UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.__)
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OVERSEAS SHIPHOLDING GROUP, |
(Name of Registrant as Specified In Its Charter) |
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Notice of Annual Meeting of Stockholders of Overseas Shipholding Group, Inc.
DATE AND TIME
Thursday, June 15, 2023 at 9:30 am, Eastern Time.
LOCATION
The Annual Meeting is to bebeing held in the Brenner Emory Smoot Training Center at 2000 Barge Avenue, Tampa, FL 33605 on Thursday, May 28, 2020 at 8:30 a.m., Eastern Time ("ET"). However, as discussed in the accompanying Proxy Statement (see "Remote Participation in Annual Meeting"), due to concerns regarding the coronavirus pandemic, youvirtually. Stockholders may participate by meansdialing (844) 200-6205 for U.S. callers and (929) 526-1599 for international callers and entering Access Code 601936.
RECORD DATE
Stockholders of remote communication. You will be notifiedrecord at the close of business on April 17, 2023, are the details through a press release prioronly stockholders entitled to notice of, and to vote at, the annual meeting.
MATERIALS
These proxy materials and the Company’s Annual Meeting and via our website at
ITEMS OF BUSINESS
(1) | to elect |
(2) | to approve, on an advisory basis, the |
(3) | to approve, on an advisory basis, the |
(4) | to ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for |
(5) | to amend our Amended and Restated Certificate of Incorporation to permit the exculpation of officers in certain circumstances as permitted by Delaware law; and |
(6) | to transact such other business as may properly be brought before the Annual Meeting. |
We are taking advantage ofutilizing the Securities and Exchange Commission (“SEC”) rules that allow issuers to furnish proxy materials to their stockholders over the Internet. We believe these rules allow us to provide stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting. If you received a printed copy of the materials, we have enclosed a copy of the Company's Annual Report on2022 Form 10-K for the year ended December 31, 2019 with this Notice and the Proxy Statement.
It is very important that you are represented at the Annual Meeting and that your shares are voted. We urge you to vote as soon as possible by telephone, over the Internet, or by marking, signing and returning your proxy or voting instruction card, even if you plan to attend the Annual Meeting in person.
/s/ SUSAN ALLAN | |
Vice President, General Counsel and Corporate Secretary | |
Tampa, Florida | |
April |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on June 15, 2023: This Notice of Annual Meeting, of Stockholders of the Company to be held on May 28, 2020, the Company's Proxy Statement, for the 2020 Annual Meeting of Stockholders and the Annual Report on2022 Form 10-K for the year ended December 31, 2019 are available at
TABLE OF CONTENTS
REMOTE PARTICIPATION IN THE ANNUAL MEETING | 1 | |
PROXY SUMMARY | 1 | |
6 | ||
11 | ||
15 | ||
HOW WE COMPENSATE OUR EXECUTIVES | 16 | |
OUR COMPENSATION PRINCIPLES, COMPONENTS AND PRACTICES | 18 | |
30 | ||
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END | 32 | |
34 | ||
35 | ||
ADVISORY VOTE ON THE APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS (PROPOSAL NO. 2) | 36 | |
37 | ||
38 | ||
40 | ||
41 | ||
43 | ||
45 | ||
46 | ||
INFORMATION CONCERNING SOLICITATION AND VOTING | 49 | |
52 |
i
OVERSEAS SHIPHOLDING GROUP, INC.
302 Knights Run Avenue, Suite 1200
Tampa, FL 33602
PROXY STATEMENT
REMOTE PARTICIPATION IN THE ANNUAL MEETING
Our Annual Meeting will be held in person at the location given in the Notice of Meeting. However, given the ongoing coronavirus pandemic, our stockholders’ health and travel concerns, and federal, state, and local government actions, you mayvirtually. To participate in the meeting by means of remote communication. We will announce arrangementsAnnual Meeting, dial (844) 200-6205 for your remote participation as promptly as practicable, including by issuing a press releaseU.S. callers and by posting information on our website.(929) 526-1599 for international callers and enter Access Code 601936. Please monitor our communications and our website at
Stockholders can ask questions by using the call-in option only. The call will be hosted by a moderator who will provide instructions on how to ask a question when the Q&A section of the meeting date. As always, we encourageis set to begin. If you have technical difficulties in joining the meeting, you should email investor-relations@osg.com for assistance.
We urge you to vote as soon as possible by telephone or over the Internet. If you wish to vote on the date of the Annual Meeting or to change your vote, you may do so by sending an email to investor-relations@osg.com and attaching your proxy card or if your shares priorare held by a bank, broker, or other nominee, your voting instruction form and the legal proxy provided by your bank, broker or other nominee. This information is necessary in order for your vote to be counted. Your email must be received by 9:35 a.m. (ET) on Thursday, June 15, 2023 in order for your vote to be counted (or your change of vote to be effective).
An audio replay of the Annual Meeting.
This summary provides an overview of the information contained in the Proxy Statement. This summaryIt is not intended to provide all of the information withinin the Proxy Statement, which we recommend that you should read and consider prior to voting. We also invite you to review our Annual Report on2022 Form 10-K for the year ended December 31, 2019and our recently issued Sustainability Report (the "2019 Form 10-K"“Sustainability Report”) to obtain a more comprehensive discussion of Overseas Shipholding Group, Inc.
OSG qualifies as a Smaller Reporting Company under SEC rules. As a Smaller Reporting Company, we are permitted to provide reducedomit certain disclosures infrom this Proxy Statement that are required for larger companies, including thosesome additional disclosures relating to executive compensation. Accordingly, we have omitted certain disclosures on those matters. However, we recognize the importance of transparency and, in some cases,accordingly, have chosen to provide many of thecertain compensation-related disclosures required for larger public companies and that we historically provided.are not required to provide.
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Voting Matters
Our stockholders are being asked to vote on the following matters at our 20202023 Annual Meeting:
PROPOSALS | BOARD RECOMMENDATIONS | |
The Board and the Corporate Governance and Risk Assessment Committee believe that each of the | FOR Each Director Nominee | |
Officers for 2022 | ||
The Human Resources and Compensation | FOR | |
Stockholders may vote to hold a say-on-pay vote every one, two, or three years, or may abstain from voting. In 2017, the stockholders voted to hold the say-on-pay vote every year, which has been done. While this vote is non-binding, the Board and | FOR Every One (1) Year | |
PROPOSAL 4. Ratification of appointment of the independent registered public accounting firm. | ||
The Audit Committee believes it to be in the best interest of the Company and its stockholders to retain the services of Grant Thornton LLP as the independent auditors of the Company for the fiscal year ending December 31, | FOR | |
PROPOSAL 5. Approval to amend the Company’s certificate of incorporation to permit the exculpation of officers in certain circumstances, as permitted by the State of Delaware. | ||
The Board and the Corporate Governance and Risk Assessment Committee believe that it is appropriate to amend the Company’s Certificate of Incorporation to permit the exculpation of certain officers in certain circumstances, as permitted by the State of Delaware, and ask the stockholders to vote in favor of this amendment. | FOR |
Company Overview
OSG is a leading provider of energy transportation services, delivering crude oil and petroleum products to major oil companies and refiners. OurOSG’s 21-vessel U.S. flag fleet includesconsists of three Suezmax crude oil tankers doing business in Alaska, four articulated tug-barge units, three shuttle tankers, seven medium range tankers, one tanker in cold layup, and articulated tug barges, or ATBs,three non-Jones Act tankers, two of which 20 operate under the U.S. Jones Act and four operate internationally (including two that participate in the U.S. Maritime Security Program).Program. We provide safe, efficient, and reliable transportation to our customers and strive to ensure the highest standards of safety and environmental compliance throughout our organization.
Board Highlights
BOARD OF DIRECTORS | OSG Committee Membership | ||||||
Name | Age | Director Since | Primary Occupation | A | C | G | |
Douglas Wheat (Non-Executive Chairman) | 69 | 2014 | Managing partner of Wheat Investments | ||||
Rebecca DeLaet | 52 | ** | Former CFO of O.G. Energy | ||||
Joseph I. Kronsberg | 37 | 2015 | Partner at Cyrus Capital Partners, L.P. | ||||
Anja L. Manuel | 45 | 2017 | Founding partner at RiceHadleyGates LLC | X | X* | ||
Samuel H. Norton | 61 | 2014 | CEO and President of OSG | ||||
John P. Reddy | 67 | 2018 | Business consultant and private investor | X* | X | ||
Julie E. Silcock | 64 | 2018 | Co-head of Southwest Investment Banking franchise at Houlihan Lokey | X | X* | ||
Gary Eugene Taylor | 66 | 2014 | Former member of U.S. Congress | X | X | ||
Ty Wallach | 48 | 2015 | Managing Director and CIO of Atlas Merchant Capitol LLC | X |
BOARD OF DIRECTORS (as of April 3, 2023) | OSG Committee Membership | |||||
Name | Age | Tenure years (1) | Primary Occupation | A | C | G |
Douglas Wheat (Non-Executive Chairman) | 72 | 9 | Managing Partner of Wheat Investments | |||
Rebecca K. DeLaet | 55 | 3 | Former CFO of O.G. Energy | X | X | |
Joseph I. Kronsberg | 40 | 8 | Former Partner at Cyrus Capital Partners, L.P. | X | ||
Anja L. Manuel (2) | 48 | 6 | Founding Partner at Rice, Hadley, Gates & Manuel LLC | X | X* | |
Samuel H. Norton | 64 | 9 | CEO and President of OSG | |||
John P. Reddy | 70 | 5 | Former CFO of Spectra Energy and private investor | X* | ||
Julie E. Silcock | 67 | 5 | Senior Advisor to CDX Advisors | X* | X | |
Gary Eugene Taylor | 69 | 9 | Former member of U.S. Congress | X |
* Indicates Chair of the Committee
A - Audit Committee
C - Human Resources and Compensation Committee
G - Corporate Governance and Risk Assessment Committee
(1) | The average tenure of the independent directors is 6.4 years. |
(2) | Anja L. Manuel is a current director but is not running for re-election. Elaine D. Luria, former U.S. Representative for the Second District of Virginia, will be running for election in place of Ms. Manuel. |
Governance Highlights
OSG is committed to maintaining leading corporate governance practices. We believe that sound governance policies encourage accountability of the Board and management, improve our standing within our industry, and promote the long-term interests of our stockholders.
Board Leadership Structure &and Independence
● | We separate the roles of the CEO and Chairman and have an independent, non-executive Chairman of the Board. |
● | Women comprise 37.5% of our Board slate. |
● | All of our directors and nominees are independent, other than our CEO. |
● | Our Board is actively engaged in director succession planning and considers diversity among other selection criteria. |
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Board Practices &and Oversight
● | Regular executive sessions consisting of the independent directors only provide independent directors an opportunity to meet in private. |
● | The average attendance by directors at Board and Committee meetings in 2022 was over 90%. |
● | Oversight of risk management occurs within each Committee, as well as by the Board. |
● | Quarterly oversight of environmental, safety, and social risks of the Company, including climate-change related risks, matters of gender equality. |
● | Our Corporate Governance Guidelines provide for consideration of average tenure of the directors. |
Board meetings had full participation by all directors.
● | We prohibit hedging and pledging of securities owned by directors and employees. |
● | Our directors and officers are required to retain ownership of a certain level of OSG stock in accordance with stock ownership guidelines. |
● | Directors possess a wide range of financial, energy, governance and transportation services experience, including service on other public and non-profit boards and prior service in the U.S. Congress, resulting in diverse viewpoints. |
● | Directors must inform the Corporate Governance and Risk Assessment Committee (the “Governance and Risk Committee”) of any changes in their principal occupation and prior to accepting outside board membership. |
Executive Compensation
Consistent with our goal of enhancing stockholder value, we are committed to aligning executive compensation with our strategic short-term and long-term objectives, as well as with the interests of our stockholders. The compensation disclosed in the Summary Compensation Table and the other related tables reflects compensation decisions that were made in early 20192022, and in prior years, and were based on the terms of employment agreements. In 2018 the Compensation Committee committed to a restructured compensation program for the Named Executive Officers which has been put in place. The section "Revisions made to 2019 Compensation Program" within the "How“How We Compensate Our Executives" section highlightsExecutives” describes our compensation program in greater detaildetail.
Cybersecurity and Cyber Awareness
In order to maintain competitiveness, OSG must utilize technology and adapt our practices to maximize efficiency in the effortconduct of our business. For example, the COVID-19 pandemic forced our business to adjust to the work-from-home environment and changesto utilize technological tools as much as possible. We have digitized most of our documents and we utilize several software applications for data analytics on our operations.
While we recognize the valuable benefits that “going digital” can provide, OSG also takes cybersecurity threats very seriously. We communicate with the Cybersecurity and Infrastructure Security Agency and Federal Bureau of Investigation on threats specific to the maritime industry and corporate operations. Over the last three years, OSG has not experienced any material cyber security violation or occurrence. We have made.in place a cyber security plan. Regular oversight of matters relating to cybersecurity is provided by our Governance and Risk Committee, including annual reviews of the cyber security plan, our current practices, and cyber security-related regulations that impact us.
Our cybersecurity plan is designed to provide malware protection and control to our systems to protect the information and operating technology on board our vessels and in our corporate operations, providing for:
● | incident hotlines for suspicious cyber activity and/or breaches of security, |
● | layered cybersecurity approaches, including next-generation software protections, and |
● | annual information technology and cybersecurity training required for all employees. |
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Environmental and Social Initiatives - Moving Energy with Integrity
OSG recognizes the risk of climate change and the impact carbon emissions have on the environment. Accordingly, we areis committed to operating one of the safest, cleanest and most reliable fleets in theour industry. Our industry is heavily regulated, and we believe our operations are devoted to minimizing our vessels’ environmental impact and ensuring each seafarer's safe return after a voyage. We complyin substantial compliance with theapplicable regulations of the United States, the IMO, andInternational Maritime Organization, the European Union where applicable,and regional and local authorities on the prevention of oil spills, clean air and water, and carbon emissionsemissions.
The Governance and periodically explore opportunities to decrease our carbon footprint when economically feasible.
OSG recently published a Sustainability Report which highlights key actions we have taken to decrease our environmental impact, provide a safe and healthy work environment, promote a responsible and equitable workplace, and provide quality governance practices. The Sustainability Report and our policies relating to health and safety, and environmental and social risks, and bi-annual reviews of the Company’s cyber security risks.
Health and Safety Policy
Following our established |
Maintaining |
● | Oversight by the Governance and Risk Committee of OSG’s safety performance and related key performance indicators. |
Environmental Protection and Social Responsibility Policy
● | Requiring all shoreside employees and seafarers to be trained on and committed to complying with our Code of Business Conduct and Ethics; |
Endeavoring that all |
● | Allocating significant capital to lessen our environmental impact and remain compliant with all applicable regulations; |
● | Installing ballast water treatment systems on our vessels; |
● | Burning low sulfur content fuel in environmentally protected areas along the U.S. coastline; and |
● | Oversight by our Governance and Risk Committee of the adequacy of OSG’s environmental initiatives and strategic planning. |
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ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The nominees for election at the Annual Meeting are listed below. The nominees were selected by the Board upon the recommendation of the Corporate Governance and Risk Assessment Committee (the "Governance and Risk Committee").Committee. Unless otherwise directed, proxies will be voted for the election of these nominees to serve until the 20212024 Annual Meeting of Stockholders of the Company and until each of their successors areis duly elected and qualify.
