UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.      )

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

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TIDEWATER INC.

(Name of Registrant as Specified in Its Charter)

   

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

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Fee paid previously with preliminary materials.

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11.

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VOLUNTARY ELECTRONIC RECEIPT
OF FUTURE PROXY MATERIALS

Since Tidewater’s inception in 1956, our focus has been on creating long-term value for our shareholders and all stakeholders. This unwavering focus continues today and underpins our approach to sustainability.

We encourage our shareholders to enroll in e-delivery: Online at www.proxyvote.com.

COMBINED WITH YOUR ADOPTION OF ELECTRONIC DELIVERY OF PROXY MATERIALS, AND THE ELIMINATION OF APPROXIMATELY 8,013 SETS OF PROXY MATERIALS, WE CAN POSITIVELY IMPACT THE ENVIRONMENT BY:

Environmental impact estimates were calculated using the Environmental Paper Network Paper Calculator. For more information visit www.papercalculator.org.

 

 

TIDEWATER INC.
842 West Sam Houston Parkway North, Suite 400
Houston, Texas 77024

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Houston, Texas
May 1, 2023

 

 

TABLE OF CONTENTS

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PROXY STATEMENT SUMMARY

This summary highlights selected information contained elsewhere in this proxy statement but does not contain all of the information that you should consider before voting your shares. We recommend that you read the entire proxy statement carefully before voting. For complete information regarding the 2023 Annual Meeting of Shareholders, including the proposals to be voted on, and our performance during the 2022 fiscal year, please review the entire proxy statement and our Annual Report on Form 10-K for the period ended December 31, 2022. These materials are being made available to shareholders on or about May 8, 2023.

2023 Annual Meeting of Shareholders

Agenda Items and Voting Recommendations

 

1

 

Director Nominee Highlights

 

2

 

Current Board Skills and Experience

Additional information regarding the Nominating and Corporate Governance Committee’s role in nominating directors and the ability of shareholders to recommend candidates for director may be found under “Proposal 1: Election of Directors—Director Nominating Process and Considerations” and “Proposal 1: Election of Directors—Consideration of Candidates Recommended by Shareholders,” respectively.

 

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Tidewater’s 2022 Performance Highlights and 2023 Recent Developments (page 36)

(1)

For a reconciliation to the most comparable GAAP financial measure of Adjusted EBITDA and Free Cash Flow, see Annex A.

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Executive Compensation Program Summary

The Compensation Committee strives to maintain a compensation program that will attract, retain and motivate outstanding executives by providing incentives to reward them for superior performance that supports Tidewater’s long-term strategic objectives, across the commodity price cycle, and is competitive with industry practices.

The primary elements of executive compensation are “direct compensation” and consist of base salary, an annual cash incentive award and long-term incentive awards. Direct compensation is heavily weighted toward long-term incentive awards. In 2022, Mr. Kneen’s target compensation consisted of: base salary (12%), annual cash incentive award (12%), long-term incentive awards conditioned on Tidewater’s three-year relative TSR (38%) and time vesting RSU awards (38%).

 

4

 

Allocation of Direct Compensation Elements in 2022

A substantial portion of named executive officer (NEO) compensation is dependent on performance. Approximately 88% of Mr. Kneen’s (and an average of 78% of the other NEOs’) target direct compensation opportunity is variable, or at risk. The ultimate value of at-risk compensation is dependent on company performance outcomes and Tidewater’s stock price performance.

CEO Target Direct Compensation Mix(1)

(1)

Target direct compensation is composed of base salary, target annual cash incentive award opportunity and the target value of long-term incentive awards.

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Highlights of Executive Compensation Program Policies and Practices

The 2022 executive compensation program for the NEOs includes many best practice features intended to enhance the alignment of compensation with the interests of Tidewater’s shareholders.

 

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PROPOSAL 1: ELECTION OF DIRECTORS

As provided by our bylaws, our directors are elected annually. We currently have nine directors, all of whom (Ms. Melissa Cougle, Ms. Lois Zabrocky and Messrs. Darron Anderson, Dick Fagerstal, Quintin Kneen, Louis Raspino, Larry Rigdon, Robert Robotti and Kenneth Traub) were elected at our 2022 Annual Meeting.

On April 26, 2023, Larry Rigdon notified the Company of his intent to retire as a director and Chairman of the Board in connection with the 2023 Annual Meeting. As such, he has chosen not to be nominated for reelection. Given Mr. Rigdon’s retirement and based upon the recommendation of the Nominating and Corporate Governance Committee, the Board (i) nominated the following eight directors to serve on the Board: Ms. Cougle, Ms. Zabrocky and Messrs. Anderson, Fagerstal, Kneen, Raspino, Robotti and Traub, and (ii) effective immediately following the 2023 Annual Meeting, set the number of directors to serve on the Board at eight. Each director elected at the 2023 Annual Meeting will serve a one-year term beginning immediately following the Annual Meeting and ending when their successor, if any, is elected or appointed. Assuming shareholders elect all eight of the director nominees at the Annual Meeting, our Board will have eight directors immediately following the Annual Meeting.

We intend to vote the proxies received in response to this solicitation “FOR” the election of each of the nominee. If, contrary to our present expectations, any nominee cannot or will not serve, we intend to vote the proxies “FOR” the election of the other nominees and proxies may be voted for any substitute nominee of our Board. Each nominee has consented to being named as a nominee in this proxy statement and to serve as a director if elected. Our Board has no information or reason to believe that any nominee will not be a candidate at the time of the 2023 Annual Meeting or, if elected, will be unable or unwilling to serve as a director. In no event will the proxies be voted for more than eight nominees.

Majority Voting.   Our directors are elected by majority vote except in the event of a contested election, in which case a plurality standard will apply. Any director who stands for re-election in an uncontested election and who receives a greater number of “AGAINST” votes than “FOR” votes must tender their resignation to the Board. The Nominating and Corporate Governance Committee of the Board is required to promptly consider and recommend to our Board whether to accept the tendered resignation. Our Board will then act on the committee’s recommendation and disclose its decision and rationale within 90 days from the certification of the election results. We would then promptly and publicly disclose the Board’s findings and final decision in a current report on Form 8-K filed with the SEC. A copy of our Corporate Governance Guidelines, which includes our majority voting policy in the event of an uncontested election, may be obtained as described under “Corporate Governance—Availability of Corporate Governance Materials.” Abstentions and broker non-votes will have no effect on this proposal.

