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 27, 2008

To Our Stockholders:

You are cordially invited to attend the 2008 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 31, 2008, 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 you will do, 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 stating that you beneficially owned Tidewater Inc. stock on the record date or an account statement showing that you beneficially owned Tidewater Inc. stock on the record date.

We may exclude from the meeting any person who is not a stockholder of record on the record date (or a duly designated proxy) or a street name holder on the record date evidenced as described above.

Table of Contents

TIDEWATER INC.

601 Poydras Street, Suite 1900

New Orleans, LA 70130

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The 2008 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 31, 2008, at 10:00 a.m., Central Time, to vote upon the following matters:

Only stockholders of record at the close of business on June 6, 2008, are entitled to notice of and to vote at the 2008 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 proxy card. You may revoke your proxy by giving notice to our Secretary at any time before the annual meeting.

By Order of the Board of Directors

BRUCE D. LUNDSTROM

Senior Vice President, General Counsel

and Secretary

New Orleans, Louisiana

June 27, 2008

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE STOCKHOLDER MEETING TO BE HELD ON JULY 31, 2008.

This proxy statement and our 2008 annual report

are available at www.envisionreports.com/TDW for registered holders

and www.edocumentview.com/TDW for beneficial holders

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

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.”

2

Table of Contents

All other matters to 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 as otherwise provided by statute, our certificate of incorporation, or our amended and restated bylaws.

3

Table of Contents

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth the beneficial ownership of our common stock as of June 6, 2008, by each director, by each executive officer named in the Summary Compensation Table, and by all directors and executive officers as a group:

4

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.

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, 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. The company’s lead director presides over these sessions.

5

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 2008, 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.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

The company and its chief financial officer, J. Keith Lousteau, entered into a formal settlement with the Securities and Exchange Commission (the “Commission”) on September 27, 2007, bringing to a conclusion the informal inquiry by the Miami office of the Commission into an approximate $26.5 million impairment charge recognized by the company at the end of its 2004 fiscal year.

In connection with the settlement, the Commission issued a cease and desist order that had been negotiated between the company, Mr. Lousteau, and the enforcement staff of the Miami office. Neither the company nor Mr. Lousteau admitted nor denied the findings of the Commission set forth in the order; however, the order requires the company and Mr. Lousteau to cease and desist from committing or causing any current or future violation of the statutes and regulations listed below. The company was found by the Commission, for certain reporting periods preceding the fiscal year ended March 31, 2004, not to have (i) performed proper impairment analysis on certain of its supply vessels in the Gulf of Mexico, (ii) reviewed properly its depreciation estimates related to such vessels, (iii) disclosed fully and accurately in certain of its public filings the inactive status of certain of the vessels, or (iv) maintained adequate internal controls to assure a proper impairment analysis of its Gulf of Mexico fleets. By reason of these findings, the order cited the company for violating Sections 13(a) and 13(b)(2)(B) of the Securities and Exchange Act of 1934 and Rules 12b-20, 13a-1 and 13a-13 thereunder, and Mr. Lousteau was cited for causing the company to violate these statutes and regulations. The order also cited Mr. Lousteau for improperly signing Sarbanes-Oxley civil certifications for the fiscal year ended March 31, 2003 and for fiscal quarters beginning with the quarter ended September 30, 2002 and ending December 31, 2003.

The cease and desist order does not require the company to restate any of its historical financial statements or pay any fines or penalties, impose any other sanctions on the company or Mr. Lousteau, or impose any prospective or forward-looking compliance or supervisory measures on the company. Additional information related to the settlement is included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2008.

6

Table of Contents

ELECTION OF DIRECTORS

(PROPOSAL 1)

At the 2006 Annual Meeting, the stockholders approved an amendment to the company’s amended and restated bylaws to eliminate our classified board and to provide for the annual election of directors. The amendment calls for the gradual implementation of annual elections, with previously elected directors continuing to serve their full year term, but with any directors elected at or after the 2007 Annual Meeting being elected for a one year term.

