SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (x)
Filed by a Party other than the Registrant ( )
- -----------------------------------------------------------------
Check the appropriate box:
( ) Preliminary Proxy Statement
(x) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule14a-12
OVERSEAS SHIPHOLDING GROUP, INC.
- -----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
OVERSEAS SHIPHOLDING GROUP, INC.
- -----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
( ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or
14a-6(j)(2).
( ) $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11:*
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* Set forth the amount on which the filing fee is
calculated and state how it was determined.
4) Proposed maximum aggregate value of transaction:
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( ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC.
1114 AVENUE OF THE AMERICAS, NEW YORK, N.Y. 10036
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 10, 1997
TO THE STOCKHOLDERS OF OVERSEAS SHIPHOLDING GROUP, INC.:
The Annual Meeting of Stockholders of Overseas Shipholding
Group, Inc. will be held at J.P. Morgan Investment Management
Inc., 522 Fifth Avenue (corner West 44th Street), New York, N.Y.,
Seventh Floor, on Tuesday, June 10, 1997, at 2:30 o'clock P.M.
for the following purposes:
(l) To elect twelve directors, each for a term of one year;
(2) To consider and act upon a proposal to approve the
appointment of Ernst & Young LLP as independent auditors for the
year 1997; and
(3) To transact such other business as may properly be
brought before the meeting.
Stockholders of record at the close of business on April 17,
1997 will be entitled to vote at the meeting. The stockholders
list will be open to the examination of stockholders for any
purpose germane to the meeting, during ordinary business hours,
for ten days before the meeting at the Corporation's office, 1114
Avenue of the Americas, New York, N.Y.
Whether or not you expect to be present at the meeting in
person, please date and sign the enclosed proxy and return it
without delay in the enclosed envelope, which requires no postage
if mailed in the United States.
We urge you to exercise your privilege of attending the
meeting in person. In that event, the Corporation's receipt of
your proxy will not affect in any way your right to vote in
person.
By order of the Board of Directors,
ROBERT N. COWEN
Senior Vice President & Secretary
New York, N.Y.
April 30, 1997
IMPORTANT
PLEASE SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED RETURN ENVELOPE
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC.
1114 Avenue of the Americas, New York, N.Y. 10036
-----------
PROXY STATEMENT
The accompanying proxy is solicited on behalf of the Board of
Directors of Overseas Shipholding Group, Inc. (the "Corporation")
for use at the Annual Meeting of Stockholders to be held on June
10, 1997. Any stockholder giving a proxy may revoke it at any
time before it is exercised at the meeting.
Only stockholders of record at the close of business on April
17, 1997 will be entitled to vote at the annual meeting. The
Corporation has one class of voting securities, its Common Stock,
of which 36,256,704 shares were outstanding on said record date
and entitled to one vote each. This proxy statement and the
accompanying proxy will first be sent to stockholders on or about
April 30, 1997.
ELECTION OF DIRECTORS
The twelve nominees for election at the forthcoming meeting,
all of whom are presently directors of the Corporation, are
listed below. Unless otherwise directed, the accompanying proxy
will be voted for the election of these nominees, to serve for
the ensuing year and until their successors are elected and
qualify.
<TABLE>
The table below sets forth information as to each nominee,
and includes the amount and percentage of the Corporation's
Common Stock of which each nominee, and all directors and
executive officers as a group, were the "beneficial owners" (as
defined in regulations of the Securities and Exchange Commission)
on April 17, 1997, all as reported to the Corporation. In
accordance with SEC regulations, the table includes, in the case
of certain of the nominees, all shares owned by partnerships or
other entities in which the nominee, by reason of his position or
interest, shares the power to vote or to dispose of securities.
<CAPTION>
Percentage
Served Shares of of
as Common Stock Common Stock
Principal Director Beneficially Beneficially
Name and Age Occupation Since Owned (a) Owned
- ------------ ---------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Raphael Recanati*, President, Finmar 1969 6,647,926 (b)(g) 18.3%
73..... Equities Co.,
shipping, finance
and banking.
Morton P. Hyman*, President of the 1969 270,000 (c) 0.7%
61...... Corporation.
Robert N. Cowen*, Senior Vice 1993 54,500 0.1%
48...... President and
Secretary of the
Corporation.
George C. Blake*, Executive Vice 1988 81,400 0.2%
65...... President,
Maritime Overseas
Corporation, ship
agents and
brokers.
Thomas H. Dean, Consultant, 1976 -- --
68........ Continental Grain
Company,
integrated food
company.
Michel Fribourg, Director and 1969 2,823,241(d) 7.8%
83....... Chairman Emeritus
of the Board,
Continental Grain
Company.
William L. Frost, Attorney and 1989 4,000(e) --
70...... President, Lucius
N. Littauer
Foundation.
