KEX Kirby Corporation

March 3, 2021

DEAR FELLOW STOCKHOLDERS,

On behalf of the Board of Directors (the “Board”), we cordially invite you to attend Kirby Corporation’s (“Kirby” or the “Company”) 2021 Annual Meeting of Stockholders. Information concerning the matters to be voted upon at the meeting is contained in this Notice of the 2021 Annual Meeting and our Proxy Statement.

There is no doubt that 2020 was a memorable year and one most of us would like to forget. While the year certainly presented many challenges which greatly impacted both our marine transportation and distribution and services businesses, Kirby employees proved to be very resilient. As much of the world shut down upon the onset of the COVID-19 pandemic, I’m pleased to say that our businesses continued to operate seamlessly, fulfilling their roles transporting and providing essential goods and services. I credit this success not only to our pandemic response plan, which was designed to ensure business continuity, uninterrupted customer service, and the safety of our employees, but also to the resilience and commitment of our employees.

In marine transportation, we began the year with record barge utilization and a continued focus on improving our fleet through the acquisition of 92 inland tank barges with approximately 2.5 million barrels of capacity and 45 inland towboats from Savage Inland Marine. However, as the COVID-19 outbreak intensified, our focus quickly shifted to responding to the unprecedented decline in market activity while keeping our employees safe and enhancing our financial position. As if the pandemic wasn’t enough, our marine operations were faced with a historic hurricane season, which brought significant disruption to the waterways. Our mariners and shore-side employees responded well, and Kirby overcame the storms without any incidents or major damage. Overall, the year brought many challenges to the forefront, but our marine companies kept our boats fully crewed, improved their safety record, and aggressively managed their costs.

In distribution and services, reduced economic activity and historically low oil prices significantly impacted our operations and the markets we serve. In response to the depressed market conditions, we made some tough, but necessary decisions to streamline our businesses and significantly reduce our cost structure. Combined with some economic recovery in the second half of the year, our actions helped to restore the segment’s operating margin back to near break-even levels. As well, during the year we acquired the Thermo King distributor in North and East Texas and Colorado, and we made significant progress on some key initiatives including: implementation of a single ERP system, launch of a new digital sales platform – DieselDash.com, further development of new environmentally friendly product offerings, and renewals and expansions of major OEM relationships.

I’m also pleased to report that we made considerable progress in our Environmental, Social, and Governance (“ESG”) journey during 2020. Most notably, we significantly enhanced our disclosures, including alignment with the Sustainability Accounting Standards Board (“SASB”) framework, as well as reporting our greenhouse gas emissions and targets. We also recently published our first report on climate risks in accordance with the Task Force on Climate-Related Financial Disclosures (“TCFD”). From a social perspective, we rolled out a new Core Values program, “The Kirby Way”; provided new disclosures on diversity and human capital management; and we also strengthened our ethical standards through updated guidelines and policies. In governance, we listened to your feedback on our executive compensation programs, and as a result, we have implemented changes to our metrics for 2021 and added a definitive clawback policy. We also elected Richard J. Alario to be our first Lead Independent Director during the year.

Overall, 2020 was a challenging year, but Kirby responded and our Company is stronger now than it was at the beginning of 2020. Our executive team and employees rose to the occasion and ensured our resiliency in a tough year. Through their determination and commitment, we focused on the things we could control, provided uninterrupted customer service, improved our safety performance, and enhanced disclosures to our stakeholders. Looking ahead, with the vaccine distribution now well underway, as well as improving economic activity, we believe better days are ahead for Kirby with increased demand for our businesses and the industries we serve.

Your vote is important to us, regardless of the number of shares you hold or whether you plan to attend the meeting. Once you have reviewed the proxy materials and have made your decision, please vote your shares using one of the methods outlined in the Proxy Statement. Thank you for your continued support and for investing in Kirby Corporation.

		Sincerely,     DAVID W. GRZEBINSKI President and Chief Executive Officer

PROXY MATERIALS

This booklet contains the notice of the Annual Meeting and the Proxy Statement, which contains information about the proposals to be voted on at the meeting, Kirby’s Board of Directors and its committees, and certain executive officers. This year you are being asked to:

General Information

This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Kirby Corporation to be voted at the Annual Meeting of Stockholders to be held virtually on April 27, 2021, at 10:00 a.m. (CDT). Stockholders of record at the close of business on March 1, 2021, will be able to access the 2021 Annual Meeting webcast online at Virtual Meeting at www.virtualshareholdermeeting.com/KEX2021 by entering the 16-digit control number provided in their proxy materials.

Whenever we refer in this Proxy Statement to the Annual Meeting, we are also referring to any meeting that results from an adjournment or postponement of the Annual Meeting.

Unless the context requires otherwise, the terms “Kirby,” “the Company,” “our,” “we,” “us,” and similar terms refer to Kirby Corporation, together with its consolidated subsidiaries.

BOARD COMPOSITION & EXPERIENCE

*As of March 2021

2020 BUSINESS HIGHLIGHTS

In 2020, consolidated revenues declined 23% to $2.17 billion primarily due to unprecedented reductions in demand for Kirby’s products and services resulting from the COVID-19 pandemic. Distribution and services was the most impacted with a 39% reduction in revenue compared to 2019, primarily due to significant activity declines in the oil and gas market. In this market, low oil prices and an approximate 80% decline in U.S. fracturing activity and rig counts resulted in minimal orders for new and remanufactured oil and gas equipment, as well as reduced demand for new transmissions and engines, service, and parts. In the commercial and industrial market, reduced economic activity and lockdowns across the United States contributed to significant demand reductions in the on-highway and power generation businesses. These reductions were partially offset by the acquisition of Convoy Services Company (“Convoy”), a Thermo King distributor in North and East Texas and Colorado, on January 3, 2020.

Marine transportation revenues declined 12% to $1.4 billion during 2020. The year started strong with record barge utilization in inland and the acquisition of Savage Inland Marine’s (“Savage”) tank barge and towboat fleet on April 1, 2020. However, as the pandemic intensified during the second quarter, demand for refined products and crude fell, refineries and chemical plants slowed production, and Kirby’s barge utilization rapidly declined from the low to mid-90% range to the high 60% range. For the duration of the year, the inland and coastal businesses experienced minimal spot market demand, low barge utilization, and very competitive pricing dynamics. Furthermore, during the third and fourth quarters, the marine transportation businesses endured a very active hurricane season which resulted in widespread disruptions, extensive delays, and further reductions in refinery and chemical plant volumes.

