But I also kept some things, of which by far the most important is this: if a PC did nothing in a given situation to earn experience then he doesn't get any for that situation. Period. And this is my beef with "level 'em when it suits" DMs: you're rewarding those who do nothing just as much as those who stick their necks out. Having played with players who would take shameless advantage of this were it possible, I'll never support it.
I have, literally, never run into anyone like this.
If you aren't going to actually play the game, why are you showing up to play the game?
Are you there just to hang out with your friends?
If so, great - hang out with your friends. But I suspect that having a level 6 character when everyone else has a level 7 character isn't going to make you any more invested, since you're just there to hang out, anyway. So, why make the other people there drag your underleveled arse through the dungeon, making you less effective when you do decide to engage?
And, what about the people who can't make it to the game? They get no experience for anything that happened while they were gone? Sorry, in my book, missing the gaming session itself is its own punishment. You miss out on the stories, the hanging out, and the dice rolling. And now you get to be "punished" by losing XP compared to the people who could make it.
Sorry, we're all friends, and when someone can't make a game it's because something more important, and usually nonoptional, came up (and its usually work). Docking them XP to ... encourage better participation ... is jerk thing to do.
But, again, I've never seen anyone actually sit at a table and not actually play at all. And doing so to somehow game this system and get "free XPs" is, well ... It is completely outside of my experience envelope.