The Governance and Risk Committee considers the following criteria for identifying and recommending qualified candidates for membership on the Board, seeking to maintain within these criteria appropriate diversity of individuals on the basis of gender, ethnic heritage, international background and life experiences:
● | judgment, character, integrity, expertise, tenure, skills and knowledge useful to the oversight of OSG’s business; |
● | status as “independent” or “audit committee financial expert” or “financially literate” as defined by the New York Stock Exchange (“NYSE”) and the SEC; |
● | high level managerial, business or other relevant experience, including, but not limited to, experience in OSG’s industry or in areas relevant to OSG’s operations; |
● | the candidate’s principal occupation and business associations; |
● | absence of conflicts of interest; |
● | status as a U.S. citizen for compliance with the Jones Act; |
● | ability and willingness of the candidate to spend a sufficient amount of time and energy in furtherance of Board matters; and |
● | average tenure of the Board as a whole. |
As part of its annual assessment of Board structure and composition, the Governance and Risk Committee evaluates the extent to which the Board as a whole satisfies the foregoing criteria. The Committee believesalso engages in succession planning and considers new candidates during this process. Upon an indication from Ms. Manuel that she might not stand for re-election, Ms. Luria was identified as a potential nominee by one of our existing Board members. Following interviews and due diligence, Ms. Luria was determined by the Committee to be a qualified candidate to join our Board.
The Governance and Risk Committee has evaluated the current nominees haveagainst the requisite character, integrity, expertise, skills,above criteria, and knowledge to oversee the Company’s business in the best interests of the Company's stockholders. All the nominees named have been evaluated under the criteria set forth above and have received the recommendation of the Committee for election byand the Board recommend that the stockholders elect all nominees at the Annual Meeting. With the exception of Ms. DeLaet, the nomineesWe expect each nominee for election atas a director to be able to serve if elected. If any nominee is not able to serve, the Annual Meeting were last elected topersons appointed by the Board byand named as proxies in the proxy materials may vote their proxies for substitute nominees, unless the Board chooses to reduce the number of directors serving on the Board. If stockholders atdo not re-elect a nominee who is already a director, Delaware law provides that the 2019 Annual Meeting of Stockholders. The entiredirector continues to serve on the Board recommends that stockholders elect all nominees.
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Director | ||
Business Experience during the Past Five Years and Other Information | ||
Douglas D. Wheat Age: 72 Director and Chairman since 2014 | Mr. Wheat Skills and Qualifications Mr. |
Rebecca DeLaet Age: 55 Director since 2020 Committees: Audit Compensation | Ms. DeLaet Ms. Skills and Qualifications Ms. DeLaet’s substantial experience in the shipping industry and her financial expertise |
Joseph I. Kronsberg Age: 40 Director Since: 2015 Committee: Audit | ||
Mr. Kronsberg Skills and Qualifications Mr. | ||
Elaine D. Luria Age: 47 New Nominee | ||
Ms. Luria served as the | ||
In Congress, Ms. Luria championed a strong military; supporting increased defense budgets, emphasizing shipbuilding and improving key capabilities in the Pacific. Ms. Luria was instrumental in the passage of the Promises to Address Comprehensive Toxics Act and was also a consistent voice on advanced nuclear technology. As a member of Congress, Ms. Luria was consistently lauded as one of the most bipartisan legislators and as the “most effective” freshman member of the House. Before her election, Ms. Luria served two decades in the United States Navy, retiring at Skills and Qualifications Ms. |
Samuel H. Norton Age: 63 Director since 2014 | Mr. Norton was appointed Chief Executive Officer and President of OSG in December 2016. Prior to this appointment, he served as Senior Vice President and President and Chief Executive Officer of Skills and Qualifications Mr. | |
John P. Reddy Age: 69 Director since 2018 Committee: Audit (Chair) | Mr. Reddy is currently a business consultant and private investor. From 2009 until 2017, he served as the Chief Financial Officer of Spectra Energy Corporation, a premier owner and operator of pipeline and midstream energy assets. Prior to that, he served as Senior Vice President and Chief Financial Officer of Atmos Energy Corporation, the Skills and Qualifications Mr. |
Julie E. Silcock Age: 66 Director since 2018 Committees: Compensation (Chair) Governance and Risk | Ms. Silcock Ms.Silcock earned her Master’s of Business Administration degree from Stanford Graduate School of Business and holds a Bachelor of Arts degree from Princeton University. Skills and Qualifications Ms. | |
Gary Eugene Taylor Age: 68 Director since 2014 Committees: Governance and Risk | Mr. Taylor is a former member of the U.S. Congress, having served for 21 years until January 2011. Mr. Taylor Skills and Qualifications Mr. | |
The Board recommends a vote "FOR"“FOR” the election of each of the nominees for director named
in this Proxy Statement.
INFORMATION ABOUT THE BOARD AND CORPORATE GOVERNANCE
Corporate Governance Guidelines.
The Board has adopted Corporate Governance Guidelines (the “Guidelines”) to supportBoard Leadership Structure.
TheOSG currently separates the role of CEO and Chairman, who is currently an independent Director.director. The CEO and the Chairman are in frequent contact with one another and with senior management of the Company.management. They provide advice and recommendations to the full Board for its consideration. They each review in advance the schedule of Board and committee meetings and establish the agenda for each Board meeting in order to ensure thataddress the interests and requirements of the stockholders the directors and other stakeholders are appropriately addressed.stakeholders. The Board believes that the current leadership structure, includinggiven the individuals holding the leadership positions, is in the best interests of stockholders.
The Board, primarily through its Governance and Risk Committee, periodically reviews the Board'sBoard’s leadership structure to determine if it remains appropriate in light of the Company’sOSG’s specific circumstances and needs, current corporate governance standards, market practices and other factors the Board considers relevant. The
Board retains the right to combine the CEORefreshment and Chairman roles in the future if it determines that such a combination would be in the best interests of the Company and its stockholders.
Independence. Under the Corporate Governance Guidelines, which incorporate the standards established by the NYSE, the Board must consist of a majority of independent directors. As determined by the Board, as of the date of this Proxy Statement, all of the nominees other than Mr. Norton have been determined to be independent for purposes of service on the Board. No relationships were identified that would bar any of them from being characterized as independent, other than the matter regarding Mr. Wallach referred to under "Director Compensation" below, which was determined by the Governance and Risk Committee and the Board not to impair Mr. Wallach's independence.independent. The Board also reviews, every quarter, relationships that directors may have with the CompanyOSG to determine whether there are any material relationships that would preclude a director from being independent.
Executive Sessions of the Board.
ToBoard Oversight of Risk Management.
While responsibility for managingAt the committee level, the Audit Committee regularly reviews the financial statements and financial and other internal controls. Further, the Audit Committee schedules private sessions individually with certain members of management, with the
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The Governance and Risk Committee manages riskrisks associated with Board independence, corporate governance, and potential conflicts of interest, as well as oversight over non-financial risk assessmentsrisks associated with the Company'sOSG’s operations. As part of risk management, the Governance and Risk Committee reviews the Company'sOSG’s policies and protective measures against risks, such as cyber securitycybersecurity and environmental matters.
The Human Resources and Compensation Committee (the "Compensation Committee"“Compensation Committee”) annually reviews executive compensation policies and practices, employee benefits, and associated risks. The Compensation Committee conducts annual assessments of any risks associated with OSG'sOSG’s compensation policies and practices and has concluded that such policies and practices do not, individually or in the aggregate, create risks reasonably likely to have a material adverse impact on the Company.
Both the Audit and Compensation Committees also rely on the advice and counsel of the Company'sOSG’s independent registered public accountants and independent compensation consultants, respectively, to raise awareness of any risk issues that may arise during their reviews of the Company'sOSG’s financial statements, audit work and executive compensation policies and practices, as applicable.
Managing risk is an ongoing process inherent in all decisions made by management. The CompanyOSG has an enterprise risk management program that is designed to ensure that risks are taken knowingly and purposefully. Management is responsible for assessing such risks and related mitigation strategies for all material projects and initiatives of the CompanyOSG submitted for consideration ofby the Board. The risk assessment process identifiesseeks to identify the primary risks facing the CompanyOSG and seeks to prioritize these risks, as well as the actions necessary to mitigate and balance these risks.
Meetings of the Board.
The Board heldAnnual Meetings of Stockholders.
Directors are not required, but are strongly encouraged, to attend the annual meeting in person or telephonically. All directorsCommunications with Board Members.
Interested parties, including stockholders, may communicate with any director, with the Chairman, or with the non-management directors as a group by sending a letter to the attention of such director, or the non-management directors as a group, as the case may be, in care ofCode of Business Conduct and Ethics; Other Compliance Policies.
● | A Code of Business Conduct and Ethics, which is an integral part of OSG’s compliance program and embodies the commitment of OSG and its subsidiaries to conduct operations in accordance with the highest legal and ethical standards. This Code applies to all of OSG’s officers, directors and employees. |
● | An Insider Trading Policy that prohibits OSG’s directors and employees from purchasing or selling securities of OSG while in possession of material non-public information or otherwise using such information for their personal benefit. |
● | An Anti-Bribery and Corruption Policy that memorializes our commitment to adhere faithfully to both the letter and spirit of all applicable anti-bribery legislation in the conduct of OSG’s business activities worldwide. |
● | A human rights statement, which can be found on OSG’s website. |
The Code of Business Conduct and Ethics, the Insider Trading Policy and the Anti-Bribery and Corruption Policy are posted on the Company'sOSG’s website,
Prohibition Against Hedging and Pledging.
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Other Directorships and Significant Activities.
The Corporate Governance Guidelines require the CEO and other members of senior management whether or not they are members of the Board, to receive the approval of the Governance and Risk Committee before accepting any outside board membership. The Corporate Governance Guidelines prohibit the CEO from serving on the board of directors of more than one publicly traded company (other than the CompanyOSG or a company in which the CompanyOSG has a significant equity interest).
If a director'sdirector’s principal occupation or business association changes substantially, that director is required by the Corporate Governance Guidelines to inform the Chairman of the Governance and Risk Committee of the change and offer to resign from the Board. In such case, such Committee must recommend to the Board the action, if any, to be taken with respect to the offer of resignation, taking into account the appropriateness of continued Board membership.
Committees
The CompanyBoard has three standing committees of its Board:committees: the Audit Committee, the Governance and Risk Committee, and the Compensation Committee. Each of these committees has a charter that is posted on the Company'sOSG’s website,www.osg.com, and is available in print upon request.
Audit Committee.
The Audit Committee is required to have no fewer than three members, all of whom must be and are independent directors in accordance withThe Audit Committee oversees the Company'sOSG’s accounting, financial reporting process, internal controls, and audits and consults with management, internal auditors, and the Company'sour independent registered public accounting firm on, among other things, matters related to the annual audit, the accounting principles applied to the financial statements, and the oversight of financial risk associated with the Company'sOSG’s operations.
The Audit Committee retains theOSG’S independent registered public accounting firm, subject to stockholder ratification (although the stockholder vote is not binding). The Committee may in its sole discretion terminate the engagement of the firm and direct the appointment of another independent auditor at any time during the year if it determines that such an appointment would be in the best interests of the CompanyOSG and itsour stockholders. The Committee maintains direct responsibility for the compensation and oversight of the independent registered public accounting firm and evaluates its qualifications, performance, and independence. The Committee has established policies and procedures for the pre-approval of all services provided by the independent registered public accounting firm. The Committee conducted a comprehensive, competitive process to determine our independent registered public accounting firm for our fiscal year ending December 31, 2020, concluding the process on April 6, 2020 by appointing Grant Thornton LLP as the independent registered public accounting firm for 2020.
Governance and Risk Assessment Committee.
The Governance and Risk Committee evaluates prospective nominees for election to the Board who are identified or referred by other Board members, management, stockholders or external sources and all self-nominated candidates, and recommends to the Board those individuals who the Committee believes are best qualified to serve on the Board. The Committee will consider recommendations for director nominees from stockholders made in writing to the following address: Corporate Secretary, Overseas Shipholding Group, Inc., 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602.
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The Committee uses the same criteria for evaluating candidates nominated by stockholders and self-nominated candidates as it does for those proposed by other Board members, management, and search consultants. This Committee also developsreviews and recommends to the Board changes to the Corporate Governance Guidelines and leads the annual review of the Board'sBoard’s performance.
The Governance and Risk Committee provides oversight over non-financial risks associated with OSG’s operations, including environmental, social, and governance strategies, policies and practices, cybersecurity risk mitigation, as well as our vessels’ adherence to environmental and regulatory requirement.
Compensation Committee.
The Compensation Committee is required to have no fewer than three members, all of whom must be and are independent directors under the standards set forth in theThe Compensation Committee establishes, oversees, and carries out the Company’sOSG’s compensation philosophy and strategy, and assesses compensation-related risks. It implements the Board'sBoard’s responsibilities relating to the compensation of the Company’sour executive officers and seeks to ensure that they are compensated in a manner consistent with the philosophy and competitive with its peers. This Committee monitors and oversees the preparation of the "Howsection entitled “How We Compensate Our Executives" sectionExecutives” for inclusion in theOSG’s annual proxy.
Related Party Transactions
Related party transactions may present potential or actual conflicts of interest or create the appearance that decisions are based on considerations other than the best interests of the CompanyOSG and itsour stockholders. Our Code of Business Conduct and Ethics requires all directors, officers and employees who may have a potential or apparent conflict of interest to disclose fully all the relevant facts to OSG'sOSG’s legal department any time they arise. EveryAny proposed transaction or relationship that could be viewed as a potential conflict is carefully reviewed, with those determined to be related party transactions reported to the Board for consideration. If the related party is a director, that director will not participate in the consideration. In deciding whether to approve the proposed related party transaction, the Board will determine whether the transaction is on terms that could be obtained in an arm’s length transaction with an unrelated third party and if the transaction is in the best interest of the stockholders and OSG. If the related party transaction is not on such terms, it will not be approved. In addition, every quarter, our Corporate Secretary inspectsdetermines whether any related party transactions have occurred and reports the findings to the Audit Committee. In addition to this reporting requirement, in order to affirmatively seek to identify related party transactions, each year we require our directors and executive officers to complete questionnaires identifying any transactions with the CompanyOSG in which the director or officer has an interest. Any proposed transaction or relationship that could be viewed as a potential conflict is carefully reviewed, with those determined to be related party transactions reported to the Board for consideration. If the related party is a director, that director will not participate in the discussion. In deciding whether to approve the proposed related party transaction, the Board will determine whether the transaction is on terms that could be obtained in an arm's length transaction with an unrelated third party and if the transaction is in the best interest of the stockholders and the Company. If the related party transaction is not on such terms, it will not be approved. There were no related party transactions in 2019.2022.
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DIRECTOR COMPENSATION
Our non-employee directors receive annual cash retainers, each year, with additional annual cash retainers for service as a committee member or chair or for services as Board Chair. In addition, each non-employee director receives an annual award of restricted stock units, or RSUs, under the Director Plan described below. The Non-Employee Director Incentive Compensation Plan (the "Director Plan"“Director Plan”), which permits the grant of various types of equity-based awards to directors. Directors receive an annual grant of time-based RSUs on the date of each annual meeting, with the number of RSUs being equal to the value shown in the table below divided by our closing stock price on the date of grant. No additional fees are paid for attendance at any Board or committee meetings.
