Highlights Urgent Need for An Independent
Director Perspective to Address Genco’s Persistent Underperformance
and Unlock Value for Shareholders
Outlines Concerns with Chairman James Dolphin’s
Outsized Influence in the Genco Boardroom
Urges Shareholders to Vote FOR the Election of
GK Investor Nominee Robert Pons on the BLUE Universal Proxy Card
and WITHHOLD on Genco Board Chairman James Dolphin
GK Investor LLC (“GK”), an
affiliate of George Economou that is an approximately 5.3%
shareholder of Genco Shipping & Trading Limited (“Genco” or the “Company”) (NYSE: GNK), today announced that it has
filed its definitive proxy statement with the U.S. Securities and
Exchange Commission in connection with Genco’s 2024 Annual Meeting
of Shareholders (the “Annual
Meeting”), scheduled for May 23, 2024. In addition, GK is
sending a letter to the Company’s shareholders which can be found
below.
April 18, 2024
Dear Fellow Shareholder:
GK Investor LLC is a top five shareholder in Genco Shipping
& Trading Limited (“Genco” or the
“Company”) (NYSE: GNK), owning
approximately 5.3% of the Company’s shares. For years, Genco’s
share price has consistently lagged significantly behind the
Company’s net asset value. In our view, this is a direct result of
the failure of the current Board of Directors (the “Board”) to take actions – in particular with
respect to capital allocation – that are in the best interests of
all shareholders. Chief among these is the Board’s resistance to
returning a sufficient amount of its excess cash to shareholders,
Genco’s owners, when, in our view, the Board has failed to
articulate a credible alternative use for that cash.
Over the last several months, we have in good faith attempted to
engage constructively with the Board to air our concerns and share
our views about how to reverse the Company’s persistent
underperformance. Unfortunately, our good faith efforts have not
only been ignored but also have been met with hostility and
Kabuki-theater “engagement” by the Board. In fact, the Company’s
response to our very first communication copied a litigator.
In light of the Board’s intransigence – especially on the part
of long-time director and Chairman James Dolphin – we have
nominated a highly qualified and independent individual, Robert
Pons, for election to the Board at the upcoming Annual Meeting of
Shareholders (the “Annual Meeting”).
Further, we are urging shareholders to vote WITHHOLD on Mr. Dolphin. Now is the time for shareholders to send a clear message
that change is needed.
Mr. Pons possesses deep technology, operational and corporate
governance experience and would bring fresh thinking and a true
sense of urgency around necessary actions to improve value for
shareholders. In our view, his perspective will go a long way
towards encouraging real debate in the boardroom, in contrast to
the seemingly domineering presence of Mr. Dolphin.
We urge you to vote on the BLUE
universal proxy card today FOR the
election of Mr. Pons to the Board and WITHHOLD on Mr. Dolphin’s re-election as a
director. Below we provide further details on our thesis for
change.
Genco’s Persistent Underperformance
Genco’s shares have consistently traded at a discount to the
Company’s net asset value. In our view, this is because the Board
has not utilized its significant cash position and cash flow to put
in place shareholder-friendly actions to improve value. Such
actions could have included share buybacks on the open market or
via issuer tender offers, for example. This has negatively impacted
shareholder value in the short term, preventing shareholders from
realizing the benefits that would flow from a buyback program, and
in the long term, by creating the assumption in the market that the
Company is unlikely to pursue such initiatives in the future.
An Overbearing Chairman
We believe that the Board, and in particular Mr. Dolphin, has
shown a disregard for shareholders’ best interests by refusing to
take steps that could set the Company on a better path and ensure
that its share price more appropriately reflects the value of its
underlying assets and business operations. Based on our and our
nominee’s interactions with the Board to date, we believe that Mr.
Dolphin commands the Board with an iron fist. He has been a
director for a decade, has little alignment with shareholders given
his low ownership of Genco shares (see Table 1 below), and has
little tolerance for dissenting opinions and shareholder input. We
believe that the rest of the Board has fallen into line with Mr.
Dolphin, and that as a result, the Board does not engage in
sufficiently robust debate about the best ways to improve value for
shareholders. A board chairman is supposed to keep order and help
facilitate an environment for good decision-making – not use his
powers to exercise complete dominion. Boardrooms do not need
kings.
