8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 12, 2010

PETROQUEST ENERGY, INC.
(Exact name of registrant as specified in its charter)

DELAWARE	001-32681	72-1440714
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

400 E. Kaliste Saloom Rd., Suite 6000 Lafayette, Louisiana	70508
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (337) 232-7028

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 12, 2010, the Board of Directors (the “Board”) of PetroQuest Energy, Inc. (the “Company”), based upon the recommendation of the Compensation Committee of the Board (the “Committee”), approved an Annual Incentive Plan (the “Plan”), which will be administered by the Committee. Employees of the Company or any of its subsidiaries may be eligible to participate in the Plan and may be assigned a participation tier (which may be based on salary or responsibility level and the competitive market), as determined on an annual basis by the Committee in its sole discretion. Each participation tier will be assigned a threshold, target and maximum bonus percentage of annual base salary, as determined on an annual basis by the Committee in its sole discretion. Awards under the Plan will be based on the attainment of Company financial and strategic performance criteria, as determined on an annual basis by the Committee in its sole discretion. Awards under the Plan will be paid in cash lump sum amounts after the end of the applicable Plan year, as determined on an annual basis by the Committee in its sole discretion. The Committee, in it sole discretion, may increase or decrease individual awards under the Plan based on an individual’s performance, may determine not to make any awards under the Plan even if the performance criteria have been achieved or may determine to pay a lesser or greater amount to any employee, a group of employees or all employees participating in the Plan. In the event of a Change in Control (as defined in the Plan) during any Plan year, participating employees shall receive their target bonus amount pro rated for the Plan year. In the event of a Change in Control after a Plan year, but prior to the payment of awards under the Plan, the Committee shall determine such awards immediately prior to the Change in Control. The foregoing description of the Plan is qualified in its entirety by reference to the Plan, which is incorporated herein by reference and is attached hereto as Exhibit 10.1.

For the 2010 Plan year, the Committee has established ten participation tiers, which range from Tier 1 for the Chief Executive Officer to Tier 10 for field personnel. The minimum, target and maximum bonus for the Chief Executive Officer, Chief Operating Officer and each Executive Vice President are 0%, 100% and 200% of annual base salary, 0%, 100% and 150% of annual base salary and 0%, 100% and 130% of annual base salary, respectively. In addition, the maximum bonus for the Chief Operating Officer and each Executive Vice President may be increased to 200% of annual base salary based on the individual’s exemplary performance, as determined by the Committee in its sole discretion. For the 2010 Plan year, the Committee has established performance criteria based on strategic objectives as set forth in the table below:

Strategic Objectives	Performance Criteria
Organic growth	Finding and development costs, capital efficiency and internal rates of return
Financial	Cash flow, lease operating expenses, and general and administrative expenses
Balance sheet management	Alignment of cash flow and capital expenditures, revolver balance, net working capital and long term debt
Production and reserves	Production, year-end reserves and reserve life index
Discretionary	Strategic opportunities, health, safety and environment, and other measures as determined by the Committee

After the end of 2010, the Committee will evaluate the performance criteria, and determine Company and individual performance. Each category of performance criteria (based on strategic objective) will be assigned a weight (from 0 to 100%) and performance score (from 1 to 5) by the Committee and the calculation of the bonus will be based on the total performance score, as adjusted for individual performance. The total points required for the 2010 minimum, target and maximum bonus are 5, 15 and 25, respectively. Point totals between the minimum and target and between target and maximum will be interpolated.

Item 5.07 Submission of Matters to a Vote of Security Holders.

The Company held its 2010 Annual Meeting of Stockholders on May 12, 2010. The following proposals were submitted to the holders of the Company’s common stock (the “Common Stock”) for a vote:

1.	The election of six nominees to the Board of Directors; and
2.	The ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2010.

The results of such votes were as follows:

1. The following votes were cast in the election of six nominees to the Board of Directors:

	Number of Votes		Number of Votes		Number of Broker
Name of Nominee	Voted For		Withheld		Non-Votes
Charles T. Goodson		35,309,880		845,552		19,650,846
William W. Rucks, IV		35,385,735		769,697		19,650,846
E. Wayne Nordberg		35,439,876		715,556		19,650,846
Michael L. Finch		35,458,090		697,342		19,650,846
W. J. Gordon, III		35,457,028		697,404		19,650,846
Charles F. Mitchell, II, M.D.		34,436,243		1,719,189		19,650,846

2. The following votes were cast in the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2010:

Number of Votes	Number of Votes		Number of Votes		Number of
Voted For	Voted Against		Abstaining		Broker Non-Votes
55,436,198		304,191		65,889		0

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

10.1. PetroQuest Energy, Inc. Annual Incentive Plan

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 13, 2010

PETROQUEST ENERGY, INC.

/s/ Daniel G. Fournerat                       
Daniel G. Fournerat
Executive Vice President, General
Counsel and Secretary

EX-10.1

Exhibit 10.1

PETROQUEST ENERGY, INC. ANNUAL INCENTIVE PLAN

1. Purpose. The purpose of the PetroQuest Energy, Inc. Annual Incentive Plan (the “Plan”) as adopted by the Board of Directors (the “Board”) of PetroQuest Energy, Inc. (the “Company”) and the compensation committee thereof, is to align the eligible employees’ interests with the Company’s annual strategic goals and to motivate and retain valuable employees with long-term incentive compensation by providing an annual cash bonus based upon the key performance criteria provided herein.

