Exhibit 10.6

   

W&T OFFSHORE, INC.
AMENDED AND RESTATED INCENTIVE COMPENSATION PLANA

Executive Annual Incentive Award Agreement

For Fiscal Year 2013

This potential Annual Incentive Award (the “Award”) is granted on June 10, 2013
(the “Award Date”), by W&T Offshore, Inc., a Texas corporation (the “Company”)
to you (“Awardee” or “you”).

WHEREAS, the Company in order to induce you to enter into and to continue to
dedicate service to the Company and to materially contribute to the success of
the Company agrees to grant you this Award;

WHEREAS, this Award is granted to you pursuant to the W&T Offshore, Inc. Amended
and Restated Incentive Compensation Plan, as may be amended from time to time
(the “Plan”), and the following terms and conditions of this agreement (the
“Agreement”) for the Company’s 2013 fiscal year;

WHEREAS, a copy of the Plan has been furnished to you and shall be deemed a part
of this Agreement as if fully set forth herein; and

WHEREAS, you desire to accept the Award made pursuant to this Agreement.

NOW, THEREFORE, in consideration of and mutual covenants set forth herein and
for other valuable consideration hereinafter set forth, the parties agree as
follows:

1.Terms and Conditions.  The Award is subject to all the terms and conditions of
the Plan.  All capitalized terms not defined in this Agreement shall have the
meaning stated in the Plan.  If there is any inconsistency between the terms of
this Agreement and the terms of the Plan, the terms of the Plan shall control
unless this Agreement expressly states that an exception to the Plan is being
made.

2.Definitions.  For purposes of this Agreement, the following terms shall have
the meanings stated below.

(a) “Base Salary” means the base salary you received during the Performance
Period, (i) including any amounts deferred pursuant to an election under any
401(k) plan, pre-tax premium plan, deferred compensation plan, or flexible
spending account sponsored by the Company or any Subsidiary, and any overtime
paid to you as an offshore employee required by your standard work schedule, but
(ii)  excluding any incentive compensation, employee benefit, or other benefit
paid or provided under any incentive, bonus or employee benefit plan sponsored
by the Company or any Subsidiary, all overtime paid other than as specified in
(i) above and/or any excellence award, gains upon stock option exercises,
restricted stock grants or vesting, moving or travel expense reimbursement, sign
on bonus, imputed income, or tax gross-ups, without regard to whether the
payment or gain is taxable income to you.

(b) “Disability” means your permanent disability as defined in your Individual
Agreement.  In the event that there is no existing written Individual Agreement
between you and the Company or if any such agreement does not define Disability,
the term “Disability” shall mean: (i) a physical or mental impairment of
sufficient severity that, in the opinion of the Company, (A) you are unable to
continue performing the duties assigned to you prior to such impairment or
(B) your condition entitles you to disability benefits under any insurance or
employee benefit plan of the Company or its Subsidiaries, and (ii) the
impairment or condition is cited by the Company as the reason for your
termination; provided, however, that in all cases, the term Disability shall be
applied and interpreted in compliance with section 409A of the Code and the
regulations thereunder.

 

   

Executive: Krohn

--------------------------------------------------------------------------------

(c) “Individual Agreement” means any employment or severance agreement, if any,
between you and the Company or any Subsidiary.

(d) “Performance Goals” means the performance criteria established by the
Committee pursuant to Section 8 of the Plan and set forth in Appendix A attached
hereto.

(e) “Performance Period” means the Company’s complete fiscal year ending
December 31, 2013.

(f) “Total Performance Score” means the aggregate number of points you are
assigned as a result of the Committee’s review, analysis and certification of
the achievement of the applicable Performance Goals set forth in Appendix A
attached hereto for the Performance Period.  

3.Effect of Award Agreement.   By signing this Agreement, you (a) acknowledge
receipt of and represent that you have read and are familiar with this
Agreement; (b) accept this Award subject to all of the terms and conditions of
the Agreement and the Plan; and (c) agree to accept as binding, conclusive and
final all decisions or interpretations of the Committee.

