-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HqwrbxepsJLOBg5rrx07MVr0oiSkIKJUqS1VvBuv3g0gW+q0sxbs0Nmn3OkenArE 6Ey8vWwO5FEPLW724kSLsg== 0000075208-96-000005.txt : 19960426 0000075208-96-000005.hdr.sgml : 19960426 ACCESSION NUMBER: 0000075208-96-000005 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960612 FILED AS OF DATE: 19960425 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OVERSEAS SHIPHOLDING GROUP INC CENTRAL INDEX KEY: 0000075208 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] IRS NUMBER: 132637623 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-06479 FILM NUMBER: 96550534 BUSINESS ADDRESS: STREET 1: 1114 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2128691222 DEF 14A 1 OSG 1996 PROXY 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): (x) $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: --------------------------------------------------------- 2) Aggregate number of securities to which transaction applies: --------------------------------------------------------- 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:* --------------------------------------------------------- * Set forth the amount on which the filing fee is calculated and state how it was determined. 4) Proposed maximum aggregate value of transaction: -------------------------------------------------------- ( ) 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: --------------------------------------------------------- 2) Form, Schedule or Registration Statement No.: --------------------------------------------------------- 3) Filing Party: --------------------------------------------------------- 4) Date Filed: --------------------------------------------------------- OVERSEAS SHIPHOLDING GROUP, INC. 1114 AVENUE OF THE AMERICAS, NEW YORK, N.Y. 10036 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS June 12, 1996 TO THE STOCKHOLDERS OF OVERSEAS SHIPHOLDING GROUP, INC.: The Annual Meeting of Stockholders of Overseas Shipholding Group, Inc. will be held at Bank of America, 335 Madison Avenue, New York, N.Y., Third Floor, on Wednesday, June 12, 1996, 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 1996; and (3) To transact such other business as may properly be brought before the meeting. Stockholders of record at the close of business on April 17, 1996 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, 1996 IMPORTANT PLEASE SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED RETURN ENVELOPE 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 12, 1996. Any stockholder giving a proxy may revoke it at any time before it is exercised at the meeting. Only stockholders of record at the close of business on April 17, 1996 will be entitled to vote at the annual meeting. The Corporation has one class of voting securities, its Common Stock, of which 36,232,976 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, 1996. 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. The table below sets forth information as to each nominee, and includes the amount and percentage of the Corporation's Common Stock of which each nominee, and all directors and executive officers as a group, were the "beneficial owners" (as defined in regulations of the Securities and Exchange Commission) on April 17, 1996, 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.
Percentage Served Shares of of as Common Stock Common Stock Principal Director Beneficially Beneficially Name and Age Occupation Since Owned (a) Owned - ------------ ---------- -------- ------------- ------------ Raphael Recanati*, President, Finmar 1969 6,647,926 (b)(g) 18.3% 72..... Equities Co., shipping, finance and banking. Morton P. Hyman*, President of the 1969 270,000 (c) 0.7% 60...... Corporation. Robert N. Cowen*, Senior Vice 1993 48,500 0.1% 47...... President and Secretary of the Corporation. George C. Blake*, Executive Vice 1988 81,400 0.2% 64...... President, Maritime Overseas Corporation, ship agents and brokers. Thomas H. Dean, Senior Vice 1976 -- -- 67........ President- Corporate Development and Planning, Continental Grain Company, integrated food company. Michel Fribourg, Director and 1969 2,823,241(d) 7.8% 82....... Chairman Emeritus of the Board, Continental Grain Company. William L. Frost, Attorney and 1989 4,000(e) -- 69...... President, Lucius N. Littauer Foundation. Ran Hettena*, President, 1969 23,241(f)(g) 0.1% 72.......... Maritime Overseas Corporation. Stanley Komaroff, Chairman, law 1993 200 -- 61...... firm of Proskauer Rose Goetz & Mendelsohn, the Corporation's counsel. Solomon N. Merkin, Vice President, 1989 (h) -- 39..... Leib Merkin, Inc., private investment company. Joel I. Picket, President and 1989 200 -- 57........ Chairman of the Board, Gotham Organization Inc., real estate, construction and development. Oudi Recanati, Chairman, Y.L.R. 1996 1,000(g) -- 46......... Capital Markets Ltd., investment banking. All directors and executive officers as a 9,940,708(i) 27.1% group... - --------------- * Member of Finance and Development Committee of the Board, of which Committee Mr. Raphael Recanati is Chairman. (a) Unless otherwise indicated, each of the nominees has the sole power to vote and direct disposition of the shares shown as beneficially owned by him. Number of shares shown includes shares issuable on exercise of vested options held by Messrs. Hyman (200,000 shares), Cowen (48,000 shares) and Blake (80,000 shares), and all directors and executive officers as a group (388,000 shares). (b) Includes 5,770,362 shares as to which Mr. Raphael Recanati shares the power to vote and/or to direct disposition, of which 2,986,416 shares are owned by OSG Holdings, a partnership in which Mr. Recanati and his wife, as tenants in common, have a 25% partnership interest. Mr. Recanati's address is 511 Fifth Avenue, New York, New York. (c) Includes 20,000 shares owned by a corporation in which Mr. Hyman shares the power to vote and/or to direct disposition; excludes 280 shares owned by Mr. Hyman's wife, beneficial ownership of which is disclaimed by him. (d) All of these shares are owned by Fribourg Enterprises L.P., a partnership; Mr. Fribourg has the sole power to vote and direct the disposition of all of said shares. The address for Mr. Fribourg and Fribourg Enterprises L.P. is 277 Park Avenue, New York, New York. (e) Excludes 400 shares owned by Mr. Frost's wife, beneficial ownership of which is disclaimed by him. (f) Excludes 12,493 shares owned by Mr. Hettena's wife, beneficial ownership of which is disclaimed by him. (g) Mr. Hettena and Mr. Raphael Recanati are brothers-in-law. Mr. Oudi Recanati is a son of Mr. Raphael Recanati and a nephew of Mr. Hettena. (h) Mr. Merkin is a 1.12% partner in OSG Holdings. (i) Of the 9,940,708 shares, persons who are directors or executive officers have sole power to vote and direct disposition of 4,170,346 shares (11.4% of the outstanding shares of the Corporation) and share with other persons the power to vote and/or direct disposition of 5,770,362 shares (15.7% of the outstanding shares).
Each nominee has been principally engaged in his present employment for the past five years except Mr. Cowen, who has served as Senior Vice President of the Corporation since February 1993 and who also serves as executive vice president and a director of Overseas Discount Corporation, a private company engaged in the business of finance and investment. Messrs. Raphael Recanati and Oudi Recanati are directors of IDB Holding Corporation Ltd. and several of its subsidiaries. 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. 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 Israel Supreme Court, 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 12 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, 1995, 1994 and 1993 by the Chief Executive Officer, and the two other executive officers and a former executive officer of the Corporation serving during 1995 whose salary for said year exceeded $100,000. SUMMARY COMPENSATION TABLE
Annual Compensation Name and Principal All Other Position Year Salary Compensation ----------------- ---- ----------- ------------ Morton P. Hyman......... 1995 $915,000(1) $ 16,661(2) President (CEO) 1994 915,000(1) 11,441 1993 915,000(1) 13,015 Robert N. Cowen......... 1995 242,500 1,145(3) Senior Vice President 1994 200,000 1,145 and Secretary 1993 175,000 1,145 Myles R. Itkin.......... 1995 256,692(4) 3,240(3) Senior Vice President 1994 -- -- and Treasurer (CFO) 1993 -- -- Michael A. Recanati..... 1995 628,212(5) 7,198(2) former Executive Vice 1994 765,000(1) 4,826 President and Treasurer 1993 735,000(1) 917 - ----------- (1) Includes a director's fee of $50,000 paid by Celebrity Cruise Lines Inc., the Corporation's cruise business joint venture. (2) For Messrs. Hyman and Recanati, consists of matching contributions by the Corporation under its Savings Plan in the amount of $4,620 for each, and the cost of term life insurance in the respective amounts of $12,041 and $2,578. (3) Cost of term life insurance. (4) Mr. Itkin was appointed to the position of 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 annualized salary of $460,000, which is reviewed each year. The Corporation has undertaken to make available to Mr. Itkin an option to purchase a total of 60,000 shares of the Corporation's Common Stock at the closing price on the New York Stock Exchange on the date of grant, which option will become exercisable in five equal annual installments of 12,000 shares, commencing no later than during the year 2000 and expiring no later than December 31, 2005. (5) Compensation for the portion of the year through September 1995 during which he was employed by the Corporation. Thereafter, pursuant to an agreement with the Corporation, Mr. Recanati is to receive payments totaling $765,000 per year for two years through September 1997.
