UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549​

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

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Filed by a Party other than the Registrant ☐

Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

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ProPetro Holding Corp.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

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No fee required.

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Fee paid previously with preliminary materials.

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11

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Bolt-on acquisition to support growth of our cementing division

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First Two FORCESM Electric Fleets Deployed Under Committed Customer Agreements

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Tier IV Dynamic Gas Blending (“DGB”) Fleets Deployed

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Published Inaugural ProPetro ProEnergy ProPeople Sustainability Report

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​		​	​	OPTIMIZE AND INDUSTRIALIZE	​
​		​	​	CAPITAL LIGHT ASSET TRANSITION	​
​		​	​	STRATEGIC EXECUTION	​

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ProPetro Holding Corp. (NYSE) is a Midland, Texas-based provider of premium completion services to leading upstream oil and gas companies engaged in the exploration and production (“E&P”) of North American unconventional oil and natural gas resources. The Company was founded in 2005. In 2010, management strategically focused the Company’s efforts on establishing a best-in-class hydraulic fracturing platform targeting the Permian Basin. In 2017, we consummated the initial public offering of shares of our common stock. Our fleet has been designed to handle the highest-intensity, most complex hydraulic fracturing jobs. By successfully serving some of the largest and most demanding public and private E&P operating companies, we have established ourselves as a premium completion services company.

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2023 BUSINESS HIGHLIGHTS

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Message from Our Chief Executive Officer

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Thanks to the hard work of our team throughout 2023, we have significantly advanced our strategy to industrialize the business and are confident that ProPetro is well-positioned to execute on the many value-enhancing opportunities in 2024 and beyond.

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LOOKING AHEAD

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2024 ANNUAL MEETING

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Dear Stockholders,

We cordially invite you to attend the 2024 annual meeting of stockholders of ProPetro Holding Corp.

When ​	​
April 23, 2024 10:00 a.m. Central Time	​

Where ​	​
2518 FM 307 Midland, Texas 79706	​

Record Date ​	​
Stockholders who owned our common stock at the close of business on February 26, 2024 are entitled to notice of, and to vote at, the annual meeting, or any continuation, postponement, or adjournment thereof.	​

​	​	Items of Business	​	​
​	​	1 Election of nine director nominees to serve for a one-year term ​ 2 Approval, on an advisory basis, of the compensation of our named executive officers ​ 3 Ratification of the appointment of RSM US LLP as our independent, registered public accounting firm for the fiscal year ending December 31, 2024 ​ 4 Transaction of such other business as may properly come before the meeting ​	​	​

A stockholders’ list will be available at our offices at 303 W. Wall Street, Suite 102, Midland, Texas 79701 for a period of ten days prior to the meeting. We hope that you will be able to attend the meeting in person.

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​	​	This notice and the accompanying proxy statement, proxy card and our 2023 Annual Report on Form 10-K are first being mailed to stockholders on or about March 21, 2024. The proxy statement and our 2023 Annual Report on Form 10-K are also available at http://www.viewproxy.com/propetro/2024	​	​

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By Order of the Board of Directors, John J. Mitchell General Counsel and Corporate Secretary March 21, 2024

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​	1	​	​	PROXY STATEMENT SUMMARY	​
​	6	​	​	CORPORATE GOVERNANCE AND BOARD MATTERS	​
​	6	​	​	Proposal 1―Election of Directors	​
​	7	​	​	Nominees	​
​	12	​	​	Director Independence	​
​	12	​	​	Board Leadership Structure	​
​	13	​	​	Board of Directors and Risk Oversight	​
​	13	​	​	Sustainability and ESG Initiatives	​
​	14	​	​	Communicating with Our Board of Directors	​
​	15	​	​	Annual Meeting Attendance	​
​	15	​	​	Compensation Committee Interlocks and Insider Participation	​
​	15	​	​	Board and Committee Activity and Structure	​
​	18	​	​	Role of the Board, Compensation Committee and Our Executive Officers	​
​	18	​	​	Role of External Advisors	​
​	19	​	​	Director Nominations Process	​
​	19	​	​	Director Orientation and Education	​
​	20	​	​	Certain Relationships and Related Party Transactions	​
​	21	​	​	Director Compensation	​
​	22	​	​	Non-Employee Director Stock Ownership Guidelines	​
​	24	​	​	EXECUTIVE OFFICERS	​
​	27	​	​	EXECUTIVE COMPENSATION	​
​	27	​	​	Proposal 2―Advisory Vote to Approve Named Executive Officer Compensation	​
​	28	​	​	Compensation Discussion and Analysis	​
​	45	​	​	Report of the Compensation Committee	​
​	46	​	​	Executive Compensation Tables	​

​	46	​	​	Summary Compensation Table	​
​	48	​	​	Grants of Plan-Based Awards Table	​
​	49	​	​	Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table	​
​	49	​	​	Outstanding Equity Awards at Fiscal Year End	​
​	50	​	​	2022 Options Exercises and Stock Vested	​
​	50	​	​	Pension Benefits	​
​	50	​	​	Nonqualified Deferred Compensation	​
​	51	​	​	Potential Payments Upon Termination or Change in Control	​
​	56	​	​	Pay Versus Performance	​
​	60	​	​	CEO Pay Ratio	​
​	60	​	​	Equity Compensation Plan Information	​
​	61	​	​	AUDIT MATTERS	​
​	61	​	​	Proposal 3―Ratification of Appointment of Independent Registered Public Accounting Firm	​
​	63	​	​	Auditor Fees for Fiscal Years 2023 and 2022	​
​	63	​	​	Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Registered Public Accounting Firm	​
​	63	​	​	Report of the Audit Committee	​
​	65	​	​	STOCK OWNERSHIP INFORMATION	​
​	65	​	​	Security Ownership of Certain Beneficial Owners and Management	​
​	67	​	​	ADDITIONAL INFORMATION	​
​	67	​	​	Information about the Annual Meeting and Voting	​
​	72	​	​	Information about Stockholder Proposals	​
​	72	​	​	Annual Report on Form 10-K	​
​	73	​	​	Other Matters	​

The following section is only a summary of key elements of this proxy statement, and is intended to assist you in reviewing this proxy statement in advance of the 2024 annual meeting. This summary does not contain all of the information you should consider, and you are encouraged to read this entire proxy statement before submitting your votes.

2024 Annual Meeting

Director Nominees

The Board of Directors (the “Board”) has nominated the nine director nominees shown below for a one-year term.

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Proxy Statement Summary

Corporate Governance Highlights

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Proxy Statement Summary

Our nine directors nominated for reelection at the 2024 annual meeting comprise a well-balanced Board.

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Proxy Statement Summary

Sustainability Highlights

In October 2023, ProPetro published its inaugural ProPetro ProEnergy ProPeople Sustainability Report, advancing our goals of increased disclosure and transparency regarding our operations. The report, which may be accessed on our website, highlights our commitment and approach to sustainability, and it provides an overview of our governance, oversight, programs, policies, and performance around sustainability matters that are important to ProPetro and its stakeholders. The scope of the report includes all businesses, assets, and joint ventures that were owned and operated by ProPetro at the time of its publishing.

More details on our progress in this area will be disclosed in 2024 through the publication of our 2024 sustainability report. We expect to continue publishing sustainability reports annually.

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Proxy Statement Summary

2023 Performance Highlights

During 2023, we improved upon our outstanding performance in 2022, by again, realizing excellent operational efficiencies, enhancing our commercial architecture, and continuing our fleet transition to natural gas-powered equipment. Importantly, we deployed our first two FORCESM electric fleets to customers under committed contracts. These successful deployments mark an important step in our continued fleet evolution as we deploy next generation equipment to better serve our customers. Additionally, we executed on our strategy of making accretive acquisitions that increase our free cash flow generation with our acquisition of Par Five Energy Services LLC, a provider of cementing services located solely in the Delaware Basin area of the Permian Basin, expanding the service offering we can provide to our customers and creating a leading cementing services company in the greater Permian Basin. We generated $1.63 billion in revenue, $86 million in net income and $375 million of operating cash flow.

Our operations continue to be focused almost entirely in the Permian Basin, where we provide pressure pumping, cementing and wireline services. Our team was able to accomplish these achievements amid continued dynamic market conditions. Moreover, our reputation for providing high-quality service and our sustained performance for our customers resulted in continuing strong demand for our services despite the challenging market. These achievements are a function of our employees’ commitment to excellence in efficient operations and safety.

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At the 2024 annual meeting, nine directors are nominated for election. All nominees are currently directors. Each director is to hold office until the next annual meeting of stockholders or until his or her successor is elected and qualified. Directors hold office until their successors have been elected or qualified or until their earlier death, resignation, removal, or disqualification.

The nominees have consented to being nominated and have expressed their intention to serve if elected. We believe that the nominees possess the professional and personal qualifications necessary for board service and have highlighted particularly noteworthy attributes for the nominees in their biographies below. We have no reason to believe that the nominees will be unable to serve if elected to office, and, to our knowledge, the nominees intend to serve the entire term for which election is sought. In the event any of the nominees should become unable to serve, or for good cause will not serve, as a director, it is intended that votes will be cast for a substitute nominee designated by the Board or the Board may elect to reduce its size. Only the nominees or substitute nominees designated by the Board will be eligible to stand for election as directors at the meeting.

