SEITEL, INC. Revised Summary of 2005 Non-Employee Director and ExecutiveOfficer Compensation and Incentive Arrangements

Exhibit 10.5

SEITEL, INC.

Revised Summary of 2005 Non-Employee Director and Executive Officer
Compensation and Incentive Arrangements

General

    The following reflects updated information for revisions made to certain non-employee director and executive officer compensation and incentive arrangements during 2005.

Non-Employee Director Compensation

    For fiscal year 2005, non-employee directors of Seitel, Inc. (the "Company") receive an annual fee of $30,000, annual restricted stock awards valued at $20,000 (granted at the close of the first trading date of the calendar year), $1,500 for each board meeting attended in person and $500 for each board meeting attended by telephone conference, including committee meetings attended.  In addition, the Chairman of the Board receives $250,000 per year on an annualized basis, which was reduced to $100,000 effective July 1, 2005, the Lead Director (which position was left vacant effective June 1, 2005) receives $1,500 per day when performing services on behalf of the Company, and annual fees are paid to each committee chairman as follows: audit committee, $15,000; compensation committee, $10,000; corporate governance and nominating committee $7,500. All directors are entitled to reimbursement for their reasonable out-of-pocket expenditures.

Executive Officer Compensation

    The Company has the following compensatory arrangements with each of its executive officers for fiscal year 2005:

Incentive Plan for 2005

    On January 24, 2005 the Compensation Committee of the Company established the criteria to be used in determining cash bonuses and certain incentive equity awards (the "Incentive Plan") for fiscal year 2005.  The Company's named executive officers and certain other executives participate in the Incentive Plan, which is operated under the Company's 2004 Stock Option Plan (the "Plan").  The targets and financial performance measures established under the Incentive Plan are described below.  The Compensation Committee reserves the right to modify the targets and financial performance measures at any time, or to grant cash bonuses or equity awards to executive officers even if the performance goals are not met.  The cash bonuses and Performance Equity Awards (defined below) are subject to increase or decrease of up to 50% in the discretion of the Compensation Committee.  In order to receive a cash bonus and incentive equity award, if any, the participants must be employed by the Company on the date such cash bonuses and incentive equity awards are paid; however, Messrs. Manson, Callaghan and Restrepo may be eligible for a cash bonus payable after termination in accordance with the terms of each of their written employment agreements.  The Company expects to pay 2005 cash bonuses and Performance Equity Awards, if any, in early 2006.  The Compensation Committee reserves the right to modify the Incentive Plan for subsequent fiscal years.

Cash Bonuses

    The Incentive Plan provides for a target cash bonus for each participant based upon a percentage of the participant's base salary, with the opportunity to earn anywhere from 0% to 200% of the target cash bonus.  The targets, as a percentage of base salary, for the Company's named executive officers are as follows:

    The Compensation Committee established cash margin, net of interest expense (80% weight) and client pre-funding percentage (20% weight) as the financial performance measures under the Incentive Plan.  Cash margin includes cash resales plus all other cash revenues other than from data acquisitions, less cash selling, general and administrative expenses, and cost of goods sold.  Cash resales result when the Company invoices customers for purchases of licenses to data from the Company's library.  Other cash revenues are primarily from the reproduction and delivery of seismic data.  Client prefunding percentage is the average of all revenue pre-commitments for each new survey as a percentage of the total cost of such survey.  Where the level achieved under the financial performance measures falls between zero and target level or target and maximum levels, the cash bonus is determined by interpolation.

Incentive Equity Awards

    The Incentive Plan includes two categories of equity awards.  Robert D. Monson, Kevin P. Callaghan, Robert J. Simon, William J. Restrepo, and Marcia H. Kendrick are the executives currently eligible for the first category of equity award ("Key Executive Award(s)").  With the exception of Mr. Restrepo, the 2005 Key Executive Awards have been made in shares of the Company's restricted common stock, par value $.01 per share (the "Common Stock"), under the Plan as follows:

    Mr. Restrepo's 2005 Key Executive Award will be valued at approximately $52,600 and payable in shares of restricted Common Stock based on the closing price of the Common Stock on the first trading day in 2006.

    Mr. Monson's Key Executive Award of 316,000 shares of restricted Common Stock was included in the 1,000,000 shares of restricted Common Stock awarded to him on December 15, 2004, and is subject to increase.  He is entitled to a 2005 Key Executive Award of restricted Common Stock in an amount equal to 90% of his base salary ($360,000) and has been deemed to have received $316,000 of this amount with the 316,000 shares already awarded.  The closing price of the Common Stock on the first trading day in 2006 will be divided into $44,000 to arrive at the number of additional restricted Common Stock to be awarded to Mr. Monson.  Unless modified by the Compensation Committee and except as noted below, Key Executive Awards in subsequent years will be made in shares of restricted Common Stock in dollar amounts equal to the participant's target percentage (Mr. Monson (90%), Mr. Callaghan (60%)⁽¹⁾, Mr. Simon (60%), Mr. Restrepo (50%), and Ms. Kendrick (25%)) multiplied by the participant's base salary.  These subsequent year Key Executive Awards, will be made based on the closing price of the Common Stock on the first trading day of the year.

    All participants in the Incentive Plan are eligible for the second category of equity awards ("Performance Equity Awards"), which will be made in shares of restricted Common Stock (except as noted below) in a dollar amount equal to the participant's target percentage multiplied by the participant's cash bonus amount.  Performance Equity Awards will be made only if the participant meets the performance criteria to receive a cash bonus as described above.  The named executive officers' target percentages for a Performance Equity Award are as follows: