The W&T Offshore, Inc. Amended and Restated Incentive Compensation Plan, and subsequent amendments, (the “Plan”) was approved by our shareholders.  The Plan covers the Company’s eligible employees and consultants and includes both cash and share-based compensation awards.  The Plan grants the Compensation Committee of the Board of Directors administrative authority over all participants, and grants the CEO with authority over the administration of awards granted to participants that are subject to section of the Exchange Act (as applicable, the “Compensation Committee”).

 

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

 

 

During  and the Company granted RSUs under the Plan to certain of its employees.  RSUs are a long-term compensation component and are granted to certain employees, and are subject to satisfaction of certain predetermined performance criteria and adjustments at the end of the applicable performance period based on the results achieved. 

 

As of there were  shares of common stock available for issuance in satisfaction of awards under the Plan.  The shares available for issuance are reduced on a -for- basis when RSUs are settled in shares of common stock, net of withholding tax through the withholding of shares.  The Company has the option following vesting to settle RSUs in stock or cash, or a combination of stock and cash.  During and only shares of common stock were used to settle all vested RSUs.  During cash was used to settle vested RSUs related to the retirement of an executive officer and shares of common stock were used to settle all other vested RSUs. The Company expects to settle RSUs that vest in the future using shares of common stock.

 

RSUs currently outstanding relate to the  and  grants, which were subject to predetermined performance criteria applied against the applicable performance period.  These RSUs continue to be subject to employment-based criteria and vesting generally occurs in of the year after the grant.  See the table below for anticipated vesting by year.

 

We recognize compensation cost for share-based payments to employees over the period during which the recipient is required to provide service in exchange for the award.  Compensation cost is based on the fair value of the equity instrument on the date of grant.  The fair values for the RSUs granted during  and  were determined using the Company’s closing price on the grant date.  We are also required to estimate forfeitures, resulting in the recognition of compensation cost only for those awards that are expected to actually vest.

 

All RSUs awarded are subject to forfeiture until vested and cannot be sold, transferred or otherwise disposed of during the restricted period.

 

During RSUs granted were subject to adjustments based on achievement of a combination of performance criteria, which was comprised of: (i) (“Adjusted EBITDA”) for  and (ii) Adjusted EBITDA as a percent of total revenue (“Adjusted EBITDA Margin”) for   Adjustments range from to based upon actual results compared against pre-defined performance levels.  For the Company achieved below target and above threshold for both Adjusted EBITDA and Adjusted EBITDA Margin, therefore only a portion of the amount granted will be eligible for vesting.

 

During RSUs granted were subject to adjustments based on achievement of a combination of performance criteria, which was comprised of: (i) Adjusted EBITDA for and (ii) Adjusted EBITDA Margin for   Adjustments range from to based upon actual results compared against pre-defined performance levels.  For the Company achieved target for both Adjusted EBITDA and Adjusted EBITDA Margin.

 

During RSUs granted were subject to adjustments based on achievement of a combination of performance criteria, which was comprised of: (i) Adjusted EBITDA for and (ii) Adjusted EBITDA Margin for Adjustments range from to based upon actual results compared against pre-defined performance levels. For the Company achieved target for both Adjusted EBITDA and Adjusted EBITDA Margin.

 

A summary of activity related to RSUs is as follows:

 

		2019								2018								2017
		Restricted Stock Units				Weighted Average Grant Date Fair Value Per Share				Restricted Stock Units				Weighted Average Grant Date Fair Value Per Share				Restricted Stock Units				Weighted Average Grant Date Fair Value Per Share
Nonvested, beginning of period			3,355,917			$	3.90				5,765,251			$	2.48				6,107,248			$	2.73
Granted			994,698				4.51				988,955				6.90				2,128,879				2.76
Vested			(1,475,373	)			2.76				(2,261,665	)			2.21				(2,108,553	)			3.45
Forfeited			(1,260,520	)			3.37				(1,136,624	)			2.68				(362,323	)			2.87
Nonvested, end of period			1,614,722			$	5.73				3,355,917			$	3.90				5,765,251			$	2.48

 

Subject to the satisfaction of service conditions, the RSUs outstanding as of  are eligible to vest in the year indicated in the table below:

 

		Restricted Stock Units
2020			821,656
2021			793,066
Total			1,614,722

 

RSUs fair value at grant date - During and  the grant date fair value of RSUs granted was million, million and  million, respectively.

