Named Executive Officers for 20192022 as disclosed in this Proxy Statement.
ADVISORY VOTE ON THE FREQUENCY OF FUTURE
ADVISORY VOTES FOR APPROVAL OF AN AMENDMENT TO THE
NON-EMPLOYEE DIRECTOR INCENTIVE COMPENSATION PLAN
OF THE NAMED EXECUTIVE OFFICERS(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.
As of April 2, 2020, 579,960 shares of Common Stock remained available for grant under the Director Plan (without giving effect to the amendment and restatement). The closing market price per share of the Common Stock on that date was $2.16 per share.
The Board of Directors believes that the ability to grant equity and other incentives to non-employee directors is critical to the Company's efforts to attract and retain key talentadvisory vote on the Board and to encourage ownershipfrequency of shares of Common Stock by non-employee directors.
Summary of the Director Plan, as Amended and Restated
The following summary of the material terms of the Director Plan, as amended and restated, is qualified in its entirety by reference to the full text of the Director Plan, which is attached to this Proxy Statement as Appendix A. Unless otherwise indicated, all capitalized terms in the summary have the meanings given to such terms in the Director Plan.
The purpose of the Director Plan is to promote the interests of the Company and its stockholders by providing non-employee directors, who are largely responsible for overseeing the management, growth and protection of the business of the Company, with incentives and rewards to encourage them to continue in the service of the Company.
Under the Director Plan, the Compensation Committee may grant to non-employee directors of the Company cash-based awards, stock options or other equity-based awards (including stock appreciation rights, phantom stock, restricted stock, restricted stock units, performance shares, deferred share units or share-denominated performance units) with respect to a maximum of 3,550,000 shares of Common Stock , subject to adjustment as set forth in the Director Plan, plus (1) shares subject to previously issued awards that are subsequently forfeited, canceled or returned and (2) shares subject to stock options that may be assumed by the Company as of a result of any merger or consolidation in which the Company is the surviving corporation. At April 2, 2020, 715,732 shares were subject to outstanding awards under the Director Plan (without giving effect to the amendment and restatement). No awards may be made under the Director Plan after September 23, 2024.
The persons eligible to receive awards pursuant to the Director Plan are those non-employee directors of the Company and its subsidiaries whom the Compensation Committee selects from time to time. All persons elected to serve as directors at the Annual Meeting, except for Mr. Samuel H. Norton, (eight persons) will be eligible to participate in the Director Plan.
Subject to changes in the Company's capitalization, the maximum number of shares of Common Stock that may be covered by incentive awards granted to any non-employee director in any calendar year under the Director Plan is 100,000 shares, and the maximum amount payable to any non-employee director under the Director Plan with respect to any calendar year for all cash incentive cash awards is $1,000,000.
The Compensation Committee administers the Director Plan and is authorized to grant awards, designating the non-employee directors of the Company or its subsidiaries who will be granted the awards, the type of award, the number of shares of Common Stock or amount of cash underlying such awards and the terms and conditions of such awards. Subject to applicable law, the Compensation Committee may also from time to time authorize a subcommittee consisting of one or more members of the Board of Directors or employees of the Company to grant awards under the Director Plan to persons who are not executive officers of the Company. The Compensation Committee has the full discretionary authority to administer the Director Plan,
including the authority to interpret and construe any provision of the Director Plan and the terms of any award granted thereunder.
The exercise price per share of Common Stock covered by any stock option that may be granted under the Director Plan may not be less than the fair market value of a share of Common Stock on the date on which such option is granted. Any stock options granted under the Plan will expire on the tenth anniversary of the date the option is granted.
Each award agreement will specify the consequences with respect to such award of any termination of employment, leave of absence, and the director's death or disability, and will also specify any consequences of a Change in Control. For purposes of the Director Plan, a "Change in Control" means: (1) any one person, or more than one person acting as a group, other than the Company or any employee benefit plan sponsored by the Company, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; or (ii) any one person, or more than one person acting as a group, other than the Company or any employee benefit plan sponsored by the Company, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty percent (30%) or more of the total voting power of the stock of the Company; or (iii) a majority of members of the Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors before the date of each appointment or election; or (iv) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions. For purposes of subsection (iv), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
On or after the date of grant of an award under the Director Plan, the Compensation Committee may (i) accelerate the date on which any such award becomes vested, exercisable or transferable, as the case may be, (ii) extend the term of any such award, including, without limitation, extending the period following a termination of a non-employee director's service during which any such award may remain outstanding; (iii) waive any conditions to the vesting, exercisability or transferability, as the case may be, of any such award; or (iv) provide for the payment of dividends or dividend equivalents with respect to any such award; provided, however, that no dividends or dividend equivalents may be paid or credited with respect to shares of Common Stock subject to Options or stock appreciation rights. If the Committee provides for the payment of dividends or dividend equivalents with respect to an unvested Incentive Award (other than Options or stock appreciation rights), such payment may accrue but shall not be paid prior to and only to the extent that such Incentive Award becomes vested. The Company may not reprice any stock option without the approval of the stockholders of the Company.
The Company is entitled to recoup compensation paid to a participant under the Director Plan to the extent permitted or required by applicable law, Company policy and/or the requirements of an exchange on which the Company's shares are listed for trading.
The number of shares of Common Stock covered by the Director Plan, the maximum number of shares with respect to which the Compensation Committee may grant awards to any individual non-employee director in any calendar year, the number of shares covered by outstanding awards, and the exercise price per share of Common Stock, if applicable, of each outstanding award will be appropriately adjusted by the Committee in the event of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares or similar corporate change. In addition, in the event of a dissolution or liquidation, sale of all or substantially all of the assets, or merger, consolidation or similar transaction involving the Company, the Committee has the power to cancel the outstanding award and pay an equivalent value in cash or exchange the outstanding award for some or all of the property which a holder of the number of shares subject to the award would have received in the transaction or securities of the acquirer or surviving entity, and make an equitable adjustment in the exercise price or number of shares or amount of property subject to the award.
No person has any rights as a stockholder with respect to any shares of Common Stock covered by or relating to any award until the date of the issuance of such shares on the books and records of the Company. Except as otherwise expressly provided in the Director Plan, no adjustment of any award will be made for dividends or other rights for which the record date occurs prior to the date of such issuance. Nothing in the Director Plan is intended, or should be construed, to limit authority of the Compensation Committee to cause the Company to make payments based on the dividends that would be payable with respect to any share of Common Stock if it were issued or outstanding, or from granting rights related to such dividends. At a non-employee director's request, the Committee may withhold or permit the non-employee director to tender a portion of the shares underlying an award to satisfy tax withholding obligations incurred in connection with such award.
