr. Taylor’s employment with the Company is previously terminated for Cause it will: (i) pay Mr. Taylor a salary of $51,000 per month, (ii) award Mr. Taylor $612,000 pursuant to the 2022 Annual Incentive Bonus Plan of the Company as and when payments are generally made by the Company pursuant to such plan, and (iii) grant to Mr. Taylor an equity award (or cash in lieu of equity if there are not sufficient shares available) with a value of $612,000 pursuant to the 2022 long-term incentive plan of the Company as and when awards are generally made by the Company pursuant to such plan.
Provided that the employment of Mr. Taylor by the Company pursuant to the Retirement Agreement is not terminated by the Company for Cause prior to June 30, 2023: (i) all equity awards (and all cash awards in lieu of equity) to Mr. Taylor by the Company which have not previously vested will immediately vest, (ii) Mr. Taylor will be entitled to receive from the Company on July 17, 2023 a cash payment of $1,224,000, (iii) Mr. Taylor will be entitled to receive from the Company on July 17, 2023 a cash payment in the amount of $1,530,000 in lieu of participation in the 2023 Annual Incentive Bonus Plan of the Company, and (iv) a grant of shares of common stock of the Company on July 17, 2023 with a value of $100,000. All payments and awards described in this paragraph are conditioned on Mr. Taylor executing and delivering to the Company within ten days after the end of the Transition Period a general release of all claims by Mr. Taylor against the Company, and its officers, directors, and other affiliated parties in the form attached as an exhibit to the Retirement Agreement.
For purposes of the Retirement Agreement, “Cause” has the meaning given that term in the Employment Agreement. In addition, Mr. Taylor remains bound by certain provisions of the Employment Agreement relating to his confidentiality, non-compete and non-disparagement obligations, along with his obligation to disclose and assign intellectual property and business opportunities to the Company.
Pursuant to the Retirement Agreement, Mr. Taylor has released all known and unknown claims against the Company. As required by applicable law, Mr. Taylor has the right to revoke the Retirement Agreement within seven days of it being entered into by the Company and Mr. Taylor.
The description of the Retirement Agreement is qualified in its entirety by reference to the copy thereof filed as Exhibit 10.1 to this Form 8-K, which is incorporated by reference.
Appointment of Interim Chief Executive Officer
On May 17, 2022, the Board of Directors appointed John W. Chisholm, the lead independent director of the Company’s Board immediately prior to his appointment, as the interim President and Chief Executive Officer. The Company and Mr. Chisholm are in the process of finalizing the financial and other terms of his appointment and the Company will report the same upon finalization.
Biography of Mr. Chisholm. John W. Chisholm, 67, was appointed as a Director of Natural Gas Services Group in December 2006. On May 17, 2022, Mr. Chisholm was appointed Interim President and Chief Executive Officer of the Company in connection with the retirement of Stephen C. Taylor. Mr. Chisholm was appointed as Lead Director in June 2020, although he will no longer act as Lead Director while he remains Interim Chief Executive Officer. Mr. Chisholm is the founder of Wellogix, an oil and gas software company that develops software aimed at expediting the exchange of enterprise data and communication of complex engineered services. Prior to founding Wellogix, Mr. Chisholm co-founded and served as President of ProTechnics Company from 1985 until its sale to Core Laboratories in December of 1996. Mr. Chisholm served as Senior Vice President of Global Sales and Marketing of Core Laboratories until 1998, when he started Chisholm Energy Partners, an investment fund focused on mid-size energy service companies. From 2002 to 2009, Mr. Chisholm served on the Board of Directors of Flotek Industries, Inc. ("Flotek"), and became its interim President in August 2009. Mr. Chisholm became President of Flotek in August 2010, was appointed as its Chief Executive Officer in March 2012, and served in those roles until
January 2020. Flotek is a public company which files reports under the Securities Exchange Act of 1934. Mr. Chisholm is presently CEO of The John Chisholm Group. Mr. Chisholm holds a Business Administration degree from Fort Lewis College in Colorado.
As Mr. Chisholm will not be able to act as lead independent director of the Board under NYSE rules, the Board has appointed current independent director, David L. Bradshaw, to a serve as lead independent director of the Board during the pendency of Mr. Chisholm’s service as an officer of the Company.