Ran Hettena*, President, 1969 32,880(f)(g) 0.1%
73.......... Maritime Overseas
Corporation.
Stanley Komaroff, Chairman, law firm 1993 200 --
62...... of Proskauer Rose
Goetz & Mendelsohn
LLP, the
Corporation's
counsel.
Solomon N. Merkin, Vice President, 1989 (h) --
40..... Leib Merkin, Inc.,
private investment
company.
Joel I. Picket, President and 1989 200 --
58........ Chairman of the
Board, Gotham
Organization Inc.,
real estate,
construction and
development.
Oudi Recanati, Joint Managing 1996 1,000(g) --
47......... Director, IDB
Holding
Corporation Ltd.,
investment and
finance.
All directors and executive officers as a group. 9,956,347(i) 27.2%
<FN>
- --------------------
* Member of Finance and Development Committee of the Board, of
which Committee Mr. Raphael Recanati is Chairman.
(a) Unless otherwise indicated, each of the nominees has the
sole power to vote and direct disposition of the shares
shown as beneficially owned by him. Number of shares shown
includes shares issuable on exercise of vested options held
by Messrs. Hyman (200,000 shares), Cowen (54,000 shares) and
Blake (80,000 shares), and all directors and executive
officers as a group (394,000 shares).
(b) Includes 5,870,362 shares as to which Mr. Raphael Recanati
shares the power to vote and/or to direct disposition, of
which 2,986,416 shares are owned by OSG Holdings, a
partnership in which Mr. Recanati and his wife, as tenants
in common, have a 25% partnership interest. Mr. Recanati's
address is 511 Fifth Avenue, New York, New York.
(c) Includes 20,000 shares owned by a corporation in which Mr.
Hyman shares the power to vote and/or to direct disposition;
excludes 280 shares owned by Mr. Hyman's wife, beneficial
ownership of which is disclaimed by him.
(d) All of these shares are owned by Fribourg Grandchildren
Family L.P., a partnership; Mr. Fribourg has the sole power
to vote and direct the disposition of all of said shares.
The address for Mr. Fribourg and Fribourg Grandchildren
Family L.P. is 277 Park Avenue, New York, New York.
(e) Excludes 400 shares owned by Mr. Frost's wife, beneficial
ownership of which is disclaimed by him.
(f) Excludes 12,493 shares owned by Mr. Hettena's wife,
beneficial ownership of which is disclaimed by him.
(g) Mr. Hettena and Mr. Raphael Recanati are brothers-in-law.
Mr. Oudi Recanati is a son of Mr. Raphael Recanati and a
nephew of Mr. Hettena.
(h) Mr. Merkin is a 1.2% partner in OSG Holdings.
(i) Of the 9,956,347 shares, persons who are directors or
executive officers have sole power to vote and direct
disposition of 4,085,985 shares (11.2% of the outstanding
shares of the Corporation) and share with other persons the
power to vote and/or direct disposition of 5,870,362 shares
(16% of the outstanding shares).
</TABLE>
Each nominee has been principally engaged in his
present employment for the past five years except Mr. Cowen, who
has served as Senior Vice President of the Corporation since
February 1993 and who also serves as executive vice president and
a director of Overseas Discount Corporation, a private company
engaged in finance and investment; Mr. Dean, who served as an
executive officer of Continental Grain Company for more than 25
years until he assumed his present listed position in 1996; and
Mr. Oudi Recanati, who assumed his present listed position in
1997 and also serves as Chairman of the Board of Y.L.R. Capital
Markets Ltd., engaged in investment banking. Messrs. Raphael
Recanati and Oudi Recanati are directors of IDB Holding
Corporation Ltd. and several of its subsidiaries. In February
1994, following a lengthy trial in Israel of 22 defendants,
including IDB Holding Corporation Ltd., the four largest Israeli
banks, and members of their senior managements, IDB Holding
Corporation Ltd., all the banks, including Israel Discount Bank
Limited, and all the management-defendants were convicted by a
district court of contravening certain provisions of that
country's laws in connection with activities that arose out of a
program related to the regulation of bank shares prior to 1984.
Messrs. Raphael Recanati and Oudi Recanati, who were among the
management-defendants, and IDB Holding Corporation Ltd.
categorically denied any wrongdoing and appealed to the Supreme
Court of Israel, which found that the share regulation had been
authorized and encouraged by high officials of the Israeli
Government, overturned the principal count of the indictments of
the management-defendants, and acquitted IDB Holding Corporation
Ltd. of all charges. The Court left standing the lower court's
finding that Mr. Raphael Recanati, who was chief executive
officer of Israel Discount Bank Limited, and Mr. Oudi Recanati,
who was a member of that bank's senior management, caused
improper advice to be given in connection with the sale of
securities and that Mr. Raphael Recanati caused false entries in
corporate documents, in contravention of Israel laws. None of
the activities in question, which occurred more than 13 years
ago, relate to or involve the Corporation or its business in any
way.