In 2018, we entered into an investor rights agreement (the “Investor Rights Agreement”) with an affiliate of Pioneer Natural Resources Company (“Pioneer”) that provides Pioneer certain rights to designate nominees for election to the Board. Under the Investor Rights Agreement, Pioneer was granted:

(i)

the one-time right to designate an independent director to the Board and

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the right to designate a non-independent director to the Board for so long as a certain affiliate of Pioneer owns 5% or more of our outstanding common stock.

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Pioneer has designated Mark S. Berg as the non-independent director and has no further rights to designate an independent director to the Board.

The proposal regarding the election of directors requires the approval of a plurality of the votes cast. This means that the nine nominees receiving the highest number of affirmative “FOR” votes will be elected as directors. Votes withheld and broker non-votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal.

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Nominees

All of the current members of the Board being nominated for reelection at the 2023 annual meeting are listed in the following table, and certain information concerning those directors follows the table:

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(1)

Chairman of the Board

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(2)

Chief Executive Officer

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(3)

Lead Independent Director

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Director Independence

Based on information provided by the director nominees concerning their background, employment and affiliations, our Board has determined that these directors do not have a material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). In making this determination, our Board considered the current and prior relationships that each of the directors has with us, and all other facts and circumstances our Board deemed relevant in determining independence, including any beneficial ownership of our capital stock by each of the directors.

Board Leadership Structure

Our Board has adopted our Corporate Governance Guidelines, which are available on our website, www.propetroservices.com, in the “Governance” subsection of the “Investor Relations” section under “Governance Documents.” Our Corporate Governance Guidelines provide that if the Chairman of the Board is a member of management or does not otherwise qualify as independent, the independent directors may elect a lead independent director. Our Board believes it is important to retain the flexibility to determine whether the roles of Chairman and Chief Executive Officer should be separated or combined depending on the circumstances and changing needs of the Company from time to time.

While our Board has previously combined the roles of Chairman and Chief Executive Officer, at present, the Board has chosen to separate the positions of Chairman and Chief Executive Officer. The Board believes this structure enhances corporate governance and allows each of our Chairman and Chief Executive Officer to remain focused on their distinct roles, which, for the Chairman, primarily involves Board and corporate governance and, for the Chief Executive Officer, primarily involves day-to-day management leadership and implementing our corporate strategy.

Although the roles of Chairman and Chief Executive Officer are currently separated, the Chairman previously served as a member of management and does not currently qualify as independent. As such, the Board believes the role of Lead Independent Director enhances independent oversight of the Company and that Mr. Best should continue to serve as the Lead Independent Director. In this capacity, Mr. Best provides, in conjunction with the Chairman, leadership and guidance to the Board. The Lead Independent Director responsibilities are as follows:

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Preside over all meetings of the Board at which the Chairman of the Board is not present, including any executive sessions of the independent directors

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Approve Board meeting schedules and agendas

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Act as the liaison between the independent directors and the Chairman of the Board

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Communicate the Chief Executive Officer’s annual evaluation and compensation, after Compensation Committee approval

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Furthermore, our Board believes that service on the boards of other public companies provides valuable governance and leadership experience that ultimately benefits the Company, but also recognizes that outside public board service requires a significant commitment of time and attention. This year, our Board updated our Corporate Governance Guidelines to limit the number of public company boards on which a director may sit in accordance with best governance practices. As a result, under our Corporate Governance Guidelines:

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our Chief Executive Officer may sit on no more than one additional outside public company board;

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the Chairman of the Board and the Lead Independent Director may sit on no more than two additional outside public company boards;

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non-management directors who are active executive officers of other public companies may sit on no more than one additional outside public board (including their own company board); and

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all other directors may sit on no more than three additional outside public boards.

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This practice helps ensure that our directors can give appropriate time and attention to the affairs of the Company.

Interested parties who wish to communicate with the Board, its committees, the Chairman, the Lead Independent Director, or any other individual director should follow the procedures described below under “Communication with our Board of Directors.”

To facilitate candid discussion among the Company’s directors, the non-management directors meet at regularly scheduled executive sessions presided over by our Chairman. In addition, at least once a year and in conjunction with a regular board meeting, the non-management directors who are independent under NYSE listing standards meet in executive session presided over by the Lead Independent Director.

Board of Directors and Risk Oversight

In the normal course of business, we are exposed to a variety of risks, including market risks relating to changes in commodity prices, interest rates, political risks and credit and investment risks. The Board oversees our strategic direction and in doing so considers the potential rewards and risks of our business opportunities and challenges and monitors the development and management of risks that impact our strategic goals. The Audit Committee assists the Board in fulfilling its oversight responsibilities by monitoring the effectiveness of our systems of financial reporting, auditing, internal controls and legal and regulatory compliance. The Nominating and Corporate Governance Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated with Board organization, membership and structure, succession planning for our directors and executive officers, and corporate governance. The Compensation Committee assists the Board in fulfilling its oversight responsibilities by overseeing our compensation policies and practices. The Board does not believe that its role in the oversight of our risks affects the Board’s leadership structure.

Sustainability and ESG Initiatives

In October 2023, we published our inaugural ProPetro ProEnergy ProPeople Sustainability Report, advancing our goals of increased disclosure and transparency regarding our operations. We encourage you to review this report, which may be accessed in the sustainability section of our website, for detailed information regarding our commitment and approach to sustainability. The report provides an overview of our sustainability initiatives and strategy, our governance, oversight, programs, and policies, and our performance on certain sustainability matters that are important to ProPetro and its stakeholders. The scope of the report includes all businesses, assets, and joint ventures that were owned and operated by ProPetro at the time of its publishing. The report was developed through the contributions of many employees from multiple functions across our Company, an effort that we believe reflects our culture of collaboration.

At ProPetro, our fundamental policy is to conduct business with honesty and integrity in accordance with the highest legal and ethical standards, along with a daily focus on safety and quality. As detailed in our sustainability report, we believe sustainability in our industry is created by offering competitive and effective services for our customers, while providing a value-generating enterprise for our shareholders, teammates, and community and minimizing negative environmental impacts from our operations. Guided by these values, and with a focus on creating a durable and sustainable business in our sector we pursue the pillars of our strategy—(1) optimizing operations and industrializing our business; (2) pursuing a more capital-light asset profile and next generation fleet by developing and integrating innovative technologies; (3) pursuing opportunistic strategic transactions to accelerate value creation and distribution; and (4) maintaining a strong balance sheet. Our strategic approach is designed to

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support ProPetro’s core goals of generating robust earnings, increasing free cash flow, and building towards enhanced shareholder returns. Achievement of these strategic objectives is a key to our long-term success, and our sustainability and environmental, social, and governance (“ESG”) initiatives are designed to support and enhance our pursuit of these goals. We believe our services play a vital role in the broader energy value chain by meaningfully contributing to the delivery of low-cost, dependable energy to end users and that our sustainability and ESG initiatives will enable us to continue to do so for years to come.

As part of our sustainability and ESG initiatives, we aim to reduce the overall environmental impact of our services by focusing on excellent execution and superior service quality. We believe that a lower emissions profile is not only vital to aid in our competitiveness but it is also a crucial component in deploying the innovative tools necessary to support our customers’ efforts to be capital efficient while respecting the communities in which we work. We seek to meet our customers’ needs while also pursuing a consistent, sustainable service solution that will increasingly replace diesel with cleaner burning and cost-advantaged fuels. With continued, significant investments in and the successful initial deployment of our first two FORCESM electric fleets and the continued improvement and strong operational performance of our Tier IV DGB, dual-fuel equipment, 2023 reflected the continued execution of our fleet transition strategy. During 2023, the impact of these investments was reflected in our performance, as our Tier IV DGB equipment displaced almost 20 million gallons of diesel over the last three quarters of the year, resulting in an 8.1% reduction in CO2e emissions for operations with this equipment. We believe these investments and our focus on continued improvements in operating performance for these assets will support our continued competitiveness, while fostering a reduced emissions profile for our services. Moreover, the initial success and continued deployment of our FORCESM electric fleet solutions reflect the collaborative approach we take with our customers towards the increasing industrialization and electrification of the oilfield.

An additional focus of our sustainability and ESG initiatives is to give back to the area where we live and work by providing employment and supporting and encouraging our employees to commit to safety and investing in our community. We aspire to play a role in shaping the future of the Permian Basin by investing in education, donating to first responders and veterans, supporting health and wellness related organizations, and focusing on charities that support local children. We do this through various charities and other organizations that are heavily involved in the Permian Basin communities. The employee created P.U.M.P. committee continues to participate in wellness events, monthly events with a local foodbank, quarterly blood drives, Thanksgiving meal drives, school supply donation drives, and other important initiatives.

2023 also saw increased focus and further improvement in our human capital development initiatives. We are particularly proud of our increased investment in our employee base as we implemented new training resources and systems and continued a leadership training initiative across all functions to support the enhancement of over 250 of our existing managers and senior leaders along with a class of developing leaders. We further sought to identify ways to better align with our employees and improve our overall work environment by conducting our first ever employee engagement survey. This survey provided key insights into areas of strength as well as employee concerns and allowed us to develop and begin to implement action plans to positively impact our employee experience.

Our safety record substantiates the close collaboration between our customers and our employees in completing each job safely. We pride ourselves on our commitment to safety and our commitment to each other, which we demonstrate and support through operational initiatives like our dedicated heavy haul team to reduce driving hazards; our culture of training, accountability, and consistent improvement; and our long-term relationships with teammates, customers and stakeholders.