The Board of Directors may at any time suspend or discontinue the Director Plan or revise or amend it in any respect whatsoever; provided, however, that to the extent that any applicable law, tax requirement, or rule of a stock exchange requires stockholder approval in order for any such revision or amendment to be effective, such revision or amendment will not be effective without such approval. The preceding sentence does not restrict the Compensation Committee's ability to exercise its discretionary authority pursuant to the Director Plan, which discretion may be exercised without amendment to the Director Plan. Except as expressly provided in the Director Plan, no action taken thereunder may, without the consent of a participant, adversely affect the participant's rights under any previously granted and outstanding incentive award.
Certain Federal Income Tax Consequences
The following is a brief description of the principal United States federal income tax consequences related to options granted under the Director Plan.
Non-Qualified Options. Generally, a grantee will not be subject to tax at the time a non-qualified option is granted, and no tax deduction is then available to the Company. Upon the exercise of a non-qualified option, an amount equal to the excess of the fair market value of the shares acquired on the date of exercise over the exercise price paid will be included in the grantee's ordinary income and the Company will generally be entitled to deduct the same amount. Upon disposition of shares acquired upon exercise, appreciation or depreciation after the date of exercise will be treated by the grantee or transferee of the non-qualified option as either capital gain or capital loss and, depending upon the length of period following exercise, either short term or long term.
If a non-qualified option provides for the issuance of Common Stock subject to restrictions upon exercise, the grantee receiving such restricted stock will not recognize income for tax purposes until the restrictions lapse, unless he or she elects otherwise, as described below. Rather, the grantee will have taxable income upon lapse of the restrictions equal to the amount by which the fair market value of the shares at the time the restrictions lapse exceeds the price paid on exercise, and the Company will generally have a tax deduction in the same amount. Proceeds from the sale of stock sold after the restrictions lapse will be taxable as a capital gain or capital loss, depending upon the amount by which the sale price exceeds or is less than the fair market value of the stock at the time the restrictions lapse.
Alternatively, a grantee who receives Common Stock subject to restrictions can elect to recognize income immediately upon exercise of the non-qualified option, in which case the grantee's taxable income and the Company's tax deduction are generally determined at the time of option exercise, as explained in the first paragraph of this section. However, if the grantee subsequently forfeits the stock or is required to sell it to the Company by the terms of the restriction, the grantee's tax deduction for any loss on the sale will be limited to the amount, if any, by which the exercise price exceeds the amount paid by the Company on such sale.
If the grantee pays the exercise price, in whole or in part, with previously acquired shares, the exchange will not affect the tax treatment of the exercise. No gain or loss is recognized on delivery of the previously acquired shares to the Company, and shares received by the grantee equal in number to the previously acquired shares so exchanged will have the same basis and holding period for capital gain purposes as the previously acquired shares. Shares received by the grantee in excess of the number of previously acquired shares will have a basis equal to the fair market value of such additional shares as of the date ordinary income equal to such fair market value is realized, and a holding period beginning as of such date.
New Plan Benefits
Awards under the Director Plan are discretionary and are not subject to set benefits or amounts. Accordingly, the Company cannot currently determine the benefits or number of shares subject to awards that may be granted in the future under the Director Plan.
“say-on-pay” votes.
The Board of Directors recommends athat stockholders vote "FOR"FOR “ONE (1) YEAR”
as the approvalpreferred frequency of the
Overseas Shipholding Group, Inc. Non-Employee Director Incentive Compensation Plan, as amended and restated.
“say-on-pay” proposal.
MATTERS
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
www.osg.com.
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.
The Company’s
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 |
| Anja L. ManuelRebecca K. DeLaet |
| Julie E. SilcockJoseph I. Kronsberg |
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.
RATIFICATION OF APPOINTMENT OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP, certified
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.
The dismissal of EY as the Company’s independent registered public accounting firm following the first quarter was not a result of any dissatisfaction with the quality of professional services rendered by EY.
EY’s audit reports on our consolidated financial statements as of and for the fiscal years ended December 31, 2019 and 2018 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The audit reports of EY on the effectiveness of internal control over financial reporting as of December 31, 2019 and 2018 did not contain an adverse opinion, nor were they qualified or modified.
During the fiscal years ended December 31, 2019 and 2018, and the subsequent interim period through April 6, 2020, there were (i) no material disagreements with EY on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to EY’s satisfaction, would have caused EY to make reference thereto in their reports on the consolidated financial statements for such years, and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K.
In deciding to engage Grant Thornton, the Audit Committee reviewed auditor independence and existing commercial relationships with Grant Thornton and concluded that Grant Thornton has no commercial relationship with the Company that would impair its independence. During the fiscal years ended December 31, 2019 and 2018, and during the subsequent interim period through April 6, 2020, neither the Company nor anyone acting on its behalf has consulted with Grant Thornton on any of the matters or events set forth in Item 304(a)(2) of Regulation S-K.
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.
A representative
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.
Fees Paid to the Independent Registered Public Accounting Firm
The following table represents professional audit services incurred by OSG to EY for the audit of our annual financial statements for the fiscal years ended December 31, 2019 and December 31, 2018, and fees billed for other services incurred by OSG to EY during those periods.
|
| | | | |
| 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 |
| |
(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 EY in 2019 and 2018 were related to agreed-upon procedures for American Tanker, Inc. and access to EY Atlas US technical guidance. |
questions.
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.
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 Audit 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 Audit Committee. All fees have been approved by the Audit Committee in accordance with these policies and procedures.
The Audit Committee and the Board of Directors recommend a vote "FOR"“FOR” theratification of the
selection of Grant Thornton LLPas
the independent registered public accounting firm for 2020. fiscal year 2023.
