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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:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-12
CHICAGO BRIDGE & IRON COMPANY N.V.
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(Name of Registrant as Specified in Its Charter)
CHICAGO BRIDGE & IRON COMPANY N.V.
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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:
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(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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PRELIMINARY COPY
CHICAGO BRIDGE & IRON COMPANY N.V.
POLARISAVENUE 31
2132 JH HOOFDDORP, THE NETHERLANDS
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 2001
To the Shareholders of:
CHICAGO BRIDGE & IRON COMPANY N.V.
You are hereby notified that the Annual General Meeting of Shareholders of
Chicago Bridge & Iron Company N.V. will be held at Amstel Inter-Continental
Hotel Amsterdam, Prof. Tulpplein 1, 1018 GX Amsterdam, The Netherlands, at 2:00
P.M., local time, on Thursday, May 10, 2001, for the following purposes:
1. To reappoint Jerry H. Ballengee, William E. Macaulay, L. Donald Simpson
and Michael D. Winfield as members of the Supervisory Board to serve
until the Annual General Meeting of Shareholders in 2004, and until
their successors shall have been duly appointed;
2. 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, 2000;
3. To approve the distribution from profits for the year ended December 31,
2000 in the amount of US$0.24 per share previously paid as interim
dividends;
4. To approve the extension of the authority of the Management Board to
repurchase up to 30% of the issued share capital of the Company until
November 10, 2002;
5. To cancel shares to be acquired by the Company in its own share capital;
6. To amend the Articles of Association to convert the par value of the
shares from Dutch Guilders to Euros, to reflect that AEX-Effectenbeurs
N.V. (the "Amsterdam Exchange") is now called Euronext Amsterdam N.V.
and to clarify the source of payment of interim dividends;
7. To approve the extension of the authority of the Supervisory Board to
issue and/or grant rights (including options to subscribe) on shares of
the Company until May 10, 2006;
8. To approve the extension of the authority of the Supervisory Board to
limit or exclude the preemptive rights of the shareholders of the
Company until May 10, 2006;
9. To adopt the Chicago Bridge & Iron 2001 Employee Stock Purchase Plan;
and
10. To approve the appointment of Arthur Andersen as the Company's
independent public accountants for the fiscal year ending December 31,
2001.
This notification is subject to the convocation for the meeting and
meeting's official agenda as they will appear or be available under Dutch law.
Copies of the Dutch Statutory Annual Accounts, the annual report of the
Management Board, the list of nominees for the Supervisory Board and the
verbatim text of the proposed amendment to the Articles of Association (in Dutch
and in English) can be obtained free of charge by shareholders and other persons
entitled to attend general meetings of shareholders of the Company at the
offices of the Company at Polarisavenue 31, 2132 JH Hoofddorp, 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,
2001, and holders of bearer shares who deposit their shares prior to May 7,
2001, are entitled to receive notice of and to vote at the Annual Meeting.
Shareholders must give notice to the Management Board of their intention to
attend the Annual
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Meeting in writing prior to May 7, 2001. The stock transfer books will not be
closed. Admittance of shareholders and acceptance of written voting proxies
shall be under Dutch law.
REGISTERED 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 , 2001
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CHICAGO BRIDGE & IRON COMPANY N.V.
PROXY STATEMENT
This proxy statement, which is first being mailed to holders of registered
shares on or about April , 2001, is furnished in connection with the
solicitation of proxies on behalf of the Supervisory Board of Chicago Bridge &
Iron Company N.V. ("we", "CB&I" or the "Company"), who ask you to complete,
sign, date and mail the enclosed proxy for use at the Annual General Meeting of
Shareholders to be held May 10, 2001, 2:00 P.M. local time (the "Annual
Meeting"), for the purposes set forth in the foregoing notice.
Each share entitles the 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 us within the time indicated on the enclosed proxy (the "Voter
Deadline"), will be voted at 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, Macaulay, Simpson and Winfield for Supervisory Directors and
for all proposals described in this Proxy Statement.
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, with regard to which
attending in person the requirements below apply.
Only holders of record of the .......... registered shares of the Company's
share capital, par value NLG 0.01 (the "Registered Shares"), issued at the close
of business on April 3, 2001, and the holders of the ...... bearer shares (the
"Bearer Shares") who deposit their shares prior to May 7, 2001 (the Registered
Shares and the Bearer Shares together, the "Common Stock" or "shares") are
entitled to notice of and to vote at the meeting. Shareholders must give notice
in writing to the Management Board of their intention to attend the Annual
Meeting prior to May 7, 2001.
Although there is no quorum requirement under Dutch law, abstentions,
directions to withhold authority to vote for a Supervisory Director nominee or
to withhold authority to vote for all Supervisory 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.
We will bear the cost of soliciting proxies on the accompanying proxy card.
Some of our directors, officers and regular employees may solicit proxies in
person or by mail, telephone or telefax, but will not receive any additional
compensation for their services. We may reimburse brokers and others for their
reasonable expenses in forwarding proxy solicitation material to the beneficial
owners of our shares.
This proxy statement is subject to the convocation for the Annual Meeting
and the Annual Meeting's official agenda as they will appear or be available
under Dutch law. Admittance of shareholders and acceptance of written voting
proxies shall be under Dutch law.
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ITEM 1
APPOINTMENT OF DIRECTORS
The general affairs and business of the Company and the Management Board
are supervised by the Board of Supervisory Directors (the "Supervisory Board"),
the members of which are appointed by the general meeting of shareholders. Our
Articles of Association (the "Articles of Association") provide for at least six
and no more than twelve Supervisory Directors to serve on the Supervisory Board.
Effective December 29, 2000, the size of the Board is twelve. Under the law of
The Netherlands, a Supervisory Director cannot be a member of the Management
Board of the Company. The general meeting of shareholders appointed Chicago
Bridge & Iron Company B.V. as the sole member of the Management Board.
Members of the Supervisory Board are appointed 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. A member of the Supervisory Board must resign effective the
date of the annual general meeting of shareholders in the year in which the
director attains the age of 72. 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 issued 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 determined 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. A nomination by the Supervisory Board
is binding on the shareholders unless overridden by a Two-thirds Majority of
Quorum.
Four Supervisory Directors are to be appointed. They will serve until the
Annual Meeting in 2004. 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, pursuant to the First Reserve Shareholder Agreement (as
hereinafter defined), has proposed the election of William E. Macaulay or W.G.
"Will" Honeybourne. For the third position, the Supervisory Board has proposed
the election of L. Donald Simpson or Samuel C. Leventry. For the fourth
position, the Supervisory Board, pursuant to the WEDGE Shareholder Agreement (as
hereinafter defined), has proposed the election of Michael D. Winfield or James
M. Tidwell. Messrs. Ballengee, Macaulay, Simpson and Winfield are presently
members of the Supervisory Board.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPOINTMENT
OF MESSRS. BALLENGEE, MACAULAY, SIMPSON AND WINFIELD.
Certain information with respect to the nominees for Supervisory Director
and the eight Supervisory Directors whose terms do not expire this year is as
follows:
THE FOLLOWING NOMINATIONS ARE MADE FOR THREE-YEAR TERMS EXPIRING IN 2004:
FIRST POSITION
FIRST NOMINEE
JERRY H. BALLENGEE, 63, has served as a Supervisory Director of the Company
since April, 1997. He served as President and Chief Operating Officer of Union
Camp Corporation from July, 1994 to May, 1999 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.
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SECOND NOMINEE
STEPHEN M. DUFFY, 51, has served as Vice President-Human Resources and
Administration 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.
SECOND POSITION
FIRST NOMINEE
WILLIAM E. MACAULAY, 55, has served as a Supervisory Director of the
Company since January, 2001. He is the Chairman and Chief Executive Officer of
First Reserve Corporation where he has been employed since 1983. First Reserve
Corporation is the general partner of First Reserve Fund VIII, L.P. He is a
member of the Board of Directors of Weatherford International, Inc., an oilfield
services company; National Oilwell, Inc., a leading international provider of
contract drilling and associated services related to the oil and gas exploration
and production industry, both onshore and offshore; Superior Energy Services,
Inc., a provider of specialized oilfield services and equipment; and Grant
Prideco, Inc., a company engaged in drill stem technology development and drill
pipe manufacturing. Mr. Macaulay holds a B.A. degree in Economics from City
College of New York and an M.B.A. from the Wharton Graduate School of Business
at the University of Pennsylvania, where he has also served as a member of the
Executive Board. He is a member of the Supervisory Board's Corporate Governance
Committee.
SECOND NOMINEE
W. G. "WILL" HONEYBOURNE, 50, is Managing Director of First Reserve
Corporation where he has been employed since January, 1999. From September, 1996
to December, 1998, Mr. Honeybourne served as Senior Vice President of Western
Atlas International, a $2.5 billion oil service company. From October, 1995 to
September, 1996, he was a private investor. From September, 1993 to October,
1995, Mr. Honeybourne served as President and Chief Executive Officer of
Alberta-based Computalog. Previously, he served in various capacities with Baker
Hughes, including Vice President and General Manager at INTEQ and President of
EXLOG. Mr. Honeybourne is a member of the Board of Directors of CiDRA Corp.,
(RC)2, Highland Energy Ltd., and Canadian Crude Separators Inc. Mr. Honeybourne
holds a BSc. in Oil Technology from Imperial College, London University.
THIRD POSITION
FIRST NOMINEE
L. DONALD SIMPSON, 65, has served as a Supervisory Director of the Company
since April, 1997. From December, 1996 to December, 1999, Mr. Simpson 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.
SECOND NOMINEE
SAMUEL C. LEVENTRY, 51, has served as Vice President-Technology Services of
Chicago Bridge & Iron Company since January, 2001. Prior to that, he was Vice
President-Engineering from April, 1997 to January, 2001, Product
Manager-Pressure Vessels and Spheres from April, 1995 to April, 1997 and Product
Engineering Manager-Special Plate Structures for Chicago Bridge & Iron Company.
Mr. Leventry has been employed by Chicago Bridge & Iron Company for over 30
years in various engineering positions.
FOURTH POSITION
FIRST NOMINEE
MICHAEL D. WINFIELD, 61, has served as a Supervisory Director of the
Company since January, 2001. He has been a member of the Board of Mangers of UOP
L.L.C., a general partnership of Honeywell International
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Inc. and Dow Chemical Corporation, engaged in the licensing of technologies to
the oil refining and petrochemical industries since January, 2001. From
February, 1992 until January, 2001 he was President and Chief Executive Officer
of UOP. Mr. Winfield has served as a director of Landauer Inc. (a firm providing
services related to radiation monitoring) since 1994. Mr. Winfield holds a
degree in Chemical Engineering from the Ohio State University, and an M.B.A.
from the University of Chicago. He is a member of the Supervisory Board's Audit
Committee and the Corporate Governance Committee.
SECOND NOMINEE
JAMES M. TIDWELL, 55, currently serves as Vice President and Chief
Financial Officer of WEDGE Group Incorporated, a position which he has held
since January, 2000. WEDGE is a diversified firm with subsidiaries in
engineering and construction, hotel, oil and gas, and real estate businesses.
Prior to joining WEDGE, Mr. Tidwell served as President of Daniel Measurement
and Control, a division of Emerson Electric Company since June, 1999. From
August, 1996 to June, 1999, he was Executive Vice President and Chief Financial
Officer of Daniel Industries Inc., a leading supplier of specialized equipment
and systems to oil, gas and process operators and plants to measure and control
the flow of fluids. For over five years prior to joining Daniel Industries, Mr.
Tidwell served as Senior Vice President and Chief Financial Officer of Hydril
Company, a worldwide leader in engineering, manufacturing and marketing premium
tubular connections and pressure control devices for oil and gas drilling and
production.
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 2003:
J. DENNIS BONNEY, 70, 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 Aeromovel Global Corporation. From 1996 to 1998, he was a
director 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 Corporate Governance Committee.
GERALD M. GLENN, 58, 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. Since April, 1994, 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.
BEN A. GUILL, 50, has served as a Supervisory Director of the Company since
January, 2001. He is the President of First Reserve Corporation where he has
served since September, 1998. Prior to joining First Reserve Corporation, Mr.
Guill was a Partner and Managing Director of Simmons & Company International, an
investment banking firm located in Houston, Texas which focuses on the oil
service and equipment industry. Mr. Guill had been with Simmons & Company since
1980. He is member of the board of directors of National-Oilwell, Inc., Superior
Energy Services, Inc., Destiny Resources Services Corp., James River Coal and
Entech Industries. Mr. Guill received his Bachelor of Arts Degree from Princeton
University and his Masters Degree in Finance from the Wharton Graduate School of
Business at the University of Pennsylvania. He is a member of the Supervisory
Board's Audit Committee and Corporate Governance Committee.
VINCENT L. KONTNY, 63, has served as a Supervisory Director of the Company
since April, 1997. He has served as Chief Operating Officer of Washington Group
International since April, 2000 and since 1992 has been the owner and CEO of the
Double Shoe Cattle Company. Mr. Kontny was President and Chief Operating Officer
of Fluor Corporation from 1990 until September, 1994. Mr. Kontny is Chairman of
the Supervisory Board's Organization and Compensation Committee and is a member
of the Audit Committee and Corporate Governance Committee.
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DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 2002:
J. CHARLES JENNETT, 60, 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. Dr. Jennett is a member of the
Supervisory Board's Nominating Committee and Corporate Governance Committee.
GARY L. NEALE, 61, has served as a Supervisory Director of the Company
since April, 1997. He is currently President, CEO and Chairman of the Board of
NiSource, Inc., whose primary business is the distribution of electricity, gas
and water through utility companies. Mr. Neale has served as a director of
NiSource, Inc. since 1991, a director of Northern Indiana Public Service Company
since 1989, and a director of Modine Manufacturing Company (heat transfer
products) since 1977. Mr. Neale is Chairman of the Supervisory Board's Corporate
Governance Committee and a member of the Organization and Compensation
Committee.
