Form 4: Core Laboratories SVP & CFO Christopher Scott Hill Reports Acquisition of Performance Shares

Christopher Scott Hill, SVP & CFO of Core Laboratories, reports the acquisition of 68,800 performance shares that will vest based on the company's ROIC performance relative to its peer group over a three-year period.

Summary

• On February 13, 2025, Christopher Scott Hill, the SVP & CFO of Core Laboratories, filed a Form 4.
• The filing reports the acquisition of 68,800 performance shares.
• These shares will vest based on Core Laboratories' Return on Invested Capital (ROIC) performance compared to the Bloomberg Peer Group (BPG) over a three-year performance period from January 1, 2025, to December 31, 2027.
• Vesting can occur even if employment is terminated due to death, disability, termination without cause, or retirement after age 62.
• The vesting schedule is as follows: 50% vest if the company is in the top 35th percentile of ROIC among the BPG, 100% vest if in the top 55th percentile, and 175% vest if at or above the 85th percentile.
• The number of shares vesting between the 35th and 55th percentiles, and between the 55th and 85th percentiles, will be interpolated on a straight-line basis.
• If the absolute total shareholder return is negative for the performance period, the number of shares vesting above 100% (up to 175%) will be reduced by one-half.

Sentiment

Score: 6

Explanation: The document itself is neutral, reporting a standard executive compensation practice. The sentiment is slightly positive as it indicates alignment of management and shareholder interests through performance-based incentives.

Positives

• The performance-based vesting of shares aligns management's interests with those of shareholders, incentivizing improved ROIC and potentially higher shareholder returns.

Risks

• The actual number of shares that will vest is uncertain and depends on Core Laboratories' future financial performance.
• Negative total shareholder return could significantly reduce the potential payout from the performance shares.

Future Outlook

The number of shares that will ultimately vest depends on Core Laboratories' ROIC performance relative to its peer group over the next three years and the total shareholder return during that period.

Industry Context

Performance-based compensation is a common practice in the oilfield services industry to align executive incentives with shareholder value creation. ROIC is a widely used metric to assess the efficiency of capital allocation.

Comparison to Industry Standards

• Many companies in the oilfield services sector, such as Schlumberger, Halliburton, and Baker Hughes, utilize performance-based equity compensation plans for their executives.
• These plans often include metrics like ROIC, revenue growth, and total shareholder return to incentivize specific strategic goals.
• The vesting schedules and performance targets vary depending on the company's specific circumstances and strategic priorities.

Stakeholder Impact

• Shareholders: The performance-based compensation structure aims to align management's interests with shareholder value creation.
• Employees: The vesting conditions may incentivize employees to improve the company's financial performance.

Next Steps

• The Compensation Committee will measure and determine the Company's ROIC performance among the BPG at the end of the Performance Period.
• The Compensation Committee will determine the absolute total shareholder return for the Performance Period at the end of the Performance Period.
• The shares will vest, if at all, on January 1, 2028, following the conclusion of the Performance Period.

Key Dates