If, for any reason, any nominee should not be available for
election or able to serve as a director, the accompanying proxy
will be voted for the election of a substitute nominee designated
by the Board of Directors. The Board has no reason to believe
that it will be necessary to designate a substitute nominee.
COMPENSATION AND CERTAIN TRANSACTIONS
<TABLE>
The following Summary Compensation Table includes individual
compensation information for services in all capacities to the
Corporation and its subsidiaries during the years ended December
31, 1996, 1995 and 1994 by the Chief Executive Officer, and the
two other executive officers of the Corporation serving during
1996 whose salary for said year exceeded $100,000.
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual
Compensation
------------
Name and Principal All Other
Position Year Salary Compensation
- -------------------- ---- ----------- ------------
<S> <C> <C> <C>
Morton P. Hyman......... 1996 $965,000 $ 20,512(1)
President (CEO) 1995 915,000 16,661
1994 915,000 11,441
Robert N. Cowen......... 1996 257,500 1,145(2)
Senior Vice President 1995 242,500 1,145
and Secretary 1994 200,000 1,145
Myles R. Itkin.......... 1996 485,000(3) 11,130(1)
Senior Vice President 1995 256,692(3) 3,240
and Treasurer(CFO) 1994 -- --
- -----------
<FN>
(1) For Messrs. Hyman and Itkin, consists of matching
contributions by the Corporation under its Savings Plan in
the respective amounts of $6,750 and $6,715, and the cost of
term life insurance in the respective amounts of $13,762 and
$4,415.
(2) Cost of term life insurance.
(3) Mr. Itkin became Senior Vice President, Treasurer and Chief
Financial Officer of the Corporation in June 1995. He has a
three year employment contract, terminating June 1998, at an
initial annualized salary of $460,000, which is reviewed
each year. The Corporation has undertaken to make available
to Mr. Itkin an option to purchase a total of 60,000 shares
of the Corporation's Common Stock at the closing price on
the New York Stock Exchange on the date of grant, which
option will become exercisable in five equal annual
installments of 12,000 shares, commencing no later than
during the year 2000 and expiring no later than December 31,
2005.
</TABLE>
In October 1996, the Corporation entered into three year
contracts with Messrs. Hyman and Cowen providing that in the
event of a "change of control" of the Corporation, as defined in
the agreements, each of the executives will be entitled to
certain payments and benefits upon a termination of his
employment (whether voluntary or involuntary) at any time within
two years after the change of control or upon termination of his
employment by the Corporation without cause or by the executive
with good reason within 120 days prior to the change of control.
Upon any such termination, the executive will be entitled to
payment of three times his highest annual base salary in effect
within 121 days prior to or at any time after the change of
control, three years of additional service and compensation
credit at that compensation level for pension purposes and for
purposes of the Corporation's supplemental employee retirement
benefit plans (see "Pension Plan" below) and three years of
continued coverage for the executive and his dependents under the
Corporation's health plan and for the executive under the
Corporation's life insurance plan. If and to the extent these
payments and benefits, and any other amounts paid to the
executive as a result of a change of control, constitute "excess
parachute payments" under Section 280G of the Internal Revenue
Code of 1986, as amended, the excess parachute payments are
subject to excise tax (and are not deductible to the
Corporation); in that event the Corporation has agreed to pay the
executive on a grossed up basis so that the net amount received
by the executive, after payment of such excise tax and of other
taxes on the grossed up amount, will equal the full amounts to
which he would be entitled in the absence of such excise tax.
Each of the executives has agreed that he will be available as a
consultant in a senior advisory capacity for 90 days following a
change of control to assist in the orderly transition to new
management. The Board of Directors of the Corporation determined
to enter into these agreements in order to encourage continued
availability of Messrs. Hyman and Cowen during any period in
which a change of control transaction may be pending or under
consideration. No such transaction is currently pending or under
consideration by the Corporation.
<TABLE>
AGGREGATE OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES (1)
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at December 31, 1996 December 31, 1996(2)
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------------------- -------------------------
<S> <C> <C>
Morton P. 200,000 / 0 $ 600,000 / 0
Hyman.........
Robert N. 30,000 / 0 90,000 / 0
Cowen.........
- -------------
<FN>
(1) No options were exercised by the named individuals during
1996.
(2) Reflects market value of underlying shares of the
Corporation's Common Stock on December 31, 1996, minus the
exercise price.
</TABLE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
<TABLE>
Set forth below is a line graph comparing the yearly percentage
change in the cumulative total stockholder return on the
Corporation's Common Stock against the cumulative total return of
the published Standard and Poor's 500 Stock Index and the Dow
Jones Marine Transportation Index for the five years ended
December 31, 1996.
