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
Filed by the Registrant [X]
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))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
INTERNATIONAL SHIPHOLDING CORPORATION
(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):
[X] 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:
INTERNATIONAL SHIPHOLDING CORPORATION
17TH FLOOR
POYDRAS CENTER
650 POYDRAS STREET
----------
NEW ORLEANS, LOUISIANA 70130
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO COMMON STOCKHOLDERS OF INTERNATIONAL SHIPHOLDING CORPORATION:
The annual meeting of stockholders of International Shipholding
Corporation will be held in the Executive Board Room, 17th Floor, Poydras
Center, 650 Poydras Street, New Orleans, Louisiana, on Wednesday, April 28,
2004, at 2:00 p.m., New Orleans time, for the following purposes:
(i) to elect a board of nine directors to serve until the next annual
meeting of stockholders and until their successors are elected and
qualified;
(ii)to ratify the appointment of Ernst & Young LLP, certified public
accountants, as independent auditors for the Corporation for the fiscal
year ending December 31, 2004; and
(iii) to transact such other business as may properly come before the
meeting or any adjournment thereof.
Only common stockholders of record at the close of business on March 1,
2004, are entitled to notice of and to vote at the annual meeting.
All stockholders are cordially invited to attend the meeting in person.
However, if you are unable to attend in person and wish to have your stock
voted, PLEASE FILL IN, SIGN, AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. Your proxy may be revoked by
appropriate notice to the Secretary of International Shipholding Corporation at
any time prior to the voting thereof.
BY ORDER OF THE BOARD OF DIRECTORS
R. CHRISTIAN JOHNSEN
Secretary
New Orleans, Louisiana
March 9, 2004
INTERNATIONAL SHIPHOLDING CORPORATION
17TH FLOOR
POYDRAS CENTER
650 POYDRAS STREET
NEW ORLEANS, LOUISIANA
----------
PROXY STATEMENT
----------
This Proxy Statement is furnished to stockholders of International
Shipholding Corporation (the "Corporation") in connection with the solicitation
on behalf of the Board of Directors (the "Board") of proxies for use at the
annual meeting of stockholders of the Corporation to be held on Wednesday, April
28, 2004, at 2:00 p.m., New Orleans time, in the Executive Board Room, 17th
Floor, Poydras Center, 650 Poydras Street, New Orleans, Louisiana. The
approximate date of mailing of this Proxy Statement and the enclosed form of
proxy is March 9, 2004.
Only holders of record of the Corporation's Common Stock at the close
of business on March 1, 2004, are entitled to notice of and to vote at the
meeting. On that date, the Corporation had outstanding 6,082,887 shares of
Common Stock, each of which is entitled to one vote.
The enclosed proxy may be revoked by the stockholder at any time prior
to the exercise thereof by filing with the Secretary of the Corporation a
written revocation or duly executed proxy bearing a later date. The proxy will
be deemed revoked if the stockholder is present at the annual meeting and elects
to vote in person.
The cost of soliciting proxies in the enclosed form will be borne by
the Corporation. In addition to the use of the mails, proxies may be solicited
by personal interview, telephone, telegraph, facsimile, or e-mail; and banks,
brokerage houses and other institutions, nominees, and fiduciaries will be
requested to forward the soliciting material to their principals and to obtain
authorization for the execution of proxies. The Corporation will, upon request,
reimburse such parties for their expenses incurred in connection therewith.
-1-
PRINCIPAL STOCKHOLDERS
The following persons, in addition to three directors whose ownership
information is set forth under "Election of Directors," were known by the
Corporation to own beneficially more than five percent of its Common Stock (the
only outstanding voting security of the Corporation) as of the date noted below.
The information set forth below has been determined in accordance with Rule
13d-3 under the Securities Exchange Act of 1934 based upon information furnished
by the persons listed. Unless otherwise indicated, all shares shown as
beneficially owned are held with sole voting and investment power.
Amount and
Nature of Percent
Beneficial of
Name and Address Ownership Class
---------------- ---------- -----
T. Rowe Price Associates, Inc. .................. 887,062 (1) 14.58%
100 E. Pratt Street
Baltimore, Maryland 21202
Franklin Resources, Inc. ........................ 480,000 (2) 7.89%
One Franklin Parkway
San Mateo, California 94403
Dimensional Fund Advisors Inc. .................. 315,524 (3) 5.19%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
(1) Based on information contained in Schedule 13G as of December 31, 2003,
filed jointly with T. Rowe Price Small-Cap Value Fund, Inc. (which
holds sole voting power with respect to 695,000 shares, representing
11.43% of the shares outstanding). T. Rowe Price Associates, Inc.
(Price Associates) serves as investment advisor with power to direct
investments with respect to all reported shares and also holds sole
voting power with respect to 40,100 shares. For purposes of the
reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities;
however, Price Associates expressly disclaims that it is, in fact, the
beneficial owner of such securities.
(2) Based on information contained in a joint filing on Schedule 13G as of
December 31, 2003, by Franklin Resources, Inc. (FRI), Charles B.
Johnson, Rupert H. Johnson, Jr., and Franklin Advisory Services, LLC.
