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 and
non-cash
compensation or among different forms of
non-cash
compensation. As noted within the introduction of the section above titled Elements 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 units 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, (g) bonus stock, (h) dividend equivalents, or (i) cash awards.
Adjustment or Recovery of Awards upon Restatement of Company Performance
. We adopted a Clawback Policy in 2014 and amended such policy
in June 2018 (the Clawback Policy) that is applicable to all awards, cash or equity-based granted under our Incentive Compensation Plan, including any dividend equivalents or other cash awards incorporated in an RSU or other stock-based
incentive award. The Clawback Policy generally states that in the event of any required restatement of the Companys financial statements due to material noncompliance with financial reporting requirements, or an error or mistake in the
calculation of a performance metric or goal that is the basis of payment of incentive compensation, the Compensation Committee and the Board each have the authority 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, subject to any applicable laws that may govern the transaction.
In connection with the amendment of the Clawback Policy in June 2018, the Compensation Committee also approved the inclusion of a provision in
all awards granted under our Incentive Compensation Plan that awards to any employee would be subject to any clawback policies that we may adopt, whether in response to the Dodd-Frank Act or otherwise. Also, under the terms of the Incentive
Compensation Plan, the Compensation Committee has the authority to adjust financial targets when unforeseen events affect the Companys results of operations.
Stock Ownership Guidelines
. On February 24, 2010, our Board approved the adoption 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.
The Policy is applicable to all employees who are eligible to and actually receive equity-based awards pursuant to the Incentive Compensation Plan. The Policy requires our eligible employees to hold a number of shares of our Common Stock having a
value in excess of set multiples of the amount of his or her annual base salary and to be compliant with the Policy within the four year period after becoming subject to the Policy. Until such time as an employee owns the requisite shares of Common
Stock, the employee is required to retain all shares of Common Stock that the employee owns or is granted. In addition, any cash amounts (net of taxes) received as payments for equity based awards, such as restricted stock units 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.
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