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Notice
of Stockholdersour values is our commitment to people and Proxy Statement
EXTERRAN CORPORATION
Thursday, April 27, 2017 at 8:30 a.m., Central Daylight Time
4444 Brittmoore Rd., Houston, Texas 77041
YouStockholders:
Enclosed you will find a meeting notice, a related Proxy Statement, a proxy or voting instructions and our 2016 Annual Report, which includes a more detailed letter regarding the state of Exterran. The Proxy Statement provides further information on the Company’s performance, corporate governance and enhanced descriptions of our compensation approach.
The past year was a period of transition for Exterran asthings we completed our first full yearare doing to operate sustainably as a public company. good corporate citizen.
Despiteareas of oil, natural gas, power generation and water. At the external market challenges and the required internal efforts to complete the restatement, yoursame time, our Board and management team did not lose sight of the needwill continue to navigate Exterran through this period of uncertaintyfocus on building and positionmaintaining a strong foundation for the Company, highlighted by ensuring a culture of accountability and core values are in place, supported by internal processes, systems and controls.
As highlightedcontinue to expand our engagement efforts. We believe we can learn a lot from people who have placed their faith in us through their investments. You will find in this proxy information on how to contact us throughout the Proxy Statement and Annual Report, we sized the business to manage through the current market challenges, focused on generating and preserving cashyear as well as repaying debt. The end result wasinformation about what is up for a stronger balance sheet, leaner organization and an evolving culture emphasizing accountability, stewardship, oversight, controls and transparency. We believe the seeds of disciplined growth and stockholder value creation are planted, supported by a compensation philosophy aimed at rewarding financial performance, strategic and operational execution, and safety.
We encourage you to vote, your shares as soon as possible. Your vote is important to us. You will find instructions in the Proxy Statement on how to vote your shares by proxy and/or in person if you attend theand how to join us at our annual meeting.
Thank you for your continued support and investment in Exterran Corporation.
To Be Held
at King & Spalding LLP
, Al Fattan Currency House, Tower 2, Level 24, Dubai International Financial Centre, Dubai, UAE. We are holding a live annual meeting simultaneously in two locations by tele-video conferencing in order to allow our international stockholders to attend in person. TheThe Board of Directors of Exterran Corporation has fixedor any adjournments or postponements thereof is the close of business on February 27, 2017 as the record date for the meeting. Only holders of our common stock as of the record date are entitled to notice of and to vote at the annual meeting. Further information regarding voting rights and the matters to be voted upon is presented in this Proxy Statement.
28, 2018.
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be held on April 27, 2017:
This Proxy Statement and the Company’s 2016 Annual Report to Stockholders are availablefree of charge on the Company’s website athttp://www.proxyvote.com and also whereindicated on the proxy card that accompanies this notice.
Table Of Contents
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 26, 2018 | |
We are making our Proxy Statement and Annual Report available to our stockholders electronically via the Internet. We will mail most of our stockholders a Notice on or about March 16, 2018, containing instructions on how to access this Proxy Statement and our Annual Report over the Internet and Vote by Internet or telephone. All stockholders who do not receive a Notice should receive a paper copy of the proxy materials by mail. Stockholders may access the proxy materials at www.exterran.com or www.proxyvote.com or request a printed set of the proxy materials be sent to them by following the instructions in the Notice. |
i
ii
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
We are furnishing you
| PROXY SUMMARY |
We are making our proxy materials available over the Internet. Accordingly, we will mail most of our stockholders a Notice of Internet Availability of Proxy Materials (“Notice”) on or about March 17, 2017. The Notice contains instructions on how to access those documents over the Internet, as well as instructions on how to request a printed copy of our proxy materials. All stockholders who do not receive a Notice should receive a paper copy of the proxy materials by mail. Stockholders may access the proxy materials on the Internet or request a printed set of the proxy materials be sent to them by following the instructions in the Notice.
We may satisfy Securities and Exchange Commission (“SEC”) rules regarding delivery of the Notice by delivering a single copy of these documents to an address shared by two or more stockholders. This process is known as “householding.” To the extent we have done so, we have delivered only one Notice to stockholders who share an address with another stockholder, unless contrary instructions were received prior to the mailing date.
When and where will the Annual Meeting be held?
We will hold our 2017 Annual Meeting of Stockholders at Exterran Corporation, 4444 Brittmoore Road, Houston, Texas 77041, on Thursday, April 27, 2017, at 8:30 a.m. Central Daylight Time.
Who may vote?
You may vote if you were a holder of record of Exterran common stock as of the close of business on February 27, 2017, the record date for the Annual Meeting. Each share of common stock is entitled to one vote. As of the record date, there were 35,582,110 shares of Exterran common stock outstanding and entitled to vote.
What am I voting on and how does the Board recommend that I vote?
| Proposal No. | Description of Proposal | Page No. Where You Can Find More Information Regarding the Proposal | Board Recommendation |
| 1 | Election of eight directors to serve for a term expiring at the next annual meeting of stockholders | 4 | FOR each nominee |
| 2 | Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2017 | 42 | FOR |
| 3 | Advisory vote to approve the compensation paid to our named executive officers | 44 | FOR |
| 4 | Advisory vote on the frequency of future stockholder advisory votes on the compensation paid to our named executive officers | 45 | 1 YEAR |
In addition, stockholders will be asked to consider at the Annual Meeting such other business as may properly come before the meeting or any adjournment thereof.
How do I vote?
You may vote by any of the following methods:
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To be counted, votes by Internet, telephone or mail must be received by 11:59 p.m. Eastern Daylight Time on April 26, 2017.
Can I change my vote?
Yes. You may change your vote or revoke your proxy before the voting polls are closed at the Annual Meeting by the following methods:
How many votes must be present to hold the Annual Meeting?
A quorum of stockholders is necessary for a valid meeting. The presence in person or by proxy of the holders of a majority of the outstanding shares of our common stock will constitute a quorum for the Annual Meeting. Under our Amended and Restated Bylaws (our “Bylaws”) and under Delaware law, abstentions and “broker non-votes” are counted as present in determining whether the quorum requirement is satisfied.
What is a broker non-vote?
A “broker non-vote” occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power for that proposal and has not received instructions from the beneficial owner. Under the rules of the New York Stock Exchange (“NYSE”), brokers do not have discretionary authority to vote shares in connection with non-routine matters without instructions from the beneficial owner. Therefore, if you hold your shares in the name of a bank, broker or other holder of record, for your vote to be counted on any of the proposals other than Proposal 2 (ratification of independent registered public accounting firm), you will need to communicate your voting decisions to your bank, broker or other holder of record before April 27, 2017.
What matters will be voted on at the Annual Meeting?
Each proposal to be voted on at the Annual Meeting is described in this Proxy Statement, as is the vote required to approve each proposal. For any other matters that may be properly presented for consideration at the Annual Meeting, the persons named as proxies will have discretion to vote on those matters according to their best judgment to the same extent as the person delivering the proxy would be entitled to vote. As of the date of this Proxy Statement, we do not anticipate that any other matters will be properly presented for consideration at the Annual Meeting.
Who pays for the proxy solicitation related to the Annual Meeting?
We will pay the cost of soliciting proxies. In addition to sending you these proxy materials or otherwise providing you access to these proxy materials, some of our officers, as well as management and non-management employees, may contact our stockholders by telephone, facsimile or in person. None of these officers or employees will receive additional compensation for any such solicitation. We have also retained Innisfree M&A Incorporated to assist in the solicitation of proxies as well as provide advisory services to the Company, for a fee of $15,000 plus out-of-pocket expenses which will be paid by the Company. We will also request brokers and other fiduciaries to forward proxy soliciting materials to the beneficial owners of shares of our common stock that are held of record by such brokers and fiduciaries, and we will reimburse their reasonable out-of-pocket expenses.
If you have any questions or require any assistance with voting your shares, please contact Innisfree M&A Incorporated, our proxy solicitor, toll-free at (888) 750-5834. Banks and brokers may call collect at (212) 750-5833.
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor New York, NY 10022
Stockholders May Call Toll-Free: (888) 750-5834 (from the United States and Canada)
Banks and Brokers May Call Collect: (212) 750-5833
How can I view the stockholder list?
A complete list of stockholders of record entitled to vote at the Annual Meeting will be available for viewing during ordinary business hours for a period of ten days before the Annual Meeting at our offices at 4444 Brittmoore Road, Houston, Texas 77041.
Who will tabulate and certify the vote?
Broadridge Financial Solutions, Inc., an independent third party, will tabulate and certify the vote and will have a representative to act as the independent inspector of elections for the Annual Meeting.
What if I want a copy of the Company’s 2016 Annual Report on Form 10-K?
We will provide to any stockholder or potential investor, without charge, upon written or oral request, by first class mail or other equally prompt means, a copy of our Annual Report on Form 10-K for the year ended December 31, 2016. Please direct any such requests2017. In this Proxy Statement, we refer to the attention of Investor Relations, Exterran Corporation 4444 Brittmoore Rd.as “Exterran,” the “Company,” “we” or “us.”
| Date: | Thursday, April 26, 2018 |
| Time: | Jointly by tele-video conferencing at 8:30 a.m. Central Daylight Time and 5:30 p.m. Gulf Standard Time, respectively |
| Place: | King & Spalding LLP, 1111 Louisiana Street, Suite 4000, Houston, Texas, USA and Al Fattan Currency House, Tower 2, Level 24, Dubai International Financial Centre, Dubai, UAE |
| Record Date: | February 28, 2018 |
| Proposals | Board Recommendation | Page | |
| Proposal 1 | Election of Directors | FOR each Director Nominee | 5 |
| Proposal 2 | Advisory Vote to Approve Named Executive Officer Compensation | FOR | 49 |
| Proposal 3 | Ratification of Independent Registered Public Accounting Firm | FOR | 50 |
| Proposal 4 | Approval of Amendment to Amended and Restated Certificate of Incorporation to Eliminate Super-Majority Vote Required for Stockholders to Amend Bylaws | FOR | 53 |
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| Using the Internet at http://www.proxyvote.com | Calling 1-800-690-6903 if in the United States and Canada | Mailing your signed and dated proxy card or voting instruction form | Attending the Annual Meeting | |||
reduced to seven members immediately following the Annual Meeting.
| Name | Age | Independent | Director Since | Primary Occupation | Committee Memberships | |||||
William M. Goodyear (Lead Independent Director) | 69 | Yes | 2015 | Retired Executive Chairman and Chief Executive Officer of Navigant Consulting, Inc. | Audit (Chair) Compensation | |||||
| James C. Gouin | 58 | Yes | 2015 | President and Chief Executive Officer of Tower International, Inc. | Audit Compensation | |||||
| John P. Ryan | 66 | Yes | 2015 | Retired President and Chief Executive Officer of Dresser, Inc. | Audit Compensation (Chair) Nominating and Corporate Governance | |||||
| Christopher T. Seaver | 69 | Yes | 2015 | Retired President and Chief Executive Officer of Hydril Company | Audit Compensation Nominating and Corporate Governance (Chair) | |||||
Mark R. Sotir Executive Chairman | 54 | No | 2015 | Executive Chairman and Director | ||||||
| Andrew J. Way | 46 | No | 2015 | President, Chief Executive Officer and Director | ||||||
| Ieda Gomes Yell | 61 | Yes | 2015 | Retired Managing Director, Energix Strategy Ltd. | Nominating and Corporate Governance | |||||
| Changes Since 2017 Annual Meeting | Ÿ | Following our Board’s amendment of our Amended and Restated Bylaws (“Bylaws”) to eliminate the super-majority vote required for stockholders to amend our Bylaws, we have included Proposal 4 in this proxy to make the same change in our Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) | |
| Ÿ | After review of best practices and discussions with stockholders, we amended our Bylaws to provide for majority voting in uncontested elections of directors | ||
| Ÿ | We implemented a prohibition on pledging Company stock | ||
| Ÿ | We increased the stockholder ownership guidelines for our Chief Executive Officer (“CEO”) | ||
| Ÿ | We expanded our stockholder engagement process | ||
| Corporate Governance Best Practices | We provide for: | ||
| Ÿ | Annual election of directors | ||
| Ÿ | Majority voting for directors | ||
| Ÿ | Resignation policy for directors who do not receive majority vote | ||
| Ÿ | Regular executive sessions of independent directors | ||
| Ÿ | Lead Independent Director | ||
| Ÿ | Mandatory director retirement policy | ||
| Ÿ | Robust director and executive stock ownership guidelines | ||
| Ÿ | Robust Code of Conduct | ||
| Ÿ | No poison pill | ||
| Ÿ | No political contributions | ||
| Lead Independent Director Responsibilities | Ÿ | Presides at executive sessions of the independent directors | |
| Ÿ | Calls meetings of the independent directors | ||
| Ÿ | Serves as liaison between the Chairman and the independent directors | ||
| Ÿ | Meets regularly with the Company’s finance, compliance and internal audit management and independent advisers | ||
| Ÿ | Briefs CEO on issues arising from executive sessions of independent directors | ||
| BOARD OF DIRECTORS |
ELECTION OF DIRECTORS
Director Nominees
TheOur Board of Directors has nominated for election as Directors at the Annual Meeting the eightseven nominees named below. IfEach nominee currently serves as a director of the Company and was elected eachby our stockholders at our 2017 annual meeting. Each nominee elected will serve until the 20182019 Annual Meeting of Stockholders or until their successors havehis or her successor has been elected and qualified or until theirhis or her death, resignation or removal.
The Board of Directors
Each nominee brings a strong and unique background and set of skills to the
Eight directors are nominated to be elected to the Board at the Annual Meeting, each to serve for a term expiring at our next annual meeting of stockholders. Each nominee has consented to serve as a director if elected.
Board of Directors’ Recommendation
The Boardunanimously recommends that the stockholders vote“FOR”the election of each of the nominees to the Board as set forth in this proposal.
Vote Required
Key Skills and Qualifications | Importance | |
| Executive Leadership | Directors who hold or have held significant leadership positions provide the Company with unique insights. These people generally possess extraordinary leadership qualities as well as the ability to identify and develop those qualities in others. Their experiences developing talent and solving problems in large, complex organizations prepare them well for the responsibilities of Board service. | |
| Financial Expertise | Accurate financial reporting and robust auditing are critical to our success. Four of our directors qualify as audit committee financial experts, and all of our directors are literate in finance and financial reporting processes. | |
Governance & Board Service | As a publicly traded energy Company, we are regulated by the Securities and Exchange Commission (“SEC”), the New York Stock Exchange (“NYSE”) and other governmental entities. As such, we seek directors with experience with publicly traded companies to provide insight and understanding of requirements and strategies in these areas. | |
| Risk Management | Managing risk in a rapidly changing environment is critical to our success. Directors should have a sound understanding of the most significant risks facing the Company and the experience and leadership to provide effective oversight of risk management processes. | |
| Strategic Planning | Experience in driving the strategic direction and growth provides the Company with needed oversight and guidance in the design and implementation of our strategic growth plan. | |
| Industry Experience | Due to the complexity and volatility of our business, we believe it is important to have directors with experience in the energy industry or energy operations to enable the Board to provide effective oversight of our business and operations. | |
| International Experience | With our global growth, directors having a global business awareness provide needed cultural and diverse experiences and competencies. | |
| Community Involvement | Directors who are involved in community or charitable organizations understand the interests and needs of our customers and communities, and provide effective oversight of our social responsibilities to all our stakeholders. | |
 | WILLIAM M. GOODYEAR | Exterran Board Committees • Audit (Chair)• Compensation | |
| Age 69 Director Since October 2015 | |||
| Lead Independent Director | Other Public Boards • Enova International, Inc. | ||
WILLIAM M. GOODYEAR
 | JAMES C. GOUIN | Exterran Board Committees • Audit• Compensation | |
| Age 58 Director Since November 2015 | |||
| Independent | Other Public Boards • Tower International, Inc. | ||
| Professional Experience | Skills and Qualifications | ||
| Mr. Gouin was appointed President of Tower International, Inc. (“Tower”), a global manufacturer of engineered automotive products, in September 2016 and became Chief Executive Officer and a member of Tower’s board of directors in January 2017. Mr. Gouin joined Tower in November 2007 as Executive Vice President and Chief Financial Officer. Prior to joining Tower, Mr. Gouin served in 2007 as a senior managing director of the corporate financial practice of FTI Consulting, Inc., a business advisory firm. Prior to joining FTI, Mr. Gouin spent 28 years at Ford Motor Company in a variety of senior positions, including as Vice President, Finance and Global Corporate Controller from 2003 to 2006 and as Vice President of Finance, Strategy and Business Development of Ford Motor Company’s International Operations from 2006 to 2007. Mr. Gouin also served on the board of directors of Azure Dynamics Corp. from January 2009 until May 2012. Azure Dynamics filed for bankruptcy protection in April 2012. Mr. Gouin also served on the Board of Trustees of the University of Detroit Mercy until October 2017, and currently serves as Chairman of the Board of Directors of Vista Maria, a non-profit corporation. Mr. Gouin received a B.B.A. from the Detroit Institute of Technology and a M.B.A. from the University of Detroit Mercy. | • Executive Leadership• Financial Expertise• Governance & Board Service• Risk Management• Strategic Planning• International Experience• Community Involvement | ||
 | JOHN P. RYAN | Exterran Board Committees • Audit• Compensation | |
| Age 66 Director Since October 2015 | |||
| Independent | • Nominating and Corporate Governance | ||
| Professional Experience | Skills and Qualifications | ||
| Mr. Ryan previously served as President and Chief Executive Officer of Dresser, Inc., a global provider of flow control products, measurement systems and other infrastructure technologies to the oil and gas and power generation industries, from May 2007 until February 2011. Mr. Ryan was President and Chief Operating Officer of Dresser, Inc. from December 2004 to June 2007. From 1987 to 2004, Mr. Ryan was employed by Dresser Wayne where he served as President from 1996 to 2004 and as Vice President from 1991 to 1996. He previously served on the board of directors of each of FlexEnergy, LLC, a provider of oil field turbine generators and environmental solutions for power generation, landfill gas and digester gas applications, from January 2012 to April 2013 and Wayne Fueling Systems, Inc., a privately-held global supplier of fuel dispensers, payment terminals and other measurement and control solutions to the retail and commercial fueling industry from April 2014 to November 2016. Prior to September 2017, Mr. Ryan served as a director of Hudson Products, Inc., a company engaged in the design, manufacture and servicing of heat transfer equipment for the petroleum, chemical, gas processing and electric utility industries, and currently serves as a director of The Village of Hope, a non-profit organization. Mr. Ryan received a B.A. from Villanova University. | • Executive Leadership• Financial Expertise• Governance & Board Service• Risk Management• Strategic Planning• Industry Experience• International Experience• Community Involvement | ||
 | CHRISTOPHER T. SEAVER | Exterran Board Committees • Audit• Compensation | |
| Age 69 Director Since October 2015 | |||
| Independent | • Nominating and Corporate Governance (Chair)Other Public Boards • Oil States International, Inc.• McCoy Global, Inc. | ||
| Professional Experience | Skills and Qualifications | ||
| Mr. Seaver served as Chairman of the board of directors of Hydril Company, an oil and gas service company specializing in pressure control equipment and premium connections for casing and tubing, from 2006 until his retirement in May 2007. Mr. Seaver held a series of domestic and international management positions at Hydril Company from 1985 to May 2007, including as President since 1993 and Chief Executive Officer and director since 1997. Prior to joining Hydril Company, Mr. Seaver was a corporate and securities attorney for the law firm of Paul, Hastings, Janofsky & Walker LLP, and was a Foreign Service Officer in the U.S. State Department with postings in Kinshasa, Republic of Congo and Bogotá, Colombia. Mr. Seaver has served as a director and officer of the Petroleum Equipment Suppliers Association, a director of the American Petroleum Institute, and a director and Chairman of the National Ocean Industries Association. Mr. Seaver is currently on the board of trustees of two non-profit organizations. Mr. Seaver received an A.B. in Economics from Yale University and a J.D. and M.B.A. from Stanford University. | • Executive Leadership• Financial Expertise• Governance & Board Service• Risk Management• Strategic Planning• Industry Experience• International Experience• Community Involvement | ||
 | MARK R. SOTIR | Exterran Board Committees | |
| Age 54 Director Since October 2015 | |||
| Executive Chairman | |||
| Professional Experience | Skills and Qualifications | ||
| Mr. Sotir has served as director and Executive Chairman of the Company since October 2015. Mr. Sotir has also served as Co-President of the Equity Group Investments division of Chai Trust Company, LLC, a private investment firm (“EGI”), since October 2015, and served as Managing Director of EGI since November 2006. While at EGI, he served as the interim president of Tribune Interactive, a division of Tribune Company, a media conglomerate, from December 2007 until April 2008. Tribune Company filed for protection under Chapter 11 of the Bankruptcy Code in December 2008. Prior to joining EGI, Mr. Sotir was the Chief Executive Officer of Sunburst Technology Corporation, an independent distributor of educational software to public schools, from August 2003 to November 2006. Mr. Sotir serves on the board of directors of several EGI portfolio companies, including SIRVA Inc., a provider of moving and relocation services. Mr. Sotir is also involved in various charitable organizations. Mr. Sotir received a B.A. in Economics from Amherst College and an M.B.A. from Harvard Business School. | • Executive Leadership• Financial Expertise• Governance & Board Service• Risk Management• Strategic Planning• Industry Experience• International Experience• Community Involvement | ||
 | ANDREW J. WAY | Exterran Board Committees | |
| Age 46 Director Since October 2015 | |||
| President and Chief Executive Officer | |||
| Professional Experience | Skills and Qualifications | ||
| Mr. Way is our President and Chief Executive Officer. He previously served as Vice President and Chief Executive Officer-Drilling and Surface Production of GE Oil & Gas, a provider of equipment and services in the oil and gas space, from 2012 through June 2015. Mr. Way joined GE Oil & Gas in October 2007 and previously served as General Manager Operations, Turbo Machinery Services from October 2007 to December 2008, as General Manager, Global Supply Chain from December 2008 to December 2010, and as Vice President and Chief Executive Officer-Turbo Machinery Services from December 2010 to June 2012. Prior to joining GE Oil & Gas, Mr. Way served as Operations Director and Managing Director-GE Equipment Services of GE Capital from 2001 to 2007 and held various positions at GE Aviation from 1996 to 2001. Mr. Way has served as an Advisory Director of the Petroleum Engineering and Services Association since August 2017, and is actively involved in various civic and charitable organizations. Mr. Way studied Mechanical Engineering and graduated from the technical leadership program with Lucas Industries in Wales, U.K. | • Executive Leadership• Financial Expertise• Governance & Board Service• Risk Management• Strategic Planning• Industry Experience• International Experience• Community Involvement | ||
 | IEDA GOMES YELL | Exterran Board Committees • Nominating and Corporate Governance | |
| Age 61 Director Since October 2015 | |||
| Independent | Other Public Boards • Bureau Veritas S.A.• Saint-Gobain S.A. | ||
| Professional Experience | Skills and Qualifications | ||
| Ms. Gomes Yell served as the Managing Director of Energix Strategy Ltd., an independent oil and gas consultancy firm, until October 2017. Before forming Energix, she served in a number of positions with BP plc and its subsidiaries from 1998 to 2011, including as President of BP Brazil, Vice President of Regulatory Affairs and Vice President of Market Development for BP Solar, and Vice President of Pan American Energy. From 1995 until 1998, Ms. Gomes Yell held a number of positions with Companhia de Gás de São Paulo, or Comgás, a Brazilian natural gas distributor, including as President and Chief Executive Officer. Ms. Gomes Yell is Chairman of the corporate governance committee of InterEnergy Holdings, a private power production company; a Councillor of the Brazilian Chamber of Commerce in Great Britain, a not-for-profit organization; a founding director of WILL Latam-Women in Leadership in Latin America, a non-profit organization; a member of the advisory board of Crystol Energy, an independent consultancy and advisory firm; and a member of the advisory board of Comgás and of the Infrastructure Department of the São Paulo Federation of Industries. Ms. Gomes Yell is a senior visiting research fellow at the Oxford Institute for Energy Studies in the United Kingdom and Fundação Getúlio Vargas Energia in Brazil. Ms. Gomes Yell received her B.S. in Chemical Engineering from the University of Bahia, Brazil, a MSc. in Environmental Engineering from the Polytechnic School of Lausanne, Switzerland and a MSc. in Energy from the University of São Paulo, Brazil. | • Executive Leadership• Financial Expertise• Governance & Board Service• Risk Management• Strategic Planning• Industry Experience• International Experience• Community Involvement | ||
| CORPORATE GOVERNANCE AT EXTERRAN |
As the former Chief Executive Officer and former Executive Chairman of the board of Navigant Consulting, Inc., Mr. Goodyear has significant business consulting experience, including with operational, risk management, financial, regulatory and dispute advisory services. As a former chief executive officer, he also has significant experience in management and business strategy, and as a former public company chairman he is familiar with a full range of board functions.