<CAPTION>
STOCK PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
OSG, S&P 500 STOCK INDEX, DOW JONES MARINE TRANSPORTATION INDEX
S&P 500 DOW JONES MARINE
PERIOD OSG STOCK INDEX TRANSPORTATION INDEX
------ --- ----------- --------------------
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 91.73 107.62 87.81
1993 128.93 118.45 112.63
1994 129.17 120.01 103.40
1995 109.91 165.11 117.95
1996 101.70 203.02 143.84
- ------------------
<FN>
* Assumes that the value of the investment in the Corporation's
Common Stock and each index was $100 on December 31, 1991 and
that all dividends were reinvested. In accordance with rules of
the Securities and Exchange Commission ("SEC"), the
Corporation's Stockholder Return Performance Presentation does
not constitute "soliciting material" and is not incorporated by
reference in any filings with the SEC made pursuant to the
Securities Act of 1933 (the "1933 Act") or the Securities
Exchange Act of 1934 (the "1934 Act").
</TABLE>
PENSION PLAN
The Corporation contributes to a pension plan which provides its
employees with annual retirement benefits based upon age, credited
service and average compensation (comprised of salaries, bonuses
and incentive compensation) for the highest five successive years
of the last ten years prior to retirement. The plan is non-
contributory by the employee, and the Corporation's contributions
to the plan are determined on an actuarial basis without
individual allocation. The Corporation is one of several
employers contributing to the plan and pays its proportionate
share of the annual cost. The plan is maintained by Maritime
Overseas Corporation, which acts as agent in respect of the
operation of the Corporation's bulk cargo vessels as described
below.
<TABLE>
The following table sets forth the estimated annual pensions
payable under the pension plan (subject to reduction on an
actuarial basis where survivorship benefits are provided), upon
normal retirement, to employees at various compensation levels and
in representative years-of-service classifications, calculated
before application of the Social Security offset provided for in
the plan:
<CAPTION>
Years of Credited Service
---------------------------------------------------------------
Average
Compen- 10 15 20 25 30 35 40
sation years years years years years years years
------- ----- ----- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 15,000 22,500 30,000 37,500 45,000 52,500 60,000
200,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000
300,000 45,000 67,500 90,000 112,500 135,000 157,500 180,000
400,000 60,000 90,000 120,000 150,000 180,000 210,000 240,000
500,000 75,000 112,500 150,000 187,500 225,000 262,500 300,000
600,000 90,000 135,000 180,000 225,000 270,000 315,000 360,000
700,000 105,000 157,500 210,000 262,500 315,000 367,500 420,000
800,000 120,000 180,000 240,000 300,000 360,000 420,000 480,000
900,000 135,000 202,500 270,000 337,500 405,000 472,500 540,000
1,000,000 150,000 225,000 300,000 375,000 450,000 525,000 600,000
- --------------
</TABLE>
The annual pension payable to any employee under the pension
plan may not exceed the limitations imposed for qualified plans
under Federal law. However, under supplemental retirement plans
Messrs. Hyman, Cowen and Itkin will be entitled to the additional
benefits that would have been payable to them under the pension
plan in the absence of such limitations. Payments under the
supplemental retirement plans will be accelerated upon a "change
of control" as defined therein.
The respective number of years of credited service under the
pension plan of the Corporation's executive officers named in the
Summary Compensation Table on page 5 are as follows: Morton P.
Hyman-37 years; Robert N. Cowen-17 years; and Myles R. Itkin-2
years.
COMPENSATION OF DIRECTORS
The independent non-employee directors of the Corporation
receive a director's fee of $15,000 per year, payable quarterly,
and a fee of $1,000 for each meeting of the Board of Directors
they attend.
EXECUTIVE COMPENSATION
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
AND THE STOCK OPTION COMMITTEE
In accordance with rules of the SEC, the Report on Executive
Compensation does not constitute "soliciting material" and is not
incorporated by reference in any filings with the SEC made
pursuant to the 1933 Act or the 1934 Act.
The Executive Compensation Committee (the "Committee") of the
Board of Directors reviews and determines compensation for
members of senior management. It is composed of two non-officer
directors of the Corporation: Raphael Recanati and Michel
Fribourg. The Committee's compensation policies are designed to
promote the following objectives:
- to attract and motivate talented executives, and to
encourage their long term tenure with the Corporation
- to compensate executives based upon the value of their
individual contributions in achieving corporate goals and
objectives
- to motivate executives to maximize shareholder values
The Committee seeks to set salaries for its executives at
levels that enable the Corporation to attract and retain talented
personnel. The Committee does not deem it appropriate to base
annual salary adjustments solely upon year-to-year comparisons of
financial performance, particularly since the Corporation's
results over a short term period are significantly influenced by
factors beyond the Corporation's control, reflecting primarily
the dynamics of world bulk shipping markets. These markets are
extremely competitive and highly volatile, influenced by the
worldwide supply and demand for tonnage and general world
economic conditions. The Corporation does not make significant
annual adjustments to compensation levels based upon changes in
financial performance that in the judgment of the Committee
primarily reflect charter market conditions or other factors over
which the Corporation has no control, whether favorable or
unfavorable.