For 2019,its current term, the following sets forth the annual cash retainers and RSU values for the Company'sour non-employee directors:
Board Position | Annual cash retainer | Annual RSU awards |
Board membership (non-management directors only) | $65,000 | $85,000 |
Board Chair | $115,000 | $127,000 |
Audit Committee Chair | $18,000 | n/a |
Audit Committee member | $9,000 | n/a |
Compensation Committee Chair | $14,000 | n/a |
Compensation Committee member | $8,000 | n/a |
Governance and Risk Committee Chair | $11,000 | n/a |
Governance and Risk Committee member | $7,000 | n/a |
Board Position | Annual cash retainer $ | Annual RSU awards* $ |
Board membership (non-management directors only) | 65,000 | 85,000 |
Board Chair | 115,000 | 127,000 |
Audit Committee Chair | 18,000 | n/a |
Audit Committee member | 9,000 | n/a |
Compensation Committee Chair | 14,000 | n/a |
Compensation Committee member | 8,000 | n/a |
Governance and Risk Committee Chair | 14,000 | n/a |
Governance and Risk Committee member | 8,000 | n/a |
* Rounded to the nearest 100 shares
The following table shows the total compensation paid to the Company'sOSG’s non-employee directors during 2019:
Name | Retainers earned or Paid in Cash ($)(1) | Stock Awards ($) FMV(2) | Total ($) |
Rebecca DeLaet | 77,500 | 85,000 | 162,500 |
Joseph I. Kronsberg | 69,500 | 85,000 | 154,500 |
Anja Manuel | 86,000 | 85,000 | 171,000 |
John P. Reddy | 86,500 | 85,000 | 171,500 |
Julie E. Silcock | 87,500 | 85,000 | 172,500 |
Gary Eugene Taylor | 76,500 | 85,000 | 161,500 |
Douglas D. Wheat | 115,000 | 127,000 | 242,000 |
Name | Retainers earned or Paid in Cash ($)(1) | Stock Awards ($) FMV(2) | Total ($) | |||
Joseph I. Kronsberg(3) | 65,000 | 85,000 | 150,000 | |||
Anja Manuel | 85,000 | 85,000 | 170,000 | |||
John P. Reddy | 90,000 | 85,000 | 175,000 | |||
Julie E. Silcock | 88,000 | 85,000 | 173,000 | |||
Gary Eugene Taylor | 80,000 | 85,000 | 165,000 | |||
Ty E. Wallach | 73,000 | 85,000 | 158,000 | |||
Douglas D. Wheat | 115,000 | 127,000 | 242,000 |
(1) | Consists of annual retainers for Board |
(2) | The grants, made on May |
OSG encourages stock ownership by directors in order to align their interests with those of the Company'sour stockholders. To further stock ownership by directors, the Board believes that regular grants of equity compensation should be a significant component of director compensation.
The Board has in place stock ownership guidelines for non-employee directors. Under the stock ownership guidelines, each non-employee director is expected within five years of becoming a director, to own shares of the Company'sOSG’s Class A Common Stock with a market value equal to at least three times the annual cash retainer for Board service. The directors are in compliance with these guidelines.
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HOW WE COMPENSATE OUR EXECUTIVES
This section provides information regarding the compensation program for 20192022 for individuals who served as executive officers and who are listed in the Summary Compensation Table (collectively, the "Named“Named Executive Officers"Officers” or "NEOs"“NEOs”). Our NEOs for 2019 were:
Name | Position |
Mr. Samuel H. Norton | President, Chief Executive Officer and Director |
Mr. Richard L. Trueblood | Vice President and Chief Financial Officer |
Mr. Patrick J. | Vice President and Chief Operations Officer |
As noted elsewhere in this Proxy Statement, OSG qualifies as a "Smaller“Smaller Reporting Company,"” or "SRC,"“SRC,” under SEC rules. As a Smaller Reporting Company, we are permitted to provide reduced disclosures in this Proxy Statement, including those relating to executive compensation. Among other things, we are no longer required to have a Compensation Discussion and Analysis. Nevertheless, we are providing the following information to be transparent to our stockholders on how we compensate our executives. This section describes our compensation philosophy, the objectives of our executive compensation program and policies, the elements of the compensation program and how each element fits into our overall compensation philosophy and strategy.
Executing on Strategy: Our 20192022 Performance
The performance measures for our 2022 compensation program were set by our Compensation Committee in the coursemidst of 2019, wesignificant uncertainty as the COVID-19 pandemic continued to executehave significant impacts on our business and Russia had just invaded Ukraine. These developments greatly disrupted the market demand for our services, and the Committee was unable to predict the duration and severity of these developments on our business. In the face of these developments, our executives acted quickly to reactivate our fleet and recruit mariners and they were also successful in focusing on the execution of our long-term business strategies, which has resulted in greater certainty and increased visibility in our financial and operational performance for 2020. We improved our fleet's earning power, reduced our spot market exposure by securing profitable time charters for the majority of our fleet throughout 2019, and we refinanced our debt. The prevailing charter rates we have recently obtained for our conventional tankers are significantly higher than our previous averages, a signal that bodes well for a business characterized by high operating leverage. We have maintained our foundation of strong, stable contracts in the niche businesses in which we operate. Growth was achieved through the acquisition of the Alaska Tanker Company and the three tankers that it operates, and with the delivery of two new tankers and two new barges currently under construction that are set for delivery in 2020. At the same time, we have been phasing out our aging vessels. We succeeded in reducing costs and improving efficiencies across our organization without compromising our commitment tostrategies. Always, safety and quality of operational performance. Safety and quality remainare the key focuses of our operations. Ouroperations, with a foundation of corporate culture is geared towardsthat continuously seekingseeks to achieve the highest standards in protecting the environment and ensuring the health and safety of all of our employees. In light ofWe have issued a Sustainability Report contemporaneously with our Annual Report and this Proxy Statement which states our commitment to reducing our carbon footprint and to making cultural changes that will provide benefits to our human capital.
The narrative that follows describes the COVID-19 pandemic, we have taken proactive measures to protect the safety and health of our crew members and shoreside employees while continuing to provide the critical services for which we are employed.
Say on Pay Results - Consideration of Stockholder Feedback
At our 20192022 annual meeting of stockholders, 93.68%99.26% of the stockholders who voted on the say-on-pay proposal were in favor of our executive compensation program. We believe that this level of support reflected, in part,reflects our entry into a new employment agreement with Mr. Norton,stockholders’ belief that our CEO in 2018 (the "2018 CEO Employment Agreement"), which was designed to more closely align Mr. Norton's interests with those of our stockholderscompensation program is effective and his compensation with sustained improvements in our long–term performance. Key featuresreasonable.
Summary of the 2018 CEO Employment Agreement are that it:
The 2018 CEO Employment Agreement significantly shifts Mr. Norton's compensation to a long-term focus, such that even if Mr. Norton achieves 100% of his short-term incentive cash bonus, his compensation will still be heavily weighted toward long-term incentives, with such weighting continuing to increase toward long-term incentives over time. Mr. Norton's long-term equity incentive opportunities are subject to performance-based vesting to promote sustained improvement in stockholder value, as well as time-based vesting to promote executive retention, and are consistent with the long-term incentive grants of our other NEOs.
The following table summarizesis the mix of compensation levels approved by the Compensation Committee for 2019.the 2022 compensation program:
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Short Term Incentives | Long Term Incentives | ||
NEOs | 2022 Base Salary | Annual Cash Incentives as a % of salary | Annual Equity Grants as a % of salary |
Samuel H. Norton | $425,000 | 100% | 250% |
Richard L. Trueblood | $325,000 | 65% | 100% |
Patrick J. O’Halloran | $300,000 | 65% | 100% |
In addition, in March 2022, the Compensation Committee implemented a retention program to recognize the efforts and high performance of our executives, including their efforts to remain in compliance with our financial covenants during the peak period of the COVID-19 pandemic, which had a significant negative impact on our business. See details under “2022 Retention Grant Program” below.
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OUR COMPENSATION PRINCIPLES, COMPONENTS AND PRACTICES
Our Executive Compensation Philosophy and Practices
We believe that a well-designed compensation program is a powerful tool to attract, motivate, retain and reward top executive and managerial talent and that it should also align the interests of our executivesexecutive officers with those of our stockholders. We have structured our compensation program to drive and support these objectives:
Overall Objectives | |||
Attract, motivate, retain and reward highly talented | |||
– | Align the interests of our | ||
– | Support the long-term retention of | ||
– | Compensate each executive officer within the range of competitive practice (1) within the marketplace for talent in which we operate; (2) based upon the scope and impact of his or her position as it relates to achieving our corporate goals and objectives; and (3) based on the potential of each executive officer to assume increasing responsibility within | ||
– | Discourage excessive or imprudent | ||
Reward the achievement of both the short-term and long-term strategic objectives necessary for sustained optimal business | |||
Pay Mix Objectives | – | Provide a mix of both fixed and variable (“at-risk”) compensation, each of which has a different time horizon and payout form (cash and equity), to reward the achievement of annual and sustained, long-term | |
– | Use our incentive compensation program and plans to align the interests of our | ||
* | |||
* placing a significant portion of our | |||
* encouraging balanced decision-making by employing a variety of performance measures to avoid over-emphasis on the short-term or any one |
Executive Compensation Practices: What We Do and What We Do Not Do
The following table summarizes some of the key features of our executive compensation program.
What We Do | What We | |||
Utilize compensation benchmarking - We review publicly available information to evaluate how our | No hedging and no pledging - Board members, executive officers and other employees are prohibited from engaging in hedging transactions or pledging OSG stock per our Insider Trading Policy | |||
Pay for performance - A significant portion of compensation is at risk, including compensation that is stock objectives | No automatic or guaranteed pay - Salary increases and incentive payments are not guaranteed | |||
No tax gross ups- We do not provide for any tax reimbursements or tax gross-ups | ||||
Compensation recoupment policies - We maintain a strict compensation recoupment (clawback) policy | No special retirement programs - We do not offer a supplemental executive retirement plan | |||
Stock ownership guidelines - Our Board has established robust stock ownership guidelines for executive officers and directors | No stock option re-pricing - We do not allow discounted stock options, reload stock options or stock option re-pricing without stockholder approval | |||
Independent compensation consultant - The Compensation Committee engages an independent compensation consulting firm program | No dividends on unvested equity- Dividend equivalents are accrued but not paid on all unvested equity grants. For Performance-based RSUs | |||
No perquisites - We do not provide any executive perquisites |
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Compensation Risk Mitigation
The Compensation Committee annually assesses risks that may be present in our compensation program and has concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.OSG. Because the Compensation Committee believes that a significant portion of our NEOs’executive officers’ total compensation should be variable and “at risk”, the Committee uses a mix of performance measures and goals in our incentive compensation program that seeks to balancewith the objective of balancing our short- and long-term goals and to discouragediscouraging excessive or inappropriate risk-taking by eliminating any inducement to over-emphasize one goal to the detriment of others. To further mitigate excessive risk taking, we have adopted the following:
Stock Ownership Guidelines | ||||||
Our Corporate Governance Guidelines include stock ownership guidelines for our directors and | ||||||
Value of Shares Owned (Multiple of | ||||||
Position | Salary / Annual | |||||
Non-Employee Directors | 3x (Annual Retainer) | |||||
President / Chief Executive Officer | 5x | |||||
Chief Financial Officer | 3x | |||||
1.5x | ||||||
Directors and | ||||||
For purposes of these stock ownership guidelines, ownership comprises all shares of Class A Common Stock held by the director or executive officer, | ||||||
- Shares deemed to be beneficially owned under federal securities laws; | ||||||
- Any time-based restricted stock or RSUs awarded (whether or not vested); | ||||||
- Any vested, in-the-money stock options; and | ||||||
- Any stock held for the | ||||||
Recoupment “Clawback” Policy | ||||||
Our Incentive Compensation Recoupment Policy provides that in the event | ||||||
No Hedging | Our Insider Trading Policy prohibits hedging, including investing in options, puts, calls, short sales, futures contracts, or other derivative instruments relating to Company securities, regardless of whether such persons have material nonpublic information about | |||||
No Pledging | Our Insider Trading Policy and our stock incentive plans prohibit pledging by our non-employee directors and all | |||||
Equity Plan Features | Our stock incentive plans do not permit repricing or cash buyouts of underwater options or stock appreciation rights without stockholder approval. The Compensation Committee believes |
Roles in Setting Executive Compensation
Role of the Compensation Committee
The primary role of our Compensation Committee, which consists entirely of independent directors, is to establish our compensation philosophy and strategy and to ensure that all ofprovide our executives havewith compensation opportunities consistent with the articulated philosophy and strategy. The Committee takes many factors into account when making compensation decisions with respect to our NEOs,executives, including the individual’s performance and experience; the ability of the individual to affect our long-term growth and success; ourOSG’s overall performance; internal equity among the NEOs;executives; and external, publicly available market data on competitive compensation practices and levels. The Committee typically will establishestablishes the annual compensation program during the first quarter of each fiscal year, setting specific annual and long-term Company goals and designing the compensation program for that year to support and reward the achievement of those goals. In setting the compensation for our NEOs,executive officers, other than the CEO, the Committee considers, among other things, the recommendations of our CEO. The Committee is however, solely responsible for making the final decisionall decisions on the compensation of our NEOs.
The Compensation Committee meets in executive session at least on a quarterly basis, but as oftenand otherwise, as necessary or indicated by events for discussiondiscussions or decisions regarding executive compensation.
Role of Compensation Consultant
The Compensation Committee engaged Lyons Benenson & Company Inc. (“LB&Co”) in 20192022 as its independent compensation consultant to assist and advise the Committee on all aspects of the Company’sOSG’s executive and director compensation programs and related corporate governance matters. LB&Co does not provide other services to the CompanyOSG or its NEOs.executive officers. LB&Co was retained directly by the Committee, which, in its discretion, has the sole authority to select, approve, retain, terminate, and oversee its relationship with its consultant. In selecting its compensation consultant, the Committee considered the independence of LB&Co in accordance with the standards of the NYSE, applicable rules and regulations of the SEC and other laws relating to the independence of advisors and consultants. The Committee determined that the work of LB&Co did not raise any conflict of interest in 2019.
A representative of LB&Co. attended by teleconference in all meetings of the Compensation Committee in 2019.
Role of the CEO in Setting Compensation
Decisions relating to the CEO’s performance and compensation are made by the Compensation Committee in executive session. In making determinations regarding compensation for the other NEOs,executive officers, the Committee generally considers the recommendations of the CEO and the advice received from LB&Co&Co. In making his recommendations, the CEO evaluates the performance of each executive, considers each executive’s compensation in relation to our other officers and executives and assesses retention risks. The Committee then reviews, modifies (as appropriate) or approves these recommendations and either reports the results to the Board or recommends actions for the Board to approve.
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Components of Named Executive Officer Compensation
The Compensation Committee reviews each element of compensation annually to ensure alignment with our compensation philosophy and objectives, as well as to assess our executive compensation program and levels relative to the competitive landscape. Our executive compensation program consistsfor 2022 consisted of the following:
Elements | |||||
What It Is | Objective/ Purpose | ||||
Fixed | |||||
Base Salary | Fixed amount | Rewards scope of responsibility, experience and individual performance. | |||
Annual Incentive Compensation | At-risk | Promotes strong business results by rewarding value drivers, without creating an incentive to take excessive risk. | |||
Serves as key compensation vehicle for rewarding results and differentiating individual performance each | |||||
Long-Term Incentive Compensation (Equity) | Equity grants are | ||||
Three-year performance period | |||||
ROIC PRSUs are payable in shares of Class A Common Stock upon vesting based on 3-year ROIC achievement | Provides executives with a significant stake in the long-term financial success of | ||||
2022 Retention Grant payable in cash and shares with vesting over a 3-year period | Granted to address retention risk. | ||||
Time-based RSUs | Portions vest annually over a three year term. | ||||
Benefits | Retirement, Health and Welfare | 401k plan with Company match and competitive health and welfare benefits | Provides market competitive benefits to attract and retain top talent. | ||
Severance | |||||
Severance Arrangements - Termination Due to Change in Control (Double-Trigger) | Severance and related benefits paid upon termination without cause or resignation for good reason following a change in control | Preserves objectivity when considering transactions in the best interest of stockholders Equity provisions keep each executive officer whole in situations where shares may no longer exist, or awards cannot otherwise be | |||
Accelerated equity vesting upon termination post-change in control | Retains | ||||
Allows | |||||
Assists in attracting top | |||||
Severance Arrangements - Termination without cause or for Good Reason | Severance and related benefits paid upon termination without cause or resignation for good reason | The employment talentAssists |
Named Executive Officer Compensation Mix
The charts below depict the mix of those elements of the 2022 compensation program that are at-risk, such as the cash payment under our Annual Incentive Program (as discussed below) and time and performance-based equity grants, compared to the fixed base salary for the CEO and the NEOs. These charts exclude the 2022 Retention Grant.