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JAMES C. GOUIN
Mr. Gouin, 57, was appointed President of Tower International, Inc. (“Tower”) in September 2016 and became Chief Executive Officer and a member of Tower’s board of directors in January 2017. Mr. Gouin joined Tower in November 2007 as Executive Vice President and Chief Financial Officer. Prior to joining Tower, Mr. Gouin served in 2007 as a senior managing director of the corporate financial practice of FTI Consulting, Inc., a business advisory firm. Prior to joining FTI, Mr. Gouin spent 28 years at Ford Motor Company in a variety of senior positions, including as the Vice President, Finance and Global Corporate Controller from 2003 to 2006 and as the Vice President of Finance, Strategy and Business Development of Ford Motor Company’s International Operations from 2006 to 2007. Mr. Gouin also served on the board of directors of Azure Dynamics Corp. from January 2009 until May 2012. He serves on the board of trustees of the University of Detroit Mercy and he is the Chairman of the board of directors of Vista Maria, a non-profit corporation. Mr. Gouin received a B.B.A. from the Detroit Institute of Technology and an M.B.A. from the University of Detroit Mercy.
Mr. Gouin brings a wealth of financial experience to theOur Board as well as managerial, manufacturing and global experience through his years of service at Tower and Ford Motor Company.
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JOHN P. RYAN
Mr. Ryan, 65, previously served as President and Chief Executive Officer of Dresser, Inc., a global provider of flow control products, measurement systems and other infrastructure technologies to the oil and gas and power generation industries, from May 2007 until February 2011. Mr. Ryan was President and Chief Operating Officer of Dresser, Inc. from December 2004 to June 2007. From 1987 to 2004, Mr. Ryan was employed by Dresser Wayne where he served as President from 1996 to 2004 and as Vice President from 1991 to 1996. He previously served on the board of directors of each of FlexEnergy, LLC, a provider of oil field turbine generators and environmental solutions for power generation, landfill gas and digester gas applications, from January 2012 to April 2013 and Wayne Fueling Systems, Inc., a privately-held global supplier of fuel dispensers, payment terminals and other measurement and control solutions to the retail and commercial fueling industry from April 2014 to November 2016. Mr. Ryan currently serves as a director of Hudson Products, Inc., a company engaged in the design, manufacture and servicing of heat transfer equipment for the petroleum, chemical, gas processing and electric utility industries; and as a director of The Village of Hope, a non-profit organization. Mr. Ryan received a B.A. from Villanova University.
As the former President and Chief Executive Officer of Dresser, Inc., Mr. Ryan has significant international experience and energy industry knowledge, as well as a combination of commercial, operational and financial skills. With an early career in engineering, manufacturing and sales, Mr. Ryan also brings a thorough understanding of these disciplines.
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CHRISTOPHER T. SEAVER
Mr. Seaver, 68, served as Chairman of the board of directors of Hydril Company, an oil and gas service company specializing in pressure control equipment and premium connections for casing and tubing from 2006 until his retirement in May 2007. Mr. Seaver held a series of domestic and international management positions at Hydril Company from 1985 to May 2007, including as President since 1993 and Chief Executive Officer and director since 1997. Prior to joining Hydril Company, Mr. Seaver was a corporate and securities attorney for the law firm of Paul, Hastings, Janofsky & Walker LLP, and was a Foreign Service Officer in the U.S. State Department with postings in Kinshasa, Republic of Congo and Bogotá, Colombia. Mr. Seaver currently serves as a director and member of the audit committee of Oil States International, Inc., an oil service company specializing in manufacturing products for offshore production and drilling, renting drilling and completion tools, and U.S. land drilling services; and a director and Chairman of McCoy Global Inc., a Canadian oil service company principally providing power tongs and related equipment. Mr. Seaver has also served as a director and officer of the Petroleum Equipment Suppliers Association, a director of the American Petroleum Institute, and a director and Chairman of the National Ocean Industries Association. Mr. Seaver received an A.B. in Economics from Yale University and a J.D. and M.B.A. from Stanford University.
Through his former roles as President, Chief Executive Officer and Chairman of the Board of a publicly traded oil and gas services company, Mr. Seaver brings to our Board both the perspective of an executive officer as well as that of a director. He has both domestic and international management and operations experience and has been heavily involved in many industry trade and professional organizations. His tenure with the U.S. State Department makes him well-versed in international cultures and the challenges and opportunities presented by conducting business in developing countries.
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MARK R. SOTIR
Mr. Sotir, 53, has served as director and Executive Chairman of the Company since October 2015. Mr. Sotir has also served as Co-President of the Equity Group Investments division of Chai Trust Company, LLC, a private investment firm (“EGI”), since October 2015, and prior to taking his current position, served as Managing Director since November 2006. While at EGI, he served as the interim president of Tribune Interactive, a division of Tribune Company, a media conglomerate, from December 2007 until April 2008. Tribune Company filed for protection under Chapter 11 of the Bankruptcy Code in December 2008. Prior to joining EGI, Mr. Sotir was the Chief Executive Officer of Sunburst Technology Corporation, an independent distributor of educational software to public schools, from August 2003 to November 2006. Mr. Sotir serves on the board of directors of several EGI portfolio companies, including Rewards Network Inc., a dining rewards company; SIRVA Inc., a provider of moving and relocation services; and Veridiam, a specialty manufacturer in the nuclear aerospace and medical industries. Mr. Sotir received a B.A. in Economics from Amherst College and an M.B.A. from Harvard Business School.
Mr. Sotir brings to our Board extensive operational experience, gained by serving in key management and leadership roles in a wide range of industries. His operational experience includes brand management, sales, marketing and distribution, as well as finance. In addition, Mr. Sotir serves as a director for several companies representing a diversity of industries.
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RICHARD R. STEWART
Mr. Stewart, 67, previously served as President and Chief Executive Officer of GE Aero Energy, a division of GE Power Systems, and as an officer of General Electric Company, from February 1998 until his retirement in 2006. From 1972 to 1998, Mr. Stewart served in various positions at Stewart & Stevenson Services, Inc., including as Group President and member of the board of directors. Mr. Stewart is vice chairman of the board of directors of Eagle Materials Inc., a U.S. manufacturer and distributor of building materials; director and Chairman of the audit committee of Kirby Corporation, a tank barge operator; and director of TAS, a privately held company providing energy conversion solutions. Mr. Stewart served as a director of Lufkin Industries, Inc., an oilfield equipment and power transmission products company, from October 2009 until its acquisition by General Electric in July 2013. Mr. Stewart received a B.B.A. in Finance from the University of Texas.
Mr. Stewart brings business knowledge and leadership experience, as well as familiarity with corporate governance issues, as a result of his prior service as chief executive officer of a manufacturing company, as an officer of General Electric and as a member of the boards of other public companies.
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ANDREW J. WAY
Mr. Way, 45, is our President and Chief Executive Officer. He previously served as Vice President and Chief Executive Officer—Drilling and Surface Production of GE Oil & Gas, a provider of equipment and services in the oil and gas space, from 2012 through June 2015. Mr. Way joined GE Oil & Gas in October 2007 and previously served as General Manager Operations, Turbo Machinery Services from October 2007 to December 2008, as General Manager, Global Supply Chain from December 2008 to December 2010, and as Vice President and Chief Executive Officer—Turbo Machinery Services from December 2010 to June 2012. Prior to joining GE Oil & Gas, Mr. Way served as Operations Director and Managing Director—GE Equipment Services of GE Capital from 2001 to 2007 and held various positions at GE Aviation from 1996 to 2001. Mr. Way studied Mechanical Engineering and graduated from the technical leadership program with Lucas Industries in Wales, U.K.
Mr. Way brings a wealth of global corporate leadership experience across many aspects of business, including finance, strategy, operations, and supply chain, from his years of service at GE, culminating in his position as Vice President and Chief Executive Officer-Drilling and Surface Production.
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IEDA GOMES YELL
Ms. Gomes Yell, 60, has served as the Managing Director of Energix Strategy Ltd., an independent oil and gas consultancy firm, since October 2011. Before forming Energix, she served in a number of positions with BP plc and its subsidiaries from 1998 to 2011, including as President of BP Brazil, Vice President of Regulatory Affairs and Vice President of Market Development at BP Solar and Vice President of Pan American Energy. From 1995 until 1998, Ms. Gomes Yell held a number of positions with Companhia de Gás de São Paulo, or Comgás, a Brazilian natural gas distributor, before being named President and Chief Executive Officer. Ms. Gomes Yell is currently a non-executive director and member of the audit and risk and strategic committees at Bureau Veritas SA, a global provider of testing, inspection and certification services; a non-executive director of Compagnie de Saint Gobain SA, a France-based producer, processor and distributor of construction and high-performance materials and packaging; a director and Chairman of the corporate governance committee at InterEnergy Holdings, a private power production company; a Councillor of the Brazilian Chamber of Commerce in Great Britain, a not-for-profit organization; a founding director of WILL Latam—Women in Leadership in Latin America, a not-for-profit organization; a member of the advisory board of Crystol Energy, an independent consultancy and advisory firm; and a member of the advisory board of Comgás and of the Infrastructure Department of the São Paulo Federation of Industries. Ms. Gomes Yell is a senior visiting research fellow at the Oxford Institute for Energy Studies in the United Kingdom and Fundação Getúlio Vargas Energia in Brazil. Ms. Gomes Yell received her B.S. in Chemical Engineering from the University of Bahia, Brazil, a MSc. in Environmental Engineering from the Polytechnic School of Lausanne, Switzerland and a MSc. in Energy from the University of São Paulo, Brazil.
Throughout her career, Ms. Gomes Yell has cultivated extensive experience in developing projects, restructuring energy businesses and advising domestic and international oil and gas companies in a variety of operational and governance matters, including developing business strategies, navigating international markets and creating growth.
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The Board believes that at least a majority of the directors should be persons who have no material relationship with our Company and who are otherwise “independent” under applicable NYSE listing standards. Currently, 75% of our directors are independent. Our Code of Business Conduct also requires all employees, officers and non-employee directors to avoid situations that may impact their ability to carry out their duties in an independent and objective fashion. Any circumstance that has the potential to compromise their ability to perform independently must be disclosed. In addition, we distribute director and officer questionnaires at least annually to elicit related-party information. The questionnaire requires that responses be updated throughout the year to the extent circumstances change.
The Nominating and Corporate Governance Committee assesses director independence each year by considering all direct and indirect business relationships between Exterran and each director (including his or her immediate family), as well as relationships with other for-profit concerns and charitable organizations and related party transactions, to determine whether any such relationship or transaction would prohibit a director from being independent under SEC rules, the NYSE listing standards and the Company’s Corporate Governance Principles. With the Nominating and Corporate Governance Committee’s recommendation, the Board makes a determination relating to the independence of each member, which is based on applicable laws, regulations, our Corporate Governance Principles and the rules of the NYSE and SEC.
During the Nominating and Corporate Governance Committee’s most recent review of independence, the Committee was provided information regarding transactions with any related parties as determined through a search of our accounting records as well as the responses to the director and officer questionnaires; these relationships were reviewed by the Nominating and Corporate Governance Committee and approved by the Audit Committee, and none are required to be reported in this Proxy Statement.
Based on the recommendation of the Nominating and Corporate Governance Committee, the Board determined that the following nominees for director are independent: Messrs. Goodyear, Gouin, Ryan, Seaver and Stewart and Ms. Gomes Yell.
Mr. Sotir is not independent because he is the Executive Chairman of the Company, and Mr. Way is not independent because he is the President and Chief Executive Officer of the Company.
We separate the roles of Executive Chairman of the Board and Chief Executive Officer. We believe this structure is currently in the best interests of our stockholders because by separating these positions:
The Board recognizes the time, effort and energy that our Chief Executive Officer is required to devote to his position, as well as the commitment required to serve as our Executive Chairman. The Board believes this structure is appropriate for the Company because of the size and composition of the Board, the scope and complexity of our operations and the responsibilities of the Board and management.
The Board has adopted procedures for the timely and efficient transfer of our Chief Executive Officer’s responsibilities in the event of an emergency or his sudden incapacitation or departure.
Mr. Sotir serves as Executive Chairman and presides over the regular sessions of the Board and the executive sessions of the Board, held at every regularly scheduled Board meeting.
Role of Lead Independent DirectorDirector.
Consistent with industry best practices and in accordance with the Company’s Corporate Governance Principles, the Board has a Lead Independent Director to ensure that the Company maintains a corporate governance structure with appropriate independence and balance. The Lead Independent Director is elected by the independent directors, and presides at the executive sessions of the independent directors which are held in conjunction with each regularly scheduled meeting of the Board, and any other meetings as determined by the Lead Independent Director. Mr. Goodyear presently serves as Lead Independent Director.
| Audit Committee | Ÿ | Assists the Board in fulfilling its oversight of financial risk exposures and implementation and effectiveness of the Company’s compliance programs and internal controls |
| Ÿ | Reviews the Company’s policies with respect to financial risk assessment and financial risk management | |
| Ÿ | Monitors the integrity of the Company’s financial statements and reporting systems and internal controls over financial reporting | |
| Ÿ | Appoints the independent auditors and monitors their qualifications and independence | |
| Ÿ | Monitors the performance of the Company’s internal auditors and independent auditors | |
| Ÿ | Meets with and reviews reports from the Company’s internal auditors and independent registered accounting firm | |
| Ÿ | Oversees environmental compliance, and climate, water and digital/cyber risks | |
| Ÿ | Oversees the Company’s Code of Conduct and Ethics Helpline, and meets with the Chief Compliance Officer to receive information regarding compliance policies and procedures | |
| Ÿ | Monitors the business practices and ethical standards of the Company | |
| Compensation Committee | Ÿ | Assists the Board in fulfilling its oversight of risks that may arise in connection with the Company’s compensation programs and practices |
| Ÿ | Reviews the Company’s compensation philosophy strategy | |
| Ÿ | Reviews the Company’s strategies and supporting processes for management succession planning, human capital and leadership development, executive retention and diversity | |
| Ÿ | Approves performance goals and total compensation for our President and CEO and conducts an annual review of the President and CEO’s performance | |
| Ÿ | Reviews and approves total compensation for the Company’s executive officers in consultation with the President and CEO | |
| Ÿ | Assesses and considers the independence of any adviser that provides advice to the Committee | |
| Nominating and Corporate Governance Committee | Ÿ | Assists the Board in fulfilling its oversight of risks that may arise in connection the Company’s governance processes and composition of the Board |
| Ÿ | Develops policies and practices relating to corporate governance and reviews compliance with the Company’s Corporate Governance Principles | |
| Ÿ | Reviews and recommends changes as appropriate in the Company’s Corporate Governance Principles, Certificate of Incorporation, Bylaws, and other Board-adopted governance provisions | |
| Ÿ | Identifies and recommends qualified individuals to become Board members | |
| Ÿ | Evaluates and recommends nominees for election as directors at the annual stockholders’ meetings or for appointment between annual stockholders’ meetings | |
| Ÿ | Reviews the composition and diversity of the Board and its committees and oversees the evaluation of the Board | |
| Ÿ | Oversees the Company’s stockholder engagement efforts | |
| Director | Independent | Board | Audit | Compensation | Nominating and Corporate Governance | |||||
| William M. Goodyear* | L | Ÿ | C | Ÿ | ||||||
| James C. Gouin* | Ÿ | Ÿ | Ÿ | Ÿ | ||||||
| John P. Ryan* | Ÿ | Ÿ | Ÿ | C | Ÿ | |||||
| Christopher T. Seaver* | Ÿ | Ÿ | Ÿ | Ÿ | C | |||||
| Mark R. Sotir | C | |||||||||
| Richard R. Stewart* | Ÿ | Ÿ | Ÿ | Ÿ | ||||||
| Andrew J. Way | Ÿ | |||||||||
| Ieda Gomes Yell | Ÿ | Ÿ | Ÿ | |||||||
| Number of 2017 Meetings | 7 | 7 | 9 | 6 | 4 | |||||
Ÿ Member | C Chair | L Lead Independent Director | * Financial Expert |
The Board has designated an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee to assist in the discharge of the Board’s responsibilities. The Board and the committees of the Board are governed by our Code of Business Conduct, Corporate Governance Principles and the applicable committee charters, each of which are available to the public on our website athttp://www.exterran.com or in print by submitting a written request to Exterran Corporation, 4444 Brittmoore Road, Houston, Texas 77041, Attention: Corporate Secretary. The purpose and composition of each committee is summarized in the table below.
| NON-EMPLOYEE DIRECTOR COMPENSATION |
COMMITTEE MEMBERSHIP
Members of each committee are elected by the Board at its first meeting following the annual meeting of stockholders to serve for one-year terms. The current members of our committees are indicated in the following chart:
The Board and its committees held the following number of meetings and acted by unanimous written consent the following number of times during calendar year 2016:
| No. of Meetings | No. of Actions by Written Consent | |||||||
| Board | 9 | 2 | ||||||
| Audit Committee | 23 | — | ||||||
| Compensation Committee | 8 | 3 | ||||||
| Nominating and Corporate Governance Committee | 5 | — | ||||||
We expect members of the Board to attend all meetings. The directors attended, individually and as a group, at least 75% of the meetings of the Board and Board committees on which they served during the period described above.
While we do not have a formal requirement relating to director attendance at our annual meetings of stockholders, all directors are strongly encouraged to attend. The Annual Meeting will be our first annual meeting as a public company and we currently expect that all directors will be in attendance.
Director Qualifications, Nominations and Diversity
The Nominating and Corporate Governance Committee believes that all Board candidates should be selected for their character, judgment, ethics, integrity, business experience, time commitment and acumen. The Board, as a whole, through its individual members, seeks to have competence in areas of particular importance to us such as finance, accounting, international business and relevant technical expertise. The Nominating and Corporate Governance Committee also considers issues of diversity in the director identification and nomination process. While the Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity, it seeks nominees with a broad diversity of experience, professions, skills, education and backgrounds. The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. The Nominating and Corporate Governance Committee believes that backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities. Nominees are not discriminated against on the basis of race, color, national origin, gender, religion or disability.
Directors must be committed to enhancing the long-term interests of our stockholders as a whole and should not be biased toward the interests of any particular segment of the stockholder or employee population. Board members should also be prepared to travel to personally attend meetings of the Board and its committees and should be ready to dedicate sufficient time to prepare in advance of such meetings to allow them to make an effective contribution to the meetings. Further, Board members should ensure that they are not otherwise committed to other activities which would make a commitment to the Board impractical or unadvisable and should satisfy the independence, qualification and composition requirements of the Board and its committees, as required by applicable law, regulation and the rules of the NYSE, our Certificate of Incorporation, our Bylaws and our Corporate Governance Principles.
Our Bylaws describe the procedures a stockholder must follow when nominating a director for election to the Board. Notice of any director nominee to be considered for election at the 2018 Annual Meeting of Stockholders must be received by the Corporate Secretary on or after November 17, 2017 and no later than December 17, 2017. The notice must include certain information about the nominee, including his or her age, address, occupation and share ownership, as well as the name, address and share ownership of the stockholder giving the notice. Our Bylaw requirements are in addition to the SEC’s requirements with which a stockholder must comply to have a stockholder proposal included in our Proxy Statement. Stockholders may obtain a copy of our Bylaws by making a written request to our Corporate Secretary. Any stockholder-recommended director nominee will be evaluated in the context of our director qualification standards and the existing size and composition of the Board.
The Board’s Role in Risk Oversight
The Board has an active role, as a whole and through its committees, in overseeing management of the Company’s risks. The Board’s role in the risk oversight process includes receiving regular reports from members of senior management on areas of material risk to us, including operational, financial and strategic risks. Also, the involvement of the Board in reviewing, approving and monitoring our fundamental financial and business strategies, as contemplated by our Corporate Governance Principles, is important to the determination of the types and appropriate levels of risk we undertake. The Board’s committees, all comprised solely of independent directors, assist the Board in fulfilling its oversight responsibilities in certain areas of risk. The Compensation Committee oversees the management of risks relating to our executive compensation plans and arrangements. The Nominating and Corporate Governance Committee manages risks associated with the composition of the Board and other types of risks within its areas of responsibility. The Audit Committee oversees the management of financial risks and also receives regular quarterly reports from our Director of Internal Audit and our Chief Compliance Officer. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about such risks. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.
Risk Assessment Related to Our Compensation Structure
We believe our compensation practices reflect sound risk management practices and are not reasonably likely to result in a material adverse effect on us. For example, our Compensation Committee and management set performance goals in light of past performance, future expectations and market conditions that they believe do not encourage the taking of unreasonable risks. Our Compensation Committee believes its practice of considering non-financial and other qualitative factors in determining compensation awards discourages excessive risk taking and encourages good judgment. In addition, we believe employee compensation is allocated between cash and equity-based awards, between fixed and variable awards, and between short-term and long-term focused compensation in a manner that encourages decision-making that balances short-term goals with long-term goals and thereby reduces the likelihood of excessive risk taking. Finally, our Compensation Committee has established (a) short-term incentives that balance various Company objectives and provide for maximum payouts, and (b) long-term incentive awards with generally three-year vesting periods, and we believe these program features further balance short- and long-term objectives and encourage employee behavior designed to deter excessive risk taking and achieve sustained profitability and growth.