A biography of each director nominee is set forth below. Each director nominee’s biography contains information regarding that person’s service as a director, business experience, other public company directorships held currently or at any time during the last five years, and the nominee’s experiences, qualifications, attributes, or skills that led the Nominating and Corporate Governance Committee and our Board to determine that he or she should serve as a director for Tidewater. The information in each biography is presented as of April 28, 2023.

 

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CURRENT DIRECTORS RENOMINATED FOR A NEW TERM

 

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Summary of the Board’s Director Nominee Core Competencies and Composition Highlights

The following chart summarizes the competencies that the Board considers valuable to effective oversight of Tidewater and illustrates how our Board's director nominees individually and collectively represent these key competencies. The lack of an indicator for a particular item does not mean that the director does not possess that qualification, skill or experience, as we look to each director to be knowledgeable in these areas; rather, the indicator represents that the item is a core competency or material experience that contributed to the director's nomination to the Board.

 

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Director Nominating Process and Considerations

The Nominating and Corporate Governance Committee is responsible for reviewing and evaluating with our Board the appropriate skills, experience, and background desired of board members in the context of our business and the then-current composition of our Board.

Director Independence. Under our Corporate Governance Guidelines and the rules of the New York Stock Exchange (“NYSE”), a majority of our directors must be independent. Our Board has determined that, as of the Record Date, except for Mr. Kneen, who serves as our President and Chief Executive Officer, each of our eight director nominees meets the NYSE’s definition of “independence” ​(discussed in greater detail below under “Board of Directors—Director Independence”). For more information on director independence, please see the section entitled, “Board of Directors—Director Independence.”

Board Diversity. Our Board does not have a formal written policy regarding the consideration of diversity in identifying director nominees. The charter of our Nominating and Corporate Governance Committee, however, requires the committee to monitor the composition of the Board and its committees and allows the Nominating and Corporate Governance Committee to develop and recommend to the Board, if necessary or appropriate, specific criteria for selecting director nominees. In considering the composition of our Board as a whole, the Nominating and Corporate Governance Committee and the Board evaluate the skills and experience of each candidate to ensure that the specific knowledge, experience, skills, expertise, integrity, analytical ability, diversity, and other characteristics needed to maintain our Board’s effectiveness are possessed by an appropriate combination of directors. The Nominating and Corporate Governance Committee seeks a diverse group of prospective candidates for board service who possess the requisite characteristics, skills, and experience, taking into consideration the availability of highly qualified candidates; committee workloads and membership needs and anticipated director retirements. Our overarching goal is that the unique skills and experiences of each individual director complement and enhance the overall capabilities of the Board.

The Board has not formerly adopted specific criteria for selecting director nominees, preferring to maintain the flexibility to evaluate the Board’s needs at any point in time given the skillset of the then-current directors and Tidewater’s ongoing business and strategic plan. However, the Board strives to have individual directors who possess experience, skills and expertise in the following broad areas:

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strategic planning and business development;

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mergers and acquisitions;

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legal and regulatory compliance;

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finance and accounting matters;

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industry experience and knowledge (particularly in the energy services and maritime sectors), including hands-on operational experience;

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demonstrated leadership of complex organizations;

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corporate governance;

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public company board service; and

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international business.

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The Nominating and Corporate Governance Committee and the Board evaluate each candidate to ensure the candidate has a history of demonstrating personal and professional character and integrity, and they have shown exceptional ability and judgment in their respective endeavors. Candidates must possess sufficient time and availability to effectively carry out their duties and responsibilities as a director of Tidewater. The Nominating and Corporate Governance 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.

Tidewater greatly benefits from diversity of representation on our Board by the inclusion of women and minorities as board members, including Ms. Cougle, Ms. Zabrocky and Mr. Anderson. As such, our Board meets most institutional investor requirements, such as the BlackRock guidelines, that public company boards have at least two women and a member of an underrepresented minority on their Board.

This year, as in prior years, the Nominating and Corporate Governance Committee reviewed the qualifications of each of our current directors as well as the contributions each has made to our Board and Tidewater during their tenure as a director. On an ongoing basis, our Board considers the optimal size and composition of the Board, which is currently set at nine directors. Given Mr. Rigdon’s retirement and the current skillset of the directors serving on the Board, the Board has determined it to be in the best interest to reduce the size of the Board to eight concurrently with the Annual Meeting. As a result, based on the recommendation of the Nominating and Corporate Governance Committee, our Board is nominating eight of the nine current directors (Messrs. Anderson, Fagerstal, Kneen, Raspino, Robotti, and Traub and Mmes. Cougle and Zabrocky) to serve for one-year terms.

Consideration of Candidates Recommended by Shareholders. Our bylaws provide that any of our shareholders entitled to vote for the election of directors may nominate candidates for election to our Board at our Annual Meeting of Shareholders by complying with the required notice procedures, as described in greater detail below. The Nominating and Corporate Governance Committee’s policy is to consider director candidates recommended by shareholders on the same basis and in the same manner as it considers all director candidates.

No director candidates were recommended by shareholders in time for consideration at the 2023 Annual Meeting. To be timely for our 2023 Annual Meeting, a shareholder’s nomination must be given in writing and delivered or mailed to Tidewater’s Secretary and received at our principal executive offices no earlier than February 26, 2024 and no later than March 28, 2024.

Shareholder recommendations of nominees are required to be accompanied by, among other things, specific information as to the nominees and as to the shareholder making the nomination or proposal. We may require any proposed nominee to furnish such information as may reasonably be required to determine his or her eligibility to serve as a director of Tidewater. A description of these requirements is set forth in Tidewater’s bylaws, which may be obtained as described under “Corporate Governance—​Availability of Corporate Governance Materials.”

 

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CORPORATE GOVERNANCE

Tidewater’s corporate governance policies, including our certificate of incorporation, bylaws, and Board adopted Corporate Governance Guidelines and committee charters (collectively, the “Corporate Governance Policies”), establish Tidewater’s governance framework. The Corporate Governance Policies address the structure and operation of the Board, including matters related to the committees of the Board; director independence; tenure; outside board memberships; the role of the Board’s Chairman and Lead Independent Director; director stock ownership; and the Board, Committee and director performance evaluations. The Corporate Governance Policies are reviewed and updated periodically, considering changing regulations, evolving best practices and shareholder feedback. The Corporate Governance Policies and other governance policies are available on our website at www.tdw.com/investors/governance.

