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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 [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CHICAGO BRIDGE & IRON COMPANY N.V.
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(Name of Registrant as Specified in Its Charter)
[COMPANY NAME]
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] 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 transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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 registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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CHICAGO BRIDGE & IRON COMPANY N.V.
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
We hereby give you notice of and invite you to attend the Annual General
Meeting of Shareholders of Chicago Bridge & Iron Company N.V., which will be
held on Tuesday, May 12, 1998 at 8:00 a.m. at the Hotel de L'Europe, Nieuwe
Doelenstraat 2-8, 1012 CP Amsterdam, The Netherlands, for the purposes set forth
in the proxy statement for such Meeting enclosed herewith.
By provision of the New York Common Share Agreement, dated as of March 2,
1998, a Holder of record at the close of business on April 3, 1998 of Shares of
New York Registry is entitled, subject, among other things, to any applicable
provisions of law and of the Articles of Association and the New York Common
Share Agreement, to attend the meeting and to exercise, the voting rights
pertaining to the amount of Common Shares represented by such Holder's Shares of
New York Registry.
If you plan to attend the Meeting or to appoint a proxy other than The Bank
of New York, as New York Transfer Agent and Registrar, please send written
confirmation of your intent, stating the numbers of your share certificates no
later than 5:00 p.m. (Amsterdam time) on May 5, 1998 to the Kas Associate N.V.,
Postbus 178/Spuistraat 172, Amsterdam 1012 VT, The Netherlands, tel. (31-20)
557-5646, fax (31-20) 557-5479. A proxy representing you must show a duly
completed proxy appointment and voting instruction card for admittance to the
Meeting.
If you wish to appoint The Bank of New York, as New York Transfer Agent and
Registrar, as your proxy and to give instructions as to the manner in which the
voting rights pertaining to the Common Shares represented by the Shares of New
York Registry held by you should be exercised at the Annual General Meeting of
Shareholders, please mark, sign, date and return the enclosed voting instruction
card as promptly as possible in the envelope provided. It is understood that, if
the enclosed voting instruction card is signed and returned but no instructions
are indicated, then a discretionary proxy will be given to a person who has been
designated by the Company, to vote or cause to be voted the amount of Common
Shares represented by such Holder's Shares of New York Registry registered in
the name of the Holder on the books of the New York Transfer Agent and Registrar
as of the close of business on April 3, 1998 in respect of the matters to be
voted upon.
The enclosed envelope requires no postage if mailed in the United States.
Voting instruction cards received by The Bank of New York, as New York Transfer
Agent and Registrar, after 5:00 p.m. (New York time) on May 5, 1998, will not be
acted upon.
The Bank of New York,
as New York Transfer Agent and
Registrar
Dated: April 13, 1998
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CHICAGO BRIDGE & IRON COMPANY N. V.
KONINGSLAAN 34
1075 AD AMSTERDAM, THE NETHERLANDS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 1998
To the Shareholders of:
CHICAGO BRIDGE & IRON COMPANY N.V.
You are hereby notified that the Annual Meeting of Shareholders of Chicago
Bridge & Iron Company N.V. will be held at Hotel de L'Europe, Nieuwe
Doelenstraat 2-8, 1012 CP Amsterdam, The Netherlands, at 8:00 A.M., local time,
on Tuesday, May 12, 1998, for the following purposes:
1. To reelect Jerry H. Ballengee and L. Donald Simpson as members
(each a "Supervisory Director") of the Board of Supervisory
Directors (the "Supervisory Board") to serve until the Annual
Meeting of Shareholders in 2001, and until their successors shall
have been duly elected and qualified;
2. To authorize the preparation of the annual accounts and the report
in the English language and to adopt the Dutch Statutory Annual
Accounts of the Company for the fiscal year ended December 31, 1997
(the "Annual Accounts");
3. To approve the distribution of profits for the fiscal year ended
December 31, 1997 in the amount of US$0.24 per share of common
stock previously paid as interim dividends;
4. To approve the extension of the authority of the Management Board
to repurchase up to 10% of the outstanding share capital of the
Company until November 12, 1999;
5. To approve the extension of the authority of the Supervisory Board
to issue and/or grant rights (including options to purchase) on
common stock of the Company until May 12, 2003;
6. To approve the extension of the authority of the Supervisory Board
to limit or exclude the preemptive rights of the holders of the
common stock of the Company until May 12, 2003;
7. To amend the Articles of Association of the Company to eliminate
provisions granting Praxair, Inc., the Company's former sole
shareholder, the right to appoint Supervisory Directors;
8. To approve the appointment of Arthur Andersen as the Company's
independent public auditors for the fiscal year ending December 31,
1998; and
9. To transact such other business as may be properly brought before
the meeting.
Copies of the Annual Accounts, the report of the Management Board and the
list of nominees for the Supervisory Board can be obtained free of charge by
shareholders and other persons entitled to attend meetings of shareholders of
the Company at the offices of the Company at Koningslaan 34, 1075 AD Amsterdam,
The Netherlands, at Kas Associatie N.V. Spuistraat 172, 1012 VT Amsterdam, The
Netherlands, and at the Bank of New York, 101 Barclay Street, 22nd Floor West,
New York, New York 10286 from the date hereof until the close of the Annual
Meeting.
Holders of registered shares of record at the close of business on April 3,
1998, and holders of the share-certificates to bearer shares are entitled to
receive notice of and to vote at the Annual Meeting and any adjournment thereof.
The stock transfer books will not be closed.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, SIGN, DATE AND PROMPTLY MAIL THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING IN
THE UNITED STATES.
Robert H. Wolfe
Secretary
April 13, 1998
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CHICAGO BRIDGE & IRON COMPANY N. V.
PROXY STATEMENT
MAY 12, 1998
This proxy statement, which is first being mailed to holders of registered
shares on or about April 13, 1998, is furnished in connection with the
solicitation of proxies on behalf of the Supervisory Board of Chicago Bridge &
Iron Company N.V. ("CB&I" or the "Company"), who ask you to complete, sign, date
and mail the enclosed proxy for use at the Annual Meeting of Shareholders to be
held at Hotel de L'Europe, Nieuwe Doelenstraat 2-8, 1012 CP Amsterdam, The
Netherlands, on May 12, 1998, 8:00 a.m. local time (the "Annual Meeting"), for
the purposes set forth in the foregoing notice. Cost of solicitation of proxies
will be borne by the Company. Proxies may be solicited personally or by
telephone or telefax by certain members of the Supervisory Board and the
directors, officers and a few regular employees of the Company and its
subsidiaries, without extra compensation.
Each share of common stock entitles the record holder thereof to one vote
on each matter submitted to a vote at the meeting. All shares represented by
proxies duly executed and received by the Company within the time indicated on
the enclosed proxy (the "Voter Deadline"), will be voted at the meeting or any
adjourned session of the meeting in accordance with the terms of the proxies. If
no choice is indicated on the proxy, the proxyholders will vote for Messrs.
Ballengee and Simpson for Supervisory Directors and for all proposals described
in this Proxy Statement. If any other business is properly brought before the
meeting, the proxies will be voted in accordance with the best judgment of the
proxyholders.
A shareholder may revoke a proxy by submitting a document revoking it or by
submitting a duly executed proxy bearing a later date prior to the Voter
Deadline, or by attending the meeting and voting in person.
Only shareholders of record of the 12,255,891 registered shares of the
Company's common stock, par value NLG 0.01 (the "Registered Shares") outstanding
at the close of business on April 3, 1998, and the holders of the 11,961
share-certificates to bearer shares (the "Bearer Shares") ( the Registered
Shares and the Bearer Shares together, the "Common Stock") are entitled to
notice of and to vote at the meeting.
The presence, in person or by proxy, of at least a majority of the Common
Stock is required for a quorum. Abstentions, directions to withhold authority to
vote for a director-nominee or to withhold authority to vote for all
director-nominees and "broker non-votes" (where a named entity holding shares
for a beneficial owner has not received voting instructions from the beneficial
owner with respect to a particular matter and such named entity does not possess
or choose to exercise its discretionary authority with respect thereto) will be
considered present at the meeting but will not be counted to determine the total
number of votes cast.
A copy of the Company's Annual Report on Form 10-K, including the financial
statements, schedules and exhibits thereto, may be obtained without charge by
written request to Robert H. Wolfe, Secretary, Chicago Bridge & Iron Company
N.V., Koningslaan 34, 1075 AD Amsterdam, The Netherlands or Investor Relations
Department c/o Chicago Bridge & Iron Company, 1501 N. Division St., Plainfield,
IL 60544-8984 USA.
