Performance PRSU Grant Agreement dated April 14, 2023 between Genco Shipping & Trading Limited and John C. Wobensmith
Exhibit 10.5
Genco Shipping & Trading Limited
Performance PRSU Grant Agreement
THIS AGREEMENT, made as of April 14, 2023, between GENCO SHIPPING & TRADING LIMITED (the “Company”) and John C. Wobensmith (the “Participant”).
WHEREAS, the Company has adopted and maintains the Genco Shipping & Trading Limited Amended and Restated 2015 Equity Incentive Plan (the “Plan”) to provide certain key persons, on whose initiative and efforts the successful conduct of the business of the Company depends, with incentives to: (a) enter into and remain in the service of the Company, (b) acquire a proprietary interest in the success of the Company, (c) maximize their performance and (d) enhance the long-term performance of the Company;
WHEREAS, the Plan provides that the Board of Directors of the Company or a committee to which the Board of Directors has delegated such authority (the Board of Directors or such committee, as applicable, the “Administrator”) shall administer the Plan and determine the key persons to whom awards shall be granted and the amount and type of such awards;
WHEREAS, the Administrator has determined that the purposes of the Plan would be furthered by granting the Participant an award under the Plan as set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows:
(a)The performance period for the PRSUs shall be the period beginning January 1, 2023 and ending on December 31, 2025 (or, if earlier and as otherwise provided in this Agreement, the consummation of a Change in Control) (the “Measurement Period”). Subject to the terms and conditions of this Agreement, the number of PRSUs that shall be deemed earned and vested, if any, shall be determined based on the level of achievement of the performance metrics set forth on Exhibit A (such performance metrics, the “Performance Metrics”) over the Measurement Period, with the number of PRSUs that may be earned and vested ranging from zero to 200% of the Target PRSUs. Any PRSUs (and any related Dividend Equivalents) that are determined not to be earned and vested at the end of the Measurement Period shall be forfeited and cancelled for no value without further action of the Participant or the Company. For the purposes of this Agreement, Change in Control will have the meaning set forth in the Participant’s Employment Agreement with the Company dated as of September 21, 2007, as amended from time to time (the “Employment Agreement”), provided, however that subclauses (iv) and (v) of such definition shall not apply for purposes of this Agreement.
As soon as reasonably practicable following the end of the Measurement Period, the Committee shall determine the level of achievement of the Performance Metrics and the percentage of the Target PRSUs earned pursuant to such criteria (the date of such determination, the “Determination Date”). As soon as reasonably practicable following the Determination Date (but no later than March 15th of the year following the year in which the end of the Measurement Period occurs), all earned and vested PRSUs shall be settled.
(b)In the event of the occurrence of a Change in Control during the Measurement Period where the PRSUs are not assumed or exchanged for an equivalent substitute award by the Company or its successor:
(i) | If the Participant is employed by the Company as of the Change in Control, then (w) the effective date of the Change in Control shall be the last day of the Measurement Period, (x) the Participant shall earn and vest in the Target PRSUs as of the Change in Control as if the Performance Metrics had been achieved at the Target level set forth in Exhibit A, (y) such Target PRSUs shall be settled on the effective date of the Change in Control and (z) any PRSUs (and any related Dividend Equivalents) that do not become earned and vested on the Change in Control shall be forfeited and cancelled with no consideration. |
(ii) | If the Participant’s employment with the Company terminated before the Change in Control by the Company without cause (as defined in the Plan), by the Participant for Good Reason (as defined in the Employment Agreement), or on account of the Participant’s death or disability, then (w) the effective date of the Change in Control shall be the last day of the Measurement Period, (x) the Participant shall earn and vest in the Target PRSUs if such Change in Control has been consummated pursuant to a definitive agreement in effect at the time of such termination of employment or an alternative definitive agreement entered into subsequent to such original definitive agreement and shall otherwise earn and vest in the Pro Rata Portion (pursuant to Section 6(c)) of the Target PRSUs as of the Change in Control, in each case as if the Performance Metrics had been achieved at the Target level set forth in Exhibit A, (y) such Target PRSUs shall be settled on the effective date of the Change in Control and (z) any PRSUs (and any related Dividend Equivalents) that do not become earned and vested on the Change in Control shall be forfeited and cancelled with no consideration. |
(c)In the event of the occurrence of a Change in Control during the Measurement Period where the PRSUs are assumed or exchanged for an equivalent substitute award by the Company or its successor and either (1) the Participant remains employed by the Company on the date that is six (6) months after the date of such Change in Control (the “6-Month Anniversary Date”) or (2) after the Change in Control but before the 6-Month Anniversary Date, the Participant’s Service with the Company is terminated by the Company without cause (as defined in the Plan), by the Participant for Good Reason (as defined in the Employment Agreement), or on account of the Participant’s death or disability, then (to the extent not previously vested in accordance with Section 4(a) or Section 6(b)), (i) the 6-Month Anniversary Date shall be the last day of the Measurement Period, (ii) the Target PRSUs shall be earned and vested as of the 6-Month Anniversary Date if the preceding clause (1) applies or as of the date of termination of the Participant’s Service if the preceding clause (2) applies, in each case as if the Performance Metrics had been achieved at the Target level set forth in Exhibit A, (iii) such Target PRSUs shall be settled within thirty days of the 6-Month Anniversary Date if the preceding clause (1) applies or within thirty days of the date of termination of the Participant’s Service if the preceding clause (2) applies and (iv) any PRSUs (and any related Dividend Equivalents) that do not become earned and vested on the 6-Month Anniversary Date shall be forfeited and cancelled with no consideration.