Base Salary
We strive to pay base salaries that are market-competitive for a company of our size so as to attract and retain talented executives and to provide a secure fixed level of compensation. The Compensation Committee annuallyregularly reviews the base salaries of our executive officers and compares them to the salaries of senior management among the peer group as well as other regional market data, bearing in mind that total estimated direct compensation opportunity is the principal comparative measure of the competitiveness of our program. Based on its own experience and such comparison, the Committee determines whether the salaries of the NEOsexecutive officers are at levels sufficient to attract, motivate and retain, in concert with other elements of compensation, the executivesexecutive officers who are essential to leading the CompanyOSG and driving stockholder value.
2022 Annual Incentive Program for the Executive Officers
At our 2019 Annual Meeting of Stockholders, our stockholders approved the 2019 Incentive Compensation Plan for Management (the “Plan”) which now governs all incentive awards given by OSG.
The Annual Incentive Program for 2022 (“Annual Incentive Program”) is consistent with our compensation philosophy, meets the requirements of the Plan, and is in line with compensation practices within OSG’s peer group.
The following summarizes the design of the Annual Incentive Program for the executive officers, which is the same design adopted by the Compensation Committee approved a Special Bonus Pool aimed at rewarding key employees for achieving material reductions in SG&A achieved during the period from November 30, 2016 to December 31, 2018, which had to be sustained throughout 2019. Payout under this program was to be made, if the performance criteria were achieved, 50% at the conclusion of the 2018 performance year2020 and 50% at the conclusion of the 2019 performance year. The goals were achieved for the 2018 performance year and a 50% payout was made to the participants as reported in last year's Proxy Statement. In order to receive a payout of the second half of the Special Bonus Pool, SG&A reductions had to be maintained and not increase by more than 10% in 2019. These goals were achieved; therefore, the second half of the Special Bonus Pool was paid following the conclusion of the 2019 performance year. All of the NEOs are participants in this program, with the allocation of the Special Bonus Pool as follows:
• | A pool of funds was established using the metric of FCF, a non-GAAP measure, with the amount of the pool calculated based on a pre-determined formula, setting forth threshold, target and maximum levels of achievement, and containing a SG&A multiplier (the “Pool”). We define FCF as EBITDA less capital expenditures. See the section “Non-GAAP Financial Measures” for further details. |
• | The FCF funding formula is based upon the budget approved by the Board of Directors, with the formula increasing or decreasing from 100% of target incentive amounts depending on achievement. A 15% increase or decrease in FCF will increase or decrease the payout potential by 50%. A decrease of greater than 15% reduces the target payout to 0%. |
The calculation of the Pool excludes the impact (positive and/or negative) of unusual, non-recurring or extraordinary items or expenses; charges for restructurings; discontinued operations; and acquisitions or divestitures. |
Achievement is tied to whether a “safety incident” has occurred. A “safety incident” is defined as: A major safety and/or containment incident which results from negligence or misconduct of management or results from a material violation of state or federal operation, safety or construction regulations or if the responsible party fails to report the incident or to cooperate with the relevant authorities in responding to such incident. |
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Achievement of performance is measured based upon the calculation of the Pool, as described above, and consideration of individual goals approved in February 2019 and February 2020,advance by the Compensation Committee for each of the executive officers as described in the table below. Following the end of the performance period, the Compensation Committee certified the level of achievementFCF formula and distributionevaluated each of the Special Bonus Pool as follows:
Participant | % Participation | First Half for period ended 12/31/18 | Second Half for period ended 12/31/19 | Total | ||||||
Norton | 35% | $ | 921,225 | $ | 921,225 | $ | 1,842,450 | |||
Trueblood | 15% | $ | 394,811 | $ | 394,811 | $ | 789,622 | |||
O'Halloran | 12.5% | $ | 329,009 | $ | 329,009 | $ | 658,018 | |||
Mote | 12.5% | $ | 329,009 | $ | 329,009 | $ | 658,018 | |||
Remainder deposited in the Annual Bonus Pool to be distributed to the other executive officer or to other employees | 25% | $ | 658,018 | $ | 658,018 | $ | 1,316,036 | |||
Total | 100% | $ | 2,632,072 | $ | 2,632,072 | $ | 5,264,144 |
NEO | GOALS | TARGET | ACHIEVEMENT LEVEL |
Samuel H. Norton | ● Maximize the utilization of the fleet and time charter equivalent (“TCE”) Results ● Promote safety culture and environmental stewardship ● Lead the Environmental, Social and Governance (“ESG”) strategy ● Lead efforts to develop plan for transitioning towards a lower carbon intensive operational future ● Lead industry and government partners in standing up the Tanker Security Program | 100% of Base Salary | 150% of Target |
Richard L. Trueblood | ● Maintain and expand relationships with capital providers ● Lead the long-term financial strategy ● Prepare for the transition of the accounting and financial control system to the new enterprise software system | 65% of Base Salary | 150% of Target |
Patrick J. O’Halloran | ● Lead safety and operational performance across the fleet and harmonize best practices ● Lead the development of strategies to reduce OSG’s carbon footprint ● Oversee the transition of operations, quality and purchasing departments to the new enterprise software system ● Maximize the efficient management of dry dock costs | 65% of Base Salary | 150% of Target |
Long Term Incentives
The Special Bonus Pool payments represented approximately 22% of the aggregate net savings in SG&A achieved during the two year performanceCompensation Committee determined to continue to grant performance-based RSU awards that are tied to TSR and cumulative ROIC metrics, with vesting after a three-year period of fiscal 2017 and 2018 and maintained in 2019, without considering the future impact of the continuing reduction in the Company’s cost structure. The aggregate net savings included the following actual SG&A reductions in actual expenses during the performance period:
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Each type of grant and the grant date values are shown in the table below. The grant date value was set at 75% of the NEO's base salary for all except Mr. Norton, whose grant date value was set at 150% of his base salary. Please refer to the Summary Compensation Table and the Outstanding Equity Awards at Fiscal Year-End Table for additional details regarding these grants:
NEO | Total Grant Date Value | Time-Based RSUs (1)(2) | Performance-Based RSUs (1) (3) |
Norton | $637,500 | $318,750 | $318,750 |
Trueblood | $216,000 | $108,000 | $108,000 |
O'Halloran | $189,750 | $94,875 | $94,875 |
Mote | $189,750 | $94,875 | $94,875 |
NEOs | Total Grant Date Value (1) | Time-Based RSUs (2) | Performance-Based RSUs TSR/ROIC (3) | ||||||
Samuel H. Norton | $ | 1,062,500 | $ | 531,250 | $ | 531,250 | |||
Richard L. Trueblood | $ | 325,000 | $ | 162,500 | $ | 162,500 | |||
Patrick J. O’Halloran | $ | 300,000 | $ | 150,000 | $ | 150,000 |
(1) | Represents the grant date value of the awards made on March |
(2) | Represents RSUs, one-third of which vested on March |
(3) | The performance metrics governing these performance-based RSU grants are |
Performance-Based RSU Awards
The 20192022 PRSU awards vestfor TSR and ROIC have three-year performance periods that end on December 31, 2021,2024, subject to the achievement of the respective performance metrics. One half of the grant is subject to a performance goal based on the Company's three-year TSR relative to the three-year TSR of the Index; the other half of the grant is subject to a performance goal based on the Company's cumulative ROIC relative to the Company's budgeted ROIC for the performance period. The vesting of these awards is subject to the Compensation Committee’s certification of the achievement of the articulated goals following the conclusion of the performance period.
Vesting of the TSR awards will beis in accordance with the following schedule, using linear interpolation for achievement between the 40th and 50th percentiles and between the 50th and 75th percentiles:
Total Shareholder Return (TSR)
Company TSR relative to the TSR of the companies in the Index | Percentage of target RSUs that vest and become |
Below 40th Percentile | —% |
40th Percentile | 50% |
50th Percentile | 100% |
75th Percentile or above | 150% |
In the event that the Company's three‐yearOSG’s three-year TSR is greater than the median of the Index but still negative, a maximum of 100% of the target number of PRSUs governed by TSR may be earned. That is, there would be no upside for greater than target achievement if the Company's three‐yearOSG’s three-year TSR is negative. Should the CompanyOSG reach the threshold level of performance for the performance period, 50% of the target number of TSR PRSUs would be earned.
Achievement of the ROIC awards will beis in accordance with the following schedule, using linear interpolation between 80% and 100% attainment and between 100% and 120% attainment of the performance goal:
Return on Invested Capital (ROIC) | |
Performance attainment (as a % of performance goal) | Percentage of target PRSUs that vest and become non-forfeitable |
Below 80% | —% |
80% | 50% |
100% | 100% |
120% or above | 150% |
Return on Invested Capital (ROIC)
Performance attainment (as a % of performance goal) | Percentage of target PRSUs that vest and become non-forfeitable |
Below 80% | —% |
80% | 50% |
100% | 100% |
120% or above | 150% |
2022 Retention Grant Program
The Compensation Committee was concerned about the retention of the executive officers and desired to recognize their significant efforts and high performance managing the business during the COVID-19 pandemic. The Committee evaluated the compensation that the executive officers would receive under the regular program, and determined that an additional award was necessary to achieve the intention of the compensation program goals. Careful consideration was given for each executive officer of the design of the award, the performance period, the total value, and the mix of cash and stock.
The 2022 Retention Grant was made pursuant to the authority and terms of the Plan, which was approved by our stockholders at our 2019 Annual Meeting of Stockholders. This Plan now governs all incentive awards to be granted.
The 2022 Retention Grant will have a total value of $1.87M for the executive officers. Payout will be in cash and equity. The Grant is time-based with vesting over a three-year period on the anniversary of the grant date of March 24, 2022. The vesting schedule is:
- 20% vesting of both the equity and cash portions of the grant on the 1st anniversary;
- 30% vesting of both the equity and cash portions of the grant on the 2nd anniversary; and
- 50% vesting of both the equity and cash portions of the grant on the 3rd anniversary.
The table below sets forth all of the components of the 2022 Retention Grant. The number of shares was determined using the 20-day volume weighted average price ending March 23, 2022 which was $2.09.
2022 Retention Grant | Vest March 24, 2023 | Vest March 24, 2024 | Vest March 24, 2025 | ||||||
NEOs | Cash | Equity | Total | Cash | Shares | Cash | Shares | Cash | Shares |
Norton | $ 275,000 | $ 856,000 | $ 1,131,000 | $ 55,000 | 81,914 | $ 82,500 | 122,871 | $ 137,500 | 204,785 |
Trueblood | $ 300,000 | $ 96,300 | $ 396,300 | $ 60,000 | 9,125 | $ 90,000 | 13,823 | $ 150,000 | 23,038 |
O’Halloran | $ 260,000 | $ 89,880 | $ 349,880 | $ 52,000 | 8,601 | $ 78,000 | 12,901 | $ 130,000 | 21,502 |
Total | $ 835,000 | $ 1,042,108 | $ 1,877,180 | $ 167,000 | 99,730 | $ 250,500 | 149,595 | $ 417,500 | 249,325 |
CEO Employment Agreement
Mr. Norton’s Employment Agreement (the “CEO Employment Agreement”) became effective on December 15, 2018 and will continue until the earliest of Mr. Norton’s death, disability, termination (whether or not for cause), or voluntary resignation (whether or not for good reason). The 2018 CEO Employment Agreement requires that Mr. Norton be nominated annually for election to the Company’sOSG’s Board of Directors and provides for annual cash and long-term equity incentive compensation opportunities and other benefits, as summarized in the following chart:
Annual Base Salary | No less than | |
Annual Incentive Opportunity | ● Eligible for a target bonus equal to 100% of salary payable in cash based on achieving | |
Long-Term Incentive Opportunity | ● Grant date value equal to at least 250% of base salary at target | |
● The number of shares to be granted to be determined | ||
price ● Vesting criteria applicable to all NEO equity awards to be set by the Compensation Committee at the time of | ||
Restrictive Covenants | ● Customary restrictive covenants, including, |
The 2018 CEO Employment Agreement carried forward certain terms of the 2016 CEO Employment Agreement.Mr. Norton’s prior employment agreement. Mr. Norton will retain, continue to vest in, and continue to hold equity awards granted to him prior to the date of the 2018 CEO Employment Agreement. Mr. Norton has agreed to hold all shares of OSG’s Class A Common Stock received that immediately vested until the earliest to occur of (x) a Change in Control (as defined in the Management Incentive Compensation Plan); (y) the Date of Separation from Service (as defined in the 2018 CEO Employment Agreement), solely in the event of a termination of his employment by OSG without Cause or by him for Good Reason (as such terms are defined in the 2018 CEO Employment Agreement); and (z) the third anniversary of the acquisition of any such shares.
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The 2018 CEO Employment Agreement provides for different severance benefits under various scenarios. The following table depicts these scenarios:
Benefit | |
Upon Separation of Service/Treatment of Leaving | |
Termination Without Cause/ Resignation With Good Reason | Accrued |
Earned but unpaid base salary | |
Earned, but unpaid annual incentives, if any | |
Accrued but unused | |
Expense reimbursement | |
Salary Continuation | |
Twelve (12) months base salary continuation at the salary rate in effect as of the date of termination | |
Annual Incentive | |
Annual incentive, not pro-rated, for the year of termination, to the extent that the applicable performance goals are achieved, and annual incentives are paid | |
Treatment Of Outstanding (Unvested) Equity Compensation | |
Time-based equity to accelerate and vest in full | |
A pro rata portion of the performance-based equity to remain in force and vest at the conclusion of the performance period, to the extent the performance goals are achieved and the performance-based equity vests | |
Termination For Cause/Voluntary Resignation (Without Good Reason) | Accrued Benefits (same as stated above) |
All vested/settled equity is retained | |
Vested options remain exercisable until the earlier of (i) one year from the date of termination or (ii) the expiration of the option | |
All unvested equity (both | |
Restructuring grant is subject to clawback |
Termination Due To Death Or Permanent Disability | Accrued Benefits (same as stated above) |
All vested/settled equity is retained | |
Vested options remain exercisable until the earlier of (i) one year from the date of termination or (ii) the expiration of the option | |
All unvested time-based equity accelerates and vests | |
All unvested performance-based equity to be forfeited and canceled | |
Termination Without Cause/Resignation With Good Reason Within Twenty-Four (24) Months Following A Change In Control (Double Trigger) | Double-Trigger Change In Control (requires both CIC and Termination for payout) |
Accrued Benefits (same as stated above) | |
Salary Continuation | |
Twelve months base salary continuation at the salary rate in effect as of the date of termination | |
Annual Incentive | |
Annual incentive, paid at target, for the year of termination | |
Treatment of Outstanding (Unvested) Equity Compensation | |
Time-based equity to accelerate and vest in full | |
Performance-based equity subject to accelerated vesting based on deemed attainment of the maximum performance level, pro-rated for the number of days in the performance period that have lapsed as of the Date of Separation from Service |
The forgoing description is qualified in its entirety by reference to the CEO Employment Agreement, which is an exhibit to OSG’s Annual Report on 10-K and is incorporated by reference herein.
Employment Agreements with NEOsExecutive Officers other than the CEO
OSG has entered into employment agreements with Messrs.Mr. Trueblood O'Halloran, and Mote, allMr. O’Halloran, both of which contain similar terms. TheEach employment agreements provideagreement provides for an annual base salariessalary and a target bonus of at least 15% of each executive'sNEO’s annual base salary, and participation in the second half of the Special Bonus Pool.salary. Each executiveNEO may receive equity awards from time to time inat the discretion of the Compensation Committee, which awards will have a total target value of at least 50% of such executive'sexecutive’s base salary.
The employment agreements provide for severance benefits in the event of termination without cause or resignation for good reason as follows: (i) accrued but unpaid amounts through the date of separation of service; (ii) 12 months'months’ continuation of annual base salary; (iii) the executive'sNEO’s annual bonus for the year of separation pro-rated based on performance factor achievement and the number of days in the fiscal year in which he was employed; and (iv) accelerated vesting of any unvested time-based equity awards.