ITEM 1
ELECTION OF DIRECTORS
The general affairs and business of the Company and the board which manages
the Company (the "Management Board") are supervised by the Supervisory Board
which is appointed by the general meeting of shareholders. The Company's
Articles of Association (the "Articles of Association") provide for at least six
and no more than 12 Supervisory Directors to serve on the Supervisory Board.
Effective March 26, 1997, the size of the Supervisory Board is eight. Under the
law of The Netherlands, a Supervisory Director cannot be a member of the
Management Board ("Managing Directors") of the Company. The shareholders have
appointed Chicago Bridge & Iron Company B.V. as the Management Board. Executive
officers are not Managing Directors of the Company for purposes of Dutch law.
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Members of the Supervisory Board are elected to serve three-year terms,
with approximately one-third of such members' terms expiring each year. Members
of the Supervisory Board must retire no later than at the general meeting of
shareholders held after a period of three years following their appointment, but
may be re-elected. Pursuant to the Articles of Association, members of the
Supervisory Board may be suspended or dismissed by the general meeting of
shareholders. The Supervisory Board may make a proposal to the general meeting
of shareholders for the suspension or dismissal of one or more of its members.
If such proposal is made by the Supervisory Board, a simple majority vote of the
shareholders is required to effect a suspension or dismissal. If no such
proposal is made, the general meeting of shareholders by vote of two-thirds of
the votes cast at the meeting if such two-thirds vote constitutes more than
one-half of the outstanding share capital of the Company (a "Two-thirds Majority
of Quorum") is required to effect a suspension or dismissal. The members of the
Supervisory Board may receive such compensation as may be authorized by the
general meeting.
As permitted under Dutch law and the Articles of Association, the
Supervisory Board is authorized to make binding nominations of two candidates
for each open position on the Supervisory Board, with the candidate receiving
the greater number of votes being elected. This means that a nomination by the
Supervisory Board is binding on the shareholders unless overridden by a
Two-thirds Majority of Quorum.
Two Supervisory Directors are to be elected to serve until the Annual
Meeting of Shareholders in 2001. For one position, the Supervisory Board has
proposed the election of Jerry H. Ballengee or Stephen M. Duffy. For the second
position, the Supervisory Board has proposed the election of L. Donald Simpson
or Kevin C. Yessian. Both Mr. Ballengee and Mr. Simpson are presently members of
the Supervisory Board. Mr. Duffy is Vice President -- Human Resources of Chicago
Bridge & Iron Company and Mr. Yessian is Vice President -- Procurement and
Manufacturing of Chicago Bridge & Iron Company.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR MR. BALLENGEE
AND MR. SIMPSON.
Certain information with respect to the nominees for Supervisory Director
and the six Supervisory Directors whose terms do not expire this year is as
follows:
NOMINEES FOR ELECTION FOR TERM OF THREE YEARS EXPIRING IN 2001:
FIRST NOMINEE
JERRY H. BALLENGEE, 60, has served as a Supervisory Director of the Company
since April, 1997. He has served as President and Chief Operating Officer of
Union Camp Corporation since July, 1994 and has served in various other
executive capacities and as a member of the Board of Directors of Union Camp
Corporation since 1988. He is Chairman of the Supervisory Board's Nominating
Committee and a member of the Corporate Governance Committee.
SECOND NOMINEE
Stephen M. Duffy, 48, has served as Vice President -- Human Resources,
Administration and Services of Chicago Bridge & Iron Company since June, 1996.
Mr. Duffy was Vice President -- Human Resources and Administration of CBI
Industries, Inc. from November, 1991 through May, 1996.
AND
FIRST NOMINEE
L. DONALD SIMPSON, 62, has served as a Supervisory Director of the Company
since April, 1997. Since December, 1996 Mr. Simpson has served as Executive Vice
President of Great Lakes Chemical Corporation. Prior thereto, beginning in 1992,
he served in various executive capacities at Great Lakes Chemical Corporation.
He is a member of the Supervisory Board's Audit Committee and Corporate
Governance Committee.
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SECOND NOMINEE
Kevin C. Yessian, 43, has served as Vice President-Procurement and
Manufacturing since July, 1997. Prior to joining the Company, he was President
of Indeck Energy Services from May, 1994 to July, 1997. Prior to that, Mr.
Yessian was Executive Vice President of the Coastal Remediation Company and Vice
President of Coastal Chem both units of The Coastal Company, and was employed
for over twenty years by that company and its predecessor company, American
Natural Resources Corporation.
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 1999:
J. CHARLES JENNETT, 57, has served as a Supervisory Director of the Company
since April, 1997. He has served as President of Texas A&M International
University since 1996. He was Provost and Vice President of Academic Affairs at
Clemson University from 1992 through 1996. Mr. Jennett is a member of the
Supervisory Board's Nominating Committee and Corporate Governance Committee.
GARY L. NEALE, 58, has served as a Supervisory Director of the Company
since April, 1997. He is currently President, CEO and Chairman of the Board of
NIPSCO Industries, Inc., whose primary business is the operation of Northern
Indiana Public Service Company, a gas and electric utility company. Mr. Neale
has served as a director of NIPSCO Industries, Inc. since 1991, a director of
Northern Indiana Public Service Company since 1989 and a director of Modine
Manufacturing Company since 1977. Mr. Neale is Chairman of the Supervisory
Board's Corporate Governance Committee and a member of the Organization and
Compensation Committee.
MARSHA C. WILLIAMS, 47, has served as a Supervisory Director of the Company
since April, 1997. Since December, 1997, she has served as Vice President and
Treasurer of Amoco Corporation, where she was Treasurer from 1993 to 1997, and
in the Mergers, Acquisitions and Negotiations Department from December, 1992 to
September, 1993 and was a Senior Financial Manager in the Treasurer's Department
from November, 1989 through December, 1992. Ms. Williams is a member of the
Supervisory Board's Audit Committee and Corporate Governance Committee.
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 2000:
J. DENNIS BONNEY, 67, has served as a Supervisory Director of the Company
since April, 1997. He served as Vice Chairman of the Board of Chevron
Corporation from 1987 to 1995. He currently serves as Chairman of the Board of
Aeromovel USA, and has also been a Director since 1996 of Alumax Inc. and United
Meridian Corporation. Mr. Bonney is Chairman of the Supervisory Board's Audit
Committee and is a member of the Organization and Compensation Committee and the
Corporate Governance Committee.
GERALD M. GLENN, 55, has served as Chairman of the Supervisory Board of the
Company since April, 1997. He has been President and Chief Executive Officer of
Chicago Bridge & Iron Company since May, 1996 and has been a Managing Director
of Chicago Bridge & Iron Company B.V. since March, 1997. From April, 1994 to
present, Mr. Glenn has been a principal in the Glenn Group LLC. From November,
1986 to April, 1994, he served as Group President -- Fluor Daniel, Inc. Mr.
Glenn is a member of the Supervisory Board's Nominating Committee.
VINCENT L. KONTNY, 60, has served as a Supervisory Director of the Company
since April, 1997. Mr. Kontny was President and Chief Operating Officer of Fluor
Corporation from 1992 until September, 1994. He is currently the owner and CEO
of the Double Shoe Cattle Company. He has held this position at Double Shoe
Cattle Company since 1992. Mr. Kontny is Chairman of the Supervisory Board's
Organization and Compensation Committee and a member of the Audit Committee and
the Corporate Governance Committee.
COMMITTEES OF THE BOARD
The Audit Committee, which held two meetings in 1997, is charged with
reviewing the adequacy and effectiveness of the internal auditing, accounting
and financial controls of the Company, and coordinating the
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annual internal audit plan with the auditing plan of the independent auditors.
The Committee receives reports from the Company's Internal Audit Department,
reviews the annual report to shareholders and the financial statements contained
therein, reviews the results of the audit performed by the Company's independent
auditors and acts as liaison between the independent auditor and the Supervisory
Board. The Committee makes recommendations concerning the appointment of the
independent auditor of the Company, the scope of the audit to be performed and
the fees to be paid. The Committee is also authorized to audit and monitor the
compliance by the Company and its subsidiaries with the laws of the various
jurisdictions in which the Company and its subsidiaries conduct business and to
report to the Supervisory Board and make recommendations with respect to any
problems.