Franklin Advisory Services, LLC, has sole voting and dispositive power
with respect to all 480,000 shares. FRI is the parent holding company
of Franklin Advisory Services, LLC, an investment advisor. Charles B.
Johnson and Rupert H. Johnson, Jr., are principal shareholders of FRI.
FRI, Charles B. Johnson, Rupert H. Johnson, Jr. and Franklin Advisory
Services, LLC disclaim any economic interest or beneficial ownership in
any of the shares.
(3) Based on information contained in Schedule 13G as of December 31, 2003.
Dimensional Fund Advisors Inc. (Dimensional), a registered investment
advisor, furnishes investment advice to four registered investment
companies, and serves as investment manager to certain other investment
vehicles, including commingled group trusts and separate accounts.
Dimensional disclaims beneficial ownership of the securities.
-2-
ELECTION OF DIRECTORS
The by-laws of the Corporation authorize the Board of Directors to fix
the size of the Board. Pursuant thereto, the Board of Directors has fixed the
number of directors at nine and proxies cannot be voted for a greater number of
persons. Unless authority to vote for the election of directors is withheld, the
persons named in the enclosed proxy will vote for the election of the nine
nominees named below to serve until the next annual meeting and until their
successors are duly elected and qualified. In the unanticipated event that any
of the nominees cannot be a candidate at the annual meeting, the shares
represented by the proxies will be voted in favor of such replacement nominees
as may be designated by the Board.
The following table sets forth certain information as of February 24,
2004, concerning the nominees and all directors and executive officers as a
group, including their beneficial ownership of shares of the Common Stock of the
Corporation as determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934. All of the director nominees are now serving a one year
term as a director except that Mr. Lane was appointed by the Board in March of
2004 to serve as a director until the Corporation's Annual Meeting of
Stockholders on April 28, 2004. Unless otherwise indicated, the shares of the
Corporation's Common Stock shown as being beneficially owned are held with sole
voting and investment power. Niels W. Johnsen, Erik F. Johnsen, Raymond V.
O'Brien, Jr., and Harold S. Grehan, Jr. each first became a director of the
Corporation in early 1979, when the Corporation was formed. Niels M. Johnsen and
Edwin Lupberger became directors in 1988. Edward K. Trowbridge and Erik L.
Johnsen became directors in 1994. In February of 2004, the Corporation's Chief
Executive Officer, Mr. Erik F. Johnsen, recommended H. Merritt Lane III to the
Nominating and Governance Committee as a candidate for director of the
Corporation. The Committee determined that Mr. Lane is qualified to serve on the
Board and recommended to the Board that he be appointed a director. The Board,
in accordance with the recommendation of the Committee, appointed Mr. Lane a
director effective March 1, 2004, to serve until the Corporation's Annual
Meeting of Stockholders to be held on April 28, 2004, and named him a nominee
for election to the Board by the stockholders at that meeting.
The only executive officer named in the Summary Compensation Table who
is not also a nominee for director is Gary L. Ferguson, Vice President and Chief
Financial Officer, who beneficially owns 75,012 shares (1.22% of the class),
including 75,000 shares he has the right to acquire upon the exercise of
currently exercisable stock options.
A majority of the director nominees are "independent directors" as
defined by the New York Stock Exchange ("NYSE") and the Securities and Exchange
Commission ("SEC"). The Board has determined that such independent directors,
who are Messrs. Grehan, Lupberger, O'Brien, Trowbridge, and Lane, have no
relationship with the Company that would prevent them from qualifying as
independent under the requirements of the NYSE and the SEC, including the
relationships described under "Board of Director and Compensation Committee
Interlocks, Insider Participation in Compensation Decisions and Certain
Transactions" later in this report involving transactions in which members of
Mr. Grehan's family have an interest.
The Board recommends a vote FOR each of the nominees named below.
Name, Age, Principal Occupation, and Shares of Common Stock Percent
Directorship in Other Public Corporations Beneficially Owned of Class (1)
----------------------------------------- ------------------ -----------
Niels W. Johnsen, 81 (2)(3) ............................. 920,107 (4) 15.13%
Formerly Chairman of the Board and Chief Executive
Officer of the Corporation
Erik F. Johnsen, 78 (3)(5) ............................... 644,753 (6) 10.60%
Chairman of the Board and Chief Executive Officer
of the Corporation
650 Poydras Street, Suite 1700
New Orleans, Louisiana 70130
(continued on page 4)
-3-
Name, Age, Principal Occupation, and Shares of Common Stock Percent
Directorship in Other Public Corporations Beneficially Owned of Class (1)
----------------------------------------- ------------------ -----------
(continued from page 3)
Niels M. Johnsen, 58 (3)(7) .............................. 561,353 (8) 8.93%
President of the Corporation
One Whitehall Street
New York, New York 10004
Erik L. Johnsen, 46 (3)(9) ............................... 311,540 (10) 4.96%
Executive Vice President of the Corporation
650 Poydras Street, Suite 1700
New Orleans, Louisiana 70130
Harold S. Grehan, Jr., 76 (11) ........................... 95,518 1.57%
Formerly Vice President of the Corporation
Edwin Lupberger, 67 (12) ................................. 1,728 .03%
President, Nesher Investments, LLC; formerly
Chairman of the Board and Chief Executive Officer
of Entergy Corporation; trustee, The Lupberger
Foundation
Raymond V. O'Brien, Jr., 76 (13) ......................... 1,000 .02%
Formerly Chairman of the Board and Chief Executive
Officer of Emigrant Savings Bank
Edward K. Trowbridge, 75 (14) ............................ 625 (15) .01%
Formerly Chairman of the Board and Chief Executive
Officer of Atlantic Mutual Companies
H. Merritt Lane III, 42 (16) ............................. 0 0%
President, Chief Executive Officer, and a director of
Canal Barge Company, Inc.