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 not a candidate when the election occurs, 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

Nominees for election at this meeting to terms expiring in 2009:

M. Jay Allison, 52, President and Chief Executive Officer of Comstock Resources, Inc. since 1988, Chairman of the Board of Directors of Comstock Resources, Inc. since 1997, Director of Comstock Resources, Inc. since 1987; Chairman of the Board of Directors of Bois d’Arc Energy, Inc.; Former Regent of Baylor University; Member of the Advisory Board of the Salvation Army in Dallas, Texas; President of Legacy Christian Academy, Frisco, Texas, since 2001. Director since 2006.

James C. Day, 65, retired Chairman of the Board and former Chief Executive Officer of Noble Corporation; Former Director of Offshore Energy Center, Global Industries, Ltd., Noble Energy, Sarkeys Energy Center at the University of Oklahoma, the National Safety Council, the American Petroleum Institute (API), the Houston YMCA, Boys & Girls Country and The Sam Houston Area Boy Scouts of America; Former Chairman of the National Ocean Industry Association (NOIA) and International Association of Drilling Contractors (IADC); Former Member of the Independent Petroleum Association of America (IPAA), the Society of Petroleum Engineers, Inc. (SPE) and the American Bureau of Shipping (ABS). Director since 2007.

Richard T. du Moulin, 61, President of Intrepid Shipping LLC since 2002; Chairman and CEO of Marine Transport Corporation, 1998-2002; Director of Teekay Tankers and Globe Wireless; Member of the Board of Trustees and Chairman of the Development Committee of Seamens Church Institute; Trustee of Storm Trysail Club, New York Yacht Club and Friends of Georgetown Sailing. Director since 2003.

J. Wayne Leonard, 57, Chief Executive Officer and Director of Entergy Corporation (public utility) since 1999. Director since 2003.

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., Superior Energy Services, Inc. and FMC Technologies, Inc; Secretary and Member of the Board of Trustees of the National WWII Museum. Director since 2001.

Nicholas Sutton, 63, Chairman and Chief Executive Officer of Resolute Natural Resources Company (and affiliated entities); Director of the St. Francis Hospital Foundation in San Francisco; Former Director of HS Resources, Inc., Kerr-McGee Corporation, Colorado Oil & Gas Association and the Association Board of the San Francisco Bay Area YMCA. Director since 2006.

7

Table of Contents

Cindy B. Taylor, 46, 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 January 2008.

Dean E. Taylor, 59, 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; United Way Campaign Cabinet Member, Greater New Orleans United Way, 2006-2007, 2007-2008. Director since 2001.

Jack E. Thompson, 58, Management Consultant since December 2001; Vice Chairman of Barrick Gold Corp. (gold mining), 2001 to 2005; Chairman and CEO of Homestake Mining Co., 1994 to 2001; Director of Century Aluminum Co; Advisory Board Member of Resource Capital Funds III and IV since 2002; Former Director of Phelps Dodge Corp., Stillwater Mining Co., Barrick Gold Corp., Rinker Group, Ltd. and Homestake Mining Co. Director since 2005.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE NINE NOMINEES FOR DIRECTOR LISTED ABOVE.

Continuing Directors

Class III Directors whose terms continue until 2009:

Jon C. Madonna, 65, formerly Chairman of DigitalThink, Inc. (e-commerce company), 2002-2004, previously President and Chief Operating Officer 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., Freeport-McMoran Copper & Gold Inc., and Jazz Technologies, Inc. Director since 1999.

William C. O’Malley, 71, formerly Chairman, (1994-2003), President, (1994-2001), and Chief Executive Officer, (1994-2002) of the company; prior thereto, served as Chairman of the Board and Chief Executive Officer of Sonat Offshore Drilling, Inc.; Director of Hibernia Corporation, Plains Resources, and BE&K, Inc. Director since 1994.