The Organization and Compensation Committee, which held two meetings in
1997, reviews and makes recommendations concerning compensation philosophy and
guidelines for the executive and managerial group of the Company, reviews
compensation and benefit programs for employees of the Company and its
subsidiaries, compares such programs and compensation against market data and
makes recommendations as to modifications, reviews recommendations or actions of
management concerning benefit plans, incentive plans, stock option or other
stock awards and oversees the administration of such plans, reviews
compensation, and awards and grants under corporate benefit plans for the Chief
Executive Officer, reviews management recommendations concerning compensation
for certain other officers, administers the Company's long-term incentive plan
and advises as to which key officers of the Company or its subsidiaries should
be offered employment and/or termination agreements.
The Nominating Committee, which held one meeting in 1997, establishes
criteria regarding the size and composition of the Supervisory Board and its
Committees, recommends criteria relating to tenure and eligibility, identifies,
reviews and recommends prospective Supervisory Directors, recommends candidates
for the position of Chief Executive Officer, approves the nominees for new
positions on the Supervisory Board and vacancies on the Supervisory Board, and
advises regarding Supervisory Board compensation. It will consider nominees for
Supervisory Director recommended by shareholders. Recommendations must be
submitted in writing and addressed to the Chairman of the Nominating Committee,
c/o Secretary of the Company, Robert H. Wolfe, Chicago Bridge & Iron Company
N.V., Koningslaan 34, 1075 AD Amsterdam, The Netherlands, and set forth the
name, age, business and residential addresses, principal occupation, number of
shares of Common Stock owned and such other information concerning the nominee
as may be requested by the Nominating Committee.
The Corporate Governance Committee, which did not meet in 1997, reviews and
makes recommendations concerning policies and practices of management relating
to corporate governance and responsibilities and is responsible for the internal
operations of the Supervisory Board.
INFORMATION REGARDING MEETINGS
The Supervisory Board held three meetings in 1997. Each of the Supervisory
Directors attended at least 75% of the meetings of the Supervisory Board and of
the committees, if any, of which he or she was a member except Mr. Neale, who
attended two Supervisory Board meetings and one of the two meetings of the
committees of which he was a member.
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COMMON STOCK OWNERSHIP BY CERTAIN
PERSONS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to each
person known to the Company to be the beneficial owner of more than 5% of any
class of the Company's outstanding stock.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
-------------- ------------------- -------------------- --------
Common Stock............ Neuberger & Berman, LLC 1,609,641(1) 12.86%
605 Third Ave.
New York, NY 10158
Common Stock............ Wellington Management Company, LLP 1,170,000(2) 9.35%
75 State Street
Boston, MA 02109
Common Stock............ H.L. Investment Advisors, Inc. 1,170,000(3) 9.35%
200 Hopmeadow Street
Simsbury, CT 06070
Common Stock............ Glickenhaus & Co. 834,600(4) 6.7%
6 East 43rd St.
New York, NY 10017
Common Stock............ Franklin Resources, Inc. 775,600(5) 6.2%
777 Mariners Island Boulevard
San Mateo, CA 94404
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(1) According to a Schedule 13G dated March 13, 1998, filed by Neuberger &
Berman LLC and Neuberger & Berman Management Incorporation and they had sole
power to vote 1,037,100 shares of Common Stock and shared power to dispose
of 1,609,641 shares of Common Stock.
(2) According to a Schedule 13G dated January 18, 1998, filed by Wellington
Management Company, LLP and it had shared power to vote and to dispose of
1,170,000 shares of Common Stock.
(3) According to a Schedule 13G dated February 12, 1998, filed by H.L.
Investment Advisors, Inc., Hartford Investment Financial Services Company
and Hartford Capital Appreciation Fund, Inc., and they had shared power to
vote and to dispose of 1,170,000 shares of Common Stock.
(4) According to a Schedule 13G dated January 12, 1998, filed by Glickenhaus &
Co. and it had sole power to vote 444,100 shares of Common Stock and sole
power to dispose of 834,600 shares of Common Stock.
(5) According to a Schedule 13G dated January 30, 1998, filed by Franklin
Resources, Inc., Charles B. Johnson, Rupert H. Johnson and Franklin Mutual
Advisers, Inc., and they had sole power to vote and to dispose of 775,600
shares of Common Stock.
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SECURITY OWNERSHIP OF MANAGEMENT OF THE COMPANY
The following table sets forth certain information regarding the Company's
Common Stock beneficially owned on March 5, 1998, by each Supervisory Director,
each nominee to be a Supervisory Director, each named executive officer and by
all directors and executive officers as a group.
PERCENT OF
SHARES OF COMMON STOCK OUTSTANDING
NAME OF BENEFICIALLY OWNED COMMON
BENEFICIAL OWNER AS OF MARCH 5, 1998 (1) STOCK
---------------- ----------------------- -----------
Gerald M. Glenn.............................. 470,094 3.8%
Thomas L. Aldinger........................... 111,979 *
Stephen M. Duffy............................. 18,662 *
Timothy J. Wiggins........................... 111,979 *
Robert H. Wolfe.............................. 37,326 *
Kevin C. Yessian............................. 0 *
Jerry H. Ballengee........................... 0 *
J. Dennis Bonney............................. 4,000 *
J. Charles Jennett........................... 1,000 *
Vincent L. Kontny............................ 1,000 *
Gary L. Neale................................ 1,000 *
L. Donald Simpson............................ 1,000 *
Marsha C. Williams........................... 0 *
All directors, nominees for directors and
executive officers as a group (16 in
number).................................... 783,733 6.2%
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* Beneficially owns less than one percent of the Company's Common Stock.
(1) Share amounts for individual Supervisory Directors, nominees to be
Supervisory Director, named executive officers and all directors and
officers as a group include shares held pursuant to the Chicago Bridge &
Iron Management Defined Contribution Plan and shares held by immediate
family members.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Supervisory Directors, Executive Officers and
persons who own more than 10% of the Common Stock to file initial reports of
ownership and reports of changes in ownership (Forms 3, 4 and 5) of Common Stock
with the Securities and Exchange Commission (the "SEC") and the New York Stock
Exchange. Supervisory Directors, Executive Officers and greater than 10%
shareholders are required by SEC regulation to furnish the Company with copies
of all such forms that they file.
To the Company's knowledge based solely on its review of the copies of such
reports received by it and on written representations by certain reporting
persons that no reports on Form 5 were required, the Company believes that
during the fiscal year ended December 31, 1997, its Supervisory Directors,
executive officers and 10% shareholders complied with all Section 16(a) filing
requirements applicable to them.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each
of the last two fiscal years awarded to or earned by the Chief Executive Officer
of the Company and the four other most highly compensated executive officers of
the Company.
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------------
(A) (B) (C) (D) (G) (I)
SECURITIES
UNDERLYING
OPTIONS/ ALL OTHER
SALARY SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) BONUS (# SHARES) ($)(3)
--------------------------- ---- ------ $)(2) ---------- ------------
Gerald M. Glenn............................ 1997 400,000 155,000 92,094 8,640,347
Chairman of the Supervisory Board; 1996 230,770 469,500 0 26,094
President, Chief Executive Officer and
Chairman of Chicago Bridge & Iron
Company; and Managing Director of Chicago
Bridge & Iron Company B.V.
Thomas L. Aldinger......................... 1997 220,000 50,000 21,489 2,063,228
Vice President -- North American Group 1996 166,200 315,075 0 261,584
Executive of Chicago Bridge & Iron
Company
Stephen M. Duffy........................... 1997 160,000 30,000 11,160 366,246
Vice President -- Human Resources, 1996 89,230 219,129 0 10,362
Administration and Services of Chicago
Bridge & Iron Company
Timothy J. Wiggins......................... 1997 220,012 75,000 21,489 2,057,273
Vice President and Chief Financial 1996 59,230 50,000 0 55,026
Officer of Chicago Bridge & Iron Company;
and Managing Director of Chicago Bridge &
Iron Company B.V.
Robert H. Wolfe............................ 1997 175,000 35,000 17,094 721,090
Secretary of the Company; Vice President, 1996 16,827 25,000 0 0
General Counsel and Secretary of Chicago
Bridge & Iron Company; and Secretary of
Chicago Bridge & Iron Company B.V.
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(1) Salary paid in 1996 for actual period of employment by the Company; Mr.
Glenn -- May 27, 1996; Mr. Duffy -- June 1, 1996; Mr. Wiggins -- September
16, 1996; and Mr. Wolfe -- November 18, 1996. Mr. Aldinger was employed by
the Company during all of 1996.
