SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

STONE & WEBSTER, INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

STONE & WEBSTER, INCORPORATED
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:

- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1

- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

- --------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:

- --------------------------------------------------------------------------------
(3) Filing party:

- --------------------------------------------------------------------------------
(4) Date filed:

- --------------------------------------------------------------------------------
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(1)Set forth the amount on which the filing fee is calculated and state
how it was determined.
2

STONE & WEBSTER, INCORPORATED
250 West 34th Street
New York, New York 10119

March 24, 1994

Dear STOCKHOLDER:

We cordially invite our Stockholders to attend the 1994 Annual Meeting of
Stockholders of Stone & Webster, Incorporated which will be held at 1209 Orange
Street, Wilmington, Delaware, on Thursday, May 12, 1994 at 2:00 P.M. We would
ask Stockholders who plan to attend the Annual Meeting to mark the appropriate
box on the enclosed proxy card.

As more fully described in the accompanying Proxy Statement, the Board of
Directors recommends that you vote FOR the election of Directors and FOR the
ratification of the selection of independent accountants.

After more than 25 years of service as a Director, Howard L. Clark is not
standing for re-election. We gratefully acknowledge his many contributions to
the Corporation over the years.

It is important that your shares be represented at the meeting whether or
not you are personally present. Accordingly, we ask that you sign, date and mail
the enclosed proxy promptly.

As in past years, members of management will review the performance and
prospects of the Corporation, and will be available to answer questions during
and after the meeting.

Sincerely,

WILLIAM F. ALLEN, JR. BRUCE C. COLES
Chairman of the Board and President
Chief Executive Officer

STONE & WEBSTER, INCORPORATED

------------------------

NOTICE OF MEETING
------------------------

250 West 34th Street, New York, New
York 10119
March 24, 1994

To the Stockholders of
STONE & WEBSTER, INCORPORATED:

Notice is hereby given that the 1994 Annual Meeting of Stockholders of
Stone & Webster, Incorporated (the Corporation) will be held at 1209 Orange
Street, Wilmington, Delaware, on Thursday, May 12, 1994, at 2:00 P.M.,
Wilmington time, for the purpose of considering and acting upon the following:

1. The election of four Directors for a term of three years and until their
successors are duly elected and qualified.

2. The ratification of the selection by the Corporation's Board of Directors of
the firm of Coopers & Lybrand, independent accountants, as auditor of the
Corporation and its subsidiaries for the year 1994.

3. Any and all other business that may properly come before the meeting.

Only Stockholders of record at the close of business on March 14, 1994 will
be entitled to vote at the meeting or any adjournment or postponement thereof.

IF YOU ARE UNABLE TO BE PERSONALLY PRESENT AT THE MEETING, YOU ARE
REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY AND TO RETURN IT PROMPTLY.

By order of the Board of Directors,

JOEL A. SKIDMORE
Secretary
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STONE & WEBSTER, INCORPORATED
250 West 34th Street
New York, New York 10119

PROXY STATEMENT

The following information is furnished to each stockholder (the
Stockholder) of Stone & Webster, Incorporated (the Corporation) in connection
with the foregoing notice of the 1994 Annual Meeting of the Stockholders of the
Corporation (the Annual Meeting) to be held on Thursday, May 12, 1994 and the
enclosed proxy for use at the Annual Meeting and any adjournments or
postponements thereof. This Proxy Statement and the form of the proxy are being
mailed to Stockholders commencing on or about March 24, 1994.

The enclosed proxy is being solicited by and on behalf of the Board of
Directors of the Corporation. A proxy executed on the enclosed form may be
revoked by the Stockholder at any time before the shares are voted by filing
with the Secretary of the Corporation an instrument revoking such proxy or a
duly executed proxy bearing a later date or by attending the Annual Meeting and
electing to vote in person. If a Stockholder is a participant in the
Corporation's Dividend Reinvestment Plan, the proxy represents the shares in the
Stockholder's plan account in addition to the shares registered in the
Stockholder's name. If the Stockholder is a participant in the Employee
Investment Plan, Employee Stock Ownership Plan or Payroll-based Employee Stock
Ownership Plan of Stone & Webster, Incorporated and Participating Subsidiaries,
the proxy will constitute voting instructions to the trustee under those plans
directing how the shares in the participant's accounts in the plans are to be
voted. The shares of the Corporation's Common Stock represented by all proxies
which are received by the Corporation, or voting instructions received by the
trustee under the plans, will be voted as specified. If no specification is
made, the shares represented thereby will be voted:

(1) FOR the election of the Board's nominees as Directors, and

(2) FOR the ratification of the selection of Coopers & Lybrand,
independent accountants, as auditor of the Corporation and its
subsidiaries for the year 1994.

Votes cast by proxy or in person at the Annual Meeting will be counted by
the persons appointed by the Corporation to act as inspectors of election for
the meeting. The inspectors of election will treat shares of Common Stock
represented by proxies that reflect abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum. However,
abstentions will be treated as a negative vote for purposes of determining the
outcome of any matter submitted to Stockholders which requires the approval of a
majority of votes entitled to be cast on such matters.

The inspectors of election will treat shares referred to as "broker
non-votes" (i.e., shares held by brokers or nominees as to which instructions
have not been received from the beneficial owners or persons entitled to vote
and which the broker or nominee does not have discretionary power to vote on a
particular matter) as shares that are present and entitled to vote for purposes
of determining the

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presence of a quorum. However, for the purposes of determining the outcome of
any matter as to which the broker has physically indicated on the proxy that it
does not have discretionary authority to vote, those shares will be treated as
not present and not entitled to vote with respect to that matter (even though
those shares are considered entitled to vote for quorum purposes and may be
entitled to vote on other matters).

The expenses in connection with the solicitation of proxies, including the
cost of preparing, assembling and mailing proxy material, and also the payment
or reimbursement of charges of brokerage houses and other institutions, nominees
and fiduciaries in forwarding the Corporation's proxy material to beneficial
owners, will be borne by the Corporation. In addition to solicitations by mail,
some of the officers and regular employees of the Corporation and its
subsidiaries may solicit proxies personally or by telephone, facsimile or
telegraph. The Corporation has also retained D. F. King & Co., Inc. to assist in
the solicitation of proxies by the methods above referred to at an estimated
cost of $8,500 plus out-of-pocket expenses.