All executive officers and directors as a group (10 persons) 2,386,974 36.40%
(1) Shares subject to currently exercisable options are deemed to be
outstanding for purposes of computing the percentage of outstanding
common stock owned by the person holding such options and by all
directors and executive officers as a group but are not deemed to be
outstanding for the purpose of computing the individual ownership
percentage of any other person.
(2) Niels W. Johnsen served as Chairman and Chief Executive Officer of the
Corporation from its formation in 1979 until his retirement in 2003. He
was one of the founders of Central Gulf Lines, Inc. ("Central Gulf"),
one of the Corporation's principal subsidiaries, in 1947. Mr. Johnsen
has served as a consultant for the Corporation since retiring as
Chairman and Chief Executive Officer.
(3) Niels W. Johnsen and Erik F. Johnsen are brothers. Niels M. Johnsen is
the son of Niels W. Johnsen. Erik L. Johnsen is the son of Erik F.
Johnsen.
(4) Includes 224,622 shares owned by a corporation of which Niels W.
Johnsen is the controlling shareholder, President, and a director.
-4-
(5) Erik F. Johnsen became Chairman and Chief Executive Officer of the
Corporation during 2003. He previously served as President, Chief
Operating Officer, and a director of the Corporation since its
formation in 1979. He was one of the founders of Central Gulf in 1947.
(6) Includes 133,908 shares held by the Erik F. Johnsen Limited Family
Partnership of which Mr. Johnsen is General Partner and 8,875 shares
owned by the estate of Erik F. Johnsen's deceased wife. Also includes
43,812 shares owned by the Erik F. Johnsen Family Foundation of which
he claims no beneficial ownership but maintains voting and disposition
rights.
(7) Niels M. Johnsen joined Central Gulf in 1970 and held various positions
before being named President of the Corporation in 2003. He also serves
as Chairman and Chief Executive Officer of each of the Corporation's
principal subsidiaries, except Waterman Steamship Corporation for which
he serves as President. Mr. Johnsen has been a director of Atlantic
Mutual Companies since 2002.
(8) Includes 2,968 shares held in trust for Niels M. Johnsen's child of
which he is a trustee, 224,622 shares owned by a corporation of which
Mr. Johnsen is a Vice President and director, and 200,000 shares that
Mr. Johnsen has the right to acquire pursuant to currently exercisable
stock options.
(9) Erik L. Johnsen joined Central Gulf in 1979 and held various positions
before being named Vice President in 1987. In 1997, he was named
Executive Vice President of the Corporation and President and Chief
Operating Officer of each of the Corporation's principal subsidiaries,
except Waterman Steamship Corporation for which he serves as Executive
Vice President.
(10) Includes 11,500 shares held in trust for Erik L. Johnsen's children of
which he is a trustee, and 200,000 shares that Mr. Johnsen has the
right to acquire pursuant to currently exercisable stock options.
(11) Mr. Grehan has served as a director of the Corporation since its
formation in 1979. He also served as Vice President of the Corporation
from its formation until his retirement at the end of 1997.
(12) Mr. Lupberger served as Chairman of the Board and Chief Executive
Officer of Entergy Corporation from 1985 to 1998. He is the Chairperson
of the Audit Committee of the Board.
(13) Mr. O'Brien served as Chairman of the Board and Chief Executive Officer
of the Emigrant Savings Bank from January of 1978 through December of
1992. He is the Chairperson of the Compensation Committee of the Board.
(14) Mr. Trowbridge served as Chairman of the Board and Chief Executive
Officer of Atlantic Mutual Companies from July of 1988 through November
of 1993. He served as President and Chief Operating Officer of the
Atlantic Mutual Companies from 1985 until 1988. He is the Chairperson
of the Nominating and Governance Committee of the Board.
(15) Shares owned jointly with wife.
(16) Mr. Lane has served as President and Chief Executive Officer of Canal
Barge Company, Inc. since January of 1994 and as a director of that
company since October of 1988.
As of January 29, 2004, Niels W. Johnsen, Erik F. Johnsen, and their
spouses, children, and grandchildren (collectively, the "Johnsen Family")
beneficially owned an aggregate of 2,506,729 shares or 38.67% of the
Corporation's Common Stock (which includes currently exercisable options to
acquire 400,000 shares), and, to the extent they act together, they may be
deemed to be in control of the Corporation.
