CJ 2018 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS WHAT WE DO WHAT WE DON’T DO “Double Trigger” Change of Control Severance Provisions. ✓ The employment agreements for our executive officers contain “double trigger” change of control severance provisions (however, the employment agreements do contain single trigger severance provisions on certain termination events not in connection with a change in control; see “Executive Compensation Tables —Potential Payments Upon Termination or Change in Control”) ✕ No “single trigger” vesting acceleration on a change in control, with the exception of performance share awards due to the relative TSR metric. ✕ No excessive change in control severance payments. ✕ Sound change in control definition means no risk of payment outside of an actual change in control occurring. Frequent Compensation Review. ✓ The Compensation Committee retains and routinely receives advice and other information from an independent, external compensation consultant and other advisors, as necessary and appropriate. ✓ The Compensation Committee frequently reviews market data for peer group companies, as well as general industry and market data, and actively evaluates to ensure compensation opportunities are reasonable and in line. ✕ No backdating, repricing, buyout, voluntary surrender, replacing or exchange of underwater stock options / stock appreciation rights without prior shareholder approval. Compensation Setting Process The Compensation Committee is responsible for administering our executive compensation program. Pursuant to its charter, the Compensation Committee reviews and approves executive compensation on an annual basis. Generally, in the fourth quarter of each year, the Compensation Committee evaluates the total compensation opportunity for each executive for the upcoming year, reviewing each component separately and collectively to determine the appropriate mix of total compensation, including: • Base salary adjustments, if any; • STIP target values and structure, including performance measures, for the annual cash bonus incentive opportunity; and • LTIP target values and structure, including types and terms of equity awards, such as performance measures. In December of each year, the Compensation Committee will typically approve the executive compensation program for the upcoming year, however, it may defer final approval of certain compensation decisions to the first quarter of the following year to permit additional evaluation and modifications based on final financial results for the prior year and the finalization of the business plan for the then current year. In administering our executive compensation program and evaluating the compensation for each executive, the Compensation Committee: • Engages an independent, external compensation consultant; • Establishes the appropriate compensation peer group; and • Reviews market data and analysis on benchmark positions prepared by, and considers guidance and other information from, the independent, external compensation consultant. Executive compensation is ultimately determined by an evaluation of each executive’s performance and consideration of the competitive position of each executive’s total compensation to retain their services. The independent, external compensation consultant gathers and performs an analysis of market data for each executive, comparing each of their individual components of compensation as well as total compensation to that of the market competitive pay levels of the compensation peer group for that executive’s position. This competitive analysis consists of market data comparing each of the pay components and total compensation at the 25th, 50th, and 75th percentiles of the peer group to current compensation for each executive. In evaluating each executive’s performance, the Compensation Committee will generally consider the following factors, in addition to those discussed elsewhere within this CD&A: • How compensation elements serve to appropriately motivate and reward each executive; • The individual performance and contribution of each executive in reaching financial and operational objectives; • Sustained levels of performance, future potential, skills and overall experience, including time in position and years of service to C&J; and C&J ENERGY SERVICES, INC. 2018 PROXY STATEMENT 31