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 2, 1998
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 2, 1998, 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 1998;
(3) To consider and act upon a proposal to approve the
adoption by the Board of Directors of the 1998 Stock Option Plan;
and
(4) To transact such other business as may properly be
brought before the meeting.
Stockholders of record at the close of business on April 16,
1998 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 29, 1998
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
2, 1998. 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
16, 1998 will be entitled to vote at the annual meeting. The
Corporation has one class of voting securities, its Common Stock,
of which 36,794,121 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 29, 1998.
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 16, 1998, 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>
Served Shares of Percentage of
as Common Stock Common Stock
Principal Director Beneficially Beneficially
Name and Age Occupation Since Owned (a) Owned
- ------------ ---------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Raphael President, Finmar 1969 6,647,926 (b)(g) 18.1%
Recanati*, 74... Equities Co.,
shipping, finance
and banking.
Morton P. President of the 1969 157,927 (c) 0.4%
Hyman*, 62...... Corporation.
Robert N. Senior Vice 1993 30,500 0.1%
Cowen*, 49...... President and
Secretary of the
Corporation.
George C. Executive Vice 1988 41,400 0.1%
Blake*, 66...... President,
Maritime Overseas
Corporation, ship
agents and
brokers.
Thomas H. Consultant, 1976 -- --
Dean, 69........ Continental Grain
Company,
integrated food
company.
Michel Director and 1969 2,823,241(d) 7.7%
Fribourg, 84.... Chairman Emeritus
of the Board,
Continental Grain
Company.
William L. Attorney and 1989 4,000(e) --
Frost, 71...... President, Lucius
N. Littauer
Foundation.
Ran President, 1969 32,880(f)(g) 0.1%
Hettena*, 74.... Maritime Overseas
Corporation.
Stanley Chairman, law firm 1993 200 --
Komaroff, 63.... of Proskauer Rose
LLP, the
Corporation's
counsel.
Solomon N. Vice President, 1989 (h) --
Merkin, 41..... Leib Merkin, Inc.,
private investment
company.
Joel I. President and 1989 200 --
Picket, 59...... Chairman of the
Board, Gotham
Organization Inc.,
real estate,
construction and
development.
Oudi Joint Managing 1996 1,000(g) --
Recanati, 48.... Director, IDB
Holding
Corporation Ltd.,
investment and
finance.
All directors and executive officers
as a group... 9,757,274(i) 26.4%
<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 (100,000 shares), Cowen (30,000 shares) and
Blake (40,000 shares), and all directors and executive
officers as a group (207,000 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;
in addition, Mr. Hyman is a 0.4% partner in OSG Holdings;
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's wife, as trustee
under various trusts, has the sole power to vote and direct
the disposition of all of said shares, beneficial ownership
of which is disclaimed by him. The address for 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 7,082 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 1.3% partner in OSG Holdings.
(i) Of the 9,757,274 shares, persons who are directors or
executive officers have sole power to vote and direct
disposition of 1,063,671 shares (2.9% of the outstanding
shares of the Corporation) and share with other persons the
power to vote and/or direct disposition of 8,693,603 shares
(23.5% of the outstanding shares).
</TABLE>
Each nominee has been principally engaged in his
present employment for the past five years except 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; 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; and
Mr. Cowen, who also serves as executive vice president and a
director of Overseas Discount Corporation, a private company
engaged in finance and investment. 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 14 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
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, 1997, 1996 and 1995 by the Chief Executive Officer, and the
two other executive officers of the Corporation serving during
1997 whose salary for said year exceeded $100,000.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
--------------------
Name and Principal All Other
Position Year Salary Bonus Compensation
- ------------------- ---- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Morton P. Hyman........ 1997 $1,000,000 $1,000,000(1) $ 22,198(2)
President (CEO) 1996 965,000 - 20,512
1995 915,000 - 16,661
Robert N. Cowen........ 1997 267,800 100,000(1) 1,145(3)
Senior Vice President 1996 257,500 - 1,145
and Secretary 1995 242,500 - 1,145
Myles R. Itkin......... 1997 505,000(4) - 11,990(2)
Senior Vice President
and Treasurer (CFO) 1996 485,000(4) - 11,130
1995 256,692(4) - 3,240
<FN>
- ---------
(1) Special bonuses paid to Messrs. Hyman and Cowen in
recognition of their achievements in negotiating and
concluding the sale of the Corporation's 49% interest in
Celebrity Cruise Lines Inc. to Royal Caribbean Cruises Ltd.
(2) For Messrs. Hyman and Itkin, consists of matching
contributions by the Corporation under its Savings Plan in
the amount of $7,125 for each, and the cost of term life
insurance in the respective amounts of $15,073 and $4,865.
