Table of Contents

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES AND EXCHANGE ACT OF 1934

Filed by the Registrant    x

Filed by a Party other than the Registrant    ¨

Check the appropriate box:

Tidewater Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

Table of Contents

TIDEWATER INC.

601 Poydras Street, Suite 1900

New Orleans, Louisiana 70130

June 4, 2009

To Our Stockholders:

You are cordially invited to attend the 2009 Annual Meeting of Stockholders of Tidewater Inc. to be held at the Pan-American Life Center Auditorium, 11th Floor, 601 Poydras Street, New Orleans, Louisiana, on July 9, 2009 at 10:00 a.m., Central Time.

The attached Notice of Annual Meeting and Proxy Statement describe the formal business to be transacted at the meeting. During the meeting, we will also report on the operations of the company. Our directors and officers will be present to respond to any questions that you may have.

You are requested to vote by proxy as promptly as possible. You can vote by signing, dating, and returning the enclosed proxy card in the envelope provided. You can also call in your vote by touchtone telephone or send it over the Internet using the instructions on the proxy card. If you attend the meeting, which we hope that you will, you may vote in person even if you have previously voted by proxy.

Sincerely,

DEAN E. TAYLOR

Chairman, President and Chief Executive Officer

Table of Contents

INFORMATION ABOUT ATTENDING THE ANNUAL MEETING

If you plan to attend the meeting in person, please bring the following:

Street Name means your shares are held of record by brokers, banks or other institutions.

Acceptable Proof of Ownership is a letter from your broker or other nominee stating that you were the beneficial owner of the company’s stock on the record date or an account statement showing that you were the beneficial owner of the company’s stock on the record date.

We reserve the right to deny admission to the meeting of any person other than a stockholder of record on the record date (or a duly designated proxy) or a beneficial owner of shares held in street name on the record date who has followed the procedures outlined above.

Table of Contents

TIDEWATER INC.

601 Poydras Street, Suite 1900

New Orleans, LA 70130

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The 2009 Annual Meeting of the Stockholders of Tidewater Inc. (the “company”) will be held in the Pan-American Life Center Auditorium, 11th Floor, 601 Poydras Street, New Orleans, Louisiana, on July 9, 2009, at 10:00 a.m., Central Time, to vote upon the following matters:

Only stockholders of record at the close of business on May 15, 2009, are entitled to notice of and to vote at the 2009 Annual Meeting.

Your vote is important. If you are unable to attend in person and wish to have your shares voted, please complete, date and sign the enclosed proxy card, and return it in the accompanying envelope as promptly as possible. Alternatively, you may vote by touchtone telephone or over the Internet as explained on the enclosed proxy card. You may revoke your proxy by giving notice to our Secretary at any time before the annual meeting, by delivering timely a proxy bearing a later date or by voting in person at the meeting.

By Order of the Board of Directors

BRUCE D. LUNDSTROM

Executive Vice President,

General Counsel and Secretary

New Orleans, Louisiana

June 4, 2009

IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF OUR

PROXY MATERIALS

FOR THE STOCKHOLDER MEETING TO BE HELD ON JULY 9, 2009.

This proxy statement and our 2009 annual report

are available at www.edocumentview.com/TDW

Table of Contents

TABLE OF CONTENTS

Table of Contents

TIDEWATER INC.

601 Poydras Street, Suite 1900

New Orleans, LA 70130

PROXY STATEMENT

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

1

Table of Contents

If your shares are held on your behalf in a stock brokerage account or by a bank or other nominee, you are the “beneficial owner” of shares held in “street name” and the proxy materials have been forwarded to you by your broker, bank or nominee who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to instruct your broker, bank or nominee how to vote your shares by using the voting instruction card included in the mailing or by following their instructions for voting by telephone or the Internet.

If you do not vote shares registered in your name, your shares will not be voted.

Although our directors are elected by plurality vote, the board has adopted a majority voting policy that provides that if, in an uncontested election, any nominee for director receives a greater number of “withheld” votes than “for” votes, he or she is required to tender his or her resignation for consideration by the nominating and corporate governance committee of the board of directors. We have provided more information about our majority voting policy in this proxy statement under the heading “Corporate Governance—Majority Voting Policy.”

Approval of the Plan.    The proposal to approve the terms of the Plan requires the affirmative vote of a majority of the shares of common stock present in person or represented by proxy and entitled to vote at the annual meeting. If you hold your shares in street name and do not give voting instructions to your broker, bank or nominee, they will not be entitled to vote your shares with respect to the approval of the Plan. Abstentions will count as a vote against the approval of the terms of the Plan.

Ratification of Independent Registered Public Accounting Firm.    The proposal to ratify the selection of Deloitte & Touche as our independent registered public accounting firm requires the affirmative vote of a majority of the shares of common stock present in person or represented by proxy and entitled to vote at the annual meeting. If you hold your shares in street name and do not give voting instructions to your broker, bank or nominee, they will be entitled to vote your shares with respect to the ratification of the selection of our independent registered public accounting firm. Abstentions will count as a vote against the ratification of the selection of our independent registered public accounting firm.

2

Table of Contents

All other matters that properly come before the annual meeting will be decided by the vote of the holders of a majority of the shares of common stock present in person or represented by proxy and entitled to vote at the annual meeting, except where a different vote is required by statute, our certificate of incorporation or our amended and restated bylaws.

3

Table of Contents

4

Table of Contents

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The table below shows the name, address and stock ownership of each person known by us to own beneficially more than 5% of our common stock as of May 15, 2009.

5

Table of Contents

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth the beneficial ownership of our common stock as of May 15, 2009, by each director, by each executive officer named in the Summary Compensation Table, and by all directors and executive officers as a group:

6

Table of Contents

CORPORATE GOVERNANCE

Our board of directors and management have adopted corporate governance practices designed to aid in the fulfillment of their respective duties and responsibilities to the company’s stockholders.

Corporate Governance Policy.    The board of directors has adopted a Corporate Governance Policy, which is the framework for the governance of our company. From time to time, the board of directors reviews and may revise our Corporate Governance Policy to reflect new regulatory requirements and evolving corporate governance practices.

Code of Business Conduct and Ethics.    The board of directors has also adopted a Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics sets forth principles of ethical and legal conduct to be followed by our directors, officers and employees. Under our Code of Business Conduct and Ethics, any employee who reasonably believes or suspects that any director or employee has violated the Code of Business Conduct and Ethics is responsible for reporting such activities. We do not permit retaliation of any kind against any person who, in good faith, reports any known or suspected improper activities pursuant to the Code of Business Conduct and Ethics.

Our Code of Business Conduct and Ethics also references disclosure controls and procedures required to be followed by all officers and employees involved with the preparation of the company’s SEC filings. These disclosure controls and procedures are designed to enhance the accuracy and completeness of the company’s SEC filings and, among other things, to ensure continued compliance with the Foreign Corrupt Practices Act.

Communications with Directors.    The board of directors has adopted procedures for stockholders and other interested parties to communicate directly with our board, the non-management directors or any individual director by writing to any one of the independent directors in care of our Secretary at 601 Poydras St., Suite 1900, New Orleans, LA 70130. Our company or the individual director that you contact will forward the communication to the appropriate director. For more information regarding how to contact the members of our board, please visit our web site at http://www.tdw.com/company/concerns.html.

Complaint Procedures for Accounting, Auditing and Financial Related Matters.    The audit committee has established procedures for receiving, reviewing and responding to complaints from any source regarding accounting, internal accounting controls and auditing matters. The audit committee has also established procedures for the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters. Interested parties may communicate such complaints by following the procedures described under the heading “Communications with Directors” above. Employees may report such complaints by following the procedures outlined in the Code of Business Conduct and Ethics and through other procedures communicated and available to them. We do not permit any retaliation of any kind against any person who, in good faith, submits a complaint or concern under these procedures.

Majority Voting Policy.    The board of directors has adopted a Majority Voting Policy. Any nominee for director in an uncontested election who receives a greater number of “withheld” votes than “for” votes shall tender his or her resignation following certification of the stockholder vote. The nominating and corporate governance committee is required to promptly consider the tendered resignation and recommend to the board of directors whether to accept the tendered resignation. The board is required to act on the committee’s recommendation within 90 days following certification of the stockholder vote.

We will promptly publicly disclose the board of directors’ final decision and decision process in a current report on Form 8-K filed with the Securities and Exchange Commission.

Executive Sessions of Independent Board Members.    The non-management members of the board of directors meet each year in regularly scheduled executive sessions. Additional executive sessions may be scheduled throughout the year by the non-management directors. Following each year’s annual meeting, the board of directors appoints a lead director who presides over these sessions for the next fiscal year.

7

Table of Contents

Annual Board Self-Assessments.    The board of directors has instituted annual self-assessments of the board of directors, as well as the audit committee, the compensation committee, the nominating and corporate governance committee and the finance and investment committee, to assist in determining whether the board of directors and its committees are functioning effectively. In fiscal 2009, the board and each of its committees completed self-evaluations and reviewed and discussed the results. The nominating and corporate governance committee oversees this evaluation process.

Board Committee Charters.    The board of directors has adopted written charters for the audit committee, the compensation committee, the nominating and corporate governance committee and the finance and investment committee. Each committee reviews and evaluates its charter at least annually and recommends any proposed changes to the board of directors for approval.

Availability of Corporate Governance Materials.    You may access all committee charters, our Corporate Governance Policy, our Code of Business Conduct and Ethics, our Majority Voting Policy (which is contained in our Corporate Governance Policy) and other corporate governance materials through the “Governance” page of our website at http://www.tdw.com. You also may receive printed copies without charge by writing to us at: 601 Poydras St., Suite 1900, New Orleans, LA 70130, Attention: Secretary.

8

Table of Contents

ELECTION OF DIRECTORS

(PROPOSAL 1)

Tidewater’s directors are elected at each annual shareholders’ meeting and hold office until the next election. Assuming shareholders elect all the director nominees named in this proxy statement at the 2009 Annual Meeting of Stockholders, Tidewater will have 11 directors.

Pursuant to company policy, William C. O’Malley is not eligible to stand for re-election as a director because he has reached the age of 72. The board has elected to reduce the number of directors from 12 to 11 and not to nominate a candidate to replace Mr. O’Malley.

It is intended that the proxies solicited hereby will be voted FOR the election of each of the nominees. In the event any nominee is no longer a candidate at the time of the annual meeting, it is intended that the proxies will be voted for the election of the other nominees and may be voted for any substitute nominee. Our board has no reason to believe that any nominee will not be a candidate or, if elected, will be unable or unwilling to serve as a director. In no event, however, will the proxies be voted for a greater number of persons than the number of nominees named.

Nominees for Director

M. Jay Allison, 53, President and Chief Executive Officer of Comstock Resources, Inc. since 1988, Chairman of the Board of Directors of Comstock Resources, Inc. since 1997, and Director of Comstock Resources, Inc. since 1987. Director since 2006.

James C. Day, 66, retired Chairman of the Board and former Chief Executive Officer of Noble Corporation; Director of ONEOK, Inc., EOG Resources, Inc. and trustee of the Samuel Roberts Noble Foundation. Director since 2007.

Richard T. du Moulin, 62, President of Intrepid Shipping LLC since 2002; Chairman and CEO of Marine Transport Corporation, 1998-2002 and Director of Teekay Tankers and Globe Wireless. Director since 2003.

J. Wayne Leonard, 58, Chief Executive Officer and Director of Entergy Corporation since 1999; Director since 2003.

Jon C. Madonna, 66, Chairman of DigitalThink, Inc., 2002-2004 and President and Chief Operating Officer of DigitalThink, Inc. since January 2002; President and Chief Executive Officer of Carlson Wagonlit Travel, 1999-2000; Vice Chairman of Travelers Group, 1997-1998; Chairman and Chief Executive Officer of KPMG Peat Marwick, 1990-1996; Director of AT&T Corp. and Freeport-McMoran Copper & Gold Inc. Director since 1999.

Joseph H. Netherland, 62, retired Chairman of the Board and former Chief Executive Officer of FMC Technologies; Director of FMC Technologies and Newfield Exploration Company. Director since 2008.

Richard A. Pattarozzi, 65, former Vice President of Shell Oil Company E&P; President and Chief Executive Officer of Shell Deepwater Development, Inc. and Shell Deepwater Production, Inc; Director of Global Industries, Inc., Stone Energy, Inc. and FMC Technologies, Inc. Director since 2001.

Nicholas J. Sutton, 64, Chairman and Chief Executive Officer of Resolute Natural Resources Company (and affiliated entities); Former Chairman and CEO of HS Resources, Inc.; Former Director of Kerr-McGee Corporation. Director since 2006.

Cindy B. Taylor, 47, President and Chief Executive Officer of Oil States International, Inc. since April 2007; Director of Oil States International, Inc. and Global Industries, Ltd. Director since 2008.

9

Table of Contents

Dean E. Taylor, 60, Chairman since July 2003, Chief Executive Officer since March 2002 and President since October 2001; Executive Vice President, 2000-2001, Senior Vice President, 1998-2000. Director of Whitney Holding Corporation and the American Bureau of Shipping. Director since 2001.

