2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 388 2018 PROXY STATEMENT Director Compensation (continued) (2) Mr. Brandi retired from the Board effective as of December 31, 2017, pursuant to the terms of the Stockholders Agreement. Mr Brandi served on the Audit and Compensation Committees. (3) Messrs. Neff and Wilks, who are affiliated with Wilks Brothers, LLC and SDW Investments, LLC, received no compensation for serving as directors, or for attending Board or committee meetings. (4) Amounts shown in this column reflect the grant date fair value of the fully vested shares of common stock received by each non-employee director and were calculated according to FASB ASC Topic 718, based on the closing price of our common stock on the date of grant as reported by NASDAQ. Please see Note 5 to our consolidated financial statements for the fiscal year ended December 31, 2017, included in our annual report on Form 10-K for the fiscal year ended December 31, 2017, a discussion of the assumptions used in determining the grant date fair value of these awards. Director 2018 Annual Retainer Reduction In 2018, consistent with the decisions made with respect to our named executive officers’ compensation, the Board reduced the value of the annual 2018 stock retainer for our compensated non-employee directors by 30%, from $80,000 to $56,000. In addition, Mr. Neff and Mr. Wilks, who were appointed to the Board in January 2017 as designees of Wilks under the Stockholders Agreement, have agreed to receive no compensation for their service on our Board, and will not receive additional compensation in connection with their service on the Board. Director Stock Ownership Guidelines The Compensation Committee believes that meaningful stock ownership by our directors is important in aligning directors’ interests more closely with those of the Company’s stockholders. Therefore, the Compensation Committee has established director stock ownership guidelines under which compensated directors who are not also named executive officers of the Company are expected to own shares of the Company’s common stock having a market value (measurable either on the grant date or the date of determination of compliance with the guidelines) of five times the portion of the annual retainer payable in cash, common stock or a combination of both, which is currently set at $50,000 for 2018. Directors have up to five years to meet the stock ownership guideline. Each compensated director currently satisfies the guidelines, except that Matthew R. Kahn, who was appointed in January 2017, has received only a pro rata portion of a single year’s director compensation, and remains in the five-year grace period. CEO Pay Ratio Disclosure As required by Section 953(b) of the Dodd-Frank Act, and Item 402(u) of Regulation S-K, we are providing the information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO, Mr. Craft. The following table sets forth a summary of the median of the annual total compensation of all employees of our company (other than the CEO), the annual total compensation of our CEO and the ratio of such amounts. CEO Pay Ratio Median employee total compensation $97,638 CEO total compensation (1) $2,377,286 Ratio of CEO to Median employee compensation 24:1 (1) Includes grant-date value of all equity-based compensation awarded in 2017. 65 Total of 02 pages in section APPROACH RESOURCES INC.