(2) Bonus amounts include payments under the Company's Senior Management
Incentive Program effective only during 1996 and under the Company's 1996
Management Incentive Compensation Program which was replaced in 1997 by the
Annual Incentive Compensation Plan (as described under the caption
"Organization and Compensation Committee Report on Executive Compensation").
(3) The compensation reported for 1996 includes payments under various
compensation plans and other employment arrangements in effect at the time
CBI Industries was acquired by Praxair, Inc. ("Praxair") which became
payable because of such acquisition totaling $240,619 for Mr. Aldinger and
$7,568 for Mr. Duffy.
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The compensation reported for 1997 represents (a) the value of shares of
Common Stock contributed pursuant to the Management Plan (as described
below) (b) contributions pursuant to the Chicago Bridge & Iron Savings Plan
(the "401(k) plan") allocated to the executive officer's account, (c) the
cost of allocations to each executive officer's account in a benefit
restoration plan (described under the caption "Pension and other retirement
benefits") for allocations pursuant to the 401(k) Plan which otherwise
exceed the maximum limit imposed upon such plan by the Internal Revenue
Code of 1986, as amended (the "Code"), (d), reimbursement for moving and
relocation expenses and (e) the dollar value of split-dollar life insurance
benefits. Pursuant to an agreement between the Company and Praxair, a trust
established by Praxair paid the premiums for the split dollar insurance and
was reimbursed by the Company. The Company expects to recover its
reimbursements from the policy's cash value at the time premium payments
are discontinued. For 1997, those five amounts, expressed in the same order
identified above, for each named executive officer are as follows: Gerald
M. Glenn, $8,458,092, $12,800, $56,760, $112,695, $0; Thomas L. Aldinger
$2,015,622, $12,800, $30,006, $0, $4,800; Stephen M. Duffy $335,916,
$12,800, $17,530, $0, $0; Timothy J. Wiggins $2,015,622, $12,800, $8,801,
$20,050, $0; Robert H. Wolfe $671,868, $12,800, $3,200, $33,222, $0.
MANAGEMENT PLAN
The Company has established the Chicago Bridge & Iron Management Defined
Contribution Plan (the "Management Plan").The Management Plan is not qualified
under Section 401(a) of the Code and each participant's account is treated as a
separate account under Section 404(a)(5) of the Code. The designation of
participants, the amount of Company contributions, and the amount allocated to
individual participants was determined by the Management Board. Restrictions on
the Management Plan shares lapse on March 27, 2000, for all participants (except
with respect to one participant, March 27, 1999). Dividends are payable to the
Participants during that period.
As an incentive to increasing the long-term value of the Company, Mr. Glenn
had an agreement with Praxair, and Messrs. Aldinger, Duffy, Wiggins, and Wolfe
have agreements with CB&I, whereby each received special compensation related to
the initial public offer of the Company by Praxair, in March, 1997 (the "IPO"),
in the amounts of 462,000, 110,298, 18,383, 110,298, and 36,766 shares of Common
Stock, respectively. Each of such officers, along with a group of approximately
65 other key management employees, are participants in the Management Plan. In
fulfillment of Praxair's commitment, upon consummation of the IPO, the Company
made a contribution to the Management Plan in the form of 925,670 shares of
Common Stock.
EMPLOYEE STOCK PURCHASE PLAN
The Company has adopted a broad-based employee stock purchase plan (the
"Stock Purchase Plan") intended to qualify under Section 423 of the Code.
Pursuant to the Stock Purchase Plan, each employee, including executive
officers, electing to participate is granted an option to purchase shares of
Common Stock on a specified future date at 85% of the fair market value of such
shares on the date of purchase. During specified periods preceding such purchase
date, a percentage of participating employees' after-tax pay is withheld and
used to purchase as many shares of Common Stock as such funds allow at the
discounted purchase price.
LONG-TERM COMPENSATION
The Company has adopted the Chicago Bridge & Iron Long-Term Incentive Plan
(the "Incentive Plan") for its executive officers, other management employees
and Supervisory Directors, which is a so-called "omnibus" plan. The Incentive
Plan allows the Company to provide long-term compensation in the following
forms: non-qualified options to purchase shares of Common Stock; qualified
"incentive" options to purchase shares of Common Stock; restricted shares of
Common Stock; "performance shares," paying out a variable number of shares of
Common Stock depending on goal achievement, and "performance units," which would
be cash payments based on either the value of the Common Stock or appreciation
in the price of the Common Stock upon achievement of specific financial goals.
Selection of participating employees and the number of
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options to be granted are subject to the approval of the Organization and
Compensation Committee of the Supervisory Board.
The exercise price of all options granted under the Incentive Plan may not
be less than the fair market value of the stock subject to the option on the
date the option is granted. Options are exercisable in accordance with the terms
set forth in individual award agreements, but no option may be exercised before
three years have elapsed from the date of grant. The expiration date of each
option shall not exceed 10 years from the date of grant.
Awards of restricted stock shall be subject to a period of restriction
during which the transfer shall be limited. Such restrictions shall lapse based
on the passage of time, the achievement of performance goals, or the occurrence
of other events as determined by the Organization and Compensation Committee.
Each performance unit shall have an initial value that is established by
the Organization and Compensation Committee at the time of grant, and each
performance share shall have an initial value equal to the fair market value of
a share of Common Stock on the date the award is granted. Holders of performance
units and shares shall be entitled to receive a payout on the number and value
of performance units and shares, based on the achievement during the performance
period of specified performance goals.
In the event of a change in control (as defined in the Incentive Plan),
unless otherwise prohibited under applicable law, all options shall become
immediately exercisable, the restriction period imposed on any restricted stock
award shall lapse and the payout opportunities attainable under all outstanding
awards of restricted stock, performance units and shares shall be deemed to have
been fully earned for the entire performance period.
OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables summarize option grants and exercises pursuant to the
Incentive Plan during the fiscal year 1997 to and by the executive officers
named in the Summary Compensation Table above, and the value of the options held
by such persons at the end of fiscal 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
GRANT DATE
INDIVIDUAL GRANTS VALUE
- ------------------------------------------------------------------------------------------ -------------
(A) (B) (D) (E) (F)
NUMBER OF (C)
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE GRANT DATE
GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
NAME (# SHARES)(1) FISCAL YEAR ($/SHARE) DATE ($)(2)
---- ------------- ------------ --------- ---------- -------------
Gerald M. Glenn.................... 92,094 18.25 $18.00 4/02/07 $491,782
Thomas L. Aldinger................. 21,489 4.25 18.00 4/02/07 114,751
Stephen M. Duffy................... 11,160 2.20 18.00 4/02/07 59,594
Timothy J. Wiggins................. 21,489 4.25 18.00 4/02/07 114,751
Robert H. Wolfe.................... 17,094 3.40 18.00 4/02/07 91,282
- -------------------------
(1) All options were granted at market value. Options are exercisable after
April 2, 2000, at the earliest, subject to achievement of a cumulative
earnings per share for the three-year period from 1997 to 1999 of at least
$6.25 per share of Common Stock (excluding the pretax charge of $16.7
million relating to the implementation of the Management Plan). If the
performance criterion is not met, then the option will become exercisable on
any succeeding April 2 if such goal, compounded an additional 15% per year,
is achieved as of the end of the fiscal year then ended preceding such April
2. If the performance criterion is not met, then the options become
exercisable on April 2, 2006. Each option will terminate and cease to be
exercisable if the Participant's employment with the Company terminates for
any reason other than death, retirement for disability or retirement under a
retirement plan of the Company.
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(2) The estimated grant date present value reflected in the above table is
determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black-Scholes model in estimating the value
of the options reflected in the above table include the following: (a) an
exercise price of the option of $18.00 equal to the fair market value of the
underlying stock on the date of grant; (b) an interest rate of 6.89% that
represents the interest rate on a U.S. treasury security with a maturity
date corresponding to that of the option term; (c) volatility of 35.242%
calculated using daily stock prices for the period March 31, 1997 to
February 12, 1998; (d) dividends at the rate of $0.24 per share,
representing the annualized dividends paid with respect to a share of Common
Stock at the date of grant; (e) an approximately 30.67% reduction to reflect
the probability of forfeiture due to termination prior to vesting and
approximately 10.98% reduction to reflect the probability of a shortened
option term due to termination of employment prior to the option expiration
date; and (f) an option term of ten years. The ultimate values of options
will depend on the future market price of Common Stock, which cannot be
forecast with reasonable accuracy. The actual value, if any, an optionee
will realize upon exercise of an option will depend on the excess of the
market value of the Common Stock over the exercise price on the date the
option is exercised.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
(A) (B) (C) (D)
NUMBER OF (E)
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
FY-END (#) AT FY-END ($)
SHARES --------------- ----------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(1)
---- ------------ ----------- ------------- ----------------
Gerald M. Glenn...................... 0 NA 0/ 0/0
92,094
Thomas L Aldinger.................... 0 NA 0/ 0/0
21,489
Stephen M. Duffy..................... 0 NA 0/ 0/0
11,160
Timothy J. Wiggins................... 0 NA 0/ 0/0
21,489
Robert H. Wolfe...................... 0 NA 0/ 0/0
17,094
- -------------------------
(1) Value is based on the NYSE composite closing price of $16.125/share on
12/31/97.