Jack E. Thompson, 59, Management Consultant since December 2001; Vice Chairman of Barrick Gold Corp., 2001 to 2005; Chairman and CEO of Homestake Mining Co., 1994 to 2001; Director of Century Aluminum Co. and of Centerra Gold Inc.; Advisory Board Member of Resource Capital Funds III and IV, 2002-2009. Director since 2005.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” EACH OF

THE ELEVEN NOMINEES FOR DIRECTOR LISTED ABOVE.

INDEPENDENCE OF DIRECTORS

The board of directors is currently composed of 12 directors, 11 of whom the board has determined meet the New York Stock Exchange definition of independence. The standards relied upon by the board in affirmatively determining whether a director is independent are comprised of the objective standards set forth in corporate governance listing standards of the New York Stock Exchange. In making this determination, the board evaluated responses to a questionnaire completed annually by each director regarding relationships and possible conflicts of interest between each director, the company and management. In its review of director independence, the board also considered the commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships any director may have with the company or management. The board of directors has affirmatively determined that Messrs. Allison, Day, du Moulin, Leonard, Madonna, Netherland, O’Malley, Pattarozzi, Sutton, and Thompson, and Ms. Taylor, are independent directors.

10

Table of Contents

BOARD OF DIRECTORS AND COMMITTEE COMPOSITION

Board of Directors.    As of the date of this proxy statement, our board consists of 12 members. During fiscal 2009, our board held seven meetings, and each of our directors attended 75% or more of the meetings of the board and of the committees on which they served. Our board does not have a policy on attendance at annual meetings. Our board’s practice is to schedule a board meeting on the same date as the annual meeting to facilitate director attendance at the annual meeting. All of the board members who were directors on the date of the 2008 Annual Meeting attended the 2008 Annual Meeting.

During fiscal 2009, the non-management members of our board, which included all of our directors except Mr. Taylor, met six times in executive session. Richard A. Pattarozzi served as lead director presiding over these executive sessions. Each year, the board of directors appoints a lead director immediately following the annual meeting to serve during the next fiscal year.

Board Committees.    Our board currently has, and appoints the members of, standing audit, compensation, nominating and corporate governance and finance and investment committees. Each of the board committees is comprised entirely of independent non-management directors. Each of the board committees has a written charter approved by the board. The current charter for each committee is posted on the “Governance” page of our website at http://www.tdw.com. The current members of our board committees are identified in the following table:

Audit Committee.    The audit committee oversees:

Among the audit committee’s key responsibilities are to review with management and the independent registered public accounting firm our audited financial statements, discuss with management and the independent registered public accounting firm the quality and adequacy of our internal controls, discuss with the independent registered public accounting firm the quality and acceptability of the accounting principles applied, appoint and retain the independent registered public accounting firm and review and approve the scope and cost of audit and non-audit services to be performed by the independent registered public accounting firm.

11

Table of Contents

The audit committee is also responsible for preparing the audit committee report required by the rules of the SEC to be included in our annual proxy statement.

The audit committee met eight times during fiscal 2009. The board has determined that each of Messrs. Madonna and Leonard and Ms. Taylor qualify as an “audit committee financial expert,” as defined by SEC rules.

Compensation Committee.    The purpose of the compensation committee is to assist the board of directors in discharging the board’s responsibilities relating to:

The compensation committee is also responsible for reviewing and discussing with management the “Compensation Discussion and Analysis” portion of our proxy statement and, based on such review and discussion, recommending to the board that the Compensation Discussion and Analysis be included in our proxy statement and issuing a Compensation Committee Report to that effect to be included in the proxy statement.

The compensation committee met seven times during fiscal 2009. The committee reports to the board of directors on all compensation matters regarding our executive officers and employees.

The “Compensation Discussion and Analysis” section of this proxy statement provides a discussion of the process the committee uses in determining executive compensation.

Nominating and Corporate Governance Committee.    The purpose of the nominating and corporate governance committee is to:

The nominating and corporate governance committee met five times in fiscal 2009.

Director Qualifications and Compensation.    The committee seeks a diverse group of prospective candidates for board service who possess the appropriate characteristics, skills, experience and time to make a significant contribution to our board of directors, the company and our stockholders. Each candidate is evaluated to ensure that he or she possesses personal and professional character and integrity, and must demonstrate exceptional ability and judgment in his or her respective endeavors. Candidates must possess sufficient time to effectively carry out their duties and responsibilities.

12

Table of Contents

In considering the composition of the board of directors as a whole, the committee and the board consider the skills and experiences of each candidate as it deems appropriate to assure that specific talents, skills and other characteristics that are needed to maintain the board’s effectiveness are possessed by an appropriate combination of directors.

The committee may employ professional search firms (for which it would pay a fee) to assist it in identifying potential nominees for board service with the right mix of skills and disciplines.

The nominating and corporate governance committee is also responsible for annually reviewing and setting director compensation and benefits and for reviewing director education programs. The nominating and corporate governance committee retained Towers Perrin in fiscal 2007 to review director retainers, meeting fees and stock-based compensation provided by our company in comparison to 16 companies in the energy services industry as well as a general market survey of similarly sized public companies.

Consideration of Candidates Recommended by Stockholders.    Our amended and restated bylaws provide that a stockholder of our company entitled to vote for the election of directors may nominate candidates for election to our board at a meeting of stockholders by complying with the required notice procedures. To be timely for our next annual meeting in 2010, a stockholder’s notice must be given in writing and delivered or mailed to the company’s Secretary and received at our principal executive offices no later than April 25, 2010 and no earlier than March 31, 2010, provided that if the 2010 annual meeting is called for a date more than 50 days prior to July 9, 2010, a stockholder’s notice, in order to be timely, must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever occurs first. Nominee recommendations are required to set forth, among other things, specified information as to the nominees, and specified information as to the stockholder making the nomination or proposal. We may require any proposed nominee to furnish such information as may reasonably be required to determine the eligibility of such proposed nominee to serve as a director of our company. A description of these requirements is set forth in the company’s amended and restated bylaws, available in the “Governance” section of our website at http://www.tdw.com.

The committee’s policy with respect to the consideration of director candidates recommended by stockholders is that the committee will consider such candidates on the same basis and in the same manner as it considers all director candidates.

Finance and Investment Committee.    The purpose of the finance and investment committee is to:

The finance and investment committee met five times in fiscal 2009.

The finance committee also has responsibility for appointing and monitoring independent investment managers and for overseeing the development of projected operating budgets and capital expenditures and making recommendations as appropriate to the board of directors on an annual and quarterly basis.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of our compensation committee are Messrs. Day, du Moulin, Netherland, Sutton and Thompson. None of the members of our compensation committee has been an officer or employee of our company or any of our subsidiaries. No executive officer of our company served in the last fiscal year as a director or member of the compensation committee of another entity one of whose executive officers served as a member of our board or on our compensation committee.