WILLIAM H. WHITE, 46, has served as a Supervisory Director of the Company
since January, 2001. He has been the President, Chief Executive Officer and Vice
Chairman of the Board of Directors of WEDGE Group Incorporated since April,
1997. WEDGE is a diversified firm with subsidiaries in engineering and
construction, hotel, oil and gas, and real estate businesses. Mr. White served
as Deputy Secretary and Chief Operating Officer of the Department of Energy from
1993 to 1995. Prior to his service at the Department of Energy, Mr. White
practiced law and served on the management committee of the law firm of Susman
Godfrey L.L.P. and taught law at the University of Texas at Austin. Mr. White is
the founder and Chairman of the Board of Frontera Resources, an international
energy company with projects in emerging markets. Mr. White is a director of
USEC, Inc., a global energy company which produces and sells uranium fuel
enrichment services for nuclear power plants and serves on the Board of North
American Electric Reliability. He is a member of the Supervisory Board's
Organization and Compensation Committee and Corporate Governance Committee.
MARSHA C. WILLIAMS, 50, has served as a Supervisory Director of the Company
since April, 1997. Since May, 1998, she has served as Chief Administrative
Officer of Crate & Barrel, a specialty retail company. Prior to that, she served
as Vice President and Treasurer of Amoco Corporation from December, 1997 to May,
1998, and Treasurer from 1993 to 1997. Ms. Williams is a director of Selected
Funds, Davis Funds and Modine Manufacturing Company (heat transfer products).
Ms. Williams is a member of the Supervisory Board's Audit Committee and
Corporate Governance Committee.
COMMITTEES OF THE BOARD
The Organization and Compensation Committee, which held five meetings in
2000, 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, 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 Plans;
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 two meetings in 2000, 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., Polarisavenue 31, 2132 JH Hoofddorp, The Netherlands,
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and set forth the name, age, business and residential address, 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 held one meeting in 2000, 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.
The Audit Committee, which held four meetings in 2000, is charged with
reviewing the adequacy and effectiveness of the internal auditing, accounting
and financial controls of the Company, and coordinating the annual internal
audit plan with the auditing plan of the independent public accountants. 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
public accountants; and acts as liaison between the independent public
accountants and the Supervisory Board. The Committee makes recommendations
concerning the appointment of the independent public accountant 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 Supervisory Board has
determined in accordance with the requirements of Sections 303.01(B)(2)(a) and
(3) the New York Stock Exchange, Inc. listing standards, that each member of the
Audit Committee is independent.
REPORT OF THE AUDIT COMMITTEE OF THE SUPERVISORY BOARD OF CHICAGO BRIDGE & IRON
COMPANY N.V.
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended December 31,
2000:
The Supervisory Board has adopted for the Audit Committee a written
charter, a copy of which is attached to this Proxy Statement as Exhibit A.
We have reviewed and discussed with management the Company's audited
financial statements as of and for the year ended December 31, 2000.
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditors' independence. The
Audit Committee has also reviewed the non-audit services provided by Arthur
Andersen LLP, as described below, and considered whether the provision of those
services was compatible with maintaining Arthur Andersen LLP's independence.
For 2000, the company incurred the following fees for services rendered by
Arthur Andersen LLP:
Audit Fees: The company incurred $730,000 in fees for audit services
rendered by Arthur Andersen LLP in connection with the Company's annual and
quarterly financial statements for 2000.
Financial Information, Systems Design and Implementation Fees: The company
incurred no fees for financial information, systems design and implementation
services rendered by Arthur Andersen LLP during 2000.
All Other Fees: The company incurred $1,848,000 in fees for services
rendered by Arthur Andersen LLP during 2000 other than audit and financial
information, systems design and implementation services. Included in these fees
were $1,269,000 for due diligence, tax structure and merger integration services
relating to the acquisition of Howe-Baker International (the "HBI Transaction")
and the acquisition of the engineered construction and water divisions of
Pitt-Des Moines, Inc. (the "PDM Transaction").
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Based on the reviews and discussions referred to above, we recommend to the
Supervisory Board that the financial statements referred to above be included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
Members of the Audit Committee:
J. Dennis Bonney (Chairman)
Ben A. Guill
Vincent L. Kontny
L. Donald Simpson
Marsha C. Williams
Michael D. Winfield
INFORMATION REGARDING MEETINGS
The Supervisory Board held six meetings in 2000 and a special committee of
the Supervisory Board held three meetings. Each of the Supervisory Directors
attended at least 75% of the meetings of the Supervisory Board and of the
committees of which he or she was a member.
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 the
Company's issued shares.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------- -------------------- --------
First Reserve Fund VIII, L.P.(1)............................ 6,810,895 29.12%
c/o First Reserve Corporation
475 Steamboat Road
Greenwich, CT 06830
WEDGE Group Incorporated(2)................................. 4,352,764 18.61%
WEDGE International Tower
1415 Louisiana Street
Houston, TX 77002
Pitt-Des Moines, Inc........................................ 2,040,816 8.73%
Town Center One
1450 Lake Robbins Drive
The Woodlands, TX 77380
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(1) First Reserve Corporation is the general partner of First Reserve Fund VIII,
L.P. The following are executive officers of First Reserve Corporation:
William E. Macaulay is the Chairman, a Managing Director and Chief Executive
Officer; W.G. "Will" Honeybourne is a Managing Director; Ben A. Guill is the
President and a Managing Director; Thomas R. Denison is General Counsel,
Secretary and a Managing Director; John A. Hill is Vice Chairman and a
Managing Director; Jonathan S. Linker is a Managing Director; Cathleen M.
Ellsworth is a Managing Director; and Jennifer G. Kornfield is Vice
President, Treasurer and Controller. Messrs. Macaulay, Guill and Hill are
the directors of First Reserve Corporation. It is anticipated that pursuant
to authority from First Reserve Corporation's board of directors, Messrs.
Macaulay and Guill may make investment and voting decisions with respect to
the shares owned by First Reserve Fund VIII, L.P. In the absence of Messrs.
Macaulay and Guill, other officers of First Reserve Corporation may,
pursuant to authority from the board of directors, make
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investment and voting decisions with respect to such shares. All such
persons disclaim beneficial ownership of the shares held by First Reserve
Fund VIII, L.P.
(2) The sole ultimate beneficial owner of WEDGE is Issam M. Fares of Lebanon.
SHAREHOLDER AGREEMENTS
The Company is party to separate Shareholder Agreements with three of its
shareholders as follows: (i) Shareholder Agreement dated as of December 28, 2000
(as amended by an Amendment thereto dated as of February 7, 2001) among First
Reserve Fund VIII, L.P. ("First Reserve"), CB&I, and certain shareholders of
CB&I (the "First Reserve Shareholder Agreement"), (ii) Shareholder Agreement
dated as of December 28, 2000 (as amended by an Amendment thereto dated as of
February 7, 2001) among WEDGE Group Incorporated, ("WEDGE"), CB&I, and certain
shareholders of CB&I (the "WEDGE Shareholder Agreement"), and (iii) Shareholder
Agreement dated as of February 7, 2001 among Pitt-Des Moines, Inc., ("PDM"),
CB&I, and certain shareholders of CB&I (the "PDM Shareholder Agreement").
First Reserve Shareholder Agreement. Under the First Reserve Shareholder
Agreement, First Reserve is subject to certain "standstill" provisions which,
among other things, (a) prohibit the purchase of additional shares by First
Reserve except in order to maintain a 10% ownership stake (and to allow First
Reserve to participate in certain other transactions approved by the Supervisory
Board, such as a stock split, recapitalization or business combination), and (b)
prohibit acquisition proposals, proxy solicitations, group formation or
encouragement of third parties for takeover purposes. In addition, First Reserve
is subject to restrictions on its voting rights relating to matters presented to
our shareholders for vote or approval: (i) First Reserve is obligated to vote
"for" the Supervisory Board nominees recommended by the Supervisory Board,
provided we are in compliance with our covenants to First Reserve relating to
Supervisory Board representation (see below), and (ii) First Reserve is
obligated to vote "for" any proposal recommended by the Supervisory Board and
"against" any proposal that is not recommended by the Supervisory Board, with
limited exceptions for certain matters as to which First Reserve has
discretionary voting rights. In the case of any business combination,
recapitalization or other transaction that involves the issuance of Common
Stock, if both of the First Reserve designees on the Supervisory Board vote
against approval of such transaction at the Supervisory Board level, then First
Reserve, in any shareholder vote, is permitted to vote the shares it acquired in
connection with the PDM Transaction in the same proportion as the votes of CB&I
shareholders, other than First Reserve and WEDGE, who vote upon the transaction.
Pursuant to the First Reserve Shareholder Agreement, First Reserve has the
right to designate two Supervisory Directors (currently Messrs. Macaulay and
Guill) so long as First Reserve owns at least 3,083,871 of our issued and
outstanding shares.
Under the First Reserve Shareholder Agreement, First Reserve is subject to
restrictions on the transfer of its shares, including the restriction that,
without our consent, First Reserve may not sell any of its shares to (i) any
person or group who is or would be required to file a Schedule 13D under the
Securities Exchange Act, (ii) any person or group who would own more than 10% of
our voting securities, or (iii) a competitor of the Company. Certain other sales
of shares by First Reserve will be subject to our right of first offer. Finally,
First Reserve has been granted two demand and unlimited "piggyback" registration
rights relating to its shares.
WEDGE Shareholder Agreement. Under the WEDGE Shareholder Agreement, WEDGE
is subject to certain "standstill" provisions which, among other things, (a)
prohibit the purchase of additional shares by WEDGE except in order to maintain
a 10% ownership stake (and to allow WEDGE to participate in certain other
transactions approved by the Supervisory Board, such as a stock split,
recapitalization or business combination), and (b) prohibit acquisition
proposals, proxy solicitations, group formation or encouragement of third
parties for takeover purposes. In addition, WEDGE is subject to restrictions on
its voting rights relating to matters presented to our shareholders for vote or
approval: (i) WEDGE is obligated to vote "for" the Supervisory Board nominees
recommended by the Supervisory Board, provided we are in compliance with our
covenants to WEDGE relating to Supervisory Board representation (see below), and
(ii) WEDGE is obligated to vote "for" any proposal recommended by the
Supervisory Board and "against" any proposal that
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is not recommended by the Supervisory Board, with limited exceptions for certain
matters as to which WEDGE has discretionary voting rights. In the case of any
business combination, recapitalization or other transaction that involves the
issuance of Common Stock, if both of the WEDGE designees on the Supervisory
Board vote against approval of such transaction at the Supervisory Board level,
then WEDGE, in any shareholder vote, is permitted to vote the shares it acquired
in connection with the PDM Transaction in the same proportion as the votes of
CB&I shareholders, other than WEDGE and First Reserve, who vote upon the
transaction.
Pursuant to the WEDGE Shareholder Agreement, WEDGE has the right to
designate two Supervisory Directors (currently Messrs. White and Winfield) so
long as it owns at least 17 1/2% of our issued and outstanding shares.
Under the WEDGE Shareholder Agreement, WEDGE is subject to restrictions on
the transfer of its shares, including the restriction that, without our consent,
WEDGE may not sell any of its shares to (i) any person or group who is or would
be required to file a Schedule 13D under the Securities Exchange Act, (ii) any
person or group who would own more than 10% of our voting securities, or (iii) a
competitor of the Company. Certain other sales of shares by WEDGE will be
subject to our right of first offer. Finally, WEDGE has been granted two demand
and unlimited "piggyback" registration rights relating to its shares.
PDM Shareholder Agreement. Under the PDM Shareholder Agreement, PDM is
subject to certain "standstill" provisions which, among other things, (a)
prohibit the purchase of additional shares by PDM except for limited investments
by PDM affiliates (and to allow PDM to participate in certain transactions
approved by the Supervisory Board, such as a stock split, recapitalization or
business combination), and (b) prohibit acquisition proposals, proxy
solicitations, group formation or encouragement of third parties for takeover
purposes. In addition, PDM is subject to restrictions on its voting rights
relating to matters presented to our shareholders for vote or approval: PDM is
obligated to vote (i) "for" the Supervisory Board nominees recommended by the
Supervisory Board and (ii) "for" any proposal recommended by the Supervisory
Board and "against" any proposal that is not recommended by the Supervisory
Board, with limited exceptions for certain matters as to which PDM has
discretionary voting rights.
As to the 2,040,816 shares currently held by PDM subject to the PDM
Shareholder Agreement, transfer restrictions apply to the 1,166,181 shares
designated as "LC Shares" and the 874,635 shares designated as "Put Shares".
Prior to June 30, 2001 any or all of such shares held by PDM may be (and shall
be) transferred by PDM pursuant to any public or private securities transaction
arranged or approved by the Company in which the net proceeds available to PDM
from such transaction are not less than $17.15 per share and such transaction is
on other terms and conditions reasonably acceptable to PDM. Upon a material
breach by CB&I (as defined in the Shareholder Agreement), PDM may freely
transfer any such shares then held by it pursuant to any lawful method of
disposition.
At any time and from time to time prior to June 28, 2001, the Company has
the right to acquire any or all of the shares then held by PDM at a purchase
price of $17.15 per share. During the twenty business day period beginning on
the earlier to occur of (i) June 30, 2001 or (ii) a material breach by CB&I, PDM
has the right to require the Company to purchase any or all of the LC Shares and
the Put Shares then held by PDM at a purchase price of $17.15 per share. To the
extent the Company does not pay the aggregate purchase price when due, PDM is
entitled to recover the unpaid amount by (a) drawing upon a bank letter of
credit established in its favor by CB&I for such purpose in the case of the LC
Shares, and (b) recovering such amount pursuant to a standby funding agreement
with an affiliate of WEDGE in the case of the Put Shares. (The Company will be
obligated to fulfill reimbursement obligations to the letter of credit bank and
to the WEDGE affiliate to the extent that funds are advanced by either such
party on the Company's behalf.) To the extent that at any time PDM has realized
net proceeds from the disposition of its shares subject to the PDM Shareholder
Agreement equal to or greater than $44,000,000, PDM is obligated to remit the
excess proceeds and/or surrender the remaining shares to the Company. (PDM has
to date realized $9,000,000 from a repurchase by the Company on March 15, 2001
of 807,356 shares designated as "Excess Shares" under the PDM Shareholder
Agreement). To the extent that PDM is still holding any of the shares subject to
the Shareholder Agreement on or after June 30, 2001, PDM is entitled to a demand
registration right with respect to such shares.
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Each of First Reserve, WEDGE and PDM has made representations and
warranties to the Company in its Shareholder Agreement that it has no
arrangement, contract, understanding or relationship with any of the other two
shareholders with respect to voting power or investment power relating to the
Common Stock.
In the event of a breach by First Reserve, WEDGE or PDM of any "standstill"
or other provision in its particular Shareholder Agreement, we and/or our other
shareholders may seek injunctive relief. However, as the relief is equitable in
nature and at the discretion of the court in which the action is brought, there
can be no assurance that the court will grant such relief.
SECURITY OWNERSHIP OF MANAGEMENT OF THE COMPANY
The following table sets forth certain information regarding the Company's
Common Stock beneficially owned on March 1, 2001 by each Supervisory Director
and each nominee to be a Supervisory Director, each named executive officer and
by all directors and executive officers as a group.
NUMBER OF RIGHTS TO RESTRICTED PERCENTAGE OF
NAME OF BENEFICIAL OWNER SHARES OWNED (1) ACQUIRE (2) STOCK (3) STOCK OWNED
------------------------ ---------------- ----------- ---------- -------------
Gerald M. Glenn............................... 37,489 64,000 638,338 3.0%
Stephen P. Crain.............................. 15,023 13,675 3,900 *
Stephen M. Duffy.............................. 21,499 7,250 1,900 *
Robert B. Jordan.............................. 53,873 25,625 19,300 *
Samuel C. Leventry............................ 3,462 2,625 700 *
Timothy J. Wiggins............................ 6,205 15,375 140,257 *
Robert H. Wolfe............................... 35,647 10,750 2,800 *
Jerry H. Ballengee............................ 3,512 3,500 -- *
J. Dennis Bonney.............................. 9,000 3,500 -- *
Ben A. Guill.................................. -- -- -- *
J. Charles Jennett............................ 2,000 3,500 -- *
Vincent L. Kontny............................. 1,000 3,500 -- *
William E. Macaulay........................... -- -- -- *
Gary L. Neale................................. 1,000 3,500 -- *
L. Donald Simpson............................. 1,000 3,500 -- *
William H. White.............................. 160,553 -- -- *
Marsha C. Williams............................ 2,000 3,500 -- *
Michael D. Winfield........................... -- -- -- *
W.G. "Will" Honeybourne....................... -- -- -- *
James M. Tidwell.............................. -- -- -- *
All directors, nominees for directors and
executive officers as a group (20 in
number)..................................... 360,926 167,000 807,195 5.1%
- ---------------
* Beneficially owns less than one percent of the Company's Common Stock.
(1) Includes shares held by immediate family members.
(2) Includes shares that can be acquired through stock options exercised through
May 15, 2001, but excludes presently exercisable stock options under the
Company's Stock Purchase Plan which will be exercised pursuant to that plan
on April 2, 2001.
(3) Includes shares subject to a vesting schedule, forfeiture risk and other
restrictions, including restricted stock units for which the participant has
voting rights on the underlying stock, and in the cases of Messrs. Glenn and
Wiggins, 621,338 shares and 136,157 shares, respectively, to which each has
fully vested rights to future delivery of the shares.
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
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initial reports of ownership and reports of changes in ownership of Common Stock
(Forms 3, 4 and 5) with the Securities and Exchange Commission (the "SEC") and
the New York Stock Exchange, Inc. 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, 2000, its Supervisory Directors,
executive officers and 10% shareholders complied with all Section 16(a) filing
requirements applicable to them, except for Messrs. Glenn, Crain, Duffy, Jordan,
Wiggins, Wolfe and Goodrich who did not report in a timely fashion on Form 5 the
December 28 vesting of performance shares and payment in the form of restricted
stock.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by the chief executive
officer and our four other most highly compensated executive officers.
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- ----------------------- -------
(A) (B) (C) (D) (E) (G) (H) (I)
(F) SECURITIES
RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3) ($)(4) (# SHARES) ($) ($)(5)
- --------------------------- ---- ------- ------- ------------ ---------- ---------- ------- ------------
Gerald. M Glenn................. 2000 475,000 0 -- -- 263,743 386,165 66,000
Chairman of the Supervisory 1999 441,000 350,000 -- 671,875 51,200 258,935 83,157
Board; President, Chief
Executive 1998 420,000 335,000 -- -- 51,200 73,935 1,268,993
Officer and Chairman of
Chicago Bridge & Iron Company;
and Managing Director of
Chicago Bridge & Iron Company
B.V.
Stephen P. Crain................ 2000 225,000 0 -- -- 79,413 84,545 26,000
Vice President -- Global Sales 1999 185,000 100,000 38,135 -- 10,600 53,625 22,633
and Marketing of Chicago 1998 146,000 87,500 -- -- 7,400 15,311 15,842
Bridge & Iron Company and
Managing Director of Chicago
Bridge & Iron Company B.V.
Robert B. Jordan................ 2000 315,000 0 -- -- 118,589 155,380 38,000
Vice President -- Operations
of 1999 300,000 160,000 46,923 -- 23,000 104,181 35,200
Chicago Bridge & Iron
Company;...................... 1998 250,082 140,000 -- 275,000 70,500 29,745 121,448
and Managing Director of
Chicago Bridge & Iron Company
B.V.
Timothy J. Wiggins.............. 2000 265,200 0 -- -- 77,167 93,685 31,416
Vice President and Chief
Financial 1999 255,008 175,000 -- -- 12,300 62,816 185,528
Officer of Chicago Bridge & 1998 242,008 125,000 -- -- 12,300 17,932 318,578
Iron Company; and Managing
Director of Chicago Bridge &
Iron Company B.V.
Robert H. Wolfe................. 2000 202,800 0 -- -- 67,272 63,980 21,684
Secretary of the Company; 1999 195,000 68,250 -- -- 8,600 42,900 22,021
Vice President, General
Counsel 1998 187,252 65,538 -- -- 8,600 12,251 116,668
and Secretary of Chicago
Bridge & Iron Company; and
Secretary of Chicago Bridge &
Iron Company B.V.
- ---------------
(1) Salary paid in 1998 for actual period of employment by the Company: Robert
B. Jordan -- February 9, 1998.
(2) Bonus amounts include payments under the Incentive Plans (See "Organization
and Compensation Committee Report on Executive Compensation").
(3) Persons for whom no amount is reported did not receive personal benefits,
the value of which exceeded the lesser of $50,000 or 10% of their annual
salary and bonus.
(4) Restricted stock awards or units are valued at the closing price on the date
of grant. Participants receive dividends on the grants reported in this
column. The restricted stock awards granted to Robert B. Jordan in 1998
vests in four equal annual installments starting in September, 1999. The
restricted stock awards granted in 2000 vest 50% in February, 2001, 33% in
February, 2002 and 17% in February, 2003. The number and value of the
aggregate restricted share holdings at the end of the last completed fiscal
year,
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based on the NYSE composite closing price of $17.9375/share on December 31,
2000, for each named executive officer who held such shares are: Gerald M.
Glenn, 83,800, $1,503,162; Stephen P. Crain, 7,600, $136,325; Robert B.
Jordan, 26,100, $468,169; Timothy J. Wiggins, 8,200, $147,087; and Robert H.
Wolfe, 5,600, $100,450.
(5) The compensation reported for 2000 represents (a) contributions pursuant to
the Chicago Bridge & Iron Savings Plan (the "401(k) Plan") allocated to the
executive officer's account, and (b) 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"). For 2000, those two amounts, expressed in the same order identified
above, for each named executive officer are as follows: Gerald M. Glenn
$13,600, $52,400; Stephen P. Crain $13,600, $12,400; Robert B. Jordan
$13,600, $24,400; Timothy J. Wiggins $13,600, $17,816; Robert H. Wolfe
$13,600, $8,084. The compensation reported for 1998 and 1999 includes values
of shares of Common Stock reallocated to each named executive officer
resulting from forfeitures of other Participants in the Management Plan (as
described below). With respect to Timothy J. Wiggins, the compensation
reported for 1999 also includes $150,000 paid to him pursuant to an
agreement whereby his receipt of Management Plan Shares would be deferred.
MANAGEMENT PLAN
At the time of the initial public offering of the Common Stock by Praxair
in March, 1997 ( the "IPO"), we established the Management Plan and made a
contribution to the Management Plan in the form of 925,670 shares allocated as
restricted stock among approximately 52 key management employees. Restrictions
on the Management Plan shares lapsed as to one participant on January 1, 1999,
and as to all other participants except Messrs. Glenn and Wiggins on March 27,
2000. Distribution of benefits to Messrs. Glenn and Wiggins is generally
scheduled to occur on the earlier of termination of employment, April 1, 2002 or
a "Change of Control".
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 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 each participating employee's after-tax pay is withheld and used to purchase
as many shares as such funds allow at the discounted purchase price.
LONG-TERM COMPENSATION
The Company's subsidiary, Chicago Bridge & Iron Company, a Delaware
corporation ("Chicago Bridge"), has adopted the Chicago Bridge & Iron 1997
Long-Term Incentive Plan (the "1997 Incentive Plan") and the Chicago Bridge &
Iron 1999 Long-Term Incentive Plan (the "1999 Incentive Plan" and, together with
the 1997 Incentive Plan, the "Incentive Plans"). The Incentive Plans are
so-called "omnibus" plans which provide long-term compensation in the form of:
non-qualified options to purchase shares; qualified "incentive" options to
purchase shares; restricted shares; restricted stock units; "performance shares"
paying out a variable number of shares depending on goal achievement; and
"performance units," which involve cash payments based on either the value of
the shares or appreciation in the price of the shares upon achievement of
specific financial goals.
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OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables summarize option grants and exercises pursuant to the
Incentive Plans during the fiscal year 2000 to and by the executive officers
named in the Summary Compensation Table above (the "named executive officers"),
and the value of the options held by such persons at the end of fiscal 2000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
GRANT VALUE
INDIVIDUAL GRANTS DATE
- ------------------------------------------------------------------------------------------------- ------------
(A) (B) (C) (D) (E) (F)
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL OPTIONS/
OPTIONS/SARS SARS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN FISCAL BASE PRICE EXPIRATION PRESENT
NAME (# SHARES)(1) YEAR ($/SHARE) DATE VALUE ($)(2)
---- ------------- ------------------- ----------- ---------- ------------
Gerald M. Glenn.................. 6,277 0.6% 16.00 2/10/10 42,620
Gerald M. Glenn.................. 51,200 4.7% 16.00 5/15/10 351,744
Gerald M. Glenn.................. 206,266 19.1% 16.6875 12/28/10 1,369,606
Stephen P. Crain................. 1,300 0.1% 16.00 2/10/10 8,827
Stephen P. Crain................. 12,300 1.1% 16.00 5/15/10 84,501
Stephen P. Crain................. 2,469 0.2% 16.50 3/27/10 17,110
Stephen P. Crain................. 63,344 5.9% 16.6875 12/28/10 420,604
Robert B. Jordan................. 2,526 0.2% 16.00 2/10/10 17,151
Robert B. Jordan................. 20,500 1.9% 16.00 5/15/10 140,835
Robert B. Jordan................. 2,500 0.2% 16.25 9/10/10 16,900
Robert B. Jordan................. 93,063 8.6% 16.6875 12/28/10 617,938
Timothy J. Wiggins............... 1,523 0.1% 16.00 2/10/10 10,341
Timothy J. Wiggins............... 12,300 1.1% 16.00 5/15/10 84,501
Timothy J. Wiggins............... 63,344 5.9% 16.6875 12/28/10 420,604
Robert H. Wolfe.................. 1,040 0.1% 16.00 2/10/10 7,061
Robert H. Wolfe.................. 8,600 0.8% 16.00 5/15/10 59,082
Robert H. Wolfe.................. 18,154 1.7% 16.50 3/27/10 125,807
Robert H. Wolfe.................. 39,478 3.7% 16.6875 12/28/10 262,134
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(1) All options were granted at market value. 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, disability or
dismissal for the convenience of the Company (other than involuntary
termination of employment for willful misconduct or gross negligence). The
options which expire February 10, 2010 vest on February 10, 2007, but may
vest on February 10, 2003 if the holder has held continuously until such
date certain shares of stock awarded as performance shares. The options
which expire on March 27, 2010 vest on March 27, 2007, but may vest on March
27, 2003 if the holders has held continuously until such date certain shares
of stock granted under the Management Plan, but for which restrictions have
lapsed. The options which expire on May 15, 2010 vest in four equal annual
installments beginning May 15, 2001. The options which expire September 10,
2010 vest on September 10, 2007 but may vest September 10, 2003 if the
holder has held continuously until such date certain shares of stock granted
as restricted stock but for which the restrictions have lapsed. The options
which expire December 28, 2010 vest on December 28, 2003.
(2) The estimated grant date present value reflected in the previous 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 previous table include the following:
Exercise prices on the options of $16.00, $16.50, $16.00, $16.25, and
$16.6875 for the February 10, March 27, May 15, September 10, and
December 28 grants, respectively, equal to the fair market value of the
underlying stock on the date of grant.