Additional information and updates regarding our sustainability and ESG initiatives can be found under the “Sustainability” tab of our website at www.propetroservices.com. Additionally, more details on our progress in this area will be disclosed in 2024 through the publication of our 2024 sustainability report.

Communicating with Our Board of Directors

Stockholders and other interested parties may communicate with our Board by writing to:

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Stockholders may submit their communications to the Board, the independent directors, any committee of the Board or individual directors on a confidential or anonymous basis by sending the communication in a sealed envelope marked “Stockholder Communication with Directors” and clearly identifying the intended recipient(s) of the communication.

Our General Counsel and Corporate Secretary will review each communication and will forward the communication, as expeditiously as reasonably practicable, to the addressees if:

(1)

the communication complies with the requirements of any applicable policy adopted by the Board relating to the subject matter of the communication and

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(2)

the communication falls within the scope of matters generally considered by the Board.

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To the extent the subject matter of a communication relates to matters that have been delegated by the Board to a committee or to an executive officer of the Company, our General Counsel and Corporate Secretary may forward the communication to the executive officer or chairman of the committee to which the matter has been delegated. The acceptance and forwarding of communications to the members of the Board or an executive officer does not imply or create any fiduciary duty of the Board members or executive officer to the person submitting the communications.

Information may be submitted confidentially and anonymously. However, the Company may be obligated by law to disclose the information or identity of the person providing the information in connection with government or private legal actions and in other circumstances. The Company’s policy is not to take any adverse action, and not to tolerate any retaliation against any person for asking questions or making good faith reports of possible violations of law, our policies or our Code of Ethics & Conduct.

Annual Meeting Attendance

While the Company does not have a specific policy about director attendance at annual meetings of stockholders, all directors are expected to attend meetings of the Board (and any committees thereof on which they serve) either in person or telephonically unless exigencies prevent them from attending. Each incumbent director attended at least 75% of the aggregate of  (1) the total number of meetings of the Board (held during the period for which he or she has been a director) and (2) the total number of meetings of committees of the Board on which he or she served (during the periods that he or she served). Our non-employee directors meet at regularly scheduled executive sessions presided over by our Lead Independent Director. Additionally, our independent directors meet at least once a year without members of management or non-independent directors present. All of our directors who were members of the Board at the time of our 2023 annual meeting of stockholders attended the meeting.

Compensation Committee Interlocks and Insider Participation

During the year ended December 31, 2023, the Compensation Committee was comprised of Ms. Vion and Messrs. Moore and Best. Ms. Vion serves as committee chair. No executive officer of the Company served as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

Board and Committee Activity and Structure

Our Board is governed by our certificate of incorporation, bylaws, the Investor Rights Agreement, charters of the standing committees of the Board, and the laws of the State of Delaware.

On December 31, 2018, we entered into the Investor Rights Agreement with an affiliate of Pioneer. The Investor Rights Agreement provides that Pioneer was granted:

(i)

the one-time right to designate an independent director to the Board and

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(ii)

the right to designate a non-independent director to the Board for so long as Pioneer owns 5% or more of the Company’s outstanding common stock.

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Pioneer has designated Mark S. Berg as the non-independent director and has no further rights to designate an independent director to the Board.

During 2023, our Board held seven meetings. There are currently three standing committees of the Board:

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the Audit Committee,

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the Compensation Committee, and

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the Nominating and Corporate Governance Committee.

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Members serve on these committees until their resignation or until as otherwise determined by our Board. The composition of the Board committees complies with the applicable rules of the NYSE and applicable law. Our Board has adopted a written charter for each of the standing committees, which can be found under “Governance Documents” in the “Governance” subsection of the “Investors” section of our website at www.propetroservices.com.

In addition to the above governing documents, our Code of Ethics & Conduct that applies to all of our employees, as well as each member of the Board, can also be found under “Governance Documents” in the “Governance” subsection of the “Investors” section of our website at www.propetroservices.com. The composition and responsibilities of each of the standing committees of our Board are as follows:

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Role of the Board, Compensation Committee and Our Executive Officers

Executive compensation decisions are typically made on an annual basis by the Compensation Committee with input from our Chief Executive Officer. Specifically, after reviewing relevant market data and surveys within our industry, our Chief Executive Officer typically provides recommendations to the Compensation Committee regarding the compensation levels for our existing named executive officers (the “Named Executive Officers”) and our executive compensation program as a whole. Our Chief Executive Officer generally attends all Compensation Committee meetings. After considering these recommendations, the Compensation Committee typically meets in executive session and adjusts base salary levels and non-equity award targets. In addition, the Compensation Committee determines the achievement of non-equity Incentive Award Plan metrics and the amount of equity awards from the Incentive Award Plan to be granted to each of our Named Executive Officers. In making executive compensation recommendations, our Chief Executive Officer considers each Named Executive Officer’s performance during the year, the Company’s performance during the year, as well as comparable company compensation levels. While the Compensation Committee gives considerable weight to our Chief Executive Officer’s recommendations on compensation matters, the Compensation Committee has the final decision-making authority on all executive compensation matters.

Role of External Advisors

The Compensation Committee engaged Pearl Meyer & Partners, LLC (“Pearl Meyer”) in 2021 to assist the Compensation Committee and the Board in evaluating, designing, and implementing compensation practices.

The Compensation Committee reviews and assesses the independence and performance of its executive compensation consultant in accordance with applicable U.S. Securities and Exchange Commission (“SEC”) and

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NYSE rules and regulations on an annual basis to confirm that the consultant is independent and meets all applicable statutory and regulatory requirements.

Director Nominations Process

The Nominating and Corporate Governance Committee may utilize a variety of methods for identifying potential nominees for directors, including considering potential candidates who come to their attention through current officers, directors, professional search firms, or other persons. Once a potential nominee has been identified, the Nominating and Corporate Governance Committee evaluates whether the nominee has the appropriate skills and characteristics required to become a director considering the then current make-up of the Board. This assessment includes an evaluation of the nominee’s judgment and skills, such as experience at a strategy and policy setting level, financial sophistication, leadership, and objectivity—all in the context of the perceived needs of the Board at that point in time. One of the director nominees, Mr. Berg, was not recommended for nomination by the Nominating and Corporate Governance Committee but rather was appointed pursuant to the Investor Rights Agreement.

Our updated corporate governance guidelines, effective as of February 2024, reflect the Nominating and Corporate Governance Committee and the Board are committed to considering diversity when identifying candidates for nomination to the Board. Our Board believes that at a minimum all members of the Board should have the highest professional and personal ethics and values. In addition, each member of the Board must be committed to increasing stockholder value and should have enough time to carry out his or her responsibilities as a member of the Board.

Our Board monitors the mix of specific experience, qualifications, and skills of its directors to assure that the Board, as a whole, has the necessary tools to perform its oversight function effectively in light of the Company’s business and structure.

Stockholders may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting the names of the recommended individuals, together with appropriate biographical information and background materials, to:

In the event there is a vacancy, and assuming that appropriate biographical and background material has been provided on a timely basis, the Nominating and Corporate Governance Committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.

Director Orientation and Education

We provide each new director with an orientation that consists of meeting with senior management and others on our business operations, strategic plans, significant accounting and risk management issues, corporate governance, compliance, and key policies and practices.

The orientation sessions are tailored to the particular director depending on their orientation needs and generally include an overview of board fiduciary duties, board independence, and public company reporting requirements. New directors are also provided the most recent reports presented to the Board and its committees by management and external advisors.

Each director is expected to participate in continuing educational programs as necessary to maintain the expertise necessary to perform his or her responsibilities as a director. In this regard, from time to time we provide pertinent articles, white papers, and information relating to our business, financial affairs, risks, competitors, corporate governance, areas of focus in shareholder activism, ESG trends, proxy advisory firm ratings, and changes in legal and regulatory issues.

We may also coordinate training and educational sessions for directors from outside experts and provide directors with tours of our facilities.

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Corporate Governance and Board Matters

Certain Relationships and Related Party Transactions

Operations and Maintenance Yards

The Company rents three yards from South Midkiff Partners, LLC, an entity partially owned by Spencer D. Armour III, a director, and David Sledge, the father of Sam Sledge, our Chief Executive Officer. Total annual rent expense in 2023 for each of the three yards was approximately $0.03 million, $0.1 million, and $0.1 million, respectively. The Company previously rented two yards from this entity and incurred rent expense of  $0.02 million and $0.1 million, respectively during the year ended December 31, 2023; these leases were terminated in June 2023.

Transportation and Equipment Rental

Adam Muñoz, our President and Chief Operating Officer, has a family relationship with an employee of J&M Burns Transportation, an entity that provides transportation services to the Company. The employee receives a portion of his compensation from J&M Burns Transportation based on the amount of services sold by him to customers, including the Company. The Company incurred approximately $38.6 million in expense for the year ended December 31, 2023 for services provided to the Company by J&M Burns Transportation.

Executive Officer Family Members

Oscar M. Dominguez is our Vice President of Hydraulic Fracturing Operations and the brother-in-law of Adam Muñoz. Mr. Dominguez received total compensation of approximately $1.3 million for his services for the year ended December 31, 2023 (including $959,000 cash compensation and $298,000 non-cash equity compensation).

Roger Dominguez is our Supply Chain Logistics Manager and the brother-in-law of Adam Muñoz. Mr. Dominguez received total compensation of approximately $294,000 for his services for the year ended December 31, 2023 (including $231,000 cash compensation and $63,000 non-cash equity compensation).

