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    omgicorrespjune30.htm

      June 30,
2009

      Mr. Rufus
Decker

      Accounting
Branch Chief

      U.S.
Securities and Exchange Commission

      100 F
Street, N.E., Mail Stop 7010

      Washington,
D.C. 20549

      Re:           Orion
Marine Group, Inc.

      Form 10-K for the fiscal year ended
December 31, 2008

      Form 10-Q for the period ended March
31, 2009

      Schedule 14A filed on April 13,
2009

      File No. 1-33891

      Dear Mr.
Decker:

      Orion
Marine Group, Inc., (the “Company”) hereby further responds to the comments
received by facsimile on May 28, 2009 (the “Comment Letter”) from the staff of
the Division of Corporation Finance (the “Staff”) of the Securities and Exchange
Commission (the “Commission”).  The responses below are to Staff
comments numbered “8,” “9” and “10” in the Comment Letter, which concern the
Company’s Schedule 14A Definitive Proxy Statement filed on April 13, 2009 (the
“2009 Proxy Statement”). The Company responded to the balance of the Staff’s
comments set forth in the Comment Letter in its response letter to the Staff
dated June 10, 2009 and in a supplement thereto dated June 15, 2009, both of
which have been submitted to the Commission. The Company requested, and the
Staff granted, an extension to June 30, 2009 to provide the responses set forth
below.

      For your
convenience and as requested, the Company’s responses are prefaced by the exact
text of the Staff’s corresponding comment, which in each case is set forth in
bold text.

      SCHEDULE 14A DEFINITIVE
PROXY STATEMENT FILED ON APRIL 13, 2009

      Executive Compensation, page
14

      Compensation Discussion and
Analysis, page
14

      Components of Executive
Compensation, page 15

      Performance-Based Incentive
Compensation, page 16

                8.

                With
      a view toward future disclosure, please provide us with a materially
      complete description and analysis of the individual goals applicable to
      each of your named executive officers, as well as the compensation
      committee's assessment of how each officer performed with respect to those
      goals. In this regard, we note your disclosure on page 17 that "certain
      individual goals were not met in full." Your description and analysis
      should identify both the goals that were not fully met and the officers
      who did not meet those goals.

          Page 1 of
5

      Response:  Set
forth below are summaries of the individual performance goals for each of the
Company’s named executive officers in 2008 and the Compensation Committee's
assessment of each officer’s performance with respect to such
goals.

      Mr. J. Michael Pearson, President and
Chief Executive Officer.  Mr. Pearson’s 2008 individual
performance goals were as follows:

                ·

                Assure the Company’s
      completion of the acquisition of certain assets of Subaqueous Services,
      Inc. (“SSI”), as a component of the Company’s growth
      strategy.  The Company successfully completed this
      acquisition on February 28, 2008, and the Compensation Committee of the
      Company’s Board of Directors determined that Mr. Pearson had met this
      goal.

                ·

                Identify additional potential
      acquisition targets for the Company, with a view to generally positioning
      the Company for future acquisitions, as part of the Company’s growth
      strategy, which includes internal as well as external
      growth.  Mr. Pearson met a significant part of this goal,
      in that several potential acquisition targets were identified and
      assessed; however, the Compensation Committee determined that factors
      beyond Mr. Pearson’s control, including prevailing credit and mergers and
      acquisitions market conditions, effectively prevented Mr. Pearson from
      completely achieving this goal.

      Mr. Mark R. Stauffer, Executive Vice
President and Chief Financial Officer.  Mr. Stauffer’s 2008
individual performance goals were as follows:

                ·

                Assure the completion of the
      Company’s acquisition of certain assets of SSI.  The
      Company successfully completed this acquisition on February 28, 2008, and
      the Compensation Committee determined that Mr. Stauffer had met this
      goal.

                ·

                Develop an internal report for
      tracking Company asset utilization and available asset capacity to enable
      the Company to assess periodic asset utilization rates and asset
      utilization trends.  The Compensation Committee
      determined that Mr. Stauffer had met this
goal.