If, during the two-year period following a change in control of the Company,OSG, an executive’sNEO’s employment is terminated without cause or the executiveNEO resigns for good reason, the employment agreements provide for severance benefits as follows: (i) accrued but unpaid amounts through the executive'sdate of separation of service; (ii) 12 months’ continuation of annual base salary; (iii) the NEO’s target annual bonus for the year of separation; and (ii)(iv) accelerated vesting of any unvested equity awards (time-based and performance-based), satisfied at the designated maximum level and such awards shall vest pro rata based solely upon the provision of services over the performance period.
In the event of Death or Disability the following benefits are provided: (i) accrued but unpaid amounts through the date of separation of service; (ii) the NEO’s annual bonus for the year of separation pro-rated based on performance factor achievement and the number of days in the fiscal year in which he was employed; and (iii) accelerated vesting of any unvested time-based equity awards.
Each executiveNEO agreed to a non-competition and non-solicitation obligation during the executive'sexecutive officers’ employment term and for 12 months thereafter. Each executiveNEO also agreed to confidentiality and non-disparagement obligations during and following employment with the Company,OSG, and to timely delivery of a release in connection with termination of the executive'sNEO’s service. Severance and other benefits are conditioned on compliance with these covenants.
The forgoing description is qualified in its entirety by reference to the employment agreements referred to above, which are exhibits to OSG’s Annual Report on 10-K and are incorporated by reference herein.
Additional Information
Benefits
In general, we provide benefits to our employees (including our NEOs)executive officers) that we believe are important to maintain a competitive total compensation program. Benefits are designed to provide a reasonable level of retirement income and to provide a safety net of protection against the financial concerns and catastrophes that can result from illness, disability or death.
We provide a tax-qualified defined contribution employee benefit plan to employees known as the OSG Ship Management Inc. Savings Plan (the “Savings Plan”). Under the Savings Plan, eligible employees may contribute, on a pre-tax basis, an amount up to the limit imposed by the Internal Revenue Code Section 401(k). In 2019, the Company2022, OSG matched 100% of the first 4% of a participant’s pre-tax contributions and then 50% of pre-tax contributions in excess of 4% but not in excess of 8%.
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SUMMARY COMPENSATION TABLE
The Summary Compensation Table includes individual compensation information for services by the NEOsNamed Executive Officers in all capacities for the CompanyOSG and our subsidiaries.
Name and Principal Position | Year | Salary (1) | Bonus | Stock Awards (2)(3)(4)(5)(6)(7) | Option Awards (4) | Non-Equity Incentive Plan Compensation (8) | All Other Compensation (9) | Total | |||||||||||||
Samuel H. Norton | 2019 | $ | 424,885 | — | $ | 637,500 | — | $ | 921,225 | $ | 18,757 | $ | 2,002,367 | ||||||||
President and | 2018 | $ | 395,000 | — | $ | 1,375,000 | $ | 625,000 | $ | 921,225 | $ | 18,457 | $ | 3,334,682 | |||||||
Chief Executive Officer | |||||||||||||||||||||
Richard L. Trueblood | 2019 | $ | 287,877 | — | $ | 216,000 | — | $ | 394,811 | $ | 18,286 | $ | 916,974 | ||||||||
Vice President and | 2018 | $ | 256,000 | — | $ | 128,000 | — | $ | 458,811 | $ | 11,332 | $ | 854,143 | ||||||||
Chief Financial Officer | |||||||||||||||||||||
Patrick J. O'Halloran | 2019 | $ | 252,912 | — | $ | 189,750 | — | $ | 329,009 | $ | 18,286 | $ | 789,957 | ||||||||
Vice President and | 2018 | $ | 230,000 | — | $ | 115,000 | — | $ | 380,759 | $ | 16,236 | $ | 741,995 | ||||||||
Chief Operations Officer | |||||||||||||||||||||
Damon M. Mote | 2019 | $ | 252,912 | — | $ | 189,750 | — | $ | 329,009 | $ | 18,286 | $ | 789,957 | ||||||||
Vice President and | 2018 | $ | 230,000 | — | $ | 115,000 | — | $ | 380,759 | $ | 17,986 | $ | 743,745 | ||||||||
Chief Administrative Officer |
Name and Principal Position | Year | Salary | Bonus (1) | Stock Awards (2)(3)(4)(5)(6) | Non-Equity Incentive Plan Compensation (7) | All Other Compensation (8) | Total | |||||||||||||||||||
Samuel H. Norton | 2022 | $ | 425,000 | $ | 226,200 | $ | 1,062,500 | $ | 637,500 | $ | 21,126 | $ | 2,372,326 | |||||||||||||
President and | 2021 | $ | 425,000 | $ | 1,338,750 | $ | 531,250 | $ | 19,967 | $ | 2,314,967 | |||||||||||||||
Chief Executive Officer | ||||||||||||||||||||||||||
Richard L. Trueblood | 2022 | $ | 325,000 | $ | 79,260 | $ | 325,000 | $ | 316,875 | $ | 20,434 | $ | 1,066,569 | |||||||||||||
Vice President and | 2021 | $ | 300,000 | — | $ | 510,000 | $ | 225,000 | $ | 19,339 | $ | 1,054,339 | ||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||
Patrick J. O’Halloran | 2022 | $ | 300,000 | $ | 69,976 | $ | 300,000 | $ | 292,500 | $ | 20,434 | $ | 982,910 | |||||||||||||
Vice President and | 2021 | $ | 265,000 | — | $ | 450,500 | $ | 198,750 | $ | 19,339 | $ | 933,589 | ||||||||||||||
Chief Operating Officer |
(1) | On March 24, 2022, each NEO received a retention bonus grant under which each NEO would receive cash and equity in installments, subject to vesting based on continued employment, on the first, second, and third anniversaries of the grant. No discretionary annual bonuses were paid with respect to 2022. The |
2022 Retention Grant | Vested March 24, 2023 | Vests March 24, 2024 | Vests March 24, 2025 | ||||||
Name | Cash | Equity | Total | Cash | Shares | Cash | Shares | Cash | Shares |
Samuel H. Norton | $275,000 | $856,000 | $1,131,000 | $55,000 | $171,200 | $82,500 | $256,800 | $137,500 | $428,000 |
Richard L. Trueblood | $300,000 | $96,300 | $396,300 | $60,000 | $19,260 | $90,000 | $28,890 | $150,000 | $48,150 |
Patrick J. O’Halloran | $260,000 | $89,880 | $349,880 | $52,000 | $17,976 | $78,000 | $26,964 | $130,000 | $44,940 |
(2) | On March O’Halloran. |
(3) | On March |
(4) | On March 23, 2021 each NEO received a Special 2021 Grant of |
(5) | On March 24, 2022, each NEO received time-based equity awards, one-third of which vested on March 24, 2023 and one-third of which will vest on each of March 24, 2024 and 2025, subject to continued employment through the vesting date. |
On March 23, 2021, each NEO received time-based equity awards, one-third of which vested on March 23, 2022 and one-third of which vested on March 23, 2023, and one-third which will vest on March 23, 2024, subject to continued employment through the vesting date. |
(7) | These amounts reflect what was actually paid under the |
See the “All Other Compensation Table” for additional information. |
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All Other Compensation Table
The following table describes each component of the All Other Compensation column for 20182022 in the Summary Compensation Table.
Name | Savings Plan (1) | Other (2) | Total | |||||||||
Samuel H. Norton | $ | 18,300 | $ | 2,826 | $ | 21,126 | ||||||
Richard L. Trueblood | $ | 18,300 | $ | 2,134 | $ | 20,434 | ||||||
Patrick J. O’Halloran | $ | 18,300 | $ | 2,134 | $ | 20,434 |
(1) | Constitutes OSG’s matching contributions under the Savings Plan. |
(2) | Represents OSG’s contribution toward excess liability insurance coverage premiums. |
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Name | Savings Plan Matching Contribution (1) | Other (2) | Total | |||||||||
Norton | $ | 16,800 | $ | 1,957 | $ | 18,757 | ||||||
Trueblood | $ | 16,800 | $ | 1,486 | $ | 18,286 | ||||||
O'Halloran | $ | 16,800 | $ | 1,486 | $ | 18,286 | ||||||
Mote | $ | 16,800 | $ | 1,486 | $ | 18,286 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table provides information concerning equity awards held by the Named Executive Officers as of December 31, 2019 concerning the holdings of stock options and stock awards by the NEOs.2022. This table includes unexercised and unvested option and stock awards. The market value of the stock awards is based on the market price of the Company’sOSG’s Class A Common Stock at the close of business on December 31, 2019,2022, which was $2.30$2.89 per share.
Option Awards | Stock Awards | ||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | ||||||||||||||
Norton | 3/22/19 | 157,672 | (5) | 362,646 | 118,254 | (7 | ) | 271,984 | |||||||||||||||
2/8/19 | 612,745 | (3) | $ | 1.82 | |||||||||||||||||||
2/8/18 | 494,118 | (3) | — | $ | 1.70 | 2/8/2028 | — | — | — | ||||||||||||||
3/23/17 | 11,758 | (2) | 5,879 | $ | 4.04 | 3/23/2027 | |||||||||||||||||
8/3/16 | 297,818 | (1) | — | $ | 5.57 | 8/3/2026 | — | — | |||||||||||||||
Trueblood | 3/22/19 | 53,423 | (5) | 122,873 | 40,068 | (7 | ) | 92,156 | |||||||||||||||
2/8/18 | — | — | — | 25,098 | (4) | 41,663 | 37,648 | (6 | ) | 62,496 | |||||||||||||
O'Halloran | 3/22/19 | 46,931 | (5) | 107,941 | 35,197 | (7 | ) | 80,953 | |||||||||||||||
2/8/18 | — | — | — | 22,550 | (4) | 37,433 | 33,824 | (6 | ) | 56,148 | |||||||||||||
3/23/17 | 6,026 | (2) | 12,052 | $ | 4.04 | 3/23/2027 | |||||||||||||||||
Mote | 3/22/19 | — | — | — | 46,931 | (5) | 107,941 | 35,197 | (7 | ) | 80,953 | ||||||||||||
2/8/18 | — | — | — | 22,550 | (4) | 37,433 | 33,824 | (6 | ) | 56,148 | |||||||||||||
3/23/17 | 6,026 | (2) | 12,052 | $ | 4.04 | 3/23/2027 |
Name | Grant Date | Number of Exercisable | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested | ||||||||||||||||||||||
Samuel H. Norton | 3/24/22 | — | — | — | — | 254,187 | (3 | ) | $ | 734,600 | 254,186 | (5 | ) | $ | 734,598 | ||||||||||||||||
3/24/22 | — | — | — | — | 409,569 | (4 | ) | $ | 1,183,656 | — | — | ||||||||||||||||||||
3/23/21 | — | — | — | — | 120,056 | (3 | ) | $ | 346,962 | 90,042 | (5 | ) | $ | 260,221 | |||||||||||||||||
3/23/20 | — | — | — | — | 87,190 | (3 | ) | $ | 251,980 | ||||||||||||||||||||||
2/8/19 | 612,745 | (2 | ) | — | $ | 1.82 | 2/8/2029 | — | — | — | — | ||||||||||||||||||||
2/8/18 | 494,118 | (2 | ) | — | $ | 1.70 | 2/8/2028 | — | — | — | — | ||||||||||||||||||||
3/23/17 | 17,637 | (1 | ) | — | $ | 4.04 | 3/23/2027 | — | — | — | — | ||||||||||||||||||||
8/3/16 | 297,818 | (1 | ) | — | $ | 5.57 | 8/3/2026 | — | — | — | — | ||||||||||||||||||||
Richard L. Trueblood | 3/24/22 | — | — | — | — | 77,751 | (3 | ) | $ | 224,700 | 77,752 | (5 | ) | $ | 224,703 | ||||||||||||||||
3/24/22 | — | — | — | — | 46,077 | (4 | ) | $ | 133,161 | — | — | ||||||||||||||||||||
3/23/21 | — | — | — | — | 36,017 | (3 | ) | $ | 104,088 | 27,012 | (5 | ) | $ | 78,065 | |||||||||||||||||
3/23/20 | — | — | — | — | 30,773 | (3 | ) | $ | 88,934 | — | — | ||||||||||||||||||||
Patrick J. O'Halloran | 3/24/22 | — | — | — | — | 71,770 | (3 | ) | $ | 207,415 | 71,770 | (5 | ) | $ | 207,415 | ||||||||||||||||
3/24/22 | — | — | — | — | 43,005 | (4 | ) | $ | 124,284 | — | — | ||||||||||||||||||||
3/23/21 | — | — | — | — | 31,815 | (3 | ) | $ | 91,944 | 23,861 | (5 | ) | $ | 68,958 | |||||||||||||||||
3/23/20 | — | — | — | — | 27,183 | (3 | ) | $ | 78,558 | — | — | ||||||||||||||||||||
3/23/17 | 18,078 | (1 | ) | — | $ | 4.04 | 3/23/2027 | — | — | — | — |
(1) |
(4) | On March 24, 2022, each NEO received a retention bonus grant under which each NEO would receive cash and equity in installments, subject to vesting based on continued employment, on the first, second, and third anniversaries of the grant. No discretionary annual bonuses were paid with respect to 2022. See footnote 1 of the Summary Compensation table for more details. |
(5) | These performance-based RSU awards are comprised of two separate grants, both of which |
# of shares | Share payout if the current trends are realized | |||||||||
Name | PRSU Name | Below Threshold | Threshold | Target | Maximum | |||||
Trueblood | TSR | — | 9,412 | 18,824 | 28,236 | 18,824 | ||||
ROIC | — | 9,412 | 18,824 | 28,236 | ||||||
O'Halloran | TSR | — | 8,456 | 16,912 | 25,368 | 16,912 | ||||
ROIC | — | 8,456 | 16,912 | 25,368 | ||||||
Mote | TSR | — | 8,456 | 16,912 | 25,368 | 16,912 | ||||
ROIC | — | 8,456 | 16,912 | 25,368 |
2021 Grant | Share payout if the | |||
Measurement Date | current trends are | |||
12/31/2023 | # of shares | realized | ||
Name | PRSU Name | Target | Trend | |
Samuel H. Norton | TSR | 90,042 | 45,021 | 90,042 |
ROIC | 90,042 | 45,021 | ||
Richard L. Trueblood | TSR | 27,012 | 13,506 | 27,012 |
ROIC | 27,012 | 13,506 | ||
Patrick J. O’Halloran | TSR | 23,861 | 11,931 | 23,861 |
ROIC | 23,861 | 11,931 |
These performance-based RSU awards are comprised of two separate |
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2022 Grant | Share payout if the | |||
Measurement Date | current trends are | |||
12/31/2024 | # of shares | realized | ||
Name | PRSU Name | Target | Trend | |
Samuel H. Norton | TSR | 127,093 | 127,093 | 254,186 |
ROIC | 127,093 | 127,093 | ||
Richard L. Trueblood | TSR | 38,876 | 38,876 | 77,752 |
ROIC | 38,876 | 38,876 | ||
Patrick J. O’Halloran | TSR | 35,885 | 35,885 | 71,770 |
ROIC | 35,885 | 35,885 |
# of shares | Share payout if the current trends are realized | |||||||||
Name | PRSU Name | Below threshold | Threshold | Target | Maximum | |||||
Norton | TSR | — | 39,418 | 78,836 | 118,254 | 118,254 | ||||
ROIC | 39,418 | 78,836 | 118,254 | |||||||
Trueblood | TSR | — | 13,356 | 26,712 | 40,068 | 40,068 | ||||
ROIC | 13,356 | 26,712 | 40,068 | |||||||
O'Halloran | TSR | — | 11,732 | 23,465 | 35,197 | 35,197 | ||||
ROIC | 11,732 | 23,465 | 35,197 | |||||||
Mote | TSR | — | 11,732 | 23,465 | 35,197 | 35,197 | ||||
ROIC | 11,732 | 23,465 | 35,197 |
POTENTIAL PAYMENTS UPON TERMINATION
The following table discloses the amounts that would have been payable to each NEONamed Executive Officer upon termination of his employment, assuming that such termination occurred on December 31, 2019.2022. The table excludes amounts that are available generally to all salaried employees, such as amounts payable under the Savings Plan. The market value of the stock awards is based on the market price of the Company'sOSG’s Class A Common Stock at the close of business on December 31, 2019,2022, which was $2.30$2.89 per share.