AGGREGATE OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES (1)
Number of Securities Value of Unexercised Underlying Unexercised In-the-Money Options at Options at December 31, 1995 December 31, 1995 (2) Name Exercisable/Unexercisable Exercisable/Unexercisable ---- ---------------------------- ------------------------- Morton P. 200,000 / 0 $ 1,000,000 / 0 Hyman......... Michael A. 150,000 / 0 750,000 / 0 Recanati..... Robert N. 30,000 / 0 150,000 / 0 Cowen......... - ------------- (1) No options were exercised by the named individuals during 1995. (2) Reflects market value of underlying shares of the Corporation's Common Stock on December 31, 1995, minus the exercise price.
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, 1995. STOCK PERFORMANCE GRAPH COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* OSG, S&P 500 STOCK INDEX, DOW JONES MARINE TRANSPORTATION INDEX
S&P 500 DOW JONES MARINE PERIOD OSG STOCK INDEX TRANSPORTATION INDEX ------ --- ------------------- -------------------- 1990 100.00 100.00 100.00 1991 124.26 130.47 140.51 1992 113.98 140.41 123.38 1993 160.20 154.54 158.25 1994 160.51 156.58 145.28 1995 138.84 215.48 165.73 - ------------------ * Assumes that the value of the investment in the Corporation's Common Stock and each index was $100 on December 31, 1990 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").
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: Years of Credited Service --------------------------
Average Compen- 10 15 20 25 30 35 40 sation years years years years years years years - --------- ------- ------- ------- ------- ------- ------- ------- $100,000 15,000 22,500 30,000 37,500 45,000 52,500 60,000 200,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000 300,000 45,000 67,500 90,000 112,500 135,000 157,500 180,000 400,000 60,000 90,000 120,000 150,000 180,000 210,000 240,000 500,000 75,000 112,500 150,000 187,500 225,000 262,500 300,000 600,000 90,000 135,000 180,000 225,000 270,000 315,000 360,000 700,000 105,000 157,500 210,000 262,500 315,000 367,500 420,000 800,000 120,000 180,000 240,000 300,000 360,000 420,000 480,000 900,000 135,000 202,500 270,000 337,500 405,000 472,500 540,000 1,000,000 150,000 225,000 300,000 375,000 450,000 525,000 600,000 - ------------ 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 a supplemental retirement plan 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 plan 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 present executive officers named in the Summary Compensation Table on page 5 are as follows: Morton P. Hyman-36 years; Robert N. Cowen-16 years; and Myles R. Itkin-1 year. 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 1995. 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 1995 salaries, the Committee considered the fact that although the Corporation's results in 1995 continued to reflect the weakness in world bulk shipping markets, the Corporation nevertheless maintained its position as one of the largest tanker owners in the world, placed newbuilding orders and purchased recently built vessels in furtherance of the Corporation's ongoing fleet modernization program, succeeded in maintaining the Corporation's recognition for high quality within the bulk shipping industry, and participated in decisions related to the new cruise ships ordered for the Celebrity Cruise Lines Inc. fleet, the Corporation's joint venture in the cruise industry. The Committee takes into consideration an executive's particular contributions to the Corporation. Length of service is another important factor taken into account. The Corporation has not yet formulated a policy with respect to qualifying compensation paid to executive officers for deductibility under Section 162 (m) of the Internal Revenue Code of 1986, as amended (the provision was enacted as part of "OBRA '93" for compensation exceeding $1 million in a taxable year paid to an executive officer, effective January 1, 1994). None of the executive officers received compensation in excess of $1 million for 1995. The Committee believes that the interests of shareholders are best served by granting stock options to executive officers and thereby giving them the opportunity to participate in appreciation in the Corporation's stock over an extended period. In this way, senior management can directly share in the benefits of maximizing shareholder values. The Corporation's stockholder- approved amended 1989 Stock Option Plan is administered by the Stock Option Committee of the Board of Directors, which is composed of three non-officer directors of the Corporation: Raphael Recanati, Ran Hettena and Joel I. Picket. The Stock Option Committee determines the persons to whom stock options will be granted under the Plan and allocates the amounts to be granted to