|
EXHIBIT
10.34
AMENDED AND
RESTATED
TIDEWATER
INC.
EXECUTIVE OFFICER ANNUAL
INCENTIVE PLAN
The primary objective of the
Tidewater Inc. Executive Officer Annual Incentive Plan (the
“Executive Incentive Plan” or the “Plan”)
is to reward Tidewater’s executive officers for their
assistance in helping Tidewater Inc. (the “Company”)
achieve its financial and operating goals for the fiscal year. The
Plan links a significant element of variable annual compensation to
the accomplishment of these goals.
The Compensation Committee of
the Board of Directors established this Plan to maximize
Tidewater’s deduction under Section 162(m) of the
Internal Revenue Code (“Section 162(m)”), provided that
such actions are consistent with its philosophy and in the best
interest of Tidewater and its shareholders. At the Company’s
2002 Annual Meeting of Stockholders, the stockholders approved the
material terms of the performance goals applicable to the Plan in
order to qualify amounts paid as performance-based compensation
under Section 162(m). The stockholders will be asked to
reapprove the performance goals at the 2008 Annual Meeting of
Stockholders in accordance with the requirements of
Section 162(m). Notwithstanding the provisions of
Section 162 (m), the Compensation Committee may award
compensation outside of the Plan that is not fully tax deductible,
if the Compensation Committee determines that such award is
consistent with its philosophy and in the best interest of
Tidewater and its stockholders.
The Plan shall be
administered by the Compensation Committee of the Board of
Directors of the Company; provided that all of the members of the
Compensation Committee qualify as “outside directors”
under Section 162(m). If all of the members do not so qualify,
the Plan shall be administered by a special subcommittee of the
Compensation Committee, all of the members of which qualify as
“outside directors” under Section 162(m). The term
“Committee” shall be used herein to refer to the
committee that is currently authorized to administer the Plan. The
authority of the Committee shall include, in particular, authority
to:
| |
A. |
designate participants and target award percentages for a
particular year; |
| |
B. |
establish performance goals and objectives for a particular
year; |
| |
C. |
establish regulations for the administration of the Plan and
make all determinations deemed necessary for the administration of
the Plan; and |
| |
D. |
certify as to whether performance goals have been
met. |
The Committee may use its
discretion to reduce, but not to increase, the bonus amount payable
to a participant under the Plan formula.
As Amended through
January 30, 2008
The Plan concept for fiscal
2007 and for future years focuses upon Tidewater’s
performance in the areas of economic value added
(“EVA”) performance and safety performance.
Eligibility for participation
in the Plan is limited to those executive officers who have a
potential to earn compensation in excess of $1,000,000. The
specific executive officers who will participate in the Plan will
be reviewed and determined annually by the Committee no later than
June 29 of each fiscal year. The Committee has determined that
the participants in this Plan and in the Company’s Management
Annual Incentive Plan shall constitute the “specified
employees” of the Company under Section 409A of the
Internal Revenue Code of 1986, as amended, and the regulations
thereunder (“Section 409A”).
| V. |
PERFORMANCE MEASURES AND STANDARDS |
The performance goals
approved by the Company’s stockholders under which a bonus
may be paid for any fiscal year shall be any or a combination of
the following: earnings per share, return on assets, an economic
value added measure, shareholder return, earnings, stock price,
return on equity, return on total capital, safety performance,
reduction of expenses or increase in cash flow of the Company, a
division of the Company or a subsidiary. For any performance
period, such performance goals may be measured on an absolute basis
or relative to a group of peer companies selected by the Committee,
relative to internal goals or relative to levels attained in prior
years.
The Committee has designed an
annual bonus program for fiscal 2007 and future years that will be
based upon economic value added and safety performance.
By June 29 of each
fiscal year, the Committee will specify target incentive awards for
each participant. These amounts are determined based upon each
eligible participant’s base salary multiplied by the target
percent associated with the participant’s position within the
Company. This percentage increases or decreases based upon
performance above or below the target. The annual award to a
participant under this Plan may not exceed $2 million.
| VII. |
GENERATION OF FUNDING POOL |
The bonus pool is equal to
the aggregate of the percentage of salary bonus amounts set by the
Committee for all participants and applied to Company performance.
The target bonus pool for participants based on a percentage of
salary is funded as follows:
75% of bonus is generated and
declared based on EVA performance; and
25% of bonus is based upon
satisfaction of Total Reported Incident Rate safety
objectives.
2
At EVA and safety performance
levels above and below the target levels, the 75%/25% relationship
will change. The 25% safety component can be increased by up to
150% of target for exceptional safety performance.
| VIII. |
PERFORMANCE CRITERIA |
The performance criteria
described below will be used to determine annual bonus amounts. No
later than June 29 of each fiscal year, the economic value
added and safety performance goals for that fiscal year will be
established by the Compensation Committee in writing or will be
reflected in minutes of a Compensation Committee
meeting.
| |
A. |
EVA Criteria . Economic Value Added (“EVA”)
equals net operating profit after taxes (“NOPAT”), less
a charge for capital employed. NOPAT equals revenues less operating
expenses (including depreciation) and taxes on operating profit.
The capital charge equals capital employed multiplied by the
weighted average cost of debt and equity. |
Certain adjustments to NOPAT
will be made in determining EVA. Accordingly, the following items
reported in the Company’s consolidated statement of earnings
will be added to or subtracted from NOPAT as reported in order to
determine EVA for purposes of the Plan:
| |
1. |
Cumulative effect of accounting changes. |
| |
2. |
Extraordinary items, as that term is defined in Accounting
Principles Board Opinion #30. |
| |
3. |
Discontinued operations; and |
| |
4. |
Unusual or infrequently occurring items (less the amount of
related income taxes), as that term is used in Accounting
Principles Board Opinion #30. |
The EVA target for the first
three years of Plan bonuses is set at $5 million additional EVA per
year, but may be changed by the Committee for a future fiscal year
in its discretion within the first 90 days of such fiscal
year.
In order to limit volatility
in annual bonus payouts and to tie payouts to sustainable value
creation, a bonus bank mechanism applies to the portion of the
bonus based upon EVA and paid through the Plan.
The materials presented to
the Committee by Stern Stewart & Co. at the Committee
meeting held March 29, 2006 (the “Stern Stewart
Materials”) provide examples of the calculation of the
declared EVA portion of the bonus under various scenarios. Any
declared EVA bonus is credited to a participant’s personal
bonus bank account each year, with payout of the lesser of the
declared EVA portion or 150% of the target bonus, and one-third of
any net positive bank balance paid out. The remaining two-thirds of
the bonus bank is held at risk.
3
In a year in
| 