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An option term of ten years on all grants.
Interest rates of 6.52, 6.26, 6.44, 5.80, and 6.03 percent that
represent the interest rate on a U.S. Treasury security on the dates of
grant with a maturity date corresponding to that of the option terms.
Volatilities of 42.69, 42.03, 42.00, 42.92, and 41.85 percent calculated
using daily stock prices for the three-year period prior to the grant
dates.
Dividends at the rate of $0.24 per share representing the annualized
dividends paid with respect to a share of common stock at the dates of
each option grant.
Reductions of approximately 11.53 percent for the February 10, March 27,
September 10, and December 28 grants and approximately 9.61 percent for
the May 15 grant to reflect the probability of forfeiture due to
termination prior to vesting, and approximately 9.11, 9.14, 9.33, 9.02,
and 12.64 percent for the February 10, March 27, May 15, September 10,
and December 28 grants, respectively, to reflect the probability of a
shortened option term due to termination of employment prior to the
option expiration date.
The ultimate values of the options will depend on the future market price
of the Company's stock, which cannot be forecast with reasonable accuracy.
The actual value, if any, an optionee will realize upon exercise of an
option will depend on the excess of the market value of the Company's
Common Stock over the exercise price on the date the option is exercised.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE (1)
---- --------------- ------------ -------------------- --------------------
Gerald M. Glenn................... 0 NA 38,400/419,837 184,800/677,277
Stephen P. Crain.................. 0 NA 7,950/99,374 38,259/172,854
Robert B. Jordan.................. 0 NA 15,375/196,714 73,992/446,469
Timothy J. Wiggins................ 0 NA 9,225/114,031 44,395/179,964
Robert H. Wolfe................... 0 NA 6,450/95,116 31,040/145,864
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(1) Value is based on the NYSE composite closing price of $17.9375 per share on
December 31, 2000.
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INCENTIVE PLANS -- PERFORMANCE SHARE AWARDS IN LAST FISCAL YEAR
In 2000, under the Incentive Plans, target awards were allocated one-third
for each year beginning in the fiscal year 2000. Target awards are subject to
adjustment based upon measurement of earnings per share for each fiscal year in
which the measurement of performance is made.
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK
PRICE-BASED PLANS
-------------------------------
(A) (C) (D) (E) (F)
(B) PERFORMANCE
NUMBER OF OR OTHER
SHARES, UNITS PERIOD UNTIL
OR OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- ------------- ------------ --------- -------- --------
Gerald M. Glenn............................. 16,900 2000 2,816 5,633 8,450
2001 2,816 5,633 8,450
2002 2,816 5,634 8,450
Stephen P. Crain............................ 4,100 2000 683 1,366 2,050
2001 683 1,366 2,050
2002 683 1,366 2,050
Robert B. Jordan............................ 6,800 2000 1,133 2,266 3,400
2001 1,133 2,266 3,400
2002 1,133 2,267 3,400
Timothy J. Wiggins.......................... 4,100 2000 683 1,366 2,050
2001 683 1,366 2,050
2002 683 1,366 2,050
Robert H. Wolfe............................. 2,800 2000 466 933 1,400
2001 466 933 1,400
2002 466 933 1,400
Actual performance against the performance goal for the fiscal year ended
December 31, 2000 has been determined and the stock earned has been allocated.
("See Summary Compensation Table -- LTIP -- Payouts").
PENSION AND OTHER RETIREMENT BENEFITS
Effective January 1, 1997, the Company adopted the Chicago Bridge & Iron
Savings Plan (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 Internal Revenue Code of 1986, as amended
(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 provides that the Company may, at
the discretion of management, make certain of its matching contributions or
additional discretionary profit sharing contributions in a uniform manner in the
form of either cash or shares.
The 401(k) Plan substantially replaced the CBI 401(k) Pay Deferral Plan and
CBI Pension Plan, each adopted by the Company's former parent, CBI Industries,
Inc. The CBI Pension Plan (the "Pension Plan") was 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 participated in the Pension Plan who were not already participants as of
December 31, 1996. No further benefits 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 were computed and
increased at a rate of 5% per year (not compounded) or fraction thereof of
continuing service, to a maximum of three additional
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years. The December 31, 1996 accrued pension benefit 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 Stephen P. Crain, the only executive officer who participates
in the plan, is $16,673.
The Code limited the compensation used to determine benefits under the
401(k) Plan to $170,000 for 2000. Chicago Bridge 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.
TERMINATION AND EMPLOYMENT AGREEMENTS
Messrs. Crain, Jordan, Wiggins and Wolfe had Change of Control severance
agreements with the Company, each providing that, in the event of certain
terminations 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. A "Change of Control"
was defined as, among other things, the acquisition by any person of 25% or more
of the total voting power of the Company.
On September 7, 2000 the Organization and Compensation Committee authorized
the Company to enter into new change of control severance agreements with
Messrs. Crain, Jordan, Wiggins and Wolfe and a change of control severance
agreement on similar terms with Mr. Glenn. Each agreement provides that upon the
executive's termination of employment with the Company by the Company without
"cause," or by the executive with "good reason," within three years following a
"Change of Control," the executive will be entitled to a lump sum payment of
three times the sum of his annual base salary plus target bonus. The executive
will also be entitled to a continuation of medical and other benefits for a
three-year period after termination of employment, payment of deferred
compensation (to the extent not paid upon the "Change of Control"), payment of
unvested plan benefits, and Company-provided outplacement services.
In addition, upon a "Change of Control," the executive will be entitled to
preservation of salary, bonus, retirement, welfare and fringe benefits at levels
not less than immediately before the "Change of Control," and will generally be
entitled to receive upon the "Change of Control," without regard to termination
of employment, a payment of minimum pro-rata target bonus, vesting in options,
restricted stock and performance shares, and an immediate lump sum cash payment
of the value of all performance shares assuming achievement of target
performance goals.
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 Company will also
reimburse the executive's costs incurred to obtain benefits under the agreements
as long as the executive had a reasonable basis for the action or was acting in
good faith. The Company must maintain a letter of credit and escrow in force to
secure this obligation for legal fee reimbursement. The agreements impose a
confidentiality obligation on each executive during employment and after
termination of employment, and subjects the executive to a noncompetition
covenant during employment and for one year following termination (regardless
whether there is a "Change of Control").
For purposes of these agreements, "cause" includes conviction of a felony
or of a crime involving moral turpitude, or willful misconduct or breach of the
agreement that results in material financial detriment to the Company, but cause
does not include negligence, actions taken in good faith, actions indemnifiable
by the Company, or know to the Company for more than a year before the purported
termination. "Good reason" for termination generally includes any adverse
changes in the executive's duties, title, reporting requirements or
responsibilities; failure by the Company to provide the compensation bonus and
other payments and plan and fringe benefits and perquisites contemplated by the
agreement; and relocation without consent to an office
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more than 50 miles from the executive's current office. However, with respect to
the "Change of Control" occurring upon consummation of the HBI Transaction, the
PDM Transaction and subsequent related share transfers, "good reason" does not
include failure to provide minimum bonus but only failure to provide minimum
bonus opportunity, and does not include failure to provide each plan and fringe
benefit and perquisite but only benefits and perquisites of equivalent value in
the aggregate. For Mr. Glenn, "good reason" includes his resignation for any
reason during a 60-day period beginning 30 days after the closing of a "Major
Change of Control." The HBI Transaction, the PDM Transaction and subsequent
related share transfers were not a "Major Change of Control" for such purpose.
In all other respects, Mr. Glenn's agreement is identical to that of the other
executive officers.
Under the new Agreements, "Change of Control" generally is defined as the
acquisition by any person or group of 25% (50% to be a "Major" change) or more
of the beneficial interest in the equity of the Company; failure of the current
Supervisory Board (and members nominated by at least 75% of the then-current
Supervisory Board members) to comprise at least 50% of the Supervisory Board;
Supervisory Board or shareholder approval of a merger or reorganization or
consolidation resulting in less than 75% (50% to be a "Major" change) continuing
ownership by the pre-merger shareholders; or Supervisory Board or shareholder
approval of any transaction as a result of which the Company does not own at
least 70% of Chicago Bridge, or Chicago Bridge does not own at least 75% of its
subsidiary, Chicago Bridge & Iron Company (Delaware). A "Change of Control" also
includes the failure of WEDGE or First Reserve to comply with their respective
Shareholder Agreements, or collective ownership by WEDGE and First Reserve of
more than 66.5% of the equity of the Company.
At the time of their initial employment, the Company entered into
employment arrangements with Messrs. Glenn, Jordan, Wiggins and Wolfe to serve
the Company as President and Chief Executive Officer, Vice
President -- Operations, Vice President -- Treasurer and Chief Financial
Officer, and Vice President -- General Counsel and Secretary. Pursuant to these
arrangements, Mr. Glenn's base salary was $400,000 per year, Mr. Jordan's base
salary was $265,000 per year, Mr. Wiggin's base salary was $220,000 per year and
Mr. Wolfe's base salary was $175,000 per year. Such arrangements do not
establish any required term of employment, but provide for, among other things,
participation in Company bonus and incentive compensation programs and change of
control benefits that are now represented by the arrangements described above.
COMPENSATION OF DIRECTORS
Supervisory Directors who are not employees of the Company receive an
annual retainer of $22,000, paid in quarterly installments, $1,500 for
attendance at each Supervisory Board meeting, and an annual grant of options,
which vest after one year, to purchase 2000 shares at an exercise price equal to
the fair market value of the shares at the time of the grant. Supervisory
Directors who are chairpersons of Supervisory Board committees receive an
additional annual retainer of $3,000. Those who serve on Supervisory Board
committees received $1,000 for each committee meeting attended. Supervisory
Directors may elect to receive their compensation in Common Stock and may elect
to defer their compensation. In addition, a Supervisory Director may direct that
up to 8% of his or her director's fees be applied to purchase shares at 85% of
the closing price per share on the New York Stock Exchange, Inc. on the first
trading day following the end of each calendar quarter. Shares are delivered
either at the time of purchase or at a specified future date. Supervisory
Directors who are full-time employees of the Company receive no compensation for
serving as Supervisory Directors.
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ORGANIZATION AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
TO OUR SHAREHOLDERS
COMMITTEE ROLE IN OVERSEEING EXECUTIVE COMPENSATION POLICY
The Company's Organization & Compensation Committee (the "Committee")
consists of four members of the Supervisory Board of the Company (the directors
of the Company elected by its public shareholders). None of the Committee's
members are current or former employees of the Company or have any
"interlocking" relationships for purposes of the proxy disclosure rules(1) of
the United States Securities and Exchange Commission (SEC).
A primary role of the Committee is to determine and oversee the
administration of compensation for the Company's executive officers. The
Committee approves the design of, assesses the effectiveness of, and
administers, reviews and approves all salary arrangements and other remuneration
for executive officers. The Committee evaluates executive performance in
reviewing and approving executive compensation.
The Committee made certain compensation decisions for the Company's 2000
fiscal year as described below.
COMPENSATION PHILOSOPHY
The Company is committed to increasing shareholder value by growing its
business in the global marketplace. The Committee seeks to ensure 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.
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, engineering, heavy industrial and 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.
The Company's compensation philosophy includes the following factors:
- Programs that will attract new talent and retain key people;
- Competitive pay with significant focus on incentive compensation;
- Equity compensation for top managers to motivate value creation for
all shareholders; and
- Plans with a higher percentage of pay "at-risk" (based on
performance) than typical marketplace practices.
In evaluating competitive practices, the Company considers competitive
market data provided by an independent compensation consultant, Hewitt
Associates LLC of Lincolnshire, Illinois. The data provided compares the
Company's compensation practices to a group of "comparator" companies. These are
companies that tend to have national and international business operations and
lines of business, and also include 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 comparator
companies based on its assessment of the comparability of the above factors. In
2000, the Committee reviewed the selection of comparator companies in light 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
- ---------------
1 The relevant SEC rule, Item 402(j) or Regulation S-K, does not define the term
"interlocking relationship."
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competitors for executive talent are not necessarily all of the companies that
would be included in a peer group established for comparing shareholder returns.
The four 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 regularly reviews each executive officer's base salary. 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. Base salaries 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 that 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; safety;
continuing educational and management training; improving quality; developing
relationships with clients, suppliers, and employees; demonstrating leadership
abilities among coworkers; and other goals.
Base salaries are targeted at approximately the 50th percentile of the
compensation data supplied by Hewitt on the comparator companies. Overall,
executive salaries were increased in 2000 at a rate comparable to the increases
provided at other companies and are near median market levels. Salaries of
individual executives may be greater or less than the median of salaries of
their counterparts at comparator companies, due to differences in individual
performance, experience and knowledge, and the Committee's comparison of the
responsibilities of the position at the Company with the responsibilities of
similar positions at comparator companies.
In 2000, Mr. Glenn received an increase in his rate of base salary to
$475,000 per year, or an increase of 7.7% from his 1999 base rate of $441,000
per year. This increase was based on an evaluation of Mr. Glenn's performance,
considered in light of the above described factors and individual performance
goals set for him by the Committee. He actually received total base salary
payments of $475,000, as reflected in the Summary Compensation Table on page .
ANNUAL INCENTIVES
The Company adopted an Incentive Compensation Plan (the "Bonus Plan") which
took effect in fiscal 1997, and was revised in 1999. The Bonus Plan is an annual
short-term cash 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 specific corporate-wide financial and
non-financial goals approved by the Committee, and other factors described
below, and is payable following the end of the fiscal year. The goals 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 Committee.
