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.
511 FIFTH AVENUE, NEW YORK, N.Y. 10017
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 8, 1999
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 8, 1999, at 2:30 o'clock P.M. for
the following purposes:
(l) To elect eleven 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 1999;
(3) To consider and act upon a proposal to approve the adoption
by the Board of Directors of the 1999 Non-Employee Director 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,
1999 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, 511
Fifth Avenue, 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, 1999
IMPORTANT
PLEASE SIGN, DATE AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED RETURN ENVELOPE
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC.
511 Fifth Avenue, New York, N.Y. 10017
--------------
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 8, 1999. 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, 1999 will be entitled to vote at the annual meeting.
The Corporation has one class of voting securities, its Common
Stock, of which 36,395,697 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, 1999.
ELECTION OF DIRECTORS
The eleven 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, 1999, 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%
75...... Equities Co.,
shipping, finance
and banking.
Morton P. Hyman, President of the 1969 157,927 (c) 0.4%
63...... Corporation.
Robert N. Cowen, Senior Vice 1993 30,500 0.1%
50...... President and
Secretary of the
Corporation.
Thomas H. Dean, Consultant, 1976 -- --
70...... Continental Grain
Company, integrated
food company.
Michel Fribourg, Director and 1969 2,823,241(d) 7.8%
85....... Chairman Emeritus
of the Board,
Continental Grain
Company.
William L. Frost, Attorney and 1989 4,000(e) --
72...... President, Lucius
N. Littauer
Foundation.
Ran Hettena, Senior Consultant 1969 32,880(f)(g) 0.1%
75....... to the Corporation.
Stanley Komaroff, Senior Partner, law 1993 200 --
64...... firm of Proskauer
Rose LLP, the
Corporation's
counsel.
Solomon N. Vice President, 1989 (h) --
Merkin, Leib Merkin, Inc.,
42....... private investment
company.
Joel I. Picket, President and 1989 200 --
60....... Chairman of the
Board, Gotham
Organization Inc.,
real estate,
construction and
development.
Oudi Recanati, Vice Chairman and 1996 1,000(g) --
49......... Co-Chief Executive
Officer, IDB
Holding Corporation
Ltd., investment
and finance.
All directors and executive officers as a 9,735,379(i) 26.6%
group.
- ---------------
<FN>
(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) and Cowen (30,000 shares),
and all directors and executive officers as a group (186,720
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 9,735,379 shares, persons who are directors or
executive officers have sole power to vote and direct
disposition of 1,041,776 shares (2.8% 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
(23.8% of the outstanding shares).
</TABLE>
Each nominee has been principally engaged in his present
employment for the past five years except Mr. Hettena, who served
as President of Maritime Overseas Corporation for more than 24
years; Mr. Dean, who served as an executive officer of
Continental Grain Company for more than 25 years until 1996; Mr.
Oudi Recanati, who has served as Vice Chairman since 1998 and Co-
Chief Executive Officer since 1996 of IDB Holding Corporation
Ltd. and also served for more than five years prior to 1998 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.
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, 1998, 1997 and 1996 by the Chief Executive Officer and the
two other executive officers of the Corporation serving during
1998 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........ 1998 $1,050,000 - $ 23,854(1)
President (CEO) 1997 1,000,000 $1,000,000(2) 22,198
1996 965,000 - 20,512
Robert N. Cowen........ 1998 444,600 100,000(2) 6,476(1)
Senior Vice 1997 267,800 100,000(2) 1,145
President 1996 257,500 - 1,145
and Secretary
Myles R. Itkin(3)...... 1998 530,000 - 12,515(1)
Senior Vice 1997 505,000 - 11,990
President 1996 485,000 - 11,130
and Treasurer (CFO)
- --------------
(1) For Messrs. Hyman, Cowen and Itkin, consists of matching
contributions by the Corporation under its Savings Plan in
the respective amounts of $7,200, $5,331 and $7,200, and the
cost of term life insurance in the respective amounts of
$16,654, $1,145 and $5,315.
(2) 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.
(3) 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>
The Corporation has extended until October 2002 its
agreements with Messrs. Hyman, Cowen and Itkin, 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 (for Messrs. Hyman and Cowen) or two times
(for Mr. Itkin) his highest annual base salary in effect within
121 days prior to or at any time after the change of control,
three years (for Messrs. Hyman and Cowen) or two years (for Mr.
