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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No.__)
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐ |
Preliminary Proxy Statement |
☐ |
Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)) |
☒ |
Definitive Proxy Statement |
☐ |
Definitive Additional Materials |
☐ |
Soliciting Material Pursuant to §240.14a-12 |
OVERSEAS
SHIPHOLDING GROUP, INC. |
(Name
of Registrant as Specified In Its Charter) |
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant) |
|
Payment
of Filing Fee (Check the appropriate box): |
☒ |
No
fee required. |
☐ |
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
☐ |
Fee
paid previously with preliminary materials. |
Notice of Annual Meeting of Stockholders
DATE
AND TIME
Thursday, June 15, 2023, at 9:30 a.m., Eastern Time.
LOCATION
The
Annual Meeting is being held virtually. Stockholders may participate by dialing (844) 200-6205 for U.S. callers and (929) 526-1599
for international callers and entering Access Code 601936.
RECORD
DATE
Stockholders
of record at the close of business on April 17, 2023, are the only stockholders entitled to notice of, and to vote at, the annual
meeting.
MATERIALS
These
proxy materials and the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”)
were first sent or made available to stockholders on or about May 1, 2023.
ITEMS
OF BUSINESS
| (1) | to
elect eight directors to serve until the 2024 Annual Meeting of Stockholders of the Company; |
| (2) | to
approve, on an advisory basis, the 2022 compensation for our Named Executive Officers
as described in “How We Compensate Our Executives” and in the compensation
data provided in the tables in the Proxy Statement; |
| (3) | to
approve, on an advisory basis, the frequency of future advisory votes on the compensation
of our Named Executive Officers; |
| (4) | to
ratify the appointment of Grant Thornton LLP as the Company’s independent registered
public accounting firm for 2023; |
| (5) | to
amend our Amended and Restated Certificate of Incorporation to permit the exculpation
of officers in certain circumstances as permitted by Delaware law; and |
| (6) | to
transact such other business as may properly be brought before the Annual Meeting. |
We
are utilizing the Securities and Exchange Commission (“SEC”) rules that allow issuers to furnish proxy materials to
their stockholders over the Internet. We believe these rules allow us to provide stockholders with the information they need,
while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting. If you received a printed copy
of the materials, we have enclosed a copy of the 2022 Form 10-K with this Notice and the Proxy Statement.
It
is very important that you are represented at the Annual Meeting and that your shares are voted. We urge you to vote as soon as
possible by telephone, over the Internet, or by marking, signing and returning your proxy or voting instruction card. Your
prompt consideration is greatly appreciated.
|
/s/ SUSAN ALLAN |
|
Vice President, General Counsel
and Corporate Secretary |
|
Tampa, Florida |
|
May 1, 2023 |
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on June 15, 2023:
This Notice of Annual Meeting, Proxy Statement,
and the 2022 Form 10-K are available at www.osg.com/investor-relations.
TABLE
OF CONTENTS
OVERSEAS
SHIPHOLDING GROUP, INC.
302
Knights Run Avenue, Suite 1200
Tampa,
FL 33602
PROXY
STATEMENT
REMOTE
PARTICIPATION IN THE ANNUAL MEETING
Our
Annual Meeting will be held 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 call. Stockholders
and other interested parties can listen to a live webcast of the Annual Meeting from the Investor Relations section of OSG’s website
at www.osg.com.
Stockholders
can ask questions by using the call-in option only. The call will be hosted by a moderator who will provide instructions on how
to ask a question when the Q&A section of the meeting is set to begin. If you have technical difficulties in joining the meeting,
you should email investor-relations@osg.com for assistance.
We
urge you to vote as soon as possible by telephone or over the Internet. If you wish to vote on the date of the Annual Meeting
or to change your vote, you may do so by sending an email to investor-relations@osg.com and attaching your proxy card or
if your shares 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. (ET) on Thursday, June 15, 2023 in order for your vote to be counted (or your change of vote to be effective).
An
audio replay of the Annual Meeting will be available for 30 days starting June 15, 2023 until July 15, 2023 by dialing (866) 813-9403
for U.S. callers and (929) 458-6194 for international callers and entering Access Code 965903.
PROXY
SUMMARY
This
summary provides an overview of the information contained in the Proxy Statement. It is not intended to provide all of the information
in the Proxy Statement, which we recommend that you read and consider prior to voting. We also invite you to review our 2022 Form
10-K and our recently issued Sustainability Report (the “Sustainability Report”) to obtain a more comprehensive discussion
of Overseas Shipholding Group, Inc.
OSG
qualifies as a Smaller Reporting Company under SEC rules. As a Smaller Reporting Company, we are permitted to omit certain disclosures
from this Proxy Statement that are required for larger companies, including some additional disclosures relating to executive
compensation. However, we recognize the importance of transparency and, accordingly, have chosen to provide certain compensation-related
disclosures that we are not required to provide.
Voting
Matters
Our
stockholders are being asked to vote on the following matters at our 2023 Annual Meeting:
PROPOSALS |
BOARD
RECOMMENDATIONS |
|
|
PROPOSAL
1. Election of Directors |
The
Board and the Corporate Governance and Risk Assessment Committee believe that each of the director nominees possess the experience
and qualifications necessary to provide quality guidance to the Company’s management and effective oversight of the Company
and ask our stockholders to vote in favor of the election of each director nominee. |
FOR
Each
Director Nominee
|
PROPOSAL
2. Advisory vote to approve the compensation of the Named Executive Officers for 2022 |
The
Human Resources and Compensation Committee believes that the compensation paid to our Named Executive Officers and our overall
pay practices are proper and supportable, and asks our stockholders to cast a favorable non-binding advisory vote on the compensation
of the Named Executive Officers (the “say-on-pay” vote) as described in “How We Compensate Our Executives”
and in the compensation data provided in the tables within this Proxy Statement. |
FOR
|
PROPOSAL
3. Advisory vote to approve the frequency of future advisory votes to approve the compensation of the
Named Executive Officers |
Stockholders
may vote to hold a say-on-pay vote every one, two, or three years, or may abstain from voting. In 2017, the stockholders voted
to hold the say-on-pay vote every year, which has been done. While this vote is non-binding, the Board and Human Resources and
Compensation Committee value the opinions of our stockholders and will consider the outcome of the vote when determining the frequency
of future say-on-pay votes. The Board asks that our stockholders continue to vote for a frequency of every one (1) year. In the
future, OSG will continue to provide a “say-on-frequency” vote at least once every six years. |
FOR
Every
One (1) Year
|
PROPOSAL
4. Ratification of appointment of the independent registered public accounting firm. |
The
Audit Committee believes it to be in the best interest of the Company and its stockholders to retain the services of Grant Thornton
LLP as the independent auditors of the Company for the fiscal year ending December 31, 2023 and asks stockholders to ratify this
appointment. |
FOR |
PROPOSAL
5. Approval to amend the Company’s certificate of incorporation to permit the exculpation of officers
in certain circumstances, as permitted by the State of Delaware. |
The
Board and the Corporate Governance and Risk Assessment Committee believe that it is appropriate to amend the Company’s Certificate
of Incorporation to permit the exculpation of certain officers in certain circumstances, as permitted by the State of Delaware,
and ask the stockholders to vote in favor of this amendment. |
FOR |
Company
Overview
OSG
is a leading provider of energy transportation services, delivering crude oil and petroleum products to major oil companies and
refiners. OSG’s 21-vessel U.S. flag fleet consists of three Suezmax crude oil tankers doing business in Alaska, four articulated
tug-barge units, three shuttle tankers, seven medium range tankers, one tanker in cold layup, and three non-Jones Act tankers,
two of which participate in the U.S. Maritime Security Program. We provide safe, efficient, and reliable transportation to our
customers and strive to ensure the highest standards of safety and environmental compliance throughout our organization. In this
Proxy Statement, we sometimes refer to OSG as the “Company,” “we,” “our,” or “us.” In
addition, except where stated otherwise, our website and the information posted on or connected to our website is not incorporated
by reference in this Proxy Statement.
Board
Highlights
BOARD
OF DIRECTORS (as of April 3, 2023) |
OSG
Committee
Membership
|
Name |
Age |
Tenure
years(1)
|
Primary
Occupation |
A |
C |
G |
Douglas
Wheat
(Non-Executive
Chairman)
|
72 |
9 |
Managing
Partner of Wheat Investments |
|
|
|
Rebecca
K. DeLaet |
55 |
3 |
Former
CFO of O.G. Energy |
X |
X |
|
Joseph
I. Kronsberg |
40 |
8 |
Former
Partner at Cyrus Capital Partners, L.P. |
X |
|
|
Anja
L. Manuel (2) |
48 |
6 |
Founding
Partner at Rice, Hadley, Gates & Manuel LLC |
|
X |
X* |
Samuel
H. Norton |
64 |
9 |
CEO
and President of OSG |
|
|
|
John
P. Reddy |
70 |
5 |
Former
CFO of Spectra Energy and private investor |
X* |
|
|
Julie
E. Silcock |
67 |
5 |
Senior
Advisor to CDX Advisors |
|
X* |
X |
Gary
Eugene Taylor |
69 |
9 |
Former
member of U.S. Congress |
|
|
X |
*
Indicates Chair of the Committee
A
- Audit Committee
C
- Human Resources and Compensation Committee
G
- Corporate Governance and Risk Assessment Committee
| (1) | The
average tenure of the independent directors is 6.4 years. |
| (2) | Anja
L. Manuel is a current director but is not running for re-election. Elaine D. Luria, former U.S. Representative for the Second
District of Virginia, will be running for election in place of Ms. Manuel. |
Governance
Highlights
OSG
is committed to maintaining leading corporate governance practices. We believe that sound governance policies encourage accountability
of the Board and management, improve our standing within our industry, and promote the long-term interests of our stockholders.
Board
Leadership Structure and Independence
| ● | We
separate the roles of the CEO and Chairman and have an independent, non-executive Chairman
of the Board. |
| ● | Women
comprise 37.5% of our Board slate. |
| ● | All
of our directors and nominees are independent, other than our CEO. |
| ● | Our Board is actively engaged in director succession planning and considers diversity, among other selection
criteria. |
Board
Practices and Oversight
| ● | Regular
executive sessions consisting of the independent directors only provide independent directors
an opportunity to meet in private. |
| ● | The
average attendance by directors at Board and Committee meetings in 2022 was over 90%.
|
| ● | Oversight
of risk management occurs within each Committee, as well as by the Board. |
| ● | Quarterly
oversight of environmental, safety, and social risks of the Company, including climate-change
related risks, matters of gender equality. |
| ● | Our
Corporate Governance Guidelines provide for consideration of average tenure of the directors. |
Board
Policies and Experience
| ● | We
prohibit hedging and pledging of securities owned by directors and employees. |
| ● | Our
directors and officers are required to retain ownership of a certain level of OSG stock
in accordance with stock ownership guidelines. |
| ● | Directors
possess a wide range of financial, energy, governance and transportation services experience,
including service on other public and non-profit boards and prior service in the U.S.
Congress, resulting in diverse viewpoints. |
| ● | Directors
must inform the Corporate Governance and Risk Assessment Committee (the “Governance
and Risk Committee”) of any changes in their principal occupation and prior to accepting
outside board membership. |
Executive
Compensation
Consistent
with our goal of enhancing stockholder value, we are committed to aligning executive compensation with our strategic short-term
and long-term objectives, as well as with the interests of our stockholders. The compensation disclosed in the Summary Compensation
Table and the other related tables reflects compensation decisions that were made in early 2022, and in prior years, and were
based on the terms of employment agreements. The section “How We Compensate Our Executives” describes our compensation
program in detail.
Cybersecurity
and Cyber Awareness
In
order to maintain competitiveness, OSG must utilize technology and adapt our practices to maximize efficiency in the conduct of
our business. For example, the COVID-19 pandemic forced our business to adjust to the work-from-home environment and to utilize
technological tools as much as possible. We have digitized most of our documents and we utilize several software applications
for data analytics on our operations.
While
we recognize the valuable benefits that “going digital” can provide, OSG also takes cybersecurity threats very seriously.
We communicate with the Cybersecurity and Infrastructure Security Agency and Federal Bureau of Investigation on threats specific
to the maritime industry and corporate operations. Over the last three years, OSG has not experienced any material cyber security
violation or occurrence. We have in place a cyber security plan. Regular oversight of matters relating to cybersecurity is provided
by our Governance and Risk Committee, including annual reviews of the cyber security plan, our current practices, and cyber security-related
regulations that impact us.
Our
cybersecurity plan is designed to provide malware protection and control to our systems to protect the information and operating
technology on board our vessels and in our corporate operations, providing for:
| ● | incident
hotlines for suspicious cyber activity and/or breaches of security, |
| ● | layered
cybersecurity approaches, including next-generation software protections, and |
| ● | annual
information technology and cybersecurity training required for all employees. |
Environmental
and Social Initiatives - Moving Energy with Integrity
OSG
is committed to operating one of the safest, cleanest and most reliable fleets in our industry. Our industry is heavily regulated,
and we believe our operations are in substantial compliance with applicable regulations of the United States, the International
Maritime Organization, the European Union and regional and local authorities on the prevention of oil spills, clean air and water,
and carbon emissions.
The
Governance and Risk Committee provides oversight of our environmental, social and governance policies and practices and its charter
requires it to conduct quarterly reviews of risks in these areas.
OSG recently published a Sustainability Report which highlights
key actions we have taken to decrease our environmental impact, provide a safe and healthy work environment, promote a responsible
and equitable workplace, and provide quality governance practices. The Sustainability Report and our policies relating to health,
safety, and environmental and social responsibility can be found on our website at www.osg.com/safety-and-environment. We
have outlined a few key components of each of these policies below.