The nature of the Corporation's business requires long range
planning that may entail advance commitments for the construction
of vessels during periods of unfavorable conditions in current
charter markets. Such commitments are made on the basis of an
analysis of long term trends in demand, utilization and market
forces that suggest future improvement in rates. Under these
circumstances, the Committee believes that short term financial
performance is only one of many guides in determining executive
compensation. Success in meeting corporate goals and objectives
also is considered to be an appropriate measure of executive
performance. Such goals and objectives include success in
meeting specific customer requirements, in reducing financing and
operating costs for the fleet, in anticipating market movements
and in improving the quality of customer service. The Committee
considers that these goals and objectives have been met in 1996.
In setting executive compensation, the Committee also
considers the Corporation's performance in the context of overall
industry conditions and its standing in the industry. The
Committee does not give particular weight to or quantify any one
or more performance factors, but in setting 1996 salaries, the
Committee considered the fact that although the Corporation's
results in 1996 continued to reflect the weakness in some
segments of the world bulk shipping markets, the Corporation
nevertheless maintained its position as one of the largest tanker
owners in the world, took delivery of newbuilding vessels in
furtherance of the Corporation's ongoing fleet modernization
program, succeeded in maintaining the Corporation's recognition
for high quality within the bulk shipping industry, refinanced
debt upon attractive terms and participated in decisions related
to the new cruise ships ordered for Celebrity Cruise Lines Inc.,
the Corporation's joint venture in the cruise industry. The
Committee takes into consideration an executive's particular
contributions to the Corporation. Length of service is another
important factor taken into account. The Corporation has not yet
formulated a policy with respect to qualifying compensation paid
to executive officers for deductibility under Section 162 (m) of
the Internal Revenue Code of 1986, as amended (the provision was
enacted as part of "OBRA '93" for compensation exceeding $1
million in a taxable year paid to an executive officer, effective
January 1, 1994). None of the executive officers received
compensation in excess of $1 million for 1996.
The Committee believes that the interests of shareholders are
best served by granting stock options to executive officers and
thereby giving them the opportunity to participate in
appreciation in the Corporation's stock over an extended period.
In this way, senior management can directly share in the benefits
of maximizing shareholder values. The Corporation's stockholder-
approved amended 1989 Stock Option Plan is administered by the
Stock Option Committee of the Board of Directors, which is
composed of two non-officer directors of the Corporation: Raphael
Recanati and Joel I. Picket. The Stock Option Committee
determines the persons to whom stock options will be granted
under the Plan and allocates the amounts to be granted to such
persons. Under the Plan, senior management in 1990 were granted
options for 570,000 shares of Common Stock, in the aggregate, to
vest over five years and be exercisable up to ten years from the
date of grant. The Committee and the Stock Option Committee
believe that over such an extended period, stock performance will
to a meaningful extent reflect executive performance, and that
such arrangements further reinforce management goals and
incentives to achieve shareholder objectives. Accordingly,
although compensation paid by the Corporation for 1996 consisted
solely of salary and the Corporation did not grant options in
1996, the Corporation may consider authorizing and granting
additional stock options in order to provide its executive
officers with satisfactory total compensation packages and reward
them for their contributions to the Corporation's long term share
performance. The Committee believes that the total compensation
package received by each of the executive officers last year,
taking into consideration outstanding option grants, was
appropriate. In considering future option grants, the number of
options previously granted will be taken into consideration.
While taking the foregoing factors into account, the
Committee's compensation determinations for the Corporation's
relatively small number of executive officers are to a large
extent subjective and not arrived at by application of any
specific formula.
Mr. Morton P. Hyman has served as a director and officer of the
Corporation since 1969, and as its President and Chief Executive
Officer since 1971. His compensation reflects his many
contributions as a key member of management since the Corporation
was founded. Such compensation is not based primarily upon the
Corporation's short term financial performance nor is it based
upon any formula. To a large extent Mr. Hyman's compensation
reflects an assessment of his performance based upon the
subjective judgment of the Committee. In light of his
contribution to the growth and success of the Corporation, and
his service as its President for 26 years, the Committee believes
his compensation is appropriate and reasonable.
Submitted by the Executive Compensation Committee and Stock
Option Committee of the Board of Directors:
Executive Compensation Committee Stock Option Committee
- -------------------------------- ----------------------
Raphael Recanati Raphael Recanati
Michel Fribourg Joel I. Picket
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Raphael Recanati and Michel Fribourg served on the
Executive Compensation Committee of the Board of Directors during
1996. Mr. Fribourg is a Director and Chairman Emeritus of the
Board and principal stockholder of Continental Grain Company (Mr.
