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We believe that effective Corporate Governance is essential for the Company’s successful operation and the building of trust among our stakeholders. The Company is committed to governing and conducting its business with integrity, honesty, fair dealing and full compliance with all laws and regulations in place. We have established a robust governance structure that is directed and controlled by our Board of Directors. The Board sets the Company’s strategic objectives, supervises the Management team, and reports to shareholders on their oversight. The company’s commitment to corporate governance is integral to its positive outcomes in all aspects of its operations, particularly in relation to sustainability.
Danaos abides by the:
The Board of Directors has adopted a set of corporate governance guidelines that outline the framework for the company’s governance. The board and management acknowledge that resolving the concerns of other stakeholders, including those of workers, charterers, suppliers, government officials, and the general public, advances the long-term interests of shareholders.
The Board is responsible for setting the company’s strategic objectives, providing leadership to put them into effect, supervising the management, and reporting to shareholders on their oversight. The Board also has four committees, including the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, and the ESG Committee, each with its own charter outlining its responsibilities. Directors are selected based on their high personal and professional ethics, integrity, and values and are willing to devote sufficient time to carry out their duties. A majority of directors are independent under NYSE listing standards. The Board also considers diversity in selecting directors and has established a process for evaluating the performance of the board and its committees.
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The Nominations and Corporate Governance Committee is responsible for identifying and recommending qualified individuals to be elected as directors at the annual stockholders meeting. The committee evaluates candidates based on their experience, skills, independence, ability to attend meetings and contribute to the company’s mission, as well as their character, judgment, and reputation. In addition, the committee may also consider factors such as diversity, the candidate’s potential to maintain relationships with other stakeholders and respond to market developments, and any additional criteria for selection. The committee also reviews director tenure and removal and approves any agreements that allow parties other than the board or committee to nominate directors, ensuring the company’s compliance with such obligations.
The board of directors is responsible for leading the company, setting strategic goals, overseeing management, and reporting to shareholders. The Board of Directors is composed of six members, with the majority being independent directors, while the two non-independent are our Chairman, President and Chief Executive Officer (CEO), and our Senior Vice President, Treasurer and Chief Operating Officer (COO). As the CEO of the company, the Chairman provides leadership and is accountable for implementing the board’s strategic objectives and supervising the company’s management team. Each director serves until the third consecutive annual stockholders’ meeting, with their term extending until a qualified successor is elected, unless there is a death, resignation, or removal for cause. If Board vacancies occur, they can be filled by a majority vote from the remaining directors in office, even with fewer directors than a quorum, at a special or regular board meeting.
The company expects all directors, officers, and employees to adhere to the Code of Conduct & Ethics and act with integrity. Directors should avoid personal or professional relationships with the company that could interfere with their duties or the company’s interests and should disclose any transactions or relationships to the Board that could give rise to a conflict of interest. The Audit Committee will address conflicts of interest involving the CEO or other executive officers, with the chair of the Audit Committee handling conflicts involving other officers.
In 2022, the Board of Directors established the ESG Committee, to provide guidance and oversight on matters related to environmental, social, and governance (ESG). The ESG Committee serves as the highest governance body in sustainability reporting. Its responsibilities include reviewing and providing oversight on the company’s efforts to promote environmentally and socially conscious business operations, evaluating and recommending initiatives for ESG matters, assessing risks and opportunities related to ESG matters, promoting ESG practices within the company’s business culture and processes, and reviewing the preparation and publication of any reports on ESG matters by the company. Composed of three directors, the committee meets at least once a year and reports to the board. By establishing the ESG Committee, the Company demonstrates its commitment to sustainability and responsible business practices. The committee’s oversight and guidance on ESG matters help to ensure that the company operates in an environmentally and socially responsible manner, and that it remains accountable to stakeholders for its actions.
