| Re: | Natural Gas Services Group, Inc. |
| Definitive Proxy Filed April 27, 2009 |
Name and Principal Position (a) | Year (b) | Salary ($) (c) | Bonus ($) (d) | Stock Awards ($) (e) | Option Awards ($) (1) (f) | Non-Equity Incentive Plan Compensation (2) (g) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (h) | All Other Compensation ($)(3) (i) | Total ($) (j) | ||||||||||||||||||||||||
| Stephen C. Taylor | 2008 | $ | 271,250 | - | − | $ | 51,211 | (4) | $ | 116,875 | (9) | − | $ | 14,029 | $ | 453,365 | |||||||||||||||||
| Chairman, | 2007 | 207,982 | - | − | 270,106 | (5) | 89,250 | − | 10,168 | 577,506 | |||||||||||||||||||||||
President and Chief | 2006 | 173,615 | − | − | 216,000 | (6) | 87,500 | − | 8,994 | 486,109 | |||||||||||||||||||||||
| Executive Officer | |||||||||||||||||||||||||||||||||
| Earl R. Wait | 2008 | 124,519 | - | − | 12,036 | (7) | 37,188 | (10) | − | 18,540 | 192,283 | ||||||||||||||||||||||
| Vice President - | 2007 | 112,500 | - | − | 12,023 | (8) | 33,469 | − | 19,766 | 177,758 | |||||||||||||||||||||||
| Accounting | 2006 | 100,769 | − | − | - | 39,375 | − | 18,490 | 158,634 | ||||||||||||||||||||||||
| Paul D. Hensley | 2008 | 137,135 | - | − | − | 49,300 | (11) | − | 12,902 | 199,337 | |||||||||||||||||||||||
| Director, | 2007 | 130,500 | - | − | − | 43,078 | (12) | − | 12,582 | 186,160 | |||||||||||||||||||||||
| Senior Vice President | 2006 | 130,500 | − | − | − | 50,680 | (13) | − | 13,551 | 194,731 | |||||||||||||||||||||||
- Technology | |||||||||||||||||||||||||||||||||
| James R. Hazlett | 2008 | 124,615 | - | − | − | 37,188 | (14) | − | 11,761 | 173,564 | |||||||||||||||||||||||
| Vice President- | 2007 | 115,000 | - | − | − | 34,213 | − | 9,573 | 158,786 | ||||||||||||||||||||||||
| Technical Services | 2006 | 105,615 | − | − | − | 40,250 | − | 7,723 | 153,588 | ||||||||||||||||||||||||
| (1) | The amounts in column (f) reflect the dollar amounts recognized for financial statement reporting purposes for the fiscal years ended December 31, 2006, 2007 and 2008, in accordance with FAS 123(R), associated with stock option grants under our 1998 Stock Option Plan and the stock option grant to Mr. Taylor under his employment agreement and thus include amounts associated with grants made in 2007 and prior to 2007. Assumptions used to calculate these amounts are included in footnote 10 to our audited consolidated financial statements for the fiscal year ended December 31, 2006, in footnote 9 to our audited consolidated financial statements for the fiscal year ended December 31, 2007 and in footnote 9 to our audited consolidated financial statements for the fiscal year ended December 31, 2008. |
| (2) | The amounts in column (g) reflect the cash bonus awards to the named executive officers under our Incentive Cash Bonus Program, which is discussed in further detail on page 16 under the caption “Short-Term Incentives – Incentive Cash Bonus Program.” |
(3) | The amounts shown in column (i) include matching contributions made by Natural Gas Services Group to each named executive officer under our 401(k) plan and the aggregate incremental cost to Natural Gas Services Group of perquisites provided to our named executive officers as follows: |
Name | Year | Automobile Allowance | Personal Use of Company Provided Automobiles | Additional Incremental Portion of Health Insurance Premiums Paid for Officers Only | 401(k) Plan | Total(a) | |||||||||||||||
| Stephen C. Taylor | 2008 | $ | - | $ | 1,237 | $ | 1,051 | $ | 6,326 | $ | 14,029 | ||||||||||
| 2007 | - | 1,237 | 956 | 5,690 | 10,168 | ||||||||||||||||
| 2006 | - | 4,566 | 927 | �� | 1,766 | 8,994 | |||||||||||||||
| Earl R. Wait | 2008 | 8,654 | − | 3,185 | 4,212 | 18,540 | |||||||||||||||
| 2007 | 9,000 | − | 4,727 | 3,564 | 19,766 | ||||||||||||||||
| 2006 | 9,000 | − | 4,581 | 2,909 | 18,490 | ||||||||||||||||
| Paul D. Hensley | 2008 | - | 1,437 | 3,185 | 5,557 | 12,902 | |||||||||||||||
| 2007 | - | 2,145 | 3,651 | 3,915 | 12,582 | ||||||||||||||||
| 2006 | - | 3,464 | 2,895 | 4,582 | 13,551 | ||||||||||||||||
| James R. Hazlett | 2008 | - | 923 | 5,012 | 3,334 | 11,761 | |||||||||||||||
| 2007 | - | 923 | 4,727 | 1,393 | 9,573 | ||||||||||||||||
| 2006 | - | 1,041 | 4,582 | − | 7,723 | ||||||||||||||||
Total | 2008 | $ | 8,654 | $ | 3,597 | $ | 12,433 | $ | 19,429 | $ | 57,232 | ||||||||||
| 2007 | 9,000 | 4,305 | 14,061 | 14,562 | 52,089 | ||||||||||||||||
| 2006 | 9,000 | 9,071 | 12,985 | 9,257 | 48,758 | ||||||||||||||||
| (a) | The amounts reflected in this column include a nominal cash Christmas Bonus paid to each of the named executive officers in the fiscal years ended December 31, 2006, 2007 and 2008. |
| (4) | This amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2008, in accordance with FAS 123(R), for 7,500 shares of common stock that vested on November 21, 2008 under the stock option granted to Mr. Taylor on November 21, 2006 under our 1998 Stock Option Plan. |