Dean, a director of the Corporation, is a consultant to that
corporation). Subsidiaries of the Corporation received revenues
of approximately $3,764,000 during 1996 from charters of vessels
to Continental Grain Company and its subsidiaries. A subsidiary
of the Corporation, together with Continental Grain Company and
an unrelated third party, are partners in an investment
partnership in which the Corporation's subsidiary has an
investment of approximately $675,000.
Messrs. Raphael Recanati and Joel I. Picket served on the Stock
Option Committee of the Board of Directors during 1996. Mr. Ran
Hettena, who also served as a member of that Committee until
October 1996, is President, a director and sole stockholder of
Maritime Overseas Corporation, a New York corporation ("MOC").
MOC or a subsidiary of MOC, under various agreements with the
Corporation and its subsidiaries, acts as agent in respect of the
operation of bulk cargo vessels owned and to be owned by these
subsidiaries and provides certain general and administrative
services required by the Corporation and its subsidiaries. The
Corporation may terminate the agreements at the end of any year
on twelve months' prior notice; MOC may not terminate the
agreements prior to December 31, 1998. Under agreements between
MOC and certain companies in which the Corporation owns a 50%
interest, MOC acts as agent in respect of the operation of bulk
cargo vessels owned by such 50%-owned companies. Under various
agreements, MOC also serves as exclusive chartering broker for
the bulk fleet owned by the Corporation's subsidiaries and
certain 50%-owned companies and as exclusive broker in connection
with sales, purchases or construction of bulk cargo vessels, and
is entitled to receive commissions therefor either from the owner
or from the seller or builder. Under the various agreements,
MOC's total compensation for any year is limited to the extent
its consolidated net income from shipping operations would exceed
specified amounts ($1,009,125 for 1996).
The aggregate compensation payable to MOC (including its
subsidiaries) under all these agreements for 1996 (excluding
brokerage) was $35,941,654, of which $1,265,689 represented
compensation paid by 50%-owned companies. Brokerage commissions
payable to MOC under all these agreements for 1996 aggregated
$6,469,191, of which $44,475 was paid by 50%-owned companies.
MOC retains as advances under the agreements an amount equivalent
to a non-current asset (net of related taxes) recorded by MOC as
a result of the application of a statement of accounting
principles adopted by the Financial Accounting Standards Board;
the advances, which approximated $2,172,000 as of December 31,
1996, are repayable as the asset is realized or when the
agreements terminate, whichever is earlier. The Corporation
advanced to MOC $1,130,000 in 1990 ($339,000 of which is
presently outstanding) to fund certain pension obligations that
were paid by MOC but which, under the agreements between MOC and
the Corporation, are borne by the Corporation over periods
determined in accordance with generally accepted accounting
principles by actuarial calculation. The advance bears interest
at the rate of 10% per annum and is repayable in ten equal annual
installments (which commenced in 1991) or when the agreements
terminate, whichever is earlier. The consolidated net income
from shipping operations of MOC for the year ended December 31,
1996 was limited to the agreed maximum amount described in the
preceding paragraph.
Four of the nominees for election as directors of the
Corporation, Messrs. Hettena, Merkin, Cowen and Oudi Recanati,
constitute the Board of Directors of MOC; Messrs. Hettena and
Blake are senior officers of MOC. All the outstanding shares of
MOC are owned by Mr. Hettena. Mr. Oudi Recanati is a son of Mr.
Raphael Recanati and a nephew of Mr. Hettena.
The MOC 1990 Stock Option Plan, as amended, provides for the
grant of options to employees, officers and directors of MOC to
purchase up to 784,435 shares of Common Stock of the Corporation.
In order to facilitate said Plan, the Corporation under an
agreement with MOC has agreed to make a total of up to 784,435
shares of the Corporation's Common Stock available to MOC, as and
when required by MOC to meet its obligations under said Plan, at
a price equal to (i) the option price, or (ii) the market price
on the date an option is granted, or (iii) $14 per share,
whichever shall be highest, for shares purchased by MOC from the
Corporation in respect of all option grants. Through December
31, 1996, the Corporation has provided an aggregate of 103,861
shares to MOC pursuant to the agreement.
Each of the business transactions referred to above under this
caption and under the "Other Transactions" caption below was
considered to be fair and reasonable to all the parties involved
at the time the transaction was entered into and was in the
opinion of management at least as favorable to the Corporation as
it would have been if made with a non-affiliated party.
