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Section 1: DEF 14A (DEF 14A)

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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:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to §240.14a-12
INTERNATIONAL SEAWAYS, INC.
(Name of Registrant as Specified in Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
 
 
 
 
(5)
Total fee paid:
 
 
 
Fee paid previously with preliminary materials.
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:
 
 
 

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INTERNATIONAL SEAWAYS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 22, 2020

To the Stockholders of International Seaways, Inc.:
We cordially invite you to attend the Annual Meeting of Stockholders (the “Annual Meeting”) of International Seaways, Inc. (the “Company” or “INSW”), which will be held “virtually” via live webcast at www.virtualshareholdermeeting.com/INSW2020, on Monday, June 22, 2020, at 2:00 p.m. Eastern time. You will be able to attend the meeting online, vote your shares and submit questions during the meeting by visiting the website listed above. In order to join the Annual Meeting, you will need to have the 16-digit control number included on your proxy card or in the instructions that accompanied your proxy materials (or in other communications you may have received from the broker, bank or other nominee in whose name your shares are held).The Annual Meeting will be held online only, and will be held for the purposes of:
(1)
Electing the nine directors named in the accompanying proxy statement, each to serve until the annual meeting of the Company to be held in 2021;
(2)
Ratifying the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020;
(3)
Approving, by advisory vote, the compensation of the Named Executive Officers for 2019 as described in the accompanying proxy statement;
(4)
Ratifying and approving the INSW 2020 Non-Employee Director Incentive Compensation Plan;
(5)
Ratifying and approving the INSW 2020 Management Incentive Compensation Plan.
We will also act on any other business that is properly raised.
Only stockholders of record at the close of business on April 23, 2020 are entitled to notice of, and to vote at, the Annual Meeting.
Your vote and that your shares be represented at the meeting are both very important. We urge you to vote as soon as possible by telephone, over the Internet or by marking, signing and returning by mail your proxy or voting instruction card, even if you plan to attend the virtual Annual Meeting. If you attend the virtual meeting and wish to vote, you may withdraw your proxy and vote at that time. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder. Your prompt consideration is greatly appreciated.
SEC rules allow issuers, including us, to furnish certain proxy materials to their stockholders over the Internet. These rules lower delivery costs and reduce the environmental impact of our Annual Meeting, while allowing us to provide stockholders with the information they need. If you requested a printed copy of the materials, we have included a copy of the Company’s Annual Report on Form 10-K for 2019 with this notice and the accompanying Proxy Statement.
 
By order of the Board of Directors,
JAMES D. SMALL III
 
 
 
Chief Administrative Officer, Senior Vice President,
General Counsel and Secretary
New York, New York
 
April 29, 2020
 

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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, JUNE 22, 2020
You may access the following materials at www.virtualshareholdermeeting.com/INSW2020:
the Notice of Annual Meeting of Stockholders of the Company to be held on June 22, 2020,
the Company’s Proxy Statement for the Annual Meeting;
the Company’s Annual Report on Form 10-K for the year ended December 31, 2019; and
the form of proxy card
The documents are also available at http://www.intlseas.com/Docs.