8

Table of Contents

INDEPENDENCE OF DIRECTORS

The board of directors is currently composed of eleven directors, ten of whom the board has determined meet the New York Stock Exchange definition of independence. 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 considered the commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships any director may have with the company or management. The standards relied upon by the board in affirmatively determining whether a director is independent are comprised of those objective standards set forth in corporate governance listing standards of the New York Stock Exchange. The board of directors, in applying these standards, has affirmatively determined that Messrs. Allison, Day, du Moulin, Leonard, Madonna, O’Malley, Pattarozzi, Sutton, and Thompson, and Ms. Taylor, are independent directors.

9

Table of Contents

BOARD OF DIRECTORS AND COMMITTEE COMPOSITION

Board of Directors.    As of the date of this proxy statement, our board consists of eleven members. During fiscal 2008, 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 serving as directors as of the date of the 2007 Annual Meeting attended the 2007 Annual Meeting.

During fiscal 2008, the non-management members of our board, which included Messrs. Allison, Day, du Moulin, Leonard, Madonna, O’Malley, Pattarozzi, Sutton, and Thompson and Ms. 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 new 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.

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.

10

Table of Contents

The audit committee met 13 times during fiscal 2008. The board has determined that each of Messrs. Madonna and Leonard qualify as an “audit committee financial expert”, as defined by SEC rules. In connection with Mr. Madonna’s appointment to the audit committee, the board determined that his simultaneous service on more than three public company audit committees would not impair his ability to serve on the company’s audit committee.

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 preparing the compensation committee report required by the rules of the SEC to be included in our annual proxy statement.

The compensation committee met five times during fiscal 2008. 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 2008.

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.

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.

11

Table of Contents

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. During fiscal 2007, the nominating and corporate governance committee retained Towers Perrin 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 make nominations of persons 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 2009, 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 May 17, 2009 and no earlier than April 22, 2009, provided that if the 2009 annual meeting is called for a date more than 50 days prior to July 31, 2009, 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 six times in fiscal 2008.

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, 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.

12

Table of Contents

DIRECTOR COMPENSATION

FISCAL YEAR 2008 DIRECTOR COMPENSATION TABLE

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

13

Table of Contents

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 2008 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.

Director Fees.    For fiscal year 2008, the cash and equity-based compensation payable to the non-management directors was as follows:

Directors Deferred Stock Units.    Beginning on March 31, 2007, and on each succeeding 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. Mr. Carlson and Dr. Murrill retired from our board in fiscal 2008 and became entitled to cash payments of $157,772 for their deferred stock units. 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. Previously under this program, the company matched a director’s contribution to an educational institution up to $5,000 per year. For fiscal 2008, the company revised the program to increase the company’s match for charitable donations made by directors and to expand the matching program to include donations made to any Section 501(c)(3) charitable organization. For fiscal 2008, director donations of up to $5,000 were matched three to one (up to a maximum of $15,000).

Retirement Plan.    We have also provided a Retirement Plan for the benefit of non-management directors who retire 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

14

Table of Contents

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.

Mr. Carlson and Dr. Murrill retired from our board in fiscal 2008 with 23 ²/3 and 25 years of service credit, respectively, and were entitled to a retirement plan benefit with a present value of $220,387 and $327,569, respectively. The other board members who have accrued benefits under the Retirement Plan and their years of credited service are as follows:

15

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 2008, our audit committee reviewed and discussed with management and our independent auditors our earnings releases and our periodic filings with the SEC. Among other things, the audit committee 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 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 13 meetings during fiscal 2008.

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. 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 expected to be no more than $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 2008 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, 2007 and the fiscal year ended March 31, 2008.

16

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, 2008, for filing with the Securities and Exchange Commission. The audit committee has selected Deloitte & Touche as our company’s independent registered public accounting firm for fiscal year 2009, 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

17

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 the company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2008 and this proxy statement.