APPROVAL 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
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% |
* Less than 1%
| | 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% |
(1) | (1) | Includes shares of Class A Common Stock issuable within 60 days of March 24, 2020upon31, 2023 upon the exercise of options or warrants owned by the indicated stockholders on that date.warrants:
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) | Mr. KronsbergMs. Luria, not currently a director, is an employee of Cyrus Capital Partners, L.P. (“CCP”) which beneficially owns 20,704,082 shares of Class A Common Stock, including 47,753 shares which were granted bystanding for election at the Company to CCP under the Company’s Non-Employee Director Incentive Compensation Plan in 2018. The grant was made to CCP pursuant to agreements between CCP and Mr. Kronsberg under which CCP is required to receive all compensation in connection with Mr. Kronsberg’s directorship. Mr. Kronsberg disclaims beneficial ownership of all Company securities held by CCP except to the extent of his pecuniary interest therein, if any.Annual Meeting. |
Other | (3) | Ms. Manuel, currently a director, is not standing for re-election at the Annual Meeting. |
Beneficial Owners
of More than 5% of the Outstanding Shares of Class A Common StockThe 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.
| |
*(1) | Unless otherwise stated in the notes to this table, the share and percentage ownership information presented is as of the Measurement Date. |
| |
(1) | 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 the Company’sOSG’s consent and are subject to certain citizenship rules and limitations on exercise, sale, transfer or other disposition. |
| |
| (2) | Based on a Schedule 13D/A filed on MarchNovember 15, 20192022 and a Form 4 filed on December 16, 2022 with the SEC by Cyrus Capital Partners, L.P. (“CCP”Cyrus”), CCP has, with respect to beneficial ownership, shared voting power and shared dispositive powercertain of 20,704,082its affiliates. The number of shares of Class A Common Stock beneficially owned by each of CCP and Cyrus, Capital Partners GP, L.L.C. (“CCPGP”) of which 2,636,376together with its affiliates, includes 2,631,760 shares are obtainable upon the exercise of 13,851,382subject to currently exercisable warrants. As the (i) principal of CCP and (ii) principal of CCPGP, the general partner of CCP, Stephen C. Freidheim (“Freidheim”) may be deemed the beneficial owner of 20,704,082 shares of Class A Common Stock. The address of each of CCP, CCPGPCyrus and Freidheimits affiliates is 399 Park Avenue, 39th65 East 55th Street, 35th Floor, New York, NY 10022. |
| |
| (3) | Based on a Schedule 13D13D/A filed on March 12, 2020September 7, 2021 with the SEC by Saltchuk Resources, Inc. ("Saltchuk"(“Saltchuk”), Saltchuk has beneficial ownership of an aggregate amount of 11,435,91815,203,554 shares of Class A Common Stock. The address of Saltchuk is 450 Alaskan Way South, Suite 708, Seattle, WA 98104. |
| |
(4) | Based on a Form 4 filed on August 21, 2018 and an amendment to a Schedule 13D filed on August 21, 2018 with the SEC by Paulson & Co. Inc. ("Paulson"), Paulson has beneficial ownership of an aggregate amount of 8,300,000 shares of Class A Common Stock. Paulson is the investment advisor, or manager, of PCO Shipping LLC and certain separately managed accounts (collectively, the “Paulson Accounts”). The address of Paulson and the Paulson Accounts is c/o Paulson & Co. Inc., 1251 Avenue of the Americas, 50th Floor, New York, NY 10020. |
| |
(5) | Based on a Schedule 13G filed on February 7, 2020 with the SEC by BlackRock, Inc. ("BlackRock"), BlackRock has beneficial ownership of an aggregate amount of 4,592,583 shares of Class A Common Stock. The address of BlackRock is 55 East 52nd Street, New York, NY 1055. |
| |
(6) | Based on a Schedule 13D filed on March 13, 2020 with the SEC by CF Partners Capital Management, LLP ("CFP"), CFP has beneficial ownership of an aggregate amount of 4,457,151 shares of Class A Common Stock by CFP. CFP is the investment manager of the CFP Opportunity Master Fund, an Irish unit trust and other controlled investment accounts of CFP (the "CFP Accounts"). The address of CFP and the CFP Accounts is 80 Hammersmith Road, 4th Floor, London, United Kingdom W14 8UD. |
Equity Compensation Plan Information
The following table provides information as of December 31, 20192022 with respect to the Company'sOSG’s equity compensation plans,
which have been approved by the Company'sOSG’s stockholders.
|
| | | | | | |
| 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
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 | | | 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.
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.
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 |
| (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. |
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 |
| 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 |
| 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 |
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 |
Relationship between CAP and TSR
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).
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
Votes Required
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) | FORto elect eight directors to serve until the election2024 Annual Meeting of nine directors,Stockholders of the Company; |
| |
| (2) | FOR the approval,to approve, on an advisory basis, of the 2022 compensation for 2019 of the executive officers named in the Summary Compensation Table in this Proxy Statement,our Named Executive Officers as described in the "How“How We Compensate Our Executives" sectionExecutives” and in the accompanying compensation data provided in the tables and narrative in thisthe Proxy Statement,Statement; |
| |
| (3) | FORto approve, on an advisory basis, the approvalfrequency of future advisory votes on the amendment and restatementcompensation of the Non-Employee Director Compensation Incentive Plan, andour Named Executive Officers; |
| |
| (4) | FOR the ratification ofto ratify the appointment of Grant Thornton LLP as the Company'sCompany’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2023; |
| (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.
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 in person 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 in person at the Annual Meeting unless you obtain a "legal proxy," as discussed below.
If you are not a stockholder of record, please understand that the Company may not know that you are a stockholder, or how many shares you own.
| ● | 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 In Person. You may vote in person at the meeting.
| ● | 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.
Meeting.
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
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.
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
in 2024
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.
ASecretary.
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.
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.
The
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.
The Company's Annual Report on
OSG’s 2022 Form 10-K for the fiscal year ended December 31, 2019 is available at
www.osg.com/investor-relations. That Annual Report on Form 10-KIt does not form part of this Proxy Statement. The CompanyOSG will provide to any stockholder of the Company,OSG, without charge, a copy of the Company's Annual Report on2022 Form 10-K for the fiscal year ended December 31, 2019 upon the written request of such stockholder addressed to the Corporate Secretary of the CompanyOSG at 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602.
PROXY OVERSEAS SHIPHOLDING GROUP, INC.
NON-EMPLOYEE DIRECTOR INCENTIVE COMPENSATION PLAN
( PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 15, 2023 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED The undersigned hereby appoints Susan Allan and Richard Trueblood, or either of them, each with power of substitution, as amended with shareholder approval)
(effective asproxies for the undersigned to vote all shares of May 28, 2020)
This PlanCommon Stock of Overseas Shipholding Group, Inc., which the undersigned is intendedentitled to promotevote at the interestsAnnual Meeting of Stockholders of the Company, to be held on June 15, 2023, and its shareholders by providing certain non-employee directorsany continuation, adjournment, or postponement thereof, as hereinafter specified and, in their judgment, upon such other matters as may properly come before the meeting. The undersigned hereby revokes all proxies previously given. Our Annual Meeting will be held virtually. To participate in the Annual Meeting, dial (844) 200-6205 for U.S. callers, and (929) 526-1599 for international callers, and enter Access Code 601936. Please dial in ten minutes prior to the start of the Company, who are largely responsible for the management, growthcall. Stockholders and protectionother interested parties can listen to a live webcast of the businessAnnual Meeting through the Investor Relations section of OSG's website at www.osg.com. We urge you to vote as soon as possible by telephone or over the Company, with incentives and rewardsInternet. If you wish to encourage them to continue in the service of the Company.
