<PAGE> 1
EXHIBIT E
Page 7
respect to executive officers, includes shares that may be purchased
under currently exercisable stock options granted pursuant to the Marine
Transport Corporation 1998 Incentive Equity Plan. (Under the terms of
that plan, one third of the options granted pursuant thereto on June 29,
1998 are currently exercisable.) With respect to Non-Employee Directors,
includes shares that may be purchased under currently exercisable stock
options granted pursuant to the Marine Transport Corporation 1998 Stock
Option Plan for Non-Employee Directors. (Under the terms of that plan,
100% of the stock options granted pursuant thereto on June 18, 1998 are
currently exercisable.)
(2) In its capacity as an investment advisor registered under Section 203 of
the Investment Advisors Act of 1940, Dimensional Fund Advisors, Inc.
("Dimensional") furnishes advice to four investment companies registered
under the Investment Company Act of 1940 and serves as investment
manager to certain other commingled group trusts and separate accounts.
Dimensional possesses voting and/or investment power over these shares
but disclaims beneficial ownership.
(3) Includes 2,000 shares owned by the Joanne Lauridsen Trust of which Mr.
Jones is a trustee; 426,666 shares owned by the Seahawk Investment Trust
of which Mr. Jones and his wife are trustees; and 73,334 shares owned by
the Seahawk Ranch Irrevocable Trust of which Mr. Jones is a trustee. In
her capacity as a trustee of the Seahawk Investment Trust, Mr. Jones'
wife Signed Kim Lauridsen-Jones shares voting and investment power with
regard to 426,666 shares.
(4) Includes 30,000 shares owned by Aries Hill Corp., a private holding
company with an address at 1350 One M&T Plaza, Buffalo, New York 14203,
of which Mr. Baird is a director, President and Treasurer (Mr. Baird has
shared voting power and shared investment power with regard to these
shares); 25,000 shares owned by Mr. Baird; 50,000 shares owned by Mr.
Brian D. Baird, Mr. Baird's brother, in his capacity as Successor
Trustee under an agreement dated 7/31/22; 70,500 shares owned by The
Cameron Baird Foundation, a charitable private foundation with an
address at Box 564, Hamburg, New York 14075, whose board consists of
members of Mr. Baird's family; and 549,710 shares owned by First
Carolina Investors, Inc. ("FCI"), a closed end non-diversified
management investment company with an address at 1130 East 3rd Street,
Suite 1410, Charlotte, North Carolina 28204, of which Mr. Baird is
Chairman and Director (Mr. Baird has shared voting power and shared
investment power with regard to these shares). When aggregated with the
beneficial interests in FCI common stock of their spouses, children,
parents, siblings and various corporations, trusts and other entities
associated with the Baird family, the family's cumulative ownership of
FCI's outstanding common stock is approximately 55%.
(5) Includes 1,000 shares purchased for Mr. Rich's granddaughter in the name
of her mother as custodian.
ELECTION OF DIRECTORS
MTC's Restated Certificate of Incorporation and By-Laws provide that the
number of directors constituting the entire Board of Directors of MTC shall be:
(a) not less than five nor more than fifteen, as fixed from time to time by the
vote of not less than 66 2/3% of the entire Board of Directors, provided,
however, that the number of directors constituting the entire Board of Directors
shall be ten until otherwise fixed by the vote of not less than 66 2/3% of the
entire Board of Directors; and (b) divided into three classes, as nearly equal
<PAGE> 2
Page 8
in number as the then total number of directors constituting the entire Board of
Directors permits. The Board currently consists of ten (10) members divided into
three classes. The directors in each class hold office for staggered terms of
three years. The three current Class II directors, Paul B. Gridley, William M.
Kearns, Jr. and Michael Klebanoff, whose present terms expire in 2000, are being
proposed for reelection at this Annual Meeting for new three year terms expiring
in 2003.
All nominees for Class II are willing to serve as directors, but if any
nominee becomes unable to serve prior to the Annual Meeting, the persons named
as proxies have discretionary authority to vote for a substitute nominee named
by the Board of Directors, or the Board of Directors may reduce the number of
directors to be determined and elected.
