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Item 9A. Controls and Procedures

2025-03-04 compared with 2024-03-05 · 64 added, 48 removed, 203 unchanged (36% of the section changed)

3 unchanged sentences

Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Exchange Act Rules 13a–15(e) and 15d–15(e), was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this report.

Based on that evaluation, management concluded that our disclosure controls and procedures were effective as of December 31, 2024.

Management’s Annual Report on Internal Control Over Financial Reporting

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• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

• provide reasonable assurance that transactions are recorded properly to allow for the preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;

• provide reasonable assurance that transactions are recorded properly to allow for the preparation of financial statements in accordance with U.S.

GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use, or disposition of our assets that could have a material effect on the Consolidated Financial Statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements.

Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures my deteriorate.

Also, any evaluation of the effectiveness of controls in future periods is subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the guidelines established in the Internal Control—Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Grant Thornton, LLP, the independent registered public accounting firm, has audited the consolidated financial statements as of and for the year ended December 31, 2024 and the effectiveness of the Company's internal control over financial reporting as of December 31, 2024, as stated in their report which appears under Item 8.

Remediation of Previously Reported Material Weaknesses

As previously disclosed in Part II, 9A.

Controls and Procedures from the Company’s Form 10-K for the year ended December 31, 2022, management identified the following deficiencies in our control environment that constituted material weaknesses in the Company’s internal control over financial reporting as of December 31, 2022:

• Ineffective controls over segregation of duties related to the review of manual journal entries and account reconciliations.

Specifically, certain personnel had the ability to both (a) create and post journal entries within our general ledger system, and (b) review account reconciliations.

• Ineffective information technology general controls related to administrative user access to the Company’s information systems that are relevant to the preparation of financial statements to ensure appropriate segregation of duties and to adequately restrict access to financial applications and data.

• Ineffective controls over the accounting for complex transactions.

During the year ended December 31, 2023, the Company completed its previously disclosed internal control procedures to remediate the control deficiencies that led to the material weaknesses.

The following remedial actions have been taken:

• Management implemented a remediation plan to update its design and implementation of controls to remediate the deficiency related to manual journal entries and enhanced the Company's internal control environment.

The Company has designed and implemented controls to prevent or detect a material misstatement resulting from certain personnel with the ability to create and post journal entries within the Company’s general ledger system.

Management has designed and implemented controls over the review of all manual journal entries initiated and approved to ensure appropriate segregation of duties.

• Management has also implemented measures to design information technology general controls related to administrative user access by restricting privileged access, implemented controls over user access and enforced proper segregation of duties within IT environments based on roles and responsibilities.

• Management enhanced processes and designed and implemented additional internal controls to properly account for complex transactions.

Additionally, the Company has hired additional accounting personnel and implemented training of new and existing personnel on proper execution of designed control procedures.

Any failure to maintain the improvements in the controls over our financial reporting could cause us to fail to meet our reporting obligations, cause misstatements (whether or not material) in our consolidated financial statements, and/or also cause investors to lose confidence in our reported financial information, which could have a negative impact on the trading price of our stock.

Changes in Internal Control over Financial Reporting

Except for the remediation of the material weaknesses noted above, there were no other changes in our internal control over financial reporting during the three months ended December 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information

During the three months ended December 31, 2023, no director or executive officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Trading Arrangement

During the three months ended December 31, 2024, none of our directors or executive officers of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(c) of Regulation S-K.

On May 6, 2024, the Company entered into a Lock-Up Agreement with Charles S.

Leykum and CSL Capital Management, L.P., for and on behalf of subsidiary and affiliated entities, including CSL Energy Opportunity GP I, LLC, CSL Fund II Preferred Holdings, LLC, CSL Energy Holdings II, LLC, CSL Energy Opportunity GP II, LLC, CSL Energy Opportunities Fund II, L.P., and CSL CM GP, LLC (the “CSL-related entities,” and collectively with CSL Capital Management, L.P.

and Charles S.