With revenues declining, Kirby aggressively reduced costs across the Company, including streamlining the distribution and services segment and significantly reducing horsepower costs in marine transportation. These actions, combined with a reduced income tax rate as a result of the U.S. Coronavirus Aid, Relief, and Economic Security Act helped to minimize the impact of the pandemic to Kirby’s earnings. Overall, net earnings attributable to Kirby, excluding one-time items¹, were $110 million in 2020.

In 2020, Kirby generated $445 million in cash flow from operations. This cash flow was used to fund investments in the marine transportation fleet, and pay down debt incurred to fund the Convoy and Savage acquisitions. During the year, Kirby invested over $300 million to acquire marine equipment, including 98 inland barges representing 2.6 million barrels of capacity and 45 inland towboats. As well, the Company had capital expenditures of $148.2 million, which were down 40% compared to 2019. While total debt peaked at $1.7 billion immediately preceding the Savage acquisition on April 1, significant debt repayments throughout the remainder of the year resulted in total long-term debt of $1.47 billion at December 31 and a debt-to-capitalization ratio of 32.2%.

CORPORATE GOVERNANCE

The Board represents the stockholders’ interest and is responsible for overseeing Company management, including monitoring the effectiveness of management practices and decisions. To that end, the Board has established governance practices including the guidelines and charters described below.

Business Ethics Guidelines

The Board has adopted Business Ethics Guidelines that apply to all directors, officers, and employees of the Company. A copy of the Business Ethics Guidelines is available on the Company’s website at www.kirbycorp.com in the Investor Relations section under Governance/Governance Overview. The Company is required to make prompt disclosure of any amendment to or waiver of any provision of its Business Ethics Guidelines that applies to any director or executive officer including its chief executive officer, chief financial officer, chief accounting officer or controller, or persons performing similar functions. The Company will make any such disclosure that may be necessary by posting the disclosure on its website at www.kirbycorp.com in the Investor Relations section under Governance/Governance Overview.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines. A copy of the guidelines is available on the Company’s website at www.kirbycorp.com in the Investor Relations section under Governance/Governance Overview.

Communication with Directors

Interested parties, including stockholders, may communicate with the full Board or any individual director, including the Chairmen of the Audit, Compensation, and Governance Committees, the lead independent director or the non-management or independent directors as a group, by writing to them c/o Kirby Corporation, P.O. Box 1745, Houston, Texas 77251-1745. The Company will refer the communication to the appropriate addressee(s). Complaints about accounting, internal accounting controls, or auditing matters should be directed to the Chairman of the Audit Committee at the same address. All communications will be forwarded to the person(s) to whom they are addressed.

Website Disclosures

The following documents and information are available on the Company’s website at www.kirbycorp.com in the Investor Relations section under Governance/Governance Overview:

GOVERNANCE HIGHLIGHTS

Our Board is committed to the highest ethical standards, effective governance practices, and leveraging its expertise in the industries in which Kirby operates. In 2020, the structure of the Board was further enhanced through the creation of a lead independent director role which will be elected annually. The independent directors of the Board elected Richard J. Alario to serve in this role for the first year. Mr. Alario’s primary duties will include presiding over meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors, serving as a liaison between the Chairman and the independent directors, exercising the authority to call meetings of the independent directors when necessary, and organizing and leading the Board’s evaluation of the CEO.

COMPENSATION HIGHLIGHTS

Our executive compensation philosophy has been consistent and focused on the creation of value for our stakeholders. A significant portion of our named executive officers’ compensation is tied to “At Risk” or pay-for-performance components. The pie charts on the following page depict how each element of compensation was weighted for our named executive officers in 2020.

Our executive compensation program is designed to attract and retain talented executive officers, motivate consistent performance over time, and encourage performance that results in increased profitability and stockholder returns. Our executive compensation program has historically received high levels of stockholder support well above 90%. In the last two years, however, stockholder support declined, and some investors voiced concerns over certain elements of the program, including the use of similar pay-for-performance metrics in both the short-term and long-term plans. We listened to these concerns, and for 2021, we will be implementing changes to differentiate the metrics in these plans, including a safety and environmental, social, and governance (“ESG”) component which the executive leadership team, Board, and many of our investors consider to be an important new element. The below table outlines the changes:

Starting in 2021, we eliminated the issuance of stock options in the executive compensation plan. The Board also approved a clawback policy effective for all incentive compensation received by an executive officer on or after January 1, 2021. The new policy is available on our website at www.kirbycorp.com in the Investor Relations section under Governance/Governance Overview. Listed below are some of the highlights of our compensation policies and practices:

 

KIRBY | 2021 PROXY STATEMENT		PROXY SUMMARY   9

 

PRESIDENT AND CEO		EXECUTIVE VP AND CFO
TOTAL COMPENSATION		TOTAL COMPENSATION

OTHER NEO

TOTAL COMPENSATION

NOTE: Includes total direct compensation as referred to in the compensation discussion and analysis on page 32. “AIP Bonus” includes non-equity annual incentive plan compensation. “Long-term bonus” includes non-equity payments for the 2018-2020 performance period under the long-term incentive compensation program. For additional information, reference the Summary Compensation Table on page 39.

STAKEHOLDER ENGAGEMENT

The executive leadership and Board at Kirby are committed to regular interaction with our stockholders and potential stockholders to share information on the Company, listen to their perspectives, and solicit feedback. While the COVID-19 pandemic presented many challenges and significantly reduced the number of face-to-face investor interactions, senior management and investor relations remained engaged with the investment community throughout the year.

Prior to the pandemic, in February, we attended an equity conference and completed a non-deal roadshow in New York. As the pandemic began to affect our operations in March, as well as our ability to travel, Kirby hosted a public webcast and Q&A session with a sell-side analyst, providing important operational updates to more than 300 live participants. Executive management also conducted individual one-on-one meetings with the majority of our Top 20 stockholders as uncertainty surrounding the pandemic intensified. During the remainder of the year, we participated in four virtual equity conferences, two virtual non-deal roadshows, and one additional webcast. We also conducted approximately 200 individual phone calls during the year which connected us to many existing and prospective investors.

