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
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INTERNATIONAL SHIPHOLDING CORPORATION
(Name of Registrant as Specified In Its Charter)
__________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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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 26, 2006, at 10:00 a.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, 2006; 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 February 28, 2006, 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 14, 2006
INTERNATIONAL SHIPHOLDING CORPORATION
17th Floor
Poydras Center
650 Poydras Street
New Orleans, Louisiana 70130
________________________
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 26, 2006, at 10:00 a.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 14, 2006.
Only holders of record of the Corporation’s Common Stock at the close of business on February 28, 2006, are entitled to notice of and to vote at the meeting. On that date, the Corporation had outstanding 6,112,087 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.
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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.
Name and Address | Amount and Nature of Beneficial Ownership | Percent of Class | ||||
T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, Maryland 21202 | 916,062 (1) | 15.05% | ||||
Franklin Resources, Inc. One Franklin Parkway San Mateo, California 94403 | 474,800 (2) | 7.80% | ||||
Donald Smith & Co., Inc. 152 West 57th Street New York, New York 10019 | 387,979 (3) | 6.37% | ||||
Dimensional Fund Advisors Inc. 1299 Ocean Avenue, 11th Floor Santa Monica, California 90401 | 326,984 (4) | 5.37% | ||||
(1)
Based on information contained in Schedule 13G as of December 31, 2005, filed jointly with T. Rowe Price Small-Cap Value Fund, Inc. (which holds sole voting power with respect to 912,562 shares, representing 14.99% 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. 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, 2005, 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 474,800 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, 2005. Donald Smith & Co., Inc. is a registered investment advisor and has sole voting power with respect to 266,779 shares and sole dispositve power with respect to all 387,979 shares.
(4)
Based on information contained in Schedule 13G as of December 31, 2005. 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.
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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, 2006, 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. Unless otherwise indicated, the shares of the Corporation's Common Stock shown as being beneficially owned are held with sole voting and investment power.
The only executive officer named in the Summary Compensation Table who is not also a nominee for director is Manuel G. Estrada, 51, Vice President and Chief Financial Officer, who does not beneficially own any shares of the Corporation’s Common Stock.
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, Lane, Lupberger, O’Brien, and Trowbridge, have no relationship with the Corporation 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
Director
Shares of Common Stock Percent
Directorship in Other Public Corporations
Since
Beneficially Owned of Class (1)
Niels W. Johnsen, 83 (2)(3) . . . . . . . . . . . . . . . . . . . .
1979
879,107 (4)
14.38%
Formerly Chairman of the Board and
Chief Executive Officer of the Corporation
One Whitehall Street
New York, New York 10004
Erik F. Johnsen, 80 (3)(5) . . . . . . . . . . . . . . . . . . . . . .
1979
567,528 (6)
9.29%
Chairman of the Board and
Chief Executive Officer of the Corporation
650 Poydras Street, Suite 1700
New Orleans, Louisiana 70130
Niels M. Johnsen, 60 (3)(7) . . . . . . . . . . . . . . . . . . . . 1988
561,353 (8)
8.89%
President of the Corporation
One Whitehall Street
New York, New York 10004
Erik L. Johnsen, 48 (3)(9) . . . . . . . . . . . . . . . . . . . . .
1994
275,090 (10)
4.36%
Executive Vice President of the Corporation
650 Poydras Street, Suite 1700
New Orleans, Louisiana 70130
(continued on page 4)
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Name, Age, Principal Occupation, and
Director
Shares of Common Stock Percent
Directorship in Other Public Corporations
Since
Beneficially Owned of Class (1)
Harold S. Grehan, Jr., 78 (11) . . . . . . . . . . . . . . . . . . .
1979
85,518
1.40%
Formerly Vice President of the Corporation
Edwin Lupberger, 69 (12) . . . . . . . . . . . . . . . . . . . . . .
1988
1,728
*
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., 78 (13) . . . . . . . . . . . . . . .