OTHER TRANSACTIONS
Subsidiaries of the Corporation received revenues of
approximately $14,979,000 during 1996 and approximately
$1,879,000 during the first three months of 1997 from charters of
vessels to a subsidiary of Archer-Daniels-Midland Company, a
company named as a beneficial owner of more than 5% of the
outstanding shares of the Corporation's Common Stock under
"Information as to Stock Ownership".
COMMITTEES AND MEETINGS
The Board of Directors has established various committees to a
ssist it in discharging its responsibilities, including an
Executive Compensation Committee and an Audit Committee. The
Executive Compensation Committee reviews and determines the
compensation of the Corporation's executives; it consists of
Messrs. Fribourg and Raphael Recanati and held one meeting during
1996. The Audit Committee recommends to the Board each year the
independent auditors to be selected by the Corporation, reviews
the planned scope and the results of each year's audit, reviews
any recommendations the auditors may make with respect to the
Corporation's internal controls and procedures and oversees the
responses made to any such recommendations; the Committee
consists of Messrs. Dean and Frost and met twice during 1996.
The Corporation does not have a nominating or similar committee.
The Corporation's Board of Directors held seven meetings during
1996. Members of the Board are frequently consulted by
management throughout the year, and the Corporation does not
consider percentage attendance information in itself to be a
meaningful indication of the quality or importance of a
director's contribution to the Board. Each director attended at
least 75% of the total number of meetings of the Board and
committees of which he was a member.
INFORMATION AS TO STOCK OWNERSHIP
Set forth below are the names and addresses of those persons,
other than nominees for directors and entities they control (see
"Election of Directors"), that are known by the Corporation to
have been "beneficial owners" (as defined in regulations of the
SEC) of more than 5% of the outstanding shares of the
Corporation's Common Stock, as reported to the Corporation.
OSG Holdings, 511 Fifth Avenue, New York, New York, a
partnership, on April 17, 1997 owned 2,986,416 shares (8.2% of
the outstanding Common Stock). One of the nominees for director
of the Corporation, by reason of his interest and position in OSG
Holdings, may be deemed to be the "beneficial owner" of the
shares owned by OSG Holdings, as disclosed in the table of
nominees.
The other principal partners in OSG Holdings on April 17,
1997 were Hermann Merkin, 415 Madison Avenue, New York, New York,
and EST Associates L.P., 275 Madison Avenue, Suite 902, New York,
New York, a limited partnership. These partners may each be
deemed to share the power to vote and to direct disposition of
the 2,986,416 shares owned by OSG Holdings and may therefore be
deemed to be the beneficial owners of the following amounts and
percentages of the outstanding Common Stock: Hermann Merkin,
3,148,625 shares (including 162,209 shares owned directly), or
8.7%; and EST Associates L.P., 4,224,817 shares (including
1,238,401 shares owned directly), or 11.7%. Vivian Ostrovsky, 4
Avenue de Montespan, Paris, France, is the general partner in EST
Associates L.P. and may therefore be deemed the beneficial owner
of all the shares owned by EST Associates L.P. and OSG Holdings.
Except for shares referred to in this paragraph as being owned
directly, each of the persons named shares the power to vote and
dispose of all the shares of which such person is considered the
beneficial owner.
To the best of the Corporation's knowledge, based on reports
filed with the SEC, the only other beneficial owners of more than
5% of the Corporation's Common Stock are: (a) Archer-Daniels-
Midland Company, 4666 Faries Parkway, Decatur, Illinois, which as
of March 31, 1997 owned beneficially an aggregate of 5,674,800
shares (15.7%), which it reported were acquired for investment
purposes, and that it has the sole power to vote and to dispose
of such shares; and (b) John Hancock Mutual Life Insurance
Company, John Hancock Place, P.O. Box 111, Boston, Massachusetts,
and its subsidiaries, John Hancock Subsidiaries, Inc., John
Hancock Asset Management, The Berkeley Financial Group and NM
Capital Management, Inc., which as of December 31, 1996 owned
beneficially an aggregate of 1,911,501 shares (5.3%) as to which
they have sole dispositive power, including 783,187 shares as to
which they have sole voting power. According to the SEC filings
referred to in this paragraph, the shares mentioned above were
not acquired for the purpose of or having the effect of changing
or influencing control of the Corporation nor in connection with
or as a participant in any transaction having such purpose or
effect.
SELECTION OF AUDITORS
On recommendation of the Audit Committee, the Board of
Directors has appointed Ernst & Young LLP as independent auditors
for the Corporation and its subsidiaries for the year 1997
subject to the approval of the stockholders at the annual
meeting. If the appointment is not approved by the stockholders,
the selection of independent auditors will be reconsidered by the
Board of Directors.
Ernst & Young LLP is a well known and well qualified firm of
public accountants which (including its predecessors) has served
as auditors of the Corporation since the Corporation was
organized in 1969. Representatives of Ernst & Young LLP will
attend the annual meeting and be afforded an opportunity to
make a statement, as well as be available to respond to
appropriate questions submitted by stockholders.
