UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

508 West Wall Street,404 Veterans Airpark Lane, Suite 550300

Midland, Texas 79701

Important Notice Regarding the Availability of Proxy Materials for the

The proxy statement and annual report to shareholders are available at

www.proxyvote.com.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

      

Only shareholders of record at the close of business on April 19, 201725, 2019 are entitled to notice of and to vote at the meeting and at any adjournment(s) of the meeting.  On that day, 12,937,36313,225,077 shares of our common stock were outstanding and entitled to vote. A complete list of our shareholders entitled to vote at the meeting will be available for examination at our offices in Midland, Texas during ordinary business hours for a period of ten (10) days prior to the annual meeting.

We cordially invite you to attend the meeting. To ensure your representation at the meeting, please vote promptly even if you plan to attend the meeting. Voting now will not prevent you from voting in person at the meeting if you are a shareholder of record and wish to do so.

NATURAL GAS SERVICES GROUP, INC.

 

508 West Wall Street,404 Veterans Airpark Lane, Suite 550300

Midland, Texas 7970179705

PROXY STATEMENT

FOR THE

ANNUAL MEETING OF SHAREHOLDERS

GENERAL INFORMATION

We are providing this proxy statement to you as part of a solicitation by the Board of Directors of Natural Gas Services Group, Inc. for use at our 20172019 Annual Meeting of Shareholders and at any adjournment or postponement that may take place. We will hold the meeting at the Petroleum Club of Midland, 501 West Wall Street,Natural Gas Services Group, Inc., 404 Veterans Airpark Lane, Suite 300, Midland, Texas 7970179705 on Thursday, June 15, 201720, 2019 at 8:30 a.m., Central Time.

We are taking advantage of Securities and Exchange Commission, or SEC, rules that allow us to deliver our proxy materials to our shareholders on the Internet. Under these rules, we are sending most of our shareholders a two-page notice regarding the Internet availability of proxy materials instead of a full set of proxy materials. If you receive this two-page notice, you will not receive printed copies of the proxy materials unless you specifically request them. Instead, this notice tells you how to access and review on the Internet all of the important information contained in the proxy materials. This notice also tells you how to submit your proxy card on the Internet and how to request to receive a printed copy of our proxy materials.

We expect to mail, or provide notice and electronic delivery of, this proxy statement and accompanying proxy card to shareholders beginning on or about May 5, 2017.

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS

AND THE MEETING

Q: What can I vote on at the meeting?

If your shares are registered in your name with our transfer agent, Computershare, you are the shareholder of record for those shares and are receiving proxy-related materials directly from us. As the shareholder of record, you have the right to grant your voting proxy directly to us or to vote in person at the meeting.

If your shares are held in a stock brokerage account, by a bank or other nominee (commonly referred to as being held in “street name”) you are the beneficial owner of those shares. Your broker, bank or nominee is the shareholder of record and therefore has forwarded proxy-related materials to you as beneficial owner. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares and are also invited to attend the meeting. However, since you are not the shareholder of record, you may not vote your shares in person at the meeting unless you obtain a signed proxy from your broker, bank or nominee giving you the right to vote the shares.

entitled to vote must be present in person or represented by proxy at the meeting. There must be a quorum for any action to be taken at the meeting (other than adjournment or postponement of the meeting). If you submit a properly completed proxy, even if you abstain from voting, then your shares will be counted for purposes of determining the presence of a quorum.

If a broker indicates on a proxy that it lacks discretionary authority as to certain shares to vote on a particular matter, commonly referred to as “broker non-votes,” those shares will still be counted for purposes of determining the presence of a quorum at the meeting.  Please see the next question and answer for further information about "broker non-votes."

We also will consider any other business that properly comes before the annual meeting.

If you sign and return your proxy card or voting instruction form without giving specific voting instructions, your shares will be voted as recommended by our Board. If you are a beneficial holder and do not return a voting instruction form, your broker may only vote on the ratification of the appointment of BDO USA, LLP (Proposal 4).

the internet availability of proxy materials you received in the mail; or a copy of a brokerage or bank

statement showing your share ownership as of the Record Date; and

Similarly, for you to raise a proposal (including a director nomination) from the floor at next year’s meeting, we must receive a written notice of the proposal no later than March 21, 2018.22, 2020.  If we change the date of next year’s meeting by more than 30 days from the date of this year’s meeting, then we must receive your written proposal at least 150 days before the date of next year’s meeting for the proposal to be timely.