4.Target Award.  You are hereby awarded a target Award of _____% of your Base
Salary (referred to herein as your “Target Award”) subject to the terms and
conditions set forth in the Plan and this Agreement.  Subject to Sections 5 and
8 below, your Total Performance Score will determine whether you may receive an
Award less than, equal to, or greater than your Target Award.

5.Minimum and Maximum Performance Levels.  As a condition of payment of the
Award, your Total Performance Score must reach 40 or above; Total Performance
Scores of 0 through 39.99 (Below Threshold) shall not result in the payment of
any portion of your Award.  The maximum Total Performance Score you may be
assigned shall not exceed 200, nor may the payout of your Award exceed 200% of
your Target Award amount.    

6.Award Calculation.  Your Award will be calculated as follows:

(a) Based on your Total Performance Score, the payout amount of your Award will
be determined using the chart below:

 

   

Performance Level

Total Performance Score

   

Percentage of Target Award
Paid to You

   

Maximum

200

200

%

Target

100

100

%

Threshold

50

50

%

Below Threshold

0

0

%

(b) General Terms.  

(i) Payout multiples between the numbers 0 and 200 on the chart in Section 6(a)
above will be calculated using straight-line interpolation.

(ii) Any Award that is earned will be settled in the form of shares of Stock and
granted pursuant to the Plan.  The number of shares of Stock to be granted to
you shall be calculated by dividing the value of the earned Award (your Total
Performance Score expressed as a percentage times your Target Award) divided by
the closing price of the Stock as of the trading day immediately

 

 

 2 

Executive:   Krohn

--------------------------------------------------------------------------------

preceding the date the Award is settled (adjusted for taxes pursuant to
Section 10 hereof and rounded down to the next whole number). The resulting
shares of Stock will be granted to you as soon as practicable after the
Committee has certified the applicable Performance Goals were achieved for the
Performance Period, but in no event later than the seventy-fifth (75th) day
following the date the Performance Period ends. Any remaining value of the
earned Award will be paid to you in cash at the same time that your Stock is
granted to you.

(iii) You must be employed by September 30 within the Performance Period in
order to be eligible to participate in the Plan for the Performance Period.

7.Effect of Termination of Employment.  Notwithstanding any provisions to the
contrary below  this Section 7, in the event of any inconsistency between this
Section 7 and any written Individual Agreement you may have, the terms of such
an Individual Agreement will control.  However, to the extent such an Individual
Agreement provides for a payment of your annual bonus in cash, your Award will
be settled in accordance with Section 6(b)(ii) above in the form of Stock.  In
the event you do not have an Individual Agreement or your Individual Agreement
does not address the treatment of Annual Incentive Awards under the Plan, and
your employment is terminated at any time on or after the Award Date and before
the Award is paid or settled, your Award will be treated as follows:

(a) Death or Disability.  If your termination of employment is a result of your
death or Disability, as determined by the Company in its sole and complete
discretion, you will receive a pro-rata Award, if an Award is payable for the
Performance Period,  based on the Base Salary you received during the
Performance Period (the “Pro-Rata Award”); provided, however, that you must have
been employed with the Company for a minimum of 90 days during the Performance
Period in order to be eligible for a Pro-Rata Award described in this
Section 7(a).  You, your beneficiaries, or your estate, as applicable, will
receive the number of shares of  Stock  equal to your Pro-Rata Award (your Total
Performance Score expressed as a percentage times your Target Award)  divided by
the closing price of the Stock as of the trading day immediately preceding the
date the Award is settled (adjusted for taxes pursuant to Section 10 hereof and
rounded down to the next whole number).The resulting shares of Stock will be
granted to you as soon as practicable after the Committee has certified the
applicable Performance Goals were achieved for the Performance Period, but in no
event later than the seventy-fifth (75th) day following the date the Performance
Period ends. Any remaining value of the earned Award will be paid to you, your
beneficiaries or your estate, as applicable, in cash at the same time that your
Stock is granted pursuant to this Section 7(a).

