SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-12
CHICAGO BRIDGE & IRON COMPANY N.V.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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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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[ ] 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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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, 2002
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 The Grand Hotel, Oudezijds
Voorburgwal 197, 1012 EX Amsterdam, The Netherlands, at 10:00 A.M., local time,
on Friday, May 10, 2002, for the following purposes:
1. To reappoint J. Charles Jennett, Gary L. Neale, William H. White and
Marsha C. Williams as members of the Supervisory Board to serve until
the Annual General Meeting of Shareholders in 2005, and to appoint
Anthony P. Banham as a member of the Supervisory Board to serve until
the Annual General Meeting of 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, 2001;
3. To discharge the members of the Management Board and the Supervisory
Board from liability in respect of the exercise of their duties during
the fiscal year ended December 31, 2001;
4. To approve the distribution from profits for the year ended December 31,
2001 in the amount of US$0.24 per share previously paid as interim
distributions;
5. 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, 2003;
6. To cancel shares to be acquired by the Company in its own share capital;
7. To amend the Articles of Association to reflect changes in Dutch law and
the Company's delisting from Euronext Amsterdam N.V. and to increase the
number of authorized shares;
8. To approve the extension of the authority of the Supervisory Board to
issue and/or grant rights on (including options to subscribe) shares of
the Company until May 10, 2007;
9. 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, 2007; and
10. To leave to the Supervisory Board the authority to appoint the Company's
independent public accountants.
This notification is subject to the convocation for the meeting and the
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 Bank N.V., Spuistraat 172, 1012 VT Amsterdam, The Netherlands; and at the
Bank of New York, 620 Avenue of the Americas, New York, New York 10011 from the
date hereof until the close of the Annual Meeting.
Holders of registered shares of record at the close of business on April 2,
2002, and holders of bearer shares who deposit their shares prior to May 3,
2002, 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
Meeting in writing prior to May 3, 2002. 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 9, 2002
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 9, 2002, 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, 2002, 10:00 A.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. Jennett, Neale, Banham and White and Ms. Williams 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 21,054,371 registered shares of our share
capital, par value Euro 0.01 (the "Registered Shares"), issued at the close of
business on April 2, 2002, and the holders of the bearer shares (the "Bearer
Shares") who deposit their shares prior to May 3, 2002 (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 3, 2002.
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.
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.
The Supervisory Board has determined to reduce its size from 12 members to 11
members effective at the time of the Annual Meeting. 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. J. Dennis Bonney, who attains the age of 72 this
year, will resign effective the time of the Annual Meeting, and the size of the
Supervisory Board will be reduced to eleven. 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.
Five Supervisory Directors are to be appointed. Four will serve until the
Annual Meeting in 2005 and one, who will serve until the Annual Meeting in 2004,
will replace William P. Macaulay who is resigning effective the time of the
Annual Meeting. For the first position to expire in 2005, the Supervisory Board
has proposed the election of J. Charles Jennett or Timothy J. Moran. For the
second position to expire in 2005, the Supervisory Board has proposed the
election of Gary L. Neale or Samuel C. Leventry. For the third position to
expire in 2005, the Supervisory Board has proposed the election of Marsha C.
Williams or David P. Bordages. For the fourth position to expire in 2005, the
Supervisory Board, pursuant to the WEDGE Shareholder Agreement (as hereinafter
defined), has proposed the election of William H. White or James M. Tidwell. For
the position to expire in 2004, the Supervisory Board, pursuant to the First
Reserve Shareholder Agreement (as hereinafter defined), has proposed the
election of Anthony P. Banham or Thomas R. Denison. Messrs. Jennett, Neale and
White and Ms. Williams are presently members of the Supervisory Board.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPOINTMENT
OF MESSRS. JENNETT, NEALE, BANHAM AND WHITE AND MS. WILLIAMS.
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Certain information with respect to the nominees for Supervisory Director
and the six Supervisory Directors whose terms do not expire this year is as
follows:
THE FOLLOWING NOMINATIONS ARE MADE FOR THREE-YEAR TERMS EXPIRING IN 2005:
FIRST POSITION
FIRST NOMINEE
J. CHARLES JENNETT, 61, has served as a Supervisory Director of the Company
since April, 1997. Since 2001, he has served as President Emeritus of Texas A&M
International University and was President from 1996 to 2001. 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.
SECOND NOMINEE
TIMOTHY J. MORAN, 46, has served as Vice President and Treasurer of Chicago
Bridge & Iron Company since August, 2000. Prior to that, Mr. Moran was Vice
President-Area Director of Finance, Eastern Hemisphere from July, 1997 to July,
2000 and Area Director-Finance-Eastern Hemisphere from August, 1995 to June,
1997. Mr. Moran has been employed by Chicago Bridge & Iron Company in various
finance and accounting positions for more than 20 years.
SECOND POSITION
FIRST NOMINEE
GARY L. NEALE, 62, 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 and
gas 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.
SECOND NOMINEE
SAMUEL C. LEVENTRY, 52, 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 31
years in various engineering positions.
THIRD POSITION
FIRST NOMINEE
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.
SECOND NOMINEE
DAVID P. BORDAGES, 51, has served as Vice President-Human Resources and
Administration of Chicago Bridge & Iron Company since February 25, 2002. Mr.
Bordages was Vice President-Human Resources of the Fluor Corporation from April,
1989 through February, 2002.
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FOURTH POSITION
FIRST NOMINEE
WILLIAM H. WHITE, 47, has served as a Supervisory Director of the Company
since January, 2001. He has been the President and Chief Executive Officer 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 a director of Pioneer Drilling
Company (AMEX), a contract drilling company; and TGC Industries, Inc. (NASDAQ),
a geophysical contracting firm. He 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.
SECOND NOMINEE
JAMES M. TIDWELL, 56, currently serves as Vice President and Chief
Financial Officer of WEDGE Group Incorporated, a position which he has held
since January, 2000. 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.
THE FOLLOWING NOMINATIONS ARE MADE FOR A TWO-YEAR TERM EXPIRING IN 2004:
FIRST NOMINEE
ANTHONY P. BANHAM, 58, is Vice Chairman of Simmons & Company International,
an investment banking firm located in Houston, Texas which focuses on the oil
service and equipment industry. Mr. Banham has been with Simmons and Company
since 1976. Prior to joining Simmons & Company, he spent nine years working for
Hawker Siddeley Aviation Ltd. in a variety of management capacities. He is past
President of the British American Business Association in Houston, a member of
the Awty International School Board of Trustees, and a member of the Board of
Trustees of the Houston Museum of Natural Science.
SECOND NOMINEE
THOMAS R. DENISON, 41, is a Managing Director and General Counsel of First
Reserve Corporation where he has served since January, 1998. He was a partner in
the international law firm of Gibson, Dunn & Crutcher LLP from January 1995 to
December, 1997. Mr. Denison received a B.S. degree in Business Administration
from the University of Denver and a J.D. from the University of Virginia. He
currently serves on the Board of Directors of T3 Energy Services, Inc., a
Houston based manufacturing company.