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INTERNATIONAL SEAWAYS, INC.
600 Third Avenue, 39th Floor
New York, New York 10016
PROXY STATEMENT
WHO WE ARE
International Seaways, Inc. (NYSE: INSW) (the “Company” or “INSW”) is one of the world’s largest tanker companies, providing energy transportation services for crude oil and petroleum products in the international markets. The Company owns and operates a fleet of 40 vessels, including 38 conventional tankers – comprising 13 VLCCs, two Suezmaxes, five Aframaxes/LR2s, 13 Panamaxes/LR1s and 5 MR tankers – and, through joint ventures, ownership interests in two floating storage and offloading service vessels.
Since becoming a stand-alone public company in December 2016, the Company has been committed to enhancing its earnings leverage and financial strength, unlocking value for shareholders, and implementing a disciplined and accretive capital allocation strategy. The significant progress we have made in achieving each of these important objectives was evident in our strong 2019 results (as described in greater detail below). From mid-2017 to the beginning of 2019, through disciplined capital allocation and without issuing equity, we successfully funded over $600 million worth of vessel acquisitions by using cash generated from operations, proceeds from the sale of older vessels and the issuance or assumption of debt while maintaining what we believe to be one of the lowest loan to value profiles in the public company shipping sector.
In 2020, we continued to implement important new initiatives. Following our $600 million investment in modern vessels, the monetization of our non-core LNG joint venture (the “LNG JV”) in late 2019, and our successfully completed January 2020 refinancing, we have remained focused on effectively allocating capital through the tanker cycle. As part of those efforts, and taking into consideration our cash and liquidity positions and long-term prospects, in March 2020 the Company established a program to begin returning capital to shareholders, implementing a fixed, quarterly dividend of $0.06 per share and repurchasing $10 million of stock pursuant to our share repurchase program. We also continued to make accretive vessel purchases, completing the purchase of an LR1 – the Seaways Guayaquil, which is named for a lighthouse in Ecuador – in February 2020 for trading in our crude oil Panamax International pool, which has historically outperformed the broader Panamax market. Going forward, we will continue to evaluate capital allocation decisions, including dividends, share buybacks and vessel sales and purchases based on the tanker cycle and market developments.
In recent months, the tanker market has become increasingly volatile. The coronavirus pandemic has negatively impacted oil demand as countries around the world seek to contain the virus. At the same time, however, oil producers have (at least currently) increased production, driving oil prices lower. The offsetting effects of lower demand and negative sentiment around the pandemic, and higher tanker demand caused by increased oil supply and the greater number of tankers being used for storage at sea (which has been taking place at strong TCE rates), have contributed significantly to that volatility. Rates, however, have so far remained generally strong, posting at levels above mid-cycle rates through the first quarter and into the second. We will continue to monitor developments throughout the remainder of the year.
2019 Performance Highlights
Shipping revenues and TCE Revenues achieved in 2019 were $366.2 million and $339.9 million, respectively, of which approximately 78% and 76%, respectively, were generated from our Crude Tankers segment. Following a loss from vessel operations of $54.5 million in 2018, results from vessel operations
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increased by $109.7 million to income of $55.2 million in 2019. Such increase resulted primarily from increased TCE revenues, decreased vessel expenses due to the sale of a number of older vessels during 2018 and 2019 and lower losses on the disposal of vessels and other property, offset partially by increased charter hire expense. We achieved Adjusted EBITDA of $164.7 million in 2019 compared to $68.3 million in 2018. “Adjusted EBITDA” represents net loss before interest expense, income taxes and depreciation and amortization expense adjusted for the impact of certain items that INSW does not consider indicative of our ongoing operating performance, as disclosed in Item 6, “Selected Financial Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”). We have included a reconciliation of Adjusted EBITDA to net loss in the 2019 Annual Report. INSW’s total cash (including restricted cash) as of December 31, 2019 was $150.2 million compared to $117.6 million as of December 31, 2018. We made capital investments totaling $37.2 million during 2019 and generated $87.5 million in cash from operations and an additional $107.9 million from investing activities, primarily reflecting proceeds from disposal of vessels and other assets and from the sale of our equity interest in the LNG JV.
Our goals for 2019 were to (i) continue to maximize our fleet’s earning potential through opportunistic charter-ins, sales and purchases of vessels and investments in Exhaust Gas Cleaning Systems (“scrubbers”) on our modern VLCCs, (ii) refinance our high interest debt obligations and (iii) execute transactions that would ultimately unlock the value of our shares to investors.
Accordingly, during 2019, we chartered in two modern LR1s, which were deployed into our market-leading Panamax International pool; we sold and delivered to buyers two 2004-built MRs; we entered into contracts to sell a 2002-built Aframax and a 2001-built Aframax, both for delivery to buyers in 2020; and we sold our non-core 49.9% ownership interest in the LNG JV we had with Qatar Gas Transport Company Limited (Nakilat) at a price in excess of the carrying value of our investment. Using restricted cash set aside from the proceeds of vessel sales and our equity interest in the LNG JV, we were able to make prepayments totaling $110 million on our 2017 Term Loan Facility due 2022. Also, in December 2019, we entered into a memorandum of agreement to acquire a 2009-built LR1 (the Seaways Guayaquil referred to above), which was delivered in February 2020 and is currently deployed in the Panamax International pool, further enhancing our presence in that market-leading pool.
The successful sale of our non-core investment in the LNG JV was a critical step in unlocking shareholder value since it allowed us to first reduce and then refinance our high interest cost debt. We ended the year by entering into a loan commitment letter with several traditional shipping lenders with respect to senior secured credit facilities aggregating $390 million (the “2020 Debt Facilities”). The loan agreements were ultimately executed on January 23, 2020 and proceeds from the January 28, 2020 initial drawdown on the 2020 Debt Facilities of $370 million were used to (i) repay the $331.5 million outstanding principal balance under the 2017 Term Loan Facility due 2022 and the $23.3 million outstanding principal balance under the ABN Term Loan Facility due 2023, and (ii) to repurchase the $27.9 million outstanding principal amount of the Company’s 10.75% subordinated notes due 2023 issued pursuant to an indenture dated June 13, 2018 with GLAS Trust Company LLC, as trustee, as amended.
The 2020 Debt Facilities will reduce annual interest expense by approximately $15 million, by lowering our average interest rates on the refinanced portion of our debt by 350 basis points, and our overall average interest rates by 200 basis points, while enabling INSW to maintain one of the lowest leverage ratios in the public company shipping sector and low cash break evens. See Note 8, “Debt,” to the consolidated financial statements as set forth in Item 8, “Financial Statements and Supplementary Data” in our 2019 Annual Report for further details on the refinancing transaction and the 2020 Debt Facilities.
Environmental, Social and Governance
INSW is committed to working to address environmental, social and governance (“ESG”) issues as a part of our core culture. Accordingly, we strive to meet, and when possible and appropriate, exceed minimum compliance levels for all applicable rules and regulations governing the maritime industry. We are focused on various matters in connection with these issues:
Environment. Due to the nature of our business, environmental and climate change-related risks are key considerations for us. We recognize that greenhouse gas (“GHG”) emissions, which are largely caused by burning fossil fuels, contribute to the warming of the global climate system.
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Our industry, which is heavily dependent on the burning of fossil fuels, faces the dual challenge of reducing its carbon footprint by transitioning to the use of low-carbon fuels while extending the economic and social benefits of delivering energy to consumers across the globe. We welcome and support efforts, such as those led by the Task Force on Climate-related Financial Disclosures, to increase transparency and to promote investors’ understanding of how we and our industry peers are addressing the climate change-related risks and opportunities particular to our industry. We are working to meet the carbon efficiency targets included in our sustainability-linked loan and to establish other appropriate metrics by which to measure our performance and drive improvement. The Company’s governance, strategy, risk management and performance monitoring efforts in this area are evolving and will continue to do so over time.
Social. We operate a well-maintained fleet staffed by experienced officers and crews, and we believe that our seafarers are as crucial to our success as the team ashore that supports them. Through our technical and commercial management partners and our own in-house expertise, we have developed a global network to support our seafarers while delivering shipping services safely and effectively to our customers. Our philosophy is one of continual improvement throughout ship and shoreside operations, and we are committed to providing our mariners a safe, high quality place to work in an environment where they can thrive professionally. We maintain a robust safety and compliance culture that reflects the leadership and commitment displayed every day by our senior officers and shoreside staff. Furthermore, we believe in fair and transparent business practices, and we do not tolerate unethical business dealings or facilitation payments.
Governance. ESG matters are of significant relevance to us, and the Board regularly engages in discussions relating to both ESG risks and opportunities. There are seven fully independent directors currently serving on the Board, including experts in both shipping and compliance. Our management team, led by the Chief Executive Officer, executes the action plans as approved by the Board and works to manage ESG-related risks and opportunities.
Some of the recent ESG initiatives we have undertaken include the following:
Establishing a compliance program to address IMO 2020 regulations relating to low-sulfur fuel and decreased GHG emissions;
Implementing a third-party data collection and analysis platform which allows data to be gathered from our vessels for use in advanced analytics with the aim of reducing our fuel consumption, and CO2 and GHG emissions, which in the 12 months ended August 2019 enabled us to achieve an approximately 8,000-ton reduction in annual fuel consumption across our fleet (equating to a nearly 26,000-ton reduction in CO2 emissions);
Including a sustainability-linked pricing mechanism in the 2020 Debt Facilities referred to above. That mechanism, which was certified by a leading independent firm in ESG and corporate governance research as satisfying sustainability-linked loan principles, is linked to the carbon efficiency of the INSW fleet as it relates to reductions in CO2 emissions year-over-year, and is aligned to the IMO’s 50% industry reduction target in GHG emissions by 2050. This key performance indicator is calculated in a manner consistent with the de-carbonization trajectory outlined in the Poseidon Principles, the global framework by which financial institutions can assess the climate alignment of their ship finance portfolios. The relevant emissions data for our fleet will be reported to the applicable Classification Societies, the IMO and the lenders under our sustainability-linked loan facility, and we intend to make such emissions data publicly available;
Complying with the European Union’s requirements relating to inventories of hazardous materials on board our vessels a year ahead of the mandated timeframe;
Participating on the Board of Directors of the ITOPF Limited, a not-for-profit ship pollution advisor providing advice worldwide on responses to spills of oil, chemicals and other substances at sea;
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Participating in the Marine Anti-Corruption Network, a global business network of over 100 members whose vision is a maritime industry free of corruption that enables fair trade to the benefit of society at large; and
Making a commitment to implement and practice environmentally and socially responsible ship recycling
Our work is regularly discussed with both the Corporate Governance and Risk Assessment Committee and the full Board.
INFORMATION CONCERNING SOLICITATION AND VOTING
The accompanying proxy is solicited on behalf of the Board of Directors (the “Board”) of the Company for use at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on June 22, 2020 at 2 p.m. Eastern time, or any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be held virtually via live webcast at www.virtualshareholdermeeting.com/INSW2020. You will be able to attend the meeting online, vote your shares and submit questions during the meeting by visiting the website listed above. In order to join the Annual Meeting, you will need to have the 16-digit control number included on your proxy card or in the instructions that accompanied your proxy materials (or in other communications you may have received from the broker, bank or other nominee in whose name your shares are held).
Any stockholder giving a proxy may revoke it at any time before it is exercised at the meeting. This Proxy Statement and the accompanying proxy will first be sent to stockholders on or about April 29, 2020.
Participating in the Annual Meeting in 2020
The Company’s Annual Meeting will be conducted exclusively online via live webcast. We believe that, in 2020, a virtual stockholder meeting will provide greater access to those who may want to attend and that our ability to hold a physical meeting in New York City may be subject to as yet unknown constraints, and therefore have chosen to conduct a virtual meeting rather than an in-person meeting. Because the Annual Meeting is virtual and being conducted electronically, stockholders cannot attend the Annual Meeting in person. Stockholders at the close of business on the record date will be allowed to communicate with us and ask questions in our virtual stockholder meeting forum before and during the meeting.
A summary of information about participating in the Annual Meeting online follows:
Any stockholder can attend the Annual Meeting live via the Internet at www.virtualshareholdermeeting.com/INSW2020
Webcast starts at 2:00 p.m. Eastern Time
Online check-in is expected to begin at 1:45 p.m. Eastern time, and you should allow up to 15 minutes for the online check-in procedures.
Stockholders will be able to vote and submit questions while attending the virtual Annual Meeting
Please have your 16-digit control number to enter the virtual Annual Meeting
Information on how to attend and participate via the Internet will be posted at www.virtualshareholdermeeting.com/INSW2020
Stockholders who participate in the virtual Annual Meeting by way of the link above will be deemed to be “present in person,” as such term is used in this Proxy Statement, including for purposes of determining a quorum and counting votes.
Record Date, Shares Outstanding and Voting
Only stockholders of record at the close of business on April 23, 2020 (the “record date”) will be entitled to vote at the Annual Meeting. As of the record date, the Company had one class of voting securities, its Common Stock, of which 28,843,761 shares were outstanding on the record date and
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entitled to one vote each (the “Common Stock”). A list of our stockholders will be open to the examination of stockholders for any purpose germane to the Annual Meeting, during ordinary business hours for ten days prior to the Annual Meeting, at the Company’s offices, 600 Third Avenue, 39th Floor, New York, New York.
All shares represented by the accompanying proxy, if it is duly executed and received by the Company at or prior to the meeting, will be voted at the meeting in accordance with the instructions provided therein. If no instructions are provided, the proxy will be voted (1) FOR the election of directors, (2) FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020, (3) FOR approval, in an advisory vote, of the compensation for 2019 of the executive officers named in the Summary Compensation Table in this Proxy Statement (each, a “Named Executive Officer” and collectively, the “NEOs”), as described in “Compensation Discussion and Analysis” section and in the accompanying compensation tables and narrative in this Proxy Statement, (4) FOR ratification and approval of the International Seaways, Inc., 2020 Non-Employee Director Incentive Compensation Plan and (5) FOR ratification and approval of the International Seaways, Inc. 2020 Management Incentive Compensation Plan.
Each of the election of directors, the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2020, and the ratification and approval of each of the International Seaways, Inc. 2020 Non-Employee Director Incentive Compensation Plan and the International Seaways, Inc. 2020 Management Incentive Compensation Plan requires the affirmative vote (in person or by proxy) of a majority of the votes cast by the holders of the shares of Common Stock present in person or represented by proxy at the meeting and entitled to vote on the election of directors. The advisory vote on approval of the compensation to the NEOs for 2019 is non-binding, but the Board and the Human Resources and Compensation Committee (the “Compensation Committee”) will review the voting results in connection with their ongoing evaluation of the Company’s compensation program.
Your vote and ensuring that your shares will be represented at the meeting are both very important. 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, even if you plan to attend the Annual Meeting in person.
Abstentions and broker non-votes will be counted for purposes of determining the presence or absence of a quorum. Abstentions will be counted in tabulations of the votes cast on each of the proposals presented at the Annual Meeting (and will have the same effect as “AGAINST” votes, except with respect to the election of directors where abstentions will not be counted), whereas broker “non-votes” will not be counted for purposes of determining the number of votes cast.
New York Stock Exchange (the “NYSE”) rules permit brokers to vote for routine matters such as the ratification of the appointment of Ernst & Young LLP without receiving instructions from the beneficial owner of the shares. NYSE rules prohibit brokers from voting on the election of directors, executive compensation, ratification and approval of incentive compensation plans and other non-routine matters without receiving instructions from the beneficial owner of the shares. In the absence of instructions, the shares are viewed as being subject to “broker non-votes.” “Broker non-votes” will be counted for quorum purposes (as they are present and entitled to vote on the ratification of the appointment of Ernst & Young LLP) but will not affect the outcome of any other matter being voted upon at the Annual Meeting. Under current applicable rules, unless provided with voting instructions, a broker cannot vote shares of Common Stock for the election of directors, on the advisory vote concerning the approval of the compensation of the NEOs for 2019 or for ratification and approval of the incentive compensation plans.
