Gulf Island Fabrication : 2024 Notice of Meeting & Proxy Statement

GULF ISLAND FABRICATION, INC. 2170 BUCKTHORNE PLACE, SUITE 420 THE WOODLANDS, TEXAS 77380

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 16, 2024

Proxy Summary

This summary highlights selected information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before returning your proxy card. For more information regarding our 2023 financial and operational performance, please review our 2023 annual report to shareholders, including financial statements (our "2023 annual report"). The 2023 annual report, including financial statements, is first being mailed to shareholders together with this proxy statement, the notice of annual meeting and form of proxy card (collectively, the "proxy materials") on or about April 11, 2024.

2024 Annual Meeting of Shareholders

1

Director Nominee Highlights (page 17)

We have included summary information about each of the director nominees in the table below. See "Information about the Director Nominees and Executive Officers" for additional information regarding our director nominees.

____________________________

• Committee Chair ** Chair of the Board

• Audit Committee Financial Expert

2

Compensation Highlights (pages 15 and 21)

• Annual Cash Incentive Program Payout Based on Performance. Annual cash incentive awards for 2023 for our named executive officers ("NEOs") were based on specific targets related to adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted year-end cash, safety, and strategic objectives. Based on our 2023 performance, our NEOs earned annual cash payouts representing approximately 139.1% of their target annual cash incentive awards.
• No Changes to Base Salaries. There have been no changes to our executive officer base salaries since April 1, 2022.
• 50% of 2023 Long-Term Incentive Program ("LTIP") Based on Performance. The 2023 LTIP included both time-based restricted stock units ("RSUs") and performance-based RSUs, with the performance award accounting for 50% of the program. The performance-based RSUs provide for a payout of between 0% and 200% of the target award based on the Company's level of achievement of certain financial and strategic objectives, with the resulting amount vesting in equal installments over the three-year period following the grant date. Following the end of 2023, the Board determined that the performance metrics for the 2023 performance-based RSUs had been achieved at 139.1% of the target award.
• "Double Trigger" Equity Awards. Vesting of equity awards will only accelerate in connection with a change of control event if, within one year following such change of control event, a participant's employment is terminated without cause or terminated by the participant for good reason.

Ongoing Board Refreshment (page 7)

Since 2018, the Board has appointed or nominated four new directors, including one female director and one racially diverse director, while at the same time reducing its overall size with the retirement of six long-standing directors from 2018 to 2023. The size of the Board is expected to be six directors following the 2024 meeting compared to ten directors in 2018. The combination of such retirements and appointments has decreased our average tenure and age of our directors. In addition, since 2022, each of our directors is elected annually.

Corporate Governance Highlights (page 11)

We prioritize developing and maintaining a corporate governance framework that promotes the long-term interests of our shareholders, strengthens the accountability of our Board and management and engenders public trust in the Company. In furtherance of our commitment to strong corporate governance, our Board reviews on an ongoing basis evolving governance practices and investor preferences, including feedback from our shareholders.

The table below summarizes certain highlights of our corporate governance practices and policies. For detail regarding our ongoing corporate governance practices, see "Corporate Governance; Our Board of Directors and its Committees-Commitment to Corporate Governance."

3

Communications with our Board and Shareholder Engagement (page 12)

We believe it is important for our shareholders and interested parties to provide input on our business, our corporate governance and executive compensation practices, or any other matter of shareholder interest. Shareholders and interested parties may contact our Chief Executive Officer, who will coordinate distribution of the correspondence to our full Board, as provided below:

During 2023, we engaged in regular dialogue with our shareholders and their representatives, with discussions centering on the following topics: (1) the resolution of a material legal proceeding; (2) liquidity and capital resources; (3) strategy; (4) end market outlook; (5) labor market and related challenges; and (6) the substantial completion of the wind down of our Shipyard division projects and operations.

Informed by discussions with our shareholders, the Board has previously implemented certain changes to our governance, board and management structures.

2023 Corporate Strategy Accomplishments

During 2023, we continued to advance our Company strategy, which is focused on generating stable, profitable growth. Underpinning this strategy is a focus on the following initiatives (1) expanding our skilled workforce, (2) pursuing new growth end markets, while maintaining a focus on our traditional offshore markets, (3) further strengthening our project execution and maintaining bidding discipline, and (4) growing and diversifying our offshore services business. Our 2023 strategic accomplishment highlights included:

• settling a material legal proceeding in the fourth quarter 2023 which removed the uncertainty and risk of a potential adverse outcome inherent in any litigation;
• substantially completing the wind down of our remaining Shipyard division operations in the fourth quarter 2023 with the substantial completion of the Company's remaining Shipyard division projects;
• implementing a share repurchase program for our common stock that is designed to provide shareholder value while not impacting the Company's ability to pursue its growth objectives;
• continuing to improve project execution and bidding processes, which resulted in increased profitability for 2023 and strong year-over-year growth for our Fabrication and Services divisions;
• ending 2023 with a strong balance sheet and liquidity, highlighted by a year-end cash balance of $47.9 million, which provides us with the financial flexibility to pursue our growth objectives, including organic and inorganic growth opportunities; and
• commencing an effort to further consolidate our fabrication operations at our Houma facilities to reduce overhead costs, improve utilization and make certain excess property available for sale, which resulted in the sale of such property in first quarter 2024.

4

Corporate Governance; Our Board of Directors and Its Committees

Our Board currently consists of six members and has established three standing committees: the Corporate Governance and Nominating Committee, the Audit Committee and the Compensation Committee. Our Board formally met 12 times during 2023.

Each committee operates under a written charter adopted by our Board, and such charters, together with our Corporate Governance Guidelines, are available at www.gulfisland.com under "Investors-Governance- Governance Documents." The composition of each committee is reviewed annually by our Board. During 2023, each of our incumbent directors attended 100% of the aggregate of the total number of meetings of our Board and the total number of meetings held by all committees of our Board on which he or she served during the periods of his or her Board membership and committee service, except for two directors, both of who attended over 90% of all meetings; one director was absent from a regular committee meeting and the other director was absent from two special committee meetings.

Board Leadership Structure

Our Corporate Governance Guidelines require the Chair of the Board and Chief Executive Officer positions to be separate. Our Board determined that the separation of these roles would maximize management's efficiency by allowing the Chief Executive Officer to focus on our day-to-day business and the Chair of our Board to lead the Board in its fundamental role of providing guidance to, and oversight of, management. Our Board periodically reviews the Company's leadership structure and may make changes in the future as it deems appropriate. Our President and Chief Executive Officer is Richard W. Heo. Our Chair of the Board is William W. Chiles.

Our Board believes that our independent directors, with the leadership of our Chair of the Board, provide effective oversight of management. Moreover, in addition to director feedback provided during the course of meetings of our full Board, the non-management directors are given the opportunity to meet in executive session at each regular meeting of our Board or more frequently, as needed. During 2023, Mr. Chiles chaired all executive sessions of the independent directors and acted as the liaison between the independent directors and the management team. Our three standing committees are composed entirely of independent directors and have the power and authority to engage legal, financial and other advisors as they may deem necessary, without consulting or obtaining the approval of the full Board or management.

Board Independence

On the basis of information solicited from each director, and upon the advice and recommendation of the Corporate Governance and Nominating Committee, our Board annually determines the independence of each of our then-current directors in connection with the nomination process. Further, in connection with the appointment of any new director to the Board during the year, our Board makes the same determination. Our Board has determined that none of our current directors (specifically Ms. Richard and Messrs. Averick, Chiles, Keeffe and Troger), except for Mr. Heo (our Chief Executive Officer), has a relationship with the Company that would interfere with the exercise of independent business judgment and each is independent as defined in the director independence standards of the listing standards of The NASDAQ Stock Market LLC ("NASDAQ"), as currently in effect. In making this determination, our Corporate Governance and Nominating Committee, with assistance from the Company's legal counsel, evaluated responses to a questionnaire completed by each director regarding relationships and possible conflicts of interest between each director, the Company, management and the independent registered public accounting firm and made a recommendation to our Board. In its review of director independence, our Board considered all commercial, industrial, banking, consulting, legal, accounting, charitable, and family relationships any director may have with the Company, management and the independent registered public accounting firm.

5

Board Skills Matrix

The following table notes the breadth and variety of business experience that each of our director nominees brings to the Company and which enable the Board to provide insightful leadership to the Company so that it may better advance its strategies and deliver returns to shareholders. The Corporate Governance and Nominating Committee annually reviews this skills matrix for possible additions and any developments in the experience, qualifications, attributes and skills of the directors.

Director Nominee Experience and Skills Matrix

6