Leykum, “CSL”), whereby CSL agreed not to enter into certain types of “Prohibited Transactions” involving the Company’s securities until December 31, 2024.

The Prohibited Transactions are defined to include:

(1) offering, pledging, encumbering, hypothecating, selling, granting of an option, or contracting to sell, lend or otherwise attempt to or transfer or dispose of, directly or indirectly, any shares of common stock of the Company (the “Common Stock”) or any securities convertible into or exercisable or exchangeable for shares of Common Stock, whether now owned or hereafter acquired;

(2) entering into any put, call, hedge, short sale or swap or other arrangement that could or does transfer to another or give another rights with respect to, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction is to be settled by delivery of Common Stock or such other securities, in cash or otherwise (including for purposes of (1) or (2) above, any other act or transaction that would transfer the beneficial ownership of the Company’s securities to any other person;

or (3) publicly disclosing the intention to do any of the foregoing.

The parties agreed to exclude from the Lock-Up Agreement certain limited types of transactions, or terminate the Lock-Up Agreement on the occurrence of certain events, which are expressly enumerated in the Lock-Up Agreement.

In partial consideration for CSL’s entry into the Lock-up Agreement, Ranger agreed to reimburse CSL for fees and expenses incurred by it in connection with its negotiation of the Lock-Up Agreement.

Equity-Based Compensation

In 2023, the Board of Directors of the Company declared the first dividend in the Company’s history.

In connection with the Compensation Committee’s (the “Committee”) annual review of executive compensation matters (including in the context of the fact that the Company is now a dividend paying company), the Committee discovered an unintentional inconsistency between the treatment of dividends under the Company’s absolute TSR (“ATSR”) and relative TSR (“RTSR”) equity-related performance metrics under our LTIP.

By way of background, in 2022, 2023 and 2024, the Company issued performance stock units (“PSUs”) to certain key employees, including to each of our NEOs, pursuant to the LTIP.

The PSUs were subject, in part, upon the achievement of an ATSR performance measure, as provided in the applicable form of Performance Stock Unit Award Incentive Agreement (the “PSU Agreement”).

The Committee developed the ATSR performance measure at a time when the Company was not paying dividends to its shareholders and, accordingly, the Form PSU Agreement did not specifically reference dividends paid when calculating ATSR.

In contrast, the Committee contemplated that our “Peer Company” (as defined in the PSU Agreement) may pay dividends and, accordingly, the Form PSU Agreement specifically referenced Peer Company dividends paid when calculating the RTSR performance measure.

On review of this inconsistency, and in light of the fact that the Company now pays dividends, the Committee determined that ATSR- and RTSR-related awards should be treated consistently as to dividends.

As a result, to strengthen the long-term alignment of the Company’s officers and employees (including our NEOs) with the Company’s shareholders and in light of the inconsistency with the treatment of RTSR-relate awards, on February 28, 2025, the Committee determined that the ATSR performance measure should include the payment of shareholder dividends in calculating ATSR.

In conjunction therewith, the Committee approved an amendment to the form PSU Agreements to provide that the ATSR measure will be based on the Company’s stock price plus any dividends paid during the applicable performance period (the “PSU Amendment”), consistent with customary, market practice of including dividends when calculating ATSR.

The PSU Amendment applies to all current and future grants under PSUs, including those granted in 2022, 2023, and 2024.

The PSU Amendment results in an incremental benefit of less than $30,000 to each NEO with respect to the PSUs issued in 2022.

The amounts payable with respect to the PSUs issued in 2023 and 2024 are dependent upon future performance.

As the performance periods for the 2023 and 2024 grants are still ongoing, it is not possible to reasonably estimate amounts payable thereunder at this time.

Regardless, the related annual accounting expense to the Company as a result of the PSU Amendment is immaterial.

The Committee believes that the PSU Amendment furthers the Company’s pay for performance philosophy, aligns the PSUs with the Committee’s original intent of measuring performance based on total shareholder returns, and bolsters the retention value of the PSUs.