                ·

                Develop an internal report for
      tracking Company revenues and projects by customer
      class.  The Compensation Committee determined that Mr.
      Stauffer had met this goal.

      Mr. Elliott J. Kennedy, Executive
Vice President, Gulf Region.  Mr. Kennedy’s 2008 individual
performance goals were as follows:

                ·

                Meet financial performance
      targets set for the operations under Mr. Kennedy’s
      supervision.  The Compensation Committee determined that
      Mr. Kennedy met a significant part of this goal.  In determining
      the appropriate 2008 cash incentive bonus for Mr. Kennedy, the Committee
      considered additional factors, including principally Mr. Kennedy’s key
      role in improving the Company’s results of operations during the second
      half of 2008, as described further
below.

                ·

                Implement significant asset
      management initiatives and promote the Company’s services in markets in
      which the Company had not previously participated, as part of the
      Company’s growth strategy and ongoing efforts to improve
      profitability.  The Compensation Committee determined
      that Mr. Kennedy had met these
goals.

          Page 2 of
5

      Mr. James L. Rose, Executive Vice
President, Atlantic Seaboard and Caribbean Region.  Mr. Rose’s
2008 individual performance goals were as follows:

                ·

                Meet financial performance
      targets set for the operations under Mr. Rose’s
      supervision.  The Compensation Committee determined that
      Mr. Rose met a significant part of this goal.  In determining
      the appropriate 2008 cash incentive bonus for Mr. Rose, the Committee
      considered additional factors, including principally Mr. Rose’s key role
      in improving the Company’s results of operations during the second half of
      2008.

                ·

                Implement significant
      marketing and sales, asset management, and
      logistics  initiatives to promote and maintain the Company’s
      presence in additional markets in which the Company had recently began to
      participate, as part of the Company’s growth
      strategy.  The Compensation Committee determined that Mr.
      Rose had met these goals.

      Mr. J. Cabell Acree, III, Vice
President, General Counsel and Secretary.  Mr. Acree’s 2008
individual performance goals were as follows:

                ·

                Provide assistance to the
      Company’s Director, Human Resources and its Health, Safety and
      Environmental (“HS&E”) Managers to improve awareness of and ensure
      compliance with applicable HS&E regulations and Company
      policies.  The Compensation Committee determined that Mr.
      Acree had met this goal.

                ·

                Customize various Company
      contract templates for all aspects of the Company’s contracting
      operations.  The Compensation Committee determined that
      Mr. Acree had met this goal.

                9.

                We
      note your disclosure on page 17 that the compensation committee "awarded a
      supplement to the bonus to certain individuals." With a view toward future
      disclosure, please provide us with a materially
      complete description and analysis of the compensation committee's decision
      to award bonus supplements. In doing so, please identify the named
      executive officers who received supplemental awards and quantify the
      amounts of the awards. You should also address the impact, if any, that
      the unsatisfied individual goals had on the committee's decision to award the
      supplements.

      Response:  The
Compensation Committee determined that supplemental bonuses were necessary and
appropriate to recognize and reward certain executive officers and other senior
managers for their extraordinary efforts in improving the Company’s financial
performance in the second half of 2008. This improved performance enabled the
Company to exceed its revised full-year financial goal for revenue, to achieve
the upper end of its revised 2008 EBITDA margin goal, and to post record results
for both revenues and EBITDA for 2008.

      Each of
Messrs. Pearson and Stauffer were instrumental in formulating a strategy for
improving the Company’s performance during the second half of
2008.  Meanwhile, each of Messrs. Kennedy and Rose, as well as certain
other senior managers, played key roles in implementing that strategy
successfully, including overseeing the necessary operations and managing their
respective subordinates to ensure performance improvements.