Compensation Committee Interlocks and Insider Participation
Each of Messrs. Goodyear, Ryan, Seaver and Stewart served on the Compensation Committee of the Board during 2016. During 2016, there were no compensation committee interlocks or insider participation matters.
INFORMATION REGARDING DIRECTOR COMPENSATION
Our Compensation Committee is responsible for recommending non-employee director compensation to the full Board of Directors for approval. Non-employeeThe Company uses a combination of cash and equity compensation to attract and retain qualified candidates to serve on the Board. The Compensation Committee periodically reviews non-employee director compensation with the advice of its independent compensation consultant and makes recommendations to the Board for any changes it considers appropriate. In making such recommendations, the Compensation Committee considers the type and amount of compensation paid to non-employee directors by comparable companies and time required for directors to fulfill their duties to the Company, as well as the backgrounds and expertise required by the Company of members of the Board are compensated in cash and equity.Board. As Executive Chairman of the Board, Mr. Sotir is an officer, but not an employee, of the Company. Mr. Way, who is both a director and our President and Chief Executive Officer, does not receive additional compensation for his service on the Board.
Director compensation levels are reviewed annually by the Compensation Committee.
As reflected in the table below, during 2016, each non-employee director received an annual cash retainer, as well as a payment for each meeting attended. The Executive Chairman of the Board and the chairs of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee each received an additional retainer for their services.respectively. All retainers arewere paid in equal quarterly installments. Directors are
| Description of Remuneration | Executive Chairman of the Board | Audit Committee Chairman | Compensation Committee Chairman | Nominating and Corporate Governance Committee Chairman | Lead Independent Director | All Other Directors | ||||||||||||||||||
| Annual Retainer | $ | 45,000 | $ | 45,000 | $ | 45,000 | $ | 45,000 | $ | 45,000 | $ | 45,000 | ||||||||||||
| Other Annual Retainers | $ | 180,000 | $ | 13,500 | $ | 13,500 | $ | 9,000 | $ | 22,500 | — | |||||||||||||
| Meeting Attendance Fee | $ | 1,500 | $ | 1,500 | $ | 1,500 | $ | 1,500 | $ | 1,500 | $ | 1,500 | ||||||||||||
| (per meeting attended) | ||||||||||||||||||||||||
Thereceive an annual grant of common stock. In March 2017, the Compensation Committee determinedapproved an annual grant of fully-vested common stock to non-employee directors valued at approximately $112,500 on the date of grant in February 2017 to maintainrespect of their service in 2017. The number of shares awarded was based on the non-employee directors’ annual retainers atmarket closing price of our common stock on the current levels for 2017.
applicable grant date.
In February 2016, the Compensation Committee approved an annual grant of fully-vested common stock to non-employee directors valued at approximately $112,500 on the date of grant in respect of their service in 2016.stock. The number of shares to be awarded will be based on the market closing price of our common stock on the applicable grant date.
Our stock ownership policy requiresBoard also has adopted guidelines that require each director to own an amount of our common stock equal to at least five times the annual cash retainer amount (which at December 31, 20162017 equals $225,000 of our common stock) within three years of his or her election to the Board. Both directly-owned shares and unvested restricted stock count toward satisfaction of this policy. We measure the stock ownership of our directors annually as of October 31. All of our directors were elected to the Board in late 2015, and therefore have until late 2018 to meet this ownership requirement.
Table
| Name | Fees Earned in Cash ($) (1) | Fees Earned in Stock (1) | Equity Grant ($) (2) | Total ($) | ||||||||||||
| William M. Goodyear | $ | — | $ | 136,500 | $ | 112,500 | $ | 249,000 | ||||||||
| James C. Gouin | $ | 87,000 | $ | — | $ | 112,500 | $ | 199,500 | ||||||||
| John P. Ryan | $ | 31,125 | $ | 88,875 | $ | 112,500 | $ | 232,500 | ||||||||
| Christopher T. Seaver | $ | — | $ | 114,000 | $ | 112,500 | $ | 226,500 | ||||||||
| Mark R. Sotir | $ | 157,875 | $ | 98,625 | $ | 112,500 | $ | 369,000 | ||||||||
| Richard R. Stewart | $ | 89,000 | $ | — | $ | 112,500 | $ | 201,500 | ||||||||
| Ieda Gomes Yell | $ | — | $ | 84,000 | $ | 112,500 | $ | 196,500 | ||||||||
| Name | Fees Earned or Paid in Cash (1) | Fees Earned or Paid in Stock (1)(3) | Stock Grants(2)(3) | Total | ||||||||||||
| William M. Goodyear(4) | $ | — | $ | 109,500 | $ | 112,500 | $ | 222,000 | ||||||||
| James C. Gouin | $ | 72,000 | $ | — | $ | 112,500 | $ | 184,500 | ||||||||
| John P. Ryan(4) | $ | — | $ | 93,000 | $ | 112,500 | $ | 205,500 | ||||||||
| Christopher T. Seaver(4) | $ | — | $ | 90,000 | $ | 112,500 | $ | 202,500 | ||||||||
| Mark R. Sotir(4) | $ | 148,125 | $ | 87,375 | $ | 112,500 | $ | 348,000 | ||||||||
| Richard R. Stewart | $ | 67,500 | $ | — | $ | 112,500 | $ | 180,000 | ||||||||
| Ieda Gomes Yell(4) | $ | — | $ | 60,000 | $ | 112,500 | $ | 172,500 | ||||||||
| (1) | Messrs. Goodyear, Ryan and Seaver, and Ms. Gomes Yell received their retainer and meeting fees in the form of our common |
| (2) | Annual grant of fully-vested common stock to non-employee directors valued at approximately $112,500 on the date of grant in respect of |
| (3) | Represents the grant date fair value of our common stock, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification 718, “Stock Compensation” (“ASC |
| (4) | Following the completion on January 4, 2017 of the Company’s restatement of its 2016 financial statements (“Restatement”), the Company made a grant on January 6, 2017 of common stock under the Amended and Restated Directors’ Stock and Deferral Plan representing payment of retainer and meeting fees paid in stock for the quarters ended March 31, 2016, June 30, 2016 and September 30, 2016. Messrs. Goodyear, Ryan, Seaver and Sotir were each paid in stock valued at $102,750, $59,250, $85,500 and $66,750 respectively, and Ms. Gomes Yell was paid in stock valued at $63,750. |
| REPORT OF THE COMPENSATION COMMITTEE |
| COMPENSATION DISCUSSION AND ANALYSIS |
| Name | Title | |
| Andrew J. Way | President and Chief Executive Officer | |
| David A. Barta | Senior Vice President and Chief Financial Officer | |
| Girish K. Saligram | Senior Vice President Global Services | |
| Roger George | Senior Vice President Global Engineering and Product Lines | |
| Christopher T. Werner* | Former Senior Vice President Global Operations | |
| Page | |||
| CD&A Highlights | • Business Overview | 22 | |
| • Our 2017 | 23 | ||
| • Our Executive Compensation Best Practices | 24 | ||
| • Our Compensation Philosophy | 25 | ||
What We Pay and Why | • How We Determine Executive Compensation | 26 | |
| • Executive Compensation Elements | 27 | ||
| • Fixed Compensation | 28 | ||
| • Variable Compensation | 29 | ||
| • Other Compensation and Benefit Arrangements | 35 | ||
| • 2018 Compensation Decisions | 35 | ||
| Compensation Policies and Practices | • Stock Ownership Guidelines | 36 | |
| • Trading Controls and Anti-Pledging and Anti-Hedging Policies | 36 | ||
| • Compensation Policies and Practices Related to Risk Management | 36 | ||
| • Compensation Committee Interlocks and Insider Participation | 36 | ||
| • Executive Offer Letters | 36 | ||
| • Tax and Accounting Considerations | 37 | ||
| Executive Compensation Tables | • 2017 Summary Compensation Table | 38 | |
| • 2017 Grants of Plan-Based Awards | 39 | ||
| • Outstanding Equity Awards at Fiscal Year-End | 40 | ||
| • Stock Vested in Fiscal Year 2017 | 41 | ||
| • 2017 Non-Qualified Deferred Compensation Plan | 41 | ||
| • Potential Payments Upon Termination or Change of Control | 42 | ||
| • Post-Employment Tables | 44 | ||
| • | EBITDA, as adjusted(1) increased 11% from 2016 levels. |
| (1) | EBITDA, as adjusted, is a non-GAAP financial measure. EBITDA, as adjusted, is defined, reconciled to net income (loss) and discussed further in “Appendix A.” |
| What We Do | What We Don’t Do | |||
| ü | Hold an annual Say-On Pay advisory vote | û | No employment contracts with any of our NEOs | |
| ü | Pay for performance | û | No hedging or pledging of, or speculative trading in, Exterran common stock | |
| ü | Target our CEO’s long-term compensation mix so that over 55% is performance-based restricted stock units rather than time-based restricted stock awards | û | No 280G excise tax “gross-up” payments in the event of a change of control | |
| ü | Require a “double trigger” for severance payments or equity acceleration in the event of a change of control | û | No tax “gross ups” on any executive compensation other than relocation benefits available to all eligible employees | |
| ü | Retain an independent external compensation consultant and review independence annually | û | No option repricing or cash buy-outs for underwater options without stockholder approval | |
| ü | Require our CEO to own 6 times base salary in stock and our other executives to own 3 times base salary in stock | û | No perquisites | |
| ü | Require executives to hold substantially all equity compensation received from the Company until stock ownership guidelines are met | |||
| ü | Use an appropriate peer group when making compensation decisions and review it regularly | |||
| ü | Condition grants of long-term equity on non-disclosure, non-solicitation and non-compete restrictions | |||
| ü | Mitigate undue risk-taking in compensation programs | |||
| ü | Require minimum vesting period for executive equity awards | |||
| 2017 CEO Compensation Mix(1) | 2017 Other NEOs Compensation Mix(1)(2) | |
 |  | |
| (i) | 2017 base salaries, as discussed on page 28; |
| (ii) | Target annual incentive cash award amounts under the Company’s 2017 Short-Term Cash-Based Incentive Plan, as discussed on page 29; and |
| (iii) | Target grant date fair value of 2017 time-based restricted stockand performance-based restricted stock units, as discussed on page 34. |
| (i) | Mr. Werner’s compensation as Mr. Werner’s employment terminated effective March 10, 2017. |
| (ii) | 2016 LTI awards made to Messrs. Barta, George and Saligram pursuant to the terms of their 2016 employment offer letters in connection with their employment, were not approved and issued until 2017 as a result of the Company’s Restatement. |
| Ÿ | Archrock, Inc. | Ÿ | Forum Technologies | Ÿ | RPC, Inc. |
| Ÿ | Colfax Corp. | Ÿ | ITT, Inc. | Ÿ | ShawCor Ltd. |
| Ÿ | Dril-Quip, Inc. | Ÿ | McDermott International | Ÿ | SPX Flow, Inc. |
| Ÿ | Enerflex Ltd. | Ÿ | Oceaneering International | Ÿ | Superior Energy Services |
| Ÿ | Flowserve Corporation | Ÿ | Oil States International | Ÿ | TETRA Technologies, Inc. |
| Characteristic | Component | Why We Pay | How We Determine | 2017 Decisions | |||
| Fixed | Base Salary payable in cash | Provides a competitive level of fixed compensation during the fiscal year and provides sufficient fixed cash income for retention and recruiting purposes | Competitive data from the peer group, data from salary surveys, internal pay equity, market knowledge from the Committee’s independent compensation consultant and individual performance | No NEOs received adjustments to their base salary for 2017 | |||
| At Risk | Short-term cash-based incentive awards | Intended to motivate and reward executive officers for achieving financial and strategic execution goals over the short-term | Targets determined using competitive data from the peer group, salary surveys, market knowledge of the Committee’s independent compensation consultant and individual performance Payouts based on Company and individual performance for the year; Compensation Committee retains discretion in determining the actual payout | Mr. Way’s annual short-term incentive target was increased to 115% from 100%; other NEOs’ targets were unchanged Strong, operational and financial performance and a review of individual performance resulted in payouts exceeding targets | |||
| Long-term equity-based incentive awards (time-based restricted stock and/or performance-based restricted stock units) | Intended to reward long-term value creation, motivate and retain top talent and align executives’ interests with our stockholders | Award amounts are based upon competitive data, total overall compensation, internal pay equity, historic grants and information provided by the Committee’s independent compensation consultant and individual performance Time-based restricted stock awards have a three-year continued service requirement that provides a retention incentive Performance-based restricted stock units are dependent upon both Company and individual performance and have a continued service requirement that provides a retention incentive | Mr. Way’s long-term incentive target was increased from $3.3 million to $3.7 million; other NEOs’ targets were unchanged. Payout for performance-based awards are consistent with above, up to the maximum specified in the performance-based awards | ||||
| Executive Officer | 2016 Base Salary | 2017 Base Salary | ||
| Andrew J. Way | $750,000 | $750,000 | ||
| David A. Barta | $435,000 | $435,000 | ||
| Girish K. Saligram | $500,000 | $500,000 | ||
| Roger George | $400,000 | $400,000 | ||
| Christopher T. Werner(1) | $300,000 | $300,000 | ||
| (1) | Mr. Werner’s employment terminated effective March 10, 2017. |
| Executive Officer | 2016 Cash Incentive Target (% of base salary) | 2017 Cash Incentive Target (% of base salary) | 2017 Cash Incentive Target ($)(3) | |||
| Andrew J. Way | 100 | 115 | 862,500 | |||
| David A. Barta | 75 | 75 | 326,250 | |||
| Girish K. Saligram | 70 | 70 | 350,000 | |||
| Roger George(1) | N/A | 70 | 280,000 | |||
| Christopher T. Werner(2) | 60 | N/A | N/A | |||
| (1) | Mr. George joined the Company effective December 15, 2016. |
| (2) | Mr. Werner’s employment terminated effective March 10, 2017. |
| (3) | Cash incentive target opportunities are not prorated. |
| Performance Measures | Weighting | What it is | Why we use it | |||
| FINANCIAL PERFORMANCE | Operational measure consistently evaluated each year | Strong correlation to stock price performance and mirrors the Company’s financial disclosure | ||||
| EBITDA, as Adjusted(1) | 30% | Earnings before interest, taxes, depreciation and amortization, excluding Belleli EPC and other items | A critical measure by which our stockholders measure our performance | |||
| OPERATIONAL GOALS | Operational near-term measures aligned to the current operating environment | Aligns with the near-term business plan and annual initiatives; encourages growth in strategic areas of the business | ||||
| Working Capital as a Percent of Sales | 20% | Working capital divided by revenue (measured quarterly and averaged for the full performance period) | Encourages an efficient use of our cash in the operation and promotes strong focus on the controllable elements of our balance sheet | |||
| Growth (Margin Dollars) | 30% | Sum of margin dollars from Contract Operations bookings for 2018 and beyond, 2017 aftermarket services revenue, and 2017 product line bookings (with certain limitedexceptions) | Balances the focus on backlog and revenue growth while improving gross margin | |||
| SAFETY GOALS | Combination of operational and strategic measures that reflect the effectiveness of our global tools, processes and infrastructure and improvements made | Encourages a balance of near-term and mid-term decision making to benefit the health and safety of our employees and contractors and the protection of the environment | ||||
| HSSE - Operational Performance | 10% | Matrix of the number of incident free days and the severity in days away from work due to work-related incidents across the global organization | Encourages a focus on people, safety and the environment | |||
| HSSE - Global Processes | 10% | Investment in new and improved global tools and processes that strengthen the Company’s foundation and enable future growth | Encourages establishment or improvements in tools and processes to enable accelerated organic or acquisition-based growth | |||
| (1) | EBITDA, as adjusted is defined as net income (loss) excluding income (loss) from discontinued operations (net of tax), cumulative effect of accounting changes (net of tax), income taxes, interest expense (including debt extinguishment costs), depreciation and amortization expense, impairment charges, restructuring and other charges, non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations, expensed acquisition costs and other items; provided, however, that adjustments to EBITDA, as adjusted, may be made by the Compensation Committee, in its discretion, for acquisitions or dispositions and unusual items or non-recurring items. EBITDA, as adjusted, as reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 is a non-GAAP financial measure, which is discussed further in “Appendix A.” |
| 2017 Short-Term Incentive Plan Performance Goals | 2017 Actual | 2017 Actual Performance % | |||
| Performance Measure | Threshold (0.5x) | Target (1.0x) | Maximum (1.50x) | — | — |
| EBITDA, as Adjusted (in millions) | $155 | $165 | $175 | $175.5(1) | 150% |
| Working Capital as a Percent of Sales | 26.6% | 23.9% | 21.2% | 14.9% | 150% |
| Growth (Margin Dollars)(in millions) | $320 | $360 | $400 | $409 | 150% |
| HSSE - Operational Results(2) | 74 | 70 | 68 | 57.5 | 150% |
| HSSE - Global Process Results(3) | 22 | 33 | 44 | 33 | 100% |
| Total Company | — | — | — | — | 145% |
| (1) | The performance measure of EBITDA, as adjusted, excludes $2.4 million of costs associated with our ongoing operations at our repurposed Belleli EPC facility. |
| (2) | Results are calculated in a matrix that considers severity of work-related incidents and the number of incident free days across global organization. |
| Name | Individual Performance |
| Andrew J. Way | Mr. Way continued his strong and proactive leadership across the organization. His leadership is a driving force behind the Company’s enhanced competitive position, development of the strategic growth playbook, and the solid execution against the annual business plan targets resulting in top quartile total stockholder return. |
| David A. Barta | Mr. Barta was instrumental in leading remediation efforts, in the successful recapitalization efforts in mid-2017, and in the recruitment and retention of a world-class functional leadership team. |
| Girish K. Saligram | Mr. Saligram’s leadership in growing key markets, developing our strategic growth playbook, improving our execution capability and adding outstanding talent to the organization are key to our present and future success. |
| Roger George | Mr. George’s leadership with respect to the improvements in product sales gross margins, development of the Company’s strategic growth playbook, and certain strategic engineering and product line advancements are instrumental to our success in 2018 and beyond. |
| Christopher T. Werner | Mr. Werner’s performance was not assessed for 2017, as his employment terminated in March 2017. |
| Name | Target ($) | x | Company Performance | + / -– | Individual Performance | = | Actual 2017 Incentive Payout |
| Andrew J. Way | $862,500 | x | 145% | + | $149,375 | = | $1,400,000 |
| David A. Barta | $326,250 | x | + | $29,937 | = | $503,000 | |
| Girish K. Saligram | $350,000 | x | + | $146,000 | = | $653,500 | |
| Roger George | $280,000 | x | + | $77,000 | = | $483,000 | |
| (2) | 2016 LTI awards made to Messrs. Barta, George and Saligram pursuant to the terms of their 2016 employment offer letters in connection with their employment, which awards were not approved and issued until 2017 as a result of the Company’s Restatement. |
| Executive Officer | 2017 Restricted Stock Awards Total ($) | 2017 Performance Based Restricted Stock Units Total ($) | 2017 Long-Term Awards Total ($) | |||
| Andrew J. Way(1) | $1,650,000 | $2,050,000 | $3,700,000 | |||
| David A. Barta(1) | $400,000 | $400,000 | $800,000 | |||
| Girish K. Saligram(1) | $400,000 | $400,000 | $800,000 | |||
| Roger George(1) | $300,000 | $300,000 | $600,000 | |||
| Christopher T. Werner(2) | — | — | — | |||
| (1) | Does not include time-based restricted stock granted to Messrs. Barta, George and Saligram pursuant to the terms of their 2016 employment offer letters, which grants were not approved and issued in 2016 as a result of the Company’s Restatement. 2016 LTI awards are included in the “2017 Summary Compensation Table” and “Grants of Plan-Based Awards” tables in this proxy statement. |
| (2) | Mr. Werner did not receive an annual equity award in 2017. |
| Performance Measures | Weight | Threshold(1) | Target | Maximum | 2017 Actual | 2017 Actual Performance % |
| Payout Factor | — | 50% | 100% | 150% | — | — |
| EBITDA, as adjusted (in millions) | 15% | $155 | $165 | $175 | 175.5(2) | 150% |
| Working Capital as a Percent of Sales | 25% | 26.6% | 23.9% | 21.2% | 14.9% | 150% |
| Growth (Margin Dollars)(in millions) | 60% | $320 | $360 | $400 | $409 | 150% |
| Total Company Performance | — | — | — | — | — | 150% |
| (2) | The performance measure of EBITDA, as adjusted, excludes $2.4 million of costs associated with our ongoing operations at our repurposed Belleli EPC facility. |
| Element | Description and Purpose | |
| Change of Control Severance and Non-Change of Control Severance | Ÿ | Our Change of Control Severance Benefit Agreements and Non-Change of Control Severance Benefit Agreements with certain senior executives are intended to provide financial security and an industry-competitive compensation package for executives. This additional security helps ensure our senior executives remain focused on our performance and the continued creation of stockholder value throughout any change of control transaction rather than on the potential uncertainties associated with their own employment. |
