New York-listed Tsakos Energy Navigation (TEN) paid $43.5m in fees to private related-party companies for vessel management and other services in 2020, a new filing indicates.
The sum was down slightly from the $44.7m paid in 2019, largely on lighter payments to an affiliated travel agency that handles seafarer flights during the Covid-19 challenged year.
The largest payment of $20.3m went to Tsakos Energy Management, a private management company solely owned by chief executive Nikolas Tsakos. It holds a 10-year contract to manage the TEN fleet.
The money received by Tsakos Energy Management included a $1.5m "incentive award" and $1.5m "special award" connected with TEN's newbuilding programme in 2020.
A further $8m went to private Tsakos Shipping & Trading (TST) for chartering commissions, up from $7.4m in 2019 and $6.6m in 2018.
TST receives a 1.25% commission on all vessel fixtures. It also earned $200,000 for its part in the sale of two vessels, and $1m in supervision fees for four newbuildings delivered in the fourth quarter of 2019 and in 2020.
A total of $1.3m went to technical manager Tsakos Columbia Shipmanagement for “additional services” relating to information technology, corporate governance training and seafarer training. This fee was down from $2m in 2019 and $2.4m in 2018.
TEN also directed $9.5m to related Argosy Insurance in premiums covering hull and machinery, increased value and loss of hire insurance on its vessels.
Crew airfares
The public company paid AirMania Travel, an affiliate of Tsakos family interests, $4.4m, primarily for transporting crews. The sum was significantly lower than the $5.6m paid in 2019 and $5.3m in 2018.
The Tsakos' array of management and services fees are perennially controversial in an age of increasing focus on corporate governance practices and related-party structures.
As a result, the venerable Greek owner has been rated near the bottom of each of Michael Webber's corporate governance scorecards. At the equity analyst's annual ranking in June, TEN was placed 50th among 52 public owners.
Tsakos and other owners have defended the relationships as providing superior services compared with contracting to third-party providers.
"It is our policy that transactions with related parties are entered into on terms no less favourable to us than would exist if these transactions were entered into with unrelated third parties," TEN said in its recently filed annual report with US securities regulators.
Also of note is the 10-year contract with Tsakos Energy Management, which calls for TEN to pay a decade's worth of fees and incentive awards if there is a change in control of the company.
The arrangement has been called a "poison pill" against merger-and-acquisition activity and a long-term drag on the owner's share price.
Such a termination at the end of 2020 would have required TEN to pay $169m.
TEN's 70 ships include crude tankers, product tankers and LNG carriers. It has a market capitalisation of about $180m.
The owner made net income of $59.2m in 2020 excluding non-cash charges of $35.2m.
