Kenneth N. Berns
PATTERSON UTI ENERGYAbout Kenneth N. Berns
Kenneth N. Berns is Executive Vice President and Chief Commercial Officer at Patterson-UTI Energy (PTEN), serving in this role since May 2017; he previously served as a PTEN director from May 2001 to June 2017 and as Senior Vice President from April 2003 to May 2017, and was a director of UTI Energy Corp. from 1995 to May 2001 . He holds a B.S. in Business Administration from San Diego State University and a Master’s in Taxation from Golden Gate University . Company performance metrics tied to his compensation include Operating Cash Flow ($568.1M in 2024 used for bonus measurement) and Adjusted EBITDA ($1,205.7M in 2024 used for bonus measurement), with strong historical say‑on‑pay support (96% approval in 2024; prior years 96–98%) and pay‑versus‑performance TSR disclosures showing $87 value from a $100 initial investment in 2024 vs $102 peer group value .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Patterson-UTI Energy, Inc. | Executive Vice President & Chief Commercial Officer | May 2017–present | Commercial leadership across expanded company footprint; achievement of merger integration synergy milestones (see “Other Bonuses”) |
| Patterson-UTI Energy, Inc. | Senior Vice President | Apr 2003–May 2017 | Senior leadership through industry cycles |
| Patterson-UTI Energy, Inc. | Director | May 2001–Jun 2017 | Board oversight during strategic evolution |
| UTI Energy Corp. | Director | 1995–May 2001 | Governance preceding PTEN’s combined structure |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| REMY Investors | Executive | Since 1994 | General partner to REMY Capital Partners III, L.P.; registration rights with PTEN continue while REMY holds legacy shares |
| REMY Capital Partners III, L.P. | Legacy stockholder | Since Mar 1995 | Holds 485,000 PTEN shares subject to registration rights; Berns is executive of REMY Investors; he disclaims beneficial ownership of REMY shares |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Annual Base Salary ($) | $450,000 | $590,000 |
| Target Annual Cash Bonus (% of salary) | 125% | 100% |
| Actual Annual Cash Bonus ($) | $603,058 | $629,000 |
Multi-Year Compensation (Summary Compensation Table)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | $450,000 | $450,000 | $590,000 |
| Bonus ($) | — | — | $300,000 (synergy bonuses) |
| Stock Awards ($) | $2,588,724 | $1,976,893 | $1,853,888 |
| Non-Equity Incentive Plan Compensation ($) | $984,375 | $603,058 | $629,000 |
| All Other Compensation ($) | — | — | — |
| Total ($) | $4,023,099 | $3,029,951 | $3,372,888 |
Performance Compensation
2024 Annual Cash Incentive Plan Design and Outcomes
| Metric | Weighting | Target | Actual (2024) | Payout (%) | Weighted Payout (%) |
|---|---|---|---|---|---|
| Operating Cash Flow | 60% | $583.0M | $568.1M (adjusted) | 97% | 56% |
| Adjusted EBITDA | 20% | $1,488.5M | $1,205.7M (adjusted) | 53% | 11% |
| Health, Safety & Environmental | 10% | Holistic KPI | Committee assessment | 200% | 20% |
| Strategy | 10% | Holistic KPI | Committee assessment | 200% | 20% |
| Total | 100% | — | — | — | 107% (applied to bonus target) |
Notes:
- Threshold for financial metrics: 80% of target; linear interpolation; 50% payout at threshold, 100% at target, 200% at maximum .
- Berns’ target bonus was 100% of 2024 salary ($590,000), and paid $629,000 at a 107% payout .
