CJ 2018 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS The 2017 LTI equity awards for the Named Executive Officers consisted of 60% restricted stock, 25% performance shares and 15% stock options, as it was determined that the mix of time-based restricted stock and stock options together with performance-based restricted stock awards best accomplished the Compensation Committee’s stated objectives. Based on the Compensation Committee’s focus on strengthening the link between pay and performance, 2017 was the first year in which performance-based share awards were included in our equity incentive program. • The stock options have an exercise price per share based on the volume weighted average price of the Company’s common stock for the 30 calendar day period immediately preceding the grant date, which was $30.83. • The time-based restricted stock and the stock options granted to the Named Executive Officers are subject to the following vesting schedule: (i) 34% vests on the first anniversary of the grant date; (ii) 33% vests on the second anniversary of the grant date; and (iii) 33% vests on the third anniversary of the grant date. • The performance shares are subject to the following vesting schedule: 100% vests on the third anniversary of the grant date (the “Performance Period”), subject to the achievement of certain pre-established performance metrics. The performance shares granted may settle for between zero and two shares of the Company’s common stock, depending on actual performance. Company’s Relative TSR Ranking to Peers Performance Share Multiplier to Determine Number of Earned Performance Shares 1 2.00 2 1.75 3 1.50 4 1.25 5 1.00 6 1.00 7 0.75 8 0.50 9 0.25 10 0.00 Upon vesting at the conclusion of the Performance Period, the number of shares to be issued and delivered pursuant to the performance shares will be determined based on the TSR of the Company’s common stock as compared to a designated group of peer companies established by the Compensation Committee (listed below). At the conclusion of the Performance Period, if the Company has a negative TSR, the number of shares to be issued and delivered pursuant to the performance shares will be capped at 1.0 shares irrespective of where the Company ranks in TSR among the peer group, providing downside protection to stockholders. If at the conclusion of the Performance Period, the Company has at least a 20% TSR, the number of shares issued and delivered pursuant to the performance shares will be at least 1.0 shares irrespective of where the Company ranks in TSR among the peer group, providing upside protection to management. The Compensation Committee chose TSR ranking among peers because it forges a direct link to stockholder performance on a relative basis rather than on an absolute basis, and is an important indicator of the Company’s success in achieving its strategic objectives. The comparable peer companies with respect to the 2017 performance shares are as follows: • Basic Energy Services • Helmerich & Payne • Patterson-UTI Energy • RPC Inc. • Superior Energy Services • Keane Group • ProPetro Holding Corp. • Halliburton • OSX (PHLX Oil Service Sector Index) 40 C&J ENERGY SERVICES, INC. 2018 PROXY STATEMENT