Quarterly report pursuant to Section 13 or 15(d)

Share-Based Compensation And Cash-Based Incentive Compensation

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Share-Based Compensation And Cash-Based Incentive Compensation
 3 Months Ended
Mar. 31, 2012
Share-Based Compensation And Cash-Based Incentive Compensation [Abstract]  
Share-Based Compensation And Cash-Based Incentive Compensation

8. Share-Based Compensation and Cash-Based Incentive Compensation

In 2010, the W&T Offshore, Inc. Amended and Restated Incentive Compensation Plan (the "Plan") was approved by our shareholders. As allowed by the Plan, in August 2010 and August 2011, the Company granted restricted stock units ("RSUs") to certain of its employees and in January 2011, the Company granted restricted stock to one of its employees. RSUs are a long-term compensation component of the Plan, which are granted to only certain employees, and are subject to adjustments at the end of the applicable performance period based on the Company achieving certain predetermined performance criteria. The RSUs vest at the end of a specified service period. In 2011 and in prior years, restricted stock was granted to the Company's non-employee directors under the Director Compensation Plan. In addition to share-based compensation, the Company may grant its employees cash-based incentive awards, which are a short-term component of the Plan, and are based on the Company and the employee achieving certain predetermined performance criteria.

We recognize compensation cost for share-based payments to employees and non-employee directors over the period during which the recipient is required to provide service in exchange for the award, based on the fair value of the equity instrument on the date of grant. We are also required to estimate forfeitures, resulting in the recognition of compensation cost only for those awards that actually vest.

At March 31, 2012, there were 2,269,745 shares of common stock available for issuance in satisfaction of awards under the Plan and 568,783 shares of common stock available for issuance in satisfaction of awards under the Directors Compensation Plan.

Restricted Stock. The Company currently has unvested restricted shares outstanding issued to one employee and the non-employee directors. Restricted shares are subject to forfeiture until vested and cannot be sold, transferred or disposed of during the restricted period. The holders of restricted shares generally have the same rights as a shareholder of the Company with respect to such shares, including the right to vote and receive dividends or other distributions paid with respect to the shares.

A summary of activity related to restricted stock is as follows:

 

   Restricted Stock  
     Shares      Weighted Average
Grant Date Fair
Value Per Share		  

Outstanding restricted shares, December 31, 2011

      51,870       $ 15.81   

Granted

      —           —     

Vested

      —           —     

Forfeited

      —           —     
  

 

 

     

Outstanding restricted shares, March 31, 2012 (1)

      51,870       $ 15.81   
  

 

 

     

 

(1) Subject to the satisfaction of service conditions, 30,137 shares, 16,699 shares and 5,034 shares will vest in 2012, 2013 and 2014, respectively.

There were no grants of restricted shares during the three months ended March 31, 2012. The grant date fair value of restricted shares granted during the three months ended March 31, 2011 was $0.1 million. There were no restricted shares that vested during the three months ended March 31, 2012 or 2011.

Restricted Stock Units. During 2011 and 2010, the Company awarded to certain employees RSUs that were 100% contingent upon meeting specified performance requirements. The specific performance requirements were achieved in 2011 and 2010. Vesting occurs upon completion of the specified vesting period applicable to each award. Effective January 2012, the RSUs awarded in 2011 and 2010 earned dividend equivalents at the same rate as dividends paid on our common stock. During 2011, RSUs awarded in 2010 earned dividend equivalents at the same rate as dividends paid on our common stock. RSUs awarded in both years are subject to forfeiture until vested and cannot be sold, transferred or disposed of during the restricted period.

A summary of activity related to RSUs is as follows:

 

   Restricted Stock Units  
     Units     Weighted Average
Grant Date Fair
Value Per Unit		  

Outstanding RSUs, December 31, 2011

      1,732,703      $ 14.67   

Granted

      —          —     

Vested

      —          —     

Forfeited

      (20,984 )      26.93   
  

 

 

    

Outstanding RSUs, March 31, 2012 (1)

      1,711,719      $ 14.52   
  

 

 

    

 

(1) Subject to the satisfaction of service conditions, 1,208,714 and 503,005 RSUs will vest in 2012 and 2013, respectively.

During the three months ended March 31, 2012 and 2011, there were no grants or vesting of RSUs.

Share-Based Compensation. A summary of incentive compensation expense under share-based payment arrangements and the related tax benefit is as follows (in thousands):

 

     Three Months Ended  
     March 31,  
     2012      2011  

Share-based compensation expense from:

      

Restricted stock

    $ 106       $ 588   

Restricted stock units

      2,553         1,238   
  

 

 

     

 

 

  

Total

    $ 2,659       $ 1,826   
  

 

 

     

 

 

  

Share-based compensation tax benefit:

      

Tax benefit computed at the statutory rate

    $ 931       $ 639   
  

 

 

     

 

 

  

As of March 31, 2012, unrecognized share-based compensation expense related to our outstanding restricted shares and RSUs was $0.4 million and $12.6 million, respectively. Unrecognized compensation expense will be recognized through April 2014 for restricted shares and November 2013 for RSUs.

Cash-based Incentive Compensation. As defined by the Plan, annual incentive awards may be granted to eligible employees payable in cash. These awards are performance-based awards consisting of one or more business criteria or individual performance criteria and a targeted level or levels of performance with respect to each of such criteria. Generally, the performance period is the calendar year and determination and payment is made in cash in the first quarter of the following year.

Share-Based Compensation and Cash-Based Incentive Compensation Expense. A summary of incentive compensation expense is as follows (in thousands):

 

     Three Months Ended  
     March 31,  
     2012      2011  

Share-based compensation expense included in:

      

Lease operating expense

    $ —         $ 116   

General and administrative

      2,659         1,710   
  

 

 

     

 

 

  

Total charged to operating income

      2,659         1,826   
  

 

 

     

 

 

  

Cash-based incentive compensation included in:

      

Lease operating expense

      1,900         1,081   

General and administrative

      1,878         2,764   
  

 

 

     

 

 

  

Total charged to operating income

      3,778         3,845   
  

 

 

     

 

 

  

Total incentive compensation charged to operating income

    $ 6,437       $ 5,671