 

RSUs fair value at vested date - The fair value of the RSUs that vested during and  was million, million and  million, respectively, based on the Company’s closing price on the vesting date.

 

 

Under the Directors Compensation Plan, shares of restricted stock (“Restricted Shares”) were issued in  and  to the Company’s non-employee directors as a component of their compensation arrangement.  Vesting occurs upon completion of the specified vesting period and - of each grant vests each year over a -year 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.  Restricted Shares are subject to forfeiture until vested and cannot be sold, transferred or otherwise disposed of during the restriction period.

 

As of there were  shares of common stock available for issuance in satisfaction of awards under the Directors Compensation Plan.  Reductions in shares available are made when Restricted Shares are granted.

 

A summary of activity related to Restricted Shares is as follows:

 

		2019								2018								2017
		Restricted Shares				Weighted Average Grant Date Fair Value Per Share				Restricted Shares				Weighted Average Grant Date Fair Value Per Share				Restricted Shares				Weighted Average Grant Date Fair Value Per Share
Nonvested, beginning of period			181,832			$	3.08				246,528			$	2.27				161,296			$	3.47
Granted			46,360				6.04				41,544				6.74				147,372				1.90
Vested			(105,012	)			2.67				(106,240	)			2.64				(62,140	)			4.51
Nonvested, end of period			123,180			$	4.55				181,832			$	3.08				246,528			$	2.27

 

 

Subject to the satisfaction of service conditions, the Restricted Shares outstanding as of  are expected to vest as follows:

 

		Restricted Shares
2020			78,428
2021			29,304
2022			15,448
Total			123,180

 

Restricted stock fair value at grant date - The grant date fair value of restricted stock granted during  and  was million each year for all years presented based on the Company’s closing price on the date of grant.

 

Restricted stock fair value at vested date - The fair value of the restricted stock that vested during  and  was million, million and  million, respectively, based on the Company’s closing price on the date of vesting.

 

 

A summary of compensation expense under share-based payment arrangements is as follows (in thousands):

 

		Year Ended December 31,
		2019				2018				2017
Share-based compensation expense from:
Restricted stock units		$	3,410			$	3,260			$	7,785
Restricted stock			280				280				280
Total		$	3,690			$	3,540			$	8,065

 

As of unrecognized share-based compensation expense related to our awards of RSUs and Restricted Shares was  million and million, respectively.  Unrecognized compensation expense will be recognized through for our RSUs and for our Restricted Shares.

 

 

In addition to share-based compensation, short-term, cash-based awards were granted under the Plan to substantially all eligible employees in  and   The short-term, cash-based awards, which are generally a short-term component of the Plan, are performance-based awards consisting of or more business criteria or individual performance criteria and a targeted level or levels of performance with respect to each of such criteria.  In addition, these cash-based awards included an additional financial condition requiring Adjusted EBITDA less reported Interest Expense Incurred for any fiscal quarter plus the preceding quarters to exceed defined levels measured over defined time periods for each cash-based award.  During long-term, cash awards were granted to certain employees subject to pre-define performance criteria.  Expense is recognized over the service period once the business criteria, individual performance criteria and financial condition are met.

 

 

 

 

 

 

 

A summary of compensation expense related to share-based awards and cash-based awards is as follows (in thousands):

 

		Year Ended December 31,
		2019				2018				2017
Share-based compensation included in:
General and administrative		$	3,690			$	3,540			$	8,065
Cash-based incentive compensation included in:
Lease operating expense			2,206				3,596				2,101
General and administrative			8,897				9,586				5,032
Total charged to operating income		$	14,793			$	16,722			$	15,198