UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of 

the Securities Exchange Act of 1934 (Amendment No.__)

Filed by the Registrant      ☒ 

Filed by a Party other than the Registrant       ☐

Check the appropriate box:

Notice of Annual Meeting of Stockholders

DATE AND TIME 

Thursday, June 15, 2023, at 9:30 a.m., Eastern Time.

LOCATION  

The Annual Meeting is being held virtually. Stockholders may participate by dialing (844) 200-6205 for U.S. callers and (929) 526-1599 for international callers and entering Access Code 601936.

RECORD DATE  

Stockholders of record at the close of business on April 17, 2023, are the only stockholders entitled to notice of, and to vote at, the annual meeting.

MATERIALS 

These proxy materials and the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) were first sent or made available to stockholders on or about May 1, 2023.

ITEMS OF BUSINESS

We are utilizing the Securities and Exchange Commission (“SEC”) rules that allow issuers to furnish proxy materials to their stockholders over the Internet. We believe these rules allow us to provide stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting. If you received a printed copy of the materials, we have enclosed a copy of the 2022 Form 10-K with this Notice and the Proxy Statement.

It is very important that you are represented at the Annual Meeting and that your shares are voted. We urge you to vote as soon as possible by telephone, over the Internet, or by marking, signing and returning your proxy or voting instruction card. Your prompt consideration is greatly appreciated.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on June 15, 2023: This Notice of Annual Meeting, Proxy Statement, and the 2022 Form 10-K are available at www.osg.com/investor-relations.

TABLE OF CONTENTS

OVERSEAS SHIPHOLDING GROUP, INC. 

302 Knights Run Avenue, Suite 1200 

Tampa, FL 33602

PROXY STATEMENT

REMOTE PARTICIPATION IN THE ANNUAL MEETING

Our Annual Meeting will be held virtually. To participate in the Annual Meeting, dial (844) 200-6205 for U.S. callers and (929) 526-1599 for international callers and enter Access Code 601936. Please dial in ten minutes prior to the start of the call. Stockholders and other interested parties can listen to a live webcast of the Annual Meeting from the Investor Relations section of OSG’s website at www.osg.com.

Stockholders can ask questions by using the call-in option only. The call will be hosted by a moderator who will provide instructions on how to ask a question when the Q&A section of the meeting is set to begin. If you have technical difficulties in joining the meeting, you should email investor-relations@osg.com for assistance.

We urge you to vote as soon as possible by telephone or over the Internet. If you wish to vote on the date of the Annual Meeting or to change your vote, you may do so by sending an email to investor-relations@osg.com and attaching your proxy card or if your shares are held by a bank, broker, or other nominee, your voting instruction form and the legal proxy provided by your bank, broker or other nominee. This information is necessary in order for your vote to be counted. Your email must be received by 9:35 a.m. (ET) on Thursday, June 15, 2023 in order for your vote to be counted (or your change of vote to be effective).

An audio replay of the Annual Meeting will be available for 30 days starting June 15, 2023 until July 15, 2023 by dialing (866) 813-9403 for U.S. callers and (929) 458-6194 for international callers and entering Access Code 965903.

PROXY SUMMARY

This summary provides an overview of the information contained in the Proxy Statement. It is not intended to provide all of the information in the Proxy Statement, which we recommend that you read and consider prior to voting. We also invite you to review our 2022 Form 10-K and our recently issued Sustainability Report (the “Sustainability Report”) to obtain a more comprehensive discussion of Overseas Shipholding Group, Inc.

OSG qualifies as a Smaller Reporting Company under SEC rules. As a Smaller Reporting Company, we are permitted to omit certain disclosures from this Proxy Statement that are required for larger companies, including some additional disclosures relating to executive compensation. However, we recognize the importance of transparency and, accordingly, have chosen to provide certain compensation-related disclosures that we are not required to provide.

Voting Matters

Our stockholders are being asked to vote on the following matters at our 2023 Annual Meeting:

Company Overview

OSG is a leading provider of energy transportation services, delivering crude oil and petroleum products to major oil companies and refiners. OSG’s 21-vessel U.S. flag fleet consists of three Suezmax crude oil tankers doing business in Alaska, four articulated tug-barge units, three shuttle tankers, seven medium range tankers, one tanker in cold layup, and three non-Jones Act tankers, two of which participate in the U.S. Maritime Security Program. We provide safe, efficient, and reliable transportation to our customers and strive to ensure the highest standards of safety and environmental compliance throughout our organization. In this Proxy Statement, we sometimes refer to OSG as the “Company,” “we,” “our,” or “us.” In addition, except where stated otherwise, our website and the information posted on or connected to our website is not incorporated by reference in this Proxy Statement.

Board Highlights

* Indicates Chair of the Committee 

A - Audit Committee 

C - Human Resources and Compensation Committee 

G - Corporate Governance and Risk Assessment Committee 

Governance Highlights

OSG is committed to maintaining leading corporate governance practices. We believe that sound governance policies encourage accountability of the Board and management, improve our standing within our industry, and promote the long-term interests of our stockholders.