(3) Cost of term life insurance.
(4) 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 was 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 "Code"), 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.
<TABLE>
AGGREGATE OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
<CAPTION>
Number of Securities
Number of Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options at
Underlying at December 31, 1997 December 31, 1997 (1)
Options Value
Name Exercised Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- --------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Morton 100,000 $1,114,458 100,000 / 0 $781,250 / 0
P. Hyman
Robert 30,000 334,662 0 / 0 0 / 0
N. Cowen
<FN>
- -------------
(1) Reflects market value of underlying shares of the
Corporation's Common Stock on December 31, 1997, minus the
exercise price.
</TABLE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
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, 1997.
<TABLE>
STOCK PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
OSG, S&P 500 STOCK INDEX, DOW JONES MARINE TRANSPORTATION INDEX
<CAPTION>
S&P 500 DOW JONES MARINE
PERIOD OSG STOCK INDEX TRANSPORTATION INDEX
------ --- ----------- --------------------
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 140.55 110.06 128.26
1994 140.82 111.51 117.75
1995 119.82 153.42 134.32
1996 110.87 188.64 163.81
1997 146.46 251.58 197.46
<FN>
- ------------------
* Assumes that the value of the investment in the Corporation's
Common Stock and each index was $100 on December 31, 1992 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.
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:
<TABLE>
Years of Credited Service
------------------------------------------------------------
<CAPTION>
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>
$ 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
1,200,000 180,000 270,000 360,000 450,000 540,000 630,000 720,000
1,500,000 225,000 337,500 450,000 562,500 675,000 787,500 900,000
- --------------
</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-38 years; Robert N. Cowen-18 years; and Myles R. Itkin-3
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 1997.
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 1997 compensation,
the Committee considered the fact that although the Corporation's
results in 1997 continued to reflect particular weakness in
certain segments of the world bulk shipping markets, the
Corporation nevertheless maintained its position as one of the
leading tanker owners in the world. During 1997, the Corporation
completed a major newbuilding program and implemented a program
to dispose of its older and less competitive dry bulk vessels,
all in furtherance of the Corporation's ongoing fleet
modernization program, and succeeded in maintaining the
Corporation's recognition for high quality within the bulk
shipping industry. During the year the Corporation also
refinanced debt upon attractive terms, and sold its 49% interest
in Celebrity Cruise Lines Inc., the Corporation's joint venture
in the cruise industry, to Royal Caribbean Cruises Ltd. on terms
favorable to the Corporation. The Committee takes into
consideration an executive's particular contributions to the
Corporation. Length of service is another important factor taken
into account. Pursuant to Section 162(m) of the Code (which was
enacted effective January 1, 1994), compensation exceeding $1
million paid to the Corporation's executive officers may not be
deducted by the Corporation unless such compensation is
performance based and paid pursuant to criteria approved by the
stockholders. The Committee considered the provisions of Section
162(m) of the Code in setting 1997 compensation paid to the
President of the Corporation.
The Committee believes that the interests of stockholders 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, the profitability and value of the Corporation is
enhanced for the benefit of stockholders by enabling the
Corporation to offer employees, including senior management,
stock based incentives in the Corporation in order to attract,
retain and reward such individuals and strengthen the mutuality
of interests between such individuals and the stockholders. 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 stockholder
objectives. Accordingly, on April 1, 1998, the Board of
Directors adopted, subject to stockholder approval, the 1998
Stock Option Plan which will provide the Corporation with the
ability to make awards of stock options in the future. The terms
of the 1998 Stock Option Plan are summarized under "Approval of
Adoption of the 1998 Stock Option Plan". Although the
Corporation did not grant options in 1997 and has not yet granted
any options under the 1998 Stock Option Plan, 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. The Committee awarded to
Mr. Hyman a special bonus in 1997 in recognition of his
achievements in negotiating and concluding the sale of Celebrity
Cruise Lines Inc. to Royal Caribbean Cruises Ltd. on terms
favorable to the Corporation. In light of his contribution to
the growth and success of the Corporation, and his service as its
President for 27 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:
Stock Option Committee
under amended 1989
Executive Compensation Committee Stock Option Plan
- -------------------------------- ----------------------
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
1997. Mr. Fribourg is a Director and Chairman Emeritus of the
Board of Continental Grain Company and his wife, as trustee under
various trusts, is the principal stockholder of that corporation
(Mr. Dean, a director of the Corporation, is a consultant to
Continental Grain Company). Subsidiaries of the Corporation
received revenues of approximately $153,000 during 1997 and
$597,000 during the first three months of 1998 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, were partners in an
investment partnership in which the Corporation's subsidiary had
an investment of approximately $675,000; the Corporation sold its
partnership interest during 1997. Messrs. Raphael Recanati and
Joel I. Picket served on the Stock Option Committee of the Board
of Directors during 1997.