-5-
OTHER INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Corporation's Board has three standing committees, the Audit
Committee, the Compensation Committee, and the Nominating and Governance
Committee, that operate under written charters adopted by the Board. The Audit
and the Nominating and Governance Committees are each composed of the same five
directors. The members of these two committees are Messrs. Grehan, Lane,
Lupberger, O'Brien, and Trowbridge, all of whom are independent under the NYSE
listing standards. The Compensation Committee is composed of Messrs. Lane,
Lupberger, O'Brien, and Trowbridge. Mr. Grehan was appointed to the Audit and
the Nominating and Governance Committees in January of 2004. Mr. Lane was
appointed to each of the three committees in March of 2004.
The Audit Committee assists the Board in monitoring the integrity of
the financial statements of the Corporation; the qualifications and independence
of the independent auditors; the performance of the Corporation's internal audit
function and independent auditors; and the compliance by the Corporation with
legal and regulatory requirements. The Audit Committee has at least one audit
committee financial expert, Mr. Lupberger, who also serves as the chairperson of
this committee. The Audit Committee met four times during 2003.
The Compensation Committee administers the Corporation's Stock
Incentive Plan, recommends director compensation policies to the Board, and
discharges the Board's responsibilities relating primarily to the compensation
of the Corporation's Chief Executive Officer. Mr. O'Brien is the chairperson of
this committee. The Compensation Committee met once during 2003.
The Nominating and Governance Committee's primary responsibilities
include identifying individuals qualified to become Board and Board committee
members; selecting, or recommending that the Board select, the director nominees
for the next annual meeting of shareholders; and developing and recommending to
the Board a set of corporate governance principles applicable to the
Corporation. The Nominating and Governance Committee's policy is to identify
individuals qualified to fill vacant director positions or to stand for
re-election based on input from all Board members and the following general
criteria. Generally, directors should possess practical wisdom, sound judgment
and a broad range of experience that is relevant to the Company's business and
is complementary to the background of the other directors. They should be
committed to devoting the time necessary to carry out their responsibilities,
serving on the Board for a sufficient period of time to develop knowledge about
the business, and objectively representing the best interests of the Company's
stockholders. The Nominating and Governance Committee will evaluate director
nominations from stockholders using the same criteria used for all other
nominees. Stockholders may submit director nominations as described in
"Stockholder Proposals and Nominations" later in this report. Mr. Trowbridge is
the chairperson of this committee. The Nominating and Governance Committee met
once during 2003. The Nominating and Governance Committee Charter, as amended in
January of 2004, is included as an exhibit to this Proxy Statement.
The Board held four meetings during 2003. Each member of the Board
attended at least 75% of the aggregate number of meetings of the Board and
committees of which he was a member in 2003. Each non-officer director receives
fees of $16,000 per year plus $1,000 for each meeting of the Board or a
committee thereof attended.
Upon his retirement as Chairman of the Board and Chief Executive
Officer, Niels W. Johnsen entered into a consulting arrangement with the
Corporation for a term of one year to be automatically extended on a
month-by-month basis thereafter for which he will be paid an annual fee of
$100,000 for providing services in the areas of vessel chartering and finance.
Directors are expected to attend the annual meeting of the
Corporation's stockholders. All directors attended the 2003 meeting except Mr.
Lane who was not a director at that time.
-6-
EXECUTIVE SESSIONS OF NON-MANAGEMENT DIRECTORS
During 2003, the non-management members of the Board, which included
Messrs. Grehan, Lupberger, O'Brien, and Trowbridge, met four times in executive
sessions. The role of presiding director at these meetings rotated quarterly
during 2003 with each director presiding at one meeting. Mr. Lane became a
non-management member of the Board upon his appointment in March of 2004.
AUDIT COMMITTEE REPORT
To the Board of Directors of International Shipholding Corporation:
In connection with the Corporation's Annual Report on Form 10-K for the
year ended December 31, 2003, we have (i) reviewed and discussed with management
the audited financial statements as of and for the year ended December 31, 2003,
(ii) discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants, and (iii) have received and reviewed
the written disclosures and the letter from the independent auditors required by
Independence Standard No. 1, Independence Discussions with Audit Committees, as
amended, by the Independence Standards Board, and have discussed with the
auditors the auditors' independence. Based on the reviews and discussions
referred to above, we recommend to the Board that the financial statements
referred to above be included in the Corporation's Annual Report on Form 10-K
for the year ended December 31, 2003.
Submitted by the 2003 Audit Committee members:
Edwin Lupberger, Raymond V. O'Brien, Jr., and Edward K. Trowbridge
AUDIT FEES
The following table sets forth the fees for professional services
rendered by Ernst & Young LLP, the Corporation's principal independent
accountants, for the fiscal years ended December 31, 2003 and 2002:
2003 2002 (4)
----------- ----------
Audit Fees (1) $ 257,000 $ 221,000
Audit Related Fees (2) 18,000 18,000
Tax Fees (3) 51,700 32,600
----------- ----------
Total Fees $ 326,700 $ 271,600
(1) Audit Fees include fees for the audit of the Corporation's consolidated
financial statements and review of interim consolidated financial
statements included in quarterly reports and services related to
statutory audits of certain of the Corporation's subsidiaries.
