SCHEDULE 14A
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 Section 240.14a-12
KIRBY CORPORATION
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(Name of Registrant as Specified in Its Charter)
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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)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(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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[KIRBY CORP. LOGO]
KIRBY CORPORATION
NOTICE OF 2003
ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
MEETING DATE: APRIL 22, 2003
YOUR VOTE IS IMPORTANT
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PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN
YOUR PROXY CARD IN THE ENCLOSED ENVELOPE
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[KIRBY CORP. LOGO] KIRBY CORPORATION
55 WAUGH DRIVE, SUITE 1000
P. O. BOX 1745
HOUSTON, TEXAS 77251-1745
March 6, 2003
Dear Fellow Stockholders:
On behalf of the Board of Directors, we cordially invite you to attend the
2003 Annual Meeting of Stockholders of Kirby Corporation to be held on Tuesday,
April 22, 2003, at 10:00 a.m. (CDT). The meeting will be held at 55 Waugh Drive,
8th Floor, Houston, Texas 77007. We look forward to personally greeting those
stockholders who will be able to attend the meeting.
This booklet contains the notice of the Annual Meeting and the Proxy
Statement, which contains information about the formal items of business to be
conducted at the meeting, Kirby's Board of Directors and its committees, and
certain executive officers. This year you are being asked to elect three Class
II directors.
In addition to the formal items of business to be brought before the Annual
Meeting, there will be a report on our Company's operations, followed by a
question and answer period.
Your vote is important. Please ensure that your shares will be represented
at the meeting by completing, signing and returning your proxy card in the
envelope provided whether or not you plan to attend personally.
Thank you for your continued support and interest in Kirby Corporation.
Sincerely,
/s/ C. BERDON LAWRENCE
C. BERDON LAWRENCE
Chairman of the Board
/s/ J. H. PYNE
JOSEPH H. PYNE
President and Chief Executive Officer
KIRBY CORPORATION
(A NEVADA CORPORATION)
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: Tuesday, April 22, 2003
Time: 10:00 a.m. CDT
Place: 55 Waugh Drive
8th Floor
Houston, Texas 77007
Items of business to be voted on:
1. To elect three Class II directors;
2. To consider any other business to properly come before the meeting.
You have the right to receive this notice and vote at the Annual Meeting if
you were a shareholder of record at the close of business on March 3, 2003.
Please remember that your shares cannot be voted unless you sign and return the
enclosed proxy card, vote in person at the Annual Meeting, or make other
arrangements to vote your shares.
For the Board of Directors,
THOMAS G. ADLER
Secretary
March 6, 2003
KIRBY CORPORATION
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PROXY STATEMENT
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GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors (the "Board") of Kirby Corporation
(the "Company") to be voted at the Annual Meeting of Stockholders to be held at
55 Waugh Drive, 8th Floor, Houston, Texas, on April 22, 2003, at 10:00 a.m.
(CDT).
Whenever we refer in this Proxy Statement to the Annual Meeting, we are
also referring to any meeting that results from an adjournment or postponement
of the Annual Meeting. The Notice of Annual Meeting, this Proxy Statement, the
proxy card and the Company's Annual Report, which includes the Annual Report on
Form 10-K for 2002, are being mailed to stockholders on or about March 11, 2003.
SOLICITATION OF PROXIES
THE PROXY CARD
Your shares will be voted as specified on the enclosed proxy card. If a
proxy is signed without choices specified, those shares will be voted for the
election of the Class II directors named in this Proxy Statement and at the
discretion of the proxies on other matters.
You are encouraged to complete, sign and return the proxy card even if you
expect to attend the meeting. If you sign a proxy card and deliver it to us, but
then want to change your vote, you may revoke your proxy at any time prior to
the Annual Meeting by sending us a written revocation or a new proxy, or by
attending the Annual Meeting and voting your shares in person.
COST OF SOLICITING PROXIES
The cost of soliciting proxies will be paid by the Company. The Company has
retained Georgeson Shareholder Communications, Inc. to solicit proxies at an
estimated cost of $4,000, plus out-of-pocket expenses. Employees of the Company
may also solicit proxies, for which the expense would be nominal and borne by
the Company. Solicitation may be by mail, facsimile, electronic mail, telephone
or personal interview.
VOTING
STOCKHOLDERS ENTITLED TO VOTE
Stockholders of record at the close of business on March 3, 2003 will be
entitled to notice of, and to vote at, the Annual Meeting. As of March 3, 2003,
the Company had 24,065,789 outstanding shares of common stock. Each share of
common stock is entitled to one vote on each matter to come before the meeting.
QUORUM AND VOTES NECESSARY TO ADOPT PROPOSALS
In order to transact business at the Annual Meeting, a quorum consisting of
a majority of all outstanding shares entitled to vote must be present.
Abstentions and proxies returned by brokerage firms for which no voting
instructions have been received from their principals will be counted for the
purpose of determining whether a quorum is present. Once a share is represented
for any purpose at the Annual Meeting, it will be deemed present for quorum
purposes for the entirety of the meeting. A plurality of the votes cast is
required for the election of directors. A majority of the outstanding shares
entitled to vote that are represented at the meeting in person or by proxy is
required for approval of any other matters that may be presented at the meeting.
2
ELECTION OF DIRECTORS (ITEM 1)
The Bylaws of the Company provide that the Board of Directors shall consist
of not fewer than three nor more than fifteen members and that, within those
limits, the number of directors shall be determined by the Board. The Bylaws
further provide that the Board shall be divided into three classes, with the
classes being as nearly equal in number as possible and with one class being
elected each year for a three-year term. The size of the Company's Board is
currently set at nine. Three Class II directors are to be elected at the 2003
Annual Meeting to serve until the Annual Meeting of Stockholders in 2006.
Each nominee named below is currently serving as a director and each has
consented to serve for the new term. All nominees have previously been elected a
director by the Company's stockholders.
If any nominee becomes unable to serve as a director, an event currently
not anticipated, the persons named as proxies in the enclosed proxy card intend
to vote for a nominee selected by the present Board to fill the vacancy.
RECOMMENDATION OF THE BOARD OF DIRECTORS CONCERNING THE ELECTION OF DIRECTORS
The Board of Directors of the Company unanimously recommends a vote "FOR"
the election of each of the following nominees for election as a director.