Health
and Safety Policies. We focus on providing healthy and safe working conditions for both our crews and shoreside employees
and seek to accomplish these goals by:
| ● | Following
our established management system, which is designed to promote safe practices in ship
operations, prevent damage to our vessels and the environment, prevent loss of human
life and personal injury, and continuously improve the safety skills of personnel; |
| ● | Maintaining
and enforcing zero tolerance for any sexual assault or sexual harassment, the use of
drugs or alcohol by seafarers and in the office workplace, and discrimination based on
race, gender, disability, or religion; |
| ● | Maintaining
a shipboard occupational health and safety program; |
| ● | Oversight
by the Governance and Risk Committee of OSG’s safety performance and related key
performance indicators. |
Environmental
Protection and Social Responsibility Policies. Our policies and operating practices include:
| ● | Requiring
all shoreside employees and seafarers to be trained on and committed to complying with
our Code of Business Conduct and Ethics; |
| ● | Endeavoring
that all seafarers are informed, trained, and committed to complying with each vessel’s
Ship Energy Efficiency Management Plan; |
| ● | Requiring
that all seafarers certify their understanding and acceptance of OSG’s Environmental
Protection and Social Responsibility Policy as a condition of employment; |
| ● | Allocating
significant capital to lessen our environmental impact and remain compliant with all
applicable regulations; |
| ● | Installing
ballast water treatment systems on our vessels; |
| ● | Burning
low sulfur content fuel in environmentally protected areas along the U.S. coastline;
and |
| ● | Oversight
by our Governance and Risk Committee of the adequacy of OSG’s environmental initiatives
and strategic planning. |
ELECTION
OF DIRECTORS
(PROPOSAL
NO. 1)
The
nominees for election at the Annual Meeting are listed below. The nominees were selected by the Board upon the recommendation
of the Governance and Risk Committee. Unless otherwise directed, proxies will be voted for the election of these nominees to serve
until the 2024 Annual Meeting of Stockholders and until each of their successors is duly elected and qualified.
The
Governance and Risk Committee considers the following criteria for identifying and recommending qualified candidates for membership
on the Board, seeking to maintain within these criteria appropriate diversity of individuals on the basis of gender, ethnic heritage,
and life experiences:
| ● | judgment,
character, integrity, expertise, tenure, skills and knowledge useful to the oversight
of OSG’s business; |
| ● | status
as “independent” or “audit committee financial expert” or “financially
literate” as defined by the New York Stock Exchange (“NYSE”) and the SEC; |
| ● | high
level managerial, business or other relevant experience, including, but not limited to,
experience in OSG’s industry or in areas relevant to OSG’s operations; |
| ● | the
candidate’s principal occupation and business associations; |
| ● | absence
of conflicts of interest; |
| ● | status
as a U.S. citizen for compliance with the Jones Act; |
| ● | ability
and willingness of the candidate to spend a sufficient amount of time and energy in furtherance
of Board matters; and |
| ● | average
tenure of the Board as a whole. |
As
part of its annual assessment of Board structure and composition, the Governance and Risk Committee evaluates the extent to which
the Board as a whole satisfies the foregoing criteria. The Committee also engages in succession planning and considers new candidates
during this process. Upon an indication from Ms. Manuel that she might not stand for re-election, Ms. Luria was identified as
a potential nominee by one of our existing Board members. Following interviews and due diligence, Ms. Luria was determined by
the Committee to be a qualified candidate to join our Board.
The
Governance and Risk Committee has evaluated the current nominees against the above criteria, and the Committee and the Board recommend
that the stockholders elect all nominees at the Annual Meeting. We expect each nominee for election as a director to be able to
serve if elected. If any nominee is not able to serve, the persons appointed by the Board and named as proxies in the proxy materials
may vote their proxies for substitute nominees, unless the Board chooses to reduce the number of directors serving on the Board.
If stockholders do not re-elect a nominee who is already a director, Delaware law provides that the director continues to serve
on the Board as a “holdover director”.
Director |
Business
Experience during the Past Five Years and Other
Information |
Douglas
D. Wheat
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg003.jpg)
Age:
72
Director
and Chairman since 2014
|
Mr.
Wheat is currently the Managing Partner of Wheat Investments, a private investment firm.
From 2007 to 2016, he was the founding and Managing Partner of the private equity company
Southlake Equity Group. From 1992 until 2006, Mr. Wheat was President of Haas Wheat &
Partners. Prior to the formation of Haas Wheat, Mr. Wheat was a founding member of the
merchant banking group at Donaldson, Lufkin & Jenrette where he specialized in leveraged
buyout financing. From 1974 to 1984, Mr. Wheat practiced corporate and securities law
in Dallas, Texas. Mr. Wheat is currently the Chairman of the Board of Directors of International
Seaways, Inc. (a former wholly-owned division of OSG) and is also the Chairman of the
Board of Directors of AMN Healthcare Services, Inc. (“AMN”). He has been a
director of AMN since 1999, becoming Chairman in 2007. He previously served as Vice Chairman
of Dex Media, Inc. and as Chairman of SuperMedia prior to its merger with Dex One. Mr.
Wheat has also previously served as a member of the board of directors of several other
companies including: Playtex Products (he also served as Chairman); Dr Pepper/Seven-Up
Companies, Inc.; Dr Pepper Bottling of the Southwest, Inc.; Walls Industries, Inc.; Alliance
Imaging, Inc.; Thermadyne Industries, Inc.; Sybron International Corporation; Nebraska
Book Corporation; ALC Communications Corporation; Mother’s Cookies, Inc.; and Stella
Cheese Company. Mr. Wheat received both his Juris Doctor and Bachelor of Science degrees
from the University of Kansas.
Skills
and Qualifications
Mr.
Wheat’s finance and legal expertise and experience serving on numerous boards of directors make him a valuable asset to
our Board.
|
Rebecca
DeLaet
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg004.jpg)
Age:
55
Director
since 2020
Committees:
Audit
Compensation
|
Ms.
DeLaet most recently served as the Chief Financial Officer of O.G. Energy (“OGE”)
from 2018 until 2019. OGE is the energy arm of Ofer Global, a private portfolio of international
businesses principally focused on shipping, real estate, energy, banking and investments.
She served as a member of the Senior Management Committee of Ofer Global from 2004 to
2018. Ms. DeLaet also worked for Zodiac Finance, another division of Ofer Global, from
1990 to 2017 in positions of escalating authority as Vice President, Managing Director,
and for the last seven years as President. She served on the Board of Directors and as
Chair of the Audit Committee for both New Zealand Oil and Gas and Cue Energy Resources,
publicly traded companies listed respectively on the New Zealand and Australian stock
exchanges. She is currently the Director and Head of Finance for Team Image Synchronized
Skating Team (a not-for-profit organization), a role which she has had since 2014. Ms.
DeLaet holds a Bachelor of Science degree in Economics as well as a Master’s of Business
Administration degree from the Wharton School of Business.
Skills
and Qualifications
Ms.
DeLaet’s substantial experience in the shipping industry and her financial expertise make her a valuable asset to our
Board.
|
Joseph
I. Kronsberg
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg005.jpg)
Age:
40
Director
Since: 2015
Committee:
Audit
|
Mr.
Kronsberg is currently a Partner with Keyframe Capital Partners, LP. a firm focused on
energy and energy transition as well as distressed investing. He served in various roles
at Cyrus Capital Partners, L.P. from 2006 until 2021, including as Principal responsible
for certain investments in the financial, shipping and energy sectors. Previously, Mr.
Kronsberg worked at Greenhill & Co. as a generalist in its mergers & acquisitions
and restructuring departments. He currently serves as a Director of International Seaways,
Inc. Mr. Kronsberg has a Bachelor of Science degree in Economics from the Wharton School
of the University of Pennsylvania, from which he graduated summa cum laude.
Skills
and Qualifications
Mr.
Kronsberg’s financial expertise and experience in investing and investment management make him a valuable asset to our
Board.
|
Elaine
D. Luria
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg006.jpg)
Age:
47
New
Nominee
|
Ms.
Luria served as the Representative for Virginia’s Second Congressional District from
2019 until 2023. While in Congress, she served as the Vice Chair of the House Armed Services
Committee and as a member of the House Committees on Homeland Security and on Veterans’
Affairs. She also served as a member of the House Select Committee to Investigate the
January 6th attack on the United States Capitol.
In Congress, Ms. Luria championed a strong military, supporting
increased defense budgets, emphasizing shipbuilding and improving key capabilities in the Pacific. Ms. Luria was instrumental in
the passage of the Promises to Address Comprehensive Toxics Act and was also a consistent voice on advanced nuclear technology.
As a member of Congress, Ms. Luria was consistently lauded as one of the most bipartisan legislators and as the “most effective”
freshman member of the House.
Before
her election, Ms. Luria served two decades in the United States Navy, retiring at the rank of Commander, serving at sea
on six ships as a nuclear-trained Surface Warfare Officer, with six deployments to the Middle East and Western Pacific,
culminating her Navy career by commanding a combat-ready unit of 400 sailors. Ms. Luria graduated from the U.S. Naval
Academy with a Bachelor of Science degree in Physics and History and received a Master’s of Engineering Management degree
from Old Dominion University.
Skills
and Qualifications
Ms.
Luria’s record of experience in both government affairs, as well as naval defense and the shipping industry, make
her an excellent candidate for our Board.
|
Samuel
H. Norton
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg007.jpg)
Age:
63
Director
since 2014
|
Mr.
Norton was appointed Chief Executive Officer and President of OSG in December 2016. Prior
to this appointment, he served as Senior Vice President and President and Chief Executive
Officer of OSG’s U.S. Flag Strategic Business Unit from July 2016 and, prior to that,
as a non-executive Director on OSG’s Board from 2014 to July 2016. In 2006 Mr. Norton
co-founded SeaChange Maritime, LLC, an owner and operator of container ships, and served
as its Chairman and Chief Executive Officer. Mr. Norton previously spent 17 years as
a senior executive officer at Tanker Pacific Management (Singapore) Pte. Ltd. In 1995,
Mr. Norton initiated and led the entry of the Sammy Ofer Group into the container segment
and acquired and operated the first container vessels in the group’s fleet. While at
Tanker Pacific, Mr. Norton also conceived and started a related business, Tanker Pacific
Offshore Terminals, which owns and operates a fleet of floating, offshore oil storage
terminals. Prior to joining the Ofer group, Mr. Norton played a lead role in the Asian
distressed assets group of the First National Bank of Boston, a position which acquainted
him with the shipping industry and the Ofer family. Mr. Norton holds a Bachelor of Arts
degree in Chinese Language and Literature from Dartmouth College.
Skills
and Qualifications
Mr.
Norton’s substantial experience in the shipping industry and his current status as Chief Executive Officer and President
of OSG make him a valuable asset to our Board.
|
John
P. Reddy
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg008.jpg)
Age:
69
Director
since 2018
Committee:
Audit
(Chair)
|
Mr. Reddy is currently a business consultant and private investor.
From 2009 until 2017, he served as the Chief Financial Officer of Spectra Energy Corporation, a premier owner and operator of pipeline
and midstream energy assets. Prior to that, he served as Senior Vice President and Chief Financial Officer of Atmos Energy Corporation,
the nation’s largest natural gas-only distributor, and in various financial roles with Pacific Enterprises Corporation. He
currently serves on the Audit Committee and the Conflicts Committee of Hess Midstream LP. and chairs the Audit Committee of Overseas
Shipholding Group, Inc. Mr. Reddy has also served as a member of PLH Group’s board from 2018 to 2022. Mr. Reddy is a graduate
of the University of California at Los Angeles and holds a Master’s of Business Administration degree from the University
of Southern California.
Skills
and Qualifications
Mr.
Reddy’s extensive experience in the energy sector, financial expertise, as well as service on the board of other publicly-traded
companies make him a valuable asset to our Board.
|
Julie
E. Silcock
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009.jpg)
Age:
66
Director
since 2018
Committees:
Compensation
(Chair)
Governance
and Risk
|
Ms.
Silcock is a Partner at CDX Advisors, a tech-enabled investment bank, since June 2020.
From 2009 to June 2020, she served as Managing Director and Co-Head of Southwest Investment
Banking at Houlihan Lokey. Prior to that, she served as Managing Director and as Founder
and Head of Southwest Investment Banking at Citigroup Global Markets, Inc. She currently
serves on the boards of MoneyGram International, Inc. (NASDAQ: MGI), a publicly traded
fintech company, Q4 Inc. (TSX: QFOR) a publicly traded capital markets platform, JC Skincare,
a privately held beauty company, and the U.S. Ski & Snowboard Foundation, a nonprofit
organization that supports winter Olympic athletes. She was formerly on the Boards of
MESA Airlines Inc. (NASDAQ: MESA), a publicly traded company, and GreenHunter Resources,
Inc. (NYSE: GRH), a publicly traded water reclamation company. Ms.Silcock earned her
Master’s of Business Administration degree from Stanford Graduate School of Business
and holds a Bachelor of Arts degree from Princeton University.
Skills
and Qualifications
Ms.
Silcock has over 35 years of Capital Markets and M&A experience in the investment banking industry, bringing extensive
financial knowledge and experience to the Board. Ms. Silcock also brings to the Board valuable knowledge of strategic
considerations including M&A, corporate governance, compensation and similar issues from her current and prior work
in investment banking and service on other publicly traded companies’ boards of directors.
|
Gary
Eugene Taylor
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg010.jpg)
Age:
68
Director
since 2014
Committees:
Governance
and Risk
|
Mr.
Taylor is a former member of the U.S. Congress, having served for 21 years until January
2011. Mr. Taylor was a senior member of the House Armed Services Committee and Chairman
of the Seapower Subcommittee, providing oversight of expenditures for Navy and Marine
Corps programs. As Chairman, Mr. Taylor worked with senior Navy leadership to develop
a 30-year shipbuilding plan. As a member of the Merchant Marine Committee, Mr. Taylor
helped guide passage of the Oil Pollution Act of 1990, the U.S. law that regulates the
shipment of petroleum products in U.S. waters. Mr. Taylor also served as a senior member
of the House Transportation and Infrastructure Committee. He co-chaired the Shipbuilding
Caucus, the Coast Guard Caucus, the National Guard and Reserve Caucus and the Expeditionary
Warfare Caucus. After leaving Congress, Mr. Taylor worked on business development for
E.N. Bisso in the ship assist business on the Mississippi River. From September 2011
until December 2013, Mr. Taylor served as a consultant for Navistar Defense on the Mine
Resistant Ambush Protected vehicle program. Mr. Taylor served as a Commissioner on the
Hancock County Port and Harbor Commission from 2012 to 2014, providing oversight for
the Port Bienville Industrial Park and Stennis International Airport in Hancock County,
Mississippi. He is a graduate of Tulane University.
Skills
and Qualifications
Mr.
Taylor’s extensive expertise in shipping regulation makes him a valuable asset to our Board.
|
The
Board recommends a vote “FOR” the election of each of the nominees for director named
in
this Proxy Statement.
INFORMATION
ABOUT THE BOARD AND CORPORATE GOVERNANCE
Corporate
Governance Guidelines. The Board has adopted Corporate Governance Guidelines (the “Guidelines”) to support the
effective functioning of the Board and its committees, to promote the interests of all stockholders, and to set expectations as
to how the Board, its committees, individual directors and management should perform their functions. The Board believes that
the ethics, character, integrity and values of OSG’s directors and senior management remain the most important aspects of quality
corporate governance. The Guidelines provide criteria for the selection of directors that include diversity. They are posted on
OSG’s website, www.osg.com, and are available in print upon request. Under the Guidelines, each director is expected to attend
all Board meetings and all meetings of committees of which the director is a member.
Board
Leadership Structure. The Guidelines provide that the Board selects the Chief Executive Officer of OSG and may select
a Chairman of the Board in the manner it considers in the best interests of OSG. The Guidelines provide that the Chairman may
be a non-management director or the CEO.
OSG
currently separates the role of CEO and Chairman, who is currently an independent director. The CEO and the Chairman are in frequent
contact with one another and with senior management. They provide advice and recommendations to the full Board for its consideration.
They each review in advance the schedule of Board and committee meetings and establish the agenda for each meeting to address
the interests and requirements of the stockholders and other stakeholders. The Board believes that the current leadership structure,
given the individuals holding the leadership positions, is in the best interests of stockholders.
The
Board, through its Governance and Risk Committee, periodically reviews the Board’s leadership structure to determine if it remains
appropriate in light of OSG’s specific circumstances and needs, current corporate governance standards, market practices
and other factors the Board considers relevant.
Board
Refreshment and Tenure. The Governance and Risk Committee identifies and recommends
to the Board qualified candidates who possess the qualities determined to be necessary and effective so as to best serve the interests
of our stockholders (see the list of criteria summarized above under “Election of Directors”). The Board understands
the value of adding directors with fresh perspectives, who possess qualities that will fit with the future strategic direction
of OSG. The Governance and Risk Committee conducts robust director succession planning that considers the criteria described above,
including diversity, and considers candidates to join our Board. The Guidelines establish an average tenure of no greater than
8 years. Considering average tenure allows OSG to benefit from both the fresh perspective provided by new members of the Board
as well as the historical context, perspective, and industry know-how that longer serving directors possess. Currently, the average
tenure of our independent directors is 6.4 years.
Independence.
Under the Guidelines, which incorporate the standards established by the NYSE, the Board must consist of a majority of independent
directors. As determined by the Board, as of the date of this Proxy Statement, all of the nominees other than Mr. Norton have
been determined to be independent for purposes of service on the Board. No relationships were identified that would bar any of
them from being characterized as independent. The Board also reviews, every quarter, relationships that directors may have with
OSG to determine whether there are any material relationships that would preclude a director from being independent.
Executive Sessions of the Board. To facilitate
free and open discussion and communication among the directors, the Guidelines provide that directors meet in executive session
without management (other than Mr. Norton) present at each regular meeting of the Board, and that at least one executive session
is for independent directors only. The non-executive Chairman must chair these executive sessions. Any non-management director
can request that an additional executive session limited to independent directors be scheduled.
Board
Oversight of Risk Management. While responsibility for managing OSG’s material risks lies with management, the Board provides
oversight of risk management directly and through its committees. Each committee reports its activities and considerations to
the full Board at every regularly scheduled quarterly meeting. The full Board reviews the risks associated with OSG’s strategic
plan at an annual strategic planning session and periodically throughout the year as part of its consideration of the strategic
direction of OSG.
At
the committee level, the Audit Committee regularly reviews the financial statements and financial and other internal controls.
Further, the Audit Committee schedules private sessions individually with certain members of management, with the internal auditors,
and with representatives of the independent registered public accounting firm at the conclusion of scheduled meetings, where aspects
of financial risk management are discussed as necessary.
The
Governance and Risk Committee manages risks associated with Board independence, corporate governance, and potential conflicts
of interest, as well as oversight over non-financial risks associated with OSG’s operations. As part of risk management, the Governance
and Risk Committee reviews OSG’s policies and protective measures against risks, such as cybersecurity and environmental matters.
The
Human Resources and Compensation Committee (the “Compensation Committee”) annually reviews executive compensation policies
and practices, employee benefits, and associated risks. The Compensation Committee conducts annual assessments of any risks associated
with OSG’s compensation policies and practices and has concluded that such policies and practices do not, individually or in the
aggregate, create risks reasonably likely to have a material adverse impact on OSG.
Both
the Audit and Compensation Committees also rely on the advice and counsel of OSG’s independent registered public accountants and
independent compensation consultants, respectively, to raise awareness of any risk issues that may arise during their reviews
of OSG’s financial statements, audit work and executive compensation policies and practices, as applicable.
Managing
risk is an ongoing process inherent in all decisions made by management. OSG has an enterprise risk management program that is
designed to ensure that risks are taken knowingly and purposefully. Management is responsible for assessing such risks and related
mitigation strategies for all material projects and initiatives of OSG submitted for consideration by the Board. The risk assessment
process seeks to identify the primary risks facing OSG and to prioritize these risks, as well as the actions necessary to mitigate
and balance these risks.
Meetings
of the Board. The Board held six meetings during 2022. Each director attended over 90% of the total number of meetings
of the Board and Board committees of which the director was a member.
Annual
Meetings of Stockholders. Directors are not required, but are strongly encouraged, to attend the annual meeting in person
or telephonically. All directors attended our 2022 Annual Meeting virtually.
Communications
with Board Members. Interested parties, including stockholders, may communicate with any director, with the Chairman,
or with the non-management directors as a group by sending a letter to the attention of such director, or the non-management directors
as a group, as the case may be, in care of OSG’s Corporate Secretary, 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602.
The Corporate Secretary opens and reviews such correspondence and forwards it (other than advertisements and other solicitations)
to the director(s) most closely associated with the nature of the communication based on Committee membership and other factors.
Code
of Business Conduct and Ethics; Other Compliance Policies. OSG has adopted the following policies:
| ● | A
Code of Business Conduct and Ethics, which is an integral part of OSG’s compliance program
and embodies the commitment of OSG and its subsidiaries to conduct operations in accordance
with the highest legal and ethical standards. This Code applies to all of OSG’s officers,
directors and employees. |
| ● | An
Insider Trading Policy that prohibits OSG’s directors and employees from purchasing
or selling securities of OSG while in possession of material non-public information or
otherwise using such information for their personal benefit. |
| ● | An
Anti-Bribery and Corruption Policy that memorializes our commitment to adhere faithfully
to both the letter and spirit of all applicable anti-bribery legislation in the conduct
of OSG’s business activities worldwide. |
| ● | A
human rights statement, which can be found on OSG’s website. |
The
Code of Business Conduct and Ethics, the Insider Trading Policy and the Anti-Bribery and Corruption Policy are posted on OSG’s
website, www.osg.com, and are available in print upon request.
Prohibition
Against Hedging and Pledging. OSG’s Insider Trading Policy prohibits the OSG’s directors and employees from hedging and
pledging any securities of OSG, including by investing in options, puts, calls, short sales, future contracts, or other derivative
instruments relating to OSG securities, regardless of whether such persons have material non-public information about OSG. In
addition, our Non-Employee Director Incentive Compensation Plan and Incentive Compensation Plan for Management prohibit incentive
awards from being pledged.
Other
Directorships and Significant Activities. OSG values the experience directors bring from other boards of directors on
which they serve but recognizes that board service presents significant demands on a director’s time and availability and may
present conflicts and legal issues. The Guidelines provide that non-management directors refrain from serving on the boards of
directors of more than four publicly traded companies (other than OSG or a company in which OSG has a significant equity interest)
absent special circumstances. A member of the Audit Committee may not serve on more than two other audit committees of publicly
traded companies.
The
Guidelines require the CEO and other members of senior management to receive the approval of the Governance and Risk Committee
before accepting any outside board membership. The Guidelines prohibit the CEO from serving on the board of directors of more
than one publicly traded company (other than OSG or a company in which OSG has a significant equity interest).
If
a director’s principal occupation or business association changes substantially, that director is required by the Guidelines to
inform the Chairman of the Governance and Risk Committee of the change and offer to resign from the Board. In such case, such
Committee must recommend to the Board the action, if any, to be taken with respect to the offer of resignation, taking into account
the appropriateness of continued Board membership.
Committees
The
Board has three standing committees: the Audit Committee, the Governance and Risk Committee, and the Compensation Committee. Each
of these committees has a charter that is posted on OSG’s website, www.osg.com, and is available in print upon request.
Audit Committee. The Audit Committee is required to have
no fewer than three members, all of whom must be and are independent directors in accordance with SEC and NYSE rules, as well as
under the standards set forth in the Guidelines. During 2022, the Committee consisted of Messrs. Reddy (Chair) and Kronsberg, and
Ms. DeLaet. The Board affirmatively determined that each member of the Committee was independent and qualified as an audit committee
financial expert, both as defined by rules of the SEC and NYSE. The Audit Committee met eight times in 2022. The Committee meets
frequently in executive session, without any members of management present, to confer with the independent registered public accounting
firm, and internal auditors. It also meets separately with executive management.
The
Audit Committee oversees OSG’s accounting, financial reporting process, internal controls, and audits and consults with management,
internal auditors, and our independent registered public accounting firm on, among other things, matters related to the annual
audit, the accounting principles applied to the financial statements, and the oversight of financial risk associated with OSG’s
operations.
The
Audit Committee retains OSG’S independent registered public accounting firm, subject to stockholder ratification (although the
stockholder vote is not binding). The Committee may in its sole discretion terminate the engagement of the firm and direct the
appointment of another independent auditor at any time if it determines that such an appointment would be in the best interests
of OSG and our stockholders. The Committee maintains direct responsibility for the compensation and oversight of the independent
registered public accounting firm and evaluates its qualifications, performance, and independence. The Committee has established
policies and procedures for the pre-approval of all services provided by the independent registered public accounting firm.
Governance and Risk Committee. The Governance and Risk
Committee is required to have no fewer than three members, all of whom must be and are independent directors under the standards
set forth in the Guidelines. During 2022, the Committee consisted of Ms. Manuel (Chair), Ms. Silcock, and Mr. Taylor. The Board
affirmatively determined that each member of the Committee was independent. The Governance and Risk Committee met four times in
2022.
The
Governance and Risk Committee evaluates prospective nominees for election to the Board who are identified or referred by other
Board members, management, stockholders or external sources and all self-nominated candidates, and recommends to the Board those
individuals the Committee believes are best qualified to serve on the Board. The Committee will consider recommendations for director
nominees from stockholders made in writing to the following address: Corporate Secretary, Overseas Shipholding Group, Inc., 302
Knights Run Avenue, Suite 1200, Tampa, Florida 33602.
The Committee uses the same criteria for evaluating candidates nominated
by stockholders and self-nominated candidates as it does for those proposed by other Board members, management, and search consultants.
This Committee also reviews and recommends to the Board changes to the Guidelines and leads the annual review of the Board’s performance.
The
Governance and Risk Committee provides oversight over non-financial risks associated with OSG’s operations, including environmental,
social, and governance strategies, policies and practices, cybersecurity risk mitigation, as well as our vessels’ adherence to
environmental and regulatory requirement.
Compensation
Committee. The Compensation Committee is required to have no fewer than three members, all of whom must be and are independent
directors under the standards set forth in the Guidelines. During its current term, the Compensation Committee consisted of Ms.
Silcock (Chair), Ms. DeLaet, and Ms. Manuel. The Board affirmatively determined that each member of the Committee was independent
under applicable rules of the NYSE, SEC, and Internal Revenue Code. The Compensation Committee met eight times in 2022.
The
Compensation Committee establishes, oversees, and carries out OSG’s compensation philosophy and strategy, and assesses compensation-related
risks. It implements the Board’s responsibilities relating to the compensation of our executive officers and seeks to ensure that
they are compensated in a manner consistent with the philosophy and competitive with its peers. This Committee monitors and oversees
the preparation of the section entitled “How We Compensate Our Executives” for inclusion in OSG’s annual proxy statements.
Related
Party Transactions
Related
party transactions may present potential or actual conflicts of interest or create the appearance that decisions are based on
considerations other than the best interests of OSG and our stockholders. Our Code of Business Conduct and Ethics requires all
directors, officers and employees who may have a potential or apparent conflict of interest to disclose fully all the relevant
facts to OSG’s legal department any time they arise. Any proposed transaction or relationship that could be viewed as a potential
conflict is carefully reviewed, with those determined to be related party transactions reported to the Board for consideration.
If the related party is a director, that director will not participate in the consideration. In deciding whether to approve the
proposed related party transaction, the Board will determine whether the transaction is on terms that could be obtained in an
arm’s length transaction with an unrelated third party and if the transaction is in the best interest of the stockholders and
OSG. If the related party transaction is not on such terms, it will not be approved. In addition, every quarter, our Corporate
Secretary determines whether any related party transactions have occurred and reports the findings to the Audit Committee. In
addition to this reporting requirement, in order to affirmatively seek to identify related party transactions, each year we require
our directors and executive officers to complete questionnaires identifying any transactions with OSG in which the director or
officer has an interest. There were no related party transactions in 2022.
DIRECTOR
COMPENSATION
Our
non-employee directors receive annual cash retainers, with additional annual cash retainers for service as a committee member
or chair or for services as Board Chair. In addition, each non-employee director receives an annual award of restricted stock
units, or RSUs, under the Non-Employee Director Incentive Compensation Plan (the “Director Plan”), which permits the
grant of various types of equity-based awards to directors. Directors receive an annual grant of time-based RSUs on the date of
each annual meeting, with the number of RSUs being equal to the value shown in the table below divided by our closing stock price
on the date of grant. No additional fees are paid for attendance at any Board or committee meetings.
