TIDEWATER INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended March 31, 2010, 2009, and 2008  Non-Employee Board of Directors Deferred Stock Unit Plan  F-30 The company began providing a Deferred Stock Unit Plan to its non-employee Board of Directors during  fiscal 2007. The plan provides that each non-employee director is granted a number of stock units having an  aggregate value of $100,000 on the date of grant. Dividend equivalents are paid on the stock units at the  same rate as dividends on the company’s common stock and are re-invested as additional stock units  based upon the fair market value of a share of company common stock on the date of payment of the  dividend. A stock unit represents the right to receive from the company the equivalent value of one share of  company’s common stock in cash. Payment of the value of the stock unit shall be made upon the earlier of  the date that is 15 days following the date the participant ceases to be a director for any reason or upon a  change of control of the company. The participant can elect to receive five annual installments or a lump  sum. The compensation expense related to the Phantom Stock Plan was $2.5 million, $1.4 million, and  $0.7 million during fiscal 2010, 2009 and 2008, respectively. No phantom stock compensation costs were  capitalized as part of the cost of an asset. As of March 31, 2010, total unrecognized phantom stock  compensation costs amounted to $8.8 million, or $7.6 million net of tax. The liability for this plan will be  adjusted in the future until paid to the participant to reflect the value of the units at the respective quarter end  Tidewater stock price.  The total grant date fair value of phantom stock vested during fiscal 2010, 2009 and 2008 was $2.6 million,  $1.1 million, and $36,356, respectively. Also, restrictions on 53,667 time-based shares and 8,969 performance-based shares outstanding at March 31, 2010 would lapse during fiscal 2011 should  performance-based targets be achieved. The fair value of the non-vested phantom shares at March 31, 2010 is $47.27 per unit. The following table sets forth a summary of phantom stock activity of the company for fiscal 2010, 2009 and  2008: Weighted-average Time Performance Grant-Date Based Based Fair Value  Shares  Shares  Non-vested balance at March 31, 2007  $  58.50  5,445  41,600  Granted 56.77 25,904 40,847 Vested 55.76 (652) --- Cancelled/forfeited 58.58 --- (4,500) Non-vested balance at March 31, 2008  57.45  30,697  77,947  Granted 34.48 118,629 3,500 Vested 47.42 (13,493) (9,622) Cancelled/forfeited 57.23 (3,906) (1,500) Non-vested balance at March 31, 2009  44.73  131,927  70,325  Granted 45.69 77,004 --- Vested 45.34 (36,841) (19,875) Cancelled/forfeited 43.14 (2,779) (748) Non-vested balance at March 31, 2010  $  44.94  169,311  49,702 