Beyond shareholder engagement, the Company is committed to listening to stakeholders across our industries to best understand and play a critical role in meeting the needs of our customers and communities in which we operate. Kirby is extensively involved with numerous trade associations and organizations related to the industries we serve. From waterway infrastructure to land conservation, Kirby takes a serious position in recognizing where our businesses have an impact. Many of Kirby’s employees also serve in numerous organizational positions ranging from a participating member to leadership roles of specific committees.

CORPORATE SUSTAINABILITY

Kirby has a long history of promoting sustainability as an integral part of our corporate culture and business strategy, and our “NO HARM” principles – NO HARM to People, to the Environment, and to Equipment – is the foundation. Kirby’s core values of responsible operation, valuing our employees, and acting as stewards of the environment in the communities we operate shape our initiatives and strategies. Kirby also has a long-standing history of investing in new equipment and technologies that improve its operations and support its environmental stewardship initiatives. We support our employees through extensive training and human capital development programs, and continuously emphasize our high safety standards.

During 2020, we made significant progress in our ESG disclosures with the release of our 2020 Sustainability Report. In this report, we aligned our ESG disclosures with the Sustainability Accounting Standards Board (“SASB”) framework for marine transportation companies, including our first- ever disclosure of scope 1 and scope 2 greenhouse gas emissions. We were pleased to report that our investment in newer and more efficient marine engines in recent years has resulted in a 17% reduction in our marine transportation fleet’s CO2e emissions since 2015 on a per barrel of capacity basis. Also included in the 2020 Sustainability Report were an ESG materiality matrix, enhanced disclosures on cargo spills, details on our investments in environmental programs, and statistics on recycling efforts. We also provided new disclosures related to employee wellness and engagement, human capital management and training, diversity, and cybersecurity.

Another recent milestone for Kirby was the release of our first report on Task Force on Climate-Related Financial Disclosures (“TCFD”). In these disclosures, Kirby provided insights into how the Board and the Company view and manage climate-related risks. Also, in a continuing effort to enhance our commitment to high ethical standards, we strengthened our business ethics guidelines and human trafficking policy, and we also implemented a new vendor code of conduct.

The Sustainability metrics below are as of December 31, 2020, unless otherwise noted. To learn more about these programs and initiatives, please visit the Sustainability section of our website at www.kirbycorp.com.

TABLE OF CONTENTS

NOMINEES FOR ELECTION (PROPOSAL 1)

The Board of Directors of the Company unanimously recommends that you vote “FOR” the election of each of the following nominees as a director.

Nominees for Election as Class II directors, serving until the Annual Meeting of Stockholders in 2024

Directors Continuing in Office

Continuing Class III directors, serving until the Annual Meeting of Stockholders in 2022

Continuing Class I directors, serving until the Annual Meeting of Stockholders in 2023

THE BOARD OF DIRECTORS

The Company’s business is managed under the direction of the Board, which is responsible for broad corporate policy and for monitoring the effectiveness of Company management. Members of the Board are kept informed about the Company’s businesses by participating in meetings of the Board and its committees, through operating and financial reports made at Board and committee meetings by Company management, through various reports and documents sent to the directors for their review, and by visiting Company facilities. The Board’s development includes onsite meetings at key operating facilities which include interaction with employees at those locations.

Director Independence

The NYSE listing standards require listed companies to have at least a majority of independent directors. For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material relationship with the Company.

The Board has determined that the following incumbent directors have no relationship with the Company except as directors and stockholders and are independent within the meaning of the NYSE corporate governance rules:

Our Chief Executive Officer, Mr. Grzebinski, has certified to the NYSE that the Company is in compliance with NYSE corporate governance listing standards.

Risk Oversight

The Board carries out its risk oversight function through the Audit Committee and the full Board. Management prepares and reviews with the Audit Committee and the Board semiannually a comprehensive assessment of the identified internal and external risks of the Company that includes evaluations of the potential impact of each identified risk, its probability of occurrence and the effectiveness of the controls that are in place to mitigate the risk. The Audit Committee and the Board also receive regular reports of any events or circumstances involving risks outside the normal course of business of the Company. At times, a particular risk will be monitored and evaluated by another Board committee with primary responsibility in the area of the subject matter involved. For example, the Compensation Committee reviews the risks related to the Company’s compensation policies and practices and the Audit Committee receives regular reports and updates on cybersecurity issues. The Board’s administration of its risk oversight function has not affected the Board’s leadership structure.

Board Leadership Structure

The Board has no set policy concerning the separation of the offices of Chairman of the Board and Chief Executive Officer, but retains the flexibility to decide how the two positions should be filled based on the circumstances existing at any given time. Following Mr. Grzebinski’s succession to the position of President and Chief Executive Officer in 2014, the Board considered it important for Mr. Pyne, with his comprehensive understanding of the Company’s businesses and strategic direction, to continue in the role of an Executive Chairman of the Board. During the same time period, the Board was focused on management succession planning, primarily for the role of Chief Executive Officer but also for other senior management positions. The Board determined that having Mr. Pyne continue to serve as an Executive Chairman of the Board after relinquishing the role of Chief Executive Officer would facilitate the succession process and provide valuable support to the senior management team. When Mr. Pyne retired as Executive Chairman of the Board in April 2018, the Board considered it important to the Company for Mr. Pyne to continue as Chairman of the Board in a non-executive capacity to continue to take advantage of his knowledge of the Company and its businesses as well as his leadership experience and he continues to serve in such capacity.

The Board has chosen Mr. Alario to be the Lead Independent Director to preside at the regular executive sessions of the non-management directors that are held at least quarterly. An executive session with only independent directors is held at least once per year. Mr. Alario also serves as a liaison between the independent directors and management on certain matters that are not within the area of responsibility of a particular committee of the Board.

Board Committees

The Board has established three standing committees, including the Audit Committee, the Compensation Committee, and the Governance Committee, each of which is briefly described below.

Audit Committee

All of the members of the Audit Committee are independent, as that term is defined in applicable Securities and Exchange Commission (“SEC”) and NYSE rules. In addition, the Board has determined that all of the members of the Audit Committee are “audit committee financial experts,” as that term is defined in SEC rules. The Audit Committee operates under a written charter adopted by the Board. A copy of the charter is available on the Company’s website at www.kirbycorp.com in the Investor Relations section under Governance/Governance Overview.

Compensation Committee

All of the members of the Compensation Committee are independent, as that term is defined in applicable SEC and NYSE rules. In addition, all of the members of the Compensation Committee are “Non-Employee Directors” and “outside directors” as defined in relevant federal securities and tax regulations. The Compensation Committee operates under a written charter adopted by the Board. A copy of the charter is available on the Company’s website at www.kirbycorp.com in the Investor Relations section under Governance/Governance Overview.

Governance Committee

All of the members of the Governance Committee are independent, as that term is defined in NYSE rules. The Governance Committee operates under a written charter adopted by the Board. A copy of the charter is available on the Company’s website at www.kirbycorp.com in the Investor Relations section under Governance/Governance Overview.

The Governance Committee will consider director candidates recommended by stockholders or proposed by stockholders in accordance with the Company’s Bylaws. Recommendations may be sent to the Chairman of the Governance Committee, Kirby Corporation, P.O. Box 1745, Houston, Texas 77251-1745, accompanied by biographical information for evaluation. The Board of the Company has approved Criteria for the Selection of Directors which the Governance Committee will consider in evaluating director candidates. The criteria address compliance with SEC and NYSE requirements relating to the composition of the Board and its committees, as well as character, integrity, experience, understanding of the Company’s business, and willingness to commit sufficient time to the Company’s business. The criteria are available on the Company’s website at www.kirbycorp.com in the Investor Relations section under Governance/Governance Overview.

In addition to the above criteria, the Corporate Governance Guidelines and Governance Committee Charter include provisions concerning the consideration of diversity in business experience, professional skills, gender, race, and ethnic background in selecting nominees for director. The Company and Governance Committee are committed to having a Board that reflects these diverse perspectives and actively seeks out highly qualified candidates that include women and individuals from minority groups when board nominees are chosen. The Governance Committee took these provisions into account in expanding the Board in 2019 and will take them into account when considering candidates to fill the vacancy after completion of Mr. Miller’s term.

When there is a vacancy on the Board (i.e., in cases other than the nomination of an existing director for reelection), the Board and the Governance Committee have considered candidates identified by executive search firms, candidates recommended by stockholders and candidates recommended by other directors. The Governance Committee will continue to consider candidates from any of those sources when future vacancies occur. The Governance Committee does not evaluate a candidate differently based on whether or not the candidate is recommended by a stockholder.

Attendance at Meetings

It is the Company’s policy that directors are expected to attend Board meetings and meetings of committees on which they serve and are expected to attend the Annual Meeting of Stockholders of the Company. During 2020, the Board met six times, the Audit Committee met nine times, the Compensation Committee met five times and the Governance Committee met five times. Each director attended all of the meetings of the Board and the meetings of the committees on which he or she served. All directors attended the 2020 Annual Meeting of Stockholders of the Company.

The following table summarizes the cash and equity compensation for nonemployee directors for the year ended December 31, 2020:

TRANSACTIONS WITH

RELATED PERSONS

The Board has adopted a written policy on transactions with related persons that provides that certain transactions involving the Company and any of its directors, executive officers, or major stockholders or members of their immediate families, including all transactions that would be required to be disclosed as transactions with related persons in the Company’s Proxy Statement, are subject to approval in advance by the Governance Committee, except that a member of the Committee will not participate in the review of a transaction in which that member has an interest. The Committee has the discretion to approve any transaction which it determines is in, or not inconsistent with, the best interests of the Company and its stockholders. If for any reason a transaction with a related person has not previously been approved, the Committee will review the transaction within a reasonable period of time and either ratify the transaction or recommend other actions, including modification, rescission or termination, taking into consideration the Company’s contractual obligations. If a transaction is ongoing or consists of a series of similar transactions, the Committee will review the transaction at least annually and either ratify the continuation of the transaction or recommend other actions, including modification, rescission or termination, taking into consideration the Company’s contractual obligations. The policy provides certain exceptions, including compensation approved by the Board or its Compensation Committee.

Mr. Grzebinski is a member of the board of directors of American Bureau of Shipping (“ABS”), a not-for-profit that provides global classification services to the marine, offshore and gas industries. The Company paid ABS $2,377,000 in 2020 to perform audits and surveys of the Company’s vessels in the ordinary course of business.

Mr. Grzebinski is a member of the board of directors of UK Protection & Indemnity Association (“UK P&I), a mutual marine protection and indemnity organization that provides protection and indemnity insurance for third party liabilities and expenses arising from vessel operations. The Company paid UK P&I $3,000,000 in premiums during 2020 for coverage in the 2020-2021 policy period in the ordinary course of business.

Amy D. Husted, Vice President, General Counsel and Secretary of the Company, is a member of the board of directors of Signal Mutual Indemnity Association Ltd (“Signal”), a group self-insurance not-for-profit organization authorized by the U.S. Department of Labor as a longshore worker’s compensation insurance provider. The Company has been a member of Signal since it was established in 1986. The Company paid Signal $667,000 in 2020 in the ordinary course of business.

The husband of Ms. Husted is a partner in the law firm of Clark Hill PLC. The Company paid the law firm $1,598,000 in 2020 for legal services. However, Mr. Husted is not involved in any legal matters related to the Company. Further, Mr. Grzebinski approves each engagement of the firm by the Company and the payment of fees billed by the firm.

No family relationship exists among the executive officers or among the executive officers and the directors.

Base salary is not variable once established for the year, but annual incentive compensation and long-term incentive compensation are variable in that they are based upon current year performance and longer term performance, respectively. Additionally, certain retention awards comprised of a cash retention bonus and RSUs approved in 2021 by the Compensation Committee for Messrs. Grzebinski, O’Neil, and Reniers are subject to incentive and retention award agreements which are intended to properly incentivize and retain key executives through the unprecedented economic downturn due to the global COVID-19 pandemic and beyond.

The overall goal of the Company’s compensation program is (1) to pay compensation competitive with similar companies and (2) to align annual incentives and long-term incentives with corporate performance and a return to the Company’s stockholders.