| Ÿ | Our Change of Control Severance Agreements and Non-Change of Control Severance Agreements are “double trigger” agreements that generally provide certain cash payments and some accelerated vesting on stock granted to the executive only if their employment is terminated during or following a change of control, or in the case of a non-change of control, a termination of employment. A description of our agreements in effect during 2017 is provided in the “Executive Compensation Tables - Potential Payments upon a Change of Control or Termination.” | |
| 401(k) Plan | Ÿ | All U.S. employees of the Company are eligible to participate in and receive up to a 3.5% Company matching contribution in our 401(k) Plan, up to the limits established by the Internal Revenue Service, which is intended to provide financial security upon retirement. |
| Non-Qualified Deferred Compensation Plan | Ÿ | All U.S. executives are eligible to be designated as participants in our Non-Qualified Deferred Compensation Plan, which is intended to provide competitive retirement planning benefits to attract and retain skilled management. |
| Ÿ | The Non-Qualified Deferred Compensation Plan allows an eligible participant to defer up to 100% of his or her salary and bonus on an annual basis. | |
| Health and Wellness Plans | Ÿ | NEOs are eligible to receive available health and other wellness benefits, including medical, dental, vision, life and disability insurance, on the same basis as our other U.S. employees. |
| Ÿ | Our health and wellness plans are intended to provide a competitive, broad-based employee benefits structure and to promote the wellness of our executives and other employees. | |
| Perquisites | Ÿ | We do not provide perquisites to our NEOs. |
| Position | Ownership Requirement |
| President and Chief Executive Officer | 6 times base salary |
| Named Executive Officers | 3 times base salary |
| Name | Position | Year | Base Salary | Bonus | Stock Awards(1) | Non-Equity Incentive Plan(2) | All Other Compensation (3) | Total | ||||||
| Andrew J. Way | President and Chief Executive Officer | 2017 | 750,000 | — | 3,700,000 | 1,400,000 | 9,950 | 5,859,950 | ||||||
| 2016 | 750,000 | — | 3,300,000 | — | 9,775 | 4,059,775 | ||||||||
| 2015 | 369,231 | 2,000,000 | 3,999,996 | 750,000 | 9,087 | 7,128,314 | ||||||||
| David A. Barta | Senior Vice President and Chief Financial Officer | 2017 | 435,000 | — | 2,156,700 | 503,000 | 9,950 | 3,104,650 | ||||||
| 2016 | 58,557 | 350,000 | — | — | 250 | 408,807 | ||||||||
| Girish K. Saligram | Senior Vice President, Global Services | 2017 | 500,000 | — | 2,895,784 | 653,500 | 4,673 | 4,053,957 | ||||||
| 2016 | 173,077 | 2,275,962 | — | — | 731 | 2,449,770 | ||||||||
| Roger George(4) | Senior Vice President, Engineering and Product Lines | 2017 | 400,000 | 600,000 | 949,031 | 483,000 | 27,434 | 2,459,465 | ||||||
| 2016 | 10,769 | 150,000 | — | — | 250 | 161,019 | ||||||||
| Christopher T. Werner(5) | Former Senior Vice President, Global Operations | 2017 | 75,000 | — | — | — | 961,408 | 1,036,408 | ||||||
| 2016 | 300,000 | 75,000 | 400,000 | — | 11,398 | 786,398 | ||||||||
| 2015 | 298,751 | 75,000 | 399,987 | 91,500 | 19,310 | 884,548 | ||||||||
| (1) | The amounts in this column represent the grant date fair value of (a) restricted shares of Exterran’s common stock (which are set forth in the table below) and (b) 2017 performance-based units awarded at target. The grant date fair values of the 2017 performance-based units at maximum level were as follows: Mr. Way: $3,075,000; Mr. Barta: $600,000; Mr. Saligram: $600,000; and Mr. George: $450,000. In addition, in connection with their employment in 2016, Messrs. Barta, George and Saligram were entitled to receive equity awards subject to Committee approval. These awards were not approved and issued until 2017 as a result of the Restatement and are included in this column. The grant date fair value of all awards shown above was calculated in accordance with ASC 718. For further discussion on the fair value of our awards, see Note 19 to the consolidated and combined financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. |
| (2) | Our short-term incentive plan program was suspended in 2016. In February 2017, participation by Mr. Way and the other NEOs in the 2017 short-term incentive plan program was reinstated. |
| (3) | The amounts in this column for 2017 include the following: |
| Name | 401(k) Plan Company Contribution (a) | Tax Preparation and Planning Services | DERs / Dividends | Other (b) | Total Other Compensation | ||||||||||
| Andrew J. Way | 9,450 | — | — | 500 | 9,950 | ||||||||||
| David A. Barta | 9,450 | — | — | 500 | 9,950 | ||||||||||
| Girish K. Saligram | 4,173 | — | — | 500 | 4,673 | ||||||||||
| Roger George | 9,450 | — | — | 17,984 | 27,434 | ||||||||||
| Christopher T. Werner | 2,625 | — | — | 958,783 | 961,408 | ||||||||||
| (4) | Under the terms of Mr. George’s offer letter, he received a one-time cash payment of $600,000 in connection with his commencement of employment and subject to continued service. |
| (5) | Mr. Werner’s employment terminated effective March 10, 2017. |
| Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Possible Payouts Under Equity Incentive Plan Awards(2) | All other Stock Awards: Number of Shares of Stock or Units (#)(3) | All other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/SH) | Grant Date Fair Value of Stock and Option Awards ($)(4) | |||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||
| Andrew J. Way | 3/4/2017 | — | 862,500 | 1,725,000 | — | 66,408 | 99,612 | — | — | — | 2,050,000 | |||||||||||||||||||||
| 3/4/2017 | — | — | — | — | — | — | 53,450 | — | — | 1,650,000 | ||||||||||||||||||||||
David A. Barta(5) | 1/6/2017 | — | — | — | — | — | — | 49,245 | — | — | 1,356,700 | |||||||||||||||||||||
| 3/4/2017 | — | 326,250 | 652,500 | — | 12,958 | 19,437 | — | — | — | 400,000 | ||||||||||||||||||||||
| 3/4/2017 | — | — | — | — | — | — | 12,958 | — | — | 400,000 | ||||||||||||||||||||||
| Girish K. Saligram(5) | 1/6/2017 | — | — | — | — | — | — | 76,072 | — | — | 2,095,784 | |||||||||||||||||||||
| 3/4/2017 | — | 350,000 | 700,000 | — | 12,958 | 19,437 | — | — | — | 400,000 | ||||||||||||||||||||||
| 3/4/2017 | — | — | — | — | — | — | 12,958 | — | — | 400,000 | ||||||||||||||||||||||
Roger George(5) | 1/6/2017 | — | — | — | — | — | — | 12,669 | — | — | 349,031 | |||||||||||||||||||||
| 3/4/2017 | — | 280,000 | 560,000 | — | 9,719 | 14,579 | — | — | — | 300,000 | ||||||||||||||||||||||
| 3/4/2017 | — | — | — | — | — | — | 9,719 | — | — | 300,000 | ||||||||||||||||||||||
| Christopher T. Werner(6) | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
| (1) | The amounts in these columns show the range of potential payouts of incentives under the 2017 Short-Term Incentive Plan. Although the Short-Term Incentive Plan sets measures for threshold, target and maximum pool funding levels at 0% to 150%, actual awards to NEOs can range from 0% to 200% of their personal or individual target due to adjustments made for individual performance. "Threshold" is the lowest possible individual payout (0% of target) and "Maximum" is the highest possible individual payout (200% of target). See ”Short-Term Cash-Based Incentive Plan” for a description of the 2017 short-term incentive awards. |
| (2) | The amounts in these columns show the range of potential payouts of 2017 performance-based units awarded under the 2017 Long-Term Incentive Plan. The Long-Term Incentive Plan sets measures for threshold, target and maximum pool funding levels at 0% to 150%, actual awards to NEOs can range from 0% to 150% of their individual target due to adjustments made for individual performance. “Threshold” is the lowest possible payout (0% of the grant) and “Maximum” is the highest possible individual payout (150% of the grant). See “Long-Term Incentive Compensation-2017 Performance-Based Awards” for a description of the 2017 performance-based awards. |
| (3) | Shares of restricted stock awarded under our 2015 Plan vest one-third per year over a three-year period, subject to continued service through each vesting date. |
| (4) | The grant date fair value of performance-based units and restricted stock is calculated in accordance with ASC 718. For a discussion of valuation assumptions, see Note 19 to the consolidated and combined financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017. The 2017 performance-based units are shown at target value. |
| (5) | In connection with their employment in 2016, Messrs. Barta, George and Saligram were entitled to receive equity awards subject to Committee approval. These awards were not approved and issued until 2017 as a result of the Restatement. |
| (6) | Mr. Werner did not participate in the 2017 Short-Term or Long-Term Incentive Plan. |
| Option Awards | Stock Awards | |||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable (1) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Yet Vested (#)(5) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested ($)(4) | ||||||||||||||||
| Andrew J. Way | — | — | — | — | 307,406 | 9,664,845 | 66,408 | 2,087,868 | ||||||||||||||||
| David A. Barta | — | — | — | — | 45,788 | 1,439,575 | 12,958 | 407,400 | ||||||||||||||||
| Girish K. Saligram | — | — | — | — | 63,672 | 2,001,848 | 12,958 | 407,400 | ||||||||||||||||
| Roger George | — | — | — | — | 18,165 | 571,108 | 9,719 | 305,565 | ||||||||||||||||
| Christopher T. Werner(3) | — | — | — | — | — | — | — | — | ||||||||||||||||
| (1) | Messrs. Way, Barta, Saligram, and George have not been granted stock options. |
| (2) | Includes the following shares of restricted stock and performance-based units awarded under our 2015 Plan: |
| Name | Unvested Share/Units | Initial Vesting Date | Vesting Increments | |||
| Andrew J. Way | 86,749 | 11/03/2016 | One-third over 3 years | |||
| 167,207 | 03/04/2017 | One-third over 3 years | ||||
| 53,450 | 03/04/2018 | One-third over 3 years | ||||
| David A. Barta | 32,830 | 11/7/2017(a) | One-third over 3 years | |||
| 12,958 | 03/04/2018 | One-third over 3 years | ||||
| Girish K. Saligram | 50,714 | 8/22/2017(a) | One-third over 3 years | |||
| 12,958 | 03/04/2018 | One-third over 3 years | ||||
| Roger George | 8,446 | 12/15/2017(a) | One-third over 3 years | |||
| 9,719 | 03/04/2018 | One-third over 3 years | ||||
| (5) | Amounts shown are the unearned and unvested number of 2017 performance-based units at target. One-third of the performance-based units awarded in 2017 under our 2015 Plan vest one-third per year on each anniversary of the grant date. |
| Option Awards | Stock Awards | |||||||||||
| Name | Number of Shares Acquired on Exercise (#)(1) | Value Realized on Exercise ($)(2) | Number of Shares and Units Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2)(4) | ||||||||
| Andrew J. Way | — | — | 170,353 | 5,348,149 | ||||||||
| David A. Barta | — | — | 16,415 | 512,476 | ||||||||
| Girish K. Saligram | — | — | 25,358 | 645,108 | ||||||||
| Roger George | — | — | 4,223 | 123,903 | ||||||||
| Christopher T. Werner(3) | 5,418 | 84,087 | 31,790 | 938,479 | ||||||||
| (1) | Includes restricted stock that vested, and stock options exercised by Mr. Werner during 2017. |
| (2) | The value realized for vested awards was determined by multiplying the fair market value of the restricted stock (market closing price of Exterran’s common stock on the vesting date) by the number of shares or awards that vested. Shares vested on various dates throughout the year; therefore, the value listed represents the aggregate value of all shares that vested for each NEO in 2017. The amounts in this column are calculated by multiplying the number of shares acquired on exercise by the difference between the fair market value of our Common Stock on the date of exercise and the exercise price of the stock options. |
| (3) | Stock awards include March 4, 2017 vesting, and March 10, 2017 acceleration of equity vesting within the 12 months of separation date for Mr. Werner. |
| (4) | The value realized on vesting includes the cash-settlement of 2016 performance-based units. |
| Name | Executive Contributions in Last Fiscal Year ($)(1) | Company Contributions in Last Fiscal Year ($)(2) | Aggregate Earnings (Losses) in Last Fiscal Year($) | Aggregate Withdrawals/ Distributions ($)(3) | Aggregate Balance at Last Fiscal Year End($) | ||||||||||
| Andrew J. Way | — | — | — | — | — | ||||||||||
| David A. Barta | — | — | — | — | — | ||||||||||
| Girish K. Saligram | 1,053,500 | — | 55,139 | — | 1,438,799 | ||||||||||
| Roger George | 483,000 | — | — | — | 483,000 | ||||||||||
| Christopher T. Werner | — | — | 732 | 10,255 | — | ||||||||||
| (1) | All contribution amounts for the last fiscal year reported in this table are also included in the “Salary” and “Non-Equity Incentive Plan Compensation” amounts reported in the “2017 Summary Compensation Table.” |
| (2) | The Company suspended its contributions to the Deferred Compensation Plan beginning in 2017. |
| (3) | Distribution was made 6 months following Mr. Werner’s separation date due to 409A regulations. |
| Name | Voluntary Resignation ($)(10) | Retirement ($)(10) | Termination for Cause ($)(10) | Termination Due to Death or Disability ($)(1) | Termination Without Cause or Resignation with Good Reason ($)(2)(3) | Change of Control Without a Qualifying Termination ($) | Change of Control with a Qualifying Termination ($)(4) | |||||||
| Andrew J. Way | Cash Severance | — | — | — | — | 2,475,000 | 5,700,000 | |||||||
| Stock Option(5) | — | — | — | — | — | — | ||||||||
Restricted Stock(6) | — | — | — | 9,664,845 | 5,916,033 | 9,664,845 | ||||||||
| Performance-Based Awards(7) | — | — | — | 2,087,868 | 695,956 | 2,087,868 | ||||||||
| Other Benefits(8) | — | — | — | — | 12,800 | 44,500 | ||||||||
| Total Pre-Tax Benefit | — | — | — | 11,752,713 | 9,099,789 | NA | 17,497,213 | |||||||
| Name | Voluntary Resignation ($)(10) | Retirement ($)(10) | Termination for Cause ($)(10) | Termination Due to Death or Disability ($)(1) | Termination Without Cause or Resignation with Good Reason ($)(2)(3) | Change of Control Without a Qualifying Termination ($) | Change of Control with a Qualifying Termination ($)(4) | |||||||
| David A. Barta | Cash Severance | — | — | — | — | 1,087,500 | 1,848,750 | |||||||
| Stock Option(5) | — | — | — | — | — | — | ||||||||
Restricted Stock(6) | — | — | — | 1,439,575 | 651,908 | 1,439,575 | ||||||||
| Performance-Based Awards(7) | — | — | — | 407,400 | 135,821 | 407,400 | ||||||||
| Other Benefits(9) | — | — | — | — | 14,021 | 14,021 | ||||||||
| Total Pre-Tax Benefit | — | — | — | 1,846,975 | 1,889,250 | NA | 3,709,746 | |||||||
| Name | Voluntary Resignation ($)(10) | Retirement ($)(10) | Termination for Cause ($)(10) | Termination Due to Death or Disability ($)(1) | Termination Without Cause or Resignation with Good Reason ($)(2)(3) | Change of Control Without a Qualifying Termination ($) | Change of Control with a Qualifying Termination ($)(4) | |||||||
| Girish K. Saligram | Cash Severance | — | — | — | — | 1,200,000 | 2,050,000 | |||||||
| Stock Option(5) | — | — | — | — | — | — | ||||||||
Restricted Stock(6) | — | — | — | 2,001,848 | 933,045 | 2,001,848 | ||||||||
| Performance-Based Awards(7) | — | — | — | 407,400 | 135,821 | 407,400 | ||||||||
| Other Benefits(9) | — | — | — | — | 19,200 | 19,200 | ||||||||
| Total Pre—Tax Benefit | — | — | — | 2,409,248 | 2,288,066 | NA | 4,478,448 | |||||||
| Name | Voluntary Resignation ($)(10) | Retirement ($)(10) | Termination for Cause ($)(10) | Termination Due to Death or Disability ($)(1) | Termination Without Cause or Resignation with Good Reason ($)(2)(3) | Change of Control Without a Qualifying Termination ($) | Change of Control with a Qualifying Termination ($)(4) | |||||||
| Roger George | Cash Severance | — | — | — | — | 960,000 | 1,640,000 | |||||||
| Stock Option(5) | — | — | — | — | — | — | ||||||||
Restricted Stock(6) | — | — | — | 571,108 | 234,637 | 571,108 | ||||||||
| Performance-Based Awards(7) | — | — | — | 305,565 | 101,866 | 305,565 | ||||||||
| Other Benefits(9) | — | — | — | — | 21,810 | 21,810 | ||||||||
| Total Pre-Tax Benefit | — | — | — | 876,673 | 1,318,313 | NA | 2,538,483 | |||||||
| Name | Voluntary Resignation ($)(10) | Retirement ($)(10) | Termination for Cause ($)(10) | Termination Due to Death or Disability ($)(1) | Termination Without Cause or Resignation with Good Reason ($)(2)(3) | Change of Control Without a Qualifying Termination ($) | Change of Control with a Qualifying Termination ($)(4) | |||||||
| Christopher T. Werner(11) | Cash Severance | — | — | — | — | 514,027 | — | |||||||
Stock Option(5) | — | — | — | — | — | — | ||||||||
| Restricted Stock(6) | — | — | — | — | 403,541 | — | ||||||||
| Performance-Based Awards(7) | — | — | — | — | 29,719 | — | ||||||||
| Other Benefits(8) | — | — | — | — | 10,996 | — | ||||||||
| Total Pre-Tax Benefit | — | — | — | — | 958,283 | NA | — | |||||||
| (1) | “Disability” is defined in our 2015 Plan for awards granted since November 3, 2015. |
| (2) | “Cause” and “Good Reason” are defined in the severance benefit and change of control agreements. |
| (3) | If the executive had been terminated without Cause or resigned with Good Reason on December 31, 2017, under his severance benefit agreement his cash severance would consist of (i) the sum of his base salary and his target annual incentive bonus (calculated as a percentage of his annual base salary for 2017), plus (ii) his target annual incentive bonus (calculated as a percentage of his annual base salary for 2017). |
| (4) | If the executive had been subject to a change of control followed by a qualifying termination (as defined in his change of control agreement) on December 31, 2017, under his change of control agreement, his cash severance would consist of (i) two times (three times for Mr. Way) the sum of his base salary and his target annual incentive bonus (calculated as a percentage of his annual base salary for 2017), plus (ii) his target annual incentive bonus (calculated as a percentage of his annual base salary for 2017). |
| (5) | No executives have stock options (vested or unvested) at this time. |
| (6) | Represents the value of the accelerated vesting of the executive’s unvested Exterran restricted stock, based on the December 29, 2017 market closing price. |
| (7) | Represents the value of the accelerated vesting of the executive’s unvested Exterran performance-based awards, based on the December 29, 2017 market closing price. |
| (8) | Represents each executive’s right to the payment, as applicable, of (i) continued coverage through COBRA benefit premiums under our medical benefit plans for him and his eligible dependents for up to one-year in the event of a termination without Cause or voluntary resignation for Good Reason, or (ii) medical benefit premiums and Exterran contributions under the 401(k) Plan and deferred compensation plan, if any, for a two-year period in the event of a change of control followed by a Qualifying Termination. |
| (9) | Represents each executive’s right to an amount equal to eighteen (18) months of (i) premium payments for continuation coverage pursuant to Section 4980B of the Code for the executive and executive’s eligible dependents following the Separation Date minus (ii) the cost to the executive of premium payments for healthcare coverage for the executive and executive’s eligible dependents during the executive’s employment with the Company (calculated based on the executive’s elections as in effect on the Date of Termination). |
| (10) | No payments are made to executives under these agreements for voluntary resignations, terminations for cause. |
| (11) | Reflects amounts paid to Mr. Werner pursuant to his Severance Benefit Agreement upon termination of his employment in March 2017. |
| CEO PAY RATIO |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS |
| COMPENSATION RELATED PROPOSAL |
| AUDIT MATTERS |
| Types of Fees | 2017 | 2016 | ||||||
| Audit fees(a) | $ | 3,556 | $ | 3,163 | ||||
| Audit-related fees(b) | — | 2,145 | ||||||
| Tax fees(c) | 21 | 38 | ||||||
| Total fees | $ | 3,577 | $ | 5,346 | ||||
| (a) | Audit fees include fees billed by our independent registered public accounting firm related to audits and reviews of financial statements we are required to file with the SEC, audits of internal control over financial reporting, statutory audits of certain of our subsidiaries’ financial statements as required under local regulations, and other services including issuance of comfort letters and assistance with and review of documents filed with the SEC. |
| (b) | Audit-related fees for 2016 include fees billed by our independent registered public accounting firm for audit work and reviews of financial statements undertaken in connection with our Restatement of certain of our historical financial results as described in Note 14 to the consolidated and combined financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017. |
| (c) | Tax fees include fees billed by our independent registered public accounting firm primarily related to tax compliance and consulting services. |
| CHARTER AMENDMENT |
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewedPROPOSAL 4 - Approval of Amendment to our Amended and discussed the Compensation Discussion and Analysis required by Item 402(b)Restated Certificate of Regulation S-K with management. Based on such review and discussions, the Compensation Committee recommendedIncorporation to Exterran’sEliminate Super-Majority Vote Required for Stockholders to Amend Bylaws
The Compensation Committeelimitation of the powers conferred by the GCL, the Board of Directors
John P. Ryan, Chair
William M. Goodyear
Christopher T. Seaver
Richard R. Stewart
The following provides information regarding our executive officers as of March 2, 2017.February 28, 2018. Information concerning the business experience of Messrs.Mr. Way and Sotir is provided under“— Nominees for Director”Our 2018 Director Nominees” beginning on page 58 of this Proxy Statement.