As used in the Plan or in any instrument governing the terms of any Incentive Award, the following definitions apply to the terms indicated below:
(a)“Affiliate” means, with respect to a specified Person, a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the specified Person.
(b)“Award Agreement” means a written agreement, in a form determined by the Committee from time to time, entered into by each Participant and the Company, evidencing the grant of an Incentive Award under the Plan.
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(c) | “Board of Directors” means the Board of Directors of OSG. |
(d)“Cash Incentive Award” means an award granted to a Participant pursuant to Section 8 of the Plan.
(e)“Change in Control” means (i) any one Person, or more than one Person acting as a group (as defined under Treasury Regulation § 1.409A-3(i)(5)(v)(B)), other than OSG or any employee benefit plan sponsored by OSG, acquires ownership of stock of OSG that, together with stock held by such Person or group, constitutes more than fifty percent (50%) of the total fair market value or total Voting Power of the stock of OSG; or (ii) any one Person, or more than one Person acting as a group (as defined under Treasury Regulation § 1.409A-3(i)(5)(v)(B)) other than OSG or any employee benefit plan sponsored by OSG acquires (or has acquired during the 12-month period endingvote on the date of the most recent acquisitionAnnual Meeting, or to change your vote, you may do so by such Personsending an email to investor-relations@osg.com and attaching your proxy card, or Persons) ownershipif your shares are 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. Eastern Time on Thursday, June 15, 2023 in order for your vote to be counted (or for your change of stockvote to be effective). THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED “FOR” PROPOSALS 1, 2, 4, AND 5, AND FOR “1 YEAR” ON PROPOSAL 3. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR JUDGMENT UPON SUCH OTHER BUSINESS NOT KNOWN AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY CONTINUATION, POSTPONEMENT, OR ADJOURNMENT THEREOF. PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE. Important Notice Regarding the Availability of OSG possessing thirty percent (30%) or moreProxy Materials for the Annual Meeting of the total Voting Power of the stock of OSG; or (iii) a majority of members of theStockholders to be held on June 15, 2023 The Annual Report and Proxy Statement to Stockholders are available at: https://viewproxy.com/OSG/2023 The Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority ofrecommends you vote FOR the members of thefollowing: The Board of Directors recommends you vote FOR Proposals 2, 4, and 5, and for “1 YEAR” on Proposal 3: Please mark your votes like this .. Proposal 1. Vote for the Election of Directors: NOMINEES: FOR ALL . WITHHOLD ALL . FOR ALL EXCEPT (1) Rebecca K. DeLaet . (2) Joseph I. Kronsberg . (3) Elaine D. Luria . (4) Samuel H. Norton . (5) John P. Reddy . (6) Julie E. Silcock . (7) Gary Eugene Taylor . (8) Douglas D. Wheat . Please indicate if you plan to attend this virtual meeting . Address Change/Comments: (If you noted any Address Changes and/or Comments above, please mark box.) . VIRTUAL CONTROL NUMBER Vote for the Proposals: Proposal 2. Approval, on an advisory basis, of the compensation for 2022 of the Named Executive Officers. FOR . AGAINST . ABSTAIN . Proposal 3. Approval, on an advisory basis, of the frequency of future advisory votes of the compensation of our Named Executive Officers. 1 YEAR . 2 YEARS . 3 YEARS . ABSTAIN . Proposal 4. Ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year 2023. FOR .. AGAINST . ABSTAIN . Proposal 5. Approval to amend our Amended and Restated Certificate of Incorporation to allow for the exculpation of officers as permitted by Delaware law. FOR . AGAINST . ABSTAIN . To transact other business as may properly come before the date ofmeeting or any continuation, adjournment, or postponement thereof. Date Signature Signature (Joint Owners) Note: Please sign exactly as your name or names appear on this card. Joint owners should each appointment or election; or (iv) any one Person, or more than one Person actingsign personally. If signing as a group (as defined in Treasury Regulation § 1.409A- 3(i)(5)(v)(B)) acquires (or has acquired during the 12-month period ending on the datefiduciary or attorney, please give your exact title. As a stockholder of the most recent acquisition by such Person or Persons) assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions. For purposes of subsection (iv), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. The foregoing subsections (i) through (iv) shall be interpreted in a manner that is consistent with the Treasury Regulations promulgated pursuant to Section 409A of the Code so that all, and only, such transactions or events that could qualify as a “change in control event” within the meaning of Treasury Regulation §1.409A-3(i)(5)(i) will be deemed to be a Change in Control for purposes of this Plan.
(f)“Code” means the Internal Revenue Code of 1986, as amended from time to time, and all regulations, interpretations and administrative guidance issued thereunder.
(g)“Committee” means the Compensation Committee of the Board of Directors or such other committee as the Board of Directors shall appoint from time to time to administer the Plan and to otherwise exercise and perform the authority and functions assigned to the Committee under the terms of the Plan.
(h)“Common Stock” means OSG’s Class A common stock, $0.01 par value per share, or any other security into which the common stock shall be changed pursuant to the adjustment provisions of Section 9 of the Plan.
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(i) | “Company” means Overseas Shipholding Group, Inc. and all of its Subsidiaries, collectively. |
(j)“Deferred Compensation Plan” means any plan, agreement or arrangement maintained by the Company from time to time that provides opportunities for deferral of compensation.
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(k) | “Effective Date” means the date the Plan is adopted. |
(l)“Employment” means the period during which an individual is classified or treated by the Company as a non-employee director of the Company.
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(m) | “Exchange Act” means the Securities Exchange Act of 1934, as amended. |
(n)“Fair Market Value” means, with respect to a share of Common Stock, the value as determined by the Committee in its sole discretion using the appropriate means for determining such value as provided in Treasury Regulation Section 1.409A-1(b)(5)(iv). If the Common Stock is readily tradeable on an established securities market the Fair Market Value of the Common Stock shall be determined by the Committee in a manner that complies with Treasury Regulation Section 1.409A-1(b)(5)(iv) (A). If the Common Stock is not readily tradeable on an established securities market the Fair Market Value of the Common Stock shall be determined by the Committee in a manner that complies with Treasury Regulation Section 1.409A-1(b)(5)(iv)(B).
(o)“Incentive Award” means one or more Stock Incentive Awards and/or Cash Incentive Awards, collectively.