Nominees for Election as Class II directors to serve until the Annual Meeting of
Stockholders in 2006
<Table>
Bob G. Gower
Director since 1998
Age 65
Houston, Texas
Mr. Gower is President and Chief Executive Officer of Carbon Nanotechnologies, Inc.,
a technology leader in single-wall carbon nanotubes. He served as Chairman and Chief
Executive Officer of Specified Fuels & Chemicals L.L.C. from 1997 to 2000. From 1985
to 1997, he served first as President and then as Chairman of Lyondell Petrochemical
Company. Mr. Gower serves as Chairman of the Audit Committee and is a member of the
Executive Committee and Compensation Committee. He is also a director of Probex
Corporation.
Joseph H. Pyne
Director since 1988
Age 55
Houston, Texas
Mr. Pyne has served as President and Chief Executive Officer of the Company since
1995. He served as Executive Vice President from 1992 to 1995 and also served as
President of Kirby Inland Marine, LP, the Company's principal transportation
subsidiary, from 1984 to 1999. He serves as a member of the Executive Committee.
Richard C. Webb
Director since 2000
Age 69
Houston, Texas
Mr. Webb is Vice Chairman of Sanders Morris Harris, a regional investment banking
firm. From 1994 to 2000 he served as President of Harris, Webb & Garrison, a regional
investment banking firm. Mr. Webb serves as a member of the Compensation Committee.
He is also a director of Pinnacle Management & Trust Co. and Varitek Industries, Inc.
</Table>
3
DIRECTORS CONTINUING IN OFFICE
The following persons are directors of the Company who will continue in
office.
Continuing Class III directors, serving until the Annual Meeting of Stockholders
in 2004
<Table>
C. Sean Day
Director since 1996
Age 53
Greenwich, Connecticut
Mr. Day is Chairman of Teekay Shipping Corporation, a foreign flag tank vessel owner
and operator. He has served in that position since 1999. Mr. Day served as President
and Chief Executive Officer of Navios Corporation, a foreign flag bulk vessel
operator, until 1999. He serves as Chairman of the Committee on Directors and Board
Governance and is a member of the Audit Committee. He is also a director of Genesee &
Wyoming, Inc.
William M. Lamont, Jr.
Director since 1979
Age 54
Dallas, Texas
Mr. Lamont is a private investor. He serves as Chairman of the Compensation Committee
and is a member of the Executive Committee, Audit Committee and Committee on
Directors and Board Governance.
C. Berdon Lawrence
Director since 1999
Age 60
Houston, Texas
Mr. Lawrence has served as Chairman of the Board of the Company since October 1999.
He was the founder and former President of Hollywood Marine, Inc., an inland tank
barge company acquired by the Company in October 1999. Mr. Lawrence serves as
Chairman of the Executive Committee.
</Table>
Continuing Class I directors, serving until the Annual Meeting of Stockholders
in 2005
<Table>
Walter E. Johnson
Director since 2001
Age 66
Houston, Texas
Mr. Johnson is Chairman of Southwest Bank of Texas, Houston's largest independent
bank. Mr. Johnson founded the bank in 1990, after serving as President and Chief
Executive Officer of Allied Bank of Texas from 1971 to 1989.
George A. Peterkin, Jr.
Director since 1973
Age 75
Houston, Texas
Mr. Peterkin is a private investor. He has served as Chairman Emeritus of the Board
of the Company since 1999 and served as Chairman of the Board of the Company from
1995 to 1999. He served as President of the Company from 1973 to 1995 and serves as a
member of the Executive Committee.
Robert G. Stone, Jr.
Director since 1983
Age 79
Greenwich, Connecticut
Mr. Stone is a private investor. He has served as Chairman Emeritus of the Board of
the Company since 1995 and served as Chairman of the Board of the Company from 1983
to 1995. He serves as a member of the Compensation Committee and Committee on
Directors and Board Governance. He is also a director of Russell Reynolds Associates,
Inc.
</Table>
Except as noted, each of the nominees for director and continuing directors
has been engaged in his principal occupation for more than the past five years.
4
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board of Directors is responsible for broad corporate policy and the
overall performance of the Company. Members of the Board are kept informed of
the Company's businesses by various reports and documents sent to them, as well
as by operating and financial reports made at Board and committee meetings by
the Chairman of the Board, President and other corporate officers. The Board has
established four standing committees, including the Audit Committee, the
Compensation Committee and the Committee on Directors and Board Governance, each
of which is briefly described in the following table. A fourth committee, the
Executive Committee, has and may exercise all of the power and authority of the
Board when the Board is not in session in the management of the business and
affairs of the Company, except the power or authority to fill vacancies in the
membership of the Board, to amend the Bylaws of the Company and to fill
vacancies in the membership of the Executive Committee.
AUDIT COMMITTEE
<Table>
<Caption>
FUNCTIONS MEMBERS(1)
- - Monitor the Company's financial reporting, accounting Bob G. Gower (Chairman)
procedures and systems of internal control C. Sean Day
William M. Lamont, Jr.
- - Recommend to the Board the selection of independent
auditors for the Company
- - Review the Company's audited financial statements with
management and the independent auditors
- - Monitor the independence and performance of the
Company's independent auditors and internal audit
function
</Table>
COMPENSATION COMMITTEE
<Table>
<Caption>
FUNCTIONS MEMBERS(1)
- - Make recommendations to the Board regarding William M. Lamont, Jr. (Chairman)
compensation policies, including salary, bonuses and Bob G. Gower
other compensation Robert G. Stone, Jr.
Richard C. Webb
- - Administer the Company's annual incentive bonus program
- - Administer the Company's stock option, restricted stock
and incentive plans and grant stock options, restricted
stock and performance awards under such plans
</Table>
COMMITTEE ON DIRECTORS AND BOARD GOVERNANCE
<Table>
<Caption>
FUNCTIONS MEMBERS(1)
- - Perform the functions of a nominating committee to C. Sean Day (Chairman)
recommend candidates for election to the Board William M. Lamont, Jr.
Robert G. Stone, Jr.
- - Review the size and composition of the Board
- - Maintain oversight of Board operations and
effectiveness
</Table>
The Committee on Directors and Board Governance will consider candidates
for Board membership suggested by stockholders. Suggestion for candidates,
accompanied by biographical information for evaluation, may be sent to the
Secretary of the Company at its principal office address.
- ---------------
(1) Each of the members of the Committee is a "non-employee director" (i.e., not
an officer or employee of the Company or its subsidiaries).
5
ATTENDANCE AT MEETINGS
During 2002, the Board held six meetings. In addition, the Audit Committee
met seven times and the Compensation Committee met three times. The Executive
Committee and Committee on Directors and Board Governance did not meet during
2002. Each incumbent director attended at least 75% of the aggregate number of
meetings of the Board of Directors and all committees on which he served that
were held during the periods for which he served.