Event | Norton | Trueblood | O’Halloran | Mote | ||||||||
Involuntary Termination Without Cause or Voluntary Termination for Good Reason | ||||||||||||
Cash severance (1) | $ | 425,000 | $ | 288,000 | $ | 253,000 | $ | 253,000 | ||||
Acceleration & Continuation of Equity Awards (2) (3) | $ | 508,749 | $ | 180,598 | $ | 166,290 | $ | 166,290 | ||||
Pro-rata Special Bonus Pool (4) | $ | 921,255 | $ | 394,811 | $ | 329,009 | $ | 329,009 | ||||
Total | $ | 1,855,004 | $ | 863,409 | $ | 748,299 | $ | 748,299 | ||||
Death / Disability | ||||||||||||
Pro rata Annual Bonus (2) | — | — | — | — | ||||||||
Acceleration & Continuation of Equity Awards (2) | $ | 368,890 | $ | 180,598 | $ | 166,290 | $ | 166,290 | ||||
Pro-rata Special Bonus Pool (4) | — | $ | 394,811 | $ | 329,009 | $ | 329,009 | |||||
Total | $ | 368,890 | $ | 575,409 | $ | 495,299 | $ | 495,299 | ||||
Change In Control | ||||||||||||
Cash severance (1) | $ | 425,000 | $ | 288,000 | $ | 253,000 | $ | 253,000 | ||||
Acceleration & Continuation of Equity Awards (5) | $ | 1,163,139 | $ | 328,624 | $ | 330,792 | $ | 330,792 | ||||
Pro-rata Special Bonus Pool (4) | $ | 921,255 | $ | 394,811 | $ | 329,009 | $ | 329,009 | ||||
Total | $ | 2,509,394 | $ | 1,011,435 | $ | 912,801 | $ | 912,801 |
Event | Samuel H. Norton | Richard L. Trueblood | Patrick J. O’Halloran | |||||||||
Involuntary Termination Without Cause or Voluntary Termination for Good Reason | ||||||||||||
Cash severance (1) | $ | 425,000 | $ | 325,000 | $ | 300,000 | ||||||
Pro-rata Annual Incentive Compensation (2) | $ | 637,500 | $ | 316,875 | $ | 292,500 | ||||||
Retention Cash (3) | $ | 275,000 | $ | 300,000 | $ | 260,000 | ||||||
Acceleration & Continuation of Equity Awards (4)(5) | $ | 3,518,744 | $ | 550,885 | $ | 502,202 | ||||||
Total | $ | 4,856,244 | $ | 1,492,760 | $ | 1,354,702 | ||||||
Death / Disability | ||||||||||||
Pro-rata Annual Incentive Compensation (2) | $ | — | $ | 316,875 | $ | 292,500 | ||||||
Retention Cash (3) | $ | 275,000 | $ | 300,000 | $ | 260,000 | ||||||
Acceleration & Continuation of Equity Awards (4) | $ | 2,517,197 | $ | 550,885 | $ | 502,202 | ||||||
Total | $ | 2,792,197 | $ | 1,167,760 | $ | 1,054,702 | ||||||
Change In Control | ||||||||||||
Cash severance (1) | $ | 425,000 | $ | 325,000 | $ | 300,000 | ||||||
Pro-rata Annual Incentive Compensation (2) | $ | 425,000 | $ | 211,250 | $ | 195,000 | ||||||
Acceleration & Continuation of Equity Awards (7) | $ | 3,814,658 | $ | 963,973 | $ | 871,561 | ||||||
Total | $ | 4,664,658 | $ | 1,500,223 | $ | 1,366,561 |
The |
The |
(3) | Represents the cash portion of the 2022 Retention Grant which is payable in full at termination |
(4) | All outstanding time-based RSU awards accelerate as of the date of separation from service. |
(5) | For Mr. Norton, all open performance-based RSU awards accelerate as of the date of separation from service and the performance criteria thereunder would be deemed to have been satisfied at the designated target level. These grants would be pro-rated to reflect the number of days in the performance period that have lapsed as of the date of separation from service. |
(6) | The full amount of the annual incentive compensation payment is payable at the target value and is not pro-rated. |
(7) | With respect to all awards |
● | Time-based RSU awards accelerate and vest as of the executive’s date of separation from service due to termination by OSG without Cause (as defined in the relevant employment agreement)or by the executive for Good Reason (as defined in the relevant employment agreement) at any time during the period ending on the second anniversary of the Change in Control. |
● | All open performance-based RSU awards accelerate as of the date of separation from service and the performance criteria thereunder would be deemed to have been satisfied at the designated maximum level. These grants would be pro-rated to reflect the number of days in the performance period that have lapsed as of the date of separation from service. |
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NON-GAAP FINANCIAL MEASURES
OSG reports its financial results in accordance with generally accepted accounting principles in the United States of America (“GAAP”). However, OSG uses certain non-GAAP financial measures in its compensation program. These measures do not have a standardized meaning prescribed by GAAP and, become exercisabletherefore, we wish to provide our stockholders with additional information that will better enable them to understand how our executive officers’ performance is measured.
In our Annual Incentive Program we use the metric FCF, defined as EBITDA less capital expenditures. EBITDA represents net income/(loss) before interest expense, income taxes and depreciation and amortization expense. EBITDA does not represent, and should not be a substitute for, net income/(loss) or cash flows from operations as determined in fullaccordance with GAAP. The following table reconciles net income/(loss) as reflected in the consolidated statements of operations, to EBITDA.
($ in thousands) | |||||||
Years Ended December 31, | |||||||
2022 | 2021 | ||||||
Net income/(loss) | $ | 26,564 | $ | (46,252) | |||
Income tax expense/(benefit) | 6,894 | (18,097) | |||||
Interest expense, net | 33,060 | 29,203 | |||||
Depreciation and amortization | 70,637 | 61,823 | |||||
EBITDA | 137,155 | 26,677 |
One of the Changemetrics used in Controlthe Special 2021 Grant are TCE revenues. TCE revenues represent shipping revenues less voyage expenses, and are used as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. Another metric in the exercise period under each such option shall not be less thanSpecial 2021 Grant is EBITDA, which is described above. Reconciliations of TCE revenues, a non-GAAP measure, to shipping revenues as reported in the period ending on the earlier to occurconsolidated statements of (i) the one year anniversary of the Change in Control or (ii) the expiration date of the option. As of December 31, 2019, Mr. Norton's 2018 and 2019 option grants were exercisable. The disclosed value includes the option spread.
($ in thousands) | |||||||
Years Ended December 31, | |||||||
2022 | 2021 | ||||||
Time charter equivalent revenues | $ | 426,328 | $ | 292,595 | |||
Add: Voyage expenses | 40,472 | 66,467 | |||||
Shipping revenues | $ | 466,800 | $ | 359,062 |
ADVISORY VOTE ON THE APPROVAL OF THE
COMPENSATION OF THE NAMED EXECUTIVE OFFICERS
(PROPOSAL NO. 2)
We are being providedproviding our stockholders with the opportunity to cast an advisory vote on the compensation of the NEOs for 2019.2022. Stockholders are urged to read the "How“How We Compensate Our Executives"Executives” section of this Proxy Statement and the accompanying compensation tables and narrative which describe in detaildiscuss how our compensation policies and procedures implement our compensation philosophy and discloseas well as the compensation paid to the NEOs for 2019.
As more fully described in the How“How We Compensate Our ExecutivesExecutives” section, our executive compensation program is designed to promote the following objectives:
1. | Attract, motivate, retain, and reward highly talented executives and managers, whose leadership and expertise are critical to OSG’s overall growth and success; |
2. | Compensate each executive based upon the scope and impact of his or her position as it relates to achieving OSG’s corporate goals and objectives, as well as the potential of each executive to assume increasing responsibility within OSG; |
3. | Align the interests of OSG’s executives with those of its stockholders by linking incentive compensation rewards to the achievement of performance goals that maximize stockholder value; and |
4. | Reward the achievement of both the short-term and long-term strategic objectives necessary for sustained optimal business performance. |
The Compensation Committee and the Board believe that the design of the executive compensation program, and hence the compensation awarded to the NEOs, fulfills these objectives. We believe that
Accordingly, the changes we have made beginning in 2019 enhance our programBoard asks stockholders to be further aligned with these objectives.
“RESOLVED
, that the stockholders ofAs an advisory vote, the results of the vote will not be binding on the Board or the Company.OSG. However, the Board and the Compensation Committee value your opinion and will consider the outcome of the vote when making future decisions on the compensation of the NEOs and our executive compensation principles, policies and procedures, as we have done in the past.
The Board recommends a vote "FOR"“FOR” advisory approval of
the resolution set forth above and approval of the compensation of the
Named Executive Officers for 20192022 as disclosed in this Proxy Statement.
36
ADVISORY VOTE ON THE FREQUENCY OF FUTURE
ADVISORY VOTES FOR APPROVAL OF AN AMENDMENT TO THE
COMPENSATION PLAN
(PROPOSAL NO. 3)
We are providing stockholders with the opportunity to vote, on an advisory basis, as to the frequency of future stockholder advisory “say-on-pay” votes. Stockholders may vote to recommend such a vote: every one year, every two years, or every three years, or they may abstain from voting.
In 2017, our stockholders, by advisory vote, approved the frequency of “say-on-pay” votes to be every year. This year we are asking our stockholders to consider this frequency again. The Overseas Shipholding Group, Inc. Non-Employee Director IncentiveBoard and Compensation Plan (the "Director Plan") was adopted in 2014Committee have determined that a “say-on-pay” vote on executive compensation every year continues to be appropriate to provide stockholders the opportunity to inform OSG of their opinion of how we compensate our executives.
As an advisory vote, this proposal is non-binding. However, the Board and approvedthe Compensation Committee value your opinion and will consider the outcome of the vote when making decisions regarding the frequency of “say-on-pay” votes. Nevertheless, the Board may decide to hold “say-on-pay” votes on a different basis than that recommended by stockholders in 2015,the stockholders.
Our Board and has since been amended from time to time, including amendments to limit the maximum numberCompensation Committee recommend a vote of shares of OSG Class A Common Stock (the "Common Stock”) that may be covered by incentive awards granted to any non-employee director in any calendar year; to further limit the amount payable to any non-employee director“ONE (1) YEAR” with respect to any calendar year for all cash incentive awards; and to increase the number of shares of Common Stock authorized for issuance under the Director Plan. In March 2020, subject to stockholder approval at the Annual Meeting, the Board of Directors adopted an amended and restated Director Plan (1) to increase by 1,500,000 the number of shares of Common Stock authorized for issuance under the Director Plan, subject to adjustment in certain cases; and (2) to make certain other changes, including to remove the double count for any shares granted as full value Incentive Awards, and to prohibit purchases of options or stock appreciation rights granted under the Director Plan without obtaining stockholder approval.
The Board of Directors recommends athat stockholders vote "FOR"FOR “ONE (1) YEAR”
as the approvalpreferred frequency of the
AUDIT COMMITTEE REPORT
Audit Committee Report
Management has primary responsibility for preparing the consolidated financial statements of the Company,OSG, for maintaining effective internal control over financial reporting and for assessing the effectiveness of internal control over financial reporting. The Company'sOur independent registered public accounting firm is responsible for performing independent audits of the Company’sOSG’s consolidated financial statements in accordance with auditing standards generally accepted in the United States ("(“U.S. GAAS'GAAS”) and the effectiveness of the Company'sOSG’s internal control over financial reporting based on criteria established by the Public Company Accounting Oversight Board (the "PCAOB'“PCAOB”). The Audit Committee'sCommittee’s responsibility is to monitor and oversee these processes on behalf of the Board. The Board has adopted a written Audit Committee Charter describing the Audit Committee’s role and responsibilities, which is posted on the Company'sour website at
In fulfilling its oversight responsibilities, the Audit Committee met with management and the Company'sOSG’s independent registered public accounting firm and held discussions concerning the acceptability and quality of the accounting principles, the reasonableness of significant judgments, and the adequacy and clarity of disclosures in the consolidated financial statements to be included in the Company's 2019OSG’s Annual Report on Form 10-K.10-K for 2022. Management represented to the Audit Committee that such consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States. The Audit Committee reviewed and discussed such consolidated financial statements with management and the Company'sOSG’s independent registered public accounting firm. The Audit Committee further discussed with the Company’sOSG’s independent registered public accounting firm the matters required to be discussed by PCAOB Auditing Standards No. 1301 (Communications with Audit Committees).
The Audit Committee also reviewed management'smanagement’s report on its assessment of the effectiveness of the Company'sOSG’s internal control over financial reporting and the Company'sOSG’s independent registered public accounting firm'sfirm’s report on the effectiveness of the Company'sour internal control over financial reporting.
OSG’s independent registered public accounting firm also provided to the Audit Committee the written disclosures and letter required by PCAOB Rule 3526 (Communication with Audit Committees Concerning Independence), and the Audit Committee discussed with the independent registered public accounting firm theirits independence from the CompanyOSG and management and considered the compatibility of non-audit services with the registered public accounting firm’s independence.
Based upon the Audit Committee’s discussions with management and the Company’sOSG’s independent registered public accounting firm, the Audit Committee’s review of the representations of management, the certifications of the Company'sOSG’s chief executive officer and chief financial officer which are required by the SEC and the Sarbanes-Oxley Act of 2002, and the reports, letters and other communications of the independent registered public accounting firm, the Audit Committee recommended to the Board of Directors (and the Board of Directors approved) that the audited consolidated financial statements be included in the 20192022 Form 10-K for filing with the SEC.
By the Audit Committee: | |
John P. Reddy, Chair | |
Fees Paid to the Independent Registered Public Accounting Firm
The following table represents professional audit services fees incurred by OSG to Grant Thornton LLP, certified public accountants (“Grant Thornton”), for the audit of our annual financial statements and fees billed for other services for the fiscal years ended December 31, 2022 and December 31, 2021.
Fee Type | Fiscal Year 2022 $ | Fiscal Year 2021 $ |
Audit Fees (1) | 676,381 | 650,000 |
Audit-Related Fees | - | - |
Tax Fees | - | - |
All Other Fees (2) | 25,000 | 25,000 |
Total | 701,381 | 675,000 |
(1) | Audit fees include fees for professional services rendered for the audit of our annual financial statements; the review of the financial statements included in our Forms 10-Q; Sarbanes-Oxley Section 404 attestation procedures; expenses incurred related to the performance of the services noted above; financial audits and reviews for certain of the Company’s subsidiaries; and services associated with documents filed with the SEC. |
(2) | All other fees incurred by us to Grant Thornton were related to agreed-upon procedures for American Tanker, Inc. |
The Audit Committee considered whether the provision of services described above under “All Other Fees” were compatible with maintaining Grant Thornton’s independence. OSG does not believe that any reasonable concerns about the objectivity of Grant Thornton in conducting the audit of OSG financial statements are raised as a result of the fees paid for non-audit-related services.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services
The Audit Committee has established policies and procedures for pre-approving audit and permissible non-audit work performed by its independent registered public accounting firm. As set forth in the pre-approval policies and procedures, unless a type of service has received general pre-approval, it will require specific pre-approval by the Committee if it is to be provided by the independent auditor. Any proposed services exceeding pre-approved cost levels require specific pre-approval by the Committee. All fees have been approved by the Committee in accordance with these policies and procedures.