Compensation Objectives

The objectives of the executive compensation program are:

The Company’s executive compensation program is designed to reward:

Company Performance

The Company’s overall performance in 2020 was negatively affected by decreased activity in oil and gas exploration and the demand destruction caused by the COVID-19 pandemic. In the marine transportation segment, revenues decreased 12% year-on-year, primarily due to reduced barge utilization in the inland and coastal markets and decreased term and spot contract pricing in the inland market, each as a result of a reduction in demand due to the COVID-19 pandemic, partially offset by the acquisition of assets from Savage Inland Marine, LLC in April 2020. In the distribution and services segment, revenues decreased 39% year-on-year, driven by reduced activity in the oilfield as a result of oil price volatility throughout 2019 and 2020, the extensive downturn in oil and gas exploration due to low oil prices, caused in part by the COVID-19 pandemic, an oversupply of pressure pumping equipment in North America, and reduced spending and enhanced cash flow discipline for the Company’s major oilfield customers. In 2020, the Company generated strong cash flow with Adjusted EBITDA of $360 million and expanded its marine fleet, investing over $300 million in acquisitions and new construction of marine transportation equipment. At the end of 2020, the Company had a debt to capital ratio of 32.2%.

The following table summarizes a number of key Company financial measures for the last three years (dollars are in millions except for per share amounts):

The Company’s total cumulative stockholder loss was 22% over the last three years primarily due to market declines in 2020 as a result of the COVID-19 pandemic.

Incentive Plan Payouts

The 2020 named executive officers received annual incentive compensation plan payouts below target amounts because the Company’s results for 2020 on the key performance measures were below target. In addition, two of the named executive officers (Mr. Grzebinski and Mr. Harvey) received a cash performance award payment below their target amounts because results for the 2018-2020 performance period were below target amounts on a cumulative basis. The other three named executive officers (Mr. O’Neil, Mr. Reniers, and Ms. Husted) were not previously granted cash performance awards for the 2018-2020 performance period.

Incentive and Retention Award Agreements

When reviewing compensation relating to 2021 performance, the Compensation Committee considered the fact that certain of its performance-based equity and cash compensation arrangements for its named executive officers were established either prior to or near the outset of the COVID-19 pandemic. The pandemic has ultimately had a widespread impact on both the equity markets and economy generally, which has, in turn, impacted the ability to achieve the performance-based targets previously established without regard to individual contributions such as pro-active leadership in maintaining continuity of the Company’s business operations during this time. The Committee believes that Messrs. Grzebinski, O’Neil and Reniers’ skills, familiarity with the Company, and leadership expertise are critical to the continued success of the Company. In addition, the Committee strongly believes that the continuity of leadership at the CEO level is integral to the long-term success of the Company. Therefore, the Committee pays significant attention to creating long-term incentives in structuring compensation packages for the key employees with retention over the longer term being a consideration during the period of industry instability. In light of that fact, the Compensation Committee determined that it should enter into incentive and retention award agreements providing for a retention award comprised of a cash retention bonus and RSUs for Messrs. Grzebinski, O’Neil, and Reniers, in order to ensure that the Company would be able to properly incentivize them and ensure retention of their services through the expected resolution of the COVID-19 pandemic and its associated impacts and beyond.

The terms of the incentive and retention award agreements for each such named executive officer are substantially similar except with regard to the amount of the cash retention bonus and the number of RSUs included in the retention award. For Mr. Grzebinski, the total cash retention bonus amount is $1,250,000 and the total number of RSUs is 24,626. For Mr. O’Neil, the total cash retention bonus amount is $375,000 and the total number of RSUs is 9,850. For Mr. Reniers, the total cash retention bonus amount is $375,000 and the total number of RSUs is 9,850.

The cash retention bonus amounts vest in three equal installments on December 15th in each of 2021, 2022, and 2023. The RSUs cliff vest on January 24, 2024. Unvested cash retention bonus payments and RSUs will be forfeited if employment of the named executive officer is terminated for any reason prior to vesting, subject to proration in the case of death or disability. In the case of termination for cause, any previously vested and paid cash retention bonus payments shall be repaid to Company.

The foregoing summary of the terms of the incentive and retention award agreements is qualified in its entirety by reference to the copy of the agreements filed as Exhibits 10.1, 10.2, and 10.3 to the Company’s current report on Form 8-K filed February 26, 2021.

Chief Executive Officer Compensation

Mr. Grzebinski’s salary remained the same at an annual rate of $950,000 in 2020. He earned an annual incentive award for 2020 performance and received a cash payment pursuant to his cash performance award for the 2018-2020 performance period for an aggregate of $1,164,828 (a decrease of 33% from 2019). In addition, he received stock options and RSUs with an aggregate grant date fair value of $2,068,480 (an increase of 4% from 2019). A total of 77% of his total direct compensation (annual incentive compensation payment, cash performance award payment, RSUs, and stock options) was at risk.

Compensation Committee

The Compensation Committee (the “Committee”) of the Board has the authority and responsibility to:

During 2020, the Committee was composed of three members, all of whom are “independent directors,” “Non-Employee Directors” and “outside directors” as those terms are defined in relevant SEC and NYSE standards and federal securities and tax regulations.

The Committee does not delegate any of its authority to determine executive compensation. The Committee considers recommendations from the Chief Executive Officer in making its compensation decisions for executive officers other than the Chief Executive Officer. The Committee takes those recommendations into account when setting compensation for other executive officers since the Chief Executive Officer is in the best position to evaluate the contributions of the other executive officers to the success of the Company. The Board undertakes an independent evaluation of the individual performance of the Chief Executive Officer before the Committee sets his compensation. The Committee also engaged a compensation consultant in connection with its compensation decisions for 2020.

In determining the compensation of the named executive officers, the Committee considered all elements of total compensation, including salary, annual incentive compensation, long-term incentive compensation, and projected payouts under the Company’s retirement plans, as applicable. The Committee also relied in part on the marketplace analysis prepared by Longnecker & Associates (the “Consultant”), a compensation consulting firm retained by the Committee, in determining that its compensation decisions, both as to specific elements of compensation and as to aggregate compensation, were in a reasonable range for comparable companies and for the positions held by the named executive officers. The Committee also considered the Consultant’s analysis in evaluating internal pay equity among the named executive officers. From that foundation, the Committee refined individual compensation decisions based on a number of factors, including the prior year’s compensation, the performance of the Company or its business groups, individual performance of the named executive officer, any increased responsibilities assigned to a particular executive officer, the recommendations of the Chief Executive Officer (except as to his own compensation) and considerations of internal pay equity. However, the final decisions of the Committee are to some extent subjective and do not result from a formulaic application of any of those factors.

