Business Context and Reporting Period
This Form 6-K filing, dated April 29, 2011, incorporates by reference the 2011 Proxy Statement for Teekay Tankers Ltd. The document serves as the Notice of Annual Meeting of Shareholders scheduled for June 10, 2011, in London. The primary business to be transacted is the election of six directors to the Board for a one-year term. The filing also details corporate governance structures, director compensation, and significant related-party transactions with Teekay Corporation.
Key Financial Metrics and Related Party Transactions
The filing does not contain a full set of audited financial statements for 2011; however, it discloses specific financial data regarding management fees, auditor fees, and related-party transactions for the years 2009 and 2010.
- Management Fees: Teekay Tankers incurred $5.6 million in management fees payable to the Manager (a subsidiary of Teekay Corporation) for both 2010 and 2009. These fees cover commercial, technical, administrative, and strategic services.
- Performance Fees: No performance fees were incurred in 2010 or 2009 as Gross Cash Available for Distribution did not exceed the $3.20 per share incentive threshold.
- Pool Management Fees: Fees incurred for the Teekay Aframax Pool and Gemini Pool were $1.4 million in 2010 and $1.5 million in 2009.
- Related-Party Revenue: Revenue earned from chartering the vessel Nassau Spirit to Teekay Corporation was $6.9 million in 2010 and $13.4 million in 2009.
- Auditor Fees: Total fees paid to Ernst & Young LLP were $889,000 in 2010 (including $535,000 in audit fees and $354,000 in audit-related fees) compared to $383,000 in 2009.
- Executive Compensation Reimbursement: Teekay Tankers reimbursed Teekay Corporation $1.0 million in 2010 for time spent by executive officers on management matters.
Material Changes and Corporate Structure
Significant changes in leadership and corporate structure were noted as of the filing date:
- Executive Leadership Changes: Bruce Chan was appointed Chief Executive Officer of Teekay Tankers on April 1, 2011. Peter Evensen resigned as Executive Vice President of Teekay Tankers on March 31, 2011, to become President and CEO of Teekay Corporation. Bjorn Moller ceased serving as CEO of Teekay Tankers and Teekay Corporation on March 31, 2011, but remains a director.
- Share Ownership: As of the record date (April 12, 2011), there were 49,376,796 shares of Class A common stock and 12,500,000 shares of Class B common stock outstanding. Teekay Corporation beneficially owns 100% of the Class B stock and 7.3% of the Class A stock, representing 52.7% of the aggregate voting power.
- Voting Rights: Class B shares carry five votes per share, subject to a cap where aggregate Class B voting power cannot exceed 49% of the total voting power of all outstanding shares. Consequently, Class B voting power is currently limited to 49%.
Guidance, Risks, and Contingencies
The filing outlines several material risks and contractual contingencies inherent to the company's operations and governance:
- Related-Party Dependence: The company relies heavily on Teekay Corporation and its subsidiaries for management services, vessel pooling, and chartering. The Management Agreement and Pooling Agreements expire on December 31, 2022, with automatic renewal provisions unless terminated.
- Termination Payments: If the Management Agreement is terminated under specific circumstances (e.g., by Teekay Tankers after 2016 or upon a Change of Control), the Manager is entitled to a "Termination Payment" equal to the aggregate performance fees payable for the immediately preceding five fiscal years.
- Business Opportunities: The company's articles of incorporation and contribution agreements renounce business opportunities in favor of Teekay Corporation. This limits the fiduciary duties of directors and officers regarding opportunities that may be attractive to both entities.
- Dividend Policy: A "Cumulative Dividend Account" is maintained to ensure shareholders receive at least $2.65 per share in annualized dividends before any performance fee is paid to the Manager. The account resets to zero every five years.
Key Facts for Investor Verification
- Verify the current status of the Management Agreement and Pooling Agreements, specifically regarding termination rights and potential termination payments.
- Confirm the extent of Teekay Corporation's control over the company via the dual-class share structure and the 49% voting cap on Class B shares.
- Review the 2010 Annual Report on Form 20-F for full audited financial statements, as this proxy statement only provides fee and transaction summaries.
- Monitor the "Cumulative Dividend Account" balance to understand the threshold for future performance fee payments to the Manager.
- Assess the impact of the recent executive leadership changes on the company's strategic direction and operational continuity.