SUPERVISORY DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 2003:
GERALD M. GLENN, 59, 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, 51, 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
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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, Transmoutaigne Inc., T3 Energy Services Inc.
and Dresser, Inc. 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, 64, has served as a Supervisory Director of the Company
since April, 1997. He has served since April, 2000 as Chief Operating Officer of
Washington Group International, which filed a petition under Chapter 11 of the
U.S. Bankruptcy Code on May 14, 2001. Since 1992 he 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.
SUPERVISORY DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 2004:
JERRY H. BALLENGEE, 64, has served as a Supervisory Director of the Company
since April, 1997. Since October, 2001 he has served as Chairman of the Board of
Morris Material Handling Company (MMH). Mr. Ballengee served as President and
Chief Operating Officer of Union Camp Corporation from July, 1994 to May, 1999
and served in various other executive capacities and as a member of the Board of
Directors of Union Camp Corporation from 1988 until 1999 when the company was
acquired by International Paper Company. He is Chairman of the Supervisory
Board's Nominating Committee and a member of the Corporate Governance Committee.
L. DONALD SIMPSON, 66, 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.
MICHAEL D. WINFIELD, 63, has served as a Supervisory Director of the
Company since January, 2001. He has been a member of the Board of Managers of
UOP L.L.C., a general partnership of Honeywell International 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 and Metallurg, Inc. (a firm
providing specialty metals, alloys and chemicals to the steel industry) since
2001. 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.
COMMITTEES OF THE SUPERVISORY BOARD
The Organization and Compensation Committee, which held three meetings in
2001, reviews and makes recommendations concerning compensation philosophy and
guidelines for our executive and managerial group; reviews compensation and
benefit programs for our employees and our 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.
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The Nominating Committee, which held two meetings in 2001, 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, and set forth the
name, age, business and residential address, principal occupation, number of
shares 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 2001, 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 three meetings in 2001, is charged with
reviewing the adequacy and effectiveness of our internal auditing, accounting
and financial controls, and coordinating the annual internal audit plan with the
auditing plan of the independent public accountants. The Committee receives
reports from our Internal Audit Department; reviews the annual report to
shareholders and the financial statements contained therein; reviews the results
of the audit performed by our 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 compliance by us and our subsidiaries with the laws of the various
jurisdictions in which we and our 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 our
audited financial statements for the fiscal year ended December 31, 2001:
The Supervisory Board of Directors has adopted for the Audit Committee a
written charter.
We have reviewed and discussed with management the Company's audited
financial statements as of and for the year ended December 31, 2001.
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 2001, the Company incurred the following fees for services rendered by
Arthur Andersen LLP:
Audit Fees: The Company incurred $768,000 in fees for audit services
rendered by Arthur Andersen LLP in connection with the Company's annual and
quarterly financial statements for 2001.
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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 2001.
All Other Fees: The company incurred $1,513,000 in fees for services
rendered by Arthur Andersen LLP during 2001 other than audit and financial
information, systems design and implementation services.
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, 2001.
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 four meetings in 2001 and a special committee of
the Supervisory Board held one meeting. 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 (other than management of the Company) 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 32.4%
c/o First Reserve Corporation
475 Steamboat Road
Greenwich, CT 06830
WEDGE Group Incorporated(2)................................. 3,852,764 18.3%
WEDGE International Tower
1415 Louisiana Street
Houston, TX 77002
Wellington Management Company(3)............................ 1,112,600 5.3%
75 State Street
Boston, MA 02109
---------------
(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; Ben A. Guill is the President and a Managing Director; John A. Hill
is Vice Chairman and a Managing Director; Thomas R. Denison is General
Counsel, Secretary and a Managing Director; J. W. G. Will Honeybourne is a
Managing Director; and Jennifer G. Kornfield is Vice President, Treasurer
and Chief Financial Officer. Messrs. Macaulay, Guill and Hill are the
directors of First Reserve Corporation. It is anticipated that pursuant to
authority from First Reserve Corporation's
7
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 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.
(3) According to a Schedule 13G filed February 14, 2002 by Wellington Management
Company, LLP, it had shared power to vote and dispose of 1,112,600 shares.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
On December 28, 2000, we acquired the entire ownership interest of
Howe-Baker International, L.L.C. from WEDGE Group Incorporated ("WEDGE") for a
consideration of 8,146,665 shares, $28 million in cash and the assumption of
certain liabilities (the "HBI Transaction"). Immediately following the HBI
Transaction, First Reserve Fund VIII, L.P. ("First Reserve") acquired from WEDGE
4,323,333 shares. Subsequently, First Reserve acquired from WEDGE 530,000
shares.
On February 7, 2001, we 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 shares and $40 million in cash (the "PDM
Transaction"). The source of funds for the cash portion of the purchase price
was a private sale of 837,692 shares to Farinvest, Ltd., an affiliate of WEDGE,
and 1,623,846 shares to First Reserve. First Reserve also acquired a warrant to
purchase, at nominal value, 251,598 shares and a warrant to purchase 250,000
shares (subject to decrease depending on the number of shares repurchased by the
Company prior to June 30, 2001), both of which warrants have subsequently been
exercised.
Mr. Guill, Supervisory Director, is President of First Reserve; Mr. Banham,
is a nominee proposed by First Reserve to be appointed as Supervisory Director;
Mr. Denison, nominee proposed by First Reserve for Supervisory Director, is a
Managing Director of First Reserve; Mr. White, Supervisory Director, is
President and Chief Executive Officer of WEDGE; Mr. Tidwell, nominee proposed by
WEDGE for Supervisory Director, is Chief Financial Officer of WEDGE; and Mr.
Winfield, Supervisory Director, was a nominee of WEDGE who will continue in
office as a Supervisory Director.
SHAREHOLDER AGREEMENTS
We are party to separate Shareholder Agreements: (i) Shareholder Agreement
dated as of December 28, 2000 (as amended by an Amendment thereto dated as of
February 7, 2001) among First Reserve, CB&I, and certain of our shareholders
(the "First Reserve Shareholder Agreement") and (ii) Shareholder Agreement dated
as of December 28, 2000 (as amended by an Amendment thereto dated as of February
7, 2001) among WEDGE, CB&I, and certain of our shareholders (the "WEDGE
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
8
connection with the PDM acquisition transaction in the same proportion as the
votes of our 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 (to be
replaced by Mr. Banham at the Annual Meeting) 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 of 1934 (the "Exchange Act"), (ii) any person or group
who would own more than 10% of our voting securities, or (iii) a competitor of
ours. 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 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 acquisition transaction in the same proportion as the votes of our
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 and the
right to designate one Supervisory Director as long as it owns at least 10% 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 Exchange Act, (ii) any person or
group who would own more than 10% of our voting securities, or (iii) a
competitor of ours. 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.
Each of First Reserve and WEDGE has made representations and warranties to
the Company in its Shareholder Agreement that it has no arrangement, contract,
understanding or relationship with the other with respect to voting power or
investment power relating to the Common Stock.
In the event of a breach by First Reserve or WEDGE of any "standstill" or
other provision in its 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.