(p)“Option” means a stock option to purchase shares of Common Stock granted to a Participant pursuant to Section 6.
(q)“OSG” means Overseas Shipholding Group, Inc., a Delaware corporation (and any successor thereto).
(r)“Other Stock-Based Award” means an award grantedyou have the option of voting your shares electronically through the Internet or by telephone, eliminating the need to a Participant pursuantreturn the proxy card. Your electronic vote authorizes the named proxy to Section 7.
(s)“Participant” means a non-employee director of the Company who is eligible to participatevote your shares in the Plansame manner as if you marked, signed, dated, and returned the proxy card. Votes submitted electronically over the Internet or by telephone must be received by 11:59 p.m., Eastern Standard Time, on June 14, 2023. VIRTUAL MEETING June 15, 2023 at 9:30 a.m. EDT To Attend the Virtual Meeting: Call 1-844-200-6205 for US callers 1-929-526-1599 for International callers Access Code 601936 or by webcast: www.osg.com/investor-relations/webcast-presentations-1 VIRTUAL CONTROL NUMBER PROXY VOTING INSTRUCTIONS Please have your 11-digit control number ready when voting by Internet or Telephone. INTERNET TELEPHONE MAIL Vote Your Proxy on the Internet: Go to whom one or more Incentive Awards have been granted pursuant towww.fcrvote.com/OSG Have your proxy card available when you access the Plan and have not been fully settled or cancelled and, followingabove website. Follow the death of any such Person, his or her successors, heirs, executors and administrators, as the case may be.
(t) “Person” means a “person” as such term is used in Section 13(d) and 14(d) of the Exchange Act, including any “group” within the meaning of Section 13(d)(3) under the Exchange Act.
(u) “Plan” means the Overseas Shipholding Group, Inc. Non-Employee Director Incentive Compensation Plan, as it may be amended from time to time.
(v) “Securities Act” means the Securities Act of 1933, as amended.
(w) “Stock Incentive Award” means an Option or Other Stock-Based Award granted pursuant to the terms of the Plan.
(x) “Subsidiary” means any “subsidiary” within the meaning of Rule 405 under the Securities Act. (y) “Target Award” means target payout amount for an Incentive Award.
(z) “Voting Power” means the number of votes available to be cast (determined by reference to the maximum number of votes entitled to be cast by the holders of Voting Securities upon any matter submitted to shareholders where the holders of all Voting Securities vote together as a single class) by the holders of
Voting Securities.
(aa) “Voting Securities” means any securities or other ownership interests of an entity entitled, or which may be entitled,prompts to vote onyour shares. Vote Your Proxy by Phone: Call 1-866-402-3905 Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the election of directors, or securities or other ownership interests which are convertible into, or exercisable in exchange for, such Voting Securities, whether or not subjectvoting instructions to the passage of time or any contingency.
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3. | Stock Subject to the Plan and Limitations on Awards |
(a)Stock Subject to the Plan
The maximum number of shares of Common Stock that may be coveredvote your shares. Vote Your Proxy by
Incentive Awards granted under the Plan shall not exceed 3,550,000 shares of Common StockMail: Mark, sign, and date your proxy card, then detach it and return it in the
aggregate. The maximum number of shares referred to in the preceding sentences of this Section 3(a) shall be subject to adjustment as provided in Section 9. Shares of Common Stock issued under the Plan may be either authorized and unissued shares, treasury shares, shares purchased by the Company in the open market, or any combination of the preceding categories as the Committee determines in its sole discretion.postage-paid envelope provided.
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(b) | For purposes of the preceding paragraph, shares of Common Stock covered by Incentive Awards shall only be counted as used to the extent they are actually issued and delivered to a Participant (or such Participant’s permitted transferees as described in the Plan) pursuant to the Plan; provided, however, that if shares of Common Stock are withheld to pay the exercise price of an Option or to satisfy any tax withholding requirement in connection with an Incentive Award, both the shares issued (if any), and the shares withheld, will be deemed delivered for purposes of determining the number of shares of Common Stock that are available for delivery under the Plan. In addition, if shares of Common Stock are issued subject to conditions which may result in the forfeiture, cancellation or return of such shares to the Company, any portion of the shares forfeited, cancelled or returned shall be treated as not issued pursuant to the Plan. In addition, if shares of Common Stock owned by a Participant (or such Participant’s permitted transferees as described in the Plan) are tendered (either actually or through attestation) to the Company in payment of any obligation in connection with an Incentive Award, the number of shares tendered shall be added to the number of shares of Common Stock that are available for delivery under the Plan. Shares of Common Stock covered by Incentive Awards granted pursuant to the Plan in connection with the assumption, replacement, conversion or adjustment of outstanding equity-based awards in the context of a corporate acquisition or merger (within the meaning of Section 303A.08 of the New York Stock Exchange Listed Company Manual) shall not count as used under the Plan for purposes of this Section 3. |
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(c) | Individual Award Limits |
Subject to adjustment as provided in Section 9, the maximum number of shares of Common Stock that may be covered by Incentive Awards granted under the Plan to any Participant in any calendar year shall not exceed 100,000 shares. For this purpose, the number of shares "covered by" an Incentive Award shall be the maximum number of shares that may be required to be delivered in settlement of that Incentive Award. The amount payable to any Participant with respect to any calendar year for all Cash Incentive Awards shall not exceed $1,000,000. For purposes of the preceding sentence, the phrase "amount payable with respect to any calendar year" means the amount of cash, or value of other property, required to be paid in a calendar year, disregarding any deferral pursuant to the terms of a Deferred Compensation Plan.
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4. | Administration of the Plan |
The Plan shall be administered by a Committee of the Board of Directors consisting of two or more Persons, each of whom qualifies as a “non-employee director” (within the meaning of Rule 16b-3 promulgated under Section 16 of the Exchange Act), an “outside director” within the meaning of Treasury Regulation Section 1.162-27(e)(3) and as “independent” as required by NYSE or any security exchange on which the Common Stock is listed, in each case if and to the extent required by applicable law or necessary to meet the requirements of such Rule, Section or listing requirement at the time of determination. From time to time, the Board may increase or decrease the size of the
Committee, add additional members to, remove members (with or without cause) from, appoint new members in substitution therefor, and fill vacancies, however caused, in the Committee. The Committee shall, consistent with the terms of the Plan, from time to time designate those individuals who shall be granted Incentive Awards under the Plan and the amount, type and other terms and conditions of such Incentive Awards. All of the powers and responsibilities of the Committee under the Plan may be delegated by the Committee, in writing, to any subcommittee thereof, in which case the acts of such subcommittee shall be deemed to be acts of the Committee hereunder. The Committee may also from time to time authorize a subcommittee consisting of one or more members of the Board of Directors (including members who are employees of the Company) or employees of the Company to grant Incentive Awards to Persons who are not “executive officers” of the Company (within the meaning of Rule 16a-1 under the Exchange Act), subject to such restrictions and limitations as the Committee may specify and to the requirements of Section 157 of the Delaware General Corporation Law.