HOUSEHOLDING OF PROXY MATERIALS

In an effort to reduce printing costs and postage fees, we have adopted a practice called “householding.” Under this practice, shareholders who have the same address and last name and do not participate in email delivery of proxy-related materials will receive only one set of our proxy statement, annual report or notice of internet availability of proxy-related materials unless one or more of these people notifies us that he or she wishes to continue to receive individual copies.

If you share an address with another shareholder and receive only one set of proxy-related materials and would like to request a separate copy for this year’s annual meeting or for any future meetings, please: (1) call our Investor Relations contact at (432) 262-2700; (2) send an email message to alicia.dada@ngsgi.com; or (3) mail your request to Natural Gas Services Group, Inc., 508 West Wall Street,404 Veterans Airpark Lane, Suite 550,300, Midland, Texas 79701,79705, Attn: Investor Relations. Similarly, you may also contact us through any of these methods if you receive multiple copies of the materials and would prefer to receive a single copy in the future.

PROPOSAL 1 - ELECTION OF DIRECTORS

Our Board of Directors is divided into three classes (commonly known as a “staggered” Board), each class to be as nearly equal in number as possible.  At each annual meeting of shareholders, members of one of the classes, on a rotating basis, are elected for a three-year term.  The authorized number of Directors is currently set at nine. We currently have five directors serving on our Board.  Our Board of Directors may fill the vacancies if a qualified candidate is vetted.  The following table sets forth, by class, the members of our Board of Directors as of the date of this proxy statement:

          

Shareholders will be electing two Directorsone Director at the meeting.  The Board is recommending Charles G. Curtis and Stephen C. TaylorJohn W. Chisholm for re-election to the Board of Directors to serve a three year term expiring at the annual meeting of shareholders in 2020. Mr. Taylor also serves as our President and Chief Executive Officer.2022.

The persons named in the enclosedour form of proxy will vote the shares represented by such proxy for the election of the nomineesnominee for Director named above unless other instructions are shown on the proxy card. If, at the time of the meeting, athe nominee becomes unavailable for any reason, which is not expected, the persons entitled to vote the proxy will vote for such substitute nominee, if any, as they determine in their sole discretion, or we may reduce the size of the Board.

Biographical information and qualifications for eachthe person nominated as a Director, and for each person whose term of office as a Director will continue after the 20172019 Annual Meeting, is set forth below.

Charles G. Curtis, 84, has servedJohn W. Chisholm, 64, was appointed as a Director of Natural Gas Services Group since April 2001. Since 2002, substantially all of Mr. Curtis’ business activities have been devotedin December 2006 to managing personal investments.  From 1992 until 2002, Mr. Curtis wasfill a vacancy created by expanding the President and Chief Executive Officer of Curtis One, Inc., a manufacturer of aluminum and steel mobile stools and mobile ladders. From 1988 to 1992, Mr. Curtis was the President and Chief Executive Officer of Cramer, Inc., a manufacturer of office furniture. Mr. Curtis has a Bachelor of Science degree from the United States Naval Academy and a Master of Science degree in Aeronautical Engineering from the University of Southern California.

Mr. Taylor’s senior management experience in theChisholm brings significant natural resources industry provides the Board and our company with significant insight into our business.  Mr. Taylor’s engineering and advanced business training (MBA) uniquely suits him to provide

In addition Mr. Chisholm's experience as a board member and executive officer.officer of a public company provides us with a wealth of leadership and management skills.

The election of eachthe director nominee requires the affirmative vote of a majority of the votes cast at the Annual Meeting with respect to each nomineethe nominee. The number of shares voted "for" athe director nominee must exceed the number of votes cast "against" that nominee for the nominee to be elected as a director to serve until the next annual meetinghis term expires or until his or her successor has been duly elected and qualified.