9
SECURITY OWNERSHIP OF OUR MANAGEMENT
The following table sets forth certain information regarding Common Stock
beneficially owned on March 1, 2002 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................................. 90,678 194,494 634,364 4.5%
Stephen P. Crain................................ 23,600 28,761 2,330 *
Richard E. Goodrich............................. 7,686 9,625 1,500 *
Timothy J. Moran................................ 3,446 6,450 3,750 *
Robert B. Jordan................................ 68,549 41,000 9,520 *
Samuel C. Leventry.............................. 4,856 5,400 *
David P. Bordages............................... *
Robert H. Wolfe................................. 29,347 34,294 1,470 *
Jerry H. Ballengee.............................. 3,986 5,500 *
J. Dennis Bonney................................ 10,000 5,500 *
Ben A. Guill.................................... 2,000 *
J. Charles Jennett.............................. 2,000 5,500 *
Vincent L. Kontny............................... 1,000 5,500 *
Thomas R. Denison............................... *
Gary L. Neale................................... 1,000 5,500 *
L. Donald Simpson............................... 1,000 5,500 *
William H. White................................ 161,406 2,000 *
Marsha C. Williams.............................. 2,000 5,500 *
Michael D. Winfield............................. 2,000 *
Anthony P. Banham............................... *
James M. Tidwell................................ *
William E. Macaulay............................. 2,000 *
All directors, nominees for directors and
executive officers as a group (25 in
number)....................................... 440,212 487,278 668,154 7.6%
---------------
* Beneficially owns less than one percent of the Common Stock.
(1) Includes shares held by immediate family members.
(2) Includes shares that can be acquired through stock options exercised through
May 10, 2002, but excludes presently exercisable stock options under the
Company's Stock Purchase Plan which have been exercised pursuant to that
Plan on April 1, 2002.
(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 case of Mr. Glenn, 621,338
shares as to which he has fully vested rights to future delivery of the
shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Supervisory Directors,
executive officers and persons who own more than 10% of the Common Stock to file
initial reports of ownership and reports of changes in ownership 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 our knowledge, based solely on our review of the copies of such reports
received by us and on written representations by certain reporting persons that
no reports on Form 5 were required, we believe that during the fiscal year ended
December 31, 2001, our Supervisory Directors, executive officers and 10%
shareholders complied with all Section 16(a) filing requirements applicable to
them, except that Messrs. White and Winfield did not report in a timely fashion
on Form 5 certain transactions during 2001.
10
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) ($)(3) (# SHARES) ($) ($)(4)
--------------------------- ---- ------- ------- ------------ ---------- ---------- ------- ------------
Gerald M. Glenn................. 2001 500,000 450,000 102,800 204,490 6,760 292,829 57,830
Chairman of the Supervisory 2000 475,000 0 -- -- 263,743 386,165 66,000
Board; President, Chief
Executive 1999 441,000 350,000 -- 671,875 51,200 258,935 83,157
Officer and Chairman of
Chicago Bridge & Iron Company;
and Managing Director of
Chicago Bridge & Iron Company
B.V.
Stephen P. Crain................ 2001 238,924 130,000 84,200 64,450 1,480 65,833 20,561
President -- Western
Hemisphere 2000 225,000 0 -- -- 79,413 84,545 26,000
Operations of Chicago 1999 185,000 100,000 38,135 -- 10,600 53,625 22,633
Bridge & Iron Company and
Managing Director of Chicago
Bridge & Iron Company B.V.
Robert B. Jordan................ 2001 330,749 200,000 84,000 90,450 5,220 117,813 28,877
Executive Vice President and 2000 315,000 0 -- -- 118,589 155,380 38,000
Chief Operating Officer of 1999 300,000 160,000 46,923 -- 23,000 104,181 35,200
Chicago Bridge & Iron Company;
and Managing Director of
Chicago Bridge & Iron Company
B.V.
Richard E. Goodrich............. 2001 197,307 122,765 63,718 -- 346 15,594 21,563
Executive Vice President and 2000 168,846 59,500 -- -- 3,200 23,250 18,662
Chief Financial Officer of 1999 158,308 54,310 -- -- 3,200 19,125 17,845
Chicago Bridge & Iron Company;
and Managing Director of
Chicago Bridge & Iron Company
B.V.
Robert H. Wolfe................. 2001 208,844 73,109 -- 40,660 1,120 48,523 17,736
Secretary of the Company; 2000 202,800 0 -- -- 67,272 63,980 21,684
Vice President, General
Counsel 1999 195,000 68,250 -- -- 8,600 42,900 22,021
and Secretary of Chicago
Bridge & Iron Company; and
Secretary of Chicago Bridge &
Iron Company B.V.
---------------
(1) Bonus amounts include payments under the Incentive Plans (See "Organization
and Compensation Committee Report on Executive Compensation").
(2) Amounts reported are personal benefits and include club dues as follows:
Gerald M. Glenn $96,000; Stephen P. Crain $79,000; Robert B. Jordan $81,500;
and Richard E. Goodrich $21,400. 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.
(3) 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 in 2001 vest in three equal
annual installments starting in February, 2002. The number and value of the
aggregate restricted
11
share holdings at the end of the last completed fiscal year, based on the
NYSE composite closing price of $26.70/share on December 31, 2001, for each
named executive officer who held such shares are: Gerald M. Glenn, 63,026,
$1,682,942; Stephen P. Crain, 3,697, $98,710; Robert B. Jordan, 10,887,
$290,683; Richard E. Goodrich, 1,800, $48,060; and Robert H. Wolfe, 2,403,
$64,160.
(4) The compensation reported for 2001 represents (a) contributions pursuant to
the Chicago Bridge & Iron Savings Plan (the "401(k) Plan") allocated to the
executive officer's account, (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") and (c)
dividends paid on restricted stock units. For 2001, those three amounts,
expressed in the same order identified above, for each named executive
officer are as follows: Gerald M. Glenn $13,600, $26,400, $17,830; Stephen
P. Crain $13,600, $5,514, $1,447; Robert B. Jordan $13,600, $12,860, $2,417;
Richard E. Goodrich $13,600, $6,945, $1,018; Robert H. Wolfe $13,600,
$3,111, $1,025. The compensation reported for 1999 includes values of shares
reallocated to each named executive officer resulting from forfeitures of
other Participants in the Management Plan (as described below).
MANAGEMENT PLAN
At the time of the initial public offering of the Common Stock by Praxair
in March, 1997 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 Mr. Glenn and one participant on March 27, 2000.
Distribution of benefits to Mr. Glenn is generally scheduled to occur on the
earlier of termination of employment, April 1, 2004 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.