13

Table of Contents

DIRECTOR COMPENSATION

FISCAL YEAR 2009 DIRECTOR COMPENSATION TABLE

This table reflects the compensation information for each of our outside directors. Mr. Taylor’s compensation is reflected in the Summary Compensation Table in the section titled “Executive Officer Compensation.”

We use a combination of cash and equity-based compensation to attract and retain our non-management directors. Compensation for the non-management directors for fiscal 2009 consisted of an annual cash retainer, an additional annual cash retainer for the lead director and for the chairs of each board committee, meeting fees, an annual grant of deferred stock units and other benefits. Officers of the company who also serve as directors do not receive any additional compensation for services as a director.

14

Table of Contents

Director Fees.    For fiscal year 2009, the cash and equity-based compensation payable to the non-management directors was as follows:

Directors Deferred Stock Units.    On each March 31 that the Directors Deferred Stock Units Plan remains in effect, each non-management director is granted a number of stock units that is determined by dividing $100,000 by the fair market value of a share of our common stock. In the event of a change of control of our company, each non-management director will be granted a pro rata number of stock units for the partial year of service beginning at the end of the prior fiscal year through the date of the change of control. Dividend equivalents will also be credited to each director’s account in the form of additional deferred stock units. The deferred stock units are paid out in cash when a director ceases to serve on our board or upon a change of control of our company. The cash amount paid to the director is equal to the number of stock units credited to the director’s account in the Directors Deferred Stock Units Plan, multiplied by the fair market value of a share of our common stock valued as of the date of the event that triggers payout. A person who becomes a director or leaves the board during the fiscal year receives a pro rata grant.

Other Benefits.    We reimburse all directors for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the board of directors and its committees.

Directors are generally eligible to participate in the company’s Gift Matching Program on the same terms as employees. Under this program, the company matches a director’s contribution to an educational institution or foundation up to $5,000 per year.

Retirement Plan.    In the past, we provided a Retirement Plan for the benefit of non-management directors who retired from our board on or after reaching age 65 or after completing five or more years of service on our board. We froze benefits under the Retirement Plan as of March 31, 2006 and terminated any further benefit accruals. A director who was a member of our board on May 31, 2001, will receive an annual benefit of $30,000 for a term equal to the number of years the retired director served as a non-management director. A non-management director who joined our board after May 31, 2001, will receive the annual benefit for no more than five years. If a director dies prior to payment of his benefit, a death benefit is payable to his beneficiaries equal to the then present value of the unpaid benefit. The Retirement Plan provides for the protection of benefits in the event of a change of control of our company and allows a director to elect to be paid out in a lump sum in such event.

15

Table of Contents

The accrued benefits of the board members under the Retirement Plan and their years of credited service are as follows:

16

Table of Contents

AUDIT COMMITTEE REPORT

The audit committee of our board is composed of five directors, all of whom meet the independence requirements of the New York Stock Exchange. Management has the primary responsibility for the preparation of the company’s financial statements and our company’s filings, including the design and implementation of the company’s internal controls. Our audit committee oversees the integrity of the company’s financial statements, reports and other financial information, the company’s compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence, and the performance of our internal audit group and independent registered public accounting firm. Our audit committee operates under a written charter which is available on the company’s website at http://www.tdw.com.

In fulfilling its oversight responsibilities for fiscal 2009, our audit committee reviewed and discussed with management and our independent auditors the company’s earnings releases and periodic filings with the SEC. Among other things, the audit committee reviewed and discussed the quality, not just the acceptability, of the accounting principles as selected by management and as applied in the financial statements.

In addition, our audit committee has discussed with the independent auditors the matters required by Statement on Auditing Standards No. 61 (Communications with Audit Committees). The independent auditors also provided to our audit committee the written disclosures required by Independence Standards Board Statement No. 1 (Independence Discussions with Audit Committees), and our audit committee discussed with the independent auditors their independence, and considered the compatibility of any non-audit services provided by our auditors with the requirements of auditor independence.

The committee discussed with our internal and independent auditors the overall scope and plans for their respective audits. The committee met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls and the overall quality of our financial reporting. The committee held eight meetings during fiscal 2009.

Under the audit committee charter, each year the audit committee appoints and retains an independent registered public accounting firm to act as auditors of our company’s financial statements for the ensuing year. Pursuant to policies adopted by the audit committee, the audit committee also pre-approves the scope of all audit services annually. Audit services and permitted non-audit services must be pre-approved by the full audit committee, except that the chairman of the audit committee has the authority to pre-approve any specific service if the total anticipated cost of such service is not expected to exceed $25,000, and provided the full audit committee ratifies the chairman’s approval at its next regular meeting. All audit and non-audit services for fiscal 2009 were pre-approved by the audit committee.

Other Information

The following table lists the aggregate fees and costs billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, the “Deloitte Entities”) to our company for the fiscal year ended March 31, 2008 and the fiscal year ended March 31, 2009.

17

Table of Contents

The audit committee has determined that the provision of services described above is compatible with maintaining the independence of the independent auditors.

Based on the review and discussions referred to above, the audit committee recommended to the board (and the board has approved) that the audited financial statements be included in our company’s Annual Report on Form 10-K for the year ended March 31, 2009, for filing with the Securities and Exchange Commission. The audit committee has selected Deloitte & Touche as the company’s independent registered public accounting firm for fiscal year 2010, and that selection is being presented to the stockholders for ratification at the annual meeting.

Audit Committee:

Jon C. Madonna, Chairman

M. Jay Allison

J. Wayne Leonard

Richard A. Pattarozzi

Cindy B. Taylor

18

Table of Contents

COMPENSATION COMMITTEE REPORT

The compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based upon this review and discussion, the committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation Committee:

Richard T. duMoulin, Chairman

James C. Day

Nicholas J. Sutton

Jack E. Thompson

Joseph H. Netherland

19

Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS

Introduction.    This Compensation Discussion and Analysis is designed to provide stockholders with an understanding of our compensation philosophy and objectives as well as the analysis that our compensation committee performed in setting executive compensation for fiscal 2009. It discusses the compensation committee’s determination of how and why, in addition to what, compensation actions were taken for the executive officers who are identified in the Fiscal 2009 Summary Compensation Table below. We refer to these executives as our “named executives.”

Objectives.    As a company with a global reach in an operationally-demanding, volatile, cyclical, and capital-intensive business, we design our executive compensation program to achieve the following objectives:

Since our compensation programs are designed to reward achievement of corporate objectives, our programs change from time to time as those objectives change. The specific principles followed and decisions made in establishing the compensation of the named executives in fiscal 2009 are discussed in more detail below.

Components of Compensation.    The major components of our executive compensation program are the following:

Each component is discussed in detail below under “Our Executive Compensation Program.”