Corporate Governance Guidelines

Our Board has adopted Corporate Governance Guidelines, which the Nominating and Corporate Governance Committee reviews at least annually to assess the continued appropriateness of these guidelines given any new regulatory requirements and evolving corporate governance practices. After this review, the Nominating and Corporate Governance Committee recommends any proposed changes to the full Board for approval.

Code of Business Conduct and Ethics

Our Board has 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. The Code of Business Conduct and Ethics requires any employee who reasonably believes or suspects that any director, officer, or employee has violated the Code of Business Conduct and Ethics, another Tidewater policy, or applicable law to report such activities to his or her supervisor or to our Chief Compliance Officer (Daniel A. Hudson, our Executive Vice President, General Counsel and Corporate Secretary), or directly or anonymously through our online or toll-free phone hotline. We do not tolerate 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 or assists with any ensuing investigation.

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 Tidewater’s SEC filings. These disclosure controls and procedures are designed to enhance the accuracy and completeness of Tidewater’s SEC filings and, among other things, to ensure continued compliance with an applicable anti-corruption and bribery laws, including the Foreign Corrupt Practices Act.

 

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Comprehensive Steps to Achieve Board Effectiveness

The Board is committed to a rigorous self-evaluation process to assess the overall functioning, performance and effectiveness of the Board, its committees, and the individual non-employee directors. The Nominating and Corporate Governance Committee oversees this annual evaluation process. From time to time, these evaluations may be conducted using a third-party facilitator. The methodology for conducting Board and Committee self-evaluations is outlined in the chart below.

Environmental, Social and Governance Highlights

For over 65 years, Tidewater has been at the forefront of the global offshore service industry driven by a simple goal: to provide outstanding service to our clients through the quality of our vessels and our operational excellence. Our tradition of excellence has led us to become an industry leader in offshore support. In addition, our goal is to build a sustainable, resilient, and responsible company with environmental, social, and governance (ESG) policies as the cornerstone of our corporate mission.

In 2022, to ensure dedicated focus and oversight of our sustainability efforts, our Board formed a stand-alone Environmental, Social, and Governance Committee to oversee and support our ESG strategy, initiatives, and reporting. Other committees of the Board also are involved with the assessment and management of our environmental and social priorities through their oversight responsibilities, including risk and talent management. For more information on the Environmental, Social and Governance Committee, please see the section entitled, “Composition and Role of Board Committees—​Environmental, Social and Governance Committee.”

 

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Our commitment to ESG principles is reflected in our core values and in various ongoing initiatives, including the following:

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maintaining the highest standards of business conduct and ethics by conducting our affairs in an honest and ethical manner with unyielding personal and corporate integrity at the foundation of our business;

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adhering to our core values and striving to continually improve our ESG systems and processes to enhance our performance;

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demonstrating integrity and respect for others by setting goals and objectives that enhance our commitment to a safe workplace;

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protecting the environment by focusing on operational efficiencies that promote the reduction of emissions through fuel and environmental monitoring;

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ensuring that the safety of our employees, as reported in industry-leading metrics, is our highest priority;

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actively embracing, valuing and encouraging the diversity of our directors, officers and employees and ensuring this culture remains an integral part of our employment and retention policies;

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communicating our expectation that Tidwater, including our suppliers, contractors, and employees, achieves and promotes strong ESG performance;

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ensuring a positive community impact in the areas in which we operate;

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focusing on developing and implementing sustainable practices that promote human rights, health and well-being, fair dealing and compliance throughout our business;

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responsibly recycling vessels in a sustainable and socially-responsible manner, safeguarding the environment and human health and safety in accordance with applicable laws and regulations, including the 2009 “Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships,” the “Basel Convention on the Control of the Transboundary Movements of Hazardous Wastes and their Disposal” and, where applicable, EU and U.S. EPA Ship Recycling Regulation;

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regularly reporting our ESG results, while continuing to evaluate ways to improve; and

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developing frameworks and metrics to present our ESG results in an effective and transparent manner.

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In recognition of the importance of ESG principles to our business, the initiatives set forth above are being undertaken with the unanimous support of our Board.

In 2022, significant progress was made in many of these areas, including, but not limited to, the following:

•

Tidewater improved the gender diversity of its Board;

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Tidewater recorded no material incidents nor any incidents related to significant or harmful accidental spills;

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our cybersecurity initiatives were expanded to ensure compliance with IMO Resolution MSC.428(98)—Maritime Cyber Risk Management in Safety Management Systems; and

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as a signatory to the UN Global Compact, we continued to progress our commitment to align our operations and strategies in the areas of human rights, labor, environment, and anti-corruption, and to take action in support of the UN goals and issues embodied in the Sustainable Development Goals (SDGs).

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In March 2023, we published our 2022 Sustainability Report, in alignment with the SASB Marine Transportation Standard (2018), TCFD climate-related disclosure recommendations and GRI’s reporting standards. A review of Tidewater’s progress in 2022, including a summary of the materiality analysis

 

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completed in early 2023, current metrics, and future sustainability plans are included in the report. The report is available at www.tdw.com/sustainability/sustainability2022.

Communicating with Directors

Shareholders and other interested parties may communicate directly with our Board, the non-management directors, or any committee or individual director by writing to any one of them in care of our Corporate Secretary, at 842 West Sam Houston Parkway North, Suite 400, Houston, Texas 77024. Our Corporate Secretary or the director contacted will forward the communication to the appropriate director. For more information regarding how to contact the members of our Board, please visit our website at www.tdw.com/about-tidewater/corporate-governance/.

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 of concerns regarding violations of our Code of Business Conduct and Ethics, including questionable accounting or auditing matters. Interested parties may communicate such complaints to the Audit Committee chair by: (1) following the procedures described under the heading “Communicating with Directors” above or (2) (anonymously through our ethics hotline, which can be found on our website at www.tdw.com/core-responsibilities/compliance-2/​. As noted above, we do not tolerate retaliation of any kind against any person who, in good faith, submits a complaint or concern under these procedures.

Availability of Corporate Governance Materials

You may access our certificate of incorporation, our bylaws, our Corporate Governance Policy, our Code of Business Conduct and Ethics, and all committee charters under “Corporate Governance” in the “About Tidewater” section of our website at www.tdw.com. You also may request printed copies, which will be mailed to you without charge, by writing to us in care of our Corporate Secretary, 842 West Sam Houston Parkway North, Suite 400, Houston, Texas 77024.

 

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BOARD OF DIRECTORS

As of the date of this proxy statement, our Board has nine members. Given the retirement of Mr. Rigdon and assuming all director nominees are elected, our Board will have eight members immediately following the 2023 Annual Meeting.

Board Meetings and Attendance

During the 2022 fiscal year, our Board held 9 meetings, including telephonic meetings. Each director attended 100% of the meetings of the Board and of the committees on which he or she served during fiscal 2022.

Our Board does not have a policy requiring director attendance at any special or annual meetings of shareholders; however, our Board’s practice is to schedule a board meeting on the same day as the Annual Meeting of Shareholders to facilitate director attendance at the Annual Meeting. All directors serving as a director during 2022 attended our 2022 Annual Meeting.

Director Independence

The standards relied upon by the Board in affirmatively determining whether a director is independent are the objective standards set forth in the corporate governance listing standards of the NYSE. In making independence determinations, our Board evaluates responses to a questionnaire completed annually by each director regarding relationships and possible conflicts of interest between each director, Tidewater, and management. In its review of director independence, our Board also considers any commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships any director may have with Tidewater or management of which it is aware.

Our Board has affirmatively determined that seven of the eight director nominees are independent, specifically Ms. Cougle, Ms. Zabrocky and Messrs. Anderson, Fagerstal, Raspino, Robotti and Traub. Mr. Kneen is not independent as he serves as our President and Chief Executive Officer.

Board Leadership Structure

The roles of Chairman, Chief Executive Officer and Lead Independent Director are currently held by three different persons—Mr. Rigdon serves as our Chairman, Mr. Kneen serves as our President and Chief Executive Officer, and Mr. Fagerstal serves as our Lead Independent Director.

Our Board believes that, at this time, our current leadership structure best serves the interests of Tidewater and our shareholders by clearly allocating responsibilities between the three offices. As our President and Chief Executive Officer, Mr. Kneen’s primary responsibilities are to manage the day-to-day business and to develop and implement Tidewater’s business strategy with the oversight of, and input from, the Board. As Chairman, Mr. Rigdon’s primary responsibility is to lead the Board in its responsibilities of providing guidance to, and oversight of, management. As our Lead Independent Director, Mr. Fagerstal’s primary responsibilities are to call for separate meetings of the independent directors, determine the agenda and serve as chairperson for meetings of the independent directors.

We have not adopted a policy requiring that the roles of Chairman and Chief Executive Officer be separate; rather, our Board’s policy is to determine from time to time whether it is in the best interests of Tidewater and its shareholders for the roles to be separate or combined. We believe that our Board should have the flexibility to make these determinations in a way that will best provide appropriate leadership for Tidewater based on needs of Tidewater at that particular time. Given Mr. Rigdon’s pending retirement in connection with the Annual Meeting, the Board has requested, and Mr. Fagerstal has agreed to serve as the independent Chairman of the Board effective immediately following the Annual Meeting.

 

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Executive Sessions of Non-Management and Independent Board Members

Our non-management directors meet in regularly scheduled executive sessions presided over by our Chairman. In addition, Mr. Fagerstal, as Lead Independent Directors, presided over regularly scheduled executive sessions with only Independent directors in attendance. At the conclusion of each Board meeting, the non-management directors and independent directors have an opportunity to meet in executive session. The non-management and independent directors may schedule additional executive sessions throughout the year. During fiscal 2022, (i) the non-management members of our Board (all directors except for Mr. Kneen, our Chief Executive Officer) met four times in executive session, and (ii) the independent directors (all directors except Messrs. Rigdon and Kneen) met four times in executive session.

Role of the Board in Risk Oversight

The Board actively oversees Tidewater’s risk management, including routinely assessing Tidewater’s major risks and mitigation measures. In addition, the Board delegates to its committees the responsibility for overseeing certain types of risk, as reflected in the chart below, and the committees in turn report regularly to the Board on activities in their respective areas of oversight.

 

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COMPOSITION AND ROLE OF BOARD COMMITTEES

Our Board currently has four standing committees: Audit; Compensation; Environmental, Social and Governance; and Nominating and Corporate Governance. Actions taken by our committees are reported regularly to the full Board. Each standing committee is comprised entirely of independent directors and is governed by a written charter that is reviewed annually, with any changes approved by the full Board. A copy of each committee charter is available online or by mail as described in “Corporate Governance—Availability of Corporate Governance Materials.”

The current members of each board committee are identified in the following table, which also indicates the number of meetings each committee held during fiscal 2022:

 

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DIRECTOR COMPENSATION

2022 DIRECTOR COMPENSATION TABLE

This table reflects all compensation paid to or accrued by each individual who served as a non-management director during fiscal 2022. The compensation of Mr. Kneen, who currently serves as our President and Chief Executive Officer, is disclosed in the Fiscal 2022 Summary Compensation Table. A description of the elements of our director compensation program follows this table.

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(1)

Reflects the aggregate grant date fair value of time-based restricted stock units or restricted stock awards granted to each director during fiscal 2022, computed in accordance with FASB ASC Topic 718. These RSU grants, which will vest on the first anniversary of the date of grant, were the only equity awards held by any of our directors at the end of fiscal 2022. These RSU grants were valued at $168,982 on the date of Board approval.

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(2)

Under the Director Stock Election Program, Ms. Cougle (100%), and Messrs. Anderson (25%), Rigdon (100%), and Robotti (100%) each elected to receive up to 100% of their cash compensation in shares of our common stock.

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We currently use a combination of cash and equity-based compensation to provide competitive compensation for our non-management directors and to enable them to meet their stock ownership guidelines. Our Compensation Committee is responsible for overseeing our non-employee director compensation program and recommending any changes to the full board for action. Meridian Compensation Partners, LLC (“Meridian”), which served as the independent consultant to our Compensation Committee in 2022, also assisted the committee and the Board in its 2022 review of director compensation to help ensure that our director pay levels and program components are in line with competitive market practice.