Pioneer

On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property in connection with the Pioneer Pressure Pumping Acquisition. In connection with the consummation of the Pioneer Pressure Pumping Acquisition and effective January 1, 2019, we became a long-term service provider to Pioneer, providing pressure pumping and related services. In March, 2022, we amended and restated our agreement to provide pressure pumping and related services to Pioneer, which reduced the number of contracted fleets to six fleets from eight fleets, modified the pressure pumping scope of work and pricing mechanism for contracted fleets, replaced the idle fees arrangement with equipment reservation fees and provided for an initial term from January 1, 2022 through December 31, 2022, subject to extension and termination as described therein. On October 31, 2022, we entered into (i) a certain Pressure Pumping Services Agreement—Fleet One Simulfrac (the “Fleet One Pressure Pumping Agreement”) and (ii) a certain Pressure Pumping Services Agreement—Fleet Two (the “Fleet Two Pressure Pumping Agreement”), which replaced all previous agreements with Pioneer and reduced the number of contracted fleets to two fleets. The Fleet One Pressure Pumping Agreement was effective as of January 1, 2023 and terminated in August 2023. The Fleet Two Pressure Pumping Agreement was effective as of January 1, 2023. In February 2023, we mutually agreed with Pioneer to terminate the Fleet Two Pressure Pumping Agreement, effective on or about May 12, 2023. Revenue from services provided to Pioneer (including reservation fees) accounted for approximately $125.1 million during the year ended December 31, 2023.

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Corporate Governance and Board Matters

Any request for us to enter into a transaction with an executive officer, director, principal stockholder or any of such persons’ immediate family members or affiliates, among others, in which the amount involved exceeds $120,000, must first be presented to our Audit Committee for review, consideration and approval. All our directors and executive officers are required to report to the Audit Committee chair any such related person transaction. In approving or rejecting the proposed agreement, our Audit Committee shall consider the facts and circumstances available and deemed relevant to the Audit Committee, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party, the extent of the related party’s interest in the transaction and the conflicts of interest and corporate opportunity provisions of our certificate of incorporation. If we should discover related person transactions that have not been approved, the Audit Committee will be notified and will determine the appropriate action, including ratification, revision, or termination of such transaction.

Director Compensation

Our Amended and Restated ProPetro Holding Corp. Non-Employee Director Compensation Policy (the “Director Compensation Policy”) provides that each eligible non-employee director receives the following, effective as of July 1, 2023:

The amendment and restatement of the Director Compensation Policy in July of 2023 provided for the following modest increases in compensation for our non-employee directors: (i) the annual cash retainer for the Chairperson of the Audit Committee was increased from $15,000 to $20,000; (ii) the annual cash retainer for the Chairperson for the Nominating and Corporate Governance Committee was increased from $10,000 to $15,000; and (iii) the annual equity retainer for all non-employee directors was increased from $140,000 to $155,000, which will be effective for awards granted in 2024 since this modification was approved after the date of the annual grant to directors in 2023. These changes were implemented in order to align our director compensation with that paid at companies with whom we compete for director talent.

All equity retainers consist of awards of restricted stock units (“RSUs”) that will vest in full on the earliest to occur of: (i) the first anniversary of the grant date, (ii) the day immediately preceding the first annual meeting of stockholders following the grant date, and (iii) the occurrence of a Change in Control, subject, in each case, to continuous service through the applicable vesting date.

The portion of the annual equity retainer that would have vested in the year following a non-employee director’s separation from service due to his or her death or disability will vest upon such separation from service. All annual retainers are pro-rated based on days of service for non-employee directors who join the Board during the applicable calendar year. The members of the Board are also entitled to reimbursement of expenses incurred in connection with attendance at Board and committee meetings in accordance with Company policy.

PROPETRO 2024 Proxy Statement | 21

Corporate Governance and Board Matters

The following table summarizes the compensation paid for services provided by our non-employee directors during 2023.

​

(1)

Reflects annual cash retainer payments made pursuant to the Director Compensation Policy.

​

(2)

Reflects the grant date fair value of RSU awards on the date of grant computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). For information regarding assumptions underlying the valuation of equity awards, see Note 14 to the Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K.

​

(3)

In 2023, Mr. Berg has elected not to be compensated for his service as a director. Beginning in 2024, Mr. Berg will be compensated for his service as a director.

​

The following table sets forth the aggregate number of outstanding stock awards held by each of our non-employee directors on December 31, 2023. With the exception of Mr. Sledge who held 21,750 stock options as of December 31, 2023, none of our directors held stock options as of December 31, 2023.

​

(1)

In 2023, Mr. Berg elected not to be compensated for his service as a director. Beginning in 2024, Mr. Berg will be compensated for his service as a director.

​

Non-Employee Director Stock Ownership Guidelines

We maintain a non-employee director stock ownership policy that is applicable to all our eligible non-employee directors. Pursuant to this policy, each non-employee director is encouraged to hold, on and following the later of the fifth anniversary of: (i) the closing of our initial public offering (“IPO”) and (ii) the non-employee director’s election or appointment to the Board, shares of our common stock or certain equity awards (valued based on the closing price of our common stock) with a value equal to or in excess of 300% of the non-employee director’s annual cash retainer, as such threshold may be amended by the Nominating and Corporate Governance Committee from time to time.

Outstanding awards of unvested time-based RSUs will count toward a non-employee director’s qualifying shareholdings to the extent the RSUs are not settled in cash. A non-employee director who is not compensated for his or her services as non-employee director pursuant to the Director Compensation Policy or any other plan, policy or agreement then in effect is not subject to the guidelines set forth in our director stock ownership policy.

As of December 31, 2023, each of our non-employee directors was in compliance with these ownership guidelines except for Ms. Ricciardello, who has additional time to fulfill the ownership levels provided in the policy because she has not served as a non-employee director for a period of five years. The stock ownership guidelines have historically not applied to Mr. Berg since he did not receive compensation for his services as a non-employee director. However, because Mr. Berg will begin receiving compensation for his services as a director in 2024, he will become subject

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Corporate Governance and Board Matters

to the stock ownership guidelines in 2024 and will have five years thereafter to accumulate holdings in order to comply with the ownership guidelines. A description of each non-employee director’s beneficial ownership of the Company’s common stock is included in the section entitled “Security Ownership of Certain Beneficial Owners and Management.”

PROPETRO 2024 Proxy Statement | 23

Our executive officers serve at the direction of our Board. All of our executive officers and certain other key officers are listed in the following table, and certain information concerning those officers, except for Mr. Sledge, who is a member of the Board, follows the table.

​

(1)

Ms. Davila is a key officer but does not serve as an executive officer of the Company.

​

See “Corporate Governance and Board Matters—Nominees” for biographical information for Mr. Sledge.

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Executive Officers

PROPETRO 2024 Proxy Statement | 25

Executive Officers

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We are asking stockholders to approve, on a non-binding advisory basis, the compensation of our Named Executive Officers as disclosed in this proxy statement. As described below in “Compensation Discussion and Analysis,” the Compensation Committee has structured our executive compensation program to achieve the following guiding principles:

•

Reward executives for exceptional performance and hold them accountable for poor performance in a manner that adheres to our values

​

•

Align executive interests with those of our stockholders by making a substantial portion of compensation performance-based and “at risk”

​

•

Provide the necessary flexibility to respond to varying market conditions and changing circumstances with a structure that ensures accountability in our cyclical and volatile business

​

•

Remain competitive in our industry to attract, retain, and motivate the talent that is necessary to achieve our financial and strategic goals

​

•

Be internally consistent and equitable

​

We urge stockholders to read the section entitled “Compensation Discussion and Analysis” beginning on page 28 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the compensation tables and narrative included therein beginning on page 46, which provide detailed information on the compensation of our Named Executive Officers. The Compensation Committee and the Board believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in achieving our goals and that the compensation of our Named Executive Officers reported in this proxy statement has and will contribute to the Company’s recent and long-term success.

In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking stockholders to approve the following resolution at the annual meeting:

RESOLVED, that the stockholders of the Company approve, on a non-binding advisory basis, the compensation of the Company’s Named Executive Officers as disclosed in the Compensation Discussion and Analysis section and the related compensation tables, notes and narrative in the proxy statement for the Company’s 2024 annual meeting.

This advisory resolution, commonly referred to as a “say-on-pay” resolution, is non-binding on the Board. Although non-binding, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program.

The affirmative “FOR” vote of the holders of a majority of the shares represented at the meeting (in person or by proxy) and entitled to vote is required to approve this Proposal No. 2. Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal. Abstentions will have the same effect as a vote “AGAINST” Proposal No. 2. Broker non-votes will have no effect on Proposal No. 2.

We currently intend to hold the next non-binding advisory vote to approve the compensation of our Named Executive Officers at our 2024 annual meeting of stockholders unless our Board modifies its policy of holding this vote on an annual basis.