For 2022, the following sets forth the annual cash retainers
and RSU values for our non-employee directors:
Board
Position |
Annual
cash
retainer
$ |
Annual
RSU
awards*
$ |
Board
membership (non-management directors only) |
65,000 |
85,000 |
Board
Chair |
115,000 |
127,000 |
Audit
Committee Chair |
18,000 |
n/a |
Audit
Committee member |
9,000 |
n/a |
Compensation
Committee Chair |
14,000 |
n/a |
Compensation
Committee member |
8,000 |
n/a |
Governance
and Risk Committee Chair |
14,000 |
n/a |
Governance
and Risk Committee member |
8,000 |
n/a |
*
Rounded to the nearest 100 shares
The
following table shows the total compensation paid to OSG’s non-employee directors during calendar year 2022:
Name |
Retainers
earned or
Paid
in Cash ($)(1)
|
Stock
Awards
FMV
($)(2)
|
Total
($) |
Rebecca
DeLaet |
77,500 |
85,000 |
162,500 |
Joseph
I. Kronsberg |
69,500 |
85,000 |
154,500 |
Anja
Manuel |
86,000 |
85,000 |
171,000 |
John
P. Reddy |
86,500 |
85,000 |
171,500 |
Julie
E. Silcock |
87,500 |
85,000 |
172,500 |
Gary
Eugene Taylor |
76,500 |
85,000 |
161,500 |
Douglas
D. Wheat |
115,000 |
127,000 |
242,000 |
| (1) | Consists
of annual retainers for Board and, if applicable, Committee service. |
| (2) | The
grants, made on May 27, 2022, were of time-based RSUs, and are scheduled to vest on May 27, 2023, subject to the continued service
of each director. Mr. Wheat received a grant of 60,000 time-based RSUs. Each other non-employee director received a grant of 40,700
time-based RSUs. |
OSG
encourages stock ownership by directors in order to align their interests with those of our stockholders. To further stock ownership
by directors, the Board believes that regular grants of equity compensation should be a significant component of director compensation.
The
Board has in place stock ownership guidelines for non-employee directors. Under the stock ownership guidelines, each non-employee
director is expected within five years of becoming a director, to own shares of the OSG’s Class A Common Stock with a market value
equal to at least three times the annual cash retainer for Board service. The directors are in compliance with these guidelines.
HOW
WE COMPENSATE OUR EXECUTIVES
This
section provides information regarding the compensation program for 2022 for individuals who served as executive officers and
who are listed in the Summary Compensation Table (collectively, the “Named Executive Officers” or “NEOs”).
Our NEOs for 2022 are:
Name |
Position |
Mr.
Samuel H. Norton |
President,
Chief Executive Officer and Director |
Mr.
Richard L. Trueblood |
Vice
President and Chief Financial Officer |
Mr.
Patrick J. O’Halloran |
Vice
President and Chief Operations Officer |
As
noted elsewhere in this Proxy Statement, OSG qualifies as a “Smaller Reporting Company,” or “SRC,” under SEC
rules. As a Smaller Reporting Company, we are permitted to provide reduced disclosures in this Proxy Statement, including those
relating to executive compensation. Among other things, we are no longer required to have a Compensation Discussion and Analysis.
Nevertheless, we are providing the following information to be transparent to our stockholders on how we compensate our executives.
This section describes our compensation philosophy, the objectives of our executive compensation program and policies, the elements
of the compensation program and how each element fits into our overall compensation philosophy and strategy.
Executing
on Strategy: Our 2022 Performance
The
performance measures for our 2022 compensation program were set by our Compensation Committee in the midst of significant uncertainty
as the COVID-19 pandemic continued to have significant impacts on our business and Russia had just invaded Ukraine. These developments
greatly disrupted the market demand for our services, and the Committee was unable to predict the duration and severity of these
developments on our business. In the face of these developments, our executives acted quickly to reactivate our fleet and recruit
mariners and they were also successful in focusing on the execution of our long-term business strategies. Always, safety and quality
are the key focuses of our operations, with a foundation of corporate culture that continuously seeks to achieve the highest standards
in protecting the environment and ensuring the health and safety of all of our employees. We have issued a Sustainability Report
contemporaneously with our Annual Report and this Proxy Statement which states our commitment to reducing our carbon footprint
and to making cultural changes that will provide benefits to our human capital.
The
narrative that follows describes the compensation program for 2022, which was designed by our Compensation Committee to incentivize
our executives to achieve our strategic and operational goals. The compensation program is heavily weighted on performance-based
measures.
Say
on Pay Results - Consideration of Stockholder Feedback
At
our 2022 annual meeting of stockholders, 99.26% of the stockholders who voted on the say-on-pay proposal were in favor of our
executive compensation program. We believe that this level of support reflects our stockholders’ belief that our compensation
program is effective and reasonable.
Summary
of the 2022 Compensation Program
The
2022 compensation program mirrored the structure and metrics used for 2021. The Compensation Committee determined that the elements
of the program remained consistent with the Company’s philosophy and would appropriately motivate the executive officers.
The annual incentive compensation program continued using the objective, performance-based metrics of free cash flow (“FCF”)
and selling, general and administrative (“SG&A”) costs measured over a one-year performance period. The long-term
equity grants also continued, with a mix of time-based and performance-based grants using total shareholder return (“TSR”)
and return on invested capital (“ROIC”) performance metrics.
The
following table is the mix of compensation approved by the Compensation Committee for the 2022 compensation program:
|
|
Short
Term Incentives |
Long
Term Incentives |
NEOs |
2022
Base Salary |
Annual
Cash Incentives
as a % of salary |
Annual
Equity Grants
as a % of salary |
Samuel
H. Norton |
$425,000 |
100% |
250% |
Richard
L. Trueblood |
$325,000 |
65% |
100% |
Patrick
J. O’Halloran |
$300,000 |
65% |
100% |
In
addition, in March 2022, the Compensation Committee implemented a retention program to recognize the efforts and high performance
of our executives, including their efforts to remain in compliance with our financial covenants during the peak period of the
COVID-19 pandemic, which had a significant negative impact on our business. See details under “2022 Retention Grant Program”
below.
OUR
COMPENSATION PRINCIPLES, COMPONENTS AND PRACTICES
Our
Executive Compensation Philosophy and Practices
We
believe that a well-designed compensation program is a powerful tool to attract, motivate, retain and reward top executive and
managerial talent and that it should also align the interests of our executive officers with those of our stockholders. We have
structured our compensation program to drive and support these objectives:
Overall
Objectives |
|
– |
Attract,
motivate, retain and reward highly talented executive officers and managers, whose leadership and expertise are critical to
our overall growth and success |
|
– |
Align
the interests of our executive officers with those of our stockholders |
|
– |
Support
the long-term retention of OSG’s executive officers to maximize continuity of management and overall effectiveness |
|
– |
Compensate
each executive officer within the range of competitive practice (1) within the marketplace for talent in which we operate;
(2) based upon the scope and impact of his or her position as it relates to achieving our corporate goals and objectives;
and (3) based on the potential of each executive officer to assume increasing responsibility within OSG |
|
– |
Discourage
excessive or imprudent risk-taking |
|
– |
Reward
the achievement of both the short-term and long-term strategic objectives necessary for sustained optimal business performance |
|
|
|
|
Pay Mix
Objectives |
|
– |
Provide
a mix of both fixed and variable (“at-risk”) compensation, each of which has a different time horizon and payout
form (cash and equity), to reward the achievement of annual and sustained, long-term performance |
|
– |
Use
our incentive compensation program and plans to align the interests of our executive officers with those of our stockholders
by linking incentive compensation rewards to the achievement of performance goals that maximize stockholder value by: |
|
|
* seeking
to ensure that our compensation program is consistent with, and supportive of, our short- and long-term strategic, operating
and financial objectives |
|
|
* placing
a significant portion of our executive officers’ compensation at risk, with payouts dependent on the achievement of
both corporate and individual performance goals, which are set by the Compensation Committee |
|
|
* encouraging
balanced decision-making by employing a variety of performance measures to avoid over-emphasis on the short-term or any one
metric |
Executive
Compensation Practices: What We Do and What We Do Not Do
The
following table summarizes some of the key features of our executive compensation program.
|
What
We Do |
|
|
What
We Don’t Do |
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009a.jpg) |
Utilize compensation
benchmarking - We review publicly available information to evaluate how our executive compensation opportunities compare
to those for similar positions at comparable companies |
|
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009b.jpg) |
No hedging and
no pledging - Board members, executive officers and other employees are prohibited from engaging in hedging transactions
or pledging OSG stock per our Insider Trading Policy |
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009a.jpg) |
Pay
for performance - A significant portion of compensation is at risk, including compensation that is stock and/or performance
based, tied to pre-established performance goals aligned with our short-term and long-term objectives |
|
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009b.jpg) |
No automatic or
guaranteed pay - Salary increases and incentive payments are not guaranteed |
|
|
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009b.jpg) |
No tax gross ups
- We do not provide for any tax reimbursements or tax gross-ups |
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009a.jpg) |
Compensation recoupment
policies - We maintain a strict compensation recoupment (clawback) policy |
|
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009b.jpg) |
No special retirement
programs - We do not offer a supplemental executive retirement plan |
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009a.jpg) |
Stock ownership
guidelines - Our Board has established robust stock ownership guidelines for executive officers and directors |
|
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009b.jpg) |
No stock option
re-pricing - We do not allow discounted stock options, reload stock options or stock option re-pricing without stockholder
approval |
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009a.jpg) |
Independent compensation
consultant - The Compensation Committee engages an independent compensation consulting firm to review and provide recommendations
on our executive compensation program |
|
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009b.jpg) |
No dividends on
unvested equity- Dividend equivalents are accrued but not paid on all unvested equity grants. For Performance-based
RSUs (“PRSUs”), no dividends are paid until the performance conditions are satisfied and the PRSUs vest |
|
|
|
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg009b.jpg) |
No perquisites
- We do not provide any executive perquisites |
Compensation
Risk Mitigation
The
Compensation Committee annually assesses risks that may be present in our compensation program and has concluded that our compensation
policies and practices do not create risks that are reasonably likely to have a material adverse effect on OSG. Because the Compensation
Committee believes that a significant portion of our executive officers’ total compensation should be variable and “at
risk”, the Committee uses a mix of performance measures and goals in our incentive compensation program with the objective
of balancing our short- and long-term goals and discouraging excessive or inappropriate risk-taking by eliminating any inducement
to over-emphasize one goal to the detriment of others. To further mitigate excessive risk taking, we have adopted the following:
Stock
Ownership
Guidelines |
|
Our
Corporate Governance Guidelines include stock ownership guidelines for our directors and executive officers. The minimum levels
of ownership for each position are as follows: |
|
|
|
Value of Shares Owned |
|
|
Position |
(Multiple of Salary
/ Annual Retainer) |
|
|
Non-Employee Directors |
3x (Annual Retainer) |
|
|
President / Chief Executive Officer |
5x |
|
|
Chief Financial Officer |
3x |
|
|
Officers (other than CEO and CFO) |
1.5x |
|
|
|
|
|
Directors and executive officers have five years from the time they first become eligible to participate
in OSG’s equity plans to come into compliance. At least fifty percent of the director or executive officer’s shares
must be retained until the ownership guidelines have been met, after accounting for any sales of shares to cover tax expenses. Each
of our directors and executive officers is expected to meet the applicable guideline in a timely manner while affiliated with the
Company. |
|
|
|
|
|
For purposes
of these stock ownership guidelines, ownership comprises all shares of Class A Common Stock held by the director or executive
officer, and his or her spouse, and minor children, including: |
|
- Shares deemed
to be beneficially owned under federal securities laws; |
|
- Any time-based
restricted stock or RSUs awarded (whether or not vested); |
|
- Any vested, in-the-money
stock options; and |
|
|
- Any stock held
for the employee’s benefit in any pension or 401(k) plans. |
|
|
|
|
|
Recoupment
“Clawback”
Policy |
|
Our Incentive
Compensation Recoupment Policy provides that in the event OSG is required to prepare an accounting restatement due to material
noncompliance with any financial reporting requirement under the federal securities laws, then OSG shall recoup the amount
of erroneously awarded incentive compensation paid to any executive officer during the three completed fiscal years immediately
preceding the date that OSG is required to prepare the accounting restatement, based on the Board’s good faith determination
that such amounts would not have been payable and determination of the practicability and cost effectiveness of pursuing the
recoupment.. We are aware that new rules regarding clawback policies were recently introduced, and we intend to
review and update our current policy, if and as needed, to be compliant with these new rules |
|
|
|
|
|
No
Hedging |
|
Our Insider
Trading Policy prohibits hedging, including investing in options, puts, calls, short sales, futures contracts, or other derivative
instruments relating to Company securities, regardless of whether such persons have material nonpublic information about OSG. |
|
|
|
No
Pledging |
|
Our Insider
Trading Policy and our stock incentive plans prohibit pledging by our non-employee directors and all employees. |
|
|
|
Equity Plan
Features |
|
Our
stock incentive plans do not permit repricing or cash buyouts of underwater options or stock appreciation rights without stockholder
approval. The Compensation Committee believes our stock incentive plans are structured so as to avoid problematic
pay practices and do not contain features that could be detrimental to stockholder interests. |
Roles
in Setting Executive Compensation
Role
of the Compensation Committee
The
primary role of our Compensation Committee, which consists entirely of independent directors, is to establish our compensation
philosophy and strategy and to provide our executives with compensation opportunities consistent with the philosophy and strategy.
The Committee takes many factors into account when making compensation decisions with respect to our executives, including the
individual’s performance and experience; the ability of the individual to affect our long-term growth and success; OSG’s
overall performance; internal equity among the executives; and external, publicly available market data on competitive compensation
practices and levels. The Committee typically establishes the annual compensation program during the first quarter of each fiscal
year, setting specific annual and long-term Company goals and designing the compensation program for that year to support and
reward the achievement of those goals. In setting the compensation for our executive officers, other than the CEO, the Committee
considers, among other things, the recommendations of our CEO. The Committee is solely responsible for making all decisions on
the compensation of our executives.