1979
1,000
*
Formerly Chairman of the Board and Chief
Executive Officer of Emigrant Savings Bank
Edward K. Trowbridge, 77 (14) . . . . . . . . . . . . . . . . .
1994
625 (15)
*
Formerly Chairman of the Board and Chief
Executive Officer of Atlantic Mutual Companies
H. Merritt Lane, III, 44 (16) . . . . . . . . . . . . . . . . . . . .
2004
0
*
President, Chief Executive Officer, and a director
of Canal Barge Company, Inc.
All executive officers and directors as a group (10 persons)
2,147,327
32.97%
(1)
Shares subject to currently exercisable options are deemed to be outstanding for purposes of computing the percentage of outstanding shares of the Corporation’s 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. Shares reported in this table include 400,000 shares subject to currently exercisable options that are beneficially owned by Niels M. Johnsen (200,000) and Erik L. Johnsen (200,000). An asterisk indicates ownership of less than 1% of the Corporation’s Common Stock.
(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.
(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 Family Limited Partnership of which Mr. Johnsen is General Partner and 53,812 shares owned by the Erik F. Johnsen Family Foundation of which he claims no beneficial ownership but maintains voting and disposition rights.
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(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 of each of the Corporation’s principal subsidiaries, except Waterman Steamship Corporation for which he serves as President. Mr. Johnsen has been a trustee and 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 of each of the Corporation’s principal subsidiaries, except Waterman Steamship Corporation for which he serves as Executive Vice President.
(10)
Includes 15,550 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 February 24, 2006, Niels W. Johnsen, Erik F. Johnsen, and their spouses, children, and grandchildren (collectively, the “Johnsen Family”) beneficially owned an aggregate of 2,373,654 shares or 36.45% 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.
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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, Messrs. Grehan, Lane, Lupberger, O'Brien, and Trowbridge, who are all independent under the NYSE listing standards. The Compensation Committee is composed of Messrs. Lane, Lupberger, O’Brien, and Trowbridge.
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 internal audit personnel 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 2005.
The Compensation Committee, which is comprised solely of independent directors, discharges the Board’s responsibilities related to the CEO’s compensation and makes recommendations to the Board with respect to non-CEO executive compensation. The Compensation Committee also administers the Corporation’s Stock Incentive Plan and makes decisions on the grant of stock options. Mr. O’Brien is the chairperson of this committee. The Compensation Committee met twice during 2005.
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 stockholders; 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 Corporation’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 Corporation’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 Proxy Statement. Mr. Trowbridge is the chairperson of this committee. The Nominating and Governance Committee met once during 2005.
The Charters of the Audit Committee, Compensation Committee, and Nominating and Governance Committee are available on the Investor Relations section of the Corporation’s website at www.intship.com and can be obtained in print without charge by writing to International Shipholding Corporation, Attention: Manuel G. Estrada, Vice President, 1700 Poydras Center, 650 Poydras Street, New Orleans, LA 70130.
Each non-officer director other than Niels W. Johnsen was paid $36,000 for services provided during 2005 except that Mr. Grehan was paid $34,000. These payments included an annual fee of $25,000 and fees of $1,000 for each meeting of the Board or a committee thereof attended. There were four Board meetings and seven committee meetings during 2005. All non-officer directors other than Niels W. Johnsen are members of each of the committees and attended each committee meeting except that Mr. Grehan is not a member of the Compensation Committee, which met twice during 2005. Directors are expected to attend the annual meeting of the Corporation’s stockholders, and all did attend the 2005 annual meeting. 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 2005.
Since his retirement as Chairman of the Board and Chief Executive Officer in 2003, Niels W. Johnsen has provided consulting services in the areas of vessel chartering and finance to the Corporation. The consulting agreement in place during 2005 expired December 31, 2005 and was renewed January 1, 2006 for an additional year with the same terms. Mr. Johnsen was paid an annual fee of $125,000 during 2005 under this agreement. Additionally, when Mr. Johnsen served as CEO, the Corporation entered into an agreement with him whereby his estate will be paid approximately $822,000 upon his death. The Corporation has reserved amounts sufficient to fund this death benefit.