Say on Pay

At the Company’s 2020 Annual Meeting, stockholders approved the compensation of the Company’s named executive officers by 83% of the votes cast. In the past two years, stockholder support has declined below historical levels. While there were no material changes to the executive compensation program in 2020, in response to stockholder feedback, the Committee has made certain changes to the 2021 compensation program to address stockholder concerns.

In 2021, long term incentive program compensation grants were in the form of RSUs (60%) and performance awards (40%) for Mr. Grzebinski, Mr. Harvey, Mr. O’Neil, and Mr. Reniers and 100% RSUs for Ms. Husted. No stock options were granted in 2021. Performance awards granted in 2021 are based on Adjusted EBITDA (50%) and return on invested capital (50%). The earnings per share component has been removed. In addition, the 2021 Annual Incentive Plan (“AIP”) program has been modified in comparison to the 2020 AIP to add an operating performance and environmental, social, and governance (“ESG”) component and the return on total capital component has been removed. For 2021, AIP metrics are based on Adjusted EBITDA (40%), EPS (40%), and operating performance and ESG (20%).

Compensation Consultant

For 2020, the Committee engaged the Consultant to provide information for the Committee to consider in making compensation decisions. The Consultant was engaged directly by the Committee to:

At the Committee’s request, the Consultant addressed the six independence factors for compensation committee advisors that are identified in SEC regulations. The Company paid the Consultant $143,000 during 2020. The Committee concluded that there were no conflicts of interest that would affect the work of the Consultant for the Committee. The Consultant performed no services during 2020 for the Company or any of its affiliates other than for the Committee.

Elements of Compensation

General

The Committee and management believe that the Company is a leader in the industries in which it operates and that its employees are frequently targeted by its competitors. Therefore, the Committee generally attempts to set compensation at levels to keep pace with inflation and the competitive employment market to avoid losing valuable employees.

Compensation information for a peer group of comparable companies used by the Committee in making compensation decisions was provided by the Consultant. See “Benchmarking” below for more detail and a listing of the companies in the peer group.

Based on the market analysis provided to the Committee in October 2019 by the Consultant, and reviewed by the Committee in January 2020 when compensation for the year was set, the Consultant determined that, in the aggregate, all five named executive officers were positioned at or below the median for comparable companies in target total cash compensation and target total direct compensation. Mr. Grzebinski, Mr. O’Neil, and Mr. Reniers were positioned above the median but below the 75th percentile for comparable companies in actual total direct compensation, while Mr. Harvey and Ms. Husted were positioned below the median in actual total direct compensation. For purposes of this study and this Compensation Discussion and Analysis, total cash compensation included base salary and annual incentive compensation, and total direct compensation included base salary, annual incentive compensation, and long-term incentive compensation.

Salary

The Committee targets base salaries for the named executive officers at approximately the median for comparable companies. Based on information provided by the Consultant in October 2019, and reviewed by the Committee in January 2020, salaries of Mr. Grzebinski, Mr. Harvey, Mr. O’Neil, Mr. Reniers, and Ms. Husted were positioned at or below the median by 0% to 15% for comparable positions with comparable companies. In response to the decline in business activity in the marine transportation and distribution and services segments due to the COVID-19 pandemic, annual base salary adjustments approved in January 2020 for named executive officers were withheld due to business conditions in April 2020. However, in July 2020, the salaries of Mr. O’Neil and Ms. Husted were increased by amounts intended to bring them up to the median range for comparable companies. Annual base salary adjustments are typically made in April of each year, and therefore differences between 2019 and 2020 base salaries for named executive officers will reflect adjustments made during the course of 2019 in addition to the noted adjustments for Mr. O’Neil and Ms. Husted.

Annual Incentive Compensation

The Company established a 2020 AIP which is administered by the Committee. The AIP addresses annual incentive compensation for all AIP participants, including the executive officers. A copy of the AIP was filed as Exhibit 10.6 with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. With regard to executive officers, the Committee attempts to set annual incentive compensation targets at a level such that, with target performance by an executive officer and the Company, the total cash compensation (base salary plus annual incentive compensation) for the executive officer will be at approximately the median for comparable companies and positions, but with a superior performance by an executive officer and the Company, the total cash compensation for the executive officer will be above the median. The Committee believes that providing total annual cash compensation above the median for similar corporations and positions is appropriate since a significant portion of each executive officer’s total annual cash compensation is at risk due to both individual performance factors and the Company’s success in achieving the targeted performance measures described below. Annual incentive compensation constitutes a significant portion of direct cash compensation and can vary significantly from year to year depending on the Company’s achievement of the performance measures set forth in the AIP.

Based on the market analysis provided to the Committee by the Consultant, the Committee determined that target total cash compensation for 2020 for Mr. Grzebinski, Mr. Harvey, Mr. O’Neil, Mr. Reniers, and Ms. Husted would be at or below the median by 0% to 10%. Based on the Company’s performance in 2020 and information available at the end of the year, total cash compensation for the five named executive officers was below the median when compared to peer group and survey information for comparable roles.

AIP targets for 2020 annual incentive compensation were based on the achievement of three equally weighted performance measures for the year, based on the budget for the year that was prepared by management and approved by the Board, which were the basis for determining the total amount to be paid out pursuant to the AIP. Target annual incentive compensation was established for each participant in the AIP and a preliminary incentive compensation payment amount was determined for each participant based on the extent to which the three performance measures were achieved by each of the Company’s business units and by the Company as a whole. The aggregate amount of the Company bonus pool for the year was equal to the sum of the preliminary annual incentive compensation payment amounts as so determined for all participants. The preliminary incentive payment amount for each participant served as a guideline for the individual awards, but each individual bonus could be above or below that level. However, in no event would a bonus paid to any participant exceed 200% of the target bonus for that participant.

