UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

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Filed by a Party other than the Registrant

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Preliminary Proxy Statement

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to §240.14a-12

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Key Energy Services, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Fee paid previously with preliminary materials.

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS

To the Stockholders of Key Energy Services, Inc.:

Notice is hereby given that the 2019 Annual Meeting of Stockholders, which we refer to as the Annual Meeting, of Key Energy Services, Inc., which we refer to as the Company, will be held at the Four Seasons Hotel Houston, 1300 Lamar Street, Houston, Texas 77010, on Wednesday, May 1, 2019 at 8:00 a.m. (Central Time). At the Annual Meeting, we will ask you to consider and take action on the following matters:

(1)

To elect four directors to serve until the 2020 Annual Meeting Stockholders;

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To approve our 2019 Equity and Cash Incentive Plan;

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(3)

To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year;

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(4)

To approve, on an advisory basis, the compensation of our own named executive officers as disclosed in these materials;

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(5)

To approve, on an advisory basis, the frequency of the named executive officer compensation advisory vote; and

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(6)

To transact such other business as may properly come before the meeting or any adjournment thereof.

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Each outstanding share of the Company’s Common Stock (NYSE: KEG) entitles the owner of record at the close of business on March 4, 2019, to receive notice of and to vote at the Annual Meeting or any adjournment or postponement of the Annual Meeting. A list of all stockholders entitled to vote is available for inspection during normal business hours at our principal executive offices at 1301 McKinney St., Suite 1800, Houston, Texas 77010. This list will also be available at the Annual Meeting.

We are pleased to take advantage of the rule of the U.S. Securities and Exchange Commission that allow us to furnish our proxy materials and our annual report to stockholders on the Internet. We believe that posting these materials on the Internet enables us to provide stockholders with the information that they need more quickly, while lowering our costs of printing and delivery and reducing the environmental impact of our Annual Meeting. Accordingly, beginning on or about March 15, 2019, we will mail each stockholder a Notice of Internet Availability of Proxy Materials with instructions on how to access the proxy materials, vote online or request paper copies.

YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, WE ENCOURAGE YOU TO READ THIS PROXY STATEMENT AND SUBMIT YOUR PROXY SO THAT YOUR SHARES CAN BE VOTED AT THE ANNUAL MEETING AND TO HELP US ENSURE A QUORUM AT THE ANNUAL MEETING. YOU MAY NONETHELESS VOTE IN PERSON IF YOU ATTEND THE ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE TAKE THE TIME TO VOTE. YOU MAY VOTE YOUR SHARES VIA THE INTERNET OR BY TELEPHONE BY FOLLOWING THE INSTRUCTIONS INCLUDED IN THIS PROXY

STATEMENT OR, IF YOU ELECTED TO RECEIVE PRINTED VERSIONS OF THE MATERIALS, BY SIGNING, DATING AND RETURNING THE ENCLOSED PAPER PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR SHARES IN PERSON, YOU MAY REVOKE YOUR PROXY.

ALL STOCKHOLDERS ARE EXTENDED A CORDIAL INVITATION TO ATTEND THE MEETING.

By Order of the Board of Directors,

Robert J. Saltiel
President and Chief Executive Officer

Key Energy Services, Inc.
1301 McKinney Street, Suite 1800
Houston, Texas 77010
Houston, Texas
March 15, 2019

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KEY ENERGY SERVICES, INC.
1301 McKinney Street, Suite 1800
Houston, Texas 770101
 
PROXY STATEMENT
2019 ANNUAL MEETING OF STOCKHOLDERS

The Board of Directors (the “Board of Directors” or the “Board”) of Key Energy Services, Inc. (the “Company”) requests your proxy for the 2019 Annual Meeting of Stockholders that will be held on May 1, 2019, at 8:00 a.m. Central Time, at the Four Seasons Hotel Houston, 1300 Lamar Street, Houston, TX 7010 (the “Annual Meeting”). By granting the proxy, you authorize the persons named on the proxy to represent you and vote your shares at the Annual Meeting. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time to time and to vote your shares at any adjournments or postponements of the Annual Meeting. The Board has made this proxy statement (the “Proxy Statement”) and the accompanying Notice of 2019 Annual Meeting of Stockholders available on the Internet at www.proxyvote.com. Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy solicitation materials primarily via the Internet, rather than mailing paper copies of these materials to each stockholder. Beginning on or about March 15 2019, we will mail to each stockholder a Notice of Internet Availability of Proxy Materials (the “Notice of Availability”) containing instructions on how to access the proxy materials, vote online or request paper copies. The approximate date on which this Proxy Statement, the Notice of 2019 Annual Meeting of Stockholders, the Company’s 2018 Annual Report to Stockholders (the “Annual Report”) and the proxy card are first being made available to stockholders at http://www.viewproxy.com/keyenergy/2019 is March 15, 2019.

ABOUT THE ANNUAL MEETING

Purpose of the Annual Meeting

The purpose of the Annual Meeting is for our stockholders to consider and act upon the proposals described in this Proxy Statement and any other matters that properly come before the Annual Meeting or any adjournment or postponement thereof.

Proposals to be Voted Upon at the Annual Meeting

At the Annual Meeting, our stockholders will be asked to consider and vote upon the following five proposals:

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Proposal ONE: To elect to the Board the four directors set forth in this Proxy Statement, each of whom will hold office until the 2020 Annual Meeting of Stockholders and until his successor is elected and qualified or until his earlier death, resignation or removal.

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Proposal TWO: To approve our 2019 Equity and Cash Incentive Plan.

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Proposal THREE: To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year;

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Proposal FOUR: To approve, on a non-binding advisory basis, the compensation of the Company’s Named Executive Officers, as disclosed in this Proxy Statement, for the fiscal year ended December 31, 2018.

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Proposal FIVE: To approve, on a non-binding advisory basis, the frequency of the Named Executive Officer compensation advisory vote.

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In addition, any other matters that properly come before the Annual Meeting or any adjournment or postponement thereof will be considered. Management is presently aware of no other business to come before the Annual Meeting.

Recommendation of the Board

The Board of Directors recommends that you vote FOR each of the nominees on proposal ONE (1), FOR each of proposals TWO (2) through FOUR (4) and FOR the frequency of  “1 year” in proposal FIVE (5), above.

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Important Notice Regarding the Availability of Proxy Materials for the 2019 Annual Meeting of Stockholders to Be Held on May 1, 2019: The Notice of Annual Meeting of stockholders, Proxy Statement and the Annual Report to Stockholders are available at http://www.viewproxy.com/keyenergy/2019.

Pursuant to the “notice and access” rules adopted by the SEC, we have elected to provide stockholders access to our proxy materials primarily via the Internet. The approximate date on which this Proxy Statement, the accompanying Notice of 2019 Annual Meeting of Stockholders, the Annual Report and the proxy card are first being made available to stockholders at http://www.viewproxy.com/keyenergy/​2019 is March 15, 2019. The Notice of Availability will be sent to all those who were stockholders of the Company as of the close of business on March 4, 2019 (the “Record Date”). The Notice of Availability includes instructions on how to access our proxy materials and how to request a printed copy of these materials. In addition, by following the instructions in the Notice of Availability, stockholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis.

Voting at the Annual Meeting

The Company’s common stock (including restricted shares of common stock), par value $0.01 per share (the “Common Stock”), is the only class of securities that entitles holders to vote generally at meetings of the Company’s stockholders. Each share of Common Stock outstanding on the Record Date entitles the holder to one vote at the Annual Meeting.

If on the Record Date you hold shares of our Common Stock that are represented by stock certificates or registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered the stockholder of record with respect to those shares. As a stockholder of record, you may vote in person at the Annual Meeting or by proxy. Whether or not you plan to attend the Annual Meeting in person, you may vote by Internet by following the instructions on the Notice of Availability or by telephone using the number included on the proxy card. If you request printed copies of the proxy materials by mail, you may also vote by signing and submitting your proxy card. Whether or not you plan to attend the Annual Meeting, we urge you to vote by way of the Internet, by telephone or by filling out and returning the proxy card you will receive upon request of printed materials. If you submit a proxy but do not give voting instructions as to how your shares should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement.

If on the Record Date you hold shares of our Common Stock in an account with a brokerage firm, bank or other nominee, then you are a beneficial owner of the shares and hold such shares in “street name,” and these proxy materials will be forwarded to you by that organization. As a beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote the shares held in their account, and the nominee has enclosed or provided voting instructions for you to use in directing it how to vote your shares. The nominee that holds your shares, however, is considered the stockholder of record for purposes of voting at the Annual Meeting. Because you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you bring to the Annual Meeting a letter from your broker, bank or other nominee confirming your beneficial ownership of the shares as of the Record Date. Whether or not you plan to attend the Annual Meeting, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted.

A list of stockholders entitled to vote at the Annual Meeting will be available for inspection during ordinary business hours for a period of ten days before the Annual Meeting at our offices located at 1301 McKinney Street, Suite 1800, Houston, Texas 77010. The list will also be available for inspection at the Annual Meeting.

Effect of Broker Non-Votes and Abstentions

If you are a beneficial owner and do not vote, and your broker, bank or other nominee does not have discretionary power to vote your shares, your shares may constitute “broker non-votes.” Broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal and generally occur because the broker (1) does not receive voting instructions from the beneficial owner and (2) lacks discretionary authority to vote the shares. Brokers and other nominees have

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discretionary authority to vote on the ratification of our independent public accounting firm for clients who have not provided voting instructions. However, without voting instructions from their clients, they cannot vote on “non-routine” proposals, including the election of directors, the approval of equity compensation plans, and the approval, on a non-binding advisory basis, of the compensation of the Company’s Named Executive Officers and the frequency of such advisory vote. Shares that constitute broker non-votes will be counted for the purpose of establishing a quorum at the Annual Meeting.

The shares of a stockholder whose ballot on any or all proposals is marked as “abstain” will be included in the number of shares present at the Annual Meeting to determine whether a quorum is present. The effect of broker non-votes and “abstain” votes, with respect to each proposal, is discussed below under “Required Votes.”

How to Revoke Your Proxy

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by (1) delivering a written notice of revocation addressed to Key Energy Services, Inc., Attn: General Counsel, 1301 McKinney Street, Suite 1800, Houston, Texas 77010, (2) duly executing a proxy bearing a later date, (3) voting again by Internet or by telephone or (4) attending the Annual Meeting and voting in person. Your last vote or proxy will be the vote or proxy that is counted. Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you vote or specifically so request.

Quorum Requirement for the Annual Meeting

The presence at the Annual Meeting, whether in person or by valid proxy, of the persons holding a majority of shares of Common Stock outstanding on the Record Date will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 20,374,477 shares of Common Stock held by 91 stockholders of record. Abstentions (i.e., if you or your broker mark “abstain” on a proxy or voting instruction form, or if a stockholder of record attends the Annual Meeting but does not vote (either before or during the Annual Meeting)) and broker non-votes will be considered to be shares present at the meeting for purposes of establishing a quorum.

Required Votes

Proposal ONE—Election of Directors. Each director nominee considered for election must receive more votes cast “for” such candidate than “against” such candidate to be elected at the Annual Meeting. Abstentions and broker non-votes are not taken into account in determining the outcome of the election of directors.

Proposal TWO—Adoption of the 2019 Equity and Cash Incentive Plan. Approval of the proposal to adopt our 2019 Equity and Cash Incentive Plan requires the affirmative vote of holders of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote. Proposal Two is not considered a routine matter. Broker non-votes are not taken into account in determining the outcome of this proposal, and abstentions will have the effect of a vote against this proposal.

Proposal THREE—Ratification of our Independent Public Accounting Firm. Approval of the proposal to ratify the appointment by the Audit Committee of the Board (the “Audit Committee”) of Grant Thornton LLC as our independent registered public accounting firm for the fiscal year ending December 31, 2019 requires the affirmative vote of the holders of at least a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. Broker non-votes are not taken into account in determining the outcome of this proposal, and abstentions will have the effect of a vote against this proposal.

Proposal FOUR—Approval of Named Executive Officer Compensation. Approval, on a non-binding advisory basis, of the Company’s Named Executive Officer compensation for the fiscal year ended December 31, 2018 requires the affirmative vote of the holders of at least a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. Broker non-votes are not taken into account in determining the outcome of this proposal, and abstentions will have the effect of a vote against this proposal. This advisory vote on executive compensation is not

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binding on the Company, the compensation committee of the Board (the “Compensation Committee”) or the Board. However, the Compensation Committee and the Board will take into account the result of the vote when determining future executive compensation programs.

Proposal FIVE—Approval of the Frequency of the Named Executive Officer Compensation Advisory Vote. Approval, on a non-binding advisory basis, of the frequency of the Company’s Named Executive Officer compensation advisory vote every year, every two years or every three years, will be determined by the alternative receiving the greatest number of votes. Broker non-votes are not taken into account in determining the outcome of this proposal, and abstentions will have the effect of a vote against each proposed frequency. This advisory vote on the frequency of the named executive officer compensation vote is not binding on the Company, the Compensation Committee or the Board. However, the Compensation Committee and the Board will take into account the result of the vote when determining the frequency at which advisory votes on executive compensation will be included in our proxy statements for future annual general meetings.

Default Voting

A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly execute and submit a proxy, but do not provide any voting instructions, your shares will be voted FOR the election to the Board of each of the director nominees listed in Proposal ONE, FOR Proposal TWO, FOR Proposal THREE, FOR Proposal FOUR and FOR the frequency of  “1 year” in Proposal FIVE.

If any other business properly comes before the stockholders for a vote at the meeting, your shares will be voted in accordance with the discretion of the holders of the proxy. The Board of Directors knows of no matters, other than those previously stated, to be presented for consideration at the Annual Meeting.

In this Proxy Statement, the terms “the Company,” “we,” “us,” “our” and similar terms refer to Key Energy Services, Inc. and its subsidiaries.

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PROPOSAL ONE: ELECTION OF DIRECTORS

At the recommendation of the nominating and governance committee of the Board (the “Nominating and Governance Committee” or “NGC”), the Board of Directors has nominated the following individuals for re-election as directors of the Company, to serve for one-year terms beginning at the Annual Meeting and expiring at the 2020 Annual Meeting of the Stockholders, and until either they are re-elected or their successors are elected and qualified or until their earlier death, resignation or removal:

Steven H. Pruett
Sherman K. Edmiston
Scott D. Vogel
Robert J. Saltiel

Messrs. Pruett, Edmiston, Vogel and Saltiel are currently serving as directors of the Company. Biographical information for each director nominee is contained in the “Directors and Executive Officers” section below.