Pursuant to the resignation policy adopted by our Board of Directors and further described in our Corporate Governance Guidelines, any nominee for director who is not elected shall promptly tender his or her resignation to our Board of Directors following certification of the stockholder vote. The Corporate Governance Committee will consider the resignation offer and recommend to our Board of Directors the action to be taken with respect to the offered resignation. In determining its recommendation, the Governance Committee shall consider all factors it deems relevant. Our Board of Directors will act on the Governance Committee's recommendation within 90 days following certification of the stockholder vote and will publicly disclose its decision with respect to the director's resignation offer (and the reasons for rejecting the resignation offer if applicable).

Any director who tenders his or her resignation pursuant to the resignation policy shall not participate in the Governance Committee's recommendation or Board of Directors action regarding whether to accept the resignation offer. If each member of the Governance Committee is required to tender his or her resignation pursuant to the resignation policy in the same election then the independent directors of our Board of Directors who are not required to tender a resignation pursuant to the resignation policy shall consider the resignation offers and make a recommendation to our Board of Directors.

To the extent that one or more directors' resignations are accepted, by our Board of Directors our Board of Directors in its discretion may determine either to fill such vacancy or vacancies or to reduce the size of the Board within the authorized range.

David L. Bradshaw, 62,64, joined our board in December of 2011. Since 2005, Mr. Bradshaw has acted as a consultant in the oil and gas exploration and production sector and has overseen his investments in this area. From August 2007 through November 2009, Mr. Bradshaw served as a Director and Audit Committee Chairman for Triangle Petroleum, a publicly traded company listed on the American Stock Exchange. From November 2007 through November 2008, Mr. Bradshaw served as a Director for Comet Ridge Limited, an Australian company listed on the Australian Securities Exchange. From 1986 to 2005, Mr. Bradshaw worked for Tipperary Corporation, a U.S. public company listed on the American Stock Exchange. During his tenure at Tipperary, the company was involved in oil and gas exploration and production, and natural gas processing and transportation. He held the positions of Chief Executive Officer from 1996 to 2005, Chairman of the Board from 1997 to 2005, Chief Financial Officer from 1990 to 1996 and Chief Operating Officer from 1993 to 1996. Mr. Bradshaw also served as Chief Executive Officer and Chairman of Tipperary Oil & Gas (Australia) Pty Ltd from 1999 to 2005, a subsidiary of Tipperary, which explored for and produced natural gas in Queensland, Australia. From 1983 to 1986, Mr. Bradshaw was an owner and officer of Bradcorp, Inc., a private exploration and production company. Prior to this, Mr. Bradshaw spent six years in public accounting serving predominantly oil and gas clients. Mr. Bradshaw graduated from Texas A&M University with a BBA in Accounting in 1976 and a MBA in 1977, and is also a Certified Public Accountant.

Mr. Bradshaw's educational and professional training and achievements as a Certified Public Accountant and MBA, along with his past experience as both a Chief Financial Officer and Chief Executive Officer of a public company involved in the natural resources industry, provides us with considerable accounting and corporate finance skills. In addition, Mr. Bradshaw's career has spanned over thirty years in the oil and gas industry and as a public accountant. His executive management positions in both private and public companies bring us significant leadership, planning and management skills and background.

William F. Hughes Jr., 64,66, has served as a Director since December 2003.  Mr. Hughes has over 30 years of experience in the engineering and construction industry as a Registered Civil Engineer and licensed building contractor.  From 1974 to 1979, he served as an officer in the United States Air Force. From 1979 to 1986, he was a project design engineer for Cushman & Associates.  From 1986 to 1996, he served as a Project Manager on a variety of public works and industrial construction projects.  Since 1983, Mr. Hughes has been co-owner of The Whole Wheatery, LLC, a natural foods store located in Lancaster, California.  Mr. Hughes holds a Bachelor of Science degree in Civil Engineering from the United States Air Force Academy and a Master of Science in Engineering from the University of California at Los Angeles.

Mr. Hughes’ career experience in the engineering and construction industry brings us invaluable skills which are applicable to our manufacturing processes.  In addition, Mr. Hughes provides leadership skills arising from his service as an officer with the U.S. Air Force and U.S. Air Force Academy graduate.

THE BOARD OF DIRECTORS AND ITS COMMITTEES

Natural Gas Services Group’s Board of Directors held foureight meetings in 2016.2018.  Each Director attended at least 75% of the total number of Board meetings held while such person was a Director.  Each Director also attended at least 75% of all of the meetings held by all committees of the Board of Directors for which he served (during the periods that he served).  The Board of Directors acts from time to time by unanimous written consent in lieu of holding a meeting.