The
Compensation Committee meets in executive session on a quarterly basis, and otherwise, as necessary for discussions or decisions
regarding executive compensation.
Role
of Compensation Consultant
The
Compensation Committee engaged Lyons Benenson & Company Inc. (“LB&Co”) in 2022 as its independent compensation
consultant to assist and advise the Committee on all aspects of OSG’s executive and director compensation programs and related
corporate governance matters. LB&Co does not provide other services to OSG or its executive officers. LB&Co was retained
directly by the Committee, which, in its discretion, has the sole authority to select, approve, retain, terminate, and oversee
its relationship with its consultant. In selecting its compensation consultant, the Committee considered the independence of LB&Co
in accordance with the standards of the NYSE, applicable rules and regulations of the SEC and other laws relating to the independence
of advisors and consultants. The Committee determined that the work of LB&Co did not raise any conflict of interest in 2022.
A
representative of LB&Co. attended all meetings of the Compensation Committee in 2022.
Role
of the CEO in Setting Compensation
Decisions
relating to the CEO’s performance and compensation are made by the Compensation Committee in executive session. In making
determinations regarding compensation for the other executive officers, the Committee generally considers the recommendations
of the CEO and the advice received from LB&Co. In making his recommendations, the CEO evaluates the performance of each executive,
considers each executive’s compensation in relation to our other officers and assesses retention risks. The Committee then
reviews, modifies (as appropriate) or approves these recommendations and either reports the results to the Board or recommends
actions for the Board to approve.
Components
of Named Executive Officer Compensation
The
Compensation Committee reviews each element of compensation annually to ensure alignment with our compensation philosophy and
objectives, as well as to assess our executive compensation program and levels relative to the competitive landscape. Our executive
compensation program for 2022 consisted of the following:
|
Elements |
|
What
It Is |
|
Objective/
Purpose |
Fixed |
Base
Salary |
|
Fixed
amount for service during the year and time in position |
|
Rewards
scope of responsibility, experience and individual performance. |
At-Risk |
Annual
Incentive Compensation |
|
At-risk
and dependent on Company and individual goal achievement |
|
Promotes
strong business results by rewarding value drivers, without creating an incentive to
take excessive risk.
Serves
as key compensation vehicle for rewarding results and differentiating individual performance each year
|
Long-Term
Incentive Compensation (Equity) |
|
Equity
grants are split between time-based and performance based RSUs |
|
Performance
metrics create incentives to outperform peers or reward performance versus plan |
|
TSR
PRSUs are payable in shares of Class A Common Stock upon vesting based on 3-year relative TSR ranking |
|
Three-year
performance period aligns pay with performance over an extended period of time |
|
ROIC
PRSUs are payable in shares of Class A Common Stock upon vesting based on 3-year ROIC
achievement
|
|
Provides
executives with a significant stake in the long-term financial success of OSG, aligned with stockholder interests |
|
|
|
2022
Retention Grant payable in cash and shares with vesting over a 3-year period
|
|
Granted
to address retention risk.
|
|
|
|
Time-based
RSUs |
|
Portions
vest annually over a three year term. |
Benefits |
Retirement,
Health and Welfare |
|
401k
plan with Company match and
competitive health and welfare benefits |
|
Provides
market competitive benefits to attract and retain top talent. |
|
|
|
|
Severance |
Severance
Arrangements - Termination Due to Change in Control (Double-Trigger) |
|
Severance
and related benefits paid upon termination without cause or resignation for good reason following a change in control |
|
Preserves
objectivity when considering transactions in the best interest of stockholders
Equity
provisions keep each executive officer whole in situations where shares may no longer exist, or awards cannot otherwise
be replaced
|
|
Accelerated
equity vesting upon termination post-change in control |
|
Retains
executive officers through a change in control |
|
|
Allows
OSG to obtain releases of employment-related claims |
|
|
Assists
in attracting top talent |
Severance
Arrangements - Termination without cause or for Good Reason |
|
Severance
and related benefits paid upon termination without cause or resignation for good reason |
|
The
severance benefits (cash and equity) are designed to assure executive officers of compensation
in the event of the loss of employment
Assists
in retaining top talent
|
Named
Executive Officer Compensation Mix
The
charts below depict the mix of those elements of the 2022 compensation program that are at-risk, such as the cash payment under
our Annual Incentive Program (as discussed below) and time and performance-based equity grants, compared to the fixed base salary
for the CEO and the NEOs. These charts exclude the 2022 Retention Grant.
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg011.jpg)
Base
Salary
We
strive to pay base salaries that are market-competitive for a company of our size so as to attract and retain talented executives
and to provide a secure fixed level of compensation. The Compensation Committee regularly reviews the base salaries of our executive
officers and compares them to the salaries of senior management among the peer group as well as other regional market data, bearing
in mind that total estimated direct compensation opportunity is the principal comparative measure of the competitiveness of our
program. Based on its own experience and such comparison, the Committee determines whether the salaries of the executive officers
are at levels sufficient to attract, motivate and retain, in concert with other elements of compensation, the executive officers
who are essential to leading OSG and driving stockholder value.
2022
Annual Incentive Program for the Executive Officers
At
our 2019 Annual Meeting of Stockholders, our stockholders approved the 2019 Incentive Compensation Plan for Management (the “Plan”)
which now governs all incentive awards given by OSG.
The
Annual Incentive Program for 2022 (“Annual Incentive Program”) is consistent with our compensation philosophy, meets
the requirements of the Plan, and is in line with compensation practices within OSG’s peer group.
The
following summarizes the design of the Annual Incentive Program for the executive officers, which is the same design adopted by
the Compensation Committee for 2020 and 2021.
| • | A
pool of funds was established using the metric of FCF, a non-GAAP measure, with the amount
of the pool calculated based on a pre-determined formula, setting forth threshold, target
and maximum levels of achievement, and containing a SG&A multiplier (the “Pool”).
We define FCF as EBITDA less capital expenditures. See the section “Non-GAAP Financial
Measures” for further details. |
| • | The
FCF funding formula is based upon the budget approved by the Board of Directors, with
the formula increasing or decreasing from 100% of target incentive amounts depending
on achievement. A 15% increase or decrease in FCF will increase or decrease the payout
potential by 50%. A decrease of greater than 15% reduces the target payout to 0%. |
| • | The
calculation of the Pool excludes the impact (positive and/or negative) of unusual, non-recurring
or extraordinary items or expenses; charges for restructurings; discontinued operations;
and acquisitions or divestitures. |
| • | Achievement
is tied to whether a “safety incident” has occurred. A “safety incident”
is defined as: A major safety and/or containment incident which results from negligence
or misconduct of management or results from a material violation of state or federal
operation, safety or construction regulations or if the responsible party fails to report
the incident or to cooperate with the relevant authorities in responding to such incident. |
| • | Target
achievement levels for each participant in the Annual Incentive Program were established
by the Compensation Committee as a percentage of salary, as set forth in the table below.
|
Achievement
of performance is measured based upon the calculation of the Pool, as described above, and consideration of individual goals approved
in advance by the Compensation Committee for each of the executive officers as described in the table below. Following the end
of the performance period, the Compensation Committee certified the FCF formula and evaluated each of the NEO’s individual performance
to determine the achievement level. The outcome of this analysis and evaluation of performance for the Annual Incentive Program
is set forth in the final column:
NEO |
GOALS |
TARGET |
ACHIEVEMENT
LEVEL |
Samuel
H. Norton |
● Maximize the utilization of the fleet and time charter equivalent (“TCE”) Results
● Promote safety culture and environmental stewardship
● Lead the Environmental, Social and Governance (“ESG”) strategy
● Lead efforts to develop plan for transitioning towards a lower carbon intensive operational future
● Lead industry and government partners in standing up the Tanker Security Program
|
100%
of Base Salary |
150%
of Target |
Richard
L. Trueblood |
● Maintain and expand relationships with capital providers
● Lead the long-term financial strategy
● Prepare for the transition of the accounting and financial control system to the new enterprise software system
|
65%
of Base Salary |
150%
of Target |
Patrick
J. O’Halloran |
● Lead safety and operational performance across the fleet and harmonize best practices
● Lead the development of strategies to reduce OSG’s carbon footprint
● Oversee the transition of operations, quality and purchasing departments to the new enterprise software system
● Maximize the efficient management of dry dock costs
|
65%
of Base Salary |
150%
of Target |
Long
Term Incentives
The
Compensation Committee determined to continue to grant performance-based RSU awards that are tied to TSR and cumulative ROIC metrics,
with vesting after a three-year period ending on December 31, 2024. These awards are subject to the achievement of performance
goals based on OSG’s three-year TSR relative to the three-year TSR of the Oil & Gas Storage & Transportation and Marine
GICS Sub-Industries, and OSG’s ROIC relative to our budgeted ROIC for the performance period. ROIC is net operating profit after
taxes divided by the net of total debt plus stockholder equity less cash.
Each
type of grant and the grant date values are shown in the table below. Please refer to the Summary Compensation Table and the Outstanding
Equity Awards at Fiscal Year-End Table for additional details regarding these grants:
NEOs |
Total
Grant Date Value
(1) |
|
Time-Based
RSUs
(2) |
|
Performance-Based
RSUs TSR/ROIC
(3) |
|
Samuel
H. Norton |
$ |
1,062,500 |
|
$ |
531,250 |
|
$ |
531,250 |
|
Richard
L. Trueblood |
$ |
325,000 |
|
$ |
162,500 |
|
$ |
162,500 |
|
Patrick
J. O’Halloran |
$ |
300,000 |
|
$ |
150,000 |
|
$ |
150,000 |
|
| (1) | Represents
the grant date value of the awards made on March 24, 2022.The grant date value was set
at 100% of Mr. Trueblood’s and Mr. O’Halloran’s base salary and 250% of Mr. Norton’s
base salary. |
| (2) | Represents
RSUs, one-third of which vested on March 24, 2023, and one-third of which will vest on
each of March 24, 2024, and 2025. |
| (3) | The
performance metrics governing these performance-based RSU grants are TSR and ROIC. Achievement
relative to these goals will be measured at the conclusion of the three-year performance
period (2022 - 2024) to determine the extent to which the performance-based RSUs will
vest. |
Performance-Based
RSU Awards
The
2022 PRSU awards for TSR and ROIC have three-year performance periods that end on December 31, 2024, subject to the achievement
of the respective performance metrics. The vesting of these awards is subject to the Compensation Committee’s certification
of the achievement of the articulated goals following the conclusion of the performance period.
Vesting
of the TSR awards is in accordance with the following schedule, using linear interpolation for achievement between the 40th and
50th percentiles and between the 50th and 75th percentiles:
Total
Shareholder Return (TSR)
Company
TSR relative to the TSR of
the companies in the Index |
Percentage
of target RSUs that vest and
become non-forfeitable |
Below
40th Percentile |
—% |
40th
Percentile |
50% |
50th
Percentile |
100% |
75th
Percentile or above |
150% |
In
the event that OSG’s three-year TSR is greater than the median of the Index but still negative, a maximum of 100% of the target
number of PRSUs governed by TSR may be earned. That is, there would be no upside for greater than target achievement if OSG’s
three-year TSR is negative. Should OSG reach the threshold level of performance for the performance period, 50% of the target
number of TSR PRSUs would be earned.
Achievement
of the ROIC awards is in accordance with the following schedule, using linear interpolation between 80% and 100% attainment and
between 100% and 120% attainment of the performance goal:
Return
on Invested Capital (ROIC)
Performance
attainment
(as a % of performance goal) |
Percentage
of target PRSUs that vest and
become non-forfeitable |
Below
80% |
—% |
80% |
50% |
100% |
100% |
120%
or above |
150% |
2022
Retention Grant Program
The
Compensation Committee was concerned about the retention of the executive officers and desired to recognize their significant
efforts and high performance managing the business during the COVID-19 pandemic. The Committee evaluated the compensation that
the executive officers would receive under the regular program, and determined that an additional award was necessary to achieve
the intention of the compensation program goals. Careful consideration was given for each executive officer of the design of the
award, the performance period, the total value, and the mix of cash and stock.
The
2022 Retention Grant was made pursuant to the authority and terms of the Plan, which was approved by our stockholders at our 2019
Annual Meeting of Stockholders. This Plan now governs all incentive awards to be granted.
The 2022 Retention Grant will have a total value of $1.87M for the executive officers. Payout will be in cash and equity. The
Grant is time-based with vesting over a three-year period on the anniversary of the grant date of March 24, 2022. The vesting
schedule is:
- 20% vesting of both the equity and cash portions of the grant on the 1st anniversary;
- 30% vesting of both the equity and cash portions of the grant on the 2nd anniversary; and
- 50% vesting of both the equity and cash portions of the grant on the 3rd anniversary.
The
table below sets forth all of the components of the 2022 Retention Grant. The number of shares was determined using the 20-day
volume weighted average price ending March 23, 2022 which was $2.09.
2022
Retention Grant
|
Vest
March 24, 2023
|
Vest
March 24, 2024
|
Vest
March 24, 2025
|
NEOs |
Cash |
Equity |
Total |
Cash |
Shares |
Cash |
Shares |
Cash |
Shares |
Norton |
$ 275,000 |
$ 856,000 |
$ 1,131,000 |
$ 55,000 |
81,914 |
$ 82,500 |
122,871 |
$ 137,500 |
204,785 |
Trueblood |
$ 300,000 |
$ 96,300 |
$ 396,300 |
$ 60,000 |
9,125 |
$ 90,000 |
13,823 |
$ 150,000 |
23,038 |
O’Halloran |
$ 260,000 |
$ 89,880 |
$ 349,880 |
$ 52,000 |
8,601 |
$ 78,000 |
12,901 |
$ 130,000 |
21,502 |
Total |
$ 835,000 |
$ 1,042,108 |
$ 1,877,180 |
$ 167,000 |
99,730 |
$ 250,500 |
149,595 |
$ 417,500 |
249,325 |
CEO
Employment Agreement
Mr.