The Board of Directors recommends a vote in favor of the
appointment of Ernst & Young LLP.
PROPOSALS FOR 1998 MEETING
Any proposals of stockholders that are intended to be
presented at the Corporation's 1998 Annual Meeting of
Stockholders must be received at the Corporation's principal
executive offices no later than December 31, 1997, and must
comply with all other applicable legal requirements, in order to
be included in the Corporation's proxy statement and form of
proxy for that meeting.
GENERAL INFORMATION
The Board of Directors is not aware of any matters to be
presented at the meeting other than those specified above. If
any other matter should be presented, the holders of the
accompanying proxy will vote the shares represented by the proxy
on such matter in accordance with their best judgment.
All shares represented by the accompanying proxy, if the
proxy is duly executed and received by the Corporation at or
prior to the meeting, will be voted at the meeting in accordance
with the instructions provided therein. If no such instructions
are provided, the proxy will be voted for the election of
directors and for the appointment of Ernst & Young LLP as
auditors. Under Delaware law and the Corporation's Certificate
of Incorporation and By-Laws, if a quorum is present, directors
are elected by a plurality of the votes cast by the holders of
the shares present in person or represented by proxy at the
meeting and entitled to vote on the election of directors. A
majority of the outstanding shares entitled to vote, present in
person or represented by proxy, constitutes a quorum. Shares
represented by proxies or ballots withholding votes from one or
more directors will not be counted in the election of that
director but will be counted for purposes of determining a
quorum.
The cost of soliciting proxies for the meeting will be borne
by the Corporation. The Corporation will also reimburse brokers
and others who are only record holders of the Corporation's
shares for their reasonable expenses incurred in obtaining voting
instructions from beneficial owners of such shares. Directors
and officers of the Corporation may solicit proxies personally or
by telephone or telegraph but will not receive additional
compensation for doing so.
The Corporation's Annual Report to Stockholders for the
fiscal year ended December 31, 1996 has been mailed to
stockholders. The Annual Report does not form part of this Proxy
Statement.
By order of the Board of Directors,
ROBERT N. COWEN
Senior Vice President & Secretary
New York, N.Y.
April 30, 1997
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, June 10, 1997
The undersigned hereby appoints MORTON P. HYMAN and RAN
HETTENA, and either of them, proxies, with full power of
substitution, to vote all shares of stock of OVERSEAS SHIPHOLDING
GROUP, INC. which the undersigned is entitled to vote, at the
Annual Meeting of Stockholders of the Corporation to be held at
J.P. Morgan Investment Management Inc., 522 Fifth Avenue (corner
West 44th Street), New York, N.Y., Seventh Floor, on June 10,
1997, at 2:30 o'clock P.M., notice of which meeting and the
related Proxy Statement have been received by the undersigned,
and at any adjournments thereof.
The undersigned hereby ratifies and confirms all that said
proxies, or either of them, or their substitutes, may lawfully do
in the premises and hereby revokes all proxies heretofore given
by the undersigned to vote at said meeting or any adjournments
thereof. If only one of said proxies, or his substitute, shall
be present and vote at said meeting or any adjournments thereof,
then that one so present and voting shall have and may exercise
all the powers hereby granted.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE CORPORATION. THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED IN THE MANNER INDICATED BY THE STOCKHOLDER. IN THE ABSENCE
OF SUCH INDICATION, SUCH SHARES WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR THE APPOINTMENT OF ERNST & YOUNG LLP AS
INDEPENDENT AUDITORS, AND IN THE DISCRETION OF SAID PROXIES WITH
RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING AND ANY ADJOURNMENTS THEREOF.
(Continued, and To Be Signed and Dated on Reverse Side)
<PAGE>
(1) Election of Directors: Nominees- Raphael Recanati, Morton P. Hyman,
Robert N. Cowen, George C. Blake,
For all Nominees Thomas H. Dean, Michel Fribourg,
(except as Withhold William L. Frost, Ran Hettena,
withheld in Authority Stanley Komaroff, Solomon N.
the space to Vote for Merkin, Joel I. Picket and Oudi
provided) all Nominees Recanati. (To withhold authority
to vote for any individual
Nominee, print that Nominee's name
--- --- on the following line:)
/ / / /
--- ---
--------------------------
(2)Approval of the appointment
of Ernst & Young LLP as
independent auditors for
the year 1997:
FOR AGAINST ABSTAIN
--- --- ---
/ / / / / /
--- --- ---
Please sign exactly as name (or
names) appears at the left. For
joint accounts each owner should
sign. Executors, administrators,
trustees, etc. should give full
title.
DATE: ......................, 1997
..................................
..................................
Signature or Signatures
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS CARD