(2) Audit Related Fees include fees for audits of the Corporation's
employee benefit plans.
(3) Tax Fees include fees for tax compliance and consulting services.
(4) In addition to those amounts disclosed in this table, audit fees for
services rendered during 2002 by Arthur Andersen LLP, who served as the
Corporation's principal accountant through June 21, 2002, were $12,000.
The Corporation was also billed $34,300 during 2002 for services
rendered by Arthur Andersen LLP for tax fees related to tax compliance
and consulting services.
-7-
The Audit Committee's policy is to pre-approve all audit and
permissible non-audit services provided by the independent auditor. These
services may include audit services, audit-related services, tax services, and
other services. Pre-approval is generally provided for up to one year and is
detailed as to the particular service or category of services. The Audit
Committee may also pre-approve particular services on a case-by-case basis. The
Audit Committee pre-approved 100% of the audit fees, audit-related fees, and tax
fees for the fiscal year ended December 31, 2003.
The Audit Committee determined that the provision of services discussed
above is compatible with maintaining the independence of Ernst & Young LLP from
the Corporation.
EXECUTIVE COMPENSATION
The Board has delegated the power to set the salaries of the executive
officers other than himself to Erik F. Johnsen. The Compensation Committee,
which is made up solely of independent directors, discharges the Board's
responsibilities related to the CEO's compensation. The Compensation Committee
also administers the Corporation's Stock Incentive Plan and makes decisions on
the grant of stock options. Set forth below is a report submitted by the Board
and the Committee addressing the Corporation's executive compensation policies
for 2003.
BOARD OF DIRECTORS AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Corporation's executive compensation structure for 2003 was
comprised of salaries and cash bonuses. The salary of Erik F. Johnsen, Chairman
of the Board and Chief Executive Officer, was set at $330,000 by the Board in
1990 and has not been increased. The Board also set the salary of Niels W.
Johnsen, formerly Chairman of the Board and Chief Executive Officer of the
Corporation, at $330,000 in 1990. He received compensation of $165,000 during
2003 based on that annual amount for the period from January 1, 2003, through
his retirement as Chairman and Chief Executive Officer on June 30, 2003. The
Board delegates to Erik F. Johnsen the power to set the salaries of the other
executive officers.
The Board believes that a portion of executive compensation should be
tied to corporate performance. Accordingly, the Bonus Plan for 2003 (the "2003
Plan") adopted by the Board was based on the achievement of certain quarterly
and annual profit levels by the Corporation. The 2003 Plan offered an
opportunity for all employees, including certain executive officers, to earn
incentive cash bonuses of up to four weeks of their annual salaries. The target
profit levels for the full year 2003 were achieved resulting in the full bonus
being earned. Messrs. Niels W. and Erik F. Johnsen did not participate in the
2003 Plan.
Since each executive officer's annual compensation is substantially
less than $1 million, the Board does not believe that any action is necessary in
order to ensure that all executive compensation paid in cash will continue to be
deductible by the Corporation under Section 162(m) of the Internal Revenue Code.
In addition, stock options granted in accordance with the terms of the Stock
Incentive Plan qualify as "performance-based" compensation and are excluded in
calculating the $1 million limit on executive compensation.
Submitted by the Board of Directors and the Compensation Committee:
Erik F. Johnsen, Niels M. Johnsen, Erik L. Johnsen,
Niels W. Johnsen, Harold S. Grehan, Jr., Edwin Lupberger*, Raymond V. O'Brien,
Jr.*, and Edward K. Trowbridge*
*Member of the Compensation Committee during 2003
-8-
SUMMARY OF COMPENSATION
The following table sets forth for the fiscal years ended December 31,
2001, 2002, and 2003, the compensation paid by the Corporation with respect to
the Chief Executive Officer and the three other executive officers of the
Corporation employed at the end of fiscal year 2003. Additionally, one former
executive officer is included who was no longer employed by the Corporation at
December 31, 2003, but who otherwise would have been included in the table. The
five individuals included in the table represent all executive officers of the
Corporation during 2003.
SUMMARY COMPENSATION TABLE
Annual Compensation
------------------- All Other
Name and Principal Position Year Salary Bonus Compensation
--------------------------- ---- -------- ------- ------------
Erik F. Johnsen, 2003 330,000 - 17,132 (2)
Chairman of the Board and Chief Executive 2002 330,000 - 17,132 (2)
Officer of the Corporation 2001 442,500 (1) - 17,132 (2)
Niels M. Johnsen, 2003 272,950 20,996 1,000 (3)
President of the Corporation 2002 265,000 - 1,000 (3)
2001 265,000 - 1,000 (3)
Erik L. Johnsen, 2003 221,450 17,350 1,000 (3)
Executive Vice President of the Corporation 2002 215,000 - 1,000 (3)
2001 215,000 - 1,000 (3)
Gary L. Ferguson, 2003 164,800 12,677 1,000 (3)
Vice President and Chief Financial Officer 2002 160,000 - 1,000 (3)
of the Corporation 2001 160,000 - 1,000 (3)
Niels W. Johnsen, 2003 165,000 - 50,000 (5)
Formerly Chairman of the Board and Chief Executive 2002 330,000 - -
Officer of the Corporation (4) 2001 442,500 (1) - -
(1) The annual salary was $330,000; however, a one-time payment made
pursuant to a commitment entered into in prior years applicable to year
2000 in the amount of $112,500 was made in January 2001.