Itkin) 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 (for Messrs. Hyman and
Cowen) or two years (for Mr. Itkin) 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 either Mr. Hyman or Mr. Cowen 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 Messrs. Hyman and
Cowen an additional amount so that the net amount retained by
each of them, after payment of such excise tax and of other
applicable taxes on the additional amount, will equal the full
amount to which each would be entitled in the absence of such
excise tax. To the extent that payments and benefits, and any
other amounts paid to Mr. Itkin as a result of a change of
control, would be subject to excise tax, the amounts to be paid
to Mr. Itkin will be reduced such that no excise tax will apply.
<TABLE>
AGGREGATE OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
December 31, 1998 December 31, 1998 (1)
Name Exercisable/Unexercisable Exercisable/Unexercisable
----- ------------------------- -------------------------
<S> <C> <C>
Morton P. 100,000 / 0 $206,250 / 0
Hyman....
Robert N. 30,000 / 0 61,875 / 0
Cowen....
- -------------
<FN>
(1) Reflects market value of underlying shares of the
Corporation's Common Stock on December 31, 1998, 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, 1998.
<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>
1993 100.00 100.00 100.00
1994 100.19 101.32 91.81
1995 85.25 139.40 104.72
1996 78.88 171.40 129.80
1997 104.21 228.59 153.95
1998 79.13 293.92 94.87
- ------------------
<FN>
* Assumes that the value of the investment in the Corporation's
Common Stock and each index was $100 on December 31, 1993 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 through OSG Ship Management, Inc., its wholly-
owned subsidiary, maintains a pension plan which provides
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 contributions to the plan
are determined on an actuarial basis without individual
allocation.
<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:
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-39 years; Robert N. Cowen-19 years; and Myles R. Itkin-4
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. In addition, as discussed below, in
February 1999 the Board of Directors adopted the 1999 Non-
Employee Director Stock Option Plan, which provides for the grant
of stock options to directors who are not active employees of the
Corporation. The 1999 Plan is subject to stockholder approval.
EXECUTIVE COMPENSATION
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
AND THE 1998 STOCK OPTION PLAN 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-employee directors of the Corporation: Oudi 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 vessels 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, acquisition or chartering-in 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.
The Committee believes that executive compensation
should be linked to performance as measured by the achievement of
specific corporate goals and objectives. In 1998 these
objectives included: reducing costs and improving operating
efficiencies, consistent with the Corporation's high standards of
safety and concern for the protection of the environment;
improving the financial strength and flexibility of the
Corporation; developing and implementing long term strategic
planning for the Corporation's bulk shipping business and
implementing fleet renewals and disposals consistent with such
planning; and establishing and expanding upon commercial
relationships with key customers.
In setting executive compensation, the Committee
noted that the Corporation had made significant progress in
achieving these goals and objectives. During 1998, the
Corporation initiated a comprehensive review of its business
practices and operations and identified many areas where
significant cost savings have been achieved. The Corporation has
reduced organizational layers and staff and consolidated office
locations. Cross-functional teams have been established which
continue to identify areas for additional cost savings. In 1998
the Corporation terminated its relationship with Maritime
Overseas Corporation and successfully assumed direct in-house
management of its fleet, a change that will enhance the
Corporation's stature as a fully integrated bulk shipping
organization. With regard to its fleet, the Corporation
successfully negotiated an order for two Very Large Crude Carrier
newbuildings on highly advantageous terms, while at the same time
developing an ambitious schedule for disposing of a large number
of its oldest and least competitive vessels. Also during 1998,
the Corporation significantly strengthened its balance sheet by
paying down approximately $220 million of debt and by refinancing
$310 million of indebtedness in order to achieve significant
annual interest cost savings.
While the Committee took the foregoing
accomplishments into account, the Committee's compensation
determinations for the Corporation's executive officers are to
some extent subjective and are not arrived at by application of
any specific formula. The Committee also takes into account an
executive's length of service and particular contributions over
the executive's entire career with the Corporation. While the
Committee considers many aspects of an individual's performance,
it does not give particular weight to or quantify any one or more
performance factors.
Mr. Morton P. Hyman has served as a director and
officer of the Corporation since 1969, and as its President since
1971. His compensation reflects his many contributions as a key
member of the management since the Corporation was founded. Such
compensation is not based primarily on short term financial
performance, nor is it based on any formula. The Committee took
into account Mr. Hyman's key leadership role in causing the
Corporation to make progress in meeting many of the goals and
objectives noted above. 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 28 years, the Committee believes
his compensation is appropriate and reasonable.