For 2000, under the Bonus Plan, a target bonus, generally expressed as a
percent of salary, was established for each participating employee at the
beginning of the year based on position, responsibilities and grade level. The
bonus could be earned from three sources: achievement of the corporate goals,
achievement of a participant's designated business unit performance goals (if
applicable), and achievement of individual performance goals. Each of these
sources consisted of a total bonus "pool," an amount that could range from zero
to 200% of the aggregate of all participants' target amounts for that source.
The total pool for
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achievement of the corporate goals was approved by the Committee, and the
respective pools for business unit and individual performance were determined by
Company management. A percentage of individual target bonus opportunity was
allocated to each bonus source as appropriate. The CEO's individual performance
bonus, if any, is determined by the Committee. The Committee has discretion to
reduce any bonus otherwise determined pursuant to the Bonus Plan.
For fiscal 2000, none of Mr. Glenn or the Company's other executive
officers received a cash bonus pursuant to the Bonus Plan.
LONG-TERM INCENTIVES
In keeping with the Company's commitment to provide a total compensation
package that 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 at or above the median of comparator companies, with the
actual realization of the opportunity dependent on the degree of achieving the
performance or other conditions of the award. As a key element of this
objective, it is the desire of the Committee to encourage continued executive
ownership of incentive award stock in order to align their long-term interests
with those of other shareholders.
Long-term incentives are provided pursuant to the Company's Long-Term
Incentive Plan ("Incentive Plan"). The Company adopted its original Incentive
Plan in 1997. The Company adopted a new Incentive Plan in 1999 which was
approved by the shareholders in 1999. Amendments to the 1999 Incentive Plan were
adopted by the Company and approved by the shareholders in 2000. 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. The long-term
incentives awarded in 2000 were: non-qualified stock options, Performance
Shares, and Restricted Stock Units.
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 generally 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,
identification with shareholders' interests, and encourages equity ownership in
the Company. In May 2000 the Company granted annual awards of stock options to
senior executives under the Incentive Plan. These awards become exercisable
beginning May 15, 2001, at a rate of 25% of such options on such date, and an
additional 25% on May 15 of each of the following three years.
In order to provide employees with an incentive to retain ownership of
vested shares acquired from prior Performance Share or Restricted Stock grants,
the Committee approved in 1999 a program, pursuant to the Incentive Plan, to
grant non-qualified stock options ("Retention Options") upon the vesting of
Performance Shares or Restricted Stock Shares. Retention Options granted in 2000
vest and become exercisable on the seventh anniversary of date of grant.
However, this vesting and exercisability is accelerated to the third anniversary
of date of grant, if the participant still retains ownership of 100% of the
vested shares in connection with which the Retention Options have been awarded.
Performance Shares are granted under the Incentive Plan subject to specific
Company performance goals set by the Committee and made a part of each
participant's grant, to be achieved over a defined Performance Period, and which
determine the number of Performance Shares actually to be earned and issued to a
participant. Accordingly, Performance Shares are issued and the award has value
only to the extent the performance goals are achieved. Performance goals are
generally set to achieve the same objectives of creation of long-term
shareholder value as in the case of stock options, with an additional focus on
the specific performance goal utilized.
During 2000, participants were granted a "target" number of Performance
Shares to be earned based on the compound growth of Company earnings per share
(EPS) as compared to fiscal year 1997 results, at a rate of one-third of the
total target for each of fiscal years 2000, 2001 and 2002. Such target
Performance Shares, or a portion thereof ranging from a minimum of 0% to a
maximum of 150% of such target, were initially scheduled to be earned for each
of such fiscal years if the compound growth in EPS fell in a specified range.
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Thereafter in 2000 the Company acquired all of the ownership interests in
Howe-Baker International, L.L.C. (the "HBI Transaction"). In light of the HBI
Transaction, including the effect of the HBI Transaction as a "Change of
Control" triggering vesting and payment of existing awards, and in consideration
of the executive's waiver of such "Change of Control" treatment for Performance
Share and other awards, the Committee approved the conversion of
then-outstanding Performance Shares to time-vested Restricted Stock on the basis
of target performance. Such restricted stock becomes vested at the end of the
originally-scheduled performance period, subject to earlier vesting if the
executive's employment terminates before that date due to retirement, death,
disability, or termination by the Company for a reason other than cause.
Restricted Stock may be provided as Restricted Stock Shares or Restricted
Stock Units. Restricted Stock Units are bookkeeping units kept on the books of
the Company, each of which, upon award to a participant, represents the right of
the participant to receive a share of Common Stock in the future upon the lapse
of restrictions subject to conditions set by the Committee. Restricted Stock is
awarded as an incentive for retention and performance of both newly-hired and
continuing key managers. Such award is subject to forfeiture during the period
of restrictions prior to vesting. Upon vesting, Restricted Stock becomes
unrestricted, and a participant is issued one share of unrestricted Common Stock
for each unit or share of Restricted Stock vested. During the period of
restriction, participants are paid cash amounts corresponding to the time and
amount of actual dividends paid on outstanding shares of Common Stock. No
executive officers received awards of Restricted Stock in 2000 other than by
conversion of Performance Shares as described above. However, the Committee will
make an award of 7,393 shares of Restricted Stock to Mr. Glenn, and proportional
awards to other executive officers, in 2001, in light of their accomplishment of
the Company's strategic acquisition objectives in 2000 and 2001. Awards of
Restricted Stock Units made in 2000 to other management employees, subject to
other conditions of forfeiture, will vest at a rate of 25% of the number of
Units awarded on each of the first four anniversaries of the date of award.
In light of the HBI Transaction, in order to provide options whose base for
stock price appreciation reflects the HBI Transaction, and to give its senior
executives an incentive to maximize the Company's potential for long-term growth
resulting from the HBI Transaction, the Committee approved effective December
28, 2000 (when the HBI Transaction became effective), a single one-time grant of
options to senior executives, all of whom had also agreed to forego certain
"Change of Control" benefits they would otherwise receive as a result of the HBI
Transaction. This single one-time award was based on providing options having a
modified Black Scholes value that is approximately equivalent, for each senior
executive, to the dollar value of long-term incentive award values which he or
she would otherwise have been awarded in 2000, 2001, and 2002, less the value of
Incentive Plan awards already made to the executive in calendar year 2000.
Previous stock option awards to, and stock currently held by, these executives
were not material factors in determining the scope of this single one-time
grant. Stock options granted under this single one-time award become exercisable
December 28, 2003; subject to proportional vesting and exercisability if the
executive's employment terminates before that date due to retirement, death,
disability, or termination by the Company for a reason other than cause. In
setting the appropriate award level for this single one-time grant of options,
the Committee received and considered reports on competitive market data
provided by Hewitt and reports on change-in-control and equity award practices
and compensation issues provided by independent compensation consultant Arthur
Anderson LLP of Chicago, Illinois.
In 2000, Mr. Glenn was granted Retention Options upon the vesting of
performance shares to purchase 6,277 shares with an exercise price of $16.000
and as part of the annual award of stock options a grant of options to purchase
51,200 shares with an exercise price of $16.000 under the 1999 Incentive Plan.
As part of the single one-time award of stock options described above, and as
detailed in the table on page 14, Mr. Glenn was granted options to purchase
206,266 shares with an exercise price of $16.6875 under the 1997 and 1999
Incentive Plans. Mr. Glenn also received in 2000 a target award of 16,900
Performance Shares, which were thereafter converted to Restricted Stock in
accordance with the conditions described above, as detailed in the table on page
16. Taking into account the fact the single one-time award of stock options
represents the balance of three years of incentive compensation award values,
the Committee believes the size and estimated value of the foregoing grants and
awards is slightly above the median of comparator companies.
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Mr. Glenn currently owns or has beneficial ownership of 675,827 shares of the
Common Stock, as shown on page . This equity interest provides an appropriate
link to the interests of shareholders.
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 those offered to the
general employee population with some variation to promote replacement of
benefit opportunities lost to regulatory limits, as discussed on page . Data
provided to the Committee under a study conducted for it by Hewitt Associates
LLC indicates that the nature and value of the benefits being so provided by the
Company are competitive and in line with those offered by the comparator
companies and those within the Company's industry.
INTERNAL REVENUE CODE 162(m) CONSIDERATIONS
Section 162(m) of the Code provides that compensation in excess of
$1,000,000 annually for any of the five most highly-paid executive officers 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
accordingly will continue to rely on performance-based compensation programs
which are designed to achieve that goal. The Committee believes that all
compensation paid in respect of 2000 and earlier years was deductible, primarily
because the aggregate amount of such compensation for each executive officer was
below the $1 million threshold under Section 162(m). The Company's Incentive
Compensation Program and 1999 Long-Term Incentive Plan approved by shareholders
in 1999 were designed in a form that payments under such plans would qualify as
deductible performance-based compensation. Certain compensation paid in 2000 and
in future years pursuant to the Company's prior Bonus Plan and Long-Term
Incentive Plan may not be deductible to the extent such compensation causes the
$1,000,000 threshold to be exceeded for any of Company's five highest paid
executive officers. The Committee intends to give appropriate consideration to
the requirements of Section 162(m) in the operation of the Plan and Program, but
will also exercise its discretion to determine, according to the best overall
interests of the Company, whether to satisfy such requirements.
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
William H. White
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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 Exchange Act
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 Dow Jones Heavy Construction Industry Index
("Peer Group Index") and the Russell 2000 Index for the same period. The
comparison assumes $100 was invested in the Common Stock, the Peer Group Index
and the Russell 2000 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)
[PERFORMANCE GRAPH]
- -----------------------------------------------------------------------------------------------------------------
03/27/97 12/31/97 12/31/98 12/31/99 12/31/00
- -----------------------------------------------------------------------------------------------------------------
Chicago Bridge & Iron Company N.V. $100.00 $ 91.14 $ 69.59 $ 80.06 $105.99
Peer Group Index $100.00 $ 83.28 $ 86.74 $ 81.47 $ 95.41
Russell 2000 Index $100.00 $129.01 $125.40 $149.96 $143.49
ITEM 2
ADOPTION OF ANNUAL ACCOUNTS
At the Annual Meeting, the shareholders will be asked to authorize the
preparation of the annual accounts and annual report in the English language and
to adopt the Dutch Statutory Annual Accounts of the Company for the fiscal year
ended December 31, 2000 (the "Annual Accounts"), as required under Dutch law and
the Articles of Association.
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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
2000 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 Results of Operations and Financial Condition
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 the Articles of Association, adoption of the Annual Accounts by the
general meeting of 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. This discharge from
liability does not extend to matters not disclosed to shareholders.
The affirmative vote of a majority of the votes cast 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 FROM PROFITS
The Articles of Association provide that the general meeting of
shareholders may, with certain restrictions, resolve to make distributions at
the expense of profits. As permitted under the Articles of Association, interim
dividends were paid in 2000 on March 30, June 30, September 30 and December 30
("interim dividends").
It is proposed that the shareholders resolve on the distribution of 2000
profits in the amount of $0.24 per share, previously paid as interim dividends
and transfer the balance of the profits to retained earnings.
The affirmative vote of a majority of the votes cast at the Annual Meeting
is required to resolve on the distribution from profits.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
DISTRIBUTION FROM PROFITS EQUAL TO 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 UP TO 30% OF
THE ISSUED SHARE CAPITAL OF THE COMPANY UNTIL NOVEMBER 10, 2002
Under Dutch law and the Articles of Association, the Management Board may,
with the prior approval of the Supervisory Board, and subject to certain Dutch
statutory provisions, be authorized to repurchase issued shares on behalf of the
Company in amounts, at prices and in the manner authorized by the general
meeting of shareholders. Adoption of this proposal will allow the Company to
have the flexibility to repurchase its shares without the expense of calling
special shareholder meetings. Such authorization may not continue for more than
18 months, but may be given on an annual rolling basis. At the 2000 Annual
Meeting, the general meeting of shareholders authorized the Management Board to
repurchase up to 30% of the Company's issued share capital on behalf of the
Company in open market purchases, through privately negotiated transactions,
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or by means of a self-tender offer or offers, at prices ranging up to 150% of
the market price at the time of the transaction. As of March 15, 2001, the
Company had repurchased 840,184 shares under this authority. Such authority
expires on November 11, 2001.
The Management Board believes that the Company would benefit by extending
and expanding the authority of the Management Board to repurchase the Company's
share capital. For example, to the extent the Management Board believes that the
Company's Common Stock may be undervalued at the market levels at which it is
then trading, repurchases of its own share capital may represent an attractive
investment for the Company. Such shares, to the extent they are not canceled
pursuant to the authority requested in Item 5 below, could be used for any valid
corporate purpose, including use under the Company's compensation plans, sale in
connection with the exercise of outstanding options, or for acquisitions,
mergers or similar transactions. The reduction in the Company's issued capital
resulting from any such purchases (assuming such repurchased shares are
subsequently canceled) will increase the proportionate interest of the remaining
shareholders in the Company's net worth and whatever further profits the Company
may earn. However, the number of shares repurchased, if any, and the timing and
manner of any repurchases would be determined by the Management Board, with the
prior approval of the Supervisory Board, in light of prevailing market
conditions, the Company's available resources and other factors that cannot now
be predicted. The nominal value of the shares to be acquired by the Company,
already held by the Company or held by a subsidiary, may never exceed 10% of the
issued share capital.
In order to provide the Company with sufficient flexibility, the Management
Board proposes that the general meeting of shareholders grant extended authority
for the repurchase of up to 30% of the current issued share capital (or over 7.0
million shares) in the open market, through privately negotiated transactions,
from PDM through exercise of the call provisions or the put provisions in the
PDM Shareholder Agreement or otherwise, or by means of a self-tender offer or
offers, at prices ranging up to 150% of the market price at the time of the
transaction. Such authority would extend for eighteen months from the date of
the 2001 Annual Meeting until November 10, 2002.