The Board of Directors has no reason to believe that its director nominees will be unable or unwilling to serve if elected. If a director nominee becomes unable or unwilling to accept nomination or election, either the number of the Company’s directors will be reduced or the persons acting under the proxy will vote for the election of a substitute nominee that the Board of Directors recommends.

In accordance with our certificate of incorporation and bylaws, Soter Capital LLC (“Soter”), as the sole holder of our Series A Preferred Stock, will nominate and elect five directors to the Board of Directors (the “Soter Directors”). Stockholders will not be entitled to cast votes in regard to these five Soter Directors at the Annual Meeting.

Vote Required

Under the Company’s bylaws, a director nominee must receive a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Under plurality voting in, the director nominee with the most votes for a particular seat is elected for that seat. Abstentions and broker non-votes are not counted for purposes of the election of directors.

However, pursuant to the Company’s director resignation policy, in any non-contested election of directors, any incumbent nominee must receive more votes cast “for” than “against” his or her re-election in order to be re-elected to the Board. The Board requires that a director tender his or her resignation if he or she fails to receive the required number of votes for re-election. If an incumbent director fails to receive the required vote for re-election, the Nominating and Governance Committee will act on an expedited basis to determine whether to accept the director’s resignation and will submit its recommendation for prompt consideration by the Board. The Nominating and Governance Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation.

Accordingly, because each director in this Proposal ONE is an incumbent director, the number of shares voted “for” each respective director must exceed the number of shares voted “against” such director in order for such director to be re-elected. Neither abstentions nor broker non-votes will have any effect on the outcome of the election of directors. Stockholders will not be entitled to cast their vote in regard to any director elected by Soter.

Recommendation

The Board unanimously recommends that stockholders vote FOR the
election to the Board of each of the director nominees.

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Directors and Executive Officers

Immediately following the Annual Meeting, assuming the stockholders re-elect the directors as set forth in “Proposal One: Election of Directors” above, the Board of the Company will consist of  (i) four directors to be elected by holders of our Common Stock at the Annual Meeting, and (ii) five Soter Directors elected solely by Soter as holder of our Series A Preferred Stock. The table below sets forth the name, age, title and status as an independent director of each Soter Director, each director to be re-elected by the stockholders at the Annual Meeting and each executive officer of the Company.

(1)

Member of the Audit Committee

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Member of the Compensation Committee

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Member of the Nominating and Governance Committee

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Set forth below is biographical information about each of the Company’s executive officers, directors and director nominees.

Board of Directors

On October 24, 2016, the Company and certain of its domestic subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware pursuant to a prepackaged plan of reorganization (the “Plan”). The Plan was confirmed by the bankruptcy court on December 6, 2016, and the Company emerged from bankruptcy proceedings on December 15, 2016 (the “Effective Date”). In this Proxy Statement, we may refer to the Company prior to the Effective Date as the “Predecessor Company,” and on and after the Effective Date as the “Successor Company.”

In connection with its emergence from bankruptcy, the Company issued to Soter the sole share of the Company’s Series A Preferred Stock, which confers certain rights to nominate and elect directors. We also adopted a new certificate of incorporation and bylaws, which provided that the Board would consist of ten directors until the annual meeting of stockholders held two years following emergence (i.e., the 2019 Annual Meeting). These included five directors appointed by Soter, as holder of our Series A Preferred Stock; two directors appointed by certain other former creditors of the Company (such former creditors, the “Other Parties”); and three independent directors (as such term is defined in NYSE Rule 303A), one of which was appointed by Soter, another of which was appointed by the Other Parties, and another of which was appointed by mutual agreement of Soter and the Other Parties. These directors would serve until the election of their successors at the 2019 Annual Meeting.

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Pursuant to our certificate of incorporation and our bylaws, following the 2019 Annual Meeting and for so long as the Series A Preferred Stock is outstanding, the size of the Board will consist of nine members, five of whom will be nominated and elected by Soter as the holder of our Series A Preferred Stock and four of whom will be nominated by the Board and elected by holders of our Common Stock. Two of the Soter Directors will hold two votes each on matters presented to the Board (subject to certain exceptions), and the Soter Directors will collectively hold votes that constitute a majority of all votes held by directors. As a result, subject to certain exceptions, the Soter Directors will control decisions made by the Board following the 2019 Annual Meeting, and the Company will continue to be considered to be a “Controlled Company” for purposes of the New York Stock Exchange (“NYSE”) Rule 303A.

Below is the name, age and certain other information of each member of our Board, including information regarding the positions each director holds, his or her principal occupation and business experience for the past five years and the names of other publicly held companies of which he or she currently serves as a director or has served as a director during the past five years. Assuming the Company’s stockholders elect the director nominees of the Board set forth in “Proposal One: Election of Directors” above, Steve Pruett, Sherman Edmiston, Scott Vogel and Robert J. Saltiel will continue as directors of the Company until their re-election, resignation or removal. Soter has separately nominated and will elect H.H. “Tripp” Wommack, III, Phil Norment, Jacob Kotzubei, Bryan Kelln and Mary Ann Sigler to continue as Soter Directors until their resignation or removal in accordance with our certificate of incorporation and bylaws.

Jacob Kotzubei, age 50, Mr. Kotzubei joined Platinum Equity in 2002 and is a Partner at the firm and a member of the firm’s Investment Committee. Mr. Kotzubei serves as an officer and/or director of a number of Platinum’s portfolio companies. Prior to joining Platinum in 2002, Mr. Kotzubei worked for 41∕2 years for Goldman Sachs’ Investment Banking Division in New York City. Previously, he was an attorney at Sullivan & Cromwell LLP in New York City, specializing in mergers and acquisitions. Mr. Kotzubei received a Bachelor’s degree from Wesleyan University and holds a Juris Doctor from Columbia University School of Law where he was elected a member of the Columbia Law Review. Mr. Kotzubei’s experience in executive management oversight, private equity, capital markets and transactional matters has led the Board to conclude that he has the varied expertise necessary to serve as a director of the Company. Mr. Kotzubei is a Soter Director. Mr. Kotzubei is also currently a director of Ryerson Holdings Corporation (“Ryerson”), a metal supplier and fabricating company and Kemet Corporation, a global manufacturer of passive electronic components and Verra Mobility Corp., a provider of smart traffic solutions. Mr. Kotzubei served as a director of CanWel Building Materials Group until April 11, 2016.

Philip E. Norment, age 59, Mr. Norment is a partner at Platinum Equity and a member of Platinum Equity’s Investment Committee and is a senior advisor on specific operational initiatives throughout the portfolio. He is also the senior operations executive responsible for evaluating acquisition opportunities and integrating new acquisitions into the portfolio. Prior to joining Platinum Equity in 1997, Mr. Norment served in a variety of management positions at Pilot Software, Inc. Over the course of 12 years he worked in the areas of global support, operations, consultative services and sales support, achieving the position of Chief Operating Officer. Mr. Norment earned a Bachelor’s degree in Economics and an MBA from the University of Massachusetts, Amherst. Mr. Norment’s experience in executive management oversight, private equity and transactional matters has led the Board to conclude that he has the varied expertise necessary to serve as a director of the Company. Mr. Norment is a Soter Director and will hold two votes on matters presented to the Board following the Annual Meeting. Mr. Norment is also a director of Ryerson.

Mary Ann Sigler, age 64, Ms. Sigler is the Chief Financial Officer of Platinum Equity. Ms. Sigler joined Platinum Equity in 2004 and is responsible for overall accounting, tax, and financial reporting as well as managing strategic planning projects for the firm. Prior to joining Platinum Equity, Ms. Sigler was with Ernst & Young LLP for 25 years where she was a partner. Ms. Sigler is a member of the board of Ryserson where she has served since January of 2010. Ms. Sigler also served as an acting Vice President of Ryerson from July 2007 through August 2014. Ms. Sigler has a B.A. in Accounting from California State University Fullerton and a Masters in Business Taxation from the University of Southern California. Ms. Sigler is a Certified Public Accountant in California, as well as a member of the American Institute of Certified

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Public Accountants and the California Society of Certified Public Accountants. Ms. Sigler’s experience in accounting and strategic planning matters has led the Board to conclude that she has the requisite qualifications to serve as a director of the Company and facilitate its continued growth. Ms. Sigler is a Soter Director.

Bryan Kelln, age 53, Mr. Kelln is a Partner at Platinum Equity and the President of Portfolio Operations, a group responsible for overseeing business strategy and operations at Platinum Equity’s portfolio companies. Mr. Kelln joined Platinum in 2008. He works closely with the firm’s Operations Team and portfolio company executive management to drive strategic initiatives and to deploy operational resources. Prior to joining Platinum Equity, Mr. Kelln held senior operations roles at a number of companies including Nortek, Inc., Jacuzzi, Inc., RockShox, Inc. and General Cable Corporation. During a portion of this time, Mr. Kelln was an Operating Executive with The Jordan Company, a private investment firm, where he was involved in acquisitions, divestitures and operations for the firm and served as a board member of various portfolio companies. Mr. Kelln also previously served as a Partner in the Supply Chain Management Practice of Mercer Management Consulting. Mr. Kelln received his bachelor’s degree, summa cum laude, from Washington State University and a Masters of Business Administration from The Ohio State University, Fisher College of Business. Mr. Kelln’s experience as a seasoned executive with a strong track record of conceiving and executing successful strategic and operational transformation programs across a broad range of different industries and his unique combination of financial, management and transactional expertise has led the Board to conclude that he has the requisite qualifications to serve as a director of the Company. Mr. Kelln is also a director of Verra Mobility Corp., a provider of smart traffic solutions. Mr. Kelln is a Soter Director and will hold two votes on matters presented to the Board after the Annual Meeting.

Robert J. Saltiel, age 56, Mr. Saltiel is Key’s President and Chief Executive Officer. He joined the Company in August 2018, and has been a member of the Board of Directors since August 2018. Prior to joining the company, Mr. Saltiel served as President and CEO of Atwood Oceanics, Inc. from 2009 until the company’s sale in October 2017. Mr. Saltiel also served as Director of Atwood Oceanics from 2010 until October 2017. Prior to this, he served in various senior management roles, including Chief Operating Officer at Transocean Ltd. Mr. Saltiel previously held management positions at Nabors Industries, Enron Corp and McKinsey & Company, and he began his career as a process engineer with ExxonMobil. Mr. Saltiel holds a BSE in Chemical Engineering from Princeton University and an MBA from Northwestern University. An active member of his community, he serves on the Board of Trustees of Spindletop Charities.

Sherman K. Edmiston III, age 56, Mr. Edmiston is a senior restructuring executive and has over 20 years of experience working with companies in transition. Mr. Edmiston was a Partner and Managing Director at Zolfo Cooper LLC from November 2009 until December 2015. Mr. Edmiston served as Chief Restructuring Officer of Xinergy, Ltd, a Central Appalachian producer of thermal and metallurgical coal, and previously served as Chairman of the Finance and Transaction committee of JL French Automotive Castings, Inc. Mr. Edmiston currently serves on the board of directors of Arch Coal, Inc. Mr. Edmiston received his B.S. in mechanical Engineering from Arizona State University and his MBA from the University of Michigan. Mr. Edmiston’s experience as a director of other public companies, including those undergoing significant transitions and his qualification as an “audit committee financial expert”, led the Board to conclude that he has the expertise necessary to serve as a director of the Company.

Scott D. Vogel, age 43, Mr. Vogel is the Managing Member at Vogel Partners LLC, a private investment firm, after serving as Managing Director at Davidson Kempner Capital Management investing in distressed debt securities. Previously, Vogel worked at MFP Investors, investing in special situations and turnaround opportunities for the private investment firm of Michael F. Price, and at Chase Securities in its investment banking group. Vogel has served on numerous boards during his career and is currently a member of the board of Arch Coal, Avaya, Bonanza Creek Energy, Seadrill Limited and several private companies. Mr. Vogel is a member of the Olin Alumni Board of Washington University and a member of the Advisory Board of Grameen America. Mr. Vogel received his M.B.A. from The Wharton School at the University of Pennsylvania and his B.S.B.A. from Washington University. Mr. Vogel contributes to the mix of experience and qualifications the Board seeks to maintain primarily through his executive management

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oversight, finance and capital markets, human resources and compensation, and strategic planning experiences. Mr. Vogel’s experience as a director of other public companies, including those undergoing significant transitions, led the Board to conclude that he has the expertise necessary to serve as a director of the Company.

Steven H. Pruett, age 57, Mr. Pruett is the President and Chief Executive Officer of Elevation Resources LLC, a Permian Basin focused exploration and production company which he co-founded in 2013. Mr. Pruett was previously senior vice president of corporate development of Concho Resources between 2012 and 2013. He co-founded and served as president and CFO of Legacy Reserves LP, a public MLP, from 2005 to 2012. Mr. Pruett has over 30 years of oil and gas operating, financial and management experience, most of which has been in the Permian Basin. Prior to forming Legacy Reserves, Mr. Pruett was a venture partner with Quantum Energy Partners and was President of Petroleum Place and P2 Energy Solutions. He previously served as president and CEO of First Permian, founded and was president and CEO of First Reserve Oil & Gas Co, and served as a Vice President for First Reserve Corporation originating upstream equity investments. Mr. Pruett began his career as a petroleum engineer for ARCO Oil & Gas and worked in planning and business development for Amoco Production Company. Mr. Pruett received his B.S. in Petroleum Engineering from the University of Texas and graduated with an MBA from the Harvard Business School. Mr. Pruett’s successful operating, financial, management and industry experience and his qualification as an “audit committee financial expert”, has led the Board to conclude he has the expertise necessary to serve as a director of the Company. Additionally, Mr. Pruett’s knowledge and experience from serving as president and chief financial officer of a company that went through an initial public offering adds a unique and valuable perspective to the Company as a public company.