Table 1
Shares of Common Stock
Beneficially Owned1
Name and Address of Beneficial
Owner
Number
Percentage
...
...
...
James G. Dolphin
-(2)(3)
-
...
...
...
(2) Does not include 102,216 shares of
common stock that may be issuable in settlement of vested
restricted stock units, including additional restricted stock units
granted in lieu of cash dividends, or 15,340 shares of common stock
that may be issuable in settlement of restricted stock units
granted on May 16, 2023, and additional restricted stock units
subsequently granted in lieu of cash dividends that generally vest
on the earlier of (i) the date of the 2024 Annual Meeting and (ii)
the date that is fourteen months after the date of the grant.
(3) Each restricted stock unit represents
the right to receive one share of our common stock, or in the sole
discretion of our Compensation Committee, the value of a share of
common stock on the date that the restricted stock unit vests.
Our Solution
Removing Mr. Dolphin would, in our view, catalyze the free
exchange of ideas at the Board level and thereby improve
decision-making – to the benefit of all shareholders. It would also
send a clear message to the rest of the incumbent Board members
that they should seek – not oppose – shareholder engagement,
carefully consider investor perspectives and actively take steps
that are in the best interests of all shareholders.
Further, we believe that the addition of a new independent voice
is imperative. Our nominee, Robert Pons would be additive in the
boardroom and would help address Genco’s lagging performance. He
would bring significant operational know-how, and technology and
corporate governance experience based on his numerous executive
leadership roles and public company directorships. Given that Mr.
Pons has served on the boards of 16 publicly traded companies, we
have no doubt that he would utilize his experience to be
immediately additive in the Genco boardroom. We are also confident
that he would be a strong and reliable advocate for shareholder
interests on a Board whose members generally own very little
Company stock.
While the Board will point to its appointment of Paramita Das as
a new director last month, we believe this does not represent
sufficient change. Bear in mind, Ms. Das was selected by an
entrenched Board that has refused to give a fair hearing to
shareholders – and this action was only taken in reaction to our
public involvement. Furthermore, a subsidiary of Ms. Das’ most
recent employer, Rio Tinto, was listed as Genco’s top customer for
vessel charters, accounting for 16.1% of voyage revenues in 2023.4
We believe a Genco boardroom refresh needs an independent advocate
for long-suffering shareholders rather than one of the Company’s
best customers. Additional independent Board representation is
needed to ensure the status quo does not persist.
***
Change is needed on the Genco Board, and it is needed now.
Adding an independent director nominated by a large shareholder to
the Board and removing Mr. Dolphin will create a Board environment
that we believe can lead to meaningfully improved value for the
Company’s investors.
Sincerely,
George Economou
VOTE TODAY ON THE BLUE PROXY CARD FOR
ROBERT M. PONS AND WITHHOLD ON JAMES
DOLPHIN
IF YOU HAVE ANY QUESTIONS ABOUT HOW TO VOTE
YOUR SHARES, PLEASE CONTACT OUR PROXY SOLICITOR USING THE
INFORMATION BELOW:
Innisfree M&A Incorporated 501
Madison Avenue, 20th Floor New York, New York 10022
Shareholders Call Toll-Free: +1 (888) 750-5884
Banks, Brokers, Trustees and Other Nominees Call Collect: (212)
750-5833
Appendix – Robert Pons
Biography
Robert Pons is President and CEO of Spartan Advisors, Inc., a
management consulting firm specializing in telecom and technology
companies. He was previously Executive Vice President of PTGi-ICS,
a wholly owned subsidiary of HC2 Holdings, Inc., a publicly traded
holding company operating subsidiaries in infrastructure, telecom,
construction, energy technology, gaming and life science.
Previously, he was Senior Vice President, Capital Markets, at TMNG
Global, a global consulting firm to technology, media,
communications and financial services companies. He also served in
senior management roles at technology companies including Uphonia,
Inc. (formerly SmartServ Online, Inc.) and FreedomPay. Mr. Pons has
served on the boards of 16 public companies and is currently a
director of Marpai, Inc. (NASDAQ: MRAI). He previously served as
Executive Chairman of Seachange International, Inc. (NASDAQ: SEAC)
as well as a director at CCUR Holdings, Inc. (OTCPK: CCUR), Alaska
Communications, Inc. and Inseego Corp. (NASDAQ: INSG), among
others. Mr. Pons received a B.A. with honors from Rowan
University.