The Board of Directors recommends a vote in favor of the election of the
nominees for directors to Class II.
The following table sets forth certain information regarding the members
of and nominees for the Board of Directors:
<TABLE>
<CAPTION>
CLASS AND
YEAR
NAME AND OTHER IN WHICH PRINCIPAL FIRST BECAME
INFORMATION AGE TERM EXPIRES OCCUPATION A DIRECTOR
-------------- --- -------------- ------------------------ ------------
NOMINEES FOR ELECTION AT THE 2000 ANNUAL MEETING
<S> <C> <C> <C> <C>
Paul B. Gridley........ 47 Class II Consultant to Marine 06/15/98
(2000) Transport Corporation
William M. Kearns, Class II Vice Chairman, Keefe 06/15/98
Jr................... 64 (2000) Managers, Inc. and
President, W.M. Kearns &
Co., Inc., a private
investment company
Michael Klebanoff...... 79 Class II Private Investor And 01/29/69*
(2000) Director of OMI
Corporation
DIRECTORS WHOSE TERMS CONTINUE
Elaine L. Chao......... 47 Class III Distinguished Fellow, 06/15/98
(2001) The Heritage Foundation
And Chairman of its Asia
Advisory Council
Richard T. du Moulin... 53 Class III Chairman of the Board, 06/15/98
(2001) President and Chief
Executive Officer,
Marine Transport
Corporation
Jerome Shelby.......... 70 Class III Of Counsel, Cadwalader, 06/15/98
(2001) Wickersham & Taft
Brent D. Baird......... 61 Class I Private Investor 05/04/99
(2002)
Jonathan Blank......... 56 Class I Partner, Preston Gates 06/15/98
(2002) Ellis & Rouvelas Meeds
</TABLE>
<PAGE> 3
Page 9
<TABLE>
<CAPTION>
CLASS AND
YEAR
NAME AND OTHER IN WHICH PRINCIPAL FIRST BECAME
INFORMATION AGE TERM EXPIRES OCCUPATION A DIRECTOR
-------------- --- -------------- ------------------------ ------------
<S> <C> <C> <C> <C>
Mark L. Filanowski..... 45 Class I Senior Vice President, 06/15/98
(2002) Treasurer and Chief
Financial Officer,
Marine Transport
Corporation
Stanley B. Rich........ 76 Class I Independent Accountant 06/15/98
(2002)
</TABLE>
----------
* Mr. Klebanoff was a director of OMI Corp. prior to the Acquisition and
related transactions. (See "Certain Background Information")
ADDITIONAL INFORMATION CONCERNING THE BOARD OF
DIRECTORS AND NOMINEES TO THE BOARD OF DIRECTORS
During 1999, there were six Board of Directors meetings of the Company.
No incumbent director attended fewer than 75 percent of the aggregate of the
total number of meetings: (1) of the Board of Directors (held during the period
for which he or she has been a director); and (2) held by all committees of the
board on which he or she served (during the periods that he or she served).
The Audit Committee, which consists of Messrs. Rich and Blank, and since
July 13, 1999, Mr. Gridley, recommends to the Board the auditors to be appointed
for the Company, reviews the results of each year's audit, evaluates any
recommendations the auditors may propose concerning the Company's internal
controls and procedures and oversees the responses made to any such
recommendations.
The Compensation Committee, which consists of Messrs. Kearns, Shelby and
Rich, reviews and determines the compensation of the Company's executives.
The Nominating Committee, which consists of Messrs. Baird, Chao and
Klebanoff, was created to advise to the Board of Directors with regard to
nominations to the Company's Board of Directors. The Nominating Committee
recommends to the Board of Directors the individuals to be nominated for
election as directors at the annual meeting of stockholders and has the
authority to recommend the individuals to be elected as directors to fill any
vacancies or additional directorships which may arise from time to time on the
Board of Directors. The Nominating Committee also considers nominations made in
accordance with the procedure in the following paragraph.