| (5) | This amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2007, in accordance with FAS 123(R), for 15,000 shares of common stock that vested on January 13, 2007 under the stock option granted to Mr. Taylor in August 2005 under his employment agreement and for 7,500 shares of common stock that vested on November 21, 2007 under the stock option granted to Mr. Taylor on November 21, 2006 under our 1998 Stock Option Plan. |
| (6) | This amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006, in accordance with FAS 123(R), for 15,000 shares of common stock that vested on January 13, 2006 under the stock option granted to Mr. Taylor in August 2005 under his employment agreement. |
| (7) | This amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2008, in accordance with FAS 123(R), for 1,666 shares of common stock that vested on November 21, 2008 under the stock option granted to Mr. Wait on November 21, 2006 under our 1998 Stock Option Plan. |
| (8) | This amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2007, in accordance with FAS 123(R), for 1,666 shares of common stock that vested on November 21, 2007 under the stock option granted to Mr. Wait on November 21, 2006 under our 1998 Stock Option Plan. |
| (9) | In March 2009, we elected to pay a portion of the earned cash bonus in stock options rather than cash. Each executive officer was required to take at least 25% of his bonus in options. Furthermore, each officer could elect to take all or part of the remaining 75% of the cash bonus in options. In lieu of $46,750 of his 2008 cash bonus included in column (g) in the table above, Mr. Taylor was granted a stock option to purchase 23,852 shares at an exercise price of $7.84 per share, which was equal to the fair market value of our common stock on the date of grant. See pages 16 and 17 under the caption “Short-Term Incentives – Incentive Cash Bonus Program” for further details. |
| (10) | In March 2009, we elected to pay a portion of the earned cash bonus in stock options rather than cash. Each executive officer was required to take at least 25% of his bonus in options. Furthermore, each officer could elect to take all or part of the remaining 75% of the cash bonus in options. In lieu of $22,313 of his 2008 cash bonus included in column (g) in the table above, Mr. Wait was granted a stock option to purchase 11,384 shares at an exercise price of $7.84 per share, which was equal to the fair market value of our common stock on the date of grant. See pages 16 and 17 under the caption “Short-Term Incentives – Incentive Cash Bonus Program” for further details. |
| (11) | In March 2009, we elected to pay a portion of the earned cash bonus in stock options rather than cash. Each executive officer was required to take at least 25% of his bonus in options. Furthermore, each officer could elect to take all or part of the remaining 75% of the cash bonus in options. In lieu of $12,325 of his 2008 cash bonus included in column (g) in the table above, Mr. Hensley was granted a stock option to purchase 6,288 shares at an exercise price of $7.84 per share, which was equal to the fair market value of our common stock on the date of grant. See pages 16 and 17 under the caption “Short-Term Incentives – Incentive Cash Bonus Program” for further details. |
| (12) | This amount reflects the cash bonus awarded to Mr. Hensley under our Incentive Cash Bonus Program. Pursuant to the employment agreement between Mr. Hensley and Screw Compression Systems, Inc., our former subsidiary, which expired according to its own terms on January 3, 2008, the amount awarded to Mr. Hensley was calculated using a base salary of $126,700 and a target award opportunity of up to 40%. |
| (13) | This amount reflects the cash bonus awarded to Mr. Hensley under our Incentive Cash Bonus Program. Pursuant to the employment agreement between Mr. Hensely and Screw Compression Systems, Inc., our former subsidiary, which expired according to its own terms on January 3, 2008, the amount awarded to Mr. Hensley was calculated using a base salary of $126,700 and a target award opportunity of up to 40%. |
| (14) | In March 2009, we elected to pay a portion of the earned cash bonus in stock options rather than cash. Each executive officer was required to take at least 25% of his bonus in options. Furthermore, each officer could elect to take all or part of the remaining 75% of the cash bonus in options. In lieu of $14,875 of his 2008 cash bonus included in column (g) in the table above, Mr. Hazlett was granted a stock option to purchase 7,589 shares at an exercise price of $7.84 per share, which was equal to the fair market value of our common stock on the date of grant. See pages 16 and 17 under the caption “Short-Term Incentives – Incentive Cash Bonus Program” for further details. |
| · | the Company is responsible for the adequacy and accuracy of the disclosure in the filing; |
| · | staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and |
| · | the Company may not assert staff comments as defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
| Very truly yours, | |||
| JONES & KELLER, P.C. | |||
| By: | /s/ David A. Thayer | ||
| David A. Thayer | |||