12
OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables summarize option grants and exercises pursuant to the
Incentive Plans during the fiscal year 2001 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 2001.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
GRANT VALUE
INDIVIDUAL GRANTS DATE
---------------------------------------------------------------------------------------------- ------------
(A) (B) (D) (E) (F)
NUMBER OF (C)
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/SARS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME (# SHARES)(1) FISCAL YEAR ($/SHARE) DATE VALUE ($)(2)
---- ------------- ------------ ----------- ---------- ------------
Gerald M. Glenn...................... 6,760 5.4% 22.85 2/13/11 62,665
Stephen P. Crain..................... 1,480 1.2% 22.85 2/13/11 13,720
Robert B. Jordan..................... 2,720 2.2% 22.85 2/13/11 25,214
Robert B. Jordan..................... 2,500 2.0% 25.93 9/10/11 27,350
Richard E. Goodrich.................. 346 0.3% 22.85 2/13/11 3,207
Robert H. Wolfe...................... 1,120 0.9% 22.85 2/13/11 10,382
---------------
(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 13, 2011 vest on February 13, 2008, but may
vest on February 13, 2004 if the holder has held continuously until such
date certain shares of stock awarded as performance shares. The options
which expire September 10, 2011 vest on September 10, 2008 but may vest
September 10, 2004 if the holder has held continuously until such date
certain shares of stock granted as restricted stock but for which the
restrictions have lapsed.
(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 $22.85, and $25.93 for the February
13, and September 10 grants, respectively, equal to the fair market
value of the underlying stock on the date of grant.
An option term of ten years on all grants.
Interest rates of 5.10 and 4.73 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 42.87 and 46.06 percent calculated using daily stock
prices for the three-year period prior to the grant dates.
Dividends at the rate of $0.24 per share representing the annualized
dividends paid with respect to a share at the dates of each option
grant.
Reductions of approximately 11.53 percent for the February 13 and
September 10 grants to reflect the probability of forfeiture due to
termination prior to vesting, and approximately 13.48, and 13.76 percent
for the February 10, and September 10 grants, respectively, to reflect
the probability of a shortened option term due to termination of
employment prior to the option expiration date.
The ultimate values of the options will depend on the future market price
of the Company's stock, which cannot be forecast with reasonable accuracy.
The actual value, if any, an optionee will realize upon exercise of an
option will depend on the excess of the market value of the Company's
Common Stock over the exercise price on the date the option is exercised.
13
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
(A) (B) (C) (D) (E)
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FY-END (#) FY-END ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE(1)
---- ------------ ------------ --------------- -------------------
Gerald M. Glenn..................... 0 NA 76,800/388,197 1,005,760/3,891,806
Stephen P. Crain.................... 0 NA 16,325/ 92,479 212,771/ 944,038
Robert B. Jordan.................... 0 NA 30,750/186,559 402,697/1,988,572
Richard E. Goodrich................. 0 NA 3,750/ 42,708 49,038/ 429,751
Robert H. Wolfe..................... 0 NA 12,900/ 89,786 168,936/ 901,176
---------------
(1) Value is based on the NYSE composite closing price of $26.70 per share on
December 31, 2001.
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 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 2001. 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
On September 7, 2000 the Organization and Compensation Committee authorized
the Company to enter into change of control severance agreements with Messrs.
Crain, Jordan, and Wolfe and a change of control severance agreement on similar
terms with Mr. Glenn. Each agreement provides that upon the executive's
14
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 known 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 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 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, Goodrich and Wolfe to serve
the Company as President and Chief Executive Officer,
15
Vice President -- Operations, Vice President, 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.
Goodrich's base salary was $150,000 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 2,000 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.
CERTAIN TRANSACTIONS
Several of our executive officers are indebted to the Company pursuant to
Senior Executive Relocation Loan Agreements in connection with our move to The
Woodlands as follows:
LARGEST AMOUNT AMOUNT
OUTSTANDING SINCE OUTSTANDING AS
NAME POSITION JANUARY 1, 2001 OF MARCH 1, 2002 INTEREST RATE
---- -------- ----------------- ---------------- -------------
Gerald M. Glenn........ President, Chief $1,328,000 $1,328,000 0%
Executive Officer &
Chairman
Stephen P. Crain....... President -- Western $ 325,512 $ 325,512 0%
Hemisphere Operations
Robert B. Jordan....... Executive Vice President $ 700,000 $ 700,000 0%
& Chief Operating
Officer
Robert H. Wolfe........ Vice President, General $ 330,900 $ 330,900 0%
Counsel & Secretary
16
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 2001
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 its
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 we 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 our financial performance. Our
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
2001, 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 that comprise the peer group index
in the Performance Graph included in this Proxy Statement. Considering the
factors described above, the Committee believes that the Company's most direct
competitors for executive talent are not necessarily all of the companies that
would be included in a peer group established for comparing shareholder returns.
---------------
1 The relevant SEC rule, Item 402(j) of Regulation S-K does not define the term
"interlocking relationship."
17
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 2001 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 2001, Mr. Glenn received an increase in his rate of base salary to
$500,000 per year, or an increase of 5.23% from his 2000 base rate of $475,000
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 $500,000 as reflected in the Summary Compensation Table.
ANNUAL INCENTIVES
The Company adopted an Incentive Compensation Plan (the "Bonus Plan") that
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 are 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 2001, 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 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
18
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 2001, Mr. Glenn and the Company's other executive officers
received bonus payments pursuant to the Bonus Plan. Mr. Glenn received a bonus
payment of $450,000. Mr. Glenn's bonus payment was above his target bonus and
reflects the achievement of the corporate financial goal for 2001. In 2001, Mr.
Glenn's annual bonus payment represented 90% of his base salary as reflected in
the Summary Table, and depending on achievement of the respective goals under
the Bonus Plan, could have ranged from 0% to 150% of his base salary. Mr.
Glenn's bonus is competitive with the 50th percentile of annual incentive
compensation paid to other executives at comparator companies for 2001. The
amount of Mr. Glenn's bonus was determined by the committee based on a
combination of the degree of achievement of the corporate goals, as applied to
all Bonus Plan participants, and the achievement of individual goals set for Mr.
Glenn in areas including but not limited to leadership, initiatives for new
business development, integration of acquired businesses, management development
of the other Company executives, and development and execution of strategic
initiatives.
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
traditionally have comprised 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"). In 1999, the Company adopted and the
shareholders approved a new Incentive Plan. In 2000, the Company adopted and the
shareholders approved an amendment to the Incentive Plan. When awarding long-
term incentives, the Committee considers executives' levels of responsibility,
prior experience, historical award data, various performance criteria, and
compensation practices at comparator companies. The long-term incentives awarded
in 2001 were nonqualified stock options and restricted stock.
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 connection with the Company's acquisition of Howe-Baker
International L.L.C. (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, based on providing options for each
senior executive having a modified Black-Scholes value that was approximately
equivalent to the dollar value of long-term incentive awards which the executive
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).
In light of this single-one time grant of options in 2000, no options were
awarded to executive officers in 2001 other than "retention options" granted
upon the vesting of previously awarded performance shares or restricted stock.
Retention options cover 40% of the shares that vest under such awards. The
retention options become vested and 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.
Restricted stock represents the right of the participant to vest in a share
of Common Stock upon lapse of restrictions, and upon conditions both set by the
Committee. Restricted stock is awarded as an incentive for retention and
performance of both newly hired and continuing key managers. Such awards are
subject to forfeiture during the period of restrictions prior to vesting, but
participants are paid cash amounts corresponding
19
to the amount of actual dividends paid on outstanding shares of Common Stock.