| Executive Officer | Age | Position | ||
| Andrew J. Way | President, Chief Executive Officer and Director | |||
| David A. Barta | Senior Vice President and Chief Financial Officer | |||
| Roger George | Senior Vice President, Global Engineering and Product Lines | |||
| Girish K. Saligram | Senior Vice President, Global Services | |||
| EXTERRAN | SHARE OWNERSHIP |
| Name and Address of Beneficial Owner | Number of | Percent of Class(1) | |||
BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | 3,801,906 | (2) | 11% | ||
MTP Energy Fund Ltd. 1603 Orrington Avenue, 13th Floor Evanston, Illinois 60201 | 3,266,488 | (3) | 9% | ||
Chai Trust Company LLC 2 North Riverside Plaza, Suite 600 Chicago, Illinois 60606 | 3,213,442 | (4) | 9% | ||
FMR LLC 245 Summer Street Boston, Massachusetts 02210 | 3,082,074 | (5) | 9% | ||
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 2,859,972 | (6) | 8% | ||
Dimensional Fund Advisors, L.P. Palisades West, Building One 6300 Bee Cave Road Austin, Texas 78746 | 2,877,035 | (7) | 8% | ||
Carlson Capital, L.P. 2100 McKinney Avenue, Suite 1800 Dallas, Texas 75201 | 1,816,215 | (8) | 5% |
| Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percent of Class(1) | ||||||
| BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | 4,909,339 | (2) | 13.7 | % | ||||
| The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 3,443,451 | (3) | 9.6 | % | ||||
| Chai Trust Company LLC 2 North Riverside Plaza, Suite 600 Chicago, Illinois 60606 | 3,213,442 | (4) | 9.0 | % | ||||
| Dimensional Fund Advisors, L.P. Palisades West, Building One 6300 Bee Cave Road Austin, Texas 78746 | 3,028,530 | (5) | 8.5 | % | ||||
| (1) | Reflects shares of common stock beneficially owned as a percentage of |
| February 28, 2018 |
| (2) | Based solely on a review of the Schedule 13G filed by BlackRock, Inc. on January |
| (3) | Based solely on a review of the Schedule 13G filed by |
| (4) | Based solely on a review of the Schedule 13D filed by Chai Trust Company LLC (“Chai Trust”) and certain other related reporting persons on March 10, 2016. Chai Trust is the managing member of |
| (5) |
| Based solely on a review of the Schedule 13G filed by Dimensional Fund Advisors LP (“Dimensional”) on February 9, | |
Shares Restricted Right to Indirect Total Percent 2016 Cash Target ($) 2016 Restricted Stock Awards (Target) ($) 2016 (Target) ($) 2016 LTI Awards Total ($) Non-Equity Incentive Plan Compensation ($)(2) All Other Compensation ($)(3) 2016 2015(4) 750,000 369,231 — 2,000,000 3,300,000 3,999,996 — — — 750,000 9,775 9,087 4,059,775 7,128,314 2016 2015 2014 350,000 350,000 334,718 — 132,000(7) — 500,000 767,983 632,646 — — — — 170,000 425,000 13,519 42,909 35,155 863,519 1,462,892 1,427,519 2016 2015 2014 300,000 298,751 285,717 75,000(8) 75,000(8) — 400,000 399,987 232,626 — — — — 91,500 133,258 11,398 19,310 20,510 786,398 884,548 672,111 2016 2015 2014 420,000 420,000 113,077 — — — 800,000 1,199,995(9) 499,974 — — — 213,000 100,000 12,578 35,723 5,151 1,232,578 1,868,718 718,202 2016 2015 2014 115,439 420,000 407,308 — 600,000(10) — — 1,400,005 511,980 — — 279,995 — 110,000 600,000 804,016 97,150 64,447 919,455 2,627,155 1,863,730 Name 401(k) Plan Tax DERs / Dividends Other Total ($) Name Number of Securities Underlying Unexercised Options (#) Exercisable (1) Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#)(3) Market Value of Shares or Units of Stock That Have Not Vested ($)(4) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Yet Vested (#)(5) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested ($)(4) Value Realized on Exercise ($)(2) Value Realized on Vesting ($)(2) 16, 2018. Any stockholder-recommended director nominee will be evaluated in the context of our director qualification standards and the existing size and composition of the Board. We will provide to any stockholder or potential investor, without charge, upon written or oral request, by first class mail or other equally prompt means, a copy of our Annual Report on Form 10-K for the year ended December 31, 2017. Please direct any such requests to the attention of Investor Relations, Exterran Corporation, following address: American Stock Transfer, Shareholder Services Department, 6201 15th Avenue, Brooklyn, New York, 11219, or you may call (800) 937-5449 or email info@ASTfinancial.com. If you are a stockholder who receives multiple copies of our proxy materials, you may request householding by contacting us in the same manner and requesting a householding consent form.55 EXTERRAN CORPORATIONSecurity Ownership of ManagementThe following table provides information, as of March 2, 2017,February 28, 2018, regarding the beneficial ownership of our common stock by each of our directors, each of our 2016 Named Executive Officers2017 NEOs (as identified beginning on page 21of21 of this Proxy Statement), and all of our current directors and executive officers as a group. Unless otherwise noted in the footnotes to the table, the persons named in the table have sole voting and investment power with respect to all shares shown as beneficially owned by them. The address for each executive officer and director listed below is c/o Exterran Corporation, 4444 Brittmoore Rd, Houston, Texas 77041.Name of Beneficial Owner
Owned
Directly
Stock(1)
Acquire
Stock(2)
Ownership
Ownership
of ClassNon-Employee Directors * William M. Goodyear 16,423 — — — 16,243 * James C. Gouin 8,676 — — — 8,676 * John P. Ryan 17,207 — — — 17,207 * Christopher T. Seaver 46,714 — — — 46,714 * Mark R. Sotir(3) 22,228 — — — 22,228 * Richard R. Stewart 8,800 — — — 8,800 * Ieda Gomes Yell(4) 11,829 — — — 11,829 * Named Executive Officers * Andrew J. Way 50,357 280,226 — — 330,583 * David A. Barta 49,245 — — 49,245 * Jon C. Biro(5)(6) 42,271 — — — 42,271 * Steven W. Muck(6) 17,629 37,780 — — 55,409 * Girish K. Saligram 400 76,072 — — 76,472 * Daniel K. Schlanger(5)(6) 59,132 — — — 59,132 * Christopher T. Werner(6) 6,032 22,163 — — 28,195 * All directors and executive
officers as a group (15 persons) 2.2% Name of Beneficial Owner SharesOwnedDirectly RestrictedStock(1) Right toAcquireStock(2) IndirectOwnership TotalOwnership Percentof ClassNon-Employee Directors William M. Goodyear 24,043 — — — 24,043 * James C. Gouin 10,928 — — — 10,928 * John P. Ryan(4) 24,239 — — — 24,239 * Christopher T. Seaver 50,905 — — — 50,905 * Mark R. Sotir(3) 29,042 — — — 29,042 * Richard R. Stewart 12,445 — — — 12,445 * Ieda Gomes Yell(4) 17,482 — — — 17,482 * Named Executive Officers Andrew J. Way 121,382 307,406 — — 428,788 * David A. Barta 11,925 45,788 — — 57,713 * Girish K. Saligram 3,707 63,672 — — 67,379 * Roger George 3,068 18,165 — — 21,233 * Christopher T. Werner(5) 6,032 22,163 — — 28,195 * All directors and executive officers as a group (12 persons) 2.2 % * Less than 1.2%*Less than 1%(1) Includes unvested restricted stock awards which generally vest ratably on each anniversary date of grant over a three-year period from the original date of grant. Officers and directors have voting power and, once vested, dispositive power.(2) Includes shares that can be acquired immediately or within 60 days of March 2, 20172018 through the exercise of stock options.19 EXTERRAN CORPORATION(3) Mr. Sotir is Co-President of Equity Group Investments, a division of Chai Trust. Chai Trust is the beneficial owner of approximately 3.2 million shares of our common stock as of March 10, 2016; however, Mr. Sotir disclaims beneficial ownership of such shares. (4) Includes 2,313 phantom units granted under the Amended and Restated Directors’ Stock and Deferral Plan.Plan to Mr. Ryan and Ms. Gomes Yell. (5) Information based on Company records and last filed Statement of Changes of Beneficial Ownership (Form 4). (6)Former Named Executive Officer during calendar year 2016.Section 16(a) Beneficial Ownership Reporting ComplianceUnder Section 16(a) of the Exchange Act, directors, executive officers and beneficial owners of 10% or more of our common stock (“Reporting Persons”) are required to report to the SEC on a timely basis the initiation of their status as a Reporting Person and any changes with respect to their beneficial ownership of our common stock. Based solely on a review of Forms 3, 4 and 5 (and any amendments thereto) furnished to us, we have concluded that no Reporting Persons were delinquent in 20162017 with respect to their reporting obligations, as set forth in Section 16(a) of the Exchange Act.2017 PROXY STATEMENT 202018 PROXY STATEMENT 56COMPENSATION DISCUSSION AND ANALYSISThis Compensation Discussion and Analysis (“CD&A”) provides information about the compensation philosophy and programs and actual compensation decisions for 2016 related to our principal executive officer, our current and former principal financial officers, our three other most highly compensated executive officers, and a former executive officer who would have been one of the three most highly compensated executive officers except he resigned in March 2016. We refer to this group collectively as our “Named Executive Officers” or “NEOs” throughout this discussion. For 2016, our Named Executive Officers are: Andrew J. Way, our President and Chief Executive Officer; David A. Barta, our Senior Vice President and Chief Financial Officer; Girish K. Saligram, our Senior Vice President, Global Services; Steven W. Muck, our former Senior Vice President, Engineering and Product Lines; Christopher T. Werner, our former Senior Vice President, Global Operations; Jon C. Biro, our former Senior Vice President and Chief Financial Officer; and Daniel K. Schlanger, our former Senior Vice President, Global Products. Our former NEOs with the exception of Mr. Schlanger remained employed with us throughout 2016 to support with the leadership transition.Our executive compensation program is designed to align executive officers’ pay with individual and company performance in order to achieve growth, profitability and stockholder returns, and to attract and retain talented executives who are critical to short- and long-term success. Important features of our executive compensation program and practices are provided in the following table:What We Do●We do maintain compensation plans designed to align our executives’ compensation with long-term stockholder value●We do base our executives’ incentive awards primarily on quantitative metrics●We do deliver one-half (50%) of our executives’ long-term incentive compensation in the form of performance-based shares●We do retain an independent compensation consultant to advise the Compensation Committee●We do conduct an annual review of our compensation strategy●We do employ our executives at-will●We do maintain double-trigger provisions under our change-of-control agreements●We do maintain stock ownership policies for our executives and directorsWhat We Don’t Do●We don’t allow our executives to hedge or sell short Company shares●We don’t allow our executives to pledge Company shares●We don’t provide for tax gross-ups in our change-of-control agreements●We don’t provide cash payments for tax equalization●We don’t provide for liberal share counting in our equity plan●We don’t allow for option repricing under our equity plan●We don’t provide any perquisites for our current executivesOUR STRATEGYExterran was spun-off as a separate, publicly-traded corporation (the “Spin-Off”) from Archrock, Inc., formerly known as Exterran Holdings, Inc. (“Archrock”), effective November 3, 2015. Our first full year of operation as a separate publicly-traded company was 2016.We are a market leader in the provision of midstream infrastructure solutions, including compression, production, and processing products and services that support the production and transportation of oil and natural gas throughout the world. We provide these solutions to a global customer base consisting of companies engaged in all aspects of the oil and natural gas industry, including large integrated oil and natural gas companies, national oil and natural gas companies, independent oil and natural gas producers, and oil and natural gas processors, gatherers and pipeline operators. We operate in four primary business lines: contract operations, aftermarket services, oil and gas product sales and Belleli EPC product sales.21 EXTERRAN CORPORATIONADDITIONAL INFORMATION To successfully compete on a global scale, we recruit, attract and retain executives who have experience and knowledge of leading global energy business operations. This skill set includes, but is not limited to, developing and implementing strategies to gain market share and generate profitable returns across a wide portfolio of product and service offerings in different countries; working knowledge of the needs of national oil companies; experience managing and navigating complex national and local laws, rules and regulations as it pertains to conducting business in different countries; and attracting, leading, and motivating local leadership who can implement corporate-level strategies, controls, processes and procedures.In 2016, as part of our strategy to emphasize and strengthen our position on a global scale, we made changes in the Company’s management team across the organization, including the employment of David A. Barta as our Senior Vice President and Chief Financial Officer; Girish R. Saligram as our Senior Vice President, Global Services; and Roger George as our Senior Vice President, Global Engineering and Product Lines to replace Steven W. Muck, who resigned from this positon and separated from the Company in March 2017. Other key individuals have been added in strategic areas across the organization, including Finance, Global Health, Safety and Environmental (“HSE”), and Aftermarket Services.Additionally, following the Spin-Off we appointed a corporate officer reporting to the Chief Executive Officer to oversee the non-core Belleli operations with the goal of divesting the Belleli Energy Critical Process Equipment S.r.l. (“Belleli CPE”), and implementing a plan to exit all other non-core business lines of our subsidiary Belleli Energy S.r.l. (“Belleli EPC”; subsequently renamed Exterran Italy S.r.l.). In August 2016, we completed the sale of Belleli CPE to Tosto S.r.l.OUR 2016 PERFORMANCE2016 was a challenging year for the industry, with significantly curtailed customer spending in the face of a multi-year decline in oil and gas prices. The year started with international oil prices dropping to a low of $26 per barrel, and natural gas production in the U.S. declining due to low levels of drilling activity. U.S. exploration and production companies continued to focus on reducing costs, preserving cash and repaying debt, and limited investment to basins where high returns for production growth could be quickly maximized. Internationally, many national oil companies were focused on lowering internal costs and seeking alternative sources of capital to develop their projects. These factors led to a sharp reduction in capital spending and project starts across the global energy industry, resulting in less demand and lower pricing for services, equipment and infrastructure across all subsectors of the energy service and equipment industry. We navigated the Company through this severe industry downturn while managing a financial restatement (which is described below).To partially offset the reduced revenue and profit opportunities resulting from this challenging market environment, we focused on maximizing cash flow and prioritizing debt reduction. To accomplish this, we reduced working capital through improved planning, lowering inventory levels, increasing supply chain efficiencies and improving visibility to cash collections. We also reduced overall costs through headcount reductions, idling or closing non-strategic manufacturing facilities, and lowering expenses in several non-compensation cost categories. Merit increases to base pay were suspended and participation in both our short-term and long-term incentive plans was reduced or eliminated. We also changed our compensation plans to include metrics that would support cash flow and debt reduction.Financial and Operational HighlightsSeveral positive outcomes came from our efforts. We increased net cash provided by continuing operating activities by $135 million to $266 million in 2016 as compared with $131 million in 2015, as working capital was reduced by $231 million from December 31, 2015 levels. We utilized this cash to reduce our debt levels in 2016 by $177 million. Long-term debt at December 31, 2016 was $349 million, a 34% reduction from long-term debt of $526 million at December 31, 2015.Selling, general and administrative expense (“SG&A”) in 2016 was reduced by 25% from 2015 levels. Our fourth quarter 2016 SG&A expense of $42 million was 21% lower than fourth quarter 2015 SG&A expense of $53 million. We enter 2017 as a leaner company.From an operational perspective, we maintained a gross margin percentage in the contract operations segment above management’s stated goal of 60% by recording a gross margin percentage of 63% for the year. This was accomplished by changing the scope and scale of certain projects despite pricing discounts requested by customers due to market conditions. Despite the difficult market environment, orders for our oil and gas products increased throughout the year, culminating in oil and gas product sales bookings of $231 million for fourth quarter 2016, which marked the third consecutive quarter of increased bookings since the first quarter 2016 low of $20 million. We evaluate the performance of our segments based on gross margin, which is defined as revenue less cost of sales (excluding depreciation and amortization expense).In an effort to focus on our core oil and gas business, we began optimizing our product portfolio by completing the sale of Belleli CPE during the third quarter of 2016, and committing to a plan to exit the non-core Belleli EPC product sales business.2017 PROXY STATEMENT 22Compensation HighlightsIn response to the difficult operating environment expected for 2016, the Compensation Committee and the Company made a number of changes to the executive compensation plans and practices to help control costs and manage through the market downturn. A summary of these changes, which are more specifically described in this CD&A, is as follows:●Our executives did not receive any pay increases in 2016 relative to their compensation at the time of the Spin-Off in November 2015;●Our 2016 Short-term Incentive Program (“2016 STI Program”) was suspended for existing Named Executive Officers;●The performance-based component of our 2016 Long-term Incentive (“LTI”) Awards was increased from 20% to 50% (“Performance Awards”); and●The financial component of our LTI Awards was changed from EBITDA, as adjusted, to operating cash flow consistent with our 2016 focus on cash flow and debt reduction.In response to market volatility the performance period for the 2016 Performance Awards was one year. The goal was to use the long-term component of the executive pay program to focus and reward the executives for meeting the near-term business objectives of the Company during a challenging year. As a result of the performance discussed above, the at-risk portion of the LTI Awards was achieved at 135% of target. See “Payout of 2016 Performance Awards”below for more details.RestatementManagement accomplished our 2016 initiatives while also working toward the completion of a financial restatement (the “Restatement”). Subsequent to the filing of our Annual Report on Form 10-K for the year ended December 31, 2015, originally filed with the SEC on February 26, 2016 (“Original Filing”), senior management identified errors relating to the application of percentage-of-completion accounting principles to certain Belleli EPC projects. Management promptly reported the matter to our Audit Committee, which immediately retained counsel, who in turn retained a forensic accounting firm, to initiate an internal investigation. As previously disclosed in the Current Report on Form 8-K filed with the SEC on April 26, 2016, Exterran’s management and the Audit Committee determined, based on the preliminary results of the internal investigation, that the financial statements and related report of independent registered public accounting firm within the Original Filing should no longer be relied upon as a result of errors and possible irregularities relating to the accounting for certain Belleli EPC projects.Our Restatement was completed on January 4, 2017 when we filed our amended Annual Report on Form 10-K/A (“Form 10-K/A”) for the fiscal year ended December 31, 2015 and our Quarterly Reports on Form 10-Q for the periods ending March 31, 2016, June 30, 2016 and September 30, 2016 (together, the “2016 Form 10Qs”). The Restatement and its effects have been set forth in our Form 10-K/A and 2016 Form 10-Qs. In addition, the remediation actions the Company has taken and will continue to take, including those to strengthen and enhance our control culture and environment, are set forth in Item 9A of the Form 10-K/A.2017 Compensation DecisionsIn February 2017, the Compensation Committee approved 2017 compensation for our Named Executive Officers. Other than Mr. Way, our anticipated Named Executive Officers for 2017 were hired by the Company during the second half of 2016, and therefore base salaries for 2017 will remain unchanged. The structure and target levels of the 2017 STI and LTI programs are substantially similar to the Company’s 2016 programs (had the 2016 STI program not been suspended) and are designed to focus executives on Company EBITDA, as adjusted, working capital, growth and HSSE, as well as each executive’s individual performance. The 2017 LTI awards will be 50% performance based for all of our Named Executive Officers other than Mr. Way, whose LTI award will be approximately 55% performance based.Compensation Philosophy and ObjectivesOur executive compensation program reflects the Company’s commitment to align pay with individual and Company performance, while allowing the Company to attract and retain highly qualified executives. Our program is designed to motivate our executives to achieve the Company’s business objectives and create long-term value for our stockholders.The primary objectives of our executive compensation program are to:●Pay competitively — We believe that to attract, retain and motivate an effective management team with the level of expertise and experience needed to achieve consistent growth, profitability and returns for stockholders, total compensation should be competitive with that of comparably-sized companies across a variety of industries and within the midstream and oilfield services sector, as further described below in “How We Determine Executive Compensation.”23 EXTERRAN CORPORATION●Pay for performance — Our program’s emphasis on performance-based, variable compensation is an important component of our overall compensation philosophy. Incentive awards based on annual performance combined with time-based equity awards that vest over several years balance short-term and long-term business objectives.●Align management’s interests with stockholders’ interests —Our program’s emphasis on equity-based compensation and ownership encourages executives to act strategically to drive sustainable long-term performance and enhance long-term stockholder value.HOW WE DETERMINE EXECUTIVE COMPENSATIONOur Compensation Committee is responsible for establishing and overseeing compensation programs for our Named Executive Officers that are consistent with our compensation philosophy. In carrying out this role, our Compensation Committee considered the factors below:●the Company’s overall results as well as each executive’s impact on Company performance;●each executive’s relative scope of responsibility;●each executive’s individual performance, demonstrated leadership and potential;●current and past total compensation, including a review of base salary, short-term incentive pay and the value of LTI Awards received;●peer group data, and information and analysis provided by the Compensation Committee’s independent compensation consultant, as further detailed below;●internal pay equity considerations;●stockholder value creation; and●any other factors that the Compensation Committee deems relevant.No specific formula is used to determine the weight of any factor; rather, compensation is established based on the Compensation Committee’s assessment of all relevant information. Using these factors, all elements of compensation, including base salaries and target percentages for short-term and long-term incentive compensation, are reviewed annually by the Compensation Committee.Role of ManagementOur Chief Executive Officer recommends to the Compensation Committee the compensation package for our executive officers other than himself. Each year, the Chief Executive Officer makes recommendations regarding salary adjustments, targets for annual cash incentives and LTI Awards. The Chief Executive Officer considers the factors described above, including his subjective analysis of their performance. The Compensation Committee makes the final determinations regarding executive compensation in light of the Chief Executive Officer’s recommendations and the Committee’s assessment on the factors described above. Compensation decisions for our Chief Executive Officer are made by our Compensation Committee.The most significant aspects of the Chief Executive Officer’s role in the compensation-setting process for 2016 were:●recommending executive officers’ compensation programs, policies, incentive opportunities and compensation levels that are consistent with our business strategy;●recommending corporate performance goals on which performance-based compensation will be based;●assisting in the evaluation of, or evaluating, executive performance; and●providing relevant materials for Compensation Committee review and consideration.Role of Independent ConsultantSince November 2015, the Compensation Committee has engaged Semler Brossy Consulting Group (“Semler Brossy”), as its independent executive compensation consultant to provide information and advise the Committee and management on matters relating to executive compensation and to assist them in developing and implementing our executive compensation programs. In 2016, Semler Brossy provided the following services:●analysis and recommendations on the 2016 peer group, as described below;●review and assistance as requested by the Company in development of new executive officer compensation packages;●provision of information related to trends, new rules and regulations that may impact executive and director compensation practices and administration; and●input and advice regarding the incentive compensation plan design for 2016.2017 PROXY STATEMENT 24The Compensation Committee reviewed the independence of Semler Brossy, employing the independence factors specified in the Corporate Governance Standards of the NYSE. Based on this assessment, the Compensation Committee determined that Semler Brossy was independent from the Company’s management and free from any relationships that could raise any conflicts of interest or similar concerns.Peer Group BenchmarkingCompensation levels for 2016, as well as benchmarking for LTI Awards and STI Program targets reflected in our executives’ employment letters entered into in November 2015, were based upon the peer group established by Exterran Holdings prior to the Spin-Off. The 2015 peer group included:Basic Energy Services, Inc.Key Energy Services, Inc.Patterson-UTI Energy, Inc.Cameron International CorporationMcDermott International, Inc.RPC, Inc.Dresser-Rand Group Inc.Oceaneering International, Inc.Superior Energy Services, Inc.Flowserve CorporationOil States International, Inc.Willbros Group, Inc.In 2016, the Compensation Committee engaged Semler Brossy to provide Exterran with an analysis of potential peer companies most similar to Exterran based on both financial metrics and business characteristics, including global footprint. Semler Brossy considered four metrics in its analysis: (1) public companies in selected energy equipment and services, machinery and construction and engineering industries; (2) business fit; (3) meaningful percentage of revenue generated from international sales; and (4) peer company financial size, based on annual revenues ranging from approximately $0.5 billion to $4.0 billion.Based upon a review of the data provided by Semler Brossy, the Compensation Committee approved the following 2016 peer group, which reflects a mix of energy equipment, well-servicing companies and industrial machinery companies with an oil and gas component:Archrock, Inc. Colfax Corp. Dril-Quip, Inc. Enerflex Ltd. Flowserve Corporation Forum Technologies ITT, Inc. McDermott International Oceaneering International Oil States International RPC, Inc. ShawCor Ltd. SPX Flow, Inc. Superior Energy Services TETRA Technologies, Inc.The Compensation Committee considered 2016 peer group data in determining executive compensation design for 2017.Consideration of Previous “Say on Pay” VotingOn March 17, 2016, we filed with the SEC a proxy statement for our 2016 annual meeting (“2016 Annual Meeting”). One of the proposals to be considered by our stockholders at the 2016 Annual Meeting was a vote, on an advisory basis, to approve the compensation of our Named Executive Officers for 2015, often referred to as a “say on pay.” As a result of the Restatement, on April 26, 2016 we filed a Current Report on Form 8-K with the SEC announcing the postponement of the 2016 Annual Meeting. Accordingly, this Annual Meeting will be the first opportunity for our stockholders to consider a “say on pay” vote on our executive compensation. See “Proposal 3 – Advisory Vote to Approve the Compensation of our Named Executive Officers.”25 EXTERRAN CORPORATIONElements of Our Executive Compensation ProgramIn order to achieve the objectives of our executive compensation program, we have developed a balanced compensation package which includes the following key elements and objectives of each:ElementObjectiveBase SalaryAttracts and retains talented executives, recognizes individual roles and responsibilities and provides stable income; targeted to be at the medianAnnual performance-based incentive compensation (“STI”) – suspended during 2016Promotes achievement of short-term performance objectives and rewards executives for their contributions toward achieving those objectivesLong-term equity incentive compensation (“LTI Awards”)Aligns executives’ interests with stockholders’ interests, emphasizes long-term financial and operational performance, and helps retain key executivesRetirement savings, and health and welfare benefitsProvides retirement income and protection against the financial hardship that can result from illness, disability or death consistent with programs that are generally available to U.S. employeesSeverance benefit and change-of-control arrangementsAids in attracting and retaining executive talent, particularly during any potential transitionThe charts below reflect the 2016 mix of compensation elements based on the executive compensation program design, although STI was suspended in 2016 for our Chief Executive Officer (“CEO”) and Named Executive Officers. Our goal is to enhance the link between pay and performance and align our executive compensation program with long-term stockholder interests. The mix for the CEO and the NEOs is more heavily weighted towards compensation that is at-risk and tied to Company performance. 
CEO Compensation MixBase: Annual Incentive: Equity Incentive:16% 16% 68% Other NEOs Compensation MixBase: Annual Incentive: Equity Incentive: 29% 21% 50%BASE SALARYThe initial base salary level for each of our Named Executive Officers was set forth in his employment letter. Due to unprecedented market conditions, the Compensation Committee determined not to make any increases to Named Executive Officers’ base salaries in 2016.2017 PROXY STATEMENT 26Generally, our base pay structure is competitive and allows us to attract new executive talent to the Company. The 2016 annualized base salaries for our Named Executive Officers were:Executive OfficerTitle2016 BaseSalaryAndrew J. WayPresident and Chief Executive Officer$750,000David A. Barta (1)Senior Vice President and Chief Financial Officer$435,000Girish K. Saligram (2)Senior Vice President, Global Services$500,000Steven W. MuckFormer Senior Vice President, Engineering and Product Lines$350,000Christopher T. WernerFormer Senior Vice President, Global Operations$300,000Jon C. BiroFormer Senior Vice President and Chief Financial Officer$420,000Daniel K. Schlanger(3)Former Senior Vice President, Global Products$420,000(1)Mr. Barta was named as our Senior Vice President and Chief Financial Officer Designate effective November 7, 2016 and became our Senior Vice President and Chief Financial Officer effective December 29, 2016. In connection with Mr. Barta’s commencement of employment in November 2016, we entered into an employment letter with him which provides for an annual base salary of $435,000. See “Executive Employment Letters” below.(2)Mr. Saligram was named as our Senior Vice President, Global Services effective August 22, 2016. In connection with Mr. Saligram’s commencement of employment, we entered into an employment letter with him which provides for an annual base salary of $500,000. See “Executive Employment Letters” below.(3)Mr. Schlanger resigned effective March 31, 2016.ANNUAL PERFORMANCE-BASED INCENTIVE COMPENSATIONThe initial incentive compensation target for each of our Named Executive Officers was set forth in his employment letter and was the result of arm’s length negotiations. In determining the target incentive opportunity for each Named Executive Officer, the Compensation Committee considered the factors discussed above under “How We Determine Executive Compensation.” Due to market conditions, the Chief Executive Officer voluntarily requested to suspend his participation in the Company’s 2016 STI Program, and the other Named Executive Officers mutually agreed to suspend participation in the 2016 STI Program.Had this program not been suspended, each Named Executive Officer’s 2016 cash incentive target would have been:Executive Officer Title 2016 Cash
Incentive
Target
(% of base
salary)
Incentive Andrew J. Way President and Chief Executive Officer 100 750,000 David A. Barta Senior Vice President and Chief Financial Officer (1) (1) Girish K. Saligram Senior Vice President, Global Services (2) (2) Steven W. Muck Former Senior Vice President, Engineering and Product Lines 70 245,000 Christopher T. Werner Former Senior Vice President, Global Operations 60 180,000 Jon C. Biro Former Senior Vice President and Chief Financial Officer 70 294,000 Daniel K. Schlanger Former Senior Vice President, Global Products 70 294,000 (1)Mr. Barta was appointed Senior Vice President and Chief Financial Officer Designate effective November 7, 2016. Under the terms of his employment letter, Mr. Barta was not eligible to participate in the 2016 STI Program but received a cash bonus of $350,000 as a sign-on bonus under the terms of his employment letter.(2)Mr. Saligram was appointed Senior Vice President, Global Services effective August 22, 2016. Under the terms of his employment letter, Mr. Saligram was not eligible to participate in the 2016 STI Program but was guaranteed to receive a minimum cash bonus of $275,000 for 2016, in part to compensate Mr. Saligram for compensation he would have been entitled to receive from his prior employer had his employment not terminated. In February 2017, the Compensation Committee determined to award Mr. Saligram $100,000 in addition for his extraordinary performance in 2016.27 EXTERRAN CORPORATIONLONG-TERM INCENTIVE COMPENSATIONWe believe that awarding a meaningful portion of our Named Executive Officers’ total compensation in the form of LTI Awards aligns executives’ interests with our stockholders’ interests, emphasizes long-term financial and operational performance and helps to retain key executives. Under the Company’s 2015 Stock Incentive Plan adopted in November 2015 (the “2015 Plan”), the Compensation Committee has the ability to grant stock options, restricted stock and restricted stock unit awards, stock appreciation rights and performance units to employees (including our Named Executive Officers and our Chief Executive Officer) and consultants of our Company and its affiliates, and to our directors.2016 LTI AWARDSDuring 2016, equity-based LTI Awards generally were granted and valued based on the market closing price of our common stock on the date of approval by our Board or Compensation Committee. LTI Awards granted during 2016 to Named Executive Officers (other than the awards to Messrs. Barta and Saligram) consisted of time-based restricted stock awards and performance awards that generally vest one-third per year over a three-year period, subject to continued service through each vesting date and to accelerated vesting as described below under “Information Regarding Executive Compensation—Potential Payments upon Termination or Change of Control.” For Messrs. Barta and Saligram, due to the Restatement, LTI Awards made in connection with their employment (“New Hire LTI Awards”) were based on the market closing price of our common stock on the start date of their employment, although the actual grants were not made until the Restatement was completed in January 2017. As a result, these awards are not included in the Summary Compensation Table or the Grant of Plan Based Awards Table in this Proxy Statement.Under the 2016 LTI Award program, we granted awards that consisted of restricted stock (50%) and performance awards (50%):LTI AwardPurposeMetricsVestingRestricted stock(50%)Encourage retention and incentivize key employees to work toward long-term performance goals by aligning their interests with stockholders’ interests; reduce impact of share price volatility over industry cyclesTime-based onlyRestricted stock awards generally vest ratably over three years from date of grant, subject to continued service through the vesting datePerformance awards (50%)Encourage achievement of short-term and long-term objectives and initiatives that reward sustained stockholder value creationOne-year measurement periodAchievement based on two absolute measures:● 90% Operating cash flow● 10% HSE improvementEarned units or shares generally vest ratably over three years from date of grant (including one-year performance period), subject to continued service through the vesting dateOur Compensation Committee establishes its schedule for making annual LTI Awards several months in advance and does not make such awards based on knowledge of material nonpublic information or in response to stock price. This practice results in awards typically being granted on a regular, predictable cycle, and in most cases after earnings information has been disseminated to the marketplace (with certain exceptions, for example upon the hiring of a new employee or following the promotion of an employee). In some instances, our Compensation Committee may be aware at the time grants are made of matters or potential developments that are not yet appropriate for public disclosure at that time, but that may result in public announcement of material information at a later date.In determining the LTI Awards for each Named Executive Officer, excluding the New Hire LTI Awards, the Compensation Committee considered the factors discussed above under “How We Determine Executive Compensation.” These LTI Awards were granted in March 2016.2017 PROXY STATEMENT 28Each Named Executive Officer’s 2016 LTI Awards, at target, were:Executive Officer Title
Performance Awards Andrew J. Way President and Chief Executive Officer $1,650,000 $1,650,000 $3,300,000 David A. Barta(1) Senior Vice President and Chief Financial Officer $750,000 — $750,000 Girish K. Saligram (2) Senior Vice President, Global Services $1,100,000 — $1,100,000 Steven W. Muck Former Senior Vice President, Engineering and Product Lines $250,000 $250,000 $500,000 Christopher T. Werner Former Senior Vice President, Global Operations $200,000 $200,000 $400,000 Jon C. Biro Former Senior Vice President and Chief Financial Officer $400,000 $400,000 $800,000 Daniel K. Schlanger Former Senior Vice President, Global Products — — — (1)Mr. Barta was appointed Senior Vice President and Chief Financial Officer Designate effective November 7, 2016, and his restricted stock award was granted January 6, 2017 and vests annually on November 7 of each year. Under the terms of his employment letter, Mr. Barta received an initial equity award of $750,000 of restricted stock. See “Executive Employment Letters” below.(2)Mr. Saligram was appointed Senior Vice President, Global Services effective August 22, 2016, and his restricted stock award was granted January 6, 2017 and vests annually on August 22 of each year. Under the terms of his employment letter, Mr. Saligram received an initial equity award of $1,100,000 of restricted stock. See “Executive Employment Letters” below.The initial equity awards granted to Mr. Barta and Mr. Saligram in 2016 were not able to be awarded until January 6, 2017 as a result of the Restatement. As a result, these awards will not appear in the Summary Compensation Table until next year.PAYOUT OF 2016 PERFORMANCE AWARDSThe performance metrics for the performance awards, as well as 2016 results for each metric, are below: Weighting Threshold Target Maximum 2016 Actual Payout Factor — 50% 100% 150% 135% Operating Cash Flow (in millions)(1) 90% $ 200 $ 250 $ 275 $ 315 Health and Safety (2) 10% (2) (2) (2) — Performance below threshold will result in a payout of 0%.(1)Operating cash flow is defined as EBITDA, as adjusted, plus cash flows from increases or reductions in (i) accounts receivable, (ii) inventory, (iii) costs in excess and estimated earnings on uncompleted contracts (“CIE”) net of billings on uncompleted contracts in excess of costs and estimated earnings (“BIE”), and (iv) accounts payable, less maintenance and other capital expenditures. “EBITDA, as adjusted” is defined as net income (loss) excluding income (loss) from discontinued operations (net of tax), cumulative effect of accounting changes (net of tax), income taxes, interest expense (including debt extinguishment costs and gain or loss on termination of interest rate swaps), depreciation and amortization expense, impairment charges, merger and integration expenses, restructuring charges, and non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations;provided, however, that adjustments to EBITDA, as adjusted, may be made by the Committee, in its discretion, for acquisitions or dispositions and unusual items or non-recurring items. Included in the definition of operating cash flow is EBITDA, as adjusted, which is a non-GAAP financial measure. For additional information about EBITDA, as adjusted, and a reconciliation to the most comparable GAAP financial measure, see “Non-GAAP Financial Measures” within the Company’s 2016 Form 10-K.(2)For purposes of the 2016 STI Program, the HSE component is measured based on improvement in certain operational safety metrics and is “on” only if those metrics are improved from prior periods.29 EXTERRAN CORPORATIONBased upon a review of 2016 results, the operating cash flow component was achieved at maximum (150%) and we did not achieve the HSE component. On February 15, 2017, the Compensation Committee certified that the 2016 Performance Awards were deemed earned at 135% of target.The earned 2016 Performance Awards vest one-third per year over a three-year period from the date of grant (except for Mr. Barta and Mr. Saligram as noted above), subject to continued service through each vesting date, and are payable in cash based on the market closing price of our common stock on the vesting date for the first tranche, which becomes vested on March 4, 2017 and in shares for the two remaining tranches, which will vest on March 4, 2018 and March 4, 2019. SeeGrants of Plan-Based Awards for 2016below for more information about the 2016 Performance Awards awarded to our Named Executive Officers.RETIREMENT SAVINGS, HEALTH AND WELFARE BENEFITSIn 2016, our Named Executive Officers participated in benefit programs sponsored by Exterran. These benefits are designed to provide retirement income and protection against the financial hardship that can result from illness, disability or death.Retirement Savings PlanThe Exterran 401(k) Retirement Savings Plan (“401(k) Plan”) allows certain employees, including our Named Executive Officers in 2016, to defer a portion of their eligible salary, up to the Code maximum deferral amount on a pre-tax basis or, commencing in 2016, on a post-tax (Roth) basis. Participants make contributions to an account maintained by an independent trustee and direct how those contributions are invested. We match 100% of a participant’s contribution to a maximum of 1% of his or her annual eligible compensation, plus 50% of the participant’s contribution from 2% to a maximum of 6% of his or her annual eligible compensation, for a total company match of up to 3.5% of annual eligible compensation up to IRS Code limits. Participants vest in the matching contributions after two years of employment.Deferred Compensation PlanWe maintain the Exterran Corporation Deferred Compensation Plan, which allows certain key employees, including our Named Executive Officers, to defer receipt of their compensation, including up to 100% of their salaries and bonuses, and which also may be credited with Company contributions designed to serve as a make-up for the portion of the employer-matching contribution that cannot be made under the Exterran 401(k) Plan due to Code limits. Participants generally must make elections relating to compensation deferrals and plan distributions in the year preceding that in which the compensation is earned. Contributions to the Company’s Deferred Compensation Plan are self-directed investments in the various funds available under the plan. There are no interest calculations or earnings measures other than the performance of the investment funds selected by the participant. Participants direct how their contributions are invested and may change these elections at any time, provided that such changes in elections comply with Section 409A of the Code. Due to the market downturn, the Company did not contribute to the Company’s Deferred Compensation Plan during 2016.Health and Welfare Benefit PlansWe maintain a standard complement of health and welfare benefit plans for our employees, including our Named Executive Officers. In 2016, we provided medical, dental and vision benefits, flexible spending accounts, short-term and long-term disability insurance, accidental death and dismemberment insurance and life insurance coverage. These benefits were provided to our Named Executive Officers on the same terms and conditions as they are provided to our other employees.PerquisitesIn 2016, the Company provided a limited perquisite to one former NEO for tax advice and preparation services. Our policies prohibit tax gross-ups.EXECUTIVE EMPLOYMENT LETTERSWe are parties to letters with each of our Named Executive Officers which set forth the material terms and conditions of their employment with us. Each executive employment letter provides for an initial annual base salary, and initial target short-term and long-term incentive the Named Executive Officer is eligible to receive. The base salary and incentive targets are subject to annual review, with future salary levels and incentive target rates subject to the discretion of the Compensation Committee. In addition, certain of the executive employment letters provide for one-time cash payments or equity awards. Each executive employment letter also provides that the applicable executive is eligible to participate in all employee benefit plans maintained by the Company for the benefit of its employees and executives generally.2017 PROXY STATEMENT 30SEVERANCE BENEFIT AND CHANGE-OF-CONTROL AGREEMENTSPursuant to the letters between our Named Executive Officers and the Company referred to above, we entered into severance benefit and change-of-control agreements with each of our Named Executive Officers. See “Information Regarding Executive Compensation—Potential Payments upon Termination or Change-of-Control” below, for a description of the terms of the severance benefit and change-of-control agreements, as well as estimates of the potential payouts under those agreements. Our Compensation Committee believes these severance benefit agreements and change-of-control agreements are necessary to attract and retain executive talent and are, therefore, a customary part of executive compensation. The change-of-control agreements are structured as “double-trigger” agreements. In other words, the change of control alone does not trigger benefits; rather, benefits are paid only if the executive incurs a qualifying termination of employment within 18 months following a change of control. These agreements also contain standard non-disparagement restrictions as well as other customary provisions.Stock Incentive PlanOur 2015 Plan permits the accelerated vesting of outstanding equity awards upon a change of control. The award agreements for all awards granted to our NEOs under the 2015 Plan are structured as “double-trigger” agreements and do not provide for accelerated vesting upon a change of control alone; rather, the awards accelerate only if the grantee incurs a qualifying termination of employment within 18 months following the change of control (in which case the award will vest in full upon such termination). See “Information Regarding Executive Compensation—Potential Payments upon Termination or Change-of-Control” below, for more information about equity vesting under various circumstances.401(k) PlanThe Exterran Corporation 401(k) Plan provides for accelerated vesting of any unvested employer matching contributions following a change of control.OTHER POLICIES AND CONSIDERATIONSStock Ownership RequirementsOur Named Executive Officers are required to hold an amount of our common stock with a market value of at least three times their annual base salary (or, for the Chief Executive Officer, five times his annual base salary) under our stock ownership policy. Executive officers generally have five years from their date of hire or promotion, respectively, to meet this stock ownership requirement. Our Compensation Committee believes that stock ownership requirements closely align our executive officers’ interests with those of its stockholders by ensuring its executive officers have a meaningful ownership stake in the Company. Our Compensation Committee measures the stock ownership of our Named Executive Officers annually as of October 31. As of October 31, 2016, our Chief Executive Officer met the stock ownership guideline, and our other Named Executive Officers were in compliance with our stock ownership requirements as they have up to five years from their date of hire or promotion to reach the required ownership level.Prohibition on HedgingWe maintain a policy prohibiting all employees and directors from entering into any transaction designed to hedge or offset any decrease in the market value of our equity securities, including purchasing financial instruments (such as variable forward contracts, equity swaps, collars or exchange funds), or otherwise trading in market options (such as puts or calls), warrants, or other derivative instruments of our equity securities.Prohibition on PledgingWe instituted a policy effective in February 2017 that prohibits senior executives and directors from pledging our equity securities as collateral for a loan, purchasing our equity securities on margin, or borrowing against our equity securities held in a margin account.TAX AND ACCOUNTING CONSIDERATIONSSection 162(m) of the CodeSection 162(m) of the Code generally disallows the deductibility of certain compensation expenses in excess of $1,000,000 paid to any one executive officer within a fiscal year. Compensation that is “performance-based” is excluded from this limitation. For compensation to be “performance-based,” it must meet certain criteria, including performance goals approved by our stockholders and, in certain cases, objective targets based on performance goals approved by31 EXTERRAN CORPORATIONstockholders. We believe that maintaining the discretion to evaluate the performance of its Named Executive Officers through the use of performance-based compensation is an important part of our responsibilities and benefits our stockholders, even if it may be non-deductible under Section 162(m) of the Code. The Compensation Committee, in coordination with management, intends to periodically assess the potential application of Section 162(m) of the Code on incentive compensation awards and other compensation decisions.Section 280G of the CodeSection 280G of the Code disallows a tax deduction for excess parachute payments to certain executives of companies that undergo a change of control. In addition, Section 4999 of the Code imposes a 20% excise tax on the individual with respect to the excess parachute payment. Parachute payments are compensation linked to or triggered by a change of control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from LTI plans including stock options and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G of the Code based on the executive’s prior compensation. It is our policy not to provide any executives with a gross-up payment to make up for these taxes, if any.Section 409A of the CodeSection 409A of the Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and directors to accelerated income tax liabilities, substantial additional taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our respective compensation and benefit plans and arrangements for all of our employees and directors, including our Named Executive Officers, so that they are either exempt from, or satisfy the requirements, of Section 409A of the Code.Accounting for Stock-Based CompensationWe have followed Financial Accounting Standards Board Accounting Standards Codification 718, “Stock Compensation” (“ASC 718”) in accounting for stock-based compensation awards. ASC 718 requires companies to calculate the grant date “fair value” of their stock-based awards using a variety of assumptions.ASC 718 also requires companies to recognize the compensation cost of their stock-based awards in their income statements over the period that an employee is required to render service in exchange for the award. We expect that we will regularly consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.2017 PROXY STATEMENT 32Information Regarding Executive CompensationThe tables below set forth certain compensation information paid or awarded by us, as applicable, during the year ended December 31, 2016.SUMMARY COMPENSATION TABLE FOR 2016The following table shows the compensation awarded, earned or paid during the years shown to our Named Executive Officers by us.Name and Title Year Salary ($) Bonus ($) Stock Awards ($)(1) Option Awards
($) Total ($) Andrew J. Way, President and Chief Executive Officer David A. Barta, Senior Vice President and Chief Financial Officer 2016 58,557 350,000(5) — — — 250 408,807 Girish K. Saligram, Senior Vice President, Global Services 2016 173,077 2,275,962(6) — — — 731 2,449,770 Steven W. Muck, Former Senior Vice President, Engineering and Product Lines Christopher T. Werner, Former Senior Vice President, Global Operations Jon C. Biro, Former Senior Vice President and Chief Financial Officer
— Daniel K. Schlanger, Former Senior Vice President, Global Products (1)The amounts in this column represent the grant date fair value of (a) restricted shares of Exterran’s common stock (which are set forth in the table below) and (b) 2016 Performance Awards at target. The grant date fair values of the 2016 Performance Awards at maximum level were as follows: Mr. Way: $2,475,000; Mr. Muck: $375,000; Mr. Werner: $300,000; and Mr. Biro: $600,000. The grant date fair value of these awards was calculated in accordance with ASC 718. For a discussion of valuation assumptions, see Note 18 to the consolidated and combined financial statements in Exterran Corporation’s Annual Report on Form 10-K for the year ended December 31, 2016.(2)In February 2016, Mr. Way voluntarily requested to suspend his participation in the 2016 STI program and the other NEOs employed at that time mutually agreed to suspend participation in the 2016 STI program.(3)The amounts in this column for 2016 include the following:
Company
Contribution
($)(a)
Preparation
and Planning
Services ($)
($)(b)