Norton’s Employment Agreement (the “CEO Employment Agreement”) became effective on December 15, 2018 and will continue
until the earliest of Mr. Norton’s death, disability, termination (whether or not for cause), or voluntary resignation (whether
or not for good reason). The CEO Employment Agreement requires that Mr. Norton be nominated annually for election to OSG’s Board
of Directors and provides for annual cash and long-term equity incentive compensation opportunities and other benefits, as summarized
in the following chart:
Annual
Base Salary |
No
less than $425,000. |
Annual
Incentive
Opportunity |
● Eligible for a target bonus equal to 100% of salary payable in cash based on achieving predetermined performance criteria,
with threshold and maximum determined annually |
Long-Term
Incentive
Opportunity |
● Grant date value equal to at least 250% of base salary at target
● The number of shares to be granted to be determined based upon a volume weighted average price
● Vesting
criteria applicable to all NEO equity awards to be set by the Compensation Committee at the time of grant |
Restrictive
Covenants |
● Customary restrictive covenants, including, non-competition, non-solicitation, non-disclosure, and non-disparagement. Non-competition/non-solicitation
period of 12 months from date of departure; provided, however, that in the event of a sale of all or substantially all of
the assets or equity, the non-competition provision no longer applies |
The
CEO Employment Agreement carried forward certain terms of Mr. Norton’s prior employment agreement. Mr. Norton will retain, continue
to vest in, and continue to hold equity awards granted to him prior to the date of the CEO Employment Agreement.
The
CEO Employment Agreement provides for different severance benefits under various scenarios. The following table depicts these
scenarios:
Benefit |
Upon
Separation of Service/Treatment of Leaving |
Termination
Without Cause/
Resignation With
Good Reason |
Accrued
Benefits include:
Earned but unpaid base salary
Earned,
but unpaid annual incentives, if any
Accrued
but unused vacations days, if any
Expense
reimbursement
Salary
Continuation
Twelve
(12) months base salary continuation at the salary rate in effect as of the date of termination
Annual Incentive
Annual
incentive, not pro-rated, for the year of termination, to the extent that the applicable performance goals are achieved, and annual
incentives are paid
Treatment
Of Outstanding (Unvested) Equity Compensation
Time-based
equity to accelerate and vest in full
A
pro rata portion of the performance-based equity to remain in force and vest at the conclusion of the performance period, to the
extent the performance goals are achieved and the performance-based equity vests |
Termination For
Cause/Voluntary
Resignation
(Without Good
Reason) |
Accrued
Benefits (same as stated above)
All
vested/settled equity is retained
Vested
options remain exercisable until the earlier of (i) one year from the date of termination or (ii) the expiration of the option
All
unvested equity (both time-and performance-based) to be forfeited and canceled
Restructuring
grant is subject to clawback |
Termination Due
To Death Or
Permanent
Disability |
Accrued
Benefits (same as stated above)
All
vested/settled equity is retained
Vested
options remain exercisable until the earlier of (i) one year from the date of termination or (ii) the expiration of the option
All
unvested time-based equity accelerates and vests
All
unvested performance-based equity to be forfeited and canceled |
Termination
Without
Cause/Resignation
With Good
Reason Within
Twenty-Four (24)
Months Following
A
Change In
Control
(Double
Trigger) |
Double-Trigger
Change In Control (requires both CIC and Termination for payout)
Accrued
Benefits (same as stated above)
Salary
Continuation
Twelve
months base salary continuation at the salary rate in effect as of the date of termination
Annual
Incentive
Annual
incentive, paid at target, for the year of termination
Treatment
of Outstanding (Unvested) Equity Compensation
Time-based
equity to accelerate and vest in full
Performance-based
equity subject to accelerated vesting based on deemed attainment of the maximum performance level, pro-rated for the number of
days in the performance period that have lapsed as of the Date of Separation from Service |
The
forgoing description is qualified in its entirety by reference to the CEO Employment Agreement, which is an exhibit to OSG’s Annual
Report on 10-K and is incorporated by reference herein.
Employment
Agreements with Executive Officers other than the CEO
OSG
has entered into employment agreements with Mr. Trueblood and Mr. O’Halloran, both of which contain similar terms. Each employment
agreement provides for an annual base salary and a target bonus of at least 15% of each NEO’s annual base salary. Each NEO may
receive equity awards from time to time at the discretion of the Compensation Committee, which awards will have a total target
value of at least 50% of such executive’s base salary.
The
employment agreements provide for severance benefits in the event of termination without cause or resignation for good reason
as follows: (i) accrued but unpaid amounts through the date of separation of service; (ii) 12 months’ continuation of annual base
salary; (iii) the NEO’s annual bonus for the year of separation pro-rated based on performance factor achievement and the number
of days in the fiscal year in which he was employed; and (iv) accelerated vesting of any unvested time-based equity awards.
If,
during the two-year period following a change in control of OSG, an NEO’s employment is terminated without cause or the NEO resigns
for good reason, the employment agreements provide for severance benefits as follows: (i) accrued but unpaid amounts through the
date of separation of service; (ii) 12 months’ continuation of annual base salary; (iii) the NEO’s target annual bonus for the
year of separation; and (iv) accelerated vesting of any unvested equity awards (time-based and performance-based), satisfied at
the designated maximum level and such awards shall vest pro rata based solely upon the provision of services over the performance
period.
In
the event of Death or Disability the following benefits are provided: (i) accrued but unpaid amounts through the date of separation
of service; (ii) the NEO’s annual bonus for the year of separation pro-rated based on performance factor achievement and the number
of days in the fiscal year in which he was employed; and (iii) accelerated vesting of any unvested time-based equity awards.
Each
NEO agreed to a non-competition and non-solicitation obligation during the executive officers’ employment term and for 12 months
thereafter. Each NEO also agreed to confidentiality and non-disparagement obligations during and following employment with OSG,
and to timely delivery of a release in connection with termination of the NEO’s service. Severance and other benefits are conditioned
on compliance with these covenants.
The
forgoing description is qualified in its entirety by reference to the employment agreements referred to above, which are exhibits
to OSG’s Annual Report on 10-K and are incorporated by reference herein.
Additional
Information
Benefits
In
general, we provide benefits to our employees (including our executive officers) that we believe are important to maintain a competitive
total compensation program. Benefits are designed to provide a reasonable level of retirement income and to provide a safety net
of protection against the financial concerns and catastrophes that can result from illness, disability or death.
We
provide a tax-qualified defined contribution employee benefit plan to employees known as the OSG Ship Management Inc. Savings
Plan (the “Savings Plan”). Under the Savings Plan, eligible employees may contribute, on a pre-tax basis, an amount
up to the limit imposed by the Internal Revenue Code Section 401(k). In 2022, OSG matched 100% of the first 4% of a participant’s
pre-tax contributions and then 50% of pre-tax contributions in excess of 4% but not in excess of 8%.
SUMMARY
COMPENSATION TABLE
The
Summary Compensation Table includes individual compensation information for services by the Named Executive Officers in all capacities
for OSG and our subsidiaries.
Name
and
Principal Position |
|
Year |
|
Salary |
|
|
Bonus
(1) |
|
|
Stock
Awards (2)(3)(4)(5)(6) |
|
|
Non-Equity
Incentive Plan
Compensation (7) |
|
|
All
Other
Compensation (8) |
|
|
Total |
|
Samuel H. Norton |
|
2022 |
|
$ |
425,000 |
|
|
$ |
226,200 |
|
|
$ |
1,062,500 |
|
|
$ |
637,500 |
|
|
$ |
21,126 |
|
|
$ |
2,372,326 |
|
President and |
|
2021 |
|
$ |
425,000 |
|
|
|
|
|
$ |
1,338,750 |
|
|
$ |
531,250 |
|
|
$ |
19,967 |
|
|
$ |
2,314,967 |
|
Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard L. Trueblood |
|
2022 |
|
$ |
325,000 |
|
|
$ |
79,260 |
|
|
$ |
325,000 |
|
|
$ |
316,875 |
|
|
$ |
20,434 |
|
|
$ |
1,066,569 |
|
Vice President and |
|
2021 |
|
$ |
300,000 |
|
|
|
— |
|
|
$ |
510,000 |
|
|
$ |
225,000 |
|
|
$ |
19,339 |
|
|
$ |
1,054,339 |
|
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick J. O’Halloran |
|
2022 |
|
$ |
300,000 |
|
|
$ |
69,976 |
|
|
$ |
300,000 |
|
|
$ |
292,500 |
|
|
$ |
20,434 |
|
|
$ |
982,910 |
|
Vice President and |
|
2021 |
|
$ |
265,000 |
|
|
|
— |
|
|
$ |
450,500 |
|
|
$ |
198,750 |
|
|
$ |
19,339 |
|
|
$ |
933,589 |
|
Chief Operating Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) | On
March 24, 2022, each NEO received a retention bonus grant under which each NEO would
receive cash and equity in installments, subject to vesting based on continued employment,
on the first, second, and third anniversaries of the grant. No discretionary annual bonuses
were paid with respect to 2022. The following table shows the grant to each NEO, including
the grant date value of the equity portion of the grant. |
2022
Retention Grant |
Vested
March 24, 2023 |
Vests
March 24, 2024 |
Vests
March 24, 2025 |
Name |
Cash |
Equity |
Total |
Cash |
Equity |
Cash |
Equity |
Cash |
Equity |
Samuel
H. Norton |
$275,000 |
$856,000 |
$1,131,000 |
$55,000 |
$171,200
|
$82,500 |
$256,800 |
$137,500 |
$428,000
|
Richard
L. Trueblood |
$300,000 |
$96,300 |
$396,300 |
$60,000 |
$19,260
|
$90,000 |
$28,890 |
$150,000 |
$48,150 |
Patrick
J. O’Halloran |
$260,000 |
$89,880 |
$349,880 |
$52,000 |
$17,976 |
$78,000 |
$26,964
|
$130,000 |
$44,940 |
|
(2) |
On March 24, 2022, each NEO received performance-based RSU grants, a portion of which have a TSR goal and an ROIC goal. Please refer to the Performance-based RSU Awards section under “How We Compensate Our Executives”. The TSR and ROIC awards are scheduled to vest in full as of December 31, 2024, subject to the Compensation Committee’s certification of the achievement of the performance goals at the end of the performance period. The amounts represent the aggregate grant date fair value of these grants at target, calculated in accordance with ASC 718, Compensation - Stock Compensation, as follows: $531,250 for Mr. Norton, $162,500 for Mr. Trueblood and $150,000 for Mr. O’Halloran. These awards are subject to a maximum achievement of 150%, which would result in a value of $796,875 for Mr. Norton, $243,750 for Mr. Trueblood, and $225,000 for Mr. O’Halloran. |
|
(3) |
On March 23, 2021, each NEO received performance-based RSU grants, a portion of which have a TSR goal and an ROIC goal. Please refer to the Performance-based RSU Awards section under “How We Compensate Our Executives”. The TSR and ROIC awards are scheduled to vest in full as of December 31, 2023, subject to the Compensation Committee’s certification of the achievement of the performance goals at the end of the performance period. The amounts represent the aggregate grant date fair value of these grants at target, calculated in accordance with ASC 718, Compensation - Stock Compensation, as follows: $425,000 for Mr. Norton, $127,500 for Mr. Trueblood and $112,625 for Mr. O’Halloran. These awards are subject to a maximum achievement of 150%, which would result in values of $637,500 for Mr. Norton, $191,250 for Mr. Trueblood, and $168,938 for Mr. O’Halloran. |
|
(4) |
On March 23, 2021, each NEO received a Special 2021 Grant of performance-based RSUs, Please refer to the Performance-based RSU Awards section under “How We Compensate Our Executives”. The Special 2021 Grant covered the 18-month period from January 1, 2021 to June 30, 2022 and the Compensation Committee certified its vesting at 65%. The amounts represent the aggregate grant date fair value of these grants at target, calculated in accordance with ASC 718, Compensation - Stock Compensation, as follows: $488,750 for Mr. Norton, $255,000 for Mr. Trueblood and $225,250 for Mr. O’Halloran. |
| (5) | On
March 24, 2022, each NEO received time-based equity awards, one-third of which vested
on March 24, 2023 and one-third of which will vest on each of March 24, 2024 and 2025,
subject to continued employment through the vesting date. |
| (6) | On
March 23, 2021, each NEO received time-based equity awards, one-third of which vested
on March 23, 2022 and one-third of which vested on March 23, 2023, and one-third which
will vest on March 23, 2024, subject to continued employment through the vesting date.
|
| (7) | These
amounts reflect what was actually paid under the Annual Incentive Program. Please see
“2022 Annual Incentive Program for the Executive Officers” section of “How
We Compensate Our Executives” for more details. |
| (8) | See
the “All Other Compensation Table” for additional information. |
All
Other Compensation Table
The
following table describes each component of the All Other Compensation column for 2022 in the Summary Compensation Table.
Name |
|
Savings Plan Matching Contribution
(1) |
|
|
Other
(2) |
|
|
Total |
|
Samuel
H. Norton |
|
$ |
18,300 |
|
|
$ |
2,826 |
|
|
$ |
21,126 |
|
Richard L. Trueblood |
|
$ |
18,300 |
|
|
$ |
2,134 |
|
|
$ |
20,434 |
|
Patrick J. O’Halloran |
|
$ |
18,300 |
|
|
$ |
2,134 |
|
|
$ |
20,434 |
|
(1) | Constitutes
OSG’s matching contributions under the Savings Plan. |
(2) | Represents
OSG’s contribution toward excess liability insurance coverage premiums. |
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
The
following table provides information concerning equity awards held by the Named Executive Officers as of December 31, 2022. This
table includes unexercised and unvested option and stock awards. The market value of the stock awards is based on the market price
of OSG’s Class A Common Stock at the close of business on December 31, 2022, which was $2.89 per share.