Synergy Milestone Bonuses (2024)
| Milestone | Payout to Berns | Achievement Date |
|---|---|---|
| $125M total integration synergies | $150,000 | March 2024 |
| $200M total integration synergies | $150,000 | May 2024 |
Long-Term Incentives and Vesting Mechanics
| Award Type | Grant Date | Shares/Units | Vesting / Performance Terms | Grant Date Fair Value ($) |
|---|---|---|---|---|
| RSUs | 5/9/2024 | 76,800 | 1/3 each on 5/9/2025, 5/9/2026, 5/9/2027 | $857,088 |
| Performance Units (PSUs) | 5/9/2024 | 80,000 target | Relative TSR vs performance peer group; 1-, 2-, 3‑year performance periods; target at 55th percentile; max at ≥75th; capped at target if absolute TSR not positive | $996,800 |
Equity Ownership & Alignment
Beneficial Ownership and Outstanding Equity (as of Mar 31, 2025 / Dec 31, 2024)
| Item | Amount / Detail |
|---|---|
| Total Beneficial Ownership | 1,246,586 shares; less than 1% of class |
| Components | Includes 343,300 options exercisable; 72,300 RSUs vesting within 60 days; 34,000 shares held in trust(s) where he is trustee; disclaims REMY Investors’ shares |
| RSUs Unvested (not vesting within 60 days) | 78,034 shares |
| Options Outstanding | 154,200 @ $20.33 expiring 4/20/2025; 189,100 @ $18.54 expiring 4/25/2026 |
| 2024 Vesting Events | 212,929 shares vested; $2,369,192 value realized |
| Ownership Guidelines | Section 16 officers: 2x base salary; all covered individuals in compliance as of proxy date |
| Anti-Pledging / Anti-Hedging | Company prohibits hedging and (generally) pledging; limited pledging waiver applies to a legacy NexTier director, not to Berns |
RSU Vesting Schedule Detail (Unvested RSUs at Dec 31, 2024)
| Vest Date | Shares |
|---|---|
| 4/29/2025 | 19,867 |
| 5/5/2025 | 26,833 |
| 5/9/2025 | 25,600 |
| 5/5/2026 | 26,834 |
| 5/9/2026 | 25,600 |
| 5/9/2027 | 25,600 |
| Total | 150,334 |
Note: Based on Dec 31, 2024 closing price $8.26, both option tranches ($20.33/$18.54 strikes) were out‑of‑the‑money at year‑end .
Employment Terms
| Provision | Key Terms |
|---|---|
| Change-in-Control Agreement (2004) | If terminated without cause or for good reason following a CIC: 2x sum of highest annual salary + average of last three annual bonuses; highest annual bonus prorated for year; up to two years welfare benefits; full excise tax gross‑up; CIC defined by 35% ownership threshold, board composition change, or post‑transaction ownership tests |
| Severance Letter Agreement | Payment equal to one year of base salary within 10 days of termination for any reason (including voluntary); offsets any CIC payment dollar-for-dollar |
| Qualified Retiree Program | Retirement eligibility: age ≥55 and ≥5 years of service; continued vesting of unvested time‑based awards and pro‑rata annual bonus in year of retirement; Berns currently meets age/service criteria |
| Clawback Policy | Nasdaq Rule 10D‑1 compliant; recovery of excess incentive‑based compensation over prior 3 fiscal years if restatement; recovery by payment/set‑off/reduction of future comp |
| Anti-Pledging / Anti-Hedging | Prohibits pledging and hedging by executives; limited waiver only for a legacy NexTier director |
| Non-Compete/Non-Solicit | Non‑compete and non‑solicit provisions disclosed for other executives via employment agreements; not specifically disclosed for Berns (no employment agreement described) |
Performance & Track Record
- Integration execution: Berns received $300,000 in 2024 synergy milestone bonuses tied to achieving $125M and $200M integration synergies following the NexTier merger, indicating delivery on value capture initiatives .
- Company performance underpinning incentives: 2024 Operating Cash Flow of $568.1M and Adjusted EBITDA of $1,205.7M (as adjusted for plan calculation) drove a 107% annual bonus payout factor; HSE and Strategic KPIs were assessed at 200% achievement .
- Long-term incentive outcomes: 2021 PSU awards paid at 87.9% of target; Berns earned 121,829 shares under that cycle, reflecting below‑median relative TSR vs that period’s peer group .
- Shareholder support: Say‑on‑pay approvals remained strong (96% in 2024; 98% in 2023; 97% in 2022; 98% in 2021; 96% in 2020) .
- Pay‑versus‑performance disclosure: For 2024, company TSR converted $100 to $87 versus peer group $102; net income was negative, while Operating Cash Flow used for plan purposes was $568.1M .
Compensation Structure Analysis
- Equity-heavy mix supports alignment: RSUs and PSUs represent the majority of LTI; PSUs require ≥55th percentile relative TSR for target, with payout capped at target if absolute TSR is not positive, embedding robust performance gating .
- Shift in cash vs equity: 2024 base salary increased to $590k from $450k in 2023; target bonus reduced from 125% to 100% of salary, while LTI target was $1.75M in 2024 versus $1.75M in 2023—maintaining equity emphasis with performance contingency .
- Governance controls: Strong clawback, anti‑hedging, anti‑pledging, and ownership guidelines (2x salary for Section 16 officers) with confirmed compliance enhance pay‑for‑performance discipline .