The Committee shall have full discretionary authority to administer the Plan, including discretionary authority to interpret and construe any and all provisions of the Plan and any Award Agreement thereunder, and to adopt, amend and rescind from time to time such rules and regulations for the administration of the Plan, including rules and regulations related to sub-plans established for the purpose of satisfying applicable foreign laws and/or qualifying for preferred tax treatment under applicable foreign tax laws, as the Committee may deem necessary or appropriate. Decisions of the Committee shall be final, binding and conclusive on all parties. For the avoidance of doubt, the Committee may exercise all discretion granted to it under the Plan in a non-uniform manner among Participants.
The Committee may delegate the administration of the Plan to one or more officers or employees of the Company, and such administrator(s) may have the authority to execute and distribute Award Agreements, to maintain records relating to Incentive Awards, to process or oversee the issuance of Common Stock under Incentive Awards, to interpret and administer the terms of Incentive Awards, and to take such other actions as may be necessary or appropriate for the administration of the Plan and of Incentive Awards under the Plan, provided that in no case shall any such administrator be authorized (i) to grant Incentive Awards under the Plan (except in connection with any delegation made by the Committee pursuant to the first paragraph of this Section 4), (ii) to take any action inconsistent with Section 409A of the Code or (iii) to take any action inconsistent with applicable provisions of the Delaware General Corporation Law. Any action by any such administrator within the scope of its delegation shall be deemed for all purposes to have been taken by the Committee and, except as otherwise specifically provided, references in this Plan to the Committee shall include any such administrator. The Committee and, to the extent it so provides, any subcommittee, shall have sole authority to determine whether to review any actions and/or interpretations of any such administrator, and if the Committee shall decide to conduct such a review, any such actions and/or interpretations of any such administrator shall be subject to approval, disapproval, or modification by the Committee.
On or after the date of grant of an Incentive Award under the Plan, the Committee may (i) accelerate the date on which any such Incentive Award becomes vested, exercisable or transferable, as the case may be, (ii) extend the term of any such Incentive Award, including, without limitation, extending the period following a termination of a Participant’s Employment during which any such Incentive Award may remain outstanding,(iii) waive any conditions to the vesting, exercisability or transferability, as the case may be, of any such Incentive Award or (iv) provide for the payment of dividends or dividend equivalents with respect to any such Incentive Award, provided, however, that no dividends or dividend equivalents may be paid or credited with respect to shares of Common Stock subject to Options or stock appreciation rights; further provided, that the Committee shall not have any such authority to the extent that the grant of such authority would cause any tax to become due under Section 409A of the Code.In the event that the Committee provides for the payment of dividends or dividend equivalents with respect to an unvested Incentive Award (other than Options or stock appreciation rights), such payment may accrue but shall not be paid prior to and only to the extent, that such Incentive Award becomes vested. If the Participant does not satisfy the vesting conditions provided in the Participant’s Award Agreement such unvested Incentive Award is forfeited along with any dividend or dividend equivalents accrued with respect to such Incentive Award. Notwithstanding anything herein to the contrary, the Company shall not reprice any stock option (within the meaning of Section 303A.08 of the New York Stock Exchange Listed Company Manual and any other formal or informal guidance issued by the New York Stock Exchange) without the approval of the shareholders of OSG.
The Company shall pay any amount payable with respect to an Incentive Award in accordance with the terms of such Incentive Award, provided that the Committee may, in its discretion, defer, or give a Participant the election to defer, the payment of amounts payable with respect to an Incentive Award subject to and in accordance with the terms of a Deferred Compensation Plan.
No member of the Committee shall be liable for any action, omission, or determination relating to the Plan, and OSG shall indemnify and hold harmless each member of the Committee and each other director or employee of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of any action, omission or determination relating to the Plan, unless, in either case, such action, omission or determination was taken or made by such member, director or employee in bad faith and without reasonable belief that it was in the best interests of the Company.
The Persons who shall be eligible to receive Incentive Awards pursuant to the Plan shall be those non-employee directors of the Company whom the Committee shall select from time to time. Each Incentive Award granted under the Plan shall be evidenced by an Award Agreement.
The Committee may from time to time grant Options on such terms as it shall determine, subject to the terms and conditions set forth in the Plan.
The exercise price per share of Common Stock covered by any Option shall be not less than 100% of the Fair Market Value of a share of Common Stock on the date on which such Option is granted.
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(b) | Term and Exercise of Options |
(1)Each Option shall become vested and exercisable on such date or dates, during such period and for such number of shares of Common Stock as shall be determined by the Committee on or after the date such Option is granted; provided, however that no Option shall be exercisable after the expiration of ten years from the date such Option is granted; and, provided, further, that each Option shall be subject to earlier termination, expiration or cancellation as provided in the Plan or the Award Agreement.
(2)Each Option shall be exercisable in whole or in part; provided, however that no partial exercise of an Option shall be for an aggregate exercise price of less than $1,000. The partial exercise of an Option shall not cause the expiration, termination or cancellation of the remaining portion thereof.
(3)An Option shall be exercised by such methods and procedures as the Committee determines from time to time, including without limitation through net physical settlement or other method of cashless exercise.
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7. | Other Stock-Based Awards |
The Committee may from time to time grant equity-based or equity-related awards not otherwise described herein in such amounts and on such terms as it shall determine, subject to the terms and conditions set forth in the Plan. Without limiting the generality of the preceding sentence, each such Other Stock-Based Award may (i) involve the transfer of actual shares of Common Stock to Participants, either at the time of grant or thereafter, or payment in cash or otherwise of amounts based on the value of shares of Common Stock, (ii) be subject to performance-based and/or service-based conditions, (iii) be in the form of stock appreciation rights, phantom stock, restricted stock, restricted stock units, performance shares, deferred share units or share-denominated performance units, and (iv) be designed to comply with applicable laws of jurisdictions other than the United States; provided, that each Other Stock-Based Award shall be denominated in, or shall have a value determined by reference to, a number of shares of Common Stock that is specified at the time of the grant of such Incentive Award.
The Committee may from time to time grant Cash Incentive Awards on such terms as it shall determine, subject to the terms and conditions set forth in the Plan. Cash Incentive Awards may be settled in cash or in other property, including shares of Common Stock, provided that the term “Cash Incentive Award” shall exclude any Option or Other Stock-Based Award.