The Corporation had outstanding, as of March 14, 1994, 14,977,814 shares of
Common Stock (excluding 2,753,674 shares held in the treasury), each share of
which is entitled to one vote. Only Stockholders of record at the close of
business on March 14, 1994 will be entitled to vote at the Annual Meeting or any
adjournments or postponements thereof.

As of March 14, 1994, the institutional trustees under the following
employee benefit plans held of record more than 5% of the outstanding Common
Stock of the Corporation:

The Employee Investment Plan of Stone & Webster, Incorporated and
Participating Subsidiaries (the Employee Investment Plan) -- 2,018,979
shares (approximately 13.4%)

and

The Employee Stock Ownership Plan of Stone & Webster, Incorporated and
Participating Subsidiaries (ESOP) -- 3,329,642 shares (approximately
22.2%).

The Committee under the Employee Investment Plan (the Plan Committee) may
be considered a beneficial owner of the shares held under the Employee
Investment Plan by reason of the definition of beneficial ownership contained in
Rule 13d-3 of the Securities and Exchange Commission (the Commission)
promulgated under the Securities Exchange Act of 1934, as amended (the Exchange
Act). The Employee Investment Plan provides that shares allocated to the
investment accounts of participants will be voted as the participants direct,
and shares not voted by participants will be voted in accordance with the
direction of the Plan Committee. To the extent that the Plan Committee shares
voting power as aforesaid, the Plan Committee may be considered a beneficial
owner under the Commission definition. The Plan Committee is presently composed
of Kenneth G. Ryder, Chairman, William F. Allen, Jr., Bruce C. Coles, Kent F.
Hansen, John A. Hooper, and Fred D. Thompson, all of whom are Directors of the
Corporation. Pursuant to the ESOP, shares allocated to the accounts of
participants are voted as the participants direct, and allocated shares not
voted by the participants and all unallocated shares are voted in the
proportions the allocated shares are voted by the participants. Shares

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held under the ESOP may not be transferred by the trustee of that plan, other
than to meet distribution requirements of the ESOP or in connection with a
statutory reclassification of the Corporation's Common Stock or a statutory
merger, consolidation or sale of assets or in certain limited circumstances,
upon the direction of the participants.

As of March 14, 1994, the Payroll-based Employee Stock Ownership Plan
(PAYSOP) trust held 80,723 shares (approximately 0.5%) of Common Stock. Shares
allocated to the accounts of participants in the plan are voted as the
participants direct, and allocated shares not voted by participants will not be
voted.

In addition to the foregoing, the following table sets forth an entity
which may be deemed to have beneficial ownership of more than 5% of the
outstanding Common Stock of the Corporation:

PERCENTAGE OF
NUMBER OF OUTSTANDING
NAME AND ADDRESS SHARES COMMON STOCK
------------------------------------------------- --------- -------------

Frank J. A. Cilluffo............................. 878,700(1) 5.87%
Cilluffo Associates, L.P.
717 Fifth Avenue, 23rd Floor
New York, New York 10022

- ---------------

(1) Frank J. A. Cilluffo, reporting for himself and Cillufffo Associates, L.P.,
Zenith Associates, L.P., Frank and Irja Cilluffo Foundation, Marvin E.
Lesser, and Edward C. Meyer, has furnished information to the Corporation
which disclosed that as of February 28, 1994, such individuals and entities
beneficially owned, taken together, 878,700 shares.

To the knowledge of the Corporation, as of March 14, 1994 no other person
beneficially owned more than 5% of the outstanding Common Stock of the
Corporation.

I. ELECTION OF DIRECTORS

In accordance with the Corporation's By-Laws, the Board of Directors will
consist of twelve members and is divided into three classes. The four Directors
to be elected at this Annual Meeting will be elected to serve until the 1997
Annual Meeting of the Stockholders and until their successors are duly elected
and qualified. The vote of a majority of all votes entitled to be cast at the
Annual Meeting shall be sufficient to elect a Director. The Board recommends
that Stockholders vote FOR each of the nominees listed below. It is intended
that proxies and voting instructions which are executed without specification
(other than broker non-votes) will be voted for the election of the nominees
listed below, all of whom are now Directors of the Corporation:

BRUCE C. COLES, WILLIAM M. EGAN, DONNA R. FITZPATRICK AND KENT F. HANSEN

On December 15, 1993, the Board of Directors of the Corporation approved a
plan to elect Bruce C. Coles Chief Executive Officer and President of the
Corporation after the 1994 Annual Meeting. William F. Allen, Jr. will remain as
Chairman of the Board. Mr. Allen will not stand for re-election to the Board
when his current term expires in May, 1995.

Certain information, as reported to the Corporation, respecting such
persons and other persons whose term of office as Director will continue after
this Annual Meeting, and information relating to the

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beneficial ownership of Common Stock of the Corporation of other Named
Executives (as hereinafter defined) who are not Directors of the Corporation is
set forth below:

SHARES OF
COMMON STOCK
OF THE
CORPORATION
BENEFICIALLY
BUSINESS EXPERIENCE OWNED ON
DIRECTORS AND NOMINEES FOR THE PAST FIVE YEARS, DIRECTOR MARCH 14,
AND EXECUTIVE OFFICERS AGE AND OTHER INFORMATION SINCE 1994(A)
- ------------------------- ------------------------------------ ----- -------------

NOMINEES FOR TERMS EXPIRING IN 1997
Bruce C. Coles........... President of the Corporation (49). 1990 37,716(B)
William M. Egan.......... Executive Vice President of the 1991 53,609(B)(C)
Corporation (65).
Donna R. Fitzpatrick..... President and Chief Executive 1994 100
Officer, Radiance Services Company
(Microelectronics cleaning
technology); during 1985-90, Under
Secretary and Assistant Secretary,
U.S. Department of Energy (45).
Kent F. Hansen........... Professor of Nuclear Engineering, 1988 200
Massachusetts Institute of
Technology (Education) (62).
Also Director of EG&G, Inc.
DIRECTORS WHOSE TERMS EXPIRE IN 1995
William F. Allen, Jr..... Chairman of the Board and Chief 1986 47,781(B)
Executive Officer of the
Corporation (74).
J. Peter Grace........... Chairman of the Board, W. R. Grace & 1945 11,680(D)
Co. (Specialty chemicals and
health care) (80).
Also Director of W. R. Grace &
Co., Chemed Corporation,
Ingersoll-Rand Company (Director
Emeritus), Milliken & Company,
National Sanitary Supply Co.,
Omnicare, Inc., and Roto-Rooter,
Inc. and Trustee Emeritus of
Atlantic Mutual Insurance Company.
J. Angus McKee........... Chairman and Chief Executive 1984 400
Officer, Gulfstream Resources Canada
Limited (Oil and gas) (58).
Meredith R. Spangler..... Trustee; Chairman of C. D. Spangler 1991 100
Foundation (56).
Also Director of NationsBank
Corporation.