Maritime Overseas Corporation, a New York corporation ("MOC"),
or a subsidiary of MOC, under various agreements with the
Corporation and its subsidiaries, acts as agent in respect of the
operation of ships 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, 2003. 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 ships owned by such 50%-
owned companies. Under various agreements, MOC also serves as
exclusive chartering broker for the ships owned by the
Corporation's subsidiaries and certain 50%-owned companies and as
exclusive broker in connection with sales, purchases or
construction of ships, 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 ($1,110,038
for 1997).
The aggregate compensation payable to MOC (including its
subsidiaries) under all these agreements for 1997 (excluding
brokerage) was $36,044,437, of which $1,559,563 represented
compensation paid by 50%-owned companies. Brokerage commissions
payable to MOC under all these agreements for 1997 aggregated
$6,547,291, of which $164,254 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 $2,650,000 as of December 31,
1997, 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 ($226,000 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,
1997 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, 1997, the Corporation has provided an aggregate of 316,843
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 $5,684,000 during 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
assist 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
1997. 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 1997.
The Corporation does not have a nominating or similar committee.
The Corporation's Board of Directors held seven meetings during
1997. 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 16, 1998 owned 2,986,416 shares (8.1% 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 16,
1998 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,
3,145,625 shares (including 159,209 shares owned directly), or
8.5%; and EST Associates L.P., 4,224,817 shares (including
1,238,401 shares owned directly), or 11.5%. 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, 1998 owned beneficially an aggregate of 5,674,800
shares (15.4%), 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) Alpine Capital, L.P., and its two general
partners Robert W. Bruce III and Algenpar, Inc., and J. Taylor
Crandall and The Anne T. and Robert M. Bass Foundation, 201 Main
Street, Suite 3100, Fort Worth, Texas, which as of March 3, 1998
owned beneficially an aggregate of 1,936,100 shares (5.3%), which
they reported were acquired for investment purposes, and that
they have the sole power to vote and to dispose of such shares.
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 1998
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.
APPROVAL OF ADOPTION OF
THE 1998 STOCK OPTION PLAN
On April 1, 1998, the Board of Directors adopted the 1998
Stock Option Plan (the "1998 Plan"), subject to and conditioned
upon stockholder approval. The affirmative vote of at least a
majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote on this matter at the
1998 Annual Meeting is required for approval of the 1998 Plan.
Under Delaware law, abstentions will be treated as votes against
the adoption of the 1998 Plan; broker non-votes will be treated
as present for quorum purposes, but as not entitled to vote on
the proposal to approve the adoption of the 1998 Plan. The
following description of the 1998 Plan is a summary and is
qualified in its entirety by reference to the 1998 Plan.
Purpose
The purpose of the 1998 Plan is to enhance the profitability
and value of the Corporation for the benefit of its stockholders
by enabling the Corporation to offer employees of the Corporation
and its affiliates stock based incentives in the Corporation in
order to attract, retain and reward such individuals and
strengthen the mutuality of interests between such individuals
and the Corporation's stockholders.
Administration
The 1998 Plan will be administered and interpreted by a
committee of the Board of Directors consisting of two or more non-
employee directors, each of whom is intended to be, to the extent
required by Rule 16b-3 under the 1934 Act ("Rule 16b-3") and
Section 162(m) of the Code, a non-employee director as defined in
Rule 16b-3 and an outside director as defined under Section
162(m) of the Code (the "1998 Plan Committee"). If no 1998 Plan
Committee exists which has the authority to administer the 1998
Plan, the functions of the 1998 Plan Committee will be exercised
by the Board of Directors. The 1998 Plan Committee has the full
authority and discretion, subject to the terms of the 1998 Plan,
to grant stock options under the 1998 Plan and to determine the
persons to whom stock options will be granted.
Eligibility
All employees of the Corporation and its affiliates will be
eligible to receive grants of stock options under the 1998 Plan.
Available Shares
A maximum of 1,300,000 shares of Common Stock may be issued
under the 1998 Plan. The maximum number of shares of Common
Stock subject to options which may be granted to any employee
during any calendar year will not exceed 500,000 shares. To the
extent that shares of Common Stock for which options are
permitted to be granted to an employee during a calendar year are
not covered by a grant during such calendar year, such shares of
Common Stock will increase the number of shares of Common Stock
available for grant or issuance to the employee in the subsequent
calendar year during the term of the 1998 Plan.
