Tracy W. Krohn
W&T OFFSHOREAbout Tracy W. Krohn
Founder and long-tenured leader of W&T Offshore, Inc. (WTI), Krohn has served as Chief Executive Officer since 1983 and Chairman since 2004; he also currently holds the President title. He is age 70 and holds a B.S. in Petroleum Engineering from Louisiana State University . Under his leadership, W&T generated 2024 revenue of $525.3 million, Adjusted EBITDA of $153.6 million, and a 29.3% Adjusted EBITDA margin . Five-year TSR was -70.1% versus a peer group TSR of +41.5%; net debt was $284.2 million at 12/31/2024, and management executed a key 2025 refinancing of second-lien notes to 2029, addressing capital structure overhangs .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Mobil Oil Corporation | Petroleum engineer and offshore drilling supervisor | Pre-1981 (not specified) | Technical operations foundation in offshore drilling |
| Taylor Energy Company | Senior Engineer | 1981–1983 | Offshore engineering experience prior to founding W&T |
| W&T Offshore, Inc. | Treasurer | 1997–2006 | Corporate finance leadership during growth period |
| W&T Offshore, Inc. | President | Founding–Sep 2008; Mar 2017–present | Executive leadership, continuity of strategy |
| Aviara Energy Corporation | Chairman & CEO | 1996–1997 | Executive leadership in energy ventures |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| American Petroleum Institute | Board of Directors | Appointed 2013 | Industry advocacy and policy engagement |
| Harris County Sheriff’s Office Foundation | Chairman | ~7 years | Community leadership and governance |
| Other public company directorships | None | — | No additional board interlocks disclosed |
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 1,150,000 | 905,505 | 800,000 |
| Target Bonus % of Salary | — | — | 100% |
| Annual Cash Incentive Paid ($) | 3,052,438 | 1,184,828 | 972,800 (128% of target, cut back to 95% of 128% per committee) |
| All Other Compensation ($) | 1,110,453 | 174,828 | 29,637 |
| Total Compensation ($) | 12,111,392 | 5,863,561 | 4,171,834 |
Notes:
- CEO base salary reduced from $1.15M to $800k in 2023/2024 to align with peers and shift pay to long-term equity; max annual bonus capped at 200% of target .
- Personal aircraft perquisite eliminated; personal use must be paid per Aircraft Policy (effective May 14, 2023; amended Jan 1, 2024) .
Performance Compensation
Annual Cash Incentive (2024)
| Metric | Target | Actual | Outcome |
|---|---|---|---|
| Production (MMBoe) | 12.9 | 12.2 | Above threshold, below target |
| Proved Reserves (MMBoe, YE) | 110.1 | 127.0 | At maximum objective |
| LOE + G&A ($mm) | 373.0 | 353.7 | Above target, below maximum (company characterization) |
| ESG Score (points) | 8.0 | 12.0 | Above target |
| Cost Control vs AFE (%) | 100% | 101.0% | Near target |
| Adjusted EBITDA Margin (%) | 29.0% | 28.9% | Above threshold, below target |
| Strategic Goals & Priorities | Refinancing, credit agreement, acquisitions | Met (refinancing in Jan 2025, acquisitions Jan/Jun/Dec 2024) | |
| Payout | 128% of target, cut to 95% of achieved → 121.6% | — | Committee exercised discretion |
Long-Term Equity Incentives (2024 design)
| Instrument | Weighting | Performance Period | Key Metric Design | Vesting |
|---|---|---|---|---|
| PSUs – TSR (relative and absolute) | 60% of PSUs | 1/1/2024–12/31/2026 | Earnout 0–200% based on peer-relative TSR; capped at target if absolute TSR negative | Earned at end of period; service through 12/31/2026 required |
| PSUs – CROCE | 40% of PSUs | 1/1/2024–12/31/2026 | Earnout based on 3-year average CROCE | Earned at end of period; service through 12/31/2026 required |
| RSUs (time-based) | 40% of LTI mix (overall RSU vs PSU mix is 40/60) | 3-year | Service-based vesting over three years in equal tranches | Annual installments 2025/2026/2027 |
If the 2024 PSU performance period had ended on 12/31/2024, none of the PSUs would have been eligible to vest (mid-period status) .