Compensation Committee:

Richard T. duMoulin, Chairman

James C. Day

Nicholas Sutton

Jack E. Thompson

18

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 we performed in setting executive compensation for fiscal 2008. 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 2008 Summary Compensation Table below. We refer to these executives as our “named executives.”

Objectives.    We design our executive compensation program to achieve the following objectives in the context of a company with worldwide operations in an operationally demanding, volatile, cyclical, capital intensive business:

Our compensation programs are designed to reward achievement of corporate objectives and these programs will change from time to time as those objectives change. The specific principles followed and decisions made in fiscal 2008 in establishing the compensation of the named executives are discussed in more detail below.

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

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.

19

Table of Contents

Our compensation committee periodically utilizes a compensation consultant to provide relative benchmarks in order to confirm that our total executive compensation is set in the zone that we believe is appropriate. We also use information from the consultant to educate ourselves as to the compensation practices of similar companies and to establish compensation levels that fit with our view of what is best in the long-term for our company and our shareholders.

Our chief executive officer makes recommendations to the compensation committee for 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 of the executives. The committee discusses with the chief executive officer his recommendations, and either approves or modifies the recommendations in its discretion. Regarding the chief executive officer’s compensation, the committee reviews the competitive market information 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.

For over five years, our compensation committee has retained Towers Perrin as its compensation consultant. Towers Perrin does not provide services to our company other than the services provided to our compensation committee that are described in this proxy statement. In fiscal 2007 we asked Towers Perrin to prepare a competitive compensation analysis of our executive compensation. The key objectives of the assignment in fiscal 2007 in terms of setting compensation were:

The scope of the Towers Perrin study involved collecting competitive market information on base salary, annual incentives and long-term incentives.

In fiscal 2006 and 2007, Towers Perrin provided us with a compensation analysis for the following 16 peer energy service companies as well as size adjusted general industry companies. The energy services peer group companies that we used for comparison purposes in fiscal 2006 and 2007 are:

20

Table of Contents

In fiscal 2007 Towers Perrin also prepared a marketplace comparison of our executive compensation to general industry companies in the Towers Perrin executive compensation database and to companies included in the Towers Perrin oilfield services compensation survey. The general industry database included 825 companies and the data is adjusted based upon size. The oilfield services compensation survey included data on the compensation practices of the following companies:

During fiscal 2007 and 2008, the committee also retained Towers Perrin to:

21

Table of Contents

We aim to pay our executives at the level that generally approximates the 50^th 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 order to determine whether it 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 setting fiscal 2008 compensation, we also reviewed a tally sheet prepared by Towers Perrin that included a computation of all elements of current compensation, the present value of retirement benefits, the value of current stock ownership and options and severance payout amounts under the various possible termination scenarios. The goal of the tally sheet analysis is to allow the committee to see a total for all elements of compensation and how each element interacts with other elements. 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. The methodology and information included in the wealth accumulation analysis will be reviewed by the committee in fiscal 2009 to determine if changes are appropriate to improve the usefulness of the analysis in setting future compensation.

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 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 peer companies for our annual bonus target, we provide opportunities to substantially exceed median compensation levels in successful years. Our annual cash incentive compensation is tied to the achievement of annual performance goals and our long-term incentive compensation is tied in part to the achievement of annual and longer-term performance goals and to the value of our common stock. We believe it is important to link a portion of our executives’ incentive compensation to appreciation in the 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. In recruiting new executive officers, we are prepared to offer a competitive salary and did so when we hired a new senior vice president and general counsel in fiscal 2008.

None of the named executives received a salary increase for fiscal 2008, except for Mr. Platt, who received a $10,000 increase, to bring his salary level into line with the other executive vice-presidents. In light of the annual bonus payouts for fiscal 2007 substantially exceeding the targets and the continued goal of emphasizing the performance-based elements of compensation, the compensation committee determined not to increase the base salaries of the other named executives.