The affirmative vote of a majority of the votes cast at the meeting is
required to adopt the proposal to grant extended authority to the Management
Board until November 10, 2002 to repurchase up to 30% of the Company's issued
share capital on behalf of the Company in the open market, through privately
negotiated transactions, from PDM through exercise of the call provisions and
put provisions in the PDM Shareholder Agreement or otherwise, or by means of a
self-tender offer or offers, at prices ranging up to 150% of the market price at
the time of the transaction.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO GRANT EXTENDED AUTHORITY TO THE MANAGEMENT BOARD TO REPURCHASE SHARES OF THE
COMPANY'S SHARE CAPITAL, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 5
CANCELLATION OF SHARES TO BE ACQUIRED BY THE
COMPANY IN ITS OWN SHARE CAPITAL
Under Dutch law and the Articles of Association, the Company may hold no
more than 10% of its issued share capital at any time. In order to allow
implementation of proposed repurchases contemplated by the authorization
requested in Item 4 above which would be in excess of 10% (and up to 30%) of the
then issued share capital, the Company must dispose of or cancel shares which
have been repurchased. The Management Board, with the prior approval of the
Supervisory Board and subject to certain Dutch statutory conditions, is
requesting a resolution on the prospective cancellation of shares so that the
Management Board will have the ability to implement any proposed repurchases in
excess of 10% (and up to 30%) of the current issued share capital in an
efficient manner without the delay and expense of calling special shareholders
meetings.
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Prospective cancellation of shares shall occur if and when the Company
holds in excess of 9% of its issued share capital, at which time the Company
will cancel all or a portion of such shares, as determined by the Management
Board. The Company proposes to cancel such shares in two tranches, or such
higher number of tranches as the Management Board shall determine, with no
tranche to exceed 10% of the then issued share capital of the Company. The total
number of shares to be prospectively canceled by the Company will not exceed 20%
of the current issued share capital, or a total of approximately 4,680,000
shares.
With regard to the requirements of Sections 2:99 and 2:100 Dutch Civil
Code, the resolution to cancel shares prospectively held by the Company of its
share capital will become effective after filing thereof with the Commercial
Register and after expiry of a two-month period following publication of such
filing in a daily newspaper distributed nationally in The Netherlands, provided
no opposition is instituted by creditors against such resolution. If opposition
is instituted, such resolution shall become effective as soon as possible, with
due observance of the law. Upon effectiveness of such resolution, the capital
decrease will be filed with the Commercial Register, the shareholder register of
the Company will reflect the cancellation of registered shares, and bearer share
certificates and registered share certificates, if any, will be destroyed. The
above-mentioned filing with the Commercial Register will show which number of
shares will have been canceled in the relevant tranche. For every cancellation
tranche, a filing will be made.
The affirmative vote of a majority of the votes cast, or the affirmative
vote of 2/3 of the votes cast if less than 50% of the issued capital is
represented at the meeting, is required to adopt the proposal to prospectively
cancel shares to be acquired by the Company of its share capital.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO PROSPECTIVELY CANCEL SHARES TO BE ACQUIRED BY THE COMPANY OF ITS SHARE
CAPITAL, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY
INSTRUCTIONS ARE INDICATED THEREON.
ITEM 6
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Amendments to the Articles of Association are required as a result of the
start of the third phase of the Economic and Monetary Union ("EU") and the
merger of the Amsterdam Stock Exchange.
On January 1, 1999, with the commencement of the third phase of the
Economic and Monetary Union, the Euro was introduced in The Netherlands.
Effective January 1, 2002, references in legal documents, such as our Articles
of Association, will be automatically deemed to be expressed in Euro, based upon
the agreed upon conversion rate of 1 Euro = NLG 2.20371. Since the par value of
the shares is denominated in Dutch Guilders (NLG 0.01), the par value will
automatically convert to Euros (.0045378). Under the EU regulations, the
converted amounts must be rounded to the nearest amount with no more than two
decimals, or Euro 0.01. Therefore, the Supervisory Board recommends that Article
4 of the Articles of Association be amended to provide that the par value of the
shares be Euro 0.01. Since this is an increase in the issued capital, the
difference will be debited to the reserve for share premium.
In connection with the merger among the Amsterdam Exchange, the Brussels
Stock Exchange and the Paris Stock Exchange, the Amsterdam Exchange became
Euronext Amsterdam N.V.
The Supervisory Board proposes the following amendments:
Amend Sections 1 and 2 of Article 4 of the Articles of Association by
deleting such sections in their entirety and replacing them with the following:
ARTICLE 4. AUTHORIZED CAPITAL.
1. The authorized capital amounts to three hundred and fifty thousand Euros
(Euro 350,000).
2. The authorized capital is divided into thirty-five million (35,000,000)
shares of one cent (Euro 0.01) each.
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The draft amendment documents contain some further changes and certain
implementations for the Euro conversion.
Amend Articles 42 and 43 of the Articles of Association by deleting the
references to "AEX-Effectenbeurs N.V." and replacing them with "Euronext
Amsterdam N.V." and by deleting references to "the official market of
Amsterdam Exchanges N.V.'s stock market" and replacing them with "the
official segment of the stock market of Euronext Amsterdam."
In addition, the Articles of Association do not explicitly provide that
interim dividends do not have to be charged to profits made in the current year.
The Supervisory Board proposes to amend Article 31.5 to clarify that interim
dividends do not have to be paid from current profits as follows:
ARTICLE 31. PROFITS. DISTRIBUTION.
5. The management board may, subject to due observance of article 31,
paragraph 3, of the Articles of Association and article 105, paragraph
4, of Book 2 of the Civil Code and with the approval of the supervisory
board resolve to pay or distribute an interim dividend or other interim
distribution in anticipation of the final dividend or final distribution
regarding the fiscal year concerned.
The affirmative vote of a majority of the votes cast at the Annual Meeting
is required to adopt the proposal to amend the Articles of Association to
convert the par value of the shares from Dutch Guilders to Euros, to replace
"AEX-Effectenbeurs N.V." with "Euronext Amsterdam N.V." in the manner described
above and clarify the source of payment of interim dividends.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO AMEND THE ARTICLES OF ASSOCIATION TO CONVERT THE PAR VALUE OF THE SHARES FROM
DUTCH GUILDERS TO EUROS, TO REPLACE "AEX-EFFECTENBEURS N.V." WITH "EURONEXT
AMSTERDAM N.V." CLARIFY THE SOURCE OF PAYMENT OF INTERIM DIVIDENDS, AND PROXIES
EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE
INDICATED THEREON.
ITEM 7
EXTENSION OF AUTHORITY OF SUPERVISORY BOARD TO
ISSUE SHARES UNTIL MAY 10, 2006
At the Annual Meeting, the shareholders will be asked to resolve on a
further extension of the designation of the Supervisory Board to issue and/or
grant rights on (including options to subscribe) shares for a five-year period
from the date of the Annual Meeting until May 10, 2006. A designation may be
effective for up to five years and may be renewed on an annual rolling basis. At
the 1999 Annual Meeting, the shareholders designated the Supervisory Board for a
five-year period to issue and/or grant rights on (including options to
subscribe) shares. This five-year period will expire on May 12, 2004. (For a
discussion of preemptive rights held by Shareholders, see Item 8 below.)
The affirmative vote of a majority of the votes cast at the Annual Meeting
or the affirmative vote of 2/3 of the votes cast if less than 50% of the issued
capital is represented at the meeting, is required to extend the authorization
of the Supervisory Board to issue and/or to grant rights on (including options
to subscribe) shares for a five-year period from the date of the Annual Meeting
until May 10, 2006.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
DESIGNATION OF THE SUPERVISORY BOARD TO ISSUE AND/OR GRANT RIGHTS ON (INCLUDING
OPTIONS TO SUBSCRIBE) SHARES UNTIL MAY 10, 2006, AND PROXIES EXECUTED AND
RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
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ITEM 8
EXTENSION OF AUTHORITY OF SUPERVISORY BOARD TO LIMIT OR EXCLUDE
PREEMPTIVE RIGHTS UNTIL MAY 10, 2006
Under Dutch law and the Articles of Association, shareholders have a pro
rata preemptive right of subscription, inter alia, to any shares issued for cash
unless such right is limited or eliminated. Shareholders have no pro rata
preemptive subscription right with respect to any shares issued for
consideration other than cash or pursuant to certain employee stock plans. If
designated for this purpose at the Annual Meeting, the Supervisory Board has the
power to limit or eliminate such preemptive rights. A designation may be
effective for up to five years and may be renewed on an annual rolling basis in
combination with the delegation discussed under Item 7. At the 1999 Annual
Meeting, the shareholders authorized the Supervisory Board for a five-year
period to limit or exclude from time to time the preemptive rights of
shareholders. This five-year period will expire on May 12, 2004.
At the Annual Meeting, shareholders will be asked to resolve on a further
extension of this designation for a five-year period from the date of the Annual
Meeting until May 10, 2006.
The affirmative vote of a majority of the votes cast at the Annual Meeting,
or the affirmative vote of 2/3 of the votes cast if less than 50% of the issued
capital is represented at the meeting, is required to resolve on the designation
of the Supervisory Board to limit or exclude the preemptive rights of
shareholders for a five-year period from the date of the Annual Meeting until
May 10, 2006.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE EXTENSION
OF THE DESIGNATION OF THE SUPERVISORY BOARD TO LIMIT OR EXCLUDE PREEMPTIVE
RIGHTS OF SHAREHOLDERS UNTIL MAY 10, 2006, AND PROXIES EXECUTED AND RETURNED
WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 9
ADOPTION OF EMPLOYEE STOCK PURCHASE PLAN
In 1997, we adopted the Chicago Bridge & Iron Employee Stock Purchase Plan
(1997) (the "1997 Plan"). The 1997 Plan is scheduled to terminate June 30, 2002.
250,000 shares were reserved for issuance under the 1997 Plan. As of March 1,
2000, there were 18,952 shares available under the Plan. We are adopting a new
Chicago Bridge & Iron 2001 Employee Stock Purchase Plan (the "2001 Plan")
effective April 1, 2001, subject to shareholder approval, which will have
500,000 shares for issuance.
SUMMARY OF THE NEW PLAN
The principal provisions of the 2001 Plan are summarized below.
Shareholders are urged to read the full text of the 2001 Plan attached as
Exhibit B to this Proxy Statement for additional information not contained in
this summary.
Purpose. We believe a key element of our future success will be
broad-based stock ownership by all our employees, and providing incentives to
become and remain shareholders. The 2001 Plan is a broad-based employee share
purchase plan which provides eligible employees, including executive officers, a
convenient opportunity to participate in the growth of the Company.
Duration. The 2001 Plan will remain in effect, subject to the right of the
Supervisory Board to amend or terminate the 2001 Plan, until all shares subject
to the 2001 Plan have been allotted or there is a merger, consolidation,
transfer of substantially all the assets or a liquidation and the successor does
not assume our obligations under the 2001 Plan.
Shares Subject to the 2001 Plan. Subject to the anti-dilution adjustment
described below, a total of 500,000 shares will be reserved for sale under the
2001 Plan.
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In the event of a stock dividend, stock split or other change in corporate
capitalization the number of shares which may be issued under the 2001 Plan, and
the number and purchase price of shares subject to outstanding options, will be
adjusted in proportion to such increase or decrease in the number of shares.
Eligibility. Each employee who is either (a) a full time or regular part
time employee of the Company or its subsidiary who is paid from a payroll
constituting U.S. source income, or (b) an employee of the Company or its
subsidiary employed outside the U.S. which has not been excluded from
participation by the Company, unless the employee's participation is prohibited
by local law, is eligible to participate in the 2001 Plan. However, no otherwise
eligible employee may be granted an option if immediately after that grant such
employee owns, or has an option on, five percent (5%) of our shares nor may an
employee receive options which will allow the employee to purchase more than
$25,000 of market value of such stock in a single year.
Stock Options. An eligible employee may elect to participate in the 2001
Plan. Such election authorizes us to withhold an integral percentage from one
percent (1%) to up to eight percent (8%) of his or her compensation, which is
accumulated (without interest) in an Employee Stock Purchase Account. The option
will automatically be exercised on the first business day on which trading
occurs on the New York Stock Exchange, Inc. following the end of each calendar
quarter, provided the employee has not left employment. The purchase price under
the option will be 85% of the composite closing price reported for that day on
the New York Stock Exchange, Inc.
Tax Consequences. The 2001 Plan is intended to meet the requirements of
Section 423 of the Internal Revenue Code of 1986 (the "Code") for employee stock
purchase plans. Under current law, the Federal income tax consequences of
receiving options and purchasing shares under the 2001 Plan, and ultimately
disposing of such shares, are as follows:
The grantee receives no income subject to tax at the time that an option is
granted under the 2001 Plan. Nor does the grantee receive taxable income at the
time such option is exercised by the purchase of shares under the 2001 Plan,
even though the price of the stock under the option is less than its then market
price. We will not be allowed a tax deduction at either of these two times.
After the employee has acquired the stock, tax consequences depend upon the
timing of the employee's disposition of it. If the employee disposes of the
stock before the end of two years after the date the option is deemed granted
under Section 423, the employee will have made a "disqualifying disposition" and
will lose the favorable tax treatment accorded an option holder (explained
below). For this purpose, such a disqualifying disposition includes a sale, an
exchange, a gift (even to a family member), and any transfer of legal title
except transfers by bequest or inheritance or a transfer from a decedent to his
or her estate, a mere pledge or certain transfers of a special type. However,
transfers of stock into joint ownership with another (with right of
survivorship) are not considered a disqualifying disposition. Termination of
such joint tenancy during the aforementioned two-year period (except to the
extent the employee acquires full ownership of such stock, or in the event of
the death of the employee) will constitute a disqualifying disposition.