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DIRECTORS WHOSE TERMS EXPIRE IN 1996
William L. Brown......... Retired Chairman, Bank of Boston 1970 400
Corporation and The First National
Bank of Boston (Banking) (72).
Also Director of G. C. Companies,
Inc., Ionics, Incorporated, North
American Mortgage Company, Standex
International Corporation, and
Trustee of Bradley Real Estate
Trust.
John A. Hooper........... Former Vice Chairman, The Chase 1974 400
Manhattan Corporation and The
Chase Manhattan Bank, N.A.
(Banking) (71).
Kenneth G. Ryder......... Chancellor, Northeastern University 1987 200
(Education) (69).
Fred D. Thompson......... Attorney, Of Counsel, Arent Fox 1989 100
Kintner Plotkin & Kahn (Attorneys)
(51).
OTHER NAMED EXECUTIVES OF THE CORPORATION WHO
ARE NOT DIRECTORS OR NOMINEES
James N. White........... Executive Vice President (59). -- 18,372(B)
Robert F. Gallagher...... Vice President and Treasurer (59). -- 20,382(B)

- ---------------

(A) The information contained in this column reflects the definition of
beneficial ownership for the purposes of the proxy rules of the Commission.
The nature of beneficial ownership for shares shown in this column is sole
voting and investment power, except to the extent set forth in footnotes
(B), (C) and (D).
(B) Includes (i) shares allocated under the Employee Investment Plan and which
are subject to its terms and provisions with respect to termination and
withdrawal and, in limited circumstances, to forfeiture, and held as of
December 31, 1993 by The Chase Manhattan Bank, N.A., trustee under the plan
(with respect to such shares, voting power and investment power are
determined in accordance with the provisions of the plan); (ii) shares
allocated under the ESOP and which are subject to its terms with respect to
forfeiture and held as of December 31, 1993 by The Chase Manhattan Bank,
N.A., trustee under the plan; (iii) shares allocated under the PAYSOP and
which are subject to its terms and held as of December 31, 1993 by The Chase
Manhattan Bank, N.A., trustee under the plan; and (iv) shares awarded under
the Corporation's Restricted Stock Plan and which are subject to its terms
with respect to forfeiture. Shares held in accounts of employees in the

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Employee Investment Plan, ESOP and PAYSOP, including Messrs. Allen, Coles,
Egan, White and Gallagher, are voted by the trustees of such plans in
accordance with the instructions of the employees; in the absence of such
instructions, such shares are voted by the trustees in accordance with the
terms of such plans.
(C) Members of Mr. Egan's family own 124 shares, beneficial ownership of which
is disclaimed by Mr. Egan.
(D) Includes 4,368 shares held in a trust of which Mr. Grace is a trustee who
shares voting and investment power and of which he is a beneficiary; and
7,312 shares held in trusts for the benefit of others of which he is a
trustee who shares voting and investment power, but in which he disclaims
any beneficial interest.

As of March 14, 1994, the Directors and officers of the Corporation, as a
group, beneficially owned 237,167 shares or approximately 1.6% of the
Corporation's outstanding Common Stock, including shares allocated under the
Employee Investment Plan, the ESOP and the PAYSOP. The nature of beneficial
ownership for said shares was sole voting and investment power, except (1) as
referred to in footnotes (B) through (D) above, (2) 400 shares were beneficially
owned by Howard L. Clark, a Director of the Corporation who is not standing for
re-election, and (3) 23,173 shares were held under the Employee Investment Plan
and hence voting power was shared as described on page 2 of this Proxy
Statement. No Director or officer beneficially owned as much as 1% of the
outstanding Common Stock of the Corporation.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Exchange Act requires the Corporation's Directors, its
executive officers, and persons holding (as defined in the regulations of the
Commission) more than 10% of a registered class of the Corporation's equity
securities, to file reports of ownership and reports of changes in ownership
with the Commission and the New York Stock Exchange. Directors, executive
officers, and greater than 10% Stockholders are also required by Commission
regulations to furnish the Corporation with copies of all such reports that they
file. Based solely on its review of the copies of such forms received by it and
written representations from certain reporting persons, the Corporation believes
that all filing requirements applicable to its Directors, executive officers,
and greater than 10% Stockholders were complied with during the fiscal year
ended December 31, 1993.

CERTAIN COMMITTEES, ATTENDANCE, AND COMPENSATION OF DIRECTORS

The Board has appointed an Audit Committee, a Nominating Committee, and a
Compensation Committee whose report appears below. All of the members of these
committees are non-employee Directors.

The Audit Committee consists of Howard L. Clark (Chairman), William L.
Brown, Kent F. Hansen and J. Angus McKee. The Audit Committee, which met three
times during 1993, among other things, considers and recommends to the full
Board the selection of the independent auditor; reviews the performance of the
audit function; and reviews with the independent and the internal auditors the
scope

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and results of the Corporation's internal auditing procedures and the adequacy
of internal accounting controls.

The Nominating Committee consists of Kent F. Hansen (Chairman), William L.
Brown, John A. Hooper and Meredith R. Spangler. The Nominating Committee, which
met twice during 1993, considers and makes recommendations to the Board of
Directors as to criteria for Board composition and membership, and the names of
persons whom it concludes should be considered for Board membership. The
Nominating Committee will consider nominees recommended by Stockholders. Such
recommendations should be submitted to the attention of the Corporate Secretary,
Stone & Webster, Incorporated, 250 West 34th Street, 32nd Floor, P. O. Box 1244,
New York, NY 10116.