All of these matters are very important to the Company, and we urge you to vote your shares by telephone, over the Internet or by marking, signing and returning your proxy or voting instruction card.
Expenses
The cost of soliciting proxies for the meeting will be borne by the Company. The Company has retained Innisfree M&A Incorporated to assist with the solicitation of votes for a fee of up to $20,000 plus reimbursement of expenses, which will be paid by the Company. The Company will also reimburse
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brokers and others who are only record or nominee holders of the Company’s shares for their reasonable expenses incurred in obtaining voting instructions from beneficial owners. Directors and officers of the Company may solicit proxies personally or by telephone or facsimile, but will not receive additional compensation for doing so.
Proposals for 2021 Annual Meeting of Stockholders
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “1934 Act”), any proposals of stockholders that are intended to be presented at the Company’s 2021 Annual Meeting of Stockholders must be received at the Company’s principal executive offices no later than December 31, 2020, and must comply with all other applicable legal requirements, in order to be included in the Company’s proxy statement and form of proxy for that meeting.
Stockholders who wish to propose a matter for action at the Company’s 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting”), including the nomination of directors, but who do not wish to have a proposal or nomination included in the proxy statement for that meeting, must notify the Company in writing of the information required by the provisions of the Company’s Amended and Restated By-laws (the “By-laws”) dealing with stockholder proposals. The notice must be delivered to the Company’s Corporate Secretary between March 22, 2021 and April 22, 2021. Stockholders can obtain a copy of the By-laws on the Company’s website or by writing the Corporate Secretary at: Corporate Secretary, International Seaways, Inc., 600 Third Avenue, 39th Floor, New York, New York 10016.
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ELECTION OF DIRECTORS (PROPOSAL NO. 1)
Our Board of Directors currently has nine members, and each director serves for a one-year term. At the Annual Meeting, shareholders will vote on the nine nominees named below, each of whom is an incumbent member of the Board. Each of the director nominees was elected by a majority of shareholders voting at the annual meeting of shareholders held in June 2019.
The nominees identified below were selected by the Board upon the recommendation of the Corporate Governance and Risk Assessment Committee (the “Governance Committee”), and each nominee has consented to serve if elected. Unless otherwise directed, the proxy will be voted for the election of these nominees, to serve until the 2021 Annual Meeting and until their successors are elected and qualify. We are not aware of any reason the nominees would not be able to serve if elected.
There are no family relationships among our directors, or between our directors and executive officers, and the Board has determined that each of the director nominees other than Ms. Zabrocky is independent within the meaning of the applicable rules of the SEC and the listing standards of the NYSE, and that each of the director nominees other than Mr. Kronsberg and Ms. Zabrocky is independent under the rules of the SEC and the NYSE relating to audit committees. See “Information About the Board and Corporate Governance — Independence” below.
Re-election of each nominee for director requires that such nominee receive a majority of the votes cast FOR his or her election. Abstentions and broker non-votes are not counted as votes cast and will have no effect on the outcome of any of these proposals.
Recommendation of the Board
The Board recommends a vote “FOR” the election of each of the nominees for director named in this Proxy Statement.
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Biographical Information
The following is biographical information about each nominee, including a description of the experience, qualifications and skills that have led the Board to determine that each nominee should serve on the Board. The terms of elected directors will expire as of the date of the annual meeting of shareholders to be held in 2021, or will continue until their successors are elected and have qualified. The age of each director is as of the date of this Proxy Statement.
Doug Wheat
Age 69
Chairman of the Board since November 2016
Committees: None
Other Current Public Company Board Service:
Overseas Shipholding Group, Inc.
AMN Healthcare Services, Inc.
Background:
Mr. Wheat is currently the Managing Partner of Wheat Investments, a private investment firm. From 2007 to 2016, he was the founding and Managing Partner of the private equity company Southlake Equity Group. From 1992 until 2006, Mr. Wheat was President of Haas Wheat & Partners (“Haas Wheat”). Prior to the formation of Haas Wheat, Mr. Wheat was a founding member of the merchant banking group at Donaldson, Lufkin & Jenrette, where he specialized in leveraged buyout financing. From 1974 to 1984, Mr. Wheat practiced corporate and securities law in Dallas, Texas.
Mr. Wheat is currently the Chairman of the board of directors of Overseas Shipholding Group, Inc. (ticker: “OSG”); Chairman of the board of directors of AMN Healthcare Services, Inc. (ticker: “AMN”). He has been a director of AMN since 1999, becoming Chairman in 2007. He previously served as Vice Chairman of Dex Media, Inc. and served as Chairman of SuperMedia prior to its merger with Dex One. Mr. Wheat has also previously served as a member of the board of directors of several other companies including among others: Playtex Products (of which he also served as Chairman); Dr. Pepper/Seven-Up Companies, Inc.; Dr. Pepper Bottling of the Southwest, Inc.; Walls Industries, Inc.; Alliance Imaging, Inc.; Thermadyne Industries, Inc.; Sybron International Corporation; Nebraska Book Corporation; ALC Communications Corporation; Mother’s Cookies, Inc.; and Stella Cheese Company. Mr. Wheat received both his Juris Doctor and Bachelor of Science degrees from the University of Kansas.
Skills and expertise: Mr. Wheat’s finance and legal expertise and experience serving on numerous boards of directors make him a valuable asset to the Board.
Timothy J. Bernlohr
Age 61
Director since November 2016
Committees: Compensation (Chair); Governance
Other Current Public Company Board Service:
Atlas Air Worldwide Holdings, Inc.
Skyline Champion Corporation
WestRock Company
Background:
Mr. Bernlohr is the Founder and Managing Member of TJB Management Consulting, LLC, which specializes in providing project specific consulting services to businesses in transformation, including restructurings, interim executive management and strategic planning services. He has held that role since 2005. Prior to that, he was the President and Chief Executive Officer of RBX Industries, Inc. (“RBX”), a nationally recognized leader in the design, manufacture and marketing of rubber and plastic materials to the automotive, construction and industrial markets. Before joining RBX in 1997, Mr. Bernlohr spent 16 years in the International and Industry Products division of Armstrong World Industries and held various management positions.
Mr. Bernlohr is currently a director and the Chairman of the Audit Committee of Atlas Air Worldwide Holdings, Inc. (ticker: “AAWW”); Chairman of the Board of Directors of Skyline Champion Corporation (ticker: “SKY”); and a director and the Chairman of the Compensation Committee of WestRock Company (ticker: “WRK”). Within the past five years, Mr. Bernlohr served as an independent director of the following publicly-held companies: Chemtura Corporation; Rock-Tenn Company (a predecessor of WRK); Cash Store Financial Services, Inc.; and OSG. Mr. Bernlohr is a graduate of Pennsylvania State University.
Skills and expertise: Mr. Bernlohr’s experience serving as a chief executive of an international manufacturing company and his varied directorship positions make him a valuable asset to the Board.
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Ian T. Blackley
Age 65
Director since July 2013
Committees: None
Other Current Public Company Board Service: None
Background:
Mr. Blackley was the President and Chief Executive Officer of OSG (the former parent corporation of the Company) from January 2015 until his retirement in December 2016. From September 2014 until November 2016, he was the Senior Vice President and Chief Financial Officer of the Company. After joining OSG in 1991, Mr. Blackley held numerous operating and financial positions. Before becoming President and Chief Executive Officer of OSG, Mr. Blackley served as Executive Vice President and Chief Operating Officer of OSG from December 2014. Prior to that, Mr. Blackley served as Senior Vice President (from May 2009 to December 2014), as Chief Financial Officer (from April 2013 to December 2014), and as Head of International Shipping (from January 2009 to April 2013). Mr. Blackley also served as Managing Director and Chief Operating Officer of OSG Ship Management (UK) Ltd. from September 2005 through April 2013. Mr. Blackley began his seagoing career in 1971, serving as a captain from 1987 to 1991.
Mr. Blackley currently serves on the board of Gard P. & I. (Bermuda) Ltd. Mr. Blackley served as a director of the Company from July 2013 through November 30, 2016, during which time the Company was a wholly-owned subsidiary of OSG, and served as a director of OSG from 2015 to 2016. He holds a diploma in Nautical Science from Glasgow College of Nautical Studies and a Master Mariner Class I license.
Skills and expertise: Mr. Blackley’s extensive experience both with the shipping industry generally, and the Company in particular, make him a valuable asset to the Board.
Randee E. Day
Age 72
Director since November 2016
Committees: Audit; Compensation
Other Current Public Company Board Service:
Eagle Bulk Shipping Inc.
Tidewater, Inc.
Background:
Ms. Day is President and Chief Executive Officer of Day & Partners, LLC, a maritime consulting and advisory company and a senior advisor to a full-service restructuring firm, Goldin Associates LLC. Prior to founding Day & Partners, LLC in 2011, Ms. Day served as interim Chief Executive Officer of DHT Maritime, Inc. Previously, Ms. Day was Managing Director at the Seabury Group, a transportation advisory firm, and the Division Head of JP Morgan’s shipping group in New York.
Ms. Day is a director of Eagle Bulk Shipping Inc. (ticker: “EGLE”), an owner and operator of dry bulk vessels, and is Chairman of its Corporate Governance Committee and a member of its Audit Committee, and is a director of Tidewater, Inc. (ticker: “TDW”), an owner and operator of offshore support vessels. She is a former director of DHT Maritime, Inc., TBS International, Inc., Ocean Rig ASA and Excel Maritime Carriers Inc. Ms. Day is a graduate of the School of International Relations at the University of Southern California and did graduate studies at George Washington University. Ms. Day also is a graduate of Senior Executives in National and International Security Program at the Kennedy School at Harvard University.
Skills and expertise: Ms. Day’s extensive experience in the shipping industry make her a valuable asset to the Board.
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David I. Greenberg
Age 66
Director since June 2017
Committees: Audit; Governance (Chair)
Other Current Public Company Board Service: None
Background:
Mr. Greenberg is the acting chief executive and Special Advisor (and from 2008 through 2016 was a member of the Executive Committee) for LRN Corporation, which advises global companies on governance, ethics, compliance, culture and strategy issues. For 20 years prior to 2008, Mr. Greenberg served in various senior positions at Altria Group, Inc. then the parent company of Phillip Morris USA, Phillip Morris International, Kraft Foods and Miller Brewing — culminating in his role as Senior Vice President, Chief Compliance Officer and a member of the Corporate Management Committee. Mr. Greenberg is a managing director of Cortina Partners LLC, a private equity firm that invests in and manages companies in the textile, health care, communications, and medical transportation and bedding industries, and is the Chief Executive Officer of Acqua Recovery, a residential drug and alcohol treatment center outside of Park City Utah. Earlier in his career, Mr. Greenberg was a partner in the Washington, D.C. law firm of Arnold & Porter. He attended Williams College and has Juris Doctor and Master of Business Administration degrees from the University of Chicago.
Skills and expertise: Mr. Greenberg’s investment and legal experience, particularly with respect to governance-related matters, make him a valuable asset to the Board.
Joseph I. Kronsberg
Age 37
Director since November 2016
Committees: None
Other Current Public Company Board Service:
Overseas Shipholding Group, Inc.
Background:
Mr. Kronsberg has served in various roles at Cyrus Capital Partners, L.P. since 2006, and he is currently a Partner responsible for certain investments in the financial, shipping and energy sectors. Previously, Mr. Kronsberg worked at Greenhill & Co. as a generalist in its Mergers & Acquisitions and Restructuring departments.
Mr. Kronsberg currently serves as a director of OSG. Mr. Kronsberg has a Bachelor of Science degree in Economics from the Wharton School of the University of Pennsylvania where he graduated summa cum laude.
Skills and expertise: Mr. Kronsberg’s substantial financial expertise and experience in investment management make him a valuable asset to the Board.
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Ty E. Wallach
Age 48
Director since November 2016
Committees: Compensation
Other Current Public Company Board Service:
Overseas Shipholding Group, Inc.
Background:
Since September 2019, Mr. Wallach has served as a Managing Director and Chief Investment Officer – Credit of Atlas Merchant Capital LLC, an international financial services investment firm. Until July 2018, Mr. Wallach was a Partner at Paulson & Co. Inc. (“Paulson”) and a Co-Portfolio Manager at Paulson’s credit funds. While at Paulson, he led numerous investments in the debt and equity of distressed and leveraged companies. Prior to joining Paulson, Mr. Wallach was a Partner and Managing Director at Oak Hill Advisors, serving most recently as Co-Head of European Investments.
He currently serves on the board of directors of OSG, as well as on the boards of two non-profit organizations, Focus for a Future Inc. and New Heights Youth, Inc. Mr. Wallach is a graduate of Princeton University.
Skills and expertise: Mr. Wallach’s substantial financial and investment experience make him a valuable asset to the Board.
Gregory A. Wright
Age 70
Director since November 2016
Committees: Audit (Chair); Governance
Other Current Public Company Board Service: None
Background:
Mr. Wright co-founded One Cypress Energy LLC in 2011 and has served as its Chief Financial Officer since inception. Mr. Wright is the former Chief Financial Officer and Chief Administrative Officer of Tesoro Corporation, where he worked from 1995 until his retirement in 2010. He led the company from a small exploration and production company into the third largest independent refining and marketing company in the United States. Prior to joining Tesoro, Mr. Wright worked for Valero Energy Corporation for 14 years in various positions, including Vice President of Finance, Vice President of Business Development, Vice President of Planning and Vice President of Investor Relations. Prior to joining Valero, he worked for nine years for Columbia Gas Systems Inc. in various positions in accounting, budgeting and corporate planning.
Mr. Wright is a former director of OSG. He graduated from The Ohio State University with a Bachelor of Business Administration in accounting and received his M.B.A. with a concentration in finance from the University of Delaware.
Skills and expertise: Mr. Wright’s extensive financial leadership experience and accounting expertise make him a valuable asset to the Board.
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Lois K. Zabrocky
Age 50
Director since May 2018
Committees: None
Other Current Public Company Board Service: None
Ms. Zabrocky has been the President and Chief Executive Officer (“CEO”) of the Company since the spin-off of the Company from OSG on November 30, 2016 and was President of the Company from August 2014. Prior to the spin-off, Ms. Zabrocky served as Senior Vice President and Head of the International Flag Strategic Business Unit of OSG with responsibility for the strategic plan and profit and loss performance of OSG’s international tanker fleet comprised of 50 vessels and approximately 300 shoreside staff. Ms. Zabrocky served in various roles during her more than 25 years at OSG. She served as Senior Vice President of OSG from June 2008 through August 2014, when she was appointed as Co-President of OSG and Head of the International Flag Strategic Business Unit of OSG. Ms. Zabrocky served as Chief Commercial Officer, International Flag Strategic Business Unit of OSG from May 2011 until her appointment as Head of International Flag Strategic Business Unit and as the Head of International Product Carrier and Gas Strategic Business Unit for at least four years prior to May 2011. She served as a director of the Company from November 2011 through November 2016 during which time the Company was a wholly-owned subsidiary of OSG.
Ms. Zabrocky is a director of ITOPF Limited, a not for profit ship pollution advisor providing advice worldwide on responses to spills of oil, chemicals and other substances at sea. Ms. Zabrocky holds a Bachelor of Science degree from the United States Merchant Marine Academy and holds a Third Mate’s License. She has also completed the Harvard Business School Strategic Negotiations and Finance for Senior Executives courses.
Skills and expertise: Ms. Zabrocky’s long experience with the Company and the shipping industry make her a valuable asset to the Board.
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DIRECTOR COMPENSATION
During 2019, the Company’s non-executive Chairman of the Board received an annual cash retainer of $172,000 and each of the Company’s other non-employee directors received an annual cash retainer of $80,000, except as described below. The Chairman of each of the Audit Committee, the Compensation Committee and the Governance Committee received an additional cash retainer of $20,000, $20,000 and $13,000 respectively. Each member of the three committees (other than the committee Chairman) received an additional cash retainer of $10,000, except that members of the Governance Committee received an additional cash retainer of $6,500. No director earned any fee for attending any Board meeting or Board committee meeting. The Company reimburses directors for their reasonable travel and lodging expenses in attending in-person Board and Board committee meetings.
Mr. Kronsberg has instructed the Company to pay all compensation (cash and equity) for his service as a director to his employer, CCP, at this time.
Under the currently effective International Seaways, Inc. Non-Employee Director Incentive Compensation Plan (the “Prior Director Plan”), the Board has discretion to grant various types of equity-based awards to directors. The Board has delegated to the Compensation Committee administration of the Prior Director Plan. The Compensation Committee, based upon consideration of information provided by the Compensation Committee’s independent advisors, has established the annual equity compensation of the non-Executive Chairman of the Board at $220,000 and the annual equity compensation of each other non-employee director at $100,000. On June 6, 2019, the Board granted the non-Executive Chairman of the Board 12,222 shares of Common Stock having a fair market value of $220,000 and granted each other non-employee director, except as described above, and Mr. Kronsberg’s employer, CCP (and not Mr. Kronsberg), 5,555 shares of Common Stock having a fair market value of $100,000, in each case vesting on the earlier of (a) June 6, 2020 and (b) the date of the Annual Meeting of Stockholders of the Company in 2020, subject to the director continuing to provide services to the Company as of such date.
The following table shows the total compensation paid to the Company’s non-employee directors during 2019:
 