such persons. Under the Plan, senior management in 1990 were granted options for 570,000 shares of Common Stock, in the aggregate, to vest over five years and be exercisable up to ten years from the date of grant. The Committee and the Stock Option Committee believe that over such an extended period, stock performance will to a meaningful extent reflect executive performance, and that such arrangements further reinforce management goals and incentives to achieve shareholder objectives. Accordingly, although compensation paid by the Corporation for 1995 consisted solely of salary and the Corporation did not grant options in 1995, the Corporation may consider authorizing and granting additional stock options in order to provide its executive officers with satisfactory total compensation packages and reward them for their contributions to the Corporation's long term share performance. The Committee believes that the total compensation package received by each of the executive officers last year, taking into consideration outstanding option grants, was appropriate. In considering future option grants, the number of options previously granted will be taken into consideration. While taking the foregoing factors into account, the Committee's compensation determinations for the Corporation's relatively small number of executive officers are to a large extent subjective and not arrived at by application of any specific formula. Mr. Morton P. Hyman has served as a director and officer of the Corporation since 1969, and as its President and Chief Executive Officer since 1971. His compensation reflects his many contributions as a key member of management since the Corporation was founded. Such compensation is not based primarily upon the Corporation's short term financial performance nor is it based upon any formula. To a large extent Mr. Hyman's compensation reflects an assessment of his performance based upon the subjective judgment of the Committee. In light of his contribution to the growth and success of the Corporation, and his service as its President for 25 years, the Committee believes his compensation is appropriate and reasonable. Submitted by the Executive Compensation Committee and Stock Option Committee of the Board of Directors: Executive Compensation Committee Stock Option Committee - -------------------------------- ---------------------- Raphael Recanati Raphael Recanati Michel Fribourg Ran Hettena 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 1995. Mr. Fribourg is a Director and Chairman Emeritus of the Board and principal stockholder of Continental Grain Company (Mr. Dean, a director of the Corporation, is an officer of that corporation). A subsidiary of the Corporation, together with Continental Grain Company and an unrelated third party, are partners in an investment partnership in which the Corporation's subsidiary has an investment of approximately $789,000. Messrs. Raphael Recanati, Ran Hettena and Joel I. Picket served on the Stock Option Committee of the Board of Directors during 1995. Mr. Hettena is President, a director and sole stockholder of Maritime Overseas Corporation, a New York corporation ("MOC"). MOC or a subsidiary of MOC, under various agreements with the Corporation and its majority-owned subsidiaries, acts as agent in respect of the operation of bulk cargo vessels owned and to be owned by these subsidiaries and provides certain general and administrative services required by the Corporation and its subsidiaries. The Corporation may terminate the agreements at the end of any year on twelve months' prior notice; MOC may not terminate the agreements prior to December 31, 1998. Under agreements between MOC and certain companies in which the Corporation owns a 50% interest, MOC acts as agent in respect of the operation of bulk cargo vessels owned by such 50%-owned companies. Under various agreements, MOC also serves as exclusive chartering broker for the bulk fleet owned by the Corporation's majority-owned subsidiaries and certain 50%-owned companies and as exclusive broker in connection with sales, purchases or construction of bulk cargo vessels, and is entitled to receive commissions therefor either from the owner or from the seller or builder. Under the various agreements, MOC's total compensation for any year is limited to the extent its consolidated net income from shipping operations would exceed specified amounts ($917,386 for 1995). The aggregate compensation payable to MOC (including its subsidiaries) under all these agreements for 1995 (excluding brokerage) was $35,430,680, of which $1,019,520 represented compensation paid by 50%-owned companies. Brokerage commissions payable to MOC under all these agreements for 1995 aggregated $8,059,737, of which $1,775,200 was paid by shipyards or