The Compensation Committee consists of John A. Hooper (Chairman), William
L. Brown, Kenneth G. Ryder and Meredith R. Spangler. The Compensation Committee
met three times during 1993. The Compensation Committee reviews and approves the
compensation and/or method of determining compensation of the principal officers
and employees of the Corporation, considers compensation plans which are
subsequently presented to the full Board, and authorizes the grant of awards of
Common Stock under the Restricted Stock Plan. For additional information
regarding the policies and mission of the Compensation Committee, see "Report of
the Compensation Committee" below. There are no compensation committee
interlocks or insider participation relationships on the Compensation Committee.

The Board of Directors met eleven times during 1993. In 1993, each of the
Directors attended at least 75% of the total number of meetings of the Board and
of the committees of the Board on which the Director served. Directors who are
not employees of the Corporation receive an annual retainer of $8,000 and a fee
of $2,000 for each Board meeting attended and $1,000 for each committee meeting
attended, except that the Chairman of the Audit Committee receives a committee
meeting fee of $2,000 and the Chairman of each other committee receives a
committee meeting fee of $1,500. Directors are reimbursed for expenses incurred
in attending Board and committee meetings.

REPORT OF THE COMPENSATION COMMITTEE

Under the direction of the Compensation Committee (the Committee), the
Corporation has developed and implemented compensation plans and programs which
are designed to enhance the growth and profitability of the Corporation and
Stockholders' value. The following is a report on the compensation philosophy
and practices of the Committee during 1993.

The Committee's fundamental approach is to compensate the Named Executives
(as hereinafter defined) at a basic level commensurate with the responsibilities
assigned to them, supplemented with contingent remuneration which is directly
related to the performance of the Corporation as measured by consolidated net
income, as described below in detail. The objectives of the Corporation's
executive compensation practices are to attract and retain very highly competent
individuals, to encourage them to accomplish and surpass the business goals of
our organization, and to link the interests of the Corporation's executives and
managers with the interests of the Stockholders. Because of the profes-

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sional nature of the Corporation, this philosophy applies not just to the Named
Executives, but to many levels within the corporate structure.

The Corporation, through operating subsidiaries, is primarily engaged in
the engineering and construction industry, and has a diversity of markets,
skills and offices in various sections of the United States and also in Canada,
Europe, Africa, the Middle East, the Pacific Rim, Japan and Korea. The diversity
in markets, skills and offices results in a matrix organization that is optimum
to manage operations, as well as to develop technologies important to the
Corporation's future.

The Corporation provides engineering, design, construction, consulting and
full environmental services for petrochemical, refining, power, industrial,
governmental, transportation and civil works projects. Other subsidiaries
participate in gas and oil exploration, production, gathering and
transportation, and in cold storage and real estate operations.

In its review of management performance and compensation, the Committee has
taken into account management's commitment to the long-term success of the
Corporation. This includes constant awareness of changes in marketing the
Corporation's services, and the staffing and execution of jobs, as well as
dedication to remaining a leader in technology. Marketing must be constant and
aggressive as new work must be obtained to replace completed jobs. The nature of
the Corporation's business has changed and has become more global and is
expanding into new types of services. This requires that management weigh many
things on a current basis. Entering new fields of business has required changes
in skills and expertise resulting in retraining staff as well as hiring staff
with this expertise. Initiatives have been developed to maintain and enhance the
Corporation's worldwide presence with the goal of obtaining projects in a very
competitive market place, with the ability to execute work profitably and
professionally.

The organization must be managed to ensure successful project execution,
development of appropriate technologies, and management and training of its
personnel. This entails coordinating a very diverse number of skilled employees
located throughout the world. Management has continued the pursuit of these
tasks. The Committee has recognized that these decisions made by management will
provide the basis for the Corporation's long-term growth.

Based on its evaluation of these factors, the Committee believes that
senior management of the Corporation is committed to long-term successful
financial results. It believes that the compensation policies, plans and
programs it has implemented and administrated have contributed to dedicated
performance by senior management.

Clients engage the Corporation's professional services because of a need
for special technical expertise or for mobilization of large engineering
manpower resources, or both. Most professional people at Stone & Webster are
expected to perform well above the average industrial level in producing
innovative designs and applying advanced management techniques. In many
businesses only a few people have the opportunity to impact the results of the
organization. In a professional firm such as the Corporation, this opportunity
extends deeply into the organization. Nevertheless, there are certain key

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people as in all organizations who have the opportunity to impact significantly
on results. Stone & Webster strives to compensate these people in line with
these responsibilities.

The engineering and construction business is fundamentally cyclical in
nature. Engineering and construction activity historically tend to come in
clusters, to some extent coinciding with the general business cycle and to some
extent depending upon flurries of activity within the industries served. For
this reason, the need to limit overhead costs was recognized early in the
history of the Stone & Webster organization. At the same time, because of the
demanding technical nature of the business, it is necessary to attract and
retain professionals of the highest competence. Accordingly, the Corporation
adopted the type of compensation arrangement discussed herein for the Named
Executives, its professional and other supervisory employees.

The solution to the conflicting requirements referred to above is dividing
compensation for employees with higher levels of responsibility and skill by
providing fixed salaries at relatively modest levels and making the balance of
their regular compensation contingent upon the profits of the business. Thus, in
lean years, the Corporation may be able to avoid the problem of reducing fixed
salaries or even laying off competent professionals in order to avoid disastrous
overhead costs. Conversely, in good years, the professionals who are the
backbone of the organization receive higher compensation. In this way, the
professional staff is compensated over the years in accordance with their worth
while the requisite flexibility for the inevitable downturns in the engineering
and construction industry is retained.

For many years compensation of the employees of the organization has been
determined by Salary Committees of the companies in the Stone & Webster
organization, on the basis of management recommendations. The Committee is
composed of four Directors who neither are nor have been officers or employees
of any company in the Stone & Webster organization. This Committee determines
compensation for the employees of Stone & Webster, Incorporated and reviews the
recommendations of separate Salary Committees for each of the subsidiary
companies.