H.H. “Tripp” Wommack, III, age 63, Mr. Wommack is currently the Chairman, President and Chief Executive Officer of Anchor Energy Resources, LLC, an oil and gas company that focuses on acquisition and exploration efforts in the Permian Basin of West Texas and Southeast New Mexico. Mr. Wommack has served in this position since July 2016. In addition, Mr. Wommack serves as the Chairman of Cibolo Creek Partners, LLC, which specializes in commercial real estate investments, a position he has held since January 1993. Mr. Wommack also serves as Chairman, CEO, and President of Warrior Technologies, LLC, which is involved in tank bottom cleaning in the Permian Basin of West Texas and Southeastern New Mexico, and as Chairman and Chief Executive Officer of Pyote Well Service, a company which serves as managing member and operator for a number of salt water disposal wells in the Permian Basin in west Texas and southeastern New Mexico and in the Eagleford area of south Texas. Mr. Wommack previously served as Chairman, President and Chief Executive Officer of Southwest Royalties, Inc. from August 1983 to August 2004, Saber Resources from July 2004 until August 2008 and Saber Oil & Gas Ventures from August 2008 until October 2017. Mr. Wommack also served as a member of the board and President of Pyote Water Solutions from 2010 until 2017. Additionally, Mr. Wommack served on the board of directors of C&J Energy Services, Inc. from March 2015 through December 2016. Additionally, Mr. Wommack was the founder, Chairman and Chief Executive Officer of Basic Energy Services (formerly Sierra Well Services, Inc.), and following its initial public offering, Mr. Wommack continued to serve on the board of directors of Basic Energy Services through June 2009. Mr. Wommack graduated with a B.A. from the University of North Carolina, Chapel Hill, and earned a J.D. from the University of Texas. Mr. Wommack was selected as a director because of his extensive executive-level management experience and proven leadership and business capabilities in the oil and gas industry and his qualification as an “audit committee financial expert”. Additionally, Mr. Wommack’s knowledge and experience from serving as chairman and chief executive officer of a company that went through an initial public offering adds a unique and valuable perspective to the Company as a public company. Mr. Wommack is an independent director appointed by Soter and holds one vote on matters presented to the Board.

Executive Officers

Below are the names, ages and certain other information on each of our current executive officers, other than Mr. Saltiel, whose information is provided above.

J. Marshall Dodson, age 48, Senior Vice President, Chief Financial Officer and Treasurer. Mr. Dodson was appointed Senior Vice President and Chief Financial Officer on March 25, 2013 and served as Senior Vice President, Chief Financial Officer and Interim Chief Executive Officer from May 11,

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2018 through August 20, 2018. Mr. Dodson joined Key as Vice President and Chief Accounting Officer on August 22, 2005 and served in that capacity until being appointed Vice President and Treasurer on June 8, 2009. From February 6, 2009, until March 26, 2009, Mr. Dodson served in the additional capacity as interim principal financial officer. Prior to joining Key, Mr. Dodson served in various capacities at Dynegy, Inc., an electric energy production and services company, from 2002 to August 2005, most recently serving as Managing Director and Controller, Dynegy Generation since 2003. Mr. Dodson started his career with Arthur Andersen LLP in Houston, Texas in 1993, serving most recently as a senior manager prior to joining Dynegy, Inc. Mr. Dodson received a BBA from the University of Texas at Austin in 1993. Mr. Dodson served as a director for Enduro Resource Partners LLC, a private exploration and production company from November 2017 until July 2018.

Scott P. Miller, age 40, Senior Vice President of Operational Services and Chief Administrative Officer. Mr. Miller joined the Company in May, 2006 serving in various leadership roles in Supply Chain Management, Enterprise Projects, Fluid Management Services and Strategy before accepting the role of Vice President and Chief Information Officer in March of 2013. Mr. Miller was promoted to his current position effective January 1, 2016. Prior to joining Key, Mr. Miller served in various financial and supply chain roles at Dynegy, Inc. and Capital One. Mr. Miller received a B.S. in Management of Information Systems from Louisiana State University and a Master of Business Administration from the University of Houston.

Katherine I. Hargis, age 47, Senior Vice President, General Counsel and Secretary. Ms. Hargis joined Key in July 2013 as Associate General Counsel, Corporate and Transactional & Assistant Secretary and was promoted to Vice President, Associate General Counsel & Assistant Secretary in November 2015. She was then promoted to Vice President, Chief Legal Officer and Secretary on January 1, 2016 and was promoted to her current position as Senior Vice President, General Counsel and Secretary on September 12, 2017. Prior to joining Key, she served as the Vice President, General Counsel and Corporate Secretary for U.S. Concrete, Inc., a publicly traded company providing ready-mixed concrete and aggregates, from June 2012 through July 2013, and as its Deputy General Counsel & Corporate Secretary from December 2011 through June 2012, and as its Assistant General Counsel from December 2006 through December 2011. From February 2006 through December 2006, Ms. Hargis served as an attorney with King & Spalding LLP. From August 2002 through February 2006, Ms. Hargis served as an attorney for Andrews Kurth Kenyon LLP. Ms. Hargis received her B.S. in Administration of Justice from Arizona State University in 1999 and her J.D. from Tulane University in 2002.

Louis Coale, age 52, Vice President and Controller serving as the Company’s principal accounting officer. Mr. Coale served as the Vice President and Operations Controller of the Company’s wholly owned subsidiary, Key Energy Services, LLC since May 2017 and was promoted to Vice President and Controller of the Company on October 3, 2018. Prior to joining Key, Mr. Coale most recently served as the Managing Principal at Coale’s Consulting from June 2016 to May 2018. Coale’s Consulting provides Business, IT and Financial consulting to various industries. Prior to his time at Coale’s Consulting, Mr. Coale served as the Vice President and CFO at Baker Hughes (Baker Oil Tools Divestiture) from 2015 to May 2016, Vice President of the Finance, Planning and Analysis—Commercial Analytics Modeling Dept. from 2014 to 2015, Vice President and CFO of the Global Products & Technology Dept. from 2013 to 2014, Vice President/Transformation Leader (Baker Hughes Finance) from 2009 to 2013, Vice President/Division CFO (Drilling Fluids) from 2007 to 2009, WW Controller (Baker Oil Tools—Completions) from 2005 to 2007 and WW Controller, Wireline Service from 2003 to 2005. Mr. Coale also served as the Expat Finance Lead (Wireline Services: Asia-Pacific from 2001 to 2003, Argentina/Bolivia/Brazil from 1999 to 2001 and Venezuela from 1996 to 1998.

Meetings and Committees of Directors

Involvement in Certain Legal Proceedings

There have been no known events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of the Company during the past ten years.

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General

This section describes our principal corporate governance guidelines and practices. Complete copies of our Corporate Governance Guidelines, committee charters and codes of business conduct described below are available on our website at www.keyenergy.com. You can also request a copy of any of these documents by writing to: Investor Relations, Key Energy Services, Inc., 1301 McKinney Street, Suite 1800, Houston, Texas 77010. Our Board strongly believes that good corporate governance is important to ensure that Key is managed for the long-term benefit of our stockholders.

Corporate Governance Guidelines

Our Board has adopted Corporate Governance Guidelines that address significant issues of corporate governance and set forth the procedures by which the Board carries out its responsibilities. Among the areas addressed by the Corporate Governance Guidelines are director qualifications and responsibilities, Board committee responsibilities, director compensation and tenure, director orientation and continuing education, access to management and independent advisors, succession planning and management development, and Board and committee performance evaluations. The NGC is responsible for assessing and periodically reviewing the adequacy of these guidelines and recommending proposed changes to the Board, as appropriate. The Corporate Governance Guidelines are posted on our website at www.keyenergy.com. We will provide these guidelines in print, free of charge, to stockholders who request them.

Director Independence

As stated above, because the Company currently qualifies as a “Controlled Company” under NYSE Rule 303A, we are permitted, and have elected, to opt out of the NYSE rules that would otherwise require our Board to be comprised of a majority of independent directors and require our Compensation Committee and the NGC to be comprised entirely of independent directors. However, all members of our Audit Committee meet the independence requirements set forth in the applicable rules of the NYSE and SEC and all members of our subcommittee of the Compensation Committee meet the independence requirements set forth in the applicable rules of the NYSE and SEC. Under applicable rules of the NYSE, a director will only qualify as “independent” if, among other things, our Board affirmatively determines that he or she has no direct or indirect material relationship with Key.

The Board has determined that, except for Mr. Saltiel, who serves as our President and Chief Executive Officer (“CEO”), Robert Drummond, who served as our CEO through May 11, 2018, and as a director until Mr. Saltiel’s appointment to the Board, and Messrs. Norment, Kotzubei and Kelln and Ms. Sigler, each of our current directors and any former director who served during fiscal year 2018 is independent within the meaning of the foregoing rules, including Messrs. Edmiston, Vogel, Pruett, Wommack and Gaut.

Board Leadership Structure

Our Board currently consists of Mr. Norment, the Chairman, and eight other directors. Following the Annual Meeting, the Board will consist of nine directors as described above under “Board of Directors.” Our Corporate Governance Guidelines provide that non-employee directors will meet in executive session on a regular basis without management present. The Chairman presides at all meetings of the Board, as well as executive sessions of non-employee directors and, in consultation with the CEO, non-employee directors and management, establishes the agenda for each Board meeting. In the event that the non-management directors include directors who are not independent under the listing requirements of the NYSE, as is currently the case, our Corporate Governance Guidelines provide that at least once a year, there shall be an executive session including only independent directors and the director who presides at these meetings (the “Lead Director”) shall be chosen by the Board based on the recommendation of the NGC. The Board has appointed Mr. Pruett as Lead Director. The Board has also delegated certain matters to its certain committees. Mr. Saltiel, as the Company’s President, CEO and Director, works in concert with the rest of our Board to oversee the execution of the Company’s strategy.

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Director Nomination Process

Pursuant to our certificate of incorporation and bylaws, following the Annual Meeting and for as long as our Series A Preferred Stock is outstanding, the Board will consist of nine members, five of whom will be nominated and elected by Soter as the holder of our Series A Preferred Stock and four of whom will be nominated by the Board and elected by holders of our common stock. Upon the cancellation of the Series A Preferred Stock, the holder of the Series A Preferred Stock will no longer have the right to nominate any directors. At the first annual meeting following the cancellation of the Series A Preferred Stock, the then-current Board will nominate their successors, and the stockholders of the Company will elect the directors.

The NGC is responsible for identifying individuals who are qualified to become Board members, provided that Soter, and not the NGC, will identify any individuals whom Soter will nominate and elect to the Board. Nominees for directorship are selected by the NGC in accordance with the policies and principles of its charter. Although there is no formal diversity policy, our Board believes that the backgrounds and qualifications of its directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow it to fulfill its responsibilities. Pursuant to its charter, the NGC is tasked with recommending director candidates who will assist in achieving this mix of Board members having diverse professional backgrounds and a broad spectrum of knowledge, experience and capability. At least once a year, the NGC will review the size and structure of the Board and its committees, including recommendations on Board committee structure and responsibilities.

In accordance with NYSE requirements, the NGC also oversees an annual performance evaluation process for the Board, the Audit Committee, the Compensation Committee and the NGC. In this process, anonymous responses from directors on a number of topics, including matters related to experience of Board and committee members, are discussed in executive sessions at Board and committee meetings. Although the effectiveness of the policy to consider diversity of director nominees has not been separately assessed, it is within the general subject matter covered in the NGC’s annual assessment and review of Board and committee structure and responsibilities, as well as within the Board and committee annual performance evaluation process.

Board Role in Risk Oversight

The Board’s role in the risk oversight process includes receiving regular reports from members of senior management on areas of material risk to Key, including operational, financial, legal and regulatory, and strategic and reputational risks. The full Board (or the appropriate committee in the case of risks that are under the purview of a particular committee) receives these reports from the appropriate “risk owner” within the organization to enable it to understand our risk identification, risk management and risk mitigation strategies. When a committee receives the report, the chair of the relevant committee reports on the discussion to the full Board during the committee reports portion of the next Board meeting. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships. In addition, as part of its charter, the Audit Committee regularly reviews and discusses with management, our internal auditors and our independent registered public accounting firm, Key’s policies relating to risk assessment and risk management. The Compensation Committee also specifically reviews and discusses risks that relate to compensation policies and practices.

Board Meetings and Attendance

During 2018, the Board held twelve (12) meetings. Non-management directors meet regularly in executive session. Additionally, management frequently discusses matters with the directors on an informal basis. Each director attended, either in person or by telephone conference, at least 93% of the Board and committee meetings held while serving as a director or committee member in 2018, except for Jacob Kotzubei who attended at least 65% of Board and committee meetings while serving as a director or a committee member in 2018. The Company expects the directors to attend annual meetings of stockholders. Pursuant to the Company’s certificate of incorporation and bylaws, as amended, adopted on the Effective Date, the current Board will serve for the Initial Board Term, which commenced on the Effective Date and will conclude upon the election of directors at the Annual Meeting.

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Board Committees

The Board has established three standing committees: the Audit Committee, the Compensation Committee, and the NGC. Current copies of the charters of each of these committees are posted in the “Corporate Governance” section of our website, www.keyenergy.com. The Compensation Committee also has a subcommittee for purposes of Section 16 of the Exchange Act. The subcommittee consists of two directors who both qualify as independent for NYSE purposes. The subcommittee of the Compensation Committee does not have a charter.

Audit Committee

The current members of our Audit Committee are Messrs. Edmiston, Pruett and Wommack. Mr. Wommack is the chair of the Audit Committee. Effective as of January 25, 2019, C. Christopher Gaut, a former member of the Audit Committee, resigned as a director of the Company. The Board will seek to identify another director to serve on the Audit Committee and in the interim intends to engage outside consultants in order to supplement the Committee’s work.

The Board has determined that all of the members of the Audit Committee are independent under the NYSE rules, including the independence requirements contemplated by Rule 10A-3 under the Exchange Act. All members of the Audit Committee meet the financial literacy standard required by the NYSE rules and each qualify as having accounting or related financial management expertise under the NYSE rules. In addition, as required by the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring that each public company disclose whether or not its audit committee has an “audit committee financial expert” as a member. An “audit committee financial expert” is defined as a person who, based on his or her experience, satisfies all of the following attributes:

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an understanding of generally accepted accounting principles and financial statements;

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an ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves;

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experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and level of complexity of issues that can reasonably be expected to be raised by Key’s financial statements, or experience actively supervising one or more persons engaged in such activities;

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an understanding of internal control over financial reporting; and

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an understanding of audit committee functions.