2. Administration. The Plan will be administered by the compensation committee of the Board (the “Compensation Committee”). The Compensation Committee shall have the exclusive authority to interpret and construe the terms of the Plan, provide any omitted terms and to authorize payments hereunder. The Compensation Committee’s determinations shall be final and binding on all persons.

3. Plan Year. The “Plan Year” shall be the calendar year.

4. Eligibility. All employees in good standing of the Company or any of its subsidiaries may be eligible to participate in the Plan as determined by the Compensation Committee in its sole discretion and may be assigned a Tier (as defined below) as determined by the Compensation Committee in its sole discretion (the “Participants”). The Compensation Committee will determine the bonus for the CEO, and generally the CEO will recommend bonuses for Participants who are officers (as defined in Rule 16a-1 promulgated under the Securities Exchange Act of 1934, as amended) for the Compensation Committee’s approval and determination, and executive management will make recommendations to the Compensation Committee for all other Participants for the Compensation Committee’s approval and determination of such bonuses. Employees who join the Company in a Plan Year or who terminate during a Plan Year due to death, disability or retirement (on or after attaining age 65) may participate on a pro rata basis, subject to the sole discretion of the Compensation Committee. Employees who terminate after the end of a Plan Year but prior to the actual payment of the bonus may participate, subject to the sole discretion of the Compensation Committee. All employees who terminate during a Plan Year (voluntarily or involuntarily) will not be entitled to any bonus. The Compensation Committee shall authorize the communication of the Plan concepts and performance criteria to the Plan Participants.

5. Performance Criteria. Awards will be based on the attainment of financial and strategic performance criteria as established by the Compensation Committee in its sole discretion for a Plan Year. The performance criteria for a Plan Year will be attached as an Exhibit to the Plan. Generally, performance criteria for a Plan Year will be determined in the first quarter of the Plan Year.

6. Allocation. Each Participant will be assigned a threshold, target and a maximum bonus percentage of annual base salary based on his or her level in the organization (“Tier”) as determined by the Compensation Committee in its sole discretion. Such Tiers may be established based on salary or responsibility level and the competitive market. The Tiers will be described in the Exhibit containing performance criteria for the applicable Plan Year.

7. Final Bonus Amount and Timing of Payment. Payments will be paid in cash lump sum amounts after the end of the applicable Plan Year and after performance is measured, but in no event later than 2 1/2 months after the end of the applicable Plan Year. The Compensation Committee will exercise its discretion in determining the final bonus amount payable. Individual adjustments up or down, based upon an individual Participant’s performance, will be made as determined by the Compensation Committee in its sole discretion. Notwithstanding anything herein to the contrary, the Compensation Committee in its sole discretion may determine not to pay any amount pursuant to the Plan even if the performance criteria have been achieved or to pay a lesser or greater amount to any individual, group or all Participants.

8. Change in Control. Upon a Change in Control (as defined in the Company’s Amended and Restated 1998 Incentive Plan, as amended from time to time) during a Plan Year, a bonus in the amount of the target bonus (pro rated based on the date of the Change in Control in the Plan Year) for Participants who are employed by the Company on the date of the Change in Control will be paid in a cash lump sum on a date determined by the Compensation Committee in its sole discretion. If a Change in Control occurs after the end of a Plan Year but before bonus payments are made under Section 7, bonus amounts shall be calculated by the Compensation Committee immediately prior to the date of the Change in Control and shall be paid in a cash lump sum on a date determined by the Compensation Committee in its sole discretion and subject to the Compensation Committee’s discretion in Sections 4 and 7.

9. Miscellaneous Provisions.

The Plan is an incentive bonus arrangement and is, therefore, not intended to be subject to the reporting requirements of the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code of 1986, as amended (the “Code”), for certain employee benefit plans. The Plan is a discretionary plan and does not require annual distributions.

• The Board reserves the right to amend, revise, modify, revoke or terminate the Plan at any time in its sole discretion, without prior notice to or consent of Participants. No contractual right to any benefit or payment described herein is created or is intended to be created by this document or any related action of the Board or the Compensation Committee and none should be inferred from the descriptions of this Plan. No officer or other employee of the Company or any of its subsidiaries is automatically entitled to any amount under the Plan.

• No amount hereunder may be assigned or transferred.

• The Company shall have the right to deduct all minimum required withholding for tax purposes from any amount payable to a Participant.

• All amounts payable under this Plan shall be paid from the general assets of the Company and shall remain subject to the creditors of the Company. Neither the establishment of the Plan nor the making of targets hereunder shall be deemed to create a trust. No individual shall have any security or other interest in any of the assets of the Company or any of its subsidiaries, in shares of stock of the Company or any of its subsidiaries or otherwise.

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• An individual shall be considered to be in the employment of the Company as long as he or she remains an officer or other employee of either the Company or any subsidiary of the Company. Nothing in the adoption of the Plan or the making of targets hereunder shall confer on any individual the right to continued employment by the Company or any subsidiary of the Company or affect in any way the right of the Company or such subsidiary to terminate his or her employment at any time.

• Plan estimates will be calculated quarterly and appropriate estimated accruals will be established each quarter by executive management after consultation with the Chairman of the Compensation Committee, and the Compensation Committee will be updated quarterly regarding the status of the Plan estimates and the accruals.

• All provisions of the Plan and all amounts paid or payable hereunder shall be construed in accordance with and governed by the laws of Delaware.

• This Plan is intended to be exempt from the requirements of Code Section 409A and shall be so interpreted.

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