Fees earned
or Paid in
Cash
($)(1)
Stock
Awards
($)
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)
Total
($)
Timothy J. Bernlohr
106,500
100,000
206,500
Ian T. Blackley
80,000
100,000
180,000
Randee E. Day
100,000
100,000
200,000
David I. Greenberg
103,000
100,000
203,000
Joseph I. Kronsberg(2)
80,000
100,000
180,000
Ty E. Wallach
90,000
100,000
190,000
Douglas D. Wheat
172,000
220,000
392,000
Gregory A. Wright
106,500
100,000
206,500
(1)
Consists of annual Board fees, annual Board Chairman and annual Chairman of the Audit, Compensation and Governance Committees fees, and annual committee member fees.
(2)
In accordance with Mr. Kronsberg’s instruction, all compensation for his service as a director was paid to his employer, CCP.
All directors’ cash compensation is payable quarterly in advance.
Director Stock Ownership Guidelines
The Company encourages stock ownership by directors in order to align interests of directors with the long-term interests of the Company’s 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 adopted stock ownership guidelines for non-employee directors. Under the stock ownership guidelines, each non-employee director is expected within five years after becoming a director to own shares of the Company’s common stock (including restricted stock units convertible into shares of stock and stock owned by his spouse and minor children), whose market value would equal at least three times his annual cash base retainer.
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CORPORATE GOVERNANCE AND THE BOARD
General
Corporate Governance Principles. The Board believes that ethics and integrity cannot be legislated or mandated by directive or policy and that the ethics, character, integrity and values of the Company’s directors and senior management remain the most important safeguards in quality corporate governance. The business and affairs of the Company are managed under the direction of the Board in accordance with Marshall Islands law. The Board’s principal responsibilities are to provide direction, oversight and counsel to the Company’s management and to generally maximize the value of the Company for its stockholders.
Corporate Governance Guidelines. The Board has adopted Corporate Governance Guidelines to promote the effective functioning of the Board and its committees, to promote the interests of all stockholders, and to ensure a common set of expectations as to how the Board, its various committees, individual directors and management should perform their functions. The Corporate Governance Guidelines are posted on the Company’s website, which is www.intlseas.com, and are available in print upon request. That website and the information contained on that site, or connected to that site, are not incorporated by reference in this proxy statement.
Board Leadership Structure. The Corporate Governance Guidelines provide that the Board selects the CEO of the Company and may select a Chairman of the Board (the “Chairman”) in the manner it considers in the best interests of the Company. The Guidelines provide that if the Board determines that there should be a Chairman, he or she may be a non-management director or the CEO. The Company currently separates the role of CEO and Chairman.
The CEO and the Chairman are in frequent contact with one another and with senior management of the Company. They provide advice and recommendations to the full Board for the full Board’s consideration. They each review in advance the schedule of Board and committee meetings and establish the agenda for each Board meeting in order to ensure that the interests and requirements of the stockholders, the directors and other stakeholders are appropriately addressed. The Board believes that the existing leadership structure, with the current individuals in their positions, is in the best interests of stockholders.
The Board, primarily through its Governance Committee, periodically reviews the Company’s leadership structure to determine if it remains appropriate in light of the Company’s specific circumstances and needs, current corporate governance standards, market practices and other factors the Board considers relevant. The Board retains the right to combine the CEO and Chairman roles in the future if it determines that such a combination would be in the best interests of the Company and its stockholders.
Board Oversight of Risk Management. While the responsibility for management of the Company’s material risks lies with management of the Company, the Board provides oversight of risk management, directly and indirectly, through its committee structure. The Board performs this oversight role by using several different levels of review. The Board and the Governance Committee receive regular reports from key members of management responsible for specified areas of material non-financial risk to the Company. In addition, the Board reviews the risks associated with the Company’s strategic plan at an annual strategic planning session and periodically throughout the year as part of its consideration of the strategic direction of the Company.
At the committee level, the Audit Committee regularly reviews the financial statements and financial and other internal controls. Further, the Audit Committee meets in private sessions individually with certain members of management and with representatives of the internal auditors and the independent registered public accounting firm at the conclusion of every regularly scheduled meeting, where aspects of financial risk management are discussed as necessary. The Governance Committee manages risk associated with Board independence, corporate governance and potential conflicts of interest as well as oversight over non-financial risk assessments associated with the Company’s operations. The Compensation Committee annually reviews executive compensation policies and practices and employee benefits, and associated risks. Both the Audit Committee and the Compensation Committee also rely on the advice and counsel of the Company’s independent registered public accountants and independent
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compensation consultants, respectively, to raise awareness of any risk issues that may arise during their regular review of the Company’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. The Company has an enterprise risk management program that is designed to ensure that risks are taken knowingly and purposefully.
Management is responsible for assessing all the risks and related mitigation strategies for all material projects and initiatives of the Company prior to being submitted for consideration by the Board.
Environmental, Social and Governance (“ESG”) Initiatives. The Board regularly engages in discussions relating to ESG risks and opportunities, including INSW’s response to environmental and climate change-related risks and opportunities. The Company’s management team, led by the Chief Executive Officer, has the day-to-day responsibility to execute the action plans as approved by the Board of Directors. The Company is committed to ESG practices as a part of its core culture. Accordingly, INSW strives to meet, and when possible and appropriate, exceed minimum compliance levels for all applicable rules and regulations governing the maritime industry, as described in greater detail in the 2019 Annual Report. The Company’s governance, strategy, risk management and performance monitoring efforts in this area are evolving and will continue to do so over time.
Independence. Under the Corporate Governance Guidelines, which incorporate 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 Ms. Lois K. Zabrocky have been determined to be independent under the Corporate Governance Guidelines for purposes of service on the Board, because no relationship was identified that would automatically bar any of them from being characterized as independent, and any relationships identified were not so material as to impair their independence. In addition, the Board has determined that all of the nominees other than Mr. Joseph I. Kronsberg and Ms. Lois K. Zabrocky are independent for purposes of serving on the Audit Committee.
The Board annually reviews relationships that directors may have with the Company to make a determination of whether there are any material relationships that would preclude a director from being independent. See “— Related Party Transactions” below.
Executive Sessions of the Board. To ensure free and open discussion and communication among the non-management directors, the Corporate Governance Guidelines provide that non-management directors meet in executive session at the time of each regular meeting of the Board; at least one of such executive sessions shall exclude non-management directors who do not qualify as independent. In accordance with the Guidelines, the nonexecutive Chairman of the Board chairs the executive sessions. Any non-management director can request that an additional executive session be scheduled.
Meetings of the Board. The Board held seven meetings during 2019. Each director attended at least 75% of the total number of meetings of the Board and Board committees of which the director was a member, except for Mr. Kronsberg who attended five of the seven meetings of the Board. Under the Corporate Governance Guidelines, each director is expected to attend all Board meetings and all meetings of committees of which the director is a member. Meeting materials are provided to Board and Committee members prior to meetings, and members are expected to review such materials prior to each meeting.
Annual Meetings of Stockholders. Directors are not required, but are strongly encouraged, to attend the Annual Meeting of Stockholders in person or telephonically. All of the current directors attended the Annual Meeting of Stockholders in 2019.
Communications with Board Members. Interested parties, including stockholders, may communicate with any director, with the nonexecutive Chairman of the Board or with the non-management directors as a group by sending a letter to the attention of such director, the nonexecutive Chairman of the Board or such non-management directors as a group, as the case may be, in care of the Company’s Corporate Secretary, 600 Third Avenue, 39th Floor, New York, New York 10016. The Corporate Secretary opens and forwards all such correspondence (other than advertisements and other solicitations) to directors unless the director to whom the correspondence is addressed has
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requested that the Corporate Secretary forward correspondence unopened. Unless the context otherwise requires, the Corporate Secretary will provide any communication addressed to the Board to the director most closely associated with the nature of the request based on Committee membership and other factors.
Business Conduct and Governance Policies. The Company has adopted a number of business conduct and governance policies, including the following:
A Code of Business Conduct and Ethics, which is an integral part of the Company’s business conduct compliance program and embodies the commitment of the Company and its subsidiaries to conduct operations in accordance with the highest legal and ethical standards. The Code of Business Conduct and Ethics applies to all of the Company’s officers, directors and employees. Each is responsible for understanding and complying with the Code of Business Conduct and Ethics.
An Insider Trading Policy which prohibits the Company’s directors and employees from purchasing or selling securities of the Company while in possession of material nonpublic information or otherwise using such information for their personal benefit. The Insider Trading Policy also prohibits the Company’s directors and employees from hedging or pledging their ownership of securities of the Company.
An Anti-Bribery and Corruption Policy which memorializes the Company’s commitment to adhere faithfully to both the letter and spirit of all applicable anti-bribery legislation in the conduct of the Company’s business activities worldwide.
A current copy of each of these policies is available in print upon request to our Investor Relations department at International Seaways, Inc., 600 Third Avenue, New York, New York 10016 and is posted on the Company’s website at https://www.intlseas.com/govdocs. If the Board grants any waivers from the Code of Business Conduct and Ethics to any of our directors or executive officers, or if we amend such policies, we will, if required, disclose these matters through that section of our website on a timely basis.
Other Directorships and Significant Activities. The Company values the experience directors bring from other boards of directors on which they serve, but recognizes that those boards also present significant demands on a director’s time and availability and may present conflicts and legal issues. The Corporate Governance Guidelines provide that non-management directors refrain from serving on the boards of directors of more than four publicly-traded companies (other than the Company or a company in which the Company 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 Corporate Governance Guidelines require the CEO and other members of senior management, whether or not they are members of the Board of the Company, to receive the approval of the Governance Committee before accepting outside board membership. The Corporate Governance Guidelines prohibit the CEO from serving on the board of directors of more than one publicly-traded company (other than the Company or a company in which the Company has a significant equity interest).
If a director’s principal occupation or business association changes substantially during the director’s tenure as a member of the Board, that director is required by the Corporate Governance Guidelines to inform the Chair of the Governance 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.
Related Party Transactions
Related party transactions may present potential or actual conflicts of interest and create the appearance that Company decisions are based on considerations other than the best interests of the Company and its stockholders. The Company’s 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 the Company’s legal department. In addition to this reporting requirement, in order to identify related party transactions, each year the Company requires its directors and executive
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officers to complete Director and Officer questionnaires identifying any transactions with the Company in which the director or officer has an interest. Management and the legal department review the terms of all related party transactions, and management reports to the Board on all proposed related party transactions with directors and executive officers. Upon the presentation of a proposed related party transaction to the Board, the related party (if such related party is a director) is excused from participation and voting on the matter. In deciding whether to approve the related party transaction, the Board determines whether the transaction is on terms that could be obtained in an arm’s length transaction with an unrelated third party. If the related party transaction is not on such terms, it will not be approved.
The Company entered into certain related party transactions in 2019 with OSG, the former parent corporation of the Company, relating to a guarantee for the benefit of the LNG JV charterer. These transactions are described in Note 12, “Related Parties,” to the audited financial statements of the Company for 2019 included in the 2019 Annual Report. The LNG JV was sold in October 2019, which terminated the guarantee.
Committees
The Company has three standing committees of its Board: the Audit Committee, the Governance Committee and the Compensation Committee. Each of the Board committee has a charter that is posted on the Company’s website 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 under the standards set forth in the Company’s Corporate Governance Guidelines. During 2019, the Audit Committee consisted of Messrs. Gregory A. Wright (Chair) and David I. Greenberg and Ms. Randee E. Day. The Board has previously determined that Mr. Wright and Ms. Day are audit committee financial experts, as defined by rules of the Securities and Exchange Commission (the “SEC”) and NYSE. The Audit Committee met five times in 2019.
The Audit Committee oversees the Company’s accounting, financial reporting process, internal controls and audits and consults with management, internal auditors and the Company’s independent registered public accounting firm on, among other things, matters related to the annual audit, and published financial statements and the accounting principles applied, and the oversight of financial risk assessments associated with the Company’s operations. As part of its duties, the Audit Committee appoints and retains the Company’s independent registered public accounting firm, subject to stockholder ratification (though the stockholder vote is not binding on the Audit Committee, and the Audit Committee may in its sole discretion terminate the engagement of the firm and direct the appointment of another independent auditor at any time during the year if it determines that such an appointment would be in the best interests of the Company and its stockholders).
The Audit Committee maintains direct responsibility for the compensation and oversight of the Company’s independent registered public accounting firm and evaluates the independent registered public accounting firm’s qualifications, performance and independence. The Audit Committee has established policies and procedures for the pre-approval of all services provided by the Company’s independent registered public accounting firm.
Governance Committee. The Governance 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 Company’s Corporate Governance Guidelines. During 2019, the Governance Committee consisted of David I. Greenberg (Chair), Timothy J. Bernlohr and Gregory A. Wright. The Governance Committee met five times in 2019.
The Governance Committee assists the Board by identifying and recommending individuals qualified to become Board members to the Board for nomination at the next annual stockholder meeting. It develops and recommends to the Board the establishment of the Company’s corporate governance guidelines, and it provides oversight over non-financial risk assessments associated with the Company’s operations. The Governance Committee’s risk assessment responsibilities include oversight of the Company’s quality of services, the Company’s vessels’ adherence to environmental and regulatory requirements, and an assessment of the scope and amount of the Company’s insurance coverage. The Governance Committee also meets with the General Counsel (in his capacity as compliance officer) in
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executive session from time to time as needed. As part of its duties, the Governance Committee also aids the Board by providing a review of the Board performance on an annual basis.
The Governance Committee evaluates prospective nominees identified on its own initiative or referred to it by other Board members, management, stockholders or external sources and all self-nominated candidates. The Governance 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.
The Governance 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, international background and life experiences:
judgment, character, age, integrity, expertise, tenure on the Board, skills and knowledge useful to the oversight of the Company’s business;
status as “independent” or an “audit committee financial expert” or “financially literate” as defined by the NYSE or the SEC;
high level managerial, business or other relevant experience, including, but not limited to, experience in the industries in which the Company operates, and, if the candidate is an existing member of the Board, any change in the member’s principal occupation or business associations;
absence of conflicts of interest with the Company; and
ability and willingness of the candidate to spend a sufficient amount of time and energy in furtherance of Board matters.
As part of its annual assessment of Board size, structure and composition, the Governance Committee evaluates the extent to which the Board as a whole satisfies the foregoing criteria. The Governance Committee believes that the current directors have the requisite character, integrity, expertise, skills, and knowledge to oversee the Company’s business in the best interests of the Company’s stockholders and does not believe at this time that the long-term goal of greater Board diversity is sufficient to merit replacing existing directors.
All the director nominees named in this Proxy Statement have been evaluated under the criteria set forth above and recommended by the Governance Committee to the full Board for election by stockholders at the Annual Meeting. The entire Board recommends that stockholders elect all nominees. All director nominees for election at the Annual Meeting were previously elected to the Board by the stockholders at the Annual Meeting of Stockholders in 2019.
A stockholder may recommend a person as a nominee for director by writing to the Corporate Secretary of the Company.
Recommendations must be received by December 31, 2020 in order for a candidate to be considered for election at the 2021 Annual Meeting. Each recommendation for nomination should contain the following information: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d) such other information regarding each nominee proposed by such stockholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had such nominee been nominated, or intended to be nominated, by the Board; and (e) the consent of each nominee to serve as a director of the Company if so elected.
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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 Company’s Corporate Governance Guidelines. During 2019, the Compensation Committee consisted of Timothy J. Bernlohr (Chair), Randee E. Day and Ty E. Wallach. The Compensation Committee met six times in 2019.
The Compensation Committee establishes, oversees, and carries out the Company’s compensation philosophy and strategy. It implements the Board responsibilities relating to compensation of the Company’s executive officers, and ensures that the Company’s officers and senior executives are compensated in a manner consistent with the Company’s philosophy and competitive with its peers. As part of its duties, it monitors and oversees the preparation of the Company’s annual Compensation Discussion and Analysis for inclusion in the annual proxy statement, prepares an annual report on executive compensation, and provides guidance with respect to other compensation matters including recommendations for the CEO and the other NEOs.
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AUDIT COMMITTEE REPORT
Management has primary responsibility for preparing the consolidated financial statements of the Company, for maintaining effective internal control over financial reporting and for assessing the effectiveness of internal control over financial reporting. The Company’s independent registered public accounting firm is responsible for performing independent audits of the Company’s consolidated financial statements in accordance with auditing standards generally accepted in the United States (“U.S. GAAS”) and the effectiveness of the Company’s internal control over financial reporting based on criteria established by the Public Company Accounting Oversight Board (the “PCAOB”). The Audit Committee’s responsibility is to monitor and oversee these processes on behalf of the Board. The Board has adopted a written Audit Committee Charter describing the Audit Committee’s role and responsibilities, which is posted on the Company’s website at www.intlseas.com/Docs.
In fulfilling its oversight responsibilities, the Audit Committee met and held discussions with management and the Company’s independent registered public accounting firm concerning the acceptability and quality of the accounting principles, the reasonableness of significant judgments, and the adequacy and clarity of disclosures in the consolidated financial statements to be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Annual Report”). Management represented to the Audit Committee that such consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States. The Audit Committee reviewed and discussed such consolidated financial statements with management and the Company’s independent registered public accounting firm. The Audit Committee further discussed with the Company’s independent registered public accounting firm the matters required to be discussed by U.S. GAAS, including those described in the PCAOB Auditing Standard No. 1301 (Communications with Audit Committees).
The Committee also held discussions with the Company’s internal auditors and reviewed management’s report on the assessment of the effectiveness of the Company’s internal control over financial reporting and the Company’s independent registered public accounting firm’s report on the effectiveness of the Company’s internal control over financing reporting.
The Company’s independent registered public accounting firm also provided to the Audit Committee the written disclosures and letter required by PCAOB Rule 3526 (Communication with Audit Committees Concerning Independence), and the Audit Committee discussed with the independent registered public accounting firm their independence from the Company and management, and considered the compatibility of non-audit services with the registered public accounting firm’s independence.
Based upon the Audit Committee’s discussions with management and the Company’s internal auditors and independent registered public accounting firm, the Audit Committee’s review of the representations of management, the certifications of the Company’s chief executive officer and chief financial officer which are required by the Securities and Exchange Commission (“SEC”) and the Sarbanes-Oxley Act of 2002, and the reports, letters and other communications of the independent registered public accounting firm, the Audit Committee recommended to the Board (and the Board approved) that the audited consolidated financial statements and management’s assessment of the Company’s internal control over financial reporting referred to above be included in the 2019 Annual Report for filing with the SEC.
 
