Brad Childers
ArchrockAbout Brad Childers
D. Bradley Childers (age 60) is President and Chief Executive Officer of Archrock and a non‑independent director since April 2013. He holds a BA from Claremont McKenna College and a JD from the University of Southern California . Under his leadership in 2024, Archrock grew net income 64% and Adjusted EBITDA by more than 30%, increased EPS ~57% YoY, achieved a record 96% fleet utilization, expanded contract operations gross margin to 67%, and returned $110M in dividends while repurchasing ~733k shares . Pay-versus-performance disclosure shows CEO compensation alignment with TSR and core financial measures, with company TSR value of a $100 investment rising to $338 over 2019–2024 and Adjusted EBITDA at $595M in 2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Archrock/Predecessors (UCI, Exterran Energy Solutions) | President & CEO; SVP; senior management roles | CEO since 2011; SVP 2007–2011; senior roles 2002–2011 | Led operations and strategic integration across predecessor entities; deep domain knowledge in compression services |
| Archrock GP LLC (Archrock Partners, L.P.) | President, CEO & Chairman of the Board | 2011–2018 | Oversaw the MLP until its merger into Archrock, Inc. in 2018, aligning equity interests and strategy |
| Occidental Petroleum & subs. | Various management roles | 1994–2002 | Upstream and energy operations experience; foundational industry expertise |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Yellowstone Academy (non-profit private school) | Director | Since 2014 | Community engagement and governance experience |
Fixed Compensation
| Metric | 2023 | 2024 | 2025 (effective Apr 2025) |
|---|---|---|---|
| Base Salary ($) | 875,000 | 913,462 (fiscal earned) | 950,000 (approved by Comp Committee) |
| Target Bonus (% of eligible earnings) | 125% (unchanged) | 125% | 125% |
| Non-Equity Incentive Paid ($) | 1,859,375 | 2,042,019 | N/A (2025 payout TBD) |
Performance Compensation
Short-Term Incentive (STI) – 2024 structure and outcomes
| Metric | Weight | Target | Actual | Payout Factor | Notes |
|---|---|---|---|---|---|
| Adjusted EBITDA | 80% | $518M | $559M (excl. TOPS) | 179% | Committee excluded TOPS impact; payout scaled per schedule |
| Environmental (mileage per avg. operating HP) | 5% | 1% reduction | 1.6% reduction | 179% | Sustainability metrics payout equals EBITDA factor if ≥ target |
| Safety – TRIR | 5% | ≤0.50 | 0.09 excl. TOPS | 179% | OSHA-calculated; safety is a core metric |
| Safety – PVIR | 5% | ≤0.50 | 0.31 excl. TOPS | 179% | API-calculated |
| Talent (voluntary turnover) | 5% | ≤17.5% | 10.6% | 179% | Employee retention focus |
| Payout Computation | Target Cash Incentive ($) | Company Perf. (%) | Individual Perf. (%) | Total Achievement (%) | Total Payout ($) |
|---|---|---|---|---|---|
| Childers 2024 | 1,141,827 | 178.8% | 100% | 178.8% | 2,042,019 |
Long-Term Incentive (LTI) – 2024 grants and design
| Award Type | Mix | Grant Units (#) | Vesting | Settlement | Performance Curve / Peer Set |
|---|---|---|---|---|---|
| Time-vested RSUs | 60% | 187,500 | 1/3 per year over 3 years | Shares or cash for time-based per Retention Agreement | Time-based retention |
| CAD Performance Units | 10% | 31,250 | 3-year cliff (1/25/2027) | Cash (stock price at vest) | Threshold $780M; Target $975M; Max $1,170M cumulative CAD (2024–2026) |
| Leverage Performance Units | 10% | 31,250 | 3-year cliff (1/25/2027) | Cash | Threshold 3.75x; Target 3.25x; Max ≤2.75x Net Leverage (removed in 2025 program) |
| TSR Performance Units | 20% | 62,500 | 3-year cliff (1/25/2027) | Shares | Relative TSR vs 2024 Performance Peer Group; payout 0–250% with absolute TSR matrix |
| 2024 LTI Grant Date Target Value ($) | RSUs (#) | CAD PUs (#) | Leverage PUs (#) | TSR PUs (#) |
|---|---|---|---|---|
| 5,000,000 | 187,500 | 31,250 | 31,250 | 62,500 |
| Prior Cycle Performance (2022 units, paid in 2025) | TSR Units: Target / Paid (#) | CAD Units: Target / Paid (#) | Leverage Units: Target / Paid (#) |