Restricted stock becomes unrestricted upon vesting. In 2001, the Committee made
an award of restricted stock to certain executive officers, in light of their
accomplishment of the Company's strategic acquisition objectives in 2000 and
2001. These awards will vest at a rate of 33 1/3% of the share units awarded on
each of the first three anniversaries of the date of award.
In 2001, Mr. Glenn was granted retention options to purchase 6,760 shares
with an exercise price of $22.85. Mr. Glenn also was granted 7,393 shares of
restricted stock, as described above, and, in recognition of the accomplishment
of the Company's strategic goals in 2000 and 2001. Taking into account a portion
of the value of the single one-time award of stock options in 2000, the
Committee believes the size and estimated value of the foregoing grants and
awards is slightly above the median of comparator companies.
Mr. Glenn currently owns or has beneficial ownership of 725,042 shares of
the Common Stock. 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. 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.
In light of the move of the Company's administrative headquarters from
Plainfield, Illinois to The Woodlands, Texas, the Committee also considered
relocation assistance for executive officers. The Committee in 2001 authorized
the Company to make interest-free loans to certain executives pursuant to
Section 7872(h)(1)(C) of the Internal Revenue Code of 1986 (the "Code") and
regulations thereunder to offset the disruption of changing their residence. The
loan agreement with Mr. Glenn provides for an interest-free loan secured by his
new residence in an amount of up to $3,000,000, payable, without amortization,
in a lump sum within three years, or upon termination of his employment with the
Company, if earlier; subject to forgiveness upon his death or disability while
an employee.
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 that 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 2001 and earlier years was deductible, primarily
because the aggregate amount of such compensation for each executive officer was
below the $1,000,000 threshold under Section 162(m). The Company's Bonus Plan
and 1999 Long-Term Incentive Plan were designed in a form that payments under
such plans would qualify as deductible performance-based compensation. Certain
compensation pursuant to prior plans in 2001 and in future years 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.
20
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
21
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 we specifically incorporate 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. We 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)
[COMPARISON OF TOTAL RETURNS GRAPH]
---------------------------------------------------------------------------------------------------------------------
03/27/97 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
---------------------------------------------------------------------------------------------------------------------
Chicago Bridge & Iron
Company N.V. $100.00 $ 91.14 $ 65.69 $ 80.06 $105.99 $159.25
Peer Group Index 100.00 81.73 96.32 102.09 117.63 122.60
Russell 2000 Index 100.00 129.01 125.40 149.96 143.49 144.95
22
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, 2001 (the "Annual Accounts"), as required under Dutch law and
the Articles of Association.
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 our 2001 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, 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 our Annual Report on Form 10-K and
other information required by Dutch law.
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
DISCHARGE OF THE MEMBERS OF THE MANAGEMENT BOARD
AND THE SUPERVISORY BOARD FROM LIABILITY
Under Dutch law, the Annual Meeting may discharge the members of the
Management Board and the Supervisory Board from liability in respect of the
exercise of their managing and supervisory duties during the financial year
concerned. The discharge is without prejudice to the provisions of the law of
The Netherlands relating to liability upon bankruptcy and does not extend to
matters not disclosed to shareholders.
It is proposed that the shareholders resolve to discharge the Management
Board and the Supervisory Board from liability in respect of the exercise of
their managing and supervisory duties for 2001.
The affirmative vote of a majority of the votes cast at the Annual Meeting
is required to so discharge the Management Board and the Supervisory Board.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" SUCH
DISCHARGE OF THE MANAGEMENT BOARD AND SUPERVISORY BOARD FROM LIABILITY FOR 2001,
AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS
ARE INDICATED THEREIN.
ITEM 4
DISTRIBUTION FROM PROFITS
The Articles of Association provide that the general meeting of
shareholders may, with certain restrictions, resolve to make distributions from
profits. As permitted under the Articles of Association, interim dividends were
paid in 2001 on March 30, June 29, September 28 and December 31 ("interim
dividends").
It is proposed that the shareholders resolve to make a distribution of 2001
profits in the amount of $0.24 per share, previously paid as interim dividends,
and transfer the balance of the profits to retained earnings.
23
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 5
EXTENSION OF AUTHORITY OF MANAGEMENT BOARD TO REPURCHASE UP TO 30%
OF OUR ISSUED SHARE CAPITAL UNTIL NOVEMBER 10, 2003
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 us to have the
flexibility to repurchase our 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 2001 Annual Meeting,
the general meeting of shareholders authorized the Management Board to
repurchase up to 30% of our issued share capital on behalf of the Company in
open market purchases, through privately negotiated transactions, 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, 2002, we had repurchased 566,600
shares under this authority. Such authority expires on November 10, 2002.
The Management Board believes that the Company would benefit by extending
and expanding the authority of the Management Board to repurchase shares in our
share capital. For example, to the extent the Management Board believes that our
shares may be undervalued at the market levels at which it is then trading,
repurchases of our 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 6 below, could be used for any valid corporate
purpose, including use under our compensation plans, sale in connection with the
exercise of outstanding options, or for acquisitions, mergers or similar
transactions. The reduction in our issued capital resulting from any such
purchases (assuming such repurchased shares are subsequently canceled) will
increase the proportionate interest of the remaining shareholders in our net
worth and whatever further profits we 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, our 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 us 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 six
million shares) in the open market, through privately negotiated transactions,
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 Annual Meeting until November 10, 2003.
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, 2003 to repurchase up to 30% of our issued share
capital on behalf of the Company in the open market, through privately
negotiated transactions, 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 OUR
SHARE CAPITAL, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS
CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
24
ITEM 6
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 5 above which would be in excess of 10% (and up to 30%) of the
then issued share capital, we 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.
Prospective cancellation of shares shall occur if and when the Company
holds in excess of 9% of its then issued share capital, at which time we will
cancel all or a portion of such shares, as determined by the Management Board.
We propose 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 us will not exceed 20% of the current issued share
capital, or a total of approximately 4,200,000 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, our shareholder register
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 7
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
The Supervisory Board proposes that certain amendments be made to our
Articles of Association. The full text of the unofficial English translation of
such proposed amendments is attached as Annex A to this Proxy Statement and is
incorporated herein by reference. Shareholders are urged to read the full text
of the proposed amendments in Annex A for additional information not contained
in the summary set forth below.
The provisions of the proposed amendments are designed to accomplish the
following:
1. Remove references to and requirements of Euronext Amsterdam N.V.,
including a conversion of outstanding bearer shares and removal of
references to bearer shares, since the Company is no longer listed on
Euronext Amsterdam N.V. (Amendment I-VIII, XIII-XV and XVIII)
("Amendment No. 1");
2. Provide for authorization of the Management Board for the setting of
record dates under Dutch law (Amendments XI and XII) ("Amendment No.
2");
25
3. Provide that the general meeting of shareholders discharges managing
directors and supervisory directors for their duties performed during
the preceding financial year by separate agenda item (Amendments IX and
X) ("Amendment No. 3"); and
4.Provide that the authorized capital be increased from Euro 350,000
(35,000,000 shares) to Euro 800,000 (80,000,000) shares (Amendment I)
("Amendment No. 4").
