Exhibit 97.1
Castor Maritime Inc.
CLAWBACK POLICY
I. BACKGROUND
Castor Maritime Inc. (the “
Company”) has adopted this Policy Regarding the Recovery of Erroneously Awarded Incentive-Based Compensation (this “
Policy”) to provide for the recovery or
“clawback” of excess
Incentive-Based Compensation earned by current or former Executive Officers of
the Company in the event of a required Restatement (each, as defined under the section entitled
“VIII. Definitions” herein).
This Policy is intended to comply with the requirements of the Nasdaq Stock Market (“Nasdaq”) Listing Rule 5608 (the “Listing Standard”). To the extent that any
provision in this Policy is ambiguous as to its compliance with the Listing Standard or to the extent any provision in this Policy must be modified to comply with the Listing Standard, such provision will be read, or will be modified, as the case
may be, in such a manner so that all applicable provisions under this Policy comply with the Listing Standard.
II. STATEMENT OF POLICY
The Company shall recover reasonably promptly the amount of erroneously awarded Incentive-Based Compensation in the event that the Company is required to prepare an
accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial
statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a “Restatement”).
The Company shall recover erroneously awarded Incentive-Based Compensation in compliance with this Policy except to the extent provided under the section entitled
“V. Exceptions” herein.
III. SCOPE OF POLICY
A. Persons Covered and Recovery Period. This Policy applies to all Incentive-Based Compensation received by an
Executive Officer:
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after beginning service as an Executive Officer,
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who served as an Executive Officer at any time during the performance period for that Incentive-Based Compensation,
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while the Company has a class of securities listed on Nasdaq, and |
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during the three completed fiscal years immediately preceding the date that the Company is required to prepare a Restatement (the “ Recovery Period”). |
Notwithstanding this look-back requirement,
the Company is only required to apply this Policy to Incentive-Based Compensation received on or after
October 2, 2023.
For purposes of this Policy, Incentive-Based Compensation shall be deemed
“received” in
the Company’s fiscal period during which the Financial Reporting Measure (as defined herein) specified in the Incentive-Based
Compensation award is attained, even if the payment or grant of the Incentive-Based Compensation occurs after the end of that period.
B. Transition Period. In addition to the Recovery Period, this Policy applies to any transition period (that
results from a change in
the Company’s fiscal year) within or immediately following the Recovery Period (a “
Transition Period”), provided that a Transition Period between the last day of
the Company’s previous fiscal year end and the first
day of
the Company’s new fiscal year that comprises a period of nine to 12 months will be deemed a completed fiscal year.
C. Determining Recovery Period. For purposes of determining the relevant Recovery Period, the date that
the Company
is required to prepare the Restatement is the earlier to occur of:
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the date the board of directors of the Company (the “ Board”), a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have
concluded, that the Company is required to prepare a Restatement, and |
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the date a court, regulator, or other legally authorized body directs the Company to prepare a Restatement. |
For clarity,
the Company’s obligation to recover erroneously awarded Incentive-Based Compensation under this Policy is not dependent on if or when a Restatement is filed.
IV. AMOUNT SUBJECT TO RECOVERY
A. Recoverable Amount. The amount of Incentive-Based Compensation subject
to this Policy is the amount of Incentive-Based Compensation received that exceeds the amount of Incentive-Based Compensation that otherwise would have been received had it been determined based on the restated amounts, computed without regard to
any taxes paid.
B. Covered Compensation Based on Stock Price or TSR. For Incentive-Based Compensation based on stock price or total
shareholder return (“
TSR”), where the amount of erroneously awarded Incentive-Based Compensation is not subject to mathematical recalculation directly from the information in a Restatement, the recoverable amount shall be based on a
reasonable estimate of the effect of the Restatement on the stock price or TSR upon which the Incentive-Based Compensation was received. In such event,
the Company shall maintain documentation of the determination of that reasonable estimate and
provide such documentation to Nasdaq.
V. EXCEPTIONS
The Company shall recover erroneously awarded Incentive-Based Compensation in compliance with this Policy except to the extent that the conditions set out below are met and a majority of the independent directors
serving on the Board has made a determination that recovery would be impracticable:
A. Direct Expense Exceeds Recoverable Amount. The direct expense paid to a
third party to assist in enforcing this Policy would exceed the amount to be recovered; provided, however, that before concluding it would be impracticable to recover any amount of erroneously awarded Incentive-Based Compensation based on expense
of enforcement,
the Company shall make a reasonable attempt to recover such erroneously awarded Incentive-Based Compensation, document such reasonable attempt(s) to recover, and provide that documentation to Nasdaq.
B. Violation of Home Country Law. Recovery would violate Marshall Islands
law where that law was adopted prior to
November 28, 2022; provided, however, that before concluding it would be impracticable to recover any amount of erroneously awarded Incentive-Based Compensation based on violation of Marshall Islands law, the
Company shall obtain an opinion of Marshall Islands counsel, acceptable to Nasdaq, that recovery would result in such a violation, and shall provide such opinion to Nasdaq.
C. Recovery from Certain Tax-Qualified Retirement Plans. Recovery would
likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of
the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
VI. PROHIBITION AGAINST INDEMNIFICATION
Notwithstanding the terms of any indemnification arrangement or insurance policy with any individual covered by this Policy,
the Company shall not indemnify any Executive Officer or former Executive Officer against the
loss of erroneously awarded Incentive-Based Compensation, including any payment or reimbursement for the cost of insurance obtained by any such covered individual to fund amounts recoverable under this Policy.
VII. DISCLOSURE
The Company shall file all disclosures with respect to this Policy and recoveries under this Policy in accordance with the requirements of the U.S. Federal securities laws, including the disclosure required by the
applicable Securities and Exchange Commission (“
SEC”) filings.
VIII. DEFINITIONS
Unless the context otherwise requires, the following definitions apply for purposes of this Policy:
“
Executive Officer” means
the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer (or if there is no such accounting officer, the
controller), any vice-president of
the Company in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy-making function, or any other person who performs
similar policymaking functions for
the Company.
Policy-making function is not intended to include policymaking functions that are not significant. Identification of an Executive Officer for purposes of this
Policy would include at a minimum executive officers identified pursuant to 17 CFR 229.401(b).
“
Financial Reporting Measures” means any of the following: (i) measures that are determined and presented in accordance with the accounting principles used in preparing
the Company’s financial statements, and
any measures that are derived wholly or in part from such measures, (ii) stock price and (iii) TSR. A Financial Reporting Measure need not be presented within
the Company’s financial statements or included in a filing with the SEC.
“Incentive-Based Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure.
X. EFFECTIVENESS
This Policy shall be effective as of
December 1, 2023. This Policy supersedes any previous policy of
the Company concerning the recovery of excess Incentive-Based Compensation earned by current or former Executive
Officers in the event of a required Restatement. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to
the Company and its
subsidiaries and affiliates
under applicable law or pursuant to the terms of any similar policy or similar provision in any employment agreement, equity award agreement or similar agreement.