22

Table of Contents

Annual Cash Incentive Compensation.    We pay annual cash incentives for the purpose of rewarding financial, safety and individual performance during the year.

Beginning with fiscal 2007, the compensation committee worked with Stern Stewart & Co., a consulting firm, to institute an annual incentive program that was based primarily on:

“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. We began using EVA in fiscal 2007 with the goal of keeping 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 the opportunity to evaluate the long-term effectiveness of the new system. At the end of the third year of the program in fiscal 2009 we will review the effectiveness of the EVA system in achieving corporate goals. 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 a competitive advantage in obtaining the most reputable and superior customers. Finally, our excellent safety record helps us to minimize our insurance premiums and overall costs 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. For tax reasons, the annual bonus of our chief executive officer is entirely based on company performance goal achievement and he does not have 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.

Our “EVA” is equal to our net after-tax operating profit minus an appropriate charge for the opportunity cost of all capital that we have invested over the measurement period. As such, it is the amount by which our earnings exceed or fall short of a rate of return that our stockholders could expect to obtain if they invested in other securities of comparable risk. We use EVA as our principal performance measure because we believe that it best evidences the value that the members of our management team add to capital invested by our stockholders. Further, 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, 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 for fiscal 2008 could not exceed $2 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 by 50% over the target for exceptional safety performance.

EVA Criteria

We determine our EVA by subtracting from net operating profit after taxes (“NOPAT”), a charge for capital employed. 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. For 2008, as in 2007, based on advice of Stern Stewart, we used a 9% weighted average cost of capital. The cost of capital percentage is subject to adjustment each year. 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 the EVA for the prior year in order for the target bonus award to be achieved. For example, since EVA for fiscal 2007 was $147.4 million, EVA for fiscal 2008 had to be $152.4 million for the target to be met. Failure to achieve the EVA target in any fiscal year would result in reduced incentive awards and could result in no award for the EVA portion of the annual incentive.

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. A very successful fiscal 2007 generated EVA of $147.4 million (a $132.5 increase over fiscal 2006 EVA) and raised the level of EVA performance that would have to be achieved in fiscal 2008 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. 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 Total Reported Incident Rate per 200,000 work hours. The

24

Table of Contents

Total Reported Incident Rate goal for fiscal 2008 was 0.21, which was a 5% targeted improvement in our average safety performance levels over the preceding two years and a 34% targeted improvement over the preceding five year average.

A Total Reported Incident Rate 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 2008, the Company’s EVA was $6.7 million over fiscal 2007 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 $132.5 million EVA improvement results of 2007 presented such an aggressive target for fiscal 2008.

Fiscal 2008 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, 2008 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 increased by approximately $.6 million for a reduction 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 18% 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, 2008 equals current assets plus the allowance for doubtful accounts, investments in and advances to unconsolidated companies, net properties and equipment as decreased by approximately $243.2 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 $38.4 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 $17.5 million, primarily for the effect of income taxes payable. Average capital was further decreased by $160.9 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 Total Reported Incident Rate for fiscal 2008 was 0.24, which did not meet the target level but would have generated a payout for the safety portion of the annual incentive. Even with an acceptable level of reported incidents, it has been the compensation committee’s practice to reduce the safety award component if fatal lost

25

Table of Contents

time accidents occur. Due to fatalities occurring during fiscal 2008, the chief executive officer recommended that the safety award component of the annual incentive be eliminated for each named executive and the compensation committee followed that recommendation.

Each of the named executives received 100% of the potential individual performance portion of the annual incentive award, except for Mr. Taylor whose bonus does not have an individual performance component and except for Mr. Laborde who retired at the end of the first quarter of fiscal 2008.