PROPETRO 2024 Proxy Statement | 27

Executive Compensation

Compensation Discussion and Analysis

CD&A Contents

​	29	​	​	I. EXECUTIVE COMPENSATION HIGHLIGHTS ​	​
​	29	​	​	Named Executive Officers for 2023	​
​	29	​	​	2023 Company Performance	​
​	0	​	​	Successful Execution of Our Leadership Succession Plan	​
​	0	​	​	Fleet Transition Investments, Strategic Growth and ESG Advancement	​
​	30	​	​	Guiding Principles	​
​	30	​	​	Performance-Based Compensation Philosophy	​
​	31	​	​	Compensation Policies and Practices	​
​	31	​	​	Say on Pay Advisory Vote	​
​	33	​	​	II. WHAT GUIDES OUR PROGRAM ​	​
​	33	​	​	Philosophy and Guiding Principles of Our Compensation Program	​
​	34	​	​	How We Make Compensation Decisions	​
​	35	​	​	Use of Peer Compensation Data	​

​	35	​	​	III. ELEMENTS OF COMPENSATION AND 2023 DECISIONS IN DETAIL ​	​
​	36	​	​	Base Salary	​
​	36	​	​	Annual Cash Incentive Awards	​
​	40	​	​	Long Term Incentive Awards	​
​	42	​	​	Employee Benefits, Perquisites and Special Payments	​
​	42	​	​	IV. OTHER COMPENSATION PRACTICES, POLICIES AND GUIDELINES ​	​
​	0	​	​	Succession and Additional Agreements	​
​	42	​	​	Executive Severance Plan	​
​	43	​	​	Employee Compensation Claw-Back Policy	​
​	43	​	​	Executive Stock Ownership Policy	​
​	43	​	​	Prohibition on Hedging and Pledging	​
​	43	​	​	No Tax Gross-Ups	​
​	44	​	​	Regulatory Considerations	​
​	44	​	​	Compensation Risk Assessment	​

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Executive Compensation

This Compensation Discussion and Analysis (“CD&A”) describes our compensation practices and the compensation awarded to, earned by, or paid to each of our Named Executive Officers during the last completed fiscal year.

Named Executive Officers for 2023

For the year ended December 31, 2023, our Named Executive Officers consisted of the following:

2023 Company Performance

Strong Financial Performance and Continued Strategic Execution

2022 was a transitional year for the Company. Our 2022 business plan focused on making capital investments to support the Company’s implementation of next generation Tier IV DGB and electric fleet equipment designed to increase the Company’s competitiveness and earning power.

Following the Company’s investments in 2022, the Compensation Committee’s approach for 2023 was designed to align with the Company’s ongoing strategy to effectively implement its transformed, next generation fleet and continue to optimize its operations, an approach that supports the Company’s commitment to sustainability. In consideration of the Company’s ongoing transitional strategy and with a strong market outlook for 2023, the Compensation Committee designed the 2023 performance metrics for the Amended and Restated ProPetro Holding Corp. Executive Incentive Bonus Plan (the “Annual Bonus Plan”) to incentivize the achievement of improved financial and operating results that were expected to be achieved from the Company’s recent investments, strategic priorities and operational improvement initiatives. The Committee retained the core financial metrics of Adjusted EBITDA and free cash flow (“FCF”) and set robust goals to incentivize a focus on improving the Company’s financial performance in what was expected to be a strong market cycle. During the course of 2023, the market for the Company’s services did not meet the expectations used to set the Company’s Annual Bonus Plan goals. As a result, the Company adjusted its public financial guidance to address these changed circumstances but despite the macro challenges faced by the Company and the associated adjustments in public guidance, the Compensation Committee elected not to change the goals established in the 2023 Annual Bonus Plan. As a result, the Company’s performance under the 2023 Annual Bonus Plan with respect to Adjusted EBITDA was below target and our performance with respect to Free Cash Flow was below threshold. However, our actual Adjusted EBITDA and FCF performance was substantially improved from 2022. The definitions of Adjusted EBITDA and FCF and other details regarding the use of these and other metrics in the Annual Bonus Plan can be found in Section III under the discussion of Annual Cash Incentive Awards in the description of Performance Measures and Payout Results beginning on page 36 below.

PROPETRO 2024 Proxy Statement | 29

Executive Compensation

To recognize the ongoing importance of advancing the Company’s approach to sustainability and ESG, which is aligned with the Company’s core strategy and fleet transition approach, the Committee refined the Company’s Sustainability and ESG objectives to align with the Company’s operational, human capital development and stakeholder engagement strategy and to increase the specificity of such goals.

Guiding Principles

Performance-Based Compensation Philosophy

Making a substantial portion of our Named Executive Officers’ compensation “at risk” and performance-based ensures that their interests are strongly aligned with those of our stockholders and, as a result, is one of the guiding principles of our executive compensation philosophy.

(1)

RSU and performance share unit (“PSU”) figures reflect the aggregate grant date fair value of the RSU and PSU awards granted in 2023, calculated in accordance with FASB ASC Topic 718. Annual Incentive Bonus figures represent the 2023 target award opportunity under our Annual Bonus Plan.

​

(2)

Our long-term incentive program is designed to grant 50% RSUs and 50% PSUs on an annual basis. The grant date fair value of these awards calculated in accordance with FASB ASC Topic 718, which is what is reported above, can differ substantially from the method used by the Compensation Committee to evaluate value at the time of grant. Much like our Chief Executive Officer’s compensation, the percentage of compensation for our Named Executive Officers comprised of PSUs far exceeds the percentage of compensation comprised of RSUs for all of our Named Executive Officers except for Mr. Fietz when calculated in accordance with FASB ASC Topic 718. The average compensation composition was as follows for the non-CEO Named Executive Officers other than Mr. Fietz: Base Salary 20%; Annual Incentive Bonus 18%; PSUs 37%; RSUs 25%. Mr. Fietz received a substantial grant of RSUs in connection with his promotion, which resulted in the increased percentage of compensation comprised of RSUs reported above. We do not have a practice of granting a greater number or value of RSUs than PSUs as part of our normal annual grant practices.

​

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Executive Compensation

Compensation Policies and Practices

The following features of our executive compensation program promote sound compensation governance and are designed in the best interests of our stockholders and executives.

Say-on-Pay Advisory Vote

At the Company’s 2023 annual meeting, the stockholders of the Company were asked to approve, on an advisory basis, the compensation of the Named Executive Officers. Advisory votes in favor of our executive compensation program were cast by over 76% of the shares of common stock of the Company represented at the meeting (in person or by proxy) and entitled to vote.

Historically Strong Say-on-Pay Support

PROPETRO 2024 Proxy Statement | 31

Executive Compensation

The Compensation Committee strives to ensure that our executive compensation program aligns with the interests of our stockholders and adheres to our pay-for-performance philosophy. Historically, our executive compensation program has received very strong stockholder support (averaging over 97% approval in the three years prior to 2023). We were disappointed with the 76% stockholder support for our 2023 Say-on-Pay vote. In connection with and following the 2023 Annual Meeting of Stockholders, the Compensation Committee sought to better understand the views of our stockholders and address their concerns.

Stockholder Engagement in 2023

We believe that discussions with a broad range of our stockholders help ensure that the Board and our management team understand our stockholders’ priorities and can work to address those priorities effectively. Accordingly, the Board and our management team undertook an extensive stockholder engagement effort in 2023, with a specific focus on reviewing our strategy and value proposition and getting feedback on the Company’s corporate governance structure, including our executive compensation program, approach to human capital management and sustainability matters. As part of our stockholder outreach, we engaged with stockholders representing 90% of our total shares outstanding. The stockholders with whom we interacted in 2023 represent holdings both large and small. Meetings with our stockholders occurred both before and following our 2023 Annual Meeting of Stockholders, though most occurred following the meeting. The chair of our Compensation Committee participated in meetings with stockholders representing 49% of our total shares outstanding. Our Board, Compensation Committee and management team take our stockholders’ concerns seriously and are committed to listening and incorporating changes to our compensation program when warranted. We asked for and received meaningful stockholder feedback on specific elements of our executive compensation program. The stockholders we spoke with almost universally indicated that they were supportive of our executive compensation program but would prefer not to see the Company accelerate the vesting of equity awards in the event of a retirement (or other voluntary departure) by our executives in future years. The Compensation Committee took this feedback and the results of the “Say-on-Pay” vote in account when evaluating the compensation of the Named Executive Officers in 2023 but did not make any material changes to our compensation program as a result since the decrease in support for our “Say-on-Pay” vote in 2023 appears to be almost entirely the result of a specific 2022 action and not as a result of the structure of our ongoing annual compensation program. We have continued, and plan to continue, engaging in ongoing stockholder outreach regarding corporate governance generally, including executive compensation programs.

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Executive Compensation

Our executive compensation program is designed to attract, motivate, and retain the management talent that we believe is necessary to achieve our financial and strategic goals. Further, we believe that our executive compensation program should be appropriately tailored to balance short-term compensation with intermediate and long-term compensation while allowing for measurement of and accountability for strategic goals in varying market conditions. We believe this structure effectively aligns the interests of our executives with the interests of our stockholders.

In establishing and evaluating our executive compensation programs, the Compensation Committee strives to achieve total compensation for our executives that reflects their individual contributions to the Company, responsibilities, duties, and experience and is competitive with the companies with which we compete for executive talent.