(b) Terminations other than Death or Disability.  Unless your termination of
employment is a result of your death or Disability, you must be employed by the
Company or a Subsidiary on the date Awards are paid in order to be eligible to
receive settlement of an Award.  You have no vested interest in the Award prior
to the Award actually being paid or settled to you by the Company.  If your
employment with the Company or a Subsidiary terminates for any reason other than
your death or Disability, whether your termination is voluntary or involuntary,
with or without cause, you will not be eligible to receive payment or settlement
of any Award for the Performance Period.

8.Right of the Committee.  The Committee has the right to reduce or eliminate
your Award for any reason regardless of the amount of your Total Performance
Score achieved.

9.Right of the Company and Subsidiaries to Terminate Services.  Nothing in this
Agreement confers upon you the right to continue in the employ of the Company or
any Subsidiary, or interfere in any way with the rights of the Company or any
Subsidiary to terminate your employment at any time, with or without cause.

 

 

 3 

Executive:   Krohn

--------------------------------------------------------------------------------

10.Withholding Taxes.  The Company may require you to pay to the Company (or the
Company’s Subsidiary if you are an employee of a Subsidiary of the Company), an
amount the Company deems necessary to satisfy its (or its Subsidiary’s) current
or future obligation to withhold federal, state or local income or other taxes
that you incur as a result of the Award.  With respect to any such required tax
withholding, the Company shall withhold from the Stock (and to the extent
necessary, the cash payment) to be issued to you under this Agreement the amount
necessary to satisfy the Company’s obligation to withhold taxes.  To the extent
that the Company withholds shares of Stock, the determination of how many shares
to withhold will be based on the Stock’s Fair Market Value at the time such
determination is made.  

11.Furnish Information.  You agree to furnish to the Company all information
requested by the Company to enable it to comply with any reporting or other
requirements imposed upon the Company by or under any applicable statute or
regulation.

12.No Liability for Good Faith Determinations.  The Company, the Committee and
the members of the Board shall not be liable for any act, omission or
determination taken or made in good faith with respect to this Agreement or the
Award granted hereunder.

13.Execution of Receipts and Releases.  Any payment of stock or cash to you, or
to your legal representative, heir, legatee or distributee, in accordance with
the provisions hereof, shall, to the extent thereof, be in full satisfaction of
all claims of such Persons hereunder. The Company may require you or your legal
representative, heir, legatee or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as the Company
shall determine.

14.Notice.  All notices required or permitted under this Agreement must be in
writing and personally delivered or sent by mail and shall be deemed to be
delivered on the date on which it is actually received by the person to whom it
is properly addressed or if earlier the date it is sent via certified United
States mail.

15.Waiver of Notice.  Any person entitled to notice hereunder may waive such
notice in writing.

16.Information Confidential.  As partial consideration for the granting of the
Award hereunder, you hereby agree to keep confidential all information and
knowledge, except that which has been disclosed in any public filings required
by law, that you have relating to the terms and conditions of this Agreement;
provided, however, that such information may be disclosed as required by law and
may be given in confidence to your spouse and tax and financial advisors.  In
the event any breach of this promise comes to the attention of the Company, it
shall take into consideration that breach in determining whether to recommend
the grant of any future similar award to you, as a factor weighing against the
advisability of granting any such future award to you.

17.Nontransferability.  Neither this Agreement nor this Award subject to this
Agreement shall be subject in any manner to anticipation, alienation, sale,
exchange, transfer, assignment, pledge, encumbrance or garnishment by your
creditors or your beneficiary, except transfer by will or by the laws of descent
and distribution. All rights with respect to this Agreement shall be exercisable
during your lifetime only by yourself or, if necessary, your guardian or legal
representative.

18.Successors. This Agreement shall be binding upon you, your legal
representatives, heirs, legatees and distributees, and upon the Company, its
successors and assigns.