Name |
Grant
Date |
Number
of Securities
Underlying
Unexercised
Options
Exercisable
(#) |
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#) |
|
Option
Exercise
Price |
|
Option
Expiration
Date |
|
Number
of
Shares or
Units of Stock
That Have Not
Vested
(#) |
|
|
|
Market
Value of
Shares or Units of
Stock That Have
Not Vested
($) |
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or Other
Rights
that Have
Not
Vested (#) |
|
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value
of Unearned
Shares,
Units or
Other
Rights that
Have
Not Vested ($) |
|
Samuel
H. Norton |
3/24/22 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
254,187 |
|
(3 |
) |
$ |
734,600 |
|
|
254,186 |
|
(6 |
) |
$ |
734,598 |
|
|
3/24/22 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
409,569 |
|
(4 |
) |
$ |
1,183,656 |
|
|
— |
|
|
|
|
— |
|
|
3/23/21 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
120,056 |
|
(3 |
) |
$ |
346,962 |
|
|
90,042 |
|
(5 |
) |
$ |
260,221 |
|
|
3/23/20 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
87,190 |
|
(3 |
) |
$ |
251,980 |
|
|
|
|
|
|
|
|
2/8/19 |
|
612,745 |
|
(2 |
) |
|
— |
|
$ |
1.82 |
|
2/8/2029 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
2/8/18 |
|
494,118 |
|
(2 |
) |
|
— |
|
$ |
1.70 |
|
2/8/2028 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
3/23/17 |
|
17,637 |
|
(1 |
) |
|
— |
|
$ |
4.04 |
|
3/23/2027 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
8/3/16 |
|
297,818 |
|
(1 |
) |
|
— |
|
$ |
5.57 |
|
8/3/2026 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard L. Trueblood |
3/24/22 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
77,751 |
|
(3 |
) |
$ |
224,700 |
|
|
77,752 |
|
(6 |
) |
$ |
224,703 |
|
|
3/24/22 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
46,077 |
|
(4 |
) |
$ |
133,161 |
|
|
— |
|
|
|
|
— |
|
|
3/23/21 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
36,017 |
|
(3 |
) |
$ |
104,088 |
|
|
27,012 |
|
(5 |
) |
$ |
78,065 |
|
|
3/23/20 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
30,773 |
|
(3 |
) |
$ |
88,934 |
|
|
— |
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick J. O'Halloran |
3/24/22 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
71,770 |
|
(3 |
) |
$ |
207,415 |
|
|
71,770 |
|
(6 |
) |
$ |
207,415 |
|
|
3/24/22 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
43,005 |
|
(4 |
) |
$ |
124,284 |
|
|
— |
|
|
|
|
— |
|
|
3/23/21 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
31,815 |
|
(3 |
) |
$ |
91,944 |
|
|
23,861 |
|
(5 |
) |
$ |
68,958 |
|
|
3/23/20 |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
27,183 |
|
(3 |
) |
$ |
78,558 |
|
|
— |
|
|
|
|
— |
|
|
3/23/17 |
|
18,078 |
|
(1 |
) |
|
— |
|
$ |
4.04 |
|
3/23/2027 |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
|
— |
|
| (1) | These
options to purchase shares of Class A Common Stock became exercisable on the first, second,
and third anniversaries of the grant date, respectively. |
| (2) | This
represents Mr. Norton’s annual incentive compensation, awarded in fully vested options
in accordance with the terms of his prior employment agreement. |
| (3) | The
unvested portions of these time-based RSUs will vest in approximately equal installments
on the second and third anniversaries of the grant date, as applicable. |
| (4) | On
March 24, 2022, each NEO received a retention bonus grant under which each NEO would
receive cash and equity in installments, subject to vesting based on continued employment,
on the first, second, and third anniversaries of the grant. No discretionary annual bonuses
were paid with respect to 2022. See footnote 1 of the Summary Compensation table for
more details. |
| (5) | These
performance-based RSU awards are comprised of two separate grants, both of which become
fully vested when the performance periods end on December 31, 2023, provided that certain
performance goals are satisfied. The performance goal for one award is based on our TSR
and the performance goals for the second award is based on ROIC. The award based upon
TSR is 50% of the grant total and is subject to OSG’s three-year TSR performance relative
to the performance of the companies that comprise a combination of the Oil & Gas
Storage & Transportation and Marine GICS Sub Industries Indexes. The award based
upon ROIC is 50% of the grant total and is subject to OSG’s cumulative ROIC relative
to OSG’s budgeted ROIC for the performance period. As of year-end 2022, the achievement
level for the TSR metric was positive but performing below the comparator group’s threshold
and the achievement level for the ROIC metric is trending toward threshold, as depicted
in the following table: |
2021
Grant |
|
|
|
Share
payout if the |
Measurement
Date |
|
|
|
current
trends are |
12/31/2023 |
|
# of shares |
realized |
Name |
PRSU
Name |
Target |
Trend |
|
Samuel
H. Norton |
TSR |
90,042 |
45,021 |
90,042 |
|
ROIC |
90,042 |
45,021 |
|
Richard
L. Trueblood |
TSR |
27,012 |
13,506 |
27,012 |
|
ROIC |
27,012 |
13,506 |
|
Patrick
J. O’Halloran |
TSR |
23,861 |
11,931 |
23,861 |
|
ROIC |
23,861 |
11,931 |
|
| (6) | These
performance-based RSU awards are comprised of two separate grants. The TSR and ROIC awards
both cliff vest with performance periods ending on December 31, 2024. The award based
upon TSR is subject to OSG’s three-year TSR performance relative to the performance
of the companies that comprise a combination of the Oil & Gas Storage & Transportation
and Marine GICS Sub Industries Indexes. The award based upon ROIC is subject to OSG’s
cumulative ROIC relative to OSG’s budgeted ROIC for the performance period. As
of year-end 2022, the achievement level for both the TSR and ROIC metrics were trending
toward a target payout, as depicted in the following table: |
2022
Grant |
|
|
|
Share
payout if the |
Measurement
Date |
|
|
|
current
trends are |
12/31/2024 |
|
# of shares |
realized |
Name |
PRSU
Name |
Target |
Trend |
|
Samuel
H. Norton |
TSR |
127,093 |
127,093 |
254,186 |
|
ROIC |
127,093 |
127,093 |
|
Richard
L. Trueblood |
TSR |
38,876 |
38,876 |
77,752 |
|
ROIC |
38,876 |
38,876 |
|
Patrick
J. O’Halloran |
TSR |
35,885 |
35,885 |
71,770 |
|
ROIC |
35,885 |
35,885 |
|
POTENTIAL
PAYMENTS UPON TERMINATION
The following table discloses
the amounts that would have been payable to each NEO upon termination of his employment, assuming that such termination occurred
on December 31, 2022. The table excludes amounts that are available generally to all salaried employees, such as amounts payable
under the Savings Plan. The market value of the stock awards is based on the market price of OSG’s Class A Common Stock
at the close of business on December 31, 2022, which was $2.89 per share.
Event |
|
Samuel
H.
Norton |
|
|
Richard
L.
Trueblood |
|
|
Patrick
J.
O’Halloran |
|
Involuntary
Termination Without Cause or Voluntary Termination for Good Reason |
|
|
|
|
|
|
|
|
|
Cash
severance (1) |
|
$ |
425,000 |
|
|
$ |
325,000 |
|
|
$ |
300,000 |
|
Pro-rata
Annual Incentive Compensation (2) |
|
$ |
637,500 |
|
|
$ |
316,875 |
|
|
$ |
292,500 |
|
Retention
Cash (3) |
|
$ |
275,000 |
|
|
$ |
300,000 |
|
|
$ |
260,000 |
|
Acceleration
& Continuation of Equity Awards (4)(5) |
|
$ |
3,518,744 |
|
|
$ |
550,885 |
|
|
$ |
502,202 |
|
Total |
|
$ |
4,856,244 |
|
|
$ |
1,492,760 |
|
|
$ |
1,354,702 |
|
Death
/ Disability |
|
|
|
|
|
|
|
|
|
Pro-rata
Annual Incentive Compensation (2) |
|
$ |
— |
|
|
$ |
316,875 |
|
|
$ |
292,500 |
|
Retention
Cash (3) |
|
$ |
275,000 |
|
|
$ |
300,000 |
|
|
$ |
260,000 |
|
Acceleration
& Continuation of Equity Awards (4) |
|
$ |
2,517,197 |
|
|
$ |
550,885 |
|
|
$ |
502,202 |
|
Total |
|
$ |
2,792,197 |
|
|
$ |
1,167,760 |
|
|
$ |
1,054,702 |
|
Change
In Control |
|
|
|
|
|
|
|
|
|
Cash
severance (1) |
|
$ |
425,000 |
|
|
$ |
325,000 |
|
|
$ |
300,000 |
|
Pro-rata Annual Incentive Compensation (6) |
|
$ |
425,000 |
|
|
$ |
211,250 |
|
|
$ |
195,000 |
|
Acceleration
& Continuation of Equity Awards (7) |
|
$ |
3,814,658 |
|
|
$ |
963,973 |
|
|
$ |
871,561 |
|
Total |
|
$ |
4,664,658 |
|
|
$ |
1,500,223 |
|
|
$ |
1,366,561 |
|
| (1) | The
cash severance payment is equal to 12 months of base salary. |
| (2) | The
Annual Incentive Compensation payment is pro-rated based on the based on the number of
days in the fiscal year in which the NEO was employed and the actual performance for
the year of termination. Mr. Norton is not eligible for a pro-rated annual incentive
compensation payment in the event of death or disability. The amounts shown reflect the
actual payment under OSG’s Annual Incentive Program for 2022. |
| (3) | Represents
the cash portion of the 2022 Retention Grant which is payable in full at termination. |
| (4) | All
outstanding time-based RSU awards accelerate as of the date of separation from service.
|
| (5) | For
Mr. Norton, all open performance-based RSU awards accelerate as of the date of separation
from service and the performance criteria thereunder would be deemed to have been satisfied
at the designated target level. These grants would be pro-rated to reflect the number
of days in the performance period that have lapsed as of the date of separation from
service. |
| (6) | The
full amount of the annual incentive compensation payment is payable at the target value
and is not pro-rated. |
|
(7) |
With
respect to all awards granted to the Executive under OSG’s incentive compensation plans and outstanding as of the Change
in Control (as defined in the relevant employment agreements): |
| ● | Time-based RSU awards accelerate and vest as of the Executive’s date of separation from service
due to termination by OSG without Cause (as defined in the relevant employment agreement) or by the Executive for Good Reason (as
defined in the relevant employment agreement) at any time during the period ending on the second anniversary of the Change in Control. |
| ● | All
open performance-based RSU awards accelerate as of the date of separation from service
and the performance criteria thereunder would be deemed to have been satisfied at the
designated maximum level. These grants would be pro-rated to reflect the number of days
in the performance period that have lapsed as of the date of separation from service. |
NON-GAAP
FINANCIAL MEASURES
OSG reports its financial results in accordance with generally
accepted accounting principles in the United States of America (“GAAP”). However, OSG uses certain non-GAAP financial
measures in its compensation program. These measures do not have a standardized meaning prescribed by GAAP and, therefore, we
wish to provide our stockholders with additional information that will better enable them to understand how our Executive Officers’
performance is measured.
In
our Annual Incentive Program we use the metric FCF, defined as EBITDA less capital expenditures. EBITDA represents net income/(loss)
before interest expense, income taxes and depreciation and amortization expense. EBITDA does not represent, and should not be
a substitute for, net income/(loss) or cash flows from operations as determined in accordance with GAAP. The following table reconciles
net income/(loss) as reflected in the consolidated statements of operations, to EBITDA.
($ in thousands) |
|
|
Years Ended December
31, |
|
|
2022
|
|
|
2021
|
Net income/(loss) |
|
$ |
26,564
|
|
|
$ |
(46,252)
|
Income tax expense/(benefit) |
|
|
6,894 |
|
|
|
(18,097) |
Interest expense, net |
|
|
33,060 |
|
|
|
29,203 |
Depreciation and amortization |
|
|
70,637 |
|
|
|
61,823 |
EBITDA |
|
|
137,155 |
|
|
|
26,677 |
One of the metrics used in the Special 2021 Grant was TCE revenues.
TCE revenues represent shipping revenues less voyage expenses, and are used as a measure to compare revenue generated from a voyage
charter to revenue generated from a time charter. Another metric used in the Special 2021 Grant was EBITDA, which is described
above. Reconciliations of TCE revenues, a non-GAAP measure, to shipping revenues as reported in the consolidated statements of
operations follows:
($ in thousands) |
|
|
Years
Ended December
31, |
|
|
2022
|
|
|
2021
|
Time charter equivalent revenues
|
|
$ |
426,328
|
|
|
$ |
292,595
|
Add: Voyage expenses |
|
|
40,472 |
|
|
|
66,467 |
Shipping revenues |
|
|
466,800 |
|
|
|
359,062 |
ADVISORY
VOTE ON THE APPROVAL OF THE
COMPENSATION
OF THE NAMED EXECUTIVE OFFICERS
(PROPOSAL
NO. 2)
We
are providing our stockholders with the opportunity to cast an advisory vote on the compensation of the NEOs for 2022. Stockholders
are urged to read the “How We Compensate Our Executives” section of this Proxy Statement and the accompanying compensation
tables and narrative which discuss how our compensation policies and procedures implement our compensation philosophy as well
as the compensation paid to the NEOs for 2022.
As
more fully described in the “How We Compensate Our Executives” section, our executive compensation program is designed
to:
| 1. | Attract,
motivate, retain, and reward highly talented executives and managers, whose leadership
and expertise are critical to OSG’s overall growth and success; |
| 2. | Compensate
each executive based upon the scope and impact of his or her position as it relates to
achieving OSG’s corporate goals and objectives, as well as the potential of each executive
to assume increasing responsibility within OSG; |
| 3. | Align
the interests of OSG’s executives with those of its stockholders by linking incentive
compensation rewards to the achievement of performance goals that maximize stockholder
value; and |
| 4. | Reward
the achievement of both the short-term and long-term strategic objectives necessary for
sustained optimal business performance. |
The
Compensation Committee and the Board believe that the design of the executive compensation program, and hence the compensation
awarded to the NEOs, fulfills these objectives.
Accordingly,
the Board asks stockholders to approve the following resolution:
“RESOLVED,
that the stockholders of OSG hereby approve, on an advisory basis, the compensation of the Named Executive Officers for 2022 as
described in the “How We Compensate Our Executives” section of, and in the accompanying compensation tables and narrative
in, OSG’s Proxy Statement for the 2023 Annual Meeting of Stockholders.”