Philosophy and Guiding Principles of Our Compensation Program

Our compensation program is guided by the following principles:

PROPETRO 2024 Proxy Statement | 33

Executive Compensation

How We Make Compensation Decisions

THE ROLE OF THE COMPENSATION COMMITTEE

Our Compensation Committee is comprised of independent, non-employee members of the Board. The Compensation Committee is responsible for establishing the elements, terms, and target value of compensation paid or delivered to our Named Executive Officers but often consults the full Board with respect to material compensation actions. Our Compensation Committee is also involved in all executive succession planning. Details of the Compensation Committee’s authority and responsibilities are specified in its charter, which may be accessed at https://ir.propetroservices.com/compensation-committee-charter. In determining the compensation of our Named Executive Officers, the Compensation Committee considers:

•

the information and advice provided by its compensation consultant,

​

•

our corporate goals,

​

•

historic and projected performance,

​

•

the current economic and commodities environment,

​

•

individual performance, experience, and responsibilities of each of our Named Executive Officers,

​

•

the results of the “Say-on-Pay” vote and feedback received from stockholders through our outreach and engagement efforts, and

​

•

other relevant factors.

​

THE ROLE OF EXECUTIVE OFFICERS IN COMPENSATION DECISIONS

With respect to the compensation of the Named Executive Officers other than our Chief Executive Officer, the Compensation Committee considers the recommendations of our Chief Executive Officer. Additionally and taking into consideration our Named Executive Officers’ integral role in establishing and executing the Company’s overall operational and financial objectives, the Compensation Committee requests that our Chief Executive Officer provide the initial recommendations on the appropriate goals for the performance metrics used under our Annual Bonus Plan and may choose to accept or modify these recommendations in its sole discretion. In addition, the Compensation Committee may invite any Named Executive Officer to attend Compensation Committee meetings to report on the Company’s progress with respect to the interim or final status of performance metrics. All Named Executive Officers are excluded from any decisions or discussions regarding their individual compensation.

THE ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT

Pearl Meyer served as the Compensation Committee’s independent compensation consultant in 2023. The compensation consultant provides advice to and works with the Compensation Committee in designing and implementing the structure and mechanics of the Company’s executive compensation program, as well as other matters related to officer, senior management, and director compensation and corporate governance. For example, our compensation consultant regularly updates the Compensation Committee on regulatory changes impacting executive compensation, proxy advisor policies, and compensation-related risks. In addition, they provide the Compensation Committee with relevant data, including market and peer-company compensation and performance surveys and information and advice regarding trends and developments in executive and director compensation practices in our industry. This information assists the Compensation Committee in making executive and director compensation decisions based on market pay levels and best practices.

Our compensation consultant reports directly and exclusively to the Compensation Committee and does not provide any other services to management, the Company, or its affiliates. While the Compensation Committee generally reviews and considers information and recommendations provided by the compensation consultant, they do not make compensation-related decisions for the Compensation Committee or otherwise with respect to the Company. The Compensation Committee has the discretion to allow our compensation consultant to work directly with management in preparing or reviewing materials for the Compensation Committee’s consideration. During 2023, and after taking into consideration the factors listed in Section 303A.05(c)(iv) of the “NYSE” Listed Company Manual, the Compensation Committee concluded that neither it nor the Company has any conflicts of interest with Pearl Meyer and that Pearl Meyer was independent from management. Other than Pearl Meyer, no other compensation consultants provided services to the Compensation Committee during 2023.

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Executive Compensation

Use of Peer Compensation Data

The Company competes with business entities across multiple industries for top executive-level talent. To this end, the Compensation Committee evaluates, on an annual basis, industry-specific and general market compensation practices and trends to ensure that our program and Named Executive Officer pay opportunities remain appropriately competitive. As part of its evaluation, the Compensation Committee works with its independent consultant to validate that the companies included in its peer group are as comparable as possible to the Company in terms of operations, revenue, market capitalization, and geographic location.

The 2023 peer group was determined by the Compensation Committee based on an in-depth review from its independent compensation consultant. This review included an assessment of potential comparators to evaluate the degree to which the current peers have kept pace with the Company’s growth and evolution, as well as an examination of the broader marketplace. Following such review and with input and support from the Company’s management, Pearl Meyer recommended, and the Compensation Committee agreed, that no modifications were necessary and that the 2023 peer group should remain the same as the 2022 peer group. In setting 2023 target compensation levels for the Named Executive Officers, as well as evaluating TSR performance for the PSUs granted in 2023, the Company used the 2023 peer group detailed below (such companies, the “2023 Peer Group”):

In 2023, the comparative compensation data reviewed by the Compensation Committee was created by Pearl Meyer based on data from a blend of the 2023 Peer Group and survey data collected by Pearl Meyer from companies in the energy industry with corporate revenues of approximately $1 billion (the “Peer Data”). Data from both sources was used to provide the best mix of authorities for competitive positions and to help smooth volatility of changes in the peer group. The Compensation Committee generally targets total compensation for each of our Named Executive Officers and directors, as well as each element of compensation, at or about the 50th percentile of the Peer Data. However, the Compensation Committee also considers many other factors when establishing compensation levels, including but not limited to, internal pay equity at the Company, each executive’s experience and responsibility, succession planning, and recruiting and retention concerns.

As a result, the compensation of our Named Executive Officers and directors may be higher or lower than the 50th percentile of the 2023 Peer Group or the Peer Data.

As shown below, a significant portion of the target compensation for our Named Executive Officers in 2023 was performance-based and an even larger portion is variable or “at risk,” meaning that it can be forfeited, and its value is dependent upon factors such as our stock price or company performance.

PROPETRO 2024 Proxy Statement | 35

Executive Compensation

Base Salary

The Compensation Committee monitors and adjusts salaries for our Named Executive Officers over time as necessary to remain competitive with market rates for similarly situated officers at our peer companies and to reflect changes in each Named Executive Officer’s role, duties and responsibilities.

​

(1)

Increases in base salary for Messrs. Sledge, Schorlemer and Muñoz were to ensure their compensation remained competitive with individuals in similar positions at members of the 2023 Peer Group.

​

(2)

Mr. Fietz was appointed as Chief Commercial Officer on November 26, 2023 and did not serve as a Named Executive Officer in 2022. As a result, his base salary for 2022 is not reflected above. Mr. Fietz’s base salary was increased from $345,000 to $495,000 in connection with his promotion to reflect the added responsibilities of his new role.

​

(3)

Mr. Mitchell was appointed as General Counsel and Corporate Secretary on January 1, 2023 and did not serve as a Named Executive Officer in 2022. As a result, his base salary for 2022 is not reflected above. His base salary for 2023 reflects his experience, position, and responsibility level in his new role.

​

Annual Cash Incentive Awards

The Annual Bonus Plan governs cash incentive awards made each year to our Named Executive Officers. Awards under the Annual Bonus Plan are tied to the achievement of performance goals, which may be based on qualitative or quantitative measures, or both, as determined by the Compensation Committee.

TARGET AWARD OPPORTUNITIES

In February 2023, the Compensation Committee established the following target bonuses under the Annual Bonus Plan for each of the Named Executive Officers:

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Executive Compensation

​

(1)

The target bonuses for Messrs. Sledge, Schorlemer and Fietz were increased from 2022 targets of 100%, 80% and 60% to 2023 targets of 105%, 90% and 90%, respectively, to better align with market and to reflect Mr. Fietz’s promotion.

​

Target bonus levels for each executive were established by the Compensation Committee after reviewing peer group data and considering each Named Executive Officer’s responsibility and experience.

PERFORMANCE MEASURES AND PAYOUT RESULTS

Each year, the Compensation Committee establishes performance metrics and threshold, target, and maximum goals for each such metric. Potential payouts under the Annual Bonus Plan depend on the actual performance level for each metric established by the Committee, as outlined below.

If performance falls between the specified performance levels, payments are generally determined via straight-line interpolation. If performance falls below the threshold performance level, no payments will be awarded. The Annual Bonus Plan provides the Compensation Committee or the Board with the discretion to increase or decrease actual payout amounts otherwise resulting from the pre-established metrics, as it may deem necessary.

Under the 2023 Annual Bonus Plan, as in prior years, the Compensation Committee selected a mix of quantitative and qualitative performance metrics to incentivize achievement of specific pre-established financial and safety metrics, while enabling the Compensation Committee the ability to encourage performance with respect to areas that are important to the growth and success of the Company but are harder to measure. While the Compensation Committee values qualitative metrics as a tool, it felt that the vast majority of the annual bonus should be calculated based on quantitative metrics, with a significant emphasis on financial metrics. To that end, 70% of each Named Executive Officer’s annual bonus for 2023 was based on the achievement of quantitative metrics (Adjusted EBITDA, FCF and safety), with 60% of that 70% dedicated to financial performance. The remaining 30% of the annual bonus for 2023 was based upon a qualitative analysis of sustainability and ESG initiatives (10%) and individual and operational performance (20%).

The Compensation Committee maintained consistency in the performance metrics because they remain important to the ongoing success of the Company and serve to focus executives on key objectives that position the Company for sustained growth and consistent operational performance. Specifically, the Compensation Committee continues to see Adjusted EBITDA and FCF as effective measures of the Company’s financial performance and capital discipline and measures that support the Company’s ability to generate enhanced shareholder returns, while total recordable incident rate (“TRIR”) is an important measure of safety.

In 2022 the Committee adjusted the weighting of the FCF metric, expecting that FCF performance would be significantly impacted in 2022 as a result of the Company’s strategic capital reinvestment program driving a conversion of the Company’s fleets to electric and Tier IV DGB (dual fuel) equipment. This strategic fleet transition was designed to position the Company to provide a more competitive and sustainable service offering for its customers. The most significant capital investments associated with this program were successfully completed in 2022 and the Company now has an updated fleet of next generation Tier IV DGB equipment and a growing fleet of electric equipment, allowing it to maintain a strong competitive position in the market, pursue its sustainability goals and meet customer demand. With the capital reinvestment program complete, in 2023, the Adjusted EBITDA and FCF metrics were rebalanced to increase the weighting of the FCF metric.