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The Board has determined that all members of the Audit Committee satisfy the definition of “audit committee financial expert,” and has designated each member of the Audit Committee as an “audit committee financial expert.” For more information about each Audit Committee member’s background and experience, see “Board of Directors” above.

Our Board has adopted a written charter for the Audit Committee, pursuant to which the Audit Committee has, among others, the following duties and responsibilities:

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appointing, evaluating, approving the services provided by and the compensation of, and assessing the independence of, our independent registered public accounting firm;

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overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of certain reports from such firm;

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reviewing with the internal auditors and our independent registered public accounting firm the overall scope and plans for audits, and reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response;

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reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;

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•

reviewing and discussing with management and the independent registered public accounting firm our system of internal controls, financial and critical accounting practices and policies relating to risk assessment and risk management;

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reviewing the effectiveness of our system for monitoring compliance with laws and regulations; and

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preparing the Audit Committee Report required by SEC rules (which is included under the heading “Report of the Audit Committee” below).

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During 2018, the Audit Committee held five (5) meetings. In addition, members of the Audit Committee speak regularly with our independent registered public accounting firm and separately with the members of management to discuss any matters that the Audit Committee or these individuals believe should be discussed, including any significant issues or disagreements concerning our accounting practices or financial statements. For further information, see “Report of the Audit Committee” below.

The Audit Committee has the authority to retain legal, accounting or other experts that it determines to be necessary or appropriate to carry out its duties. We will provide the appropriate funding, as determined by the Audit Committee, for the payment of compensation to our independent registered public accounting firm and to any legal, accounting or other experts retained by the Audit Committee and for the payment of the Audit Committee’s ordinary administrative expenses necessary and appropriate for carrying out the duties of the Audit Committee.

The Audit Committee charter provides that a member of the Audit Committee may not simultaneously serve on the Audit Committees of more than two other public companies. Currently, no member of the Audit Committee serves on the Audit Committees of more than two other public companies.

The charter of our Audit Committee can be accessed on the “Corporate Governance” section of our website, www.keyenergy.com.

Compensation Committee

Our Compensation Committee reviews and recommends policies relating to compensation and benefits of our executive officers and employees, including reviewing and approving corporate goals and objectives relevant to the compensation of chief executive officer and other executive officers, evaluating the performance of those officers in light of those goals and objectives and setting compensation of those officers based on such evaluations. During 2018, the Compensation Committee met six (6) times. Because the Company currently qualifies as a “Controlled Company” under the NYSE Rule 303A, we are permitted, and have elected, to opt out of the NYSE rules that would otherwise require our Compensation Committee to be comprised entirely of independent directors. The Compensation Committee consists of Messrs. Kelln (chair), Kotzubei, Norment, Vogel and Wommack. The Compensation Committee also has a subcommittee for purposes of Section 16 of the Exchange Act. The subcommittee consists of Messrs. Vogel and Wommack who both qualify as independent for NYSE purposes. No Compensation Committee member participates in any of our employee compensation programs other than the Key Energy Services, Inc. 2016 Equity and Cash Incentive Plan.

The Compensation Committee has responsibility for establishing, implementing and continually monitoring adherence with our compensation philosophy. Our Board has adopted a written charter for the Compensation Committee, pursuant to which the Compensation Committee has, among others, the following duties and responsibilities:

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reviewing and approving corporate goals and objectives relevant to the compensation of the CEO;

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evaluating the CEO’s performance in light of corporate goals and objectives and determining and approving the CEO’s compensation level based on this evaluation;

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reviewing and approving the compensation of senior executive officers other than the CEO;

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reviewing and approving any incentive-compensation plans or equity-based plans;

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•

approving any new equity compensation plan or any material change to an existing plan where stockholder approval has not been obtained;

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in consultation with management, overseeing regulatory compliance with respect to compensation matters, including overseeing Key’s policies on structuring compensation programs to preserve tax deductibility;

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making recommendations to the Board with respect to any severance or similar termination payments proposed to be made to any current or former senior executive officer or member of senior management of Key;

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reviewing any potential conflicts of interest of our compensation consultant;

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preparing an annual report of the Compensation Committee on executive compensation for inclusion in Key’s annual proxy statement or annual report in accordance with applicable SEC rules and regulations; and

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reviewing and approving the Compensation Disclosure and Analysis for inclusion in Key’s annual proxy statement or annual report in accordance with applicable SEC rules and regulations.

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The Compensation Committee has the sole authority to select, retain, terminate and approve the fees and other retention terms of special counsel or other experts or consultants, as it deems appropriate in order to carry out its responsibilities, without seeking approval of the Board or management. With respect to compensation consultants retained to assist in the evaluation of director, CEO or executive officer compensation, this authority is vested solely in the Compensation Committee.

The charter of our Compensation Committee can be accessed in the “Corporate Governance” section of our website, www.keyenergy.com.

Nominating and Governance Committee

As stated above, because the Company currently qualifies as a “Controlled Company” under the NYSE Rule 303A, we are permitted, and have elected, to opt out of the NYSE rules that would otherwise require the NGC to be comprised entirely of independent directors. The NGC consists of Ms. Sigler (chair), and Messrs. Saltiel, Kelln, Kotzubei and Vogel. During 2018, the NGC met five (5) times. Our Board has adopted a written charter for the NGC, pursuant to which the NGC has, among others, the following duties and responsibilities:

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identifying and recommending individuals to the Board for nomination as members of the Board and its committees, consistent with criteria approved by the Board;

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developing and recommending to the Board corporate governance guidelines applicable to Key; and

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overseeing the evaluation of the Board and management of Key.

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The NGC has the authority and funding to retain counsel and other experts or consultants, including the sole authority to select, retain and terminate any search firm to be used to identify director candidates and to approve the search firm’s fees and other retention terms.

The charter of the NGC can be accessed in the “Corporate Governance” section of our website, www.keyenergy.com.

Code of Business Conduct and Code of Business Conduct for Members of the Board of Directors

Our Code of Business Conduct applies to all of our employees, including our directors, CEO, Chief Financial Officer, or CFO and senior financial and accounting officers. Among other matters, the Code of Business Conduct establishes policies to deter wrongdoing and to promote both honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest, compliance with applicable laws, rules and regulations, full, fair, accurate, timely and understandable disclosure in public communications and prompt internal reporting of violations of the Code of Business Conduct. We also have an ethics and compliance committee, composed of members of management, which administers our

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ethics and compliance program with respect to our employees. In addition, we provide an ethics line for reporting any violations on a confidential basis. Copies of our Code of Business Conduct are available in the “Corporate Governance” section of our website at www.keyenergy.com. We will post on our website all waivers to or amendments of our Code of Business Conduct and the Code of Business Conduct for Members of the Board of Directors that are required to be disclosed by applicable law and the NYSE listing standards.

Compensation Committee Report

The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with our management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement for the year ended December 31, 2018.

By the Compensation Committee of the Board of Directors of Key Energy Services, Inc.

Bryan Kelln, Chair
Philip Norment
Jacob Kotzubei
Scott D. Vogel
H. H. Tripp Wommack, III

Compensation Discussion and Analysis

This section of the Proxy Statement describes our executive compensation philosophy and program in the context of the compensation paid or awarded to our Named Executive Officers for 2018. Our Named Executive Officers and their titles during the 2018 calendar year are listed below:

(1)

Mr. Saltiel was appointed as President, Chief Executive Officer and Director effective August 20, 2018.

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(2)

Mr. Dodson served as our Senior Vice President, Chief Financial Officer, Treasurer for all of 2018 and as our Interim Chief Executive Officer from May 11, 2018 until Mr. Saltiel’s appointment effective August 20, 2018.

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(3)

Mr. Coale was promoted from Vice President—Operations Controller of the Company’s wholly owned subsidiary, Key Energy Services, LLC to Vice President and Controller of the Company effective October 3, 2018.

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(4)

Mr. Drummond terminated his employment with the Company effective May 11, 2018, but continued to serve as a director until Mr. Saltiel’s appointment.

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(5)

Mr. Brunnert no longer served as an employee of the Company effective September 12, 2018. Both Messrs. Drummond and Brunnert were no longer with the Company at the end of the 2018 fiscal year, but are still considered NEOs for the 2018 year under SEC disclosure rules.

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Executive Summary

The oilfield services industry has faced many challenges in the past several years and Key has faced similar challenges and was not immune to the volatility in the industry. In 2016, the Company experienced a Chief Executive Officer (“CEO”) Transition when Mr. Alario retired and Mr. Drummond was appointed CEO in March, the Company completed a two-year Foreign Corrupt Practices Act Investigation in August and in October of 2016, the Company entered Chapter 11. After emerging from bankruptcy in December 2016, the Company’s business faced lower-for-longer and volatile oil prices all impacting the ability to attract and retain our best employees. In 2018, the Company experienced another CEO transition, described below. These macro-economic and industry conditions and industry challenges, along with management transition had an impact on the compensation designs and outcomes for 2018, as described in more detail in this Compensation Discussion & Analysis.

2018 CEO Transition and Officer Retention

On May 11, 2018, Mr. Drummond voluntarily terminated his position as President and Chief Executive Officer with the Company and the Board appointed Mr. Dodson to serve as Interim Chief Executive Officer while the Board conducted an executive search for the new President and Chief Executive Officer (the “CEO Transition”). At the Board’s request, Mr. Drummond agreed to continue as a director of the Company until the appointment of his successor. In connection with his departure, Mr. Drummond forfeited 150,637 RSUs and 150,637 PSUs and received no annual cash incentive compensation for the period of 2018 that he served as the Company’s CEO.

Because of the uncertainty created by the CEO Transition and in order to retain the executive leadership believed to be critical to the ongoing operation of the Company during the CEO Transition, on July 1, 2018, the Compensation Committee granted time-based cash retention awards (each, a “Retention Bonus”) to Messrs. Dodson, Brunnert and Miller and Ms. Hargis in the following amounts: $637,500, $400,000, $310,000 and $310,000, respectively. Twenty-five percent of the Retention Bonus will vest on July 1, 2019 and the remaining 75% will vest on July 1, 2020. In the event of a voluntary termination prior to vesting, any unvested portion of the Retention Bonus will be forfeited and in the event the Company terminates the executive’s employment without Cause (as defined in the 2016 Equity and Cash Incentive Plan (the “2016 ECIP”)), any unvested portion of the Retention Bonus will vest in full. Mr. Brunnert’s employment with the Company was terminated without Cause on September 12, 2018 and his Retention Bonus of  $400,000 vested in full.

On August 20, 2018, the Board appointed Mr. Saltiel as the Company’s President, Chief Executive Officer and director. On August 17, 2018, the Company entered into an employment agreement with Mr. Saltiel (the “Employment Agreement”) establishing his compensation as President and Chief Executive Officer. Under the Employment Agreement, Mr. Saltiel’s initial compensation will consist of an annual base salary of  $750,000, an annual incentive award target of 100% of base salary (which for 2018 will be paid based on target performance and prorated for the portion of the year during which he is employed by the Company), and an annual long-term incentive award of  $1.25 million in the form of time-vesting restricted stock units (“RSUs”) that vest over 3 years and a special sign-on award of  $2 million in the form of time-vesting RSUs that vest over 3 years. The 2018 long-term incentive award and sign-on award were granted on August 20, 2018 on the form of time-vested restricted stock unit award agreement (the “RSU Award Agreement”) included in the Employment Agreement. Additional details about Mr. Saltiel’s Employment Agreement (including an amendment entered into on February 4, 2019) are discussed in the Potential Payments Upon Termination or Change-in-Control section below, and in the SEC Form 8-K filed August 20, 2018.

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NEO Pay at a Glance—Mix of Target Pay

Say-on-Pay and Say-on Frequency

The Company is offering stockholders the opportunity to vote, on a non-binding advisory basis, to approve the Company’s 2018 executive compensation programs as described in this Proxy Statement, colloquially known as “Say-on-Pay,” as well as the frequency of such Say-on-Pay votes, or “Say-on-Frequency.” We look forward to receiving feedback from our stockholders regarding the Company’s executive pay practices as we value our stockholders’ evaluation of executive compensation programs and policies. As discussed in more detail in Proposals Four and Five below, the Board has recommended that stockholders vote, on a non-binding advisory basis, to approve our executive compensation programs as described below, and to support annual Say-on-Pay votes in order to receive more frequent feedback regarding our executive compensation policies.

2018 Stockholder Outreach

Our Board and Management team launched a stockholder outreach program in the fall of 2018 in an effort to obtain feedback from our stockholders, including Soter.1 Soter provides its perspective on executive compensation through its board service. Three out of the five members of our Compensation Committee, including the Chairman of the Compensation Committee are members of Soter. Our goal in soliciting feedback from other stockholders was to provide information to our Compensation Committee to help the Committee (i) better understand other stockholders’ views on executive compensation and (ii) understand whether potential changes to our compensation program would address any concerns expressed by our stockholders. We contacted a significant majority of our largest stockholders, to get their opinion on our compensation policies and practices. Our outreach efforts included the following:

✓

Outreach efforts to stockholders holding in the aggregate more than 94% of our outstanding stock; and

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✓

In-depth meaningful discussions with stockholders representing approximately 55% of our outstanding stock (some stockholders declined our request to engage and some stockholders targeted in our comprehensive outreach effort have not yet responded).

​

1

As described above, Soter owns approximately 50.11% of our stock and the Soter Directors control decisions made by the Board. Accordingly, the Company is considered to be a “Controlled Company” for purposes of NYSE rule 303A.

​

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Our Chairman of the Compensation Committee and our General Counsel led the outreach to interested investors. We believe the stockholders appreciated the outreach and the dialogue that resulted, and generally expressed a high level of satisfaction with our pay-for-performance approach and overall disclosure, but also provided some meaningful recommendations for the Compensation Committee to consider. We intend to continue this dialogue with our major stockholders and will consider stockholder feedback as we consider any future changes to our executive compensation program.