It is further proposed to authorize each managing director and each
supervisory director as well as any and all lawyers and paralegals practising
with any law firm appointed by the Management Board including, but not limited
to, De Brauw Blackstone Westbroek, to draw up the appropriate notarial deed of
amendment and to apply for the required ministerial declaration of no-objection
on the draft of the notarial deed referred to, to amend such draft as may appear
necessary to obtain such declaration of no-objection or as may be advised by the
Ministry of Justice, as well as to execute the notarial deed of amendment of the
Articles of Association.
The purpose of Amendment No. 1 is to simplify the Articles of Association
by removing provisions required because we were listed on Euronext Amsterdam
N.V. These include references to Euronext Amsterdam N.V., the requirement that
we allow shares to be held in bearer form and references to bearer shares in
provisions regarding meeting rights, admittance and deposition of documents.
The purpose of Amendment No. 2 is to authorize the Management Board to
establish a record date pursuant to Article 2:119 of the Dutch Civil Code as
amended December 15, 1999 (the "Amendment"). Prior to the Amendment, only
persons who were shareholders at the time of the shareholders meeting were
entitled to vote or attend. Under the Amendment, the general meeting of
shareholders can authorize the Management Board for a period of up to five years
to establish that, at a certain point in time (a record date) any person who is
a shareholder will be entitled to vote or attend the meeting. The ultimate date
may not be earlier than the seventh day prior to the day of the meeting. Instead
of authorizing the Management Board by resolution at general meetings of
shareholders, the Articles of Association can be amended to permit the
Management Board to establish a record date. By adopting this amendment, our
burden in tabulating votes at general meetings will be eased and the need for
the general meeting to consider this matter each year will be eliminated.
The purpose of Amendment No. 3 is to bring our Articles in compliance with
Dutch law. Under Article 29(3) of the Articles of Association, the unconditional
adoption of the annual accounts by the general meeting of shareholders
constitutes a discharge of the Management Board members for their management and
for the Supervisory Board members for their supervision insofar as such
management and supervision are apparent from the annual accounts. Pursuant to a
recent amendment of the Dutch Civil Code, adoption of the annual accounts may no
longer automatically discharge the managing directors or Supervisory Directors
and must be granted specifically by the General Meeting as a separate item. In
practice, we have regarded this as a separate item already.
The purpose of Amendment No. 4 is to increase the authorized capital from
Euro 350,000 (35,000,000 shares) to Euro 800,000 (80,000,000 shares.) As of
April 2, 2002, there were 21,054,371 shares outstanding. Approximately 2,000,000
shares are reserved for our employee stock plans. We believe that additional
shares may be required for our future growth and for acquisitions. The
additional shares will provide us with greater flexibility by allowing our
Supervisory Board to act quickly with respect to investment or acquisition
opportunities without the expense and delay involved in extraordinary meetings
of shareholders to authorize additional shares which may be issued in connection
with such investment or acquisition. It is noted that the increase of the
authorized share capital does not create an obligation to issue shares and that
the shares may also be used for other corporate purposes, including issuance in
connection with employee stock plans. (For a discussion of the Supervisory
Board's authority to issue shares, see Item 8 below and for a discussion of
preemptive rights held by shareholders, see Item 9 below.)
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 as
described above and as set forth in Annex A.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO AMEND THE ARTICLES OF ASSOCIATION AS DESCRIBED ABOVE AND AS
26
SET FORTH IN ANNEX A, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS
CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 8
EXTENSION OF AUTHORITY OF SUPERVISORY BOARD
TO ISSUE SHARES UNTIL MAY 10, 2007
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, 2007. A designation may be
effective for up to five years and may be renewed on an annual rolling basis. At
the 2001 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 10, 2006. (For a
discussion of preemptive rights held by shareholders, see Item 9 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, 2007.
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, 2007, AND PROXIES EXECUTED AND
RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 9
EXTENSION OF AUTHORITY OF SUPERVISORY BOARD TO LIMIT OR
EXCLUDE PREEMPTIVE RIGHTS UNTIL MAY 10, 2007
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 above under Item 8. At the 2001 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 10, 2006.
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, 2007.
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, 2007.
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, 2007, AND PROXIES EXECUTED AND RETURNED
WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
27
ITEM 10
LEAVE TO THE SUPERVISORY BOARD THE AUTHORITY TO
APPOINT OUR INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen has acted as the Company's (and its predecessors')
independent public accountants since 1939. Normally, the Supervisory Board would
have asked the Annual Meeting to appoint Arthur Andersen as the Company's
independent public accountants for 2002. The Supervisory Board believes that the
Andersen partners and team members assigned to us are of the highest quality.
However, after reviewing the present circumstances and considering all relevant
facts surrounding Arthur Andersen's involvement in the Enron Corporation matter,
the Supervisory Board has decided that it would be premature this year to ask
the Annual Meeting to appoint Arthur Andersen as our independent public
accountants. Under Article 27 of the Articles of Association and Dutch law, the
shareholders may leave to the Supervisory Board to appoint this year's
independent public accountants by not exercising any appointment rights. The
Supervisory Board recommends that the Annual Meeting leave it to the Supervisory
Board to appoint our independent public accountants. This will allow the
Supervisory Board to continue its review of developing circumstances and allow
it to make changes, if necessary, without the delay and costs incumbent in
holding an extraordinary shareholder meeting. 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 respond to appropriate questions. In
addition, pursuant to our policy, representatives of Arthur Andersen or any
successor auditor, are required to attend all of our Audit Committee meetings.
The proposal to leave the appointment to the Supervisory Board this year does
not mean we will not propose to the Annual Meeting of 2003 to appoint our
independent public accountants.
The affirmative vote of a majority of the votes cast at the Annual Meeting
is required to leave to our Supervisory Board the authority to appoint our
independent public accountants.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" LEAVING IT TO
OUR SUPERVISORY BOARD TO APPOINT OUR INDEPENDENT PUBLIC ACCOUNTANTS, AND PROXIES
EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE
INDICATED THEREON.
SHAREHOLDER PROPOSALS
Any proposal of a shareholder intended to be presented at the 2003 Annual
Meeting of Shareholders must be received at our principal executive offices no
later than December 10, 2002, if the proposal is to be considered for inclusion
in our proxy statement relating to such meeting, without prejudice to
shareholder rights to cause a general meeting of shareholders to be convened
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 9, 2002
28
ANNEX A
UNOFFICIAL TRANSLATION OF THE DEED OF
AMENDMENT OF THE ARTICLES OF ASSOCIATION
CHICAGO BRIDGE & IRON COMPANY N.V.
On this day, the ** day of ** two thousand and two appears before me, **,
notaris (civil-law notary) practising in Amsterdam: **.
The person appearing declares that on the tenth day of May two thousand and
two the general meeting of shareholders of Chicago Bridge & Iron Company N.V., a
limited liability company, with corporate seat in Amsterdam, the Netherlands and
address at: 2132 JH Hoofddorp, the Netherlands, Polarisavenue 31, resolved to
amend the articles of association of this company and to authorise the person
appearing to execute this deed.