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no additional
compensation for their services on the Board or Board committees. Each
nonemployee director receives an annual fee of $20,000 (which the director may
elect to receive in cash or stock options), a fee of $1,000 for each Board
meeting attended and $3,000 for each Committee meeting attended. Audit and
Compensation Committee Chairmen receive an additional $10,000 retainer per year.
Directors are reimbursed for reasonable expenses incurred in attending meetings.
The Company has three director stock option plans, the 1989 Director Stock
Option Plan (the "1989 Director Plan"), the 1994 Nonemployee Director Stock
Option Plan (the "1994 Director Plan") and the 2000 Nonemployee Director Stock
Option Plan (the "2000 Director Plan").
The 1989 Director Plan, under which no more options can be granted,
provided for the one-time granting to nonemployee directors of stock options to
purchase the Company's common stock. Currently, Mr. Day and Mr. Gower each holds
options under the 1989 Director Plan for 5,000 shares of common stock.
The 1994 Director Plan, which was superceded by the 2000 Director Plan on
September 22, 2000, provided for automatic annual grants to nonemployee
directors of stock options to purchase the Company's common stock. Currently,
under the 1994 Director Plan, Mr. Lamont and Mr. Stone each holds options for
12,000 shares of common stock, Mr. Day holds options for 7,500 shares of common
stock and Mr. Gower holds options for 4,500 shares of common stock.
The 2000 Director Plan provides for the automatic grant to nonemployee
directors of stock options for 5,000 shares of common stock on the date of first
election as a director and 3,000 shares immediately after each annual meeting of
stockholders. In addition, the 2000 Director Plan provides for the issuance of
stock options in lieu of cash for all or part of the $20,000 annual director
fee. A director who elects to receive options in lieu of the annual cash fee
will be granted an option for a number of shares equal to (a) the amount of the
fee for which the election is made divided by (b) the fair market value per
share of the common stock on the date of grant multiplied by (c) 3. The exercise
price for all options granted under the 2000 Director Plan is the fair market
value per share of the Company's common stock on the date of grant. The options
granted on first election as a director vest immediately. The options granted
immediately after each annual meeting of stockholders vest six months after the
date of grant. Options granted in lieu of cash director fees vest in equal
quarterly increments during the year to which they relate. Currently, under the
2000 Director Plan, Mr. Webb holds options for 17,526 shares, Mr. Day, Mr. Gower
and Mr. Stone each holds options for 13,170 shares, Mr. Johnson holds options
for 11,772 shares, Mr. Peterkin holds options for 11,585 shares and Mr. Lamont
holds options for 6,000 shares.
The Company also has a 1993 Nonqualified Stock Option for Robert G. Stone,
Jr. (the "Stone Option"). The Stone Option provided for the grant to Mr. Stone,
in July 1993, of a stock option to purchase 25,000 shares of the Company's
common stock.
TRANSACTIONS WITH DIRECTORS AND OFFICERS
During 2002, the Company and its subsidiaries paid Knollwood, L.L.C.
("Knollwood"), a company owned by C. Berdon Lawrence, the Chairman of the Board
of the Company, $197,000 for air transportation services provided by Knollwood.
Such services were in the ordinary course of business of the Company and
Knollwood. The Company anticipates that similar services will be rendered in
2003.
6
The Company is a 25% member of The Hollywood Camp, L.L.C. ("Hollywood
Camp"), a company that owns and operates a hunting facility used by the Company
and two other members primarily for customer entertainment. Knollwood is a 25%
member and acts as manager of Hollywood Camp. The other 50% member is not
affiliated with the Company or Knollwood. Hollywood Camp leases hunting rights
to land owned by Mr. Lawrence and other unaffiliated parties and allocates lease
and lodging expenses to the owners based on their usage of the facilities.
During 2002, the Company was billed $683,000 by Hollywood Camp for its share of
facility expenses. The Company anticipates that similar costs will be incurred
in 2003.
Walter E. Johnson, a director of the Company, is a 25% limited partner in a
limited partnership that owns one barge operated by a subsidiary of the Company,
which owns the other 75% interest in the partnership. The partnership was
entered into on October 1, 1974. During 2002, Mr. Johnson received $82,000 in
distributions from the partnership. The distributions were proportionate to his
interest in the partnership and were made in the ordinary course of business of
the partnership. The partnership will continue to operate in the ordinary course
of the Company's business in 2003.
Southwest Bank of Texas has a 5% participation in the Company's term loan
facility dated October 12, 1999. As of December 31, 2002, the outstanding
balance of the term loan was $171,500,000, of which Southwest Bank of Texas'
participation was $8,575,000. Mr. Johnson is Chairman of the Board of Southwest
Bank of Texas. Southwest Bank of Texas is one of 14 lenders under the term loan,
which was consummated in the ordinary course of business of the Company, and
before Mr. Johnson's appointment as a director of the Company.
7
BENEFICIAL OWNERSHIP OF COMMON STOCK
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the number of shares of common stock beneficially
owned by each director, each named executive officer listed in the Summary
Compensation Table, and by the directors and executive officers of the Company
as a group as of March 3, 2003. Under rules of the Securities and Exchange
Commission ("SEC"), "beneficial ownership" is deemed to include shares for which
the individual, directly or indirectly, has or shares voting or investment
power, whether or not they are held for the individual's benefit.
<Table>
<Caption>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED ON MARCH 3, 2003
-----------------------------------------------
VOTING OR PERCENT OF
INVESTMENT RIGHT TO COMMON
DIRECT(1) POWER(2) ACQUIRE(3) TOTAL STOCK(3)(4)
--------- ---------- ---------- --------- -----------
DIRECTORS
C. Sean Day......................... 5,300 25,670 30,970
Bob G. Gower........................ 40,000 22,670 62,670
Walter E. Johnson................... 1,000 11,772 12,772
William M. Lamont, Jr............... 5,142(5) 18,000 23,142
C. Berdon Lawrence.................. 3,500,581 997,981 4,498,562 18.6%
George A. Peterkin, Jr.............. 215,976(6) 85,135(6) 11,585 312,696 1.3%
Joseph H. Pyne...................... 94,200 228,187 322,387 1.3%
Robert G. Stone, Jr................. 109,050(7) 33,950(7) 50,170 193,170
Richard C. Webb..................... 1,000 17,526 18,526
NAMED EXECUTIVES
Norman W. Nolen..................... 9,959 95,543 105,502
Dorman L. Strahan................... 3,279 60,253 63,532
Steven P. Valerius.................. 11,142(8) 60,919(9) 72,061
Directors and Executive Officers as
a group (17 in number)........... 4,013,732 119,085 1,725,938 5,858,755 23.5%
</Table>
- ---------------
(1) Shares held individually or jointly with others, or in the name of a bank,
broker or nominee for the individual's account. Also includes shares held
under the Company's 401(k) Plan.