Executive Compensation Philosophy and Objectives

We are committed to providing value to our stockholders. We believe that our executive compensation program fairly and appropriately compensates our executive officers. The core principle of our executive compensation philosophy is to pay for performance in ways that we believe will motivate our executives to develop and execute strategies that deliver performance improvements and create shareholder value over the short and long term. Accordingly, our compensation philosophy has been to heavily weight executive compensation toward “at-risk” and performance-based compensation. In early 2019, during lower for longer than expected oil prices, executive turnover and extreme market volatility, in the interest of retaining our Named Executive Officers who we believe have the unique capabilities and experience to enable the Company to achieve our financial and operational goals, along with other corporate objectives, and to create long-term value for our stockholders, we increased our time-based long-term incentive compensation for our Named Executive Officers. We have three principal elements of total direct compensation: base salary, annual incentive compensation and long-term incentive compensation. These elements provide our Compensation Committee with a platform to reinforce our pay-for-performance and “at-risk” compensation philosophy while addressing our business needs and goals with appropriate flexibility.

Our compensation strategy is to ensure progress towards the successful attainment of our vision, values and business objectives by aligning the interests of our executive officers with stockholder interests. The primary goals of our compensation program are to attract and retain the talent we need to successfully manage the Company, reward exceptional organizational and individual performance improvements, and accomplish these objectives at a reasonable total cost in relation to performance and market conditions.

The following compensation objectives are considered in setting the compensation components for our executive officers:

•

Attracting and retaining key executives responsible not only for our continued growth and profitability, but also for ensuring proper corporate governance and carrying out the goals and plans of Key;

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•

Motivating management to enhance long-term stockholder value by aligning our executives’ interests with those of our stockholders;

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•

Paying for performance by linking a significant portion of management’s compensation to measurable performance, including specific financial and operating goals and granting other awards that are “at-risk”;

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•

Evaluating and rating performance relative to the existing market conditions during the measurement period; and

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•

Setting compensation and incentive levels that reflect competitive market practices.

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We want our executives to be motivated to achieve Key’s short-term and long-term goals, without sacrificing our financial and corporate integrity in trying to achieve those goals. While an executive’s overall compensation should be strongly influenced by the achievement of specific financial and operational targets, we also believe that a portion of an executive’s compensation should be awarded in components that provide a degree of financial certainty and stability, due to the volatility and cyclicality inherent in our industry and the impact of oil and gas commodity prices on our business. The design and operation of the compensation arrangements provide our executives with incentives to engage in business activities that support the value of Key and its stockholders.

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We have worked extensively and deliberately to develop a thoughtful, fair, and effective compensation program for our Named Executive Officers that helps us to deliver long-term sustainable growth to our stockholders. In an effort to achieve these goals, we have implemented the best practices described in the chart below:

How We Make Compensation Decisions

Role of the Compensation Committee

The Compensation Committee has the responsibility to review and approve the compensation policies, programs, and plans for our officers (including the Named Executive Officers) and non-employee directors. The Compensation Committee’s responsibilities include administering the 2016 ECIP, which provides for the grant of cash and equity-based awards. The Compensation Committee also reviews the Compensation Discussion and Analysis section of our annual proxy statement and produces the Compensation Committee Report with respect to our executive compensation disclosures for inclusion in our annual proxy statement. In addition, the Compensation Committee regularly reviews current best compensation and governance practices to ensure that our executive compensation program is consistent with recent developments and market practice. The Compensation Committee, in overseeing the compensation of our directors and officers, employs several analytic tools and considers information from multiple resources. Subject in certain circumstances to Board approval, the Compensation Committee has the sole authority to make final decisions with respect to our executive compensation program, and the Compensation Committee is under no obligation to utilize the input of other parties. For more detailed information regarding the Compensation Committee, please refer to the Compensation Committee Charter, which is posted on the Corporate Governance section of the Company’s website at www.keyenergy.com.

Determining Compensation Levels

As discussed above, the Compensation Committee has the overall responsibility for establishing the elements, terms and target value of compensation paid or delivered to our Named Executive Officers. The Compensation Committee strives to develop a competitive, but not excessive, compensation program for our Named Executive Officers in order to recruit and retain the best possible talent in our industry. An important element of the Compensation Committee’s decision making is compensation data produced by its independent compensation consultant, Meridian Compensation Partners, LLC (“Meridian”), including direct data from our peer group (described below), other industry compensation surveys (including the 2017 U.S. Mercer Total Compensation Survey), and proprietary data developed by Meridian. In addition, the Compensation Committee considers information provided by our executive officers in designing and implementing our executive compensation program. This data assists the Compensation Committee in evaluating appropriate compensation levels for each Named Executive Officer in relation to market practice and in designing an effective executive compensation program for the Company. The roles of Meridian and our executive officers in the Compensation Committee’s decision-making process are described more fully below.

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Role of Compensation Consultant in Compensation Decisions

During the second quarter of 2018, the Compensation Committee retained Meridian as its independent compensation consultant. Meridian provides advice to and works with the Compensation Committee in designing and implementing the structure and mechanics of the Company’s executive compensation regime as well as other matters related to officer and director compensation and corporate governance. For example, Meridian regularly updates the Compensation Committee on regulatory changes impacting executive compensation, proxy advisor policies, compensation-related risks, and industry compensation trends. In addition, Meridian provides the Compensation Committee with external context such as relevant market regarding non-employee director executive compensation practices. This information assists the Compensation Committee in making executive and director compensation decisions based on market pay levels and best practices.

Meridian reports directly and exclusively to the Compensation Committee and does not provide any other services to management, the Company or its affiliates. Meridian does not make compensation-related decisions for the Compensation Committee or otherwise with respect to the Company, and, while the Compensation Committee generally reviews and considers information and recommendations provided by Meridian, the Compensation Committee has the final authority to make compensation-related decisions. The Compensation Committee has the discretion to allow Meridian to work directly with management in preparing or reviewing materials for the Compensation Committee’s consideration. During 2018, and after taking into consideration the factors listed in Section 303A.05(c)(iv) of the NYSE Listed Company Manual, the Compensation Committee concluded that neither it nor the Company has any conflicts of interest with Meridian, and that Meridian is independent from management. Other than Meridian, no other compensation consultants provided services to the Compensation Committee during 2018, but as described below, based on its review of our compensation program in 2017, Longnecker recommended that the Compensation Committee consider certain compensation practices for 2018.

In 2017, and through the first quarter of 2018 before engaging Meridian, the Compensation Committee engaged Longnecker & Associates (“Longnecker”), its former compensation consultant to assist with its overall compensation review and decision-making. In late 2017, Longnecker conducted an independent, comprehensive, broad-based analysis of our executive compensation program, and the Compensation Committee used this analysis as one of several reference points in making decisions regarding the Replacement Awards (as defined below). For more information regarding the Replacement Awards see “2017 Year-End Grant of Performance-Based Restricted Stock Units” and the “2018 Summary Compensation Table.” Longnecker performed services solely on behalf of the Compensation Committee. In accordance with the rules and regulations of the SEC and NYSE, the Compensation Committee assessed the independence of Longnecker and concluded that no conflicts of interest exist that would prevent Longnecker from providing independent and objective advice.

Role of Executive Officers in Compensation Decisions

In determining the compensation of our Chief Executive Officer, the Compensation Committee considers the information and advice provided by its compensation consultant, and other factors, which may include, our corporate goals, historic and projected performance, the current economic and commodities environment, and other relevant factors. With respect to the compensation of the Named Executive Officers other than our Chief Executive Officer, the Compensation Committee also considers the recommendations of our Chief Executive Officer. Additionally, in light of the Named Executive Officers’ integral role in establishing and executing the Company’s overall operational and financial objectives, the Compensation Committee requests that the Named Executive Officers provide recommendations on the appropriate goals for the qualitative and quantitative performance metrics used in our short-term cash incentive program. As discussed above, the Compensation Committee retains sole discretion to make final compensation determinations, and the Compensation Committee may accept, modify or reject any recommendations or observations made by our executive officers. In addition, the Compensation Committee may invite any Named Executive Officer to attend Compensation Committee meetings to report on the Company’s progress with respect to the annual quantitative and qualitative performance metrics, but any such officer is excluded from any decisions or discussions regarding his individual compensation.

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Peer Group

The Compensation Committee, with input from management and its compensation consultant, selects our peer group after reviewing the relative revenue size, market capitalization, enterprise value, business structure, operational footprint and historical performance of a number of similar companies in the oilfield services industry.

The peer group used for the executive compensation comparisons in November 2017 included the following:

The Compensation Committee, with input from Meridian, determined that the peer group used for compensation comparisons in November 2017 should be updated for 2018 and 2019 in order to better reflect our operational focus, market capitalization, revenues and enterprise value and the expectation of continued consolidation and volatility in the energy industry. After taking all of these considerations into account, the Compensation Committee determined that the companies included in the table below reflect an appropriate peer group for 2018 and 2019:

As described above, compensation data from the above peer group was considered by the Compensation Committee when making decisions regarding the 2018 compensation paid to our Named Executive Officers.

Elements of Compensation; 2018 Compensation Decisions

The principal components of our executive compensation program are base salary, cash incentive bonuses and long-term incentive awards in the form of equity, including performance-based equity. We blend these elements in order to formulate compensation packages that provide competitive pay, reward the achievement of financial, operational and strategic objectives on a short-term and long-term basis, and align the interests of our executive officers with those of our stockholders. We strive to hire and retain talented people who are compatible with our corporate culture and committed to our core values and who want to make a contribution to our mission.

Base Salary

Base salary is an integral component of our compensation and a crucial aspect of retaining top executive talent. Each Named Executive Officer’s base salary is a fixed component of compensation each year for performing specific job duties and functions. This provides a level of financial certainty and stability in an industry with historic volatility and cyclicality. The base salaries are designed to reflect the experience, education, responsibilities and contribution of the individual executive officers. Base salary is an integral component of our compensation and a crucial aspect of retaining top executive talent. The Compensation Committee sets our Chief Executive Officer’s base salary and works together with our Chief Executive Officer to determine what adjustments, if any, should be made to the base salaries of our other Named Executive Officers. With the exception of base salary increases in connection with promotions, the

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Compensation Committee generally evaluates whether to increase the base salaries of our Named Executive Officers in June of each year. The base salary rates for the Named Executive Officers are modified based upon consideration of factors that the Compensation Committee deems relevant, including but not limited to: (i) any increase or decrease in the executive’s responsibilities; (ii) the executive’s experience; (iii) the executive’s job performance; and (iv) the level of compensation paid to executives of other companies with which we compete for executive talent, as estimated based on data provided by Meridian, publicly available information, and the experience of the members of the Compensation Committee.

The following increases table sets forth our Named Executive Officers’ 2019 base salaries as compared to their 2017 base salaries. The 2018 base salary increases for Messrs. Dodson, Brunnert and Miller and Ms. Hargis were effective July 1, 2018:

(1)

Mr. Saltiel’s base salary was increased from $750,000 to $800,000 effective January 1, 2019 pursuant to the terms of his Employment Agreement.

​

(2)

With the exception of Messrs. Drummond, Saltiel and Coale, the 2018 base salary rates shown in the table were effective July 1, 2018. For the first half of 2018, NEOs’ base salary rates were at the 2017 base salary rates shown in the table.

​

(3)

Mr. Coale’s base salary was increased from $220,000 to $240,000 effective October 3, 2018 in connection with his promotion to Vice President and Controller. Mr. Coale joined the Company’s wholly owned subsidiary, Key Energy Services, LLC as its Vice President and Operations Controller in May 2018.

​

The total base salary to each of our Named Executive Officers for services provided during 2018 is reported in the “Salary” column of our Summary Compensation Table.

Incentive Compensation

Annual Cash Incentive; 2018 Annual Incentive Plan

The annual cash bonus incentive is designed to pay for performance and align the interests of our executives with stockholder interests. The cash bonus incentive plan provides variable cash compensation earned only when established performance goals are achieved. It is designed to reward the plan participants, including the NEOs, who have achieved certain corporate and executive performance objectives and have contributed to the achievement of certain objectives of Key.

In November of 2017, the compensation committee approved a performance-based cash bonus plan for 2018, the 2018 Annual Incentive Plan (the “2018 AIP”), pursuant to which eligible employees, including each of the NEOs, were eligible to receive cash bonuses based on the achievement of certain performance metrics, and subject to their continued employment with the Company through payout of the 2018 AIP in 2019. The 2018 AIP is a sub-plan under the 2016 ECIP. Individual target bonuses under the 2018 AIP were based on a percentage of each eligible employee’s base salary. Performance metrics under the 2018 AIP consisted of  (i) adjusted earnings before interest expense, taxes, depreciation and amortization (“Adjusted EBITDA,” weighted 80%), (ii) safety performance (weighted 10%) and (iii) free cash flow (weighted 10%), as described in more detail below. For all executives of the Company, including each

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Named Executive Officer, the 2018 AIP consists of a single one-year measurement period of January 1, 2018 to December 31, 2018 (the “Performance Period”) equal to 100% of an individual’s bonus opportunity. The 2018 AIP goals and related actual performance were as follows:

Adjusted EBITDA (weighted 80%). The financial target was based on Adjusted EBITDA which a non-GAAP financial measure that is defined as total revenue, less operating expenses (excluding depreciation and amortization), adjusted for non-recurring and non-cash charges as disclosed in public reporting documents.2 Payout of the Adjusted EBITDA portion of the cash bonus could range between 0% and 140% of the applicable target.

There is no payout for Adjusted EBITDA for achievement below threshold. The Adjusted EBITDA results for the Performance Period were $21.8 million which exceeded the threshold payout, but was under the target payout. Therefore, the Company attained 52.6% of the Adjusted EBITDA target for the period.

Safety (weighted 10%). Positive safety results are critical in this industry to ensure the safety of our people. This goal represents the improvement required in the safety performance index made up of 4 leading and lagging indicators including (i) the Occupational Safety and Health Administration, or OSHA, total recordable incident rate (“TRIR”), (ii) Behavioral Based Safety Observations (“BBS”), (iii) Total Incident Reporting/Recordable Incidents and (iv) preventable vehicle incident rate (“PVIR”). Achievement of 4 out of the 4 metrics results in 100% attainment of the 10% target, achievement of 3 out of the 4 metrics results in attainment of 50% of the 10% target, and achievement of 1 or 2 out of the 4 metrics results in attainment of 0% of the 10% target. OSHA total recordable incident rates are determined by measuring the number of injury incidents involving our employees against the number of exposure hours worked. Incidents that are considered recordable include injuries resulting in a fatality, an employee missing work, an employee having to switch to “light” duty or restricted work or an employee requiring medical treatment. The target safety goal for the Performance Period was a corporate-wide Safety Performance Index (“SPI”) of 100% with a threshold of 75%. The SPI for the Performance Period was not met resulting in attainment of 0% of the safety target for the period.