          Page 3 of
5

      All of
the named executive officers met their individual performance goals in
substantial part as demonstrated above. The fact that not all goals were
completely achieved was a significant consideration in the Compensation
Committee’s award of cash incentive compensation, and indeed, reduced the bonus
amounts that such individuals otherwise would have been entitled to receive
under the Company’s Executive Incentive Plan.  The Committee, however,
also considered the Company’s need to reward extraordinary management efforts,
to retain executive personnel, and to maintain incentives to support future
growth and more favorable financial performance. As a result, the Committee
determined to award supplemental bonuses to certain other senior managers, and
to the following named executive officers in the respective amounts set forth
below:

                            Mr.
      Pearson

                  $
                  92,058

                            Mr.
      Stauffer

                  $
                  76,100

                            Mr.
      Kennedy

                  $
                  45,400

                            Mr.
      Rose

                  $
                  61,250

                            Total:

                  $
                  274,809

      The
Committee approved a total of $474,674 in supplemental bonuses for named
executive officers and other senior managers. Of that amount, the Committee
awarded approximately $199,865 to senior managers other than named executive
officers, in recognition of their extraordinary efforts in improving the
Company’s results of operations in the second half of 2008 and as a retention
tool to provide incentives for additional future positive
performance.

      Long-Term Incentive
Compensation, page 18

                10.

                 We
      note your disclosure on page 18 that "[t]he Compensation Committee will
      determine on an annual basis who will receive awards under the LTIP and
      the limitations on those awards. The determination will be based on
      factors that normally apply to a company's decision to grant awards, i.e.,
      performance and industry conditions." With a view toward future
      disclosure, please provide us with a materially complete description and
      analysis of the compensation committee's long-term incentive award
      determinations for 2008. In doing so, please address how the committee
      determined the number of shares underlying the option awards received by
      each named executive officer in
2008.

      Response:  For
2008, the Compensation Committee awarded the named executive officers options to
purchase Company common stock under the Company’s Long Term Incentive Plan in
the amounts disclosed in the table in the 2009 Proxy Statement under the caption
“Grants of Plan Based
Awards.” In determining the 2008 awards, the Committee’s primary
consideration was to provide longer-term performance incentives to the named
executive officers in order to align their interests in the long-term growth and
prospects of the Company with those of the Company’s shareholders. Stock options
granted to the named executive officers vest over a three-year period and thus
provide executives with an incentive to manage the Company’s operations for the
longer-term.

      In
particular, the Committee’s analysis included an assessment of the impact that
individual executive officers could likely have on the Company’s future
performance, growth and prospects, in order to determine the relative impact
that such officers could have on enhancing longer-term shareholder value. In
addition, to insure that awards to Company executives were in line with the
market, the Committee, with its independent consultant, carefully assessed
levels of equity incentive compensation paid historically by its peers. Further,
the Committee, in determining the amount of such awards, considered the
Company’s growth strategies and how to best provide incentives for the
achievement of such strategies.

          Page 4 of
5

      As
reflected in the table in the 2009 Proxy Statement under the caption “Grants of Plan Based Awards,”
the Committee determined to grant the greatest number of stock options to
the President and Chief Executive Officer, and then in descending amounts to the
Executive Vice President and Chief Financial Officer, the Company’s Regional
Executive Vice Presidents, and the Company’s General Counsel. In large part, the
respective numbers of stock options granted to the named executive officers
reflect the Committee’s determination of the relative impact that each such
officer could likely have on the creation and protection of long-term
shareholder value and the levels of incentives necessary, consistent with the
market, for insuring superior performance in order to promote the Company’s
longer-term performance, growth and prospects.

      ***

      In
connection with the Company’s response to the Staff’s comments, the Company
acknowledges that:

                ·

                The
      Company is responsible for the adequacy and accuracy of the disclosure in
      its filings;

                ·

                Staff
      comments or changes to disclosure in response to Staff comments do not
      foreclose the Commission from taking any action with respect to the
      filing; and

                ·

                The
      Company may not assert Staff comments as a defense in any proceeding
      initiated by the Commission or any person under the federal securities
      laws of the United States.

      We hope
that our answers above appropriately respond to the Staff’s
comments.  Please do not hesitate to contact me by telephone at (713)
852-6500, or in my absence, Cabell Acree at the same number, with any questions
or comments regarding this correspondence.

      Sincerely,

      /s/ Mark R. Stauffer
Mark R.
Stauffer

      Executive
Vice President and Chief Financial Officer

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