 

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Director Fees. In June 2022, the Compensation Committee recommended, and the Board approved, the following changes to the compensation of our non-management directors effective July 1, 2022:

The number of RSUs granted in each award is calculated by dividing the grant date target value by the closing price of a share of our common stock on the date of grant. Unless the director has elected to defer vesting of their RSU, all time-based RSUs granted to directors during fiscal 2022 will vest on the first anniversary of the date of grant, provided the director remains a member of our Board on the vesting date. However, vesting of the award would accelerate if, prior to the vesting date, the director died, terminated service due to disability, or was willing and able to continue to serve as a director but was either not renominated or not re-elected to serve another term.

Director Stock Election Program. Under the Director Stock Election Program, each non-employee director is provided an opportunity to elect to receive a percentage of their base cash retainer in fully vested shares of Tidewater common stock, which are issued from our equity compensation plans. For each participant, the shares are issued to a director on the same day on which they would have received the cash payment, based on the closing price of a share on that day (rounded down to the nearest whole share). Ms. Cougle and Messrs. Anderson, Rigdon, and Robotti elected to participate in the program during 2022.

Director Stock Deferral Program. Under the Director Stock Deferral Program, each non-employee director can elect prior to any equity grant to defer the vesting of their annual stock award beyond the first anniversary of the date of grant.

Stock Ownership Guidelines. Our non-employee directors are subject to stock ownership guidelines requiring each director to own and hold shares of our common stock worth eight times his or her annual cash retainer no later than five years after his or her appointment. Under the guidelines, unvested RSUs count as shares of Company common stock. As of April 28, 2023, all non-employee director nominees were in compliance with the guidelines. These guidelines are described in greater detail under “Compensation Discussion and Analysis—Other Compensation and Equity Ownership Policies—​Stock Ownership Guidelines.”

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 and its committees. We also cover the cost of our directors attending continuing education programs (including tuition and travel).

 

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PROPOSAL 2: ADVISORY APPROVAL OF OUR EXECUTIVE COMPENSATION

Our Board is asking you to approve, on an advisory basis, the compensation of our named executive officers (NEOs) as disclosed in this proxy statement. This item, which is provided pursuant to Section 14A of the Exchange Act, is commonly referred to as a “say-on-pay” resolution.

The Compensation Committee has structured our executive compensation program to achieve the following key objectives:

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to attract, motivate and retain talented executive officers,

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to motivate the achievement of companywide financial objectives, as well as other strategic personal objectives, while balancing rewards for short-term and long-term performance, and

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to align the interests of our executive officers with those of our shareholders,

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each as described in the “Compensation Discussion and Analysis” section of this proxy statement.

Our Compensation Committee and the Board believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in achieving our goals, and that the compensation of our NEOs as reported in this proxy statement has contributed to Tidewater’s short-term and long-term success. Therefore, we are asking our shareholders to approve the compensation of our NEOs by voting “FOR” the following resolution on an advisory basis:

RESOLVED, that the compensation paid to Tidewater Inc.’s named executive officers, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED on an advisory basis.

This vote is non-binding, but our Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program. Although annual “say-on-pay” advisory votes are not required by our bylaws, the Board currently believes that having our shareholders provide annual feedback on our compensation practices supports effective governance. As a result, the next “say-on-pay” advisory vote will occur in 2024.

 

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INFORMATION REGARDING EXECUTIVE OFFICERS

Each of our executive officers is appointed by, and serves at the pleasure of, our Board. Information regarding our current executive officers (other than Mr. Kneen, who also serves as a director and whose biography is included above under “Proposal 1—Election of Directors”), including all offices held by the officer as of December 31, 2022, is as follows:

 

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COMPENSATION DISCUSSION AND ANALYSIS

This section of our proxy statement discusses and analyzes our executive compensation philosophy and program in the context of the compensation paid to or earned for performance during the last fiscal year to our named executive officers. We refer to these executives as our “named executives” or “NEOs.” For fiscal 2022, our named executives were:

In this CD&A section, we first provide an Executive Summary of Tidewater’s business and performance during the fiscal year and how that performance affected executive compensation decisions and payouts. We next explain the Compensation Philosophy and Objectives that guide our Compensation Committee’s executive compensation decisions. We then describe the Compensation Committee’s Process of Setting Compensation. Finally, we discuss in detail each of the Compensation Components, including, for each component, a design overview as well as the actual results yielded for each named executive in fiscal 2022.

Executive Summary

In 2022, Tidewater’s operations returned to increased activity levels, which required a renewed focus on safety and the environment as well as strong leadership from our senior executives. Tidewater’s employees demonstrated flexibility and persistence as we successfully navigated the integration of Swire’s fleet and business, the lingering impacts of the COVID-19 pandemic, market volatility, inflationary pressures and supply chain issues, among other things. Tidewater’s strong operational performance drove our financial success, including delivering 244% in total shareholder return for the year.

 

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Fiscal 2022 and Recent Company Performance Highlights

(1)

For a reconciliation to the most comparable GAAP financial measure of Adjusted EBITDA and Free Cash Flow, see Annex A.

​

•

Announced Agreement to Acquire 37 Platform Supply Vessels from Solstad Offshore. On March 7, 2023, we announced a definitive agreement to purchase 37 platform supply vessels from Solstad Offshore ASA (“Solstad”) for approximately $577 million. All 37 vessels are currently active and working throughout the world, principally in the North Sea, but also in Brazil, Australia and West Africa.

​

•

Successfully Closed & Integrated Acquisition of Swire Pacific Offshore, Becoming the World’s Largest OSV Provider. On April 22, 2022, we closed on our acquisition of Swire Pacific Offshore (“SPO”), comprised of 50 Offshore Support Vessels (“OSVs”) including 29 Anchor Handling Tug Supply Vessels (“AHTS”) and 21 Platform Supply Vessels (“PSV”) operating primarily in West Africa, Southeast Asia and the Middle East.

​

​

•

ESG Leadership Published Third Comprehensive and Stand-Alone Sustainability Report and Formed an ESG Committee of the Board. In March 2023, we published our third Sustainability Report, describing our ongoing commitment to environmental, social and governance (“ESG”) principles, along with our ESG performance and approach to material sustainability topics for the 2022 calendar year. In addition, during 2022, the Board created an Environmental, Social and Governance Committee, which is tasked with the responsibility of overseeing the effectiveness and reporting of our ESG policies, goals and programs.

