NOTE 8 — SHARE-BASED AWARDS AND CASH BASED AWARDS

On June 16, 2023, the 2023 Incentive Compensation Plan (the “2023 Plan”) was approved by the Company’s shareholders. The 2023 Plan is effective June 16, 2023, and the Company will no longer grant awards pursuant to the W&T Offshore, Inc. Amended and Restated Incentive Compensation Plan, as amended from time to time, (the “Prior Plan”) or the 2004 Directors Compensation Plan, as amended from time to time. Under the 2023 Plan, the Company may issue, subject to the approval of the Board of Directors, stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, stock awards, dividend equivalents, other stock-based awards, performance units or shares, cash awards, substitute awards or any combination of the foregoing to eligible employees, non-employee directors, and consultants. Any awards granted prior to the effective date of the 2023 Plan are considered to have been granted under the Prior Plan.

Share-Based Awards to Employees

Restricted Stock Units (“RSUs”) – On June 5, 2023, the Company granted RSUs under the Prior Plan to certain employees. RSUs outstanding as of June 30, 2023 relate to the 2023, 2022, and 2021 grants. The 2023 RSUs granted are a long-term compensation component, subject to service conditions, with one-third of the award vesting each year on June 5, 2024, 2025 and 2026, respectively.

A summary of activity related to RSUs during the six months ended June 30, 2023 is as follows:

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Performance Share Units (“PSUs”) – On June 5, 2023, the Company granted PSUs under the Prior Plan that are eligible to vest based on continued employment and the Company’s total shareholder return (“TSR”) ranking against peer companies’ TSR over a three-year performance period, which ends on December 31, 2025. PSUs outstanding as of June 30, 2023 relate to the 2023, 2022 and 2021 grants.

A summary of activity related to PSUs during the six months ended June 30, 2023 is as follows:

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The following table summarizes the assumptions used in the Monte Carlo simulations to calculate the fair value of the absolute TSR PSUs granted at the date indicated:

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Share-Based Awards to Non-Employee Directors

The Company may from time-to-time issue awards to non-employee directors pursuant to the 2023 Plan. There were no awards granted to non-employee directors during the six months ended June 30, 2023. Restricted shares vested during the six months ended June 30, 2023 relate to 2022 restricted shares issued to the non-employee directors.

A summary of activity related to restricted shares during the six months ended June 30, 2023 is as follows:

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Share-Based Compensation Expense

Compensation costs for share-based payments are recognized over the requisite service period. A summary of compensation expense under share-based payment arrangements is as follows (in thousands):

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Cash-Based Incentive Compensation

In addition to share-based compensation, short-term cash-based incentive awards were granted under the Plan to all eligible employees during the six months ended June 30, 2023. The short-term cash-based incentive awards granted in 2022 were paid in March 2023.

Share-Based Awards and Cash-Based Awards Compensation Expense

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

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