The Company's By-Laws provide that nominations for the election of
directors may be made in writing by any stockholder entitled to vote for the
election of directors, such writing to be delivered or mailed to the executive
offices of the Company, 1200 Harbor Boulevard, Weehawken, New Jersey 07087-0901,
not less than ten days nor more than 60 days prior to the meeting, except that
if less than 21 days notice of the meeting is given, such written notice shall
be delivered or mailed not later than the close of business on the seventh day
following the day on which notice of the meeting was mailed. Each notice shall
set forth: (a) as to each person whom the stockholder proposes to nominate for
election or re-election as a director: (i) the name, age, business address and,
if known, residence address of such person; (ii) the principal occupation or
employment of such
<PAGE> 4
Page 10
person; and (iii) the number of shares of the Company that are beneficially
owned by such person. If the Chairman of the meeting determines that a
nomination was not made in accordance with the foregoing procedure, such
nomination will be disregarded.
In 1999: (a) the Audit Committee met three times for the purpose of
reviewing audit procedures and inquiring into financial, legal, and other
matters; (b) the Compensation Committee met two times for the purpose of
reviewing overall compensation and employee benefit practices and programs; and
(c) the Nominating Committee held no meetings.
THE NOMINEES TO CLASS II
MR. GRIDLEY is a consultant to the Company. Mr. Gridley was the
President and Vice Chairman of MTL from November 1989 until June 18, 1998. Prior
to that time, Mr. Gridley was employed as a Senior Vice President of Shearson
Lehman Hutton, Inc. in the Investment Banking Division where he was responsible
for ship financing.
MR. KEARNS formed W.M. Kearns & Co., Inc., a private investment company,
where he has served as President since July 1994. From 1969 to June 1994, Mr.
Kearns was a Managing Director of Lehman Brothers and its predecessor firms. Mr.
Kearns served as an advisor to MTL's board of directors from 1993 until 1998 and
from 1989 to 1993 was a member of MTL's Board of Directors. Mr. Kearns is: (a) a
director of Selective Insurance Group, Inc., Malibu Entertainment Worldwide,
Inc., Greenfield Capital Partners, and Transistor Devices, Inc.; (b) a trustee
of EQ Advisors Trust (The Equitable Life Assurance Society of the United
States); and (c) an advisory director of Proudfoot Consulting, PLC. He has been
the Vice Chairman of Keefe Managers, Inc. since December of 1998.
MR. KLEBANOFF is a private investor who founded the predecessor of the
Company. From 1983 to 1995, Mr. Klebanoff was Chairman of the Board of the
Company, and from 1969 to 1983 he was President of the Company. He is a
currently a member of the board of directors of OMI CORPORATION.
THE MEMBERS OF CLASS I
MR. BAIRD is a private investor and a member of the boards of directors
of M&T Bank Corporation, First Carolina Investors, Inc., Allied Healthcare
Products, Inc., Ecology & Environment, Inc., Exolon -- ESK, Inc., Todd Shipyards
Corporation, and Merchants Group, Inc. Mr. Baird was a major shareholder of
Marine Transport Lines, Inc. ("MTL"), currently a subsidiary of the Company, and
served on MTL's board of directors from 1986 until 1989 when MTL was a public
company.
MR. BLANK has experience in maritime issues, especially those affecting
U.S. flag vessels, and has been a partner with Preston Gates Ellis & Rouvelas
Meeds since prior to 1995 and is currently the Managing Partner of that firm.
MR. FILANOWSKI has been Senior Vice President, Chief Financial Officer
and Treasurer of the Company since June, 1998. Prior thereto, he was Senior Vice
President of MTL since November 1989 serving as MTL's head of operations and
ship management since 1994 and as chief financial officer from 1989 to 1994.
From 1984 to 1988, Mr. Filanowski served as Vice President and Controller of
Armtek Corporation, and from 1976 to 1984 he served as Audit and Tax Manager for
Ernst & Young. Mr. Filanowski is a director of Shoreline Mutual (Bermuda), Ltd.,
a mutual insurance company that provides guarantees to the U.S. Coast Guard on
behalf of the insurance company's members (including the
<PAGE> 5
Page 11
Company) to enable them to be issued Certificates of Financial Responsibility
under the Oil Pollution Act of 1990.
MR. RICH has been a practicing accountant for over 50 years and served
as an advisor to MTL's board of directors from 1993 until 1998 and from 1989 to
1993 was a member of MTL's Board of Directors. Mr. Rich is a retired director of
Fleet Bank.
THE MEMBERS OF CLASS III
MS. CHAO has been a Distinguished Fellow at The Heritage Foundation
since August 1996 where she is also chairman of its Asia Advisory Council. From
1992 to 1996, Ms. Chao was president and chief executive officer of United Way
of America. Prior to joining United Way of America, she was director of the
Peace Corps and prior thereto was deputy secretary of the U.S. Department of
Transportation. In 1988 and 1989, Ms. Chao was the chairman of the Federal
Maritime Commission. From 1986 to 1988, she served as deputy administrator of
the Maritime Administration. She has also served as a vice president of
BankAmerica Capital Markets Group. Ms. Chao is a director of Northwest Airlines,
Clorox, Columbia/HCA, C.R. Bard, Inc. and Raymond James Financial.
MR. DU MOULIN has been Chairman, Chief Executive Officer and President
of the Company since June 1998. Prior thereto he was Chairman and Chief
Executive Officer of MTL since November 1989. Prior to joining MTL, Mr. du
Moulin was employed at the Company, where he held the position of Chief
Operating Officer and was a member of the Board of Directors. Mr. du Moulin
served three years as a U.S. Navy officer and thereafter continued to serve on
the Fales Advisory Committee to the Superintendent of the U.S. Naval Academy. He
is presently Chairman of the International Association of Independent Tanker
Owners (INTERTANKO), Chairman of the North American Regional Council for the
American Bureau of Shipping and is on the Board of Seamen's Church Institute of
New York and New Jersey.
MR. SHELBY has been of counsel to the law firm of Cadwalader, Wickersham
& Taft since 1993, where Mr. Shelby was a partner from 1963 through 1992.
Cadwalader, Wickersham & Taft has acted as counsel to the Company and, from time
to time since 1958, provided legal services to MTL. Mr. Shelby served as an
advisor to MTL's board of directors from 1993 until 1998 and from 1989 to 1993
was a member of MTL's Board of Directors. He is also a director of Astro Tankers
Limited, an oil tanker owner, and is a director and executive vice president of
Energy Transportation Group, Inc., a shipping and energy company, and is on the
board of Seamen's Church Institute of New York and New Jersey.
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
Paul B. Gridley, a member of Class II of the Company's Board of
Directors, is party to a consulting agreement with the Company pursuant to
which, for two years commencing on or about June 18, 1998, he will perform
consulting services for the Company for $189,000 per year.
Jonathan Blank, a member of Class I of the Company's Board of Directors,
is also a member of the law firm of Preston Gates Ellis & Rouvelas Meeds LLP
("Preston Gates"). The Company retained Preston Gates during its last fiscal
year and proposes to retain Preston Gates during the current fiscal year.
<PAGE> 6
Page 12
Jerome Shelby, a member of Class III of the Company's Board of
Directors, is also of counsel to Cadwalader, Wickersham & Taft ("Cadwalader").
The Company retained Cadwalader during its last fiscal year and proposes to
retain Cadwalader during the current fiscal year.
COMPENSATION OF DIRECTORS
Directors who are also officers or employees of the Company do not
receive any fees or remuneration for services on the Board of Directors or of
any Committee thereof. Commencing on or about June 18, 1998, each member of the
board of directors of the Company who is not an employee of the Company became
entitled to an annual retainer of $15,000 and a fee of $1,500 per board (or
committee) meeting attended. Effective March 3, 2000, the annual retainer for
each member of the board of directors of the Company who is not an employee of
the Company was increased to $20,000.
Non-employee directors also participate in the Marine Transport
Corporation 1998 Stock Option Plan for Non-Employee Directors. Under that plan,
each Non-Employee director was automatically granted an option to acquire 7,500
shares of the Company's common stock upon becoming a director. On May 4, 1999,
each Non-Employee Director was granted an option to acquire an additional 7,500
shares of the Company's common stock.