(2) Shares with respect to which directors or executive officers have or share
voting or investment power.
(3) The number of shares and percentage ownership of common stock for each
person named assumes that such person is the beneficial owner of common
stock with respect to which such person has the right to acquire beneficial
ownership within 60 days after March 3, 2003. The number of shares and
percentage ownership of common stock for the named directors and executive
officers as a group assumes that all of the shares shown as beneficially
owned by each of such persons are outstanding.
(4) Unless otherwise indicated, beneficial ownership of any named individual is
less than 1% of the outstanding shares of common stock.
(5) Does not include 432,985 shares owned by his wife, Mary Noel Lamont, or
497,171 shares owned by trusts of which Ms. Lamont is the beneficiary. Mr.
Lamont disclaims beneficial ownership of all 930,156 shares.
(6) Does not include 4,000 shares owned by Mr. Peterkin's wife. Mr. Peterkin
disclaims beneficial ownership of those 4,000 shares and 85,135 shares owned
by trusts of which Mr. Peterkin is trustee, the beneficiaries of which are
relatives of his or his wife's.
(7) Does not include 10,000 shares owned by Mr. Stone's wife. Mr. Stone
disclaims beneficial ownership of those 10,000 shares and 33,950 shares
owned by trusts of which Mr. Stone is trustee.
8
(8) Does not include 463 shares owned by Mr. Valerius' wife. Mr. Valerius
disclaims beneficial ownership of those shares.
(9) Does not include 7,833 shares of which Mr. Valerius' wife has the right to
acquire beneficial ownership within 60 days after March 3, 2003. Mr.
Valerius disclaims beneficial ownership of those shares.
PRINCIPAL STOCKHOLDERS
The following table and notes set forth information as of the dates
indicated concerning persons known to the Company to be the beneficial owner of
more than 5% of the Company's outstanding common stock:
<Table>
<Caption>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED(1) OF CLASS
---------------- --------------------- --------
C. Berdon Lawrence........................................ 4,498,562(2) 18.6%
55 Waugh Drive, Suite 1000
Houston, Texas 77007
Luther King Capital Management Corporation................ 1,447,300(3) 6.0%
301 Commerce Street, Suite 1600
Fort Worth, Texas 76102
PRIMECAP Management Company............................... 1,407,400(4) 5.9%
225 South Lake Avenue, Suite 400
Pasadena, California 91101
</Table>
- ---------------
(1) Except for 997,981 shares with respect to which Mr. Lawrence has the right
to acquire beneficial ownership, to the Company's knowledge, all of the
shares are directly owned by the named person or entities and none were
subject to options or other rights to acquire beneficial ownership in the
future.
(2) Based on Form 5, dated February 14, 2003, filed by Mr. Lawrence with the
SEC.
(3) Based on Schedule 13G, dated February 4, 2003, filed by Luther King Capital
Management Corporation with the SEC.
(4) Based on Schedule 13F, dated February 10, 2003, filed by PRIMECAP Management
Company with the SEC.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's directors and executive officers, and persons who own
beneficially more than 10% of the Company's common stock, are required under
Section 16(a) of the Securities Exchange Act of 1934 to file reports of
beneficial ownership and changes in beneficial ownership of the Company's common
stock with the SEC and the New York Stock Exchange. Based solely on a review of
the copies of reports furnished to the Company and written representations that
no other reports were required, the Company believes that all filing
requirements were complied with during 2002.
9
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of the Company has a standing Compensation Committee
whose functions are to (1) administer the Company's annual incentive bonus
program, (2) make recommendations to the Board of Directors with respect to
salaries for officers and key employees of the Company, (3) administer all of
the Company's stock option and incentive compensation plans and grant stock
options and other awards under the plans (except those plans under which grants
of options are automatic) and (4) review and make recommendations to the Board
of Directors with respect to any other forms of compensation for officers and
key employees of the Company. The Compensation Committee held three meetings in
2002. In 2002, the Board of Directors did not reject or modify in any material
way any action or recommendation of the Compensation Committee. The Compensation
Committee is composed of four members, all of whom are "Non-Employee Directors"
and "outside directors" as defined in relevant federal securities and tax
regulations.
Compensation of executive officers is based primarily on three elements:
(1) base salary, (2) annual incentives, such as bonuses, and (3) long-term
incentives, including stock options, restricted stock and performance awards.
The basic goal is to pay compensation comparable to similar corporations, giving
due regard to relative financial performance, and to tie annual incentives and
long-term incentives to corporate performance and a return to the Company's
stockholders.
With regard to the annual cash incentives for an executive officer,
exclusive of base salary, the Compensation Committee attempts to set bonuses at
a level such that, with a positive performance by the executive officer, and a
certain level of profitability by the Company, the total compensation for such
executive officer, including base salary and annual cash incentives, should be
above the median total cash compensation for similar corporations and positions.
The Compensation Committee believes that total annual cash compensation above
the median for similar corporations and positions is appropriate since a
significant portion of each executive officer's total annual cash compensation
is at risk due to both individual and Company performance factors.
Annual incentive bonuses paid to the Company's executive officers in 2002
related to 2001 performance. Effective for bonuses earned during the 1999 fiscal
year, the Board of Directors of the Company adopted a new incentive compensation
program based on the creation of "Economic Value" ("EV") in each of the
Company's three business groups -- inland marine transportation, diesel engine
services and offshore marine transportation -- and for the Company as a whole.
Performance under the program is measured on a calendar year basis. The primary
component of the program for executive officers and other management level
employees is a "Business Performance Bonus".
The Company establishes its key business objectives at the beginning of the
year. The primary performance benchmark used since 1999 has been EV, a financial
measure of performance calculated to determine whether the Company is generating
returns above the rate expected by debt holders and equity holders, a blended
rate called the "cost of capital" for the Company.
For the Business Performance Bonus, EV objectives were established for the
Company and for each of its business groups. A target bonus and a maximum bonus
which would be earned if the EV objective was achieved or exceeded were
established for each eligible employee. The bonus is formula based and can vary
from 0% to 125% of the target bonus, depending on the EV added for the year in
the Company or in the employee's business group, as applicable. Bonuses for
employees of the Company itself (a holding company which conducts operations
through its subsidiaries) are based entirely on the performance of the Company
as a whole. Bonuses for the heads of the Company's business groups are based 50%
on the performance of the business group and 50% on overall Company performance.
Bonuses for all other employees in a business group are based 70% on the
performance of the business group and 30% on Company performance.
Effective for bonuses earned during 2003, the Board of Directors has
modified the incentive compensation program to use a combination of three
performance measures to replace EVA -- net operating cash flow,
10
return on total capital and earnings per share -- but the changes did not affect
compensation paid in 2002 for 2001 performance.
Stock options granted to executive officers and other Company employees
have been granted at a price equal to the fair market value of the common stock
on the date of grant and, except for the Premium Stock Options granted on
November 5, 1996 and February 15, 1999 (the "Premium Stock Options"), generally
vest in equal increments over a period of either three or four years and, unless
earlier terminated, are for a period of either five or ten years. The Premium
Stock Options, which cover 510,000 of the shares subject to unexercisable
options shown in the table under "Aggregated Option Exercises in 2002 and 2002
Year-End Option Values" on page 14, may only be exercised on or after November
5, 2005 and on or before November 5, 2006.
The Compensation Committee's objective for long-term incentive compensation
for executive officers is the median for long-term incentive compensation of
similar corporations and positions, giving effect to the Company's long-term
performance relative to its peers.
In addition to retirement, health care and similar benefits, the primary
long-term incentives for executive officers are options under the Company's
stock option plans. Generally, stock option awards are made by the Compensation
Committee in January of each year. The Compensation Committee believes that the
Company's long-term executive officer compensation, as evidenced by the options
granted to date, does not exceed the value of stock options granted by similar
companies to their executive officers holding similar positions.
In 2002, the Board of Directors of the Company instituted a long-term
incentive compensation program for selected senior executives, to be
administered by the Compensation Committee. The program allows the grant of
incentive stock options, nonincentive stock options, restricted stock,
performance shares and performance units (or any combination thereof). The
objective of the program is to provide long-term incentive compensation to the
specified executives in an amount equal to the median for companies or business
units of comparable size. The new program addresses the concern of the
Compensation Committee and the Board about using stock options as the sole form
of long-term incentive compensation for senior executives and reflects their
conclusion that it is appropriate for the ultimate value of a long-term
incentive compensation package to be based in part on other indicators of the
Company's performance besides stock price. Under the newly adopted program, the
elements of long-term compensation to be awarded, as well as the executives
selected to participate, will be determined each year by the Compensation
Committee.
For 2002, the Compensation Committee determined that the executives who
would receive awards under the long-term incentive compensation program would be
Joseph H. Pyne, President and Chief Executive Officer, Norman W. Nolen,
Executive Vice President and Chief Financial Officer, Steven P. Valerius,
President of Kirby Inland Marine, LP, and D. Lynn Strahan, President of Kirby
Engine Systems, Inc., and that 40% of the target value of the awards would be in
the form of stock options, 20% in the form of restricted stock and 40% in the
form of performance units tied to the achievement of EV objectives. The options
vest over a three-year period and the restricted stock vests over a five-year
period. The performance awards were tied to the achievement of EV objectives
over a three-year period, but that portion of the 2002 awards has been cancelled
subsequent to 2002 since, as discussed above, EV will no longer be used as the
performance measure under the Company's incentive compensation program. The
amount and form of the awards were based in part on survey information and
recommendations provided by an independent consultant to the Compensation
Committee. The actual awards made to the four participants during 2002 are
included in the compensation tables presented elsewhere in this proxy statement.
The Compensation Committee encounters certain difficulties in establishing
a peer group of companies for compensation comparison purposes because there are
few publicly traded marine transportation companies of similar size and none
with a similar service mix. Some other marine transportation companies are
limited partnerships or subsidiaries of larger public corporations, again making
comparisons difficult. The Compensation Committee also compares the Company's
executive compensation to the executive compensation of publicly held industrial
companies.
11
On October 18, 1994, on the recommendation of the Compensation Committee,
the Board of Directors adopted an unfunded, nonqualified Deferred Compensation
Plan for Key Employees effective January 1, 1992, which was designed primarily
to provide additional benefits to eligible employees to restore benefits to
which they would be entitled under the Company's Profit Sharing Plan and 401(k)
Plan were it not for certain limits imposed by the Internal Revenue Code. The
plan is designed to restore benefits for employees being compensated in excess
of $200,000 per annum.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the Chief Executive Officer and the four other most highly compensated
executive officers. Certain performance-based compensation, however, is
specifically exempt from the deduction limit. The Compensation Committee did
take the steps necessary to qualify the Premium Stock Options awarded to
executive officers for deductibility under Section 162(m) of the Internal
Revenue Code. The Compensation Committee considers the net cost to the Company
in making all compensation decisions.
On the recommendation of the Compensation Committee, the 2002 base salary
for Joseph H. Pyne, the Company's Chief Executive Officer, was established at
$530,000 by the Company's Board of Directors effective January 1, 2002. The
Chief Executive Officer's base salary was generally based on the same factors
and criteria outlined above, being compensation paid to chief executives of
corporations of similar size, individual as well as corporate performance and a
general correlation with compensation of other executive officers of the
Company. The $573,300 bonus paid to Mr. Pyne in 2002, which was earned in 2001,
was determined under the incentive compensation program described above.
In 2002, the Compensation Committee granted nonqualified stock options
covering 174,214 shares of common stock to persons considered executive officers
of the Company. The Compensation Committee generally has granted stock options
based on its belief that stock options are a key element in the Company's
executive compensation policy. The Compensation Committee grants stock options
to executive officers based on its evaluation of individual performance and the
Company's overall performance. The Compensation Committee recognizes that there
is a significant subjective element in this procedure, but believes that such
procedure is better suited to the Company than would be a formula-driven policy.
Total options outstanding at the end of 2002 were for 1,481,581 shares,
excluding the Premium Stock Options, constituting 6.2% of the then outstanding
common stock of the Company, and 654,000 shares in the Premium Stock Option
program, constituting 2.7% of the then outstanding common stock of the Company,
assuming all such options were fully exercised. The Compensation Committee
believes that options in this amount are justified and are within the range of
options granted by similar corporations that consider stock options an important
part of their executive compensation package and that the options held by the
Chief Executive Officer are an appropriate portion of the total options. The
Compensation Committee also granted to the four executive officers named above a
total of 16,964 shares of restricted stock and the performance units shown in
the table under "Long-Term Incentive Plan Awards Granted in 2002" on page 15.
Compensation Committee
William M. Lamont, Jr., Chairman
Bob G. Gower
Robert G. Stone, Jr.