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Executive Compensation

The qualitative component of the Annual Bonus Plan allows the Committee to assess the Company’s progress towards the achievement of strategic goals, each Named Executive Officer’s specific contribution to the achievement of those strategic goals, and progress towards selected sustainability and ESG goals, which continued to be refined.

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(1)

We define EBITDA as earnings before (i) interest expense, (ii) income taxes, and (iii) depreciation and amortization. We define Adjusted EBITDA as EBITDA, plus (i) loss/(gain) on disposal of assets, (ii) loss/(gain) on extinguishment of debt, (iii) stock-based compensation, and (iv) other unusual or non-recurring (income)/expenses, such as impairment charges, severance, costs related to our IPO and costs related asset acquisition or one-time professional fees. For a more detailed definition of the non-GAAP financial measure of Adjusted EBITDA and reconciliation of Adjusted EBITDA to our most directly comparable financial measures calculated in accordance with GAAP, please read “How We Evaluation Our Operations” in our Form 10-K filed for the year ended December 31, 2023.

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(2)

We define FCF as Adjusted EBITDA less Total Capital Expenditures, which are defined as costs incurred in connection with the growth and maintenance of our asset base. For a more detailed definition of Total Capital Expenditures please see Note 11—Reportable Segment Information in the Notes to Consolidated Financial Statements to our Form 10-K filed for the year ended December 31, 2023.

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(3)

The Compensation Committee may provide for the manner in which actual performance and the performance goal(s) with regard to these metrics will reflect the impact of specified events or occurrences during the year, which may mean including or excluding the impact of one or more events or occurrences, as specified by the Compensation Committee, for the year.

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(4)

TRIR stands for Total Recordable Incident Rate and is a measurement of workplace safety calculated as follows: (total number of recordable incidents amongst covered personnel in the applicable period (here, 2023) multiplied by 200,000) divided by the total man hours worked by covered personnel in the applicable period. TRIR is a commonly accepted and utilized metric for both workplace safety regulation and for making safety performance comparisons amongst companies. The Company uses an annual TRIR metric in our compensation program to reflect aggregate safety performance across the year being reviewed.

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(5)

We define ESG as Environmental, Social, and Governance. For 2023, the Compensation Committee established the following ESG goals: (i) publish the Company’s inaugural Sustainability Report in the third quarter of 2023; (ii) achieve reduced greenhouse gas (“GHG”) emissions through Tier IV DGB fleet equipment diesel displacement performance, measured over the last three quarters of 2023 as follows: threshold: 6.1% CO2e emissions reduction; target: 8.9% CO2e emissions reduction; maximum: 11.7% CO2e emissions reduction; and (iii) complete a company-wide employee engagement survey.

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(6)

The corporate strategic goals for 2023 were focused on execution on goals to advance the Company’s strategic priorities of  (i) optimizing and industrializing operations; (ii) pursuing a more capital light asset profile and next generation fleet; (iii) implement and integrate innovative technologies, (iv) pursuing opportunistic strategic acquisitions; and (v) maintaining a strong balance sheet.

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After considering the Company’s performance with respect to all three ESG goals, in the aggregate, the Compensation Committee determined that the Company had performed above expectations with respect to the ESG metric, awarding a 15% payout percentage for this metric. In the Compensation Committee’s judgment, the Company exceeded its goals for the breadth of the initial report and the robust data and qualitative disclosures included in the report. The Committee noted that the report was issued before the Company’s third quarter earnings release and was well received during the Company’s fall investor engagement meetings.

The Compensation Committee established a GHG reduction goal focused on the Company’s operational performance in diesel displacement utilizing its strategically important Tier IV DGB (dual fuel) fleet equipment. This equipment is designed to displace diesel with lower-emission, more cost effective natural gas, and, when operated effectively, allows the Company to provide a more competitive service offering while lowering the GHG and particulate emissions associated with its operations. In reviewing the Company’s accomplishments in connection with this goal, the Committee credited the Company’s success, noting that the Company displaced almost 19.5 million gallons of diesel over the measurement period, resulting in an 8.1% reduction in CO2e emissions for operations with this equipment. In assessing performance on this metric, the Committee recognized that the Company exhibited strong overall performance with a significant improvement from 2022 and consistent advancement over the measurement period with the best performance in the fourth quarter and a high-water mark in December to close the year. The Committee also considered the impact of several unanticipated challenges that it determined were outside the Company’s control related to customer fuel-type choices and equipment performance limitations in high ambient summer temperatures, as well as positive feedback from Company’s customers regarding its performance.

Lastly, the Compensation Committee recognized successful execution of an initial Company-wide employee engagement survey, which resulted in key actions to improve job training and overall work environment.

In connection with these achievements, the Compensation Committee certified one hundred fifty percent (150%) achievement of the Company’s 2023 ESG goals.

The Committee determined that 2023 was a year of notable achievements towards the Company’s strategic operational performance objectives during what remains a transitional period for the Company. In particular, the Company saw significant improvement in its financial results and continued progress in the execution of its strategic priorities. During 2023, the Company achieved revenue of  $1.6 billion and net income of  $86 million, each representing significant improvements over 2022 results. The Company also deployed its first two FORCESM electric fleets, demonstrated improvement in the performance of its next generation Tier IV DGB hydraulic fracturing equipment, instituted a share repurchase plan that resulted in 5.8 million shares being repurchased and retired, representing approximately 5% of the shares outstanding when the program commenced, realized results from its internal optimization program, which supported the improved financial performance, completed the integration of Silvertip Completion Services (“Silvertip”), and closed an acquisition of Par Five Energy Services (“Par Five”), a cementing services company. These results were achieved despite a challenging macro market for the Company’s services with customers remaining disciplined and demand trending downwards in the second half of the year. The Compensation Committee determined that performance exceeded the target level for each Named Executive Officer. Mr. Sledge was credited with leadership in driving the improvement in the Company’s performance in 2023 when compared to 2022, the successful Silvertip integration and the Company’s progress in its fleet transition strategy; Messrs. Muñoz and Schorlemer were recognized for the continued success of the Company’s internal optimization program, which supported the Company’s significant increase in FCF. Messrs. Fietz, Mitchell and Muñoz were credited for the successful commercial negotiations and operational deployment related to the Company’s first two FORCESM electric fleets. Mr. Mitchell and Mr. Schorlemer were recognized for their leadership in executing the Par Five acquisition. The Committee also noted the leadership provided by Mr. Schorlemer in establishing the Company’s share repurchase plan and Mr. Mitchell in the development of the Company’s sustainability report and its corporate office relocation.

As a result of its assessment of performance, the Compensation Committee certified a range of attainment of one hundred seventy and one-half percent (170.5%) to one hundred ninety-five percent (195%) achievement for the individual and operational performance metric.

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Executive Compensation

As a result, the Compensation Committee approved the following payments under the Annual Bonus Plan:

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(1)

Bonus amounts were rounded up or down to the nearest hundred dollars.

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(2)

The target bonus for Mr. Fietz for 2023 was adjusted in connection with his promotion, and his Base Salary and target bonus as of December 31, 2023 were utilized for determining his award under the 2023 Annual Bonus Plan.

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Long Term Incentive Awards

AWARDS GRANTED IN 2023

Our mix of time- and performance-based awards is intended to achieve the twin goals of ensuring retention and driving performance, while aligning the interests of our Named Executive Officers with those of our stockholders by providing an opportunity for increased share holdings. Both RSUs and PSUs may be settled in shares of our common stock or in the cash equivalent of the same.

In 2023, 50% of the value of each Named Executive Officer’s long term incentive awards were granted pursuant to the ProPetro Holding Corp. 2020 Long Term Incentive Plan (the “2020 LTIP”) in the form of RSUs that vest in three substantially equal annual installments commencing on the first anniversary of the grant date. The other 50% was granted in the form of PSUs that vest, if earned, following the completion of a three-year performance period, in each case subject to the Named Executive Officer’s continued employment through the end of such period.

The PSUs granted in 2023 vest based on the Company’s TSR as compared to the TSR of the 2023 Peer Group. After careful review, the Compensation Committee chose to use the same 2023 Peer Group to set 2023 target compensation levels for our Named Executive Officers and evaluate TSR performance for the PSUs granted in 2023. Recipients of PSUs may earn between 0% and 200% of the target number of shares granted, as indicated in the following table. If performance falls between the specified performance levels, payouts will be determined via straight-line interpolation. If performance falls below the threshold performance level, no payouts will be awarded. If the Company’s TSR is below zero on an absolute basis for the performance period, the number of PSUs earned shall be reduced in accordance with the table below. For PSU awards granted in 2021, if the Company’s TSR was below zero, the awards would not vest in excess of the target number of PSUs granted. As illustrated in the table below, beginning in 2022, the Compensation Committee modified the approach for the PSU awards to provide the potential for an over target award if TSR is negative. The Committee’s goal was to ensure the Named Executive Officers will continue to be strongly motivated to outperform the Company’s peers, even in a negative TSR environment, while retaining a meaningful reduction in the number of PSUs settled if absolute TSR was negative for the performance period so that the Named Executive Officers’ continue to be motivated to achieve a positive absolute TSR.

