Annual report pursuant to Section 13 and 15(d)

Incentive Compensation Plan

v2.4.0.6
Incentive Compensation Plan
12 Months Ended
Dec. 31, 2011
Incentive Compensation Plan [Abstract]  
Incentive Compensation Plan

10. Incentive Compensation Plan

In 2010, the W&T Offshore, Inc. Amended and Restated Incentive Compensation Plan (the "Plan") was approved by our shareholders and covers the Company's eligible employees and consultants. The Plan is an amended and restated version of the Company's previous Long-term Incentive Compensation Plan (the "Previous Plan"). In addition to other cash and equity-based compensation awards, the Plan is designed to grant awards that qualify as performance-based compensation within the meaning of section 162(m) of the Internal Revenue Code ("IRC"). The Plan grants the Compensation Committee of the Board of Directors administrative authority over all participants, and grants the President and Chief Executive Officer with authority over the administration of awards granted to participants that are not subject to section 16 of the Exchange Act (as applicable, the "Committee"). The administrative authority includes setting the terms and provisions of each award granted and modifications to previously granted awards with certain restrictions.

Pursuant to the terms of the Plan, the Committee establishes the performance criteria and may use a single measure or combination of business measures as described in the Plan. Also, individual goals are established by the Committee for certain individuals. Performance awards may be granted in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, bonus stock, dividend equivalents, or other awards related to stock, and awards may be paid in cash, stock, or any combination of cash and stock, as determined by the Committee. The performance awards granted under the Plan can be measured over a performance period of up to ten years and annual incentive awards (a type of performance award) will be paid within 90 days following the applicable year end.

 

For 2011, performance awards under the Plan were granted in the form of restricted stock units ("RSUs") and cash awards. As defined by the Plan, RSUs are rights to receive stock, cash or a combination thereof at the end of a specified vesting period, subject to certain terms and conditions as determined by the Committee. RSUs are a long-term compensation component of the Plan, which are granted to only certain employees, and are subject to adjustments at the end of the applicable performance period based on the Company achieving certain predetermined performance criteria. The sole business performance criteria established for the 2011 RSU awards was an earnings per share target. The Company exceeded the top-tier target; therefore 100% of the RSU awards will be eligible for vesting on December 15, 2013. The cash-based awards, which are a short-term component of the Plan, were determined based on multiple performance measures, such as earnings per share, reserve and production growth, cost containment and individual performance measures. With respect to the 2011 cash-based awards, most of the performance criteria targets were achieved and individual performance was estimated at the mid-point of the eligible range. Employees will be paid their cash-based awards within 75 days following year end 2011.

For 2010, performance awards under the Plan were granted in the form of RSUs and cash awards. The sole business performance criteria established for the 2010 RSU awards was an earnings per share target. The Company exceeded the top-tier target; therefore 100% of the RSU awards will be eligible for vesting on December 15, 2012. The cash based awards were determined based on multiple performance measures. With respect to the 2010 cash-based awards, most of the performance criteria targets were achieved.

In 2009, the Previous Plan was effective. Awards consisted of a general award and an extraordinary performance award. For 2009, the Company's performance did not achieve any of the targets; therefore no awards were granted that were related to Company performance.

In 2009, the Compensation Committee approved a modification to the restricted stock portion of the 2008 award. Due to a decline in the market price of the Company's common stock, the Compensation Committee determined that the number of shares available for issuance under the Previous Plan was insufficient to cover 100% of the restricted stock portion of the 2008 award. Accordingly, in March 2009, the Company granted to its eligible employees, on a pro-rata basis, substantially all of the shares of restricted stock available to be issued under the Previous Plan. In May 2009, the Company's shareholders approved an increase in the number of shares available for issuance under the Previous Plan of 2,000,000 shares. Subsequent to the increase in the number of shares available, the Company granted to its employees restricted stock to satisfy the remainder of the 2008 award.

For information concerning grants awarded and amounts recognized in lease operating expense and general and administrative expense, see Note 11.