39
RATIFICATION OF APPOINTMENT OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PROPOSAL NO. 4)
The Audit Committee has appointed Grant Thornton as OSG’s independent registered public accountants (“EY”),accounting firm to examine the consolidated financial statements of OSG and its subsidiaries for the fiscal year ending December 31, 2023. Grant Thornton has served as our independent registered public accounting firm for the year ended December 31, 2019. Earlier this year, the Audit Committee conducted a comprehensive, competitive process to determine our independent registered public accounting firm for our fiscal year ending December 31,since April 2020. Consideration was made of, among other things, external auditor capability, effectiveness and efficiency of audit services, the Company’s status as a smaller reporting company, and the appropriateness of fees in the context of the audit scope. Several accounting firms participated in the process. On April 6, 2020, the Audit Committee approved the engagement of Grant Thornton LLP (“Grant Thornton”) as our independent registered public accounting firm for the fiscal year ending December 31, 2020.
Stockholder ratification of the appointment of Grant Thornton as our independent registered public accounting firm for the fiscal year ending in 2020 is not required by our Bylaws or other applicable legal requirement.requirements. However, the Audit Committee is submitting this appointment to the stockholders for ratification as a matter of good corporate practice. If the appointment of Grant Thornton is not ratified by the stockholders, the Audit Committee, at its discretion, will reconsider its selection of Grant Thornton as our independent registered public accounting firm. Even if the appointment of Grant Thornton is ratified, the Audit Committee may direct the appointment of a different independent registered certified public accounting firm at any time during the year if it determines that such a change would be in our and our stockholders’ best interests.
Representatives of Grant Thornton isare expected to virtually attend the 2023 Annual Meeting and, be affordedif in attendance, will have an opportunity to make a statement as well as be availableif they so desire and to respond to appropriate questions submitted by stockholders.
Ernst & Young | Fiscal Year 2019 $ | Fiscal Year 2018 $ | ||
Audit Fees (1) | 1,068,000 | 854,000 | ||
All Other Fees (2) | 36,000 | 35,000 | ||
Total | 1,104,000 | 889,000 |
The Audit Committee considered whether the provision of services described above under "All Other Fees" were compatible with maintaining EY's independence. The Company does not believe that any reasonable concerns about the objectivity of EY in conducting the audit of the Company’s financial statements are raised as a result of the fees paid for non-audit-related services.
ratification of the
as
the independent registered public accounting firm forAPPROVAL OF AN AMENDMENT TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
(PROPOSAL NO. 5)
Background and Considerations
Effective August 1, 2022, the State of Delaware, which is where the Company is incorporated, amended Section 102(b)(7) of the Delaware General Corporation Law (“DGCL”) to enable Delaware corporations to eliminate or limit the monetary liability of certain officers for the breach of the duty of care in limited circumstances. In light of this update, the Board has unanimously approved and declared advisable the amendment of our Amended and Restated Certificate of Incorporation (the “Restated Certificate”) to provide for the elimination or limitation of monetary liability of specified executive officers of the Company for the breach of the duty of care in certain actions, as further described below.
Purpose and Effects of Proposed Amendment
As a general matter, the Board believes that our Restated Certificate should contain provisions consistent with the DGCL, as amended from time to time, and that amending our Restated Certificate to add the authorized liability protection for certain officers, which is consistent with the protection currently afforded our directors under the DGCL, is desirable in order to continue to attract and retain experienced and qualified officers.
The new provision of the DGCL, and, if this proposal is approved, our Restated Certificate, would only eliminate or limit an officer’s liability in connection with those direct claims brought by stockholders for breach of an officer’s fiduciary duty of care, including class actions. However, this would not eliminate or limit officers’ monetary liability for breach of fiduciary duty claims brought by the Company itself or for derivative claims brought by stockholders in the name of the Company. Further, as is currently the case with directors under our Restated Certificate, the proposed amendment would not allow the elimination or limitation of liability of officers for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, breaches of the duty of loyalty, or any transaction in which the officer derived an improper personal benefit.
The rationale for so limiting the scope of liability is to strike a balance between stockholders’ interests in accountability and their interests in the Company being able to attract and retain quality officers to work on its behalf. The Governance and Risk Committee and the Board believe it is important to provide protection from certain liabilities and expenses that may dissuade prospective or current officers from serving the Company due to the exposure to personal liability and risk of expenses they may incur without such protections.
The Governance and Risk Committee and the Board have considered the effects of the amendment to the Restated Certificate, if approved, including the narrow scope of the type and class of claims that officers of the Company would be exculpated from, the limited number of officers of the Company that would be impacted, and the benefits the Company would gain, and have determined that it is in the best interest of the Company and its stockholders to amend the Restated Certificate accordingly.
Text of the Amendment
The Board requests stockholders of the Company approve the following resolution:
“RESOLVED, that the Company’s stockholders approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to revise Article FIFTH, Section (h) as follows:
(h) No director or officer of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as a director, officer, or both, as applicable, provided that nothing contained in this Second Amended and Restated Certificate of Incorporation shall eliminate or limit the liability of (i) a director or officer(i) for any breach of his or herthe director’s duty of loyalty to the Corporation or its stockholders, (ii) a director or officer for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) a director under Section 174 of the DGCL;or (iv) a director or officer for any transaction from which he or shethe director derived an improper personal benefit; (v) an officer in any action by or in the right of the Corporation or (vi) a director or officer to the extent that such an elimination
41
from or limitation of liability is prohibited under the DGCL. If the DGCL is amended after the filing of this Amended and Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors and/or officers, then the liability of a director and/or officer of the Corporation, as applicable, shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any repeal or modification of Section102-(b)(7) of the DGCL or of this paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing in respect of any act or omission occurring prior to the time of such repeal or modification. All references in this paragraph to an “officer” shall mean only a person who, at the time of an act or omission as to which liability is asserted, falls within the meaning of the term “officer,” as defined in Section 102-(b)(7) of the DGCL.”
Effectiveness of the Amendment
Upon the approval of this proposal by our stockholders, the Company will file with the Delaware Secretary of State, an Amended and Restated Certificate of Incorporation reflecting the changes contemplated by the proposed amendment. Such filing is expected to occur as soon as reasonably practicable following the Annual Meeting. If this proposal is not approved by our stockholders, the Company’s Restated Certificate will not be further amended, and no exculpation will be provided for our officers.
The Governance and Risk Committee and the Board of Directors recommend
a vote “FOR” the amendment of the Amended and Restated Certificate of Incorporation.
OWNERSHIP OF CLASS A COMMON STOCK BY DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN OTHER BENEFICIAL OWNERS
The tables below set forth certain beneficial ownership information with respect to the Company'sour directors and director nominees, each of the NEOsexecutive officers listed in the Summary Compensation Table, and each person who is known to the CompanyOSG to be the beneficial owner of more than 5% of the outstanding shares of Class A Common Stock. The information with respect to such beneficial ownership by the identified stockholdersowners was prepared based on information supplied by such stockholdersowners in their filings with the SEC. Except as disclosed in the notes to these tables and subject to applicable community property laws, the CompanyOSG believes that each beneficial owner identified in the table possesses sole voting and investment power over all Class A Common Stock shown as beneficially owned by the beneficial owner.
Beneficial ownership for the purposes of the following tables is determined in accordance with the rules and regulations of the SEC. Those rules generally provide that a person is the beneficial owner of shares if such person has or shares the power to vote or direct the voting of shares or to dispose or direct the disposition of shares or has the right to acquire such powers within 60 days of the Measurement Date (March 24, 2020)31, 2023). For purposes of calculating each person'sperson’s percentage ownership, shares of Class A Common Stock issuable pursuant to options or warrants exercisable within 60 days are included as outstanding and beneficially owned for that person, but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. In some cases, the CompanyOSG believes that foreign ownership or other restrictions may limit the ability of warrant holders to exercise warrants they hold, meaning that such persons may not be required to report share ownership as they would not be entitled to receive the underlying shares of Class A Common Stock. The percentage of beneficial ownership is based on 85,817,34479,191,275 shares of the Company'sOSG’s Class A Common Stock outstanding as of the Measurement Date. On that date, there were 19,238,26218,372,136 warrants (exercisable for 3,655,2693,490,706 shares of Class A Common Stock) that were not included in that calculation (other than to the extent set forth with respect to any individual stockholder below).
Directors and Executive Officers
The table below sets forth information as to the Company's director nominees and NEOs and includes the amountnumber of shares and percentage of the Company’soutstanding shares of OSG’s Class A Common Stock of whichbeneficially owned by each director and director nominee, each NEO, other executive officers, and all director nominees and executive officers as a group, was the “beneficial owner” (as defined in regulations of the SEC) on the March 24, 2020,Measurement Date, all as reported to the Company.OSG. The address of each person identified below as of the date of this Proxy Statement is c/o Overseas Shipholding Group, Inc., 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602.
Directors and Director Nominees | Shares of Class A Common Stock Beneficially Owned(1) | |||
Number | Percentage Beneficially Owned | |||
Douglas D. Wheat | 310,885 | * | ||
Rebecca DeLaet | ||||
Joseph I. Kronsberg | — | (2) | * | |
Anja L. Manuel | 60,600 | * | ||
Samuel H. Norton | 1,517,626 | 1.77% | ||
John P. Reddy | 23,300 | * | ||
Julie E. Silcock | 175,174 | * | ||
Gary E. Taylor | 80,488 | * | ||
Ty E. Wallach | 19,100 | * | ||
Other Named Executive Officers | ||||
Richard Trueblood | 56,127 | * | ||
Patrick J. O’Halloran | 72,667 | * | ||
Damon M. Mote | 72,581 | * | ||
All current directors and executive officers as a group (12 persons) | 2,388,548 | 2.78% |
Shares of Class A Common Stock Beneficially Owned (1) | ||
Directors and Director Nominees | Number | Percentage Beneficially Owned |
Douglas D. Wheat | 210,633 | * |
Rebecca DeLaet | 74,600 | * |
Joseph I. Kronsberg | 186,800 | * |
Elaine D. Luria (2) | ||
Anja L. Manuel (3) | 85,053 | * |
Samuel H. Norton | 4,065,614 | 5.06% |
John P. Reddy | 145,653 | * |
Julie E. Silcock | 93,512 | * |
Gary E. Taylor | 182,841 | * |
Other Named Executive Officers and executive officers | ||
Richard Trueblood | 344,142 | * |
Patrick J. O’Halloran | 345,993 | * |
Damon M. Mote | 345,584 | * |
Susan Allan | 287,662 | * |
All directors and executive officers as a group (13 persons) | 6,368,087 | 7.97% |
* | Less than 1% |
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(1) | Includes shares of Class A Common Stock issuable within 60 days of March Mr. Norton - 1,422,318 shares; Mr. O’Halloran and Mr. Mote - 18,078 shares; Ms. Allan - 20,282; and all directors and executive officers as a group: 5,494,553 shares. |
(2) |
(3) | Ms. Manuel, currently a director, is not standing for re-election at the Annual Meeting. |
Beneficial Owners
The following table below sets forth information as to the number of March 24, 2020 (except as otherwise noted) with respect to persons known by us to beshares and percentage of the beneficial ownersoutstanding shares of those stockholders of OSG that beneficially own more than 5% of our outstanding Class A Common Stock based solely(excluding director and nominees, NEOs, or other executive officers) on the information reported by such persons in their Schedule 13D and 13G filings with the SEC. For each entity included in the table below, percentage ownership is calculated by dividing the number of shares reported as beneficially owned by such entity by the number of shares of Class A Common Stock outstanding as of the Measurement Date, as reported to the Company andby such owners in their filings with the SEC.
Name | Shares of Class A Common Stock Beneficially Owned*(1) | |||
Number | Percentage Beneficially Owned | |||
Cyrus Capital Partners, L.P. (2) | 20,704,082 | 24.13% | ||
Saltchuk Resources, Inc.(3) | 11,435,918 | 13.33% | ||
Paulson & Co. Inc (4) | 8,300,000 | 9.67% | ||
BlackRock, Inc.(5) | 4,592,583 | 5.35% | ||
CF Partners Capital Management, LLP (6) | 4,457,151 | 5.19% |
Name | Shares of Class A Common Stock Beneficially Owned*(1) | |
Number | Percentage Beneficially Owned | |
Cyrus Capital Partners, L.P. (2) | 16,297,542 | 16.70% |
Saltchuk Resources, Inc. (3) | 15,203,554 | 19.20% |
* Unless otherwise stated in the notes to this table, the share and percentage ownership information presented is as of the Measurement Date.
Includes shares of Class A Common Stock underlying all warrants owned by such person (at the Measurement Date stock exercise ratio of 0.19 shares for every warrant), owned by such person, and assumes gross exercise of warrants without withholding of any shares pursuant to the cashless exercise procedures of the warrants. The warrants are immediately exercisable but may only be exercised with |
(2) | Based on a Schedule 13D/A filed on |
(3) | Based on a Schedule |
Equity Compensation Plan Information
The following table provides information as of December 31, 20192022 with respect to the Company'sOSG’s equity compensation plans,
Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)* | |||
Equity compensation plans approved by security holders | 1,478,756 | 2.65 | 4,579,960 | |||
Equity compensation plans not approved by stockholders | — | — | — |
Plan Category | Number of Securities to be issued upon exercise of warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||
Equity compensation plans approved by security holders | 1,478,756 | 2.65 | 2,149,787 | ||||||
Equity compensation plans not approved by stockholders | — | — | — |
* Consists of 4,000,0001,130,883 Class A Common Stock shares eligible to be granted under the Incentive Compensation Plan for Management and 579,9601,018,904 shares under the Non-Executive Director Incentive Compensation Plan.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, of the United States, the Company’sOSG’s directors, executive officers and any persons holdingowning beneficially more than ten percent (10%)10% of the Company'sOSG’s Class A Common Stock are required to reportfile reports with the SEC on a timely basis concerning their ownership of Class A Common Stock and any changes in that ownership, on a timely basis, to the SEC.ownership. Directors, executive officers and beneficial owners of more than 10% of the Class A Common Stock are also required to furnish the CompanyOSG with copies of all Section 16(a) reports that they file with the SEC. Based solely upon a review of these reports received by the CompanyOSG for 20192022 and any written representations from reporting persons, we believe that all such reports were filed on a timely basis in 2019.2022, except that, due to an administrative oversight, Messrs. Mote, Norton, O’Halloran, and Trueblood and Ms. Allan each had one Form 4 that was filed late, each such Form 4 relating to two transactions: one in connection with the vesting of Performance Restricted Stock Units upon the satisfaction of specified performance goals, and another relating to shares withheld in payment of the reporting person’s tax withholding liability incurred as a result of such vesting.
45
PAY VERSUS PERFORMANCE DISCLOSURE
In accordance with the SEC requirements, this section (1) presents “Compensation Actually Paid,” or “CAP,” and (2) compares CAP to OSG’s performance, as measured by various metrics.
At the outset, we note that compensation decisions at OSG are made by our Compensation Committee, independently of disclosure requirements, based on the factors discussed in the section of this Proxy Statement entitled “How We Compensate our Executives.” In particular, while SEC rules require disclosure of CAP and specifies the manner in which CAP is calculated, the Committee does not use CAP in making compensation decisions and regards CAP as a supplemental measure to be viewed alongside the performance metrics on which the Committee bases its decisions.
CAP
The table below shows (1) CAP, based on the information in Summary Compensation Table (“SCT”), and as adjusted for 2021 and 2022, as required by SEC rules, and (2) the value of a hypothetical initial investment made on December 31, 2020 of $100 in our stock, as of December 31, 2021 and December 31, 2022, based on TSR, as explained below.
