CJ 2018 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS The 2017 STI target values were generally set to the 75 th percentile of our peer group for annual STI cash bonus awards. The 2017 STI target values set by the Compensation Committee for each Named Executive Officer, as well as the actual payout amounts for the 2017 STI cash bonus awards, are as follows: Name Target Value as Percentage of 2017 Salary Actual Payment as Percentage of Target Actual Payment Amount ($) Donald Gawick(1) 150-250% 235% 1,953,438 E. Michael Hobbs 150% 163% 771,848 Mark Cashiola 100% 108% 437,381 Danielle Hunter 100% 108% 411,652 Patrick Bixenman 100% 108% 372,654 (1) Mr. Gawick and the other NEO’s achieved comparable payout of the applicable incentive opportunity. Because Mr. Gawick’s employment agreement provides a target value range of 150-250% for the annual STI cash bonus award, the Compensation Committee determined that it was appropriate to calculate his 2017 STI cash bonus award using the midpoint of the range, or 200%, as target, and based on that assumption, applying the range to the Company’s actual performance against the pre-established performance levels. For comparison purposes, each of the other Named Executive Officers earned more than the individual target value based on the Company’s financial performance, which was partially offset by the Company’s operational performance. This approach was taken for Mr. Gawick in lieu of applying the achieved performance goal multipliers, as was done for the other Named Executive Officers whose employment agreements do not contain a target value range. The annual STI cash bonus awards, to the extent earned at all, are typically paid in the first quarter of the year following the year for which the bonus was earned. In the event that a Named Executive Officer is terminated for cause in advance of the bonus payment date, however, such executive would forfeit any right to receive the bonus for that year. Special Short-Term Incentive Award—Successful Execution of Re-IPO Following emergence, the Compensation Committee established the special, one-time IPO Incentive Award for the timely, successful execution of C&J’s re-IPO. The Compensation Committee set the following specific performance metrics for achievement of the IPO Incentive Award: • An underwritten public offering of common stock with net proceeds to the Company of at least $200 million; and • A successful completion date of the offering on or before June 30, 3017. On March 14, 2017, upon satisfaction and the achievement of the performance metrics, the Compensation Committee approved payment of IPO Incentive Awards to certain contributing employees. Following certification of the performance metrics by the Compensation Committee those key people, including Messrs. Gawick, Cashiola and Bixenman and Ms. Hunter, each received the one-time cash payment at a value equal to approximately 20% of their base salary as then currently in effect. Annual Long-Term Incentive Award—Equity Grant As discussed above, on January 12, 2017, the Board adopted the MIP, effective as of January 6, 2017. A maximum of 8,046,021 shares of our common stock may be issued or transferred pursuant to awards under the MIP as the Company’s prior omnibus plan was terminated in conjunction with the Chapter 11 Proceeding. On December 13, 2017, the Compensation Committee approved the annual LTI equity grants (the “2017 LTI”) to key employees, including each of the Named Executive Officers. In determining the 2017 LTI, the Compensation Committee consulted with Pearl Meyer to design a program that the Compensation Committee believed would, among other targeted benefits, align the interests of the Named Executive Officers with the interests of stockholders, drive appropriate performance, be market competitive, be effective for retention purposes, be tax efficient, minimize earnings volatility, reinforce strategic planning processes and balance short- and long- term decision making. The Compensation Committee also considered the need to establish stock ownership for the executive officers, given the impact of the Chapter 11 Proceeding. C&J ENERGY SERVICES, INC. 2018 PROXY STATEMENT 39