 |  | KIRBY CORPORATION |
Notice of 20112013
Annual Meeting of Stockholders
and
Proxy Statement
Meeting Date: April 26, 201123, 2013
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN
YOUR PROXY CARD IN THE ENCLOSED ENVELOPE
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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þ Definitive Proxy Statement
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Kirby Corporation
(Name of Registrant as Specified in its Charter)
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| | KIRBY CORPORATION |
Notice of 20112013
Annual Meeting of Stockholders
and
Proxy Statement
Meeting Date: April 26, 201123, 2013
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN
YOUR PROXY CARD IN THE ENCLOSED ENVELOPE
55 Waugh Drive, Suite 1000
P. O. Box 1745
Houston, Texas77251-1745
March 18, 2011
Dear Fellow Stockholders:
On behalf of the Board of Directors, we cordially invite you to attend the 20112013 Annual Meeting of Stockholders of Kirby Corporation to be held on Tuesday, April 26, 2011,23, 2013, at 10:00 a.m. (CDT). The meeting will be held at 55 Waugh Drive, 9th Floor, Houston, Texas 77007. We look forward to personally greeting those stockholders who will be able to attend the meeting.
This booklet contains the notice of the Annual Meeting and the Proxy Statement, which contains information about the proposals to be voted on at the meeting, Kirby’s Board of Directors and its committees and certain executive officers. This year you are being asked to elect three Class IIII directors, ratify the Audit Committee’s selection of KPMG LLP as Kirby’s independent registered public accounting firm for 20112013 and cast an advisory votesvote on executive compensation and the frequency of advisory votes on executive compensation.
In addition to the formal proposals to be brought before the Annual Meeting, there will be a report on our Company’s operations, followed by a question and answer period.
Your vote is important. Please ensure that your shares will be represented at the meeting by completing, signing and returning your proxy card in the envelope provided whether or not you plan to attend personally.
Thank you for your continued support and interest in Kirby Corporation.
| Sincerely, |
 |
| JOSEPH H. PYNE |
Chairman of the Board and Chief Executive Officer |
KIRBY CORPORATION
P. O. Box 1745
Houston, Texas 77251-1745
NOTICE OF CONTENTS
| Date: | Tuesday, April | |||
| Time: | 10:00 a.m. CDT | |||
| Place: | 55 Waugh Drive | |||
| 9th Floor | ||||
| Houston, Texas 77007 |
Proposals to be voted on at the Kirby Corporation 20112013 Annual Meeting of Stockholders are as follows:
1. Election of three Class IIII directors;
2. Ratification of the Audit Committee’s selection of KPMG LLP as Kirby’s independent registered public accounting firm for 2011;
3. Advisory vote on the approval of the compensation of Kirby’s named executive officers;
4. Advisory vote on the frequency of advisory votes on executive compensation; and
You have the right to receive this notice and vote at the Annual Meeting if you were a stockholder of record at the close of business on March 1, 2011.2013. Please remember that your shares cannot be voted unless you sign and return the enclosed proxy card, vote in person at the Annual Meeting, or make other arrangements to vote your shares.
We have enclosed a copy of Kirby Corporation’s 20102012 Annual Report to stockholders with this notice and Proxy Statement.
| For the Board of Directors, |
| THOMAS G. ADLER |
Secretary |
March 18, 2011
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors (the “Board”) of Kirby Corporation (the “Company”) to be voted at the Annual Meeting of Stockholders to be held at 55 Waugh Drive, 9th Floor, Houston, Texas, on April 26, 2011,23, 2013, at 10:00 a.m. (CDT).
Whenever we refer in this Proxy Statement to the Annual Meeting, we are also referring to any meeting that results from an adjournment or postponement of the Annual Meeting. The Notice of Annual Meeting, this Proxy Statement, the proxy card and the Company’s Annual Report, which includes the Annual Report onForm 10-K for 2010,2012, are being mailed to stockholders on or about March 18, 2011.
SOLICITATION OF PROXIES
The Proxy Card
Your shares will be voted as specified on the enclosed proxy card. If a proxy is signed without choices specified, those shares will be voted for the election of the Class IIII directors named in this Proxy Statement, for the ratification of the Audit Committee’s selection of KPMG LLP as the Company’s independent registered public accounting firm for 2011,2013, for the approval on an advisory basis of executive compensation for the approval on an advisory basis of holding the advisory vote on executive compensation every year and at the discretion of the proxies on other matters.
You are encouraged to complete, sign and return the proxy card even if you expect to attend the meeting. If you sign a proxy card and deliver it to us, but then want to change your vote, you may revoke your proxy at any time prior to the Annual Meeting by sending us a written revocation or a new proxy, or by attending the Annual Meeting and voting your shares in person.
Cost of Soliciting Proxies
The cost of soliciting proxies will be paid by the Company. The Company has retained Georgeson Inc. to solicit proxies at an estimated cost of $5,750,$6,000, plusout-of-pocket expenses. Employees of the Company may also solicit proxies, for which the expense would be nominal and borne by the Company. Solicitation may be by mail, facsimile, electronic mail, telephone or personal interview.
VOTING
Stockholders Entitled to Vote
Stockholders of record at the close of business on March 1, 20112013 will be entitled to notice of, and to vote at, the Annual Meeting. As of the close of business on March 1, 2011,2013, the Company had 53,667,64856,719,387 outstanding shares of common stock. Each share of common stock is entitled to one vote on each matter to come before the meeting.
Quorum and Votes Necessary to Adopt Proposals
In order to transact business at the Annual Meeting, a quorum consisting of a majority of all outstanding shares entitled to vote must be present. Abstentions and proxies returned by brokerage firms for which no voting instructions have been received from their beneficial owners will be counted for the purpose of determining
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whether a quorum is present. A majority of the votes cast (not counting abstentions and broker nonvotes) is required for the election of directors (Proposal 1). A majority of the outstanding shares entitled to vote that are represented at the meeting in person or by proxy is required for the ratification of the selection of KPMG LLP as the Company’s independent registered public accounting firm for 20112013 (Proposal 2). Proposal 3 and Proposal 4 areis a non-binding
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Please note that if your shares are held in the name of a brokerage firm on your behalf, your broker may not vote your shares on the election of directors or the matters related to executive compensation without voting instructions from you.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 26, 2011
This Proxy Statement and the Company’s 20102012 Annual Report, which includes the Annual Report onForm 10-K filed with the Securities and Exchange Commission (“SEC”), are available electronically at www.edocumentview.com/kex.
The following proposals will be considered at the meeting:
Proposal 1 | — | Election of three Class | ||||||
Proposal 2 | — | Ratification of the selection of KPMG LLP as the Company’s independent registered public accounting firm for | ||||||
Proposal 3 | — | Advisory vote on the approval of the compensation of | ||||||
The Board of Directors of the Company unanimously recommends that you vote “FOR” the Board’s nominees for director, “FOR” the selection of KPMG LLP as our independent registered public accounting firm for 2011,2013 and “FOR” approval of our executive compensation and “FOR” an annual advisory vote on executive compensation.
ELECTION OF DIRECTORS (PROPOSAL 1)
The Bylaws of the Company provide that the Board shall consist of not fewer than three nor more than fifteen members and that, within those limits, the number of directors shall be determined by the Board. The Bylaws further provide that the Board shall be divided into three classes, with the classes being as nearly equal in number as possible and with one class being elected each year for a three-year term. Effective at the 2011 Annual Meeting, theThe size of the Board will beis currently set at nine.ten. Three Class IIII directors are to be elected at the 20112013 Annual Meeting to serve until the Annual Meeting of Stockholders in 2014.
Each nominee named below is currently serving as a director and each has consented to serve for the new term if elected. James R. Clark, who has served as a director since 2008, will not stand for reelection as director. If any nominee becomes unable to serve as a director, an event currently not anticipated, the persons named as proxies in the enclosed proxy card intend to vote for a nominee selected by the present Board to fill the vacancy.
In addition to satisfying, individually and collectively, the Company’s Criteria for the Selection of Directors discussed under the “THE BOARD OF DIRECTORS — Governance Committee” below, each of the directors has extensive experience with the Company or in a business similar to one or more of the Company’s principal businesses or the principal businesses of significant customers of the Company. The brief biographies of each of the nominees and continuing directors below includes a summary of the particular experience and qualifications that led the Board to conclude that he should serve as a director.
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The Board of Directors of the Company unanimously recommends that you vote “FOR” the election of each of the following nominees for election as a director.