The Compensation Setting Process.    Our board of directors has delegated to the compensation committee the responsibility of overseeing our executive compensation program. The compensation committee annually reviews and sets the compensation for our executive officers. For more information about the compensation committee’s responsibilities, see “Board of Directors and Committee Composition—Compensation Committee” and the committee’s charter, which is available in the “Governance” section of our website at http://www.tdw.com.

20

Table of Contents

Our chief executive officer makes recommendations to the compensation committee with respect to salary, bonus, and long-term incentive awards for all executive officers other than himself. He develops these recommendations based on the competitive market information generated by the compensation consultant, the company’s compensation strategy, his assessment of individual performance, and the experience level of the particular executive. The committee discusses with the chief executive officer his recommendations and either approves or modifies the recommendations in its discretion. In evaluating the chief executive officer’s compensation, the committee reviews the competitive market information provided by Towers Perrin and determines changes to compensation levels based on our compensation strategy and its assessment of his performance. The compensation committee reports to the board of directors on all compensation matters regarding our executives and other key salaried employees.

Role of Compensation Consultant.    Our compensation committee uses Towers Perrin to assist in its ongoing review and analysis of our executive compensation program. Towers Perrin has been the primary compensation consultant for the committee for over six years. In addition, since 2006, we have retained Stern Stewart & Co. to provide specific guidance on developing and utilizing a particular performance metric (the measure of “economic value added” or “EVA”) as the major component of our annual incentive plan. EVA^® is a registered trademark of Stern Stewart & Co. The use of EVA and Stern Stewart’s role in its development are discussed in greater detail below in “Annual Cash Incentive Compensation.”

Towers Perrin has no service or other relationship with the company except its role as primary consultant to our compensation committee as disclosed in this proxy statement. In fiscal 2008 and 2009, Towers Perrin provided a variety of services and information. The key objectives of the assignment in fiscal 2008 in terms of setting compensation for fiscal 2009 were:

The scope of the Towers Perrin compensation analysis involved collecting competitive market information on base salary, annual incentives and long-term incentives. Base salaries and bonus opportunities for the upcoming fiscal year are determined and equity awards are typically made in March of each year. We endeavor to use the most current information available when making compensation decisions. Since cash compensation decisions for fiscal 2009 disclosed in this proxy statement were made shortly before the end of fiscal 2008 and the equity awards reported in this proxy statement were made late in fiscal 2009, two separate Towers Perrin analyses were used to set fiscal 2009 compensation.

In both analyses, Towers Perrin compared our executive compensation to their most recent data for three separate groups: a group of peer energy services companies, the Towers Perrin Oilfield Service Compensation Survey, and a survey of general industry companies. The companies included in each of these three groups for the fiscal 2009 cash compensation analysis are listed on Annex A to this proxy statement; the companies included in each of the three groups for the fiscal 2009 equity grants are listed on Annex B.

Towers Perrin’s general industry survey includes a large number of companies of various sizes. In addition, Towers Perrin applies a regression analysis to size-adjust the data for companies with similar revenues to Tidewater, wherever possible. The particular companies included in those surveys with annual revenues of between $1 billion and $3 billion (the range in which our revenues fall) are also identified in Annexes A and B.

21

Table of Contents

Analysis.    We target our executive pay at the level that generally approximates the 50th percentile of the comparison companies and the size-adjusted general industry survey. We review our actual and target total direct compensation (which is made up of base salary, target and actual annual cash incentive compensation and long-term incentive compensation) in conjunction with the Towers Perrin analyses in order to determine whether target total direct compensation is likely to fall at the range that we have targeted. We aim to keep salary somewhat below the median, annual incentive opportunities above the median and long-term incentives at the approximate median.

In late fiscal 2008, the committee also reviewed for the first time a wealth accumulation analysis prepared by company management that presented current wealth accumulation and valued each element of compensation that the executive could accumulate in the next five years under various scenarios of continuing employment and retirement. For this review, total compensation included all aspects of the named executive’s total cash compensation from continuing employment, the future value of current equity holdings and future equity awards, value of projected shares to be sold over the next five years and projected retirement benefits. The purpose of this analysis was to allow the committee to understand the total wealth potential of past and future compensation and benefit plans and to see how current compensation decisions may affect future wealth accumulation. In fiscal 2009, Towers Perrin prepared a wealth accumulation analysis for the committee’s consideration. The purpose of the analysis was to assess past, present and future value generated by all company sponsored compensation arrangements including past equity grants, future cash compensation, future equity grants and pension and defined contribution plan benefits. The analysis considered several different stock price scenarios. The committee used the wealth accumulation analysis as a method to gauge whether the wealth accumulated by the named executives was generally in line with peer companies, recognizing that tenure and age of the executive can have a significant impact on the amount of wealth accumulated.

Our Executive Compensation Program.    We compensate our named executives principally by using a combination of short-term compensation (salary and annual cash incentive payouts) and long-term compensation (the deferred portion of our annual cash incentives, stock options and restricted stock). We do not have a specific policy for the allocation of compensation between short-term and long-term compensation or cash and equity compensation. Rather, it is our policy to strongly emphasize the at-risk performance-based elements of compensation by keeping the salary portion of total compensation lower than that of our peer companies. Maintaining below the median salary levels also allows us to appropriately manage our fixed cash obligations in our cyclical industry. By using a higher salary percentage than that of our peer companies for our annual bonus target, we provide opportunities for our executives to achieve total cash compensation in successful years that substantially exceeds the median of cash compensation paid by our peers. We link annual cash incentive compensation to the company’s achievement of annual performance goals, while we link our long-term incentive compensation to longer-term performance goals and to the value of our common stock. We believe it is important to base a portion of our executives’ incentive compensation on the appreciation in value of our common stock in order to align the interests of our executives with the interests of our stockholders. We also believe it is important that our long-term compensation include a performance component. We select performance goals that we believe best reflect the principal drivers of our business and financial performance and create stockholder value.

Base Salary.    We review salary levels for named executives annually based on a variety of factors, including individual performance, annual incentive bonus payout amounts, general market salary levels, our company’s overall financial condition, and industry conditions. After reviewing these factors, we increased the salary levels of each of the named executives who served for all of fiscal 2009 by 4%, except that Mr. Bennett’s salary was increased by 22% in connection with his promotion to executive vice president during fiscal 2009. In recruiting new executive officers, we are prepared to offer competitive salaries and did so when we hired Mr. Fanning as an executive vice president and our chief financial officer during fiscal 2009.

Annual Cash Incentive Compensation.    We pay annual cash incentives for the purpose of rewarding financial, safety, and—for the named executives except for the chief executive officer—individual performance during the year.

22

Table of Contents

In fiscal 2007 the compensation committee began working with Stern Stewart to institute an annual incentive program that was based primarily on the EVA to our company during the fiscal year and our safety performance.