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9. | Adjustment Upon Certain Changes |
Subject to any action by the shareholders of OSG required by law, applicable tax rules or the rules of any exchange on which shares of common stock of OSG are listed for trading:
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(a) | Shares Available for Grants |
In the event of any change in the number of shares of Common Stock outstanding by reason of any stock dividend or split, recapitalization, merger, consolidation, combination or exchange of shares or similar corporate change, the maximum aggregate number of shares of Common Stock with respect to which the Committee may grant Incentive Awards and the maximum aggregate number of shares of Common Stock with respect to which the Committee may grant Incentive Awards to any individual Participant in any year shall be appropriately adjusted or substituted by the Committee. In the event of any change in the number of shares of Common Stock of OSG outstanding by reason of any other event or transaction, the Committee shall, to the extent deemed appropriate by the Committee, make such adjustments to the type or number of shares of Common Stock with respect to which Incentive Awards may be granted.
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(b) | Increase or Decrease in Issued Shares Without Consideration |
In the event of any increase or decrease in the number of issued shares of Common Stock resulting from a subdivision or consolidation of shares of Common Stock or the payment of a stock dividend (but only on the shares of Common Stock), or any other increase or decrease in the number of such shares effected without receipt or payment of consideration by the Company, the Committee shall, to the extent deemed appropriate by the Committee, adjust the type or number of shares of Common Stock subject to each outstanding Incentive Award and the exercise price per share of Common Stock of each such Incentive Award.
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(c) | Certain Mergers and Other Transactions |
In the event of any merger, consolidation or similar transaction as a result of which the holders of shares of Common Stock receive consideration consisting exclusively of securities of the surviving corporation in such transaction, the Committee shall, to the extent deemed appropriate by the Committee, adjust each Incentive Award outstanding on the date of such merger or consolidation so that it pertains and applies to the securities which a holder of the number of shares of Common Stock subject to such Incentive Award would have received in such merger or consolidation.
In the event of (i) a dissolution or liquidation of OSG, (ii) a sale of all or substantially all of the Company’s assets (on a consolidated basis), (iii) a merger, consolidation or similar transaction involving OSG in which the holders of shares of Common Stock receive securities and/or other property, including cash, other than shares of the surviving corporation in such transaction, the Committee shall, to the extent deemed appropriate by the Committee, have the power to:
(i)cancel, effective immediately prior to the occurrence of such event, each Incentive Award (whether or not then exercisable or vested), and, in full consideration of such cancellation, pay to the Participant to whom such Incentive Award was granted an amount in cash, for each share of Common Stock subject to such Incentive Award, equal to the value, as determined by the Committee, of such Incentive Award, provided that with respect to any outstanding Option such value shall be equal to the excess of (A) the value, as determined by the Committee, of the property (including cash) received by the holder of a share of Common Stock as a result of such event over
(B) the exercise price of such Option; or
(ii)provide for the exchange of each Incentive Award (whether or not then exercisable or vested) for an Incentive Award with respect to (A) some or all of the property which a holder of the number of shares of Common Stock subject to such Incentive Award would have received in such transaction or (B) securities of the acquiror or surviving entity and, incident thereto, make an equitable adjustment as determined by the Committee in the exercise price of the Incentive Award, or the number of shares or amount of property subject to the Incentive Award or provide for a payment (in cash or other property) to the Participant to whom such Incentive Award was granted in partial consideration for the exchange of the Incentive Award.
In the event of any change in the capitalization of OSG or corporate change other than those specifically referred to in Sections 9(b), (c) or (d), the Committee shall, to the extent deemed appropriate by the Committee, make such adjustments in the number and class of shares subject to Incentive Awards outstanding on the date on which such change occurs and in such other terms of such Incentive Awards as the Committee may consider appropriate.
In the event of any transaction or event described in this Section 9, including without limitation any corporate change referred to in paragraph (e) hereof, the Committee shall, to the extent deemed appropriate by the Committee, make such adjustments in the terms and conditions of any Cash Incentive Award.
Except as expressly provided in the Plan or any Award Agreement, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividends or dividend equivalents, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger or consolidation of OSG or any other corporation. Except as expressly provided in the Plan, no issuance by OSG of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares or amount of other property subject to, or the terms related to, any Incentive Award.
No provision of this Section 9 shall be given effect to the extent that such provision would cause any tax to become due under Section 409A of the Code.
Furthermore, no provision of this Section 9 shall be given effect to the extent such provision would result in short-swing profits liability under Section 16 of the Exchange Act or violate the exemptive conditions of Rule 16b-3 of the Exchange Act.
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10. | Change in Control; Termination of Employment |
The consequences of a Change in Control, if any, will be set forth in the Award Agreement in addition to what is provided in this Section 10.
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(b) | Termination of Employment |
(1)Except as to any awards constituting stock rights subject to Section 409A of the Code, termination of Employment shall mean a separation from service within the meaning of Section 409A of the Code. The Employment of a Participant with the Company shall be deemed to have terminated for all purposes of the Plan if such Person is employed by or provides services to a Person that is a Subsidiary of the Company and such Person ceases to be a Subsidiary of the Company, unless the Committee determines otherwise. Without limiting the generality of the foregoing, the Committee shall determine whether an authorized leave of absence, or absence in military or government service, shall constitute termination of Employment. Furthermore, no payment shall be made with respect to any Incentive Awards under the Plan that are subject to Section 409A of the Code as a result of any such authorized leave of absence or absence in military or government service unless such authorized leave or absence constitutes a separation from service for purposes of Section 409A of the Code.
(2)The Award Agreement shall specify the consequences with respect to such Option of the termination of Employment of the Participant holding the Option.
Unless approved by the shareholders of OSG, there shall be no cash buyout permitted for an Option or stock
appreciation right granted under the terms of this Plan if the Fair Market Value of the Common Stock underlying such Option or stock appreciation right is less than or equal to the Fair Market Value on the date such Option or stock appreciation right was granted.
No Person shall have any rights as a shareholder with respect to any shares of Common Stock covered by or relating to any Incentive Award until the date of the issuance of such shares on the books and records of OSG. Except as otherwise expressly provided in Section 9 hereof, no adjustment of any Incentive Award shall be made for dividends or other rights for which the record date occurs prior to the date of such issuance. Nothing in this Section 12 is intended, or should be construed, to limit authority of the Committee to cause the Company to make payments based on the dividends that would be payable with respect to any share of Common Stock if it were issued or outstanding, or from granting rights related to such dividends.