The company also has a Whistleblowing Policy to encourage the reporting of any unethical or illegal activity and to protect employees from dismissal or retaliation for doing so. The company has established procedures to promote compliance with environmental, safety, and socioeconomic laws and regulations, and to educate employees about the Code of Business Conduct & Ethics and Policies and the process for reporting violations and requesting waivers.
The Board of Directors and its committees conduct comprehensive annual self-evaluations to gain valuable insight into their effectiveness. These evaluations are analyzed and discussed by the Board and committees, with the Nominating & Corporate Governance Committee leading the process. The Committee is responsible for rigorously assessing the consolidated results of the evaluations, using their experience and expertise to suggest recommendations for improvement.
The Board and Committees’ commitment to maintaining high standards is evident in their satisfaction with the results of their evaluations. They recognize that corporate governance excellence is an ongoing process and continuously strive for improvement, demonstrating their dedication to high standards. Their focus on achieving the highest standards has positioned them as a leading voice in corporate governance and a role model for other organizations, making them well-prepared for even greater success in the future.
The Compensation Committee of the Board of Directors, which is comprised of independent directors, evaluates and approves the compensation of the senior executives of Danaos Corporation and the Board of Directors every year. The compensation of the board of directors and the senior executives are not linked with the performance of the company’s share price/market cap, profitability and other matrix.
Danaos provides information on the direct economic value generated and distributed in its annual report.
The company also has a defined benefit plan in place, which is managed through its liquidity resources. Danaos believes it has sufficient cash and cash equivalents to meet its defined benefit plan obligations. However, due to confidentiality reasons, quantitative disclosure about the terms of executives’ defined benefit plan cannot be provided. For detailed information, please refer to our latest annual report.
Not applicable as Danaos did not receive any financial assistance from any government.
Danaos assesses its operations for risks related to corruption and has implemented an Anti-Bribery & Anti-Corruption (ABAC) Policy. This policy applies to all directors, officers, contractors, employees, and third parties performing duties for or acting on behalf of the Company or the Managers. The policy aims to ensure compliance with anti-bribery and anti-corruption laws and prohibits all forms of bribery, including bribes to or from government officials and private sector parties. Covered persons are required to report any actual or potential violations of the policy or anti-corruption laws to the Company’s management or legal department. No confirmed incidents of corruption have been reported, and the company has taken appropriate measures to prevent such incidents. Our Anti-Bribery & Anti-Corruption (ABAC) Policy is available on our website and is also included in our annual report.
Danaos is committed to promoting fair and sustainable business practices in compliance with relevant anti-competitive and anti-trust policies. The company’s directors and employees are expected to maintain high ethical standards in all their interactions and refrain from engaging in any unfair or deceptive practices. The company is not aware of any legal actions that have been pending or completed implicating them in anti-competitive behavior or violations of anti-trust and monopoly legislation.
We remain vigilant in maintaining our commitment to ethical and sustainable business practices.
Danaos Corporation is registered and domiciled in the Marshall Islands and its subsidiaries are exempt from tax on income generated from international shipping. To qualify for exemption from US tax on international shipping income, the company operating the ships must be incorporated in a country that grants an equivalent exemption from income taxes to US corporations, and more than 50% owned by residents of that country or another foreign country that also grants an equivalent exemption. All of Danaos’ ship operating subsidiaries meet these initial criteria and the more than 50% beneficial ownership requirement for 2022. The company’s in-house legal department, in consultation with US tax experts, ensures compliance with US tax regulations and assesses whether any subsidiaries are subject to US taxes. However, compliance with these regulations is subject to factors outside of company’s control. For more information about Danaos’ tax compliance and regulations, please refer to the company’s annual report.
Danaos Corporation places a strong emphasis on ethical business conduct and is committed to maintaining the highest standards of integrity in all of its operations. The company has developed a comprehensive Code of Business Conduct & Ethics and associated policies to ensure adherence to these standards. Employees are expected to conduct themselves in a manner that upholds the reputation and integrity of the company, avoiding any actual or perceived conflicts of interest in their personal and business activities, and disclosing any such conflicts promptly.
To promote ethical behavior throughout the organization, Danaos has established procedures for identifying, interpreting, and effectively communicating compliance issues to both shore-based and onboard personnel. The company also provides a safe and anonymous system for reporting any violations of its Code of Business Conduct & Ethics and Policies. By prioritizing ethical conduct, Danaos aims to establish trust with stakeholders and mitigate potential legal and operational risks.
Danaos measures its commitment to ethical behavior through several key performance indicators. All employees (100%) certify their compliance with the company’s Code of Business Conduct & Ethics and Policies, and all employees (100%) receive training and education on ethical policies and procedures. Incidents reported through the anonymous reporting system are monitored, and effective resolution of any issues that arise is ensured. For 2022, no material reports were received. The company also conducts regular reviews and updates to its ethical policies and procedures to ensure their continued relevance and effectiveness.
For more information on Danaos’ ethical business conduct practices, please refer to the company’s Code of Business Conduct & Ethics and Policies, which are available on its website and annual report. Danaos’ commitment to ethical behavior and integrity is essential for establishing a safe and inclusive work environment, boosting employee satisfaction, morale, and productivity, and contributing to the company’s long-term growth and sustainability.
In 2022 we have initiated a customer satisfaction survey receiving a result of 82% and we are currently in process of revisiting the survey for fine tuning based on the assessment in order to reach our commitment by 2025.
International, National and Local regulatory framework
Overall, our strong internal controls and proactive approach to risk management help ensure that we maintain compliance with the regulations, promote safety and environmental stewardship, and continue to operate successfully in the shipping industry.
The shipping industry faces a variety of risks, from environmental and safety hazards to regulatory compliance issues. In our company, we take a proactive approach to risk management and control, beginning with an enterprise-wide risk assessment to identify and prioritize key risks. This process is dynamic and iterative, continually assessing risks and developing strategies to manage them.
To ensure robust risk management, we have established four main business objectives: Operations, Reporting, Compliance, and Sustainability. These objectives are measurable, observable, attainable, and relevant, and they shape our day-to-day operations and priorities. Additionally, we consider possible changes in the external environment and our own business model that may render internal controls ineffective.
Our internal controls are designed to provide assurance and promote strong risk management. To achieve this, we maintain two separate assurance functions: an independent Internal Audit Department and a Safety Quality and Environmental Department. The Internal Audit Department reports directly to the Audit Committee of the Board and provides recommendations and action plans. They assist Management in achieving compliance with various laws and regulations, including the Sarbanes-Oxley requirements regarding the internal control environment over financial reporting.
The Safety Quality and Environmental Department focuses on maintaining compliance with relevant environmental and safety regulations, as well as our own Danaos Safety Management System. We have established procedures to ensure that all vessels under our management comply with the maritime environmental requirements set up under applicable regulations. Our good records in PSC (Port State Control) examinations are an indication of a sound safety management system.
We also undergo third-party audits annually at our Piraeus office and twice within a 5-year cycle on board. These audits are performed by Recognized Organizations members of IACS to maintain the validity of our Company’s Documents of Compliance and issue Vessels’ Safety Management Certificates after verifying the effectiveness of our Safety Management System.
In November – December 2022, we conducted a materiality assessment in our 6 key stakeholder groups via a qualitative survey (Employees, Financial Institutions, Charterers, Suppliers, Flag State & Classification Societies and Danaos Management). The results of the materiality survey were evaluated and updated through internal procedures, benchmarking, and in conjunction with the Sustainability (ESG) Strategy of 2021. In the 5-year sustainability (ESG) Strategy as of 2021 was also highlighted the importance of improving the key ESG rating performance commitments, to achieve IMO goals as well as, transparency and disclosing ESG data annually.
The materiality matrix from 2022 is presented below:
The material topics presented below are determined by the outcome of the 2022 materiality assessment in conjunction with the 2021 Sustainability ESG strategy.
The topics which have been identified for the first time are underlined for clarity.