Management Annual Incentive Plan


 EXHIBIT 10.4 
 TIDEWATER INC. 
 MANAGEMENT ANNUAL INCENTIVE PLAN 
 For 2010, 2011 and 2012 Fiscal Years 
  

	I.	PLAN OBJECTIVE 

 The primary objective of the
Tidewater Inc. Management Annual Incentive Plan (the “MAIP” or the “Plan”) is to reward certain of Tidewater’s officers and key employees 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.	designate participants and target award percentages for a particular year; 

  

	 	B.	establish performance goals and objectives for a particular year; 

  

	 	C.	consider the achievement of the performance goals and objectives 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 concept for
fiscal 2010, 2011 and 2012 focuses upon Tidewater’s performance in the areas of economic value added (“EVA”), safety and the individual. 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 MAIP 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 Section II above. The Committee has determined
that the







 
participants in this Plan and in the Company’s Executive Officer Annual Incentive Plan shall constitute the “specified employees” of the Company under Section 409A of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder (“Section 409A”). 
  

	V.	PERFORMANCE MEASURES AND STANDARDS 

 The
Committee has designed an annual bonus program for fiscal years 2010, 2011 and 2012 under which potential bonuses will be based upon economic value added, safety performance and individual performance. 
  

	VI.	AWARD OPPORTUNITIES 

 Prior to or early in
each fiscal year, the Committee will specify target incentive awards for each participant. These potential bonus amounts are determined based upon each eligible participant’s base salary multiplied by the target percentage 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 initial hiring during a fiscal year. 
  

	VII.	PERFORMANCE CRITERIA 

 The annual bonus amount
will be based upon EVA growth, safety and individual performance. At target performance levels, each performance component would generate the following: 
  

			
	 EVA
	  	50% of target bonus
	 Safety
	  	25% of target bonus
	 Individual Performance
	  	25% of target bonus

 At EVA, safety and individual performance levels above and below the target levels, the
50%/25%/25% relationship will change. The EVA bonus declared shall not exceed five times target. Each of safety and individual performance shall not exceed one and one-half times target for exceptional performance. 
  

	VIII.	DETERMINATION OF BONUS PAYOUT 

 The
performance criteria described below will be used to determine potential annual bonus amounts. The goals for a particular year will be established by the Compensation Committee prior to or early in each fiscal year. 
  

	 	A.	EVA Criteria. Economic Value Added (“EVA”) equals net operating profit after taxes (“NOPAT”), less a charge for capital employed. NOPAT equals revenues
less operating expenses (including depreciation) and taxes on operating profit. The capital charge equals capital employed multiplied by the weighted average cost of debt and equity. 

 Certain adjustments to NOPAT will be made in determining EVA. Accordingly, the following items reported in the Company’s consolidated statement of
earnings will be added to or subtracted from NOPAT as reported in order to determine EVA for purposes of the Plan: 
  

	 	1.	Cumulative effect of accounting changes; 

  

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	 	2.	Extraordinary items, as that term is defined in Accounting Principles Board Opinion #30; 

  

	 	3.	Discontinued operations; 

  

	 	4.	Unusual or infrequently occurring items (less the amount of related income taxes), as that term is used in Accounting Principles Board Opinion #30; and 


 

	 	5.	All other items that resulted in adjustment to the EVA calculation for purposes of determining the annual bonuses paid by the Company for prior fiscal years.


 The EVA target is set at $5 million additional EVA per year, but may be changed by the Compensation Committee for a future
fiscal year in its discretion. 
 In order to limit volatility in annual bonus payouts and to tie payouts to sustainable value creation, a
bonus bank mechanism applies to the portion of the bonus based upon EVA and paid through the Plan. 
 The materials presented to the
Committee by Stern Stewart & Co. at the Committee meeting held January 21, 2009 (the “Stern Stewart Materials”) provide examples of the calculation of the potential declared EVA portion of the bonus under various scenarios.
The Committee is under no obligation to declare or pay an EVA portion of the bonus. The declared EVA portion of the bonus for a participant may not exceed five times the target EVA portion. Any declared EVA bonus is credited to a participant’s
personal bonus bank account each year, with a payout of (a) up to the lesser of the declared EVA portion for that year or 150% of the target bonus, and (b) one-third of any net positive bank balance paid out. The remaining two-thirds of
the bonus bank is held at risk. 
 In a year in which the EVA bonus declared is a negative number, this negative amount determined
according to the Stern Stewart Materials is deducted from the bonus bank; provided that a participant’s bonus bank balance will not be reduced for any year below negative 0.5 of the participant’s EVA portion target for that year.

 Residual amounts, including negative balances, are banked forward to be credited or debited against future declared bonus amounts. If a
negative balance is more than half of a future positive declaration, one-third of the negative balance will be deducted against the positive declaration in that year, with the remaining negative balance carried forward to subsequent years. If a
negative balance is less than half of a future positive declaration, the entire negative balance will be deducted in that period. Negative balances shall not be held as claims against employees who leave the payroll for any reason. 
  

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	 	B.	Safety Criteria. The safety performance measurement is determined by achievement of the established safety performance goals for the fiscal year for the participant’s
area of responsibility. 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 may, in the
discretion of the Committee, entitle a participant to a safety payment in an amount that is greater than 25% of the pool funding amount and which may be up to 150% of 25% of the target pool funding amount. Pro rating will be permitted. The safety
performance portion of the Plan operates independently from the EVA portion and the individual performance portion and the EVA bonus bank does not impact the payout based upon safety performance. 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. At or near the end of the Fiscal Year, the Compensation Committee will establish a multiple of between 0 and 1.5 times the target payout that will be the declared
amount to which all participants shall be eligible. Each participant’s 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. 

  

	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,
unless otherwise determined by the Committee, the participant or, in the case of death, the participant’s estate or heirs, shall be paid: 

  

	 	1.	any positive balance in the participant’s bonus bank 30 days following termination of employment, and 

  

	 	2.	 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



  

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bonus shall be paid to the participant or, in the case of death, to the participant’s estate or heirs under Article X at the same time as the bonus for such fiscal year is paid to
participants who continue to be employed. 


  

	 	B.	If a participant’s employment is terminated because the participant Retires or is terminated by the Company without Cause, and such termination constitutes a
“separation from service” under Section 409A, unless otherwise determined by the Committee, the participant shall be paid: 

  

	 	1.	any positive balance in the participant’s bonus bank on the first business day that is more than six months following the date of termination of employment, and


  

	 	2.	a pro rata bonus for the fiscal year in which termination occurs, based upon 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. Any such bonus shall be paid to the participant as provided in Article X on the date on which the annual bonus is
paid to participants whose employment did not terminate, except that any portion of such bonus that constitutes a pro rata portion of an amount that would have been credited to the bonus bank absent termination of employment shall be paid on the
later of such date or the first business day that is more than six months following the date of termination of employment. 

  

	 	C.	If a participant’s employment is terminated voluntarily by the participant or if the participant is involuntarily terminated by the Company for Cause,


  

	 	1.	any positive balance in the participant’s bonus bank shall be forfeited, unless otherwise determined by the Committee in its discretion, in which case such positive balance
shall be paid as provided in Article IX.B.1. above; and 

  

	 	2.	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 bonus so awarded shall be paid to the participant as provided in Article IX.B.2.


 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. See Section XII for
terms applicable to a participant for whom amounts credited to the bonus bank are subject to taxation under Section 457A of the Code. 
  

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

	 	3.	the willful and continued failure of the participant to perform substantially 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 

  

	 	4.	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 the June 15 following the end of the fiscal year for which the award is earned, unless deferred by a participant under a separate benefit plan of the Company. The payment of any
positive bonus bank balance that the Committee determines to pay upon termination of employment shall be made as provided in Article IX. 
  

	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 EVA and safety goals, as
well as individual performance, shall determine the extent to which participants may receive bonuses hereunder in the discretion of the 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



  

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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 the requirements of Section 409A or an exception from compliance 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. 

  

	 	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,
including any amounts previously credited to a bonus bank. Payout of any amount subject to Section 409A shall not occur earlier than provided herein, except to the extent permitted by Section 409A. 

  

	 	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. 

  

	XII.	SECTION 457A 

 If compensation earned under
the Plan constitutes nonqualified deferred compensation of a nonqualified entity subject to Section 457A of the Internal Revenue Code of 1986, as amended, and regulations and guidance thereunder (“Section 457A”), amounts credited to
the bonus bank for a particular year will be subject to federal income tax for the year in which such amounts are no longer subject to a substantial risk of forfeiture under Section 457A. In such case, such amounts subject to Section 457A
will be included in the income of the participant for federal income tax purposes in the year that

  

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the amount is no longer subject to a substantial risk of forfeiture regardless of the time at which such amount shall be payable to a participant. The Company shall be required to collect
applicable withholding taxes at the time that such amount is no longer subject to a substantial risk of forfeiture. In order to assist the participant in satisfying the withholding tax obligation, the Company will distribute to the participant from
the bonus bank in the calendar year in which the withholding taxes are required to be collected the amount necessary to satisfy the withholding tax obligation and deduct the tax advance from future distributions with a payment schedule calling for
the repayment of one-third of a previously advanced tax payment per year in each of the next three taxable years. If the Plan distributions in future years are not sufficient to repay the previously advanced tax payments or if such bonus bank
amounts on which tax was paid are never earned and paid to the participant in the future, the repayment of all or a portion of any such tax advances by the participant, after taking into account the benefit of any related tax losses to the
participant, may be forgiven, in the discretion of the Committee. 
 EXECUTED effective as of the 8th day of July 2009. 
  

									
	WITNESSES:	 		 	TIDEWATER INC.
				
	 	 		 	By:	 	 /s/ Bruce D. Lundstrom

	 	 		 		 	 Bruce D. Lundstrom
 Executive Vice President,
 General Counsel and Secretary


  

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