EVA^® is a framework developed by Stern Stewart for setting goals and measuring performance that rewards participants for both short-term and long-term results realized by the company. When we began using EVA in fiscal 2007, it was our goal to keep the EVA-based annual incentive program in place for three years in order to develop an EVA-driven culture throughout the company and to give us an adequate opportunity to evaluate the long-term effectiveness of the new system. The compensation committee has also used EVA as a performance measure in triggering the lapse of restrictions on recent grants of restricted stock.

In addition to the EVA component, we also include a safety performance component in our annual incentive program to reinforce our commitment to be an industry leader in safety. Experience has taught us that a safe work environment helps us to attract and retain a more experienced work force. Additionally, a safe work environment gives us an advantage when we compete for work from the most reputable and superior customers. Finally, our excellent safety record helps us to minimize our insurance premiums and overall cost of doing business.

The annual incentive award established for our chief executive officer was based upon EVA and safety results and is earned under our Executive Officer Annual Incentive Plan. To preserve the tax deductibility of his compensation, the annual bonus of our chief executive officer is entirely based on company performance goal achievement without a subjective individual performance component. Annual awards paid to our other named executives are paid under our Management Annual Incentive Plan. These awards are also based upon EVA and safety performance, but are subject to adjustment based on evaluations of individual performance by the chief executive officer and the compensation committee.

We calculate our EVA by subtracting from our net after-tax operating profit an appropriate charge for the opportunity cost of all capital that we have invested over the measurement period. Thus, our EVA measures the amount by which our earnings exceed or fall short of a rate of return that our stockholders could reasonably expect to obtain if they invested in other securities of comparable risk. EVA is our principal performance measure because we believe that it is the best measure of the value that the members of our management team add to capital invested by our stockholders. By focusing on our financial performance as a function of our invested capital, our management is incentivized to make prudent investments in assets that are capable of providing a strong return on capital.

At the beginning of each fiscal year, our compensation committee specifies target annual awards for each named executive. The target award is a percentage of base salary, and the percentage is determined based upon the Towers Perrin analysis and the participant’s position and ability to directly influence our financial and safety performance. The percentage of salary that the named executive is eligible to receive increases or decreases based upon the company’s performance above or below the target performance goals, and awards can be earned even if EVA decreases from the prior fiscal year, although such awards would be prorated appropriately to reflect the shortfall. There is no cap placed on the annual bonus opportunity for the named executives other than our chief executive officer, whose bonus potential for fiscal 2009 was capped at $3 million.

Generation of the Bonus Pool

We establish a target bonus pool each year that is derived by aggregating the percentage of salary amounts set by the committee for all plan participants and then applying a factor for the Company’s EVA and a separate factor for safety performance. The target bonus pool for participants based on a percentage of salary is as follows:

23

Table of Contents

At EVA and safety performance levels above and below the target levels, the 75%/25% relationship components may change. In addition, the 25% safety component can be increased for exceptional safety performance, such that the executive could be paid up to 37.5% of the target bonus amount based upon safety performance.

EVA Criteria

We determine our EVA by subtracting a charge for capital employed from net operating profit after taxes (“NOPAT”). NOPAT generally equals revenues, less operating expenses, depreciation expense, general and administrative expenses, other income and expenses and taxes on operating profit. Our capital charge is determined by multiplying our average capital invested during the year by a weighted average cost of debt and equity. Prior to each fiscal year, we set the weighted average cost of capital for that year. For 2009, as in 2007 and 2008, based on advice of Stern Stewart, we used a 9% weighted average cost of capital. Certain adjustments to NOPAT are made in determining EVA, including adjustments to eliminate the effects of accounting changes, extraordinary items, discontinued operations and unusual or infrequently occurring items (less the amount of related income taxes).

When we implemented the EVA-based incentive bonus program, we established a target for fiscal 2007, 2008 and 2009 that required a $5 million improvement in EVA each year over actual EVA for the prior year in order for the target bonus award to be achieved. For example, since EVA for fiscal 2008 was $154.1 million, EVA for fiscal 2009 had to be at least $159.1 million for the target to be met. Failure to achieve the EVA target in any fiscal year would result in reduced incentive awards and EVA of less than $109.8 million would have generated no EVA bonus amount for fiscal 2009.

The targeted $5 million improvement in annual EVA was based upon a study by Stern Stewart and its recommendation of the appropriate level after considering the company’s past performance and taking into account that, because of the volatility in the company’s business sector, EVA levels can fluctuate substantially from year to year. The $5 million additional EVA target was set as a realistic goal for sustainable annual improvement in return on invested capital. Fiscal 2008 generated EVA of $154.1 million (a $6.7 million increase over fiscal 2007 EVA) and raised the level of EVA performance that would have to be achieved in fiscal 2009 in order for the target EVA level to be achieved.

In order to limit volatility in annual incentive payouts and to tie payouts to sustainable value creation, on Stern Stewart’s recommendation, we also created a “bonus bank” to which a portion of the bonus based upon EVA is subject, as described below. A portion of the bonus that is determined by the company’s EVA in any given year is set aside, or “banked”, for possible payout in future years, and is subject to reduction as a result of negative future EVA results. Any declared EVA bonus is credited to a participant’s personal bonus bank account each year, with a maximum annual payout of

The remaining two-thirds of the bonus bank is held at risk. In a year in which the EVA bonus declared would be a negative amount because the company has experienced a significant decline in EVA from the prior year, this negative amount is deducted from the bonus bank. Declared but unpaid amounts, including negative balances, are banked forward to be credited or debited against future declared bonus amounts in future years.

For executive officers other than the chief executive officer, 25% of the maximum payout amount for the EVA portion may be reduced or eliminated based upon a subjective assessment of the officer’s individual performance by the chief executive officer and the compensation committee.

Safety Criteria

The safety performance measurement is determined by achievement of the established safety performance goals for the fiscal year, which is based upon our TRIR per 200,000 work hours. The TRIR goal for fiscal 2009

24

Table of Contents

was 0.19, which was a 5% targeted improvement in our average safety performance levels over the preceding two years and an 8% targeted improvement over the preceding five year average.

A TRIR below a certain level will entitle a participant to a safety payment in an amount that is greater than 25% of the pool funding amount and which may be up to 150% of 25% of the target pool funding amount. The safety performance portion of the pool operates independently from the EVA portion, and the EVA bonus bank does not impact the payout based upon safety performance.

Calculation of Annual Incentive

For fiscal 2009, the Company’s EVA was $42 million over fiscal 2008 EVA. The committee recognized and anticipated when the $5 million additional EVA target was set that in very successful years the EVA added could substantially exceed the $5 million target. Historically, changes in EVA from year to year have been substantial and EVA results as recently as fiscal 2005 were negative. Superior EVA results in a particular year provide an aggressive target for subsequent fiscal years where an improvement on prior superior performance is required to meet the new target. The $42 million EVA improvement results of 2009 will present such an aggressive target for fiscal 2010.