The 1998 Plan Committee may make appropriate adjustments to
the number of shares available for stock option grants and the
terms of outstanding stock options to reflect any change in the
Corporation's capital structure or business by reason of a stock
dividend, extraordinary dividend, stock split, recapitalization,
reorganization, merger, consolidation or sale of all or
substantially all the assets of the Corporation (and certain
other events).
Stock Options
The 1998 Plan authorizes the 1998 Plan Committee to grant
stock options to purchase shares of the Corporation's Common
Stock to employees of the Corporation and its affiliates.
Options granted to employees of the Corporation or any
"subsidiary" or "parent" (within the meaning of Section 424 of
the Code) may be in the form of incentive stock options ("ISOs")
or non-qualified stock options. Options granted to employees of
affiliates that do not qualify as "subsidiaries" or "parents" may
only be non-qualified stock options. The 1998 Plan Committee
will determine the number of shares subject to each option, the
term of each option (which may not exceed ten years (or five
years in the case of an ISO granted to a ten percent
stockholder)), the exercise price, the vesting schedule (if any),
and the other material terms of the option. No option may have
an exercise price less than the fair market value of the Common
Stock at the time of grant (or, in the case of an ISO granted to
a ten percent stockholder, 110 percent of fair market value).
Options granted to employees will be exercisable at such
time or times and subject to such terms and conditions as
determined by the 1998 Plan Committee at grant. All options
granted to employees may be made exercisable in installments, and
the exercisability of such options may be accelerated by the 1998
Plan Committee. The exercise price of an option may be paid in
cash, by a cashless exercise procedure through a broker or by
such other methods approved by the 1998 Plan Committee (which may
include payment in shares of Common Stock owned for at least six
months).
Change in Control
Upon a change in control of the Corporation (as defined in
the 1998 Plan), all unvested options of employees will fully vest
and become exercisable in their entirety, provided that, no
acceleration of vesting and exercisability will occur with regard
to options that the 1998 Plan Committee determines in good faith
prior to a change in control of the Corporation will be honored
or assumed or new rights substituted therefor by a participant's
employer immediately following the change in control of the
Corporation.
Amendment and Termination
The 1998 Plan may be amended or terminated in its entirety
by the Board of Directors or the 1998 Plan Committee, provided
that the rights granted to an individual prior to such amendment
or termination may not be impaired without the consent of such
individual. In addition, no such amendment, without stockholder
approval to the extent such approval is required by the Delaware
law, Rule 16b-3 or under Sections 162(m) or 422 of the Code, may
increase the aggregate number of shares of Common Stock that may
be issued under the 1998 Plan, increase the maximum number of
shares of Common Stock subject to options which may be granted to
any employee during any calendar year, change the classification
of employees eligible to receive options, decrease the minimum
exercise price of any option or extend the maximum option term
under the 1998 Plan.
Miscellaneous
Subject to limited post-service exercise periods and vesting
in certain instances, options granted to participants under the
1998 Plan are generally forfeited upon any termination of
employment. Options will have such terms and will terminate upon
such conditions as may be contained in the individual option
grants. Although options will generally be nontransferable
(except by will or the laws of descent and distribution), the
1998 Plan Committee may determine at the time of grant or
thereafter that a non-qualified option granted to an employee
that is otherwise nontransferable may be transferable in whole or
in part and in such circumstances, and under such conditions, as
specified by the 1998 Plan Committee.
U.S. Federal Income Tax Consequences
The following discussion of the principal U.S. federal
income tax consequences with respect to options under the 1998
Plan is based on statutory authority and judicial and
administrative interpretations as of the date of this Proxy
Statement, which are subject to change at any time (possibly with
retroactive effect) and may vary in individual circumstances.
Therefore, the following is designed to provide a general
understanding of the federal income tax consequences (state,
local and other tax consequences are not addressed below). This
discussion is limited to the U.S. federal income tax consequences
to individuals who are citizens or residents of the U.S., other
than those individuals who are taxed on a residence basis in a
foreign country.
