Exhibit 10.21

 

FORM OF PROPETRO HOLDING CORP.

 

DIRECTOR STOCK OWNERSHIP POLICY
(as of _______ __, 2017)

 

Purpose

 

This Non-Employee Director Stock Ownership Policy (the “Policy”) of ProPetro Holding Corp. (the “Company”), together with the equity awards granted to certain members of the board of directors of the Company (the “Board”) pursuant to the Company’s Non-Employee Director Compensation Policy, as may be amended from time to time (the “Non-Employee Director Compensation Policy”), is designed to align the interests of members of the Board with the interests of the Company’s common stockholders.  This Policy shall become effective upon the consummation of an initial public offering of the Company’s common stock and if such an initial public offering does not occur on or prior to December 31, 2017 this policy shall be void ab initio.

 

Eligibility

 

This Policy shall apply to all members of the Board who are not employees of the Company or its subsidiaries and who is not an affiliate of Energy Capital Partners (each, a “Non-Employee Director”).

 

Share Retention Policy

 

Each Non-Employee Director is encouraged to hold shares of the Company’s common stock (“Common Stock”) and at all times make good faith progress towards holding, on and following the later of the later of the fifth anniversary of (i) the date hereof and (ii) the Non-Employee Director’s election or appointment to the Board, Qualifying Shareholdings (as defined herein) equal to or in excess of the Non-Employee Director’s equity threshold, as described under “Equity Threshold” below, as such threshold may be amended by the Company’s Nominating and Corporate Governance Committee (the “Committee”) from time to time.

 

Equity Threshold

 

Each Non-Employee Director’s equity threshold is an amount equal to 300% of the Non-Employee Director’s annual cash retainer (as set forth in Section 1(a) of the Non-Employee Director Compensation Policy).

 

The Company uses the closing price per share of the Common Stock on the applicable measurement date to determine the number of Qualifying Shareholdings required to meet the equity threshold.

 

 

Qualifying Shareholdings

 

Securities that qualify in determining whether a Non-Employee Director has satisfied the shareholding requirements of this Policy (“Qualifying Shareholdings”) include:  (i) issued and outstanding shares of Common Stock held beneficially or of record by the Non-Employee Director that are not subject to transfer or other restrictions; (ii) issued and outstanding shares of Common Stock held by a Qualifying Trust (as defined below); (iii) issued and outstanding shares of Common Stock held by a 401(k) or other qualified pension or profit-sharing plan for the benefit of the Non-Employee Director (whether denominated in shares or units);  and (iv) shares of Common Stock underlying vested Company time-based restricted stock units; provided that the number of shares of Common Stock underlying restricted stock units constituting Qualifying Shareholdings shall equal the number of shares of Common Stock that would be deliverable upon exercise or settlement in full of the respective awards, less a number of shares of Common Stock with a value equal to any applicable income and employment taxes, utilizing an assumed tax rate equal to 40% (the “Tax Amount”).  The Company uses the closing price per share of Common Stock on the applicable measurement date to determine the number of shares needed to satisfy the Tax Amount.

 

For purposes of the foregoing paragraph, “beneficial ownership” shall mean the ownership or sharing, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, of (i) voting power which includes the power to vote, or to direct the voting of, such security; and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security. “Qualifying Trust” means a trust created for the benefit of the Non-Employee Director, the Non-Employee Director’s spouse, or members of the Non-Employee Director’s immediate family.

 

Qualifying Shareholdings Reporting

 

Each Non-Employee Director shall report in such Non-Employee Director’s annual Director and Officer Questionnaire (“D&O Questionnaire”) his or her Qualifying Shareholdings as of the date the D&O Questionnaire is completed and, in the case of newly appointed Non-Employee Directors, such information shall also be reported in such Non-Employee Director’s initial D&O Questionnaire.

 

Remedies for Non-Compliance

 

The Committee has the authority to review each Non-Employee Director’s compliance (or progress towards compliance) with this Policy from time to time and, in its sole discretion, to impose such conditions, restrictions or limitations on any Non-Employee Director as the Committee determines to be necessary or appropriate in order to achieve the purposes of this Policy.  For example, the Committee may mandate that a Non-Employee Director retain (and not transfer) all or a portion of any shares delivered to the Non-Employee Director through the Company’s equity plans or otherwise restrict the Non-Employee Director’s transfer of previously owned shares.

 

Undue Hardship

 

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There may be instances in which this Policy would place a severe hardship on a Non-Employee Director or prevent the Non-Employee Director from complying with a court order, such as a divorce settlement, or other legal requirement.  In these instances, the Non-Employee Director must submit a request in writing to the Committee or its designee that summarizes the circumstances and describes the extent to which an exemption is being requested.  The Committee or its designee will make the final decision as to whether an exemption will be granted.  If such a request is granted in whole or part, the Committee or its designee will work with the Non-Employee Director to develop an alternative stock ownership plan that reflects both the intention of this Policy and the Non-Employee Director’s individual circumstances.

 

Administration

 

This Policy is administered and interpreted by the Committee.  The Committee retains the authority to make exceptions to or waivers of the Policy based upon changes in circumstances or to otherwise amend or alter the Policy as it may determine appropriate.  The Committee will review each Non-Employee Director’s compliance efforts with respect to this Policy no less than annually and will review this Policy from time to time as the Committee deems necessary or appropriate.

 

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