19.Severability.  If any provision of this Agreement is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions hereof, but such provision shall be fully

 

 

 4 

Executive:   Krohn

--------------------------------------------------------------------------------

severable and this Agreement shall be construed and enforced as if the illegal
or invalid provision had never been included herein.

20.Amendment.  The Committee may amend this Agreement at any time; provided,
however, that no such amendment may adversely affect your rights under this
Agreement without your consent, except to the extent such amendment is
reasonably determined by the Committee, in its sole discretion, to be necessary
to comply with applicable law or to prevent a detrimental accounting impact. No
amendment or addition to this Agreement shall be effective unless in writing.

21.Headings.  The titles and headings of Sections are included for convenience
of reference only and are not to be considered in construction of the provisions
hereof.

22.Governing Law.  All questions arising with respect to the provisions of this
Agreement shall be determined by application of the laws of Texas, without
giving any effect to any conflict of law provisions thereof, except to the
extent Texas state law is preempted by federal law.  

23.Consent to Texas Jurisdiction and Venue.  You hereby consent and agree that
state courts located in Harris County, Texas and the United States District
Court for the Southern District of Texas each shall have personal jurisdiction
and proper venue with respect to any dispute between you and the Company arising
in connection with the Award or this Agreement.  In any dispute with the
Company, you will not raise, and you hereby expressly waive, any objection or
defense to any such jurisdiction as an inconvenient forum.

24. The Plan.  This Agreement is subject to all the terms, conditions,
limitations and restrictions contained in the Plan.

25.Acceptance.  This Agreement shall be deemed accepted by you unless you notify
the Manager of Human Resources of the Company on or before June 20, 2013 that
you reject the Award under this Agreement, in which event the Award shall be
deemed forfeited and this Agreement shall have no further force or effect.

Executed by the Company as of the Award Date.

W&T offshore, Inc.

   

By: /s/ Compensation Committee

     Compensation Committee

   

   

   

           

 

 

 5 

Executive:   Krohn

--------------------------------------------------------------------------------

Exhibit 10.6

   

Appendix A- For Annual Plan

Performance Goals

The Performance Goals for your 2013 Annual Incentive Award shall be comprised of
two equal portions: the “Business Criteria” and the “Company and Individual
Performance Criteria.”  The Business Criteria will comprise 50% of your
potential Award, and the Company and Individual Performance Criteria will
comprise the remaining 50% of your potential Award.   

Your Total Performance Score will be calculated using the criteria and the
scales below. The Committee shall review, analyze and certify the achievement of
each of the criterion below, either for the Company or yourself, as applicable,
and shall determine your Total Performance Score according to the aggregate
number of points you receive from each of the scales below.   

Part 1. Business Criteria

 

Target Criteria

Percentage of Weight Relative to your Total Potential Award

Points

Production Growth: equivalent production at least 110 Bcfe for YE 2013, but
taking into account the effect of property sales, if applicable.

15

%

0-30

Reserve Growth:  Increase in reserves of 120 Bcfe over 2012 YE reserves,
excluding 2013 YE production and the effect of property sales, if applicable.

15

%

0-30

F&D Costs: not to exceed $3.40  per Mcfe at year end 2013

10

%

0-20

LOE & G&A:  2013 LOE and G&A per Mcfe of production no more than a 7% increase
in LOE and G&A per Mcfe of production, measured against 2012 LOE and G&A per
Mcfe of production (excluding hurricane expenses and insurance credits for such
expenses)

10

%

0-20

    Total

50

%

100

   

   

   

   

 

 

A- 1 

Executive:  Krohn

--------------------------------------------------------------------------------

   

The number of points you receive on each individual scale shall be determined as
follows, using a straight-line interpolation:

(a) Production Growth – Year end Production for 2013, but taking into account
the effect of property sales, if applicable.

