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 deferral period. Prior to 2010, the Company granted only restricted stock to its employees. 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 September 30, 2011, there were 2,157,482 shares of common stock available for award under the Plan and 568,783 shares of common stock available for award under the Directors Compensation Plan.

Restricted Stock: The Company currently has unvested restricted shares outstanding issued to employees and 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 share activity related to restricted stock for the nine months ended September 30, 2011 is as follows:

At September 30, 2011, the composition of our restricted stock awards outstanding, by year granted, was as follows:

Vesting is expected to occur, less any forfeitures, as follows:

The grant date fair value of restricted stock granted during the nine months ended September 30, 2011 and 2010 was $0.5 million and $0.4 million, respectively. The fair value of the shares that vested during the nine months ended September 30, 2011 and 2010 was $0.6 million and $0.1 million, respectively.

Restricted Stock Units: During 2011, the Company awarded to certain employees RSUs that are 100% contingent upon meeting a specified performance requirement for the year 2011. If the performance requirement is achieved, the RSUs awarded in 2011 will earn dividend equivalents effective January 1, 2012 at the same rate as dividends paid on our common stock. During 2010, the Company awarded to certain employees RSUs that were 100% contingent upon meeting a specified performance requirement, which was achieved in 2010. Effective January 2011, RSUs awarded in 2010 earn 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 share activity related to RSUs for the nine months ended September 30, 2011 is as follows:

During the nine months ended September 30, 2011 and 2010, the fair value of RSUs granted was $14.2 million and $12.0 million, respectively. No vesting of RSUs occurred in either time period.

Share-Based Compensation: A summary of incentive compensation expense under share-based payment arrangements and the related tax benefit for the three and nine months ended September 30, 2011 and 2010 is as follows (in thousands):

Cash-based Incentive Compensation: As defined by the Plan, annual cash-based incentive awards may be granted to eligible employees. These awards are performance-based awards consisting of one or more business criteria and 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.

Incentive Compensation: A summary of incentive compensation expense for the three and nine months ended September 30, 2011 and 2010 is as follows (in thousands):

As of September 30, 2011, unrecognized share-based compensation expense related to our outstanding restricted shares and RSUs was $1.1 million and $18.2 million, respectively. Unrecognized compensation expense will be recognized through April 2014 for restricted shares and November 2013 for RSUs.