Nominees for Election as Class IIII directors to serve until the Annual Meeting of Stockholders in 20142016
| C. Sean Day | Director since 1996 | |
| Greenwich, Connecticut | Age 63 |
Mr. Day is Chairman of Teekay Corporation, a foreign flag tank vessel owner and operator. He serves as Chairman of the Governance Committee and is a member of the Compensation Committee. He is also Chairman of Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P., Chairman of Teekay Offshore GP L.L.C., the general partner of Teekay Offshore Partners L.P., Chairman of Teekay Tankers Ltd. and Chairman of Compass Diversified Holdings.
Mr. Day has over 40 years of experience in the marine transportation business, serving for the past 15 years as Chairman of one of the largest tanker companies in the world and for 10 years before that as chief executive officer of an international bulk shipping company. In addition, Mr. Day has been active in the private equity investment business for the last 28 years, gaining extensive experience in financial management and analysis.
| William M. Lamont, Jr. | Director since 1979 | |
| Dallas, Texas | Age 64 |
Mr. Lamont is a private investor. He serves as Chairman of the Compensation Committee and is a member of the Executive Committee and Governance Committee.
Mr. Lamont and his family have been major stockholders of the Company since its formation and he has been a director of the Company throughout its transformation from a company engaged in the oil and gas and insurance businesses, among others, into the largest domestic tank barge company in the United States, as well as a significant presence in the diesel engine services business. Through his private investment activities, Mr. Lamont also has extensive experience in financial analysis and in financial markets.
| William M. Waterman | Director since 2012 | |
| Bedford, New York | Age 59 |
Mr. Waterman served as President and Chief Executive Officer of Penn Maritime Inc. (“Penn”) from 1983 through 2012 until the acquisition of Penn by the Company on December 14, 2012. Penn is a coastwise tank barge operator, transporting primarily refinery feedstocks, asphalt and crude oil along the East Coast and Gulf Coast of the United States. He is also a director and past Chairman of The American Waterways Operators, the national trade association for the United States barge industry.
Mr. Waterman has over 36 years of experience in the coastal tank barge business with Penn and predecessor companies, building Penn into one of the largest coastal tank barge operators in the United States. The Company significantly expanded its coastal marine transportation business with several major acquisitions in 2011 and 2012. Mr. Waterman’s extensive experience in that business and knowledge of its markets and customers are valuable to the Board in its oversight of the Company’s expanding coastwise business and complement the inland marine transportation and petrochemical industry experience of other Company directors.
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Directors Continuing in Office
The following persons are directors of the Company who will continue in office.
Continuing Class I directors, serving until the Annual Meeting of Stockholders in 2014
| Richard J. Alario | Director since 2011 | |
| Houston, Texas | Age 58 |
Mr. Alario is Chairman of the Board, President and Chief Executive Officer of Key Energy Services, Inc. (“Key Energy”), a publicly traded oilfield service company listed on the New York Stock Exchange (“NYSE”). He has served in senior executive positions with Key Energy since 2004. Prior to joining Key Energy, Mr. Alario served as Vice President of BJ Services Company, an oilfield service company, from 2002 to 2004, and served for over 21 years in various capacities, most recently Executive Vice President, of OSCA, Inc., also an oilfield service company. He currently serves as Vice Chairman, Director and Executive Committee member of the National Ocean Industries Association and serves as a member of the American Association of Drilling Engineers and the Petroleum Equipment Suppliers Association. He serves as a member of the Audit Committee. Mr. Alario also served as a director of Seahawk Drilling, Inc. from 2009 to 2011.
Mr. Alario has over 30 years of experience in the oilfield service business, currently serving as Chief Executive Officer with both operating and financial responsibility for one of the largest oilfield service companies in the United States. That experience is valuable to the Board in its oversight of the Company’s diesel engine services business which serves the oilfield services industry as a significant part of its customer base. Mr. Alario also adds a current public company Chief Executive Officer to the Board.
| David L. Lemmon | Director since 2006 | |
| Las Vegas, Nevada | Age |
Mr. Lemmon is a private investor. He served as President and Chief Executive Officer of Colonial Pipeline Company, an interstate common carrier of refined liquid petroleum products, from 1997 to 2006. Prior to that, he held management positions with Amoco Corporation and Amoco Pipeline. He serves as a member of the Audit Committee. Mr. Lemmon is also a director of Teekay Offshore GP L.L.C., the general partner of Teekay Offshore Partners L.P., and Deltic Timber Corporation. Mr. Lemmon was a director and chairman of the audit committee of Pacific Energy GP L.L.C., the general partner of Pacific Energy Partners L.P., from 2002 to 2006.
Colonial Pipeline Company is the world’s largest refined liquid petroleum products pipeline and a competing mode of transportation for the Company’s inland tank barge business. Under Mr. Lemmon’s leadership, Colonial placed a strong emphasis on safety and environmental compliance in its operations, receiving the American Petroleum Institute’s “Most Distinguished Pipeline Award for Safety and Environmental Leadership” for four years in a row from 2002 through 2005. Mr. Lemmon’s accomplishments reinforce the Company’s emphasis on safety and its achievement of one of the best safety records in the inland tank barge industry.
| George A. Peterkin, Jr. | Director since 1973 | |
| Houston, Texas | Age |
Mr. Peterkin is a private investor. He has served as Chairman Emeritus of the Board of the Company since 1999 and served as Chairman of the Board of the Company from 1995 to 1999. He served as President of the Company from 1973 to 1995 and serves as a member of the Executive Committee.
Mr. Peterkin has served in executive positions in the marine transportation business with the Company and its predecessor companies for over 50 years. During his tenure as President and then Chairman of the Board of the Company, he presided over the Company’s transition from an oil and gas and insurance company with a small
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barge line to the largest inland tank barge company in the United States. Mr. Peterkin’s knowledge of and perspective on the Company and its history, growth and principal businesses are a valuable resource for the Board.
| Richard R. Stewart | Director since 2008 | |
| Houston, Texas | Age |
Mr. Stewart served as President and Chief Executive Officer of GE Aero Energy, a division of GE Energy, and as an officer of General Electric Company, from 1998 until his retirement in December 2006. From 1972 to 1998, Mr. Stewart served in various positions at Stewart & Stevenson Services, Inc., including Group President and member of the Board of Directors. He serves as a member of the Audit Committee. Mr. Stewart is also a director of Eagle Materials Inc. and Lufkin Industries, Inc.
During a35-year business career, Mr. Stewart has been the principal executive officer with both operating and financial responsibility for the diesel engine power and service businesses at Stewart & Stevenson and then at GE Aero Energy. Mr. Stewart’s extensive experience in the diesel engine business is valuable to the Board in its oversight of the Company’s diesel engine services business and complements the predominately marine transportation and petrochemical industry experience of a number of the Company’s other directors.
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| Bob G. Gower | Director since 1998 | |
| Houston, Texas | Age |
Mr. Gower is a private investor. He has served as President and Chief Executive OfficerChairman of Carbon Nanotechnologies,the Board of Ensysce Biosciences, Inc., a technology leader in small-diameter carbon nanotubes, until 2007.company developing cancer therapeutics using nanotechnology, since 2008. Mr. Gower serves as Chairman of the Audit Committee, is a member of the Executive Committee and Compensation Committee, and has been chosen by the non-management directors to serve as the presiding director at executive sessions of the non-management directors.
Mr. Gower has 46 years of experience in the chemical business, including 11 years as the Chief Executive Officer of Lyondell Petrochemical Company. The transportation of petrochemicals generates a major portion of the Company’s marine transportation revenues and Mr. Gower’s knowledge of the chemical business is valuable to the Board.
| Monte J. Miller | Director since 2006 | |
| Durango, Colorado | Age |
Mr. Miller is a consultant and private investor. He served as Executive Vice President, Chemicals, of Flint Hills Resources, LP (“Flint Hills”), a company engaged in crude oil refining, transportation and marketing, and the production of petrochemicals, from 2003 to 2006. From 1999 to 2003, he was Senior Vice President of Koch Chemical Company, a predecessor company of Flint Hills. Mr. Miller serves as a member of the Compensation Committee and Governance Committee.
Mr. Miller has 30 years of experience in the petrochemical and refining business. A significant volume of petrochemical products is transported coastwise and on the inland waterways and petrochemicals represent a major portion of the Company’s business, so Mr. Miller’s extensive knowledge about petrochemical and refining companies, which constitute a substantial part of the Company’s customer base, as well as the products they ship and the end users of the products, is valuable to the Board. He also has experience in developing and administering incentive compensation programs at companies similar in size to the Company.