The foregoing summary of the PSU Amendment is not complete and is subject to, qualified in its entirety by, and should be read in conjunction with, the full text of the amendment, which is filed as Exhibit 10.14 to this Annual Report on Form 10-K and incorporated herein by reference.

Report of Independent Registered Public Accounting Firm

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Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Ranger Energy Services, Inc.

a Delaware corporation and subsidiaries (collectively, the “Company”) as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

We have audited the internal control over financial reporting of Ranger Energy Services, Inc., a Delaware corporation, and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in the 2013 Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

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Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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Directors, Executive Officers and Corporate Governance

Please see the information appearing in the proposal for the election of directors and under the headings “Executive Officers,” “Information Concerning Meetings and Committees of the Board of Directors,” “Code of Business Conduct and Ethics and Corporate Governance Guidelines” and “Delinquent Section 16(a) Reports” in the definitive proxy statement for our 2024 Annual Meeting of Stockholders for the information this Item 10 requires that is incorporated herein by reference.

We have adopted a code of ethics entitled “Code of Business Ethics,” which applies to all our employees, officers and directors, a copy of which can also be found at www.rangerenergy.com.

We incorporate by reference into this Item information to be disclosed in the definitive proxy statement for our 2025 Annual Meeting of Stockholders, including the information appearing in the proposal for the election of directors and under the headings “Proposal One – Election of Directors,” “Executive Officers,” “Meeting Attendance and Committees of the Board of Directors,” “Corporate Governance Guidelines” and “Delinquent Section 16(a) Reports.”

We have adopted an Insider Trading Policy governing the purchase, sale and other dispositions of our securities by directors, officers, employees, and the Company that are reasonably designed to promote compliance with insider trading laws and applicable listing standards.

A copy of our Insider Trading Policy, as amended to date, is filed as Exhibit 19.1 to this Annual Report.

We have adopted a code of ethics entitled “Code of Business Conduct and Ethics,” which applies to all our employees, officers and directors, a copy of which can also be found at www.rangerenergy.com.

We intend to satisfy the requirement under Item 5.05 of Form 8-K to disclose any amendments to our Code of Business Ethics and any waiver from any provision to it by posting such information on our website at www.rangerenergy.com.

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2017 Long Term Incentive Plan dated May 30, 2019.

(incorporated by reference to Exhibit 4.

2 to the Registrant’s Form S‑8 Registration Statement (File No.

(incorporated by reference to Exhibit 4.2 to the Registrant’s Form S‑8 Registration Statement (File No.

333‑220018) filed with the Commission on May 30, 2019)

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001‑38183) filed with the Commission on May 5, 2023)

10.7† Form of Restricted Stock Agreement (Directors) under the Ranger Energy Services, Inc.

2017 Long Term Incentive Plan.

(incorporated by reference to Exhibit 4.9 to the Registrant’s Form S‑8 Registration Statement(File No.

333‑220018) filed with the Commission on August 17, 2017)

10.8† Form of Restricted Stock Agreement ( Directors ) under the Ranger Energy Services, Inc.

10.7† Form of Restricted Stock Agreement (Employees) under the Ranger Energy Services, Inc.

2017 Long Term Incentive Plan.(202 4 ) (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10‑Q (File No.

001‑38183) filed with the Commission on May 7 , 202 4 )

10.8† Form of Restricted Stock Unit Agreement (Directors) under the Ranger Energy Services, Inc.

2017 Long-Term Incentive Plan dated 202 4 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10‑Q (File No.

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Performance Stock Unit Award Incentive Agreement (2022) (incorporated by reference to Exhibit 10.9 to the Registrant’s Form 10‑K (File No.

001‑38183) filed with the Commission on February 26, 2021)

10.10† Form of Ranger Energy Services, Inc.

Performance Stock Unit Award Incentive Agreement (2021) (incorporated by reference to Exhibit 10.

8 to the Registrant’s Form 10‑K (File No.

001‑38183) filed with the Commission on March 13, 2023).

10.10† Form of Ranger Energy Services, Inc.