Our non-management directors hold regularly scheduled executive sessions in which those directors meet without management participation.  Generally, the Lead Director presides over these sessions; Charles G. Curtis is currently the Lead Director.

We typically schedule a Board meeting in conjunction with our annual meeting of shareholders.  Although we do not have a formal policy on the matter, we expect our Directors to attend each annual meeting, absent a valid reason, such as illness or an unavoidable schedule conflict.  Last year, all of the individuals then serving as Directors attended our 20162018 Annual Meeting of Shareholders.

 

To assist it in carrying out its duties, the Board has delegated certain authority to four separately designated standing committees. These committees are described below.

 

The primary functions of our Audit Committee include:

The members of the Audit Committee are David L. Bradshaw (Chairman), Charles G. Curtis, and William F. Hughes, Jr. Our common stock is listed for trading on the New York Stock Exchange, or “NYSE”. Under rules of the NYSE, the Audit Committee is to be comprised of three or more Directors, each of whom must be independent.  Our Board has determined that all of the members of the Audit Committee are independent, as defined under the applicable NYSE rules and listing standards.  In addition, our Board of Directors has determined that David L. Bradshaw is qualified as an “audit committee financial expert” as that term is defined in the rules of the Securities and Exchange Commission.  The Audit Committee met eight times during the last fiscal year. The audit committee has also received from, and discussed with, BDO the matters required to be discussed by Public Accounting Oversight Board Auditing Standard No. 1301 (AS 1301) (Communications with Audit Committees).

The Compensation Committee’s policy is to offer the executive officers competitive compensation packages that will permit us to attract and retain individuals with superior abilities and to motivate and reward such individuals in an appropriate fashion in the long-term interests of Natural Gas Services Group and its shareholders.  Currently, executive compensation is comprised of salary and cash bonuses and awards of long-term incentive opportunities in the form of restricted stock or restricted stock unit awards under the 2009 Restricted Stock/Unit Plan.

The members of the Compensation Committee are William F. Hughes, Jr. (Chairman), John W. Chisholm and David L. Bradshaw. Our Board has determined that all of the members of the Compensation Committee are independent, as defined under the applicable NYSE rules and listing standards.  During the last fiscal year there were fivefour meetings of the Compensation Committee.

The Compensation Committee members are not officers or employees of our company, and there is not, nor was there during fiscal 2016,2018, any compensation committee interlock (in other words, no executive of our company serves as a Director or on the compensation committee of a company that has one or more executives serving on our Board of Directors or our Compensation Committee).

 

Our Governance and Personnel Development Committee primarily focuses on:

The functions of our Nominating Committee include:

Our Nominating Committee will consider a Director candidate recommended by a shareholder.  A candidate must be highly qualified in terms of business experience and be both willing and expressly interested in serving on the Board.  A shareholder wishing to recommend a candidate for the Committee’s consideration should forward the candidate’s name and information about the candidate’s qualifications to Natural Gas Services Group, Inc., Nominating Committee, 508 West Wall Street,404 Veterans Airpark Lane, Suite 550,300, Midland, Texas 79701,79705, Attn.: John W. Chisholm.  Submissions must include sufficient biographical information concerning the recommended individual, including age, employment history for at least the past five years indicating employer's names and description of the employer’s business, educational background and any other biographical information that would assist the Committee in determining the qualifications of the individual.  The Committee will consider recommendations received by a date not later than 120 calendar days before the date our proxy statement was released to shareholders in connection with the prior year’s annual meeting for nomination at that annual meeting.  The Committee will consider nominations received after that date at the annual meeting subsequent to the next annual meeting.

The Committee evaluates nominees for Directors recommended by shareholders in the same manner in which it evaluates other nominees for Directors.  Minimum qualifications include the factors discussed above.

To promote the independence of the Board and appropriate oversight of management and to demonstrate our commitment to strong corporate governance, the independent directors designate an independent, non-employee director to serve as our Lead Director. The Lead Director helps to facilitate free and open discussion and communication among the independent, nonemployee directors. The responsibilities of the Lead Director are set forth in our Corporate Governance Guidelines, which is available under “Investor Relations - Governance Documents” on our website at www.ngsgi.com. Charles G. Curtis was appointed Lead Director in April 2016.

