CJ 2018 Proxy Statement

CEO PAY RATIO DISCLOSURES CEO PAY RATIO DISCLOSURES As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the relationship (the “CEO Pay Ratio”) of the annual total compensation of an identified median employee and the annual total compensation of Donald Gawick, our President and Chief Executive Officer. For 2017, our last completed fiscal year, the CEO Pay Ratio as calculated pursuant to Item 402(u) was as follows: • The annual total compensation of our median employee was $78,884. • The annual total compensation of our CEO, as reported in the Summary Compensation Table included under “Executive Compensation Tables,” was $16,146,805. • The ratio of the 2017 annual total compensation of our CEO to the annual total compensation of our median employee was reasonably estimated to be 202 to 1. CEO 2017 Total Compensation: The 2017 total compensation of Mr. Gawick was unusually high compared to prior years, and we expect to disclose a lower CEO Pay Ratio in future years. As explained in CD&A under “2017 Overview-Key Considerations and Actions,” we experienced a number of exceptional circumstances and had other unique considerations that significantly impacted our 2017 executive compensation program. Most notably, entering 2017, Mr. Gawick did not own any C&J common stock due to the impact of the Chapter 11 Proceeding. The Compensation Committee worked with an independent, external compensation consultant to design the special, one-time, long-term incentive “Emergence Grant” to Mr. Gawick and other key employees. The primary purpose of this Emergence Grant was to build stock ownership and create alignment between our people and the long-term interests of our stockholders, as well as for retention. Mr. Gawick’s Emergence Grant of restricted stock and stock options was valued at approximately $8.8 million at the time of grant. See “Components of Our 2017 Executive Compensation Program—Special Long-Term Incentive Award-Successful Emergence from Chapter 11 Proceeding” under CD&A for additional information regarding the Emergence Grant; and “CEO 2017 Total Realized Compensation” graph under “Components of Our 2017 Executive Compensation Program— Overview” for additional information regarding Mr. Gawick’s 2017 total realized compensation. Because the Emergence Grant was a special, one-time compensation award for Mr. Gawick to address exceptional circumstances and unique considerations, we have also calculated the CEO Pay Ratio excluding the Emergence Grant. We believe the below represents a more normalized CEO Pay Ratio and expect this estimate to be more closely in line with the CEO Pay Ratio we will report in future years: • The annual total compensation of our median employee was $78,884. • The annual total compensation of our CEO excluding the Emergence Grant was $7,384,698. • Based on the above, the ratio of the modified 2017 annual total compensation of Mr. Gawick to the annual total compensation of our median employee was reasonably estimated to be 92 to 1. Identifying the Median Employee: We identified the median employee by examining the 2017 total cash compensation for all individuals, excluding our CEO, who were full-time C&J employees on December 31, 2017. • We believe that total cash compensation for all employees is a consistently applied compensation measure because we do not widely distribute equity awards within our organization. Approximately 6% of our employees received annual long-term incentive equity awards in 2017. • We selected December 31, 2017 as the appropriate identification date for determining our median employee because it enabled us to make such identification in a reasonably efficient and economic manner. • We did not make any assumptions, adjustments, or estimates with respect to total cash compensation, and we did not annualize the compensation for any full-time employees that were not employed by us for all of 2017. • For purposes of identifying the median employee, total cash compensation includes all cash compensation paid in 2017, including base earnings, vacation pay, sick-leave pay, overtime pay and/or double time pay, as derived from our internal payroll systems. • Using this methodology, we determined that the median employee was a full-time, hourly employee located in Bakersfield, California working as a mechanic in our well support services segment. Median Employee 2017 Total Compensation: We combined all of the components of the median employee’s 2017 compensation to determine annual total compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. The difference between such employee’s total cash compensation (comprised of salary, wages and overtime pay) and total compensation represents the estimated value of such employee’s health care benefits and contributions that were made on the employee’s behalf to our 401(k) plan for the 2017 fiscal year. We expect that in 2018 and going forward Mr. Gawick’s annual total compensation will reflect the objectives, principles, policies and practices of our executive compensation program discussed in this Proxy Statement under “Compensation Discussion and Analysis.” C&J ENERGY SERVICES, INC. 2018 PROXY STATEMENT 53