If the employee makes a disqualifying disposition of the stock, the
employee will realize ordinary income in the year of disposition in the amount
of the difference between what the employee paid for the stock under the 2001
Plan and its fair market value on the date of exercise of the option to purchase
the stock. This is reportable on the employee's income tax return for the year
of disposition, even though such disposition may be a gift or may result in an
actual loss. The same amount would then be deductible by us. If the disposition
of the stock is by sale, the employee realizes a capital gain or loss depending
upon whether the amount realized is more or less than his or her tax basis for
the stock, which is the sum of the price paid for the stock and amount included
in ordinary income under the first sentence in this paragraph. Whether it is
long or short term gain (loss) depends upon the period the stock is held.
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If the employee disposes of the stock after the end of two years after the
date of the grant of the option, it is not a disqualifying disposition. In such
event, the employee realizes ordinary income equal to the lesser of:
(1) 15% of the fair market value of the stock on the purchase date; or
(2) the excess of the price the stock was sold for (or fair market value at
the date of disposition, if disposed of by gift or at death) over the
price paid for it under the 2001 Plan.
If the disposition of the stock is by sale, the seller also realizes
capital gain or loss depending upon whether the amount realized by the seller is
more or less than the seller's tax basis for the stock (the sum of the price
paid for the stock and the amount included in ordinary income under the
preceding sentence).
The affirmative vote of a majority of the votes cast at the meeting is
required to approve the adoption of the Chicago Bridge & Iron 2001 Employee
Stock Purchase Plan.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF THE CHICAGO BRIDGE & IRON 2001 EMPLOYEE STOCK PURCHASE PLAN, AND PROXIES
EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE
INDICATED THEREON.
ITEM 10
RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN
AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR 2001
The Supervisory Board has appointed the firm of Arthur Andersen as the
Company's independent public accountants for the year ending December 31, 2001,
subject to ratification by the shareholders. Arthur Andersen has acted as the
Company's independent public accountants 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 a majority of the votes cast at the Annual Meeting
is required to ratify the appointment of Arthur Andersen as the Company's
independent public accountants for 2001.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF ARTHUR ANDERSEN'S APPOINTMENT AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR 2001, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
CERTAIN TRANSACTIONS
On December 28, 2000, CB&I acquired the entire ownership interest of
Howe-Baker International, L.L.C. from WEDGE Group Incorporated for a
consideration of 8,146,665 common shares of the Company, $28 million in cash and
the assumption of certain liabilities. Immediately following the HBI
Transaction, First Reserve Fund VIII, L.P. acquired from WEDGE 4,323,333 common
shares of the Company. Subsequently, First Reserve acquired from WEDGE 530,000
common shares of the Company.
On February 7, 2001, the Company acquired substantially all of the assets
of the Engineered Construction Division and the Water Division of Pitt-Des
Moines, Inc. for a consideration of 2,848,172 common shares of the Company
(including 282,575 collar shares for price protection, if required). PDM is
obligated to remit to the Company net proceeds from the disposition of the
shares in excess of $44 million. The source of funds for the cash portion of the
purchase price was a private placement of 837,692 common shares of the Company
to Farinvest, Ltd., an affiliate of WEDGE and 1,623,846 common shares of the
Company plus a warrant to purchase, at nominal value, 251,598 common shares of
the Company to First Reserve, plus a warrant to purchase 250,000 common shares
of the Company, subject to decrease depending on the number of common shares
repurchased by the Company prior to June 30, 2001.
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Mr. Macaulay, Supervisory Director, is Chairman and Chief Executive Officer
of First Reserve; Mr. Guill, Supervisory Director; is President of First
Reserve; Mr. Honeybourne, nominee proposed by First Reserve for Supervisory
Director, is Managing Director of First Reserve; Mr. White, Supervisory
Director, is President, Chief Executive Officer and Vice Chairman of WEDGE; Mr.
Tidwell, nominee proposed by WEDGE for Supervisory Director, is Chief Financial
Officer of WEDGE; and Mr. Winfield, Supervisory Director, is a nominee proposed
by WEDGE to be reappointed as Supervisory Director.
SHAREHOLDER PROPOSALS
Any proposal of a shareholder intended to be presented at the 2002 Annual
Meeting of Shareholders must be received at the Company's principal executive
offices no later than December 10, 2001, if the proposal is to be considered for
inclusion in the Company's proxy statement relating to such meeting, without
prejudice to shareholder's rights to cause a general meeting of shareholders to
be convened or to convene one under article 34.2 of the Articles of Association.
By Order of the Board of Supervisory
Directors
Gerald M. Glenn
Chairman of the Board of Supervisory
Directors
Amsterdam, The Netherlands
April , 2001
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EXHIBIT A
THE AUDIT COMMITTEE OF THE
SUPERVISORY BOARD OF CHICAGO BRIDGE & IRON COMPANY N.V.
GENERAL -- The Audit Committee shall consist of not less than three
independent members of the Supervisory Board of the Company, and shall not
include any employees of the Company. The Chief Financial Officer shall serve as
an ex-officio, non-voting member of the Committee. At the Board meeting held in
conjunction with the Company's Annual Meeting of Shareholders, and thereafter as
necessary, the Board shall appoint the membership of the Committee and appoint
the Chairman of the Committee for the ensuing year. A quorum of the Committee
shall consist of at least two Committee members.
RESPONSIBILITIES -- The Audit Committee shall have the following
responsibilities:
1. Provide an avenue of communication among management, the internal
auditors, the independent public accountant and the Board as to the
Company's accounting and financial reporting practices, internal audit
programs and standards, and business policy and legal compliance
guidelines.
2. Review the appointment and replacement of the director of internal
auditing.
3. Review the charter of the Company's Internal Audit Department as
well as policies and standards relating to the programs implemented by that
department for carrying out its stated charter and the annual audit plan.
4. Annually evaluate and recommend to the Supervisory Board the
appointment and, if necessary, replacement of, the independent public
accountant selected to audit the financial records and statements of the
Company. The independent public accountant is ultimately accountable to the
Supervisory Board and to the Audit Committee.
5. Review the scope of the annual independent audit of the Company,
the non-audit services performed by independent public accountants and the
compensation to be paid to independent public accountants for audit and
non-audit services.
6. Satisfy itself as to the independence of the independent public
accountant and ensure that the independent public accountant submits to the
Audit Committee on a periodic basis a formal written statement delineating
all relationships and services which may affect objectivity and
independence and discuss with the independent public accountant any
relevant issues and recommend to the Supervisory Board with regard to
actions that may be taken to ensure the independence of the independent
public accountant.
7. Review with the independent public accountant and with the
appropriate Company officers and personnel the adequacy and effectiveness
of accounting, financial reporting and control systems, financial
disclosures, and financial, administrative, information systems and
operational auditing procedures, and satisfy itself that any weaknesses
identified are corrected in a timely manner.
8. Review with appropriate Company officers and personnel the
existence and adequacy of statements of Company policy and procedures
concerning illegal or unauthorized conduct or activities and the means to
monitor compliance, and make recommendations to the Board with respect to
explanations or solutions concerning any issues raised in such review,
including but not limited to conflicts of interest.
9. Review policies and procedures, and compliance therewith,
applicable to officer expense accounts and perquisites, including use of
company assets, and consider the results of any review of these areas by
the internal auditor or the independent public accountant.
10. Conduct or authorize investigations into any affairs within the
Committee's scope of responsibilities.
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RESPONSIBILITIES OF THE CHAIRMAN OF THE AUDIT COMMITTEE -- The Chairman of
the Committee, in addition to the duties of a Committee member, shall have the
following responsibilities:
1. Preside at each meeting of the Audit Committee;
2. Cause minutes of the deliberations at each such meeting to be
prepared and retained in the Company's records;
3. Review all issued internal audit reports and report to the full
committee on any matters of particular concern arising from such reports.
4. Assess and discuss with the Audit Committee the performance of the
Audit Committee and report the results thereof to the Supervisory Board.
5. Supervise the completion and the submission of all required Audit
Committee reports.
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EXHIBIT B
TABLE OF CONTENTS
CHICAGO BRIDGE & IRON
2001 EMPLOYEE STOCK PURCHASE PLAN
(EFFECTIVE APRIL 1, 2001)
ARTICLE I: DEFINITIONS.............................................. 1
1.01 Company..................................................... 1
1.02 Compensation................................................ 1
1.03 Contribution Period......................................... 1
1.04 Included Employee........................................... 1
1.05 Market Value................................................ 1
1.06 Plan........................................................ 2
1.07 Plan Administrator.......................................... 2
1.08 Participant................................................. 2
1.09 Participating Subsidiary.................................... 2
1.10 Purchase Date............................................... 2
1.11 Purchase Price.............................................. 2
1.12 Service Provider............................................ 2
ARTICLE II: EFFECTIVE DATE.......................................... 2
ARTICLE III: PARTICIPATION.......................................... 2
3.01 Participation............................................... 2
3.02 Election to Contribute...................................... 2
3.03 Election of Investment...................................... 2
3.04 Interest on Contributions................................... 2
ARTICLE IV: PURCHASE OF SHARES...................................... 3
4.01 Grant of Options............................................ 3
4.02 Purchase Price.............................................. 3
4.03 Withdrawal of Contributions................................. 3
4.04 Stock Available for Options................................. 3
ARTICLE V: LIMITATIONS ON STOCK PURCHASE............................ 3
5.01 Ineligible Employees........................................ 3
5.02 Nontransferability of Option................................ 3
5.03 Recapitalization Adjustments................................ 4
5.04 Termination of Employment................................... 4
5.05 Notice of Disposition....................................... 4
ARTICLE VI: AMENDMENT OF THE PLAN................................... 4
ARTICLE VII: TERMINATION OF THE PLAN................................ 5
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CHICAGO BRIDGE & IRON
2001 EMPLOYEE STOCK PURCHASE PLAN
(EFFECTIVE APRIL 1, 2001)
CHICAGO BRIDGE & IRON COMPANY N.V., in order to give its employees and
those of Participating Subsidiaries an opportunity to participate in the growth
of the Company by investment and reinvestment in the common stock of the
Company, has established the Chicago Bridge & Iron 2001 Employee Stock Purchase
Plan.
ARTICLE I: DEFINITIONS
Unless the context clearly indicates otherwise, the following terms when
used in this Plan shall have the following meanings:
1.01 COMPANY: Chicago Bridge & Iron Company N.V., a Netherlands
corporation, and its respective corporate successors, if any.
1.02 COMPENSATION: The total of all wages and salaries, overtime,
shift and other premiums and bonuses and other incentive payments paid by
the Company or any Participating Subsidiary to an employee or former
employee with respect to a given period of employment during which the
employee is a Participant, but excluding the following:
(a) All employer contributions and payments under any deferred
compensation plan or contract, whether tax qualified or
non-qualified, excepting all elective employee salary deferrals
which are treated as employer contributions under any such plan or
contract;
(b) All payments made by the Company or any Participating Subsidiary for
services performed outside the United States which are of a
character not customarily made by the Company or any Participating
Subsidiary for services performed within the United States;
(c) All payments identified when made as an allowance for reimbursement
of actual or estimated expenses incurred or to be incurred by the
recipient of such payments; and
(d) Any income realized from the grant, receipt, vesting, modification,
relinquishment, exchange, assignment, transfer, sale or other
disposition of securities of the Company or any Participating
Subsidiary, or rights or options with respect thereto.
1.03 CONTRIBUTION PERIOD: Any one of four periods of each calendar
year during which payroll deductions are made under the Plan. A new
Contribution Period shall begin with the start of the pay period which
includes the first day of each calendar quarter.
1.04 INCLUDED EMPLOYEE: Any person who is either: a) a full time or
regular part time employee of the Company or of a Participating Subsidiary
who is paid from a payroll constituting U.S. source income, or b) an
employee of the Company or a Participating Subsidiary employed outside of
the United States, if the Participating Subsidiary or a unit thereof which
employees the employee has not been excluded from participation by the
Company and such employee is not prohibited by the laws of the nation of
the employee's residence or employment from participating in the Plan.
1.05 MARKET VALUE: The composite closing price reported for a given
date for a share of the common stock of the Company as traded on the New
York Stock Exchange, or if such price is not so reported for that date,
then the closing price of a share as so reported for the most recent
preceding date on which such trading occurred. If the common stock of the
Company shall cease to be so traded, then Market Value shall be the value
on that date as determined in such reasonable manner as the Managing
Director of the Company determines and describes in a written notice sent
to all holders of options granted hereunder and affected by that
determination.
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1.06 PLAN: The Chicago Bridge & Iron 2001 Employee Stock Purchase
Plan, as from time to time amended.
1.07 PLAN ADMINISTRATOR: The person or committee from time to time
designated by the Managing Director of the Company for the purposes of
administering and conclusively construing the Plan.
1.08 PARTICIPANT: An Included Employee for whom there is an account
established pursuant to this Plan.
1.09 PARTICIPATING SUBSIDIARY: Such present or future subsidiaries
and affiliates of the Company which employ Included Employees, as
designated from time to time by the Plan Administrator from among the group
consisting of the Company and its present or future subsidiaries and
affiliates.
1.10 PURCHASE DATE: The first regular business day on which trading
occurs on the New York Stock Exchange following the end of each calendar
quarter.
1.11 PURCHASE PRICE: The price of the common stock of the Company as
defined in Section 4.02.
1.12 SERVICE PROVIDER: Such third party institution, if any, to or
with which the Company, or the Plan Administrator on the Company's behalf,
may choose to delegate or contract to provide recordkeeping and other
services for the administration of the Plan, which may include, but not be
limited to, operation and maintenance of stock brokerage accounts for the
purchase, sale and holding of stock for Participants' Employee Stock
Purchase Accounts, processing of Participant elections, and reinvestment of
dividends paid on stock held in Employee Stock Purchase Accounts.
ARTICLE II: EFFECTIVE DATE
The effective date of this Plan is April 1, 2001.
