CJ 2018 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS • Other factors as the Compensation Committee determines are appropriate to ensure internal equity among positions having similar scopes, roles and responsibilities. After considering these factors, the Compensation Committee then sets the final compensation opportunity for each executive officer so that their actual total compensation is targeted to be consistent with our executive compensation objectives and principles. We generally seek to target total direct compensation between the 50 th and 75 th percentiles of our peer group, based on various organizational and individual factors. The Compensation Committee manages executive compensation from the total compensation opportunity perspective and retains full flexibility to set the components at varying percentiles. Additionally, actual realized compensation may be below the targeted percentile as a result of our pay-for-performance philosophy. Role of the CEO and Other Named Executive Officers in Setting Compensation The Compensation Committee is responsible for making all compensation decisions and final determinations regarding total compensation for our executive officers. The Compensation Committee may solicit input from our CEO and other executive officers in evaluating and determining executive compensation. The Compensation Committee also consults with our CEO and other executive officers regarding the Company’s compensation and benefit programs, and members of senior management frequently present at committee meetings and answer various questions from the Compensation Committee. Role of Independent Consultants and Advisors in Setting Compensation Our Compensation Committee has the authority to engage an independent, external compensation consultant and other advisors at any time. Following our emergence from the Chapter 11 Proceeding, the Compensation Committee engaged Pearl Meyer as its independent, external compensation consultant during 2017. Pearl Meyer provided executive compensation consulting services to the Compensation Committee throughout the year, which included: • Providing independent and objective market data; • Conducting compensation analysis, benchmarking and market comparisons; • Analyzing and making recommendations regarding the compensation peer group; • Advising on the Company’s first performance based STIP design and award structure; • Advising on the Company’s LTI award structure, including specific recommendations on the Company’s first performance-based equity awards; • Providing recommendations with respect to the special circumstances and concerns facing C&J, including the need to establish and build long-term equity ownership for management; and • Advised on our compensation program policies and practices, including stock ownership guidelines for our executive officers and non-employee directors. Specifically, as part of its executive compensation consulting services, Pearl Meyer advised the Compensation Committee on the Emergence Grants and IPO Incentive Awards and made recommendations as to how these special, one-time awards factor into total compensation in light of the unique facts and circumstances for 2017. Pearl Meyer was also engaged to review our non-employee director compensation program, with the information provided by Pearl Meyer given significant weight by the Compensation Committee in determining director compensation for 2018. In connection with the engagement of Pearl Meyer and based on the information presented to it, the Compensation Committee assessed the independence of Pearl Meyer pursuant to applicable SEC and NYSE rules and concluded that Pearl Meyer’s work for the Compensation Committee did not raise any conflict of interest for 2017. Market Analysis, Peer Group On an annual basis, the Compensation Committee reviews and establishes a peer group of companies for purposes of determining and evaluating executive compensation. The general criteria for selecting this compensation peer group includes the following, with data and recommendations provided to the Compensation Committee by the independent, external compensation consultant: • Companies that are direct competitors for the same space, products and/or services; • Companies that competed with us for the same executive team talent; 32 C&J ENERGY SERVICES, INC. 2018 PROXY STATEMENT