The three performance measures were Adjusted EBITDA, return on total capital, and earnings per share. Adjusted EBITDA for the year is calculated by adding the following amounts shown in the Company’s audited financial statements:

Return on total capital for the year is calculated by dividing (i) net earnings attributable to Kirby plus provision for taxes on income plus interest expense by (ii) the average of total equity plus long-term debt for the year. Earnings per share is diluted net earnings per share attributable to the Company’s common stockholders as shown in the Company’s Consolidated Statements of Earnings for 2020.

In addition to the target payment established for each participant in the AIP, the Committee also established a range of possible annual incentive compensation payments, with no payment unless a minimum percentage of the target performance is achieved, which ranged from 65% to 80% depending on the business unit, and a maximum possible award of 200% of the target amount if a maximum percentage of the target performance is achieved, which ranged from 120% to 135% depending on the business unit. Annual incentive compensation payments for most employees of the Company itself (a holding company which conducts operations through its subsidiaries) are based entirely on the performance of the Company and its subsidiaries, as a whole. Payments for the heads of the Company’s business units and for certain management level employees with responsibilities for more than one business unit are generally based partly on the performance of the relevant business units and partly on overall Company performance.

For 2020, the target and actual amounts for the three performance measures for the Company were:

The cash performance awards are based on cumulative performance over a three-year period from 2020 to 2022. The targets for 2020 were the same as those for the AIP, while the targets for 2021 and 2022 will be based on each respective year’s performance targets.

For 2020, the Committee set the individual target AIP payment for the named executive officers at the following percentages of base salary:

The target percentages were set at levels which the Committee determined, based in part on analysis by the Consultant, to be commensurate with the responsibilities of the named executive officers, consistent with the Company’s executive compensation philosophy, and internally equitable and competitive for executives with their qualifications and experience. For compensation based upon 2020 performance, the Committee exercised its discretion to calculate the AIP bonus payout of 37.8%, based on the performance of the Company as whole. For Mr. O’Neil and Mr. Reniers and the marine transportation and distribution and services segment employees who served throughout the pandemic as essential workers and have continued to serve each segment’s customer base without a disruption in service, the Committee adjusted the AIP bonus payout to 37.8%. Payouts under the AIP for 2020, at 37.8% of the target for each named executive officer based on consolidated Company performance, were:

The Committee awarded an amount equal to the preliminary annual incentive compensation payment calculated under the AIP, without adjustment, to each named executive officer for 2020 after determining that the performance of each of the officers met performance expectations for the year. The determination for the Chief Executive Officer was based on the performance evaluation of the Chief Executive Officer conducted by the Board, under the guidance of the Governance Committee, on the extent of the Company’s achievement of its financial, operational, and strategic goals for 2020 and on the Board’s regular interaction with Mr. Grzebinski. The determination for the other named executive officers was based primarily on evaluations and recommendations made by the Chief Executive Officer, as well as on the Board’s interaction with the other named executive officers during the previous year in relation to matters in their areas of responsibility.

Long-Term Incentive Compensation

The Company maintains a long-term incentive compensation program for selected senior executives and key employees that is administered by the Committee. Awards under the long-term incentive compensation program are made under the Company’s 2005 Stock and Incentive Plan which allows the grant of incentive stock options, non-incentive stock options, restricted stock, RSUs, performance shares, and performance awards payable in stock, cash, or a combination thereof. Typically, the primary long-term incentive compensation for executive officers are in the form of non-incentive stock options, restricted stock, RSUs, and cash performance awards.

Long-term incentive compensation ties a meaningful portion of total compensation to Company performance, as well as business group and individual performance. The Committee views stock options, restricted stock, and RSU awards as regular components of compensation for executive officers, as well as for managerial level employees generally, because the Committee believes that such awards provide an incentive for key employees to remain with the Company and focus on the Company’s long-term performance. Cash performance awards are tied to the Company performance over a specified period of time and provide similar incentives to key employees. The Committee’s objective for long-term incentive compensation for executive officers is to generally fall between the 50th and 75th percentiles (depending on performance) in long-term incentive compensation of similar companies and positions. The actual value of awards realized will be based on the Company’s performance over a period of approximately three to seven years.

In 2020, the Committee granted non-incentive stock options covering 78,246 shares of common stock and 45,500 RSUs to the named executive officers as a group. Those numbers include stock options and RSUs granted under the long-term incentive compensation program discussed below. The stock options were granted at a price equal to the fair market value of the Company’s common stock on the date of grant, vest in equal increments over three years and have a term of seven years. The RSUs vest in equal increments over five years. The number of RSUs granted is based in part upon the fair market value of the Company’s common stock on the date of grant.

Under the program, the elements of long-term incentive compensation to be awarded, as well as the executives selected to participate, are determined each year by the Committee. For 2020, the Committee determined that Mr. Grzebinski, Mr. Harvey, Mr. O’Neil, and Mr. Reniers would receive awards under the long-term incentive compensation program and that 20% of the target value of the awards for each of them would be in the form of stock options, 40% in the form of RSUs and 40% in the form of cash performance awards and Ms. Husted would receive 25% of the target value would be in the form of stock options and 75% in the form of RSUs.

The target values of the awards, broken down by component, were as follows:

The stock options vest over a three-year period and the RSUs vest over a five-year period. The cash performance awards are based on performance over a three-year period from 2020 to 2022, to be paid in 2023. The percentage of the target award paid at the end of the performance period will be based on the Company’s achievement on a cumulative basis for the three-year period of the objective levels of EBITDA, return on total capital and earnings per share established under the AIP, with the three factors equally weighted. The officers will be paid the target amount if 100% of the objective performance measures is achieved over the three-year period. The payment can range from zero if less than 80% of the objective performance measures is achieved to a maximum of 200% of the target award for the achievement of 130% or more of the objective performance measures.

The amount and form of the long-term incentive compensation awards, including the specific mix of long-term incentive compensation elements, were based in part on an analysis of market data on the amounts of awards and recommendations on the form of awards based on peer benchmarking provided by the Consultant to the Committee. Due to the impact of the COVID-19 pandemic on the demand for the Company’s products and services in both the marine transportation and distribution and services segments, the realized or realizable pay may be significantly lower than these targets.

Chief Executive Officer

The base salary of the Company’s President and Chief Executive Officer, David W. Grzebinski, was generally based on the same factors and criteria outlined above, which include compensation paid to chief executives of similar companies, individual as well as Company performance and a general correlation with the compensation of other executive officers of the Company. In January 2020, the Committee authorized an increase in Mr. Grzebinski’s base salary which would have become effective April 1, 2020. However, due to deterioration in business conditions due to the COVID-19 pandemic, executive management agreed to defer Mr. Grzebinski’s base salary increase until such time as the business conditions improved. Mr. Grzebinski’s base salary for 2020 remained at $950,000 which was unchanged from the end of 2019. In setting Mr. Grzebinski’s compensation, the Committee also considered the Company’s success in achieving the financial, operational and strategic corporate goals established for the previous year, as well as the annual evaluation of the Chief Executive Officer’s performance conducted by the Board under the guidance of its Governance Committee. However, neither the achievement of corporate goals, the performance evaluation nor any other particular aspect of Company or individual performance is given any specific weighting or tied by any type of formula to decisions on the Chief Executive Officer’s base salary or long-term incentive compensation awards. The $1,164,828 in non-equity incentive plan compensation shown for Mr. Grzebinski in the Summary Compensation Table consisted of (1) $359,100 determined under the AIP described above and (2) a $805,728 payment earned by Mr. Grzebinski for the 2018-2020 performance period under a cash performance award granted as part of the Company’s long-term incentive compensation program based on the formula for the cash performance award established by the Committee when the award was granted at the beginning of 2018. Based on information available at the end of the year, 2020 actual total cash compensation and 2020 actual total direct compensation for Mr. Grzebinski were below the median, compared to peer group and survey data.

Retirement Plans

The Company maintains two primary retirement plans in which the named executive officers are eligible to participate on the same basis as broad categories of employees — a Profit Sharing Plan and a 401(k) Plan. Most of the Company’s shore-based employees are eligible to participate in the Profit Sharing Plan. The aggregate contributions made to the plan by the Company are allocated among the participants according to base salary. All employees of the Company are eligible to participate in the 401(k) Plan, under which the Company matches employee contributions in an amount up to 3% of an employee’s base salary.

The Company maintains an unfunded, nonqualified Deferred Compensation Plan for Key Employees, which is designed primarily to provide additional benefits to eligible employees to restore benefits to which they would be entitled under the Company’s Profit Sharing Plan and 401(k) Plan were it not for certain limits imposed by the Internal Revenue Code. The plan is designed to restore benefits for employees being compensated in excess of certain limits (base salary of $285,000 per annum for 2020). In 2020, the Committee approved contributions for each participant at the maximum amounts allowed by the Plan.

Perquisites and Personal Benefits

The only perquisites or other personal benefits that the Company provides to the named executive officers are an automobile allowance that is given to approximately 220 executive and management employees. Club memberships that are used for both business and personal purposes are provided to the CEO and divisional presidents and sales people where required for business. Perquisites also include air travel on the Company plane that is considered personal income under Internal Revenue Service regulations for family members to attend business related and customer events. The Committee believes the personal benefits are reasonable in amount and help the Company attract and retain key employees.

Employment/Severance Agreements

Except for accelerated vesting of outstanding stock options, restricted stock and RSUs upon a qualifying termination of employment following a change in control of the Company, and a right to receive a proportionate part of outstanding cash performance awards upon a change in control of the Company, there are no special compensation arrangements related to severance or change in control events. The Company has no employment agreements with any of its executive officers but has entered into the previously described incentive and retention award agreements for Messrs. Grzebinski, O’Neil, and Reniers.

Benchmarking

The Committee used information provided by the Consultant to benchmark executive compensation and assist in the design of its incentive plans. Marketplace analysis developed by the Consultant was based in part on a peer group of companies. The companies in the peer group were selected by the Committee, based upon recommendations by the Consultant, because they were of a similar size to the Company in revenues and market capitalization, generated comparable returns on assets, equity and capital and had comparable primary operations in at least one of the same business segments as the Company. In determining competitive market levels for the elements of executive compensation, the Consultant used a combination of peer group proxy data and data from published compensation surveys.

The peer group companies used by the Consultant at the beginning of 2020 were:

Based on information available at the end of the year, total cash compensation was at or above the median and total direct compensation was at or slightly below the median for the five named executive officers in the aggregate for comparable companies based on peer group and survey data.

Timing of Compensation Decisions

The Committee generally makes executive compensation decisions in January of each year. Stock options have always been granted at an exercise price equal to the fair market value of one share of the Company’s stock on the date of grant. Stock options approved to be granted at the regular January meeting of the Committee, which takes place several days before the Company’s public release of earnings information for the previous year, are granted at an exercise price equal to the fair market value of the Company’s stock on a specified date shortly after the earnings release, in which case the later date is considered the date of grant. RSUs are based upon a specific compensation target for each grantee and are determined by dividing the compensation target by the fair market value of one share of the Company’s stock on the date of grant. RSUs are approved and granted at the same time as stock options. Base salary increases approved by the Committee in its January meeting of each year become effective April 1 of that year.

Stock Ownership Guidelines

The Board has established stock ownership guidelines for executive officers of the Company and its subsidiaries. Executive officers must be in compliance within five years after becoming an executive officer, but are expected to accumulate the required number of shares ratably over the applicable five-year period. Under the guidelines, the Chief Executive Officer is required to own common stock of the Company having a value equal to four times base salary. For executive vice presidents of the Company and presidents of the Company’s business units, the requirement is three times base salary. For vice presidents of the Company, the requirement is two times base salary. As of December 31, 2020, four of the five named executive officers were in compliance with the stock ownership guidelines. As of March 1, 2021, all named executive officers were in compliance with the stock ownership guidelines.

Hedging

The Company has adopted a policy prohibiting hedging the economic risk of ownership of Company stock. The policy, which applies to all transactions that establish protection against a decline in the market price of Company stock, provides that Company directors and employees, including named executive officers, may not (a) engage in short sales of Company stock, (b) pledge Company stock as collateral for a loan or hold Company stock in a margin account or (c) engage in transactions involving other financial instruments that are designed to, or have the effect of, hedging or protecting against any decline in the market value of any Company stock held, directly or indirectly, by such person. Hedging transactions include, but are not limited to, prepaid variable forward contracts, equity swaps, exchange funds, short sales and puts, calls, collars or similar options to buy or sell Company stock, but do not include the exercise of stock options granted by the Company.