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The non-management members of the Board met four times in executive sessions during 2005. All of the non-management directors, including Messrs. Grehan, Lane, Lupberger, O’Brien, and Trowbridge, attended all four sessions. During 2005, selection of the presiding director at these meetings followed the established procedure by which the role of presiding director rotates in order among the non-management directors.
Stockholders 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. Stockholders who wish to communicate directly with the non-management members of the Board of Directors as a group should direct their correspondence to: International Shipholding Corporation, Attn: Non-Management Members of the Board of Directors (c/o Director of Internal Audit), 650 Poydras Street Suite 1700, New Orleans, LA 70130. The Director of Internal Audit will not share such communications or their subject matter with the Corporation’s management and will provide all such communications to the non-management director who will preside at the next scheduled executive session of non-management directors, prior to that meeting.
The Board has adopted a Code of Business Conduct and Ethics for Officers, Directors and Employees, including the Corporation’s principal executive officer, principal financial officer, and principal accounting officer, and has adopted Corporate Governance Guidelines. These are available on the Investor Relations section of the Corporation’s website at www.intship.com and can be obtained in print without charge by writing to International Shipholding Corporation, Attention: Manuel G. Estrada, Vice President, 1700 Poydras Center, 650 Poydras Street, New Orleans, LA 70130.
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, 2005, we have (i) reviewed and discussed with management the audited financial statements as of and for the year ended December 31, 2005, (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, 2005.
Submitted by the Audit Committee members:
Harold S. Grehan, Jr., H. Merritt Lane, III, Edwin Lupberger, Raymond V. O’Brien, Jr., and Edward K. Trowbridge
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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, 2005 and 2004:
2005 | 2004 | ||
Audit Fees (1) | $ 357,182 | $ 429,400 | |
Audit Related Fees (2) | 32,050 | 35,815 | |
Tax Fees (3) | 22,100 | 53,400 | |
Total Fees | $ 411,332 | $ 518,615 |
(1)
Audit Fees include fees for the audit of the Corporation’s consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports, services related to statutory audits of certain of the Corporation’s subsidiaries, and assistance with a registration statement filed with the Securities & Exchange Commission (“SEC”) related to the Corporations’s preferred stock offering. During 2004, Audit Fees also included fees for assistance with responses to comments received from the SEC during a routine review. In addition, the 2004 fees were revised compared to what was disclosed in the 2004 proxy statement for subsequent fees incurred for U.S. GAAP financial statements of one of the Company’s foreign unconsolidated subsidiaries which were needed for filing in the Company’s Form 10-K/A. The 2005 fees do not include future audit fees that will be incurred for the same services related to foreign unconsolidated subsidiaries.
(2)
Audit Related Fees include fees for audits of the Corporation’s employee benefit plans and fees for assistance with determining the accounting implications of the changes in tax regulations resulting from the American Jobs Creation Act of 2004.
(3)
Tax Fees include fees for tax compliance and consulting services.
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, 2005.
The Audit Committee determined that the provision of services discussed above is compatible with maintaining the independence of Ernst & Young LLP from the Corporation.
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EXECUTIVE COMPENSATION
The Compensation Committee, which is made up solely of independent directors, discharged the Board’s responsibilities related to the CEO’s compensation and made recommendations to the Board with respect to non-CEO executive compensation for 2005. 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 2005.
Board of Directors and Compensation Committee Report on Executive Compensation
The Corporation’s executive compensation structure for 2005 was comprised of salaries and cash bonuses. The salary of Erik F. Johnsen, Chairman of the Board and Chief Executive Officer, was increased by $10,000 and set at $340,000 by the Compensation Committee in 2005. The Compensation Committee recommended and the Board approved salary increases for the other executive officers.