Richard C. Webb
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Mr. Lamont, Mr. Gower, Mr.
Stone and Mr. Webb. No member of the Compensation Committee is or has been an
officer or employee of the Company or any of its subsidiaries. In 2002, no
executive officers of the Company served on the board of directors or
compensation committee of another entity, any of whose executive officers served
on the Board of Directors or Compensation Committee of the Company.
12
SUMMARY ANNUAL AND LONG-TERM COMPENSATION
The following table summarizes compensation paid in 2002, 2001 and 2000 to
the Chief Executive Officer and the four other highest paid executive officers
(the "named executive officers") for 2002:
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM COMPENSATION
---------------------------------------------
ANNUAL COMPENSATION RESTRICTED
NAME AND ------------------- STOCK SHARES SUBJECT ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) TO OPTIONS COMPENSATION(2)
------------------ ---- -------- -------- ---------- -------------- ---------------
Joseph H. Pyne.................. 2002 $539,362 $238,501 $272,790 52,063 $ --
President, Director and Chief 2001 518,960 573,300 110,000 28,680
Executive Officer 2000 499,360 441,000 100,000 29,464
C. Berdon Lawrence.............. 2002 $414,962 $182,521 55,000 $ --
Chairman of the Board 2001 399,360 438,750 55,000 28,680
2000 384,360 337,500 35,000 29,464
Steven P. Valerius.............. 2002 $285,860 $ 96,775 $ 93,062 17,758 $ --
President of Kirby Inland 2001 271,860 229,688 30,000 28,680
Marine, LP 2000 259,360 175,000 30,000 29,464
Norman W. Nolen................. 2002 $259,360 $ 87,500 $ 87,145 16,630 $ --
Executive Vice President and 2001 248,360 209,125 30,000 28,680
Chief Financial Officer 2000 238,190 161,000 30,000 29,464
Dorman L. Strahan............... 2002 $187,860 $ 76,095 $ 24,963 4,763 $ --
President of Kirby Engine 2001 180,960 120,120 10,000 22,423
Systems, Inc. 2000 174,360 86,510 10,000 24,375
</Table>
- ---------------
(1) Represents the value of the restricted stock on the date of grant. At
December 31, 2002, the value of the restricted stock owned by each of the
named executive officers was $265,190 for Mr. Pyne (9,682 shares), $90,469
for Mr. Valerius (3,303 shares), $84,717 for Mr. Nolen (3,093 shares) and
$24,268 for Mr. Strahan (886 shares). The restricted stock awards were
granted on February 7, 2002 and vest over a period of five years, beginning
on the first anniversary of the date of grant, subject to continued
employment. In the event a change of control occurs, all restricted stock
grants become fully vested. The Company does not have an established
dividend policy. Should the Board declare a dividend after the restricted
stock has been awarded, restricted stock owners shall receive dividends on
the shares of restricted stock that have not been forfeited.
(2) Represents the aggregate value of the Company's contributions under the
Company's Profit Sharing Plan, 401(k) Plan and Deferred Compensation Plan
for Key Employees. The Company's contributions under these deferred
compensation plans for the 2002 year have not been determined as of the date
of this Proxy Statement, except for the Company's matching contributions
under the Company's 401(k) Plan, pursuant to which matching contributions to
the individual accounts were as follows: $6,000 each to Mr. Pyne, Mr.
Lawrence, Mr. Valerius, Mr. Nolen and $5,355 to Mr. Strahan.
STOCK OPTIONS GRANTED, OPTION EXERCISES AND YEAR END VALUE
The following table includes information on grants of stock options during
2002 to the five named executive officers. The amounts shown for the named
executive officers as potential realizable value for such options are based on
assumed annual rates of stock price appreciation of 0%, 5% and 10% over the full
five-year terms of the options granted. The amounts shown as potential
realizable value for all stockholders as a group represent the corresponding
increases in the market value of 24,006,863 outstanding shares of common stock
held by all stockholders as of December 31, 2002. No gain to the optionees is
possible without an increase in the stock price that would benefit all
stockholders proportionately. The potential realizable values are based solely
on arbitrarily assumed rates of appreciation required by applicable SEC
regulations. Actual
13
gains, if any, on stock option exercises are dependent on the future performance
of the common stock and overall market conditions. There can be no assurance
that the amounts reflected in this table will be achieved.
STOCK OPTIONS GRANTED IN 2002
<Table>
<Caption>
POTENTIAL REALIZED VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(3)
------------------------------------------------ ------------------------------------
% OF TOTAL
OPTIONS 0% 5% 10%
GRANTED TO EXERCISE ANNUAL ANNUAL ANNUAL
OPTIONS EMPLOYEES OR BASE EXPIRATION GROWTH GROWTH GROWTH
NAME GRANTED(1) IN 2002 PRICE DATE RATE(2) RATE(2) RATE(2)
- ---- ---------- ---------- -------- ---------- ------- ----------- -----------
C. Berdon Lawrence....... 55,000 15.27% $27.130 01/28/07 $0 $ 412,253 $ 910,971
Norman W. Nolen.......... 16,630 4.62% 28.175 02/07/07 0 129,451 286,054
Joseph H. Pyne........... 52,063 14.45% 28.175 02/07/07 0 405,269 895,541
Dorman L. Strahan........ 4,763 1.32% 28.175 02/07/07 0 37,076 81,929
Steven P. Valerius....... 17,758 4.93% 28.175 02/07/07 0 138,232 305,457
All stockholders as a
group.................. N/A N/A 27.39(4) N/A 0 181,669,535(4) 401,440,362(4)
</Table>
- ---------------
(1) These options become exercisable 33% after one year, 67% after two years,
and 100% after three years of the date of grant. The exercise price for the
options may be paid with already owned shares of common stock. No stock
appreciation rights were granted with the stock options.
(2) For stock options, the value is based on the exercise price per share of
common stock, which was the average of the high and low sales price per
share of common stock on the New York Stock Exchange on the date of grant.
(3) Potential realizable value amounts for the named executive officers have
been calculated by multiplying the exercise price by the annual appreciation
rate shown (compounded for the five-year term of the options), subtracting
the exercise price per share and multiplying the gain per share by the
number of shares covered by the option. The derived potential realized value
is the nominal undiscounted future value not adjusted for inflation.
(4) For stockholders as a group, the potential realized value reflects the
appreciation over $27.39 per share of common stock, which was the closing
price per share of common stock on December 31, 2002, for 24,006,863
outstanding shares of common stock as of December 31, 2002.
The following table summarizes for each of the named executive officers
their option exercises in 2002 and the value of their options at December 31,
2002.