EXECUTIVE COMPENSATION
The Summary Compensation Table shows the compensation for each of the
Company's Chief Executive Officer and three other Executive Officers of the
Company for the period since the Acquisition, including that approximately one
half year period in 1998 when the management of the Company consisted of certain
individuals who managed Marine Transport Lines, Inc. prior to the Acquisition
(the "named executive officers") (see "Certain Background Information.")
<PAGE> 7
Page 13
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------------------------------
OTHER
ANNUAL
NAME AND COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)
------------------ ---- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Richard T. du Moulin .............. 1999 351,936 30,000 0
President and Chief Executive 1998(3) 157,716 30,000(4) 0
Officer
Mark L. Filanowski ................ 1999 231,768 20,000 0
Senior Vice President, Chief 1998(3) 120,288 20,000(4) 0
Financial Officer and Treasurer
Peter N. Popov .................... 1999 180,264 0 0
Vice President, Secretary and 1998(3) 93,561 10,000(4) 0
General Counsel
Jeffrey Miller .................... 1999 150,000 0 0
Vice President, Chartering 1998(3) 72,173 20,000(4) 0
</TABLE>
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND AWARDS OPTIONS/ COMPENSATION
PRINCIPAL POSITION ($)(1) SARS(#)(2) ($)
------------------ ---------- ---------- ------------
<S> <C> <C> <C>
Richard T. du Moulin .............. 0 30,000
President and Chief Executive 0 25,000 0
Officer
Mark L. Filanowski ................ 0 20,000 0
Senior Vice President, Chief 0 25,000
Financial Officer and Treasurer
Peter N. Popov .................... 0 10,000 0
Vice President, Secretary and 0 18,750
General Counsel
Jeffrey Miller .................... 0 10,000
Vice President, Chartering 0 18,750 0
</TABLE>
----------
(1) Messrs. du Moulin, Filanowski, Popov and Miller had no restricted stock
holdings in or prior to 1999.
(2) Options granted under the Marine Transport Corporation 1998 Equity
Incentive Plan to the named executive officers. Marine Transport
Corporation did not grant any stock appreciation rights in calendar year
1999.
(3) Includes only those amounts paid to Messrs. du Moulin, Filanowski, Popov
and Miller in their capacity as executive officers of Marine Transport
Corporation between June 18, 1998 and December 31, 1998. Prior to that
period, Messrs. du Moulin, Filanowski, Popov and Miller were officers of
Marine Transport Lines, Inc.
(4) Does not include bonus amounts paid by MTL to Messrs. du Moulin,
Filanowski, Popov and Miller in 1998 after the Acquisition for services
rendered to MTL prior to the Acquisition.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Messrs. du Moulin,
Filanowski, Popov and Miller. Pursuant to the employment agreements, Messrs. du
Moulin, Filanowski, Popov and Miller receive base salaries prescribed therein
and are eligible for discretionary incentive bonuses approved by the
compensation committee of the Company's Board of Directors.
The agreements with each executive are for one-year terms commencing on
June 18, 1998 and may be renewed for consecutive one year periods. If the
agreements with Messrs. du Moulin and Filanowski are not renewed at the end of
any term thereof or if the Company terminates either Executive without cause,
the Company will be required to pay each such Executive an amount equal to 150%
of the base salary then in effect for such affected Executive. The agreement
with Mr. Popov provides that if such agreement is not renewed at the end of any
term thereof or if the Company terminates Mr. Popov without cause, the Company
will be required to pay Mr. Popov an amount equal to the base salary in effect
for Mr. Popov. The agreement with Mr. Miller provides that if such agreement is
not renewed at the end of any term thereof or if the Company terminates Mr.
Miller
<PAGE> 8
Page 14
without cause, the Company will be required to pay Mr. Miller an amount equal to
one-half of the base salary then in effect for Mr. Miller. Under the employment
agreements, each Executive will be paid, subject to the limitations of Section
280G of the Code, 300% of compensation then in effect upon the occurrence of a
change of control of the Company resulting from a hostile takeover.
Paul B. Gridley, a member of Class II of the Company's Board of
Directors, is party to a consulting agreement with the Company pursuant to
which, for two years commencing on or about June 18, 1998, he will perform
consulting services for the Company for $189,000 per year.