The Committee generally meets throughout the year when necessary and in
December of each year to determine the basis of compensation for the following
year. The total compensation appropriate for each Named Executive, as well as
other employees, is presented for evaluation. In the case of employees who are
reaching or have reached a certain level of responsibility and of compensation,
a determination is made that a part of their compensation shall be placed at
risk, that is, be made "contingent," and assignment is made of a contingent
interest at that time for the following year. The actual amount of that
contingent interest is determined at the end of that year, and is based on a
relationship to net income subject to certain adjustments and limitations. Thus
performance of the organization has a direct impact on the contingent payments
to the Named Executives. Initially, of course, this contingent portion will
normally be a relatively small percentage of compensation. As responsibilities
and compensation level increase, an increasing part of total compensation is
placed at risk by the Committee.

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The compensation plan for the Corporation, which provides for payment of
contingent compensation, is a formal plan recommended by the Committee for
adoption by the Board of Directors. Units of participation under the plan are
assigned to officers and employees who are in the plan and are approved by the
Committee. The value of the participations is based on consolidated net income
which would be adjusted for extraordinary debits or credits reflected in
consolidated net income.

Additionally, the plan provides that the aggregate of contingent amounts
determined by the Committee as payable pursuant to this plan may equal but not
exceed a maximum amount. Further, the Committee can reduce the contingent amount
otherwise payable under the plan to any officer or employee if the Committee
believes the total compensation otherwise payable would exceed fair and
reasonable compensation for the services rendered by the officer or employee.
There is no minimum contingent payment guaranteed under the plan; indeed, in
1993, there were no contingent payments made due to the level of the
Corporation's adjusted consolidated net income.

Increases in both the fixed and the contingent portions of an employee's
compensation are treated as constituting normal compensation adjustments which
would otherwise be paid in full as fixed compensation. This type of arrangement
is regarded simply as a means of recognizing those factors which are ordinarily
taken into account in determining salaries, such as length of service, quality
of experience, competition for highly skilled professionals, and ability. While
the Committee is not able to formally and precisely compare salaries to
compensation paid by comparable companies (including, for example, those
included in the industry index in the performance graph which appears in this
proxy statement) because of the absence of any comprehensive published listing
of such data, there is information available from various sources which enables
the Committee to take into consideration the effects of competition for
highly-skilled professionals.

Under the terms of the Corporation's Restricted Stock Plan discussed
elsewhere in this proxy statement, the Committee may from time to time implement
a long-term component in the compensation package for a Named Executive by
authorizing the grant of restricted stock awards pursuant to the plan. This
component has the additional impact of further linking the employee's interests
with those of the Corporation's Stockholders. The Committee determined that
there would be no awards to any Named Executive in 1992, and in 1993, only Mr.
Coles received an award, consisting of 12,000 shares of Common Stock which will
vest over a period of five years under the terms of the plan and the award.

On August 6, 1993, Congress enacted the Revenue Reconciliation Act of 1993,
which includes, among other things, a provision that denies public companies the
ability to deduct certain amounts paid as executive compensation in excess of $1
million per year (Section 162(m)). Section 162(m) does not prohibit a company
from paying annual compensation in excess of $1 million but rather eliminates a
company's ability to deduct such excess amounts. The Corporation has reviewed
its compensation policies with respect to covered executives and determined that
Section 162(m) should have no impact on such policies in 1994, since no covered
executive is expected to receive compensation in such year in excess of the $1
million threshold.

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In determining the compensation of the Chief Executive Officer (the CEO)
for 1993, the items discussed above were considered by the Committee. Specific
consideration was given to the performance of the Corporation for 1992 in
accordance with the compensation plan discussed above. The Committee also
weighed the need of continuing investments in new technology in order to
maintain the ability to respond to changes that affect the company's business.
The Committee reviewed the results of operations for 1992 and determined the
CEO's rate of compensation (including both the fixed salary and the contingent
interest) for the year 1993 would remain at the same level as 1992. The amount
of his contingent payment for 1993 therefore was determined by performance of
the organization during 1993; accordingly, there was no contingent payment made
to the CEO for 1993. The CEO does not have a long-term employment contract with
the Corporation, nor do any of the Named Executives. The recommendations of the
Committee are reviewed and approved by the full Board, except that the CEO and
other Directors who are also officers or employees of the Corporation do not
attend that portion of the Board meeting at which their compensation is
discussed, nor do they participate in the review or vote on the approval of
their compensation.

THE COMPENSATION COMMITTEE

John A. Hooper, Chairman
William L. Brown
Kenneth G. Ryder
Meredith R. Spangler

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EXECUTIVE COMPENSATION

The following table sets forth information concerning compensation awarded
to, earned by or paid to any person serving as the Corporation's CEO (or any
person acting in a similar capacity during the last completed fiscal year), and
each of the four most highly compensated executive officers of the Corporation
(collectively, the Named Executives), for services rendered to the Corporation
in all capacities during each of the last three fiscal years.

SUMMARY COMPENSATION TABLE

LONG TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION(1) AWARDS(4)
------------------------------ ------------------------
OTHER SECURITIES PAYOUTS ALL
ANNUAL RESTRICTED UNDER- ------- OTHER
NAME AND COMPEN- STOCK LYING LTIP COMPEN-
PRINCIPAL (2) (2) SATION AWARD(S) OPTIONS/ PAYOUTS SATION
POSITION YEAR SALARY($) BONUS($) (3)($) ($) SARS(#) ($) ($)(5)
- ------------------------- ---- --------- -------- ------- ---------- ----------- ------- -------

William F. Allen,........ 1993 550,000 0 - 0 0 0 6,187
Jr., Chairman and 1992 550,000 88,399 - 0 0 0 6,185
Chief Executive 1991 458,400 150,146 0 0 0
Officer
Bruce C. Coles........... 1993 349,000 0 - 306,000 0 0 6,187
President(6) 1992 349,000 55,249 - 0 0 0 6,185
1991 319,000 85,798 0 0 0
William M. Egan.......... 1993 327,000 0 - 0 0 0 6,187
Executive Vice 1992 327,000 39,779 - 0 0 0 6,185
President 1991 307,000 72,928 0 0 0
James N. White........... 1993 242,000 0 - 0 0 0 6,187
Executive Vice 1992 227,000 22,099 - 0 0 0 6,185
President(7) 1991 182,000 14,006 0 0 0
Robert F. Gallagher...... 1993 203,500 0 - 0 0 0 5,765
Vice President 1992 203,500 20,995 - 0 0 0 6,185
and Treasurer 1991 178,500 36,464 0 0 0

- ---------------

(1) Salaries for the years 1991, 1992 and 1993 were paid to certain employees
of the Corporation, including the Named Executives, under a plan adopted
for that year for compensating the individuals selected, in part by a fixed
amount ("Salary" in the table above) and in part by a contingent amount
("Bonus"), the latter amount being measured by a percentage, as determined
by the Compensation Committee in each individual case, of the Corporation's
Adjusted Consolidated Net Earnings determined as provided in the plan and
subject to certain limitations including a percentage limitation on the
total contingent amounts which may be paid. A similar plan has been adopted
for 1994 in which the Named Executives are among those selected to
participate. Under the proxy regulations of the Commission, the second
column under "Annual Compensation" is required to be labeled "Bonus"; these
amounts would more accurately be described as "Contingent Payments" because
the amounts paid are dependent on the Corporation's performance during the
year, and there is no

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assurance that any such amounts would be paid, as was the case in 1993 when
no such payments were made.
(2) Includes amounts deferred by the Named Executives under provisions of the
Employee Investment Plan pursuant to Section 401(k) of the Internal Revenue
Code.
(3) Perquisites and personal benefits paid to each Named Executive during 1993
and 1992 in each instance aggregated less than $50,000 or 10% of the total
annual salary and contingent payment set forth in the columns entitled
"Salary" and "Bonus" and, accordingly, is omitted from the table as
permitted by the rules of the Commission. In accordance with the
transitional provisions applicable to the Commission's rules regarding
executive compensation disclosure, the Corporation has not provided any
such information for fiscal year 1991.
(4) Restrictions on shares awarded pursuant to the Restricted Stock Plan lapse
in five equal annual installments commencing on the first anniversary date
of each award. Pursuant to the Restricted Stock Plan, as of December 31,
1993, Mr. Coles held 13,200 shares of Common Stock with a market value of
$364,650, which includes 12,000 shares awarded in 1993 as reflected in the
table above. No other Named Executive holds any shares of restricted stock
which have not fully vested under the terms of the Restricted Stock Plan.
Dividends are payable on restricted stock awards directly to the holder of
restricted stock. The Corporation does not have any plans which provide
compensation in the forms of stock options or stock appreciation rights
(SAR's), nor did it have any such plans during the years covered by this
table.
(5) Includes contributions made by the Corporation under the Employee
Investment Plan during 1993 on behalf of Messrs. Allen, Coles, Egan, White
and Gallagher in the amount of $2,948, $2,948, $2,948, $2,948 and $2,806,
respectively, and contributions made by the Corporation under the ESOP
during 1993 of $3,239, $3,239, $3,239, $3,239 and $2,959, respectively. In
accordance with the transitional provisions applicable to the Commission's
rules regarding executive compensation disclosure, the Corporation has not
provided any information for this column for fiscal year 1991.
(6) On December 15, 1993, the Board of Directors approved a plan to elect Mr.
Coles Chief Executive Officer and President of the Corporation after the
1994 Annual Meeting of Stockholders.
(7) Mr. White served as an officer of subsidiaries of the Corporation prior to
1992.

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PERFORMANCE GRAPH

The following graph compares the yearly percentage change in the cumulative
total Stockholder return (assuming the reinvestment of dividends) on the
Corporation's Common Stock against the cumulative total return of the Dow Jones
Industrial Average (DJIA) and the Investors' Business Daily -- Building-Heavy
Construction Industry Index published by William O'Neil for a period of five
years. The graph assumes an initial investment of $100 on December 31, 1988 in
the Corporation's Common Stock or in the underlying securities which comprise
each of those market indices.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
STONE & WEBSTER, INCORPORATED, DJIA AND THE WILLIAM O'NEIL HEAVY CONSTRUCTION
INDEX

WILLIAM
MEASUREMENT PERIOD O'NEIL HEAVY
(FISCAL YEAR COVERED) DJIA S&W CONSTRUCTION

1988 100.00 100.00 100.00
1989 132.00 112.00 138.00
1990 131.00 93.00 128.00
1991 163.00 93.00 157.00
1992 175.00 80.00 152.00
1993 205.00 90.00 155.00

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RESTRICTED STOCK PLAN

Under the provisions of the Restricted Stock Plan approved by the
Stockholders in 1976, and amendments to the plan approved by the Stockholders in
1983 and 1988, shares of the Corporation's Common Stock have been awarded by the
Compensation Committee, subject to forfeiture provisions, to a limited number of
selected key employees. As approved by the Stockholders at the 1988 Annual
Meeting of Stockholders, the plan was amended to increase the number of shares
available for restricted stock awards to 2,400,000 shares and to extend the
termination date of the plan to June 1, 1998. Restrictions on awarded shares
lapse in five equal annual increments commencing on the first anniversary date
of each award. Restrictions on certain shares lapse in May and October of 1994;
restrictions on certain other shares lapse in 1995 on the anniversary dates of
awards. Shares subject to restrictions may not be sold or otherwise disposed of
and must be returned to the Corporation if the employee's employment is
terminated for any reason other than death or disability occurring more than one
year after the date of the award. The 1983 amendments to the plan approved by
the Stockholders also provide that restrictions on the sale or transfer of
Common Stock of the Corporation awarded pursuant to the plan will lapse upon and
simultaneously with any change in control of the Corporation occurring without
the prior approval of the incumbent Board of Directors prior to the change in
control. Such a change in control would be deemed to have taken place if (i) a
third person, including a "group" as defined in Section 13d-3 of the Exchange
Act, acquires shares of the Corporation having 20% or more of the total number
of votes that may be cast for the election of directors of the Corporation, or
(ii) as the result of any cash tender or exchange offer, merger, consolidation,
sale of assets or other similar transaction, the persons who were Directors
before such transaction shall cease to constitute a majority of the Board or any
successor to the Corporation. In the event of such a change in control, the
lapse of restrictions on shares awarded under the plan to some or all of the
Named Executives might be deemed to constitute payments received from the
Corporation.

EMPLOYEE RETIREMENT PLAN

The Corporation's Employee Retirement Plan is a trusteed, non-contributory,
defined benefit plan which applies to all eligible employees of the Corporation.
Benefits are based upon the length of credited service and the amounts of annual
compensation (as defined in the plan) received during that period of service.
Normal retirement age is the employee's Social Security Retirement Age. The
formula for computing benefits provides that, for employees under the plan who
had not attained their retirement date prior to January 1, 1992, annual
retirement benefits are equal to the sum of (a) 0.75% of average annual
compensation for the years 1989, 1990 and 1991 up to $21,000 plus 1.35% of such
compensation in excess of $21,000, multiplied by the years and months of
credited service before January 1, 1992 for up to 35 years, plus (b) 1% of such
annual compensation for the years and months of credited service before January
1, 1992 in excess of 35 years, plus (c) for each year of credited service after
January 1, 1992, 1% of annual compensation up to an indexed amount (which was
$39,900 for 1993) equal to 1.75 times the "Social Security Covered Compensation"
(a 35-year average Social Security earnings base), plus 1.45% of such annual
compensation in excess of such amount; provided that employees with more than 35
years of service at retirement will be credited with a flat 1.33% of annual

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compensation for each year of service after the 35th year. With respect to the
Named Executives, compensation, for purposes of calculating retirement benefits,
includes both the fixed and contingent portions of salaries shown in the Summary
Compensation Table under the Salary and Bonus headings, respectively. As of
January 1, 1994, the number of full credited years of service for Messrs. Coles,
Egan, White, and Gallagher is 25, 38, 36 and 32 years, respectively, and the
estimated annual benefit payable to them upon retirement at normal retirement
age and assuming the continuance of current rates of compensation for each until
normal retirement age is $189,591, $168,975, $107,223 and $94,861, respectively.
These amounts do not reflect any limitations on annual benefits which may be
paid from a tax-qualified retirement plan at the time of retirement imposed by
Section 415 of the Internal Revenue Code, as amended from time to time, nor do
they reflect any limitations imposed by Section 401(a)(17) of the Internal
Revenue Code on the amount of compensation upon which benefits may be
determined. The Board of Directors has adopted a Supplemental Retirement
Program, which was amended in 1989, under which a trust has been established to
fund the payment of any benefits calculated under the provisions of the Employee
Retirement Plan which would be in excess of the limitations imposed by Sections
415 and 401(a)(17) of the Internal Revenue Code.

Mr. Allen, who has 45 full credited years of service, is receiving annual
retirement benefits in accordance with Internal Revenue Service minimum
distribution regulations in the amount of $107,677; as of January 1, 1994, he
has accrued an additional estimated annual benefit payable to him upon his
actual retirement of $53,596. Pursuant to action taken by the Board in 1986, Mr.
Allen entered into an agreement with the Corporation whereby, in consideration
for his services to the Corporation, he will receive following termination of
his services as an officer, an annual amount equal, as of December 31, 1993, to
$109,001 which amount is actuarially reduced to reflect benefits payable to his
surviving spouse, provided that such amount will be recalculated upward based
upon completion of additional service or if benefits payable generally under the
Employee Retirement Plan of the Corporation should be increased in the future.
In 1987, the Board authorized the extension of annuity and lump sum settlement
options under this agreement.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 1993, a subsidiary of the Corporation paid to the Law Offices of
Fred D. Thompson, of which firm Mr. Thompson (a Director of the Corporation) was
a member, approximately $120,000 for legal services. It is anticipated that
payments will continue to be made in the future to a firm with which Mr.
Thompson is associated for additional services.

II. SELECTION OF INDEPENDENT ACCOUNTANTS

The Stockholders will be asked to ratify the selection, on the
recommendation of the Audit Committee, by the Corporation's Board of Directors
of the firm of Coopers & Lybrand, independent accountants, as auditor of the
Corporation and its subsidiaries for the year 1994. The Board recommends that
their selection be ratified by the Stockholders. A representative of said firm
is expected to be present

16
20

at the Annual Meeting and will have the opportunity to make a statement if he or
she desires to do so and to respond to appropriate questions raised at the
Annual Meeting.

III. AS TO OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING

Management knows of no business which will be presented to the Annual
Meeting other than as set forth in the accompanying Notice of Meeting. However,
if any other matters properly come before the Annual Meeting or any adjournments
or postponements thereof, it is intended that the persons named in the enclosed
form of proxy, or their respective substitutes, shall have authority to vote
said proxy in accordance with their judgment on such matters. In the event that
one or more of the nominees for election as Directors should become unavailable
for election for any reason, it is intended that the persons named in said
proxy, or their respective substitutes, shall have authority to vote according
to their judgment for other persons in lieu thereof. Management has no present
knowledge that any of the nominees for election as a Director will be
unavailable to serve.

IV. LAST DATE TO SUBMIT STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING

November 28, 1994 is the date by which proposals of Stockholders intended
to be presented at the 1995 Annual Meeting of Stockholders must be received by
the Corporation to the attention of the Corporate Secretary, Stone & Webster,
Incorporated, 250 West 34th Street, 32nd Floor, P. O. Box 1244, New York, N.Y.
10116, in order to be considered for inclusion in the Corporation's Proxy
Statement and form of proxy relating to that meeting.
- --------------------------------------------------------------------------------

A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1993, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES, WILL BE FURNISHED UPON REQUEST WITHOUT CHARGE TO ANY PERSON WHO WAS A
BENEFICIAL OWNER OF COMMON STOCK OF THE CORPORATION AS OF MARCH 14, 1994, THE
RECORD DATE FOR THE 1994 ANNUAL MEETING OF STOCKHOLDERS. ALL REQUESTS SHOULD BE
DIRECTED TO THE CORPORATION TO THE ATTENTION OF THE CORPORATE SECRETARY, STONE &
WEBSTER, INCORPORATED, 250 WEST 34TH STREET, 32ND FLOOR, P.O. BOX 1244, NEW
YORK, N.Y. 10116.
- --------------------------------------------------------------------------------

