Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
In light of current market conditions and in furtherance of actions taken by Archrock, Inc. (the “Company”) to reduce costs and improve cash flow, each of D. Bradley Childers, Doug S. Aron, Stephanie C. Hildebrandt, Jason G. Ingersoll and Eric R. Thode (each, an “Executive”) entered into a compensation letter (the “Compensation Letter”) with the Company dated April 24, 2020, which provides for a 10% reduction (or, in the case of Mr. Childers, a 25% reduction) in each Executive’s annual base salary. Under their respective Compensation Letter, effective as of June 7, 2020, the Executives have agreed to reductions to their respective annual base salaries to the following levels: Mr. Childers: $656,250; Mr. Aron: $414,000; Ms. Hildebrandt: $378,000; Mr. Ingersoll: $324,000; and Mr. Thode: $315,000.
Under each Executive’s Compensation Letter, the terms of which were approved by the Compensation Committee of the Board of Directors (the “Compensation Committee”) on April 24, 2020, if an Executive incurs a qualifying termination of employment under his or her severance benefit agreement with the Company (a “Severance Benefit Agreement”) or his or her change of control agreement with the Company (a “Change of Control Agreement”), then, for purposes of calculating the applicable Executive’s severance payments and benefits under his or her Severance Benefit Agreement or Change of Control Agreement (as applicable), the Company will apply the Executive’s pre-reduction base salary.
Further, each Executive has agreed to waive his or her right to resign his or her employment with the Company for “Good Reason” (as defined in the applicable Severance Benefit Agreement or Change of Control Agreement) in connection with the compensation changes described in the applicable Executive’s Compensation Letter. In the event of any subsequent reduction in an Executive’s annual base salary, the cumulative impact of such subsequent reduction and the compensation changes described in the applicable Executive’s Compensation Letter may be taken into account for determining whether “Good Reason” exists under the Executive’s Severance Benefit Agreement or Change of Control Agreement (as applicable).
In addition, on April 24, 2020, the Compensation Committee recommended and the Board of Directors approved a 25% reduction in all retainers paid to directors, including the base, chairman of the board and committee chair retainers, effective beginning with the payment for the second quarter of 2020.
The foregoing summary is qualified in its entirety by reference to the Form of Compensation Letter, a copy of which is filed as Exhibit 10.1 hereto and is incorporated in this Item 5.02 by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