ARTICLE III: PARTICIPATION
3.01 PARTICIPATION: An Included Employee who is not ineligible under
Section 5.01 may elect to make contributions to the Plan pursuant to Section
3.02.
3.02 ELECTION TO CONTRIBUTE: An election must be in writing in a form as
prescribed by the Plan Administrator, and must be submitted to the Plan
Administrator by the 20th day of the calendar month preceding the beginning of a
Contribution Period to be effective for such Contribution Period. Thereafter
such election cannot be changed or terminated during that Contribution Period
except as provided in Section 4.03. Each such election shall authorize the
Company or Participating Subsidiary, as applicable, to withhold an integral
percentage from one percent (1%) to up to eight percent (8%) of each payment of
Compensation. An election once made shall be continuously applied to that
Contribution Period and all subsequent Contribution Periods so long as the
Participant remains an Included Employee, except as otherwise provided in
Section 4.03 or 5.01, until the Participant notifies the Plan Administrator, in
writing as the Plan Administrator prescribes, of a change or termination of such
election. Such notice of change or termination must be submitted by the same
date as described above and shall take effect as of the beginning of the next
Contribution Period after the date of such notice's effective submission.
3.03 ELECTION OF INVESTMENT: Each Participant electing to make
contributions to the Plan as provided in Section 3.02 shall at the time of each
such election also be deemed to elect to purchase common stock of the Company
under the terms of Articles IV and V, and also to agree to the establishment and
administration of an Employee Stock Purchase Account in accordance with such
additional requirements as the Plan Administrator may prescribe pursuant to any
agreement with the Plan's Service Provider, if any. The Plan Administrator shall
promptly notify Participants from time to time of any such additional
requirements.
3.04 INTEREST ON CONTRIBUTIONS: The contributions made by a Participant
pursuant to Section 3.02 shall be held by the Company or Participating
Subsidiary, as may be applicable, until the purchase of stock
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pursuant to Sections 4.01 and 4.02, or withdrawal pursuant to Section 4.03, and,
except as may be required by applicable law, shall not draw any interest or
other earnings until so disbursed.
ARTICLE IV: PURCHASE OF SHARES
4.01 GRANT OF OPTIONS: A Participant who is an Included Employee and who
has made an election pursuant to Section 3.02 shall be granted on the first day
of each Contribution Period on which an election pursuant to Section 3.03 is
effective, an option to purchase shares of common stock of the Company on the
Purchase Date next following the applicable Contribution Period. The option so
granted shall be automatically exercised, and shares of the common stock of the
Company shall be purchased with the Participant's contributions withheld during
or paid for the applicable Contribution Period pursuant to Section 3.02,
provided a withdrawal pursuant to Section 4.03 or a termination of employment
pursuant to Section 5.04 has not occurred. Any unused portion, representing an
excess over the amount needed to purchase on the applicable Purchase Date the
maximum number of shares allowable under the limitations of Sections 4.02 and
5.01, shall be refunded to such Participant.
4.02 PURCHASE PRICE: The Purchase Price of the stock purchased under the
option granted pursuant to Section 4.01 shall be 85% of the Market Value of such
stock on the Purchase Date. The number of shares to which the option applies
shall be the number of whole and fractional shares equal to the amount of
contributions withheld during the preceding Contribution Period divided by 85%
of the Market Value of the stock on the Purchase Date. The maximum number of
shares a Participant may purchase under the Plan in a single calendar year shall
be the further limited as required by Section 5.01.
4.03 WITHDRAWAL OF CONTRIBUTIONS: A Participant may withdraw and receive
from the Company or Participating Subsidiary, as applicable, a refund of all
(but only all) contributions made to date during the current Contribution Period
by the submittal of a written election as prescribed by the Plan Administrator
no later than the 20th day of the last calendar month of such Contribution
Period. Upon such withdrawal, all elections pursuant to Sections 3.02 and 3.03
shall automatically terminate until reinstated pursuant to said Sections.
4.04 STOCK AVAILABLE FOR OPTIONS: All shares of common stock of the
Company from time to time held in the treasury of the Company, and authorized
but presently unissued shares of common stock of the Company, but in any event
limited to a total of 500,000 shares, shall be available for option and sale
pursuant to this Plan. Shares allotted for option and sale pursuant to this Plan
for which the right to purchase has expired shall be deemed available for
reallotment for option and sale in ensuing Contribution Periods and on
subsequent Purchase Dates, as if such shares had never been so allotted.
ARTICLE V: LIMITATIONS ON STOCK PURCHASE
5.01 INELIGIBLE EMPLOYEES: No otherwise eligible Included Employee shall
be granted an option to purchase stock pursuant to this Plan if immediately
after that grant such employee owns, or has an option on, stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or any affiliate thereof. The rules of Section 425(d) of
the U.S. Internal Revenue Code of 1986, as from time to time amended, shall
apply in determining the stock ownership of an employee for this purpose. Any
stock which an employee may purchase under any outstanding right or option shall
be treated as stock owned by such employee for the purpose of this section. No
employee shall have or be granted under this Plan any option that will permit
the employee's rights or options to purchase stock under all such employee stock
purchase plans of the Company and its affiliates to accrue at a rate which
exceeds twenty-five thousand dollars ($25,000) of Market Value of such stock,
determined as of the date such right or option is granted, for each calendar
year during which such right or option is outstanding.
5.02 NONTRANSFERABILITY OF OPTION: No option to purchase stock pursuant
to this Plan shall be transferable by the grantee thereof during the grantee's
lifetime, but such an option may be transferred by will or by laws of descent
and distribution, which shall include the valid designation of a beneficiary
pursuant to uniform procedures prescribed by the Plan Administrator. Each such
option shall be exercisable during the
B-4
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lifetime of the grantee only by the grantee. Certificates for shares of stock
purchased pursuant to an option granted under this Plan may, however, be issued
in the names of the grantee and any other adult person or persons jointly, with
right of survivorship, provided each such person is a member of the grantee's
immediate family and provided further that the grantee so requests in writing at
or before the time of his purchase of such shares and at the same time informs
the Company of the name and address of his co-owner. A grantee's "immediate
family" for the purposes of this Section 5.02 shall include only the grantee's
spouse, son, daughter, grandson, granddaughter, niece, nephew, father, mother,
brother or sister. Certificates for shares purchased after the transfer of an
option as provided above in this Section 5.02 may be issued only in the name or
names of the person or persons so succeeding to the option.
5.03 RECAPITALIZATION ADJUSTMENTS: If the outstanding common stock of the
Company is augmented by a dividend in such common stock or divided into a
greater or consolidated into a lesser number of shares of such common stock,
then (A) the number of unissued shares of such common stock which may thereafter
be allotted shall be correspondingly increased or decreased, (B) the number of
shares of common stock to which any then outstanding options under the Plan
relates shall be correspondingly increased or decreased to the extent that
shares are available for allotment within the limit provided in Section 4.04,
and (C) the purchase price for each share in respect of which any such option is
outstanding at the time of such increase or decrease in the number of
outstanding shares of common stock of the Company shall be adjusted in inverse
proportion to such increase or decrease in the number of outstanding shares. If
the outstanding common stock of the Company is affected by any reorganization,
recapitalization, combination of shares, merger, consolidation, acquisition of
property or shares, separation, assets spin-off, stock rights offering,
liquidation or other similar change in the capital structure of the Company that
is not described in the preceding sentence and that does not terminate the Plan
pursuant to Article VII, the Plan Administrator shall make such adjustments, if
any, in the number, kind and purchase price of the shares allotted or subject to
options under the Plan, as it deems appropriate.
5.04 TERMINATION OF EMPLOYMENT: Participation in this Plan ceases
immediately when a Participant ceases to be employed by the Company or a
Participating Subsidiary for any reason whatsoever, when the Participant's
employer ceases to be a Participating Subsidiary, or when the Participant
otherwise ceases to be an Included Employee; and such Participant's options
shall thereupon terminate. As soon as administratively practicable upon
termination of participation, the Company or Participating Subsidiary, as
applicable, shall refund to the Participant all contributions accumulated during
the applicable Contribution Period. Neither the existence of this Plan nor the
grant nor exercise of any rights to purchase shares under this Plan shall impose
any obligation on the Company or a Participating Subsidiary to continue to
employ any employee, or adversely affect the right of the Company or a
Participating Subsidiary to terminate such employment at any time.
5.05 NOTICE OF DISPOSITION: If a Participant or former Participant sells,
transfer, or otherwise makes a disposition of shares purchased pursuant to an
option granted under the Plan within two years after the date such option is
granted or within one year after the Purchase Date to which such option relates,
and if such Participant is subject to U.S. Federal income taxes, then such
Participant or former Participant shall notify the Company or Participating
Subsidiary in writing of such sale, transfer or other disposition, and shall
remit to the Company or Participating subsidiary or authorize the Company or
Participating Subsidiary to withhold from other sources such amount as the
company may determine to be necessary to satisfy any federal, state or local tax
withholding obligations of the Company or Participating Subsidiary.
ARTICLE VI: AMENDMENT OF THE PLAN
The Company reserves the right to amend this Plan in any manner, at any
time or from time to time, by action of its Managing Director, or by action of
the Supervisory Directors (in which case any such action shall supercede any
conflicting action of the Managing Director), but no such amendment shall
increase the number of shares of common stock that may be allotted for sale
under the Plan without the approval of shareholders of the Company; and except
for the purpose of making the Plan meet the requirements of the U.S. Internal
Revenue Code of 1986, as from time to time amended, with respect to employee
stock purchase plans, no such amendment shall alter or impair any right granted
under the Plan without the previous written consent of the holder of that right.
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ARTICLE VII: TERMINATION OF THE PLAN
The Plan shall continue indefinitely until termination under this Section.
The Company reserves the right to terminate this Plan at any time by resolution
of its Supervisory Directors, and the Plan shall automatically terminate upon
the happening of the first to happen of the following events:
(a) whenever no shares remain to be allotted under the Plan, or
(b) whenever any merger of the Company into another corporation or any
consolidation of the Company with another corporation, or any
transfer of substantially all of the assets of the Company, or any
liquidation of the Company, becomes effective or takes place unless
the corporate successor of the Company in any such transaction
assumes the obligations of the Company under the Plan.
No options shall be granted after the Plan is terminated nor may any stock
be purchased pursuant to the Plan subsequent to the termination. All funds
accumulated in Participants' Employee Stock Purchase Accounts as of the date of
termination shall be refunded to the affected Participants as soon as
administratively practicable after such termination.
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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 3, 2001)
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 10, 2001
and, in general, to exercise all rights the undersigned could exercise in
respect of such Common Shares if personally present thereat upon all matters
which may properly come 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 under- signed on the books of the New York Transfer Agent and
Registrar as of the close of business on April 3, 2001, at 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.
CHICAGO BRIDGE & IRON COMPANY N.V.
P.O. BOX 11436
NEW YORK, N.Y. 10203-0436
(Continued and to be dated and signed on the reverse side.)
45
The Supervisory Board recommends a vote for members Ballengee, Macaulay,
Simpson and Winfield and for items 2-10
1. To reappoint Jerry H. Ballengee, William E. Macaulay, L. Donald 4. To approve the extension of the authority of the
Simpson and Michael D. Winfield as members of the Supervisory Management Board to repurchase up to 30% of the issued
Board to serve until the Annual General Meeting of Shareholders share capital of the Company until November 10, 2002;
in 2004, and until their successors shall have been duly appointed;
5. To cancel shares to be acquired by the Company in its
First Position: a) Jerry H. Ballengee own share capital;
OR
b) Stephen M. Duffy 6. To amend the Articles of Association to convert the par
value of shares from Dutch Guilders to Euros, to
Second Position: c) William E. Macaulay reflect that AEX-Effectenbeurs N.V. (the "Amsterdam
OR Exchange") is now called Euronext Amsterdam N.V. and
clarify the source of payment of interim dividends;
d) W.G. "Will" Honeybourne
Third Position: e) L. Donald Simpson
OR 7. To approve the extension of the authority of the
f) Samuel C. Leventry Supervisory Board to issue and/or grant rights on
(including options to subscribe) on shares of the
Fourth Position: g) Michael D. Winfield Company until May 10, 2006;
OR
h) James M. Tidwell 8. To approve the extension of the authority of the
Supervisory Board to limit or exclude the preemptive
rights of the share-holders of the Company until
2. To authorize the preparation of the annual accounts and the annual May 10, 2006;
report in the English language and to adopt the Dutch Statutory
Annual Accounts of the Company for the fiscal year ended 9. To adopt the Chicago Bridge & Iron 2001 Employee Stock
December 31, 2000; Purchase Plan (2001); and
3. To approve the distribution of profits for the year ended December 10. To approve the appointment of Arthur Andersen as the
31, 2000 in the amount of US$0.24 per share previously paid as Company's independent public accountants for the fiscal
interim dividends; year ending December 31, 2001.
* Please Detach Proxy Card Here *
- ------------------------------------------------------------------------------------------------------------------------------------
1. FOR FOR AGAINST ABSTAIN
a) g) 6.
b) h) 7.
FOR AGAINST ABSTAIN
c) 2. 8.
d) 3. 9.
e) 4. 10.
f) 5.
PLEASE DETACH HERE
* You Must Detach This Portion of the Proxy Card *
* Before Returning it in the Enclosed Envelope *
Change of Address and/or
Comments Mark Here
The Voting Instruction must be
signed by the person in whose
name the relevant Receipt is
registered on the books of the
Depositary. In the case of a
Corporation the Voting
Instruction must be executed by
a duly authorized Officer or
Attorney.
Dated: , 2001
--------------------
--------------------------------
Signature of Registered Holder
--------------------------------
Votes MUST be indicated (x) in
Black or Blue ink.
Sign, Date and Return the Instruction Card Promptly Using the Enclosed Envelope.