The following table shows information concerning stock options granted
to the named executive officers during calendar year 1999 pursuant to the Marine
Transport Corporation 1998 Incentive Equity Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(2)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION -------------------------
EXECUTIVE OFFICER GRANTED(1) IN FISCAL YEAR (PER SHARE) DATE 5%($) 10%($)
----------------- ---------- -------------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
Richard T. du Moulin ......... 30,000 29% $3.18 5/03/09 60,138.05 152,401.62
Mark L. Filanowski ........... 20,000 19% $3.18 5/03/09 40,092.03 101,601.08
Peter N. Popov ............... 10,000 9.5% $3.18 5/03/09 20,046.02 50,800.54
Jeffrey Miller ............... 10,000 9.5% $3.18 5/03/09 20,046.02 50,800.54
</TABLE>
----------
(1) Options for the named executive officer were granted as of May 3, 1999.
One-third of the options will become exercisable on May 3, 2000 and the
remaining options will become exercisable in one-third increments on May
3, 2001 and May 3, 2002, subject to the terms of the options.
(2) These amounts represent certain assumed rates of appreciation only.
Actual gains, if any, on stock option exercises and common stock
holdings are dependent on the future performance of the common stock and
overall stock market conditions.
<PAGE> 9
Page 15
The following table shows the exercise of stock options or tandem SARs
during fiscal year 1999 by each of the named executive officers and the fiscal
year-end value of unexercised options and SARs.
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER NUMBER OF UNEXERCISED IN-THE-MONEY
OF SECURITIES OPTIONS/SARS AT FISCAL OPTIONS/SARS
UNDERLYING VALUE YEAR END(#)(1) AT FISCAL YEAR END($)(2)
OPTIONS/SARS REALIZED --------------------------- ---------------------------
NAME EXERCISED(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard T. du Moulin..... 0 0 8,332 46,668 0 0
Mark L. Filanowski....... 0 0 8,332 36,668 $ 666.48 $ 1,333.30
Peter N. Popov........... 0 0 6,249 22,501 $ 749.88 $ 1,500.12
Jeffrey Miller........... 0 0 6,249 22,501 $ 749.88 $ 1,500.12
</TABLE>
----------
(1) Under the Marine Transport Corporation 1998 Incentive Equity Plan,
options vest over a period of three years (unless there is a change of
control, in which case the options vest immediately) are granted at an
exercise price of not less than 100% of the fair market value of the
stock subject to the option on the date of the grant of the option and
are exercisable over a period of not more than ten years from the date
of grant.
(2) Based on the closing price of the Company's common stock on NASDAQ on
December 31, 1999 of $2.62.
<PAGE> 10
Page 16
REPORT ON SENIOR EXECUTIVE COMPENSATION
BY THE BOARD OF DIRECTORS' COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors (the
"Committee") has furnished the following report on compensation with respect to
executive officers defined under the rules of the Securities and Exchange
Commission.
The Committee is comprised of non-employee directors of the Company
listed in this report. The Committee is responsible for developing and
recommending the Company's executive compensation principles, policies, and
programs to the Board of Directors. In addition, the Committee recommends to the
Board of Directors, on an annual basis, the compensation to be paid to the Chief
Executive Officer (the "CEO") and, with advice from the CEO, to each of the
other executive officers of the Company, including the executive officers named
in the Summary Compensation Table of this proxy statement (the "Named
Executives").
In 1999, the Committee retained an outside compensation consultant who
reviewed the scope of the Company's compensation structure and made suggestions
for revisions to accomplish the Committee's objectives.
COMPENSATION PHILOSOPHY
The Company's compensation programs are meant to support and reinforce
its long-term business strategy and link pay to shareholder value. The current
programs provide executive officers and other key employees with the opportunity
to earn market competitive salaries and incentive compensation related to
performance considered to be acceptable to the Board. The objectives of the
Company's executive compensation program, as developed by the Committee, are to:
- Align compensation program design with the goals and key
performance measures and expectations of the Company and each
business unit.
- Attract and retain high-quality executives with experience in
the Company's marine transportation markets.
- Reward executives for superior performance measured by corporate
and business unit financial results, strategic achievements and
individual contributions.