2024 Grants (CEO)
| Grant Type | Grant Date | Units | Grant-Date Fair Value ($) |
|---|---|---|---|
| PSUs (2024 tranche) | Aug 8, 2024 | 598,131 (target) | 1,476,187 |
| RSUs (2024 tranche) | Aug 8, 2024 | 398,754 | 893,209 |
| Total Stock Awards (SEC) | 2024 | — | 2,369,397 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 48,374,443 shares; 32.8% of outstanding (147,643,470 shares at 3/31/2025) |
| Insider Ownership Note | Company highlights insider ownership among highest vs peers |
| Unvested RSUs (CEO, 12/31/2024) | 398,754 (2024 grant); 213,334 (2023 grant); 83,874 (2022 grant, vested 1/1/2025) |
| Unearned PSUs (CEO, 12/31/2024) | 598,131 (2024 target); 480,000 (2023 target) |
| Options Outstanding | Company has no outstanding stock options and does not generally grant options |
| Stock Ownership Guidelines | CEO required to hold 5x base salary; retention until compliant; 5-year window to comply |
| Anti-Hedging & Anti-Pledging | Hedging prohibited; pledging prohibited (including margin accounts) |
| 2024 Vested Shares (Liquidity) | 157,737 RSUs vested on 1/1/2024 ($514,223); 106,666 RSUs on 6/5/2024 ($228,265) |
| Insider Trading Controls | Blackout windows, pre-clearance for covered persons; policy filed with 10-K |
Employment Terms
| Provision | CEO Agreement Terms |
|---|---|
| Agreement | Amended and restated April 20, 2023; auto-renewing 1-year terms unless notice given |
| Base Salary Minimum | $800,000 |
| Bonus Eligibility | Annual cash incentive per plan; target 100% of base |
| Severance (No Cause / Good Reason) | 3.0x base salary; pro-rata target bonus; 24 months COBRA differential; equity acceleration (RSUs fully vest; PSUs vest at earned if period ended or at target if not) |
| Change in Control | Equity awards shifted to double-trigger from 2023 onward; no single-trigger vesting |
| 280G Cutback | Payments reduced to avoid excise tax if beneficial on net after-tax basis |
| Restrictive Covenants | Confidentiality; 15-month non-compete and non-solicit post-termination |
| Clawback | NYSE/SEC-compliant clawback adopted in 2023; 3-year lookback for excess incentive-based pay on restatements |
| Perquisites | Personal aircraft perquisite eliminated; personal use paid per policy (effective 5/14/2023; amended 1/1/2024) |
Board Governance
- Roles and independence: Krohn is Chairman, CEO, and President; the Board appointed an independent Presiding Director (John D. Buchanan) in 2024 to enhance independent oversight; all directors other than Krohn are independent under NYSE and SEC rules .
- Committee service: Krohn serves on no Board committees; all standing committees (Audit, Compensation, Nominating & Corporate Governance, ESG) are fully independent .
- Meetings and executive sessions: All directors attended all Board and committee meetings in 2024; non-employee directors hold executive sessions at each regular Board meeting .
- Say-on-Pay: 2024 advisory vote received ~91.56% approval following program reforms enacted in 2023 .
Director Compensation (Krohn)
- As an employee director, Krohn receives no separate director compensation; director compensation table applies to non-employee directors only .
Compensation Structure Analysis
- Shifts implemented in 2023: reduced cash compensation, increased equity mix (60% PSUs / 40% RSUs), removed single-trigger vesting and aircraft perquisite, cut CEO base to $800k, capped maximum annual bonus at 200% .
- Equity grant cadence: annual grants post-fiscal review; policy avoids timing around material nonpublic information; no stock options outstanding .
- Consultant independence: Meridian engaged; no conflicts identified; peer benchmarking at 25th/50th/75th percentiles .