PENSION AND OTHER RETIREMENT BENEFITS
Effective January 1, 1997, the Company adopted the 401(k) Plan, a tax
qualified defined contribution pension plan for eligible employees, including,
but not limited to, the named executive officers. Such plan consists of a
typical voluntary pretax salary deferral feature under Section 401(k) of the
Code; a dollar-for-dollar Company matching contribution applicable to such
employee deferrals, up to 3% of a participating employee's considered earnings;
a basic additional Company contribution of 5% of each participating employee's
considered earnings; and an additional discretionary Company profit-sharing
contribution.
The 401(k) Plan substantially replaces the CBI 401(k) Pay Deferral Plan and
the CBI Pension Plan, each adopted by the Company's former parent, CBI
Industries, Inc. The 401(k) Plan provides that the Company may, at the
discretion of management, make certain of its matching contribution or
additional discretionary profit sharing contributions in a uniform manner in the
form of either cash or shares of Common Stock.
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The CBI Pension Plan (the "Pension Plan") is non-contributory and covered
substantially all salaried employees and certain hourly employees of the Company
and its participating subsidiaries. Since December 31, 1996 no employees of the
Company participate in the Pension Plan who were not already participants as of
December 31, 1996. No further benefits will accrue under the provisions of the
Pension Plan's normal benefit formulas for employees participating as of
December 31, 1996. Instead, benefits accrued as of that date will be computed
and increased at a rate of 5% per year (not compounded) or fraction thereof of
continuing service, to a maximum of three additional years. The December 31,
1996, accrued pension was based on credited service and average earnings over
the high three consecutive year period and is subject to an offset adjustment
for each individual for primary social security benefits and a portion of the
value of benefits under the terminated CBI Salaried Employee Stock Ownership
Plan (1987) previously sponsored by CBI Industries, Inc. The estimated annual
benefit payable upon retirement at normal retirement age for each of the named
executive officers who participate in the plan is: Thomas L. Aldinger, $52,459;
and Stephen M. Duffy, $8,739.
The Code limited the compensation used to determine benefits under the
401(k) Plan to $160,000 for 1997. Chicago Bridge & Iron Company adopted the
Chicago Bridge & Iron Company Excess Benefit Plan through which it contributes
benefits which would be paid under the 401(k) Plan in the absence of the IRS
limit. Such contributions are paid into a trust, with an independent trustee,
established for this purpose.
COMPENSATION OF DIRECTORS
Supervisory Directors who were not employees of the Company received in
1997 an annual retainer of $15,000, paid in quarterly installments, and $1,500
for attendance at each Supervisory Board meeting. Supervisory Directors who were
chairpersons of committees received in 1997 an additional retainer of $2,250.
Those who serve on Supervisory Board Committees receive $1,000 for each
Committee meeting attended. Supervisory Directors who are full-time employees of
the Company receive no compensation for serving as Supervisory Directors.
TERMINATION AND EMPLOYMENT AGREEMENTS
The Company and Messrs. Aldinger, Duffy, Wiggins and Wolfe entered into
change of control severance agreements each providing that, in the event of a
termination of their respective employment with the Company (other than by
reason of the employee's willful misconduct or gross negligence) or a
significant reduction in their respective responsibilities, salary or benefits
or a substantive change in the respective location of their employment, within
the two-year period following a change of control of the Company, each will
receive a special lump-sum payment following separation equal to $1,500,000,
$240,000, $1,000,000 and $750,000, respectively. In addition, upon termination
for any reason (other than by reason of the employee's willful misconduct or
gross negligence) during the six-month period prior to a change of control, each
employee will be entitled to receive a special lump-sum payment (in the amount
previously set forth) minus the gross amount of any severance payments otherwise
paid to such employee, within ten days following a change of control. Each
employee who receives a special lump-sum payment is also entitled to receive
outplacement services at the expense of the Company. The agreements provide that
the Company will pay an amount necessary to reimburse each employee, on an
after-tax basis, for any excise tax due under Section 4999 of the Code, as a
result of such payment being treated as a "parachute payment" under Section 280G
of the Code. The receipt by each employee of any of the amounts payable pursuant
to the agreements is contingent upon the employee's execution of a release of
claims in favor of the Company. A change of control for purposes of such
agreements is deemed to occur if, other than in connection with the IPO, (i) any
person or group of persons other than Praxair or one of its subsidiaries becomes
the beneficial owner of 25% or more of the total voting power of the Company's
or any such subsidiary's outstanding securities, (ii) upon consummation of any
merger or other business combination of the Company or any subsidiary with or
into another person pursuant to which the shareholders of the Company or any
such subsidiary do not own, upon consummation or such combination, more than 50%
of the voting power and value of the stock of the surviving person, or (iii) if,
during any period of two years or less, a majority of the
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members of the Company's Supervisory Board changes and new members were not
nominated by at least 75% of the Supervisory Directors then still in office who
were supervisory directors at the beginning of such period.
In addition, the Company has entered into employment arrangements with
Messrs. Glenn, Wiggins and Wolfe to serve the Company as President and Chief
Executive Officer, Vice President -- Treasurer and Chief Financial Officer, and
Vice President -- General Counsel and Secretary, respectively. Pursuant to these
arrangements, Mr. Glenn's minimum base salary is $400,000 per year, Mr. Wiggins
minimum base salary is $220,000 per year and Mr. Wolfe's minimum base salary is
$175,000 per year. Such arrangements do not establish any required term of
employment. The arrangements provide for, among other things, participation in
Company bonus and incentive compensation programs, lump-sum payments, in the
amounts specified above, in the event of termination (or a significant reduction
in levels of responsibility) within two years of a sale of the Company and for a
special stock-based compensation award relating to the IPO (as described under
the caption "Management Plan"). Each employee is also entitled to participate in
the Company's relocation program and to receive either an automobile allowance
of $500 per month or the use of a Company-owned vehicle.
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ORGANIZATION AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
TO OUR SHAREHOLDERS
On March 26, 1997, Praxair completed the IPO, upon which the Company,
established as a company under the laws of The Netherlands, became a separate,
public company. Prior to the IPO, all decisions on compensation matters that
pertained to the executive officers of the Company for 1997 were considered by,
and were made in the context of the compensation policies followed by, the
senior management of Praxair.
The current Supervisory Board of the Company was elected in connection with
the IPO and the current members of the Company's Organization and Compensation
Committee (the "Committee") were appointed effective June 6, 1997. Since its
inception, the Committee has reviewed and approved certain compensation actions
relating to the Company's 1997 fiscal period, which actions are described in
this report. The Committee has also considered and approved a policy for
executive compensation, which is described below.
COMMITTEE ROLE IN OVERSEEING EXECUTIVE COMPENSATION POLICY
A primary role of the Committee is to determine and oversee the
administration of compensation for the Company's executive officers. In this
capacity, the Committee is dedicated to ensuring that the Company's compensation
policies and practices are used effectively to support the achievement of the
Company's short-and long-term business objectives.
To preserve objectivity in the achievement of its goals, the Committee is
comprised of independent, non-employee directors who have no "interlocking"
relationships, as defined by the SEC. The Committee approves the design of,
assesses the effectiveness of, and administers executive compensation programs
in support of compensation policies. The Committee also reviews and approves all
salary arrangements and other remuneration for executives, evaluates executive
performance and considers related matters.
In 1992, the SEC amended the proxy statement rules regarding the disclosure
of executive compensation for officers and directors of reporting companies. The
current rules require a report on executive compensation to be submitted by the
compensation committee of the Board of Directors of regulated, publicly-traded
companies (which includes the Company, even though not organized under the laws
of a state in the United States). The purpose of the report is to inform
shareholders of the Committee's compensation policies for executive officers and
the rationale for compensation paid to the Chief Executive Officer ("CEO"). This
report, submitted by the Committee, follows.
