UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C.
20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of
1934
Date
of Report (Date of Earliest Event Reported): March 17, 2009
NATURAL GAS SERVICES GROUP,
INC.
(Exact
Name of Registrant as Specified in Charter)
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Colorado
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1-31398
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75-2811855
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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508
West Wall Street, Suite 550
Midland,
TX 79701
(Address
of Principal Executive Offices)
(432)
262-2700
(Registrant’s
Telephone Number, Including Area Code)
N/A
(Former
Name or Former Address if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General
Instruction A.2. below):
o Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)).
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-14(c)).
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment
of Certain Officers; Compensatory Arrangements of Certain Officers.
On
March 17, 2009, the Compensation Committee of the Board of Directors of
Natural Gas Services Group, Inc. (the “Company”) granted cash bonuses to each of
its executive officers as follows:
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Name
and Position
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Amount
of Cash Bonus
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|||
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Stephen
C. Taylor
Chairman
of the Board, President & Chief Executive Officer
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$ | 70,125 | ||
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Paul
D. Hensley
Director
& Senior Vice President – Technology
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$ | 36,975 | ||
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Earl
R. Wait
Vice
President – Accounting
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$ | 14,875 | ||
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James
R. Hazlett
Vice
President-Technical Services
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$ | 22,313 | ||
The cash
bonuses were granted under our incentive cash bonus program or, the “IBP,” that
provides guidelines for the calculation of annual non-equity incentive based
compensation in the form of cash bonuses to our executives. Each year, the
Compensation Committee of the Board of Directors approves the group of
executives eligible to participate in the IBP and establishes target award
opportunities for such executives, excluding our Chief Executive Officer, whose
employment agreement provides for a target award opportunity of up to 50% of his
base salary. Target award opportunities for our executives range from 20% to 50%
of base salary.
In 2008,
85% of an executive officer’s IBP award was based on achievement of company
financial objectives relating to:
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·
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total
revenues;
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·
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net
income before taxes; and
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·
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EBITDA.
EBITDA is calculated from our audited consolidated financial statements by
adding to net income, or loss, (1) amortization and depreciation
expense, (2) interest expense and (3) provision for income tax
expense.
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Each of
these three components accounts for 30% of the total company financial objective
portion of the IBP. The remaining 10% of an executive officer’s IBP award is
based upon individual performance as evaluated by our Chief Executive Officer
(except with respect to our Chief Executive Officer whose individual performance
is evaluated by the Compensation Committee).
Each
year, the Compensation Committee sets a target level for each component of the
company financial objective portion of the IBP. The payment of awards under the
IBP is based upon whether these target levels are achieved for the year. As an
example, if we achieve the target levels for all components of the company
financial object portion of the IBP, an executive with a base salary of $100,000
and a target award opportunity of 40% will receive a cash bonus of $40,000,
assuming the executive receives the full amount (10%) of the individual
performance portion of the IBP. If we do not achieve the target levels for all
of the components, the target award opportunity for each executive officer is
decreased by 30% for each component in which there is a shortfall. For instance,
if we meet all target levels except the target level for EBITDA, the executive’s
award opportunity is decreased by 30%. With respect to the example described
above, the award opportunity for the executive would be reduced from 40% to 28%
(the target bonus of 40% multiplied by 70%) and the executive would receive a
cash bonus of $28,000, assuming the executive receives the full amount of the
individual performance portion of the IBP. In 2008, we met nearly all of our
targets and each of our executives received no less than 85% of the maximum
bonus amount they could be awarded.
1
In
connection with the bonuses for 2008, rather than pay the entire bonus amounts
in cash, our Compensation Committee elected to issue a portion of the bonus for
each executive officer by an award of stock options. Thus, on
March 17, 2009, as a part of the bonus earned by the employee, our
Compensation Committee granted stock options to each of our executive officers
as set forth below:
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Name
and Position
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Number
of Shares Underlying Option
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|||
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Stephen
C. Taylor
Chairman
of the Board, President & Chief Executive Officer
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$ | 23,852 | ||
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Paul
D. Hensley
Director
& Senior Vice President – Technology
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$ | 6,288 | ||
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Earl
R. Wait
Vice
President – Accounting
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$ | 11,384 | ||
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James
R. Hazlett
Vice
President-Technical Services
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$ | 7,589 | ||
The stock
options granted to the employees noted above were pursuant to the Company’s 1998
Stock Option Plan, as amended. The options are not exercisable until
their first anniversary date, although each option will immediately become
exercisable if the employee's employment is terminated for any
reason. The exercise price of the options is $7.84 per share, which was
equal to the fair market value of our common stock on the date of
grant. The committee believes that the options qualify as “incentive
stock options” under federal tax laws and are exercisable for a term of 10 years
from the date of grant, subject to the vesting requirements described above and
earlier termination pursuant to the terms of the 1998 Stock Option
Plan.
In
addition, on March 18, 2009 the Compensation Committee also approved the
grant to each of the six non-employee Directors of the Company of a regular
annual stock option to purchase 2,500 shares of the Company’s common stock. The
six non-employee Directors of the Company include Alan A. Baker, John W.
Chisholm, Charles G. Curtis, William F. Hughes, Jr., Richard L. Yadon and Gene
A. Strasheim.
The stock
options granted to the non-employee Directors were pursuant to the Company’s
1998 Stock Option Plan, as amended. Each stock option has an exercise price
equal to $8.00 per share, which was equal to the fair market value of our common
stock on the date of grant. The stock options vest in quarterly
installments through 2009, and will be fully exercisable on December 31,
2009. The stock options are “nonstatutory” stock options and are
exercisable for a term of 10 years from the date of grant, subject to the
vesting requirements described above and earlier termination pursuant to the
terms of the 1998 Stock Option Plan.
The
purchase price of shares as to which an option is exercised must be paid in full
at the time of exercise either in cash or by delivering to the Company shares of
stock having a fair market value equal to the purchase price, or a combination
of cash and stock.
2
Item 9.01.
Financial Statements and Exhibits
(d) Exhibits
The
Exhibits listed below are filed as Exhibits to this Current Report on Form
8-K.
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Exhibit
No.
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Description
of Exhibit
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10.1
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Natural
Gas Services Group, Inc. 1998 Stock Option Plan, as amended by the Board
of Directors on May 9, 2006 and approved by the shareholders on
June 20, 2006 (Incorporated by reference to Exhibit 10.1 of the
Registrant’s Form 8-K Report dated May 9, 2006 and filed with
the Securities and Exchange Commission on May 15,
2006).
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10.2
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Form
of Nonstatutory Stock Option Agreement for non-employee directors
(Incorporated by reference to Exhibit 10.2 of the Registrant’s
Form 8-K Report dated May 9, 2006 and filed with the Securities
and Exchange Commission on May 15,
2006).
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3
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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NATURAL
GAS SERVICES GROUP, INC.
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Dated:
March 23, 2009
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By:
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/s/
Stephen C.
Taylor
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Stephen
C. Taylor
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President
& Chief Executive Officer
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4