Fiscal 2009 EVA was calculated as follows:

The calculation of EVA was made in accordance with the EVA program design that we established in consultation with Stern Stewart when the program was initiated in fiscal 2007.

NOPAT for the year ended March 31, 2009 equals revenues (vessel revenues and other marine service revenues) less operating expenses (vessel operating costs, costs of other marine service revenues, depreciation and amortization, general and administrative expenses as decreased by approximately $.5 million for an increase in the allowance for doubtful accounts), plus our equity interest in net earnings of unconsolidated companies, plus interest income and other income and expenses, net less foreign exchange losses, less a charge of 17.2% for estimated income taxes on operating profit.

The charge for capital employed equals average total capital employed of $2.1 billion multiplied by the weighted average cost of capital of 9%. Total capital employed at March 31, 2009 equals current assets plus the allowance for doubtful accounts, investments in and advances to unconsolidated companies, net properties and equipment as decreased by approximately $403.2 million primarily for the effect of vessels under construction, goodwill as increased by $35.5 million for the effect of accumulated goodwill amortization, other assets as decreased by $31.4 million, primarily for the effect of deferred tax assets; less accounts payable, accrued expenses and accrued property and liability losses, less other current liabilities as decreased by $18.6 million, primarily for the effect of income taxes payable. Average capital was further decreased by $178.6 million for the effect of cumulative gains on sales of assets and by $72.5 million for the cumulative effect of discontinued operations, net of tax. Average capital was further increased by $20.3 million for the effect of cumulative asset impairments, net of tax. Cumulative adjustments give effect to such items beginning in fiscal 1996.

The TRIR for fiscal 2009 of 0.18 was better than the targeted 0.19, which generated a payment equal to 120% of the total target level bonus payout.

Each of the named executives received 100% of the potential individual performance portion of the annual incentive award, except for Mr. Taylor whose 2009 bonus does not have an individual performance component and except for Mr. Lousteau who retired in September of 2008, and whose annual incentive award was contractually set by his retirement agreement.

25

Table of Contents

For purposes of awarding the individual performance portion of the annual incentive award to the named executives, we relied on the judgment of our chief executive officer in assessing their individual performances. We did not use specific performance metrics or goals as part of that individual assessment in fiscal 2009. In the case of Mr. Fanning, his leadership in continuing to maintain our overall financial discipline (including the ability to fund our vessel building commitments without the occurrence of additional company debt) and to bolster the company’s financing/acquisition analytical and implementation capabilities were important factors in his award. In the case of Mr. Dick, his management of our new vessel building program in a challenging shipyard environment, his important role in maintaining and advancing key partnership and other relationships, and his oversight of vessel dispositions at appropriate times and on favorable terms were key factors in awarding his full individual performance portion. Mr. Platt’s leadership in all aspects of our operations, including the management of vessel day rates and utilization, maintenance and creation of constructive customer relationships and the incorporation of increasingly sophisticated new vessels into our fleet profile were instrumental to his full award. Finally, in the case of Mr. Bennett, his continued interface with the investment community and his work in budgeting and forecasting in a challenging macroeconomic environment were the basis for his award.

For each of our named executives, we have set forth in the table below information on the incentive award amounts.

Long-term Incentive Compensation.    We grant long-term incentive compensation in the form of restricted stock and stock options annually to our named executives. In fiscal 2009 we received data from Towers Perrin from its long-term incentive survey, oilfield services compensation survey and peer group data which provided information as to the expected value of long-term incentives. As in past years, we targeted the approximate median of the companies included in Towers Perrin’s Oilfield Services Compensation Survey, where the value of the long-term incentives granted was presented as a multiple of salary at various salary levels. We also generally use a multiple of an executive’s base salary to determine the overall grant size. The multiple used for any particular executive is based on Towers Perrin’s recommendation for that executive and reflects the nature and scope of the executive’s duties. When making awards of stock options and restricted stock to the named executives, we generally allocate approximately 50% of total value to restricted stock and 50% of total value to options. We now utilize restricted stock equally with options as a result of the changes in the accounting treatment of options, stock plan limits on shares available for grant and the historic volatility of our stock price. In addition, we believe that granting restricted stock provides our named executives with a significant equity ownership opportunity, and we further note that restricted stock is widely used among our competitors. In such a cyclical industry, the use of restricted stock in addition to options encourages executives to remain with our company even during periods of stock price volatility. As much of our recent grants of restricted stock have been tied to performance hurdles, we are placing added emphasis on financial performance goals, as well as providing rewards for growth in the value of our common stock.

26

Table of Contents

In order to formalize our stock option grant procedures, in fiscal 2008 we adopted a stock option grant policy that provides for annual grants to be made at a regularly scheduled compensation committee meetings held in March of each year. Grants may also be made by the committee at other times in the event of a new hire or promotion. No backdating of options is permitted. If a grant is approved during a blackout period when there exists material non-public information about the company, the committee will consider the effect of the non-public information as part of the approval process. Information relating to the stock options and shares of restricted stock granted to our named executives is set forth in the 2009 Summary Compensation Table and the 2009 Grants of Plan-Based Awards Table.

Stock Options.    The number of stock options granted to an executive is based upon the executive’s position and level of responsibility. In accordance with the terms of our stock plans, the option exercise price for all stock options is at least equal to the closing price of our common stock on the date options are granted. We do not re-price stock options. Stock options granted in fiscal 2009 vest one-third per year following grant and expire after ten years.

Restricted Stock.    We also base our restricted stock grant levels on the named executive’s position and responsibility. Shares of restricted stock are subject to forfeiture and vest in accordance with certain performance and continued employment requirements. For 2009, two-thirds of each named executive officer’s grant of restricted stock is time-based, as the shares will vest based on continued employment in four equal tranches over the next four years. The remaining one-third of each grant is subject to the satisfaction of pre-established performance targets. The performance-based shares will vest following fiscal 2013, provided the simple average of the preceding four fiscal years of return on capital employed (“SAROCE”) exceeds 10%, as shown below:

The number of shares that vest are prorated for SAROCE between 10% and 15%. The named executives have voting and dividend rights on their restricted stock and dividends are paid to them currently. We provided for vesting after completion of a full four-year period rather than annual vesting in order to emphasize long-term, multi-year performance and value creation.

Grants Made to New Executive Officer in Fiscal 2009—Mr. Fanning.    On July 31, 2008, Mr. Fanning joined our company and the compensation committee granted him stock options and shares of restricted stock. The options will vest one-third per year over the next three years and the shares of restricted stock will vest 25% per year if cumulative EVA increases $5 million per year above the EVA for fiscal 2008. At the end of four years all unvested restricted stock will vest, regardless of EVA performance. The amounts of these grants are disclosed in the table “Grants of Plan-Based Awards.”