International Seaways, Inc. Audit Committee:
 
 
 
Gregory A. Wright, Chair
 
Randee E. Day
 
David I. Greenberg
 
 
 
April 29, 2020
In accordance with the rules of the SEC, this Audit Committee report does not constitute “soliciting material” and shall not be incorporated by reference in any filings with the SEC made pursuant to the 1933 Act or the 1934 Act and shall not otherwise be deemed filed under such Acts.
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RATIFICATION OF APPOINTMENT OF THE COMPANY’S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM (PROPOSAL NO. 2)
The Audit Committee has reappointed Ernst & Young LLP (“EY”) as the independent registered public accounting firm for the Company and its subsidiaries for the year ending December 31, 2020, subject to ratification of the stockholders at the Annual Meeting. EY served as the independent registered public accounting firm of the Company since 2017. The lead audit partner was appointed in 2017. As in prior years, management and the Audit Committee engaged in a review of EY in connection with the Audit Committee’s review of whether to recommend that stockholders ratify the selection of EY as the Company’s independent registered public accounting firm for 2020. In that review, the Audit Committee considered, among other factors, (i) the continued independence of EY, (ii) whether retaining EY is in the best interest of the Company and its stockholders, (iii) EY’s known legal risks and significant proceedings that may affect its ability to perform the Company’s annual audit, (iv) EY’s fees and services provided to the Company and (v) the impact of changing independent registered public accounting firms. The Audit Committee considers the appointment of EY to be in the best interest of the Company and its stockholders.
In deciding to engage EY, the Audit Committee reviewed auditor independence and existing commercial relationships with EY, and concluded that EY had no commercial relationship with the Company that would impair its independence.
Representatives of EY 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. If the appointment is not ratified by stockholders, the selection of the Company’s independent registered public accounting firm will be reconsidered by the Audit Committee.
Audit Fees. Audit fees incurred by the Company to EY were $984,000 in 2019 and $1,242,000 in 2018. Audit fees incurred by the Company to EY for 2019 and 2018 include fees for professional services rendered for the audit of the Company’s annual financial statements for the years ended December 31, 2019 and 2018; the review of the financial statements included in the Company’s Forms 10-Q for the respective quarters in the years ended December 31, 2019 and 2018; financial audits and reviews for certain of the Company’s subsidiaries; services associated with documents filed with the SEC; and expenses incurred related to the performance of the services noted above.
Audit-Related Fees. There were no audit-related fees incurred by the Company to EY in 2019 and 2018.
Tax Fees. Tax fees incurred by the Company to EY were $36,000 in 2019 and $38,000 in 2018. Tax fees relate to the preparation of certain foreign tax returns.
All Other Fees. There were no other fees incurred by the Company to EY in 2019 and 2018.
The Audit Committee considered whether the provision of services described above under “Tax Fees” are compatible with maintaining EY’s independence. The Company does not believe that any reasonable concerns about the objectivity of EY in conducting the audit of the Company’s financial statements are raised as a result of the fees paid for non-audit-related services in 2019.
The Audit Committee has established policies and procedures for pre-approving audit and permissible non-audit work performed by its independent registered public accounting firm. As set forth in the pre-approval policies and procedures, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee if it is to be provided by the independent auditor. Any proposed services exceeding pre-approved cost levels require specific pre-approval by the Audit Committee.
Accordingly, at the Annual Meeting, stockholders will be asked to vote on the following resolution:
RESOLVED, that the action of the Audit Committee of the Board of Directors of this Company in appointing Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020 be, and it hereby is, ratified and approved.
Recommendation of the Board
The Audit Committee and the Board recommends a vote “FOR” such ratification.
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ADVISORY VOTE ON APPROVAL OF THE COMPENSATION OF THE NAMED
EXECUTIVE OFFICERS (PROPOSAL NO. 3)
As required by the Dodd-Frank Act, stockholders are being provided with the opportunity to cast an advisory vote on the compensation of the Named Executive Officers for 2019 as described beginning on the next page of this Proxy Statement in the section titled “Compensation Discussion and Analysis”.
As more fully described in that section, the Company’s executive compensation program is designed to promote the following objectives:
Attract, motivate, retain and reward highly-talented executives and managers, whose leadership and expertise are critical to the Company’s overall growth and success;
Compensate each executive based upon the scope and impact of his or her position as it relates to achieving the Company’s corporate goals and objectives, as well as on the potential of each executive to assume increasing responsibility within the Company;
Align the interests of the Company’s executives with those of its stockholders by linking incentive compensation rewards to the achievement of performance goals that maximize stockholder value; and
Reward the achievement of both the short-term and long-term strategic objectives necessary for sustained optimal business performance.
The Compensation Committee and the Board believe that the design of the executive compensation program, and hence the compensation awarded to the Named Executive Officers, fulfills these objectives.
Stockholders are urged to read the “Compensation Discussion and Analysis” section of this Proxy Statement and the accompanying compensation tables and narrative which describe in detail how the Company’s compensation policies and procedures implement the Company’s compensation philosophy and disclose the compensation paid to the Named Executive Officers for 2019.
Accordingly, at the Annual Meeting, stockholders will be asked to vote on the following resolution:
RESOLVED, that the stockholders of the Company hereby approve, in an advisory vote, the compensation of the Named Executive Officers for 2019 as described in the “Compensation Discussion and Analysis” section and in the accompanying compensation tables and narrative in the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders.
As an advisory vote, the results of the vote will not be binding on the Board or the Company. However, the Board and the Compensation Committee value the opinion of the Company’s stockholders and will consider the outcome of the vote when making future decisions on the compensation of the Named Executive Officers and the Company’s executive compensation principles, policies and procedures. The affirmative vote of the holders of a majority of the outstanding shares of Common Stock present in person or represented by proxy and entitled to vote is required to approve the resolution.
Recommendation of the Board
The Board recommends a vote “FOR” advisory approval of the resolution set forth above and approval of the compensation of the Named Executive Officers for 2019 as disclosed in this Proxy Statement.
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COMPENSATION DISCUSSION AND ANALYSIS
General
This Compensation Discussion and Analysis (“CD&A”) discusses our 2019 executive officer compensation program. It describes our compensation philosophy; the objectives of the executive compensation program and policies in 2019; the elements of the compensation program; and how each element fits into our overall compensation philosophy. The Compensation Committee oversees the compensation paid to our executive officers, including under their employment agreements (described below).
INSW became a public company on November 30, 2016, when it was spun off from OSG (the “Spin-Off”). Following the Spin-Off, the Compensation Committee developed an independent set of policies and practices to support the Company’s compensation philosophy and strategy. Prior to the Spin-Off, INSW was a wholly-owned subsidiary of OSG, and its compensation policies were substantially the same as those of OSG.
The compensation of the executives who constitute INSW’s named executive officers (the “Named Executive Officers” or “NEOs”) is set out in the Summary Compensation Table following this CD&A. In 2019, our NEOs (all of whom were employees of INSW throughout the year) were as follows:
Incumbent
NEOs Position
Lois K. Zabrocky
President and Chief Executive Officer (“CEO”)
Jeffrey D. Pribor
Chief Financial Officer (“CFO”) Senior Vice President and Treasurer
James D. Small III
Chief Administrative Officer, Senior Vice President, General Counsel & Secretary
Derek G. Solon
Vice President (Chief Commercial Officer)
William F. Nugent
Vice President (Head of Ship Operations)
2019 Performance
We have a strong and measurable pay for performance philosophy. Accordingly, our operational and financial performance in fiscal years 2017, 2018 and 2019 were important factors in understanding our 2019 executive compensation. Please refer to “Who We Are – 2019 Performance Highlights” above for a summary of our recent achievements. We believe that 2019 was a transformative year for the Company, as described in our 2019 Annual Report (a copy of which you can obtain as described in “Other Matters” below).
Say-on-Pay Results
At INSW’s 2019 Annual Meeting, approximately 99.7% of the stockholders who voted on the say-on-pay proposal (excluding broker non-votes) voted in favor of INSW’s executive compensation program. In considering that result, the Compensation Committee acknowledges the support received from its stockholders and views the result as a confirmation of INSW’s existing executive compensation policies and decisions.
The Company holds an annual say-on-pay vote by its stockholders, which vote frequency was most recently approved by stockholders in 2017. The Company anticipates its next “say-when-on-pay” vote will be conducted at the 2023 Annual Meeting of Stockholders. The Compensation Committee will continue to engage with stockholders and will consider feedback from them, as well as the results from this year’s and future advisory votes on executive compensation, when evaluating INSW’s executive compensation program and policies.
Compensation Philosophy, Objectives and Practices
Compensation Philosophy and Objectives
The Company believes that a well-designed compensation program is a powerful tool to attract, motivate, retain and reward top executive and managerial talent. INSW further believes that the compensation program should align the interests of executives with those of stockholders in achieving and sustaining increases in stockholder value over both the short- and long-term.
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The Company’s compensation program is structured to drive and support these goals, and is designed with the following objectives in mind:
COMPENSATION PROGRAM OBJECTIVES
Overall Objectives
Attract, motivate, retain and reward highly-talented executives and managers, whose leadership and expertise are critical to our overall growth and success.
 
 
 
 
 
Align the interests of our executives with those of our stockholders.
 
 
 
 
 
Support the long-term retention of the Company’s executives to maximize opportunities for teamwork, continuity of management and overall effectiveness.
 
 
 
 
 
Compensate each executive competitively (1) within the marketplace for talent in which we operate; (2) based upon the scope and impact of his or her position as it relates to achieving our corporate goals and objectives; and (3) based on the potential of each executive to assume increasing responsibility within the Company.
 
 
 
 
 
Discourage excessive and imprudent risk-taking.
 
 
 
 
 
Structure the total compensation program to reward the achievement of both the short-term and long-term strategic objectives necessary for sustained optimal business performance.
 
 
 
 
Pay Mix Objectives
Provide a mix of both fixed and variable (“at-risk”) compensation, each of which has a different time horizon and payout form (cash and equity), to reward the achievement of annual and sustained, long-term performance.
 
 
 
 
Pay-For-Performance Objectives
Use our incentive compensation program and plans to align the interests of our executives with those of our stockholders by linking incentive compensation rewards to the achievement of performance goals that maximize stockholder value by:
 
 
 
 
 
 
Ensuring our compensation programs are consistent with, and supportive of, our short-term and long-term strategic, operating and financial objectives.
 
 
 
 
 
 
Placing a significant portion of our executives’ compensation at risk, with payouts dependent on the achievement of both corporate and individual performance goals, which are set annually by the Compensation Committee.
 
 
 
 
 
 
Encouraging balanced performance by employing a variety of performance measures to avoid over-emphasis on the short-term or any one metric.
 
 
 
 
 
 
Applying judgment and reasonable discretion in making compensation decisions to avoid relying solely on formulaic program design, taking into account both what has been accomplished and how it has been accomplished in light of the existing commercial environment.
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Executive Compensation Practices
Our goal is to maintain an executive compensation program that is competitive, rooted in the principles of pay-for-performance and in conformance with best practices in executive compensation and corporate governance. To this end, the Compensation Committee routinely evaluates its practices and programs with respect to executive compensation to identify opportunities for improvement. The following table summarizes key features of our executive compensation program.
WHAT WE DO
 
 
 
Stock Ownership Guidelines
We maintain, and track progress against stock ownership guidelines for our executives and directors.
 
 
Anti-Hedging and Anti-Pledging Policies
We maintain policies and procedures for transactions in the Company’s securities that are designed to ensure compliance with all insider trading rules and that prohibit all hedging, pledging and short-selling of our stock by all officers and employees.
 
 
Compensation Recoupment (“Clawback”) Policy
All of our incentive compensation plans and the terms of our equity agreements provide that the Compensation Committee may seek reimbursement of incentives paid or equity-related proceeds provided to an executive officer if it is later determined that the executive officer engaged in misconduct, acted in a manner contrary to the Company’s interest or breached a non-competition agreement.
 
 
WHAT WE DO NOT DO
 
 
 
Excise Tax Gross-Ups
We do not provide for excise tax gross-ups.
 