COMPENSATION PHILOSOPHY
The Company is committed to increasing shareholder value by growing its
business in the global marketplace. To accomplish this objective, the Company
has developed a combination of strategic initiatives.
The Company's overall compensation philosophy is to remain competitive with
comparable companies while focusing on performance-based compensation. This
philosophy is premised on the fact that the Company must compete with a wide
variety of construction and engineering related firms in order to attract and
develop a pool of talented employees. The philosophy also acknowledges the need
to focus employees on the Company's financial performance, especially in view of
the Company's transition to a freestanding entity through the IPO. The Company's
compensation philosophy includes the following factors:
- Utilize programs that will attract new talent and retain key people
- Pay competitively with significant focus on incentive compensation
- Use equity compensation for top managers to motivate value creation for
all shareholders
- Develop plans with a higher percentage of pay "at-risk" (based on
performance) than typical marketplace practice
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The Committee has determined appropriate target levels for base salary,
annual incentives and long-term compensation. Base salaries should be targeted
at or near the 50th percentile of the market, and individual pay determinations
and increases will be based on individual responsibilities and contributions.
Annual incentives will be targeted at the 50th percentile of market, with
opportunities for additional rewards for superior performance. Long-term
compensation will consist primarily of stock options, with targeted awards which
are above competitive levels, thus creating the opportunity for Participants to
receive above average levels of compensation based on appreciation in the value
of the Common Stock.
Competitive market data is provided by a major independent global
compensation consultant, Hewitt Associates LLC, of Lincolnshire, Illinois. The
data provided compares the Company's compensation practices to a group of
"comparator" companies. The Company's market for compensation comparison
purposes is comprised of a group of companies which tend to have national and
international business operations and similar lines of business, as well as
companies operating in the same geographic areas and competing for management
employees in the same areas of expertise as the Company. The Committee reviews
and approves the selection of companies used for compensation comparison
purposes, based on its assessment of the comparability of the above factors.
The companies chosen for the comparator group used for compensation
purposes generally are not the same companies which comprise the peer group
index in the Performance Graph included in this proxy statement. Considering the
factors described above, the Committee believes that the Company's most direct
competitors for executive talent are not necessarily the companies that would be
included in a peer group established for comparing shareholder returns.
The key elements of the Company's executive compensation are base salary,
annual incentives, long-term incentives and benefits. These key elements are
addressed separately below. In determining compensation, the Committee considers
all elements of an executive officer's total compensation package.
BASE SALARIES
The Committee will regularly review each executive officer's base salary.
Base salaries are targeted at market levels. Base salaries for executive
officers are initially determined by evaluating executives' levels of
responsibility, prior experience, breadth of knowledge, internal equity within
the Company and external pay practices.
Base salaries provide the underlying level of compensation security to
executives and allow the Company to attract competent executive talent and
maintain a stable management team. They also allow executives to be rewarded for
individual performance based on the Company's evaluation process. Base salary
increases for individual performance reward executives for achieving goals which
may not be immediately evident in common financial measurements.
Individual performance is evaluated based on sustained levels of individual
contribution to the Company. When evaluating individual performance, the
Committee considers the executive's efforts in promoting Company values;
continuing educational and management training; improving project quality;
developing relationships with clients, suppliers, and employees; demonstrating
leadership abilities among coworkers; and other goals. Overall, executive
salaries were increased in 1997 at a rate comparable to the increases provided
at other companies and are near market levels.
In 1996, Praxair entered into an employment agreement with Mr. Glenn (the
"Employment Agreement"), providing that Mr. Glenn would serve as the President
and Chief Executive Officer of the Company's predecessor. Following the IPO, the
Company assumed the Employment Agreement with Mr. Glenn.
The Employment Agreement provided for Mr. Glenn to receive a minimum base
salary of $400,000 per annum. The Employment Agreement did not provide for any
increase in 1997, and Mr. Glenn did not receive any. In 1997, Mr. Glenn actually
received total base salary payments of $400,000, as reflected in the Summary
Compensation Table on page 7.
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ANNUAL INCENTIVES
The Company adopted the Annual Incentive Compensation Plan (the "Bonus
Plan"), which took effect in fiscal 1997. The Bonus Plan is an annual short-term
incentive plan covering a group consisting of the executive officers of the
Company and its principal operating subsidiaries, and other designated key
management employees. The Bonus Plan is based on the annual operating plan of
the Company, arrived at as a result of discussion and analysis of the business
plans within the major divisions of the Company. Payment of bonuses is based on
attaining a specific goal of operating income, and other factors described
below, and is payable following the end of the fiscal year. The operating income
goal will be set from year to year, at the beginning of each year (subject to
modifications relating to extraordinary events), upon management's
recommendation and approval by the Supervisory Board.
A target bonus will be established for each participating employee at the
beginning of each year based on position, responsibilities and grade level. The
bonus may be earned from three sources: achievement of the corporate operating
income goal, achievement of a cash management goal and achievement of individual
performance goals. A percentage of target bonus opportunity is allocated to each
bonus source. The individual performance bonus is determined by the management's
evaluation, and in the case of the CEO, by the Committee.
For fiscal 1997, Mr. Glenn and the Company's other executive officers
received bonus payments pursuant to the Bonus Plan. Mr. Glenn received a bonus
payment of $155,000. Mr. Glenn's bonus payment was below his target bonus. There
was no bonus payment relating to the corporate operating income goal for 1997.
In 1997, Mr. Glenn's annual bonus payment represented 39% of his base salary as
is reflected in the Summary Table on page 7, and depending on achievement of the
respective goals under the Plan, could have ranged from 0% to 110% of his base
pay. Mr. Glenn's bonus is below the median of annual incentive compensation paid
other executives at comparator companies for 1997.
LONG-TERM INCENTIVES
In keeping with the Company's commitment to provide a total compensation
package which favors at-risk components of pay, long-term incentives comprise a
significant portion of an executive's total compensation package. The
Committee's objective is to provide executives with long-term incentive award
opportunities that are above market levels.
Long-term incentives are provided pursuant to the Chicago Bridge & Iron
Long-Term Incentive Plan ("Incentive Plan"). When awarding long-term incentives,
the Committee considers executives' levels of responsibility, prior experience,
historical award data, various performance criteria and compensation practices
at comparator companies.
Stock options are granted under the Incentive Plan at an option price not
less than the fair market value of the Common Stock on the date of grant.
Accordingly, stock options have value only if the stock price appreciates from
the date the options are granted. This design focuses executives on the creation
of shareholder value over the long term and identification with shareholders'
interests, and encourages equity ownership in the Company.
Initial stock options granted in 1997 under the Incentive Plan may become
exercisable after March, 2000 subject to achievement of a cumulative earnings
per share for the three-year period from 1997 through 1999 of at least $6.25 per
share of Common Stock (excluding a pretax charge of approximately $16.7 million
relating to the implementation of the Management Plan discussed on page 8). All
of such options which have not previously vested otherwise under the terms of
the Incentive Plan will vest automatically nine years from their date of grant.
The Incentive Plan will have a life of five years for the purpose of making
grants or awards, unless the number of shares reserved for such plan are used up
before the expiration of that period, in which case shareholder approval will be
required in order to reserve additional shares of Common Stock for the Incentive
Plan. The vesting and exercise periods for options granted will run
independently of, and be in addition to, such five-year period.
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In 1997, Mr. Glenn received options to purchase 92,094 shares with an
exercise price of $18.00, as is detailed in the table on page 9. Mr. Glenn also
currently owns or has beneficial ownership of 470,094 shares of the Company's
Common Stock, as shown on page 6. These equity interests provide an alignment
with the interests of other shareholders appropriate to Mr. Glenn's position and
responsibilities for management of the Company.
BENEFITS
In general, benefits provide a safety net of protection against financial
catastrophes that can result from illness, disability, or death. The benefits
offered by the Company to key executives are generally the same as those offered
to the overall employee population with some variation to promote replacement of
benefit opportunities lost to regulatory limits, as discussed on page 11.
INTERNAL REVENUE CODE 162(M) CONSIDERATIONS
Section 162(m) of the Internal Revenue Code of 1986 ("Code") provides that
executive compensation in excess of $1 million will not be deductible for
purposes of U.S. corporate income taxes unless it is "performance-based"
compensation and is paid pursuant to a plan meeting certain requirements of the
Code. The Committee's primary obligation is to promote, recognize and reward
performance which increases shareholder value, and the Committee accordingly
will continue to rely on performance-based compensation programs which are
designed to achieve that goal. The Committee will give appropriate consideration
to the requirements of Section 162(m) in the design of any such programs, but
will also exercise its discretion to determine, according to the best overall
interests of the Company, whether to recommend or adopt a program which complies
with such requirements.