- Red flag: Legacy CIC tax gross‑up in Berns’ agreement is shareholder‑unfriendly relative to modern practice; other executives’ more recent agreements exclude gross‑ups .
Equity Ownership & Alignment (Skin‑in‑the‑Game)
- Beneficial ownership is 1,246,586 shares (<1%), including 343,300 currently exercisable options and 72,300 RSUs vesting within 60 days; he also serves as trustee for 34,000 shares; REMY Investors’ separate holdings are disclaimed by Berns .
- Unvested RSUs total 150,334 shares across tranches vesting from 2025 to 2027, supporting ongoing alignment and retention .
- Options maturing April 2025 and April 2026 were out‑of‑the‑money at year‑end 2024 ($8.26 close vs $20.33/$18.54 strike), limiting near‑term exercise incentives .
- Ownership guidelines and holding requirements are in force and compliant, supporting alignment (retain net after‑tax shares until guideline met) .
Employment Terms (Retention & Transition)
- Retirement eligibility (age and tenure) plus continued vesting for time‑based awards under the Qualified Retiree Program materially reduces forfeiture risk, potentially easing retirement path while preserving alignment through pro‑rata bonus vesting .
- The severance letter guarantees one year of base salary for any termination (including voluntary), partially cushioning exit economics, while CIC economics provide significant protection inclusive of a legacy tax gross‑up .
Risk Indicators & Red Flags
- CIC tax gross‑up (legacy) for Berns .
- Related party transaction linkage: REMY Capital registration rights with continued holdings; Berns is executive of REMY Investors; PTEN describes review processes for related person transactions (Audit Committee oversight), and Berns disclaims REMY beneficial ownership .
- Mechanical supply risk: Significant annual RSU vesting volumes (e.g., 212,929 shares vested in 2024) may create periodic selling pressure for tax withholding/portfolio rebalancing; no 2024 option exercises reported .
Compensation Peer Group (Benchmarking)
- 2024 compensation peer group includes Antero Resources, APA, ChampionX, Diamondback, Dover, Fluor, Halliburton, Helmerich & Payne, Ingersoll Rand, KBR, Liberty, Nabors, NOV, TechnipFMC, Weatherford; performance peer group includes Baker Hughes, Ensign, Expro, Halliburton, Helmerich & Payne, Liberty, Nabors, Precision Drilling, ProFrac, ProPetro, Schlumberger, Weatherford .
- PSU design requires above‑median relative TSR (≥55th percentile) for target payout and caps payouts at target if absolute TSR is not positive .
Say‑on‑Pay & Shareholder Feedback
- Say‑on‑pay approval percentages: 2024 (96%), 2023 (98%), 2022 (97%), 2021 (98%), 2020 (96%), indicating consistent shareholder support for executive pay programs .
Employment & Contracts (Additional Details)
- Equity award agreements: No single-trigger acceleration on change in control; acceleration generally requires termination without cause/for good reason following a change in control; death/disability provisions allow partial acceleration .
- Indemnification agreements are in place for officers .
Investment Implications
- Alignment: High equity mix with rigorous PSU design (relative TSR gates and absolute TSR cap) and multi‑year vesting fosters alignment; strong clawback and anti‑hedging/pledging policies reduce governance risk .
- Retention risk: Retirement eligibility plus severance letter (one year salary on any termination) lowers forfeiture risk and may facilitate an orderly transition; continued vesting of time‑based awards under the retiree program mitigates exit friction .
- Trading signals: Annual RSU vest tranches (notably each May) and large periodic vesting (212,929 shares in 2024) can create predictable supply; options expiring April 2025/2026 were out‑of‑the‑money at year‑end 2024, limiting exercise‑driven supply near term .
- Governance watch‑item: Legacy CIC tax gross‑up for Berns is out of step with modern practice (other executives’ agreements exclude gross‑ups), warranting continued monitoring of potential changes to legacy terms .
- Performance lens: 2024 OCF and EBITDA drove incentive payouts despite negative net income; TSR lagged peers in 2024 (Company $87 vs Peer Group $102 from $100 base), reinforcing the importance of relative TSR gates in PSU design .
Note on insider transactions: We reviewed proxy disclosures for vesting/exercise activity. Form 4 trade-level data was not retrieved via available tools; our assessment relies on proxy-reported vest/award data and policies (see “Option Exercises and Stock Vested” and “Ownership & Alignment”) .