Board Leadership Structure and Independence

Board Practices and Oversight

Board Policies and Experience

Executive Compensation

Consistent with our goal of enhancing stockholder value, we are committed to aligning executive compensation with our strategic short-term and long-term objectives, as well as with the interests of our stockholders. The compensation disclosed in the Summary Compensation Table and the other related tables reflects compensation decisions that were made in early 2022, and in prior years, and were based on the terms of employment agreements. The section “How We Compensate Our Executives” describes our compensation program in detail.

Cybersecurity and Cyber Awareness

In order to maintain competitiveness, OSG must utilize technology and adapt our practices to maximize efficiency in the conduct of our business. For example, the COVID-19 pandemic forced our business to adjust to the work-from-home environment and to utilize technological tools as much as possible. We have digitized most of our documents and we utilize several software applications for data analytics on our operations.

While we recognize the valuable benefits that “going digital” can provide, OSG also takes cybersecurity threats very seriously. We communicate with the Cybersecurity and Infrastructure Security Agency and Federal Bureau of Investigation on threats specific to the maritime industry and corporate operations. Over the last three years, OSG has not experienced any material cyber security violation or occurrence. We have in place a cyber security plan. Regular oversight of matters relating to cybersecurity is provided by our Governance and Risk Committee, including annual reviews of the cyber security plan, our current practices, and cyber security-related regulations that impact us.

Our cybersecurity plan is designed to provide malware protection and control to our systems to protect the information and operating technology on board our vessels and in our corporate operations, providing for:

Environmental and Social Initiatives - Moving Energy with Integrity

OSG is committed to operating one of the safest, cleanest and most reliable fleets in our industry. Our industry is heavily regulated, and we believe our operations are in substantial compliance with applicable regulations of the United States, the International Maritime Organization, the European Union and regional and local authorities on the prevention of oil spills, clean air and water, and carbon emissions.

The Governance and Risk Committee provides oversight of our environmental, social and governance policies and practices and its charter requires it to conduct quarterly reviews of risks in these areas.

OSG recently published a Sustainability Report which highlights key actions we have taken to decrease our environmental impact, provide a safe and healthy work environment, promote a responsible and equitable workplace, and provide quality governance practices. The Sustainability Report and our policies relating to health, safety, and environmental and social responsibility can be found on our website at www.osg.com/safety-and-environment. We have outlined a few key components of each of these policies below.

Health and Safety Policies. We focus on providing healthy and safe working conditions for both our crews and shoreside employees and seek to accomplish these goals by:

Environmental Protection and Social Responsibility Policies. Our policies and operating practices include:

ELECTION OF DIRECTORS

(PROPOSAL NO. 1)

The nominees for election at the Annual Meeting are listed below. The nominees were selected by the Board upon the recommendation of the Governance and Risk Committee. Unless otherwise directed, proxies will be voted for the election of these nominees to serve until the 2024 Annual Meeting of Stockholders and until each of their successors is duly elected and qualified.

The Governance and Risk Committee considers the following criteria for identifying and recommending qualified candidates for membership on the Board, seeking to maintain within these criteria appropriate diversity of individuals on the basis of gender, ethnic heritage, and life experiences:

As part of its annual assessment of Board structure and composition, the Governance and Risk Committee evaluates the extent to which the Board as a whole satisfies the foregoing criteria. The Committee also engages in succession planning and considers new candidates during this process. Upon an indication from Ms. Manuel that she might not stand for re-election, Ms. Luria was identified as a potential nominee by one of our existing Board members. Following interviews and due diligence, Ms. Luria was determined by the Committee to be a qualified candidate to join our Board.

The Governance and Risk Committee has evaluated the current nominees against the above criteria, and the Committee and the Board recommend that the stockholders elect all nominees at the Annual Meeting. We expect each nominee for election as a director to be able to serve if elected. If any nominee is not able to serve, the persons appointed by the Board and named as proxies in the proxy materials may vote their proxies for substitute nominees, unless the Board chooses to reduce the number of directors serving on the Board. If stockholders do not re-elect a nominee who is already a director, Delaware law provides that the director continues to serve on the Board as a “holdover director”.

The Board recommends a vote “FOR” the election of each of the nominees for director named 

in this Proxy Statement.

INFORMATION ABOUT THE BOARD AND CORPORATE GOVERNANCE

Corporate Governance Guidelines. The Board has adopted Corporate Governance Guidelines (the “Guidelines”) to support the effective functioning of the Board and its committees, to promote the interests of all stockholders, and to set expectations as to how the Board, its committees, individual directors and management should perform their functions. The Board believes that the ethics, character, integrity and values of OSG’s directors and senior management remain the most important aspects of quality corporate governance. The Guidelines provide criteria for the selection of directors that include diversity. They are posted on OSG’s website, www.osg.com, and are available in print upon request. Under the Guidelines, each director is expected to attend all Board meetings and all meetings of committees of which the director is a member.

Board Leadership Structure. The Guidelines provide that the Board selects the Chief Executive Officer of OSG and may select a Chairman of the Board in the manner it considers in the best interests of OSG. The Guidelines provide that the Chairman may be a non-management director or the CEO.

OSG currently separates the role of CEO and Chairman, who is currently an independent director. The CEO and the Chairman are in frequent contact with one another and with senior management. They provide advice and recommendations to the full Board for its consideration. They each review in advance the schedule of Board and committee meetings and establish the agenda for each meeting to address the interests and requirements of the stockholders and other stakeholders. The Board believes that the current leadership structure, given the individuals holding the leadership positions, is in the best interests of stockholders.

The Board, through its Governance and Risk Committee, periodically reviews the Board’s leadership structure to determine if it remains appropriate in light of OSG’s specific circumstances and needs, current corporate governance standards, market practices and other factors the Board considers relevant.

Board Refreshment and Tenure. The Governance and Risk Committee identifies and recommends to the Board qualified candidates who possess the qualities determined to be necessary and effective so as to best serve the interests of our stockholders (see the list of criteria summarized above under “Election of Directors”). The Board understands the value of adding directors with fresh perspectives, who possess qualities that will fit with the future strategic direction of OSG. The Governance and Risk Committee conducts robust director succession planning that considers the criteria described above, including diversity, and considers candidates to join our Board. The Guidelines establish an average tenure of no greater than 8 years. Considering average tenure allows OSG to benefit from both the fresh perspective provided by new members of the Board as well as the historical context, perspective, and industry know-how that longer serving directors possess. Currently, the average tenure of our independent directors is 6.4 years.

Independence. Under the Guidelines, which incorporate the standards established by the NYSE, the Board must consist of a majority of independent directors. As determined by the Board, as of the date of this Proxy Statement, all of the nominees other than Mr. Norton have been determined to be independent for purposes of service on the Board. No relationships were identified that would bar any of them from being characterized as independent. The Board also reviews, every quarter, relationships that directors may have with OSG to determine whether there are any material relationships that would preclude a director from being independent.

Executive Sessions of the Board. To facilitate free and open discussion and communication among the directors, the Guidelines provide that directors meet in executive session without management (other than Mr. Norton) present at each regular meeting of the Board, and that at least one executive session is for independent directors only. The non-executive Chairman must chair these executive sessions. Any non-management director can request that an additional executive session limited to independent directors be scheduled.

Board Oversight of Risk Management. While responsibility for managing OSG’s material risks lies with management, the Board provides oversight of risk management directly and through its committees. Each committee reports its activities and considerations to the full Board at every regularly scheduled quarterly meeting. The full Board reviews the risks associated with OSG’s strategic plan at an annual strategic planning session and periodically throughout the year as part of its consideration of the strategic direction of OSG.

At the committee level, the Audit Committee regularly reviews the financial statements and financial and other internal controls. Further, the Audit Committee schedules private sessions individually with certain members of management, with the internal auditors, and with representatives of the independent registered public accounting firm at the conclusion of scheduled meetings, where aspects of financial risk management are discussed as necessary.

The Governance and Risk Committee manages risks associated with Board independence, corporate governance, and potential conflicts of interest, as well as oversight over non-financial risks associated with OSG’s operations. As part of risk management, the Governance and Risk Committee reviews OSG’s policies and protective measures against risks, such as cybersecurity and environmental matters.

The Human Resources and Compensation Committee (the “Compensation Committee”) annually reviews executive compensation policies and practices, employee benefits, and associated risks. The Compensation Committee conducts annual assessments of any risks associated with OSG’s compensation policies and practices and has concluded that such policies and practices do not, individually or in the aggregate, create risks reasonably likely to have a material adverse impact on OSG.

Both the Audit and Compensation Committees also rely on the advice and counsel of OSG’s independent registered public accountants and independent compensation consultants, respectively, to raise awareness of any risk issues that may arise during their reviews of OSG’s financial statements, audit work and executive compensation policies and practices, as applicable.

Managing risk is an ongoing process inherent in all decisions made by management. OSG has an enterprise risk management program that is designed to ensure that risks are taken knowingly and purposefully. Management is responsible for assessing such risks and related mitigation strategies for all material projects and initiatives of OSG submitted for consideration by the Board. The risk assessment process seeks to identify the primary risks facing OSG and to prioritize these risks, as well as the actions necessary to mitigate and balance these risks.

Meetings of the Board. The Board held six meetings during 2022. Each director attended over 90% of the total number of meetings of the Board and Board committees of which the director was a member.

Annual Meetings of Stockholders. Directors are not required, but are strongly encouraged, to attend the annual meeting in person or telephonically. All directors attended our 2022 Annual Meeting virtually.

Communications with Board Members. Interested parties, including stockholders, may communicate with any director, with the Chairman, or with the non-management directors as a group by sending a letter to the attention of such director, or the non-management directors as a group, as the case may be, in care of OSG’s Corporate Secretary, 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602. The Corporate Secretary opens and reviews such correspondence and forwards it (other than advertisements and other solicitations) to the director(s) most closely associated with the nature of the communication based on Committee membership and other factors.

Code of Business Conduct and Ethics; Other Compliance Policies. OSG has adopted the following policies:

The Code of Business Conduct and Ethics, the Insider Trading Policy and the Anti-Bribery and Corruption Policy are posted on OSG’s website, www.osg.com, and are available in print upon request.

Prohibition Against Hedging and Pledging. OSG’s Insider Trading Policy prohibits the OSG’s directors and employees from hedging and pledging any securities of OSG, including by investing in options, puts, calls, short sales, future contracts, or other derivative instruments relating to OSG securities, regardless of whether such persons have material non-public information about OSG. In addition, our Non-Employee Director Incentive Compensation Plan and Incentive Compensation Plan for Management prohibit incentive awards from being pledged.

Other Directorships and Significant Activities. OSG values the experience directors bring from other boards of directors on which they serve but recognizes that board service presents significant demands on a director’s time and availability and may present conflicts and legal issues. The Guidelines provide that non-management directors refrain from serving on the boards of directors of more than four publicly traded companies (other than OSG or a company in which OSG has a significant equity interest) absent special circumstances. A member of the Audit Committee may not serve on more than two other audit committees of publicly traded companies.

The Guidelines require the CEO and other members of senior management to receive the approval of the Governance and Risk Committee before accepting any outside board membership. The Guidelines prohibit the CEO from serving on the board of directors of more than one publicly traded company (other than OSG or a company in which OSG has a significant equity interest).

If a director’s principal occupation or business association changes substantially, that director is required by the Guidelines to inform the Chairman of the Governance and Risk Committee of the change and offer to resign from the Board. In such case, such Committee must recommend to the Board the action, if any, to be taken with respect to the offer of resignation, taking into account the appropriateness of continued Board membership.

Committees

The Board has three standing committees: the Audit Committee, the Governance and Risk Committee, and the Compensation Committee. Each of these committees has a charter that is posted on OSG’s website, www.osg.com, and is available in print upon request.

Audit Committee. The Audit Committee is required to have no fewer than three members, all of whom must be and are independent directors in accordance with SEC and NYSE rules, as well as under the standards set forth in the Guidelines. During 2022, the Committee consisted of Messrs. Reddy (Chair) and Kronsberg, and Ms. DeLaet. The Board affirmatively determined that each member of the Committee was independent and qualified as an audit committee financial expert, both as defined by rules of the SEC and NYSE. The Audit Committee met eight times in 2022. The Committee meets frequently in executive session, without any members of management present, to confer with the independent registered public accounting firm, and internal auditors. It also meets separately with executive management.

The Audit Committee oversees OSG’s accounting, financial reporting process, internal controls, and audits and consults with management, internal auditors, and our independent registered public accounting firm on, among other things, matters related to the annual audit, the accounting principles applied to the financial statements, and the oversight of financial risk associated with OSG’s operations.

The Audit Committee retains OSG’S independent registered public accounting firm, subject to stockholder ratification (although the stockholder vote is not binding). The Committee may in its sole discretion terminate the engagement of the firm and direct the appointment of another independent auditor at any time if it determines that such an appointment would be in the best interests of OSG and our stockholders. The Committee maintains direct responsibility for the compensation and oversight of the independent registered public accounting firm and evaluates its qualifications, performance, and independence. The Committee has established policies and procedures for the pre-approval of all services provided by the independent registered public accounting firm.

Governance and Risk Committee. The Governance and Risk Committee is required to have no fewer than three members, all of whom must be and are independent directors under the standards set forth in the Guidelines. During 2022, the Committee consisted of Ms. Manuel (Chair), Ms. Silcock, and Mr. Taylor. The Board affirmatively determined that each member of the Committee was independent. The Governance and Risk Committee met four times in 2022.

The Governance and Risk Committee evaluates prospective nominees for election to the Board who are identified or referred by other Board members, management, stockholders or external sources and all self-nominated candidates, and recommends to the Board those individuals the Committee believes are best qualified to serve on the Board. The Committee will consider recommendations for director nominees from stockholders made in writing to the following address: Corporate Secretary, Overseas Shipholding Group, Inc., 302 Knights Run Avenue, Suite 1200, Tampa, Florida 33602.

The Committee uses the same criteria for evaluating candidates nominated by stockholders and self-nominated candidates as it does for those proposed by other Board members, management, and search consultants. This Committee also reviews and recommends to the Board changes to the Guidelines and leads the annual review of the Board’s performance.

The Governance and Risk Committee provides oversight over non-financial risks associated with OSG’s operations, including environmental, social, and governance strategies, policies and practices, cybersecurity risk mitigation, as well as our vessels’ adherence to environmental and regulatory requirement.

Compensation Committee. The Compensation Committee is required to have no fewer than three members, all of whom must be and are independent directors under the standards set forth in the Guidelines. During its current term, the Compensation Committee consisted of Ms. Silcock (Chair), Ms. DeLaet, and Ms. Manuel. The Board affirmatively determined that each member of the Committee was independent under applicable rules of the NYSE, SEC, and Internal Revenue Code. The Compensation Committee met eight times in 2022.

