Form 4: Select Water Solutions CEO Sells Shares to Cover Tax Obligations, Receives Performance Share Units

John Schmitz, President/CEO of Select Water Solutions, Inc., disposed of shares to cover tax obligations and received performance share units tied to the company's total shareholder return.

Summary

• John Schmitz, the President and CEO of Select Water Solutions, Inc. (WTTR), filed a Form 4 detailing changes in his beneficial ownership.
• On March 5, 2024, Schmitz disposed of 28,437 shares of Class A Common Stock at a price of $8.18 to satisfy tax withholding obligations related to the vesting of restricted stock.
• Following this transaction, Schmitz directly owns 1,604,416 shares of Class A Common Stock.
• He also indirectly owns 2,825,444 shares through B-29 Holdings, LP and 399,684 shares through B-29 Investments, LP.
• On February 24, 2024, Schmitz was granted 92,832 Performance Share Units (PSUs).
• These PSUs represent a contingent right to receive Class A common stock, with the number of shares vesting dependent on the company's total shareholder return from January 1, 2024, to December 31, 2026.
• The vesting percentage can range from 0% to 200% of the target number of PSUs.

Sentiment

Score: 6

Explanation: The document is neutral overall. The disposal of shares is a routine transaction for tax purposes, and the granting of PSUs is a positive sign of aligning management with shareholder interests.

Positives

• The granting of Performance Share Units to the CEO aligns his interests with those of the shareholders, incentivizing him to improve the company's total shareholder return.

Risks

• The disposal of shares to cover tax obligations could be perceived negatively by some investors, although it is a common practice.

Future Outlook

The number of shares ultimately received from the PSUs will depend on Select Water Solutions' performance relative to its peers over the next three years.

Industry Context

Form 4 filings are a routine part of corporate governance, providing transparency into the transactions of company insiders. The use of performance-based equity compensation is a common practice to align management incentives with shareholder value creation.

Comparison to Industry Standards

• Performance-based equity compensation is a common practice among publicly traded companies, particularly in the energy sector.
• Companies like Halliburton, Schlumberger, and Baker Hughes also utilize similar performance metrics, such as total shareholder return, to determine vesting of equity awards.
• The specific vesting criteria and performance targets vary from company to company, reflecting their individual strategic priorities and risk profiles.

Stakeholder Impact

• Shareholders: The PSU grant aligns management's interests with shareholder value creation.
• Employees: The PSU plan may motivate employees through its impact on company performance.

Key Dates