​

•

Continue to Drive Free Cash Flow. Capital discipline remains a core focus that drives our ongoing fleet rationalization, working capital management and disciplined approach to capital expenditures that, in turn, contribute significantly to our ability to generate positive cash flow. During 2022, we continued to realize efficiencies through our digital transformation to enable a much more effective and efficient management of the entire business. Further, we generated $50.6 million of free cash flow in 2022 through a combination of cash flow from operations and non-core vessel sales.

​

Pay-for-Performance Driven

Tidewater remains committed to the pay-for-performance philosophy that underpins our compensation program, incentivizing our executive team to focus on strategic business objectives that, when met, will continue to create shareholder value. To achieve this, a substantial portion of NEO compensation is performance-based, and as a result, Tidewater’s performance significantly impacts the realizable values of the NEOs’ compensation awards.

For 2022, the Compensation Committee established an appropriate mix of short-term and long-term incentive compensation, resulting in significant at-risk pay for Mr. Kneen at 88% and the other NEOs at an average of 78%. The Compensation Committee will continue to thoughtfully oversee the

 

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effectiveness of Tidewater’s executive compensation structure to ensure CEO and executive compensation is strongly aligned with company performance and shareholder experience.

Objectives of the Executive Compensation Program

The Compensation Committee strives to maintain a compensation program that will attract, retain and motivate outstanding executives by providing incentives to reward them for strong performance that supports Tidewater’s long-term strategic objectives and is competitive with industry practices. In addition to paying for performance, the executive compensation program is intended to:

•

Align with shareholder interests;

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•

Promote a performance and results-oriented environment with conservative salaries and enhanced emphasis on at-risk pay;

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•

Build and encourage long-term share ownership;

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•

Provide a consistent retention incentive;

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•

Preserve performance accountability across the commodity price cycle;

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•

Pay competitively and equitably, providing for straightforward and transparent pay for the benefit of executives and shareholders;

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•

Use relative and absolute performance measures for equity awards; and

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•

Match or exceed prevailing governance standards for performance-based compensation.

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The specific principles followed and decisions made in establishing the compensation of our named executives for fiscal 2022 are discussed in more detail below.

 

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Governance Features of the Executive Compensation Program

Our Compensation Committee strives to align executive compensation with shareholder interests and incorporate strong governance standards into our compensation program, including through the following:

 

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Fiscal 2022 Compensation Highlights

As described in greater detail under “Compensation Components,” the three main components of our executive compensation program are base salary, an annual cash incentive award, and long-term incentive awards. During 2022, the Compensation Committee: (i) increased the CEO’s base salary by 20%, from $500,000 to $600,000; (ii) increased the CEO’s long-term incentive target to $3,500,000; and (iii) adjusted the CEO’s long-term incentive mix to 50% time-based restricted stock units and 50% performance-based restricted stock units, replacing stock option awards with performance units. The table below provides a summary of key actions taken with respect to each of these three components in fiscal 2022:

PARTICIPANTS AND PROCESS OF EXECUTIVE COMPENSATION DECISION MAKING

Our Board has delegated to the Compensation Committee the primary responsibility for overseeing our executive compensation program. The Compensation Committee annually reviews and sets the compensation for our executive officers, subject to approval by the full Board (excluding the CEO) of all compensation matters regarding our executives and other key management employees. For more information about the Compensation Committee’s responsibilities, see “Composition and Role of Board Committees—Compensation Committee.”

Role of the Chief Executive Officer. Our CEO makes recommendations to the Compensation Committee with respect to salary, short-term incentive (bonus), and long-term incentive awards for all executive officers other than himself. He develops those recommendations based on competitive market information generated by the Committee’s compensation consultant, the company’s current strategy, his assessment of individual performance, and the experience level of the particular executive. After the Compensation Committee discusses the recommendations with the CEO, its consultant, and amongst themselves, the Compensation Committee makes the final decisions on executive compensation, subject to approval by the full board (excluding the CEO).

 

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Evaluating the Chief Executive Officer’s Compensation. In evaluating the CEO’s compensation, the Compensation Committee reviews the competitive market information provided by its compensation consultant and bases its decisions regarding his compensation on our overall compensation strategy, the CEO’s self-assessment, and the Compensation Committee’s independent assessment of his performance, using the objectives that the Committee established at the beginning of the year as one point of analysis. The Compensation Committee’s determinations are then subject to approval by the full Board (excluding the CEO). These deliberations are held in executive session so that the CEO is not present when the Compensation Committee and Board make determinations regarding his compensation.

Role of Compensation Consultant. Our Compensation Committee has sole authority over the selection, use, compensation and retention of any compensation consultant engaged to assist the Compensation Committee in discharging its responsibilities. During 2022, Meridian Compensation Partners, LLC (“Meridian”) served as the Compensation Committee’s primary consultant. Meridian also surveys director compensation upon the request of the Compensation Committee. Meridian has provided no other services to, nor has any other relationship with, Tidewater. As required by SEC rules, the Compensation Committee has assessed Meridian’s independence with respect to all six independence factors and concluded that Meridian’s work has not raised any conflicts of interest.

Peer Group. With Meridian’s assistance, the Compensation Committee reviews and approves our peer group annually. We pay particular attention to mergers, acquisitions, and bankruptcies, each of which may make a peer company more or less aligned to our business. As such, the Compensation Committee updated our Compensation peer group in September of 2022, and in making its determinations regarding fiscal 2022 compensation and adjustments for fiscal 2023, the Compensation Committee reviewed detailed performance and compensation data on the companies in the following peer group:

Consideration of Prior Say-on-Pay Vote Results. Since 2011, our Board’s policy has been to hold say-on-pay votes at each annual meeting of shareholders.

At our 2022 Annual Meeting, our shareholders approved our executive compensation, with more than 97% of voting shares cast in favor of the say-on-pay resolution. The result of the most recent say-on-pay vote is an important point of reference for the Compensation Committee as it makes executive compensation decisions for a given year. In addition, we regularly engage with shareholders and welcome their feedback on our compensation programs throughout the year.

COMPENSATION COMPONENTS

As noted previously, the three core components of our executive compensation program are base salary, a short-term cash incentive, and long-term incentive awards. This section discusses each of these compensation elements and arrangements as well as the change of control protections, retirement benefits, and limited perquisites provided to our named executives during fiscal 2022.