other third parties and $53,583 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 $1,956,000 as of December 31, 1995, 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 ($452,000 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 of MOC from shipping operations for the year ended December 31, 1995 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, 1995, the Corporation has provided an aggregate of 96,898 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 $9,812,000 during 1995 and approximately $4,818,000 during the first three months of 1996 from charters of vessels to a subsidiary of Archer-Daniels-Midland Company, a company named as a beneficial owner of more than 5% of the outstanding shares of the Corporation's Common Stock under "Information as to Stock Ownership". COMMITTEES AND MEETINGS The Board of Directors has established various committees to a ssist it in discharging its responsibilities, including an Executive Compensation Committee and an Audit Committee. The Executive Compensation Committee reviews and determines the compensation of the Corporation's executives; it consists of Messrs. Fribourg and Raphael Recanati and held one meeting during 1995. 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 1995. The Corporation does not have a nominating or similar committee. The Corporation's Board of Directors held five meetings during 1995. Members of the Board are frequently consulted by management throughout the year, and the Corporation does not consider percentage attendance information in itself to be a meaningful indication of the quality or importance of a director's contribution to the Board. Each director attended at least 75% of the total number of meetings of the Board and committees of which he was a member. INFORMATION AS TO STOCK OWNERSHIP Set forth below are the names and addresses of those persons, other than nominees for directors and entities they control (see "Election of Directors"), that are known by the Corporation to have been "beneficial owners" (as defined in regulations of the SEC) of more than 5% of the outstanding shares of the Corporation's Common Stock, as reported to the Corporation. OSG Holdings, 511 Fifth Avenue, New York, New York, a partnership, on April 17, 1996 owned 2,986,416 shares (8.2% of the outstanding Common Stock). One of the nominees for director of the Corporation, by reason of his interest and position in OSG Holdings, may be deemed to be the "beneficial owner" of the shares owned by OSG Holdings, as disclosed in the table of nominees. The other principal partners in OSG Holdings on April 17, 1996 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, 3,169,837 shares (including 183,421 shares owned directly), or 8.7%; and EST Associates L.P., 4,224,817 shares (including 1,238,401 shares owned directly), or 11.7%. Vivian Ostrovsky, 4 Avenue de Montespan, Paris, France, is the general partner in EST Associates L.P. and may therefore be deemed the beneficial owner of all the shares owned by EST Associates L.P. and OSG Holdings. Except for shares referred to in this paragraph as being owned directly, each of the persons named shares the power to vote and dispose of all the shares of which such person is considered the beneficial owner. To the best of the Corporation's knowledge, based on reports filed with the SEC, the only other beneficial owners of more than 5% of the Corporation's Common Stock are: (a) Archer-Daniels- Midland Company, 4666 Faries Parkway, Decatur, Illinois, which as of March 31, 1996 owned beneficially an aggregate of 5,592,200 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) John Hancock Mutual Life Insurance Company, John Hancock Place, P.O. Box 111, Boston, Massachusetts, and its subsidiaries, John Hancock Subsidiaries, Inc., John Hancock Asset Management, The Berkeley Financial Group and NM Capital Management, Inc., which as of December 31, 1995 owned beneficially an aggregate of 2,030,271 shares (5.6%) as to which they have sole dispositive power, including 836,422 shares as to which they have sole voting power. According to the SEC filings referred to in this paragraph, the shares mentioned above were not acquired for the purpose of or having the effect of changing or influencing control of the Corporation nor in connection with or as a participant in any transaction having such purpose or effect. SELECTION OF AUDITORS On recommendation of the Audit Committee, the Board of Directors has appointed Ernst & Young LLP as independent auditors for the Corporation and its subsidiaries for the year 1996 subject to the approval of the stockholders at the annual meeting. If the appointment is not approved by the stockholders, the selection of independent auditors will be reconsidered by the Board of Directors. Ernst & Young LLP