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| Joseph H. Pyne | Director since 1988 | |
| Houston, Texas | Age |
Mr. Pyne is the Chairman of the Board President and Chief Executive Officer of the Company. He serves as a member of the Executive Committee.
Mr. Pyne has been with the Company for 3335 years, servinghaving served as President of its principal marine transportation subsidiary prior to becoming President and Chief Executive Officer of the Company. He has served asIn April 2010, he was elected Chairman of the Board, President and Chief Executive Officer of the Company sinceand in April 2010.2011 was elected Chairman of the Board and Chief Executive Officer of the Company. He has primary responsibility for the business and strategic direction of the Company and is an essential link between the Board and the Company’sday-to-day operations. Mr. Pyne has overall knowledge of all aspects of the Company, its operations, customers, financial condition and strategic planning. With the retirement of C. Berdon Lawrence as Chairman of the Board of the Company in April 2010, Mr. Pyne is the only management representative on the Board.
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THE BOARD OF DIRECTORS
The Company’s business is managed under the direction of the Board, which is responsible for broad corporate policy and for monitoring the effectiveness of Company management. Members of the Board are kept informed about the Company’s businesses by participating in meetings of the Board and its committees, through operating and financial reports made at Board and committee meetings by Company management, through various reports and documents sent to the directors for their review and by visiting Company facilities.
Director Independence
The New York Stock Exchange (“NYSE”)NYSE listing standards require listed companies to have at least a majority of independent directors. For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material relationship with the Company.
The Board has determined that the following incumbent directorsC. Sean Day, Bob G. Gower, William M. Lamont, Jr., David L. Lemmon, Monte J. Miller, George A. Peterkin, Jr. and Richard R. Stewart have no relationship with the Company except as directors and stockholders and are independent within the meaning of the NYSE corporate governance rules:
The Board has determined that an indirect relationship between Richard J. Alario and the Company through Key Energy is not material and that Mr. Alario is also independent. Key Energy is a customer of United Holdings LLC (“United Holdings”), a wholly owned subsidiary of the Company that provided diesel engine equipment, parts and service to Key Energy in the ordinary course of business in 2012. The volume of business done between Key Energy and United Holdings during 2012 was $13,152,000, which represents less than 1% of Key Energy’s total revenues for 2012. The business relationship between Key Energy and United Holdings predates both the Company’s acquisition of United Holdings in April 2011 and the election of Mr. Alario to the Board.
The Board has determined that the acquisition of Penn and an affiliated company from Mr. Waterman and members of his family for approximately $175 million in cash and Company stock in December 2012 does not affect his independence since he and his family sold their entire interest in Penn and affiliated companies to the Company and he resigned from all director and officer positions he held with Penn and affiliated companies contemporaneously with the closing of the acquisition by the Company. In connection with the acquisition, Mr. Waterman entered into a three-year noncompetition agreement with the Company that is not in any way contingent on continued service with the Company or any of its subsidiaries. In addition, in 2012, Penn paid the Company $1,253,000 for diesel engine services relating to the repair and maintenance of Penn’s vessels. The Board determined that relationship between Penn and the Company does not affect Mr. Waterman’s independence since Mr. Waterman no longer has any ownership in or position with Penn, which is now a wholly owned subsidiary of the Company.
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The Board has established four standing committees, including the Audit Committee, the Compensation Committee and the Governance Committee, each of which is briefly described below. The fourth committee, the Executive Committee, may exercise all of the power and authority of the Board in the management of the business and affairs of the Company when the Board is not in session, except the power or authority to fill vacancies in the membership of the Board, to amend the Bylaws of the Company and to fill vacancies in the membership of the Executive Committee.
Audit Committee
All of the members of the Audit Committee are independent, as that term is defined in applicable SEC and NYSE rules. In addition, the Board has determined that all of the members of the Audit Committee are “audit committee financial experts,” as that term is defined in SEC rules. The Audit Committee operates under a written charter adopted by the Board. A copy of the charter is available on the Company’s web site at www.kirbycorp.com in the Investor Relations section under Corporate Governance.
| Principal Functions | Members | |
• Monitor the Company’s financial reporting, accounting procedures and systems of internal control | Bob G. Gower (Chairman) Richard J. Alario David L. Lemmon Richard R. Stewart | |
• Select the independent auditors for the Company | ||
• Review the Company’s audited annual and unaudited quarterly financial statements with management and the independent auditors | ||
• Monitor the independence and performance of the Company’s independent auditors and internal audit function | ||
• Monitor the Company’s compliance with legal and regulatory requirements |
Compensation Committee
All of the members of the Compensation Committee are independent, as that term is defined in NYSE rules. In addition, all of the members of the Committee are “Non-Employee Directors” and “outside directors” as defined in relevant federal securities and tax regulations. The Compensation Committee operates under a written charter adopted by the Board. A copy of the charter is available on the Company’s web site at www.kirbycorp.com in the Investor Relations section under Corporate Governance.
| Principal Functions | Members | |
• Determine the compensation of executive officers of the Company | William M. Lamont, Jr. (Chairman) C. Sean Day Bob G. Gower Monte J. Miller | |
• Administer the Company’s annual incentive bonus program | ||
• Administer the Company’s stock option, restricted stock and incentive plans and grant stock options, restricted stock and performance awards under such plans |
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Governance Committee
All of the members of the Governance Committee are independent, as that term is defined in NYSE rules. The Committee operates under a written charter adopted by the Board. A copy of the charter is available on the Company’s web site at www.kirbycorp.com in the Investor Relations section under Corporate Governance.
| Principal Functions | Members | |
• Perform the function of a nominating committee in recommending candidates for election to the Board | C. Sean Day (Chairman) William M. Lamont, Jr. Monte J. Miller | |
• Review all related party transactions | ||
• Oversee the operation and effectiveness of the Board | ||
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In addition to the criteria, the Governance Committee and the Board will consider diversity in business experience, professional expertise, gender and ethnic background in evaluating potential nominees for director. The Company’s Corporate Governance Guidelines and Governance Committee Charter include provisions concerning the consideration of diversity in business experience, professional skills, gender and ethnic background in selecting nominees for director.
When there is a vacancy on the Board (i.e., in cases other than the nomination of an existing director for reelection), the Board and the Governance Committee have considered candidates identified by executive search firms, candidates recommended by stockholders and candidates recommended by other directors. The Governance Committee will continue to consider candidates from any of those sources when future vacancies occur. The Governance Committee does not evaluate a candidate differently based on whether or not the candidate is recommended by a stockholder.
Attendance at Meetings
It is the Company’s policy that directors are expected to attend Board meetings and meetings of committees on which they serve and are expected to attend the Annual Meeting of Stockholders of the Company. During 2010,2012, the Board met eight times, the Audit Committee met eight times, the Compensation Committee met fivesix times and the Governance Committee met fourfive times. Each director attended at least 94% of the aggregate numberall of the meetings of the Board and of the committees on which he served. All directors attended the 20102012 Annual Meeting of Stockholders of the Company.
Director Compensation
Directors who are employees of the Company receive no additional compensation for their servicesservice on the Board or Board committees.Board. Compensation of nonemployee directors is determined by the full Board, which may consider recommendations of the Compensation Committee. Past practice has been to review director compensation when the Board believes that an adjustment may be necessary in order to remain competitive with director compensation of comparable companies. Management of the Company periodically collects published survey information on director compensation for purposes of comparison.
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Each nonemployee director receives an annual fee of $24,000, a fee of $1,250 for each Board meeting and a fee of $3,000 for each Committeecommittee meeting attended. A director may elect to receive the annual fee in cash, stock options or restricted stock. The Compensation and Governance Committee Chairmen receive an additional $10,000 retainer per year, the Audit Committee Chairman receives an additional $15,000 retainer per year and the presiding director at executive sessions of the non-management directors receives an additional $5,000 retainer per year. Directors are reimbursed for reasonable expenses incurred in attending meetings.