Pursuant to Section 162(m) of the Internal Revenue
Code, 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) in setting 1998 compensation
paid to the President of the Corporation.
The Committee believes that the interests of
stockholders are best served by granting stock options to all
employees 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 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
1998 Stock Option Plan, approved by the stockholders, is
administered by a Stock Option Plan Committee composed of two non-
employee directors of the Corporation: Oudi Recanati and Michel
Fribourg. The 1998 Stock Option Plan Committee determines the
persons to whom stock options will be granted under the Plan and
allocates the amounts to be granted to such persons. Although the
Corporation did not grant any stock options in 1998 to its senior
management under the 1998 Stock Option Plan, the Corporation may
consider authorizing and granting such stock options in the
future.
Submitted by the Executive Compensation Committee and the
1998 Stock Option Plan Committee of the Board of Directors:
Executive 1998 Stock Option
Compensation Committee Plan Committee
---------------------- -----------------
Oudi Recanati Oudi Recanati
Michel Fribourg Michel Fribourg
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Oudi Recanati and Michel Fribourg served on the
Executive Compensation Committee and the 1998 Stock Option Plan
Committee of the Board of Directors during 1998. 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 $2,627,370 during 1998 and $38,274 during the first
three months of 1999 from charters of vessels to Continental
Grain Company and its subsidiaries.
Since the Corporation's inception in 1969 until October 30,
1998, Maritime Overseas Corporation, a New York corporation
("MOC"), or a subsidiary of MOC, under various agreements with
the Corporation and its subsidiaries, acted as agent in respect
of the operation of ships owned by these subsidiaries and
provided certain general and administrative services required by
the Corporation and its subsidiaries. Under agreements between
MOC and certain companies in which the Corporation owns a 50%
interest, MOC acted as agent in respect of the operation of ships
owned by such 50%-owned companies. Under various agreements,
MOC also served 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 was 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 was limited to the extent its consolidated net
income from shipping operations would exceed a specified amount
($1,013,632 for January 1 to October 30, 1998).
The aggregate compensation paid to MOC (including its
subsidiaries) under all these agreements for January 1 to October
30, 1998 (excluding brokerage) was $27,601,032, of which
$1,307,200 represented compensation paid by 50%-owned companies.
Brokerage commissions paid to MOC under all these agreements for
January 1 to October 30, 1998 aggregated $5,692,470, of which
$323,617 was paid by 50%-owned companies. The consolidated net
income from shipping operations of MOC for January 1 to October
30, 1998 was limited to the agreed maximum amount described in
the preceding paragraph.
On October 30, 1998, the Corporation assumed direct
management of its fleet, and terminated by mutual consent its
arrangements with MOC. Effective that date, the Corporation
employed the staff of MOC, and in that connection the Corporation
acquired certain employee benefit plan assets and assumed related
benefit obligations of MOC. Based on the opinion of the
Corporation's actuarial consultant, the value of such plan assets
exceeded the amount of the related obligations assumed. The
Corporation also assumed MOC's obligations under leases for
related office space and paid approximately $4,000,000 to MOC for
certain assets acquired, consisting principally of office
furniture, fixtures, equipment and leasehold improvements.
According to the Corporation's independent real estate adviser,
the rentals payable under these leases are below current market
rates. All such furniture, fixtures, equipment and leasehold
improvements were acquired at MOC's book value net of
depreciation. Through October 30, 1998, Mr. Hettena, one of the
nominees for election as a director of the Corporation, was the
sole owner, a director and President of MOC, and Messrs. Merkin,
Cowen and Oudi Recanati, three of the nominees for election as
directors of the Corporation, were the other directors of MOC.
At that time Mr. Hettena became MOC's sole director and the other
three directors resigned. Mr. Oudi Recanati is a son of Raphael
Recanati and a nephew of Mr. Hettena.
Each of the business transactions referred to above under
this caption was in the opinion of management considered to be
fair and reasonable to all the parties involved at the time the
transaction was entered into.
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 Oudi Recanati and held one meeting during
1998. 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 1998.
The Corporation does not have a nominating or similar committee.
The Corporation's Board of Directors held seven meetings
during 1998. 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, except Mr. Raphael Recanati.
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, 1999 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 16, 1999 were the Estate of 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: the Estate of Hermann Merkin, 3,140,612 shares
(including 154,196 shares owned directly), or 8.6%; and EST
Associates L.P., 4,224,817 shares (including 1,238,401 shares
owned directly), or 11.6%. 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, 1999 owned beneficially an aggregate of
5,674,800 shares (15.6%), 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
31, 1999 owned beneficially an aggregate of 4,409,100 shares
(12.1%), 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
1999 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 1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
On February 16, 1999, the Board of Directors adopted the
1999 Non-Employee Director Stock Option Plan (the "Director
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 1999 Annual Meeting is
required for approval of the Director Plan, provided that the
number of votes cast represent a quorum. Under Delaware law,
abstentions will be treated as votes against the adoption of the
Director 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 Director Plan. The following
description of the Director Plan is a summary and is qualified in
its entirety by reference to the Director Plan.
Purpose
The purpose of the Director Plan is to enhance the
profitability and value of the Corporation for the benefit of its
stockholders by enabling the Corporation to make automatic grants
of stock options to non-employee directors of the Corporation,
thereby attracting, retaining and rewarding such directors and
strengthening the mutuality of interests between them and the
Corporation's stockholders.
Eligibility
All non-employee directors of the Corporation will
automatically receive periodic grants of stock options (as
described below) under the Director Plan. For purposes of the
Director Plan, a "non-employee director" is any director of the
Corporation who is not an active employee of the Corporation (or
any related person).
Available Shares
A maximum of 150,000 shares of Common Stock may be issued
under the Director Plan. The Board of Directors may, in
accordance with the terms of the Director Plan and in its sole
discretion, make appropriate adjustments to the number of shares
available for the grant of options and the terms of outstanding
options to reflect any change in the Corporation's capital
structure or business by reason of any stock dividend, stock
split, recapitalization, reorganization, merger, consolidation,
sale of all or substantially all the assets of the Corporation or
any similar change affecting the Corporation's capital structure
or business.
Stock Option Grants
Initial Grant
The Director Plan provides for the automatic grant of an
option to purchase 7,500 shares of the Common Stock of the
Corporation (the "Initial Option") to each non-employee director
of the Corporation on the later of February 16, 1999 or the date
on which the non-employee director begins service as a non-
employee director.
Annual Grant
The Director Plan also provides for the automatic annual
grant of an option to purchase 1,000 shares of Common Stock of
the Corporation (the "Annual Option") to each non-employee
director of the Corporation on the first day of the month
following each annual meeting of the Corporation's stockholders
during the term of the Plan (other than the annual meeting which
occurs in the calendar year in which an Initial Option is
granted), provided that a sufficient number of shares are
available to satisfy exercise of the options and, if a sufficient
number of shares are not available, each non-employee director
shall receive an option to purchase a pro rata portion of the
remaining shares.
Terms of Grants
The options will have a ten year term, subject to earlier
expiration in the event of a termination of directorship, and an
exercise price equal to the fair market value of the Common Stock
at the time of grant. Generally, one-third (1/3) of each Initial
Option granted under the Director Plan will vest and become
exercisable on each of the first three anniversaries of the date
of grant of such Initial Option, provided the non-employee
director has not ceased to be a director. Generally, each Annual
Option will vest and become fully exercisable on the one year
anniversary of the date of grant of such Annual Option, provided
the non-employee director has not ceased to be a director.
Upon a termination of directorship due to a non-employee
director's death or disability, all of the director's outstanding
stock options will vest and become fully exercisable and, in the
case of the director's death, will remain exercisable by the
legal representative of the director's estate until the earlier
of one year following the director's death or the expiration of
the option term and, in the case of the director's disability,
will remain exercisable by the director until the earlier of one
year following his or her termination of directorship or the
expiration of the option term (except that if the director dies
within this one year period, the options will remain exercisable
by the legal representative of the director's estate until the
earlier of one year from the director's death or the expiration
of the option term). Upon a termination of directorship due to a
non-employee director's retirement (as defined in the Director
Plan), the director's vested outstanding stock options will
remain exercisable by the director until the earlier of three
years following retirement or the expiration of the option term,
except that if the director dies during such three year period,
the options will remain exercisable by the legal representative
of his or her estate until the earlier of (i) the later of one
year from the date of the director's death or three years from
the director's retirement or (ii) the expiration of the option
term. Upon a termination of directorship for reasons other than
death, disability, retirement or cause (as "cause" is defined
under Delaware law), all vested outstanding stock options will
remain exercisable until the earlier of one year or the
expiration of the option term. In the event of a termination of
directorship for a cause, all outstanding options will
immediately terminate. In the event of a change of control of
the Corporation (as defined in the Director Plan), all unvested
options will vest and become fully exercisable.
Amendment or Termination
The Director Plan may be amended, suspended or terminated by
the Board of Directors, provided, however, that, unless otherwise
required by law or specifically provided under the Director Plan,
the rights of a director with respect to stock options granted
prior to such amendment, suspension or termination, may not be
impaired without the consent of such director. The Board of
Directors may not effect any amendment that would require the
approval of the stockholders of the Corporation under applicable
law or under any regulation of a national securities exchange or
automated quotation system unless such approval is obtained.
Administration
The Director Plan will be administered by the Board of
Directors. The Board of Directors has the full authority to
interpret the Director Plan and to decide any questions and
settle all controversies and disputes that may arise in
connection with the Director Plan and to make all other
determinations and to take all such steps in connection with the
Director Plan and the stock options as the Board of Directors, in
its sole discretion, deems necessary or desirable.
Miscellaneous
Participants required to file reports under Section 16(a) of
the 1934 Act may be limited to certain specific exercise,
election or holding periods with respect to the awards granted to
them under the Director Plan. Although awards will generally be
nontransferable (except by will or the laws of descent and
distribution), the Board of Directors may determine at the time
of grant or thereafter that a nonqualified stock option that is
otherwise nontransferable is transferable in whole or in part and
in such circumstances, and under such conditions, as specified by
the Board of Directors. A non-employee director shall have no
rights with respect to an option until such option is granted
pursuant to the terms of the Director Plan.
U.S. Federal Income Tax Consequences
The following discussion of the principal U.S. federal
income tax consequences with respect to options under the
Director 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 only a general
understanding of the federal income tax consequences (state,
local and other tax consequences are not addressed below).
Recipients of stock option grants should consult their own tax
advisors as to the specific tax consequences that apply to them.
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 certain individuals who are also subject to
foreign taxes.
In general, an optionee will realize no taxable income upon
the grant of stock options and the Corporation will not receive a
deduction at the time of such grant, unless the option has a
readily ascertainable fair market value (as determined under
applicable tax law) at the time of grant. Upon exercise of a
stock option, an optionee generally will recognize ordinary
income in an amount equal to the excess of the fair market value
of the stock on the date of exercise over the exercise price.
Upon a subsequent sale of the 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 stock. The
Corporation will generally be allowed a deduction equal to the
amount recognized by the optionee as ordinary income.
The Director Plan is not subject to any of the requirements
of the Employee Retirement Income Security Act of 1974, as
amended. The Director Plan is not, nor is it intended to be,
qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended.
The Board of Directors of the Corporation recommends a vote
in favor of the approval of the adoption of the 1999 Non-Employee
Director Stock Option Plan.
PROPOSALS FOR 2000 MEETING
Any proposals of stockholders that are intended to
be presented at the Corporation's 2000 Annual Meeting of
Stockholders must be received at the Corporation's principal
executive offices no later than December 31, 1999, 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.
A stockholder who intends to submit a proposal for the
Corporation's 2000 Annual Meeting that the stockholder does not
intend to request be included in the Corporation's 2000 Proxy
Statement in accordance with SEC rules must give notice to the
Corporation prior to March 15, 2000. If the stockholder does not
provide the Corporation with timely notice of such a proposal,
the persons designated as management proxies on the Corporation's
proxy card may exercise their discretionary authority to vote on
that proposal. If the stockholder does provide the Corporation
with timely notice of such a proposal, depending upon the
circumstances, management proxies may not be able to exercise
their discretionary authority to vote on the proposal.
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 1999
Non-Employee Director 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, 1998 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, 1999
<PAGE>
OVERSEAS SHIPHOLDING GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, June 8, 1999
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 8,
1999, 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
1999 NON-EMPLOYEE DIRECTOR 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)
<PAGE>
(1) Election of Directors: Nominees: Raphael Recanati, Morton P.
Hyman, Robert N. Cowen, Thomas
For all Nominees 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 (3) Ratification of the adoption
of Ernst & Young LLP as of the 1999 Non-Employee Director
independent auditors for the Stock Option Plan described in
year 1999: the Proxy Statement:
FOR AGAINST ABSTAIN 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:..................., 1999
------------------------------
------------------------------
Signature or Signatures
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS CARD