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21

IN KEEPING WITH OUR CONCERN FOR THE ENVIRONMENT,
THIS PROXY STATEMENT IS PRINTED ON RECYCLED PAPER.
(LOGO)
Printed on Recycled Paper

STONE & WEBSTER, INCORPORATED

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints WILLIAM F. ALLEN, JR., BRUCE C. COLES,
ROBERT F. GALLAGHER AND JOEL A. SKIDMORE, or any one of them, as attorneys, with
full power of substitution, for and in the name of the undersigned, to vote, or
withhold from voting, all shares of the undersigned in Stone & Webster,
Incorporated at the Annual Meeting of its Stockholders to be held, in accordance
with notice and proxy statement received, in Wilmington, Delaware, on May 12,
1994, and at any and all adjournments and postponements thereof:

(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
23

PLEASE MARK
YOUR VOTES
/X/ AS THIS

THIS PROXY WILL BE VOTED FOR ITEMS (1) AND (2) UNLESS A CONTRARY CHOICE IS
SPECIFIED

WITHHOLD
FOR AUTHORITY
1. The election of Bruce C. Coles, William M. Egan, / / / /
Donna R. Fitzpatrick and Kent F. Hansen as
Directors to serve until the 1997 Annual Meeting of
Stockholders.

You may withhold authority to vote for any nominee by
writing his or her name on the line below:

---------------------------------------
FOR AGAINST ABSTAIN
2. The ratification of the selection of / / / / / /
Coopers & Lybrand, independent
accountants, as auditor for the year
1994.

3. Upon all such matters as may
properly come before said meeting.

/ / PLEASE CHECK BOX IF YOU
PLAN TO ATTEND THE
ANNUAL MEETING

SIGNATURE(S) DATE , 1994
------------------------------ -----------------------
NOTE: Please sign name as it appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator trustee or guardian, give full
title as such.
24

STONE & WEBSTER EMPLOYEE INVESTMENT PLAN TRUST
STONE & WEBSTER EMPLOYEE STOCK OWNERSHIP PLAN TRUST
STONE & WEBSTER PAYROLL-BASED EMPLOYEE STOCK OWNERSHIP PLAN TRUST

VOTING INSTRUCTIONS TO TRUSTEE

THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

To the Trustee:

In accordance with provisions of the Employee Investment Plan, the Employee
Stock Ownership Plan, and the Payroll-based Employee Stock Ownership Plan of
Stone & Webster, Incorporated and Participating Subsidiaries, I hereby instruct
you, as Trustee, to vote or cause to be voted at the Annual Meeting of the
Stockholders of Stone & Webster, Incorporated to be held on May 12, 1994 and at
any and all adjournments and postponements thereof, all shares in said
Corporation standing to my credit in each of the trusts under the foregoing
Plans in which I may be a participant and which I am entitled to vote at such
meeting as follows:

(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
25
PLEASE MARK
YOUR VOTES
/X/ AS THIS

THESE VOTING INSTRUCTIONS WILL BE VOTED FOR ITEMS (1) AND (2) UNLESS A CONTRARY
CHOICE IS SPECIFIED

WITHHOLD
FOR AUTHORITY
1. The election of Bruce C. Coles, William M. Egan, / / / /
Donna R. Fitzpatrick and Kent F. Hansen as
Directors to serve until the 1997 Annual Meeting of
Stockholders.

You may withhold authority to vote for any nominee by
writing his or her name on the line below:

- ---------------------------------------
FOR AGAINST ABSTAIN
2. The ratification of the selection of / / / / / /
Coopers & Lybrand, independent
accountants, as auditor for the year
1994.

3. Upon all such matters as may
properly come before said meeting.

SIGNATURE DATE , 1994
------------------------------ -----------------------
26

STONE & WEBSTER, INCORPORATED
250 West 34th Street
New York, New York 10119

A REMINDER

Dear Stockholder:

Proxy material for the Annual Meeting of Stockholders was sent to you under
date of March 24, 1994.

Our records indicate that your proxy for this meeting, which will be held
on Thursday, May 12, 1994, has not yet been received. Regardless of the number
of shares you may own, it is important that they be represented.

Since the time remaining is short, we urge you to sign, date and mail the
enclosed proxy promptly.

Sincerely,

JOEL A. SKIDMORE
Secretary

IF YOU HAVE ALREADY MAILED YOUR PROXY, PLEASE
ACCEPT OUR THANKS AND DISREGARD THIS REQUEST.
27

STONE & WEBSTER, INCORPORATED

250 West 34th Street
New York, New York 10119

March 24, 1994

To Participants in the Employee Investment Plan,
Employee Stock Ownership Plan, and
Payroll-based Employee Stock Ownership
Plan of Stone & Webster, Incorporated and
Participating Subsidiaries

VOTING RIGHTS

As a participant in the Employee Investment Plan, Employee Stock Ownership
Plan, and Payroll-based Employee Stock Ownership Plan, you may instruct The
Chase Manhattan Bank, N.A., Trustee under the Plans, to vote the shares of Stone
& Webster, Incorporated standing to your credit under the Plans at the Annual
Stockholders' Meeting of the Corporation to be held May 12, 1994.

Enclosed for your information and use are:

1. Combined Notice and Proxy Statement.

2. A form of Voting Instructions to Trustee card.

3. A post-paid, pre-addressed envelope.

To vote, please mark and sign the enclosed Voting Instructions card and
return it to the Trustee in the enclosed envelope.

Voting rights with respect to shares in the Employee Investment Plan Trust
not exercised by participants will be exercised by the Trustee in accordance
with the directions of the Committee under the Employee Investment Plan. With
respect to shares in the Employee Stock Ownership Plan Trust, shares allocated
to the accounts of participants are voted as the participants direct, and
allocated shares not voted by the participants and all unallocated shares are
voted in the proportions the allocated shares are voted by the participants.
Allocated shares in the Payroll-based Employee Stock Ownership Plan Trust are
voted as the participants direct, and allocated shares not voted by participants
will not be voted.

A copy of the Corporation's 1993 Annual Report to Stockholders has been
furnished to you.

Employee Benefits Committee
Stone & Webster, Incorporated