     Our Board of Directors oversees the management of risks inherent in the operation of our business and the implementation of our strategic plan.  Our executive management is responsible for the day-to-day management of risks we face.  The Board is periodically advised by management on the status of various factors that could impact our business and operating results, including oil and gas industry issues, operational issues (such as compressor manufacturing issues, backlog for compressor equipment etc.), legal and regulatory risks. The full Board is also responsible for reviewing our strategy, business plan, and capital expenditure budget.    

 

CODE OF ETHICS

Our Board of Directors has adopted a Code of Business Conduct and Ethics, or “Code”, which is posted on our website atwww.ngsgi.com. You may also obtain a copy of our Code by requesting a copy in writing at 508 West Wall Street,404 Veterans Airpark Lane, Suite 550,300, Midland, Texas 7970179705 or by calling us at (432) 262-2700.

Our Code provides general statements of our expectations regarding ethical standards that we expect our Directors, officers and employees, including our Chief Executive Officer and principal financial officer, to adhere to while acting on our behalf.  Among other things, the Code provides that:

EXECUTIVE OFFICERS

Biographical information for the executive officers of Natural Gas Services Group who are not Directors is set forth below.  There are no family relationships between any Director or executive officer and any other Director or executive officer.  Executive officers serve at the discretion of the Board of Directors and until their successors have been duly elected and qualified, unless sooner removed by the Board of Directors.  Officers are elected by the Board of Directors annually at its first meeting following the annual meeting of shareholders.

This compensation discussion and analysissection provides information regarding our executive compensation program in 20162018 for the following executive officers of the Company (collectively, the "named executive officers").

Stephen C. Taylor, our Chairman, President, and Chief Executive Officer;

G. Larry Lawrence, our Chief Financial Officer; and

James R. Hazlett, our Vice President-Technical Services.

The Committee is responsible for formulating and administering our overall compensation principles and plans.  This includes establishing the compensation paid to our CEO, meeting and consulting with our CEO to establish the compensation paid to our other executive officers, counseling our CEO as to different compensation approaches, administering our stock equity plans, monitoring adherence to our compensation philosophy and conducting an annual, and sometimes more frequent, review of our compensation programs and philosophy regarding executive compensation.

Our compensation philosophy is to provide an executive compensation program that:

The overall objectives of our compensation philosophy are to:

Our Committee supports these objectives by emphasizing compensation arrangements that we believe are reasonable and will attract and retain qualified executives and reward them for their efforts to further our long-term growth and success.  At the same time, we remain cognizant of and aim to balance our executive compensation arrangements with the interests and concerns of our shareholders.

The following summary highlights our commitment to executive compensation practices that align the interests of our executives and shareholders:

the Company and Compensation Committee to maintain a high degree of transparency, as well as relative certainty for our executives and our shareholders and prospective investors, while minimizing the impact of complex benefit programs that are both costly and potential confusing. Our compensation programs are focused on a simple goal: a fair, reasonable and straightforward compensation program that rewards our leadership team for achievements beneficial to the Company and its shareholders.

Although the Advisory Vote on Executive Compensation inis not binding on the Company, the Board of Directors providesassigns significant weight to the outcome of the vote and responds accordingly. In both 2015 and 2016the past four years, the Company’s Board of Directors and executive management considered the results of the vote and recommendations of the proxy advisory firms as it engaged in meaningful review of its corporate governance and executive compensation matters with advisors and other stakeholders. Those discussions included over 80 meetings with key institutionalThe vast majority of input on our compensation programs and executive pay from these shareholders during the past year, in addition to over 75 meetings with similar shareholders during 2015.has been positive.

The Compensation Committee and Board of Directors believe that our executive compensation program and corporate governance policies are optimal for the Company, and continue to align company leadership with the best interests of shareholders.shareholders and have facilitated and supported executive compensation that has delivered industry-leading results. At the same time, the Compensation Committee also recognizes the ever-evolving compensation and governance landscape. Below is a summary of what we heard and the actions we took in response during the last two years:

Below is a summary of what we heard and the actions we took in response:response to many of these issues during the last four years:

As the foregoing table indicates, the Company has significantly outperformed its peers in both 20162018 and over the past three and five years. Moreover, as the table below indicates, on an annualized basis, the Company has also outpaced its peer group over the same time period.