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(a)In the event that the Participant’s Service with the Company terminates for any reason other than a termination by the Company without cause (as defined in the Plan), by the Participant for Good Reason (as defined in the Employment Agreement), or the Participant’s death or disability (as defined in the Plan) prior to the end of the Measurement Period, all unvested PRSUs, together with any Dividend Equivalents related to such PRSUs, as set forth in Section 9 hereof, shall be forfeited as of the date such Service terminates and the Participant shall not be entitled to any compensation or other amount with respect to such forfeited PRSUs. For purposes hereof, “Service” means a continuous time period during which the Participant is at least one of the following: an employee or a director of, or a consultant to, the Company. For the avoidance of doubt, no resignation by the Participant as a director following termination of the Participant’s employment by the Company without cause shall be deemed a resignation by the Participant subject to this Section 6(a).
(b)In the event that during the Measurement Period the Participant’s Service as an employee of the Company is terminated by the Company without cause (as defined in the Plan) or by the Participant for Good Reason (as defined in the Employment Agreement), within twelve (12) months after completion of any merger, consolidation, reorganization or similar event of the Company or any of its subsidiaries, as a result of which (A) if the Company is the surviving entity, the Company issues securities representing more than thirty-five percent (35%) of the voting power of the voting securities of the Company prior to such transaction or (B) if the Company is not the surviving entity, the holders of the voting stock of the Company immediately prior to such merger, consolidation, reorganization or similar event do not directly or indirectly hold at least sixty-five percent (65%) of the aggregate voting power of the voting securities of the surviving entity, then (i) the date of such termination of employment shall be the last day of the Measurement Period, (ii) the Target PRSUs shall be earned and vested as of the date of such termination of employment as if the Performance Metrics had been achieved at the Target level set forth in Exhibit A, (iii) such Target PRSUs shall be settled within thirty days of the termination of employment and (iv) any PRSUs (and any related Dividend Equivalents) that do not become earned and vested on the date of such termination of employment shall be forfeited and cancelled with no consideration.
(c)Except as provided in Sections 4(b), 4(c) and 6(b) hereof, in the event that, before the end of the Measurement Period, the Participant’s Service with the Company is terminated by the Company without cause (as defined in the Plan), by the Participant for Good Reason (as defined in the Employment Agreement), or on account of the Participant’s death or disability, a “Pro Rata Portion” of the Participant’s PRSUs shall remain outstanding during the Measurement Period and shall vest and such Pro Rata Portion shall be settled, if and to the extent the Performance Metrics are achieved, as set forth in Sections 4 and 7. For purposes hereof, “Pro Rata Portion” shall be based on a calculation where the numerator is the number of completed months that have elapsed between the first day of the Measurement Period through the date of termination of the Participant’s Service and the denominator is 36.
(a)All earned and vested PRSUs shall be settled by the Company’s issuance and delivery to the Participant of a number of shares of Common Stock equal to the number of vested PRSUs or, in the discretion of the Administrator, by the payment of an amount in cash equal to the Fair Market Value of such shares of Common Stock (with Fair Market Value determined as of the Determination Date.