The Committee believes that all compensation actually paid in respect of
1997 was deductible.
CONCLUSION
The Committee believes these executive compensation policies and programs
serve the interests of shareholders and the Company effectively. The various pay
vehicles offered are appropriately balanced to provide increased motivation for
executives to contribute to the Company's overall future success, thereby
enhancing the value of the Company for the shareholders' benefit.
We will continue to monitor the effectiveness of the Company's total
compensation program to meet the current needs of the Company.
Vincent L. Kontny (Chairman)
J. Dennis Bonney
Gary L. Neale
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STOCK PERFORMANCE CHART
The Stock Performance Chart below shall not be deemed incorporated by
reference by a general statement incorporating by reference this proxy statement
into any filing under the Securities Act of 1933 or under the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts. There can be no assurance that the Common Stock performance will
continue into the future with the same or similar trends depicted in the graph
below. The Company will not make or endorse any predictions as to future
performance of the Common Stock.
The chart below compares the cumulative total shareholder return on the
Common Stock from the date of the IPO to the end of the last fiscal year with
the cumulative total return on the Russell 2000 Index and the Dow Jones Heavy
Construction Industry Index ("Peer Group Index") for the same period. The
comparison assumes $100 was invested in the Company's Common Stock, the Russell
2000 Index and the Peer Group Index on March 27, 1997, and reinvestment of all
dividends.
COMPARISON OF TOTAL RETURNS
VALUE FOR EACH ONE HUNDRED DOLLARS INVESTED ON MARCH 27, 1997
(GAINS IN STOCK PRICE, DIVIDENDS AND REINVESTED DIVIDENDS)
CHICAGO BRIDGE
MEASUREMENT PERIOD & IRON PEER GROUP RUSSELL 2000
(FISCAL YEAR COVERED) COMPANY N.V. INDEX INDEX
03/27/97 100.00 100.00 100.00
12/31/97 91.14 83.28 129.01
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ITEM 2
APPROVAL OF ANNUAL ACCOUNTS
At the Annual Meeting, the shareholders will be asked to authorize the
preparation of the annual accounts and the annual report in the English language
and to adopt the Dutch Statutory Annual Accounts of the Company for the fiscal
year ended December 31, 1997 (the "Annual Accounts"), as required under Dutch
law and the Articles of Association. Copies of the Annual Accounts, the report
of the Management Board and the list of nominees for the Supervisory Board can
be obtained free of charge by shareholders and other persons entitled to attend
meetings of shareholders of the Company at the offices of the Company at
Koningslaan 34, 1075 AD Amsterdam, The Netherlands; at Kas Associatie N.V.
Spuistraat 172, 1012 VT Amsterdam, The Netherlands; and at the Bank of New York,
101 Barclay Street, 22nd Floor West, New York, New York 10286 from the date
hereof until the close of the Annual Meeting.
The Annual Accounts are prepared in accordance with Dutch law and
International Accounting Standards ("IAS"). However, the Annual Accounts are
substantially similar to the financial statements contained in the Company's
1997 Annual Report to Shareholders (the "Annual Report") accompanying this Proxy
Statement, which were prepared in accordance with generally accepted accounting
principles in the United States ("U.S. GAAP"). The Annual Accounts contain
certain disclosures not required under U.S. GAAP. In addition, the Management
Report required by Dutch law although substantially similar to the Management's
Discussion and Analysis of Financial Conditions and Results of Operations
included in the Annual Report, also contains information included in the
Company's Annual Report on Form 10-K and other information required by Dutch
law.
Under Dutch law and the Articles of Association, adoption of the Annual
Accounts by the shareholders discharges the members of the Management Board and
the Supervisory Board from liability in respect of the exercise of their duties
during the financial year concerned, unless an explicit reservation is made by
the Annual Meeting and without prejudice to the provisions of the law of The
Netherlands relating to liability upon bankruptcy. Under the law of The
Netherlands, this discharge from liability does not extend to matters not
disclosed to shareholders.
The affirmative vote of the holders of a majority of the Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting is
required to adopt the Annual Accounts.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ADOPTION
OF THE ANNUAL ACCOUNTS, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 3
DISTRIBUTION OF PROFITS
(in thousands, except share data)
The Company's Articles of Association provide that "from appearing from the
annual accounts as adopted, such an amount shall be reserved by the company as
shall be determined by the management board which resolution requires the
approval of the supervisory board. The profits remaining after (such)
reservation... are at the disposal of the general meeting for distribution on
the shares equally and proportionally and/or for reservation." As permitted
under the Company's Articles of Association, interim dividends were paid in 1997
on June 30, September 30 and December 30 and in 1998 on March 30 ("interim
dividends").
It is proposed that the shareholders approve the distribution of 1997
profits in the amount of $0.24 per share of common stock ($2,989) paid as
interim dividends, and a transfer of the balance of the profits to retained
earnings. The Company's financial statements reflect $2,253 in interim dividends
paid to shareholders as of December 31, 1997. The balance of 1997 profits was
transferred to retained earnings, including $736 which was paid to shareholders
as an interim dividend subsequent to year end.
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The affirmative vote of the holders of a majority of the Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting is
required to approve the distribution of profits.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF
THE DISTRIBUTION OF PROFITS PAID IN THE FORM OF INTERIM DIVIDENDS, AND PROXIES
EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE
INDICATED THEREON.
ITEM 4
EXTENSION OF AUTHORITY OF MANAGEMENT BOARD TO REPURCHASE
SHARES OF THE SHARE CAPITAL OF THE COMPANY UNTIL NOVEMBER 12, 1999
Under Dutch law and the Articles of Association, the Management Board may,
subject to certain Dutch statutory provisions, authorize the Company to
repurchase up to 10% of the Company's Common Stock in open market purchases at
any price not to exceed 110% of the then market price. At March 20, 1998, the
Company held 249,700 shares of Common Stock, leaving 977,085 shares of Common
Stock which it could acquire under this limitation. Any such purchases are
subject to the approval of the Supervisory Board and the authorization of
shareholders at the Annual Meeting, which authorization may not continue for
more than eighteen months, but may be renewed on an annual rolling basis. In
connection with the IPO, the shareholders authorized the Supervisory Board for
an eighteen-month period to repurchase shares of the Common Stock. This
eighteen-month period is set to expire on September 25, 1998.
At the Annual Meeting, the shareholders will be asked to approve a further
extension of this authority for an additional eighteen-month period from the
date of the Annual Meeting until November 12, 1999.
The affirmative vote of the holders of a majority of the Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting is
required to extend the authorization of the Management Board to authorize the
Company to repurchase up to 10% of the Common Stock for an additional
eighteen-month period from the date of the Annual Meeting.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE EXTENSION
OF THE AUTHORITY OF THE MANAGEMENT BOARD TO REPURCHASE UP TO 10% OF THE
OUTSTANDING SHARE CAPITAL OF THE COMPANY UNTIL NOVEMBER 12, 1999, AND PROXIES
EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE
INDICATED THEREON.
ITEM 5
EXTENSION OF AUTHORITY OF SUPERVISORY BOARD TO ISSUE SHARES
OF COMMON STOCK UNTIL MAY 12, 2003
At the Annual Meeting, the shareholders will be asked to approve a further
extension of the authority of the Supervisory Board to issue and/or grant rights
(including options to purchase unissued shares) on shares of Common Stock for a
five-year period from the date of the Annual Meeting until May 12, 2003. A
designation may be effective for up to five years and may be renewed on an
annual rolling basis. In connection with the IPO, the shareholders authorized
the Supervisory Board for a five-year period to issue and/or grant rights
(including options to purchase) on shares of Common Stock. This five-year period
is set to expire on March 25, 2002. (For a discussion of preemptive rights held
by holders of Common Stock, see Item 6 below.)
At the Annual Meeting, the shareholders will be asked to approve a further
extension of this authority for a five-year period from the date of the Annual
Meeting until May 12, 2003.
The affirmative vote of the holders of a majority of the Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting is
required to extend the authorization of the Supervisory Board to issue and/or to
grant rights (including options to purchase unissued shares) on Common Stock for
a five-year period from the date of the Annual Meeting.