Free Cash Flow (weighted 10%). Cash flow management is critical. The Free Cash Flow goal measures the ability to provide accurate and signed work tickets for invoicing in less than 12 days in order to invoice more quickly and drive down the days of sales outstanding (“DSO”). Payout of the Free Cash Flow portion of the cash bonus could range between 0% and 100% of the applicable target. The target Free Cash Flow goal for the Performance Period was to provide accurate and signed work tickets for invoicing in less than 12 days. Free Cash Flow for the Performance Period was 11.4 days resulting in 100% attainment of the Free Cash Flow target for the period.

The final payout percentage earned for the Performance Period was 52.6%.

With the exception of Messrs. Saltiel, Drummond and Brunnert, the final payout percentage of 52.6%, as determined above, was then multiplied by each Named Executive Officer’s target bonus opportunity of the Named Executive Officer base salaries in effect as of December 31, 2018, in order to

2

For a reconciliation of net loss as presented in accordance with United States generally accepted accounting principles (“GAAP”) to Adjusted EBITDA as required under Regulation G of the Securities Exchange Act of 1934 see the Company’s press release dated February 25, 2019 filed as Exhibit 99.1 on the Company’s Form 8-K dated February 26, 2019.

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calculate the total bonus payable to each Named Executive Officer. For 2018, Mr. Saltiel received a guaranteed annual incentive bonus determined as a prorated portion (based upon the number of days Mr. Saltiel was employed by the Company in 2018) of  $750,000 pursuant to his Employment Agreement and Messrs. Drummond and Brunnert did not receive a bonus as they were not employed by the Company at the time of payout.

The bonus amounts paid to the Named Executive Officers for the 2018 fiscal year under the 2018 AIP are outlined in the chart below and are reported in the Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column:

(1)

Mr. Saltiel received a guaranteed pro-rated target bonus pursuant to his Employment Agreement.

​

(2)

Mr. Coale’s bonus calculated pursuant to the 2018 AIP was $42,170. However, the Compensation Committee exercised positive discretion and awarded Mr. Coale a bonus of  $60,170 in connection with his promotion to Vice President and Controller of the Company.

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Long-Term Incentive Compensation

2018 Equity Award Grants

The purpose of our long-term incentive compensation is to align the interests of our executives with those of our stockholders and to retain our executives and other eligible employees over the long term. We want our executives to be focused on increasing stockholder value, and we use the 2016 ECIP as the long-term vehicle to encourage and establish this focus.

The Compensation Committee may elect to grant equity-based awards under the 2016 ECIP to NEOs in connection with an employee’s initial hire, promotion and other events. Since emerging from bankruptcy in December 2016, the Compensation Committee has not yet developed a regular ongoing annual long-term incentive (“LTI”) award cycle for officers. In 2016, officers, including the NEOs, received emergence grants. In 2017 those grants were cancelled and replacement awards were granted that consisted of 50% time-based RSUs and 50% performance-based RSUs (the “Replacement Awards”). In light of leadership transitions, industry volatility, the grant of Replacement Awards at year-end 2017 and in an effort to conserve shares in the 2016 ECIP, no normal-cycle equity-based LTI awards were made to NEOs in 2018 except for in the case of promotions or new-hires (as described below). The Committee is still developing its strategy and plan for a future annual ongoing officer LTI program by taking into consideration stockholder feedback, the recent decline in the Company’s stock price, macro-economic industry factors, the impact on future run rate and dilution and the need to competitively award compensation to attract, retain and motivate employees.

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2018 Coale Awards

On July 1, 2018, in connection with his offer letter and appointment to Vice President—Operations Controller of the Company’s wholly owned subsidiary, the Compensation Committee granted Mr. Coale 10,000 shares of time-based restricted stock units (“RSUs”) and 10,000 shares of performance-based restricted stock units (“PSUs”) with a fair market value of  $324,800 based on the closing stock price of  $16.24 per share on July 1, 2018. One-third of the RSU grant will vest each year on the anniversary date of the grant. One-third of the PSU grant will be earned based on the Adjusted EBITDA-based performance goals achieved over each of the one-year performance periods with respect to the 2018, 2019, and 2020 calendar years, and the earned portion of the entire PSU award will settle following the end of the performance period with respect to the 2020 calendar year. Upon a termination of Mr. Coale’s employment for any reason, any portion of the PSU award which remains unvested will be forfeited.

2018 Saltiel Awards

In connection with his appointment as the Company’s President and Chief Executive Officer and the execution of his Employment Agreement, on August 20, 2018, the Compensation Committee granted Mr. Saltiel a long-term incentive award of  $1.25 million in the form of time-vesting RSUs that vest over three years in three equal installments and a special sign-on award of  $2 million in the form of RSUs that vest over three years in three equal installments.

2017 Year-End Grant of Performance-Based Restricted Stock Units (2018–2020 Performance Period)

As described above, on December 31, 2017, the Compensation Committee granted 50% of the Replacement Awards to Messrs. Drummond, Brunnert, Dodson and Miller and Ms. Hargis in the form of performance-based restricted stock units (the “2017 PSU Grant”). One-third of the 2017 PSU Grant will be earned based on the Adjusted EBITDA-based performance goals achieved over each of the one-year performance periods with respect to the 2018, 2019, and 2020 calendar years, and the earned portion of the entire 2017 PSU Grant will settle following the end of the performance period with respect to the 2020 calendar year. Upon a termination of holder’s employment for any reason, any portion of the PSU award which remains unvested will be forfeited. Messrs. Drummond and Brunnert forfeited the 2017 PSU Grant upon termination with the Company on May 11, 2018 and September 12, 2018, respectively. On January 17, 2019, the Compensation Committee confirmed that the first tranche of the 2017 PSU Grant did not meet the performance criteria (EBITDA Threshold: $32.8 million; EBITDA Target: $41 million; EBITDA Stretch: $51.3 million; or EBITDA Maximum: $61.5 million) and as such were deemed forfeited.

Other Components of Total Compensation

The total compensation program for our Named Executive Officers also consists of the following components:

•

retirement, health and welfare benefits;

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•

limited perquisites; and

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•

certain post-termination payments.

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Retirement, Health and Welfare Benefits

We offer a 401(k) savings plan and health and welfare programs to all eligible employees. Under the terms of their employment agreements, the NEOs are eligible for the same broad-based benefit programs on the same basis as the rest of our employees. Our health and welfare programs include medical, pharmacy, dental, vision, life insurance and accidental death and disability. For additional information about employment agreements, see “Compensation of Executive Officers-Employment Agreements” below.

Under the 401(k) plan, eligible employees may elect to contribute up to 100% of their eligible compensation on a pre-tax basis in accordance with the limitations imposed under the Internal Revenue Code of 1986, as amended, and the regulations promulgated there under (collectively, the “Code”). The

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cash amounts contributed under the 401(k) plan are held in a trust and invested among various investment funds in accordance with the directions of each participant. Effective as of September 1, 2015, we suspended the matching contribution under our 401(k) plan. Accordingly, for the year ended December 31, 2018, we made no employer matching contributions to the 401(k) plan. For plan years commencing on or after January 1, 2019, the Company reinstated the 100% match on the first 4% of eligible compensation contributed by an employee.

Limited Perquisites

We provide our NEOs with the opportunity to receive certain perquisites that we believe are reasonable and consistent with the practices of our peer group. With respect to certain NEOs, we pay eligible covered out-of-pocket medical and dental expenses not otherwise covered by insurance. The NEOs receive these reimbursements under the terms of, and subject to the limitations set forth in, our Executive Health Reimbursement Plan. These programs are intended to promote the health and financial security of our executives. The programs are provided at competitive market levels to attract, retain and reward superior executives in key positions. Perquisites did not constitute a material portion of the compensation to the NEOs for 2018. The value of these benefits for NEOs in 2018 is reflected under “All Other Compensation” column of the “2018 Summary Compensation Table” below.

Employment Agreements

We believe that it is appropriate to formally document the employment relationships that we have with certain executive officers of the Company, and we have entered into employment agreements with Messrs. Saltiel, Dodson and Miller and Ms. Hargis that offer severance payments and other benefits following termination of the applicable executive officer’s employment under various scenarios, as described below. The Company believes that offering severance benefits is beneficial in attracting and retaining key executive officers, encourages the retention of such executive officers during the pendency of a potential change of control transaction or other organizational changes within the Company and protects the Company’s interest.

The employment arrangements in place with Messrs. Saltiel, Dodson and Miller and Ms. Hargis provide for severance compensation if the executive’s employment is terminated for a variety of reasons, including a change of control of Key. Change of control benefits are structured as “double trigger” benefits such that benefits are paid only if the executive’s employment of is terminated during a specified period after a change of control. We believe a “double trigger” benefit maximizes stockholder value because it prevents an unintended windfall to executives in the event of a change of control where executives retain their positions and compensation is not reduced, while still providing appropriate incentives to cooperate in negotiating any change of control. In addition, these agreements avoid distractions involving executive management or their own continued employment that arise when the Board is considering possible strategic transactions involving a change of control, and assure continuity of executive management and objective input to the Board when it is considering any strategic transaction. For additional information concerning severance and change of control benefits contained in the employment agreements of our Named Executive Officers, see “Compensation of Executive Officers—Payments Upon Termination or Change of Control” below.

Tax and Accounting Considerations

We account for equity-based compensation in accordance with the requirements of FASB ASC Topic 718, “Stock Compensation.” The tax and accounting consequences of utilizing various forms of compensation are considered by the Compensation Committee when adopting new or modifying existing compensation.

Risk Assessment and Mitigation

The Compensation Committee has reviewed our executive and non-executive compensation programs and believes that they do not encourage excessive or unnecessary risk-taking. In designing and implementing our award structure, we and the Compensation Committee worked closely with Meridian to mitigate any risks and to minimize the creation of imprudent incentives for our executives. We do not

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believe that our performance-based compensation encourages unnecessary risks because the executive pay mix is sufficiently diversified over several performance metrics as well as over short-term and long-term compensation. Our compensation program structure and policy includes the following features to prevent and safeguard against excessive risk-taking:

✓

Payments under our short-term cash incentive program are based upon the Compensation Committee’s certification and review of a variety of performance metrics, thereby diversifying the risk associated with any single performance indicator;

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✓

Our long-term equity compensation rewards have performance or time-based vesting periods of at least three years for executives, which encourages executives to focus on sustaining the performance of the Company and its stock price;

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✓

We pay compensation that is competitive with the market and our industry peers, while not being excessive;

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✓

Our compensation mix is balanced among fixed and variable components, annual and long-term compensation, and cash and equity and includes multiple performance metrics intended to create rewards based on our Company’s and our executives’ long-term performance;

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✓

Our incentive compensation plans cap the maximum payout and implement design features that do not encourage excessive risk-taking;

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✓

Our Compensation Committee has an appropriate level of discretion, including the ability to reduce payments under the short-term cash incentive program;

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✓

Our Compensation Committee adopted a clawback policy and stock ownership guidelines, which provide additional levels of accountability for decision-making;

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✓

Our insider trading policy contains a general anti-hedging and anti-pledging policy for all insiders; and

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✓

We do not have any agreements that provide for payments solely upon the occurrence of a change in control (except for performance-based equity awards, which vest based on the actual achievement of the applicable performance conditions through the date immediately prior to the change of control).

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We believe that our executive compensation program provides our executive officers with appropriate rewards for sustained performance, without giving unnecessary weight to any one factor or type of compensation, and avoids excessive risk. Our compensation structure is designed to encourage sustained performance over a long-term period. Based on the foregoing, the Compensation Committee has concluded that the risks arising from our compensation policies and programs are not reasonably likely to have a material adverse effect on us.

Recoupment of Compensation

Upon the recommendation of the Compensation Committee, in 2018, the Board adopted a clawback policy that allows for the recoupment of cash and equity-based incentive-based compensation, at the sole discretion of our Board of Directors or Compensation Committee, in the event of a financial restatement that resulted in excess compensation being paid to current or former executive officers within a twenty-four month period preceding the date on which the Company is required to prepare the financial restatement. This clawback policy can be found in the Corporate Governance section of the Company’s website at www.keyenergy.com.

Insider Trading Policy; Anti-Hedging and Anti-Pledging

We maintain an insider trading policy that prohibits insiders from trading shares of our Common Stock when in possession of material non-public information. The policy also prohibits the pledging and hedging of our shares, including transactions involving short-sales, margin accounts and derivative securities.

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Stock Ownership Guidelines

Upon the recommendation of the Compensation Committee, in 2018, the Board adopted stock ownership guidelines for our non-employee directors and executive officers, including our Named Executive Officers. The details of the stock ownership guidelines applicable to our executives (including our Named Executive Officers) are outlined below.

It is the responsibility of the non-employee directors and our executive officers to achieve and maintain compliance with this policy by the later of December 31, 2023 or at the end of five years of continuous service with the Company as an executive officer or member of the Board.

Executive Compensation Decisions Since Fiscal Year-End

Annual Incentive Bonus—2019 Short-Term Cash Incentive Plan

Certain 2019 compensation decisions were made in light of continued industry volatility and a challenging industry environment, as well as the decline in the Company’s stock price. Due to the market uncertainty, the Compensation Committee decided to set quarterly EBITDA performance goals in 2019, while safety and strategic goals will be measured annually. This is intended to allow better line of sight in the goal-setting process.

The performance metrics under the 2019 AIP, and their respective weightings, are as follows: 60% normalized EBITDA measured quarterly and, if earned, paid annually, 20% Safety measured annually and paid annually and 20% Strategic and Individual measured annually and, if earned, paid annually. The Compensation Committee has full discretion to evaluate all aspects of the bonus when determining the level of achievement of the 2019 AIP performance metrics, not to exceed 150% of target in the aggregate. The Compensation Committee will re-evaluate the effectiveness of quarterly versus annual performance goals for the 2020 short-term incentive plan.