The Company shall not have any obligation to establish any separate fund or trust or other segregation of assets to provide for payments under the Plan. To the extent any Person acquires any rights to receive payments hereunder from the Company, such rights shall be no greater than those of an unsecured creditor.
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13. | No Special Employment Rights; No Right to Incentive Award |
(a)Nothing contained in the Plan or any Award Agreement shall confer upon any Participant any right with respect to the continuation of his or her Employment by the Company or interfere in any way with the right of the Company at any time to terminate such Employment or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Incentive Award.
(b)No Person shall have any claim or right to receive an Incentive Award hereunder. The Committee’s granting of an Incentive Award to a Participant at any time shall neither require the Committee to grant an Incentive Award to such Participant or any other Participant or other Person at any time nor preclude the Committee from making subsequent grants to such Participant or any other Participant or other Person.
(a)OSG shall be under no obligation to affect the registration pursuant to the Securities Act of any shares of Common Stock to be issued hereunder or to effect similar compliance under any state or local laws. Notwithstanding anything herein to the contrary, OSG shall not be obligated to cause to be issued shares of Common Stock pursuant to the Plan unless and until OSG is advised by its counsel that the issuance is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Common Stock are traded. The Committee may require, as a condition to the issuance of shares of Common Stock pursuant to the terms hereof, that the recipient of such shares make such covenants, agreements and representations, and that any related certificates representing such shares bear such legends, as the Committee, in its sole discretion, deems necessary or desirable.
(b)The exercise or settlement of any Incentive Award (including, without limitation, any Option) granted hereunder shall only be effective at such time as counsel to OSG shall have determined that the issuance and delivery of shares of Common Stock pursuant to such exercise is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Common Stock are traded. OSG may, in its sole discretion, defer the effectiveness of any exercise or settlement of an Incentive Award granted hereunder in order to allow the issuance of shares pursuant thereto to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state or local securities laws. OSG shall inform the Participant in writing of its decision to defer the effectiveness of the exercise or settlement of an Incentive Award granted hereunder. During the period that the effectiveness of the exercise of an Incentive Award has been deferred, the Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto.
Whenever withholding tax obligations are incurred in connection with any Incentive Award, OSG shall have the right to require the Participant to remit to OSG in cash an amount sufficient to satisfy federal, state and local withholding tax requirements, if any, attributable to such event. In addition, upon the exercise or settlement of any Incentive Award in cash, or the making of any other payment with respect to any Incentive Award (other than in shares of Common Stock), OSG shall have the right to withhold from any payment required to be made pursuant thereto an amount sufficient to satisfy the federal, state and local withholding tax requirements, if any, attributable to such exercise, settlement or payment.
At the election of the Participant, subject to the approval of the Committee, whenever withholding tax obligations are incurred in connection with any Incentive Award, the Participant may tender to OSG a number of shares of Common Stock that have been owned by the Participant for at least six months (or such other period as the Committee may determine) having a Fair Market Value at the tender date determined by the Committee to be sufficient to satisfy the minimum federal, state and local withholding tax requirements, if any, attributable to such event. Such election shall satisfy the Participant’s obligations under Section 15(a) hereof, if any.
At the election of the Participant, subject to the approval of the Committee, whenever withholding tax obligations are incurred in connection with any Incentive Award, OSG shall withhold a number of such shares having a Fair Market Value determined by the Committee to be sufficient to satisfy the minimum federal, state and local withholding tax requirements, if any, attributable to such event. Such election shall satisfy the Participant’s obligations under Section 15(a) hereof, if any.
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16. | Amendment or Termination of the Plan |
The Board of Directors may at any time suspend or discontinue the Plan or revise or amend it or any Incentive Award in any respect whatsoever; provided, however, that to the extent that any applicable law, tax requirement, or rule of a stock exchange requires shareholder approval in order for any such revision or amendment to be effective, such revision or amendment shall not be effective without such approval. The preceding sentence shall not restrict the Committee’s ability to exercise its discretionary authority hereunder pursuant to Section 4 hereof, which discretion may be exercised without amendment to the Plan. No provision of this Section 15 shall be given effect to the extent that such provision would cause any tax to become due under Section 409A of the Code. Except as expressly provided in the Plan, no action hereunder may, without the consent of a Participant, adversely affect the Participant’s rights under any previously granted and outstanding Incentive Award. Nothing in the Plan shall limit the right of the Company to pay compensation of any kind outside the terms of the Plan.
Notwithstanding anything in the Plan or in any Award Agreement to the contrary, the Company will be entitled to the extent permitted or required by applicable law (including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act), Company policy and/or the requirements of an exchange on which the Company’s shares are listed for trading, in each case, as in effect from time to time to recoup compensation of whatever kind paid by the Company at any time to a Participant under this Plan.
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18. | No Obligation to Exercise |
The grant to a Participant of an Incentive Award shall impose no obligation upon such Participant to exercise such Incentive Award.
Incentive Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of a Participant, only by the Participant. Upon the death of a Participant, outstanding Incentive Awards granted to such Participant may be exercised only by the executors or administrators of the Participant’s estate or by any Person or Persons who shall have acquired such right to exercise by will or by the laws of descent and distribution. No transfer
by will or the laws of descent and distribution of any Incentive Award, or the right to exercise any Incentive Award, shall be effective to bind OSG unless the Committee shall have been furnished with (a) written notice thereof and with a copy of the will and/or such evidence as the Committee may deem necessary to establish the validity of the transfer and (b) an agreement by the transferee to comply with all the terms and conditions of the Incentive Award that are or would have been applicable to the Participant and to be bound by the acknowledgements made by the Participant in connection with the grant of the Incentive Award.
The expenses of the Plan shall be paid by OSG. Any proceeds received by OSG in connection with any Incentive Award will be used for general corporate purposes.
In addition to the remedies of the Company elsewhere provided for herein, failure by a Participant to comply with any of the terms and conditions of the Plan or any Award Agreement, unless such failure is remedied by such Participant within ten days after having been notified of such failure by the Committee, shall be grounds for the cancellation and forfeiture of such Incentive Award, in whole or in part, as the Committee, in its absolute discretion, may determine.
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22. | Relationship to Other Benefits |
No payment with respect to any Incentive Awards under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically provided in such other plan.
The Plan and the rights of all Persons under the Plan shall be construed and administered in accordance with the laws of the State of Delaware without regard to its conflict of law principles.
If all or any part of this Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate any portion of this Plan not declared to be unlawful or invalid. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner that will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
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25. | Effective Date and Term of Plan |
The Effective Date of the Plan, as amended, is May 28, 2020.