Cautionary Statement Regarding
Forward-Looking Statements
This communication does not constitute an offer to sell or
solicitation of an offer to buy any of the securities described
herein in any state to any person. The information herein contains
“forward-looking statements.” Specific forward-looking statements
can be identified by the fact that they do not relate strictly to
historical or current facts and include, without limitation, words
such as “may,” “will,” “expects,” “believes,” “anticipates,”
“plans,” “estimates,” “projects,” “potential,” “targets,”
“forecasts,” “seeks,” “could,” “should” or the negative of such
terms or other variations on such terms or comparable terminology.
Similarly, statements that describe our objectives, plans or goals
are forward-looking. Forward-looking statements are subject to
various risks and uncertainties and assumptions. There can be no
assurance that any idea or assumption herein is, or will be proven,
correct or that any of the objectives, plans or goals stated herein
will ultimately be undertaken or achieved. If one or more of such
risks or uncertainties materialize, or if GK Investor LLC
(“GK”)’s underlying assumptions prove
to be incorrect, the actual results may vary materially from
outcomes indicated by these statements. Accordingly,
forward-looking statements should not be regarded as a
representation by GK that the future plans, estimates or
expectations contemplated will ever be achieved.
Certain statements and information included herein have been
sourced from third parties. GK does not make any representations
regarding the accuracy, completeness, or timeliness of such third
party statements or information. Except as may be expressly set
forth herein, permission to cite such statements or information has
neither been sought nor obtained from such third parties. Any such
statements or information should not be viewed as an indication of
support from such third parties for the views expressed herein.
Certain Information Concerning the
Participants
The participants in the proxy solicitation are GK, Sphinx
Investment Corp., Maryport Navigation Corp., Mr. George Economou
and Mr. Robert M. Pons (collectively, the “Participants”).
GK and the other Participants filed a definitive proxy statement
and accompanying BLUE proxy card (the “Definitive Proxy Statement”) with the Securities
and Exchange Commission (the “SEC”) on
April 17, 2024 to be used to solicit proxies for, among other
matters, the election of GK’s director nominee at the 2024 annual
meeting of shareholders of Genco Shipping & Trading Ltd. (the
“Company”) and the passage of the
Participants’ proposal to repeal, at the Company’s 2024 Annual
Meeting, certain bylaws of the Company passed after March 28,
2023.
Important Information and Where to Find
It
GK STRONGLY ADVISES ALL STOCKHOLDERS OF GENCO SHIPPING &
TRADING LIMITED TO READ THE DEFINITIVE PROXY STATEMENT, ANY
AMENDMENTS OR SUPPLEMENTS TO SUCH DEFINITIVE PROXY STATEMENT, AND
OTHER PROXY MATERIALS FILED BY GK AS THEY CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS ARE AVAILABLE AT NO CHARGE ON THE
SEC’S WEBSITE AT WWW.SEC.GOV. THE DEFINITIVE PROXY STATEMENT AND
ACCOMPANYING PROXY CARD WILL BE FURNISHED TO SOME OR ALL OF THE
COMPANY’S STOCKHOLDERS. STOCKHOLDERS MAY ALSO DIRECT A REQUEST TO
THE PARTICIPANTS’ PROXY SOLICITOR, INNISFREE M&A INCORPORATED,
501 Madison Avenue, 20th Floor, New York, New York 10022
(STOCKHOLDERS CAN CALL TOLL-FREE: +1 (888) 750-5884).
Information about the Participants and a description of their
direct or indirect interests by security holdings or otherwise can
be found in the Definitive Proxy Statement.
_________________________ 1Extract from the Beneficial Ownership
Table included in Genco’s 2024 definitive proxy statement. 4Genco’s
2023 Form 10-K.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240418094462/en/
Investor Arthur B. Crozier / Jonathan Kovacs Innisfree
M&A Incorporated acrozier@innisfreema.com /
jkovacs@innisfreema.com (212) 750-5837 / (212) 750-7923
Media Dan Zacchei / Joe Germani Longacre Square Partners
dzacchei@longacresquare.com / jgermani@longacresquare.com
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