Kirby Corp has filed this S-4 in connection with an acquisition of K-Sea Transportation Partners L.P. The joint proxy statement/prospectus includes a Dodd-Frank advisory say-on-pay golden parachute vote. The disclosures are pretty straightforward but others may want to add more of a sales pitch as to why shareholders should vote for the golden parachute compensation. Another disclosure worth adding may be that failure to approve the golden parachute compensation will not affect whether or not the merger is approved.
The agenda item for the vote is as follows:
In accordance with Section 14A of the Exchange Act, K-Sea is providing unitholders with the opportunity to cast an advisory vote on the compensation that may be payable to the K-Sea Management GP named executive officers in connection with the merger as reported on the Golden Parachute Compensation table on page 73. The K-Sea Board of Directors unanimously recommends that you vote “FOR” the proposal to approve the executive compensation payable in connection with the merger.
The “required vote” disclosure is as follows:
The advisory vote of K-Sea unitholders on the compensation to be received by K-Sea Management GP executive officers in connection with the merger will be approved if the holders of a majority of the outstanding K-Sea common units and outstanding K-Sea preferred units (voting on an as-converted to common units basis), voting together as a single class, vote “For” such proposal. This proposal is advisory in nature and will not be binding on K-Sea or the K-Sea Board of Directors.
The text of the required golden parachute disclosure under Rule S-K402(t) is fairly straight forward with the required table. We were expecting something more complex. Disclosures other than the table include the following (italics added):
The merger agreement provides that all K-Sea phantom units will vest upon the consummation of the merger. Each executive officer that holds K-Sea phantom units has the right to elect to receive either cash or a combination of cash and Kirby common stock in the merger as if such K-Sea phantom units were K-Sea common units.
Kirby agreed that K-Sea would amend the employment agreements with Timothy J. Casey, Richard P. Falcinelli and Thomas M. Sullivan to extend their terms by one year following the merger, and to provide severance benefits in the event their employment is terminated without cause or for good reason under such agreements. Under their existing employment agreements, the severance that each of Messrs. Casey, Falcinelli and Sullivan would receive if they were terminated following a change in control is 3.5 times his base salary at the time of termination or resignation. Severance may be paid in a lump sum or in installments at the discretion of K-Sea. In addition, K-Sea would make COBRA payments on such officer’s behalf for a period of one year.
Kirby has agreed that if Terrence P. Gill or Gregg Haslinsky are terminated without cause or they terminate their employment for good reason within one year following the merger, they will be entitled to eighteen months’ base salary and target bonus as severance, payable in a lump sum. For this purpose, good reason means (a) a material diminution in scope of responsibilities as in effect immediately prior to the merger, (b) material diminution in compensation opportunities, or (c) relocation of the officer’s principal work location by 75 miles or more.
None of Kirby’s executive officers will receive any type of golden parachute compensation that is based on or otherwise relates to the merger.
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