Exhibit 10.3

TIDEWATER INC.
MANAGEMENT ANNUAL INCENTIVE PLAN
For Fiscal Year 2017

 

 

I.

PLAN OBJECTIVE

The primary objective of the Tidewater Inc. Management Annual Incentive Plan
(the “Plan”) is to reward certain officers and key employees of Tidewater and
its subsidiaries for their assistance in helping Tidewater Inc. (the “Company”)
achieve its financial and operating goals for the fiscal year.  The Plan links a
significant element of potential variable annual compensation to the
accomplishment of these goals.

II.

ADMINISTRATION

The Plan shall be administered by the Compensation Committee of the Board of
Directors of the Company (the “Committee”).  The authority of the Committee
shall include, in particular, authority to:

 

A.

review and approve participants and target award percentages for a particular
year;

 

B.

review and approve performance goals and metrics for a particular year;

 

C.

consider the achievement of the performance goals and metrics and whether any
payment will be made hereunder, and

 

D.

establish regulations for the administration of the Plan and make all
determinations deemed necessary for the administration of the Plan.

The Chief Executive Officer shall have the authority to name additional
participants after the beginning of a particular plan year and establish target
award percentages for such participants in connection with promotions, new
hires, and the establishment of new positions within the Company.  

III.

BASIC PLAN CONCEPT

The Plan focuses on Tidewater’s financial and safety performance as well as the
performance of the individual participant.  Regardless of achievement in these
areas, the Committee has sole and complete discretion as to whether a
participant will be paid any award hereunder and the amount of any such award.

IV.

ELIGIBILITY CRITERIA

Eligibility for participation in the Plan will be limited to officers and
certain key employees who directly impact the Company’s financial performance
and who do not participate in another Company bonus plan.  The specific
positions eligible to participate in the plan will be reviewed and determined
annually by Tidewater’s Chief Executive Officer and the Committee.  The Chief
Executive Officer also has the authority to name participants as described in
Article II above.  

 

 

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V.

PERFORMANCE MEASURES AND STANDARDS 

The Committee has designed this Plan as an annual bonus program for fiscal 2017
under which potential bonuses may be earned based upon financial, safety, and
individual performance.

VI.

AWARD OPPORTUNITIES

At the beginning of the fiscal year, the Committee will specify target incentive
awards for each participant based upon recommendations from management and the
Committee’s compensation consultant.  These amounts are determined based upon
each eligible participant’s base salary multiplied by the target percent
associated with the participant’s position within the Company and the measurable
amount of the participant’s direct influence on the Company’s financial
performance.  This percentage increases or decreases based upon performance
above or below the target.  The base target percentage will be adjusted as a
result of changes in position or pro-rated if the participant joins the Company
during a fiscal year.

VII.

PERFORMANCE CRITERIA

Any annual bonus amount will be based upon four metrics – two financial metrics
(cash flow from operations and vessel operating margin percentage), one safety
metric, and an individual performance metric.  At target performance levels,
each performance component would pay out at 25% of the target bonus.

At financial, safety, and individual performance levels above and below the
target levels, the 25%/25%/25%/25% relationship will change, as each metric
operates independently from the others.  The bonus declared for each of the two
financial metrics may not exceed 3 times target, while the bonus declared for
each of the safety and individual performance components may not exceed 2 times
target for exceptional performance.  

VIII.

DETERMINATION OF BONUS AMOUNT

The performance criteria described below will be used to determine potential
annual bonus amounts.  

 

A.

Financial Metrics.  For fiscal 2017, the two financial metrics are cash flow
from operations and vessel operating margin percentage.  Early in the fiscal
year, the specific targets and payout percentages for each of these two
financial metrics for the 2017 fiscal year will be established by the
Committee.  These two metrics operate independently, and the calculation of each
shall be adjusted as provided in subsection (3).

 

1.

Cash Flow From Operations.  “Cash flow from operations” means net cash provided
by operating activities as reported in the Company’s consolidated statements of
cash flows for the fiscal year ended March 31, 2017.

 

2.

Vessel Operating Margin Percentage.  “Vessel operating margin percentage” means
the difference between vessel revenues and vessel operating expenses, divided by
vessel revenue, as reported in the

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Company’s consolidated statements of earnings for the fiscal year ended March
31, 2017. 

 

3.

Adjustments.  Certain pre-approved adjustments will be made in calculating the
financial metrics.  Specifically, the calculation of each financial metric will
be adjusted for any of the following items as reported in the Company’s
consolidated financial statements:

 

a.

cumulative effect of accounting changes;

 

b.

extraordinary, unusual, or infrequently occurring items, as those terms are
defined in FASB ASC Topic 225, less the amount of related income taxes;

 

c.

discontinued operations; and

 

d.

the effect of any acquisitions for a twelve-month period following the date of
such acquisition.