 
Supplemental Executive Retirement Plans (“SERPs”)
We do not provide any SERPs, and our legacy SERP was frozen to new participants in November 2012.
Roles in Setting Executive Compensation
Role of the Compensation Committee
Structure of the Compensation Committee: In 2019, the Compensation Committee consisted of three members of the Board, each of whom qualified as “independent” under the NYSE listing standards and applicable independence standards under the 1934 Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the ‘‘Dodd-Frank Act”). Recognizing the importance of independent perspectives, the Compensation Committee regularly meets in executive session, without any members of management present.
Objectives of The Compensation Committee and the Decision-Making Process: The primary goals of the Compensation Committee are to establish the Company’s compensation philosophy and strategy and to ensure that the Company’s executives are compensated in a manner consistent with the articulated philosophy and strategy. The Compensation Committee takes many factors into account when making compensation decisions with respect to the NEOs and other senior executives, including the individual’s performance, tenure and experience; the ability of the individual to affect long-term growth and success; INSW’s overall performance; internal equity among the NEOs; and external, publicly available market data on competitive compensation practices and levels.
Role of Outside Advisors: The Compensation Committee has the authority to engage independent advisors to assist in carrying out its duties. The Compensation Committee has engaged Lyons, Benenson & Company Inc. (“LB&Co.”) as its independent compensation consultant to advise on executive and director compensation arrangements and related governance matters. Additionally, LB&Co. assisted management in the preparation of this Proxy Statement.
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Compensation Consultant Conflict of Interest Assessment: As required by rules adopted by the SEC under the Dodd-Frank Act, the Compensation Committee assessed all relevant factors and determined that the work of LB&Co. did not raise any conflict of interest in 2019. In making this determination, the Compensation Committee considered all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the 1934 Act.
Role of the CEO in Setting CEO and Other Executives’ Compensation
All decisions relating to the compensation of Ms. Zabrocky, INSW’s CEO, are made by the Compensation Committee without her or other members of management present. In making determinations regarding compensation for INSW’s other NEOs and other selected senior executives, the Compensation Committee generally considers the recommendations of the CEO (for all executives other than herself), and advice received from LB&Co. The CEO recommends the compensation levels for the other NEOs and for all others whose compensation is determined by the Compensation Committee. In making her recommendations, the CEO evaluates the performance of each executive, considers each executive’s compensation in relation to the other officers and executives (“internal equity”) and assesses retention risks. The CEO’s recommendations are subject to review by and, in some cases modification by, and ultimately approval of, the Compensation Committee or, when sufficiently material, the full Board.
All 2019 compensation decisions (including base salaries, annual and long-term incentive target percentages and annual and long-term incentive performance measures and goals) were made under the auspices of the Compensation Committee. Additionally, the Compensation Committee was responsible for the review and certification of the 2019 performance results that determined the annual and long-term incentive payouts for the NEOs.
Consideration of Compensation Peer Group
The Compensation Committee examines the executive compensation of a group of peer companies to stay current with market pay practices and trends, and to understand the competitiveness of our total compensation and its various elements. In general, we strive for total compensation to be competitive with a select group of companies that the Compensation Committee believes to be an appropriate compensation reference group (the “Peer Group”). The Compensation Committee reviews the Peer Group at least annually to affirm that it is comprised of companies that are similar to us in terms of industry focus and scope of operations, size (based on revenues and market capitalization), and the competitive marketplace for talent.
While the Compensation Committee believes the data derived from any peer group is helpful, it also recognizes that benchmarking is not necessarily definitive in every case. Furthermore, the Peer Group is limited to those companies for which executive compensation data is publicly available, which necessarily eliminates some of INSW’s closest competitors that are privately held and/or incorporated in jurisdictions that do not require public disclosure of executive compensation. The Compensation Committee, therefore, uses the information from the Peer Group for informational and analytical purposes, but does not make compensation decisions based solely on this market data. With this in mind, INSW augments the Peer Group data with publicly-available survey data, and uses all compensation data in conjunction with annual assessments of corporate and individual performance to make recommendations and decisions on the compensation arrangements applicable to the Company’s NEOs.
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2019 Peer Group. The Peer Group for 2019 consisted of 12 publicly traded oil, shipping and transportation companies, with a significant international focus. For the 2018 fiscal year the total revenues of this group ranged between $159 million and just under $3 billion, with median revenues of approximately $503 million. For the 2019 fiscal year, the total revenues of this group ranged between $158 million and $2.8 billion, with median revenues of some $667.5 million. The following 12 companies comprised the 2019 Peer Group:
DHT Holdings, Inc.
Kirby Corporation
Dorian LPG Ltd.
Martin Midstream Partners, L.P.
Eagle Bulk Shipping Inc.
Matson, Inc.
Euronav NV
SEACOR Holdings Inc.
Genco Shipping & Trading Limited
SEACOR Marine Holdings Inc.
Genesis Energy, L.P.
Tidewater Inc.
2020 Peer Group. At the end of 2019, a decision was made to reassess the Peer Group for 2020. For 2020, the Compensation Committee approved a revised Peer Group consisting of 11 publicly traded oil, shipping and maritime offshore companies, again, with a significant international focus, with total revenues for 2019 between approximately $158 million and $2.8 billion, and median revenues of approximately $535 million. The 2020 Peer Group differs from the 2019 Peer Group in that Diamond S Shipping Inc. was added and Genesis Energy, L.P. and Martin Midstream Partners, L.P. were removed.
Elements of the 2019 Executive Officer Compensation Program
The Compensation Committee reviews each element of compensation annually to ensure it aligns with our compensation philosophy and objectives, as well as to assess INSW’s executive compensation program and levels relative to the competitive landscape. The executive compensation program consists of the following:
Base salary
Annual cash incentive compensation
Long-term (equity) incentive compensation
Severance arrangements through employment agreements
Retirement benefits generally available to all employees
Welfare and similar benefits (e.g., medical, dental, disability and life insurance)
INSW seeks to provide competitive “fixed” compensation in the form of base salary while emphasizing a pay-for-performance culture in which we place a larger portion of total compensation “at-risk” in the form of annual performance-based cash incentives (which will only be paid if INSW achieves specified performance goals) and long-term equity incentives (which vest over a multi-year period and, in certain cases, also depend on the achievement of specific performance goals).
Base Salary
We strive to pay base salaries that are market competitive to attract talented executives and to provide a secure fixed level of compensation to our executives and managers. The Compensation Committee reviews the base salaries of the executive officers and compares them to the salaries of senior management among the Peer Group companies, 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 that comparison, the Compensation Committee determines whether the NEO salaries, taken together with other elements of compensation, are at levels sufficient to attract, motivate and retain the executives who are essential to leading the Company and driving stockholder value.
Annual adjustments in base salary, if any, consider individual performance, prior experience, position duties and responsibilities, internal equity and external market practices. The Compensation Committee generally relies on the CEO’s evaluation of each NEO’s performance (other than her own) in deciding whether to recommend and/or approve merit increases for any NEOs in a given year. In those instances
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where the duties and responsibilities of a NEO change, the CEO may recommend any adjustments believed to be warranted, and the Compensation Committee will consider all the factors enumerated above in determining whether to approve any such changes.
With respect to those employees who were NEOs in 2019, increases in base salary from 2018 to 2019 for Ms. Zabrocky and Messrs. Pribor, Solon and Nugent were 2.5%, 11.1%, 5.1% and 9.7%, respectively. Mr. Small did not receive an increase in his base salary in 2019. The following table summarizes 2019 base salaries for our NEOs.
Name
Position
2019 Salary
Lois K. Zabrocky
President and Chief Executive Officer
$615,000
Jeffrey D. Pribor
Chief Financial Officer, Senior Vice President and Treasurer
$500,000
James D. Small III
Chief Administrative Officer, Senior Vice President, General Counsel & Secretary
$475,000
Derek G. Solon
Vice President (Chief Commercial Officer)
$300,000
William F. Nugent
Vice President (Head of Ship Operations)
$300,000
2019 Annual (Cash) Incentive Plan
Pursuant to the Company’s currently effective Management Incentive Compensation Plan (the “MICP”), NEOs are eligible to receive annual cash incentives based upon the achievement of specified annual performance goals, which are established and approved by the Compensation Committee during the first quarter of the performance year. Our annual cash incentive plan, which for the NEOs generally reflects the terms of the annual cash incentive plan available to all employees, is intended to focus our NEOs on our critical, short-term financial and operational goals. As in past years, the financial performance measure for 2019 was earnings from shipping operations (“ESO”). ESO is a non-GAAP measure defined as income from vessel operations before depreciation and amortization and gains and losses from vessel sales (including impairments) reduced by payments for drydockings and vessel expenditures, which we use for compensation purposes. ESO for INSW was income of $73.5 million in 2019. The NEO awards were also based on quantifiable measures of our performance in corporate metrics, business/operational metrics (including safety) and individual factors.
For 2019, the annual incentive target for Ms. Zabrocky was 115% of her base salary; the annual incentive targets for Messrs. Pribor and Small were 100% of their respective base salaries and the annual incentive targets for Messrs. Solon and Nugent were 70% of their respective base salaries. Based on the weighting described below, the potential actual incentive payout range for Ms. Zabrocky and Messrs. Pribor and Small was 0% to 142% of target, while for Messrs. Solon and Nugent the range was 0% to 137%.
NEOs have different weights ascribed to their Company ESO, business/operational and individual goals, each of which is a component of the payout calculation. The specific weights were established based on the scope of each NEO’s role and their respective abilities to affect the results, and were ultimately recommended by the CEO and approved by the Compensation Committee. The following table sets forth the weights by component and NEO.
Individual
Company
ESO
Business/ Operational
Metrics
Individual
Performance
Goals
Ms. Zabrocky
60%
15%
25%
Messrs. Pribor and Small
60%
10%
30%
Messrs. Solon and Nugent
33.3%
33.3%
33.4%
For 2019, each goal was assessed on an achievement scale of between 70% and 130%, with 100% reflecting target level, 130% being the maximum level, and a score of 0% given for achievement below 70%.
For ESO achievement, the performance factor (i.e. payout) can range from 0% to a maximum of 150% (corresponding with a 130% ESO achievement level, as detailed below).
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For the business/operational metrics and individual performance, the payout can range from 0% to a maximum of 130% (corresponding with actual achievement level).
If the achievement level for ESO or business/operational metrics is below 70%, the performance factor (payout) for those measures is zero, resulting in no bonus being payable in respect of those measures.
If the individual performance achievement level for any NEO is below 70%, it would result in no bonus being payable to that individual.
The formulas to determine each NEO’s actual annual cash incentive award for 2019 are as follows:
Chief Executive Officer (Zabrocky)
the sum of
Base Salary × Target Incentive% ×
(60% × Performance Factor for Company ESO 0-150%) + (15% × Performance Factor for Business/Operational Metrics 0-130%) + (25% × Performance Factor for Individual 0-130%)
=
Annual Cash
Incentive Payout
Chief Financial Officer and Chief Administrative Officer (Pribor and Small)
the sum of
Base Salary × Target Incentive % ×
(60% × Performance Factor for Company ESO 0-150%) + (10% × Performance Factor for Business/Operational Metrics 0-130%) + (30% × Performance Factor for Individual 0-130%)
=
Annual Cash
Incentive Payout
Other Participants: Vice Presidents (Solon and Nugent)
the sum of
Base Salary × Target Incentive % ×
(33.3% × Performance Factor for Company ESO 0-150%) + (33.3% × Performance Factor for Business/Operational Metrics 0-130%) + (33.4% × Performance Factor for Individual 0-130%)
=
Annual Cash
Incentive Payout
2019 Company ESO Goal. For 2019, the table below sets forth the ESO performance thresholds at INSW and the corresponding amounts that would be earned (expressed as percentages of target) by the NEOs at each level of achievement.
($ Thousands)
 
ESO Threshold
Performance Factor (Payout As a % of Target)
%
Achievement
2019
50.0%
70%
(58,082)
58.4%
75%
(42,755)
66.7%
80%
(27,428)
75.0%
85%
(12,101)
83.3%
90%
3,226
91.7%
95%
18,553
100.0%
100%
33,880
108.4%
105%
49,207
116.7%
110%
64,534
125.0%
115%
79,861
133.3%
120%
95,188
141.7%
125%
110,515
150.0%
130%
125,842
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In 2019, the ESO result was $73.5 million which corresponded to a performance factor of 116.7%.
INSW Business/Operational Metrics. For 2019, the INSW business and operational metrics were weighted equally.
The business metrics related to (a) the time charter equivalent (“TCE”) performance of INSW’s VLCCs, Aframaxes, Suezmaxes, Panamaxes and MRs TCE compared with spot TCE rates of competitors or market spot TCE rates published by a third party maritime research service for Panamaxes; and (b) minimizing the discount received on the Company’s older VLCCs compared with the TCE achieved on its more modern units.
The operational metrics included (a) achieving or doing better than INSW vessel operating budget; (b) time not earning (technical) — a metric that measures operational availability; (c) total recordable case frequency — a metric that tracks safety within the fleet; (d) vetting observations — a metric that indicates acceptability of our fleet to our customers; and (e) vessel visits — number of visits to a vessel by shoreside staff, a metric that indicates corporate culture and “tone at the top.” The Company also, for the first time, tracked (but did not include a score for) an environmental performance metric; that metric will be included in the 2020 operational metric score.
The overall INSW performance score for business/operational metrics for 2019 was 111%.
Individual Performance Goals. Each of our NEOs also had individual performance goals established by the Compensation Committee. The individual goals for 2019 covered a broad range of performance indicators that included, among others, the following (although not all goals listed below applied to all NEOs):
Assessing, negotiating and completing the sale of INSW’s interest in the LNG JV;
Developing and executing business strategy;
Achieving revenue, operating expenses and general & administrative expense targets;
Enhancing lines of communication with key customers and investors;
Evaluating strategic alternatives;
Evaluating capital allocation choices and balance sheet recapitalization;
Further establishing and executing ESG initiatives, including the Company’s “get to green” initiative;
Reviewing and identifying operational risks and performing risk assessments; and
Assessing and engaging in special projects, including additional fleet renewal assessments, business development, scrubber technology rollout, capital management, management development and financial strategy and reporting.
After the 2019 performance year, the Compensation Committee assessed the level of achievement of our NEOs relative to their respective individual performance goals. Following this assessment, it was determined that Ms. Zabrocky and Messrs. Pribor, Small, Solon and Nugent achieved their individual goals above target levels.
2019 Actual Annual Incentive Paid. Based on the foregoing, the NEOs received the following annual cash incentive awards for 2019: Ms. Zabrocky – $813,833; Mr. Pribor – $577,800; Mr. Small – $549,195; Mr. Solon – $238,040; and Mr. Nugent – $237,773.
Equity-Based Compensation
INSW’s equity-based compensation program is intended to align the interests of its executives with those of its stockholders, and to focus executives on achieving long-term performance objectives aligned with the Company’s business strategy, thereby establishing a direct relationship between compensation, long-term operating performance and sustained increases in stockholder value. The MICP and a similar currently effective plan applicable to the long-term equity compensation for non-employee directors (the “Prior Director Plan”) became effective in December 2016. The MICP provides for grants of nonqualified stock options, incentive stock options, stock appreciation rights, performance units,
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performance shares and other performance awards, restricted stock units and restricted stock, and other awards valued in whole or in part by reference to, or otherwise based on, INSW stock. The primary purpose of the MICP and the Prior Director Plan is to facilitate the grant of equity and cash incentives to employees (including our NEOs) and equity compensation to non-employee directors of the Company, and to enable the Company to obtain and retain the services of these individuals, which is essential to our long-term success. INSW initially reserved 2,000,000 shares for issuance under the MICP and 400,000 shares for issuance under the Prior Director Plan, which included shares reserved in respect of certain equity awards issued prior to the Spin-Off under equivalent plans maintained by OSG and inherited by the Company in the Spin-Off. The MICP contains an anti-dilution provision whereby in the event of certain corporate changes in the Company, outstanding awards may be adjusted, as appropriate, to prevent dilution or enlargement of rights.
Consistent with our practices and in each case pursuant to the terms of the MICP, equity awards may be granted from time to time to motivate and retain executives and other key managers and employees and to align their interests with stockholders.
2019 Awards. In April 2019, the Compensation Committee approved the following long-term incentive award date values for Ms. Zabrocky and Messrs. Pribor, Small, Solon and Nugent:
Incumbent
Total Grant
Date Value
Stock Options
Time-Based
RSUs
Performance-
Based RSUs
Lois K. Zabrocky
$1,230,000
$410,000
$410,000
$410,000
Jeffrey D. Pribor
$750,000
$250,000
$250,000
$250,000
James D. Small III
$593,750
$197,916
$197,916
$197,916
Derek G. Solon
$300,000
$100,000
$100,000
$100,000
William F. Nugent
$300,000
$100,000
$100,000
$100,000
The time-based restricted stock units (“RSUs”) and stock options vest and become exercisable in equal amounts on the first, second and third anniversaries of the grant date of April 5, 2019. The 2019 performance-based restricted stock units (“PRSUs”) awards vest as follows: (i) one-half of the target PRSUs vest on December 31, 2021, subject to INSW’s three-year Return on Invested Capital (“ROIC”) performance; and (ii) one-half of the target PRSUs vest on December 31, 2021, subject to INSW’s three-year total shareholder return (“TSR”) performance relative to that of a performance peer group. Vesting is subject in each case to the Compensation Committee’s certification of achievement of the performance targets no later than March 15, 2022.
The funding formulas applicable to the PRSUs granted in April 2019 are as follows:
The cumulative target ROIC for the three-year period is 3.72% (with a minimum threshold for 50% achievement of 0.72% and a maximum threshold for 150% achievement of 6.72%).
TSR performance is described in the following table. If the absolute value of three-year TSR is negative, then the payout for the TSR component of the PRSUs is capped at 100%; this was a newly added provision in 2019.
TSR
Threshold
Target
Maximum
Performance Achievement
25th Percentile
50th Percentile
90th Percentile
Payout
50%
100%
150%
Upon termination of employment for any reason, all unvested PRSUs will be forfeited unless the NEO’s respective employment agreement provides otherwise.
For the initial award of performance-based RSUs granted on March 29, 2017 to Mr. Pribor, the Compensation Committee reserved the right to choose different performance measures and targets applicable to the performance-based RSUs before March 31 of each year (2017, 2018 and 2019) and for 2019 determined that the performance measure would be ROIC with a target ROIC of 2.83% for the year ending December 31, 2019 (with a minimum threshold for 50% achievement of -0.17% and a maximum threshold for 150% achievement of 5.83%). For 2019, the actual ROIC result was 4.37% resulting in
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achievement of 126% for Mr. Pribor. Therefore, for Mr. Pribor the performance-based RSUs awarded vested at the appropriate percentage upon certification of this result which occurred in 2020. The grant date value of the 2019 tranche of the 2017 PRSU grant value for Mr. Pribor was $204,489.
In addition, in December 2019, the Compensation Committee approved long-term incentive awards for Ms. Zabrocky and Messrs. Pribor, Small, Solon and Nugent, as well as a number of other employees of the Company, in connection with the successful completion of the sale of INSW’s interest in the LNG JV. Ms. Zabrocky and Messrs. Pribor and Small each received RSUs in the amount of $119,989 and Messrs. Solon and Nugent each received RSUs in the amount of $169,998. The RSUs granted in December 2019 will vest on the first anniversary of the grant date.
2020 Plans. In April 2020, the Company adopted a new Management Incentive Compensation Plan (the “2020 Management Plan”) and a new non-employee director equity compensation plan (the 2020 Director Plan” and, together with the 2020 Management Plan, the “2020 Plans”). The Company has submitted the 2020 Plans for shareholder ratification and approval pursuant to this Proxy Statement. Please refer to Proposal No. 4 (Ratification and Approval of the International Seaways, Inc. 2020 Non-Employee Director Incentive Compensation Plan) and Proposal No. 5 (Ratification and Approval of the International Seaways, Inc. 2020 Employee Incentive Compensation Plan) further below in this Proxy Statement. Certain features of the existing MICP and Prior Director Plan were revised in the 2020 Plans, and the features of the new plans are detailed in those proposals.
2020 Compensation Decisions
Base Salary Decision:
On April 2, 2020, base salaries were increased for Ms. Zabrocky (from $615,000 to $675,000), Mr. Pribor (from $500,000 to $510,000), Mr. Small (from $475,000 to $485,000), Mr. Solon (from $300,000 to $320,000), and Mr. Nugent (from $300,000 to $320,000), in each case retroactive to January 1, 2020. The NEOs earn annualized base salaries that are commensurate with their positions as named executive officers of a public company and which will provide a steady source of income sufficient to permit these officers to focus their time and attention on their work duties and responsibilities.
Annual Incentive Decisions
The design of INSW's 2020 annual cash incentive plan is generally consistent with INSW's 2019 annual cash incentive plan, with two significant changes. The first change is that a failure to achieve the minimum threshold for the Company’s ESO target will result in payouts attributable to Operational/Business Metrics being capped at target and payouts for individual goals being capped at threshold. The second is that any person what has an individual goal achievement below threshold will no longer “zero out” his or her full cash bonus for the year, but will instead zero out only the bonus attributable to achievement of those goals, while the ESO target and Operational/Business Metric goals will continue to pay out pursuant to the formula described above to reflect the actual results achieved. In 2020, pursuant to the terms of their employment agreements with the Company, as amended, Ms. Zabrocky will have a target annual incentive equal to 125% of base salary (increased from 115% in 2019), and Messrs. Pribor and Small will each continue to have a target annual incentive equal to 100% of their base salaries. In addition, Messrs. Solon and Nugent will each have a target annual incentive equal to 85% of base salary (increased from 70% in 2019 in each case).
Long-Term Equity Awards Decisions:
On April 2, 2020, the Compensation Committee awarded each of the NEOs equity grants with a fair value as of the grant date of approximately (1) for Ms. Zabrocky, 250% of her base salary (an increase from 200%); (2) for Mr. Pribor, 150% of his base salary; (3) for Mr. Small, 125% of his base salary; and (4) Messrs. Solon and Nugent, 100% of their respective base salaries. These equity grants were divided equally among time-based RSUs, stock options and PRSUs. Certain of the PRSU grants remain subject to ratification by the Company’s stockholders within twelve months after the grant date.
Ms. Zabrocky, as President and CEO, does not receive additional compensation for services as a director of the Company.
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Employment Agreements with the NEOs
Employees of INSW Classified as NEOs for 2019
INSW has employment agreements with Ms. Zabrocky and Messrs. Pribor and Small. Under the terms of those agreements, Ms. Zabrocky and Messrs. Pribor and Small are entitled to certain compensation arrangements and severance benefits as detailed in the paragraphs below. Although Messrs. Solon and Nugent do not have formal contractual employment agreements with INSW, they are also entitled to certain compensation arrangements and severance benefits. In addition, each NEO (whether or not his or her employment relationship with INSW is governed by a formal contractual employment agreement) is entitled to vacation in accordance with INSW policy, and each of them participates in medical, dental, and life insurance, as well as retirement and other benefit plans as may be in effect from time to time. Each of the employment agreements also provides for the possibility of annual equity grants at the discretion of the Board upon recommendation from the Compensation Committee.
Under the terms of the employment agreements for Ms. Zabrocky and Messrs. Pribor and Small, if an executive’s employment is terminated by INSW for any reason or terminated voluntarily by the executive, he or she is entitled to the following payments (“Accrued Payments”):
any earned, unpaid base salary through the date of termination;
any earned, unpaid annual bonus applicable to the performance year prior to the termination;
payment for any accrued, but unused vacation through the date of termination; and
reimbursement of any business expenses not reimbursed as of the date of termination.
If any such executive’s employment is terminated by reason of death or permanent disability, INSW will pay the Accrued Payments to the executive or the executive’s estate, and INSW will vest any non-performance-based equity previously granted to the executive that has not yet vested.
The following table summarizes certain terms of the Company’s employment agreements with Ms. Zabrocky and Messrs. Pribor and Small as in effect on December 31, 2019 and describing amendments to those agreements made during 2019 and 2020:
Name and
Current
Position
Date of
Original
Agreement
Base
Salary at
12/31/19
Bonus
Target at
12/31/19
Additional Terms / Amendments to Employment Agreements in 2019 and 2020
Lois K. Zabrocky
President and CEO
9/29/14 (originally entered into with OSG; assumed in Spin-Off)
$615,000 (increasing to $675,000 for 2020)
115% (increasing to 125% for 2020)
Severance benefits in the event of termination without cause or resignation with good reason include:
 