The Board believes that a portion of executive compensation should be tied to corporate performance. Accordingly, the Bonus Plan for 2005 (the “2005 Plan”) adopted by the Board was based on the achievement of certain quarterly and annual profit levels by the Corporation. The 2005 Plan offered an opportunity for all eligible employees, including the executive officers, to earn incentive cash bonuses of up to four weeks of their annual salaries. The target profit levels for the first and second quarters of 2005 were achieved resulting in two weeks bonus being earned by all eligible employees.
The Board and the Compensation Committee believe that the compensation paid to the executive officers of the Corporation is reasonable.
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.,
H. Merritt Lane, III*, Edwin Lupberger*, Raymond V. O’Brien, Jr.*, and Edward K. Trowbridge*
*Member of the Compensation Committee
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Summary of Compensation
The following table sets forth for the fiscal years ended December 31, 2003, 2004, and 2005, the compensation paid by the Corporation with respect to the Chief Executive Officer and the other executive officers of the Corporation who served during 2005, except for Gary L. Ferguson who retired from his position as Vice President and Chief Financial Officer on June 30, 2005. The four individuals included in the table represent all executive officers of the Corporation at the end of 2005.
Summary Compensation Table | |||||||||
Annual Compensation | All Other | ||||||||
Name and Principal Position | Year | Salary | Bonus | Compensation | |||||
Erik F. Johnsen, | 2005 | 340,000 | 13,077 | 17,132 | (1) | ||||
Chairman of the Board and Chief Executive | 2004 | 330,000 | 25,385 | 17,132 | (1) | ||||
Officer of the Corporation | 2003 | 330,000 | - | 17,132 | (1) | ||||
Niels M. Johnsen, | 2005 | 320,000 | 12,308 | 1,000 | (2) | ||||
President of the Corporation | 2004 | 300,000 | 23,077 | 1,000 | (2) | ||||
2003 | 272,950 | 20,996 | 1,000 | (2) | |||||
Erik L. Johnsen, | 2005 | 300,000 | 11,539 | 1,000 | (2) | ||||
Executive Vice President of the Corporation | 2004 | 275,000 | 21,154 | 1,000 | (2) | ||||
2003 | 221,450 | 17,350 | 1,000 | (2) | |||||
Manuel G. Estrada, | 2005 | 125,000 | (3) | 4,231 | 1,000 | (2) | |||
Vice President and Chief Financial Officer | 2004 | 110,000 | 8,462 | 1,000 | (2) | ||||
of the Corporation | 2003 | 103,000 | 7,923 | 1,000 | (2) | ||||
(1)
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.
(2)
Consists of contributions made by the Corporation to its 401(k) plan on behalf of the employee.
(3)
Mr. Estrada has served as Vice President and Chief Financial Officer of the Corporation since July 1, 2005. His annual salary was increased from $110,000 to $140,000 on that date. He previously served as Vice President and Controller.
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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 2005. The only persons named in the Summary Compensation Table who were employed by the Corporation at December 31, 2005 and who are not listed below, Erik F. Johnsen and Manuel G. Estrada, have never been granted options under the Stock Incentive Plan.