Performance Stock Unit Award Incentive Agreement (2022) (incorporated by reference to Exhibit 10.

9 to the Registrant’s Form 10‑K (File No.

001‑38183) filed with the Commission on March 13, 2023).

Performance Stock Unit Award Incentive Agreement (2023) (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10‑Q (File No.

001‑38183) filed with the Commission on May 5, 2023).

10.11† Form of Ranger Energy Services, Inc.

Performance Stock Unit Award Incentive Agreement with Floor (2023) (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 10‑Q (File No.

001‑38183) filed with the Commission on May 5, 2023).

10.12† Form of Ranger Energy Services, Inc.

Performance Stock Unit Award Incentive Agreement (202 4 ) (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10‑Q (File No.

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001‑38183) filed with the Commission on May 7 , 202 4 ).

*10.14† Form of Amendment to Ranger Energy Services, Inc.

Performance Stock Unit Award Incentive Agreements for 2022, 2023 and 2024 Agreements.

10.15 Tax Receivable Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8‑K (File No.

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001‑38183) filed with the Commission on August 22, 2017)

10.17† Indemnification Agreement (Charles S.

Leykum) (incorporated by reference to Exhibit 10.9 to the Registrant’s Form 8‑K (File No.

001‑38183) filed with the Commission on August 22, 2017)

10.18† Indemnification Agreement (Krishna Shivram) (incorporated by reference to Exhibit 10.14 to the Registrant’s Form 8‑K (File No.

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Kearney) (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed with the Commission on July 31, 2018)

*10.20† Indemnification Agreement (Carla Mashinski)

*10.21† Indemnification Agreement (Sean Woolverton)

10.20† Indemnification Agreement (Carla Mashinski ) (incorporated by reference to Exhibit 10.20 of the Registrant’s Form 10 -K filed with the Commission on March 5 , 20 24 )

10.21† Indemnification Agreement (Sean Woolverton) (incorporated by reference to Exhibit 10.2 1 of the Registrant’s Form 10-K filed with the Commission on March 5, 2024)

10.22† Indemnification Agreement, dated as of June 15, 2022, by and between the Company and Melissa Cougle (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K (File No.

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001‑38183) filed with the Commission on May 31, 2023).

10.28 First Amendment to the Credit Agreement, dated May 31, 2023, by and among RNGR Energy Services, LLC and certain of its subsidiaries and Wells Fargo Bank, National Association (incorporated by reference to Exhibits 10.1 to the Registrations for 10-Q (File No.

001-38183) filed with the Commission on July 30, 2024).

10.29 Debt, Commitment Letter, dated as of September 10, 2021, by and among RNGR Energy Services, LLC, Eclipse Business Capital, LLC and Eclipse Business Capital SPV, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K (File No.

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001-38183) filed with the Commission on October 4, 2021).

10.38 Lock-Up Agreement by and among the Company, Charles Leykum and CSL Capital Management, L.P.

for and on behalf of the CSL-related entities, dated as of May 6, 2024 (incorporated by referenced to Exhibit 10.4 of the Registrants Form 10-Q (File No.

001-38183) filed with the Commission on May 7, 2024).

*19.1 Ranger Energy Services, Inc.

Insider Trading Policy Amended and Restated as of June 5, 2024

*21.1 List of subsidiaries of Ranger Energy Services, Inc.

*23.1 Consent of Grant Thornton, LLP

*23.2 Consent of BDO USA, P.C.

*31.1 Certification of Chief Executive Officer Pursuant to Rule 13a‑14(a)/15d‑14(a) of the Securities Exchange Act of 1934

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97.1 Ranger Energy Services, Inc.

Clawback Policy

Clawback Policy (incorporated by reference to Exhibit 97.1 to the Registrant’s Form 10‑ K (File No.

001‑38183) filed with the Commission on Ma rch 5, 2024).

*101.CAL XBRL Calculation Linkbase Document

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Krishna Shivram

/s/ Charles S.

Leykum Director March 5, 2024

/s/ Carla Mashinski Director March 4, 2025

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures