* | | | Name of Beneficial Owner | | | Shares of Common Stock
Beneficially Owned (1) | | | Percent of Outstanding
Common Stock | | | | Five Percent Holders: | | | | | | | | | | | | | | | | Tracy W. Krohn | | | | | 48,263,327 | | | | | | 32.9% | | | | | BlackRock, Inc. (2) | | | | | 8,378,248 | | | | | | 5.7% | | | | | State Street Corporation (3) | | | | | 7,350,048 | | | | | | 5.0% | | | | | Directors and Named Executive Officers: | | | | | | | | | | | | | | | | Tracy W. Krohn | | | | | 48,263,327 | | | | | | 32.9% | | | | | Virginia Boulet | | | | | 331,497 | | | | | | * | | | | | Daniel O. Conwill IV | | | | | 34,976 | | | | | | * | | | | | B. Frank Stanley | | | | | 280,973 | | | | | | * | | | | | Nancy Chang | | | | | — | | | | | | * | | | | | John D. Buchanan | | | | | — | | | | | | * | | | | | Jonathan Curth | | | | | 7,333 | | | | | | * | | | | | William J. Williford | | | | | 163,156 | | | | | | * | | | | | Sameer Parasnis | | | | | — | | | | | | * | | | | | Janet Yang (4) | | | | | 85,899 | | | | | | * | | | | | Directors and Executive Officers as a Group (9 persons) | | | | | 49,167,161 | | | | | | 33.5% | | |
*
Less than one percent. (1)
Under the regulations of the SEC, shares are deemed to be “beneficially owned” by a person if he directly or indirectly has or shares the power to vote or dispose of, or to direct the voting of or disposition of, such shares, whether or not he has any pecuniary interest in such shares, or if he has the power to acquire such power through the exercise of any option, warrant or right, which is presently exercisable or convertible or will be within 60 days of the measurement date. (2)
The information is based on a Schedule 13G filed with the SEC on January 29, 2024, reporting ownership of shares of Common Stock as of December 31, 2023. Consists of 8,378,248 shares of Common Stock over which BlackRock, Inc. holds sole dispositive power. R. Andrew Dickson, III is the Corporate Secretary of BlackRock, Inc. The address of BlackRock, Inc. is 50 Hudson Yards, New York, NY 10001. (3)
The information is based on a Schedule 13G Amendment filed with the SEC on January 25, 2024, reporting ownership of shares of Common Stock as of December 31, 2023. Consists of (i) 7,252,961 shares of Common Stock over which State Street Corporation holds shared voting power and (ii) 7,350,048 shares of Common Stock over which State Street Corporation holds shared dispositive power. Elizabeth Schaefer is the Senior Vice President and Deputy Controller of State Street Corporation. The address for the State Street Entities is 1 Lincoln Street, Boston, MA 02111. (4)
The number of shares reported as beneficially owned by Ms. Yang is as of her May 11, 2023, departure from the Company. | | 38 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
The following persons serve as our executive officers as of the date of this proxy statement in the indicated positions: | | Tracy W. Krohn, 69 Chairman, Chief Executive Officer and President | | | | | | | Mr. Krohn’s biographical information can be found in this proxy statement in the section entitled “Proposal No. 1—Election of Directors” under the subsection “Information About the Nominees.” | |
(1) | UnderSameer Parasnis, 49 Executive Vice President and Chief Financial Officer | | | | | | | Mr. Parasnis joined the regulationsCompany in July 2023 as Executive Vice President and Chief Financial Officer. Mr. Parasnis has 25 years of financial and operational experience, of which 20 have been in banking. Mr. Parasnis has advised companies in the oil and gas and energy transition industry on equity capital markets, debt capital markets and strategic M&A. Prior to joining the Company, Mr. Parasnis served as Managing Director of Stifel Financial Corporation’s (“Stifel”) Energy and Natural Resources team in Houston, from August 2016 until May 2019. In July 2019, Mr. Parasnis joined Texas Pacific Land Trust, where he served as Executive Vice President and Chief Commercial Officer until June 2020. In August 2020, Mr. Parasnis rejoined Stifel, serving again as Managing Director of the SEC, shares are deemedEnergy and Natural Resources team until his departure from Stifel. Mr. Parasnis started his investment banking career at Credit Suisse, where he worked for eight years (inclusive of four years internationally) on several notable domestic and international deals in the oil and gas industry, including initial public offerings, debt high-yield offerings and spinoffs. Mr. Parasnis began his career as a chemical engineer at Reliance Industries Ltd. in 1996 and subsequently transitioned to be “beneficially owned” byfinance with Citigroup, following his MBA. Mr. Parasnis is a person if he directly or indirectly has or sharesgraduate of the power to vote or disposeInstitute of or to directChemical Technology in Mumbai, India. He also earned a Master of Business Administration from Southern Methodist University and a Master of Finance from the voting of or disposition of, such shares, whether or notLondon Business School. | |
| | William J. Williford, 51 Executive Vice President and Chief Operating Officer | | | | | | | William J. Williford joined the Company in 2006 and was named Executive Vice President and Chief Operating Officer in March 2022. Since joining the Company in 2006, he has any pecuniary interestserved as Reservoir Engineer, Exploration Project Manager, General Manager Deepwater of Gulf of Mexico, Vice President and General Manager of Gulf of Mexico Shelf and Deepwater, and most recently, Executive Vice President and General Manager of Gulf of Mexico. Mr. Williford has over 25 years of oil and gas technical experience with large independents in such shares, or ifthe Gulf of Mexico and Domestic Onshore. Prior to joining the Company, Mr. Williford held positions in reservoir, production, operations and strategic planning at Kerr-McGee and Oryx Energy. Mr. Williford earned a Bachelor of Science degree in Petroleum Engineering from Mississippi State University. | |
| | 2024Proxy Statement | | | | | | W&T Offshore | | | 39 | |
| | Jonathan Curth, 41 Executive Vice President, General Counsel and Corporate Secretary | | | | | | | Jonathan C. Curth joined the Company in June 2022 as Executive Vice President, General Counsel and Corporate Secretary and manages legal and other various business functions. Mr. Curth has served in numerous commercial and legal positions at other energy companies, including most recently serving as Executive Vice President, General Counsel, Compliance Officer and Corporate Secretary for Vine Energy, Inc. (now a subsidiary of Chesapeake Energy Corp.) from November 2020 to December 2021. His prior experience also includes Interim President and Chief Executive Officer, General Counsel, Chief Compliance Officer and Corporate Secretary of Vanguard Natural Resources, Inc. (now Grizzly Energy, LLC) from December 2017 to December 2019, where he was responsible for multiple commercial functions and all legal matters, and Assistant General Counsel at Newfield Exploration Company (now Ovintiv Inc.) from August 2013 to December 2017. He also previously worked at Willkie Farr and Gallagher LLP and at Baker and McKenzie LLP. Mr. Curth is Board Certified in Oil, Gas and Mineral Law by the Texas Board of Legal Specialization and has over 15 years of commercial and legal experience in the power to acquire such power through the exerciseenergy industry. Mr. Curth received a B.A. degree from Baylor University and a J.D. degree from The University of any option, warrant or right, which is presently exercisable or convertible or will be within 60 daysTexas School of the measurement date.Law at Austin. | |
| | 40 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
TABLE OF CONTENTSSection 16(a) Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires our directors and executive officers and beneficial owners of more than 10% of our Common Stock to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock. SEC rules require these persons to furnish us copies of all Section 16(a) reports they file. To our knowledge, based solely on a review of the copies of such reports furnished to us during 2017 and written representations that no other reports were required with respect to 2017, these persons complied with applicable Section 16(a) filing requirements; except that a correction to Form 4 regarding one report, covering a total of one transaction initially filed in 2017, was filed by Ms. Boulet.
EQUITY COMPENSATION PLAN INFORMATION
Equity Compensation
Plan Information Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information with respect to the equity compensation plans available to directors, officers, certainand employees and certain consultants of the Company atin effect as of December 31, 2017. | | | | | | | | | | | | | Plan category (1) | | Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights (a) | | | Weighted-average
exercise price of
outstanding options,
warrants and rights (b) | | | Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding securities
reflected in column (a)) (c) | | Equity compensation plans approved by security holders | | | 5,765,251 | | | | N/A | (2) | | | 7,769,065 | | Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | | | | | | | | | | | | | | | Total | | | 5,765,251 | | | | N/A | | | | 7,769,065 | | | | | | | | | | | | | | |
(1) | Our equity compensation plans are the Amended and Restated Incentive Compensation Plan and the Director Compensation Plan. Column (a) consists of restricted stock units granted and unvested. Column (c) consists of shares available for issuance under both plans excluding amounts in Column (a). |
(2) | The securities granted under the plans are restricted stock and restricted stock units,2023.| | Plan category (1) | | | Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a) (2) | | | Weighted-average exercise
price of outstanding options,
warrants and rights
(b) (3) | | | Number of securities
remaining available for
future issuance under equity
compensation plans,
(excluding securities
reflected in column (a))
(c) (4) | | | | Equity compensation
plans approved by
security holders | | | | | 7,205,634 | | | | | | N/A | | | | | | 9,506,374 | | | | | Equity compensation
plans not approved
by security holders | | | | | — | | | | | | — | | | | | | — | | | | | Total | | | | | 7,205,634 | | | | | | N/A | | | | | | 9,506,374 | | |
(1)
On June 16, 2023, the Incentive Compensation Plan was approved by the Company’s shareholders. The Company will no longer grant awards pursuant to the 2004 W&T Offshore, Inc. Amended and Restated Compensation Plan, as amended from time to time, (the “Prior Incentive Plan”) or the 2004 Directors Compensation Plan of W&T Offshore, Inc., as amended from time to time (the “Prior Director Plan”). (2)
Represents the number of underlying shares of Common Stock associated with the RSUs and PSUs (assuming the maximum number of PSUs will be earned). Consists of (i) 6,708,383 RSUs and PSUs granted under the Prior Incentive Plan, and (ii) 497,251 RSUs and PSUs granted under the Incentive Compensation Plan. (3)
The securities granted under the Incentive Compensation Plan, the Prior Incentive Plan and the Prior Director Plan are restricted stock, RSUs and PSUs, which do not have an exercise price. (4)
Represents the number of shares of Common Stock available for issuance under the Incentive Compensation Plan, excluding the applicable amounts in column (a). | | 2024Proxy Statement | | | | | | W&T Offshore | | | 41 | |
Compensation Discussion
and Analysis CD&A Contents This Compensation Discussion and Analysis provides a general description of our compensation program and specific information about its various components, which are largely base salaries, short- and long-term incentive and retention programs, retirement plans and health and welfare benefits. This Compensation Discussion and Analysis also provides information about our Chief Executive Officer, Chief Financial Officer and each of the Company’s other three most highly compensated executive officers (thefollowing individuals who are our “Named Executive Officers”), and is intended to place in perspective the information contained in the executive compensation tables that follow this discussion.Throughout this discussion, the following individuals are referred to as the or “NEOs” (each a “Named Executive Officers” and are includedOfficer” or “NEO”) for fiscal year 2023, identified in theour Summary Compensation Table and other compensation tables that follow this Compensation Discussion and Analysis:
provided below: Tracy W. Krohn—Chairman, Chief Executive Officer and President
![[MISSING IMAGE: tb_neodirectors-4c.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-054130/tb_neodirectors-4c.jpg) John D. Gibbons—Senior Vice President and Chief Financial Officer
| | 42 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
Thomas P. Murphy—Senior Vice President and Chief Operations Officer
Stephen L. Schroeder—Senior Vice President and Chief Technical Officer
Shahid A. Ghauri—Vice President, General Counsel and Corporate Secretary
Compensation Philosophy and ObjectivesThe primary objectives of our compensation program for the Named Executive Officers are to attract, as needed, and retain the best possible executive talent, to stimulate the Named Executive Officers’ efforts on our behalf in a way that supports our financial performance objectives and business strategy, and to align their incentives with enhancement of shareholder value. In particular, our
Our compensation program for Named Executive Officers is designed to reward superior job performance and individual initiative to help increase our profitability, oil and gas reserves, production rates, Adjusted EBITDA, and Adjusted EBITDA Margin, and to appropriately manage lease operating expenses (“LOE”) and general and administrative (“G&A”) expense. Under its charter,expense and various other key operational and ESG metrics. Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. Please see Annex A to this proxy statement for definitions of, and additional information about, non-GAAP financial measures. Primary Compensation Objectives for the Named Executive Officers | | 1 | | | Attract & Retain | | | We seek to attract and retain the best possible executive talent. | | | | 2 | | | Motivate Performance | | | We seek to stimulate their efforts on our behalf in a way that supports our financial performance objectives and business strategy. | | | | 3 | | | Align with Objectives | | | We seek to align their incentives with enhancement of long-term shareholder value. | |
To achieve these objectives, the Compensation Committee, as set forth under its charter, sets the compensation of our Chief Executive Officer, and reviews and approves with the Chief Executive Officer the evaluation process and the compensation of our other Named Executive Officers.Officers, and evaluates the performance of the Company’s executive officers and senior management. The Compensation Committee has approved metrics by which each Named Executive Officer’s cash incentives and stock-related incentives will be awarded through our incentive plans. In that effort, theIncentive Compensation Plan. The Compensation Committee has historically applied the following compensation strategies in
connection with its deliberations:To compensate the Named Executive Officers so that their aggregate compensation compares favorably with the total compensation of executives at peer group companies as well as companies with similar areas of operations and/or revenues in the oil and gas industry.
To provide over 50%
| | | | | To compensate the Named Executive Officers so that their aggregate compensation compares favorably with the total compensation of executives at peer group companies as well as companies with similar areas of operations and/or revenues in the oil and gas industry. | | | | | | | To provide a significant component of the total target compensation of the Named Executive Officers in the form of equity-based incentive compensation awarded as a function of our performance in an effort to encourage retention and so that over time our Named Executive Officers have and maintain a meaningful financial interest which is aligned with our shareholders’ interests. | | | | | | | To provide incentive compensation (both short and long-term) awards that are subject to well-defined performance-based targets. | |
| | 2024Proxy Statement | | | | | | W&T Offshore | | | 43 | |
In addition to the primary components of executive compensation described further below, our executive compensation program includes other features that we believe are consistent with strong governance practices, including: ![[MISSING IMAGE: hd_whatwedo-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-054130/hd_whatwedo-pn.jpg) | | Transparent Compensation Program: We strive to maintain a transparent executive compensation program that is easily understandable both to shareholders and employees Independent Compensation Consultant: Engagement by the Compensation Committee of an independent compensation consultant to assist with the Compensation Committee’s regular review of our executive compensation program Award Mix of Long Term Equity Incentives: Long term equity incentive grants include PSUs and RSUs. Effective in 2023, long term equity incentive grants are granted as a mix of 60% PSUs and 40% RSUs Business Judgment: In addition to our formulaic incentive programs, we maintain the ability to incentivize and retain our executives in a manner that reflects our strategic environment in real-time conditions, and compensate our executives in a manner meant to strengthen our business goals and align with our peers Mitigation of Undue Risk: We conduct a risk assessment annually to carefully consider whether any of our compensation programs could lead to excessive or unnecessary risk-taking behavior in our employees Annual Bonus Metrics: We regularly review annual bonus metrics for our executives to align them with our strategy and our peer group | | | Significant At-Risk, Variable Compensation Aligned with Company Performance and Shareholder Interests: A significant percentage of target compensation awards are at-risk, variable and performance-based Multi-Year Equity Vesting: Multiple-year vesting for all executive equity awards, with increased performance periods for equity awards Stock Ownership Guidelines and Retention Policy: Requires our executives and directors to hold a minimum amount of our Common Stock having a value equal to, for officers, a multiple of their base salary depending on their position and for directors, $500,000 Clawback Policy: All incentive-based compensation awards are subject to recoupment in the event of certain financial restatements Anti-Hedging Policy: We have a policy that prevents executives and directors from engaging in short-term trading, pledging or hedging transactions involving our Common Stock Alignment of Executive Incentives: Our executives own a significant stake in the Company (above our peers), encouraging alignment between our strategic objectives and those of our executive management | |
![[MISSING IMAGE: hd_whatwedonotdo-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-054130/hd_whatwedonotdo-pn.jpg) | | No Tax Gross-Ups or Excessive Perquisites: We do not provide tax gross-up payments to the NEOs for any reason. We eliminated perquisites related to personal use of the Company chartered aircraft as of the second quarter of fiscal year 2023 No Guaranteed Payments: We do not provide any guaranteed bonus awards to our NEOs Dividend Payments: No current dividend payments on unvested equity awards No Benefits to Former Executives: We do not maintain benefits for former executives, other than our broad-based 401(k) plan | | | Limited Employment Agreements: We are party to an employment agreement with our founder, largest shareholder and Chief Executive Officer, but all other NEOs are at-will employees No “Single Trigger” Executive Employment Agreements or Equity Awards: In 2023, we entered into a new employment agreement with our Chief Executive Officer that no longer provides for a “single trigger” payout in the event of a change in control. In addition, beginning in 2023, equity awards granted to employees and non-employee directors do not include any “single trigger” benefits that vest upon a change of control No Excess Benefit Plans: We do not maintain pension, supplemental executive retirement plans or other excessive benefit plans for executives | |
| | 44 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
Shareholder Votes on Executive Compensation and Company Responses The Board believes it is advisable and in the best interest of the Company and its shareholders to hold an advisory vote on executive compensation on an annual basis. In 2023, the Company held a shareholder advisory vote on the compensation paid to our Named Executive Officers in 2022, which resulted in approximately 70.3% of votes cast approving such compensation. The Company is holding another vote in connection with the formAnnual Meeting. Following a disappointing advisory vote in 2022, the Compensation Committee considered many factors in evaluating our executive compensation programs as discussed in this Compensation Discussion and Analysis, including the Compensation Committee’s assessment of the interaction of our compensation programs with our corporate business objectives and review of data of our peer group, each of which is evaluated in the context of the Compensation Committee’s duty to act as the directors determined to be in all shareholders’ best interests. The Company reached out to its 25 largest shareholders for feedback regarding its 2022 compensation practices, and based on the conversations we had with some of our larger shareholders’ representatives and after a review of the policies of proxy advisory firms such as Institutional Shareholder Services and Glass Lewis, we made significant changes to our compensation policies and executive compensation program beginning in 2023 to address shareholders’ expressed concerns, including: | | Reduced cash compensation for NEOs and shift to higher percentage of equity-based compensation Equity-grants to be awarded with 60% PSUs and 40% RSUs Amended Mr. Krohn’s employment agreement to remove single trigger change in control payment, among other things Eliminated individual multiplier for target cash bonuses for NEOs Limited maximum annual bonus limited to 200% of target for NEOs Reduced CEO annual base salary from $1,150,000 to $800,000 and increased equity-based compensation target from 275% to 400% of base salary | | | Eliminated perquisite compensation related to Mr. Krohn’s personal aircraft use effective in the second quarter of fiscal year 2023 Eliminated single trigger vesting of equity awards in connection with a change of control Reduced cash retainer for non-employee directors from $110,000 to $85,000 Eliminated non-employee director compensation for the execution of consents, membership on committees and meeting fees Increased equity compensation to non-employee directors from $70,000 to $150,000 Paid no special bonuses in 2023 | |
Our shareholders took note of these positive changes, which were effected in early 2023, and there was a nearly 25% increase in votes “For” the Company’s compensation program at the 2023 Annual Meeting. As a continuation of our shareholder outreach program, in 2024, we have reached out to our 25 largest shareholders (other than Mr. Krohn) to discuss executive compensation and any other issues. We have not received requests for discussion from such shareholders as of the date hereof, but we will continue to engage with our largest shareholders through the date of the Annual Meeting. The Company intends to make a continued concerted effort to provide our shareholders with additional insight regarding our incentive compensation programs, our peer group analysis, and our general compensation philosophy disclosures within this CD&A. For more detail on shareholder communications and Company responses to certain compensation issues raised in resultant discussions, see “—Compensation Changes in 2023” below, and “Shareholder Engagement and Company Responses” under the “Corporate Responsibility” section of this proxy statement. | | 2024Proxy Statement | | | | | | W&T Offshore | | | 45 | |
Compensation Changes in 2023 As referenced above, in the fiscal year 2023 we made substantial changes to our compensation programs based on feedback from our shareholders. We amended and restated Mr. Krohn’s employment agreement and made changes to his cash compensation for 2023, revised the terms of our go-forward grants of equity-based incentive compensation based uponawards, made changes to our performance in an effort to encourage retention and so that over timecash-based incentive program, including eliminating the individual multiplier for our Named Executive Officers haveto align closer to our peer group, made changes to our director compensation program to align compensation more closely with Company performance and shareholder goals, revised severance payment arrangements for Named Executive Officers to align more closely with the market approach and adopted a meaningful financial interestnew incentive plan which is identically alignedreceived shareholder approval. In April 2023 the Company, with Mr. Krohn’s concurrence, amended and restated his employment agreement to provide for: (i) double trigger vesting requirements in the event of a change in control, see “Executive Compensation and Related Information—Potential Payments Upon Termination or a Change in Control”, (ii) a reduction in base salary from $1,150,000 to $800,000 to be more reflective of annual base salary compensation for Chief Executive Officers at members of our peer group and shift more of his total compensation to long-term equity-based compensation (increasing his equity-based compensation target from 275% to 400% of base salary), (iii) annual bonus no longer includes an individual multiplier and his performance metrics were revised to conform with our shareholders’ interests.peer group with the assistance of Meridian to calibrate the form and amount of executive compensation for his target annual bonus, (iv) payment of personal use of the Company’s corporate aircraft by Mr. Krohn in accordance with the Company’s aircraft use policy starting in the second quarter of fiscal year 2023, (v) increased non-compete and non-solicitation period, (vi) annual bonus and equity grant eligibility to be consistent with market practices and (vii) revised employment terms consistent with current market practices, including an updated definition of “Good Reason,” a formal clawback provision and pre-negotiated form of release. ToAll equity-based incentive awards for all employees and non-employee directors granted in 2023 or later no longer provide for single trigger vesting in the event of a change in control and instead provide for double trigger vesting, see “Executive Compensation and Related Information—Potential Payments Upon Termination or a Change in Control”. The mix of equity-based incentive awards was shifted to 60% PSUs and 40% RSUs.
For annual target bonuses in fiscal year 2023 and going forward, the individual performance multiplier was removed for each Named Executive Officer, meaning the maximum annual bonus payout will not exceed 200% of the executive’s target, rather than 380% under the prior formulation. Consistent with the Company’s goal to eliminate perquisite compensation (both short-for personal use of Company aircraft beginning in the second quarter of 2023, certain costs of executive officers’ personal travel on the Company’s corporate aircraft (including the personal travel of family and long-term) awards thatguests) are subject to well-defined performance-based targets, as approvedeither paid directly by the Compensation Committee.executive officer on at least an annual basis or, in certain cases, the executive officer is required to reimburse the Company for personal use, in each case, in accordance with the Company’s aircraft use policy, effective January 1, 2024 (the “Aircraft Policy”). Direct payments are due to the air carrier in accordance with the air carrier’s terms. In our discussions with our larger shareholders, we were told that our compensation system seemed to disproportionally reward our Chief Executive Officer as compared to other members of our management team. We believe that, with the changes outlined above, the relative difference in compensation between our Chief Executive Officer, on the one hand, and the other members of our management team, on the other hand, have been substantially reduced in 2023 and going forward. Role of the Compensation Committee, its Consultants and Management Our Board has entrusted the Compensation Committee to carry out the Board’sits overall responsibility relating to the compensation of our officers and senior executives,management, including our Named Executive Officers. The Compensation Committee meets outside the presence of all of our executive officers, including our Named Executive Officers, to consider appropriate compensation for our Chief Executive Officer. For all other Named Executive Officers, the Compensation Committee meets outside the presence of all executive officers except our Chief Executive Officer. During 2017,2023, our
Chief Executive Officer also played an important role in the executive compensation process by overseeing the performance and dynamics of the executive team and generally keeping the Compensation Committee informed. All final approvals regarding our Named Executive Officers’ | | 46 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
compensation remain with the Compensation Committee. The Compensation Committee has the authority to engage the services of outside advisors, experts and others to assist in performing its responsibilities. It selects our compensation consultants and other advisors taking into consideration the factors identified by the SEC rules and regulations and the NYSE listing standards, as described in greater detail within the Corporate Governance section above. For the 2017 compensation program, in August 2016, theThe Compensation Committee retained Meridian, Compensation Partners, LLC (“Meridian”), an independent consulting firm experienced in executive and overall compensation practices and policies, to assist in calibrating the form and amount of executive compensation as applicable,for the 2023 compensation program by providing market data. In Augustdata, and continued to engage Meridian with respect to current 2024 compensation decisions. Prior to the start of 2017,the 2023 year, and then throughout the 2023 year, the Compensation Committee again retainedconsulted with Meridian in order to perform similareither set target compensation functionsvalues, or to receive assistance in determining the satisfaction of applicable Performance Metrics (as defined below) for the 20182023 compensation program. awards, as applicable. Using the independence factors established by the SEC and the NYSE, the Compensation Committee determined that Meridian’s work did not raise any conflicts of interest, and they are considered an independent consulting firm. The Compensation Committee typically works with our Chief Executive Officer to implement and promote our executive compensation strategy. The most significant aspects of management’s involvement in this process are: preparing meeting agendas and materials in advance of Compensation Committee meetings for review by the Compensation Committee members; •
evaluating employee performance;performance (other than the Chief Executive Officer); •
meeting with compensation consultants, legal counsel or other advisors as directed by the Compensation Committee; •
recommending our business goals, subject to approval by the Compensation Committee; •
providing background information regarding our business goals; and •
recommending the compensation arrangements and components for our employees, including Named Executive Officers.Officers (other than the Chief Executive Officer). The Compensation Committee, together with the assistance and recommendation of our Chief Executive Officer, compensation consultants and any legal counsel or other advisors deemed appropriate by the Compensation Committee, typically reviews and discusses each particular executive compensation component presented and approves the compensation of the Named Executive Officers other than our Chief Executive Officer. In the case of our Chief Executive Officer, the Compensation Committee reviews and discusses each compensation component, together with compensation consultants and any legal counsel, other advisors or members of management deemed appropriate by the Compensation Committee. The Compensation Committee considers the advice ofstatistical comparisons to our peer group as provided by the compensation consultant as only one factor in setting compensation of our Named Executive Officers, as actual compensation decisions are the result of the Compensation Committee’s subjective analysis of a number of factors. Following this review, the Compensation Committee, meeting without management in attendance, sets the annual base salary and other compensation of our Chief Executive Officer.
When making compensation decisions, the Compensation Committee typically considers comparative compensation information of select peer and industry companies as aone reference point in its review and approval of compensation for our Named Executive Officers. This review is done with respect to both the structure of our executive compensation program as well as the targeted amount of compensation.Prior to structuring executive compensation for 2017, the
The Compensation Committee sought presentations from a number of leading compensation consultants. As a result of that selection process, we retained Meridian in August 2016 to act as an independent compensation consultant to provide competitive executive compensation analysis in connection with establishingand establish the 20172023 compensation program.programs. Meridian provided usthe Compensation Committee with a competitive compensation analysis based on a proprietary and confidential industry compensation survey, the Meridian 2016 North America Oil and Gas Exploration and Production Compensation Survey. The data comprised all survey participants with assets between approximately one and five billion as of June 1, 2016. Management supplemented Meridian’s survey with publicly available information for a select group of peer compensation data. In August 2016,companies approved by the Compensation Committee reviewedCommittee. The peer companies chosen included E&P companies with similar offshore operations to the Company or E&P companies of comparable size to the Company and considered which companies that we regularly compete
| | 2024Proxy Statement | | | | | | W&T Offshore | | | 47 | |
with for executive and management talent. The list of peers that were identified for purposes of analyzing our 2023 executive compensation program were originally set as follows: | | •
Berry Corporation •
Centennial Resource Development, Inc. •
Earthstone Energy, Inc. •
Gran Tierra Energy Inc. •
Gulfport Energy Corporation •
Kosmos Energy Ltd. | | | •
Northern Oil and Gas, Inc. •
Ranger Oil Corporation •
Ring Energy, Inc. •
SilverBow Resources, Inc. •
Talos Energy Inc. •
Vital Energy, Inc. (formerly Laredo Petroleum, Inc.) | |
There were various mergers and acquisitions involving the peer companies above during the 2023 year, but this list is intended to reflect the status of our peer company group used in 2016, which was based on companies having market capitalizations, revenues and areas of oil and gas operations similar toat the Company. Certain companiestime that 2023 compensation decisions were included at that time with larger capitalizations because of their principal location in Texas and the fact that they compete with us for personnel. Three of the companies in our 2016 peer group were delisted as of December 31, 2017 and have been excluded from this 2017 peer group:originally determined. In 2016, Meridian provided us an update of its compensation analysis and overview of compensation practices based on a published survey source. The Compensation Committee examined data at the 25th, 50th and 75th percentiles for each executive position and for each pay component. Using this market data, the Compensation Committee set total compensation consisting of cash and equity, by generally targetingwithin the 50th percentilecompetitive market range for a comparable position,peers, while also recognizing that compensation for any specific employee is not purely a mechanical equation.
The statistical competitive compensation information is just one of the inputs used in setting executive compensation, as the Compensation Committee has discretion in determining the nature and extent of its use. When exercising its discretion, the Compensation Committee may consider factors such as the nature of an officer’s duties and responsibilities as compared to the corresponding position in the survey and Peer Group,peer group. For example, Mr. Krohn, as the Company’s founder and as the Company’s largest shareholder, provides additional services and benefits to the Company that a traditional chief executive officer at one of the Company’s peers may not, including providing a line of credit to the Company when commercial banks withdrew from the Gulf of Mexico oil and gas market. The experience and value the officer brings to the role, the officer’s performance results, demonstrated success in meeting key financial and other business objectives and the amount of the officer’s pay relative to the pay of his or her peers within our company. In setting compensation for 2017,Company are also important factors that the Compensation Committee used 2016considers. Risk Assessment Related to our Compensation Structure We believe that our executive compensation plans are appropriately structured and 2017are not reasonably likely to result in material risk to W&T Offshore, Inc. We believe our approach to goal setting, setting of targets with payouts at multiple levels of performance, and evaluation of performance results assist in mitigating excessive risk-taking that could harm our value or reward poor judgment by our executives. Several features of our programs reflect sound risk management practices. We set performance goals that we believe are reasonable in light of past performance and market conditions. In addition, compensation datathat may be paid under our annual cash incentive compensation program is capped at 200% of target. We also believe we have allocated our compensation among base salary and short- and long-term compensation target opportunities in such a way as it deemed appropriate.to not encourage excessive risk-taking. Further, with respect to our incentive compensation programs, the metrics that determine initial payouts for our employees are Company-wide metrics, and any individual performance adjustments are discretionary and not guaranteed, and we updated our practices in fiscal year 2023 as described above to reflect market practice, advice from our compensation consultant, Meridian, and to address comments received from several of our largest shareholders. This is based on our belief that applying Company-wide metrics mitigates risk by encouraging decision-making that is in the best long-term interests of W&T Offshore, Inc. and our shareholders as a whole. We use RSUs rather than stock options for equity awards because RSUs retain value even in a depressed market so that employees are less likely to take unreasonable risks to get, or keep, options “in-the-money.” Finally, the time-based vesting over a multi-year period for our long-term incentive awards ensures that our employees’ interests align with those of our shareholders for the long-term performance of our Company. | | 48 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
Elements and Purpose of Executive Compensation Our Named Executive Officers’ compensation currently has historically had three primary components—base salary, annual cash incentive compensation and long-term incentive compensation. Pursuant to the Incentive Compensation Plan, we may grant annual cash incentive awards (the “Cash Incentive Awards”), stock-based awards or a combination of both. In 2010, we established cash incentive awards and performance-based RSU awards. Each component of the compensation program is designed to serve a particular purpose. Base salary is primarily designed to reward current and past performance and may be adjusted from time to time to realign salaries with market levels. Annual cash incentive awards are granted to incentivize our Named Executive Officers largely to assist us in achieving our annual performance goals,purpose, as well as, to a much lesser degree, to achieve their individual performance goals. In designing the 2017 long-term incentive compensation plan the Compensation Committee took note of the fact that the Chief Executive Officer owned a significant equity interestset forth in the Company. Accordingly,figure below:
| Base Salary | | | | | | Annual Cash Incentive
Compensation | | | | | | Long-Term Incentive
Compensation | | | Base salary is primarily designed to reward current and past performance and may be adjusted from time to time to realign salaries with market levels. | | | | | | Annual cash incentive awards are granted to incentivize our Named Executive Officers largely to assist us in achieving our annual performance goals, as well as, to a lesser degree, to achieve their individual performance goals. | | | | | | The long-term incentive award is designed with two main goals in mind: •
To align the interests of Named Executive Officers and shareholders by creating a mechanism through which the executives are reasonably likely to build a substantial equity oriented financial interest in the Company; and •
Retention. | |
With respect to our equity-based compensation awards, the judgment of the Compensation Committee there could not have been a better alignment between the senior most officer’s interests and those of the shareholders regarding the Chief Executive Officer’s pursuit of development of projects with appropriate long-term risk/reward and the best potential for long term value creation for the shareholders. The overarching alignment between the interests of the Chief Executive Officer and the shareholders has allowed the Compensation Committee the flexibility to design a hybrid long-term incentive plan. Accordingly, the performance-based RSU award is designed with two main goals in mind: (i) to align the interests of Named Executive Officers and shareholders by creating a mechanism through which the executives are reasonably likely to build a substantial equity oriented financial interest in the Company and (ii) retention. The Compensation Committee believes that by personally owning a significant equity interest in the Company, the executives’ interests are better aligned with the shareholders’. In designing our 2023 long-term incentive compensation plan, the Compensation Committee took note of the fact that the Chief Executive Officer owns a significant equity interest in the Company. Accordingly, in the judgment of the Compensation Committee there is a strong alignment between the most senior officer’s interests and those of the shareholders regarding the Company’s pursuit of development of projects with appropriate long-term risk/reward and high potential for long-term value creation for the shareholders. In addition, there is a retention element in the design of our plan2023 program because the equity interest vestslong-term awards vest over a three-year period (consistingperiod. A portion of the yearlong-term awards granted in which the award is made and two years thereafter). While the RSU awardseach year are subject to performance criteria, thecriteria. The targets for such criteria are usually chosenbased on three-year relative TSR. The remaining long-term awards are subject to ensure that the Company has met reasonable expectations during the respective period, but they are not designed as “stretch targets”. The Company does not provide purely retention oriented equity grants as do many of its competitors.service-based vesting over a three-year period. The Compensation Committee designedbelieves that the blend of TSR performance-based long-term awards and long-term awards with a service-based vesting period strike an appropriate balance between incentivizing long-term performance criteriaby the Company and allowing executives to be more demanding thanpersonally obtain a purely retention-oriented grant provided by competitors, yet less demanding than some long-termmeaningful equity incentive plans because ofinterest in the belief that it helpsCompany, thereby helping to align the executives’ interest with those of the shareholders if they personally own a significant amount of equity interest in the Company. The Compensation Committee believes it has achieved its goals in setting the long-term incentive performance targets in 2017, as the Company achieved results which allowed the Named Executive Officers to earn substantially all, but not all, of the award. The design of the long-term incentive RSU award being subject to performance criteria has the added benefit of making the payments tax deductible to us (to the extent the awards are “grandfathered” for purposes of the Section 162(m) performance-based compensation exception, as described in greater detail below). This deductibility is a benefit not found in the structure of many of our competitors’ incentive plans.Company’s shareholders. In addition, our Named Executive Officers participate in the benefit plans and programs that are generally available to all employees of the Company and receive perquisites and other personal benefits, all of which are intended to be part of a competitive overall compensation program. Particularly with respect to our Chief Executive Officer, we consider his perquisites and other benefits to be a material element of his overall compensation package, and the value of such benefits hold significant weight when we make decisions regarding his salary, annual cash incentive compensation and long-term incentive compensation awards.Base Salary
Base salaries for our Named Executive Officers are established based on their role within the Company and the scope of their responsibilities, taking into account the market compensation paid by the Peer Group and survey companies described above. Their base salaries are reviewed annually and adjusted from time to time to realign salaries with those market levels after taking into account individual responsibilities, performance, experience and/or cost of living.
Annual Cash Incentive Compensation
We grant annual cash incentive awards pursuant to the Incentive Compensation Plan. For 2017, as in 2016, our executive annual incentive cash awards program (the “Cash Incentive Awards”) was designed to align executive officer pay with the Company’s financial performance, as well as performance against important short-term initiatives. The Cash Incentive Awards reward our Named Executive Officers based on the achievement of company and individual performance objectives (the “Performance Metrics”). Under the plan, the Compensation Committee establishes threshold, target and maximum award payout opportunities for each Named Executive Officer as a percentage of annual base salary (the “target cash incentive amount”) at certain levels of performance.
In summary, the Incentive Compensation Plan provides for an annual cash payment equal to an established target cash incentive amount, multiplied by an award percentage (the “Award Percentage”) (between 0% and 200%) as determined by a set ofpre-defined goals using straight-line interpolation. More specifically, if threshold performance is achieved for all Performance Metrics, including individual performance, then the Named Executive Officer would generally be entitled to receive 50% of his or her target cash incentive amount. If target performance is achieved for all Performance Metrics, then the Named Executive Officer is generally entitled to receive 100% of his or her target cash incentive amount. Maximum performance results in the Named Executive Officer being generally entitled to receive 200% of the Named Executive Officer’s target cash incentive amount. If the performance achieved for all Performance Metrics does not result in the achievement of at least the threshold level of performance, then the Named Executive Officer is not entitled to any Cash Incentive Award.
The Compensation Committee designed the 2017 Cash Incentive Awards with an additional overall financial metric that will work in combination with the 2017 Performance Metrics. In summary, once we determine the amount that each Named Executive Officer has earned (based on the 2017 Performance Metrics) we will generally be required to make the payment only when we achieve an Adjusted EBITDA less Interest Expense Incurred in an amount exceeding $200 million as of the end of any fiscal quarter on or before December 31, 2019 plus the three preceding fiscal quarters, as reported in our Earnings Release. The Compensation Committee added this unusual condition in order for there to be a payment of the Cash Incentive Awards in recognition of the extremely difficult industry conditions as well as our interest in maintaining liquidity while these conditions persist. This formulation of the Cash Incentive Award allows the executives to retain the possibility to benefit from their accomplishments if and when the industry and our company recover. However, the Compensation Committee in its sole discretion retains the right to pay any Cash Incentive Award otherwise earned regardless of whether such financial condition is achieved.
For the Named Executive Officers, the fiscal 2017 target cash incentive amounts as a percent of base salary were set at the same level as the targets that were set for 2016, except for Mr. Ghauri, who was not employed by the Company during 2016. These percentages were as follows:
| | 2024Proxy Statement | | | | Named Executive Officer
| | 2017 Target Cash
Incentive Amount
as a % of Base
Salary | | Tracy W. Krohn
W&T Offshore | | | 10049 | % | John D. Gibbons
| | | 90 | % | Thomas P. Murphy
| | | 80 | % | Stephen L. Schroeder
| | | 75 | % | Shahid A. Ghauri
| | | 75 | % |
The 2017 Award Percentage was contingent upon our attainment of the following Performance Metrics, provided, however, the 2017 Incentive Cash Award was subject to an additional overall financial metric that must be achieved on or before December 31, 2019, as described above.
| | | | | | | | | | | | | | | | | | | Business Criteria | | Threshold Objective | | Threshold
Weighting * | �� | | Target Objective | | Target
Weighting * | | | Maximum Objective | | Maximum
Weighting * | | Production (1) | | 15.4 MMBoe | | | 12.5 | % | | 16.2 MMBoe | | | 25.0 | % | | 20.0 MMBoe or greater | | | 50.0 | % | | | | | | | | Reserve (2) | | Proven reserves of 75.0 MMBoe at2017 year-end | | | 7.5 | | | Proven reserves of 78.0 MMBoe at 2017year-end | | | 15.0 | | | Proven reserves of 84 MMBoe at2017 year-end | | | 30.0 | | | | | | | | | LOE and G&A (3) | | $16.00 per Boe | | | 12.5 | | | $15.00 per Boe | | | 25.0 | | | $13.00 or less per Boe | | | 50.0 | | | | | | | | | Company Criteria | | | | | | | | | | | | | | | | | | | | | | | Adjusted EBITDA
Margin Percentage (4) | | 48% for year 2017 | | | 10.0 | | | 50% for year 2017 | | | 20.0 | | | 62% or greater for year 2017 | | | 40.0 | | | | | | | | | Individual Criteria | | | | | | | | | | | | | | | | Individual Performance | | Met Expectations | | | 7.5 | | | Exceeded Expectations | | | 15.0 | | | Far Exceeded Expectations | | | 30.0 | | | | | | | | | | | | | | | | | | | | | Total | | | | | 50.0 | % | | | | | 100.0 | % | | | | | 200.0 | % | | | | | | | | | | | | | | | | | | | |
(1) | “Production” amounts are based upon production on a MMBoe basis for and the 2017 fiscal year, but taking into account the effect of property sales, if applicable, as determined by the Compensation Committee. “MMBoe” is defined as one million barrels of oil equivalent. |
(2) | The threshold, target and maximum levels for the “Reserves” are based upon ending reserves on a MMBoe basis for the 2017 fiscal year, excluding the effect of property sales, if applicable, as determined by the Compensation Committee. |
(3) | The threshold, target and maximum levels for the LOE and G&A are determined on a per Boe basis (excluding hurricane expenses, insurance credits for such expenses and/or other extraordinary event). |
(4) | Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total revenues for the period. EBITDA is defined as net income plus income tax expense, net interest expense, depreciation, depletion, amortization, and accretion. Adjusted EBITDA excludes the unrealized gain or loss related to our derivative contracts, gain or loss on extinguishment of debt, gains or losses in connection with litigation settlements, and other items that are, in the sole discretion of the Compensation Committee appropriate adjustments to reflect normalized results. |
Attaining or exceeding the Performance Metrics is not assured and requires significant effort by our Named Executive Officers. Where the actual performance achieved is between threshold, target and maximum objectives, the Company interpolates (using straight-line interpolation) the Award Percentage for any given Performance Metric.
Long-Term Incentive Compensation
We granted performance-based RSU awards to each of the Named Executive Officers during 2017. These awards are eligible for vesting if certain identified targets are obtained. Once eligible for performance vesting, they will vest on December 13th of the second calendar year following the year in which the date of grant occurs.
For 2017, the Compensation Committee designed the long-term incentive around two important metrics, Adjusted EBITDA and Adjusted EBITDA margin (each metric of which is described above). The Compensation Committee believes that these metrics are appropriate because the Company sells a commodity product whose price is set by a world market outside the executives’ control. Further, the prices of the commodities we sell are subject to substantial volatility. Accordingly, it makes more sense to set the long-term incentive goals each year as opposed to choosing targets for which commodity price swings can lead to unintentional outsized favorable or unfavorable results. In addition, to the extent that the Compensation Committee considers a portion of the goal of the long-term incentive to be retention, we believe it is important to choose goals that are reasonably obtainable.
One of our main operational challenges in 2017 was to continuere-alignment of the cost structure of our business in light of what appeared to be a substantial and prolonged decrease in the price of oil and gas. By focusing our incentive awards on Adjusted EBITDA margins, we believe management was properly motivated to address this critical need, and in fact management did achieve a substantialre-alignment of the cost structure of our business in 2017. For 2017, the RSU grant percentage for the officers was similar to 2016 levels, which was reduced by 50% from the 2015 levels.
When determining the size of the awards, we consider the proportion of equity-based incentives to salary and cash incentives as compared to proportions granted by the Peer Group and survey companies. For 2017, we determined that the size of each Named Executive Officer’s target RSU grant would be based upon a specific percentage of the officer’s 2017 base salary, taking into consideration the fact that the normal vesting schedule for each award will be December 15th of the second calendar year following the year in which the date of grant occurs. The number of RSUs that were initially granted to each Named Executive Officer was determined by multiplying the target percentage below by each Named Executive Officer’s base salary, divided by a number that equaled the arithmetic average of the closing price per share of our common stock for the period January 17, 2017 through January 26, 2017, which was $3.13. For example, Mr. Krohn was awarded 638,977 RSUs (number of RSUs equals 200% times $1,000,000 divided by $3.13, rounded down to the nearest whole share), such award is subject to meeting certain performance criteria described below.
| | | | | Named Executive Officer
| | 2017 RSU Grant
as a % of Base
Salary | | Tracy W. Krohn
| | | 200 | % | John D. Gibbons
| | | 150 | % | Thomas P. Murphy
| | | 125 | % | Stephen L. Schroeder
| | | 113 | % | Shahid A. Ghauri
| | | 113 | % |
The performance-based RSUs awarded in 2017 were contingent upon meeting various performance measures for the 2017 calendar year. Forty percent of each of the 2017 RSU grants (the “Adjusted EBITDA Portion”) was subject to the following targets for the 2017 calendar year:
| | | | | Adjusted EBITDA Performance Level ($ in thousands)
| | % of Adjusted EBITDA
Portion Available for
Vesting | | Level 1: $ 235,000 or greater (“Target”)
| | | 100 | % | Level 2: $ 160,000
| | | 75 | % | Level 3: $ 90,000
| | | 50 | % | Level 4: Less than $ 90,000
| | | 0 | % |
Sixty percent of each of the 2016 RSU grants (the “Adjusted EBITDA Margin Portion”) was subject to the following targets for the 2017 calendar year:
| | | | | Adjusted EBITDA Margin Performance Level
| | % of Adjusted EBITDA
Margin Portion
Available for Vesting | | Level 1: 50% or greater (“Target”)
| | | 100 | % | Level 2: 48%
| | | 75 | % | Level 3: 44%
| | | 50 | % | Level 4: 40%
| | | 25 | % | Level 5: Less than 40%
| | | 0 | % |
Where the actual performance achieved is between performance levels, we interpolate (using straight-line interpolation) the award percentage.
If at least a threshold performance level is satisfied as described above with respect to the 2017 year, the RSUs remain subject to a time-based vesting requirement that will not be fully satisfied until December 14, 2019.
Other Compensation and Benefits. All of our Named Executive Officers are eligible to participate in all of our employee benefit plans, such as medical, dental, group life, disability, accidental death and dismemberment insurance and our 401(k) plan, in each case on the same basis as all other employees. These benefits are provided so as to assure that we are able to maintain a competitive position in terms of attracting and retaining executive officers and other employees.
Perquisites and Other Personal Benefits. We provide our Named Executive Officers with perquisites and other personal benefits that the Company and the Compensation Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key executive positions. Under an arrangement between the Company and the Chief Executive Officer, which was originally entered into in 2004 and subsequently amended in 2010, Mr. Krohn is entitled to the use of Company- chartered aircraft for personal travel. In addition, an aircraft personally owned by Mr. Krohn may be chartered by the Company and used by Mr. Krohn for any purpose. This benefit is reported as “other compensation” in the Summary Compensation Table that follows. For security reasons and to facilitate efficient business and personal travel, Mr. Krohn may use Company-chartered aircraft for both business and personal travel. The Company reflects the amounts attributable to Mr. Krohn’s personal aircraft usage in the Summary Compensation Table. In 2017, Mr. Krohn’s aircraft was used by the Company or Mr. Krohn for 196.8 flight hours. The costs to the Company to charter Mr. Krohn’s aircraft may not exceed the cost to charter aircraft owned by a third party, which meets the needs for such trip, taking into account required seating capacity, operational requirements and flight duration. Aggregate incremental cost, if any, of travel by the officer’s family or other guests when accompanying the officer on both business andnon-business occasions is also included in the Summary Compensation Table when applicable.
Setting Executive Compensation in 2017
Base Salary. The base salary of each Named Executive Officer is reviewed annually by the Compensation Committee. Please see “—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards.” Increases to the Chief Executive Officer’s salary are established by the Compensation Committee (and ratified by the Board), and for our other Named Executive Officers, our Chief Executive Officer recommends salary increases, which are reviewed and approved by the Compensation Committee. Base salaries for our Named Executive Officers are established based on their role within the Company and the scope of their responsibilities, taking into account the market compensation paid by the peer group and survey companies described above. Their base salaries are adjusted from time to time to realign salaries with those market levels after taking into account changes in individual responsibilities, performance, experience and/or cost of living. Base salaries are designed to provide our Named Executive Officers with steady income during the course of the fiscal year that is not contingent on short-term variations in our corporate performance. The base salary amounts for each of the Named Executive Officers for the 2023 and 2022 years were as follows: | | Named Executive Officer | | | 2023 Base Salary
($) | | | 2022 Base Salary
($) | | | | Tracy W. Krohn | | | | | 800,000 | | | | | | 1,150,000 | | | | | Sameer Parasnis | | | | | 450,000 | | | | | | — | | | | | William J. Williford | | | | | 450,000 | | | | | | 425,000 | | | | | Jonathan Curth | | | | | 425,000 | | | | | | 400,000 | | | | | Janet Yang | | | | | 425,000 | | | | | | 425,000 | | |
| | 50 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
For 2017,2023, the primary factor in determining the amount of the base salaries was the Compensation Committee’s subjective assessment of individual performance of each of our Named Executive Officers. The Compensation Committee also reviewed the comparative compensation data discussed above to assess the reasonableness of the base salary amounts in light of the officer’s duties and responsibilities as compared to similarly situated officers. As a result of this review, the annual base salaries for Mr. Williford and Mr. Curth were noteach increased by $25,000 to a total of $450,000 and $425,000, respectively. In 2023, the Compensation Committee approved substantial changes to our compensation program for the 2017 year. In addition, with respect toMr. Krohn based on feedback from our shareholders. Among other things, Mr. Krohn’s 2017employment agreement was amended and restated to provide for a reduction in base salary from $1,150,000 to $800,000 to be more consistent with the annual base salary compensation for Chief Executive Officers at members of our peer group. Please see “—Compensation Changes in 2023” for a description of additional changes to the compensation structure for our NEOs in 2023. As part of the evaluation of Mr. Krohn’s 2023 base salary, the Compensation Committee tookconsidered the following ways that Mr. Krohn has personally supported the Company, which the Committee believes to provide valuable competitive advantages for the Company: •
Entities affiliated with and controlled by Mr. Krohn have purchased approximately 5.9 million shares of the Company since 2016; •
Entities affiliated with and controlled by Mr. Krohn reinvested $21.0 million into considerationpurchasing our senior second lien notes due February 2026 when we refinanced our long-term debt in early 2023; •
Entities affiliated with and controlled by Mr. Krohn committed $14.5 million of equity investment for the fact$361.4 million drilling joint venture with private equity investors that the employment agreement we entered intoCompany closed in 2010June 2018; and •
Calculus Lending, LLC, which is affiliated with and controlled by Mr. Krohn provides himprovided a $100 million first priority lien secured revolving facility with aircraft benefits each year. This benefit, while not a fixed amount in any given year, is deemed to be a material aspectborrowing base of Mr. Krohn’s compensation package. The$50 million. Annual Cash Incentive Compensation Committee takes this benefit into consideration when reviewing Mr. Krohn’s base salary against his peers, and determined that, in addition With respect to the reasons discussed above, during2023 year, the 2017Cash Incentive Awards were structured as formulaic annual incentive awards, granted pursuant to the Incentive Compensation Plan. The Cash Incentive Awards for the 2023 year Mr. Krohn should not receive any increases in his base salary or target cash award percentage. The base salaries for eachrewarded our Named Executive Officers based on the achievement of very detailed and clear Company objectives (the “Performance Metrics”). For the Named Executive Officers, for the 2017 (and 2016)fiscal year 2023 target cash incentive amounts as a percent of base salary were as follows: Mr. Krohn, $1,000,000; Mr. Gibbons, $440,000; Mr. Murphy, $410,000, Mr. Schroeder, $374,000 and Mr. Ghauri, $340,000 (2017 base salary – employment began March 8, 2017).Annual
Target Cash Incentive Amounts as a Percent of Base Salary (1) (1)
Ms. Yang departed from the Company on May 11, 2023, so she was not eligible to receive a 2023 Cash Incentive Award. The 2023 Cash Incentive Award was contingent upon our attainment of the following Performance Metrics. | | 2024Proxy Statement | | | | | | W&T Offshore | | | 51 | |
Performance Metrics for 2023 Cash Incentive Compensation (1)
Production amounts are based upon production on an MMBoe basis for the 2023 fiscal year, but taking into account the effect of property sales, if applicable, as determined by the Compensation Committee. “MMBoe” is defined as one million barrels of oil equivalent. (2)
The threshold, target and maximum levels for the “Reserves” are based upon ending reserves on an MMBoe basis for the 2023 fiscal year, taking into consideration the effect of property sales, if applicable, as determined by the Compensation Committee. (3)
The threshold, target and maximum levels for the LOE and G&A are determined on a gross basis in millions (excluding hurricane expenses, insurance credits for such expenses and/or other extraordinary events). | | 52 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
(4)
ESG Score will be measured in points, as described in the following table using the defined terms below: ESG Score Calculation Details Combined ESG Score: 0 To 12 Points Total Recordable Incident Rate (“TRIR”): Total Number of Recordable Cases (occupational injury requiring medical treatment) multiplied by 200,000 divided by total hours worked by all employees during the year covered. Spill Ratio: Barrels spilled / millions of barrels produced. INC to Component Ratio: Number of Incidents of Non-Compliance (“INCs”) divided by number of components inspected by the Bureau of Safety and Environmental Enforcement. Employee Development Training Courses (per Employee): The minimum number of Company-sponsored employee development training courses (as specified by the Company for the calculation of this performance metric) per employee, completed by at least 75% of active employees during the performance period to achieve the specified level. (5)
Cost Control on Capex Spent on Wells and P&A Projects. Actual capex and P&A costs divided by pre-drill/authorization for expenditure (“AFE”) estimates (based on drilling JV, Budget and/or AFEs) for all capex required to drill, complete and hookup new wells and other capex and P&A expense that individually contribute 5% or more to the total capex and P&A costs for 2023. Metric will be weighted on project by project basis (25%) and cumulative basis, adjusted for timing and other changes to the capex and P&A program (75%). (6)
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. Please see Annex A. (7)
Strategic Goals and Priorities: Evaluation of whether the Company has met expectations for important, broad-ranging strategic, operational, and financial goals and other priorities for the year, which may also include individual performance. The Cash Incentive Awards are designed to align with metrics that we believe directly impact the Company’s operational performance and profitability, help the Company achieve its long-term strategic objectives (for example, the reduction of Net Debt in recent years) and unlock potential shareholder value. We strive thereby to increase accountability at the project level, significantly emphasize the importance of safe operations and create more individual reward potential for employees to encourage entrepreneurial and results-driven thinking and behavior (as opposed to a purely mechanical approach). However, appropriately setting compensation metrics, goals and objectives in the oil and gas exploration industry, in the view of the Compensation Committee, presents certain unusual challenges because the operational and financial results of the Company are heavily influenced by changes in commodity prices over which the Named Executive Officers have no direct influence. The Compensation Committee, annuallyaccordingly, seeks to establish Performance Metrics that strike a balance between components that will have a direct impact on the Company’s performance | | 2024Proxy Statement | | | | | | W&T Offshore | | | 53 | |
while also not being completely dependent on commodity prices. The Compensation Committee reviews the recommendation of executivetargets utilized to incentivize management regarding the performance-based goals for the Company. As discussed above, the Compensation Committee established the targets for 2017annually, with referencereferences to forecasts and other financial and operational operation data. The Performance Metrics applicable to the 2023 Cash Incentive Award, the Compensation Committee set awardCommittee’s considerations for management’s targets basedand actual 2023 results for each Performance Metric are as follows:
| | Establishing 2023 Performance Metrics | | | | Production | | | | The Compensation Committee set the target for production for 2023 at 13.2 MMBoe, which was slightly lower than the Company’s actual performance for 2022, which was 14.6 MMBoe. The production target was consistent with the Company’s updated guidance for 2023, which represented a modest decline from prior-year performance. The Compensation Committee believes that the target was appropriately rigorous because the first quarter of 2023 included a significant turn-around project in the Mobile Bay area, which resulted in planned production down-time. In 2023, the Company was above its threshold objective but below the target objective for Production, at 12.7 MMBoe. | | | | Proved Reserves | | | | The Compensation Committee set the target for proved reserves for 2023 at the end of the year at 153.9 MMBoe, which was slightly lower than the Company’s proved reserves at the end of 2022 of 165.3 MMBoe, although materially consistent with the 2022 target of 153.6 MMBoe. In establishing this target, the Compensation Committee recognized that commodity prices in 2022 were particularly high, and prior to the time that the Compensation Committee established the targets for 2023, there was an unexpected downturn in commodity prices, which would have a negative impact on the Company’s proved reserves at the end of 2023 outside of management’s control. The Compensation Committee, therefore, felt that a slightly reduced proved reserves target from year end 2022 would adequately incentivize management to increase proved reserves while not punishing the management team for the unexpected downturn in commodity price environment. In 2023, the Company was below its threshold objective for Proved Reserves, at 123.0 MMBoe. | | | | LOE and G&A | | | | The Compensation Committee set the target for LOE and G&A for 2023 at a total of $322.70 million in expense. In 2022, the Company’s performance was $19.83 per BOE. In setting the target for 2023, the Compensation Committee determined that it was advisable to consider performance on a gross basis, rather than a per barrel basis, because the per barrel metric can be artificially impacted by significant increases or decreases in the Company’s production. As production is already included as a metric (noted above), the Committee preferred to view LOE & G&A on a gross basis, which is also consistent with how the Company budgets for the year. This view further made sense for 2023 due to the fact that the first quarter of 2023 included a significant turn-around project in the Mobile Bay Area which resulted in planned production down-time. The Company was above the threshold objective but below the target objective LOE & G&A, at $333.22 million. | | | | ESG Score | | | | The Compensation Committee set the target for ESG Score for 2023 at 8.0 points, which was below the Company’s actual performance for 2022 at 10.4 points and consistent with the Company’s target performance for 2022. Although the target score for 2023 was below the Company’s actual performance for 2022, the Compensation Committee believes that the targets were sufficiently rigorous, as the underlying ESG score calculation details were consistent with prior year targets that the Committee believes place the Company among the industry’s best performers on the applicable metrics already. The Compensation Committee believes that the targets adequately challenge management to continue the Company’s goal of furthering ESG initiatives. The Company was above its target objective for ESG Score, at 11.3. | |
| | 54 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
| | Cost Control | | | | The Compensation Committee set the target for cost controls for 2023 at 100%, which was an improvement from the Company’s actual performance for 2022 at 104.7%. The Compensation Committee believes that 100% cost control is a rigorous target for management to meet, as it requires that material actual capital expenditures remain consistent with the cost estimates at the time work is budgeted and commissioned. This incentivizes management to control its costs at an operational level, thereby helping the Company meet its larger budgeting and expense goals. The 2023 target was consistent with the prior year’s target of 100%. In 2023, the Company was near its target objective for Cost Control measures, at 101.2%. | | | | Adjusted EBITDA Margin | | | | The Compensation Committee set the target for 2023 Adjusted EBITDA Margin at 35.6%, which was below the Company’s prior year performance of 61.2%. The Compensation Committee believed that the large Adjusted EBITDA Margin in 2022 reflected high commodity prices that were unlikely to continue during 2023. Taking into account the projected energy prices going forward, the target for 2023 was set at a meaningful goal, the obtaining of which is in the shareholders’ best interest. The Compensation Committee believes that rigidly retaining an Adjusted EBITDA Margin target set for a prior year during periods of substantially higher commodity prices could act as a significant management disincentive. Conversely, an Adjusted EBITDA Margin target may be set significantly higher than the prior year in light of commodity price increases which in the context of many other businesses would represent an unrealistic increase in a fundamental financial metric. For the 2023 year, the Compensation Committee recognized that 2022 was a year during which commodity prices were particularly high, and as a result, the Compensation Committee determined that a lower Adjusted EBITDA Margin would still appropriately incentivize management performance given the context of a lower expected commodity price environment during 2023. In 2023, the Company was above its threshold objective but below its target objective for Adjusted EBITDA Margin, at 34.4%. | | | | Strategic Goals and Priorities | | | | In 2023, the Compensation Committee added a new Performance Metric, Strategic Goals and Priorities. This Performance Metric was designed to incentivize the management team to achieve certain objectives that would not traditionally appear in the financial statements or operational results of the Company. Considerations for the achievement of Strategic Goals and Priorities for 2023 included, but were not limited to, the Company’s refinancing of its Senior Second Lien Notes due November 2023 with new Senior Second Lien Notes due January 2026 and the successful completion of accretive acquisitions. The Company met its target objective for the achievement of strategic goals and priorities, as the Senior Second Lien Notes due November 2023 were refinanced in January 2023, and the Company successfully completed an acquisition in September of 2023 and entered into a definitive agreement for another acquisition in December of 2023. | |
The Performance Metrics are also designed to incentivize and encourage the achievement of long-term strategic objectives that, while not specifically accounted for as a Performance Metrics, are vital to the Company’s long-term performance. For example, the Company has viewed the reduction of Net Debt to be important to further strengthening the Company’s balance sheet, and existing shareholders and potential investors regularly communicated to the Company in recent years that the looming maturity of the Company’s $552.5 million of Senior Second Lien Notes due November 2023 was viewed to be one of the most significant near-term risks of the Company and a substantial limiting factor for the Company’s total shareholder return performance. As a result, Performance Metrics that support the reduction in Net Debt, such as meeting or exceeding Target production, reserve growth, LOE containment, G&A cost containment,reserves, Adjusted EBITDA Margin and individual performance metrics, each metric of which was selected duecost control goals, are integral to the Compensation Committee’s belief thatCompany’s compensation program. In 2023, the metrics were an important measureCompany also added a category for Strategic Goals and Priorities to the Performance Metrics, and the accomplishment of the performancerefinancing of the Company’s $552.5 million of Senior Second Lien Notes due November 2023 with $275 million of Senior Second Lien Notes due January 2026 was material in evaluating management’s performance under that Performance Metric. | | 2024Proxy Statement | | | | | | W&T Offshore | | | 55 | |
Attaining or exceeding the Performance Metrics is not assured and requires significant effort by our Named Executive Officers and other employees. Where the actual performance achieved is between threshold, target and maximum objectives, the Company and, in turn, potential shareholder value.interpolates (using straight-line interpolation) the Award Percentage for any given Performance Metric. The following chart presents information about the actual performance relative to the Performance Metrics established by the Compensation Committee and the calculation of the Award Percentage: | | | | | | | | | | Actual 2017 Company /
Individual Performance | | Actual % of Target Cash
Incentive Eligible (1) | | Business Criteria | | | | | | Production | | 14.6 MMBoe | | | — | % | Reserve Growth | | 74.2 MMBoe | | | — | % | LOE and G&A | | $13.96 /Boe | | | 38.0 | % | | | | Company Criteria | | | | | | Adjusted EBITDA Margin | | 55.0% | | | 28.3 | % | | | | Individual Criteria | | | | | | Individual Performance | | 15.0% | | | 15.0 | % | | | | | | | | Total | | | | | 81.3 | % | | | | | | | |
(1) | The 2017 Incentive Cash Award is subject to an additional overall financial metric that must be achieved on or before December 31, 2019, as described above. The Company met these criteria as of December 31, 2017; therefore, payments for achievement of these financial metrics with respect to the 2017 year have been made to the Named Executive Officers. |
The determination of the individual performance award by the Compensation Committee for the Named Executive Officers was done as a group in recognition of the fact that this group of executives must function in a coordinated fashion for us to achieve our goals. The Compensation Committee evaluated the leadership, initiative and intensity this group demonstrated during 2017 in achieving the common goals set out for them at the beginning of the year, specifically with respect to cost reduction and liquidity. We were able to drive significant cost reduction in LOE. After taking each of these factors into consideration, the Compensation Committee determined that as a group, each of the executive officers met their performance goals at a target level, which indicated that the executive team had exceeded expectations for the 2017 year.
Accordingly, the following chart presents information about the awards eligible2023 Cash Incentive Awards earned by each of our eligible Named Executive Officers with respect to the actual performance relativefor the 2023 year.
| | Named Executive Officer (1) | | | Cash Incentive
Amount Earned
($) | | | | Tracy W. Krohn | | | | | 640,000 | | | | | Sameer Parasnis | | | | | 154,258 | | | | | William J. Williford | | | | | 306,000 | | | | | Jonathan Curth | | | | | 289,000 | | |
(1)
Ms. Yang departed from the Company on May 11, 2023, so she was not eligible to receive a 2023 Cash Incentive Award. Long-Term Equity Incentive Compensation We granted service-based RSU awards and performance-based cash awards and PSUs to each of the Performance Metrics, although these amounts remainNamed Executive Officers during 2023, with a target mix of 60% PSUs and 40% RSUs. Total long-term equity award values were determined based upon a percentage of the Named Executive Officer’s base salary for the year, set forth in the figure below. The split between the service-based RSUs and the PSUs (at target), as a percentage of salary, are also set forth below for each Named Executive Officer: Aggregate Long-Term Incentive Awards
(as a % of Base Salary) (1) (1)
Ms. Yang departed from the Company on May 11, 2023, so she was not eligible to receive any long-term incentive awards. The result is that cash compensation is only a small portion of the total compensation of our Named Executive Officers, with the majority of their compensation being non-cash. The figure below shows the percentage of cash compensation to total compensation for each of our Named Executive Officers. | | 56 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
Percentage of Cash Compensation in Comparison to Total Compensation ![[MISSING IMAGE: bc_neocashcomp-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-054130/bc_neocashcomp-pn.jpg) The service-based RSU awards vest in equal installments on each of the first three anniversaries of the vesting commencement date, subject to the additional overall financial metricNamed Executive Officers’ continued employment through each applicable vesting date. The PSU awards vest pursuant to a three-year performance period based on the satisfaction of our relative TSR ranking to a predetermined set of peers generally from the beginning of the first calendar year during which the award is granted through the end of the third calendar year, as further described below. The PSU awards are also subject to service-based vesting requirement through the end of the third calendar year following the year of the grant. The RSUs and PSUs are settled for participants subject to Section 16(b) of the Exchange Act in the form of shares of Common Stock, however the Compensation Committee has the authority to modify the settlement form of vested RSUs prior to the 2017 Cash Incentive Awards. | | | | | | | | | Named Executive Officer | | Eligible 2017 Incentive
Cash Award as a % of
Base Salary* | | | Amount Eligible* | | Tracy W. Krohn | | | 81.3 | % | | $ | 813,000 | | John D. Gibbons | | | 73.2 | % | | | 321,948 | | Thomas P. Murphy | | | 65.0 | % | | | 266,664 | | Stephen L. Schroeder | | | 61.0 | % | | | 228,047 | | Shahid A. Ghauri | | | 61.0 | % | | | 165,653 | |
* | The 2017 Incentive Cash Award is subject to an additional overall financial metric that must be achieved on or before December 31, 2019, as described above. The Company met these criteria as of December 31, 2017; therefore, payments for achievement of these financial metrics with respect to the 2017 year have been made to the Named Executive Officers. |
Long-term Restricted Stock Unit Award
As discussed above in “Elements of Executive Compensation—Long-term Incentive Compensation,” the Adjusted EBITDA portionapplicable vesting date. The RSUs and PSUs are settled for participants not subject to Section 16(b) of the 2017 RSU awards that is eligible for vesting depends on the levelExchange Act in either shares of Adjusted EBITDA achievedCommon Stock, cash or a combination of Common Stock or cash. Settlement shall occur in 2017. In 2017, the Company achieved $268 million of Adjusted EBITDA, resultingeach case as soon as administratively practicable but in 100%no event later than March 15 of the Adjusted EBITDA portion ofcalendar year following the 2017 RSU award becoming eligible to vest. With respect toyear in which all vesting restrictions lapse.
If the Adjusted EBITDA Margin Goal, the Company achieved an Adjusted EBITDA Margin of 54.9%, resulting in 100% of the Adjusted EBITDA Margin Goal portion of the 2017 RSU award becoming eligible to vest. Accordingly, 100%performance period had ended on December 31, 2023, none of the awarded 2017 RSUs are nowPSUs would have been eligible for vesting on December 14, 2019, subject31, 2025. The TSR for the Company and each member of the peer group will generally be calculated as follows: (X + Y)/Z, where “X” equals the difference in the volume-weighted average closing price (“VWAP”) of the Company’s securities for the 20 consecutive trading days prior to the requirementend of continuous employmentthe performance period, minus the VWAP of that Company’s securities for the 20 consecutive trading days at the beginning of the performance period; “Y” means the cumulative amount of dividends and distributions (whether in the form of cash or equity) paid in respect of the Company’s securities during the performance period, assuming dividends and distributions on such securities are reinvested in additional shares of the Company’s securities; and “Z” means the VWAP of a company’s securities for the 20 consecutive trading days at the beginning of the performance period. Depending on the Company’s ranking within the performance peer group, the PSU award may be earned from 0% to 200% of the target amount of the award, but in no event will the earned award exceed the target amount if the Company’s TSR for the applicable performance period is negative. The amount for the PSU award is earned as follows: ![[MISSING IMAGE: bc_threshold-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-054130/bc_threshold-pn.jpg) The performance peer group for the 2023 performance-based equity awards consists of the following companies: | | 2024Proxy Statement | | | | | | W&T Offshore | | | 57 | |
| | •
Berry Corporation •
Centennial Resources Development Inc. •
Earthstone Energy, Inc. •
Gran Tierra Energy Inc. •
Gulfport Energy Corporation •
Kosmos Energy Ltd. | | | •
Northern Oil and Gas, Inc. •
Ranger Oil Corporation •
Ring Energy, Inc. •
SilverBow Resources, Inc. •
Talos Energy Inc. •
Vital Energy, Inc. (formerly Laredo Petroleum, Inc.) | |
Other Compensation and Benefits All of our Named Executive Officers are eligible to participate in all of our employee benefit plans, such as medical, dental, group life, disability, accidental death and dismemberment insurance and our 401(k) plan, in each case on the same basis as all other employees. These benefits are provided so as to assure that we are able to maintain a competitive position in terms of attracting and retaining our Named Executive Officers and other employees. Perquisites and Other Personal Benefits We provide our Named Executive Officers with perquisites and other personal benefits that the Company and the Compensation Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key executive positions. The value of such benefits is a very small percentage of total compensation for all Named Executive Officers with the exception of our Chief Executive Officer. Under an arrangement between the Company through December 14, 2019.The 2017 RSUs were designedand the Chief Executive Officer, which was originally entered into in 2004 and subsequently amended in 2010, Mr. Krohn was previously entitled to the use of Company-chartered aircraft for personal travel for security reasons and to facilitate efficient personal and business travel. In April 2023, we entered into an amended and restated employment agreement with Mr. Krohn which, among other things, eliminated the perquisite compensation Mr. Krohn received for use of the aircraft and required payment of personal use of the Company’s corporate aircraft by Mr. Krohn in accordance with the same structure asCompany’s aircraft use policy starting in the 2015 and 2016 RSUs. For 2017,second quarter of fiscal year 2023. Please see “—Compensation Changes in 2023” for a description of the changes to Mr. Krohn’s RSU grant percentage was similaremployment agreement. The Company reflects the amounts attributable to Mr. Krohn’s personal aircraft usage prior to the 2016 percentage, whichchanges to his compensation structure within “All Other Compensation” in the Summary Compensation Table that follows. In 2023, Mr. Krohn’s aircraft was reducedused by 50% from the 2015 percentageCompany or Mr. Krohn for 5 flight hours.
| | 58 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
Summary of 2023 Compensation Outcomes To assist shareholders in understanding the compensation arrangement for NEOs, we are providing a summary of the following two views of the Compensation for each of our NEOs for 2023: | SEC Compensation | | | Realized Compensation | | The compensation for the 2023 year calculated in accordance with SEC rules and set out in the Summary Compensation Table on page 64 reflects the actual base salary and annual incentive bonus, the grant date fair value of the long-term equity granted in such year and all other compensation, including perquisites, required to be reported. Thus, SEC compensation includes amounts which the NEOs do not actually receive during such years, such as equity grants that may not vest for several years (or at all). As such, the SEC compensation may differ substantially from the compensation actually realized by our NEOs. | | | To supplement the SEC-required disclosure, we provide a realized compensation view that is designed to capture the compensation actually received by an NEO in a given year. We calculate realized compensation as the sum of: (1)
the “Salary”, “Bonus” and “All Other Compensation” columns reported in the Summary Compensation Table; and (2)
the time-based and performance based awards that vested in each of the applicable years as reported in the “Stock Vested Table for 2023” table on page 68 at a value based upon the closing price on the NYSE on the date of vesting. | |
Each of our NEO’s realized compensation in 2023 was less than the total compensation reported in the Summary Compensation Table, in alignment with our pay-for performance philosophy and matched 50% reductionsthe downward trend in 2016TSR for the other officers and employees receiving such awards. With respect to the 2015 RSUs, performance criteria were determined and calculated with respect to the 2015 year; therefore, the 2015 RSU awards were subject solely to time-based restrictions throughout the 2016 and the majority of the 2017 year. Following the satisfaction of the time-based vesting restrictions, the 2015 RSUs became vested on December 15, 2017. With respect to the 2016 RSUs, performance criteria were determined and calculated with respect to the 2016 year; therefore are subject solely to time-based restrictions throughout the 2017 year and the majority of the 2018 year. Subject to the satisfaction of the time-based vesting conditions, the 2016 RSUs will become eligible to vest on December 14, 2018.Company. ![[MISSING IMAGE: bc_neoreportcomp-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-054130/bc_neoreportcomp-pn.jpg) | | 2024Proxy Statement | | | | | | W&T Offshore | | | 59 | |
Tax and Accounting Treatment. During the 2017 year, Section 162(m) generally disallowedof the Internal Revenue Code limits us to a deduction for federal income tax deductionpurposes of no more than $1 million of compensation paid to public corporations for compensation over $1.0 million paid for any fiscal year to our Chief Executive Officer and the three highest paidcertain executive officers other than the chief financial officer. However, the statute exempted qualifying performance-based compensation from the deduction limit when specified requirements were met. Awards to the Named Executive Officers under our incentive programs have been structured to qualify for this exemption when thein a taxable year. The Compensation Committee has determined thatconsiders the structure was appropriate for the individual situation. However, the Compensation Committee has retained the discretion to award compensation that exceeded Section 162(m)’s deductibility limit and looked at each situation and each award when determining how to structure any elementimpact of compensation granted to our covered officers. Beginning with the 2018 year, the performance-based compensation exception has been deleted from Section 162(m) for arrangements that are not deemed to be grandfathered pursuant to the Tax Cuts and Jobs Act, therefore we do not expect Section 162(m) to significantly impact ourwhen making compensation decisions on a going forward basis.decisions. We account for stock-based payments in accordance with the requirements of ASC Topic 718, by which compensation cost is based on the fair value of the equity instrument on the date of grant and is recognized over the period during which an employee is required to provide service in exchange for the award. Because we may offer incentive stock options,non-qualified stock options and restricted stock grants, the deductibility of an equity compensation award by us may not always occur at the time the award is otherwise taxable to the employee.
Basis for Allocation among Incentives. Except as described above, our Compensation Committee has not adopted any formal or informal policies or guidelines for allocating compensation between long-term and currently paid compensation, between cash andnon-cash compensation or among different forms ofnon-cash compensation. As noted within the introduction of the section above titled “Elements and Purpose of Compensation,” different forms of compensation serve to meet our various compensation goals, from incentivizing to retaining our executives. Those goals are best met by analyzing the environment in which we will be operating each year and the changing market analysis of our peer group. The allocation of our compensation items needs to be flexible enough to accommodate changing needs. Although we currently grant restricted stock unitshave historically granted RSUs pursuant to our equity program, incentive awards under the Incentive Compensation Plan may be granted in any one or a combination of the following awards in the future: (a) incentive stock options,(b) non-qualified stock options, (c) stock appreciation rights, (d) restricted stock, (e) performance shares, (f) restricted stock units,RSUs, (g) bonus stock, (h) dividend equivalents, or (i) cash awards.
Adjustment or Recovery of Awards upon Restatement of Company Performance. We adopted a Clawback Policyrevised clawback policy in 20142023 (the “Clawback Policy”) that will be applicable to all awards, cash or equity-based, that are granted under our Incentive Compensation Plan. The Clawback Policy generally states that incomplies with the NYSE’s new clawback listing standards, Section 10D of the Exchange Act and the rules promulgated thereunder. In the event of anythat we are required to prepare an accounting restatement of the Company’sour financial statements due to our material noncompliance with any financial reporting requirements,requirement under the securities laws, the Clawback Policy requires that covered executives must reimburse us, or an error or mistake inforfeit, any excess incentive-based compensation received by such covered executive during the calculation of a performance metric or goal that isthree completed fiscal years immediately preceding the basis of payment of incentive compensation,date on which we are required to prepare the restatement. Executives covered by the Clawback Policy include our current and former executive officers, as determined by the Compensation Committee in accordance with Section 10D of the Exchange Act and the Board each have the authorityNYSE listing standards, and such other senior executives or employees who may from time to cause an executive officer to repay all or applicable portions of the incentive award in question. The Compensation Committee shall have full discretion to determine the form, the amount and the timing of the recoupment,time be deemed subject to any applicable laws that may govern the transaction.In connection with the adoption of the Clawback Policy by the Compensation Committee also approvedCommittee.
Incentive-based compensation subject to the inclusionClawback Policy includes any compensation that is granted, earned or vested based wholly or in part on the attainment of a provision in all awards granted under our Incentive Compensation Plan that the award would befinancial reporting measure. The amount subject to any clawback policies that we may adopt, whether in response torecovery is the Dodd-Frank Act or otherwise. Also, under the termsexcess of the Incentive Compensation Plan,incentive-based compensation received based on the Compensation Committee haserroneous data over the authorityincentive-based compensation that would have been received had it been based on the restated results, and is computed without regard to adjust financial targets when unforeseen events affect the Company’s results of operations.any taxes paid. The Clawback Policy will only apply to incentive-based compensation received on or after October 2, 2023. Stock Ownership Guidelines. On February 24, 2010, In April 2023 our Board approved the adoptionamendment and restatement of the W&T Offshore, Inc. Stock Ownership and Retention Policy (the “Policy”). The Compensation Committee administers the Policy for employees subject to Section 16 of the Exchange Act, while our Chief Executive Officer administers the Policy for all other eligible employees. Theemployees (as defined herein). During 2023, the Policy iswas applicable to all employees with a role at or above the director level who arewere eligible to and whom actually do, receivereceived equity-based awards pursuant to | | 60 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
the Incentive Compensation Plan.Plan (each, an “eligible employee”). The Policy requires our eligible employees to own and hold a number of shares of our Common Stock having a valuebased on employee title and salary as set forth in excess of set multiples of the amount of his or her annual base salary.following table: | | Chief Executive Officer | | | Five (5) Times Annual Base Salary | | | | President | | | Three (3) Times Annual Base Salary | | | | Executive Vice President | | | Two (2) Times Annual Base Salary | | | | Chief Financial Officer | | | Two (2) Times Annual Base Salary | | | | Chief Operating Officer | | | Two (2) Times Annual Base Salary | | | | General Counsel | | | Two (2) Times Annual Base Salary | | | | Vice President | | | One (1) Times Annual Base Salary | | | | Director | | | One half (1/2) of Annual Base Salary | |
All eligible employees must be compliant with the Policy within the five-year period after becoming subject to the Policy. Until such time as an eligible employee owns the requisite sharesamount of Common Stock, the eligible employee is required to retain all shares of Common Stock that the eligible employee owns or is granted. In addition, any cash amounts (net of taxes) received as payments for equity based cashequity-based awards, such as restricted stock unitsRSUs paid out in cash, must be used to purchase shares of Common Stock on the open market. Following the achievement of the amount and subject to any applicable securities laws, the individual may conduct any appropriate transactions with our Common Stock so long as he or she does not fall below the required amount as a result. Common Stock that counts toward The Company can grant exceptions to the satisfaction of the stock ownership level shall include: (a) shares of Common Stock owned outright by the employee and his or her immediate family members who also share the same household; (b) shares of Common Stock acquired upon an option exercise or upon the lapse of restrictions on other awards; (c) Common Stock purchasedPolicy in the open market;event of certain financial needs and (d) deemed or actual stock investments due to an employee’s participation in the our 401(k) plan.
other circumstances. A hardship exemption may be granted to an eligible employee prior to the time he or she has satisfied the initial ownership requirement. Prior to such time, the Plan Administrator holds the authority to relieve an eligible employee from the Policy upon a determination that the eligible employee has incurred a unique financial or personal situation where the Policy becomes inequitable in light of the eligible employee’s circumstances. The penalty for noncompliance with the Policy may result in the suspension of any future grants or awards to the eligible employee, or the eligible employee’s base salary and compensation may be frozen at current levels until such time as the eligible employee meets the terms of the Policy.
| | 2024Proxy Statement | | | | | | W&T Offshore | | | 61 | |
Anti-Hedging Policy We have adopted a policy that prohibits directors, executives and Change of Control ProvisionsWe maintain employment agreements with certain of the Named Executive Officers to ensure they will perform their roles for an extended period of time. Certain provisions containedother employees from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engage in these agreements, such asnon-competition andnon-solicitation provisions as well as change of control payments, are essential to retaining
our talented management team and protecting our shareholders. We believetransactions, that it is appropriate to compensate individuals to refrain from working with competitors following termination, and that compensation enhances the enforceability of such agreements. These employment agreements, including the potential severance and change of control provisions, are described in more detail elsewhere in this proxy statement. Please read “Executive Compensation and Related Information—Potential Payments Upon Terminationhedge or a Change in Control.” These agreements provide for severance compensation to be paid if the officer’s employment is terminated under certain conditions, such as following a corporate change, involuntary termination, termination by the Named Executive Officer for “good reason,” termination by us for “cause,” deathoffset, or disability, each as defined in the applicable executive’s employment agreement.
The employment agreements between us and certain of our Named Executive Officers and the related severance provisions are designed to meet the following objectives:
Change of Control. In certain scenarios, the potential for mergerhedge or being acquired may beoffset, any decrease in the best interestsmarket value of our shareholders. AsCommon Stock.
Anti-Pledging Policy We have adopted a result, we provide severance compensation to the Named Executive Officers if the officer’s employment is terminated following a change of control transaction. Our intent is to promote the ability of the officer to act in the best interests of our shareholders even though his or her employment could be terminated as a result of the transaction.Termination without Cause or for Good Reason. If we terminate the employment of a Named Executive Officer “without cause” or a Named Executive Officer terminates his or her employment for “good reason,” as each such term is defined in the applicable employment agreement, we are obligated to pay the officer certain compensationpolicy that prohibits directors, executives and other benefitsemployees from pledging the Company’s securities as describedcollateral to secure loans, including holding such securities in greater detail in “Potential Payments Upon Termination or a Change in Control” below. We believe these payments are appropriate becausemargin account to borrow against the terminated officer is bound by confidentiality,non-solicitation andnon-competition provisions ranging from six monthsCompany’s securities to one year after termination. Both parties have mutually agreed to a severance package that would be in place prior to any termination event. This provides us with more flexibility to make a change in senior management if such a change is in the best interests of our Company and its shareholders.
buy other securities. | | 62 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
TABLE OF CONTENTS2014 and 2017 Shareholder VoteThe Company has implemented a three year advisory vote on executive compensation. In 2017, the Company held its third shareholder advisory vote on the compensation paid to our Named Executive Officers in 2016, which resulted in an excess of 85% of votes cast approving such compensation.
Following the last advisory vote in 2017, the
Compensation
Committee considered many factors in evaluating our executive compensation programs as discussed in this Compensation Discussion and Analysis, including the Compensation Committee’s assessment of the interaction of our compensation programs with our corporate business objectives and review of data of our Peer Group, each of which is evaluated in the context of the Compensation Committee’s duty to act as the directors determine to be in all shareholders’ best interests. While each of these factors bore on the Compensation Committee’s decisions regarding the Named Executive Officer’s compensation, the Compensation Committee did not make any material changes to our executive compensation program and policies as a result of the 2017 “say on pay” advisory vote. Given the level of shareholder support in 2017 for our executive compensation programs, the Compensation Committee generally elected to apply the same principles in determining the types and amounts of compensation to be paid to our Named Executive Officers in 2018.Report COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statementproxy statement with management. Based on the Compensation Committee’s review of and discussions with management with respect to the Compensation Discussion and Analysis, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.proxy statement. Submitted by the Compensation Committee.Stuart B. Katz Virginia Boulet B. Frank Stanley
(Chair)
| | 2024Proxy Statement | | | | | | W&T Offshore | | | 63 | |
Executive Compensation
and Related Information 2023 Summary Compensation Table The following table sets forth certain information with respect to the compensation for the fiscal year ended 2023 earned by, awarded to or paid to our Named Executive Officers. | | Name | | | Year | | | Salary
($) (1) | | | Special
Bonus
($) | | | Stock Awards
($) (2) | | | Non-Equity
Incentive Plan
Compensation
($) (3) | | | All Other
Compensation
($) (4) | | | Total
($) (5) | | | | Tracy W. Krohn Chairman, Chief Executive Officer and President (Principal Executive Officer) | | | | | 2023 | | | | | | 905,505 | | | | | | — | | | | | | 3,598,400 | | | | | | 1,184,828 | | | | | | 174,828 | | | | | | 5,863,561 | | | | | | | 2022 | | | | | | 1,150,000 | | | | | | — | | | | | | 6,798,501 | | | | | | 3,052,438 | | | | | | 1,110,453 | | | | | | 12,111,392 | | | | | | | 2021 | | | | | | 1,000,000 | | | | | | 1,044,400 | | | | | | 1,892,602 | | | | | | 963,300 | | | | | | 592,419 | | | | | | 5,492,721 | | | | | Sameer Parasnis Executive Vice President
and Chief Financial
Officer (Principal
Financial Officer) | | | | | 2023 | | | | | | 225,000 | | | | | | — | | | | | | 740,096 | | | | | | 154,258 | | | | | | 13,363 | | | | | | 1,132,717 | | | | | | | 2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | William J. Williford Executive Vice President
and Chief Operating
Officer | | | | | 2023 | | | | | | 442,464 | | | | | | — | | | | | | 1,518,075 | | | | | | 365,655 | | | | | | 19,202 | | | | | | 2,345,395 | | | | | | | 2022 | | | | | | 425,000 | | | | | | — | | | | | | 1,462,029 | | | | | | 816,962 | | | | | | 18,300 | | | | | | 2,722,291 | | | | | | | 2021 | | | | | | 400,000 | | | | | | 299,066 | | | | | | 206,897 | | | | | | 249,850 | | | | | | 16,833 | | | | | | 1,172,646 | | | | | Jonathan Curth Executive Vice President,
General Counsel and
Corporate Secretary | | | | | 2023 | | | | | | 417,464 | | | | | | — | | | | | | 1,433,738 | | | | | | 289,000 | | | | | | 8,286 | | | | | | 2,148,488 | | | | | | | 2022 | | | | | | 221,496 | | | | | | — | | | | | | 427,203 | | | | | | 358,694 | | | | | | 6,462 | | | | | | 1,013,855 | | | | | | | 2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | Janet Yang Former Executive Vice
President and Chief
Financial Officer | | | | | 2023 | | | | | | 191,505 | | | | | | — | | | | | | — | | | | | | — | | | | | | 11,490 | | | | | | 202,995 | | | | | | | 2022 | | | | | | 425,000 | | | | | | — | | | | | | 1,462,029 | | | | | | 902,458 | | | | | | 20,017 | | | | | | 2,809,504 | | | | | | | 2021 | | | | | | 400,000 | | | | | | 319,583 | | | | | | 206,897 | | | | | | 308,256 | | | | | | 17,100 | | | | | | 1,251,836 | | |
(1)
The amounts reflected in this column include total annual base salary earned for the fiscal year. (2)
The amounts under the “Stock Awards” column reflect the aggregate grant date fair value of performance-based stock units granted to the NEOs pursuant to the Incentive Compensation Plan, computed in accordance with ASC Topic 718, without regard to any risk of forfeitures. The grant date fair value of performance-based stock units is reported based on the probable outcome of the performance conditions on the date of grant. The discussion of the assumptions used in calculating these values can be found in Note 11 to our consolidated financial statements. If the maximum amount, rather than the target amount, were reported in the table with respect to the PSUs as of December 31, 2023, the total values associated with all stock award grants, would be as follows: Mr. Krohn, $5.1 million; Mr. Parasnis, $1.1 million; Mr. Williford, $2.2 million; and Mr. Curth, $2.0 million. (3)
The long-term cash incentive component granted in connection with our Chairman, Chief2021 PSUs vested on September 29, 2023, and have been included as follows: Mr. Krohn, $544,828; and Mr. Williford, $59,655. (4)
The amount excludes perquisites and other personal benefits if the total aggregate value (based on aggregate incremental cost to the Company) in a given year did not exceed $10,000. As of January 1, 2021, Mr. Krohn is no longer reimbursed for taxes on imputed income associated with his | | 64 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
personal aircraft usage for gross-up for taxes on imputed income associated with such aircraft usage. The amounts under “All Other Compensation” for 2023 include for Mr. Krohn $149,850 for incremental costs associated with his use of chartered aircraft and to reimburse him for the charter of his aircraft for his personal use prior to our compensation changes. Please see “—Compensation Changes in 2023” for a description of the changes to our aircraft policy. The remaining amounts for each Named Executive Officer relate to Company contributions made into the executives’ 401(k) plan accounts and President, Mr. Gibbons, our Chief Financial Officer, and the Company’s three other most highly compensated executive officers for the year ended December 31, 2017, and where applicable, the 2016 and 2015 fiscal years. | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Year | | | Salary | | | Stock
Awards (1)(2) | | | Non-Equity
Incentive Plan
Compensation (3) | | | All Other
Compensation (4) | | | Total | | Tracy W. Krohn | | | 2017 | | | $ | 1,000,000 | | | $ | 1,769,966 | | | $ | 813,000 | | | $ | 880,827 | | | $ | 4,463,793 | | Chairman, Chief | | | 2016 | | | | 1,000,000 | | | | 2,194,643 | | | | — | | | | 965,976 | | | | 4,160,619 | | Executive Officer and President | | | 2015 | | | | 1,000,000 | | | | 2,192,890 | | | | — | | | | 1,164,673 | | | | 4,357,563 | | | | | | | | | John D. Gibbons | | | 2017 | | | | 440,000 | | | | 584,088 | | | | 321,948 | | | | 35,300 | | | | 1,381,336 | | Senior Vice President and Chief Financial Officer | | | 2016 | | | | 440,000 | | | | 724,230 | | | | — | | | | 22,230 | | | | 1,186,460 | | | | | 2015 | | | | 440,000 | | | | 723,651 | | | | — | | | | 38,088 | | | | 1,201,739 | | | | | | | | | Thomas P. Murphy | | | 2017 | | | | 410,000 | | | | 453,554 | | | | 266,664 | | | | 10,408 | | | | 1,140,626 | | Senior Vice President and Chief Operations Officer | | | 2016 | | | | 410,000 | | | | 562,374 | | | | — | | | | — | | | | 972,374 | | | | | 2015 | | | | 410,000 | | | | 561,925 | | | | — | | | | 15,900 | | | | 987,825 | | | | | | | | | Stephen L. Schroeder | | | 2017 | | | | 374,000 | | | | 374,011 | | | | 228,047 | | | | 12,946 | | | | 989,004 | | Senior Vice President and Chief Technical Officer | | | 2016 | | | | 374,000 | | | | 463,746 | | | | — | | | | — | | | | 837,746 | | | | | 2015 | | | | 374,000 | | | | 461,326 | | | | — | | | | 15,900 | | | | 851,226 | | | | | | | | | Shahid A. Ghauri(5) | | | 2017 | | | | 271,673 | | | | 271,682 | | | | 165,653 | | | | 14,123 | | | | 723,131 | | Vice President, General Counsel and Corporate Secretary | | | 2016 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | 2015 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | The amounts under the “Stock Awards” column reflects the aggregate grant date fair value computed in accordance with ASC Topic 718, without regard to any risk of forfeitures. The discussion of the assumptions used in calculating these values can be found in Note 10 to our consolidated financial statements included in our Annual Report on Form10-K for the year ended December 31, 2017 filed with the SEC. |
(2) | The 2017 RSU awards subject to performance conditions are reported at their grant date value based upon the probable outcome. The amounts reported under the “Stock Awards” column for fiscal year 2017 reflect the amounts rewarded for the highest level of performance achieved. |
(3) | The 2017 Incentive Cash Awards is subject to an additional overall financial metric that must be achieved on or before December 31, 2019, as described above within the Compensation Discussion and Analysis. The Company met these criteria as of December 31, 2017; therefore payments for achievement of these financial metrics with respect to the 2017 year have been made to the Named Executive Officers. |
(4) | The amount excludes perquisites and other personal benefits if the total aggregate value (based on aggregate incremental cost to the Company) in a given year did not exceed $10,000. The amounts under “All Other Compensation” for 2017 include (i) for Mr. Krohn, $794,774 for incremental costs associated with his use of chartered aircraft and to reimburse him for the charter of his aircraft for his personal use, the costs of which represents no more than the current market rates for equivalent use of chartered aircraft, and $83,745 forgross-up for taxes on imputed income associated with such aircraft usage and (ii) for Mr. Gibbons, $9,178 forgross-up for taxes and $9,922 with respect to country club dues. Remaining amounts for each Named Executive Officer relate to company contributions made into the executives’ 401(k) plan accounts. |
(5) | Mr. Ghauri joined the Company as Vice President, General Counsel and Corporate Secretary effective March 8, 2017. The amounts shown in the table for fiscal year 2017 reflect Mr. Ghauri’s compensation for all services rendered in all capacities to the Company since joining the Company. |
club membership fees. 20172023 Grants of Plan-Based Awards
The following table sets forth information with respect to the possibleequity-based incentive awards that could have been payable for 2017 under the Incentive Compensation Plan, and the 2023 Cash Incentive Awards. Amounts reflect grant date values, rather than actual values that may be received upon the vesting or settlement of the award. | | Named Executive
Officer (1) | | | Grant Date | | | Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards Grant (2) | | | Estimated Future Payouts Under
Equity Incentive Plan Awards (3) | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (4) | | | Grant Date
Fair Value of
Stock Awards
($) (5) | | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | | Tracy W. Krohn | | | | | 6/5/2023 | | | | | | 400,000 | | | | | | 800,000 | | | | | | 1,600,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6/5/2023 | | | | | | | | | | | | | | | | | | | | | | | | 240,000 | | | | | | 480,000 | | | | | | 960,000 | | | | | | | | | | | | 2,318,400 | | | | | | | 6/5/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 320,000 | | | | | | 1,280,000 | | | | | Sameer Parasnis | | | | | 7/3/2023 | | | | | | 96,411 | | | | | | 192,822 | | | | | | 385,644 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7/3/2023 | | | | | | | | | | | | | | | | | | | | | | | | 51,041 | | | | | | 102,082 | | | | | | 204,164 | | | | | | | | | | | | 476,723 | | | | | | | 7/3/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 68,055 | | | | | | 263,373 | | | | | William J. Williford | | | | | 6/5/2023 | | | | | | 191,250 | | | | | | 382,500 | | | | | | 765,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6/5/2023 | | | | | | | | | | | | | | | | | | | | | | | | 101,250 | | | | | | 202,500 | | | | | | 405,000 | | | | | | | | | | | | 978,075 | | | | | | | 6/5/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 135,000 | | | | | | 540,000 | | | | | Jonathan Curth | | | | | 6/5/2023 | | | | | | 180,625 | | | | | | 361,250 | | | | | | 722,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6/5/2023 | | | | | | | | | | | | | | | | | | | | | | | | 95,625 | | | | | | 191,250 | | | | | | 382,500 | | | | | | | | | | | | 923,738 | | | | | | | 6/5/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 127,500 | | | | | | 510,000 | | |
(1)
Ms. Yang departed from the Company on May 11, 2023, so she was not eligible to receive any plan-based awards. (2)
These amounts represent the threshold, target and maximum cash values associated with the grants of our 2023 Cash Incentive Awards. (3)
These amounts represent the threshold, target and maximum number of PSUs that may become earned pursuant to the PSUs granted to the Named Executive Officers. | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Grant Date | | Estimated Future Payouts Under
Non-Equity Incentive
Plan Awards Grant (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | Grant Date
Fair Value of
Stock
Awards
(3) | | | | | Threshold | | | Target | | | Maximum | | | Threshold (#) | | | Target/
Maximum | | | Tracy W. Krohn | | N/A | | $ | 500,000 | | | $ | 1,000,000 | | | $ | 2,000,000 | | | | | | | | | | | | | | | | 3/30/2017 | | | | | | | | | | | | | | | 159,744 | | | | 638,977 | | | $ | 1,769,966 | | John D. Gibbons | | N/A | | | 198,000 | | | | 396,000 | | | | 792,000 | | | | | | | | | | | | | | | | 3/30/2017 | | | | | | | | | | | | | | | 52,716 | | | | 210,862 | | | | 584,088 | | Thomas P. Murphy | | N/A | | | 164,000 | | | | 328,000 | | | | 656,000 | | | | | | | | | | | | | | | | 3/30/2017 | | | | | | | | | | | | | | | 40,935 | | | | 163,738 | | | | 453,554 | | Stephen L. Schroeder | | N/A | | | 140,250 | | | | 280,500 | | | | 561,000 | | | | | | | | | | | | | | | | 3/30/2017 | | | | | | | | | | | | | | | 33,756 | | | | 135,022 | | | | 374,011 | | Shahid A. Ghauri | | N/A | | | 101,881 | | | | 203,762 | | | | 407,524 | | | | | | | | | | | | | | | | 3/30/2017 | | | | | | | | | | | | | | | 24,520 | | | | 98,080 | | | | 271,682 | |
(4)
The RSUs vest in equal one-third installments on the anniversary of the grant date in 2024, 2025, and 2026, in each case, subject to continued service and employment through the applicable vesting date. (5)
These amounts represent the aggregate grant date fair value of these awards computed in accordance with FASB ASC Topic 718 assuming no forfeitures. For the PSUs, the amounts shown reflect estimates of the probable outcomes of the performance vesting conditions judged as of the time of issuance. These are the amounts shown in the “Summary Compensation Table”. (1) | The Company achieved the following financial condition as of December 31, 2017: Adjusted EBITDA less Interest Expense Incurred, as reported by the Company in its announced Earnings Release with respect to the end of any fiscal quarter plus the three preceding fiscal quarters, exceeds $200 million.2024Proxy Statement | | | | | | W&T Offshore | | | 65 | |
(2) | Target and maximum share numbers are the same amounts, therefore the columns have been combined. Performance based restricted stock units vesting subject to first achieving certain Adjusted EBITDA and Adjusted EBITDA Margin targets, which were fully satisfied in December 2017 and are discussed in “Compensation Discussion and Analysis—Elements of Executive Compensation—Long-term Incentive Compensation.” These units remain subject to time-vesting requirements. |
(3) | Reported at grant date value based upon probable outcome. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based AwardsWe maintained employment agreements with each of the Named Executive Officers during 2017 except Mr. Ghauri. On November 1, 2010, we entered into
Employment Agreements The Company is party to an employment agreement with Tracy W.Mr. Krohn who serves as our Chairman, Chief Executive Officer and President. This November 1 agreement supersedes our previous employment agreement with Mr. Krohn. The term of the employment agreement is three years, subject to automatic extensions for an additionalone-year period beginningwhich was entered into on the first anniversary from the November 1, 2010 effective date(the “Prior Agreement”) which was amended and restated on April 20, 2023 (the “A&R Agreement”). The Prior Agreement provided for an initial term of the agreementthree years that ended on November 1, 2013 and on each anniversary date thereafter.continued automatically for successive one-year periods thereafter until either party gave written notice of non-renewal (and for Mr. Krohn at least 30 days in advance). The agreementA&R Agreement provides for an initial term of one year that has and will continue automatically for successive one-year periods thereafter unless either party gives written notice of non-renewal (and for automatically for successive one-year periods thereafter unless either party gives written notice of non-renewal (and for Mr. Krohn at least 30 days in advance)). The A&R Agreement provides for a minimum base salary of $1,000,000$800,000 and also entitles Mr. Krohn to participate in the Company’s annual incentive plans and long-term incentive plans as approved from time to time by the Compensation Committee. His employment agreement provides that he isThe Prior Agreement entitled Mr. Krohn to the use of Company-chartereda Company chartered aircraft for personal travel. For security reasons and to facilitate efficient business travel which is further described below under the Company andheading “—Perquisites”, the A&R Agreement eliminated the perquisite compensation Mr. Krohn entered into an arrangement in 2004 that was subsequently amended in 2010. Underreceives for use of the amended arrangement, Mr. Krohn mayaircraft and requires payment of personal use Company-charteredof the Company’s corporate aircraft for both business and personal travel. In addition, aircraft personally owned by Mr. Krohn may be chartered byin accordance with the Company’s aircraft use policy starting in the second quarter of fiscal year 2023. Please see “Compensation Discussion and Analysis—Compensation Changes in 2023” for a description of the changes to Mr. Krohn’s compensation that the Company with Mr. Krohn receiving agross-up for any taxes on imputed income associated with such aircraft usage, and used by Mr. Krohn for any purpose. In 2017, Mr. Krohn’s aircraft was used by the Company or Mr. Krohn for 196.8 flight hours. In any event, the costs to the Company to charter Mr. Krohn’s aircraft may not exceed the cost to charter aircraft owned by a third party, which meets the needs for such trip (taking into account required seating capacity, operational requirements and flight duration).made in 2023. The potential severance and change of control provisions within Mr. Krohn’s employment agreement are discussed in detail below under the heading “—Potential Payments Upon Termination or a Change in Control.” Other executive officers may be required
Perquisites Prior to April 20, 2023, for security reasons and to facilitate efficient business purposes, or allowed for personal purposes,travel, the Company and Mr. Krohn had entered into an arrangement under which Mr. Krohn personally purchased an aircraft that he was able to use, chartered aircraft. While no executive officers other thanand be reimbursed by the Company for, for both business and personal travel (the “Legacy Aircraft Policy”). In addition, the aircraft personally owned by Mr. Krohn could have a formal agreement withbeen chartered by the Company regardingunder the Legacy Aircraft Policy. Under the Legacy Aircraft Policy, Mr. Krohn had received a gross-up cash payment for any taxes on imputed income associated with such aircraft usage and used by Mr. Krohn for any purpose. Effective January 1, 2021, Mr. Krohn no longer receives such tax gross-up payments. In 2023, Mr. Krohn’s aircraft was used by the Company or Mr. Krohn for 5 flight hours under the Legacy Aircraft Policy. In connection with the Company’s compensation changes in 2023, the Legacy Aircraft Policy was terminated as of April 20, 2023, and the Company adopted the Aircraft Policy effective May 14, 2023, which was amended and restated on January 1, 2024. Under the Aircraft Policy, certain costs of executive officers’ personal travel on the Company’s corporate aircraft (including the personal travel of family and guests) are either paid directly by the executive officer other than Mr. Krohn has historically made substantial use of chartered aircrafton at least an annual basis or, in certain cases, the executive officer is required to reimburse the Company for personal travel,use, in each case, in accordance with the Company hasAircraft Policy. Direct payments are due to the discretion to allow such use by other executive officersair carrier in limitedaccordance with the air carrier’s terms. Please see “Compensation Discussion and individual circumstances. To the extent any Named Executive Officer uses a chartered aircraftAnalysis—Compensation Changes in 2023” for personal travel, such use would be reflected in the Summary Compensation Table under “All Other Compensation.”The employment agreements for Messrs. Gibbons, Murphy and Schroeder also have terms of three years, subject to automatic extension for an additionalone-year period beginning on the first anniversary from the effective date of the agreements and on each anniversary date thereafter. The agreements also entitle the Named Executive Officers to participate in the Company’s annual incentive plans and long-term incentive plans as approved from time to time by the Compensation Committee. The potential severance and change of control provisions within the employment agreements are discussed in detail below under the heading “—Potential Payments Upon Termination or a Change in Control.”
information. Equity Incentive Awards Please see “Compensation Discussion and Analysis—Elements and Purpose of Executive Compensation— Long-termLong-Term Equity Incentive Compensation” for a discussion of the terms of the restricted stock unit awards.RSUs. Please see the section titled “Potential Payments Upon Termination or a Change in Control” below for a detailed description of certain terminations of employment or change in control events that could impact the normal vesting schedules for the equity awards. Percentage of Base Salary and Cash Discretionary Bonus in Comparison to Total Compensation
| | 66 | | | | Named Executive Officer
W&T Offshore | | Percentage of Salary
and Cash
Discretionary Bonus to
Total Compensation | | Tracy W. Krohn
| | | 222024Proxy Statement | % | John D. Gibbons
| | | 32 | % | Thomas P. Murphy
| | | 36 | % | Stephen L. Schroeder
| | | 38 | % | Shahid A. Ghauri
| | | 38 | % |
Outstanding Equity Awards at December 31, 20172023 The following table sets forth information regarding restricted stock unitsRSUs and PSUs that have not vested for each of the Named Executive Officers outstanding as of December 31, 2017.2023. The Company did not2023 closing stock price used to calculate the values in the table below was $3.26. | | | | | Stock Awards | | | | Name | | | Number of Shares
or Units of Stock
That Have
Not Vested
(#) | | | Market Value of
Shares or Units
of Stock That
Have Not Vested
($) | | | Equity Incentive
Plan Awards:
Number of Unearned
Shares, Units or Other
Rights That Have
not Vested
(#) | | | Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares,
Units or Other Rights
That Have
Not Vested
($) | | | | Tracy W. Krohn
Chairman, Chief Executive
Officer and President | | | | | 320,000 (1) | | | | | | 1,043,200 | | | | | | 480,000 (4) | | | | | | 1,564,800 | | | | | | | 167,748 (2) | | | | | | 546,858 | | | | | | 502,970 (5) | | | | | | 1,639,682 | | | | | | | 73,863 (3) | | | | | | 240,793 | | | | | | | | | | | | | | | | | Sameer Parasnis
Executive Vice President
and Chief Financial Officer | | | | | 68,055 (1) | | | | | | 221,859 | | | | | | 102,082 (4) | | | | | | 332,787 | | | | | William J. Williford
Executive Vice President
and Chief Operating Officer | | | | | 135,000 (1) | | | | | | 440,100 | | | | | | 202,500 (4) | | | | | | 660,150 | | | | | | | 36,033 (2) | | | | | | 117,468 | | | | | | 108,202 (5) | | | | | | 352,739 | | | | | | | 8,063 (3) | | | | | | 240,793 | | | | | | | | | | | | | | | | | Jonathan Curth
Executive Vice President, General Counsel and Corporate Secretary | | | | | 127,500 (1) | | | | | | 415,650 | | | | | | 191,250 (4) | | | | | | 623,475 | | | | | | | 11,668 (2) | | | | | | 38,038 | | | | | | 35,056 (5) | | | | | | 114,283 | | | | | Janet Yang
Former Executive Vice
President and Chief
Financial Officer | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
(1)
These RSUs were granted to Mr. Krohn, Mr. Williford and Mr. Curth on June 5, 2023, and to Mr. Parasnis on July 3, 2023. These RSUs vest in three equal annual installments on the anniversary of the grant option awardsdate in 20172024, 2025, and there are no stock options outstanding as2026, subject to continued employment through the applicable vesting date. (2)
These RSUs were granted to Mr. Krohn and Mr. Williford on May 26, 2022, and to Mr. Curth on June 20, 2022. These RSUs vest in three equal annual installments on each of January 1, 2023, January 1, 2024, and January 1, 2025, subject to continued employment through the applicable vesting date. (3)
These RSUs were granted on June 28, 2021, and vest in three equal annual installments on each of January 1, 2022, January 1, 2023, and January 1, 2024, subject to continued employment through the applicable vesting date. (4)
These PSUs were granted to Mr. Krohn, Mr. Williford and Mr. Curth on June 5, 2023, and to Mr. Parasnis on July 3, 2023. These PSUs were granted for the performance period commencing on January 1, 2023, and ending on December 31, 2017. | | | | | | | | | | | | | Named Executive Officer | | Grant | | | Number of Shares or
Units of Stock That
Have Not Vested (1) | | | Market Value of
Shares or Units of
Stock That Have Not
Vested (2) | | | | | | Tracy W. Krohn | | | 2017 | | | | 638,977 | | | $ | 2,115,014 | | | | | 2016 | | | | 993,051 | | | | 3,286,999 | | | | | | John D. Gibbons | | | 2017 | | | | 210,862 | | | | 697,953 | | | | | 2016 | | | | 327,706 | | | | 1,084,707 | | | | | | Thomas P. Murphy | | | 2017 | | | | 163,738 | | | | 541,973 | | | | | 2016 | | | | 254,468 | | | | 842,289 | | | | | | Stephen L. Schroeder | | | 2017 | | | | 135,022 | | | | 446,923 | | | | | 2016 | | | | 209,840 | | | | 694,570 | | | | | | Shahid A. Ghauri | | | 2017 | | | | 98,080 | | | | 324,645 | | | | | 2016 | | | | — | | | | — | |
(5)
These PSUs were granted to Mr. Krohn and Mr. Williford on May 26, 2022, and to Mr. Curth on June 20, 2022. These PSUs were granted for the performance period commencing on January 1, 2022, and ending on December 31, 2024, subject to continued employment through January 1, 2025. The number of shares reported reflects the target payout. (1) | This column includes performance-based restricted stock units that were granted in 2016 and 2017. The 2016 and 2017 RSUs were subject to Adjusted EBITDA and Adjusted EBITDA Margin based performance requirements. Adjustments related to performance levels achieved in 2016 and 2017 have been applied to the grants presented and adjusted as appropriate from the target level of awards originally granted. These awards related to performance levels achieved in 2016 and 2017 and are now subject solely to the time-based vesting conditions that will vest in full on December 14, 2018 (for the 2016 awards) and December 13, 2019 (for the 2017 awards). Please see “Compensation Discussion and Analysis—Elements of Executive Compensation—Long-term Incentive Compensation.”2024Proxy Statement | | | | | | W&T Offshore | | | 67 | |
(2) | The market value of the shares of restricted stock units that have not vested was calculated using the closing price of the Company’s Common Stock on December 29, 2017 of $3.31 per share. |
Stock Vested Table for 20172023 The following table sets forth certain information regardingfor the fiscal year ended December 31, 2023, concerning the vesting of restricted stock unitspreviously granted shares of RSUs and PSUs for eachour Named Executive Officers. The value shown is based on the closing price of our Common Stock on the date of vesting. There were no options exercised in 2023. | | Named Executive Officer | | | Vesting
Date | | | Number of
Shares Acquired
on Vesting | | | Value
Realized
on Vesting
($) | | | | Tracy W. Krohn | | | | | 1/1/2022 | | | | | | 157,737 | | | | | | 798,149 (1) | | | | | | | 9/29/2023 | | | | | | 77,227 | | | | | | 338,254 (2) | | | | | Sameer Parasnis | | | | | — | | | | | | — | | | | | | — | | | | | William J. Williford | | | | | 1/1/2023 | | | | | | 26,082 | | | | | | 131,975 (1) | | | | | | | 9/29/2023 | | | | | | 8,455 | | | | | | 37,033 (2) | | | | | Jonathan Curth | | | | | 1/1/2023 | | | | | | 5,834 | | | | | | 29,520 (1) | | | | | Janet Yang | | | | | 1/1/2023 | | | | | | 26,082 | | | | | | 131,975 (1) | | |
(1)
Valued at $5.06 per share, which was the closing price on the date of vesting. A portion of the Named Executive Officers during 2017. | | | | | | | | | | | | | Named Executive Officer | | Vesting Date | | | Number of Shares
Acquired on
Vesting | | | Value Realized
on Vesting (*) | | Tracy W. Krohn | | | 12/15/2017 | | | | 610,833 | | | $ | 1,588,166 | | John D. Gibbons | | | 12/15/2017 | | | | 201,574 | | | | 524,092 | | Thomas P. Murphy | | | 12/15/2017 | | | | 156,525 | | | | 406,965 | | Stephen L. Schroeder | | | 12/15/2017 | | | | 128,503 | | | | 334,108 | | Shahid A. Ghauri | | | 12/15/2017 | | | | — | | | | — | |
(*) | Valued at the closing price on the date of vesting. A portion of the vested shares were used for withholding and payroll taxes, valued on the closing price at the date of vesting. |
vested shares were used for withholding and payroll taxes, valued on the closing price at the date of vesting. (2)
Valued at $4.38 per share, which was the closing price on the date of vesting. A portion of the vested shares were used for withholding and payroll taxes, valued on the closing price at the date of vesting. Potential Payments Upon Termination or a Change in ControlEach
Mr. Krohn’s Employment Agreement Pursuant to the terms of the Company’s Named Executive Officers has an employment agreement with the Company as of December 31, 2017 except Mr. Ghauri. Employment Agreement with Tracy W. Krohn
Mr. Krohn’s employment agreement provides for a potential severance payment in certain situations. In the event of his death or “disability” (generally definedentered into November 1, 2010 as an accident, sickness or other circumstance which renders him mentally or physically incapable of performing his services for the Company)amended and restated on April 20, 2023 (the “Krohn Employment Agreement”), his compensation and benefits will terminate on the date of termination. If, during the term of his agreement,if he is terminated by the Company terminates the employment of Mr. Krohn for any reason other than in connection with his death, disability, or for “cause” (generallywithout Cause (which is generally defined to include Mr. Krohn’s fraud, embezzlement or misappropriation against the Company or our affiliates, any willful failure, neglect, or refusal to perform his duties under the agreementKrohn Employment Agreement that results in an injury to the Company or an affiliate, or Mr. Krohn’s plea of guilty to, or his conviction of, a felony), or Mr. Krohn terminates his employment for “good reason” (generallyGood Reason (which is generally defined to include a material breach by the Company of the agreementKrohn Employment Agreement or a material adverse change in Mr. Krohn’s title, position or responsibilities), whetherresponsibilities and a material reduction of Mr. Krohn’s base salary or not in connection with a changetarget bonus or relocation of control,his primary work location by more than 30 miles), Mr. Krohn will beis entitled to receive, subject to his execution and non-revocation of a release of claims: (i) his base salary until the actualhis termination date of his agreement and a severance payment in the amount of 3.0 times his annual base salary that is then in effect (the “CEO Severance Payment”); the CEO Severance Payment will be paid 60 days following his termination from employment (or six months following his termination of employment if he is consideredeffect; (ii) a “specified employee” under Section 409A of the Code at that time). If he elects to continue coverage for himself and his dependents under the Company’s group health plans following his termination of employment pursuantpro-rata target annual bonus with respect to the Consolidated Omnibus Budget Reconciliation Actfiscal year Mr. Krohn is terminated, calculated based on the assumed annual bonus payout at target performance, multiplied by a fraction, the numerator of 1985, or “COBRA,”which is the number of days Mr. Krohn was employed by the Company shall reimburse Mr. Krohn forduring the costfiscal year and the denominator of which is based on the total number of days in such year; (iii) a lump sum payment equal to the difference between the amount necessary to continue such coverage and the amount Mr. Krohn wasis required to pay for such coverage as an employee, for a period of 12 months. If Mr. Krohn elects to effect and continue his health coverage following the initial 12 month period, then at any time during the following 18 months his COBRA coverage terminates, the Company will provide him and his dependents with health benefits substantially similar to those provided under the Company’s group health plans for active employees and at a cost that is no greater to Mr. Krohn than the cost of his original 1224 month COBRA costs (collectively, the “Continued Medical Benefit”). Any outstanding restricted stock or restricted stock unit awards held at the time of a termination of Mr. Krohn’s employment by the Company without cause, or by Mr. Krohnperiod for good reason, will receive 100% accelerated vesting,himself and any annual incentive awardcovered dependents and the employee contribution amount that Mr. Krohn would have been entitled to receiveactive senior employees pay for the yearsame or similar coverage under the Company’s group health plans, determined based on the rates in which his termination occurred would be paid to him on apro-rata basis. In the event that the Company undergoes a change in control during the term of the employment agreement, and Mr. Krohn is not also terminated in connection with such a change in control that would also trigger a payment of the CEO Severance Payment, then Mr. Krohn will receive the CEO Severance Payment described above as if he had been terminatedeffect as of the date of his termination of employment; (iv) the changerestrictions on any outstanding restricted stock, RSUs or other equity based incentive awards will lapse and the restricted stock, RSUs or other non-performance based equity based incentive awards will accelerate and fully vest; (v) for any PSU awards for which the applicable performance period has ended but prior to the Service Vesting Date (as defined in control. the award agreement), the restrictions on an Earned Award (as defined in the award agreement) will lapse and be deemed vested; and (vi) for any PSU awards for which the applicable performance period has not yet ended, the PSUs will accelerate and fully vest based on the Target Award (as defined in the award agreement) (collectively the “Termination Benefits”).
| | 68 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
The employment agreementKrohn Employment Agreement provides for certaincut-backs for amounts paid to Mr. Krohn in the event thatif such a payment would be considered a “parachute payment” pursuant to Section 280G of the Code. If an amount to be paid to Mr. Krohn is considered a parachute payment, then suchhis payments will either be reduced to an amount that is $1.00 less than three times Mr. Krohn’s then annual base salary, or paid in full, whichever produces the better netafter-tax position to Mr. Krohn.In addition, all outstanding restricted stock or restricted stock unit awards held by
The Krohn Employment Agreement subjects Mr. Krohn as of the date of a change in control will accelerate by 100%, whether such awards were subject to a performance period and whether such a performance period had passed as of the date of the change in control. In the event that Mr. Krohn is terminated without cause or for good reason, any outstanding restricted stock or restricted stock units would also vest, provided that the termination of employment occurred following the satisfaction of any applicable performance period associated with that award. The definition of “change of control” in Mr. Krohn’s employment agreement generally will occur upon one or more of the following events: (1) a merger or consolidation that results in the Company’s voting securities representing less than 50% of the combined voting power of the voting securities of the Company or the surviving corporation immediately after the transaction; (2) the individuals who constitute the Company’s board of directors cease to constitute at least a majority of the Company’s board of directors; (3) the acquisition, by a person or a group, of beneficial ownership of any capital stock of the Company if, after such acquisition, the person or group beneficially owns 51% or more of either (A) the then-outstanding shares of the Company’s Common Stock or (B) the combined voting power of the then-outstanding voting securities of the Company (provided that for purposes of this subsection (3), the following acquisitions will not give rise to a change of control:restrictive covenants (i) acquisitions directly from or by the Company, (ii) acquisitions by a Company employee benefit plan, (iii) acquisitions by any corporation pursuant to a transaction that results in the Company’s security holders remaining in control of 50% or more of the Company’s securities immediately following the transaction, (iv) an acquisition that constitutes an employee buyout, or (v) acquisitions by Mr. Krohn or his immediately family); (4) a sale of all or substantially all of the Company’s assets, or (5) the approval by the Company’s shareholders of a complete liquidation or dissolution.
In addition to acknowledging the continued binding effect of theNon-Competition/Non-Solicitation provisions in Section 6 of the 2004 employment agreement, Mr. Krohn has agreed in his 2010 employment agreement (i) not to disclose our confidential informationperpetual confidentiality and (ii) during the 1215 months following his termination from employment with the Company, that he will not (A) provide to a third party competitor the same services that he currently provides to the Company in any market area in which the Company has conducted oil and gas exploration and production activities during the last two years of the term of the employment agreement, or (B) not to solicit or hire Company employees.
Employment Agreements with
NEOs Change in Control Severance Plan Under the Remaining Named Executive OfficersThe Company has entered into employment agreements with each ofW&T Offshore, Inc. Change in Control Severance Plan (“Severance Plan”), the remaining Named Executive Officers exceptNEOs other than Mr. Ghauri. The agreements provideKrohn (the “Eligible Executives”) are entitled to certain severance benefits toupon the employees in certain situations. In the event of a death or “disability” (defined the same as in Mr. Krohn’s employment agreement), an executive’s compensation and benefits will terminate on the date of termination. If, during the term of the agreement, the Company terminates the employment of the executive for any reason other than in connection with his or her death, disability, or for “cause” (generally defined to include a failure to perform any material duties in accordance with the professional standards for such executive’s position in the Company, a refusal to perform material duties under the agreement or the duties associated with that executive’s position in the Company, a willful breach of the agreement or a corporate policy, any willful failure, neglect, or other action that results in an injury to the Company or an affiliate, the executive’s serious dishonesty which impacts his performance in a material manner, or the executive’s plea of guilty to, or conviction of, a felony), or the executive terminates his or her employment for “good reason” (generally defined to include a material breach by the Company of the agreement or a material reduction in the executive’s base salary), whether or not in connection with a change of control, the executive will be entitled to receive their base salary until the actual termination date of the agreement and a severance payment in the amount of a specific multiple times his or her annual base salary that is then in effect (the “Severance Benefit”). The Severance Benefit multiple for Mr. Gibbons is three, and the Severance Benefit multiple for Messrs. Schroeder and Murphy is two. The Severance Benefit will be paid to the executive 60 days following a termination from employment (or six months following the termination of employment if he or she is considered a “specified employee” under Section 409A of the Code at that time). The executives will also receive the Continued Medical Benefit that is described above for Mr. Krohn in the event that they are terminated by the Company without cause or they resign for good reason, although the original reimbursement period will be six months rather than twelve months for Messrs. Schroeder and Murphy. Restricted stock and restricted stock units granted to the executives after January 1, 2010 will vestpro-rata. Any annual incentive award that the executive would have been entitled to receive for the year in which hisEligible Executive’s termination by the Company without causeCause or resignation by the executive’s resignationEligible Executive for good reason would be paid onGood Reason (as each term is defined in the Severance Plan). Subject to the execution and non-revocation of apro-rata basis.
In release of claims within 60 days following a qualifying termination within one year of a Change in Control (as defined in the eventIncentive Compensation Plan), the Eligible Executive is entitled to receive the following: (i) an amount equal to two times the sum of the Eligible Executive’s annual base salary and annual target bonus with payment made in a lump sum as soon as practicable, (ii) any earned but unpaid annual bonus, if any, for the prior calendar preceding the Eligible Executive’s separation date, (iii) a payment equal to the product of (A) the Eligible Executive’s target annual bonus for the calendar year that includes the Eligible Executive’s separation date and (B) a fraction the numerator of which is the number of days prior to the Eligible Executive’s separation date in the calendar year in which the Eligible Executive’s separation date occurs and the denominator of which is the number of days in such year, (iv) subject to the Eligible Executive’s timely election of continuation coverage pursuant to COBRA, the employer portion of continued coverage for a period of 18 months following the Eligible Executive’s separation date and his or her eligible dependents under the Company’s health plans if and in which the Eligible Executive participated immediately prior to the Eligible Executive’s separation date or any equivalent plans maintained by the Company undergoesin the replacement thereof, and (v) the vesting and forfeiture of any equity incentive awards held by the Eligible Executive will be determined in accordance with the applicable equity incentive plan and award agreement pursuant to which such awards are granted, in each case of (i)-(iii) payable as soon as practicable but no later than 10 days following the release effective date.
The Severance Plan also subjects Eligible Executives to the following restrictive covenants: (i) perpetual confidentiality; and (ii) during the 15 months following his termination from employment with the Company, the Eligible Executive will not (A) provide to a changethird party competitor the same services that he currently provides to the Company in controlany market area in which the Company has conducted oil and gas exploration and production activities during the last two years of the term of the employment agreement, the executive will receive the Severance Benefit described above as if he or she had been terminated as of the date of the change in control; provided however, if the executive is also terminated in connection with such a change in control, and a payment of the Severance Benefit is triggered by such termination, the executive would only receive a Severance Benefit in connection with the termination. The employment agreements provide for the same“cut-back” described above for Mr. Krohn in the event that an executive is considered to receive a “parachute payment” under Section 280G of the Code. The employment agreements also address the treatment that outstanding restricted stock and restricted stock unit awards would receive pursuant to a change in control and/(B) solicit or certain terminations of employment. The language in the employment agreements mirrors that of the governing individual award agreements granted pursuanthire Company employees.
Incentive Compensation Plan Pursuant to the Incentive Compensation Plan which are described in greater detail below, for change in control events. Pursuant to a termination of employment by the Company without cause, or by the executive for good reason, an outstanding performance-based restricted stock or restricted stock unit award would be acceleratedpro-rata only if the termination of employment occurred at a time following the satisfaction of the applicable performance period. Such apro-rata acceleration would be calculated by dividing the award into thirds (the“pro-rata percentage calculation”).An executive must sign a general release in our favor before receiving the Severance Benefit, and the executive shall not make any unauthorized disclosures of any confidential information related to the Company during the executive’s employment or following a termination of employment. An executive will also be subject to standardnon-competition andnon-solicitation restrictions for a period of twelve months following Mr. Gibbons’ terminations of employment, or for a period of six months following Messrs. Schroeder and Murphy’s terminations of employment.
Incentive Compensation Plan
With regard to executives, as of December 31, 2017, the Incentive Compensation Plan provided that in the event of a change of control ofChange in Control (as defined in the Company,Incentive Compensation Plan), the Company may choose to accelerate or remove any restrictions upon an outstanding award. The plan generally definesaward (ii) require holders to surrender some or all of their outstanding awards in exchange for cash calculated based on the Change in Control Price (as defined in the Incentive Compensation Plan) or make adjustments to grants then outstanding as the Compensation Committee deems appropriate to reflect the Change in Control.
For RSU awards granted under the Prior Incentive Plan, in the event of a “changeNamed Executive Officer’s termination due to death or Disability (as defined in the individual award agreement) or in the event of control” accordinga Consummation of a Change in Control the RSUs will accelerate and fully vest. For RSUs granted under the Prior Incentive Plan, in the event of a termination due to Normal Retirement (as defined in the definition given aboveaward agreement) the RSUs will pro-rata vest based on multiplying the number of unvested RSUs held by the Named Executive Officer at the time of his or her Normal Retirement by a fraction, the numerator of which is the number of full months (counting the month in Mr. Krohn’s employment agreement. The agreementswhich the termination occurs as a full month) that governhave passed following the outstanding restricted stock unitdate of grant and the denominator of which is 36. | | 2024Proxy Statement | | | | | | W&T Offshore | | | 69 | |
For RSU awards granted in 2023 under the Incentive Compensation Plan haveand going forward, in the event of atwo-tiered vesting requirement based on time Named Executive Officer’s termination due to death or Disability (as defined in the individual award agreement) any RSUs outstanding will be deemed forfeited. For RSU awards granted in 2023 under the Incentive Compensation Plan and performance metrics. A changegoing forward in the event of controla Change in Control will 100%only accelerate all restricted stock unitand fully vest in the event the Named Executive Officer is also terminated without Cause (as defined in the award agreement) within one year following the Change in Control. RSU awards that have become partially vested pursuantgranted in 2023 under the Incentive Compensation Plan and going forward will not pro-rata vest in the event of a termination due to Normal Retirement. For PSU awards granted under the satisfactionPrior Incentive Plan, in the event of a Named Executive Officer’s termination due to death or Disability following the performance vesting requirement but have yet to vest pursuant to the time-based restrictions, as well as restricted stock unit awards that have not vested becauseend of the applicable performance period has not ended at the time the change of control occurs. A change of control will also accelerate any outstanding restricted stock awards held by the executives.The acceleration of the performance-based restricted stock unit awards will depend upon whether the awards have been partially vested pursuantbut prior to the performance-based vesting provision atService Vesting Date (as defined in the timeaward agreement) any restrictions on an Earned Award (as defined in the award agreement) will lapse and be deemed vested. In the event of the termination of employment. While eacha Named Executive Officer’s employment agreement addresses certain changetermination due to death or Disability prior to the end of the applicable performance period, no portion of the PSUs will vest. In the event of a consummation of a Change in control orControl prior to the end of the applicable performance period, the PSUs will accelerate and fully vest based on the Target Award (as defined in the award agreement). In the event of a consummation of a Change in Control following the applicable performance period, the PSUs will accelerate and fully vest based on the Earned Award.
In the event of a termination due to Normal Retirement, if following the end of employment events,the applicable performance period and prior to the Service Vesting Date, the restriction on any Earned Award will lapse pro-rata as described below. For PSUs granted under the termsPrior Incentive Plan, in the event of a termination due to Normal Retirement prior to the end of the restricted stock unit agreements, ifapplicable performance period, no portion of the performance criteria have not been satisfied at the time of an executive’s death or disability, or before a “normal retirement,” the awards would be forfeited; however, if the performance criteriaPSUs will vest. The pro-rata percentage calculation for the restricted stock units has been satisfied at the timevesting of an executive’s death or disability the awards will be 100% accelerated. Acceleration uponPSUs following a normal retirement will be calculated using thepro-rata percentage calculation.Thepro-rata percentage calculation workstermination due to Normal Retirement is as follows.Two-thirds of the award will be called the“two-year “two-year portion,” and the final third will be called the “three-year portion.” Thetwo-year portion will accelerate by taking the number of underlying stock or units in that portion and multiplying that number by a fraction, the numerator of which is the number of months that the executive was employed during the year in which the grant occurred up until the termination of employment, and the denominator of which is 24; the three-year portion will accelerate by taking the number of underlying stock or units in that portion and multiplying that number by a fraction, the numerator of which is the number of months that the executive was employed during the year in which the grant occurred up until the termination of employment and the denominator of which is 36. As an example, provided below
For PSU awards granted in 2023 under the Incentive Compensation Plan and going forward, in the event of a Named Executive Officer’s termination due to death or Disability, the PSU awards will be deemed forfeited and no portion of the PSUs will vest. For PSU awards granted in 2023 under the Incentive Compensation Plan and going forward, in the event of a Change in Control in which Named Executive Officer is also terminated for a reason other than Cause within one year following the Change in Control (i) prior to the end of the applicable performance period, the PSUs will accelerate and fully vest based on the Target Award (as defined in the award agreement) and (ii) following the applicable performance period, the PSUs will accelerate and fully vest based on the Earned Award. PSU awards granted in 2023 under the Incentive Compensation Plan and going forward will not pro-rata calculation vest in the event of a termination due to Normal Retirement. | | 70 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
Potential Payments upon Termination or a Change in Control Table The following table provides information regarding potential payments to our Named Executive Officers as of December 31, 2023, in connection with certain termination or change in control events. Ms. Yang did not receive any payments in connection with her departure from the Company on May 11, 2023. | | Executive and Compensation Component | | | Change of
Control
($) | | | Death and
Disability
($) | | | Termination by
Company
without Cause
or by Executive
for Good
Reason
($) | | | Retirement
($) | | | | Tracy W. Krohn | | | | | | | | | | | | | | | | | | | | | | | | | | | | Pro-Rata Bonus Award (1) | | | | | 800,000 | | | | | | — | | | | | | 800,000 | | | | | | — | | | | | CEO Severance Payment (2) | | | | | 2,400,000 | | | | | | — | | | | | | 2,400,000 | | | | | | — | | | | | Continued Medical (3) | | | | | 47,639 | | | | | | — | | | | | | 47,639 | | | | | | — | | | | | Accelerated Equity and Incentive Awards (4) | | | | | 5,035,334 | | | | | | 787,652 | | | | | | 5,035,334 | | | | | | 438,834 | | | | | Total (5) | | | | | 8,282,973 | | | | | | 787,652 | | | | | | 8,282,973 | | | | | | 438,834 | | | | | Sameer Parasnis | | | | | | | | | | | | | | | | | | | | | | | | | | | | NEO Severance Payment (6) | | | | | 1,285,644 | | | | | | — | | | | | | — | | | | | | — | | | | | NEO Earned Bonus Payment (7) | | | | | 154,258 | | | | | | — | | | | | | — | | | | | | — | | | | | Pro-Rata Target Bonus Award (8) | | | | | 192,822 | | | | | | — | | | | | | — | | | | | | — | | | | | Continued Medical (9) | | | | | 34,017 | | | | | | — | | | | | | — | | | | | | — | | | | | Accelerated Equity and Incentive Awards (4) | | | | | 554,647 | | | | | | — | | | | | | — | | | | | | — | | | | | Total (5) | | | | | 2,221,388 | | | | | | — | | | | | | — | | | | | | — | | | | | William J. Williford | | | | | | | | | | | | | | | | | | | | | | | | | | | | NEO Severance Payment (6) | | | | | 1,665,000 | | | | | | — | | | | | | — | | | | | | — | | | | | NEO Earned Bonus Payment (7) | | | | | 306,000 | | | | | | — | | | | | | — | | | | | | — | | | | | Pro-Rata Target Bonus Award (8) | | | | | 382,500 | | | | | | — | | | | | | — | | | | | | — | | | | | Continued Medical (9) | | | | | 34,017 | | | | | | — | | | | | | — | | | | | | — | | | | | Accelerated Equity and Incentive Awards (4) | | | | | 1,811,249 | | | | | | 358,261 | | | | | | — | | | | | | — | | | | | Total (5) | | | | | 4,198,766 | | | | | | 358,261 | | | | | | — | | | | | | — | | | | | Jonathan Curth | | | | | | | | | | | | | | | | | | | | | | | | | | | | NEO Severance Payment (6) | | | | | 1,572,500 | | | | | | — | | | | | | — | | | | | | — | | | | | NEO Earned Bonus Payment (7) | | | | | 289,000 | | | | | | — | | | | | | — | | | | | | — | | | | | Pro-Rata Target Bonus Award (8) | | | | | 361,250 | | | | | | — | | | | | | — | | | | | | — | | | | | Continued Medical (9) | | | | | 34,017 | | | | | | — | | | | | | — | | | | | | — | | | | | Accelerated Equity and Incentive Awards (4) | | | | | 1,191,445 | | | | | | 38,038 | | | | | | — | | | | | | — | | | | | Total (5) | | | | | 3,448,212 | | | | | | 38,038 | | | | | | — | | | | | | — | | |
(1)
Mr. Krohn would be entitled to receive the Pro-Rated Bonus upon a termination by the Company without Cause, or by Mr. Krohn for Good Reason, in each case whether or not in connection with a change of control. (2)
In the event of a termination without Cause or by Mr. Krohn for Good Reason, in each case whether or not in connection with a change of control, the CEO Severance Payment is three times the executive’s annual base salary as of December 31, 2023, which was $800,000 for Mr. Krohn. (3)
In the event of a termination without Cause or by Mr. Krohn for Good Reason, in each case whether or not in connection with a change of control, Mr. Krohn is entitled to a lump sum payment equal to the difference between the amount Mr. Krohn is required to pay to effect and continue COBRA coverage under the Company’s group health plans for a 24 month period and the employee contribution amount that active senior employees pay for the same or similar coverage under the Company’s group health plans. The amounts are based upon the Company’s COBRA costs as of December 31, 2023, for the maximum period of 24 months. (4)
Accelerated equity reflects 2023 and 2022 RSU and PSU amounts outstanding and the 2021 RSU amounts outstanding. The accelerated amounts were determined by multiplying the number of outstanding awards held by each executive (detailed above in the “Outstanding Equity Awards at | | 2024Proxy Statement | | | | | | W&T Offshore | | | 71 | |
December 31, 2023” table), either on a full or pro-rata basis as applicable in each circumstance for each grant, by the closing price of our Common Stock on December 29, 2023 (the last trading day in 2023), which was $3.26 per share. (5)
Amounts shown here are a total of the full costs for each element. The employment agreement for Mr. Krohn has a “cut back” provision that would applyrequire us to Mr. Krohn’s acceleration of restricted stock units grantedpay $1.00 less than three times the executive’s base salary in the event that the payment to him in 2017 uponthe executive would constitute a normal retirement, assuming the performance measures have been satisfied with respect to Mr. Krohn’s restricted stock units, but they are still subject to time-based vesting until December 14, 2019. Assuming that“parachute payment” and Mr. Krohn was eligiblewould be better off on a net after tax basis with a cut back, so the total amounts shown could be reduced in certain situations. (6)
In the event of a termination without Cause or by the NEO for Good Reason within one year of a normal retirement uponchange of control, the NEO Severance Payment is two times the sum of the executive’s annual base salary and annual target bonus as of December 31, 2017, his acceleration amount2023. (7)
In the event of a termination without Cause or by the Eligible Executive for Good Reason within one year of a change of control, the Eligible Executives are entitled to any earned but unpaid annual bonus, if any, for the prior calendar preceding the Eligible Executive’s separation date. These amounts represent each executive’s earned bonus amounts as of December 31, 2023. (8)
In the event of a termination without Cause or by the NEO for Good Reason within one year of a change of control, the Eligible Executives are entitled to a payment equal to the product of (A) the Eligible Executive’s target annual bonus for the calendar year that specific grant of restricted stock units would be calculated as follows: (i) 2/3 of his restricted stock units (638,977 ) times 12/24 (theincludes the Eligible Executive’s separation date and (B) a fraction the numerator of which is the number of months, beginning withdays prior to the first day ofEligible Executive’s separation date in the first month of thecalendar year in which the Eligible Executive’s separation date of issuance occurs during which Mr. Krohn was employed as of December 31, 2017), plus (ii) 1/3 of his restricted stock units (638,977 ) times 12/36 (the numeratorand the denominator of which is the number of months, beginning withdays in such year. These amounts represent the first dayrespective Eligible Executive’s target annual bonus amount that would be payable had such separation occurred on December 31, 2023.