 

Performance Level

Points

Maximum: greater than 125 Bcfe

30

Target: 110 Bcfe

15

Threshold: 105 Bcfe

7.5

Below Threshold

0

   

(b) Reserve Growth –  In 2013, increase in reserves over 2012 YE reserves,
excluding reductions from 2013 YE production and the effect of property sales,
if applicable.

 

Performance Level

Points

Maximum: increase in reserves of greater than 175 Bcfe over 2012 YE reserves

30

Target:  increase in reserves of 120 Bcfe over 2012 YE reserves

15

Threshold: increase in reserves of 107 Bcfe over 2012 YE reserves

7.5

Below Threshold

0

   

(c) F&D Costs: for 2013 not to exceed a specified dollar amount per Mcfe at year
end 2013.  “F&D” is defined as the total capital dollars spent in 2013 plus
changes in ARO; divided by proved reserves added for the year 2013.

 

Performance Level

Points

Maximum:  F&D costs not to exceed $2.25  per Mcfe at year end 2013

20

Target: F&D costs not to exceed $3.40  per Mcfe at year end 2013

10

Threshold: not to exceed $3.60  per Mcfe at year end 2013

5

Below Threshold

0

   

   

   

   

   

 

 

A- 2 

Executive: Krohn

--------------------------------------------------------------------------------

(d) Combined LOE & G&A:  2013 LOE and G&A per Mcfe of production no more than a
percentage increase in LOE and G&A per Mcfe of production, measured against 2012
LOE and G&A per Mcfe of production (both measurements excluding hurricane
expenses and insurance credits for such expenses).

 

Performance Level

Points

Maximum:  less than a 3% increase in LOE and G&A per Mcfe of production,
measured against 2012 LOE and G&A per Mcfe of production

20

Target:  no more than a 7% increase in LOE and G&A per Mcfe of production,
measured against 2012 LOE and G&A per Mcfe of production

10

Threshold:  no more than a 9% increase in LOE and G&A per Mcfe of production,
measured against 2012 LOE and G&A per Mcfe of production  

5

Below Threshold

0

Part 2. Company and Individual Performance Criteria

 

Criteria

Percentage of Weight Relative to your Total Potential Award

Points

Overall Company Performance Conditions

   

   

   

   

2013 Adjusted EBIDTA,  but taking into account the effect of property sales, if
applicable

20

%

0-40

2013 Adjusted EBIDTA Margin Percentage

15

%

0-30

   

   

   

   

   

   

   

   

   

   

   

   

   

   

   

Individual Performance Conditions

   

   

   

   

Individual Performance as assessed by management for year 2013

15

%

0-30

   

   

   

   

   

Total for Overall Company Performance     Conditions and Individual Performance
Conditions Combined

50

%

100

   

   

   

The number of points you receive on each individual scale shall be determined as
follows, on straight-line interpolation:

(a) Adjusted EBIDTA (Earnings Before Interest, Depreciation, Taxes and
Accretion), but taking into account the effect of property sales, if applicable
for YE2013.

 

Performance Level

Points

Maximum:  Adjusted EBIDTA of $700,000

40

Target: Adjusted EBIDTA of $556,000

20

Threshold: Adjusted EBIDTA of $475,000

10

 

 

A- 3 

Executive: Krohn

--------------------------------------------------------------------------------

   

 

Below Threshold

0

   

(b) Adjusted EBIDTA Margin Percentage YE 2013

 

Performance Level

Points

Maximum:  Adjusted EBIDTA Margin Percentage greater than 70% YE 2013

30

Target: Adjusted EBIDTA Margin Percentage greater than 61% YE 2013

15

Threshold: Adjusted EBIDTA Margin Percentage greater than 58% YE 2013

7.5

Below Threshold

0

   

(c) Individual Performance in 2013, assessed by management

 

Performance Level

Points

Maximum – Far Exceeded Expectations

30

Target – Exceeded Expectations

15

Threshold – Met expectations

7.5

Below Threshold

0

   

   

   

       

 

 

A- 4 

Executive: Krohn

--------------------------------------------------------------------------------