Under current federal income tax laws, the grant of an ISO
can be made solely to employees and generally has no income tax
consequences for the optionee or the Corporation. In general, no
taxable income results to the optionee upon the exercise of an
ISO. However, the amount by which the fair market value of the
stock acquired pursuant to the exercise of an ISO exceeds the
exercise price is an adjustment item for purposes of alternative
minimum tax. If no disposition of the shares is made within
either two years from the date the ISO was granted or one year
from the date of exercise of the ISO, any gain or loss realized
upon disposition of the shares will be treated as a long-term
capital gain or loss to the optionee. If the disposition of the
shares is made more than 18 months after the date of the exercise
of the ISO, the optionee will be taxed at the lowest rate
applicable to capital gains for such individual. The Corporation
will not be entitled to a tax deduction upon the exercise of an
ISO, nor upon a subsequent disposition of the shares, unless the
disposition occurs prior to the expiration of the holding period
described above. In general, if the optionee does not satisfy
these holding period requirements, any gain equal to the
difference between the exercise price and the fair market value
of the Common Stock at exercise (or, if a lesser amount, the
amount realized on disposition over the exercise price) will
constitute ordinary income. In the event of such a disposition
before the expiration of either holding period described above,
the Corporation is entitled to a deduction at the time of
disposition equal to the amount of ordinary income recognized by
the optionee. Any gain in excess of the amount recognized by the
optionee as ordinary income would be taxed to the optionee as
short-term or long-term capital gain (depending on the applicable
holding period).
In general, an optionee will recognize no taxable income
upon the grant of a non-qualified stock option and the
Corporation will not receive a deduction at the time of such
grant. Upon exercise of a non-qualified stock option, an
optionee generally will recognize ordinary income in an amount
equal to the excess of the fair market value of the Common Stock
on the date of exercise over the exercise price. Upon a
subsequent sale of the Common Stock by the optionee, the optionee
will recognize short-term or long-term capital gain or loss,
depending upon his or her holding period for the Common Stock.
Subject to the possible application of Section 162(m) of the
Code, the Corporation will generally be allowed a deduction equal
to the amount recognized by the optionee as ordinary income.
In addition: (i) any officers of the Corporation subject to
Section 16(b) of the 1934 Act may be subject to special tax rules
regarding the income tax consequences concerning their options;
(ii) any entitlement to a tax deduction on the part of the
Corporation is subject to the applicable federal tax rules,
including, without limitation, Section 162(m) of the Code
regarding the $1 million annual limitation on deductible
compensation; (iii) in the event that the exercisability of a
stock option is accelerated because of a change in control of the
Corporation, payments relating to the stock options, either alone
or together with certain other payments may constitute parachute
payments under Section 280G of the Code, in which case certain
amounts may be subject to excise taxes and a portion of the
recognized income may be nondeductible by the Corporation; and
(iv) the exercise of an ISO may have implications in the
computation of alternative minimum taxable income.
In general, Section 162(m) of the Code denies a publicly
held corporation a deduction for federal income tax purposes for
compensation in excess of $1 million per taxable year per person
to its chief executive officer and the other officers whose
compensation is disclosed in its proxy statement, subject to
certain exceptions. Options will generally qualify under one of
these exceptions if they are granted under a plan that states the
maximum number of shares which may be granted to any employee
during a specified period, the exercise price is not less than
the fair market value of the Common Stock at the time of grant,
and the plan under which the options are granted is approved by
stockholders and is administered by a committee comprised of
outside directors. The 1998 Plan is intended to satisfy these
requirements with respect to options granted to employees.
The 1998 Plan is not subject to any of the requirements of
the Employee Retirement Income Security Act of 1974, as amended,
and is not, nor is it intended to be, qualified under Section
401(a) of the Code.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE
IN FAVOR OF THE APPROVAL OF THE ADOPTION OF THE 1998 STOCK OPTION
PLAN.
PROPOSALS FOR 1999 MEETING
Any proposals of stockholders that are intended to be
presented at the Corporation's 1999 Annual Meeting of
Stockholders must be received at the Corporation's principal
executive offices no later than December 31, 1998, 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, for the appointment of Ernst & Young LLP as auditors,
and for the approval of the adoption of the 1998 Stock Option
Plan. 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, 1997 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 29, 1998
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, June 2, 1998
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 2,
1998, 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, FOR THE RATIFICATION OF THE ADOPTION OF THE
1998 STOCK OPTION PLAN, 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)
(1) ELECTION OF DIRECTORS: NOMINEES: Raphael Recanati, Morton P.
Hyman, Robert N. Cowen, George
FOR all Nominees C. Blake, Thomas H. Dean, Michel
(except as WITHHOLD Fribourg, William L. Frost, Ran
withheld in AUTHORITY Hettena, Stanley Komaroff,
the space to Vote for Solomon N. Merkin, Joel I.
provided) all Picket and Oudi Recanati. (To
Nominees 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
1998:
FOR AGAINST ABSTAIN
--- --- ---
/ / / / / /
--- --- ---
(3) Ratification of the
adoption of the 1998
Stock Option Plan
described in the Proxy
Statement:
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:.................., 1998
.............................
.............................
Signature or Signatures
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS CARD