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THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE EXTENSION
OF THE AUTHORITY OF THE SUPERVISORY BOARD TO ISSUE AND/OR GRANT RIGHTS
(INCLUDING OPTIONS TO PURCHASE) ON COMMON STOCK UNTIL MAY 12, 2003, AND PROXIES
EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE
INDICATED THEREON.
ITEM 6
EXTENSION OF AUTHORITY OF SUPERVISORY BOARD TO LIMIT OR ELIMINATE
PREEMPTIVE RIGHTS UNTIL MAY 12, 2003
Under Dutch law and the Articles of Association, holders of Common Stock
have a prorata preemptive right of subscription to any shares of Common Stock
issued for cash unless such right is limited or eliminated. Holders of Common
Stock have no prorata preemptive subscription right with respect to any Common
Stock issued for consideration other than cash or pursuant to employee stock
plans. If designated for this purpose at the Annual Meeting, the Supervisory
Board has the power to limit or eliminate such rights. A designation may be
effective for up to five years and may be renewed on an annual rolling basis. In
connection with the IPO, the shareholders authorized the Supervisory Board for a
five-year period to limit or eliminate from time to time the preemptive rights
of holders of Common Stock. This five-year period is set to expire on March 25,
2002.
At the Annual Meeting, the shareholders will be asked to approve a further
extension of this authority for a five-year period from the date of the Annual
Meeting until May 12, 2003.
The affirmative vote of the holders of a majority of the Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting is
required to extend the authorization of the Supervisory Board to limit or
eliminate the preemptive rights of holders of Common Stock for a five-year
period from the date of the Annual Meeting.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE EXTENSION
OF THE AUTHORITY OF THE SUPERVISORY BOARD TO LIMIT OR ELIMINATE PREEMPTIVE
RIGHTS OF HOLDERS OF COMMON STOCK UNTIL MAY 12, 2003, AND PROXIES EXECUTED AND
RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 7
TO AMEND THE ARTICLES OF ASSOCIATION
The Company's Articles of Association provide that Praxair be entitled to
appoint two Supervisory Directors if it owns more than 20% of the outstanding
Common Stock and one Supervisory Director if it owns more than 10% of the
outstanding Common Stock. Such Supervisory Directors may only be dismissed or
replaced by Praxair. Since Praxair no longer owns any shares of Common Stock,
the provisions are inoperative. At the Annual Meeting, the shareholders will be
asked to amend the Articles of Association by deleting these provisions.
As restated for this amendment, the provisions in the Articles of
Association will be as follows:
"Article 20. Appointment
1. All members of the supervisory board shall be appointed by the general
meeting from a nomination of at least two persons for every position to
be filled, which has been drawn up by the supervisory board.
2. The provisions in paragraph 2 and 3 of article 12 shall likewise apply
to an appointment by the general meeting.
3. No person who has reached the age of seventy-two may be appointed as a
supervisory board member.
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Article 21. Suspension And Dismissal. Retirement.
1. Every member of the supervisory board may be suspended or dismissed by
the general meeting at any time.
2. The provisions in paragraph 2 of article 13 shall similarly apply to the
suspension and dismissal of supervisory board members by the general
meeting.
3. A supervisory board member shall retire no later than at the next annual
meeting held after a period of three years following his appointment. A
so retired member of the supervisory board may be immediately
re-elected.
4. Every member of the supervisory board shall retire no later than on the
day on which the annual meeting is held in the financial year in which
he reaches the age of seventy-two.
5. With due observance of the preceding paragraphs the supervisory board
shall draw up a rotation plan."
The affirmative vote of the holders of a majority of the Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting is
required to amend the Articles of Association.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
AMENDMENTS TO THE ARTICLES OF ASSOCIATION, AND PROXIES EXECUTED AND RETURNED
WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 8
RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN
AS INDEPENDENT PUBLIC AUDITORS OF THE COMPANY FOR 1998
The Supervisory Board has appointed the firm of Arthur Andersen as the
Company's independent public auditors for the year ending December 31, 1998,
subject to ratification by the shareholders. Arthur Andersen has acted as the
Company's auditors since inception and of the Company's predecessors since 1939.
Representatives of Arthur Andersen are expected to be present at the Annual
Meeting. They will have an opportunity to make a statement, if they desire, and
are expected to be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the Common Stock
present or represented by proxy and entitled to vote at the Annual Meeting is
required to ratify the appointment of Arthur Andersen as the Company's
independent public auditors for 1998.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF ARTHUR ANDERSEN'S APPOINTMENT AS THE COMPANY'S INDEPENDENT
PUBLIC AUDITORS FOR 1998, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 9
OTHER MATTERS
The Supervisory Board does not know of any other matters that are to be
presented for action at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment(s) thereof, it is
intended that the enclosed proxy will be voted in accordance with the judgment
of the persons voting the proxy.
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SHAREHOLDER PROPOSALS
Any proposal of a shareholder intended to be presented at the 1999 Annual
Meeting of Shareholders must be received at the Company's principal executive
offices no later than December 14, 1998, if the proposal is to be considered for
inclusion in the Company's proxy statement relating to such meeting.
By Order of the Board of
Supervisory Directors
Gerald M. Glenn
Chairman of the Board of
Supervisory Directors
Amsterdam, The Netherlands
April 13, 1998
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CHICAGO BRIDGE & IRON COMPANY N.V.
Voting Instruction Card
(Must be presented at the meeting or received by mail prior to the close of
business on May 5, 1998)
The undersigned registered holder of Shares of New York Registry (each
representing one Common Share of NLG 0.01 nominal amount of Chicago Bridge &
Iron Company N.V.), hereby appoints The Bank of New York, as New York Transfer
Agent and Registrar, through its agent, as the proxy of the undersigned to
attend and address the Annual General Meeting of Shareholders of Chicago Bridge
& Iron Company N.V. to be held in Amsterdam, The Netherlands, on May 12, 1998
and, in general, to excercise all rights the undersigned could exercise in
respect of such Common Shares if personally present thereat upon all matters
which may properly become before such Meeting and every adjournment thereof,
and instructs such proxy to endeavor, in so far as practicable, to vote or
cause to be voted on a poll (if a poll shall be taken) the Common Shares of
Chicago Bridge & Iron Company N.V. represented by Shares of New York Registry
registered in the name of the undersigned on the books of the New York Transfer
Agent and Registrar as of the close of business on April 3, 1998, at the such
Meeting in respect of the resolutions specified on the reverse side hereof.
NOTE: Please direct your proxy how it is to vote by placing an X in the
appropriate box opposite the resolutions specified on the reverse side
hereof.
(Continued and to be dated and signed on the reverse side)
Resolutions
FOR AGAINST ABSTAIN
1. To re-elect the following members of the
Board of Supervisory Directors to serve
until the Annual Meeting of Shareholders in
2001, and until their successors shall have
been duly elected and qualified;
Jerry H. Ballengee [ ] [ ] [ ]
L. Donald Simpson [ ] [ ] [ ]
2. To confirm and adopt the Dutch Statutory Annual [ ] [ ] [ ]
Accounts of the Company for the fiscal year
ended December 31, 1997 (the "Annual Accounts");
3. To approve the distribution of profits for the [ ] [ ] [ ]
fiscal year ended December 31, 1997 in the
amount of UBS.24 per share of common stock
previously paid as an interim dividend;
4. To approve the extension of the authority of [ ] [ ] [ ]
the Management Board to repurchase up to 10%
of the outstanding share capital of the Company
until November 12, 1999;
5. To approve the extension of the authority of [ ] [ ] [ ]
the Supervisory Board to insure and/or grant
rights (including options to purchase) on
common stock of the Company until May 12, 2003;
6. To approve the extension of the authority of [ ] [ ] [ ]
the Supervisory Board to limit or exclude the
preemptive rights of the holders of the common
stock of the Company until May 12, 2009;
7. To amend the Articles of Association of the [ ] [ ] [ ]
Company to eliminate provisions granting
Praxair, Inc. the Company's former sole share-
holder, the right to appoint Supervisory
Directors;
8. To approve the appointment of Authur Andersen [ ] [ ] [ ]
& Co. as the Company's independent public
auditors for the fiscal year ending December
31, 1998; and
Change of Address and [ ]
or Comment Mark Here
This Form must be signed by the person in whose
name the above Common Share is registered
on the basis of the New York Transfer Agent and
Registrar. In the case of a Corporation, the
Form should be executed by a duly authorized
Officer or Attorney.
Dated:____________________________________, 1998
________________________________________________
Signature of Registered Holder
Votes must be indicated (X) in [ ]
Black or Blue Ink.
Please date, sign and return promptly
in the accompanying envelope.