AGGREGATED OPTION EXERCISES IN 2002 AND 2002 YEAR-END OPTION VALUES
<Table>
<Caption>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2002 DECEMBER 31, 2002(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
C. Berdon Lawrence.... 41,666 103,334 $ 325,051 $337,943
Norman W. Nolen....... 60,000 96,630 548,400 311,538
Joseph H. Pyne........ 10,000 $133,550 155,832 546,731 1,378,993 740,570
Dorman L. Strahan..... 10,000 153,775 49,499 99,264 468,561 93,869
Steven P. Valerius.... 40,000 42,758 340,753 222,794
</Table>
- ---------------
(1) Based on the average of the high and low sales price per share of common
stock on the date of exercise.
(2) Value based on $27.39 per share of common stock, which was the closing price
per share of common stock on December 31, 2002.
14
The following table provides information as of December 31, 2002 with
respect to shares of the Company's common stock that may be issued under the
existing equity compensation plans, including the Company's 1989 Employee Stock
Option Plan, the 1994 Employee Stock Option Plan, the 1996 Employee Stock Option
Plan, the 2001 Employee Stock Option Plan, the 2002 Stock and Incentive Plan,
the 1989 Director Stock Option Plan, the 1994 Nonemployee Director Stock Option
Plan, the 2000 Nonemployee Director Stock Option Plan and the 1993 Nonqualified
Stock Option for Robert G. Stone, Jr.
EQUITY COMPENSATION PLAN INFORMATION AS OF DECEMBER 31, 2002
<Table>
<Caption>
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
NUMBER OF UNDER EQUITY
SECURITIES TO BE COMPENSATION PLANS
ISSUED UPON WEIGHTED-AVERAGE (EXCLUDING SECURITIES
EXERCISE OF EXERCISE PRICE OF REFLECTED IN FIRST
PLAN CATEGORY OUTSTANDING OPTIONS OUTSTANDING OPTIONS COLUMN)
- ------------- ------------------- ------------------- ---------------------
Equity compensation plans approved by
stockholders.......................... 2,206,581 $20.60 1,115,180
Equity compensation plans not approved
by stockholders(1).................... 86,393 $24.55 213,607
--------- ---------
Total......................... 2,292,974 $20.75 1,328,787
========= =========
</Table>
- ---------------
(1) The only plan included in the table that was adopted without stockholder
approval was the 2000 Nonemployee Director Stock Option Plan, the material
features of which are summarized under "THE BOARD OF DIRECTORS AND BOARD
COMMITTEES -- Director Compensation."
LONG-TERM INCENTIVE PLAN AWARDS GRANTED IN 2002
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<Table>
<Caption>
PERFORMANCE OR OTHER
PERIOD UNTIL
NUMBER OF SHARES, MATURATION OR
NAME UNITS OR OTHER RIGHTS PAYOUT THRESHOLD(1) TARGET MAXIMUM
---- --------------------- -------------------- ------------ -------- --------
Joseph H. Pyne.......... 3 years $99,680 $498,400 $996,800
Norman W. Nolen......... 3 years 31,840 159,200 318,400
Steven P. Valerius...... 3 years 34,000 170,000 340,000
Dorman L. Strahan....... 3 years 9,120 45,600 91,200
</Table>
- ---------------
(1) Amount payable if 80% of performance target is achieved; if less than 80% is
achieved, there is no payment.
The long-term performance awards made to the named executive officers in
2002 were based on achievement on a cumulative basis over a three-year
performance period of the Company's EV targets established under the Company's
annual incentive bonus plan. In January 2003, the Board of Directors decided to
discontinue EV as the measure of performance under the annual bonus plan and
replace it with three equally weighted performance measures -- net operating
cash flow, return on total capital and earnings per share. Since the Company
will therefore not be setting EV targets under the annual bonus plan for the
second and third years of the performance period, the Compensation Committee
decided in January 2003 to cancel the performance awards made in 2002 that are
shown in the table, with the consent of the participants, and in lieu of the
performance awards the Committee granted shares of restricted stock to Mr. Pyne
(9,682 shares), Mr. Nolen (3,093 shares), Mr. Valerius (3,303 shares) and Mr.
Strahan (886 shares).
15
COMPENSATION AGREEMENTS
In connection with its acquisition of Hollywood Marine, Inc. on October 12,
1999, the Company entered into an Employment Agreement with Mr. Lawrence, the
former President of Hollywood and current Chairman of the Board of the Company.
The Agreement was for a three-term year, which ended on October 11, 2002, and
provided for an annual base salary of $375,000 (subject to increase but not
decrease at the discretion of the Board of Directors) and provided that Mr.
Lawrence was eligible to participate in other compensation and benefit plans
generally on the same basis as other Company officers. The Agreement contained
noncompetition and confidentiality covenants and provisions for termination by
the Company with or without cause (in the latter case with certain cash
severance payments).
Kirby Inland Marine, LP has a Deferred Compensation Agreement with Mr. Pyne
in connection with his previous employment as its President. The agreement
provides for benefits to Mr. Pyne totaling $4,175 per month commencing upon the
later of his severance from the employment of the Company, or his 65th birthday
and continuing until the month of his death. If Mr. Pyne should die prior to
receiving such deferred compensation, the agreement provides for monthly
payments to his beneficiary for a period of sixty months. The agreement also
provides that no benefits will be paid if Mr. Pyne is terminated for cause (as
defined in the agreement).
The Company has an unfunded, nonqualified Deferred Compensation Plan for
Key Employees which was adopted in October 1994, effective January 1, 1992. The
Plan is designed primarily to provide additional benefits to eligible employees
to restore benefits to which they would be entitled under the Company's Profit
Sharing Plan and 401(k) Plan were it not for certain limits imposed by the
Internal Revenue Code. The benefits under the Deferred Compensation Plan are
designed to restore benefits for employees being compensated in excess of
$200,000 per year. The following table discloses for the named executive
officers the amount of contributions to the Deferred Compensation Plan for 2000
and 2001. Contributions for the 2002 year have not been determined as of the
date of this Proxy Statement.