(b)Notwithstanding the above, if the Participant is subject to any Company “blackout” policy or other trading restriction imposed by the Company on the date such distribution would otherwise be made pursuant to Section 7(a) hereof and the shares in such distribution are not subject to a trading plan to which the Recipient and the Company are parties adopted under Rule 10b5-1 promulgated under the Securities Exchange Act of 1934, amended, pursuant to which at least an approximately sufficient number of such shares (in the discretion of the administrator) are to be sold at the time of such distribution to cover the Participant’s
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tax obligations with respect to such distribution, such distribution shall instead be made on the earlier of (i) the date that the Participant is not subject to any such policy or restriction and (ii) the later of (1) the last business day of the calendar year in which the vesting in respect of such distribution occurred and (2) the 90th day after the date of the vesting in respect of such distribution (or, if such 90th day is not a business day, the immediately preceding business day).
(b) The Participant shall not be deemed for any purpose to be, or have rights as, a shareholder of the Company by virtue of the grant of PRSUs, unless and until shares of Common Stock are issued to the Participant in respect of such PRSUs.
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(a) Notwithstanding any other provisions in this Agreement, in the event that any payment or benefit received or to be received by the Participant (including, but not limited to, any payment or benefit received in connection with a change in control of the Company or the termination of the Participant’s employment, whether pursuant to the terms of this Agreement or any other plan, program, arrangement or agreement) (all such payments and benefits, together, the “Total Payments”) would be subject (in whole or part), to any excise tax imposed under Section 4999 of the Code, or any successor provision thereto (the “Excise Tax”), then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments and the amount of Excise Tax to which the Participant would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).
(b)In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order: (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values
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are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata. Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity not subject to Section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to Section 409A as deferred compensation.
(c)For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax: (i) no portion of the Total Payments the receipt or enjoyment of which the Participant shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which, in the opinion of tax counsel (“Tax Counsel”) selected by the accounting firm which was, immediately prior to the change in control, the Company’s independent auditor (the “Auditor”), does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including, but not limited to, by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as set forth in Section 280G(b)(3) of the Code) that is allocable to such reasonable compensation; and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments will be determined by the Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. All determinations required by this Section 18 will be at the expense of the Company.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer, and the Participant has hereunto signed this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement and the Plan as of the day and year first written above.
GENCO SHIPPING & TRADING LIMITED | ||
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By: | /s/ Joseph Adamo | |
Name: | Joseph Adamo | |
Title: | Chief Accounting Officer | |
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/s/ John C. Wobensmith | ||
JOHN C. WOBENSMITH | ||
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Exhibit A
50% of the Target PRSUs vest based on Relative Total Shareholder Return (“rTSR”) and 50% of the Target PRSUs vest based on Return on Invested Capital (“ROIC”), as provided below:
Performance Metric |
| Award Weighting |
| Threshold |
| Target |
| Stretch |
rTSR | 50% | 25rd Percentile | 55th Percentile | 85th Percentile | ||||
ROIC | 50% | 3.0% | | 7.0% | 11.0% | |||
Percent of Target PRSUs Earned | 25% | | 100% | 200% |
If the level of performance achievement is between two of these identified levels of performance (i.e., between Threshold and Target or between Target and Stretch), the actual amount of the PRSUs that is earned will be “interpolated” in a linear progression between such goals.
For avoidance of doubt, failure to achieve Threshold of one Performance Metric (i.e., failure to achieve threshold for rTSR or failure to achieve threshold for ROIC) shall not result in the forfeiture of the PRSUs subject to the Performance Metric that is achieved.
For purposes of this Agreement, the following terms shall have the following meanings:
“Peer Group” shall mean Eagle Bulk Shipping Inc., Star Bulk Carriers Corp., Diana Shipping Inc., Golden Ocean Group Limited, Safe Bulkers, Inc., Pacific Basin Shipping Limited, Pangaea Logistics Solutions Ltd., Belships ASA, Seanergy Maritime Holdings Corp., Taylor Maritime Investments Limited, 2020 Bulkers Ltd., and Thoresen Thai Agencies Plc. Any members of the Peer Group that become acquired are removed from the Peer Group.
“rTSR” shall be based on share price for the Peer Group measured at the end of the Measurement Period based on a twenty (20) trading day average plus dividends paid (assumed to be reinvested) compared to the share price for the Peer Group at the start of the Measurement Period based on a twenty (20) day trading average. Any Peer Group member that enters bankruptcy, liquidation, or delisting is assumed to be -100%.
“ROIC” is an internally adjusted ratio based on Net Operating Profit After Taxes (NOPAT) / (debt + equity - cash) and is averaged for each year during the Measurement Period.
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