In addition to the fees provided to the directors described above, the Company has a nonemployee director stock option plan under which nonemployee directors are granted stock options and restricted stock awards. The Company’s 2000 Nonemployee Director Stock Option Plan (the “2000 Director Plan”) provides for the automatic grant to nonemployee directors of stock options for 10,000 shares of common stock on the date of first election as a director and stock options for 6,000 shares and 1,000 shares of restricted stock immediately after each annual meeting of stockholders. The 2000 Plan also provides for discretionary grants of an aggregate of 10,000 shares in the form of stock options or restricted stock. In addition, the 2000 Director Plan provides for the issuance of stock options or restricted stock in lieu of cash for all or part of the annual director fee. A director who elects to receive options in lieu of the annual cash fee will be granted an option for a number of shares equal to (a) the amount of the fee for which the election is made divided by (b) the fair market value per share of the common stock on the date of grant multiplied
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In 2008, the Board established stock ownership guidelines for officers and directors of the Company. The guidelines were effective January 1, 2009 and nonemployee directors must be in compliance within five years after the adoption of the guidelines or five years after first election as a director, whichever is later, but are expected to accumulate the required number of shares ratably over the applicable five-year period. Under the guidelines, nonemployee directors are required to own common stock of the Company having a value equal to four times the annual cash director fee. The Governance Committee of the Board will monitor compliance with the guidelines and may recommend modifications or exceptions to the Board.
The following table summarizes the cash and equity compensation for nonemployee directors for the year ended December 31, 2010:
Director Compensation for 20102012
| Fees Earned | ||||||||||||||||
Name | or Paid in Cash | Stock Awards(1)(2) | Option Awards(1)(2) | Total | ||||||||||||
| James R. Clark | $ | 28,000 | $ | 70,212 | $ | 101,580 | $ | 199,792 | ||||||||
| C. Sean Day | 47,000 | 70,212 | 101,580 | 218,792 | ||||||||||||
| Bob G. Gower | 67,750 | 41,328 | 131,142 | 240,220 | ||||||||||||
| William M. Lamont, Jr. | 71,000 | 41,328 | 101,580 | 213,908 | ||||||||||||
| C. Berdon Lawrence | 24,250 | 41,328 | 101,580 | 167,158 | ||||||||||||
| David L. Lemmon | 58,000 | 41,328 | 101,580 | 200,908 | ||||||||||||
| Monte J. Miller | 25,000 | 70,212 | 101,580 | 196,792 | ||||||||||||
| George A. Peterkin, Jr. | 34,000 | 41,328 | 131,142 | 206,470 | ||||||||||||
| Richard R. Stewart | 58,000 | 41,328 | 101,580 | 200,908 | ||||||||||||
Name | Fees Earned or Paid in Cash | Stock Awards(1)(2) | Option Awards(1)(2) | Total | ||||||||||||
Richard J. Alario | $ | 31,000 | $ | 62,988 | $ | 165,234 | $ | 259,222 | ||||||||
C. Sean Day | 53,000 | 92,028 | 138,600 | 283,628 | ||||||||||||
Bob G. Gower | 72,000 | 92,028 | 138,600 | 302,628 | ||||||||||||
William M. Lamont, Jr. | 77,000 | 62,988 | 138,600 | 278,588 | ||||||||||||
C. Berdon Lawrence(3) | 34,000 | 62,988 | 138,600 | 235,588 | ||||||||||||
David L. Lemmon | 58,000 | 62,988 | 138,600 | 259,588 | ||||||||||||
Monte J. Miller | 43,000 | 92,028 | 138,600 | 273,628 | ||||||||||||
George A. Peterkin, Jr. | 16,000 | 62,988 | 165,234 | 244,222 | ||||||||||||
Richard R. Stewart | 58,000 | 62,988 | 138,600 | 259,588 | ||||||||||||
William M. Waterman(4) | — | — | 229,896 | 229,896 | ||||||||||||
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| (1) | The amounts included in the “Stock Awards” and “Option Awards” columns represent the grant date fair value related to restricted stock awards and option grants to the directors, computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note | |
| (2) | Each director was granted 1,000 shares of restricted stock on April |
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Name | Aggregate Shares of Unvested Restricted Stock as of December 31, 2012 | Aggregate Stock Options Outstanding as of December 31, 2012 | Grant Date Fair Value of Restricted Stock and Stock Options Awarded during 2012 | |||||||||
Richard J. Alario | — | 17,153 | $ | 228,222 | ||||||||
C. Sean Day | 116 | 24,000 | 230,628 | |||||||||
Bob G. Gower | 116 | 20,574 | 230,628 | |||||||||
William M. Lamont, Jr. | — | 60,000 | 201,588 | |||||||||
David L. Lemmon | — | 42,000 | 201,588 | |||||||||
Monte J. Miller | 116 | 55,264 | 230,628 | |||||||||
George A. Peterkin, Jr. | — | 64,947 | 228,222 | |||||||||
Richard R. Stewart | — | 34,000 | 201,588 | |||||||||
William M. Waterman | — | 10,000 | 229,896 | |||||||||
| (3) | ||
| (4) | Mr. Waterman was elected to the |
| Aggregate Shares | Aggregate | Grant Date | ||||||||||
| of Restricted Stock | Stock Options | Fair Value of | ||||||||||
| Outstanding | Outstanding | Restricted Stock and | ||||||||||
| as of | as of | Stock Options | ||||||||||
Name | December 31, 2010 | December 31, 2010 | Awarded during 2010 | |||||||||
| James R. Clark | 175 | 28,000 | $ | 171,792 | ||||||||
| C. Sean Day | 175 | 42,000 | 171,792 | |||||||||
| Bob G. Gower | — | 35,477 | 172,470 | |||||||||
| William M. Lamont, Jr. | — | 60,000 | 142,908 | |||||||||
| C. Berdon Lawrence | — | 6,000 | 142,908 | |||||||||
| David L. Lemmon | — | 40,000 | 142,908 | |||||||||
| Monte J. Miller | 175 | 41,988 | 171,792 | |||||||||
| George A. Peterkin, Jr. | — | 74,964 | 172,470 | |||||||||
| Richard R. Stewart | — | 28,000 | 142,908 | |||||||||
Board Leadership Structure
The Board has no set policy concerning the separation of the offices of Chairman of the Board and Chief Executive Officer, but retains the flexibility to decide how the two positions should be filled based on the circumstances existing at any given time. The roles of Chairman of the Board and Chief Executive Officer of the Company were separated for many years, with Mr. Lawrence serving as Chairman of the Board and Mr. Pyne serving as President and Chief Executive Officer from 1999 until Mr. Lawrence’s retirement as Chairman in April 2010. The Board has placed considerable emphasis on management succession planning and decided that, upon Mr. Lawrence’s retirement, the election of Mr. Pyne as Chairman of the Board in addition to Chief Executive Officer would best serve the Company’s needs and the succession process. In light of the economic conditions of the last fewduring recent years and the prospect of significant acquisition opportunities foracquisitions completed by the Company during 20102011 and 2011,2012 and the challenge of integrating these acquisitions with the Company’s operations, the Board consideredconsiders it important to continue to have someone in the role of Chairman of the Board with a comprehensive understanding of, as well as primary responsibility for, the Company’s businesses and strategic direction.
The Board does not have a “lead director,” but has chosen Mr. Gower to be the “presiding director” to preside at the regular executive sessions of the non-management directors that are held at least quarterly. Mr. Gower also serves as a liaison between the independent directors and management on certain matters that are not within the area of responsibility of a particular committee of the Board.
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Risk Oversight
The Board carries out its risk oversight function primarily through the Audit Committee. Management prepares and reviews with the Audit Committee annually a comprehensive assessment of the identified internal and external risks of the Company that includes evaluations of the potential impact of each identified risk, its probability of occurrence and the effectiveness of the controls that are in place to mitigate the risk. The Audit Committee then brings to the attention of the Board any issues that warrant further discussion or action. The Audit Committee and the Board also receive regular reports of any events or circumstances involving risks outside the normal course of business of the Company. At times, a particular risk will be monitored and evaluated by another Board committee with primary responsibility in the area involved, such as the Compensation Committee’s review of the risks related to the Company’s compensation policies and practices. The Board’s administration of its risk oversight function has not affected the Board’s leadership structure.
TRANSACTIONS WITH RELATED PERSONS
The Board has adopted a written policy on transactions with related persons that provides that certain transactions involving the Company and any of its directors, executive officers or major stockholders or members of their immediate families, including all transactions that would be required to be disclosed as transactions with related persons in the Company’s Proxy Statement, are subject to approval in advance by the Governance Committee, except that a member of the Committee will not participate in the review of a transaction in which that member has an interest. The Committee has the discretion to approve any transaction which it determines is in,
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During 2010, the Company and its subsidiaries paid L3 Partners, LLC (“L3P”), a company owned by Mr. Lawrence, the former Chairman of the Board and current director of the Company, $259,000 for air transportation services provided by L3P and office relocation costs. Such services were in the ordinary course of business of the Company.