|---|---|---|---|
| Childers | 107,014 / 214,028 | 53,507 / 107,514 | 53,507 / 107,014 |
2025 LTI mix shifts to 50% time-based / 50% performance-based; leverage metric removed, with CAD and TSR retained .
Equity Ownership & Alignment
| Item | Value | Notes |
|---|---|---|
| Total beneficial ownership (shares) | 2,116,697 | 1,806,504 direct; 310,193 restricted stock/units; 1.2% of class |
| Shares outstanding (record date) | 175,268,710 | As of March 3, 2025 |
| Unvested time-based shares/units (12/31/2024) | 489,843 | Market value $12,192,192 at $24.89 close |
| Unearned performance units outstanding | Multiple tranches | 2023 and 2024 CAD/Leverage and TSR units at target; cliff vest 2026/2027 |
| Stock vested in 2024 | 461,789 units; $8,295,310 value | Includes dividends on earned performance units |
| Ownership guidelines | CEO: ≥5x base salary; NEOs: ≥2x | All NEOs in compliance (measured annually) |
| Hedging/Pledging | Prohibited | Policy bans hedging and pledging for all insiders |
Employment Terms
| Provision | Key Terms |
|---|---|
| Severance Benefit Agreement | If terminated without cause or for good reason: lump sum equal to base salary + target STI, prorated target STI for the year, any earned but unpaid prior-year STI, and 12 months of COBRA-equivalent premiums; accelerates next scheduled vest tranche of equity; for performance units, 1/3, 2/3, or 100% of target depending on year of cycle or actual if determined |
| Change-of-Control Agreement | Double-trigger; upon qualifying termination within 6 months before or 18 months after CoC: cash equal to 3x base salary + 3x target STI (Childers; 2x for others), prorated STI for year, any unpaid prior-year STI, 2x company retirement contributions, 24 months COBRA-equivalent premiums; all unvested LTI awards accelerate; 280G “best-pay” cut, no tax gross-ups |
| CEO Retention Agreement (1/25/2024) | If Childers remains through age 62 and “qualifying retirement”: all outstanding Equity Awards continue vesting per terms (performance remains subject to goals); may request cash settlement of time-based RSUs granted on/after effective date; prorated STI at 100% individual factor and actual company metrics; medical/dental/vision at active employee rates through Medicare eligibility; enhanced equity vesting if qualifying termination after age 61.5 not in CoC; non-compete and non-solicit through full vesting period |
| Potential Payments (illustrative at 12/31/2024) | Termination: Death/Disability ($) | Termination: Without Cause/Good Reason ($) | CoC: Without Qualifying Termination ($) | CoC: With Qualifying Termination ($) |
|---|---|---|---|---|
| Childers Total Pre-Tax Benefit | 25,492,338 | 19,516,835 | — | 33,095,637 |
Board Governance (service history, committees, dual-role implications)
- Role and independence: Childers is a non‑independent director since April 2013. Archrock separates the CEO and Chairman roles; Gordon T. Hall serves as independent Chairman with defined responsibilities (e.g., presiding over meetings, agendas, board communication). All board committees (Audit, Compensation, Governance & Sustainability) are 100% independent with full attendance in 2024 .
- Committee service: As CEO, Childers is not a member of the independent committees; he does not receive director compensation for board service .
- Meeting attendance: Board met 11 times in 2024; directors maintained 100% attendance at regular meetings, underscoring governance rigor; independent directors regularly hold executive sessions without management .
- Independence and dual-role implication: Separation of Chair/CEO mitigates potential concentration of power and independence concerns; board conducts annual evaluations, maintains no-hedging/pledging policy, and enforces strict related party oversight (e.g., Hilcorp transactions monitored; affiliated director recusal) .
Compensation Committee Analysis
- Committee composition: All independent; chaired by James H. Lytal; 7 meetings in 2024 with 100% attendance .
- Consultant: Pearl Meyer serves as independent compensation consultant; independence assessed with no conflicts .
- Peer group and positioning: 2024 Compensation Peer Group spans midstream and oilfield services (e.g., ChampionX, Helmerich & Payne, NuStar, USA Compression); target positioning typically between the 50th and 75th percentile, considering role scope and performance .
- Best practices: Three-year performance periods; three-year vesting; double-trigger CoC; clawback policy effective October 2, 2023; limited perquisites; ownership guidelines; prohibition on hedging/pledging .