Annual Long Term Incentive Grant—2019 Long-Term Incentive Awards

As mentioned above, due to the current industry environment and recent leadership transitions, the Compensation Committee has not yet developed a normal cycle granting LTI awards. The recent rapid decline in the value of our stock, the difficulty in setting long-term performance goals and the limited number of shares in our 2016 ECIP made awarding long-term incentive compensation in 2019 challenging. In an effort to control run rate and dilution levels as a result of the decline in our stock price at the time of grant, and based on the belief that there is significant upside value in our stock, the Compensation Committee elected to grant 2019 LTI awards at values that are significantly lower than typical targeted LTI values for our NEOs, and to award a portion of our 2019 LTI awards in equity and a portion in cash. The reduced award values were determined by dividing the original targeted LTI award values by an imputed $6.00 stock price, which approximates the 5-month average price on grant date. This resulted in fewer shares being granted than would have been granted at the closing stock price on the February 4, 2019 grant date (the “Award Date”) of  $2.19.

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2019 LTI Awards versus Target LTI Awards

The following table presents information on the 2019 LTI awards versus typical targets for currently employed NEOs.

Due to the significantly reduced 2019 LTIP grant values, the Compensation Committee determined it was appropriate to only grant time-based awards for this grant cycle. The Compensation Committee intends to re-evaluate its LTI program strategy for 2020 based on industry and market conditions present at that time, and intends to reinstate performance-based LTI awards in the future.

Time-vesting restricted stock units (“RSUs”) granted in 2019 will vest in equal installments on the first three anniversaries of the Award Date and the cash long-term incentive award (a “Cash LTI Award”) will vest 40% on the first anniversary of the Award Date and 60% on the second anniversary of the Award Date.

The RSU grants to Messrs. Dodson and Miller and Ms. Hargis are contingent upon stockholder approval of the 2019 Equity and Cash Incentive Plan (the “2019 Plan”) at the Company’s 2019 annual meeting of the stockholders. If stockholders approve the 2019 Plan, such RSUs will vest in equal installments on the first three anniversaries of the Award Date.

Employment Agreement Amendment

On February 4, 2019, the Company entered into an amendment (the “Amendment”) to the Employment Agreement to adjust the terms regarding Mr. Saltiel’s annual long-term incentive award for 2019 to reflect the changes to the Company’s 2019 LTI Award terms described above, and are provided in the Form 8-K filed with the SEC on February 6, 2019. The amendment to Mr. Saltiel’s Employment Agreement is described in more detail in the section below entitled “Potential Payments Upon a Termination of Control”.

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Compensation of Executive Officers

2018 Summary Compensation Table

The following table contains information about the compensation that our NEOs earned for fiscal years 2018, 2017 and 2016 as applicable to their status as NEOs for each given year:

(1)

The amount in this column for 2018 consists of a payment received by Mr. Drummond pursuant to a promotion retention award granted on March 5, 2016 in connection with Mr. Drummond’s promotion to CEO. Amounts in this column for 2016 and 2017 consist of payments paid pursuant to cash retention awards granted on January 28, 2016 to Messrs. Drummond, Dodson, Miller and Ms. Hargis in the aggregate amounts as follows: Mr. Drummond ($766,000); Mr. Dodson ($425,000); Mr. Miller ($150,000) and Ms. Hargis ($120,000). Each of Messrs. Dodson, Miller and Ms. Hargis received payment of one-third of their retention award amounts on October 21, 2016 ($141,667, $50,000 and $40,000, respectively). The remainder of the retention award amounts for such executives ($283,333, $100,000 and $80,000, respectively), and the entire amount for Mr. Drummond, vested and was paid on June 30, 2017. The amount in this column consists of Mr. Saltiel’s pro-rata 2018 bonus paid pursuant to the terms of his Employment Agreement

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(2)

The amounts in these columns represent the aggregate grant date fair value dollar amounts with respect to RSUs, PSUs and option awards granted in 2016, 2017 and 2018 under the 2016 Incentive Plan, as applicable, calculated on the respective grant date of each such award in accordance with FASB ASC Topic 718. For the 2018 awards, the assumptions made in the valuation of the expense amounts included in these columns are discussed in Note 20 in the notes to our consolidated financial statements, entitled “Share-Based Compensation,” which is included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. See the section of our Compensation Discussion and Analysis above entitled “2018 Equity Award Grants” and the “2018 Grants of Plan-Based Awards” table below for additional information regarding these awards. Amounts for 2018 for Mr. Saltiel include the value of an annual

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long-term incentive award of  $1.25 million in the form of time-vesting RSUs that vest over three years in three equal installments granted on August 20, 2018 and a special sign-on award of  $2 million in the form of time-vesting RSUs that vest over three years in three equal installments granted on August 20, 2018 in connection with his appointment as the Company’s President and Chief Executive Officer. Amounts for 2018 for Mr. Coale include the value of 10,000 performance-based RSUs with a three-year performance period using an EBITDA performance metric granted on July 1, 2018 and 10,000 time-based RSUs that vest over a period of three years in three equal installments, granted on July 1, 2018 in connection with his hiring as Vice President—Operations Controller of our wholly owned subsidiary, Key Energy Services, Inc. For 2017, amounts for each NEO include the value of Replacement Awards (granted 50% in the form of time-based RSUs vesting in three equal installments over a three-year period from the date of grant and 50% in the form of performance-based RSUs with a three-year performance period using an EBITDA performance metric) granted on December 31, 2017 in exchange for the forfeiture of all outstanding unvested equity awards, including time and performance-based options, performance-based stock units and time-based restricted stock units. The value of the portion of the Replacement Awards granted in the form of performance-based restricted stock units reflects performance at target, the probable outcome of the performance conditions underlying those awards as of the date of grant. The 2016 equity awards reflected in the column above were grants made upon emergence, as well as grants made prior to the Company’s Chapter 11 restructuring.

(3)

The amounts shown in this column consist of annual bonus payments made to the NEOs under each of the 2016 cash bonus incentive plan, the 2017 AIP, and the 2018 AIP.

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(4)

A breakdown of the amounts shown in this column for 2018 for each of the NEOs is set forth in the table below.

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(a)

Includes premiums paid by the Company on behalf of the NEO for life insurance, accidental death and disability or other insurance policy for which the officer (or his or her family) is the beneficiary.

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(b)

Represents out-of-pocket medical expenses not covered by insurance that are reimbursed to the NEO.

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(c)

Includes amounts for imputed income with respect to life insurance and other benefits, including the Excess Group Life Policies.

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(d)

Represents (i) $400,000 severance payable to Mr. Brunnert in connection with his departure and (ii) $400,000 retention bonus payable to Mr. Brunnert pursuant to the terms of Mr. Brunnert’s employment agreement and retention bonus award agreement, respectively.

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2018 Grants of Plan-Based Awards

The following table presents information on plan-based awards made to the NEOs in fiscal 2018:

(1)

The columns represent the potential annual value of the payout for each NEO under the cash bonus incentive compensation component if the threshold, target or maximum goals were satisfied. For a detailed description of the cash bonus incentive plan, see “Elements of Compensation; 2018 Compensation Decisions—Annual Cash Incentive; 2018 Incentive Plan” above. Amounts actually paid for the 2018 year are reflected in the “Non-Equity Incentive Plan Compensation” column of the “2018 Summary Compensation Table” above.

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(2)

These amounts represent the grant date fair value calculated in accordance with FASB ASC Topic 718.

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2018 Outstanding Equity Awards at Fiscal Year-End

The following table provides information with respect to outstanding stock options, time-based RSUs and performance-based RSUs held by the NEOs as of December 31, 2018:

(1)

The market price of stock awards is determined by multiplying the number of shares by the closing price of the stock on the last trading day of the year. The closing price quoted on the NYSE on December 31, 2018 was $2.07.

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(2)

Represents RSUs which vest in annual increments beginning on the one-year anniversary of the date of grant. Performance-based RSUs are shown assuming target performance. With respect to each NEO, the vesting applicable to each outstanding award as of December 31, 2018 (including performance-based RSUs, assuming target performance) is as follows:

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2018 Option Exercises and Stock Vested

The following table sets forth certain information regarding options and stock awards exercised and vested, respectively, during 2018 for the NEOs:

(1)

Represents the number of shares of time-based RSUs that vested during 2018.

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(2)

The value realized on vesting of restricted stock was calculated as the number of shares acquired on vesting (including shares withheld for tax withholding purposes) multiplied by the market value of our common stock on each respective vesting date. Market value is determined in accordance with the terms of the applicable incentive plan under which the restricted stock was granted, and, in the table above, was either (i) the closing price of our common stock on the NYSE for vesting dates that were trading days or (ii) using the average of the closing price of a share of Common Stock on the immediately preceding trading day and the opening price of a share of Common Stock on the immediately following trading day for vesting dates that were on a weekend or holidays.

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Potential Payments Upon Termination or Change of Control

Key has entered into employment arrangements with each NEO that provide for certain payments upon a termination of employment, depending upon the circumstances of the NEO’s separation from Key, as summarized below. Our rationale for maintaining certain severance and change in control benefits has been described above within the Compensation Discussion and Analysis. Each of the arrangements with our NEOs that was effective for the 2018 year is summarized below.

Robert J. Saltiel, President and Chief Executive Officer

On August 20, 2018, the Company entered into the Employment Agreement with Mr. Saltiel pursuant to which Mr. Saltiel would serve as the Company’s President and Chief Executive Officer. Under the Employment Agreement, Mr. Saltiel’s initial compensation will consist of an annual base salary of $750,000, an annual cash incentive award target of 100% of base salary (for 2018 to be paid based on target performance and prorated for the portion of the year during which he is employed by the Company), an annual long-term incentive award of  $1.25 million in the form of time-vesting restricted stock units that vest over 3 years and a special sign-on award of  $2 million in the form of time-vesting restricted stock units that vest over three years. The 2018 long-term incentive award and sign-on award were granted on August 20, 2018. Beginning in 2019, Mr. Saltiel’s annual base salary will increase to $800,000 and his annual long-term incentive award will increase to $3.5 million and with respect to long-term incentive grants for fiscal years 2020 and thereafter, the Employment Agreement provides that each such annual grant (a) will have a grant date target value of no less than $3.75 million, (b) will be comprised of no less than 50% time-vesting and the remainder performance-vesting restricted stock units, as determined by the Board in its sole discretion, (c) will be subject to the terms of the applicable LTI Plan and award agreement, to the extent consistent with the Employment Agreement, and (d) will be made on or before April 30, of each calendar year.

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On February 4, 2019, in connection with the Company’s lower stock price and shortage of available shares for issuance under the 2016 ECIP, the Company amended Mr. Saltiel’s Employment Agreement to revise the 2019 long-term annual incentive award from an equity award equal to $3.5 million to an award of 600,000 time-vesting restricted stock units that vest in equal annual installments on the first three anniversaries of the grant date and a time-vesting cash long-term incentive award in an amount equal to $1 million that vests 40% on the first anniversary of the grant date and 60% on the second anniversary of the grant date, subject to the terms of the applicable award agreements (the “2019 CEO LTI Grant.” The 2019 CEO LTI Grant was made on February 4, 2019 and is reflected above in the section entitled “Annual Long Term Incentive Grant—2019 Long-Term Incentive Awards.” Mr. Saltiel is entitled to at least four weeks of vacation per year and to participate in other benefit plans on terms consistent with those applicable to the Company’s employees generally, including, without limitation, personal time off, group medical and dental, life, accident and disability insurance, retirement plans and supplemental and excess retirement benefits as the Company may from time-to-time provide to similarly situated employees. As a condition of employment, Mr. Saltiel entered into a non-competition agreement pursuant to which Mr. Saltiel has agreed not to compete with Key or to solicit customers or employees of Key after the termination of his employment for a period of time equal to that during which he receives severance compensation or for a period of three years following a severance received after a Change of Control (as defined in his agreement).

Mr. Saltiel will be entitled to cash severance equal to two times the sum of his base salary plus target annual incentive award upon a termination by the Company without “Cause” (as defined in the Employment Agreement), or enhanced cash severance equal to three times the sum of his base salary plus target annual incentive award upon a termination by the Company without “Cause” or a termination by Mr. Saltiel for “Good Reason” (as defined in the Employment Agreement), in each case within two years following a “Change in Control” (as defined in the Employment Agreement).

Robert Drummond, former President and Chief Executive Officer

Mr. Drummond voluntarily terminated his employment with the Company effective May 11, 2018. Because the termination was voluntary, no payments were made to Mr. Drummond pursuant to his employment agreement and all unvested equity was forfeited on May 11, 2018. Following is a description of the terms of Mr. Drummond’s employment agreement that was in effect during his employment with the Company

On June 22, 2015, the Company entered into an employment agreement with Mr. Drummond pursuant to which Mr. Drummond would serve as the Company’s President and Chief Operating Officer. The Company amended and restated this employment agreement effective April 19, 2016 to reflect Mr. Drummond’s promotion to President and Chief Executive Officer. The agreement provides for an initial term to expire on March 5, 2018. The term will be automatically renewed for an additional one-year period on that date (and on each subsequent anniversary of the effective date of the agreement) unless either party gives written notice of its intent not to extend the term. The agreement provides for an annual base salary of  $750,000 and an annual incentive bonus opportunity based on the achievement of performance objectives established by the Compensation Committee with the target bonus based on a percentage of his base salary as determined by the Compensation Committee. Mr. Drummond is entitled to at least four weeks of vacation per year and to participate in the Company’s Executive Health Reimbursement Plan, Director and Officer Liability Insurance, voluntary annual physicals and other benefit plans on terms consistent with those applicable to the Company’s employees generally, including, without limitation, personal time off, group medical and dental, life, accident and disability insurance, retirement plans and supplemental and excess retirement benefits as the Company may from time-to-time provide to similarly situated employees. As a condition of employment, Mr. Drummond entered into a non-competition agreement pursuant to which Mr. Drummond has agreed not to compete with Key or to solicit customers or employees of Key for a period of one year after the termination of his employment. In addition, in connection with Mr. Drummond’s promotion to Chief Executive Officer, the Company entered into a Promotion Bonus Agreement with Mr. Drummond on March 7, 2016 pursuant to which Mr. Drummond would receive a promotion bonus of  $750,000 (the “Promotion Bonus”) if he was still employed by the Company on March 5, 2018. The Company revised the Promotion Bonus Agreement on

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April 6, 2016 to provide that the promotion bonus will vest in full if Mr. Drummond’s employment with the Company is terminated for any reason other than for “Cause” within 12 months following a “Change of Control” (both terms as defined in the revised Promotion Bonus Agreement), rather than on a pro-rata basis.