    

    

The Compensation Committee also evaluates compensation, particularly base salary levels and equity awards (restricted stock awards), through an analysis of each executive officer’s individual performance and the overall performance of Natural Gas Services Group,the Company, our goal being to strengthen the link between what we pay our executives and the performance of Natural Gas Services Group.the Company.  Factors the Committee considers in our analysis include:

With respect to compensation we pay in the form of cash bonuses, the Committee sets performance levels for three specific companyCompany financial metrics.  The Committee relies on whether these levels are achieved and the individual performance of our executive officers to determine whether cash bonuses are awarded and the amounts of such bonuses.  The three financial metrics the Committee considers are:

Adjusted EBITDA is calculated from our audited financial statements by adding to net income, or loss, (1) amortization and depreciation expense, (2) interest expense, (3) provision for income tax expense and (4) loss on retirement of rental equipment.

We believe that our core executive compensation mix of base salary, cash bonuses and equity awards, while fairly limited, presently provides enough diversity for us to link executive compensation to our short-term and long-term objectives.  For instance, annual income, while equity awards are more closely linked to the long-term objectives of earnings per share and increased market value of our common stock.

We provide our executive officers and other employees with base salary to compensate them for services rendered during the fiscal year.  Each year the Committee receives base salary recommendations from our Chief Executive Officer for all of our executive officers (other than our Chief Executive Officer whose base salary is evaluated by the Committee on an annual basis).

In January 2016,2018, the Compensation Committee reviewed the 20152017 performance of our Chief Executive Officer, Stephen C. Taylor, along with the competitive pay information provided in Longnecker’sthe Compensation Consultant’s report, in setting Mr. Taylor's base salary for 2016. Before the increase in salary for 2016, Mr. Taylor’s base salary fell to slightly less than the 75th percentile bracket using the blended Custom Peer Group and natural gas compression/energy services specific data contained in Longnecker’s report. In connection with2018. Based on that review, the Committee modestly increased the base salary of Mr. Taylor from $543,063 in 2015$576,800 to $560,000,$594,100, an increase of approximately 3%. The increase was made in recognition of Mr. Taylor’s leadership and contributions to the Company's strong 2015 financial and operational results, which included: (i) increasing cash and cash equivalents from $6.2 million to $35.5 million in 2015; (ii) maintained long-term debt at a continuing, very low level (less than $500,000) while self-funding capital expenditures; (iii) total revenue decreased only 1.1% in 2015 compared to 2014, a record revenue year, a significant achievement considering the depressed oil and gas operating environment in 2015; (iv) decreasing capital expenditures from $53.3 million in 2014 to $12.5 million in 2015 demonstrating a timely and quick response to the deteriorating oil and gas industry environment; (v) increasing operating cash flow as a percentage of revenue from 35.6% in 2014 to 43% in 2015, making the Company an industry leader in this category; (vi) increasing free cash flow (operating cash flow less capital expenditures) as a percentage of revenue from (19.4% ) in 2014 to 30.3% in 2015; (vii) maintaining strong adjusted EBITDA; (viii) increasing average gross margins in our core rental business from 60% in 2014 to 62% in 2015, notwithstanding continuing pressures on revenue and pricing due to the significant fall-off in oil and gas industry; (ix) increasing compressor sales revenues by 27% from 2014 to 2015; (x) maintaining SG&A expenses at 11% of total revenue in both 2014 and 2015 -- the lowest among the Company’s public peers; (xi) finalized development, and introduced two new gas compression products, a 500 horsepower CiP compressor frame/package and a 50HP-100Hp Vapor Recovery Unit (VRU) product line; and (xii) significantly outperforming the Company’s peer group with respect to total shareholder return.