(2) The Corporation has an agreement with Erik F. Johnsen whereby his
estate will be paid approximately $626,000 upon his death. To fund this
death benefit, the Corporation maintains a life insurance policy at an
annual cost of $17,132.
(3) Consists of contributions made by the Corporation to its 401(k) plan on
behalf of the employee.
(4) The Corporation has an agreement with Niels W. Johnsen whereby his
estate will be paid approximately $822,000 upon his death. The
Corporation has reserved amounts sufficient to fund this death benefit.
(5) Niels W. Johnsen has served as a consultant to the Corporation since
his retirement on June 30, 2003, for an annual fee of $100,000. He
earned consulting fees of $50,000 for the period from July 1, 2003
through December 31, 2003.
-9-
STOCK INCENTIVE PLAN
The following table presents information with respect to stock option
exercises and values under the Corporation's Stock Incentive Plan. No stock
option grants occurred in 2003. The two individuals named in the Summary
Compensation Table that are not listed below, Niels W. Johnsen and Erik F.
Johnsen, have never been granted options under the Stock Incentive Plan.
AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 2003
AND FISCAL YEAR END OPTION VALUES
Number of Value of
Securities Underlying Unexercised
Number of Unexercised Options at In-the-Money
Shares Acquired Value December 31, 2003 Options at
Name on Exercise Realized Exercisable/ Unexercisable December 31, 2003
----------------- ---------------- ---------- -------------------------- -----------------
Niels M. Johnsen 0 0 200,000 / 0 $ 125,000
Erik L. Johnsen 0 0 200,000 / 0 $ 125,000
Gary L. Ferguson 0 0 75,000 / 0 $ 46,875
PENSION PLAN
The Corporation has in effect a defined benefit pension plan, in which
all employees of the Corporation and its domestic subsidiaries who are not
covered by union sponsored plans may participate after one year of service.
Computation of benefits payable under the plan is based on years of service, up
to thirty years, and the employee's highest sixty consecutive months of
compensation, which is defined as a participant's base salary plus overtime,
excluding incentive pay, bonuses or other extra compensation, in whatever form.
The following table reflects the estimated annual retirement benefits (assuming
payment in the form of a straight life annuity) an executive officer can expect
to receive upon retirement at age 65 under the plan, assuming the years of
service and compensation levels indicated below:
Years of Service
---------------------------------------------------
Earnings 15 20 25 30 or more
---------- --------- --------- --------- ----------
$ 100,000 .................... $ 20,237 $ 26,983 $ 33,729 $ 40,475
150,000 .................... 32,612 43,483 54,354 65,225
200,000 .................... 44,987 59,983 74,979 89,975
250,000 .................... 57,362 76,483 95,604 114,725
300,000 .................... 69,737 92,983 116,229 139,475
350,000 .................... 82,112 109,483 136,854 164,225
This table does not reflect the fact that the benefit provided by the
Retirement Plan's formula is subject to certain constraints under the Internal
Revenue Code. For 2004, the maximum annual benefit generally is $165,000 under
Code Section 415. Furthermore, under Code Section 401(a)(17), the maximum annual
compensation that may be reflected in 2004 is $205,000. These dollar limits are
subject to cost of living increases in future years. Each of the individuals
named in the Summary Compensation Table set forth above is a participant in the
plan and, for purposes of the plan, was credited during 2003 with a salary of
$200,000, except that Mr. Ferguson and Mr. Niels W. Johnsen were credited with
their actual salaries. At December 31, 2003, such individuals had 51, 33, 24,
35, and 56 credited years of service, respectively, under the plan. The plan
benefits shown in the above table are not subject to deduction or offset by
Social Security benefits.
-10-
COMPENSATION COMMITTEE AND BOARD OF DIRECTOR INTERLOCKS,
INSIDER PARTICIPATION IN COMPENSATION DECISIONS,
AND CERTAIN TRANSACTIONS
The Board has delegated the power to set the salaries of the executive
officers other than himself to Erik F. Johnsen. No executive officer of the
Corporation served during the last fiscal year as a director, or member of the
Compensation Committee, of another entity, one of whose executive officers
served as a director of the Corporation.
Furnished below is information regarding certain transactions in which
executive officers and directors of the Corporation or members of their
immediate families had an interest during 2003.
R. Christian Johnsen, a son of Erik F. Johnsen, Chairman of the Board
of the Corporation, serves as the Secretary of the Corporation and is a partner
in the law firm of Jones, Walker, Waechter, Poitevent, Carrere and Denegre,
which has represented the Corporation since its inception. H. Hughes Grehan, a
son of Harold S. Grehan, Jr., a director of the Corporation, serves as Assistant
Secretary of the Corporation and is a partner in the same law firm. Fees paid to
the firm for legal services rendered to the Corporation during 2003 were
$1,030,000. The Corporation believes that these services are provided on terms
at least as favorable to the Corporation as could be obtained from unaffiliated
third parties.
James M. Baldwin, a son-in-law of Erik F. Johnsen, Chairman of the
Board of the Corporation, and brother-in-law of Erik L. Johnsen, Executive Vice
President of the Corporation, is employed by the Corporation in a non-executive
officer position and received compensation for the year ended December 31, 2003,
of $138,700. Brooke Y. Grehan, a son of Harold S. Grehan, Jr., a director of the
Corporation, is also employed by the Corporation in a non-executive officer
position and received compensation for the year ended December 31, 2003, of
$85,400. Compensation includes annual salaries and bonuses earned during 2003.
-11-
PERFORMANCE GRAPH
The following performance graph compares the performance of the
Corporation's Common Stock to the S&P 500 Index and to an Industry Peer Group
(which consists of OMI Corporation, Overseas Shipholding Group, Stolt Tankers,
Sea Containers Limited, and Alexander and Baldwin) for the Corporation's last
five fiscal years.
COMPARISON OF CUMULATIVE TOTAL RETURNS*
INTERNATIONAL SHIPHOLDING CORPORATION (ISH), S&P 500, PEER GROUP
(PERFORMANCE RESULTS THROUGH DECEMBER 31, 2003)
[PERFORMANCE GRAPH]
1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ----
ISH --[SOLID BULLET SIGN]-- $100.00 $ 75.60 $ 42.02 $ 43.64 $ 41.66 $ 100.73
S&P 500 --[SOLID DIAMOND SIGN]-- $100.00 $ 121.05 $110.02 $ 96.95 $ 75.52 $ 97.19
Peer Group --[SOLID SQUARE BOX]-- $100.00 $ 105.27 $131.70 $120.24 $ 93.31 $ 155.59
---------
*Assumes $100 invested at the close of trading on the last trading day in 1998
in ISH common stock, the S&P 500, and the Industry Peer Group. Also assumes
reinvestment of dividends.
-12-
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
The Corporation's 2003 financial statements were audited by Ernst &
Young LLP ("E&Y"). The Audit Committee of the Board has appointed E&Y as
independent auditors of the Corporation for the fiscal year ending December 31,
2004, and the Board is submitting that appointment to its stockholders for
ratification at the annual meeting. E&Y became the Corporation's independent
auditors on June 21, 2002. Representatives of E&Y will be present at the annual
meeting, are expected to be available to respond to appropriate questions, and
will have an opportunity to make a statement if they wish. If the stockholders
do not ratify the appointment of E&Y by the affirmative vote of at least a
majority of the shares of Common Stock represented at the meeting in person or
by proxy, the Audit Committee and the Board will reconsider the selection of
independent auditors.
Prior to June 21, 2002, Arthur Andersen LLP ("Andersen") were the
Corporation's independent auditors. Andersen's reports on the Corporation's
consolidated financial statements for each of the two fiscal years prior to that
date did not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or accounting principles.
During the Corporation's two fiscal years prior to the date Andersen was
dismissed and for the subsequent interim period through the date Andersen was
dismissed, there were no disagreements between the Corporation and Andersen on
any matters of accounting principles or practices, financial statement
disclosures, or auditing scope or procedures, which disagreements, if not
resolved to Andersen's satisfaction, would have caused Andersen to make
reference to the subject matter of the disagreement in connection with its
reports; and there were no reportable events as listed in Item 304(a)(1)(v) of
Regulation S-K.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER MATTERS
QUORUM AND VOTING OF PROXIES
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock of the Corporation is necessary to constitute a quorum.
If a quorum is present, the vote of a majority of the Common Stock present or
represented will decide all questions properly brought before the meeting,
except that directors will be elected by plurality vote.
All proxies in the form enclosed received by the Board will be voted as
specified and, in the absence of instructions to the contrary, will be voted for
the election of the nominees named in the "Election of Directors" section of
this Proxy Statement.
Management has not received any notice that a stockholder desires to
present any matter for action by stockholders at the annual meeting and does not
know of any matters to be presented at the annual meeting other than the
election of directors and the ratification of the appointment of the independent
auditors. The enclosed proxy will confer discretionary authority with respect to
any other matters that may properly come before the meeting or any adjournment
thereof. It is the intention of the persons named in the enclosed proxy to vote
in accordance with their best judgment on any such matter.
EFFECT OF ABSTENTION AND BROKER NON-VOTES
Because directors are elected by plurality vote, abstentions and broker
non-votes will not affect the election of directors. With respect to any other
matter that is properly before the meeting, an abstention from voting on the
proposal by a shareholder will have the same effect as a vote "against" the
proposal, and a broker non-vote will be counted as "not present" with respect to
the proposal and therefore will have no effect on the outcome of the vote with
respect thereto.
-13-
STOCKHOLDER PROPOSALS AND NOMINATIONS
Any stockholder who desires to present a proposal qualified for
inclusion in the Corporation's proxy material relating to the 2005 annual
meeting, including stockholder nominations of directors, must forward the
proposal to the Secretary of the Corporation at the address shown on the first
page of this Proxy Statement in time to arrive at the Corporation prior to
November 9, 2004. Proxies solicited on behalf of the Board for the 2005 annual
meeting will confer discretionary authority to vote with respect to any other
matter properly submitted by a stockholder for action at the 2005 annual meeting
if the Corporation does not, on or before January 23, 2005, receive written
notice, addressed to the Secretary of the Corporation at the address shown on
the first page of this Proxy Statement, that the stockholder intends to submit a
matter for action.