<Table>
<Caption>
DEFERRED
COMPENSATION PLAN
-----------------
2001 2000
------- -------
C. Berdon Lawrence.......................................... $37,152 $35,523
Norman W. Nolen............................................. 11,663 10,395
Joseph H. Pyne.............................................. 57,340 55,453
Steven P. Valerius.......................................... 15,630 13,861
</Table>
16
COMMON STOCK PERFORMANCE GRAPH
The performance graph below shows the cumulative total return on the
Company's common stock compared to the Russell 2000 Index and the Dow Jones
Marine Transportation Index over the five-year period beginning December 31,
1997. The results are based on an assumed $100 invested on December 31, 1997,
and reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG KIRBY CORPORATION, THE RUSSELL 2000 INDEX
AND THE DOW JONES US MARINE TRANSPORTATION INDEX
[PERFORMANCE GRAPH]
<Table>
<Caption>
- --------------------------------------------------------------------------------------
12/97 12/98 12/99 12/00 12/01 12/02
- --------------------------------------------------------------------------------------
KIRBY CORPORATION $100.00 $103.24 $106.15 $108.74 $142.65 $141.83
RUSSELL 2000 $100.00 $ 97.45 $111.17 $114.60 $117.45 $ 93.39
DOW JONES US MARINE
TRANSPORTATION $100.00 $ 58.22 $ 82.28 $102.14 $104.62 $ 98.40
</Table>
* $100 INVESTED ON 12/31/97 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDED DECEMBER 31.
OTHER BUSINESS (ITEM 3)
The Board of Directors knows of no other business to be brought before the
Annual Meeting. However, if any other matters are properly presented, it is the
intention of the persons named in the accompanying proxy to take such action as
in their judgment is in the best interest of the Company and its stockholders.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP served as the Company's principal independent public accountants
during 2002 and will continue to serve as the Company's principal independent
public accountants for the current year. Representatives of KPMG LLP are
expected to be present at the 2003 Annual Meeting of Stockholders, with the
opportunity to make a statement if they desire to do so, and are expected to be
available to respond to appropriate questions.
17
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors of the Company is responsible
for monitoring the integrity of the Company's financial reporting, accounting
procedures and internal controls. The Audit committee is composed of three
directors, all of whom are independent within the meaning of New York Stock
Exchange standards. The Audit Committee operates under a written charter adopted
by the Board of Directors.
Management is primarily responsible for the Company's financial reporting
process and internal controls. The Company's independent auditors are
responsible for performing an audit of the Company's financial statements and
issuing a report on the conformity of the financial statements with generally
accepted accounting principles. The Audit Committee is responsible for
overseeing those processes.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the year ended December 31, 2002 with management
and the independent auditors. The Audit Committee also discussed with the
independent auditors the matters required by Statement on Auditing Standards No.
61 (Communication with Audit Committees), received written disclosures from the
independent auditors required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and discussed with the
independent auditors their independence.
Based on the Audit Committee's review of the audited financial statements
for the year ended December 31, 2002 and the Audit Committee's discussions with
management and the independent auditors, the Audit Committee recommended to the
Board of Directors of the Company that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2002, which has been filed with the Securities and Exchange Commission.
AUDIT COMMITTEE
Bob G. Gower, Chairman
C. Sean Day
William M. Lamont, Jr.
AUDIT FEES AND NON-AUDIT FEES
The following table presents fees for professional audit services rendered
by KPMG LLP for the audit of the Company's annual financial statements for 2002,
and fees billed for other services rendered by KPMG LLP:
<Table>
Audit fees.................................................. $288,500
========
Audit related fees(1)....................................... $ 36,000
========
Tax services................................................ $107,375
========
Financial information systems design and implementation
fees...................................................... $ --
========
All other fees.............................................. $ --
========
</Table>
- ---------------
(1) Audit related fees consisted principally of audits of financial statements
of employee benefit plans.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the independence of the Company's
principal accounting firm.
STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Stockholder proposals must be received by the Company at its principal
executive offices no later than November 7, 2003 to be considered for inclusion
in the Company's proxy statement and form of proxy for the 2004 Annual Meeting
of Stockholders.
18
Under the Company's Bylaws, written notice (containing the information
required by the Bylaws) of any stockholder proposal for action at an annual
meeting of stockholders (whether or not proposed for inclusion in the Company's
proxy materials) must be received by the Company at its principal executive
offices not less than 90 nor more than 120 days prior to the anniversary date of
the prior year's annual meeting of stockholders and must be a proper subject for
stockholder action.
BY ORDER OF THE BOARD OF DIRECTORS
THOMAS G. ADLER
Secretary
March 6, 2003
Houston, Texas
19
KIRBY CORPORATION
55 WAUGH DRIVE, SUITE 1000
P.O. BOX 1745
HOUSTON, TEXAS 77251-1745
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF KIRBY
CORPORATION.
The undersigned hereby appoints Joseph H. Pyne, Norman W. Nolen, G. Stephen
Holcomb and Thomas G. Adler, and each of them, as Proxies, each with the power
to appoint his substitute, and hereby authorizes each to represent and to vote,
as designated below, all the shares of common stock, par value $0.10 per share,
of Kirby Corporation (the "Company") held of record by the undersigned as of
the close of business on March 3, 2003, at the Annual Meeting of Stockholders
to be held on April 22, 2003, at 55 Waugh Drive, 8th Floor, Houston, Texas
77007 at 10:00 A.M. (CDT) and any adjournment(s) thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE PERSONS LISTED IN ITEM 1. SHOULD ANY OF THEM BECOME
UNAVAILABLE FOR NOMINATION OR ELECTION OR REFUSE TO BE NOMINATED OR ACCEPT
ELECTION AS A DIRECTOR OF THE COMPANY, THE PROXY WILL BE VOTED FOR THE ELECTION
OF SUCH PERSON OR PERSONS AS MAY BE NOMINATED OR DESIGNATED BY THE BOARD OF
DIRECTORS. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTER
REFERRED TO IN ITEM 2.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
[SEE REVERSE SIDE] [SEE REVERSE SIDE]
<Table>
PLEASE MARK
VOTES AS
[X] IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE FOLLOWING PROPOSALS:
1. To elect (3) Class II Directors to hold office 2. In their discretion, the Proxies are authorized to
until the Annual Meeting of Stockholders in 2006. vote upon such other business as may properly
come before the meeting.
NOMINEES: Bob G. Gower, Joseph H. Pyne, Richard C. Webb
FOR WITHHELD MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
[ ] USING THE ENCLOSED ENVELOPE.
--------------------------------------
For all nominees except as noted above Please execute this Proxy as your name(s) appear(s) hereon. When
shares are held by joint owners, both should sign. When signing
as attorney, executor, administrator, trustee, guardian, or
other fiduciary or representative capacity, please set forth the
full title. If a corporation, please sign in full corporate name
by president or other authorized officer. If a partnership,
limited liability company or other entity, please sign in entity
name by authorized person.
Signature: Date: Signature: Date:
-------------------------------------- ------- -------------------------------------- -------
</Table>