($)(c)Andrew J. Way 9,275 — — 500 9,775 David A. Barta — — — 250 250 Girish K. Saligram 481 — — 250 731 Steven W. Muck 9,275 — 3,744 500 13,519 Christopher T. Werner 9,275 — 1,623 500 11,398 Jon C. Biro 9,275 — 3,303 — 12,578 Daniel K. Schlanger 6,257 8,613 1,548 787,598 804,016 (a)The amounts shown represent matching Company contributions for 2016.(b)Represents cash payments pursuant to dividend equivalents which were paid on unvested 2014 Archrock shares awarded under the Archrock 2013 Plan which were bifurcated at the time of the Spin-Off.(c)Represents contributions made to employee health savings accounts, and in the case of Mr. Schlanger, also represents severance payments paid pursuant to the severance benefit agreement.33 EXTERRAN CORPORATION(4)Mr. Way’s letter provided for a one-time cash signing bonus of $2,000,000, which was intended, in part, to compensate Mr. Way for the value of the expatriate compensation package that he would have been entitled to receive from his prior employer during 2015 had his employment not terminated. Mr. Way must repay the signing bonus in full in the event that he voluntarily terminates employment prior to July 1, 2017. Mr. Way’s employment letter also provided for a one-time grant to Mr. Way of $3,999,996 in restricted stock pursuant to the 2015 Plan which vests one-third per year over three years beginning on November 4, 2016.(5)Under the terms of Mr. Barta’s employment offer, he received a one-time cash payment of $350,000 in connection with his commencement of employment and subject to continued service.(6)Under the terms of Mr. Saligram’s employment offer, certain one-time cash payments were negotiated as to make him whole for compensation and benefits he was forfeiting for leaving his prior employer and paid in connection with his commencement of employment and subject to continued service. In addition, the Compensation Committee determined to award him $100,000 in February 2017 for extraordinary performance in 2016.(7)Mr. Muck’s employment letter in connection with the Spin-Off provided for a retention incentive with an aggregate value of $400,000, 33% of which was paid in cash on the date of the Spin-Off, and the remaining was made in the form of a restricted stock award granted which vests 33% and 34% per year over the next two years on the anniversary date of the Spin-Off.(8)Mr. Werner’s employment letter in connection with the Spin-Off provided for a cash retention payment of $150,000 which $75,000 was paid on the date of the Spin-Off and $75,000 on the first anniversary of the Spin-Off.(9)Mr. Biro’s employment letter in connection with the Spin-Off provided for a restricted stock award equal to $400,000 which vests 33% on the date of Spin-Off, and 33% and 34% per year over the next two years on the anniversary date of the Spin-Off.(10)Mr. Schlanger’s employment letter provided for a retention incentive with an aggregate value equal to $1,200,000, one-half of which was paid in cash on the date of Spin-Off, and one-half of which was made in the form of a restricted stock award which was accelerated due to his severance agreement.GRANTS OF PLAN-BASED AWARDS FOR 2016The following table shows the short- and long-term incentive plan awards granted to the Named Executive Officers in 2016.Estimated PossiblePayoutsUnder Non-EquityIncentive PlanAwards (1)Estimated PossiblePayoutsUnder EquityIncentive PlanAwards (2)All other Stock Awards: Number of Shares of Stock or Units (#)(3)All other Option Awards: Number of Securities Under-lying Options(#)Exer-cise or Base Price of Option Awards ($/SH)Grant Date Fair Value of Stock and Option Awards ($)(4)NameGrant DateThresh-old ($)Target($)Maxi-mum ($)Thresh-old (#)Target(#)Maxi-mum(#)Andrew J. Way3/4/20163/4/2016————————106,728160,092——106,728————1,650,0001,650,000David A. Barta(5)———————————Girish K. Saligram(5)——————————Steven W. Muck3/4/20163/4/2016————————16,171—24,257——16,171————250,000250,000Christopher T. Werner3/4/20163/4/2016————————12,937—19,406——12,937————200,000200,000Jon C. Biro3/4/20163/4/2016————————25,874—38,811——25,874————400,000400,000Daniel K. Schlanger———————————(1)In February 2016, Mr. Way voluntarily requested to suspend his participation in the 2016 STI program and the other NEOs employed at that time mutually agreed to suspend participation in the 2016 STI program.(2)The amounts in these columns show the range of potential payouts of 2016 Performance Awards awarded as part of the 2016 LTI Award. “Target” is the number of 2016 Performance Awards at Plan. “Threshold” as used in this table is the lowest possible payout (0% of the grant), and “Maximum” is the highest possible payout (150% of the grant). See “Long-Term Incentive Compensation—2016 Performance Awards” for a description of the 2016 Performance Awards.(3)Shares of restricted stock awarded under our 2015 Plan that vest one-third per year over a three-year period, subject to continued service through each vesting date.2017 PROXY STATEMENT 34(4)The grant date fair value of performance awards and restricted stock is calculated in accordance with ASC 718. For a discussion of valuation assumptions, see Note 18 to the consolidated and combined financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016. 2016 Performance Award units are shown at target value.(5)In connection with their employment in 2016, Mr. Barta and Mr. Saligram were entitled to receive equity awards subject to Committee approval. These awards were not approved and issued until 2017 as a result of the Restatement and therefore do not appear in the Grants of Plan-Based Awards Table or the Summary Compensation Table.OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END FOR 2016The following table shows our Named Executive Officers’ equity awards and equity-based awards denominated in our common stock outstanding at December 31, 2016.Option Awards Stock Awards Andrew J. Way — — — — 280,226 6,697,401 106,728 2,550,799 David A. Barta — — — — — — — — Girish K. Saligram — — — — — — — — Steven W. Muck — — — — 40,606 970,483 16,171 386,487 Christopher T. Werner 5,418(2) — 17.96 2/28/2017 24,459 584,570 12,937 309,194 Jon C. Biro — — — — 57,774 1,380,799 25,874 618,389 Daniel K. Schlanger — — — — — — — — (1)Messrs. Way, Barta, Saligram, Muck, and Biro have not been granted stock options.(2)Stock options awarded under the Archrock 2007 Plan that vested at the rate of one-third per year, subject to continued service through each vesting date, and with a term of seven years following the grant date.(3)Includes shares of restricted stock and units awarded under the Archrock 2013 Plan or our 2015 Plan.NameUnvested Share/UnitsInitial VestingDateVesting IncrementsAndrew J. Way173,498106,72811/03/201603/04/2017One-third over 3 yearsOne-third over 3 yearsSteven W. Muck94203/04/2015One-third over 3 years1,54904/29/2015One-third over 3 years13,22603/04/2016One-third over 3 years8,71811/03/201633% (cash) on 11/4/2015; 33% (restricted stock) on 11/3/16; 34% (restricted stock) on 11/3/1716,17103/04/2017One-third over 3 yearsChristopher T. Werner94203/04/2015One-third over 3 years10,58012,93703/04/201603/04/2017One-third over 3 yearsOne-third over 3 yearsJon C. Biro1,88809/22/2015One-third over 3 years21,1628,85025,87403/04/201611/04/201503/04/2017One-third over 3 years33% on 11/4/15; 33% on 11/3/16; 34% on 11/3/17One-third over 3 years35 EXTERRAN CORPORATION(4)Based on the market closing price of our common stock on December 30, 2016, $23.90.(5)Amounts shown are the unearned and unvested number of 2016 Performance Award units at target. One-third of the performance units awarded in 2016 under our 2015 Plan vest one-third per year on each anniversary of the grant date.OPTION EXERCISES AND STOCK VESTED FOR 2016The following table shows the value realized by the Named Executive Officers upon vesting of restricted stock awards and exercised stock options during 2016. Option Awards Stock Awards Name Number of Shares Acquired on Exercise (#)(1) Number of Shares and Units Acquired on Vesting (#)(1) Andrew J. Way — — 86,749 1,282,150 David A. Barta — — — — Girish K. Saligram — — — — Steven W. Muck — — 17,568 265,425 Christopher T. Werner 5,209 8,598 6,244 96,532 Jon C. Biro — — 18,940 285,878 Daniel K. Schlanger(3) 22,522 96,189 60,098 929,115 (1)Includes stock options exercised by Messrs. Schlanger and Werner and our restricted stock that vested during 2016.(2)The value realized for vested awards was determined by multiplying the fair market value of the restricted stock (market closing price of Exterran’s common stock on the vesting date) by the number of shares or awards that vested. Shares vested on various dates throughout the year; therefore, the value listed represents the aggregate value of all shares that vested for each Named Executive Officer in 2016.(3)Stock awards include March 4, 2016 vesting and March 31, 2016 acceleration of equity vesting within the 12 months of separation date for Mr. Schlanger.NONQUALIFIED DEFERRED COMPENSATION FOR 2016The following table shows our Named Executive Officers’ compensation for 2016 under our nonqualified deferred compensation plan.Name Executive
Contributions in
Last Fiscal Year ($) Company
Contributions in
Last Fiscal Year ($)(1) Aggregate Earnings
(Losses) in Last
Fiscal Year ($) Aggregate
Withdrawals/
Distributions ($) Aggregate Balance
at Last Fiscal Year
End ($) Andrew J. Way — — — — — David A. Barta — — — — — Girish K. Saligram 100,961 — 381 — 101,342 Steven W. Muck 7,000 — 29,045 — 277,137 Christopher T. Werner — — 462 — 9,523 Jon C. Biro 12,780 — 6,931 — 66,569 Daniel K. Schlanger (2) — — 4,327 98,303 — (1)The Company suspended its contributions to the Deferred Compensation Plan.(2)Distribution was made 6 months following separation date due to 409A regulations.2017 PROXY STATEMENT 36POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROLPursuant to the agreements we entered into with Archrock at the time of the Spin-Off, each outstanding Exterran Holdings stock option, restricted stock award, restricted stock unit award and performance unit award granted prior to calendar year 2015, was split into two awards of the same type as the underlying pre-Spin-Off award, consisting of an Archrock award and an Exterran Corporation award. In the case of outstanding non-qualified options, the exercise price was also adjusted to preserve the spread between the exercise price and the applicable market closing price immediately prior to and following the Spin-Off. Adjusted equity awards generally remain subject to the same vesting schedules and other terms and conditions as applied to the underlying Exterran Holdings awards immediately prior to the Spin-Off.Severance Benefit AgreementsWe entered into severance benefit agreements with Messrs. Way, Biro, Muck and Werner in November 2015, with Mr. Saligram in August 2016 and with Mr. Barta in November 2016. The terms and conditions of these severance benefit agreements were substantially similar.Each severance benefit agreement provides that if the executive’s employment is terminated by us without cause or by the executive with good reason at any time through the term of the agreement which is one year, to be automatically renewed for successive one-year periods, until 365 days’ (for Messrs. Way, Biro, Muck and Werner) or 90 days’ (for Messrs. Saligram and Barta) prior notice is given by either party, he would receive a lump sum payment in cash on the 60th day after the termination date equal to the sum of:●his annual base salary then in effect;●his target annual incentive bonus opportunity for the termination year;●a pro-rated portion of his target annual incentive bonus opportunity for the termination year based on the length of time during which he was employed during such year; and●any earned but unpaid annual incentive award for the fiscal year ending prior to the termination date (collectively, the “Non-CoC Cash Severance”).In addition, the executive would be entitled to:●accelerated vesting as of the termination date of all his outstanding unvested equity, equity-based and cash awards based in Exterran common stock, or where applicable the common stock of Archrock, in any case that were scheduled to vest within 12 months following the termination date (the “Non-CoC Accelerated Vesting”), provided that, if the achievement of the performance period goals for unearned performance award units has not yet been measured as of the separation date, the achievement of such goals will be measured following the conclusion of the performance period and paid in accordance with the applicable award agreement (for Messrs Way, Biro, Muck and Werner), and will be measured at target (for Mr. Saligram and Mr. Barta); and●continued coverage under our medical benefit plans for him and his eligible dependents for up to one year subject to executive’s payment of the employee premium (for Messrs. Way, Biro, Muck and Werner), or a cash payment equal to 18 months of employer premium payments (for Messrs. Saligram and Barta) following the termination date.Each executive’s entitlement to the payments and benefits under his severance benefit agreement is subject to his execution of a waiver and release for Exterran’s benefit. In addition, all severance benefit agreements contain non-disparagement restrictions, and Messrs. Saligram’s and Barta’s severance benefit agreements also contain non-competition and non-solicitation or hire provisions.Change of Control AgreementsWe entered into change-of-control agreements with Messrs. Way, Biro, Muck and Werner in November 2015, with Mr. Saligram in August 2016 and with Mr. Barta in November 2016. The terms and conditions of these change-of-control agreements were substantially similar.Each change-of-control agreement provides that if the executive’s employment is terminated by us other than for cause, death or disability, or by the executive for good reason (in each case, a “Qualifying Termination”), within 18 months following a change of control of Exterran (as defined in the change of control agreements), he would receive a cash payment not later than 60 days after the termination date equal to:●two times (or, for Mr. Way, three times) his current annual base salary plus two times (or, for Mr. Way, three times) his target annual incentive bonus opportunity for that year; and (i) a pro-rated portion of his target annual incentive bonus opportunity for the termination year based on the length of time during which he was employed during such year and (ii) any earned but unpaid annual incentive award for the fiscal year ending prior to the termination date; (the “CoC Cash Severance”); and37 EXTERRAN CORPORATION●two times (for Messrs. Way, Biro, Muck and Werner) the total of the Company contributions that would have been credited to him under the Exterran 401(k) Plan and any other deferred compensation plan had he made the required amount of elective deferrals or contributions during the 12 months immediately preceding the termination month.In addition, the executive would be entitled to:●Company provided medical coverage for him and his eligible dependents subject to executive’s payment of the employee premium for up to two years (for Messrs. Way, Biro, Muck and Werner) or a cash payment equal to 18 months of employer premium payments (for Messrs. Saligram and Barta) following the termination date;●the accelerated vesting of all his unvested stock options, restricted stock, restricted stock units and other stock-based awards based in Exterran common stock or where applicable the common stock of Archrock, and all cash-based incentive awards (collectively, the “CoC Accelerated Vesting”); and●a Section 280G “best pay” provision pursuant to which in the event any payments or benefits received by the executive would be subject to an excise tax under Section 4999 of the Code, the executive will receive either the full amount of his payments or a reduced amount such that no portion of the payments is subject to the excise tax (whichever results in the greater after-tax benefit to the executive).Each executive’s entitlement to the payments and benefits under his change-of-control agreement is also subject to his execution of a waiver and release for Exterran’s benefit. In addition, in the event an executive received payments under his change-of-control agreement, such executive is subject to confidentiality, non-solicitation and non-competition restrictions for two years following a termination of his employment, and for Messrs. Saligram and Barta a non-disparagement provision.Vesting of Equity-Based IncentivesPursuant to the agreements we entered into with Archrock at the time of the Spin-Off, a change of control of us will be treated as a change of control of Archrock for purposes of outstanding stock options, restricted stock, restricted stock units, and performance awards that continue to cover Archrock common stock and are held by our employees (including any of our Named Executive Officers) following the Spin-Off (collectively, “Archrock Awards”). In addition, upon death or disability, notwithstanding anything to the contrary in the applicable award agreements, all Archrock Awards will vest in full (to the extent then-unvested) upon a change in control of Archrock.The outstanding award agreements for all Archrock and Exterran stock options, restricted stock and restricted stock units provide that, upon a termination due to death or disability, the award will accelerate in full. In addition, upon death or disability, the outstanding award agreements for performance awards provide that the award will accelerate in full based on (i) the achievement of the applicable performance goals if such goals have been determined as of the date of termination or (ii) achievement at the target performance level if the applicable performance goals have not been determined as of the date of termination.2016 Termination PaymentsDuring 2016, we entered into separation agreements with each of Mr. Biro and Mr. Schlanger, which are described below.Mr. Schlanger.On March 7, 2016, we entered into a separation letter with Mr. Schlanger pursuant to which, in connection with his separation of employment, Mr. Schlanger received the payments and benefits set forth in his severance benefit agreement, which consisted of: (i) a lump sum cash payment equal to the sum of (a) his annual base salary, (b) his target annual incentive bonus opportunity for 2016 and (c) his target annual incentive bonus opportunity for 2016, prorated based on the length of his employment during 2016; and (ii) the accelerated vesting of any then-outstanding equity, equity-based and cash awards held by Mr. Schlanger that were denominated in shares of our common stock or Archrock common stock and would have otherwise vested during the twelve (12)-month period following his separation date. Pursuant to his severance benefit agreement and his separation letter, Mr. Schlanger is also subject to certain customary non-disparagement restrictions.Mr. Biro.On December 23, 2016, we entered into a separation letter with Mr. Biro pursuant to which, in connection with his separation of employment in January 2017, Mr. Biro received the payments and benefits set forth in his severance benefit agreement, which consisted of: (i) a lump sum cash payment equal to the sum of (a) his annual base salary, and (b) his target annual incentive bonus opportunity, and (c) his target annual incentive bonus opportunity for 2017, prorated based on the length of his employment during 2017, (ii) the accelerated vesting of any then-outstanding equity, equity-based and cash awards held by Mr. Biro that were denominated in shares of our common stock or Archrock common stock and would have otherwise vested during the twelve (12)-month period following his separation date; and (iii) Company provided medical coverage under our medical benefit plans for him and his eligible dependents for up to one year following his separation date. Pursuant to his severance benefit agreement and his separation letter, Mr. Biro is also subject to certain customary non-disparagement restrictions.2017 PROXY STATEMENT 38Potential PaymentsThe following table shows the potential payments to the Named Executive Officers (other than Mr. Schlanger) upon a theoretical termination of employment or change of control occurring on December 31, 2016. The amounts shown assume a common stock value of $23.90 per share of our common stock (the December 30, 2016 market closing prices). The actual amount paid out to an executive upon an actual termination or change of control can only be determined at the time of such event. Amounts shown for Mr. Schlanger reflect amounts paid pursuant to his separation agreement dated March 7, 2016.Name TerminationDue to Deathor Disability($)(1) TerminationWithout Causeor Resignationwith GoodReason($)(2)(3) Change ofControlWithout aQualifyingTermination($) Change ofControl with a QualifyingTermination($)(4) Andrew J. Way Cash Severance Stock Option(5) Restricted Stock(6) Performance Awards(7) Other Benefits (8) Total Pre-Tax Benefit — — 6,697,401 2,550,799 — 9,248,200 2,250,000 — 2,923,568 850,26610,617 6,034,451 NA5,250,000 — 6,697,401 2,550,799 39,783 14,537,983 David A. Barta Cash Severance Stock Option(5) Restricted Stock(6) Performance Awards(7) Other Benefits (9) Total Pre—Tax Benefit — — — — — — 1,087,500 — — — 13,758 1,101,258 NA1,848,750 — — — 13,758 1,862,508 Girish K. Saligram Cash Severance Stock Option(5) Restricted Stock(6) Performance Awards(7) Other Benefits (9) Total Pre—Tax Benefit — — — — — — 1,200,000 — — — 15,925 1,215,925 NA2,050,000 — — — 15,925 2,065,925 Steven W. Muck Cash Severance Stock Option(5) Restricted Stock(6) Performance Awards(7) Other Benefits (8) Total Pre-Tax Benefit — — 963,913 458,794 — 1,422,707 840,000 — 579,804 169,540 7,754 1,597,098 NA1,435,000 — 963,913 458,794 34,057 2,891,764 Christopher T. Werner Cash Severance Stock Option(5) Restricted Stock(6) Performance Awards(7) Other Benefits (8) Total Pre-Tax Benefit — — 549,786 368,834 — 918,620 660,000 — 242,492 137,442 10,617 1,050,551 NA1,140,000 — 549,786 368,834 39,783 2,098,403 Jon C. Biro Cash Severance Stock Option(5) Restricted Stock(6) Performance Awards(7) Other Benefits (8) Total Pre-Tax Benefit — — 1,279,654 719,533 — 1,999,187 1,008,000 — 665,089 256,702 12,061 1,941,852 NA1,722,000 — 1,279,654 719,533 42,672 3,763,859 Daniel K. Schlanger Cash Severance Stock Option(5) Restricted Stock(6) Performance Awards(7) Other Benefits (8) Total Pre-Tax Benefit — — — — — — 787,098 — 770,040 52,076 — 1,609,214NA— — — — — — (1)“Disability” is defined in our 2015 Plan for awards granted since November 3, 2015.(2)“Cause” and “Good Reason” are defined in the severance benefit and change of control agreements with us.39 EXTERRAN CORPORATION(3)If the executive had been terminated without Cause or resigned with Good Reason on December 31, 2016, under his severance benefit agreement his cash severance would consist of (i) the sum of his base salary and his target annual incentive bonus (calculated as a percentage of his annual base salary for 2016), plus (ii) his target annual incentive bonus (calculated as a percentage of his annual base salary for 2016).(4)If the executive had been subject to a change of control followed by a qualifying termination (as defined in his change of control agreement) on December 31, 2016, under his change of control agreement, his cash severance would consist of (i) two times (three times for Mr. Way) the sum of his base salary and his target annual incentive bonus (calculated as a percentage of his annual base salary for 2016), plus (ii) his target annual incentive bonus (calculated as a percentage of his annual base salary for 2016).(5)As of December 31, 2016, Mr. Werner’s vested options to purchase Exterran Corporation common stock were both outstanding and in-the-money. No other executives have stock options (vested or unvested) at this time.(6)The amounts in this row represent the value of the accelerated vesting of the executive’s unvested restricted stock of Exterran Corporation and Archrock, based on the December 30, 2016 market closing prices of Exterran Corporation and Archrock common stock.(7)The amounts in this row represent the value of the accelerated vesting of the executive’s unvested performance awards of Exterran Corporation and Archrock, based on the December 30, 2016 market closing prices of Exterran Corporation and Archrock common stock.(8)The amounts in this row represent each executive’s right to the payment, as applicable, of (i) continued coverage under our medical benefit plans for him and his eligible dependents for up to one year in the event of a termination without Cause or voluntary resignation for Good Reason. COBRA benefit premiums for a one-year period in the event of a termination without Cause or voluntary resignation for Good Reason, or (ii) medical benefit premiums and Exterran Corporation contributions under the 401(k) Plan and deferred compensation plan for a two-year period in the event of a change of control followed by a Qualifying Termination.(9)The amounts in this row represent each executive’s right to an amount equal to eighteen (18) months of (A) premium payments for continuation coverage pursuant to Section 4980B of the Code for Executive and Executive’s eligible dependents following the Separation Date minus (B) the cost to Executive of premium payments for healthcare coverage for Executive and Executive’s eligible dependents during Executive’s employment with the Company (calculated based on Executive’s elections as in effect on the Date of Termination).2017 PROXY STATEMENT 40CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSWe recognize that transactions with related persons can present potential or actual conflicts of interest and create the appearance that decisions are based on considerations other than the best interests of us and our stockholders. Therefore, our Audit Committee has adopted a written policy on related party transactions to provide guidance and set standards for the approval and reporting of transactions between us and individuals with a direct or indirect affiliation with us and to ensure that those transactions are in our best interest. Any proposed related-party transaction must be submitted to the Audit Committee for approval prior to entering into the transaction. Additionally, our policy requires that our subsidiaries report all related party transactions to the Financial Reporting Department on a quarterly basis. In the event a senior officer becomes aware of any pending or ongoing related party transaction that has not been previously approved or ratified, the transaction must be promptly submitted to the Audit Committee or its Chair for ratification, amendment or termination of the related party transaction. If a related party transaction is ongoing, the Audit Committee may establish guidelines for management and will annually assess the relationship with such related party.In reviewing a proposed or ongoing related-party transaction, the Audit Committee will consider, among other things, the following factors to the extent relevant to the related-party transaction:●whether the terms of the transaction are fair to the Company and would apply on the same basis if the transaction did not involve a related party;●whether there are any compelling business reasons for the Company to enter into the transaction;●whether the transaction would impair the independence of an otherwise independent director; and●whether the transaction would present an improper conflict of interest for any director or executive officer of the Company, taking into account, among other factors the Audit Committee deems relevant, the size of the transaction, the overall financial position of the director, executive officer or other related party, that person’s interest in the transaction and the ongoing nature of any proposed relationship.There were no related party transactions during 2016 that are required to be reported in this Proxy Statement.41 EXTERRAN CORPORATIONRATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMDeloitte & Touche LLP (“Deloitte”) served as our independent registered public accounting firm for the fiscal year ended December 31, 2016. The Audit Committee has selected Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2017. We are submitting the selection of Deloitte for stockholder ratification at the Annual Meeting.Representatives of Deloitte attended all regularly scheduled meetings of the Audit Committee in 2016. For additional information concerning the Audit Committee and its activities with Deloitte, see “Report of the Audit Committee” contained in this Proxy Statement and “Pre-Approval Policy” following this proposal description. We expect that a representative of Deloitte will attend the Annual Meeting, and the representative will have an opportunity to make a statement if he or she so chooses. The representative will also be available to respond to appropriate questions from stockholders.Board of Directors’ RecommendationThe Board recommends that the stockholders vote“FOR” the ratification of the reappointment of Deloitte & Touche LLP.Vote RequiredRatification requires the affirmative vote of the holders of a majority of the votes cast in favor of or against the proposal. This proposal is considered a “routine” matter, and therefore, if a brokerage firm holds your shares and you do not provide any voting instructions, your brokerage firm will have discretionary authority to vote your shares on this matter. Abstentions will have no effect on the outcome of the vote.Our organizational documents do not require that our stockholders ratify the selection of our independent registered public accounting firm. We are requesting such ratification because we believe it is a matter of good corporate practice. If our stockholders do not ratify the selection, the Audit Committee will reconsider whether to retain Deloitte. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of us and our stockholders.Fees Paid to the Independent Registered Public Accounting FirmThe following table presents fees for professional services rendered by Deloitte and its member firms and respective affiliates on our behalf during calendar years 2016 and 2015.Types of Fees 2016 2015 Audit fees(a) $ 3,163,241 $ 2,857,524 Audit-related fees(b) 2,145,000 440,435 Tax fees(c) 37,550 55,200 Other(d) — 3,000 Total fees: $ 5,345,791 $ 3,356,159 (a)Audit fees include fees billed by our independent registered public accounting firm related to audits and reviews of financial statements we are required to file with the SEC, statutory audits of certain of our subsidiaries’ financial statements as required under local regulations and other services, including assistance with and review of documents filed with the SEC.(b)Audit-related fees for 2016 include fees billed by our independent registered public accounting firm for audit work and reviews of financial statements undertaken in connection with our Restatement of certain of our historical financial results as described in Note 13 to the consolidated and combined financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016. Audit-related fees primarily consisted of fees for 2015 for services rendered by our independent registered public accounting firm in connection with the preparation of our Form 10 registration statement, including issuance of comfort letters, which were incurred prior to the completion of the Spin-off and paid by Archrock.2017 PROXY STATEMENT 42(c)Tax fees include fees billed by our independent registered public accounting firm primarily related to tax compliance and consulting services.(d)All other fees include fees billed by our independent registered public accounting firm related to software licensing agreements.In considering the nature of the services provided by Deloitte, the Audit Committee determined that such services are compatible with the provision of independent audit services. The Audit Committee discussed these services with Deloitte and our management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by (i) the SEC to implement the Sarbanes-Oxley Act of 2002 and (ii) the American Institute of Certified Public Accountants.The Audit Committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm. This policy generally provides that we will not engage our independent registered public accounting firm to render audit or non-audit services, and will not engage any other independent registered public accounting firm to render audit services, unless the service is specifically approved in advance by the Audit Committee.The Audit Committee’s practice is to consider for approval, at its regularly scheduled meetings, all audit and non-audit services proposed to be provided by our independent registered public accounting firm. In situations where a matter cannot wait until the next regularly scheduled committee meeting, the chair of the Audit Committee has been delegated authority to consider and, if appropriate, approve audit and non-audit services. Approval of services and related fees by the Audit Committee chair is reported to the full Audit Committee at the next regularly scheduled meeting. All services performed by our independent registered public accounting firm in 2016 were pre-approved by our Audit Committee.43 EXTERRAN CORPORATIONADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERSThe Dodd-Frank Wall Street Reform and Consumer Protection Act added Section 14A to the Exchange Act, which requires that we provide our stockholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the SEC. This proposal gives stockholders the opportunity to approve, reject or abstain from voting with respect to the compensation provided to our Named Executive Officers for 2016, as described in this Proxy Statement.As discussed in the Compensation Discussion and Analysis section of this Proxy Statement, our executive compensation program is designed to attract and retain individuals with the level of expertise and experience needed to help achieve the business objectives intended to drive both short- and long-term success and stockholder value. You are encouraged to read the detailed information concerning our executive compensation program and policies contained in the Compensation Discussion and Analysis section of this Proxy Statement as well as the compensation-related tabular and other disclosure following the Compensation Discussion and Analysis.Board of Directors’ RecommendationThe Board recommends that stockholders vote“FOR” the following resolution:“RESOLVED, that the stockholders of Exterran Corporation approve, on an advisory basis, the compensation paid to its Named Executive Officers for 2016, as disclosed in this Proxy Statement, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.”Vote RequiredApproval of Proposal 3 requires the affirmative vote of the holders of a majority of the votes cast in favor of or against the proposal. Abstentions and broker non-votes will have no effect on the outcome of the vote.Because the vote on this proposal is advisory in nature, the outcome will not be binding on the Company, the Board or the Compensation Committee and will not affect compensation already paid or awarded. However, the Board and the Compensation Committee value the opinions of our stockholders and will take into account the outcome of the vote when considering future compensation arrangements for our Named Executive Officers.2017 PROXY STATEMENT 44ADVISORY VOTE ON THE FREQUENCY OF FUTURE STOCKHOLDER VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERSSection 14A of the Securities Exchange Act of 1934 requires that we provide stockholders with the opportunity to vote, on a non-binding, advisory basis, for their preference as to how frequently we should conduct advisory votes on the compensation of our Named Executive Officers. Stockholders may indicate whether they would prefer that we conduct advisory votes on executive compensation every year, every two years or every three years. Stockholders also may abstain from casting a vote on this proposal.After careful consideration, the Board believes that a frequency of “every year” for the advisory vote on executive compensation is the preferable interval for conducting and responding to a “say on pay” vote, so that stockholders may annually express their views on our executive compensation programs.Board of Directors’ RecommendationThe Board recommends thatstockholdersvote for the option of“EVERY YEAR”on the following resolution:“RESOLVED, that thestockholdersof Exterran Corporation determine, on an advisory basis, whether the preferred frequency of an advisory vote on the executive compensation of the Company’s Named Executive Officers as set forth in the Company’s proxy statement should be every year, every two years or every three years.”Vote RequiredThe frequency option (every year, every two years or every three years) that receives a plurality of votes cast on this proposal will be deemed the preferred option of our stockholders. Abstentions and broker non-votes will have no effect on the outcome of the vote.Because the vote on this proposal is advisory in nature and non-binding on the Company, the Board may decide to hold advisory votes on Named Executive Officer compensation more or less frequently than the deemed preferred option, except that these votes must be held at least every three years. However, the Board and the Compensation Committee value the opinions expressed by stockholders regarding the frequency of these votes and will take into account the outcome of the vote when considering how often to submit these matters for stockholder input.45 EXTERRAN CORPORATION20182019 Annual Meeting of StockholdersAny stockholder proposal that is intended for inclusion in our Proxy Statement for our 20182019 annual meeting of stockholders must be received by our Corporate Secretary no later than November 17, 2017.Our Bylaws establish an advance-noticeadvance notice procedure for stockholder proposals or director nominations to be brought before an annual meeting but not included in our Proxy Statement. Under these bylawBylaw provisions, we must receive written notice of a stockholder proposal or director nomination to be brought before the 20182019 annual meeting of stockholders on or after November 17, 201716, 2018 and no later than December 17, 20172018 for that proposal or nomination to be considered timely. Stockholder proposals and director nominations brought under these Bylaw provisions must include the information required under our Bylaws, including the following:●a description of the material terms of certain derivative instruments to which the stockholder or the beneficial owner, if any, on whose behalf the nomination or proposal is being made is a party, a description of the material terms of any proportionate interest in our shares or derivative instruments held by a general or limited partnership in which such person is a general partner or beneficially owns an interest in a general partner, and a description of the material terms of any performance-related fees to which such person is entitled based on any increase or decrease in the value of our shares or derivative instruments; and●with respect to a nomination of a director, a description of the material terms of all direct and indirect compensation and other material monetary arrangements during the past three years, and any other material relationships between or among the proponent of the nomination and his or her affiliates, on the one hand, and each proposed nominee and his or her affiliates, on the other hand, including all information that would be required to be disclosed pursuant to Rule 404 promulgated under the SEC’s Regulation S-K if the proposing person were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant.a description of the material terms of certain derivative instruments to which the stockholder or the beneficial owner, if any, on whose behalf the nomination or proposal is being made is a party, a description of the material terms of any proportionate interest in our shares or derivative instruments held by a general or limited partnership in which such person is a general partner or beneficially owns an interest in a general partner, and a description of the material terms of any performance-related fees to which such person is entitled based on any increase or decrease in the value of our shares or derivative instruments; andwith respect to a nomination of a director, a description of the material terms of all direct and indirect compensation and other material monetary arrangements during the past three years, and any other material relationships between or among the proponent of the nomination and his or her affiliates, on the one hand, and each proposed nominee and his or her affiliates, on the other hand, including all information that would be required to be disclosed pursuant to Rule 404 promulgated under the SEC’s Regulation S-K if the proposing person were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant.A stockholder submitting a proposal or director nomination under our Bylaw provisions must also, among other things:●include the name and address of the stockholder, and the number of our shares that are, directly or indirectly, owned beneficially and of record by the stockholder;●state whether the stockholder intends to deliver a proxy statement and form of proxy to holders of a sufficient number of voting shares to carry the proposal or to elect the nominee or nominees, as applicable;●be a stockholder of record as of the time of giving the notice and at the time of the meeting at which the proposal or nomination will be considered and include a representation to that effect; and●update and supplement the required information 10 business days prior to the date of the meeting.Theseinclude the name, address, age and occupation of the stockholder, and the number of our shares that are, directly or indirectly, owned beneficially and of record by the stockholder;state whether the stockholder intends to deliver a proxy statement and form of proxy to holders of a sufficient number of voting shares to carry the proposal or to elect the nominee or nominees, as applicable;be a stockholder of record as of the time of giving the notice and at the time of the meeting at which the proposal or nomination will be considered and include a representation to that effect; andupdate and supplement the required information 10 business days prior to the date of the meeting.Our Bylaw requirements in our Bylaws are in addition to the SEC’s requirements with which a stockholder must comply to have a stockholder proposal included in our Proxy Statement. Stockholders may obtain a copy of our Bylaws by making a written request to our Corporate Secretary.Stockholder proposals and nominations of directors must be delivered to our principal executive office at 4444 Brittmoore Road, Houston, Texas 77041, Attention: Corporate Secretary.57 EXTERRAN CORPORATIONFREQUENTLY ASKED QUESTIONS ABOUTTHE MEETING AND VOTINGWhen and where will the Annual Meeting be held?We will hold our 2018 Annual Stockholders Meeting jointly at two locations on Thursday, April 26, 2018, at 8:30 a.m. Central Daylight time at King & Spalding LLP, 1111 Louisiana Street, Suite 4000, Houston, Texas, USA and at 5:30 p.m. Gulf Standard Time at King & Spalding LLP, Al Fattan Currency House, Tower 2, Level 24, Dubai International Financial Centre, Dubai, UAE. We are holding a live annual meeting simultaneously in two locations by tele-video conferencing in order to allow our international stockholders to attend in person.Who may vote?You may vote if you were a holder of record of Exterran common stock as of the close of business on February 28, 2018, the record date for the Annual Meeting. Each share of common stock is entitled to one vote. As of the record date, there were 35,760,917 shares of Exterran common stock outstanding and entitled to vote.What am I voting on and how does the Board recommend that I vote?Proposal No. Description of Proposal Page No. Where You Can Find More Information Regarding the Proposal BoardRecommendation1 Election of seven directors to serve for a term expiring at the next annual meeting of stockholders 5 FOR each nominee 2 Advisory vote to approve Named Executive Officer Compensation 49 FOR 3 Ratification of independent registered public accounting firm 50 FOR 4 Approval of amendment to our Amended and Restated Certificate of Incorporation to eliminate the super-majority vote required for stockholders to amend our Bylaws 53 1 YEAR In addition, stockholders will be asked to consider at the Annual Meeting such other business as may properly come before the meeting or any adjournment thereof. For any other matters that may be properly presented for consideration at the Annual Meeting, the persons named as proxies will have discretion to vote on those matters according to their best judgment to the same extent as the person delivering the proxy would be entitled to vote. As of the date of this Proxy Statement, we do not anticipate that any other matters will be properly presented for consideration at the Annual Meeting.2018 PROXY STATEMENT 58How do I vote?You may vote by any of the following methods:
Meeting. In person at the Annual Meeting at either of the two locations where the Annual Meeting is being held. If you hold your shares through a broker or other intermediary, you will need proof of your stockholdings to attend the meeting. A recent account statement, letter or proxy from your broker or other intermediary will suffice. 2017 PROXY STATEMENT 46
Internet. By Internet at http://www.proxyvote.com. You will need the 12-digit Control Number included on the Notice or on your proxy card. Online procedures are designed to ensure the authenticity and correctness of your proxy vote instructions. 
Telephone. If you received a proxy card by mail, by dialing (via touch-tone telephone) the toll-free phone number on your proxy card under “Vote by Phone” and following the instructions. 
Mail. If you received a proxy card by mail, by completing, signing and dating your proxy card or voting instruction form and returning it promptly in the envelope provided. To be counted, votes by Internet, telephone or mail must be received by 11:59 p.m. Eastern Daylight Time on April 26, 2018.Can I change my vote?Yes. You may change your vote or revoke your proxy before the voting polls are closed at the Annual Meeting by the following methods:voting again by telephone or Internet;sending us a signed and dated proxy card dated later than your last vote;notifying the Corporate Secretary of Exterran in writing (in the case of a revocation); orvoting in person at the Annual Meeting at either of the two locations where the Annual Meeting is being held.How many votes must be present to hold the Annual Meeting?A quorum of stockholders is necessary for a valid meeting. The presence in person or by proxy of the holders of a majority of the outstanding shares of our common stock will constitute a quorum for the Annual Meeting. Under our Bylaws and under Delaware law, abstentions and “broker non-votes” are counted as present in determining whether the quorum requirement is satisfied.What is a broker non-vote?A “broker non-vote” occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power for that proposal and has not received instructions from the beneficial owner. Under the rules of the NYSE, brokers do not have discretionary authority to vote shares in connection with non-routine matters without instructions from the beneficial owner. Therefore, if you hold your shares in the name of a bank, broker or other holder of record, for your vote to be counted on any of the proposals other than Proposal 3 (ratification of independent registered public accounting firm), you will need to communicate your voting decisions to your bank, broker or other holder of record before April 25, 2018.What impact do broker non-votes and abstentions have on matters to be considered at the meeting?Abstentions and broker non-votes will count as votes against Proposal 4 (approval of the amendment to our Certificate of Incorporation). Abstentions and broker non-votes will not have any effect on the vote for any of the other proposals but will count towards establishment of a quorum.59 EXTERRAN CORPORATIONWho pays for the proxy solicitation related to the Annual Meeting?We will pay the cost of soliciting proxies. In addition to sending you these proxy materials or otherwise providing you access to these proxy materials, some of our officers, as well as management and non-management employees, may contact our stockholders by telephone, facsimile or in person. None of these officers or employees will receive additional compensation for any such solicitation. We have also retained Innisfree M&A Incorporated to assist in the solicitation of proxies as well as provide advisory services to the Company, for a fee of approximately $15,000 plus out-of-pocket expenses which will be paid by the Company. We will also request brokers and other fiduciaries to forward proxy soliciting materials to the beneficial owners of shares of our common stock that are held of record by such brokers and fiduciaries, and we will reimburse their reasonable out-of-pocket expenses.If you have any questions or require any assistance with voting your shares, please contact Innisfree M&A Incorporated, our proxy solicitor, toll-free at (888) 750-5834. Banks and brokers may call collect at (212) 750-5833.INNISFREE M&A INCORPORATED501 Madison Avenue, 20th Floor New York, NY 10022Stockholders May Call Toll-Free: (888) 750-5834 (from the United States and Canada)Banks and Brokers May Call Collect: (212) 750-5833How can I view the stockholder list?A complete list of stockholders of record entitled to vote at the Annual Meeting will be available for viewing during ordinary business hours for a period of ten days before the Annual Meeting at our offices at 4444 Brittmoore Road, Houston, Texas 77041 and at our offices located in FZE East Wing 5B, 4th Floor Dubai Airport Free Zone, PO Box 293509, Dubai, United Arab Emirates.Who will tabulate and certify the vote?Broadridge Financial Solutions, Inc., an independent third party, will tabulate and certify the vote and will have a representative to act as the independent inspector of elections for the Annual Meeting.What if I want a copy of the Company’s 2017 Annual Report on Form 10-K? www.exterran.com 4444 Brittmoore Rd., Houston, Texas 77041, or by email to investor.relations@exterran.com or by telephone at (281) 836-7000. This document is also available at the SEC’s website, which can be found at http://www.sec.gov.
EXTERRAN CORPORATION4444 BRITTMOORE ROADHOUSTON, TX 77041VOTE BY INTERNET -www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALSIf you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:E19763-P86024KEEP THIS PORTION FOR YOUR RECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.DETACH AND RETURN THIS PORTION ONLYEXTERRAN CORPORATIONForAllWithholdAllFor AllExceptTo withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.The Board of Directors recommends you vote FOR the election of the following eightdirector nominees:☐☐☐1.Election of Directors:01) William M. Goodyear05) Mark R. Sotir02) James C. Gouin06) Richard R. Stewart03) John P. Ryan07) Andrew J. Way04) Christopher T. Seaver 08) Ieda Gomes YellThe Board of Directors recommends you vote FOR proposals 2 and 3:ForAgainstAbstain2.Ratification of the appointment of Deloitte & Touche LLP as Exterran Corporation’s independent registered public accounting firm for 2017.☐☐☐3.Advisory, non-binding vote to approve the compensation of our named executive officers.☐☐☐The Board of Directors recommends you vote 1 YEAR on the following proposal:1 Year2 Years3 YearsAbstain4.Advisory, non-binding vote on the frequency of future stockholder advisory votes on the compensation of our named executive officers.☐☐☐☐NOTE:Such other business as may properly come before the meeting or any adjournment or postponement thereof.Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.Signature [PLEASE SIGN WITHIN BOX]DateSignature (Joint Owners)DateV.1.1ImportantWhat if I share my residence with another stockholder, how many copies of the Notice Regarding theof Internet Availability of Proxy Materials or of the printed proxy materials will I receive?In accordance with SEC rules, we are sending only a single Notice of Internet Availability of Proxy Materials or set of the printed proxy materials to any household at which two or more stockholders reside if they share the same last name or we reasonably believe they are members of the same family, unless we have received instructions to the contrary from any stockholder at that address. This practice, known as “householding,” reduces the volume of duplicate information received at your household and helps us reduce costs.Each stockholder subject to householding that requests printed proxy materials will receive a separate proxy card or voting instruction card. We will deliver promptly, upon written request, a separate copy of the annual report or proxy statement, as applicable, to a stockholder at a shared address to which a single copy of the document was previously delivered. If you received a single set of these documents for this year, but you would prefer to receive your own copy, you may direct requests for separate copies to our Transfer Agent at the Annual Meeting:2018 PROXY STATEMENT 60What if I consent to have one set of materials mailed now but change my mind later?You may withdraw your householding consent at any time by contacting our Transfer Agent at the address, telephone number and email address provided above. We will begin sending separate copies of stockholder communications to you within 30 days of receipt of your instruction.The Noticereason I receive multiple sets of materials is because some of the shares belong to my children. What happens if they move out and Proxy Statementno longer live in my household?When we receive notice of an address change for one of the members of the household, we will begin sending separate copies of stockholder communications directly to the stockholder at his or her new address. You may notify us of a change of address by contacting our Transfer Agent at the address, telephone number and Annual Report are available at www.proxyvote.com.email address provided above.61 EXTERRAN CORPORATIONE19764-P86024APPENDIX A EXTERRAN CORPORATIONAnnual Meeting of StockholdersApril 27, 2017 8:30 AM CDTThis proxy is solicited by the Board of DirectorsThe stockholder(s) hereby appoint(s) Andrew J. Way, William M. Goodyear and Valerie L. Banner, or any of them, as proxies, each with the power to appoint his or her substitute, and hereby authorizes each of them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of EXTERRAN CORPORATION that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholder(s) to be held at 8:30 AM CDT on April 27, 2017, at the offices of EXTERRAN CORPORATION located at 4444 Brittmoore Road, Houston, Texas 77041, USA, and any adjournment or postponement thereof.This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.Continued and to be signed on reverse sideV.1.1Reconciliation of GAAP and Non-GAAP Financial MeasuresWe define EBITDA, as adjusted, as net income (loss) excluding income (loss) from discontinued operations (net of tax), cumulative effect of accounting changes (net of tax), income taxes, interest expense (including debt extinguishment costs), depreciation and amortization expense, impairment charges, restructuring and other charges, non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations, expensed acquisition costs and other items. We believe EBITDA, as adjusted, is an important measure of operating performance because it allows management, investors and others to evaluate and compare our core operating results from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization), our subsidiaries’ capital structure (non-cash gains or losses from foreign currency exchange rate changes on intercompany obligations), tax consequences, impairment charges, restructuring and other charges, expensed acquisition costs and other items. Management uses EBITDA, as adjusted, as a supplemental measure to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, the compensation committee has used EBITDA, as adjusted, in evaluating the performance of the Company and management and in evaluating certain components of executive compensation, including performance-based annual incentive programs. Our EBITDA, as adjusted, may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner.EBITDA, as adjusted, is not a measure of financial performance under GAAP and should not be considered in isolation or as an alternative to net income (loss), cash flows from operating activities or any other measure determined in accordance with GAAP. Items excluded from EBITDA, as adjusted, are significant and necessary components to the operation of our business and therefore, EBITDA, as adjusted, should only be used as a supplemental measure of our operating performance.The following table reconciles our net income (loss) to EBITDA, as adjusted (in thousands): Years Ended December 31, 2017 2016 Net income (loss) $ 33,880 $ (227,937 ) (Income) loss from discontinued operations, net of tax (39,736 ) 56,171 Depreciation and amortization 107,824 132,886 Long-lived asset impairment 5,700 14,495 Restatement related charges 3,419 18,879 Restructuring and other charges 3,189 22,038 Proceeds from sale of joint venture assets — (10,403 ) Interest expense 34,826 34,181 Gain on currency exchange rate remeasurement of intercompany balances (516 ) (8,559 ) Loss on sale of businesses 111 — Penalties from Brazilian tax programs 1,763 — Provision for income taxes 22,695 124,242 EBITDA, as adjusted $ 173,155 $ 155,993 2018 PROXY STATEMENT 62——— A LEADING PROCESS AND SYSTEMS COMPANY ———– oil – gas – water – power –Exterran Corporationwww.exterran.com4444 Brittmoore Rd.Houston, Texas 77041