salary continuation for 24 months
 
a lump sum payment of $1,049,999
 
accelerated vesting of all outstanding and unvested options, RSUs and other equity-based grants or cash in lieu of grants that in all cases are not performance-based upon a termination without cause, for good reason, by death or disability
Equity grant target set at 200% of base salary for 2019, and increased to 250% of base salary for 2020
Amended on April 5, 2019 to increase base salary and target bonus for 2019 to $615,000 (from $600,000) and 115% of base salary (from 100%), respectively
Amended as of April 2, 2020 to increase base salary and target bonus for 2020 to $675,000 and 125% of base salary, respectively
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Name and
Current
Position
Date of
Original
Agreement
Base
Salary at
12/31/19
Bonus
Target at
12/31/19
Additional Terms / Amendments to Employment Agreements in 2019 and 2020
Jeffrey D. Pribor
Senior Vice President, CFO and Treasurer
11/9/16
$500,000 (increasing to $510,000 for 2020)
100%
Severance benefits in the event of termination without cause or resignation with good reason include:
 
12 months’ continuation of annual base salary plus Target Bonus (18 months’ in the event of a change in control)
 
a lump sum payment of a pro rata portion of his annual bonus based on actual achievement
 
accelerated vesting of the outstanding time-based awards that would have vested on the next regularly scheduled vesting date following the termination date
 
pro-rated vesting of all performance-based RSUs and other equity-based grants, to the extent the applicable performance goals are achieved
Equity grant target set at 150% of base salary for 2019 and 2020
Amended on April 5, 2019 to increase base salary and target bonus for 2019 to $500,000 (from $450,000)
Amended as of April 2, 2020 to increase base salary for 2020 to $510,000
James D. Small III
Senior Vice President, Chief Administrative Officer, Secretary & General Counsel
2/13/15 (originally entered into with OSG; assumed in Spin-Off)
$475,000 (increasing to $485,000 for 2020)
100%
Severance benefits in the event of termination without cause or resignation with good reason include:
 
 
 
 
salary continuation for 24 months
 
 
 
 
a lump sum payment of $950,000
 
 
 
 
accelerated vesting of all outstanding and unvested time-based options, RSUs and other equity-based grants upon a termination without cause, for good reason, by death or disability
 
 
 
Equity grant target set at 125% of base salary for 2019 and 2020
 
 
 
Amended as of April 2, 2020 to increase base salary and target bonus for 2020 to $485,000
The Company has entered into its standard offer letter with Messrs. Solon and Nugent, except that each of Messrs. Solon and Nugent have an additional letter providing for their years of service to be treated as 26 years of service solely with regard to the terms of the INSW severance plan and the specific terms as described in their equity grant letters. On April 5, 2019, each of their annual base salaries was increased to $300,000. On April 2, 2020, each of their annual base salaries was increased to $320,000 from $300,000 and each of their target bonuses increased to 85% from 70% of base salary.
Additional Information
Benefits
In general, INSW provides benefits to its employees that we believe are important to maintaining a competitive total compensation program. Benefits are designed to provide a reasonable level of retirement income and to provide a safety net for protection against the financial concerns and catastrophes that can result from illness, disability or death.
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INSW provides a tax-qualified defined contribution employee benefit plan to employees, which for 2020 is the EngagePEO Retirement 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 and the Internal Revenue Code of 1986, as amended (the “Code”). Under the Savings Plan, INSW will match 100% of the first 6% of a participant’s pre-tax contribution (up to the Code limit) which for 2019 was $16,800.
INSW does not currently have any plans that provide for payments or other benefits at, following or in connection with the retirement of our employees, other than the Savings Plan and the INSW SERP (as described in the following paragraph). INSW also assumed OSG’s obligations under the retiree medical plan with respect to those OSG employees who continued to work for INSW after the Spin-Off.
In December 2017, INSW formally adopted the INSW Supplemental Executive Retirement Plan (“INSW SERP”), pursuant to which INSW formally documented its assumption of existing obligations under OSG’s Supplemental Executive Retirement Plan (the “OSG SERP”), which were assumed in connection with the Spin-Off. INSW employees who participated in the OSG SERP prior to the Spin-Off (including Ms. Zabrocky) now participate in the INSW SERP, which is frozen to new contributions and pays interest on assumed obligations at an annual rate of 2.98%.
Risk Mitigation
As previously discussed, the Compensation Committee believes a significant portion of the NEOs’ total compensation should be variable and “at risk,” based upon Company ESO achievement, business/operational metrics and individual performance. To accomplish this, the Compensation Committee uses a balanced weighting of performance measures and metrics in its incentive compensation programs (i) to promote the achievement of its annual operating plan and long-term business strategy; (ii) to build long-term stockholder value; and (iii) to discourage excessive risk taking by eliminating any inducement to over-emphasize one goal to the detriment of others.
To further ensure the Company mitigates excessive risk taking, INSW maintains:
policies prohibiting insider trading, hedging and pledging of its securities by non-employee directors and executives;
an incentive compensation recoupment, or “clawback,” policy for executives; and
stock ownership guidelines applicable to, among others, non-employee directors and executives of the Company.
Hedging, Pledging and Insider Trading. INSW’s insider trading policy prohibits its directors and employees from hedging their ownership of its securities, including investing in options, puts, calls, short sales, futures contracts or other derivative instruments relating to its securities or pledging securities directly owned by them, regardless of whether such directors and employees have material nonpublic information about INSW. The policy also prohibits INSW directors and employees from purchasing or selling its securities while in possession of material nonpublic information or otherwise using such information for their personal benefit. Directors and employees are permitted to enter into trading plans under Rule 10b5-1 under the 1934 Act. With the approval of INSW’s General Counsel, a 10b5-1 Plan may be entered into during a time when the equity participant is not in possession of material, non-public information. These plans are intended to aid the equity participants in diversifying their portfolios without violating federal securities laws.
Incentive Compensation Recoupment Policy for Executive Officers. INSW’s Incentive Compensation Recoupment Policy (or “clawback policy”) generally provides that if an executive officer, including any NEO, receives cash or equity-based incentive compensation based on the achievement of a performance metric and the Board commenced action to restate the calculation of such performance metric within five fiscal years due to a material misstatement or inaccuracy, INSW may require such executive officer to repay all or a portion of the amounts of such incentive compensation that the Board in good faith determines would not have been payable if not for the material misstatement or inaccuracy. The five-year look back limitation does not apply where the Board determines that the executive officer’s fraud, misconduct, negligence or other knowing actual involvement was a contributing factor to the need for the restatement. The Compensation Committee is monitoring the proposed regulations under the Dodd-Frank Act relating to incentive compensation recoupment and will amend the policy to the extent
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necessary to comply with the Dodd-Frank Act.
Stock Ownership Guidelines. INSW encourages stock ownership by its executives and non-employee directors in order to align their interests with the long-term interests of its stockholders. INSW has adopted stock ownership guidelines for non-employee directors and executive officers of the Company. As measured on January 1 of each fiscal year, each non-employee director and officer of the Company (including the NEOs) is expected to own a number of shares of INSW common stock priced at the closing price on the last trading day of the prior fiscal year equal to a specified multiple of his or her salary (or, in the case of the independent, non-employee members of the Board, a multiple of his or her annual cash retainer) as follows:
President and CEO — 5 × base salary
Senior Vice Presidents — 2 × base salary
Vice Presidents — 1 × base salary
Independent Non-Employee Directors — 3 × annual board service cash retainer
NEOs and independent, non-employee directors are afforded five years from the later of (1) the adoption of the ownership guidelines following the Spin-Off and (2) the time they first received an equity grant from INSW to achieve these ownership guidelines. For purposes of satisfying the guidelines, shares of common stock deemed to be owned include (a) stock owned outright by the incumbent, his or her spouse and minor children; (b) vested time-based restricted stock or RSUs; (c) vested PRSUs where the performance criteria have been satisfied; (d) vested in-the-money stock options (counted based on the number of shares underlying such in-the-money options); and (e) shares of stock held for the incumbents’ benefit in any pension or 401(k) plan. Unvested time-based RSUs and PRSUs do not count towards satisfying the guidelines. INSW has only recently become a public company, and its directors and executive officers have made progress towards meeting these goals since the Spin-Off.
Report of the Compensation Committee
The Compensation Committee, comprised entirely of independent directors (as defined under U.S. securities laws, NYSE listing standards and applicable guidelines under the Code), has reviewed the CD&A included in this Proxy Statement and discussed that CD&A with management. Based on its review and discussion with management, the Compensation Committee approved the CD&A and recommended to the INSW Board of Directors that the CD&A be included in this Proxy Statement.
 