Base Salary. In prior years, the Compensation Committee’s practice has been to review and determine salary levels for named executives prior to the beginning of each fiscal year. Our base salary determinations are based on a variety of factors, including individual performance, market salary levels, our company’s overall financial condition, and industry conditions. The primary rationale for

 

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salary increases for our NEOs during 2022 was to be competitive and align with market practice. We generally consider the market median of our peer group as the target for total compensation, although individual pay levels may vary from median for a variety of reasons.

Annual Short-Term Cash Incentive Compensation.

Structure of the Program. Our Board and Compensation Committee have adopted the Tidewater Inc. Short-Term Incentive Plan to provide the framework under which annual or short-term incentive bonuses may be paid to our NEO’s and key employees for the purpose of rewarding both company and individual performance during any given year or other specified performance period. The 2022 STI program was conditioned on Tidewater achieving positive free cash flow of at least $30 million and allocated among the four following measures of performance:

 

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The performance targets established for 2022 were set at a level considered challenging, and the potential payout range was set conservatively in the interest of avoiding any unintended windfalls due to market volatility.

The Compensation Committee’s practice has been to review the upcoming year’s STI program during its December meeting and then approve the specific metrics and allocation of the STI program during the first quarter of our fiscal year. In approving the NEO’s STI program, the Compensation Committee approves the company performance metrics, the specific performance levels for each metric, and the target award for each named executive, which is expressed as a percentage of the executive’s base salary. In March 2022, the Compensation Committee approved the fiscal 2022 STI program and designated each of the named executives as a participant.

For all metrics except FCF, payouts could range between 0-100% of the individual component’s target award, depending on performance. Payout on the FCF portion could range from 0-125% of target, depending on performance. Assuming maximum performance on all metrics, the overall maximum a participant could earn under the fiscal 2022 STI program would have been 112.5% of the target award.

The following chart shows the target award for each NEO, expressed as a percentage of his base salary, as well as the dollar amount of the target award he was eligible to receive under the STI program for fiscal 2022:

Calculation of 2022 STI Program Metrics and Payouts. The table below summarizes performance standards and actual achievement for the year. For the Operational Efficiency and Safety performances, performance at or above target results in a 100% payout and performance at or below target results in a 0% payout. For the FCF performance, (i) performance below threshold results in a 0% payout (ii) performance at threshold results in a 75% payout, (iii) performance at target results in 100% payout and (iv) maximum performance or above results in a payout at 125% of target opportunity. Actual payout is calculated using straight line interpolation between threshold and target and between target and maximum. The individual performance was a discretionary component, based on the Compensation Committee’s subjective assessment of the individual executive’s performance. The Compensation Committee determined that individuals did achieve the 20% in this category.

The performance targets established for 2022 were set at a level considered challenging, and the potential payout range was set conservatively in the interest of avoiding any unintended windfalls due to market volatility. As shown, actual performance under the STT Program resulted in a payout at 98.0% of target, which yielded an aggregate plan payout to all participants of approximately $4.5 million.

 

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(a)

FCF. The minimum threshold of $30 million required to fund the 2022 STI program. Includes $8.6 million of Pemex Bonds taken in exchange for accounts receivable in lieu of cash.

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(b)

Individual Performance. This is a discretionary component, based on the Compensation Committee’s subjective assessment of the individual executive’s performance. The Compensation Committee determined that individuals did achieve the 20.0% in this category.

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Calculation of individual bonuses. The table below provides a summary of individual award determination for 2022.

In addition, in connection with the SPO acquisition in April 2022, the Compensation Committee approved an additional STI program to reward officers and other key employees, excluding the CEO, for the achievement of approved operating and general & administrative synergy targets by April 2023. These targets were achieved at the end of March 2023 and will be included in our NEOs compensation disclosures for fiscal 2023.

Long-Term Incentive Compensation. We maintain one main long-term incentive (“LTI”) plan, the Tidewater Inc. 2021 Stock Incentive Plan (the “2021 LTI Plan”), which became effective in connection with our 2021 Annual Meeting.

For each named executive, awards (time based RSUs and, for Mr. Kneen, stock options) vest in three equal installments on the first three anniversaries of the date of grant, contingent upon continued employment on the vesting date (except in the case of death or termination due to disability). Performance based RSUs vest in a three-year cliff, dependent on certain performance metrics.

 

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(1)

Number of time-vesting restricted stock units (RSUs) was determined by dividing 50% of the target LTI value for Mr. Kneen and 75% of the target LTI value for the other NEOs by $18.84, which was the closing price on March 10, 2022, the date on which the Compensation Committee approved grant values and numbers of shares to be granted to our NEOs in 2022.

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(2)

Number of performance-vesting restricted stock units (PRSUs) was determined by dividing 50% of the target LTI value for Mr. Kneen and 25% of the target LTI value for the other NEOs by $18.84, which was the closing price on March 10, 2022, the date on which the Compensation Committee approved grant values and numbers of shares to be granted to our NEOs in 2022.

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2022 Long-term Incentive Program: For 2022, the Compensation Committee approved a change in our mix of long-term incentive awards that included the following:

•

Replacing premium options with PRSUs for our CEO, with PRSUs comprising 50% and RSUs comprising 50% of CEO LTI value; and

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•

For our other NEOs, granting PRSUs for 25% and RSUs for 75% of their respective LTI value.

​

Our 2022 PRSUs may be earned based upon relative and absolute total shareholder return (“TSR”) over a three-year performance period. As described below, no award may be earned above 100% of target if TSR over the period is negative, irrespective of relative performance.

​

Relative TSR Performance Level

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​

Payout (% of target units earned)

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Absolute TSR ≥ 0%

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Absolute TSR < 0%

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90th percentile

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200%

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100%

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60th percentile

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100%

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​

​

100%

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30th percentile

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50%

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​

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50%

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< 30th percentile

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0%

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0%

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​	2022 PRSU Peers				​
​	• Bristow Group ​ • Core Laboratories ​ • Dorian LPG ​ • Dril-Quip ​ • Forum Energy Technologies ​ • Gulf Island Fabrication ​ • Helix Energy Solutions ​	​	​	• International Seaways ​ • NCS Multistage Holdings ​ • Newpark Resources ​ • Oceaneering International ​ • Oil States International ​ • SEACOR Marine Holdings ​ • TETRA Technologies ​	​

The performance peer group set forth in the PRSUs granted in March 2022 was the same peer group approved and used by the Compensation Committee in connection with its 2021 compensation analysis and decisions, except for Exterran that was removed given it announced an agreement to be acquired by Enerflex. The performance peer group set forth in the PRSUs granted in March 2023 was the same peer group approved and used by the Committee for its 2022 compensation analysis and decisions.