The performance period for the 2023 PSU awards commenced on January 1, 2023 and ends on December 31, 2025.

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Executive Compensation

If a peer company is acquired by another peer company during the performance period, the acquirer will remain in the peer group but the acquired company will be excluded from the peer group entirely. If a peer company files for bankruptcy during the performance period, it will remain in the peer group but will be ranked last. Should a peer company cease to exist as a separate publicly traded company for any other reason during the performance period, it will be excluded from the peer group entirely.

The annual value of each Named Executive Officer’s long-term incentive award is generally determined in conjunction with the Compensation Committee’s annual compensation analysis or, if later, in connection with the Named Executive Officer’s promotion or hire date following the Compensation Committee’s review of peer compensation data and consideration of each Named Executive Officer’s position and associated responsibilities. In 2023, the Compensation Committee granted the RSUs and PSUs included in the table below to our Named Executive Officers. Except as specified below, all awards were granted in February of 2023.

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(1)

Amounts in these columns reflect the aggregate grant date fair value of the RSU and PSU awards granted in 2023 under the 2020 LTIP, calculated in accordance with FASB ASC Topic 718. Because the grant date fair value is calculated differently for time-based and performance-based awards under FASB ASC Topic 718, the value of the awards reported is different even though the number of RSUs and PSUs granted to each Named Executive Officer is the same. The number of awards granted by the Compensation Committee and the Board in 2023 were calculated based on the closing price on the date of grant, which is the standard practice, rather than the accounting grant date fair value.

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(2)

Mr. Fietz was granted 10,615 RSUs and 10,615 PSUs during the annual grant cycle in February of 2023. He was also granted 30,769 RSUs as a special retention award in February of 2023. The retention RSUs Mr. Fietz received vest 33.33% on May 31, 2024 and 66.67% on May 31, 2025. This targeted award was granted before Mr. Fietz was promoted and was intended to recognize Mr. Fietz’s vital role in the Company’s leadership, strong contributions to the Company’s business development and supply chain functions, and to provide Mr. Fietz with a strong incentive to remain with the Company for several years. Mr. Fietz also received a grant of 313,152 RSUs in connection with his promotion to Chief Commercial Officer in November of 2023, which vest ratably over three years, consistent with the Company’s normal RSU vesting schedule. The number of RSUs awarded to Mr. Fietz in connection with his promotion and the determination that this award should consist of RSUs instead of a combination of RSUs and PSUs were made after reviewing (i) a market analysis by Pearl Meyer for awards made in connection with comparable commercial roles, (ii) the value of his unique skill set and relationships with the Company’s customers, and (iii) the competitiveness in our local market for similar executives. The special retention award and the award in connection with Mr. Fietz’s promotion were non-routine. Mr. Fietz’s annual equity grant for 2024 was substantially smaller than his aggregate grants in 2023 and consisted 50% of RSUs and 50% of PSUs. The Compensation Committee does not anticipate granting any special retention or other non-routine equity awards to named executive officers in 2024.

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AWARDS SETTLED FOLLOWING THE END OF 2023

Much like the PSUs granted in 2023, the PSUs granted in 2021 vested based on performance over a three-year performance period. In accordance with the compensation philosophy and designs adopted by the Compensation Committee, the PSUs granted in 2021 resulted in an award of zero shares. Our philosophy is that these long-term incentive awards should drive strong alignment between our stockholders and executives and pay for positive performance. For this assessment period, performance was below expectations and the PSUs yielded a result reflective of this performance.

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Executive Compensation

Employee Benefits, Perquisites, and Special Payments

HEALTH/WELFARE PLANS

All of our full-time employees, including our Named Executive Officers, are eligible to participate in our health and welfare plans on the same basis, including: medical, dental and vision benefits, medical and dependent care flexible spending accounts, short-term and long-term disability insurance, and group life insurance.

RETIREMENT PLANS

We currently maintain a 401(k) retirement savings plan for our employees who satisfy certain eligibility requirements. Our Named Executive Officers are eligible to participate in the 401(k) plan on the same terms as other full-time employees. Currently, we match contributions made by participants in the 401(k) plan up to a specified percentage of the employee’s contributions, and we may make certain discretionary profit-sharing contributions. Both the matching contributions and the profit-sharing contributions vest immediately. We believe that offering a vehicle for tax-deferred retirement savings through our 401(k) plan and making matching contributions and profit-sharing contributions that vest over time add to the overall desirability of our compensation packages and further incentivize our employees in accordance with our compensation policies. We do not maintain any defined benefit pension plans or deferred compensation plans.

PERQUISITES

Messrs. Sledge, Muñoz, Schorlemer, Fietz and Mitchell each participated in a vehicle allowance program during 2023. In 2023, the Company also provided other limited perquisites to its Named Executive Officers, including club memberships and dues, and also permitted Mr. Sledge’s and Mr. Fietz’s spouses, respectively, to accompany them on certain business trips via Company chartered aircraft that resulted in no incremental cost to the Company. The Compensation Committee reviews the perquisites we provide to our Named Executive Officers periodically, including in 2023, to ensure that they are necessary to retain our executives, appropriate, and consistent with benefits offered by companies with which we compete for executive talent.

Executive Severance Plan

The Board adopted the Second Amended and Restated ProPetro Services, Inc. Executive Severance Plan and subsequently (the “Executive Severance Plan”) because they and the Compensation Committee felt it was desirable to pivot away from individually negotiated employment agreements and towards a streamlined plan providing for more uniform treatment upon a termination of employment. Each of our Named Executive Officers is a participant in the Executive Severance Plan. We believe the Executive Severance Plan serves to maintain the focus of our senior executives and ensure that their attention, efforts and commitment are aligned with maximizing the success of the Company and stockholder value. Further, providing market severance benefits is an important element of compensation that allows us to attract and retain talented executives, ensuring continuity of management, stability of the Company, and efficient execution of our business goals.

The amounts of the severance and benefits established for each “Tier” under the Executive Severance Plan were selected after the Compensation Committee received advice from its independent compensation consultant at the time of adoption regarding the types and amounts of severance that are market among the Company’s peers. The Compensation Committee also considered its members’ ample experience in the industry when making this determination. The Tier level assigned to each participant in the plan was determined based on each participant’s position and responsibility. No changes were made to the Tier levels for the Named Executive Officers in 2022, except that Messrs. Fietz and Mitchell both became Tier 2 participants in connection with their promotions in 2023. Mr. Fietz had previously been designated as a Tier 3 participant in the Severance plan. The Tier levels for each of the Named Executive Officers and the terms of the Executive Severance Plan are described in detail below in the section entitled “Potential Payments upon Termination and Change of Control―Executive Severance Plan.”

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Executive Compensation

Employee Compensation Claw-Back Policy

Effective October 11, 2023, we adopted the ProPetro Holding Corp. Incentive-Based Compensation Recovery (Clawback) Policy (the “Clawback Policy”). The Clawback Policy is intended to comply with the requirements of Section 10D of the Exchange Act and Section 303A.14 of the NYSE Listing Company Manual. Under the terms of the Clawback Policy, in the event of a restatement of our financial statements due to material non-compliance with any financial reporting requirement under applicable securities laws, the Compensation Committee shall take reasonably prompt action to cause the Company to recover from any covered executive the amount of any incentive-based compensation granted, earned or vested within the three preceding completed fiscal years, to the extent the value of such compensation was in excess of the amount of incentive compensation that would have been granted, earned, or vested had the financial statements been in compliance with the financial reporting requirements. Each executive officer, including our Named Executive Officers and former executive officers, are considered “covered executives” for purposes of the Clawback Policy. Incentive-based compensation is not subject to the Clawback Policy if it is received (i) prior to the date a covered executive becomes an executive officer or (ii) prior to October 2, 2023.

Executive Stock Ownership Policy

Under the terms of our Executive Stock Ownership Policy, our executive officers must own shares of our common stock or certain equity awards with a value equal to not less than the following multiples of base salary:

Any individuals who became executive officers as a result of an internal promotion or a new hire, will have five years from the date of being named an executive officer to meet the stock ownership guidelines. As a result, all of our Named Executive Officers still have additional time in which to comply with these guidelines. In calculating the value of shares of our common stock or certain equity awards held for purposes of determining compliance with the policy, such value is equal to the closing price per share on the measurement date, based on shares owned outright and unvested RSUs, with the value of such unvested RSUs discounted by 40%. Unexercised option awards and unvested PSUs are excluded from the calculation.

Prohibition on Hedging and Pledging

We believe that derivative transactions, including puts, calls, and options, and hedging transactions for our securities carry a high risk of inadvertent securities laws violations and may lead to an officer, director, or employee no longer having the same objectives as the Company’s other stockholders. For these reasons, we prohibit our directors, officers, and employees from engaging in any type of derivative or hedging transactions in respect of our securities pursuant to our Insider Trading Compliance Policy. Company stock pledged as collateral, including shares held in a margin account, may be sold without the consent of the holder by the lender in a foreclosure or default event, which could lead to inadvertent securities laws violations. For this reason, pursuant to our Insider Trading Compliance Policy, we prohibit pledging Company securities as collateral to secure loans and purchasing Company securities on margin.

No Tax Gross-Ups

We do not provide gross-up payments to cover our Named Executive Officers’ personal income taxes that may pertain to any of the compensation or perquisites paid or provided by our Company.

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