The Committee is under no obligation to declare or pay a bonus based on either
financial metric.  For each of the two financial metrics, the declared portion
of the bonus for a participant may not exceed 3 times the target award for that
metric.

 

B.

Safety Criteria.  The safety performance measurement is determined by
achievement of the Company’s overall established safety performance goals for
the fiscal year.   Under this performance measure, potential payout is directly
correlated with the Total Recordable Incident Rate (TRIR)  for the current
fiscal year.  “Total Recordable Incident Rate” is defined as follows:

(Loss Time Accidents + Recordable Incidents) X
200,000 (man hours)

 

=

Total Recordable Incident Rate per
200,000 man hours of exposure

Total Man Hour Exposure

Non-job related deaths will not count toward the TRIR.  A TRIR below a certain
level will permit a safety payment to a participant in an amount that is greater
than 25% of the pool funding amount, which under the pre-established formula may
not exceed 200% of the target pool funding amount (25% of total bonus), except
the Committee may determine not to award all or a portion of this additional
amount.  Pro-rating will be permitted.  The safety performance portion of the
Plan operates independently from each of the three other metrics. The Committee
may determine not to pay the safety portion of the bonus, because of the
occurrence of one or more fatalities or for any other reason.

 

C.

Individual Performance Criteria.  Three to five subjective or objective
individual goals will be established for and communicated to each participant
early in the fiscal year.  These goals will be established by the participant’s
supervisor and, in the case of officers, will be approved by the Committee.  The
Committee will establish a multiple of between 0 and 2 times the target payout
that will be the declared amount for which all participants may be
eligible.  Each participant’s

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supervisor will then evaluate the participant’s overall performance, including
the achievement of the individual performance goals, and determine whether the
participant will receive all or a portion of the declared individual performance
portion of the bonus.  The determination of any individual performance portion
payable to a participant who is an officer will be subject to the Committee’s
approval.   

IX.

TERMINATION OF EMPLOYMENT

 

A.

If a participant’s employment is terminated because the participant dies or if
the participant becomes disabled, as “disability” is defined in Section 409A of
the Internal Revenue Code of 1986, as amended, and the regulations and guidance
thereunder (“Section 409A”), unless otherwise determined by the Committee, the
participant or, in the case of death, the participant’s estate or heirs, shall
be paid a pro rata bonus for the fiscal year in which termination occurs based
upon the level of satisfaction of the performance criteria in effect for such
year with the individual performance portion assumed to be target level
performance and the percentage of salary applicable to such participant’s bonus,
but applied to the actual salary amount paid to the participant for the portion
of the year that the participant was employed.  Any such bonus shall be paid to
the participant or, in the case of death, to the participant’s estate or heirs,
at the same time as any bonuses for such fiscal year are paid to other Plan
participants as provided in Article X.

 

B.

If a participant’s employment is terminated because the participant Retires (as
defined below) or is terminated by the Company without Cause (as defined below),
and such termination constitutes a “separation from service” under Section 409A,
unless otherwise determined by the Committee, the participant shall be paid a
pro rata bonus for the fiscal year in which termination occurs, based upon the
performance criteria in effect for such year with the individual performance
portion assumed to be target level performance and the percentage of salary
applicable to such participant’s bonus.  Any such bonus shall be paid to the
participant at the same time as any bonuses for such fiscal year are paid to
other Plan participants as provided in Article X.

 

C.

If a participant’s employment is terminated due to a voluntary resignation by
the participant (other than a participant who Retires under Article IX.B.) or if
the participant is involuntarily terminated by the Company for Cause, no pro
rata bonus shall be paid for the fiscal year in which termination occurs, unless
otherwise determined by the Committee in its discretion, in which case the pro
rata bonus will not exceed the amount that would be due based upon the
performance criteria in effect for such year with the individual performance
portion assumed to be target level performance and the percentage of salary
applicable to such participant’s bonus, but applied to the actual salary amount
paid to the participant for the portion of the year that the participant was
employed.  Any such bonus shall be paid to the participant at the same time as
any bonuses for such fiscal year are paid to other Plan participants as provided
in Article X.

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D.

Certain Definitions.   

 

1.

A participant is deemed to have “Retired” for purposes of the Plan, if the
participant’s employment terminates, other than as a result of a termination by
the Company for Cause, at age 55 or later with at least ten years of service
with the Company or at age 65 or later with at least five years of service with
the Company.  

 

2.