The Company is a 50% owner of The Hollywood Camp, L.L.C. (“The Hollywood Camp”), a company that owns and operates a hunting and fishing facility used by the Company and L3P,L3 Partners, LLC (“L3P”), a company owned by Mr. Lawrence, which is also a 50% owner. The Company uses The Hollywood Camp primarily for customer entertainment. L3P acts as manager of The Hollywood Camp. The Hollywood Camp allocates lease and lodging expenses to its members based on their usage of the facilities. During 2010, theThe Company paid $1,558,000 to The Hollywood Camp $2,392,000 in 2012 for its share of facility expenses.
The Company paid L3P $144,000 in 2012 for air transportation services provided by L3P in the ordinary course of business of the Company.
The son of Mr. Lawrence is the Chairman of the Board and Chief Executive Officer, and owner ofowns 70% of the common stock of Bayou City Pump,Pumps, Inc. (“Bayou City”). In 2010, the Company paid Bayou City $200,000provides overhauls of black oil barge pumps to the Company. Bayou City acquired Engineering Pump Services (“EPS”), previously the Company’s primary vendor for overhauls of black oil barge pumps. Suchpumps, in the first quarter of 2012. The Company paid Bayou City $1,409,000 in 2012 for overhauls wereof black oil barge pumps in the ordinary course of business of the
11
Company. In addition, the Company specified the use of a particular EPS pump in certain of its shipyard contracts for new barge construction, resulting in payments of approximately $3,700,000 from the shipyard to Bayou City in 2012.
Mr. Alario, a director of the Company, is the Chairman of the Board, President and Chief Executive Officer of Key Energy. Key Energy paid the Company $13,152,000 in 2012 for oilfield service equipment and for parts and service in the ordinary course of business of the Company.
In December 2012, the Company acquired Penn and an affiliated company from Mr. Waterman and his family for approximately $175 million in cash and Company stock. Contemporaneously with the closing of the acquisition, Mr. Waterman resigned from all director and officer positions with Penn and affiliated companies and no longer has any ownership in or position with Penn or any of its affiliated companies.
During 2012, Penn paid the Company $1,253,000 for diesel engine services related to the repair and maintenance of Penn’s vessels in the ordinary course of business of the Company.
The husband of Amy D. Husted, Vice President — Legal of the Company, is a partner in the law firm of Strasburger & Price, LLP. In 2010, theThe Company paid the law firm $412,000$384,000 in 2012 for legal services in connection with matters in the ordinary course of business of the Company.
Wayne G. Strahan, the brother of Dorman L. Strahan, the President of one of the Company’s two principal diesel engine services subsidiaries, is the Service Manager of the Company’s diesel engine services facility in Tampa, Florida. In 2012, Wayne G. Strahan received compensation of $128,878 from the Company.
Bernard L. Casey, the brother of Timothy J. Casey, former President of one of the Company’s marine transportation subsidiaries, is the West Coast Division Manager of the Company’s coastal marine transportation operations. In 2012, Bernard L. Casey received compensation of $159,884 from the Company.
In 2012, United Holdings, a subsidiary of the Company, paid Midwest Hoses and Specialty, Inc. (“Midwest”) $2,422,000 for fabrication services at one of its manufacturing and remanufacturing facilities. The stepdaughter of Bill F. Moore, Jr., the President of United Holdings, is an account representative for Midwest and received approximately $12,000 in commissions from Midwest in 2012 on the business done by Midwest with United Holdings.
CORPORATE GOVERNANCE
Business Ethics Guidelines
The Board has adopted Business Ethics Guidelines that apply to all directors, officers and employees of the Company. A copy of the Business Ethics Guidelines is available on the Company’s web site at www.kirbycorp.com in the Investor Relations section under Corporate Governance. The Company is required to make prompt disclosure of any amendment to or waiver of any provision of its Business Ethics Guidelines that applies to any director or executive officer or to its chief executive officer, chief financial officer, chief accounting officer or controller, or persons performing similar functions. The Company will make any such disclosure that may be necessary by posting the disclosure on its web site at www.kirbycorp.com in the Investor Relations section under Corporate Governance.
Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines. A copy of the guidelines is available on the Company’s web site at www.kirbycorp.com in the Investor Relations section under Corporate Governance.
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Communication with Directors
Interested parties may communicate with the full Board or any individual directors, including the Chairmen of the Audit, Compensation and Governance Committees, the presiding director or the non-management or
11
Web Site Disclosures
The following documents and information are available on the Company’s web site at www.kirbycorp.com in the Investor Relations section under Corporate Governance:
Audit Committee Charter
Compensation Committee Charter
Criteria for the Selection of Directors
Business Ethics Guidelines
Corporate Governance Guidelines
Communication with Directors
BENEFICIAL OWNERSHIP OF COMMON STOCK
Beneficial Ownership of Directors and Executive Officers
The following table shows the number of shares of common stock beneficially owned by each director, each named executive officer listed in the Summary Compensation Table, and by the directors and executive officers of the Company as a group as of March 1, 2011.2013. Under rules of the SEC, “beneficial ownership” is deemed to include shares for which the individual, directly or indirectly, has or shares voting or investment power, whether or not they are held for the individual’s benefit. Except as otherwise indicated, the persons named have sole voting and investment power over the shares shown.
| Shares of Common Stock | ||||||||||||||||||||
| Beneficially Owned on March 1, 2011 | Percent of | |||||||||||||||||||
| Right to | Common | |||||||||||||||||||
| Direct(1) | Indirect | Acquire(2) | Total | Stock(3) | ||||||||||||||||
| DIRECTORS | ||||||||||||||||||||
| James R. Clark | 3,699 | — | 28,000 | 31,699 | ||||||||||||||||
| C. Sean Day | 21,123 | — | 42,000 | 63,123 | ||||||||||||||||
| Bob G. Gower | 42,922 | — | 35,477 | 78,399 | ||||||||||||||||
| William M. Lamont, Jr. | 40,284 | (4) | — | 60,000 | 100,284 | |||||||||||||||
| C. Berdon Lawrence | 315,171 | 34,227 | (5) | 206,000 | (6) | 555,398 | 1.0 | % | ||||||||||||
| David L. Lemmon | 5,000 | — | 40,000 | 45,000 | ||||||||||||||||
| Monte J. Miller | 7,973 | — | 41,988 | 49,961 | ||||||||||||||||
| George A. Peterkin, Jr. | 205,344 | (7) | 63,040 | (8) | 61,608 | 329,992 | ||||||||||||||
| Joseph H. Pyne | 421,633 | — | 143,607 | 565,240 | 1.1 | % | ||||||||||||||
| Richard R. Stewart | 3,000 | — | 28,000 | 31,000 | ||||||||||||||||
| NAMED EXECUTIVES | ||||||||||||||||||||
| Gregory R. Binion | 50,731 | — | 37,962 | 88,693 | ||||||||||||||||
| David W. Grzebinski | 46,554 | — | 2,970 | 49,524 | ||||||||||||||||
| Dorman L. Strahan | 44,835 | — | 14,654 | 59,489 | ||||||||||||||||
| Amy D. Husted | 17,818 | (9) | — | 4,833 | 22,651 | |||||||||||||||
| Directors and Executive Officers as a group (19 in number) | 1,286,953 | 97,267 | 767,098 | 2,151,318 | 4.0 | % | ||||||||||||||
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| Shares of Common Stock Beneficially Owned on March 1, 2013 | Percent of Common Stock(3) | |||||||||||||||||||
| Direct(1) | Indirect | Right to Acquire(2) | Total | |||||||||||||||||
DIRECTORS | ||||||||||||||||||||
Richard J. Alario | 1,479 | — | 17,153 | 18,632 | ||||||||||||||||
C. Sean Day | 54,095 | — | 24,000 | 78,095 | ||||||||||||||||
Bob G. Gower | 36,383 | — | 20,574 | 56,957 | ||||||||||||||||
William M. Lamont, Jr. | 54,284 | (4) | — | 60,000 | 114,284 | |||||||||||||||
David L. Lemmon | 7,000 | — | 36,000 | 43,000 | ||||||||||||||||
Monte J. Miller | 2,636 | — | 55,264 | 57,900 | ||||||||||||||||
George A. Peterkin, Jr. | 149,418 | (5) | 69,920 | (6) | 64,947 | 284,285 | ||||||||||||||
Joseph H. Pyne | 427,226 | — | 70,850 | 498,076 | ||||||||||||||||
Richard R. Stewart | 8,000 | — | 34,000 | 42,000 | ||||||||||||||||
William M. Waterman | 150,001 | (8) | 349,999 | (7)(8) | 10,000 | 510,000 | ||||||||||||||
NAMED EXECUTIVES | ||||||||||||||||||||
Gregory R. Binion | 73,243 | — | 29,532 | 102,775 | ||||||||||||||||
David W. Grzebinski | 37,580 | — | 15,679 | 53,259 | ||||||||||||||||
William G. Ivey | 29,854 | — | 22,430 | 52,284 | ||||||||||||||||
James F. Farley | 45,863 | — | 21,046 | 66,909 | ||||||||||||||||
Directors and Executive Officers as a group | 1,226,626 | 421,439 | 531,798 | 2,179,863 | 3.8 | % | ||||||||||||||
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| (1) | Shares owned as of March 1, | |
| (2) | Shares with respect to which a director or executive officer has the right to acquire beneficial ownership within 60 days after March 1, | |
| (3) | No percent of class is shown for holdings of less than 1%. | |
| (4) | Does not include | |
| (5) | ||
| Does not include 8,000 shares owned by Mr. Peterkin’s wife. Mr. Peterkin disclaims beneficial ownership of those shares. |
| (6) | Shares owned by trusts of which Mr. Peterkin is trustee, the beneficiaries of which are relatives of his or his wife’s. Mr. Peterkin disclaims beneficial ownership of those shares. |
| (7) | Shares are held by a grantor retained annuity trust for the benefit of Mr. Waterman and, following the expiration of the two-year annuity term, for the benefit of Mr. Waterman’s wife and Mr. Waterman’s two adult children. |
Principal Stockholders
The following table and notes set forth information as of the dates indicated concerning persons known to the Company to be the beneficial owner of more than 5% of the Company’s outstanding common stock, based on filings with the SEC:
| Number of Shares | Percent | |||||||
Name and Address | Beneficially Owned | of Class(1) | ||||||
| Janus Capital Management, LLC 151 Detroit Street Denver, Colorado 80206 | 3,631,404 | (2) | 6.77 | % | ||||
| Royce & Associates, LLC 745 Fifth Avenue New York, New York 10151 | 3,258,429 | (3) | 6.07 | % | ||||
| Araltec, S.L. Calle Santisima Trinidad, 2 Madrid, Spain 28010 | 2,990,190 | (4) | 5.57 | % | ||||
| PRIMECAP Management Company 225 South Lake Avenue, Suite 400 Pasadena, California 91101 | 2,987,604 | (5) | 5.57 | % | ||||
| BlackRock, Inc. 40 East 52nd Street New York, New York 10022 | 2,710,078 | (6) | 5.05 | % | ||||
Name and Address | Number of Shares Beneficially Owned | Percent of Class(1) | ||||||
Select Equity Group, Inc. and 380 Lafayette Street, 6th Floor New York, NY 10003 |
| 4,171,573 | (2) |
| 7.4 | % | ||
Atlanta Capital Investment Managers 1075 Peachtree Street NE, Suite 2100 Atlanta, GA 30309 | 3,449,500 | (3) | 6.1 | % | ||||
BlackRock, Inc. 40 East 52nd Street New York, NY 10022 | 3,295,927 | (4) | 5.8 | % | ||||
Araltec, S.L. Calle Santisima Trinidad, 2 Madrid, Spain 28010 | 2,990,190 | (5) | 5.3 | % | ||||
| (1) | Based on the Company’s outstanding shares of common stock on March 1, | |
| (2) | Based on Schedule 13G, dated February 14, | |
| (3) | Based on Schedule 13G, dated January | |
| (4) | Based on Schedule 13G, dated January 30, 2013, filed by BlackRock, Inc. with the SEC. |
| (5) | Based on Schedule 13G, dated December 23, 2009, filed by Araltec, S.L. with the SEC. | |
14 2011, filed by PRIMECAP Management Company with the SEC.
13
The Company’s directors and executive officers, and persons who own beneficially more than 10% of the Company’s common stock, are required under Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) to file reports of beneficial ownership and changes in beneficial ownership of the Company’s common stock with the SEC and the NYSE. Based solely on a review of the copies of reports furnished to the Company and written representations that no other reports were required, the Company believes that its executive officers and directors complied with all Section 16(a) filing requirements during 2010,2012, except that a report covering two sales on February 13, 2012 and February 14, 2012 for an aggregate of 10,000 shares by a trust for the benefit of Mr. Lamont’s wife was filed on March 19, 2012 and the reports covering gifts of 1,350 shares bythe stock option grants and restricted stock awards to Mr. Alario, Mr. Day, Mr. Gower, Mr. Lamont, Mr. Lawrence, Mr. Lemmon, Mr. Miller, Mr. Peterkin in 2007 and 2009Mr. Stewart on April 24, 2012 for an aggregate of 56,306 stock option grants and 10,383 restricted stock awards were reported in December 2010.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Compensation CommitteeExecutive Summary
Named Executive Officer in making its compensation decisions for executive officers other than the Chief Executive Officer. The Committee will usually, but not always, follow those recommendations in setting compensation for other executive officers since the Chief Executive Officer is in the best position to evaluate the contributions of the other executive officers to the success of the Company. The Committee undertakes a more thorough evaluation of the individual performance of the Chief Executive Officer prior to setting his compensation than it does for the other executive officers. The Committee also engaged a compensation consultant in connection with its compensation decisions for 2010.
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Compensation Objectives
The objectives of the compensation program are:
to attract and retain senior executives with competitive compensation opportunities;
to achieve consistent performance over time; and
to achieve performance that results in increased profitability and stockholder value.
The Company’s executive compensation program is designed to reward:
performance that contributes to the long-term growth and stability of the Company and the effectiveness of management in carrying out strategic objectives identified for the Company (through the base salary);
the financial and operational success of the Company for the current year (through the annual incentive plan); and
the future growth and profitability of the Company (through long-term incentive compensation awards). Chief Executive Officer Compensation for 2012 Mr. Pyne’s salary increased from $710,000 to $772,500 in 2012 (an increase of 8.8% over 2011). He earned cash incentive compensation payments of $2,334,224 (a decrease of 17.1% from 2011) and received equity compensation awards with a grant date fair value of $1,853,172 (an increase of 9.0% over 2011). A total of 59% of his direct compensation (annual bonus, three-year performance award and stock options) was performance-based. 15 Highlights of Company Performance in 2012 The Company achieved strong financial results in 2012. The following table summarizes a number of key financial measures for 2011 and 2012 (dollars in millions except per share amounts):
The Company’s total stockholder return was (6%) for the last year and 78% for the last three years. During 2012, the Company further expanded and consolidated its position in the coastal marine transportation business through two significant acquisitions and made significant progress in changing the primary focus of the land-based diesel engine business acquired in 2011 from manufacturing to a more stable and predictable remanufacturing and service operation. Compensation Committee The Compensation Committee (the “Committee”) of the Board of Directors of the Company has the authority and responsibility to (1) determine the salaries for executive officers of the Company, (2) administer the Company’s annual incentive compensation program, (3) administer all of the Company’s stock option and incentive compensation plans and grant stock options, restricted stock and other awards under the plans and (4) review and make recommendations to the Board of Directors with respect to incentive and equity-based compensation plans and any other forms of compensation for executive officers of the Company. The Compensation Committee is composed of four members, all of whom are “independent directors,” “Non-Employee Directors” and “outside directors” as those terms are defined in relevant NYSE standards and federal securities and tax regulations. The Committee does not delegate any of its authority to determine executive compensation. The Committee considers recommendations from the Chief Executive Officer in making its compensation decisions for executive officers other than the Chief Executive Officer. The Committee will usually follow those recommendations when setting compensation for other executive officers since the Chief Executive Officer is in the best position to evaluate the contributions of the other executive officers to the success of the Company. The Committee undertakes an independent evaluation of the individual performance of the Chief Executive Officer prior to setting his compensation. The Committee also engaged a compensation consultant in connection with its compensation decisions for 2012. In determining the compensation of the named executive officers, the Compensation Committee considered all elements of total compensation, including salary, annual incentive compensation, equity-based and other long-term incentive compensation and projected payouts under the Company’s retirement plans. The Compensation Committee also relied in part on the marketplace analysis prepared by Cogent Compensation Partners, a compensation consulting firm retained by the 16 Company or its business groups, individual performance of the named executive officer, any increased responsibilities assigned to a particular executive officer, the recommendations of the Chief Executive Officer (except as to his own
compensation) and considerations of internal pay equity. However, the final decisions of the Committee are to some extent subjective and do not result from a formulaic application of any of those factors. Say on Pay At the Company’s 2012 Annual Meeting, stockholders approved the compensation of the Company’s named executive officers by 95% of the votes cast. Although the Company interpreted the vote as an endorsement of its executive compensation policies and practices, the Compensation Committee continues to reevaluate the principal elements of the Company’s executive compensation and for 2012 modified the structure of the annual incentive plan as described under “Elements of Compensation — Annual Incentive Compensation” below. Compensation Consultant For 2012, the Compensation Committee engaged the Consultant to provide information for the Committee to consider in making compensation decisions. The Consultant was engaged directly by the Compensation Committee to: review the reference group of comparable companies used for comparisons of Company performance and executive compensation; perform a marketplace analysis of direct compensation for senior executive officers compared to the reference group of companies and published compensation surveys; update the Committee on current issues in executive compensation; consult with the Committee concerning risks of the Company’s compensation policies and practices; consult with the Committee concerning the structure of the annual incentive plan; and consult with the Committee concerning the evaluation of executive compensation by proxy advisory firms. At the Compensation Committee’s request, the Consultant has addressed the six independence factors for compensation committee advisers that were identified in a recently adopted SEC regulation. The Committee concluded that there are no conflicts of interest that affect the work of the Consultant for the Committee. The Consultant was not retained by the Company or any of its affiliates (other than the Compensation Committee) to perform any services during 2012. During 2012, Cogent Compensation Partners was acquired by another executive compensation consulting firm, Frederic W. Cook & Co., Inc. (“FWC”). The acquisition did not result in any conflicts of interest or other impediments to continuing work for the Committee by FWC and the Committee continued to engage FWC after the acquisition to perform the same types of services that the Consultant had previously provided. Elements of Compensation Salary The Compensation Committee attempts to set base salaries for the named executive officers at approximately the median for comparable companies. The Committee and management believe that the Company is 17 Based on information available in
Annual Incentive Compensation With regard to the annual cash incentives for executive officers, the Compensation Committee attempts to set annual incentive compensation targets at a level such that, with Following the 2011 evaluation of the Company’s annual incentive plan by the Compensation Committee, the Committee decided in 2012 to modify the structure of the plan to allow more flexibility in determining awards to individual participants. Bonuses paid under the plan are intended to qualify as performance-based compensation for The three additional performance measures are EBITDA, 18 Performance under the annual incentive plan is measured on a calendar year basis. At the beginning of
For
In For The Compensation Committee awarded the 19 Long-Term Incentive Compensation The Compensation Committee’s objective for long-term incentive compensation for executive officers is generally to fall between the 50th and 75th percentiles (depending on performance) in long-term incentive compensation of similar corporations and positions.
supplies the incentive of tying a meaningful portion of total compensation to Company performance, as well as business group and individual performance. In addition, the ultimate value of the options and shares of restricted stock granted depends on the Company’s stock price, aligning the interests of recipients of those awards with the interests of the Company’s stockholders. In The Company maintains a long-term incentive compensation program for selected senior executives that is administered by the Compensation Committee. The program allows the grant of incentive stock options, nonincentive stock options, restricted stock, performance shares and performance units (or any combination thereof). The objective of the program is to provide long-term incentive compensation to the specified executives in an amount that falls between the 50th and 75th percentiles (depending on performance) when compared to companies or business units of similar size. For 2012, the value of long-term incentive compensation awards to the named executive officers actually ranged from 73% to 92% of the market median. Under the program, the elements of long-term compensation to be awarded, as well as the executives selected to participate, are determined each year by the Compensation Committee. For
The Committee granted Mr. Farley options to purchase 6,540 shares of common stock and 3,400 shares of restricted stock at the beginning of the year when he was Executive Vice President-Operations of the Company’s principal inland marine transportation subsidiary. Then when he was subsequently named President of the 20 Company’s principal offshore marine transportation subsidiary, the Committee granted him a three-year cash performance award with a target value of $224,000 to increase his long-term incentive compensation to a level commensurate with his increased responsibilities. The options vest over a three-year period and the restricted stock vests over a five-year period. The performance awards are based on a three-year performance period beginning January 1, The amount and form of the long-term incentive compensation awards, including the specific mix of long-term incentive compensation elements, were based in part on an analysis of market data on the amounts of awards and recommendations on the form of awards provided by the Consultant to the Compensation Committee.
Chief Executive Officer The Compensation Committee set the 2010.
Retirement Plans The Company maintains two primary retirement plans in which the named executive officers are eligible to participate on the same basis as broad categories of employees — a Profit Sharing Plan and a 401(k) Plan. Most of the Company’s shore-based employees are eligible to participate in the Profit Sharing Plan. The aggregate contributions made to the plan by the Company are allocated among the participants according to base salary. All employees of the Company are eligible to participate in the 401(k) Plan, under which the Company will match employee contributions in an amount up to 3% of an employee’s base salary. The Company maintains an unfunded, nonqualified Deferred Compensation Plan for Key Employees, which is designed primarily to provide additional benefits to eligible employees to restore benefits to which they would be entitled under the Company’s Profit Sharing Plan and 401(k) Plan were it not for certain limits imposed by the 21 Internal Revenue Code. The plan is designed to restore benefits for employees being compensated in excess of certain limits ($ Perquisites and Personal Benefits The only perquisites or other personal benefits that the Company provides to the named executive officers are an automobile allowance that is given to approximately
Committee believes the personal benefits are reasonable in amount and help the Company attract and retain key employees. Employment/Severance Agreements Except for accelerated vesting of outstanding stock options, restricted stock and performance awards upon a change in control of the Company, there are no special compensation arrangements related to severance orchange-in-control events. The Company has no employment agreements with any of its executive officers. Benchmarking Information used by the Compensation Committee to benchmark against comparable companies in determining particular elements of executive compensation has been provided by the Consultant. Marketplace analysis developed by the Consultant has been based in part on a reference group of The Consultant reevaluated the reference group used for Kirby in 2011 in light of the Company’s increased size after its significant acquisitions in 2011, as well as developments affecting some of the companies in the group. As a result, the Consultant proposed and the Committee approved changes in the composition of the reference group used by the Consultant for the information provided to the Committee in connection with its compensation decisions for
22 Based on the most recent executive compensation review prepared by the Consultant for the Compensation Committee (for which the Consultant removed from the original reference group one company that separated its shipping business from its other business during the year and another company that filed for bankruptcy during the year): the base salaries of the five named executive officers ranged from 85% to 97% of the median for the reference group; total cash compensation (salary plus annual incentive compensation) fell between the median and the 75th percentile (except for Mr. Farley); long-term incentive compensation ranged from 73% to 92% of the median; and total direct compensation for Mr. Pyne and Mr. Grzebinski was between the median and the 75th percentile and for the other three named executive officers ranged from 86% to 99% of the median. Mr. Farley was promoted from Executive Vice President of the Company’s principal inland marine transportation subsidiary to President of the Company’s principal offshore marine transportation subsidiary during the year and was also included in the Company’s long-term incentive compensation program for the first time after the beginning of the year. As a result of those circumstances and related compensation adjustments during the year, his total cash compensation was slightly above the 75th percentile for the year and his long-term incentive compensation was below the median for the year. The Consultant also gathered data on the Company’s financial performance relative to the reference group of comparable companies based on public information. The Company, which is slightly below the median size of the companies in the reference group, ranked above the median for the reference group, and in most cases above the 80th percentile, for both one-year (2011) and three-year (2009-2011) periods on a broad range of financial performance measures, including return on equity, return on assets, return on total capital and growth in revenues and in earnings per share. The only exception was the one-year total shareholder return which was below the median, although the three-year total shareholder return was near the 90th percentile. Other Compensation Matters Compensation Related Risk With the assistance of the Consultant, the Compensation Committee undertook a review of the Company’s compensation policies and practices and concluded that the Company’s compensation programs do not encourage excessive risk taking and do not present risks that are reasonably likely to have a material adverse effect on the Company. Tax Considerations Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation over $1 million paid to the Chief Executive Officer and the three other most highly compensated executive officers other than the Chief Financial Officer. Certain performance-based compensation, however, is specifically exempt from the deduction limit. The Committee does take steps to qualify compensation for deductibility to the extent practical, but may award compensation that is not deductible when such an award would be in the Company’s best interests. Timing of Compensation Decisions The Compensation Committee generally makes executive compensation decisions in January of each year. Options have always been granted at an exercise price equal to the fair market value of the Company’s stock on the date of grant. Options granted at the regular January meeting of the Committee, which takes place several days before the Company’s public release of earnings information for the previous year, are granted at an exercise price equal to the fair market value of the Company’s stock on a specified date shortly after the earnings release, in which case the later date is considered the date of grant.
23 Stock Ownership Effective January 1, 2009, the Board established stock ownership guidelines for executive officers and directors of the Company and its subsidiaries. Executive officers must be in compliance within five years after the adoption of the guidelines or five years after becoming an executive officer, whichever is later, but are expected to accumulate the required number of shares ratably over the applicable five-year period. Under the guidelines, the Chief Executive Officer is required to own common stock of the Company having a value equal to four times his base salary. For the other named executive officers, the requirement is three times base salary. The guidelines do not address hedging the economic risk of stock ownership, but the Company’s insider trading policy prohibits employees and directors from engaging in short sales of the Company’s stock or in transactions involving options to buy or sell the Company’s stock (other than stock options granted by the Company). The Governance Committee of the Board will monitor compliance with the guidelines and may recommend modifications or exceptions to the Board. Compensation Committee Report The Compensation Committee of the Board of Directors of the Company has reviewed and discussed with management the Compensation Discussion and Analysis in this Proxy Statement. Based on that review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Compensation Committee Interlocks and Insider Participation The members of the Compensation Committee are, and during 24 Compensation Tables Summary Compensation Table
25
Grants of Plan Based Awards During
26
Outstanding Equity Awards at December 31,
27
Option Exercises and Stock Vested During
28 Pension Benefits
Nonqualified Deferred Compensation
29 Equity Compensation Plan Information as of December 31,
Potential Payments Upon Change in Control If a change in control were to have occurred on December 31, 2012. Joseph H. Pyne Mr. Pyne’s options to purchase an aggregate of $61.89. Mr. Pyne had 30 On December 31,
Gregory R. Binion Mr. Mr. Binion had 24,321 shares of restricted stock that were not vested as of December 31, 2012. If a change of control had occurred on that date, the 24,321 shares would have become fully vested. The maximum value of the accelerated vesting of Mr. Binion’s restricted stock would have been $1,505,227 ($61.89 per share value on December 31, 2012, multiplied by 24,321 restricted shares). On December 31, 2012, Mr. Binion would have become entitled to payments under previously granted performance awards totaling $370,739 if a change in control had occurred on that date. David W. Grzebinski Mr. Grzebinski’s options to purchase an aggregate of 7,056 shares of common stock would have become fully exercisable on December 31, 2012, if a change in control had occurred on that date. Under the terms of Mr. Grzebinski’s stock options, he would have to pay 2012 have an exercise price higher than the year end stock price of $61.89. Mr. Grzebinski had On December 31,
Mr. $61.89. Mr. 31 On December 31,
Mr. $61.89. Mr. On December 31,
AUDIT COMMITTEE REPORT The Audit Committee of the Board of Directors of the Company is responsible for monitoring the integrity of the Company’s financial reporting, accounting procedures and internal controls. The Audit Committee is composed of Management is primarily responsible for the Company’s financial reporting process and internal controls. The Company’s independent auditors are responsible for performing an audit of the Company’s financial statements and issuing a report on the conformity of the financial statements with generally accepted accounting principles. The Company’s independent auditors are also responsible for performing an audit of the Company’s internal control over financial reporting. The Audit Committee is responsible for overseeing those processes. The Audit Committee has reviewed and discussed the audited financial statements of the Company for the year ended December 31, Based on the Audit Committee’s review of the audited financial statements for the year ended December 31,
32 RATIFICATION OF THE AUDIT COMMITTEE’S SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL 2) The Audit Committee has selected KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31,
The Board of Directors of the Company unanimously recommends that you vote “FOR” the ratification of the selection of KPMG LLP as the Company’s independent registered public accounting firm for 2013. Ratification of the selection of KPMG requires the affirmative vote of a majority of the shares represented at the meeting in person or by proxy. If the stockholders do not ratify the selection of KPMG, the Audit Committee will reconsider the selection. However, because of the difficulty and expense of changing independent auditors at this point in the year, the selection of KPMG will probably be continued for Representatives of KPMG are expected to be present at the Fees Paid to the Independent Registered Public Accounting Firm The following table sets forth the fees billed by KPMG, the Company’s independent registered public accounting firm, during the last two fiscal years:
Audit Feesare fees for professional services rendered by KPMG for the audit of the Company’s annual financial statements, audit of internal control over financial reporting, review of the Company’s quarterly financial statements or services normally provided in connection with statutory or regulatory filings. Audit-Related Feesare fees for assurance and related services reasonably related to the performance of the audit or review of the Company’s financial statements. Services performed by KPMG in this category consisted of the audit of the Company’s benefit plans. Tax Feesare fees for professional services rendered by KPMG for tax compliance, tax advice and tax planning. Services performed by KPMG in this category for Each engagement of the independent registered public accounting firm to perform audit or non-audit services must be approved in advance by the Company’s Audit Committee or by its Chairman pursuant to delegated authority. 33 ADVISORY VOTE ON EXECUTIVE COMPENSATION (PROPOSAL 3) The Company is requesting your approval, on a non-binding advisory basis, of the compensation of the Company’s named executive officers as disclosed and discussed under “EXECUTIVE COMPENSATION” on pages
is appropriately tied to Company and individual performance; is designed with both short-term and long-term business objectives of the Company in mind; does not encourage excessive risk-taking by the Company’s management; and properly aligns the interests of management with those of the Company’s stockholders. For those reasons, we are asking you to approve the following resolution: RESOLVED that the compensation of the Company’s named executive officers as described under “EXECUTIVE COMPENSATION” in the Company’s Proxy Statement for its Although the vote on approval of executive compensation is not binding, the Compensation Committee and the Board will consider the result of the vote in making future compensation decisions. The Board of Directors of the Company unanimously recommends that you vote “FOR” Proposal 3 approving the compensation of the named executive officers as disclosed in this Proxy Statement. OTHER BUSINESS (PROPOSAL The Board knows of no other business to be brought before the Annual Meeting. However, if any other matters are properly presented, it is the intention of the persons named in the accompanying proxy to take such action as in their judgment is in the best interest of the Company and its stockholders. STOCKHOLDER PROPOSALS FOR Stockholder proposals must be received by the Company at its principal executive offices no later than November Under the Company’s Bylaws, written notice (containing the information required by the Bylaws) of any stockholder proposal for action at an annual meeting of stockholders (whether or not proposed for inclusion in the Company’s proxy materials) must be received by the Company at its principal executive offices not less than 90 nor more than 120 days prior to the anniversary date of the prior year’s annual meeting of stockholders and must be a proper subject for stockholder action.
March 8, 2013 Houston, Texas
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q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –
Change of Address— Please print new address below.
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –
Proxy — Kirby Corporation 55 Waugh Drive, Suite 1000 P.O. Box 1745 Houston, Texas 77251-1745 This Proxy is solicited on behalf of the Board of Directors of Kirby Corporation. The undersigned hereby appoints Joseph H. Pyne, David W. Grzebinski, G. Stephen Holcomb and Thomas G. Adler, and each of them, as Proxies, each with the power to appoint his substitute, and hereby authorizes each to represent and to vote, as designated below, all the shares of common stock, par value $0.10 per share, of Kirby Corporation (the “Company”) held of record by the undersigned as of the close of business on March 1, 2013, at the Annual Meeting of Stockholders to be held on April 23, 2013, at 55 Waugh Drive, 9th floor, Houston, Texas 77007 at 10:00 A.M. (CDT) and any adjournment(s) thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PERSONS LISTED IN PROPOSAL 1. SHOULD ANY OF THEM REFUSE OR BECOME UNABLE TO ACCEPT ELECTION AS A DIRECTOR OF THE COMPANY, THE PROXY WILL BE VOTED FOR THE ELECTION OF SUCH PERSON OR PERSONS AS MAY BE NOMINATED OR DESIGNATED BY THE BOARD OF DIRECTORS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 2 AND 3. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN ITEM 4. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE. (Continued and to be signed on reverse side) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