Pursuant to those resolutions the person appearing declares that he / she
amends the company's articles of association as follows:
I. ARTICLE 4, INCLUDING THE BOLD PRINTED AND UNDERLINED HEADING, SHALL BE
AMENDED and shall read as follows:
CHAPTER III.
CAPITAL AND SHARES. REGISTER
ARTICLE 4. AUTHORIZED CAPITAL.
1. The authorized share capital amounts to eight hundred thousand euro (EUR
800,000).
2. The authorized share capital is divided into eighty million (80,000,000)
shares of one eurocent (EUR 0.01) each.
3. All shares are in registered form.
II. ARTICLE 5, PARAGRAPH 1 SHALL BE AMENDED and shall read as follows:
1. At the discretion of the management board or at the request of a
shareholder share certificates may be issued for shares.
III. ARTICLES 5.A. AND 5.B. SHALL LAPSE.
IV. ARTICLES 5.C. AND 5.D. SHALL BE RENUMBERED into articles 5.A. and 5.B.
respectively.
V. THE FIRST SENTENCE OF ARTICLE 5.A., PARAGRAPH 1 (NEW) SHALL BE AMENDED and
shall read as follows:
In the event of the loss, theft or destruction of share certificates, the
management board can issue duplicates.
VI. THE FIRST AND SECOND PARAGRAPH OF ARTICLE 5.B. (NEW) SHALL BE AMENDED and
shall read as follows:
1. The management board shall keep a register containing the names and
addresses of all shareholders.
2. Every holder of one or more shares and any person having a life interest
or a right of pledge over one or more shares shall be obliged to provide
the company in writing with their name and address.
VII. THE FIRST SENTENCE OF ARTICLE 10, PARAGRAPH 2 SHALL BE AMENDED and shall
read as follows:
If the transfer concerns a share for which a share certificate has been
issued, the corresponding share certificate must be delivered to the company or
its duly authorized representative.
VIII. ARTICLE 10, PARAGRAPH 3 SHALL BE AMENDED and shall read as follows:
1. The provisions of paragraph 2 of this article 10 shall equally apply to
the transfer of shares as a consequence of foreclosure of a right of
pledge.
IX. ARTICLE 29, PARAGRAPH 3 SHALL LAPSE.
29
X. ARTICLE 33, PARAGRAPH 2 SHALL BE AMENDED and shall read as follows:
2. The agenda for such meeting shall set forth, inter alia the following
points for discussion:
a. the annual report;
b. adoption of the annual accounts;
c. appropriation of profits;
d. discharge of supervisory directors and management directors;
e. filling of any vacancies in the management board and/or supervisory
board and if necessary the appointment of the accountants;
f. other proposals put forward for discussion and announced with due
observance of article 35 by the supervisory board, the management
board or by shareholders or beneficiaries of a life interest or
pledgees to whom the voting rights have been granted, representing, in
the aggregate, at least one-tenth of the issued capital.
XI. PARAGRAPHS 1 UP TO AND INCLUDING 8 OF ARTICLE 40 SHALL BE RENUMBERED into
paragraphs 4 up to and including 11.
XII. NEW PARAGRAPHS 1 UP TO AND INCLUDING 3 SHALL BE ADDED TO ARTICLE 40 and
shall read as follows:
1. The management board may determine that any person entitled per a
certain date, such date to be determined by the management board
(hereinafter: the "record date"), to attend the general meeting of
shareholders, may attend the general meeting of shareholders if (i) they
are as such registered in a register (or one or more parts thereof)
designated for that purpose by the management board, and (ii) at the
request of the applicant the holder of the register has notified the
company in writing prior to the general meeting that such applicant has
the intention to attend the general meeting of shareholders, regardless
of who will be applicant at the time of the general meeting of
shareholders. The notification will state the name and the number of
shares for which the applicant is entitled to attend the general
meeting. The provision under (ii) on the notification to the company
will also apply to a proxy authorized in writing by an applicant.
2. The record date referred to in paragraph 1 of this article and the date
on which the notification of the intention to attend the general meeting
of shareholders shall have been given at the latest, referred to in
paragraph 1 of this article, cannot be fixed earlier than at a time on
the seventh day, and not later than at a time on the third day, prior to
the date of the general meeting of shareholders. The convocation of the
general meeting of shareholders will include said times, the place of
the meeting, the proceedings for registration and/or notification and,
if share certificates have been issued, share certificates must be
lodged not later than on the date referred to in the convocation of the
meeting, at the place referred to in such convocation.
3. In case the management board does not exercise the power to set a record
date as referred to in paragraph 1 of this article, paragraphs 4, 5 and
6 of this article apply.
XIII. THE SECOND AND THIRD SENTENCE OF ARTICLE 40, PARAGRAPH 4 (NEW) SHALL BE
AMENDED and shall read as follows:
"The management board must be notified in writing of the intention to
attend the meeting and, if share certificates have been issued, share
certificates must be lodged not later than on the date referred to in the notice
of the meeting, at the place referred to in such notice. The notice of the
intention to attend the meeting must be received by the management board not
later than on the date referred to in the notice of the meeting."
XIV. THE LAST SENTENCE OF ARTICLE 40, PARAGRAPH 4 (NEW) SHALL LAPSE.
30
XV. ARTICLE 40, PARAGRAPHS 5 (NEW), 6 (NEW) AND 7 (NEW) SHALL BE AMENDED and
shall read as follows:
5. The right to take part in the meeting in accordance with paragraph 4 may
be exercised by a proxy authorised in writing, provided that the power
of attorney has been received by the management board not later than on
the date referred to in the notice of the meeting.
6. The date referred to in the notice of the meeting, referred to in
paragraphs 4 and 5 of this article, cannot be earlier than the seventh
day prior to the date of the meeting.
7. If the voting rights on a share accrue to the beneficiary of a life
interest or to a pledgee, instead of to the shareholder, the shareholder
is also authorized to attend the general meeting of shareholders and to
address the meeting, provided that the management board has been
notified of the intention to attend the meeting in accordance with
paragraph 1 of this article, and, where share certificates have been
issued, the lodging as prescribed by paragraph 4 of this article has
taken place. Paragraph 5 of this article applies accordingly.
XVI. THE SECOND SENTENCE OF ARTICLE 42, PARAGRAPH 1 SHALL LAPSE.
XVII. ARTICLE 43, PARAGRAPH 1 SHALL BE AMENDED and shall read as follows:
1. When a proposal to amend the articles of association or to dissolve the
company is to be submitted to the general meeting, such must be
mentioned in the notice of the general meeting of shareholders and, if
an amendment to the articles of association is to be discussed, a copy
of the proposal, setting forth the text of the proposed amendment
verbatim, shall at the same time be deposited for inspection at the
company's office, and shall be held available for shareholders as well
as for beneficiaries of a life interest and pledgees to whom the voting
rights on share accrue, free of charge until the end of the meeting.
XVIII. A TRANSITIONAL PROVISION SHALL BE ADDED, that shall read as follows:
ARTICLE 45. TRANSITIONAL PROVISION.
Each issued bearer share is hereby converted into one (1) registered share.