“Cause” for purposes of this Plan shall be determined in the sole discretion of
the Board of Directors of the Company and shall mean:

 

a.

the willful and continued failure of the participant to substantially perform
the participant’s duties with the Company or its affiliates (other than any such
failure resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the participant by
the Board of Directors of the Company which specifically identifies the manner
in which the Board believes that the participant has not substantially performed
the participant’s duties, or

 

b.

the willful engaging by the participant in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise.

For purposes of this provision, no act or failure to act, on the part of the
participant, shall be considered “willful” unless it is done, or omitted to be
done, by the participant in bad faith or without reasonable belief that the
participant’s action or omission was in the best interests of the Company or its
affiliates.  Any act, or failure to act, based upon authority given pursuant to
a resolution duly adopted by the Board or upon the instructions of a senior
officer of the Company or its affiliates or based upon the advice of counsel for
the Company or its affiliates shall be conclusively presumed to be done, or
omitted to be done, by the participant in good faith and in the best interests
of the Company or its affiliates.  

X.

AWARD PAYMENTS

Awards determined by the Committee to be paid hereunder will be paid in cash no
later than June 15, 2017, unless deferred by a participant under a separate
benefit plan of the Company.  

XI.

MISCELLANEOUS

 

A.

Nothing in this Plan shall confer upon a participant any right to continue in
the employment of the Company, or to interfere in any way with the right of the
Company to terminate the participant’s employment relationship with the Company
at any time.  Participation provides no guarantee that any bonus will be
paid.  The success of the Company as measured by the achievement of financial
and safety goals, as well as individual performance, shall determine the extent
to which participants may receive bonuses hereunder in the discretion of the

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Committee.  Participation in the Plan is not a right, but a privilege, subject
to annual review by the Company.  The Company retains the right to withhold
payment from any participant who violates Company policies or for any other
reason.  The Company also has the right to recover any amounts paid under the
Plan if (i) the amount paid was based on the achievement of financial results
that were subsequently the subject of a restatement, (ii) the participant is
subject to the Company’s Executive Compensation Recovery Policy; (iii) the
participant engaged in intentional misconduct that caused or partially caused
the need for the restatement, and (iv) the effect of the wrongdoing was to
increase the amount of bonus or incentive compensation.  Any participant accepts
any payment hereunder subject to such recovery rights of the Company.  The
Company may, if it chooses, effect such recovery by withholding from other
amounts due to the participant by the Company. 

 

B.

The Plan shall be governed by and construed in accordance with the laws of the
State of Louisiana.

 

C.

If any term or provision of the Plan, shall at any time or to any extent be
invalid, illegal or unenforceable in any respect as written, the participant and
the Company intend for any court construing the Plan to modify or limit such
provision so as to render it valid and enforceable to the fullest extent allowed
by law.  Any such provision that is not susceptible of such reformation shall be
ignored so as to not affect any other term or provision hereof, and the
remainder of the Plan, or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid, illegal or
unenforceable, shall not be affected thereby and each term and provision of the
Plan shall be valid and enforced to the fullest extent permitted by law.

 

D.

The Company has no obligation to make any payments hereunder.  Any payments made
shall be in the sole discretion of the Committee.  The Company shall have no
obligation to set aside, earmark, or invest any fund or money with which to pay
bonuses under the Plan.  

 

E.

The payment made hereunder are intended to comply with, or be exempt from, the
requirements of Section 409A and the terms of the Plan related thereto shall be
construed accordingly.  Payments hereunder that are subject to Section 409A
shall not be accelerated unless permitted under Section 409A.  If a participant
who is a “specified employee” of the Company is entitled to a payment under this
Plan due to his or her “separation from service” (as such terms are used in
Section 409A) and such payment is subject to the Section 409A six-month payment
delay rule, then such payment shall not be made until the earlier of (1) the
first business day that is more than six months following such participant’s
separation from service or (2) such participant’s death.

 

F.

The Company shall have the right to terminate the Plan at any time in its sole
discretion.  Upon termination, the participant shall have no right to receive
any amounts hereunder.  Payout of any amount subject to Section 409A shall not
occur earlier than provided herein, except to the extent permitted by Section
409A.

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G.

The Company shall deduct from any payment made hereunder all applicable federal
and state income and employment taxes. 

 

H.

Nothing in this Plan precludes the Company from making additional payments or
special awards to a participant outside of the Plan.

EXECUTED this 25th day of July, 2016, with effect from May 11, 2016.

 

TIDEWATER INC.

 

By: /s/ Joseph M. Bennett

Joseph M. Bennett

Executive Vice President and

Chief Investor Relations Officer

 

 

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