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 2008. In the case of Mr. Lousteau, his leadership in ensuring our overall financial discipline (including the ability to fund our vessel building commitments without the occurrence of additional company debt) and the continued implementation of a proactive stock buyback program 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 advancement of vessel day rates, 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, Mr. Lundstrom’s efforts to reinvigorate our legal compliance program and support the company’s internal investigation efforts during his relative short tenure with the company in fiscal 2008 led to his award.

For each of our named executives, we have set forth in the table below information on the incentive awards 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 2007 we received data from Towers Perrin from its oilfield services compensation survey, which provided information as to the expected value of long-term incentives as a percent of salary at various salary levels. As in past years, we targeted the approximate median of the oilfield service companies included in the survey. When making awards of stock options and restricted stock to the named executives in fiscal 2008, we allocated 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

26

Table of Contents

remain with our company even during periods of stock price volatility. Our restricted stock granted in previous years contained a performance element in that vesting of portions of the grant would accelerate if the annual EVA target was exceeded. The grants of restricted stock in fiscal 2008 vest in 25% annual increments based on EVA results, but will be forfeited if cumulative EVA performance criteria are not met by the end of the four year vesting period. By adding performance hurdles to our restricted stock, we are placing added emphasis on financial performance goals, as well as providing rewards for growth in the value of our common stock.

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 2008 Summary Compensation Table and the 2008 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 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 2008 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 performance and continued employment requirements. All restricted stock granted in fiscal 2008 vests 25% per year, if the executive remains employed and if the cumulative EVA increases $5 million per year above the EVA for fiscal 2008. The named executives have voting and dividend rights on their restricted stock and dividends are paid to them currently.

In May 2007 the committee approved an amendment to the terms of all restricted stock held by Cliffe F. Laborde, our executive vice president and general counsel, who resigned effective June 29, 2007. Mr. Laborde did not forfeit his unvested shares of restricted stock upon termination of employment, but retained the shares subject to a prohibition on the sale of the shares until the originally scheduled vesting dates. The committee took this action in recognition of Mr. Laborde’s more than 15 years of valuable service to our company.

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.

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 2008 was $100,494, valued at the incremental cost to the company 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 $53,245 for the income tax liability incurred as a

27

Table of Contents

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 2008 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 2008 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. 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.”

In fiscal 2007, the compensation committee engaged Towers Perrin to evaluate our Change of Control Agreements in order to determine how these agreements compared to market practices. Towers Perrin’s evaluation included a review of the change in control trigger threshold, single versus double triggers, severance pay, severance pay multiples, continuation of retirement, health and welfare benefits and excise tax gross-ups. As a result of such review, the compensation committee offered those officers with Change of Control Agreements the choice of replacing their current agreements with new agreements that would include a parachute payment excise tax gross-up payment, but would also reduce the change of control benefit related to the Supplemental Executive Retirement Plan (“SERP”) as well as restrict the conditions under which an officer could terminate employment for “good reason” following a change of control and receive the severance benefit. In fiscal 2008, Dean Taylor elected to accept the offer to change the terms of his Change of Control Agreement. The other named executives retained their original agreements. The compensation committee determined that new executive officers would be offered the new form of agreement and when Bruce Lundstrom joined our company in September 2007 as senior vice-president and general counsel, he entered into the new form of agreement that included the excise tax gross-up, but reduced the change of control SERP benefit and restricted the requirements for a “good reason” termination.

In May 2007, the compensation committee entered into a severance agreement with J. Keith Lousteau, our executive vice president and chief financial officer, with a three-year term. We entered into this severance agreement with Mr. Lousteau at the time that our company and Mr. Lousteau entered into a consent decree with the Securities and Exchange Commission and the terms are described in “Executive Compensation—Potential Payments Upon Termination or Change in Control”.

After the end of fiscal 2008, we entered into a Retirement Agreement with Mr. Lousteau that generally anticipates that he will retire from his position as chief financial officer of the company effective September 30, 2008. Mr. Lousteau has also agreed to enter 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, and subject to certain adjustments if he retires before or after September 30, 2008, Mr. Lousteau will receive at retirement a lump sum payment equal to the sum of:

28

Table of Contents

In addition, Mr. Lousteau’s health, disability and life insurance benefits will be continued through May 31, 2010. All of Mr. Lousteau’s previously granted stock options and restricted stock that have not previously vested will vest at retirement. The Retirement Agreement also 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.

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 Mr. 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—2008 Pension Benefits” and “Executive Compensation—2008 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 in the future 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.     In September, 2007, the board adopted stock ownership guidelines for the company’s directors and executives. The guidelines require our directors and executive officers to hold the following values in the form of company stock by January 1, 2013 (the director’s annual base compensation or the executive’s base salary is multiplied by the appropriate multiple):

Once achieved, ownership of the guideline amounts must be maintained for as long as the director or executive 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 2008 are designed to qualify as performance-based and to be excluded in calculating the $1 million limit of Section 162(m). Annual bonuses paid to the named executive officers for fiscal 2008 will not qualify as performance-based compensation under Section 162(m). We are asking the stockholders to approve the terms of the Executive Officer Annual Incentive Plan at the annual meeting in order that executive officer bonuses for fiscal 2009 and future years may satisfy the performance-based requirements of Section 162(m).

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, 2008, the compensation paid to each of our named executive officers in all capacities in which they served.

FISCAL 2008 SUMMARY COMPENSATION TABLE

30

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, 2008.

FISCAL 2008 GRANTS OF PLAN-BASED AWARDS

31

Table of Contents

Salary.    Salaries paid to our named executives are set forth in the Fiscal 2008 Summary Compensation Table. For fiscal 2008, salaries paid to our named executives accounted for the following percentages of their total annual compensation: Mr. Taylor (11.0%), Mr. Lousteau (14.3%), Mr. Platt (20.1%), Mr. Dick (15.5%), Mr. Lundstrom (39.9%), and Mr. Laborde (4.4%).

Non-equity Incentive Plan Compensation.    The non-equity incentive plan compensation set forth in the tables above reflects annual cash incentive compensation under our Management Annual Incentive Plan and our Executive Officer Annual Incentive Plan, as applicable. Annual cash incentive compensation is earned based upon EVA, safety performance and, in the case of the named executive officers other than our chief executive officer, individual performance. The performance goals are discussed in greater detail under the heading “Compensation Discussion and Analysis—Annual Cash Incentive Compensation.”

Stock Options and Restricted Stock.    Each year, we provide long-term incentives in the form of stock options to our executives. Stock options are intended to reward executives for generating appreciation in our company’s stock price through their individual performance. Restricted stock granted in fiscal 2008 is subject to EVA performance requirements. The restricted stock is forfeited after four years if the cumulative EVA criteria is not met. The restricted stock is also subject to forfeiture if the executive’s employment terminates prior to vesting other than as a result of death or disability.

During the vesting period, the executives are the beneficial owners of the shares of restricted stock and possess all voting and dividend rights. Dividends are payable at the same rate as is paid on the company’s common stock generally. During fiscal 2008, the quarterly dividend rate was $0.15 per share.

Employment Agreements.    None of the named executive officers has a written employment agreement with the company, although we entered into a Severance Agreement with Mr. Lousteau in fiscal 2008, which was replaced by a Retirement Agreement on April 24, 2008. The terms of the Severance Agreement are described under the heading “Executive Compensation—Potential Payments upon Termination or Change in Control.” The terms of the Retirement Agreement, which was entered into following the end of fiscal 2008, is described under the heading “Compensation Discussion and Analysis”.

Additional Information.    We have provided additional information regarding the compensation we pay to our named executives under the heading “Compensation Discussion and Analysis.”

32

Table of Contents

The following table illustrates the outstanding equity awards held by our named executive officers as of March 31, 2008.

OUTSTANDING EQUITY AWARDS AT MARCH 31, 2008

33

Table of Contents

34

Table of Contents