(9)
In the event of a termination without Cause or by the first monthEligible Executive for Good Reason within one year of a change of control, the year in whichEligible Executives are entitled to continued medical coverage pursuant to COBRA for a period of up to 18 months. The amounts are based upon the date of issuance occurs, during which Mr. Krohn was employedCompany’s COBRA costs as of December 31, 2017), multiplied by2023. Pay Versus Performance The following table sets forth certain information with respect to the Company’s financial performance and the compensation paid to our closing stockNEOs for the fiscal years ended on December 29, 201731, 2023, December 31, 2022, December 31, 2021, and December 31, 2020. | | Year | | | Summary
Compensation
Table Total
for PEO (1) | | | Compensation
Actually Paid
to PEO (1)(2) | | | Average
Summary
Compensation
Table Total
for Non-PEO
NEOs (3) | | | Average
Compensation
Actually Paid
to Non-PEO
NEOs (3)(2) | | | Value of Initial Fixed $100
Investment Based On: | | | Net Income
(in thousands) (5) | | | Net Debt
(in thousands) (6) | | | | Total
Shareholder
Return (4) | | | Peer Group
Total
Shareholder
Return (4) | | | | 2023 | | | | $ | 5,863,561 | | | | | $ | 324,131 (7) | | | | | $ | 1,457,399 | | | | | $ | 513,840 (7) | | | | | $ | 58.63 | | | | | $ | 146.23 | | | | | $ | 15,598 | | | | | $ | 217,266 | | | | | 2022 | | | | $ | 12,111,392 | | | | | $ | 11,581,183 | | | | | $ | 1,878,070 | | | | | $ | 2,779,710 | | | | | $ | 100.36 | | | | | $ | 144.89 | | | | | $ | 231,149 | | | | | $ | 232,080 | | | | | 2021 | | | | $ | 5,492,721 | | | | | $ | 4,896,511 | | | | | $ | 1,129,297 | | | | | $ | 1,065,664 | | | | | $ | 58.09 | | | | | $ | 101.81 | | | | | $ | (41,478) | | | | | $ | 485,099 | | | | | 2020 | | | | $ | 2,030,112 | | | | | $ | 36,005 | | | | | $ | 456,097 | | | | | $ | 262,900 | | | | | $ | 39.03 | | | | | $ | 61.84 | | | | | $ | 37,790 | | | | | $ | 581,560 | | |
(1)
The name of $3.31 per share,the Principal Executive Officer of the Company (“PEO”) reflected in these columns for each of the applicable fiscal years is Tracy W Krohn. (2)
In calculating the ‘compensation actually paid’ amounts reflected in these columns, the fair value or change in fair value, as applicable, of the equity award adjustments included in such calculations was computed in accordance with FASB ASC Topic 718. The valuation assumptions used to equal $940,004. Ifcalculate such fair values did not materially differ from those disclosed at the term “normal retirement”time of grant. (3)
The names of each of the non-PEO NEOs reflected in these columns for each applicable fiscal year are as follows: (i) for fiscal year 2023, Sameer Parasnis, Janet Yang, William J. Williford and Jonathan Curth, (ii) for fiscal year 2022, Janet Yang, William J. Williford, Jonathan Curth and Stephen Schroeder; and (iii) for fiscal years 2021 and 2020, Janet Yang, William J. Williford, Stephen Schroeder and Shahid Ghauri. | | 72 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
(4)
The Company TSR and the Company’s Peer Group TSR reflected in these columns for each applicable fiscal year is calculated based on a fixed investment of $100 at the applicable measurement point on the same cumulative basis as is used in Item 201(e) of Regulation S-K. The peer group used to determine the Company’s Peer Group TSR for each applicable fiscal year is the following published industry index, as disclosed in our Annual Report on Form 10-K for the year-ended December 31, 2023, pursuant to Item 201(e) of Regulation S-K: SPSIOP. (5)
Represents the amount of net income reflected in the Company’s audited GAAP financial statements for each applicable fiscal year. (6)
We have selected Net Debt as our most important financial measure (that is not definedotherwise required to be disclosed in an executive’s employment agreement, the normal retirement age will be age 67. table) used to link ‘compensation actually paid’ to our NEOs to company performance for fiscal year 2023. Net Debt is a measure of the Company’s total debt, less the Company’s cash and cash equivalents. (7)
For fiscal year 2023, the ‘compensation actually paid’ to the PEO and the average ‘compensation actually paid’ to the non-PEO NEOs reflect each of the following adjustments made to the total compensation amounts reported in the Summary Compensation Table for fiscal year 2023, computed in accordance with Item 402(v) of Regulation S-K: | | Compensation Actually Paid for Fiscal Year 2023 | | | PEO | | | Average
Non-PEO
NEOs | | | | Total Compensation Reported in 2023 Summary Compensation Table | | | | $ | 5,863,561 | | | | | $ | 1,457,399 | | | | | Less, Grant Date Fair Value of Stock & Option Awards Reported in the 2023 Summary Compensation Table | | | | | (3,598,400) | | | | | | (922,977) | | | | | Plus, Year-End Fair Value of Awards Granted in 2023 that are Outstanding and Unvested | | | | | 2,214,400 | | | | | | 571,860 | | | | | Plus, Change in Fair Value of Awards Granted in Prior Years that are Outstanding and Unvested (From Prior Year-End to Year-End) | | | | | (3,980,734) | | | | | | (275,882) | | | | | Plus, Vesting Date Fair Value of Awards Granted in 2023 that Vested in 2023 | | | | | — | | | | | | — | | | | | Plus, Change in Fair Value of Awards Granted in Prior Years that Vested in 2023 (From Prior Year-End to Vesting Date) | | | | | (174,696) | | | | | | (10,076) | | | | | Less, Prior Year-End Fair Value of Awards Granted in Prior Years that Failed to Vest in 2023 | | | | | — | | | | | | (306,484) | | | | | Plus, Dollar Value of Dividends or other Earnings Paid on Stock & Option Awards in 2023 prior to Vesting (if not reflected in the fair value of such award or included in Total Compensation for 2023) | | | | | — | | | | | | — | | | | | Total Adjustments | | | | $ | (5,539,430) | | | | | $ | (943,559) | | | | | Compensation Actually Paid for Fiscal Year 2023 | | | | $ | 324,131 | | | | | $ | 513,840 | | |
Pay Versus Performance Comparative Disclosure As described in more detail in the section titled “Compensation Discussion and Analysis—Compensation Philosophy and Objectives,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of December 31, 2017, none of our Named Executive Officers were eligible for a normal retirement, thus no amounts were be includedthose Company measures are not presented in the table belowabove. Further, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with ‘compensation actually paid’ for such a terminationparticular year (as computed in accordance with Item 402(v) of employment.TheRegulation S-K).
In accordance with Item 402(v) of Regulation S-K, the Company is providing the following table reflects the values that eachdescriptions of the Named Executive Officers would receive upon certain terminationsrelationships between the information presented in the table above. Compensation Actually Paid and Company TSR As demonstrated by the following graph, the amount of employment‘compensation actually paid’ to the PEO and the average amount of ‘compensation actually paid’ to the non-PEO NEOs is generally aligned with the Company’s TSR over the four years presented in the table. This is because a significant portion of the ‘compensation | | 2024Proxy Statement | | | | | | W&T Offshore | | | 73 | |
actually paid’ to the PEO and to the non-PEO NEOs is comprised of equity awards and performance awards tied to the Company’s relative TSR. Compensation Actually Paid and Net Income We do not use net income as a performance measure in our overall executive compensation program, and, as a result, there is not a direct correlation between the amount of “compensation actually paid” to the PEO and the average amount of “compensation actually paid” to the non-PEO NEOs as set forth in the table. Due to high levels of non-cash depreciation, depletion and amortization recorded by oil and gas companies, net income often understates the cash flows available to oil and gas companies for repayment of debt, capital investments, dividends or uponshare buybacks. Furthermore, oil and gas companies often hedge oil and gas production to protect future cash flows from the volatility of oil and gas prices. If large volumes of production are hedged for multiple years (as the Company did with natural gas production volumes in 2021), as there are large swings in oil and gas prices, companies are often forced to record large non-cash unrealized derivative gains or losses related to their outstanding hedge positions for future years, which can further meaningfully impact net income upward or downward for a changegiven year. Due to the impacts of such large non-cash items that are regularly recorded on the income statement of oil and gas companies, we do not believe net income is a good performance measure to focus on for the Company. ![[MISSING IMAGE: bc_compvnetincome-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-054130/bc_compvnetincome-pn.jpg) Compensation Actually Paid and Net Debt As demonstrated by the following graph, the amount of ‘compensation actually paid’ to the PEO and the average amount of ‘compensation actually paid’ to the non-PEO NEOs is generally aligned with the Company’s | | 74 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
reduction in control. For purposesNet Debt over the four years presented in the table. As described above, Net Debt is defined as the Company’s total debt, less the Company’s cash and cash equivalents. While the Company uses numerous financial and non-financial performance measures for the purpose of these calculations,evaluating performance for the Company’s compensation programs, the Company has made certain assumptions which we consider reasonable, such as all legitimate reimbursable business expenses are current, anddetermined that all earned salary payments are current asreduction in Net Debt has been the Company’s most important financial performance measure (that is not otherwise required to be disclosed in the table) used to link ‘compensation actually paid’ to the non-PEO NEOs to company performance for the past several years, including for fiscal year 2023. The reduction of Net Debt to improve the Company’s credit profile to either enable full repayment or refinance of the dateSenior Second Lien Notes due November 2023 was a key strategic initiative for the Company’s management team in recent years and seen to be a key driver for the Company’s relative total shareholder return performance, given regular communications from existing shareholders and potential investors that the looming maturity of the potential termination scenario. The actual amount$552.5 million of payments that each executive could receive may notSenior Second Lien Notes due November 2023 was viewed to be determined with complete accuracy until such time as an actual termination or changethe most significant near-term risk of control occurs, but the values below are our best estimate as toCompany. In 2023, the potential payments each executive would receiveCompany successfully leveraged its overall reduction in Net Debt to$232.1 million as of December 31, 2017. Equity award acceleration2022, to fully refinance the $552.5 million of Senior Second Lien Notes due November 2023 and issue $275 million of new Senior Second Lien Notes due January 2026, despite a challenging capital markets environment. The reduction in Net Debt and successful refinancing of the Second Lien Notes due November 2023 has resulted in a more attractive, de-levered balance sheet for the Company. As a result, the evaluation of the reduction in Net Debt is integral in determining how the Company has performed in recent years including 2023 and therefore, how the Company’s management team has performed. ![[MISSING IMAGE: bc_compvnetdebt-pn.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-054130/bc_compvnetdebt-pn.jpg) Company TSR and Peer Group TSR As demonstrated by the following graph, the Company’s TSR over the four years presented in the table was calculated using-41.4%, while the stock price of $3.31, which isCompany’s peer group TSR was 46.2% over the closing price of our stock on December 29, 2017, as December 30 and 31, 2017 were not trading days.four years presented in the table. Potential Payments Upon Termination or a Change of Control
| | | | | | | | | | | | | Executive and Compensation Component | | Change of Control | | | Death and Disability | | | Termination by
Company without Cause
or by Executive for Good
Reason | | Tracy W. Krohn | | | | | | | | | | | | | Pro-Rata Bonus Award (1) | | $ | 813,000 | | | $ | 813,000 | | | $ | 813,000 | | CEO Severance Payment (2) | | | 3,000,000 | | | | — | | | | 3,000,000 | | Continued Medical (3) | | | 15,504 | | | | 15,504 | | | | 15,504 | | Accelerated Equity (4) | | | 3,861,781 | | | | 3,861,781 | | | | 3,861,781 | | | | | | | | | | | | | | | Total (5) | | $ | 7,690,285 | | | $ | 4,690,285 | | | $ | 7,690,285 | | | | | | | | | | | | | | | John D. Gibbons | | | | | | | | | | | | | Pro-Rata Bonus Award (1) | | $ | 321,948 | | | $ | 321,948 | | | $ | 321,948 | | Severance Payment (2) | | | 1,320,000 | | | | — | | | | 1,320,000 | | Continued Medical (3) | | | — | | | | — | | | | — | | Accelerated Equity (4) | | | 1,274,383 | | | | 1,274,383 | | | | 1,274,385 | | | | | | | | | | | | | | | Total (5) | | $ | 2,916,331 | | | $ | 1,596,331 | | | $ | 2,916,333 | | | | | | | | | | | | | | | Thomas P. Murphy | | | | | | | | | | | | | Pro-Rata Bonus Award (1) | | $ | 266,664 | | | $ | 266,664 | | | $ | 266,664 | | Severance Payment (2) | | | 820,000 | | | | — | | | | 820,000 | | Continued Medical (3) | | | 888 | | | | 888 | | | | 888 | | Accelerated Equity (4) | | | 989,574 | | | | 989,574 | | | | 989,574 | | | | | | | | | | | | | | | Total (5) | | $ | 2,077,126 | | | $ | 1,257,126 | | | $ | 2,077,126 | | | | | | | | | | | | | | | Stephen L. Schroeder | | | | | | | | | | | | | Pro-Rata Bonus Award (1) | | $ | 228,047 | | | $ | 228,047 | | | $ | 228,047 | | Severance Payment (2) | | | 748,000 | | | | — | | | | 748,000 | | Continued Medical (3) | | | 7,752 | | | | 7,752 | | | | 7,752 | | Accelerated Equity (4) | | | 816,024 | | | | 816,024 | | | | 816,024 | | | | | | | | | | | | | | | Total (5) | | $ | 1,799,823 | | | $ | 1,051,823 | | | $ | 1,799,823 | | | | | | | | | | | | | | |
(1) | Each of the Named Executive Officers would be entitled to receive a pro rata bonus pursuant to the Incentive Plan upon a upon a death or disability, but due to the fact that the 2017 Cash Incentive Awards were designed with an additional financial metric that may be measured until December 31, 2019 (described in detail within the Compensation Discussion and Analysis above), we have not included any values for bonuses within this table. |
(2)2024Proxy Statement | The CEO Severance Amount, and the Severance Payment for Mr. Gibbons, is three times the executive’s annual base salary as of December 31, 2017, which was $1,000,000 for Mr. Krohn and $440,000 for Mr. Gibbons. The Severance Payment for each of the remaining executives is equal to two times the executive’s annual base salary as of December 31, 2017, which was $410,000 for Mr. Murphy and $374,000 for Mr. Schroeder. |
(3) | Amounts are based upon the Company’s COBRA costs as of December 31, 2017 for the periods set forth above in the narrative. Mr. Gibbons has currently chosen not to participate in the Company’s health plans; thus, there is no “continuation” cost for him as of December 31, 2017. |
(4) | Accelerated equity reflects 2017 and 2016 restricted stock unit amounts, as adjusted for performance criteria that were applied in the 2017 and 2016 years. The accelerated amounts were determined by multiplying the number of outstanding awards held by each executive (detailed above in the “Outstanding Equity Awards at December 31, 2017” table), either on a full orpro-rata basis as applicable, by the closing price of our stock on December 29, 2017, which was $3.31 per share. | | | W&T Offshore | | | 75 | |
(5) | Amounts shown here are a total of the full costs for each element. The employment agreements for each of the Named Executive Officers have a “cut back” provision that would require us to pay $1.00 less than three times the executive’s base salary in the event that the payment to the executive would constitute a “parachute payment,” so the total amounts shown could be reduced in certain situations. |
Pay versus Performance Tabular List The following table lists our most important performance measures used by us to link ‘compensation actually paid’ to our Compensation StructureWe believe our executive compensation plans are appropriately structured andNEOs to company performance for fiscal year 2023. The performance measures included in this table are not reasonably likely to result in material risk to W&T Offshore. We believe our approach to goal setting, setting of targets with payouts at multiple levels of performance, and evaluation of performance results assist in mitigating excessive risk-taking that could harm our value or reward poor judgmentranked by our executives. Several features of our programs reflect sound risk management practices. We set performance goals that we believe are reasonable in light of past performance and market conditions. We also believe we have allocated our compensation among base salary and short- and long-term compensation target opportunities in such a way as to not encourage excessive risk-taking. Further, with respect to our incentive compensation programs, the metrics that determine payouts for our employees are Company-wide metrics only. This is based on our belief that applying Company-wide metrics encourages decision-making that is in the best long-term interests of W&T Offshore and our shareholders as a whole. We use restricted stock units rather than stock options for equity awards because restricted stock units retain value even in a depressed market so that employees’ are less likely to take unreasonable risks to get, or keep, options“in-the-money.” Finally, the time-based vesting over a multi-year period for our long-term incentive awards ensures that our employees’ interests align with those of our shareholders for the long-term performance of our Company.
relative importance. | | Most Important Performance Measures | | | | Production | | | | Proved Reserves | | | | ESG Score | | | | Adjusted EBITDA | | | | Adjusted EBITDA Margin | | | | Net Debt | | | | TSR | |
| | 76 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Tracy W. Krohn, our Chief Executive Officer. For 2017,2023, our last completed fiscal year: The median of the annual total compensation of all employees of our companyCompany (other than the Chief Executive Officer) was $140,662;$130,971; •
The annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table included elsewhere within this Proxy Statement,proxy statement, was $4,463,793;$5,863,561; and •
For 20172023 the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees was reasonably estimated to be 3245 to 1. The process used to determine this ratio is described below: To identify the median employee using the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our Chief Executive Officer, we took the following steps: | • | | We determined that, as of December 31, 2017, our employee population consisted of approximately 298 individuals. All of these individuals are located in the United States (as reported in Item 1,Business, in our Annual Report on Form10-K filed with the Securities and Exchange Commission (“SEC”) on March 2, 2018). This population consisted of persons classified as employees. We do not have seasonal workers and we did not include persons classified as contractors.
|
We determined that, as of December 31, 2023, our employee population consisted of approximately 395 individuals. All of these individuals are located in the United States (as reported in Item 1, Business, in our Annual Report on Form 10-K filed with the SEC on March 6, 2023). This population consisted of persons classified as employees. We do not have seasonal workers, and we did not include persons classified as contractors. •
We used December 31, 20172023, as our identification date for determining our median employee because it enabled us to make such identification in a reasonably efficient and economic manner. Payroll information for the year 20172023 is currently accumulated for other purposes, such as providing information to the Internal Revenue Service (“IRS”) for 2017;2023; therefore, payroll information for the year 20172023 was utilized. •
We consistently applied a compensation measure to all employees by using the 20172023 gross earnings reflected in our payroll records. The gross earnings for employees who were hired during 20172023 were annualized using their gross earnings paid during 20172023 and their date of hire. Employees who were hired at the end of December 20172023 and did not receive any compensation in 20172023 were excluded from the population. These gross earnings included all earnings reported on FormW-2 to the IRS, plus earnings which are excluded fromW-2 earnings, which were primarily employee contributions to our 401K401(k) plan. •
We identified our median employee by consistently applying this compensation measure to all of our employees included in our analysis. Since all of our employees, including our Chief Executive Officer, are located in the United States, we did not make any cost of living adjustments in identifying the median employee. •
After we identified our median employee, we combined all of the elements of such employee’s compensation for 20172023 in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K, resulting in annual total compensation of $140,662.$130,971. This amount will differ from amounts reported on FormW-2 primarily due to estimates of amounts earned, but not yet paid, under the Company’s Incentive Compensation Plan and the amounts contributed by the Company to the employee’s account under the 401K401(k) plan. | | 2024Proxy Statement | | | | | | W&T Offshore | | | 77 | |
Audit Committee and Independent
Registered Public Accounting Firm The Audit Committee’s role in the Company’s corporate governance is summarized under the caption “Standing Committees of the Board” beginning on page 724 above. The Audit Committee’s role with respect to the Company’s financial reporting process is set out in the report. The Board adopted a written charter setting forth the procedures and responsibilities of the Audit Committee. In addition, the Board appointed the undersigned directors as members of the Audit Committee. Each year, the Audit Committee reviews its charter and reports to the Board on its adequacy in light of applicable SEC and NYSE rules. In addition, the Company furnishes an annual written affirmation to the NYSE relating to Audit Committee membership, the independence and financial management expertise of the Audit Committee and the adequacy of the Audit Committee charter. The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. The Audit Committee has appointed EY as the Company’s independent external auditor for fiscal year 20182024 (and the Audit Committee is seeking ratification by the Company’s shareholders for this appointment at this Annual Meeting). During the last year, and earlier this year in preparation for the filing with the SEC of the Form10-K, the Audit Committee: oversaw the Company’s cyber security program and conducted periodic reviews of the Company’s cybersecurity policies, procedures and risks; •
met quarterly with the Company’s internal audit manager to review the scope of their review of internal controls and the quality of the Company’s financial reporting; •
reviewed and discussed the audited financial statements with management and the Company’s independent auditors; •
reviewed the overall scope and plans for the audit and the results of the independent auditors’ examinations; •
met with management periodically during the year to consider the adequacy of the Company’s internal controls and the quality of its financial reporting and discussed these matters with the Company’s independent auditors and with appropriate Company financial personnel; •
discussed with the Company’s senior management, independent auditors and appropriate Company financial personnel the process used for the Company’s Chief Executive Officer and Chief Financial Officer to make the certifications required by the SEC and the Sarbanes-Oxley Act of 2002 in connection with the Form10-K and other periodic filings with the SEC; •
reviewed and discussed with the independent auditors (1) their judgments as to the quality (and not just the acceptability) of the Company’s accounting policies, (2) the written communication required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors’ communications with the Audit Committee concerning independence, and (3) the matters required to be discussed with the Audit Committee under auditing standards generally accepted in the United States, including Auditing Standard No. 16, “Communications with Audit Committees”; | | 78 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
•
recommended, based on these reviews and discussions, as well as private discussions conducted in executive sessions without management present with the independent auditors and appropriate Company financial personnel, to the Board the inclusion of the audited financial statements of the Company and its subsidiaries in the Form10-K; and •
determined that thenon-audit services provided to the Company by the independent auditors (discussed above under the Proposal 2, Ratification3 (Ratification of Appointment of Independent Accountants)), are compatible with maintaining the independence of the independent auditors. The Audit Committee’spre-approval policies and procedures are discussed below. Notwithstanding the foregoing actions and the responsibilities set forth in the Audit Committee charter, the charter clarifies that it is not the duty of the Audit Committee to prepare the Company’s financial statements, to plan or conduct audits, to determine that the Company’s financial statements are complete and accurate and in accordance with generally accepted accounting principles, or to assure compliance with applicable laws or the Company’s policies, procedures and controls. Management is responsible for the Company’s financial reporting process, including its system of internal controls, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States. The independent auditors are responsible for expressing an opinion on those financial statements and on the effectiveness of internal control over financial reporting. Audit Committee members are not employees of the Company or, in certain cases, accountants or auditors by profession. Therefore, the Audit Committee has relied, without independent verification, on management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States, that the Company’s internal controls over financial reporting were effective as of December 31, 20172023, and on the representations of the independent auditors included in their reports on the Company’s financial statements and effectiveness of internal control over financial reporting. The Audit Committee’s failure to investigate any matter, to resolve any dispute or to take any other actions or exercise any of its powers in connection with the good faith exercise of its oversight functions shall in no way be construed as a breach of its duties or responsibilities to the Company, its directors or its shareholders.
The Audit Committee held fourseven meetings in 20172023 and met regularly with management and the independent and internal auditors, including private discussions with the independent auditors and the Company’s internal auditors, and received the communications described above. The Audit Committee has also established procedures for (a) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and (b) the confidential, anonymous submission by the Company’s employees of concerns regarding questionable accounting or auditing matters. However, this oversight does not provide usthe Audit Committee with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, ourthe Audit Committee’s considerations and discussions with management and the independent auditors do not assure that the Company’s financial statements are presented in accordance with generally accepted accounting principles or that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards. The Audit Committee maintains written procedures that require it to annuallypre-approve the scope of all auditing services to be performed by the Company’s independent auditor. The Audit Committee’s procedures prohibit the independent auditor from providing anynon-audit services unless the service is permitted under applicable law and ispre-approved by the Audit Committee or its Chair. Although applicable regulations waive thesepre-approval requirements in certain limited circumstances, the Audit Committee reviews andpre-approves allnon-audit services provided by EY. The Audit Committee has determined that the provision of EY’snon-audit services is compatible with maintaining EY’s independence. If you would like additional information on the responsibilities of the Audit Committee, please refer to its charter, a copy of which is posted on the Company’s website atwww.wtoffshore.com and is available in print to any shareholder who requests it.without charge upon written request to our Corporate Secretary at 5718 Westheimer Road, Suite 700, Houston, TX 77057. | | 2024Proxy Statement | | | | | | W&T Offshore | | | 79 | |
Submitted by the Audit Committee.S. James Nelson, Jr. Stuart B. Katz B. Frank Stanley
(Chair)
Principal Accounting Fees and Services EY has served as independent auditor for the Company since 2000. The aggregate fees and costs billed by EY and its affiliates to the Company for the years ended December 31, 20172023, and 20162022 are identified below. | | | | | | | | | | | | 2017 | | | 2016 | | Audit fees (1) | | $ | 1,548,000 | | | $ | 1,603,000 | | Tax fees (2) | | | 208,565 | | | | 373,737 | | All other fees (3) | | | 2,160 | | | | 2,160 | | | | | | | | | | | | | $ | 1,758,725 | | | $ | 1,978,897 | | | | | | | | | | |
(1) | Includes fees for the audit of our annual consolidated financial statements, including the effectiveness of our internal control over financial reporting, reviews of our quarterly consolidated financial statements and reviews of various documents filed with the SEC. |
(2) | Includes fees for preparation of federal and state tax returns, tax planning advice and review of tax related issues with respect to proposed transactions. |
(3) | 100% of the fees described below were approved by the Audit Committee.| | | | | 2023 | | | 2022 | | | | Audit fees (1) | | | | $ | 1,789,628 | | | | | $ | 1,872,000 | | | | | Tax fees (2) | | | | | 140,000 | | | | | | 211,378 | | | | | All other fees (3) | | | | | 4,000 | | | | | | 3,600 | | | | | Total | | | | $ | 1,933,628 | | | | | $ | 2,086,978 | | |
(1)
Includes fees for the audit of our annual consolidated financial statements, including the effectiveness of our internal controls over financial reporting, reviews of our quarterly consolidated financial statements and reviews of various documents filed with the SEC. (2)
Includes fees for preparation of federal and state tax returns, tax planning advice and review of tax related issues with respect to proposed transactions. (3)
Includes an annual fee for access to an accounting literature database. | | 80 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
Certain Relationships and
Related Transactions On November 2, 2021, the Company entered into the Ninth Amendment to its Sixth Amended and Restated Credit Agreement (the “Credit Agreement”) pursuant to which Calculus Lending, LLC (“Calculus”), an entity controlled by, and an affiliate of, Tracy W. Krohn, the Chief Executive Officer of the Company, became as sole lender to the Company under a six-month revolving facility with a borrowing base of $50 million that is secured by a $60 million first priority lien on certain of the Company’s assets. On November 7, 2022, the Company entered into the Eleventh Amendment to the Credit Agreement, which extended the maturity date and Calculus’ commitment to January 3, 2024, and shifted the rate at which outstanding borrowings will accrue interest to a SOFR-based rate. The terms of this extension with Calculus were reviewed and approved by the Audit Committee. On May 15, 2023, the Company entered into the Twelfth Amendment to the Credit Agreement, which, among other things, amended the Credit Agreement to effectuate the establishment of certain trusts for the benefit of certain of the Company’s guarantor subsidiaries by specifically excluding interests in such trusts from the collateral arrangements under the Credit Agreement and permitting existing security interests related to such trusts. From December 2023 to March 2024, the Company has entered into a series of amendments to extend the maturity date on the Credit Agreement, with the most recent being the Sixteenth Amendment to the Credit Agreement, dated as of March 28, 2024, to extend the maturity date from March 28, 2024 to April 30, 2024. Each of the extensions with Calculus was reviewed and approved by the Audit Committee. Calculus was not paid any arrangement or upfront fees in 2023. Calculus is entitled to commitment fees equal to 3.0% of the unborrowed portion of the borrowing base lending commitment. These fees were $1.5 million for the year ended December 31, 2023. As of the date of this proxy statement, there have been no borrowings from Calculus by the Company on the revolving credit facility and no borrowings are outstanding. In 2023, the Company made payments totaling approximately $1.2$0.2 million to W&T Offshore LLC (“W&T LLC”), an entity controlled by TracyMr. Krohn. Substantially all of theThese payments relate to the personal use by Mr. Krohn and the business use by the Company of an aircraft indirectly owned by Mr. Krohn. In addition,Mr. Krohn's employment agreement previously provided this perquisite to him. On April 20, 2023, Mr. Krohn's employment agreement was amended to, among other things, eliminate the perquisite compensation Mr. Krohn received for use of the aircraft and require payment of personal use of the Company’s corporate aircraft by Mr. Krohn in accordance with the Company’s aircraft use policy starting in the second quarter of fiscal year 2023. Please see “—Compensation Changes in 2023” for a description of the changes to Mr. Krohn’s employment agreement. As part of the Company’s Compensation Changes in 2023, on May 15, 2023, the Company billsacquired a corporate aircraft from a company affiliated with and controlled by Mr. Krohn. The purchase price of the aircraft was $19.1 million, which was paid using $9.0 million of cash on hand and through the assumption of an approximately $11.8 million amortizing loan (the “TVPX Loan”), not in the Company’s individual capacity but as owner trustee of the trust which holds title to the aircraft, a wholly owned indirect subsidiary of the Company, as the borrower. The terms of this transaction were reviewed and approved by the Audit Committee of the Board of Directors. The TVPX Loan is guaranteed by the Company on a senior unsecured basis. At the date of assumption, the Company determined that the fair market value of the TVPX Loan was $10.1 million using current market rates. In addition, W&T LLC has legacy ownership interests in certain wells operated by W&T, which pre-date the Company’s initial public offering. These wells are covered under W&T’s insurance policy. W&T LLC reimburses the Company for expensesits proportionate share of insurance premiums related to these wells and when insurance proceeds are collected related to damage, those costs are disbursed as applicable. In addition, W&T LLC’sLLC reimburses W&T for certain administrative costs incurred during the year. Reimbursements from W&T LLC totaled $0.4 million during 2023. Entities affiliated with and controlled by Mr. Krohn reinvested $21.0 million into purchasing our senior second lien notes due February 2026 when we refinanced our long-term debt in early 2023. | | 2024Proxy Statement | | | | | | W&T Offshore | | | 81 | |
In March 2018, the Company and two other initial members formed and initially funded a limited liability company, Monza Energy, LLC (“Monza”), which jointly participates with the Company in the exploration, drilling and development of certain drilling projects in the Gulf of Mexico. The members of the limited liability company include a minority investment by an entity owned and controlled by Mr. Krohn and his family. The Krohn entity invested as a minority investor on the same terms and conditions as the third-party investors and its investment is limited to 4.5% of total invested capital within Monza. The entity affiliated with Mr. Krohn has made a capital commitment to Monza of $14.5 million. The business and affairs of the limited liability company are managed by a board of five directors, which includes Mr. Krohn. W&T contributed 88.94% of its working interest in certain identified undeveloped drilling projects to the limited liability company and retained 11.06% of properties operated by the Company. For the year 2017,its working interest. Since inception through December 31, 2023, the Company made total capital contributions, including the contributions of working interest in the drilling projects, to Monza totaling $68.2 million and received approximately $0.1 million as reimbursement for these expenses.cash distributions totaling $46.4 million. The Company charters supply boats from Gulf Offshore Logistics, LLC (“GOL”) in the ordinary course of its business. The wife of Mr. Krohn has been employed by GOL for several years and currently serves as an officer of GOL. During 2017, GOL performedThe rates charged for these marine and transportation services forwere determined by the Company into be either equal to or below rates charged by non-related, third-party companies and/or otherwise determined to be of the amount of approximately $22.8best value to the Company. Payments to GOL totaled $16.5 million in respect of these charters.2023. Mrs. Krohn’s compensation is commission-based, and as a result she received commissions of approximately $0.2$0.1 million during 20172023 related to business from the Company. The Company has maintained a business relationship with GOL since 2007, which predates Mr. and Mrs. Krohn’s marriage in September 2010.In March 2018, the Company and a group of initial investors formed and initially funded a limited liability company that is expected to jointly participate in the exploration, drilling and development of up to 14 identified drilling projects from Company-held leases and producing acreage in the Gulf of Mexico (the “Drilling Program”). The initial investors in the limited liability company include a minority investment by an entity owned and controlled by Mr. Krohn and his family. The Krohn entity’s investment, which consists of an approximately 4% equity and profits interest in the limited liability company, was made on the same terms and conditions as were negotiated by the Company with the lead investor, an unaffiliated entity owned and controlled by funds managed by HarbourVest Partners, a major Boston based private equity fund sponsor. The Krohn entity’s initial cash capital commitment to the limited liability company is $9.2 million (of which approximately $3.0 million has been funded as of the date of this Proxy Statement), which commitment can be increased up to $16.8 million in the event additional investors join the Drilling Program. Mr. Krohn will serve as one of five directors of a board that manages the business and affairs of the limited liability company, three of which are selected by the HarbourVest investor entity. Mr. Krohn’s interest in the Drilling Program was reviewed andpre-approved by the Board of Directors, including all members of the Audit Committee, subject to a cap on maximum investment.
The Company has adopted policies and procedures for approval of related party transactions, which are set forth in ourits Code of Business Conduct and Ethics. Such policies and procedures state that the Company shall not enter into any contractual relationship or transaction that would be required to be disclosed under Section 404 of RegulationS-K, or any successor to such regulation (a “Transaction”), without first complying with the provisions of the Code of Conduct and Ethics. The Audit Committee will beis responsible for reviewing and evaluating the terms of such a proposed Transaction. If a Transaction involves a corporate opportunity, such opportunity must have been first rejected by the Company. The Audit Committee has the authority to approve or disapprove the use of the rejected corporate opportunity by the individual who wants to utilize the opportunity that the Company has rejected. No such Transaction shall be approved by the Audit Committee unless the terms of such Transaction are the same or more favorable to the Company than those which would have been obtainable at the time inarm’s-length dealing with unaffiliated persons. If the Audit Committee approves the Transaction, the Company shall be authorized to proceed with the Transaction as approved and to execute the documents necessary to give effect to such Transaction. The Company will make all required disclosures as appropriate in its periodic or special filings. Notwithstanding the foregoing, the Board shall have authority over any Transaction that may involve a change in control of the Company and in such a case, the Board may adopt such procedures that it deems necessary to review such Transaction. A written copy of our Code of Business Conduct and Ethics can be found on our website atwww.wtoffshore.com.www.wtoffshore.com. | | 82 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
Shareholder
Proposals At the Annual Meeting each year, the Board submits to shareholders its nominees for election as directors. The Board may also submit other matters to the shareholders for action at the Annual Meeting. If you want the Company to consider including a proposal in next year’s 2019 proxy statement, you must submit the proposal in writing to our Corporate Secretary no later than November 24, 2018.December 25, 2024. If you want us to consider including a nominee for election to the Board at the 2019next Annual Meeting, you must submit the nominee’s name in accordance with the procedures discussed more fully in the section entitled “Director Nomination Process,” no earlier than January 3, 2019February 14, 2025, and no later than February 1, 2019.March 16, 2025. In addition to satisfying the requirements under the Bylaws, to comply with the universal proxy rules under the Exchange Act, any shareholder who intends to solicit proxies in support of director nominees other than the nominees of the Board must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act in accordance with the time period set forth immediately above for providing notice of shareholder nominations for director candidates. Please mail any nomination or proposal following the prescribed guidelines to W&T Offshore, Inc., Nine Greenway Plaza,5718 Westheimer Road, Suite 300,700, Houston, Texas 77046,TX 77057, Attention: Corporate Secretary.OTHER MATTERS
Incorporation
by Reference To the extent that this Proxy Statement is incorporated by reference into any other filing by the Company under the Securities Act or the Exchange Act, the sections of this Proxy Statement entitled “Compensation Committee Report” and “Audit Committee Report” (to the extent permitted by the rules of the SEC) will not be deemed incorporated unless specifically provided otherwise in such filing. Information contained on or connected to our website is not incorporated by reference into this Proxy Statement and should not be considered part of this Proxy Statement or any other filing that we make with the SEC. Other
Matters Neither I nor any of the persons named as proxies know of any matters other than those described above to be voted on at the Annual Meeting. However, if any other matters are properly presented at the Annual Meeting, it is the intention of the persons named as proxies to vote in accordance with their judgment on these matters, subject to the discretion of the Board. Shareholders may obtain a copy of our current Annual Report on Form10-K without charge by writing to our Corporate Secretary at W&T Offshore, Inc., Nine Greenway Plaza,5718 Westheimer Road, Suite 300,700, Houston, Texas 77046.TX 77057. Our Annual Report on Form10-K and other filings with the SEC may also be accessed through our website atwww.wtoffshore.com under the “Investor Relations” tab“Investors—SEC Filings” section or the SEC’s website atwww.sec.gov. www.sec.gov. By Order of the Board of Directors, Sameer Parasnis Executive Vice President and Chief Financial Officer | | By Order of the Board of Directors,
2024Proxy Statement | | | 
| Shahid A. Ghauri
| Vice President, General Counsel and Corporate Secretary
| | W&T Offshore | | | 83 | |
W&T OFFSHORE, INC. ATTN: CORPORATE SECRETARY NINE GREENWAY PLAZA, SUITE 300 HOUSTON, TX 77046 1
Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 1 1Annex A Non-GAAP Financial Measures Certain financial information included in this proxy statement are not measures of financial performance recognized by accounting principles generally accepted in the InternetUnited States (“GAAP”), including “Adjusted EBITDA,” “Free Cash Flow” and “Net Debt.” Such measures may not be viewed as a substitute for results determined in accordance with GAAP and are not necessarily comparable to transmit your voting instructionsnon-GAAP performance measures which may be reported by other companies. We define “Adjusted EBITDA” as net income plus income tax expense, net interest expense, and depreciation, depletion, amortization and accretion, excluding the unrealized commodity derivative gain or loss, allowance for electronic deliverycredit losses, non-cash incentive compensation, non-recurring IT transition costs, non-ARO plugging and abandonment costs, and other miscellaneous costs that are appropriate adjustments to reflect normalized results. Company management believes this presentation is relevant and useful because it helps investors understand our operating performance and makes it easier to compare its results with those of information. Voteother companies that have different financing, capital and tax structures. Adjusted EBITDA should not be considered in isolation from or as a substitute for net income, as an indication of operating performance or cash flows from operating activities or as a measure of liquidity. Adjusted EBITDA, as we calculate it, may not be comparable to Adjusted EBITDA measures reported by 11:59 P.M. ETother companies. In addition, Adjusted EBITDA does not represent funds available for discretionary use. We define “Free Cash Flow” as Adjusted EBITDA (defined above), less capital expenditures, plugging and abandonment costs and net interest expense (all on 05/01/2018. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce theaccrual basis). For this purpose, our definition of capital expenditures includes costs incurred related to oil and natural gas properties (such as drilling and infrastructure costs and the lease maintenance costs) and equipment, furniture and fixtures, but excludes acquisition costs of oil and gas properties from third parties that are not included in our capital expenditures guidance provided to investors. Company management believes that Free Cash Flow is an important financial performance measure for use in evaluating the performance and efficiency of its current operating activities after the impact of accrued capital expenditures, plugging and abandonment costs and net interest expense and without being impacted by our company in mailing proxy materials, youitems such as changes associated with working capital, which can consentvary substantially from one period to receiving all future proxy statements, proxy cardsanother. There is no commonly accepted definition of Free Cash Flow within the industry. Accordingly, Free Cash Flow, as defined and annual reports electronically via e-mailcalculated by the Company, may not be comparable to Free Cash Flow or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Voteother similarly named non-GAAP measures reported by 11:59 P.M. ET on 05/01/2018. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY MAIL Mark, sign and date your proxy card and return itother companies. While we include net interest expense in the postage-paid envelope we havecalculation of Free Cash Flow, other mandatory debt service requirements of future payments of principal at maturity (if such debt is not refinanced) are excluded from the calculation of Free Cash Flow. These and other non-discretionary expenditures that are not deducted from Free Cash Flow would reduce cash available for other uses. We defined “Adjusted EBITDA Margin” as Adjusted EBITDA divided by total revenues. We define “Net Debt” as total debt (current and long-term portions), less cash and cash equivalents. Management uses Net Debt to evaluate our financial position, including our ability to service our debt obligations. The following tables present (i) a reconciliation of net income, a GAAP measure, to Adjusted EBITDA and Adjusted EBITDA Margin and (ii) a reconciliation of net cash provided or return itby operating activities, a GAAP measure, to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPANY NAME INC. - 401 K CONTROL #0000000000000000 SHARES 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 PAGE 1Free Cash Flow. | | A-1 | | | W&T Offshore | | | | | | 2024Proxy Statement | |
| | | | 2023 | | | 2022 | | | Net Income | | | | $ | 15,598 | | | | | $ | 231,149 | | | | Interest expense, net | | | | | 44,689 | | | | | | 69,441 | | | | Income tax expense | | | | | 18,345 | | | | | | 53,660 | | | | Depreciation, depletion, amortization and accretion | | | | | 143,695 | | | | | | 133,630 | | | | Unrealized commodity derivative (gain) loss net | | | | | (58,846) | | | | | | 45,475 | | | | Allowance for credit losses | | | | | 37 | | | | | | (76) | | | | Non-cash incentive compensation | | | | | 10,383 | | | | | | 7,922 | | | | Non-recurring costs related to IT services transition | | | | | 3,044 | | | | | | 8,237 | | | | Non-ARO P&A costs | | | | | 6,246 | | | | | | 18,402 | | | | Other | | | | | 31 | | | | | | (4,104) | | | | Adjusted EBITDA | | | | $ | 183,222 | | | | | $ | 563,736 | | | | Total Revenue | | | | | 532,656 | | | | | | 920,997 | | | | Adjusted EBITDA Margin | | | | | 34.4% | | | | | | 61.2% | | |
| | | | 2023 | | | 2022 | | | Net cash provided by operating activities | | | | $ | 115,326 | | | | | $ | 339,530 | | | | Allowance for credit losses | | | | | 37 | | | | | | (76) | | | | Amortization of debt Other items | | | | | (6,980) | | | | | | (7,551) | | | | Non-recurring costs related to IT services transition | | | | | 3,044 | | | | | | 8,237 | | | | Current tax (benefit) expense | | | | | (140) | | | | | | 8,476 | | | | Changes in derivatives receivable (payable) | | | | | 4,845 | | | | | | 47,933 | | | | Non-ARO P&A costs | | | | | 6,246 | | | | | | 18,402 | | | | Changes in operating assets and liabilities, excluding asset retirement obligation settlements | | | | | (17,846) | | | | | | 7,223 | | | | Investment in oil and natural gas properties and equipment | | | | | (41,278) | | | | | | (41,632) | | | | Other | | | | | 31 | | | | | | (4,104) | | | | Free Cash Flow | | | | $ | 63,285 | | | | | | 376,438 | | |
| | 2024Proxy Statement | | | | | | W&T Offshore | | | A-2 | |
![[MISSING IMAGE: px_24wtproxy01pg01-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-054130/px_24wtproxy01pg01-bw.jpg) Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) DateTO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:KEEP THIS PORTION FOR YOUR RECORDS THISRECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY The Board of Directors recommends you vote FOR the following: 0 2 1. Election of Directors Nominees ForONLYV45199-P09690For Against Abstain 1AAbstainW&T OFFSHORE, INC.ATTN: CORPORATE SECRETARY5718 WESTHEIMER ROAD, SUITE 700HOUSTON, TX 770571e. Mr. Tracy W. Krohn1a. Ms. Virginia Boulet 1BBoulet1c. Mr. StuartDaniel O. Conwill, IV1b. Mr. John D. Buchanan1f. Mr. B. Katz 0 0 0 NOTE:Frank Stanley1d. Dr. Nancy Chang2. To approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Proxy Statement pursuant to Item402 of Regulation S-K.3. To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accountants for the year ending December 31, 2024.NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 1C Mr. Tracy W. Krohn 0 0 0 1D Mr. S. James Nelson, Jr 0 0 0 1E Mr. B. Frank Stanley 0 0 0 The Board of Directors recommends you vote FOR the following proposal: For Against Abstain 2. Proposal to ratify the appointment of Ernst & 0 0 0 Young LLP as our independent registered public accountants for the year ending December 31, 2018. Yes No Please indicate if you plan to attend this meeting 0 0 0000359533_1 R1.0.1.1 7 Pleasethereof.Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint ownersJointowners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date JOB # Signature (Joint Owners) Date SHARES CUSIP # SEQUENCE #
Importantofficer.1. Election of DirectorsNominees:W&T OFFSHORE, INC.The Board of Directors recommends you vote FORthe following:The Board of Directors recommends you vote FOR the following proposals:For Withhold! ! !! !! !! !! !! !! !! ! !VOTE BY INTERNETBefore The Meeting - Go to www.proxyvote.com or scan the QR Barcode aboveUse the Internet to transmit your voting instructions and for electronic delivery ofinformation. Vote by 11:59 P.M. ET on June 13, 2024. Have your proxy card in handwhen you access the web site and follow the instructions to obtain your records andto create an electronic voting instruction form.During The Meeting - Go to www.virtualshareholdermeeting.com/WTI2024You may attend the meeting via the Internet and vote during the meeting. Havethe information that is printed in the box marked by the arrow available and followthe instructions.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions. Vote by11:59 P.M. ET on June 13, 2024. Have your proxy card in hand when you call andthen follow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope wehave provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,Edgewood, NY 11717.SCAN TOVIEW MATERIALS & VOTE w
![[MISSING IMAGE: px_24wtproxy01pg02-bw.jpg]](https://capedge.com/proxy/DEF 14A/0001104659-24-054130/px_24wtproxy01pg02-bw.jpg) V45200-P09690Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice &and Proxy Statement and Form 10-K are available at www.proxyvote.com .
Wwww.proxyvote.com.W&T OFFSHORE, INC. AnnualINC.Annual Meeting of Shareholders May 2, 2018ShareholdersJune 14, 2024, 8:00 AM CDT
ThisCDTThis proxy is solicited by the Board of Directors
TheDirectorsThe undersigned hereby appoints Tracy W. Krohn and John D. Gibbons,Sameer Parasnis, or either of them, as proxies, with full power of substitution, and hereby authorizes each of them to vote, as designated on the reverse side, all shares of Common Stock of WofW&T Offshore, Inc. held of record by the undersigned on March 13, 2018April 23, 2024 at the Annual Meeting of Shareholders of W&T Offshore, Inc. on May 2, 2018,Inc.on June 14, 2024, and any adjournments or postponements thereof, with all the powers that the undersigned would possess if personally present.
THISpresent.THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR ALL OF THE DIRECTOR NOMINEES NAMED ON THE REVERSE SIDE OF THIS PROXY, AND FOR PROPOSAL 2.PROPOSALS 2 AND 3. THE PROXIES NAMED ABOVE ARE HEREBY AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
0000359533_2 R1.0.1.17
ContinuedTHEREOF.Continued and to be signed on reverse side
0001288403 7 2023-01-01 2023-12-31
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