If Mr. Drummond’s employment with the Company is terminated by the Company without Cause or by Mr. Drummond for Good Reason (as such terms are defined in the employment agreement), or due to non-renewal of the agreement, subject to Mr. Drummond’s delivery of a release of claims in favor of the Company, Mr. Drummond will be entitled to a severance benefit equal to (i) two times his base salary in effect on the termination date payable in twenty-four equal monthly installments, (ii) full vesting of all equity-based incentive awards, and (iii) the cost of COBRA premiums for continued medical insurance coverage for Mr. Drummond and his dependents until the earlier of two years from the date of termination or the date on which he commences full-time employment with another employer. In the event Mr. Drummond terminates his employment for Good Reason or is terminated without Cause (including non-renewal of his agreement) within one year following a Change of Control (as such term is defined in his employment agreement), Mr. Drummond shall receive a severance benefit equal to (i) three times his base salary in effect on the termination date payable in twenty-four equal monthly installments plus three times his annual target cash bonus payable in a lump sum, (ii) full vesting of all equity-based incentive awards, (iii) the Promotion Bonus and (iv) a lump sum payment in cash equal to the cost of COBRA premiums for continued medical insurance coverage for Mr. Drummond and his dependents for two years from the date of termination. If Mr. Drummond’s employment with the Company is terminated by reason of Disability (as defined in his employment agreement), Mr. Drummond shall receive a severance benefit equal to (i) one times his base salary in effect on the termination date, payable in twelve equal monthly installments, reduced by the amount of any disability insurance proceeds actually paid to Mr. Drummond or for his benefit from the Company’s disability plans and programs during such time period, (ii) full vesting of all equity-based incentive awards, and (iii) the cost of COBRA premiums for continued medical insurance coverage for Mr. Drummond and his dependents until the earlier of two years from the date of termination or the date on which he commences full-time employment with another employer. If Mr. Drummond’s employment is terminated by reason of death, Mr. Drummond shall not receive any severance payments pursuant to his agreement; however, his spouse and his dependents shall be entitled to receive continued group health, dental and vision coverage under the Company’s Welfare Plans and the Company shall pay all required COBRA premiums until the earlier of the second anniversary of his death or the date on which his spouse and his dependents receive replacement coverage that would terminate their COBRA termination rights.

J. Marshall Dodson, Senior Vice President, Chief Financial Officer and Treasurer

On March 25, 2013, the Company entered into an employment agreement with Mr. Dodson pursuant to which Mr. Dodson would serve as the Company’s Senior Vice President, Chief Financial Officer and Treasurer. The employment agreement provides for an initial two-year term expiring on the second anniversary of the effective date of the agreement. The term will be automatically renewed for an additional one-year period on that date (and on each subsequent anniversary of the effective date of the agreement) unless either party gives written notice of its intent not to extend the term. The agreement provides for an annual base salary of  $350,000 that may be increased at the discretion of the Chief Executive Officer and the Compensation Committee and an annual incentive bonus opportunity based on the achievement of performance objectives established by the Compensation Committee. In January 2014, the Compensation Committee increased Mr. Dodson’s base salary to $375,000. In July, 2018 the Compensation Committee increased Mr. Dodson’s annual base salary to $425,000. Mr. Dodson is entitled to at least four weeks of vacation per year and to participate in the Company’s Executive Health Reimbursement Plan, Director and Officer Liability Insurance, voluntary annual physicals and other benefit plans on terms consistent with those applicable to the Company’s employees generally, including, without limitation, personal time off, group medical and dental, life, accident and disability insurance, retirement plans and supplemental and excess retirement benefits as the Company may from time-to-time provide to similarly situated employees. As a condition of employment, Mr. Dodson entered into a non-competition

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agreement pursuant to which Mr. Dodson has agreed not to compete with Key or to solicit customers or employees of Key after the termination of his employment for a period of time equal to that during which he receives severance compensation or for a period of three years following a severance received after a Change of Control (as defined in his agreement).

If Mr. Dodson’s employment with the Company is terminated by the Company without Cause or by Mr. Dodson for Good Reason (as such terms are defined in the employment agreement), or due to non-renewal of the agreement, subject to Mr. Dodson’s delivery of a release of claims in favor of the Company, Mr. Dodson will be entitled to a severance benefit equal to (i) two times his base salary in effect on the termination date payable in twenty-four equal monthly installments, (ii) full vesting of all equity-based incentive awards, and (iii) the cost of COBRA premiums for continued medical insurance coverage for Mr. Dodson and his dependents until the earlier of two years from the date of termination or the date on which he commences full-time employment with another employer. In the event Mr. Dodson terminates his employment for Good Reason or is terminated without Cause (including non-renewal of his agreement) within one year following a Change of Control (as such term is defined in his employment agreement), Mr. Dodson shall receive a severance benefit equal to (i) three times his base salary in effect on the termination date payable in twenty-four equal monthly installments plus three times his annual target cash bonus payable in a lump sum, (ii) full vesting of all equity-based incentive awards, and (iii) a lump sum payment in cash equal to the cost of COBRA premiums for continued medical insurance coverage for Mr. Dodson and his dependents for two years from the date of termination. If Mr. Dodson’s employment with the Company is terminated by reason of Disability (as defined in his employment agreement), Mr. Dodson shall receive a severance benefit equal to (i) 12 months’ base salary in effect on the termination date, payable in twelve equal monthly installments, reduced by the amount of any disability insurance proceeds actually paid to Mr. Dodson or for his benefit from the Company’s disability plans and programs during such time period, (ii) full vesting of all equity-based incentive awards, and (iii) the cost of COBRA premiums for continued medical insurance coverage for Mr. Dodson and his dependents until the earlier of two years from the date of termination or the date on which he commences full-time employment with another employer. If Mr. Dodson’s employment is terminated by reason of death, Mr. Dodson shall not receive any severance payments pursuant to his agreement; however, his spouse and his dependents shall be entitled to receive continued group health, dental and vision coverage under the Company’s Welfare Plans and the Company shall pay all required COBRA premiums until the earlier of the second anniversary of his death or the date on which his spouse and his dependents receive replacement coverage that would terminated their COBRA termination rights and all unvested equity awards vest in full.

On July 1, 2018, the Company entered into a retention bonus award agreement with Mr. Dodson providing for payment of a retention bonus pursuant to an award agreement (the “Retention Bonus”) in the amount of  $637,500 with 25% of the bonus vesting July 1, 2019 and the remainder vesting July 1, 2020. In the event Mr. Dodson is terminated without Cause (as defined in the 2016 ECIP), any unvested portion of the Retention Bonus will vest in full.

David Brunnert, former Senior Vice President and Chief Operations Officer

The Company terminated Mr. Brunnert’s employment without cause effective September 12, 2018. The Company paid severance in the amount of  $400,000, accelerated the vesting of his unvested time-based RSUs and paid COBRA pursuant to the terms of his employment agreement. In addition, the Company paid a lump sum of  $400,000 to Mr. Brunnert in connection with his termination pursuant to the terms of his Retention Bonus. Following is a description of the terms of Mr. Brunnert’s employment agreement that was in effect during his employment with the Company.

On December 4, 2017, the Company entered into an employment agreement with Mr. Brunnert which supersedes and replaces that certain amended and restated Change of Control Agreement between the Company and Mr. Brunnert dated January 31, 2017. The employment agreement provides for an annual base salary of  $350,000. In July of 2018, the Compensation Committee increased Mr. Brunnert’s annual base salary to $400,000. The employment agreement contains certain confidentiality, non-competition and intellectual property covenants.

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Upon a termination of Mr. Brunnert’s employment with the Company (i) by the Company without “cause” (as defined in the employment agreement), (ii) by either the Company or the executive at the end of the term of the employment agreement after such term expires due to the Company delivering a notice of non-renewal, (iii) due to death or “disability” (as defined in the employment agreement), or (iv) by the executive for “good reason” within one year following a “change of control” (each as defined in the employment agreement), in each case, subject to the execution and non-revocation of a release, the Company will provide (x) a lump sum severance payment equal to the executive’s annual base salary, (y) continued coverage under the Company’s medical and dental benefit plans for 12 months, and (z) accelerated vesting of outstanding equity awards. If any amounts due to the executive on a termination of employment with the Company by the executive for good reason within one year following a change of control are includable in the executive’s gross income under Section 409A of the Internal Revenue Code of 1986, as amended, then the Company will pay an additional amount necessary to pay the executive for additional income taxes on such amounts.

On July 1, 2018, the Company entered into a retention bonus award agreement with Mr. Brunnert providing for payment of a retention bonus pursuant to an award agreement (the “Retention Bonus”) in the amount of  $400,000 with 25% of the bonus vesting July 1, 2019 and the remainder vesting July 1, 2020. In the event Mr. Brunnert is terminated without Cause (as defined in the 2016 ECIP), any unvested portion of the Retention Bonus will vest in full.

Scott P. Miller, Senior Vice President, Operations Services and Chief Administrative

On January 28, 2016, the Company entered into an employment agreement with Mr. Miller pursuant to which Mr. Miller would serve as the Company’s Senior Vice President, Operations Services and Chief Administrative Officer. The employment agreement provides for an initial term expiring on January 31, 2017. The term will be automatically renewed for an additional one-year period on that date (and on each subsequent anniversary of the effective date of the agreement) unless either party gives written notice of its intent not to extend the term. The agreement provides for an annual base salary of  $275,000. In July 2018, the Compensation Committee increased Mr. Miller’s annual base salary to $310,000. Mr. Miller is entitled to at least four weeks of vacation per year and to participate in other benefit plans on terms consistent with those applicable to the Company’s employees generally, including, without limitation, personal time off, group medical and dental, life, accident and disability insurance, retirement plans and supplemental and excess retirement benefits as the Company may from time-to-time provide to similarly situated employees.

If Mr. Miller’s employment with the Company is terminated by the Company for death, Disability or without Cause (as such terms are defined in his employment agreement) or due to non-renewal of the agreement, subject to Mr. Miller’s delivery of a release of claims in favor of the Company, Mr. Miller will be entitled to a severance benefit equal to 12 months’ annual base salary in effect at the time of his termination payable in a lump sum. In the event Mr. Miller terminates his employment for Good Reason or is terminated without “Cause” (including non-renewal of his agreement) within one year following a Change of Control (as such term is defined in his employment agreement), Mr. Miller shall receive the severance benefit stated above and, in addition, he will be entitled to continued coverage for himself and his dependents under the Company’s medical and dental benefit plans for a period of 12 months at a cost equal to the cost of such coverage for similarly-situated employees of the Company. Accelerated vesting of Mr. Miller’s equity awards is controlled by Mr. Miller’s equity award agreements. In the event of a termination without Cause, including a termination for Good Reason, within one year of a Change of Control (as such terms are defined in Mr. Miller’s equity award agreements), Mr. Miller’s outstanding time-vested equity awards will automatically vest and his performance-based equity awards will vest at the discretion of the Board.

On July 1, 2018, the Company entered into a retention bonus award agreement with Mr. Miller providing for payment of a retention bonus pursuant to an award agreement (the “Retention Bonus”) in the amount of  $310,000 with 25% of the bonus vesting July 1, 2019 and the remainder vesting July 1, 2020. In the event Mr. Miller is terminated without Cause (as defined in the 2016 ECIP), any unvested portion of the Retention Bonus will vest in full.

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Katherine I. Hargis, Senior Vice President, General Counsel & Secretary

In connection with her promotion as the Company’s Senior Vice President, General Counsel and Corporate Secretary on September 12, 2017, the compensation committee approved the terms for an employment agreement to be entered into with Ms. Hargis effective December 4, 2017, which supersedes and replaces that certain Change of Control Agreement between the Company and Ms. Hargis dated January 6, 2014. The employment agreement provides for an annual base salary of  $300,000 and contains certain confidentiality, non-competition and intellectual property covenants. In July 2018, the Compensation Committee increased Ms. Hargis’ annual base salary to $310,000.

Upon a termination of Ms. Hargis’ employment with the Company (i) by the Company without “Cause” (as defined in the Hargis employment agreement), (ii) by either the Company or the executive at the end of the term of the employment agreement after such term expires due to the Company delivering a notice of non-renewal, (iii) due to death or “Disability” (as defined in the Hargis employment agreement), or (iv) by the executive for “Good Reason” within one year following a “Change of Control” (each as defined in the Hargis employment agreement), in each case, subject to the execution and non-revocation of a release, the Company will provide (x) a lump sum severance payment equal to the executive’s annual base salary, (y) continued coverage under the Company’s medical and dental benefit plans for 12 months, and (z) accelerated vesting of outstanding equity awards. If any amounts due to the executive on a termination of employment with the Company by the executive for Good Reason within one year following a Change of Control is includable in the executive’s gross income under Section 409A of the Internal Revenue Code of 1986, as amended, then the Company will pay an additional amount necessary to pay the executive for additional income taxes on such amounts.

On July 1, 2018, the Company entered into a retention bonus award agreement with Ms. Hargis providing for payment of a retention bonus pursuant to an award agreement (the “Retention Bonus”) in the amount of  $310,000 with 25% of the bonus vesting July 1, 2019 and the remainder vesting July 1, 2020. In the event Ms. Hargis is terminated without Cause (as defined in the 2016 ECIP), any unvested portion of the Retention Bonus will vest in full.

Louis Coale, Vice President and Controller

Mr. Coale is not a party to an employment agreement.

The following tables reflect the potential payments to which our NEOs would have been entitled upon termination of employment and/or a change in control event that occurred on December 31, 2018. The closing price of a share of our common stock on December 31, 2018, the last trading day of the year, was $2.07. The actual amounts to be paid out to executives upon termination can only be determined at the time of each NEO’s separation from Key.

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