Related Party Transactions (Governance Red Flags)
| Transaction | 2024/2025 Amounts | Notes |
|---|---|---|
| Calculus Lending LLC (affiliate) revolving credit facility | $1.5 million commitment fees (2024); facility terminated Jan 28, 2025 | Sole lender since 2021; replaced by Texas Capital Bank-led facility; no outstanding borrowings under new facility as of proxy |
| Affiliates’ holdings of notes | $21.0M of 11.75% 2026 notes (purchased earlier; repurchased for cash in Jan 2025); $22.0M of new 10.75% 2029 notes purchased | Alignment via capital support; continued investment in company debt |
| Monza Energy LLC JV | Krohn entity 4.5% of total committed capital; $14.5M commitment; W&T contributions $68.2M and distributions $54.0M since inception | JV board includes Krohn; affiliate invested on same terms as third parties |
| Gulf Offshore Logistics (GOL) | $20.3M payments; spouse commissioned ~$0.1M (commission basis) | Services at or below third-party rates; relationship predates marriage |
| Hittner Group (legal services) | ~$1.6M fees in 2024 before Hittner’s executive appointment; none after appointment | Policies require Audit Committee review; Code of Conduct governs RPTs |
Compensation Peer Group (2024 Review)
- Peer group used for structure and pay levels included Amplify (AMPY), Berry (BRY), Diversified (DEC), Gran Tierra (GTE), Gulfport (GPOR), Kosmos (KOS), Ring (REI), Sandridge (SD), SilverBow (SBOW; later acquired), Talos (TALO), VAALCO (EGY), Vital (VTLE) .
Pay Versus Performance and Operating Metrics
| Metric | 2024 | 2023 |
|---|---|---|
| Revenue ($mm) | 525.3 | 532.7 |
| Adjusted EBITDA ($mm) | 153.6 | 183.2 |
| Adjusted EBITDA Margin (%) | 29.3% | 34.4% |
| Net Income ($mm) | (87.1) | 15.6 |
| Net Debt ($mm) | 284.2 | 217.3 |
| Company TSR (value of $100) | $29.86 | $58.63 |
| Peer Group TSR (value of $100) | $141.49 | $146.23 |
Equity Award Inventory (CEO, as of 12/31/2024)
| Award Type | Units | Valuation Basis |
|---|---|---|
| Unvested RSUs (2024 grant) | 398,754 | $1.66 closing price 12/31/2024 |
| Unvested RSUs (2023 grant) | 213,334 | $1.66 closing price 12/31/2024 |
| RSUs (2022 grant; vested 1/1/2025) | 83,874 | $1.66 at 12/31/2024 (pre-vesting table) |
| Unearned PSUs (2024 target) | 598,131 | Target units; 2024–2026 period |
| Unearned PSUs (2023 target) | 480,000 | Target units; 2023–2025 period |
Board Service History and Roles; Dual-Role Implications
- Service: Director since 2004; Chairman since 2004; CEO since founding; President role resumed in 2017 .
- Committees: None; all committees are independent .
- Dual-role considerations: Board cites efficiency and founder ownership to justify combined CEO/Chairman structure; appointed Presiding Director (independent) to bolster oversight; all other directors are independent . Independence mitigants include executive sessions, committee independence, and active shareholder engagement .
Employment Terms – Change-of-Control Economics (Illustrative)
| Scenario | Cash | Equity | Other |
|---|---|---|---|
| Change of Control + Termination (CEO) | $2.4M severance (3x base), $800k pro-rata bonus | ~$2.945M accelerated equity at $1.66 per share | ~$47,639 COBRA differential |
| Death/Disability (CEO) | — | ~$493k accelerated equity | — |
| Termination Without Cause / Good Reason (CEO) | $2.4M severance, $800k pro-rata bonus | ~$2.945M accelerated equity | ~$47,639 COBRA differential |
Risk Indicators & Red Flags
- Dual role (CEO + Chairman) with 32.8% ownership concentration; presence of Presiding Director mitigates but governance risk remains .
- Related party transactions: affiliate lending (terminated), spouse commissions linked to vendor, JV interests, and prior outside legal services; Audit Committee oversight and pricing safeguards disclosed .
- No pledging or hedging permitted; revised clawback policy implemented .
- No stock options or repricings; elimination of single-trigger vesting and certain perquisites aligns with shareholder feedback .
Investment Implications
- Alignment: Large insider stake (32.8%) and shift to PSU-heavy LTI tied to TSR and CROCE improve pay-performance alignment and retention (three-year service conditions) .
- Overhangs addressed: Net debt reduction and 2025 refinancing of second-lien notes reduce capital structure risk, a prior TSR headwind; continued operational metrics (production, reserves, LOE/G&A) drive cash bonus outcomes .
- Governance trade-offs: Founder-led structure with combined CEO/Chairman role and historical related party engagements warrants monitoring; Board independence, executive sessions, and policy updates mitigate but do not eliminate risks .
- Trading signals: 2024 vesting created potential liquidity events; insider trading controls apply; PSU outcomes will be sensitive to TSR and capital efficiency through 2026 .