Compensation Committee:
 
 
 
Timothy J. Bernlohr, Chairman
 
Randee E. Day
 
Ty E. Wallach
 
 
 
April 29, 2020
In accordance with the rules of the SEC, the report of the Compensation Committee 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, as amended (the “1933 Act”), or the 1934 Act.
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SUMMARY COMPENSATION DATA
Summary Compensation Table
The following Summary Compensation Table includes individual compensation information for services in all capacities for the Company received by the individuals identified as NEOs of the Company.
Name and Principal Position
Year
Salary(1)
Bonus
Stock
Awards(2)(3)
Option
Awards(2)
Non-Equity
Incentive Plan
Compensation(4)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
All Other
Compensation(5)
Total
Lois Zabrocky
President and Chief
Executive Officer
2019
$614,942
$—
$939,989
$410,000
$813,833
$—
$37,153
$2,815,917
2018
$600,000
$—
$800,000
$399,997
$567,720
$—
$36,899
$2,404,616
2017
$525,000
$—
$394,669
$174,993
$554,439
$—
$36,465
$1,685,566
Jeffrey D. Pribor
Senior Vice President,
Chief Financial Officer
and Treasurer
2019
$499,808
$—
$619,989
$250,000
$577,800
$—
$31,952
$1,979,549
2018
$450,000
$—
$657,460
$225,000
$426,645
$—
$24,666
$1,783,771
2017
$450,000
$—
$1,300,000
$798,648
$476,321
$—
$24,532
$3,049,501
James D. Small III
Senior Vice President,
Chief Administrative
Officer, Secretary and
General Counsel
2019
$475,000
$—
$515,822
$197,917
$549,195
$—
$26,221
$1,764,155
2018
$475,000
$—
$316,665
$158,335
$448,153
$—
$26,000
$1,424,153
2017
$475,000
$—
$428,348
$158,335
$490,556
$—
$25,556
$1,577,795
Derek G. Solon
Vice President and
Chief Commercial
Officer
2019
$299,944
$—
$369,998
$100,000
$238,040
$—
$37,153
$1,045,135
2018
$285,475
$—
$190,317
$95,153
$206,257
$—
$36,899
$814,101
 
2017
$277,160
$—
$129,341
$64,665
$208,279
$—
$36,465
$715,910
William F. Nugent
VP & Head of
International Fleet
Operations
2019
$299,898
$—
$369,998
$100,000
$237,773
$—
$37,153
$1,044,742
2018
$273,500
$—
$182,333
$91,164
$196,569
$—
$36,899
$780,465
2017
$260,337
$—
$121,491
$60,747
$194,785
$—
$35,932
$673,292
(1)
The salary amounts reflect the actual salary received during the year, including amounts contributed by such individuals to the INSW Savings Plan.
(2)
These amounts represent the aggregate grant date value of equity awards granted in the specified fiscal year. On April 5, 2019, Ms. Zabrocky, Messrs. Pribor, Small, Solon and Nugent received time-based equity awards. One-third of these awards vests on each of the first, second and third anniversaries of the award. Additionally, on December 11, 2019, Ms. Zabrocky, Messrs. Pribor, Small, Solon and Nugent received time-based equity awards. All of these December 2019 awards vest on the first anniversary of the award. Ms. Zabrocky and Messrs. Pribor, Small, Solon and Nugent received stock option awards on April 5, 2019. One third of each stock option award vests and becomes exercisable on each of the first, second and third anniversaries of April 5, 2019.
(3)
Ms. Zabrocky and Messrs. Pribor, Small, Solon and Nugent received PRSU grants on April 5, 2019. The performance awards vest in full on December 31, 2021, subject to the Compensation Committee’s certification of achievement of the performance measures and targets. Settlement of the PRSUs may be either in shares of common stock or cash, as determined by the Compensation Committee in its discretion, and shall occur as soon as practicable following the Compensation Committee’s certification of the achievement of the applicable performance measures and targets for 2021 and in any event no later than March 15, 2022. The number of PRSUs shall be subject to an increase or decrease depending on performance against the applicable performance measures and targets with the maximum number of PRSUs vesting equivalent to 150% of the PRSUs awarded. The 2019 amounts in this column represent the aggregate grant date fair value of the PRSU award at target, calculated in accordance with accounting guidance, as follows: Ms. Zabrocky — $410,000, Mr. Pribor — $250,000, Mr. Small — $197,917, Mr. Solon — $100,000 and Mr. Nugent — $100,000. Additionally, as part of his initial grant, Mr. Pribor also received a PRSU grant on March 29, 2017 with one-third of the performance award vesting on each anniversary of December 31, 2016 subject in each case to the Compensation Committee’s certification of the performance measures and targets no later than each March 31st following the respective date of vesting. Settlement of the vested PRSUs may be in either shares of common stock or cash, as determined by the Compensation Committee in its discretion, and shall occur as soon as practicable following the Committee’s certification of the achievement of the applicable performance measures and targets for 2019
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and in any event no later than March 31, 2020. The number of PRSUs, shall be subject to an increase or decrease depending on performance against the applicable performance measures and goals with the maximum number of PRSUs vesting equivalent to 150% of the PRSUs awarded. Since performance targets are set annually each tranche of the award is considered to be a separate grant for accounting purposes. For accounting purposes, the amount of $204,489 represents the aggregate grant date fair value of the 2019 tranche of such PRSU award at target, calculated in accordance with accounting guidance.
(4)
The amounts in this column for 2019, 2018 and 2017 reflect the amounts paid in 2020, 2019 and 2018 under the Company’s Cash Incentive Compensation Plan for performance in 2019, 2018, and 2017, respectively.
(5)
See the “All Other Compensation Table” below for additional information.
All Other Compensation Table
The following table describes each component of the All Other Compensation column for 2019 in the Summary Compensation Table.
Name
Savings Plan
Matching
Contribution(1)
Qualified
Defined
Contribution
Plan
Life
Insurance
Premiums(2)
Other(3)
Total
Lois K. Zabrocky
$16,800
$—
$1,158
$19,195
$37,153
Jeffrey D. Pribor
$16,800
$—
$1,158
$13,994
$31,952
James D. Small III
$16,800
$—
$1,158
$8,263
$26,221
Derek G. Solon
$16,800
$—
$1,158
$19,195
$37,153
William F. Nugent
$16,800
$—
$1,158
$19,195
$37,153
 
 
 
 
 
 
(1)
Constitutes INSW’s matching contributions under the INSW Savings Plan.
(2)
Life insurance premiums represent the cost of term life insurance paid on behalf of the NEO.
(3)
Includes the following amounts for each NEO under plans and arrangements generally maintained by us for all employees (other than “umbrella” liability insurance coverage): (a) medical and dental coverage premiums of $16,662 for Ms. Zabrocky, Messrs. Pribor, $11,461, Small, $5,730, Solon, $16,662, Nugent, $16,662, (b) long-term and short-term disability plan premiums for each NEO of $735; and (c) a premium for excess liability insurance coverage for each NEO of $1,798.
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Grants of Plan-Based Awards
This following table lists the INSW equity and non-equity awards made in fiscal year 2019 to the NEOs granted under the MICP, which included one-time awards in conjunction with the sale of the LNG JV in 2019.
 
 
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)
Estimated Future Payouts
Under Equity
Incentive Plan Awards(2)
All Other
Stock
Awards:
Number of
Shares of
Stock or
Stock Units(3)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
Exercise
or
Base
Price of
Option
Awards
($/Sh)
Grant
Date Fair
Value of
Stock and
Option
Awards(4)
Name
Grant
Date
Threshold
Target
Maximum
Threshold
(#)
Target
(#)
Maximum
(#)
 
 
 
 
Lois K. Zabrocky
4/5/2019
$353,625
$707,250
$1,060,875
11,911
23,822
35,733
23,823
51,314
$17.21
$1,223,656
 
12/11/2019
 
 
 
 
 
 
4,338
 
 
119,989
Jeffrey D. Pribor
4/5/2019
$250,000
$500,000
$750,000
7,263
14,526
21,789
14,526
31,289
$17.21
$950,624
 
12/11/2019
 
 
 
 
 
 
4,338
 
 
119,989
James D. Small III
4/5/2019
$237,500
$475,000
$712,500
5,750
11,500
17,250
11,500
24,771
$17.21
$590,703
 
12/11/2019
 
 
 
 
 
 
4,338
 
 
119,989
Derek G. Solon
4/5/2019
$105,000
$210,000
$315,000
2,905
5,810
8,715
5,811
12,515
$17.21
$298,453
 
12/11/2019
 
 
 
 
 
 
6,146
 
 
169,998
William F. Nugent
4/5/2019
$105,000
$210,000
$315,000
2,905
5,810
8,715
5,811
12,515
$17.21
$298,453
 
12/11/2019
 
 
 
 
 
 
6,146
 
 
169,998
(1)
Amounts actually paid under these awards for 2018 are set forth above under “ – Elements of the 2019 Executive Officer Compensation Program – 2019 Actual Annual Incentive Paid.”
(2)
In 2019, Ms. Zabrocky and Messrs. Pribor, Small, Solon and Nugent received PRSU grants on April 5, 2019. These performance awards vest in full on December 31, 2021, subject to the Compensation Committee’s certification of achievement of the performance measures. Settlement of the PRSUs may be either in shares of common stock or cash, as determined by the Compensation Committee in its discretion, and shall occur as soon as practicable following the Compensation Committee’s certification of the achievement of the applicable performance measures and targets for 2021 and in any event no later than March 15, 2022. The number of PRSUs shall be subject to an increase or decrease depending on performance against the applicable performance measures and targets with the maximum number of PRSUs vesting equivalent to 150% of the PRSUs awarded.
Mr. Pribor received a PRSU grant on April 5, 2019 as part of an initial grant made to him in 2017. One third of the initial PRSU grant award was eligible to vest on each of December 31, 2017, 2018 and 2019, subject in each case to the Compensation Committee’s establishing performance criteria at the beginning of each of 2017, 2018 and 2019 and then certification of achievement of the performance measures and targets no later than each March 31 of the year following the performance period. Settlement of the vested PRSUs may be in either shares of common stock or cash, as determined by the Compensation Committee in its discretion, and shall occur as soon as practicable following the Compensation Committee’s certification of the achievement of the applicable performance measures and targets for 2019 and in any event no later than March 31, 2020. The number of target PRSUs shall be subject to an increase or decrease depending on performance against the applicable performance measures and targets with the maximum number of PRSUs vesting equivalent to 150% of the PRSUs awarded. Since performance targets are set annually each tranche of the award is considered to be a separate grant for accounting treatment and, therefore, $204,489 is excluded from the grant date fair value amounts in the above table. For 2019, the actual achievement level was 125.7% for Mr. Pribor. Therefore, for Mr. Pribor the PRSUs awarded vested at the appropriate percentage upon certification of this result which occurred in 2020. These awards were made pursuant to the terms of Mr. Pribor’s employment agreement.
(3)
The grants comprise time-based RSUs. The grants made on April 5, 2019 vest in equal installments on the first, second and third anniversaries of the date of grant, while the grants made on December 11, 2019 vest on the first anniversary of the grant date.
(4)
For information with respect to grant date fair values, see Note 13, “Capital Stock and Stock Compensation, “to INSW’s consolidated financial statements included in INSW’s 2019 Annual Report.
39

TABLE OF CONTENTS

Outstanding Equity Awards at Fiscal Year-End
The following table lists outstanding INSW equity awards at December 31, 2019 for NEOs under the MICP.
Name
Year
Option Awards
Stock/RSU Awards
 
Grant
Year
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
Unexercisable
Options
Exercise
Price
Option
Expiration
Date
Number of
Shares or
Units of
Stock
That
Have Not
Vested (#)
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested (#)(1)
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested (#)
Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested(1)
Lois K. Zabrocky
2014
14,942(2)
$30.93
9/29/2024
 
 
 
 
 
2016
24,474(2)
$19.04
3/30/2026
 
 
 
 
 
2017
13,565
6,783(3)
$19.13
3/29/2027
3,049(4)
$90,738
(5)
$
 
2018
17,182
34,364(6)
$17.46
4/4/2028
15,274(7)
$454,554
22,908(8)
$681,742
 
2019
51,314(9)
$17.21
4/5/2029
23,823(10)
$708,972
23,822(11)
$708,943
 
 
 
 
 
 
 
4,338(12)
$129,099
 
 
 
 
 
 
 
 
 
 
 
 
 
Jeffrey D. Pribor
2017
79,491
$18.21
2/14/2027
 
 
(13)
$
 
 
11,628
5,814(3)
$19.13
3/29/2027
2,614(4)
$77,793
(5)
$
 
2018
9,665
19,330(6)
$17.46
4/4/2028
8,592(7)
$255,698
12,887(8)
$383,487
 
2019
31,289(9)
$17.21
4/5/2029
14,526(10)
$432,294
14,526(11)
$432,294
 
 
 
 
 
 
 
4,338(12)
$129,099
 
 
 
 
 
 
 
 
 
 
 
 
 
James D. Small III
2015
42,452(2)
$27.54
3/11/2025
 
 
 
 
 
2016
41,956(2)
$19.04
3/30/2026
 
 
 
 
 
2017
12,274
6,137(3)
$19.13
3/29/2027
2,759(4)
$82,108
(5)
$
 
2018
6,801
13,603(6)
$17.46
4/4/2028
6,046(7)
$179,929
9,068(8)
$269,864
 
2019
24,771(9)
$17.21
4/5/2029
11,500(10)
$342,240
11,500(11)
$342,240
 
 
 
 
 
 
 
4,338(12)
$129,099
 
 
 
 
 
 
 
 
 
 
 
 
 
Derek G. Solon
2017
4,324
2,162(14)
$22.42
8/3/2027
962(15)
$28,629
(5)
$
 
2018
4,087
8,175(6)
$17.46
4/4/2028
3,634(7)
$108,148
5,450(8)
$162,192
 
2019
12,515(9)
$17.21
4/5/2029
5,811(10)
$172,935
5,810(11)
$172,906
 
 
 
 
 
 
 
6,146(12)
$182,905
 
 
 
 
 
 
 
 
 
 
 
 
 
William F. Nugent
2017
4,062
2,031(14)
$22.42
8/3/2027
903(15)
$26,873
(5)
$
 
2018
3,916
7,832(6)
$17.46
4/4/2028
3,481(7)
$103,595
5,222(8)
$155,407
 
2019
12,515(9)
$17.21
4/5/2029
5,811(10)
$172,935
5,810(11)
$172,906
 
 
 
 
 
 
6,146(12)
$182,905