CJ 2018 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS Component Objective Nature Type Value Determination 2017 Decisions STI target value and incentive opportunity generally evaluated based on individual’s sustained performance, leadership and expected contribution to reaching goals, as well as position and responsibilities Also reviewed for internal equity in roles and responsibilities and benchmarked against peers 75th percentile of our peer group 2017 included special, one-time IPO Incentive Award for achievement of successful execution of Re-IPO Long-Term Incentives (“LTI”) Aligns the interests of our executives with stockholders on a long-term basis Helps attract and retain talent At risk, mix of time- and performance- based vesting, but ultimately based on stock price Equity award with structure reviewed annually to set mix of time- and performance- based elements Annual Grant: • 60% restricted stock • 25% performance shares • 15% stock options Restricted stock and stock options have ratable three-year time- based vesting with value driven by our stock price; restricted stock also provides a significant retention incentive Performance shares cliff vest at three years subject to relative TSR measured over three years against pre-determined performance peers LTI target value and incentive opportunity generally evaluated based on individual’s sustained performance, leadership and expected contribution to reaching goals, as well as position and responsibilities and future potential Also reviewed for internal equity in roles and responsibilities and benchmarked against peers Performance-based equity awards first introduced for annual LTI grant Committee exercised discretion to increase target value for first annual LTI opportunity, reflecting need for greater stock holding LTI target value generally set between the 50 th and 75 th percentile of our peer group 2017 included special, one time Emergence Grants of restricted stock (80%) and stock options (20%) to address the need to vest NEOs in Company, build stock ownership and create alignment with long- term stockholders. Equity awards vested 34% at grant, with ratable three-year time-based vesting for remaining 66% The annual STI cash bonus and annual LTI equity awards are considered “at risk” and the annual STI cash bonus as well as the performance shares and stock options granted as part of the annual LTI equity awards are considered “performance based.” The IPO Incentive Award and Emergence Grant are also considered “at risk” and the IPO Incentive Award as well as the stock options granted as part of the Emergence Grant are also considered “performance based.” We believe that cash bonus awards and equity awards are optimal vehicles for providing performance-based incentives because, among other reasons, they are flexible in application and can be tailored to meet our specific strategic, corporate and compensation objectives. 34 C&J ENERGY SERVICES, INC. 2018 PROXY STATEMENT