COMMUNICATIONS WITH DIRECTORS
A stockholder may communicate directly with the Board of Directors, or
with any individual director, by writing to the Chairman of the Board of
Directors of the Corporation at the address shown on the first page of this
Proxy Statement. The Chairman will forward the stockholder's communication to
the appropriate director or officer for response.
BY ORDER OF THE BOARD OF DIRECTORS
R. CHRISTIAN JOHNSEN
Secretary
New Orleans, Louisiana
March 9, 2004
-14-
EXHIBIT A
INTERNATIONAL SHIPHOLDING CORPORATION
NOMINATING AND GOVERNANCE COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
PURPOSE
The purpose of the Nominating and Governance Committee shall be to identify
individuals qualified to become Board and Board Committee members, and to
select, or to recommend that the Board select, the director nominees for the
next annual meeting of shareholders; and develop and recommend to the Board a
set of corporate governance principles applicable to the corporation.
COMMITTEE MEMBERSHIP
The Nominating and Governance Committee shall be composed of no fewer than three
members. The members of the Nominating and Governance Committee shall meet the
independence requirements of the New York Stock Exchange. The Nominating and
Governance Committee members shall be appointed by the Board and may be replaced
by the Board.
MEETINGS
The Nominating and Governance Committee shall meet as often as it determines,
but at least annually.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
The Nominating and Governance Committee shall have the following authority and
responsibilities:
1. Evaluate and make recommendations to the full Board concerning the
number and accountability of Board Committees and Committee assignments
and Committee membership.
2. Establish selection criteria for members of the Board of Directors in
accordance with relevant law and New York Stock Exchange listing rules.
3. Make recommendations to the full Board concerning all nominees for
Board membership. Stockholder nominees will be evaluated using the same
criteria as other types of director nominees. In this regard, the
Committee has the sole authority to hire and terminate any search firm
to be used to identify director candidates, including sole authority to
approve the search firm's fees and other retention terms.
4. Periodically review and make recommendations to the full Board
regarding Director orientation and continuing education.
5. Solicit input from the full Board and conduct an annual review of the
effectiveness of the operation of the Board and Board Committees,
including an evaluation of its own performance.
6. Review the Committee's Charter annually and recommend proposed changes
to the Board if necessary or advisable.
7. Develop and recommend to the full Board for its approval a set of
corporate governance principles.
FORM OF PROXY
This Proxy is Solicited on Behalf of the Board of Directors of
INTERNATIONAL SHIPHOLDING CORPORATION
The undersigned hereby (a) acknowledges receipt of the notice of annual
meeting of stockholders of International Shipholding Corporation to be held in
the Executive Board Room, 17th Floor, Poydras Center, 650 Poydras Street, New
Orleans, Louisiana, on Wednesday, April 28, 2004, at 2:00 p.m., New Orleans
time; (b) appoints Niels W. Johnsen, Erik F. Johnsen and William H. Hines, or
any one or more of them, as proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote, as
designated on the reverse side of this Form of Proxy, all of the shares of
common stock of International Shipholding Corporation held of record by the
undersigned on March 1, 2004, at the annual meeting of stockholders to be held
on April 28, 2004, or any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
ANNUAL MEETING OF STOCKHOLDERS OF
INTERNATIONAL SHIPHOLDING CORPORATION
APRIL 28, 2004
PLEASE DATE, SIGN AND MAIL YOUR PROXY COMPANY NUMBER ___________
CARD IN THE ENVELOPE PROVIDED AS SOON AS ACCOUNT NUMBER ___________
POSSIBLE.
- Please Detach and Mail in the Envelope Provided -
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. Election of Directors:
NOMINEES:
[ ] FOR ALL NOMINEES - Niels W. Johnsen
- Erik F. Johnsen
[ ] WITHHOLD AUTHORITY - Niels M. Johnsen
FOR ALL NOMINEES - Erik L. Johnsen
- Harold S. Grehan, Jr.
[ ] FOR ALL EXCEPT - Edwin Lupberger
(See instructions below) - Raymond V. O'Brien, Jr.
- Edward K. Trowbridge
- H. Merritt Lane III
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: -
2. Proposal to ratify the appointment of Ernst & Young LLP, certified
public accountants, as the independent auditors for the Corporation for the
fiscal year ending December 31, 2004.
FOR ___________ AGAINST ___________ ABSTAIN___________
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 and 2.
To change the address on your account, please check the box at right and
indicate your new address in the space above. Please note that changes to the
registered name(s) on the account may not be submitted via this method. [ ]
Signature of Stockholder _________________________ Date:____________
Signature of Stockholder _________________________ Date:____________
NOTE: This proxy must be signed exactly as the name appears hereon. When shares
are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If the signer is a partnership, please sign
in partnership name by authorized person.