Aggregated Option Exercises During the Year Ended December 31, 2005 | ||||||||
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, 2005 | Options at | |||||
Name | on Exercise | Realized | Exercisable/Unexercisable | December 31, 2005 | ||||
Niels M. Johnsen | 0 | 0 | 200,000 / 0 | $ 285,000 | ||||
Erik L. Johnsen | 0 | 0 | 200,000 / 0 | $ 285,000 | ||||
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 the 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 | . . . . . . . . . . . | $ 19,753 | $ 26,337 | $ 32,922 | $ 39,506 | |||
150,000 | . . . . . . . . . . . | 32,128 | 42,837 | 53,547 | 64,256 | |||
200,000 | . . . . . . . . . . . | 44,503 | 59,337 | 74,172 | 89,006 | |||
250,000 | . . . . . . . . . . . | 56,878 | 75,837 | 94,797 | 113,756 | |||
300,000 | . . . . . . . . . . . | 69,253 | 92,337 | 115,422 | 138,506 | |||
350,000 | . . . . . . . . . . . | 81,628 | 108,837 | 136,047 | 163,256 | |||
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 2006, the maximum annual benefit generally is $175,000 under Code Section 415. Furthermore, under Code Section 401(a)(17), the maximum annual compensation that may be reflected in 2006 is $220,000. 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 2005 with a salary of $210,000, except that Mr. Estrada was credited with his actual salary. At December 31, 2005, such individuals had 53, 35, 26, and 27 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.
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BOARD OF DIRECTOR AND COMPENSATION COMMITTEE INTERLOCKS,
INSIDER PARTICIPATION IN COMPENSATION DECISIONS, AND CERTAIN TRANSACTIONS
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 2005.
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 2005 were $1,633,000. 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, 2005, of $156,600. 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, 2005, of $91,800. Compensation includes annual salaries and bonuses earned during 2005.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Corporation’s executive officers and directors, and persons who beneficially own more than ten percent of the Corporation’s common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors, and persons who beneficially own more than ten percent of the Corporation’s common stock are required by SEC regulations to furnish the Corporation with copies of all Section 16(a) forms they file.
Based solely upon review of the copies of reporting forms furnished to the Corporation, and written representations that no other reports were required, the Corporation believes all filing requirements under Section 16(a) of the Securities Exchange Act of 1934 applicable to directors, officers, and any persons holding more than ten percent of the Corporation’s common stock with respect to the fiscal year ended December 31, 2005, were satisfied on a timely basis.
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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-Nielsen, Sea Containers Limited, and Alexander and Baldwin) for the Corporation's last five fiscal years.
![[proxy06edgar002.gif]](proxy06edgar002.gif)
*Assumes $100 invested at the close of trading on the last trading day in 2000 in ISH common stock, the S&P 500, and the Industry Peer Group. Also assumes reinvestment of dividends.
![[proxy06edgar004.gif]](proxy06edgar004.gif)
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
The Corporation’s 2005 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, 2006, 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.
The Board of Directors recommends a vote FOR this proposal.
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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 Abstentions 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 stockholder 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.
Stockholder Proposals and Nominations
Any stockholder who desires to present a proposal qualified for inclusion in the Corporation's proxy material relating to the 2007 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 14, 2006. Proxies solicited on behalf of the Board for the 2007 annual meeting will confer discretionary authority to vote with respect to any other matter properly submitted by a stockholder for action at the 2007 annual meeting if the Corporation does not, on or before January 28, 2007, 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.
BY ORDER OF THE BOARD OF DIRECTORS
R. CHRISTIAN JOHNSEN
Secretary
New Orleans, Louisiana
March 14, 2006
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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 26, 2006, at 10:00 a.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 February 28, 2006, at the annual meeting of stockholders to be held on April 26, 2006, or any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
ANNUAL MEETING OF STOCKHOLDERS OF
INTERNATIONAL SHIPHOLDING CORPORATION
APRIL 26, 2006
PLEASE DATE, SIGN AND MAIL
YOUR PROXY CARD IN THE
ENVELOPE PROVIDED AS SOON
AS POSSIBLE.
¯ Please detach along perforated line 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
o Niels W. Johnsen
o Erik F. Johnsen
WITHHOLD AUTHORITY
o Niels M. Johnsen
FOR ALL NOMINEES
o Erik L. Johnsen
o Harold S. Grehan, Jr.
FOR ALL EXCEPT
o Edwin Lupberger
(See instructions below)
o Raymond V. O'Brien, Jr.
o Edward K. Trowbridge
o 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, 2006.
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 address 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: Please sign exactly as your name or names appear on this Proxy. 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.