CJ 2018 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS The target LTI award opportunities reflected in our Named Executive Officers’ employment agreements for LTI awards were generally set between the 50 th and 75 th percentile of our peer group. The 2017 LTI awards to each of the Named Executive Officers are detailed in “Grants of Plan-Based Awards for the 2017 Year” under “Executive Compensation Tables” below. We expect the percentage of performance-based equity awards will continue to increase. Special Long-Term Incentive Award—Successful Emergence from Chapter 11 Proceeding Following C&J’s emergence from the Chapter 11 Proceeding, in February 2017, the Compensation Committee approved the Emergence Grants to certain key employees, including each of the Named Executive Officers. In determining the Emergence Grants, the Compensation Committee reviewed market practices for companies following emergence from a financial restructuring, including data provided by Pearl Meyer. The Emergence Grants were intended to serve the following objectives: • Reward key contributors for their efforts and dedication in the Company’s successful emergence from the Chapter 11 Proceeding; • Establish alignment with the interests of our new stockholders; • Retain our high performers and incentivize the creation of long-term stockholder value; and • Strengthen the ability to retain key talent through the post-emergence period. The Emergence Grants granted to our Named Executive Officer were granted in the form of restricted stock and stock options, subject to the following vesting schedule: (i) 34% vested immediately on the grant date; (ii) 22% vested on the first anniversary of the grant date; (iii) 22% vests on the second anniversary of the grant date; and (iv) 22% vests on the third anniversary of the grant date. These awards were made from the MIP, which was approved by the Compensation Committee. The stock options have an exercise price per share based on the fair market value of a share of the Company’s common stock on the applicable date of grant, which was $42.65. The Emergence Grants awarded to each Named Executive Officer are detailed in “Grants of Plan-Based Awards for the 2017 Year” under “Executive Compensation Tables” below. Other Benefits and Perquisites Each Named Executive Officer and eligible family members are eligible to receive the health and welfare benefits generally made available to our other full-time, salaried employees (including, but not limited to, medical and dental insurance, retirement plans, disability insurance and life insurance), as well as other fringe benefits and perquisites, including provision for an automobile (or an automobile allowance) for business and personal use and related insurance coverage and reimbursement of reasonable business expenses. We do not maintain a defined benefit pension plan for our executive officers or other employees because we believe such plans primarily reward longevity rather than performance. Nevertheless, we recognize the importance of providing our employees with assistance in saving for their retirement. We therefore maintain a retirement plan, or the “401(k) Plan”, that is qualified under Section 401(k) of the Internal Revenue Code. Following a 30-day waiting period, we offer matching contributions for each of our employees, including our Named Executive Officers, of 100% of 3% of their qualifying compensation each year, and 50% of the next 2% of their qualifying compensation each year, subject to certain limitations imposed by the Internal Revenue Code. Among other austerity measures taken in response to the industry downturn, the employer match component of the Company’s 401(k) plan was eliminated for 2016 and the first half of 2017, and other benefits and perquisites were significantly reduced or eliminated. Severance and Change in Control Benefits We believe it is important that the Named Executive Officers focus their attention and energy on our business without any distractions regarding the effects of a termination that is beyond their control or our change in control. Therefore, the employment agreements each provide that they will be entitled to receive severance benefits and certain accelerated vesting of their outstanding equity awards in the event their employment is terminated under certain circumstances. With respect to terminations in connection with a change in control, with the exception of the 2017 LTI performance shares due to the relative TSR performance metric, all payment obligations to the Named Executive Officers associated with a change in control are “double trigger” payments, which require termination of employment within a specified period prior to or following a change in control to receive the benefit. We believe that in connection with a change in control, double trigger payments are typically more appropriate than single trigger payments (where a payment is made upon the occurrence of a change in control alone) because they financially protect the employee if he or she is terminated following a change in control transaction, without providing a potential windfall if the employee is not terminated. C&J ENERGY SERVICES, INC. 2018 PROXY STATEMENT 41