- Align executives' interests with the long-term interests of
shareholders by enabling significant Company stock ownership.
The Company achieves these goals through a compensation strategy of
competitive salaries, annual cash bonuses and the grant of stock options and
other stock-based incentives.
The marine shipping industry is extremely competitive and cyclical.
Attraction and development of experienced executives in this narrow industry is
challenging. The best use of the Company's assets and interests cannot be
realized without the conception, development and execution of creative ideas
which fully utilize worthwhile opportunities as they arise. The Company's
current compensation plan allows the Compensation Committee to judge and reward
executive achievement which meets these criteria.
INTERNAL REVENUE CODE SECTION 162(m) POLICY
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), precludes tax deductions for compensation paid in excess of $1 million
to the Named Executives
<PAGE> 11
Page 17
unless certain conditions are met. Based on current pay levels and the design of
existing compensation plans, the Committee believes that any lost tax
deductions, if any, for such compensation will not be material as a result of
this Code section. Therefore, it is the Committee's intent to take no action
with respect to conforming with Section 162(m) conditions that permit tax
deductions.
BASE SALARIES
The Committee seeks to set base salaries for the Company's executive
officers at levels that are competitive with those for executives with
comparable roles and responsibilities, including revenue size, within the marine
shipping industry. Individual executive officer salaries are reviewed annually
by the Committee, which may approve increases from time to time based on
individual and company performance, as well as general increases in pay levels
for executives within the marine shipping industry.
Base salary increases were granted on or about June 18, 1998 to the
Named Executives and the base salary of Richard T. du Moulin was further
increased to $400,000 effective July 1, 1999.
ANNUAL INCENTIVE COMPENSATION
The Committee administers an annual cash incentive program for executive
officers, as well as other management employees. Executive officers are either
corporate executives or executives responsible for a significant business
segment.
Each year the Committee recommends to the Company's Board of Directors
an individual cash bonus. The amount of the cash bonus reflects the Committee's
consideration of such factors as earnings per share, cash flow, strategic
decisions that position the Company for long-term success and individual
employee contributions. Awards for selected business unit executives also vary
based on business unit financial performance.
EQUITY INCENTIVE PLAN
The 1998 Equity Incentive Plan authorizes the Committee to award stock
options (both non-qualified and incentive options), stock appreciation rights, a
stock bonus and restricted stock to key executives.
Stock option and restricted stock grants are designed to align the
long-term interests of the Company's executives with those of its shareholders
by directly linking executive pay to shareholder return. During 1999,
non-qualified options were granted pursuant to the 1998 Equity Incentive Plan at
not less than fair market value on the date of grant. Both the size of such
grants and the proportion relative to the total number of option shares granted
are a function of the recipient's level of responsibility within the Company,
stock option (and/or long-term incentive) grants provided to comparable
executives within other marine shipping companies and the judgment of the
Committee. There were no grants of restricted stock in 1999.
CHIEF EXECUTIVE OFFICER COMPENSATION
The principles guiding compensation for the CEO are the same as those
set forth for other executive officers. Due to the Company's restructuring
arising from the Acquisition, Mr. du Moulin's overall compensation was under
review in 1999 in conjunction with the study by the appointed compensation
consultant. In 1998, Mr. du Moulin received a standard cost of living adjustment
which increased his salary from $295,000 to $303,850
<PAGE> 12
Page 18
and in 1999, his salary was increased to $400,000. Consistent with the policy of
aligning executive pay opportunity with shareholder interests, Mr. du Moulin was
granted, in 1999, the option to purchase 30,000 shares of the Company's common
stock for $3.18 per share pursuant to the 1998 Equity Incentive Plan.
COMPENSATION COMMITTEE
William M. Kearns, Jr.