Compensation Structure Analysis
- Mix shift: For 2025, LTI shifts from 60/40 time/performance to 50/50, increasing at-risk performance exposure and aligning with shareholder feedback after an 88% say-on-pay approval in 2024 (down from >95% five-year average) .
- Performance rigor: 2024 STI emphasizes Adjusted EBITDA (80%) plus quantifiable sustainability metrics (20%) including safety, retention, and efficiency; LTI incorporates CAD, leverage (removed for 2025), and TSR with robust payout curves and peer benchmarking .
- Realizable pay alignment: CEO compensation actually paid tracked TSR and Adjusted EBITDA over the last five years, evidencing pay-for-performance alignment .
Say‑on‑Pay & Shareholder Feedback
- 2024 approval: 88% support for 2023 program; five-year average exceeded 95%; changes for 2025 increase performance-based equity weighting .
- Outreach: Management and board conducted extensive investor engagement (>70% of SOs), refining disclosures and program design based on feedback .
Risk Indicators & Red Flags
- Clawback: NYSE-compliant clawback adopted Oct 2, 2023; applies to erroneously awarded incentive compensation for the prior three fiscal years .
- Hedging/Pledging: Prohibited for employees and directors; trading policy with blackout designations; mitigates misalignment risk .
- Section 16(a): Administrative errors corrected with late Form 4s (e.g., 2021 TSR Performance Awards vesting and a director stock election) .
- Related party transactions: Board monitors services to Hilcorp/affiliates; affiliated director recusal; Childers not implicated in related party arrangements .
Equity Ownership & Vesting Schedule Details (Childers)
| Tranche | Type | Initial Vest Date(s) | Next Key Cliff/Tranche Date | Units |
|---|---|---|---|---|
| Time-based RSUs (annual grants) | RSUs | 1/25/23, 1/25/24, 1/25/25 | Annual pro-rata vesting (1/3 per year) | 489,843 unvested at YE 2024 |
| 2022 Performance Units | TSR; CAD; Leverage | Cycle 1/1/2022–12/31/2024 | Cliff vested 1/25/2025 | Paid 200% of target; TSR settled in shares, CAD/Leverage in cash |
| 2023 Performance Units | TSR; CAD; Leverage | Cycle 1/1/2023–12/31/2025 | Cliff vest 1/25/2026 | Target units outstanding |
| 2024 Performance Units | TSR; CAD; Leverage | Cycle 1/1/2024–12/31/2026 | Cliff vest 1/25/2027 | Target units outstanding |
2024 “Stock Vested” shows magnitude of delivery and value to the CEO during the year, relevant for supply monitoring around vest dates .
Employment Contracts, Severance, and CoC Economics
| Topic | Terms (Childers) |
|---|---|
| Severance | Cash equal to base + target STI, prorated target STI for partial year, any unpaid prior-year STI, 12 months COBRA-equivalent premiums; equity tranche acceleration; performance units vest pro-rata by cycle year or actual if determined |
| CoC | 3x base + 3x target STI; prorated STI; retirement contributions multiple; 24 months COBRA-equivalent premiums; full acceleration of LTI; 280G best-pay cut; no gross-ups; 2‑year restrictive covenants post-termination |
| Retention Agreement | Continued vesting post-retirement at age ≥62; option to cash-settle time-based RSUs granted on/after 1/25/2024; prorated STI with 100% individual factor; extended healthcare at active rates; non‑compete/non‑solicit through vesting |
Expertise & Qualifications
- Education: BA, Claremont McKenna College; JD, University of Southern California .
- Industry depth: >20 years in compression/midstream operations and leadership, with prior upstream roles at Occidental and leadership of Archrock’s MLP .
Investment Implications
- Strong alignment: High proportion of at-risk comp (87% of CEO target TDC in 2024) tied to EBITDA, sustainability, and multi-year CAD/TSR outcomes; 2025 shift further increases performance linkage .
- Retention risk mitigated: CEO Retention Agreement promotes continuity through age 62 with continued vesting and structured benefits; restrictive covenants lower transition risk .
- Supply events: TSR units settle in shares at cliff dates (e.g., 1/25/2026 and 1/25/2027), while CAD/Leverage units settle in cash—monitor vest calendars for potential share deliveries, noting meaningful 2024 vest value for CEO .
- Governance safeguards: Separate Chair/CEO, independent committees, clawback, and no hedging/pledging reduce governance and alignment concerns; no director pay for CEO board service .