Holders of bearer shares cannot exercise the rights attached to their shares
until they have handed in their share certificate(s) to the company and are
registered in the register referred to in article 5.B. (new).
This article shall lapse and shall cease to be effective upon receipt by
the company of the share certificate(s) referred to in this article.
Finally, the person appearing declares that at the time of the execution of
this deed the issued share capital of the company amounts to ** euro (EUR **).
The required ministerial declaration of no-objection was granted on ** two
thousand and two, number N.V. **.
The ministerial declaration of no-objection and a document in evidence of
the resolutions, referred to in the head of this deed, are attached to this
deed.
In witness whereof the original of this deed, which will be retained by me,
notaris, is executed in Amsterdam, on the date first mentioned in the head of
this deed. Having conveyed the substance of the deed and given an explanation
thereto and following the statement of the person appearing that [he][she] has
taken note of the contents of the deed and agrees with the same, this deed is
signed, immediately after reading those parts of the deed which the law requires
to be read, by the person appearing, who is known to me, notaris, and by myself,
notaris, at .
31
GERALD M. GLENN
Chairman, President &
Chief Executive Officer
--------------------------------------------------------------------------------
CB&I . 10200 Grogan's Mill Road, Suite 300 . The Woodlands, TX 77380
March 22, 2002
Dear CB&I Shareholders and Investors:
Over the past several months, considerable public attention has been focused on
the fallout from the Enron failure. Two issues have emerged from that fallout
which have the potential to affect CB&I: (a) concerns about accounting
practices, and more broadly the basic integrity of the financial reporting of
some U.S. companies, and (b) the role of Arthur Anderson LLP, particularly given
the recent federal indictment, and ensuing concerns about Andersen's on-going
viability and its ability to continue serving its clients.
Regarding the first issue, I want to assure you that CB&I's financial,
accounting and reporting practices are above reproach and that you can rely on
their fairness and accuracy. CB&I does not and will not use off balance sheet
accounting tactics such as the special purpose entities you have by now heard so
much about. In addition, our ethics standards and conflict of interest rules are
strictly enforced - no exceptions.
You may be aware that Arthur Andersen has served as the Company's independent
public accountants for many years. The Andersen partners and team members who
are assigned to cover CB&I are, in our opinion, professionals of the highest
caliber. We have been satisfied with their performance over the years,
especially as they have helped guide us through our initial public offering and
then again with our recent acquisitions. In the absence of the current impact on
Andersen from the Enron situation, there would not have been any thought of
changing accountants.
Your Audit Committee has always taken its responsibilities very seriously, and
in the past few months their focus on this issue has intensified. Extended
committee meetings, an additional special meeting and numerous other
communications have dealt with all aspects of this subject. As of today, the
Andersen team assigned to cover CB&I is intact and functioning, and appears to
be fully capable of fulfilling the Company's requirements for at least the near
term.
However, while we will continue to maintain prudent vigilance on the developing
circumstances of this situation, we have also begun a pragmatic analysis of
alternatives. We will be prepared to effect a change in independent public
accountants should that step become necessary.
Thank you for your continued support of CB&I.
/s/ GERALD M. GLENN
-------------------
Gerald M. Glenn
Chairman, President & Chief Executive Officer
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 3,2002)
The undersigned registered holder of Shares of New York Registry (each
representing one Common Share of EUR 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, 2002
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 undersigned on the books of the New York Transfer Agent and
Registrar as of the close of business on April 2, 2002, at such Meeting in
respect of the resolutions specified on the reverse side hereof.
NOTE: 1. 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.
2. IF NO INSTRUCTIONS ARE GIVEN ON THIS VOTING INSTRUCTION CARD, THEN
THE SHARES WILL BE VOTED FOR MESSRS. JENNETT, NEALE, WHITE, BANHAM AND
MS. WILLIAMS AND FOR ITEMS 2-10.
3. THIS VOTING INSTRUCTION CARD IS SOLICITED BY THE SUPERVISORY BOARD OF
THE COMPANY.
CHICAGO BRIDGE & IRON COMPANY N.V.
P.O. BOX 11436
NEW YORK, N.Y. 10203-0436
To change your address, please mark this box. [ ]
To include any comments, please mark this box. [ ]
PLEASE COMPLETE AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE.
The Supervisory Board recommends a vote for members first listed at each position and for items 2-10
1. To reappoint J. Charles Jennett, Gary L. Neale, William H. 3. To discharge the members of the Management Board
White and Marsha C. Williams as members of the and the Supervisory Board from liability in
Supervisory Board to serve until the Annual General respect of the exercise of their duties during
Meeting of Shareholders in 2005, and to appoint the fiscal year ended December 31, 2001;
Anthony P. Banham as a member of the Supervisory
Board to serve until the Annual General Meeting of 2004, 4. To approve the distribution from profits for the
and until their successors shall have been duly appointed; year ended December 31, 2001 in the amount of
US$0.24 per share previously paid as interim
dividends;
5. To approve the extension of the authority of the
First Position: a) J. Charles Jennett Management Board to repurchase up to 30% of the
OR issued share capital of the Company until
b) Timothy J.P. Moran November 10, 2003;
6. To cancel shares to be acquired by the Company
Second Position: c) Gary L. Neale in its own share capital;
OR
d) Samuel C. Leventry 7. To amend the articles of association to reflect
changes in dutch law and the Company's delisting
Third Position: e) William H. White from the Euronext Amsterdam N.V. and to increase
OR the number of authorized shares;
f) James M. Tidwell
8. To approve the extension of the authority of the
Fourth Position: g) Marsha C. Williams Supervisory Board to issue and/or grant rights on
OR (including options to subscribe) shares of the
h) David P. Bordages Company until May 10, 2007;
9. To approve the extension of the authority of the
Fifth Position: i) Anthony P. Banham Supervisory Board to limit or exclude the
OR preemptive rights of the shareholders of the
j) Thomas R. Denison Company until May 10, 2007; and
10. To leave to the Supervisory Board to appoint
2. To authorize the preparation of the annual accounts and the Company's independent public accountants.
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, 2001;
------------------------------------------------------------------------------------------------------------------------------------
\/ DETACH PROXY CARD HERE \/
[ ] Mark, Sign, Date and Return [ X ]
the Proxy Card Promptly Votes must be indicated
Using the Enclosed Envelope. (x) in Black or Blue ink.
WITHHOLD
AUTHORITY
FOR FOR FOR FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1.
a) Jennett [ ] or b) Moran [ ] [ ] 2. [ ] [ ] [ ] 7. [ ] [ ] [ ]
c) Neale [ ] or d) Leventry [ ] [ ] 3. [ ] [ ] [ ] 8. [ ] [ ] [ ]
e) White [ ] or f) Tidwell [ ] [ ] 4. [ ] [ ] [ ] 9. [ ] [ ] [ ]
g) Williams [ ] or h) Bordages [ ] [ ] 5. [ ] [ ] [ ] 10. [ ] [ ] [ ]
i) Banham [ ] or j) Denison [ ] [ ] 6. [ ] [ ] [ ]
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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.
Date Share Owner sign here Co-Owner sign here
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