Stanley Rich
Jerome Shelby
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors and holders of more than 10% of the Company's common
stock (collectively, "reporting persons") to file reports of ownership and
changes in ownership of the Company's equity securities with the Securities and
Exchange Commission and NASDAQ. Based upon a review of the copies of such
reports furnished to the Company and written representations from the reporting
persons other than executive officers and directors of the Company that no
reports on Form 5 were required to be filed, the Company believes that all
reports by such reporting persons were timely filed.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Kearns, Rich and Shelby,
all of whom are directors of the Company and none of whom are or were officers
of the Company or any of its subsidiaries. During 1999, Jerome Shelby was of
Counsel to the law firm of Cadwalader Wickersham & Taft and a member of the
Compensation Committee. In 1999, the Company retained Cadwalader Wickersham &
Taft to provide legal services.
Set forth below is a graph comparing the cumulative total shareholder
return on the Company's common stock with the cumulative total return of the Dow
Jones Equity Market Index and the Dow Jones Marine Transportation Index for the
five-year period ended December 31, 1999.
<PAGE> 13
Page 19
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MARINE TRANSPORT CORPORATION,**
THE DOW JONES EQUITY MARKET INDEX AND
THE DOW JONES MARINE TRANSPORTATION INDEX
[MARINE TRANSPORT PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
MARINE TRANSPORT DOW JONES MARINE
CORPORATION DOW JONES EQUITY MARKET TRANSPORTATION
---------------- ----------------------- ----------------
<S> <C> <C> <C>
12/94 100.00 100.00 100.00
12/95 98.00 138.00 114.00
12/96 132.00 169.00 139.00
12/97 139.00 169.00 168.00
6/18/98 9.00 259.00 130.00
12/98 3.00 292.00 103.00
12/99 4.00 351.00 128.00
</TABLE>
* THE TOTAL RETURN ON THE COMPANY'S COMMON STOCK AND EACH INDEX ASSUMES
THE VALUE OF EACH INVESTMENT WAS $100 ON DECEMBER 31, 1994, AND THAT ALL
DIVIDENDS WERE REINVESTED.
** ON OR ABOUT JUNE 18, 1998, OMI CORP. CHANGED ITS NAME TO MARINE
TRANSPORT CORPORATION AND BEGAN TO TRADE ON NASDAQ UNDER THE SYMBOL
MTLX. PRIOR TO THAT DATE, OMI CORP. TRADED ON THE NEW YORK STOCK
EXCHANGE UNDER THE SYMBOL OMM. AS A RESULT OF CERTAIN TRANSACTIONS WHICH
OCCURRED CONTEMPORANEOUSLY WITH THE CHANGE OF THE NAME OF OMI CORP. TO
MARINE TRANSPORT CORPORATION, THE SHAREHOLDERS OF OMI CORP.: (a)
RECEIVED ONE SHARE OF STOCK IN A NEWLY CREATED MARSHALL ISLANDS
CORPORATION NAMED OMI CORPORATION FOR EACH SHARE OF STOCK OF OMI CORP.;
AND (b) CONTINUED TO OWN THEIR STOCK IN OMI CORP. WHICH,
CONTEMPORANEOUSLY WITH THE CHANGE OF ITS NAME TO MARINE TRANSPORT
CORPORATION, WAS SUBJECT TO A ONE FOR TEN REVERSE STOCK SPLIT (THE
"REVERSE STOCK SPLIT"). IN ASSESSING THE PERFORMANCE OF THE COMMON STOCK
OF MARINE TRANSPORT CORPORATION AS SET FORTH ABOVE, IT SHOULD BE NOTED
THAT THE: (a) CHART CHRONICLES THE PERFORMANCE OF OMI CORP. FOR THE
PERIOD FROM DECEMBER 31, 1994 UNTIL JUNE 18, 1998, DURING WHICH IT
OPERATED BOTH ITS DOMESTIC AND INTERNATIONAL BUSINESSES (SEE "CERTAIN
BACKGROUND INFORMATION CONCERNING MARINE TRANSPORT CORPORATION, ITS
DIRECTORS AND ITS EXECUTIVE OFFICERS"); AND (b) PERFORMANCE OF THE STOCK
OF MARINE TRANSPORT CORPORATION SINCE JUNE 18, 1998, REFLECTS THE
REVERSE STOCK SPLIT.
*** THE DATE UPON WHICH THE ONE FOR TEN REVERSE STOCK SPLIT OF THE COMPANY'S
STOCK BECAME EFFECTIVE.