The Compensation Committee establishes, oversees, and carries out OSG’s compensation philosophy and strategy, and assesses compensation-related risks. It implements the Board’s responsibilities relating to the compensation of our executive officers and seeks to ensure that they are compensated in a manner consistent with the philosophy and competitive with its peers. This Committee monitors and oversees the preparation of the section entitled “How We Compensate Our Executives” for inclusion in OSG’s annual proxy statements.

Related Party Transactions

Related party transactions may present potential or actual conflicts of interest or create the appearance that decisions are based on considerations other than the best interests of OSG and our stockholders. Our Code of Business Conduct and Ethics requires all directors, officers and employees who may have a potential or apparent conflict of interest to disclose fully all the relevant facts to OSG’s legal department any time they arise. Any proposed transaction or relationship that could be viewed as a potential conflict is carefully reviewed, with those determined to be related party transactions reported to the Board for consideration. If the related party is a director, that director will not participate in the consideration. In deciding whether to approve the proposed related party transaction, the Board will determine whether the transaction is on terms that could be obtained in an arm’s length transaction with an unrelated third party and if the transaction is in the best interest of the stockholders and OSG. If the related party transaction is not on such terms, it will not be approved. In addition, every quarter, our Corporate Secretary determines whether any related party transactions have occurred and reports the findings to the Audit Committee. In addition to this reporting requirement, in order to affirmatively seek to identify related party transactions, each year we require our directors and executive officers to complete questionnaires identifying any transactions with OSG in which the director or officer has an interest. There were no related party transactions in 2022.

DIRECTOR COMPENSATION

Our non-employee directors receive annual cash retainers, with additional annual cash retainers for service as a committee member or chair or for services as Board Chair. In addition, each non-employee director receives an annual award of restricted stock units, or RSUs, under the Non-Employee Director Incentive Compensation Plan (the “Director Plan”), which permits the grant of various types of equity-based awards to directors. Directors receive an annual grant of time-based RSUs on the date of each annual meeting, with the number of RSUs being equal to the value shown in the table below divided by our closing stock price on the date of grant. No additional fees are paid for attendance at any Board or committee meetings.

For 2022, the following sets forth the annual cash retainers and RSU values for our non-employee directors:

* Rounded to the nearest 100 shares

The following table shows the total compensation paid to OSG’s non-employee directors during calendar year 2022:

OSG encourages stock ownership by directors in order to align their interests with those of our stockholders. To further stock ownership by directors, the Board believes that regular grants of equity compensation should be a significant component of director compensation.

The Board has in place stock ownership guidelines for non-employee directors. Under the stock ownership guidelines, each non-employee director is expected within five years of becoming a director, to own shares of the OSG’s Class A Common Stock with a market value equal to at least three times the annual cash retainer for Board service. The directors are in compliance with these guidelines.

HOW WE COMPENSATE OUR EXECUTIVES

This section provides information regarding the compensation program for 2022 for individuals who served as executive officers and who are listed in the Summary Compensation Table (collectively, the “Named Executive Officers” or “NEOs”). Our NEOs for 2022 are:

As noted elsewhere in this Proxy Statement, OSG qualifies as a “Smaller Reporting Company,” or “SRC,” under SEC rules. As a Smaller Reporting Company, we are permitted to provide reduced disclosures in this Proxy Statement, including those relating to executive compensation. Among other things, we are no longer required to have a Compensation Discussion and Analysis. Nevertheless, we are providing the following information to be transparent to our stockholders on how we compensate our executives. This section describes our compensation philosophy, the objectives of our executive compensation program and policies, the elements of the compensation program and how each element fits into our overall compensation philosophy and strategy.

Executing on Strategy: Our 2022 Performance 

The performance measures for our 2022 compensation program were set by our Compensation Committee in the midst of significant uncertainty as the COVID-19 pandemic continued to have significant impacts on our business and Russia had just invaded Ukraine. These developments greatly disrupted the market demand for our services, and the Committee was unable to predict the duration and severity of these developments on our business. In the face of these developments, our executives acted quickly to reactivate our fleet and recruit mariners and they were also successful in focusing on the execution of our long-term business strategies. Always, safety and quality are the key focuses of our operations, with a foundation of corporate culture that continuously seeks to achieve the highest standards in protecting the environment and ensuring the health and safety of all of our employees. We have issued a Sustainability Report contemporaneously with our Annual Report and this Proxy Statement which states our commitment to reducing our carbon footprint and to making cultural changes that will provide benefits to our human capital.

The narrative that follows describes the compensation program for 2022, which was designed by our Compensation Committee to incentivize our executives to achieve our strategic and operational goals. The compensation program is heavily weighted on performance-based measures.

Say on Pay Results - Consideration of Stockholder Feedback  

At our 2022 annual meeting of stockholders, 99.26% of the stockholders who voted on the say-on-pay proposal were in favor of our executive compensation program. We believe that this level of support reflects our stockholders’ belief that our compensation program is effective and reasonable.

Summary of the 2022 Compensation Program 

The 2022 compensation program mirrored the structure and metrics used for 2021. The Compensation Committee determined that the elements of the program remained consistent with the Company’s philosophy and would appropriately motivate the executive officers. The annual incentive compensation program continued using the objective, performance-based metrics of free cash flow (“FCF”) and selling, general and administrative (“SG&A”) costs measured over a one-year performance period. The long-term equity grants also continued, with a mix of time-based and performance-based grants using total shareholder return (“TSR”) and return on invested capital (“ROIC”) performance metrics. 

The following table is the mix of compensation approved by the Compensation Committee for the 2022 compensation program:

In addition, in March 2022, the Compensation Committee implemented a retention program to recognize the efforts and high performance of our executives, including their efforts to remain in compliance with our financial covenants during the peak period of the COVID-19 pandemic, which had a significant negative impact on our business. See details under “2022 Retention Grant Program” below.

OUR COMPENSATION PRINCIPLES, COMPONENTS AND PRACTICES

Our Executive Compensation Philosophy and Practices

We believe that a well-designed compensation program is a powerful tool to attract, motivate, retain and reward top executive and managerial talent and that it should also align the interests of our executive officers with those of our stockholders. We have structured our compensation program to drive and support these objectives:

Executive Compensation Practices: What We Do and What We Do Not Do

The following table summarizes some of the key features of our executive compensation program.

	What We Do			What We Don’t Do
	Utilize compensation benchmarking - We review publicly available information to evaluate how our executive compensation opportunities compare to those for similar positions at comparable companies			No hedging and no pledging - Board members, executive officers and other employees are prohibited from engaging in hedging transactions or pledging OSG stock per our Insider Trading Policy
	Pay for performance - A significant portion of compensation is at risk, including compensation that is stock and/or performance based, tied to pre-established performance goals aligned with our short-term and long-term objectives			No automatic or guaranteed pay - Salary increases and incentive payments are not guaranteed
				No tax gross ups - We do not provide for any tax reimbursements or tax gross-ups
	Compensation recoupment policies - We maintain a strict compensation recoupment (clawback) policy			No special retirement programs - We do not offer a supplemental executive retirement plan
	Stock ownership guidelines - Our Board has established robust stock ownership guidelines for executive officers and directors			No stock option re-pricing - We do not allow discounted stock options, reload stock options or stock option re-pricing without stockholder approval
	Independent compensation consultant - The Compensation Committee engages an independent compensation consulting firm to review and provide recommendations on our executive compensation program			No dividends on unvested equity- Dividend equivalents are accrued but not paid on all unvested equity grants.  For Performance-based RSUs (“PRSUs”), no dividends are paid until the performance conditions are satisfied and the PRSUs vest
				No perquisites - We do not provide any executive perquisites

Compensation Risk Mitigation

The Compensation Committee annually assesses risks that may be present in our compensation program and has concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on OSG. Because the Compensation Committee believes that a significant portion of our executive officers’ total compensation should be variable and “at risk”, the Committee uses a mix of performance measures and goals in our incentive compensation program with the objective of balancing our short- and long-term goals and discouraging excessive or inappropriate risk-taking by eliminating any inducement to over-emphasize one goal to the detriment of others. To further mitigate excessive risk taking, we have adopted the following:

Roles in Setting Executive Compensation

Role of the Compensation Committee

The primary role of our Compensation Committee, which consists entirely of independent directors, is to establish our compensation philosophy and strategy and to provide our executives with compensation opportunities consistent with the philosophy and strategy. The Committee takes many factors into account when making compensation decisions with respect to our executives, including the individual’s performance and experience; the ability of the individual to affect our long-term growth and success; OSG’s overall performance; internal equity among the executives; and external, publicly available market data on competitive compensation practices and levels. The Committee typically establishes the annual compensation program during the first quarter of each fiscal year, setting specific annual and long-term Company goals and designing the compensation program for that year to support and reward the achievement of those goals. In setting the compensation for our executive officers, other than the CEO, the Committee considers, among other things, the recommendations of our CEO. The Committee is solely responsible for making all decisions on the compensation of our executives.

The Compensation Committee meets in executive session on a quarterly basis, and otherwise, as necessary for discussions or decisions regarding executive compensation.

Role of Compensation Consultant

The Compensation Committee engaged Lyons Benenson & Company Inc. (“LB&Co”) in 2022 as its independent compensation consultant to assist and advise the Committee on all aspects of OSG’s executive and director compensation programs and related corporate governance matters. LB&Co does not provide other services to OSG or its executive officers. LB&Co was retained directly by the Committee, which, in its discretion, has the sole authority to select, approve, retain, terminate, and oversee its relationship with its consultant. In selecting its compensation consultant, the Committee considered the independence of LB&Co in accordance with the standards of the NYSE, applicable rules and regulations of the SEC and other laws relating to the independence of advisors and consultants. The Committee determined that the work of LB&Co did not raise any conflict of interest in 2022.

A representative of LB&Co. attended all meetings of the Compensation Committee in 2022.

Role of the CEO in Setting Compensation

Decisions relating to the CEO’s performance and compensation are made by the Compensation Committee in executive session. In making determinations regarding compensation for the other executive officers, the Committee generally considers the recommendations of the CEO and the advice received from LB&Co. In making his recommendations, the CEO evaluates the performance of each executive, considers each executive’s compensation in relation to our other officers and assesses retention risks. The Committee then reviews, modifies (as appropriate) or approves these recommendations and either reports the results to the Board or recommends actions for the Board to approve.

Components of Named Executive Officer Compensation

The Compensation Committee reviews each element of compensation annually to ensure alignment with our compensation philosophy and objectives, as well as to assess our executive compensation program and levels relative to the competitive landscape. Our executive compensation program for 2022 consisted of the following:

Named Executive Officer Compensation Mix

The charts below depict the mix of those elements of the 2022 compensation program that are at-risk, such as the cash payment under our Annual Incentive Program (as discussed below) and time and performance-based equity grants, compared to the fixed base salary for the CEO and the NEOs. These charts exclude the 2022 Retention Grant.

Base Salary

We strive to pay base salaries that are market-competitive for a company of our size so as to attract and retain talented executives and to provide a secure fixed level of compensation. The Compensation Committee regularly reviews the base salaries of our executive officers and compares them to the salaries of senior management among the peer group as well as other regional market data, bearing in mind that total estimated direct compensation opportunity is the principal comparative measure of the competitiveness of our program. Based on its own experience and such comparison, the Committee determines whether the salaries of the executive officers are at levels sufficient to attract, motivate and retain, in concert with other elements of compensation, the executive officers who are essential to leading OSG and driving stockholder value.

2022 Annual Incentive Program for the Executive Officers

At our 2019 Annual Meeting of Stockholders, our stockholders approved the 2019 Incentive Compensation Plan for Management (the “Plan”) which now governs all incentive awards given by OSG.

The Annual Incentive Program for 2022 (“Annual Incentive Program”) is consistent with our compensation philosophy, meets the requirements of the Plan, and is in line with compensation practices within OSG’s peer group.

The following summarizes the design of the Annual Incentive Program for the executive officers, which is the same design adopted by the Compensation Committee for 2020 and 2021.

Achievement of performance is measured based upon the calculation of the Pool, as described above, and consideration of individual goals approved in advance by the Compensation Committee for each of the executive officers as described in the table below. Following the end of the performance period, the Compensation Committee certified the FCF formula and evaluated each of the NEO’s individual performance to determine the achievement level. The outcome of this analysis and evaluation of performance for the Annual Incentive Program is set forth in the final column:

Long Term Incentives

The Compensation Committee determined to continue to grant performance-based RSU awards that are tied to TSR and cumulative ROIC metrics, with vesting after a three-year period ending on December 31, 2024. These awards are subject to the achievement of performance goals based on OSG’s three-year TSR relative to the three-year TSR of the Oil & Gas Storage & Transportation and Marine GICS Sub-Industries, and OSG’s ROIC relative to our budgeted ROIC for the performance period. ROIC is net operating profit after taxes divided by the net of total debt plus stockholder equity less cash.

Each type of grant and the grant date values are shown in the table below. Please refer to the Summary Compensation Table and the Outstanding Equity Awards at Fiscal Year-End Table for additional details regarding these grants:

Performance-Based RSU Awards

The 2022 PRSU awards for TSR and ROIC have three-year performance periods that end on December 31, 2024, subject to the achievement of the respective performance metrics. The vesting of these awards is subject to the Compensation Committee’s certification of the achievement of the articulated goals following the conclusion of the performance period.

Vesting of the TSR awards is in accordance with the following schedule, using linear interpolation for achievement between the 40th and 50th percentiles and between the 50th and 75th percentiles:

Total Shareholder Return (TSR)

In the event that OSG’s three-year TSR is greater than the median of the Index but still negative, a maximum of 100% of the target number of PRSUs governed by TSR may be earned. That is, there would be no upside for greater than target achievement if OSG’s three-year TSR is negative. Should OSG reach the threshold level of performance for the performance period, 50% of the target number of TSR PRSUs would be earned.

Achievement of the ROIC awards is in accordance with the following schedule, using linear interpolation between 80% and 100% attainment and between 100% and 120% attainment of the performance goal:

Return on Invested Capital (ROIC)

2022 Retention Grant Program

The Compensation Committee was concerned about the retention of the executive officers and desired to recognize their significant efforts and high performance managing the business during the COVID-19 pandemic. The Committee evaluated the compensation that the executive officers would receive under the regular program, and determined that an additional award was necessary to achieve the intention of the compensation program goals. Careful consideration was given for each executive officer of the design of the award, the performance period, the total value, and the mix of cash and stock.

The 2022 Retention Grant was made pursuant to the authority and terms of the Plan, which was approved by our stockholders at our 2019 Annual Meeting of Stockholders. This Plan now governs all incentive awards to be granted.

The 2022 Retention Grant will have a total value of $1.87M for the executive officers. Payout will be in cash and equity. The Grant is time-based with vesting over a three-year period on the anniversary of the grant date of March 24, 2022. The vesting schedule is:

- 20% vesting of both the equity and cash portions of the grant on the 1st anniversary;

- 30% vesting of both the equity and cash portions of the grant on the 2nd anniversary; and

- 50% vesting of both the equity and cash portions of the grant on the 3rd anniversary.

The table below sets forth all of the components of the 2022 Retention Grant. The number of shares was determined using the 20-day volume weighted average price ending March 23, 2022 which was $2.09.

CEO Employment Agreement

Mr. Norton’s Employment Agreement (the “CEO Employment Agreement”) became effective on December 15, 2018 and will continue until the earliest of Mr. Norton’s death, disability, termination (whether or not for cause), or voluntary resignation (whether or not for good reason). The CEO Employment Agreement requires that Mr. Norton be nominated annually for election to OSG’s Board of Directors and provides for annual cash and long-term equity incentive compensation opportunities and other benefits, as summarized in the following chart:

The CEO Employment Agreement carried forward certain terms of Mr. Norton’s prior employment agreement. Mr. Norton will retain, continue to vest in, and continue to hold equity awards granted to him prior to the date of the CEO Employment Agreement.

The CEO Employment Agreement provides for different severance benefits under various scenarios. The following table depicts these scenarios:

The forgoing description is qualified in its entirety by reference to the CEO Employment Agreement, which is an exhibit to OSG’s Annual Report on 10-K and is incorporated by reference herein.

Employment Agreements with Executive Officers other than the CEO

OSG has entered into employment agreements with Mr. Trueblood and Mr. O’Halloran, both of which contain similar terms. Each employment agreement provides for an annual base salary and a target bonus of at least 15% of each NEO’s annual base salary. Each NEO may receive equity awards from time to time at the discretion of the Compensation Committee, which awards will have a total target value of at least 50% of such executive’s base salary.

The employment agreements provide for severance benefits in the event of termination without cause or resignation for good reason as follows: (i) accrued but unpaid amounts through the date of separation of service; (ii) 12 months’ continuation of annual base salary; (iii) the NEO’s annual bonus for the year of separation pro-rated based on performance factor achievement and the number of days in the fiscal year in which he was employed; and (iv) accelerated vesting of any unvested time-based equity awards.

If, during the two-year period following a change in control of OSG, an NEO’s employment is terminated without cause or the NEO resigns for good reason, the employment agreements provide for severance benefits as follows: (i) accrued but unpaid amounts through the date of separation of service; (ii) 12 months’ continuation of annual base salary; (iii) the NEO’s target annual bonus for the year of separation; and (iv) accelerated vesting of any unvested equity awards (time-based and performance-based), satisfied at the designated maximum level and such awards shall vest pro rata based solely upon the provision of services over the performance period.

In the event of Death or Disability the following benefits are provided: (i) accrued but unpaid amounts through the date of separation of service; (ii) the NEO’s annual bonus for the year of separation pro-rated based on performance factor achievement and the number of days in the fiscal year in which he was employed; and (iii) accelerated vesting of any unvested time-based equity awards.

Each NEO agreed to a non-competition and non-solicitation obligation during the executive officers’ employment term and for 12 months thereafter. Each NEO also agreed to confidentiality and non-disparagement obligations during and following employment with OSG, and to timely delivery of a release in connection with termination of the NEO’s service. Severance and other benefits are conditioned on compliance with these covenants.

The forgoing description is qualified in its entirety by reference to the employment agreements referred to above, which are exhibits to OSG’s Annual Report on 10-K and are incorporated by reference herein.

Additional Information

Benefits

In general, we provide benefits to our employees (including our executive officers) that we believe are important to maintain a competitive total compensation program. Benefits are designed to provide a reasonable level of retirement income and to provide a safety net of protection against the financial concerns and catastrophes that can result from illness, disability or death.

We provide a tax-qualified defined contribution employee benefit plan to employees known as the OSG Ship Management Inc. Savings Plan (the “Savings Plan”). Under the Savings Plan, eligible employees may contribute, on a pre-tax basis, an amount up to the limit imposed by the Internal Revenue Code Section 401(k). In 2022, OSG matched 100% of the first 4% of a participant’s pre-tax contributions and then 50% of pre-tax contributions in excess of 4% but not in excess of 8%.

SUMMARY COMPENSATION TABLE

The Summary Compensation Table includes individual compensation information for services by the Named Executive Officers in all capacities for OSG and our subsidiaries.

All Other Compensation Table

The following table describes each component of the All Other Compensation column for 2022 in the Summary Compensation Table.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table provides information concerning equity awards held by the Named Executive Officers as of December 31, 2022. This table includes unexercised and unvested option and stock awards. The market value of the stock awards is based on the market price of OSG’s Class A Common Stock at the close of business on December 31, 2022, which was $2.89 per share.

POTENTIAL PAYMENTS UPON TERMINATION

The following table discloses the amounts that would have been payable to each NEO upon termination of his employment, assuming that such termination occurred on December 31, 2022. The table excludes amounts that are available generally to all salaried employees, such as amounts payable under the Savings Plan. The market value of the stock awards is based on the market price of OSG’s Class A Common Stock at the close of business on December 31, 2022, which was $2.89 per share.