is a well known and well qualified firm of public accountants which (including its predecessors) has served as auditors of the Corporation since the Corporation was organized in 1969. Representatives of Ernst & Young LLP will attend the annual meeting and be afforded an opportunity to make a statement, as well as be available to respond to appropriate questions submitted by stockholders. The Board of Directors recommends a vote in favor of the appointment of Ernst & Young LLP. PROPOSALS FOR 1997 MEETING Any proposals of stockholders that are intended to be presented at the Corporation's 1997 Annual Meeting of Stockholders must be received at the Corporation's principal executive offices no later than December 31, 1996, and must comply with all other applicable legal requirements, in order to be included in the Corporation's proxy statement and form of proxy for that meeting. GENERAL INFORMATION The Board of Directors is not aware of any matters to be presented at the meeting other than those specified above. If any other matter should be presented, the holders of the accompanying proxy will vote the shares represented by the proxy on such matter in accordance with their best judgment. All shares represented by the accompanying proxy, if the proxy is duly executed and received by the Corporation at or prior to the meeting, will be voted at the meeting in accordance with the instructions provided therein. If no such instructions are provided, the proxy will be voted for the election of directors and for the appointment of Ernst & Young LLP as auditors. Under Delaware law and the Corporation's Certificate of Incorporation and By-Laws, if a quorum is present, directors are elected by a plurality of the votes cast by the holders of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. A majority of the outstanding shares entitled to vote, present in person or represented by proxy, constitutes a quorum. Shares represented by proxies or ballots withholding votes from one or more directors will not be counted in the election of that director but will be counted for purposes of determining a quorum. The cost of soliciting proxies for the meeting will be borne by the Corporation. The Corporation will also reimburse brokers and others who are only record holders of the Corporation's shares for their reasonable expenses incurred in obtaining voting instructions from beneficial owners of such shares. Directors and officers of the Corporation may solicit proxies personally or by telephone or telegraph but will not receive additional compensation for doing so. The Corporation's Annual Report to Stockholders for the fiscal year ended December 31, 1995 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, 1996 OVERSEAS SHIPHOLDING GROUP, INC. PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, June 12, 1996 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 Bank of America, 335 Madison Avenue, New York, N.Y., Third Floor, on June 12, 1996, at 2:30 o'clock P.M., notice of which meeting and the related Proxy Statement have been received by the undersigned, and at any adjournments thereof. The undersigned hereby ratifies and confirms all that said proxies, or either of them, or their substitutes, may lawfully do in the premises and hereby revokes all proxies heretofore given by the undersigned to vote at said meeting or any adjournments thereof. If only one of said proxies, or his substitute, shall be present and vote at said meeting or any adjournments thereof, then that one so present and voting shall have and may exercise all the powers hereby granted. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER INDICATED BY THE STOCKHOLDER. IN THE ABSENCE OF SUCH INDICATION, SUCH SHARES WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS, AND IN THE DISCRETION OF SAID PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF. (Continued, and To Be Signed and Dated on Reverse Side) (1) Election of Directors: Nominees- Raphael Recanati, Morton P. Hyman, Robert N. For all Nominees Cowen, George C. Blake, (except as Withhold Thomas H. Dean, Michel withheld in Authority Fribourg, William L. the space to Vote for Frost, Ran Hettena, provided) all Nominees Stanley Komaroff, Solomon N. Merkin, Joel I. Picket ----- ----- and Oudi Recanati. (To / / / / withhold authority to ----- ----- vote for any individual Nominee, print that Nominee's name on the following line:) ------------------------- (2)Approval of the appointment of Ernst & Young LLP as independent auditors for the year 1996: 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: , 1996 ------------------- ------------------------------ ------------------------------ Signature or Signatures PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS CARD -----END PRIVACY-ENHANCED MESSAGE-----