Retirement Benefits. Our named executives participate in employee benefit plans generally available to all employees, including a qualified defined contribution retirement plan (the “401(k) Savings Plan”). We have a broad-based legacy Pension Plan, which has been frozen and closed to new participants for nearly a decade. Mr. Darling is the only named executive who participates in our Pension Plan. Since his participation is based on his prior employment with us (from 1983 to 1996), he is currently in payout status and receives a modest annual benefit ($2,227). Mr. Darling will not accrue any additional benefits under the Pension Plan for his current service (he rejoined us in March 2018). Since January 1, 2011, when the Pension Plan was frozen, all qualified retirement benefits have been provided through our 401(k) Savings Plan.

In addition to these broad-based programs, we provide our executives with a non-qualified deferred compensation plan, the Supplemental Savings Plan (the “SSP”), which acts as a supplement to our 401(k) Savings Plan. The SSP is designed to provide retirement benefits to our officers that they are precluded from receiving under the underlying qualified plans due to the compensation and benefit limits in the Internal Revenue Code. None of our named executives have elected to participate in the SSP.

Change of Control Agreements. During 2021, our Board approved the combined Severance and Change of Control Agreements, which are described further below in the section entitled, “Fiscal 2022 Consolidation of Employment-Related Agreements.”

We continue to offer our executives change of control benefits for several reasons. We believe that offering these protections to our executives and other key personnel is an important part of good corporate governance, as they alleviate individual concerns about the possible involuntary loss of employment and ensure that the interests of our named executives will be materially consistent with the

 

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interests of our shareholders when considering corporate transactions. In addition, we believe that these change of control protections preserve morale and productivity and encourage retention in the face of the potential disruptive impact of an actual or potential change of control of our company.

Other Benefits and Perquisites. We also provide certain limited perquisites to our named executives. For 2022, these perquisites consisted primarily of club dues for one country club membership for our CEO, gym memberships and Tidewater’s match program under its 401k Savings Plan. We do not provide tax gross-ups on any perquisites.

Fiscal 2021 Consolidation of Employment-Related Agreements. During 2021, our Board approved a new form of severance and change of control agreement to be entered into with each of the named executives (referred to below as the “consolidated agreement”). This new consolidated agreement superseded all prior employment-related agreements between the company and named executive, including the legacy employment agreements with Messrs. Kneen and Rubio and the legacy change of control agreements with each of the four named executives. The severance payment multiples for Mr. Kneen did not change under the new consolidated agreement, and the severance payment multiples for Messrs. Rubio, Hudson, and Darling reflect their promotions to Executive Vice President.

The consolidated agreement is subject to one-year “evergreen” renewal periods unless the company provides written notice to officer by June 30 of a given year that it does not wish to extend the agreement past its current term. The consolidated agreement had an initial term through December 31, 2021, was extended through December 31, 2022 and then again through December 31, 2023.

The consolidated agreement provides each officer with certain employment protections for a two-year period following a change in control of the company. If the officer experiences a qualifying termination during that two-year protected period (if either the company terminates him without cause or the officer terminates his own employment with good reason), he will be entitled to receive certain payments and benefits, including: (1) a cash severance payment equal to a specific multiple (three times for the Chief Executive Officer, two times for the Executive Vice Presidents, and one time for the Vice President) of the sum of (a) his base salary in effect at the time of termination and (b) the greater of his average bonus over the last three years and his target bonus; (2) a pro-rata cash bonus for the fiscal year in which the termination occurs; (3) a cash payment equal to any unpaid bonus with respect to a completed fiscal year as calculated by the agreement; (4) a lump sum cash payment for continuation coverage under the company’s health benefit plans; (5) immediate vesting of any outstanding but unvested equity awards as of the termination date, including retention of unexercised stock options to term; and (7) treatment of any performance conditions to have been achieved at target level for any equity awards for which vesting or payout is subject to performance conditions.

In addition, the consolidated agreement provides that if the officer experiences a qualifying termination (if either the company terminates him without cause or the officer terminates his own employment with good reason) during the term of the agreement but outside of any change of control protected period, he will be entitled to receive, among other benefits: (1) a cash severance payment equal to a specific multiple (two times for the Chief Executive Officer, one-and-a-half times for the Executive Vice Presidents, and a half time for Vice President) of the sum of (a) his base salary in effect at the time of termination and (b) his target bonus, to be paid over a specified number of months following the termination date; (2) a pro-rata cash bonus for the fiscal year in which the termination occurs; (3) a lump sum cash payment for continuation coverage under the company’s health benefit plans; (4) immediate vesting of any unvested portion of his time-based equity awards which was scheduled to vest within 12 months of the termination date; and (5) retention of any unvested portion of his performance-based equity awards vesting within 12 months of the termination date, subject to the original performance conditions and payout timing.

Under the consolidated agreement, the officer would not be entitled to any tax gross-ups for excise taxes that may be triggered under Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended. However, the officer would be entitled to receive the “best net” treatment, which means that if the total of all change of control payments due him exceeds the threshold that would trigger the imposition of excise taxes, the officer will either (1) receive all payments and benefits due him and be

 

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responsible for paying all such taxes or (2) have his payments and benefits reduced such that imposition of the excise taxes is no longer triggered, depending on which method provides him the better after-tax result.

The consolidated agreements contain certain restrictive covenants that apply during and after the officer’s employment, including an agreement to not disclose confidential information and, for a specified period of time following his termination of employment for any reason (other than a termination that occurs during a protected period by the company without cause or by the officer with good reason), non-competition and non-solicitation agreements.

COMPENSATION AND EQUITY OWNERSHIP POLICIES

Clawback Policy. Under our Compensation Recovery Policy, we may recover cash and equity incentive compensation awarded if the compensation was based on the achievement of financial results that were the subject of a subsequent restatement of our financial statements if the effect of the misstatement negatively impacted the amount of bonus or incentive compensation.

Stock Ownership Guidelines. Under our stock ownership guidelines, our officers are required to hold the following amounts of company stock within five years of becoming an officer:

•

5x salary for the Chief Executive Officer;

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•

3x salary for the Chief Operating Officer, Chief Financial Officer, and Executive Vice Presidents; and

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•

2x salary for all other officers.