Impact of Retirement on Outstanding Options and Restricted Stock—Mr. Lousteau.    Mr. Lousteau retired from our company on September 30, 2008, and in recognition of his more than 30 years of service to our company, the compensation committee vested all of his previously granted and unvested stock options and restricted stock. He was not awarded any additional restricted stock or stock options during fiscal 2009.

Other Benefits.    Our named executives participate in employee benefit plans generally available to all employees. In addition, we provide our named executives with supplemental retirement and savings programs and certain perquisites provided only to executive officers.

27

Table of Contents

At the time of the acquisition of the corporate airplane, our board of directors, for security reasons, adopted a policy that required that the chief executive officer complete all air travel, both business and personal, aboard our airplane. We reviewed this policy during fiscal 2007. We continue to believe that this is an appropriate and reasonable practice because it increases the level of safety and security for Mr. Taylor and his family. Furthermore, commercial travel has become more inefficient in recent years. Making the aircraft available to Mr. Taylor maximizes his availability to conduct business before, during and after flights and allows him to travel on short notice, quickly take advantage of business opportunities and respond to emergencies. For certain international travel, use of the corporate airplane is impractical and Mr. Taylor does fly commercially in those instances.

The value of the use of the corporate airplane for personal travel by Mr. Taylor during 2009 was $120,572, valued at the incremental cost to the company of such personal travel as required by the Securities and Exchange Commission for proxy statement disclosure purposes. Mr. Taylor was also reimbursed for his income tax liability related to his personal use of the company airplane. Mr. Taylor’s reimbursement of $27,300 for the income tax liability incurred as a result of his personal use of the airplane resulted from Internal Revenue Service regulations valuing such personal use at an amount in excess of the incremental cost of such travel to our company.

Other perquisites for fiscal 2009 consist primarily of club dues for one country club membership for each named executive, financial planning services, lunch club memberships, and executive medical benefits.

We have set forth the incremental cost of providing these perquisites to our named executives in a separate table that is included in a footnote to the “All Other Compensation” column of the 2009 Summary Compensation Table.

Severance and Change of Control Agreements.    To ensure continuity and the continued dedication of our executives during any period of uncertainty caused by a possible change of control of our company, we have entered into Change of Control Agreements with our executives, including each of our named executives. When Mr. Fanning joined our company in July 2008, he also entered into a change-in-control agreement with us. Information regarding the current Change of Control Agreements, including the estimated amounts payable to each named executive, is set forth under the heading “Potential Payments upon Termination or Change in Control—Change in Control.”

Retirement Agreement with Mr. Lousteau.    During fiscal 2009, we entered into a Retirement Agreement with Mr. Lousteau in anticipation of his retirement from the position of chief financial officer of the company effective September 30, 2008. Mr. Lousteau also entered into a consulting agreement with us under which he will provide certain consulting services for two years following his retirement date, subject to our right to extend the consulting arrangement for an additional two years.

Under the Retirement Agreement, Mr. Lousteau received a lump sum payment equal to the sum of:

In addition, Mr. Lousteau’s health, disability and life insurance benefits will continue through May 31, 2010. All of Mr. Lousteau’s previously granted but unvested stock options and restricted stock vested upon retirement. The Retirement Agreement requires Mr. Lousteau to keep confidential company nonpublic information known to him and not to compete with the Company after his retirement. During the initial two-year term of the consulting agreement, Mr. Lousteau will be paid at an hourly rate of $200 for his services, which amount will be increased to $250 per hour if we exercise our option to extend the term.

28

Table of Contents

Retirement Benefits.    We also provide a non-qualified deferred compensation plan, which acts as a supplement to our 401(k) plan, and a SERP that operates as a supplement to our qualified pension plan, or in the case of Messrs. Fanning and Platt, a supplement to our qualified retirement plan, which is a defined contribution plan. Both of these plans are designed to provide retirement benefits to our officers that the officers are precluded from receiving under the underlying qualified plans due to the compensation and benefits limits in the Internal Revenue Code. These plans are described in more detail in “Executive Compensation—2009 Pension Benefits” and “Executive Compensation—2009 Non Qualified Deferred Compensation.”

Recovery Policy.    During fiscal 2008, the compensation committee adopted an Executive Compensation Recovery Policy under which the company may recover cash and equity incentive compensation awarded after adoption of the policy if the compensation was based on the achievement of financial results that were subsequently the subject of a restatement of our financial statements, if the executive officer engaged in intentional misconduct that caused the need for a restatement and the effect was to increase the amount of the incentive compensation.

Stock Ownership Guidelines.    Under stock ownership guidelines adopted by the Board in September of 2007 for the company’s directors and officers and reevaluated by the compensation committee in fiscal 2009, our directors and officers are required to hold the following values in the form of company stock within five years of becoming a director or officer (the director’s annual cash retainer or the officer’s base salary is multiplied by the appropriate multiple):

If an officer’s ownership guideline increases because of a change in title or if a new officer or director is added, a five-year period to achieve the incremental guideline begins in January following the year of the title change or addition as a director or officer. The deferred stock units granted to directors each year count as shares of company stock under the guidelines.

Once achieved, ownership of the guideline amounts must be maintained for as long as the director or officer is subject to the guidelines.

$1 Million Pay Deductibility Cap.    Section 162(m) of the Internal Revenue Code limits our federal income tax deductions for compensation, other than qualified performance-based compensation, to $1 million for compensation paid to each of our most highly-compensated executive officers. Stock options and restricted stock granted by us in fiscal 2009 are designed to qualify as performance-based and to be excluded in calculating the $1 million limit of Section 162(m). The annual bonus paid to Mr. Taylor for fiscal 2009 under the Executive Officer Annual Incentive Plan has also been structured to be fully deductible under Section 162(m) as performance-based compensation.

We intend to continue to establish executive officer compensation programs that will maximize our company’s income tax deduction. However, from time to time, the committee may award compensation that is not fully tax deductible if we determine that such award is consistent with our philosophy and in the best interest of our company and our stockholders.

29

Table of Contents

EXECUTIVE COMPENSATION

The following table summarizes, for the fiscal year ended March 31, 2009, the compensation paid to each of our named executive officers in all capacities in which they served.

FISCAL 2009 SUMMARY COMPENSATION TABLE

30

Table of Contents

31

Table of Contents

The following table presents additional information regarding restricted stock and option awards, as well as non-equity incentive plan awards granted to our named executive officers during the fiscal year ended March 31, 2009.

FISCAL 2009 GRANTS OF PLAN-BASED AWARDS

32

Table of Contents