Year | Summary Compensation Table Total to PEO ($) (1) | Compensation Actually Paid to PEO($) (1) | Average Summary Compensation Table Total for Non-PEO NEOs (2) | Average Compensation Actually Paid to Non-PEO NEOs (2) | Value of Initial Fixed $100 Investment Based on TSR (3) | Net Income ($) (in thousands) | |||||||||||||||||||
2022 | $ | 2,372,326 | $ | 2,627,988 | $ | 990,990 | $ | 1,003,566 | $ | 126 | $ | 28,741 | |||||||||||||
2021 | $ | 2,314,967 | $ | 1,634,695 | $ | 973,839 | $ | 767,260 | $ | 116 | $ | (46,252 | ) |
(1) | The PEO in both reporting years is our CEO, Mr. Norton. |
(2) | The non-PEO NEOs in 2022 were Mr. Trueblood and Mr. O’Halloran. The non-PEO NEOs in 2021 were Mr. Trueblood, Mr. O’Halloran, and Mr. Mote. |
(3) | The values disclosed in this column represent a hypothetical investment of $100 in our stock made on December 31, 2020, and as of December 31, 2021 and December 31, 2022, based upon the Company’s TSR for the years then ended. |
To calculate CAP, the following amounts were deducted from and added to “Total Compensation,” as set forth in the SCT.
PEO SCT Total to CAP Reconciliation: |
Year | Salary | Bonus and Non- Equity Incentive Compensation | Other Compensation | SCT Total | Deductions from SCT Total | Additions to SCT Total | CAP |
(1) | (2) | (3) | |||||
2022 | $425,000 | $692,500 | $21,126 | $2,372,326 | ($1,233,700) | $1,489,361 | $2,627,988 |
2021 | $425,000 | $531,250 | $19,967 | $2,314,967 | ($1,338,750) | $658,478 | $1,634,695 |
Average Non-PEO NEOs SCT Total to CAP Reconciliation: |
Year | Salary | Bonus and Non- Equity Incentive Compensation | Other Compensation | SCT Total | Deductions from SCT Total | Additions to SCT Total | CAP |
(1) | (2) | (3) | |||||
2022 | $312,500 | $326,937 | $20,434 | $990,990 | ($331,118) | $343,694 | $1,003,566 |
2021 | $276,667 | $207,500 | $19,339 | $973,839 | ($470,333) | $263,754 | $767,260 |
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(1) | Reflects “all other compensation,” as reported in the SCT for the year shown. |
(2) | Represents the grant date fair value of equity-based awards granted each year. |
(3) | Reflects the fair value of equity calculated in accordance with the SEC methodology for determining CAP for each year shown. The equity component of CAP for fiscal years 2021 and 2022 is further detailed in the supplemental tables below. |
SUPPLEMENTAL |
PEO Equity Component of CAP for FY2021:
Equity Type | Fair Value of Current Year Equity Awards at 12/31/21 | Change in Value of Prior Years’ Awards Unvested at 12/31/21 | Change in Value of Prior Years’ Awards That Vested in FY2021 | Equity Value Included in CAP |
(a) | (b) | (c) | (d) = (a) + (b) + (c) | |
PSUs | $727,900 | ($352,489) | $0 | $375,412 |
RSUs | $338,558 | ($59,004) | $3,512 | $283,066 |
Total | $1,066,458 | ($411,492) | $3,512 | $658,478 |
SUPPLEMENTAL |
Average Non-PEO Equity Component of CAP for FY2021: |
Equity Type | Fair Value of Current Year Equity Awards at 12/31/21 | Change in Value of Prior Years’ Awards Unvested at 12/31/21 | Change in Value of Prior Years’ Awards That Vested in FY2021 | Equity Value Included in CAP |
(a) | (b) | (c) | (d) = (a) + (b) + (c) | |
PSUs | $281,001 | ($111,472) | $17,565 | $187,094 |
RSUs | $93,667 | ($19,012) | $2,005 | $76,660 |
Total | $374,668 | ($130,484) | $19,570 | $263,754 |
SUPPLEMENTAL |
PEO Equity Component of CAP for FY2022: |
Equity Type | Fair Value of Current Year Equity Awards at 12/31/22 | Change in Value of Prior Years’ Awards Unvested at 12/31/22 | Change in Value of Prior Years’ Awards That Vested in FY2022 | Equity Value Included in CAP |
(a) | (b) | (c) | (d) = (a) + (b) + (c) | |
PSUs | $734,598 | ($26,086) | ($443,751) | $264,760 |
RSUs | $971,332 | $209,319 | $43,951 | $1,224,601 |
Total | $1,705,929 | $183,233 | ($399,801) | 1,489,362 |
SUPPLEMENTAL |
Average Non-PEO Equity Component of CAP for FY2022:
Equity Type | Fair Value of Current Year Equity Awards at 12/31/22 | Change in Value of Prior Years’ Awards Unvested at 12/31/22 | Change in Value of Prior Years’ Awards That Vested in FY2022 | Equity Value Included in CAP |
(a) | (b) | (c) | (d) = (a) + (b) + (c) | |
PSUs | $216,059 | ($13,429) | ($178,046) | $24,584 |
RSUs | $241,802 | $63,522 | $13,785 | $319,110 |
Total | $457,861 | $50,094 | ($164,261) | $343,694 |
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As shown in the graph below, the PEO and average non-PEO NEO CAP amounts are aligned with the Company’s TSR (assuming an initial investment of $100 made on December 31, 2020) for the fiscal years ended December 31, 2021 and 2022. The dollar amounts in the graph are shown in thousands ($K).
Relationship between CAP and Net Income
The graph below reflects the relationship between PEO and Average Non-PEO NEO CAP amounts and the Company’s net income for the fiscal years ending December 31, 2021 and 2022. As shown in the graph below, the PEO and Average Non-PEO NEO CAP amounts are aligned with the Company’s net income. The dollar amounts in the graph are shown in thousands ($K).
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INFORMATION CONCERNING SOLICITATION AND VOTING
Proxies are being solicited on behalf of the Board of OSG for use at the Annual Meeting to be held virtually on May 28, 2020Thursday, June 15, 2023 at 8:30 a.m.9:30a.m. (ET), or any adjournment or postponement thereof, for the purposes set forth herein and in the Notice of Annual Meeting of Stockholders. The Annual Meeting is scheduled to be held in the Brenner Emory Smoot Training Center at 2000 Barge Avenue, Tampa, Florida. However, as discussed above, due to concerns regarding the coronavirus pandemic, stockholders may participate in the meeting by means of remote communication.
Any stockholder giving a proxy may revoke it at any time before it is exercised at the meeting.
Record Date, Shares Outstanding and Voting
Only stockholders of record at the close of business on April 2, 202017, 2023 (the "Record Date"“Record Date”) will beare entitled to vote at the Annual Meeting. The Company has one class of voting securities, its Class A Common Stock, with each share entitled to one vote. As of the Record Date, 85,845,92078,693,369 shares werewere outstanding.
All shares represented by an eligible proxy will be voted at the meeting in accordance with the instructions provided therein. If no such instructions are provided, the proxy will be voted:
(1) |
(2) |
(3) |
(4) |
(5) | to amend our Amended and Restated Certificate of Incorporation to allow for the exculpation of officers as permitted by Delaware law. |
Vote Required to Approve the Matters being submitted to stockholder votes at the Annual Meeting
Election of Directors; “Say-on-Pay” Vote; and Ratification of Independent Registered Public Accounting Firm.Each of the election of directors, the advisory vote to approve the compensation of the NEOs, the approval of the amendment to the Non-Employee Director Incentive Plan, and the ratification of the appointment of the Company'sCompany’s independent registered public accounting firm for 2020fiscal year 2023 requires the affirmative vote (in person or by proxy) of a majority of the votes cast by the holders of the shares of Common Stock present in person or represented by proxy at the meeting and entitled to vote thereon. IfAbstentions and broker non-votes do not count as votes “for” or “against” and, therefore, have no effect on the appointmentoutcome of the Company's independent registered public accounting firmvoting.
“Say-on-Frequency” Vote. Stockholders will be able to specify one of four options in connection with the advisory vote on the frequency of future “say-on-pay” votes: ONE (1) YEAR, TWO (2) YEARS, THREE (3) YEARS, or ABSTAIN. The option that receives the most votes at the Annual Meeting will be approved on a non-binding, advisory basis. Abstentions and broker non-votes do not count for 2020 is not ratified,purposes of determining the Audit Committee will reconsiderresult of this non-binding advisory vote.
Amendment of Restated Certificate of Incorporation. Approval of the appointment and review its future selection of an independent registered public accounting firm. If theproposed amendment to the Non-Employee Director Compensation Incentive PlanRestated Certificate requires the affirmative vote of a majority of the voting power of the outstanding shares of our stock entitled to vote thereon, voting together as a single class. As a result, abstentions and broker non-votes will have the same effect as a vote “against” the amendment. Holders of proxies solicited by this proxy statement will vote the proxies received by them as directed on the proxy card or, if no direction is not approved, it will not be implemented, andgiven, then FOR the Board will consider alternative plans or other actions.approval of the proposed amendment.
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Voting
Some of the Company’s stockholders hold their shares through a broker, trustee, or other nominee rather than directly in their own names. As summarized below, there are some distinctions between shares held of record and those shares owned beneficially.
● | Stockholder of Record. If your shares are registered directly in your name with the Company’s transfer agent, Computershare, Inc. then you are considered the “stockholder of record.” As the stockholder of record, you have the right to grant your voting proxy directly to the Company or to a third party, or to vote at the Annual Meeting. |
● | Beneficial Owner. If your shares are held in a brokerage account, by a trustee, or by another nominee, then you are considered the “beneficial owner” of those shares. As the beneficial owner of those shares, you have the right to direct your broker, trustee, or nominee how to vote and you also are invited to attend the Annual Meeting. However, because a beneficial owner is not the stockholder of record, you may not vote these shares at the Annual Meeting unless you obtain a “legal proxy,” as discussed below. |
As a stockholder of record, you may vote by one of the following methods:
● | Internet Voting. You may use the Internet as described on the proxy card or the notice of availability of proxy materials, as applicable, to vote your shares of Common Stock by giving the Company a proxy. You will be able to vote your shares by the Internet and confirm that your vote has been properly recorded. Please see your proxy card or your notice of availability of proxy materials, as applicable, for specific instructions. |
● | Telephone Voting. You may vote your shares of Common Stock by giving the Company a proxy using the toll–free number listed on the proxy card. The procedure allows you to vote your shares and to confirm that your vote was recorded. Please see your proxy card for specific instructions. |
● | Voting By Mail. You may sign, date, and mail your proxy card in the postage-paid envelope provided. This option is available only to those stockholders who have received a paper copy of a proxy card by mail. |
● | Voting at the Annual Meeting. You may vote at the Annual Meeting as indicated above under “Remote Participation in the Annual Meeting” at the beginning of this Proxy Statement. |
If your shares are held through a broker, bank, trustee or other nominee, you will receive a request for voting instructions with respect to your shares of Common Stock from the broker, bank, trustee or other nominee. You should respond to the request for voting instructions in the manner specified by the broker, bank, trustee or other nominee. If you have questions about voting your shares, you should contact your broker, bank, trustee or other nominee.
If you hold your shares through a broker, bank, trustee or other nominee and you wish to vote in person at the meeting, you will need to bring a legal proxy to the meeting. You must request a legal proxy through your broker, bank, trustee or other nominee. Please note that if you request a legal proxy, any proxy with respect to your shares of Common Stock previously executed by your broker, bank, trustee, or other nominee will be revoked and your vote will not be counted unless you appearvote at the meeting and vote in person or legally appoint another proxy to vote on your behalf.
It is very important that you are represented at the meeting and that your shares are voted. We urge you to vote as soon as possible by telephone, over the Internet or by marking, signing and returning your proxy or voting instruction card, even if you plan to virtually attend the Annual Meeting in person.
To conduct the business of the Annual Meeting, we must have a quorum. The presence in person or by proxy of at least a majority of the shares entitled to vote is necessary to constitute a quorum at the Annual Meeting. Abstentions will be counted toward fulfillment of quorum requirements. Abstentions and broker non-votes will not be counted in tabulations of the votes cast on any of the proposals presented at the Annual Meeting. A broker non–vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner. In the absence of voting instructions from the beneficial owner of the shares, nominee holders will not have discretionary authority to vote the shares at the Annual Meeting in the election of directors, or for the compensation
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for 20192022 of the executive officers,our NEOs, or for the approval of the amendment to the Non-Employee Director Compensation Incentive Plan,Restated Certificate, or on the frequency of future advisory votes on the compensation of our NEOs, but will have discretionary authority to vote on the ratification of the appointment of the Company'sCompany’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2023. Proxies that are transmitted by nominee holders for beneficial owners will count toward a quorum and will be voted as instructed by the nominee holder.
As all of these matters are very important to the Company,OSG, we urge you to vote your shares as soon as possible by telephone, over the Internet or by marking, signing and returning your proxy or voting instruction card.
Expenses
The cost of soliciting proxies for the meeting will be borne by the Company. The CompanyOSG. OSG will also reimburse brokers and others who are only record holders of the Company'sOSG shares for their reasonable expenses incurred in obtaining voting instructions from beneficial owners of such shares.
Proposals for 2020 Annual Meeting of Stockholders
Stockholder proposals submitted under the SEC rules for inclusion in the Proxy Statement for the Annual Meeting in 2024 must be received no later thanDecember 30, 2023. Stockholder proposals submitted under the SEC rules must comply with the proxy rules and be submitted in writing to our Corporate Secretary at the following address: Corporate Secretary, Overseas Shipholding Group, Inc., 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602.
Any stockholder who wishes to propose a matter for action at the Company's nextCompany’s Annual Meeting includingin 2024 pursuant to the nomination of a director,Company’s Amended and Restated By–laws must notify the Company in writing, and provide the information required by the Company’s Amended and Restated By–laws, no earlier than 90 days and no later than 60 days prior to April 14, 2021,June 15, 2024, the first anniversary of this year's Notice ofyear’s Annual Meeting. In other words, the notice and such information must be received no earlier than January 14, 2021,between March 17, 2024 and no later than February 14, 2021.April 16, 2024. Stockholders can obtain a copy of the Amended and Restated By-laws by writing to the Corporate Secretary at the following address: Corporate Secretary, Overseas Shipholding Group, Inc., 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602.
Under our Amended and Restated By-laws, a stockholder may recommendnominate a person as a nominee for director by writing to the Corporate Secretary of the Company. RecommendationsSecretary. Such nominations must be received by February 14, 2021between March 17, 2024, and April 16, 2024 in order for a candidate to be considered for election at the 2021 Annual Meeting.Meeting in 2024. Each recommendation forsuch nomination should contain the following information: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) the class and/or series and number of shares of stock of the Company which are beneficially owned by the stockholder; (c) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy atattend the meeting to nominate the person or persons specified in the notice; (c)(d) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d)(e) such other information regarding each nominee proposed by such stockholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had such nominee been nominated, or intended to be nominated, by the Board; and (e)(f) the consent of each nominee to serve as a director of the Company if so elected. elected; and (g) if the stockholder intends to solicit proxies in support of such stockholder’s nominee(s), a representation to that effect. Additionally, a stockholder soliciting proxies in support of director candidates other than those nominated by the Board are subject to, and must comply with, the SEC’s “universal proxy” rules.
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OTHER MATTERS
The Board is not aware of any matters to be presented at the Annual Meeting other than those specified above. If any other matter should be presented, proxy holders will vote the shares represented by the proxy on such matter in accordance with their best judgment.
We have adopted a procedure approved by the SEC has adopted rulesknown as “householding” that permitpermits companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. Stockholders who participate in householding will continue to receive separate proxy cards. This process which is commonly referred to as "householding," potentially provides extra convenience for stockholders and cost savings for companies. Some brokers use this process for proxy materials, delivering a single proxy statement to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice that any person will be householding materials to your address, householdingHouseholding will continue until you are notified otherwise or until you revoke your consent.request to no longer participate in householding. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account or the CompanyOSG if you hold shares registered in your name, and the CompanyOSG will promptly undertake to carry out your request. You can notify the CompanyOSG by sending a written request to the CompanyOSG at its address set forth above.
OSG’s 2022 Form 10-K for the fiscal year ended December 31, 2019 is available at
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PROXY OVERSEAS SHIPHOLDING GROUP, INC.