As an advisory vote, the results of the vote will not be binding.
However, the Board and the Compensation Committee value your opinion and will consider the outcome of the vote when making future
decisions on the compensation of the NEOs and our executive compensation principles, policies and procedures, as we have done in
the past. We are currently holding “say-on-pay” advisory votes on an annual basis.
The
Board recommends a vote “FOR” advisory approval of
the
resolution set forth above and approval of the compensation of the
Named
Executive Officers for 2022 as disclosed in this Proxy Statement.
ADVISORY
VOTE ON THE FREQUENCY OF FUTURE
ADVISORY
VOTES FOR APPROVAL OF THE
COMPENSATION
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 Board and Compensation Committee 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 the 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 the stockholders.
Our
Board and Compensation Committee recommend a vote of “ONE (1) YEAR” with respect to the advisory vote on the frequency
of future “say-on-pay” votes.
The
Board of Directors recommends that stockholders vote FOR “ONE (1) YEAR”
as the preferred frequency of the “say-on-pay”
proposal.
AUDIT
COMMITTEE MATTERS
Audit
Committee Report
Management has primary responsibility for preparing the consolidated
financial statements of OSG, for maintaining effective internal control over financial reporting, and for assessing the effectiveness
of internal control over financial reporting. Our independent registered public accounting firm is responsible for performing
independent audits of OSG’s consolidated financial statements in accordance with auditing standards generally accepted in
the United States (“U.S. GAAP”) and the effectiveness of OSG’s internal control over financial reporting based
on criteria established by the Public Company Accounting Oversight Board (the “PCAOB”). The Audit Committee’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 our website at www.osg.com.
In
fulfilling its oversight responsibilities, the Audit Committee met with management and OSG’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 included in OSG’s
Annual Report on Form 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 OSG’s independent registered public accounting firm.
The Audit Committee further discussed with OSG’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’s report on its assessment of the effectiveness of OSG’s internal control over
financial reporting and OSG’s independent registered public accounting firm’s report on the effectiveness of our internal
control over financial reporting.
OSG’s
independent registered public accounting firm also provided to the Audit Committee the written disclosures and letter required
by PCAOB Rule 3526 (Communication with Audit Committees Concerning Independence), and the Audit Committee discussed with the independent
registered public accounting firm its independence from OSG 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 OSG’s independent registered public accounting firm, the
Audit Committee’s review of the representations of management, the certifications of OSG’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 2022 Form 10-K for filing with the
SEC.
|
By the Audit Committee: |
|
|
|
John P. Reddy, Chair |
|
Rebecca K. DeLaet |
|
Joseph 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. Proposed services that exceed 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
(PROPOSAL
NO. 4)
The
Audit Committee has appointed Grant Thornton as OSG’s independent registered public 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 since April 2020.
Stockholder
ratification of the appointment of Grant Thornton as our independent registered public accounting firm is not required by our
Bylaws or other applicable legal 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 Committee may direct the appointment of a different independent
registered certified public accounting firm at any time during the year if it determines that such a change would be in our and
our stockholders’ best interests.
Representatives
of Grant Thornton are expected to virtually attend the 2023 Annual Meeting and, if in attendance, will have an opportunity to
make a statement if they so desire and to respond to appropriate questions.
The
Audit Committee and the Board of Directors recommend a vote “FOR” the
ratification
of the selection of Grant Thornton LLP
as the independent registered public accounting firm
for 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, 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 her the 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 Section 102- (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 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 beneficial ownership information with respect to our directors and director nominees, each of the executive
officers listed in the Summary Compensation Table, and each person who is known to OSG 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 owners was prepared based
on information supplied by such owners in their filings with the SEC. Except as disclosed in the notes to these tables and subject
to applicable community property laws, OSG 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 March 31, 2023 (the “Measurement Date”). For purposes
of calculating each person’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, OSG 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 79,191,275 shares of OSG’s Class A Common Stock outstanding as of the Measurement Date.
On that date, there were 18,372,136 warrants (exercisable for 3,490,706 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 number of shares and percentage of the outstanding shares of OSG’s Class A Common
Stock beneficially owned by each director and director nominee, each NEO, other executive officers, and all director nominees
and executive officers as a group, on the Measurement Date, all as reported to 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.
|
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) |
0 |
0 |
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, director nominees, and executive officers as a group
(13
persons)
|
6,368,087 |
7.97% |
| (1) | Includes
shares of Class A Common Stock issuable within 60 days of March 31, 2023 upon the exercise
of options 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) | Ms.
Luria, not currently a director, is standing for election at the Annual Meeting. |
| (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 Stock
The
table below sets forth information as to the number of shares and percentage of the outstanding shares of those stockholders of
OSG that beneficially own more than 5% of our outstanding Class A Common Stock (excluding director and nominees, NEOs, or other
executive officers) on the Measurement Date, as reported by 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) |
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) |
Includes shares of Class A Common Stock underlying all warrants (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 OSG’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 November 15, 2022 and a Form 4 filed on December 16, 2022
with the SEC by Cyrus Capital Partners, L.P. (“Cyrus”) and certain of its
affiliates. The number of shares of Class A Common Stock beneficially owned by Cyrus,
together with its affiliates, includes 2,631,760 shares subject to currently exercisable
warrants. The address of Cyrus and its affiliates is 65 East 55th Street, 35th Floor,
New York, NY 10022. |
| (3) | Based
on a Schedule 13D/A filed on September 7, 2021 with the SEC by Saltchuk Resources, Inc.
(“Saltchuk”), Saltchuk has beneficial ownership of an aggregate amount of 15,203,554
shares of Class A Common Stock. The address of Saltchuk is 450 Alaskan Way South, Suite
708, Seattle, WA 98104. |
Equity
Compensation Plan Information
The following table provides information as of December 31, 2022
with respect to OSG’s equity compensation plans, which have been approved by OSG’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 |
|
|
2,149,787 |
|
Equity
compensation plans not approved by stockholders |
|
— |
|
|
— |
|
|
— |
|
*
Consists of 1,130,883 Class A Common Stock shares eligible to be granted under the Incentive Compensation Plan for Management
and 1,018,904 shares under the Non-Executive Director Incentive Compensation Plan.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, OSG’s directors, executive officers and any persons owning beneficially
more than 10% of OSG’s Class A Common Stock are required to file reports with the SEC on a timely basis concerning their
ownership of Class A Common Stock and any changes in that ownership. Directors, executive officers and beneficial owners of more
than 10% of the Class A Common Stock are also required to furnish OSG with copies of all Section 16(a) reports that they file with
the SEC. Based solely upon a review of these reports received by OSG for 2022 and any written representations from reporting persons,
we believe that all such reports were filed on a timely basis in 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 one day late relating to the vesting
of performance-based restricted stock units upon the satisfaction of specified performance goals and the 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.
We note that compensation decisions at OSG are made by our Compensation
Committee independently of disclosure requirements, based on the factors discussed in “How We Compensate Our Executives.”
In particular, while SEC rules require disclosure of CAP and specify 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 $100 in OSG stock as of December 31, 2021 and December 31, 2022 based on TSR, as
explained below.
Year | | |
Summary
Compensation Table Total to PEO ($)(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 Principle Executive Officer (“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).
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg013.jpg)
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).
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_n3515sch14aimg014.jpg)
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 Thursday, June 15, 2023 at 9:30 a.m. (ET), or any adjournment or postponement
thereof, for the purposes set forth herein and in the Notice of Annual Meeting of Stockholders.
Any
stockholder giving a proxy may revoke it at any time before it is exercised at the meeting.
Record
Date, Shares Outstanding and Votes Required
Only
stockholders of record at the close of business on April 17, 2023 (the “Record Date”) are 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, 78,693,369 shares were 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) | to
elect eight directors to serve until the 2024 Annual Meeting of Stockholders of the Company; |
| (2) | to
approve, on an advisory basis, the 2022 compensation for our Named Executive Officers
as described in “How We Compensate Our Executives”
and in the compensation data provided in the tables in the Proxy Statement; |
| (3) | to
approve, on an advisory basis, the frequency of future advisory votes on the compensation
of our Named Executive Officers; |
| (4) | to
ratify the appointment of Grant Thornton LLP as the Company’s independent registered
public accounting firm for 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, and the ratification of the appointment
of the Company’s independent registered public accounting firm for fiscal year 2023 requires the affirmative vote of a majority
of the votes cast by the holders of the shares of Common Stock present at the meeting and entitled to vote thereon. Abstentions
and broker non-votes do not count as votes “for” or “against” and, therefore, have no effect on the outcome
of the voting.
“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
purposes of determining the result of this non-binding advisory vote.
Amendment
of Restated Certificate of Incorporation. Approval of the proposed amendment to the Restated 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 given, then FOR the 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 at the Annual Meeting. |
| ● | Beneficial
Owner. If your shares are held in a brokerage account, by a trustee, or by another
nominee, then you are considered the “beneficial owner” of those shares. As
the beneficial owner of those shares, you have the right to direct your broker, trustee,
or nominee how to vote and you also are invited to attend the Annual Meeting. However,
because a beneficial owner is not the stockholder of record, you may not vote these shares
at the Annual Meeting unless you obtain a “legal proxy,” as discussed below. |
As
a stockholder of record, you may vote by one of the following methods:
| ● | Internet
Voting. You may use the Internet as described on the proxy card or the notice of
availability of proxy materials, as applicable, to vote your shares of Common Stock by
giving the Company a proxy. You will be able to vote your shares by the Internet and
confirm that your vote has been properly recorded. Please see your proxy card or your
notice of availability of proxy materials, as applicable, for specific instructions.
|
| ● | Telephone
Voting. You may vote your shares of Common Stock by giving the Company a proxy using
the toll–free number listed on the proxy card. The procedure allows you to vote
your shares and to confirm that your vote was recorded. Please see your proxy card for
specific instructions. |
| ● | Voting
By Mail. You may sign, date, and mail your proxy card in the postage-paid envelope
provided. This option is available only to those stockholders who have received a paper
copy of a proxy card by mail. |
| ● | Voting
at the Annual Meeting. You may vote at the Annual Meeting as indicated above under
“Remote Participation in the Annual Meeting” at the beginning of this Proxy
Statement. |
If
your shares are held through a broker, bank, trustee or other nominee, you will receive a request for voting instructions with
respect to your shares of Common Stock from the broker, bank, trustee or other nominee. You should respond to the request for
voting instructions in the manner specified by the broker, bank, trustee or other nominee. If you have questions about voting
your shares, you should contact your broker, bank, trustee or other nominee.
If you hold your shares through a broker, bank, trustee or other
nominee and you wish to vote at the meeting, you will need to deliver a legal proxy as indicated above under “Remote Participation
in the Annual Meeting” at the beginning of this Proxy Statement. 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
vote at the meeting and 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.
To conduct the business of the Annual Meeting we must have a
quorum. The presence 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 2022 of our NEOs, or for the approval of the amendment to the 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’s independent registered public accounting firm for the fiscal year ending December 31, 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 OSG, we urge you to vote your shares as soon as possible by telephone, over the Internet
or by marking, signing and returning your proxy or voting instruction card.
Expenses
The
cost of soliciting proxies for the meeting will be borne by OSG. OSG will also reimburse brokers and others who are only record
holders of the OSG shares for their reasonable expenses incurred in obtaining voting instructions from beneficial owners of such
shares.
Proposals
for 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 than December 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 Annual Meeting in 2024 pursuant to the 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 June
15, 2024, the first anniversary of this year’s Annual Meeting. In other words, the notice and such information must be received
between March 17, 2024 and April 16, 2024. Stockholders can obtain a copy of the Amended and Restated By-laws by writing to the
Corporate Secretary.
Under
our Amended and Restated By-laws, a stockholder may nominate a person as a nominee for director by writing to the Corporate Secretary.
Such nominations must be received between March 17, 2024, and April 16, 2024 in order for a candidate to be considered for election
at the Annual Meeting in 2024. Each such 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 attend the meeting to nominate the
person or persons specified in the notice; (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; (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; (f) the consent of each nominee to serve as a director of the Company if so 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.
OTHER
MATTERS
The
Board is not aware of any matters to be presented at the Annual Meeting other than those specified above. If any other matter
should be presented, proxy holders will vote the shares represented by the proxy on such matter in accordance with their best
judgment.
We
have adopted a procedure approved by the SEC known as “householding” that permits 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 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. Householding will continue until you are notified
otherwise or until you 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 OSG if you hold shares
registered in your name, and OSG will promptly undertake to carry out your request. You can notify OSG by sending a written request
to OSG at its address set forth above.
OSG’s
2022 Form 10-K is available at www.osg.com/investor-relations. It does not form part of this Proxy Statement. OSG will
provide to any stockholder of OSG, without charge, a copy of the 2022 Form 10-K upon the written request of such stockholder addressed
to the Corporate Secretary of OSG at 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602.
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_proxycard1.jpg)
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001539497-23-000786_proxycard2.jpg)
PROXY OVERSEAS SHIPHOLDING
GROUP, INC. 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 proxies for the undersigned to vote all shares of Common Stock of Overseas Shipholding Group, Inc.,
which the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company, to be held on June 15, 2023, and any
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 call. Stockholders and other interested parties can listen to a live webcast of
the Annual 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 Internet. If you wish to vote on the date of the Annual Meeting, or to change your vote, you may do so by sending
an email to investor-relations@osg.com and attaching your proxy card, or if your shares 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 vote 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 Proxy Materials for the Annual Meeting of Stockholders 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 recommends you vote FOR the following: 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 meeting
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 sign personally. If signing as a fiduciary or attorney, please give your
exact title. As a stockholder of Overseas Shipholding Group, Inc., you have the option of voting your shares electronically through the
Internet or by telephone, eliminating the need to return the proxy card. Your electronic vote authorizes the named proxy to vote your
shares in the same 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 www.fcrvote.com/OSG
Have your proxy card available when you access the above website. Follow the prompts to vote your 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 voting instructions
to vote your shares. Vote Your Proxy by Mail: Mark, sign, and date your proxy card, then detach it and return it in the postage-paid
envelope provided.
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