With respect to our other two named executive officers other than our CEO, James Hazlett, our Vice President of Technical Services, base salary for 20162018 was $206,000$218,545 compared to $200,000$212,180 for 2015.2017. The base salary of G. Larry Lawrence, our Vice President and Chief Financial Officer, for 2016,2018, was $192,600$204,330 compared to $187,000$198,380 for most of 2015. We continue, as we have in the past, to rely on the following factors in evaluating and determining the amount of compensation we pay these executives:

In 2006, the Committee adopted an Annual Incentive Bonus Plan 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, subject to Committee oversight and modification.  The bonuses awarded under the IBP are short-term awards in recognition of the overall performance and efforts made by our executives during a particular year. Each year, the Committee approves the group of executives eligible to participate in the IBP and establishes target award opportunities for such executives. For 2016,2018, the Committee maintained Mr. Taylor’s target

award opportunity at 100% of his base salary. Target award opportunity was 50% of average base salary for Messrs. Lawrence and Hazlett.

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 CEO (except with respect to our CEO whose individual performance is evaluated by the Committee).

The following table sets forth the maximum bonus eligibility set by the Committee for 20162018 for each of our named executive officers, and based upon the payout percentages noted in the table above, the bonus payout amount earned by each named executive for 20162018 under our Annual Incentive Bonus Plan:

In 2018 our executives did not receive any of their financial metric payout because the tables above, actual financialCompany did not attain the aggressive annual performance for 2016 metmeasures set by the “target” performance level for two of the metrics but failed to meet the "threshold" performance level amount for the Revenue criterion, thereby entitling each of the named executive officers to 100% bonus payout for two of the three financial metrics.

With respect to Mr. Taylor’s personal performance criteria, the Committee based its full award on his successleadership in positioningguiding the Company through the recent market downturn related to remain debt-freethe collapse in oil and buildnatural gas prices by maintaining a strong balance sheet through reductions in operating and capital expenses. Mr. Taylor’s leadership positioned the Company with a balance sheet that enabled it to significantly increase capital spending to meet the opportunity to become a major player in the high horsepower compression market. Mr. Taylor developed significant contractual commitments from customers for the Company’s high horsepower equipment allowing it to grow its cash balances duringmarket share in a periodkey new market. His continuing efforts have resulted in fourteen consecutive years of unprecedented market deterioration, continuing to post positive earnings, in an environment where the vast majority of the Company’s peers posted significant lossescash flow and his ability to further reduce capital expenditures in a most challenging operating environment. Capital expenditures declined by over 65% in 2016,return on top of a reduction of over 75% in 2015.capital.

With respect to Mr. Lawrence’s personal performance criteria, the Committee based its full award on his success in implementing a major upgrade tooverseeing the construction of the Company’s ERP systemnew headquarters and maintaining generaldelivering it on-time and administrative expenses at an efficient level.on-budget; identification and implementation of advanced information technologies that improved our communications and computing environments; assuming responsibility for the supply chain function; and assisting in the transition of health care partners that should provide enhanced care and savings in the future.

With respect to Mr. Hazlett’s personal performance criteria, the Committee based its full award on his efficiently managingcontinued improvement of our high horsepower products including advances in the lowfabrication, operational and maintenance processes of this equipment; the development of a new high-pressure gas compressor package for utilization in the single-point gas lift market; his leadership in transitioning our fabrication facilities from a moderate level of activity in our compressorutilization for medium horsepower products to full utilization for fabrication facilitiesof high horsepower products; and finalizingimplementation of an outsourced supplier to supplement the engineering and design of NGS’s entry into highercontinuing need for high horsepower gas compression equipment.

We maintain a 401(k) retirement plan in which all of our executives and employees are eligibleIn addition to participate.  We match executive and employee contributionsthe cash payments described above, we made additional bonus cash payments to our 401(k) plan, on an equal percentage basis, with cash contributions.  The Company matching portion is equal to one-half of the employee’s annual contribution up to a maximum of 3% of the employee’s salary. Our matching amounts for our executive officers are includedas follows: Taylor $88,616; Hazlett $40,820; Lawrence $43,660.

We made these additional cash payments in columnrecognition of our executive management’s (i) ability to continue growth in the high horsepower market that was identified in 2017; (ii) flexibility in managing the Company’s reduction of capital expenditures following a severe downturn and subsequently managing new capital investments to address high horsepower market demands; (iii) maintaining one of the “Summary Compensation Table” on page 35.

In addition, subject to revision by the Committee, the default provisions of the Plan and form of award agreements provide that a Change of Control triggers accelerated vesting of all shares or units.  Under the 2009 Plan, a Change in Control Event is generally defined as: