<PAGE> 1
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 sec. 240.14a-11(c) or sec. 240.14a-12
UNIFAB International, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(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)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] 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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[UNIFAB INTERNATIONAL, INC. LOGO]
UNIFAB INTERNATIONAL, INC.
5007 PORT ROAD
NEW IBERIA, LOUISIANA 70562
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 17, 1999
---------------------
<TABLE>
<S> <C>
DATE: Friday, September 17, 1999
TIME: 10:00 A.M. C.D.T.
PLACE: 5007 Port Road, New Iberia, Louisiana
PURPOSE: - To elect two directors;
- To ratify the appointment of Ernst & Young LLP as our
independent auditors to audit our financial statements for
fiscal 2000; and
- To transact such other business as may properly come
before the annual meeting.
RECORD DATE: Close of business on August 5, 1999
</TABLE>
Your vote is important. Whether or not you plan to attend the meeting,
please complete, sign and date the enclosed proxy card and return it promptly in
the enclosed envelope. You may revoke your proxy at any time before it is voted.
We appreciate your cooperation.
By Order of the Board of Directors
Peter J. Roman
Secretary
New Iberia, Louisiana
August 19, 1999
<PAGE> 3
UNIFAB INTERNATIONAL, INC.
5007 PORT ROAD
NEW IBERIA, LOUISIANA 70562
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 17, 1999
We will begin mailing this proxy statement to our shareholders on or about
August 19, 1999.
We are furnishing this proxy statement to our shareholders in connection
with the solicitation of proxies on behalf of our board of directors for use at
our 1999 annual meeting of shareholders to be held on Friday, September 17, 1999
at 10:00 A.M. C.D.T. at our offices, 5007 Port Road, New Iberia, Louisiana.
WHO CAN VOTE
If you held any of our common stock at the close of business on August 5,
1999, then you are entitled to notice of and to vote at our 1999 annual meeting.
On that date 6,806,368 shares of our common stock were outstanding.
QUORUM
The presence of a majority of our common stock entitled to vote, present in
person or represented by proxy, is necessary to constitute a quorum. For
purposes of determining a quorum we will count as present shares of common stock
present at the meeting that abstain from voting or that are the subject of
broker non-votes. A broker non-vote occurs when a broker, or the broker's
nominee, who holds common stock for a beneficial owner does not vote on a
particular matter because the broker or nominee does not have discretionary
voting power with respect to that matter and has not received voting
instructions from the beneficial owner.
VOTING RIGHTS
Each share of our common stock that you hold entitles you to one vote on
all matters that come before the annual meeting. One or more inspectors of
election will count votes cast at the annual meeting. Directors will be elected
by a plurality of the shares voted (that is, the two nominees receiving the
largest number of votes will be elected). All other matters voted on are decided
by a majority of the votes actually cast, except as otherwise provided by
statute, our articles of incorporation and our bylaws.
Abstentions and broker non-votes are not considered as cast in the election
of directors or as to any matter expected to come before the annual meeting and
will have no effect on the outcome.
HOW YOUR PROXY WILL BE VOTED
Our board of directors is soliciting a proxy in the enclosed form to
provide you with an opportunity to vote on all matters scheduled to come before
the annual meeting, whether or not you attend in person.
Granting Your Proxy
If you properly execute and return a proxy in the enclosed form, your stock
will be voted as you specify. If you make no specifications, the proxy
representing your common stock will be voted in favor of the proposed director
nominees and for the ratification of the appointment of auditors.
We expect no matter to be presented for action at the 1999 annual meeting
other than the items described in this proxy statement. The enclosed proxy will,
however, confer discretionary authority with respect to any other matter that
may properly come before the meeting. The persons named in the enclosed
<PAGE> 4
proxy intend to vote in accordance with their judgment on any matters that may
properly come before the annual meeting.
Revoking Your Proxy
If you submit a proxy, you may subsequently revoke it or submit a revised
proxy at any time before your proxy is voted. You may also attend the annual
meeting in person and vote by ballot, which would cancel any proxy that you
previously submitted.
PROXY SOLICITATION
We will pay all expenses of soliciting proxies for the 1999 annual meeting.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone, telefax and telegraph. We will request banks, brokerage
houses and other institutions, nominees and fiduciaries to forward solicitation
materials to the beneficial owners of our common stock and, upon their request,
we will reimburse such persons for reasonable out-of-pocket expenses incurred in
doing so.
SHAREHOLDER PROPOSALS
If you want us to consider including a proposal in next year's proxy
statement, you must deliver it in writing to Peter J. Roman, Secretary, UNIFAB
International, Inc., 5007 Port Road, New Iberia, Louisiana 70562 by April 21,
2000. Proxies solicited on behalf of our board of directors for next year's
annual meeting will confer discretionary authority to vote with respect to any
matter properly submitted by a shareholder for action at next year's annual
meeting if we do not receive notice of the matter on or before July 5, 2000.
ELECTION OF DIRECTORS
Our articles of incorporation and by-laws provide for a board of directors
of five natural persons, divided into three classes. The members of each class
serve for three years, with one class to be elected at each annual meeting. The
term of office of the Class II directors will expire at the 1999 annual meeting.
Our board of directors has nominated each of the Class II directors named
below to serve for an additional three-year term expiring in 2002 and recommends
that shareholders vote FOR the re-election of the nominees. In the absence of
contrary instructions, the proxy holders will vote for the election of the two
nominees listed below. In the unanticipated event that any of the nominees is
unavailable as a candidate for director, the persons named in the accompanying
proxy will vote for a substitute candidate nominated by the board of directors.
The following table sets forth as of July 1, 1999, for each nominee, each
of our other directors and each of our executive officers, the age, position,
and principal occupation and employment during the past five years of each such
person, any family relationships among such persons, and, if a nominee or a
director, each person's directorships in other public corporations and the year
that he was first elected a director of our company or its predecessor. All
executive officers serve at the pleasure of our board of directors.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, DIRECTORSHIPS IN DIRECTOR
NAME AND AGE OTHER PUBLIC CORPORATIONS, AND FAMILY RELATIONSHIPS SINCE
- ------------ --------------------------------------------------- --------
<S> <C> <C>
NOMINEES FOR ELECTION AS CLASS II DIRECTORS (FOR TERM EXPIRING IN 2002)
Charles E. Broussard, 74................. Mr. Broussard is a director of our company. Mr. 1980
Broussard is also Chairman of the Board and Chief
Executive Officer of Flying J. Ranch, Inc., a
Louisiana cattle and rice farm.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, DIRECTORSHIPS IN DIRECTOR
NAME AND AGE OTHER PUBLIC CORPORATIONS, AND FAMILY RELATIONSHIPS SINCE
- ------------ --------------------------------------------------- --------
<S> <C> <C>
George C. Yax, 58........................ Mr. Yax is a director of our company. Mr. Yax was 1997
also a co-founder of Ceanic Corporation
(previously, American Oilfield Divers, Inc.), a
provider of subsea products and services to the
offshore oil and gas industry, and served as its
Chairman of the Board until its sale in August,
1998.
CONTINUING CLASS III DIRECTORS (TERM EXPIRES IN 2000)
Dailey J. Berard, 69..................... Mr. Berard is the founder of our company. Mr. 1980
Berard serves as our Chairman of the Board,
President and Chief Executive Officer. Mr. Berard
is a brother of David J. Berard.
William A. Hines, 62..................... Mr. Hines is a director of our company. Mr. Hines 1998
is also Chairman of the Board and President of
Nassau Holding Corporation, a manufacturer of
couplings for oilfield tubular goods and
distributor of oilfield tubular goods, and a
director of Whitney Holding Corporation, a regional
bank holding company.
CONTINUING CLASS I DIRECTOR (TERM EXPIRES IN 2001)
Perry Segura, 69......................... Mr. Segura is a director of our company. Mr. Segura 1980
is an architect and real estate developer. Mr.
Segura has served as Chairman of the Board of
Supervisors of Louisiana State University since
1997 and was Vice Chairman of that board from 1996
to 1997.
</TABLE>
Our board of directors has primary responsibility for directing our
management and affairs. During fiscal 1999, our board of directors held five
meetings. Each director attended 75% or more of the aggregate number of meetings
held during fiscal 1999 of the board of directors and committees of which he was
a member.
To provide for effective direction and management of our business, our
board has established an audit committee and a compensation committee. Our board
does not have a nominating committee. The following tables provide you with
information about our audit and compensation committees. None of the members of
these committees is an officer or employee of us or any of our subsidiaries.
<TABLE>
<CAPTION>
NUMBER OF
MEETINGS HELD
AUDIT COMMITTEE MEMBERS FUNCTIONS OF THE COMMITTEE IN FISCAL 1999
- ----------------------- -------------------------- --------------
<S> <C> <C>
William A. Hines - Reviews our financial statements and annual 2
audit
Perry Segura - Meets with our independent auditors to review
our internal controls and financial management
practices
- Exercises general oversight of the integrity and
reliability of our accounting and financial
reporting practices and the effectiveness of our
system of internal controls
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NUMBER OF
MEETINGS HELD
COMPENSATION COMMITTEE MEMBERS FUNCTIONS OF THE COMMITTEE IN FISCAL 1999
- ------------------------------ -------------------------- --------------
<S> <C> <C>
Charles E. Broussard - Analyzes, reviews and makes recommendations to 2
George C. Yax our board concerning compensation programs
- Administers our long-term incentive plan
</TABLE>
DIRECTOR COMPENSATION
Each director who is not also an employee of the company receives an annual
fee of $12,000 for his services as a director. We reimburse all directors for
reasonable out-of-pocket expenses incurred in attending board and committee
meetings.
In addition, in each year during which our long-term incentive plan is in
effect and a sufficient number of shares are available under the plan, on the
day of each annual meeting of shareholders, each non-employee director will
receive an option to purchase no more than 2,500 shares of common stock at an
exercise price equal to the fair market value of our common stock on such date.
The compensation committee determines the exact number of shares subject to the
option. Each stock option will become fully exercisable on the date of its grant
and will expire ten years from the date of grant, unless the non-employee
director ceases to be a director. In that case, the exercise period will be
shortened. In accordance with this arrangement, on August 28, 1998, we granted
each non-employee director an option to buy 2,500 shares of our common stock at
an exercise price of $8.75, the fair market value of our common stock on that
date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, controller and the beneficial owners of more than 10% of
our common stock to file certain beneficial ownership reports with the
Securities and Exchange Commission. Mr. Broussard, a director of our company,
failed to report timely six transactions on two statements on Form 4 in fiscal
1999; all transactions were reported late on a statement on Form 4 filed in
fiscal 1999. In 1998, Mr. Hines, a director of our company, filed a late
statement on Form 3 reporting one holding. Mr. Segura, a director of our
company, failed to report six transactions on three statements on Form 4 in
fiscal 1998, a statement on Form 5 for fiscal 1998, or a statement on Form 5 for
fiscal 1999. Mr. Segura also failed to report four transactions on four
statements on Form 4 in fiscal 1999 or a statement on Form 5 for fiscal 1999.
4
<PAGE> 7
STOCK OWNERSHIP
The following table sets forth, as of July 1, 1999, certain information
regarding beneficial ownership of our common stock by (1) each of our directors
as of that date, (2) each of our executive officers as of that date, (3) all of
our directors and executive officers as a group, and (4) the other shareholder
known by us to be the beneficial owner of more than 5% of our outstanding common
stock, determined in accordance with Rule 13(d)(3) under the Securities Exchange
Act of 1934. Unless otherwise indicated, we believe that the shareholders listed
below have sole investment and voting power with respect to their shares based
on information furnished to us by such shareholders.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF SHARES OUTSTANDING
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) COMMON STOCK
- ------------------------ --------------------- ------------
<S> <C> <C>
Dailey J. Berard(2)......................................... 495,374(2) 7.2%
David J. Berard............................................. 42,383(3) *
Charles E. Broussard(4)..................................... 416,934(4) 6.1%
William A. Hines............................................ 702,500 10.3%
Peter J. Roman.............................................. 12,195 *
Perry Segura(5)............................................. 449,035(5) 6.7%
George C. Yax............................................... 15,000 *
All directors and executive officers as a group (9
persons).................................................. 2,138,863 30.9%
Kalmar Investments Inc.(6).................................. 299,700(6) 4.4%
</TABLE>
- ---------------
* Less than one percent.
(1) Includes shares that could be acquired within sixty days after July 1, 1999,
upon the exercise of options granted pursuant to our stock option plan, as
follows: Dailey J. Berard, 75,000 shares; David J. Berard, 13,000 shares;
Mr. Broussard, 5,000 shares; Mr. Hines, 2,500 shares; Mr. Roman, 10,666
shares; Mr. Segura, 5,000 shares; Mr. Yax, 5,000 shares; all directors and
executive officers as a group, 116,166 shares.
(2) Includes 5,700 shares owned by Dailey J. Berard's spouse. His address is c/o
UNIFAB International, Inc., 5007 Port Road, New Iberia, Louisiana 70562.
(3) Includes 300 shares owned by David J. Berard's children.
(4) Includes 151,900 shares owned by a company controlled by Mr. Broussard,
254,534 shares owned by a limited liability company controlled by Mr.
Broussard and 500 shares owned by his spouse. His address is 23604 South
Louisiana Highway 82, Kaplan, Louisiana 70548.
(5) Includes 373,591 shares owned by a company controlled by Mr. Segura. His
address is Post Office Box 13410, New Iberia, Louisiana 70562.
(6) Kalmar Investments Inc. has sole investment power but no voting power over
all 299,700 shares. Its address is Barley Mill House, 3701 Kennett Pike,
Greenville, Delaware 19807.
5
<PAGE> 8
EXECUTIVE OFFICER COMPENSATION
The following table provides you with information about the compensation we
paid in fiscal 1999, 1998 and 1997 to our Chief Executive Officer and our other
executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION SECURITIES
FISCAL ------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(1)
- --------------------------- ------ -------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Dailey J. Berard....................... 1999 $180,000 $ 75,600 30,000 $3,600
President and Chief Executive Officer 1998 206,681 429,120 65,000 8,276
1997 125,449 50,015 0 9,530
David J. Berard........................ 1999 83,006 35,700 15,000 2,490
Vice President -- Domestic Sales 1998 66,588 48,339 8,000 1,746
1997 63,416 0 0 1,746
Peter J. Roman(2)...................... 1999 90,000 37,800 20,000 1,350
Vice President and Chief Financial
Officer 1998 61,038 37,375 4,000 0
</TABLE>
- ---------------
(1) Comprised of our contributions to our 401(k) Plan and interest, at the prime
rate as quoted by the Chase Manhattan Bank from time to time, earned on
deferred bonus compensation:
<TABLE>
<CAPTION>
FISCAL INTEREST ON DEFERRED
NAME YEAR PLAN CONTRIBUTIONS COMPENSATION
- ---- ------ ------------------ --------------------
<S> <C> <C> <C>
Dailey J. Berard..................... 1999 $3,600 $ 0
1998 3,219 5,057
1997 3,453 6,077
David J. Berard...................... 1999 2,490 0
1998 1,746 0
1997 1,746 0
Peter J. Roman....................... 1999 1,350 0
1998 0 0
</TABLE>
(2) Mr. Roman began employment with us in July 1997.
STOCK OPTION GRANTS
The following table sets forth information with respect to all stock
options that we granted in fiscal 1999 to each of our executive officers named
in the Summary Compensation Table.
OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
GRANT
INDIVIDUAL GRANTS DATE VALUE
---------------------------------------------------------------- ----------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED GRANT DATE
OPTIONS TO EMPLOYEES IN EXERCISE OR BASE EXPIRATION PRESENT
NAME GRANTED (#)(1) FISCAL 1999 PRICE ($/SH) DATE VALUE $(2)
- ---- -------------- --------------- ---------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Dailey J. Berard............. 30,000 10% $7.50 12/03/08 $102,000
David J. Berard.............. 15,000 5% 7.50 12/03/08 57,000
Peter J. Roman............... 20,000 7% 7.50 12/03/08 68,000
</TABLE>
- ---------------
(1) Each of the stock options that we granted in fiscal 1999 to our executive
officers will become exercisable over a three-year period beginning on the
grant date. The stock options will become immediately exercisable in their
entirety if (a) under certain circumstances, any individual, entity or group
acquires beneficial ownership of more than 30% of our outstanding shares of
common stock; (b) under certain circumstances, the composition of our board
of directors is changed; (c) under certain circumstances, our
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<PAGE> 9
shareholders approve of a reorganization, merger or consolidation, or sale
or other disposition of all or substantially all of our assets; or (d) our
shareholders approve of a complete liquidation or dissolution of our
company. Our compensation committee also has the authority to take several
actions regarding outstanding stock options upon the occurrence of any of
the events described above, including requiring that outstanding stock
options remain exercisable only for a limited time, providing for mandatory
conversion of outstanding stock options in exchange for either a cash
payment or certain securities, making equitable adjustments to stock options
or providing that outstanding stock options will become options relating to
securities to which a participant would have been entitled in connection
with any of the events described above if the stock options had been
exercised.
(2) We used the Black-Scholes option pricing model to determine the grant date
present value of the stock options that we granted in fiscal 1999 to our
executive officers. Under the Black-Scholes option pricing model, the grant
date present value of each stock option referred to in the table was
calculated to be $3.40. We used the following facts and assumptions in
making such calculation: (a) an exercise price of $7.50 for each such stock
option; (b) a fair market value of $7.50 for one share of common stock on
the date of grant; (c) no dividend payments on our common stock; (d) a stock
option term of 10 years; (e) a stock volatility of 79.7%, based on an
analysis of monthly closing stock prices of shares of our common stock
during a 2 1/2-month period; and (f) an assumed risk-free interest rate of
4.69%, which is equivalent to the yield on a two-year treasury note on the
grant date. We applied no other discounts or restrictions related to vesting
or the likelihood of vesting of stock options. We multiplied the resulting
grant date present value of $3.40 for each stock option by the total number
of stock options granted to each of our executive officers to determine the
total grant date present value of such stock options granted to each of our
executive officers.
OUTSTANDING STOCK OPTIONS
The following table provides you with information about all outstanding
stock options held by each of our executive officers as of March 31, 1999. None
of our executive officers exercised stock options in fiscal 1999.
AGGREGATED OPTIONS AS OF MARCH 31, 1999
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 3/31/99 (#) AT 3/31/99(1)
------------------------- -------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------------- -------------------------
<S> <C> <C>
Dailey J. Berard.................................. 53,333/41,667 6,250/12,500
David J. Berard................................... 10,333/12,667 3,125/ 6,250
Peter J. Roman.................................... 9,333/14,666 4,167/ 8,333
</TABLE>
- ---------------
(1) Based on the difference between the closing sales price of our common stock
of $8.125 on March 31, 1999, as reported by the Nasdaq National Market and
the exercise price of such options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year, Messrs. Broussard and Yax served on our
compensation committee. No member has ever served as an officer or employee of
our company or any of our subsidiaries. In fiscal 1999, none of our executive
officers served as a director or member of the compensation committee of another
entity, any of whose executive officers served on our board of directors or on
our compensation committee.
CERTAIN TRANSACTIONS
In July 1998, we acquired all the capital stock of Allen Tank, Inc. and
LATOKA USA Inc. by means of mergers of those corporations with our subsidiaries.
William A. Hines, who became a director of our company in satisfaction of a
condition to the completion of the acquisitions, was a director and executive
officer of Allen Tank and LATOKA and owned 70% of the capital stock of Allen
Tank and approximately 89% of the capital stock of LATOKA.
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<PAGE> 10
Each shareholder of Allen Tank and LATOKA received shares of our common
stock, or the equivalent fair market value in cash, for his shares of Allen Tank
stock and LATOKA stock. In exchange for his Allen Tank shares, Mr. Hines
obtained a total of 630,000 shares of our common stock, and in exchange for his
LATOKA shares, Mr. Hines received 70,000 shares of our common stock. We
determined the consideration we paid for the outstanding shares of Allen Tank
and LATOKA together with the shareholders of Allen Tank and LATOKA in arm's
length negotiations.
In connection with the acquisitions of all the capital stock of Allen Tank
and LATOKA, we granted to each of the Allen Tank and LATOKA shareholders,
including Mr. Hines, a one-time limited right to include all or a portion of his
shares of our common stock in a registration statement otherwise being filed by
us to register the sale of our common stock under the Securities Act of 1933. We
have agreed to pay all the expenses of any such registration, other than
underwriting fees, discounts and commissions. In addition, we granted Mr. Hines
a one-time limited right to require us to register all or a portion of his
shares of common stock under the Securities Act. Mr. Hines has agreed to pay all
the expenses of such demand registration up to $200,000, and we have agreed to
pay all the expenses, other than underwriting fees, discounts and commissions,
in excess of $200,000. In consideration of the Allen Tank acquisition, Mr. Hines
agreed that, during his initial term as a member of our board of directors
(which will expire in 2000), he will not, without our consent, sell or dispose
of any of his shares of our common stock except in a registered offering in
accordance with his registration rights or by gift to a donee who agrees to be
bound by the same restrictions.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Our compensation committee has the authority, among other things, to
review, analyze, and recommend compensation programs to our board of directors
and to administer and grant awards under our employee benefit plans. Two of our
directors, Charles E. Broussard and George C. Yax, comprise the compensation
committee. Neither Mr. Broussard nor Mr. Yax are present or former officers of
our company, and none of the members of the Compensation Committee are employees
of our company.
Our executive compensation consists primarily of (1) salaries, (2) annual
cash incentive bonuses and (3) long-term incentive compensation in the form of
stock options granted under our long-term incentive plan. The annual salary of
Dailey J. Berard, our President and Chief Executive Officer, is set at $180,000
in his employment agreement, which was negotiated between our board of directors
and Mr. Berard. The salaries of our other executive officers are based on their
levels of responsibility and the subjective assessment of their performance.
The amount of the annual bonus, if any, payable to Dailey J. Berard is
determined in accordance with the terms of his employment agreement, which
provides that he will be entitled to receive, as an annual incentive bonus, a
percentage of his annual salary ranging from 50% to 100%, depending on the
percentage net income return on our capital. We must achieve a minimum 15% net
income return on capital for Mr. Berard to receive a minimum bonus of 50% of his
annual salary, and Mr. Berard may receive the maximum bonus of 100% of his
annual salary if we achieve a 30% or greater percentage net income return on
capital. Our net income return on capital in fiscal 1999 was 18%, and,
accordingly, Mr. Berard earned an incentive bonus of $75,600 for that year.
We have adopted an executive compensation program for our other executive
officers that ties a portion of executive compensation to our short-term
performance. Under this program, executive officers and other key employees are
entitled to receive, as an annual incentive bonus, a percentage of their
respective annual salary ranging from 35% to 70%, depending on the percentage
net income return on our capital. We must achieve a minimum 15% net income
return on our capital for any of them to receive a minimum bonus of 35% of
annual salary, and each of them may receive the maximum bonus of 70% of annual
salary if we achieve a 30% or greater percentage net income return on capital.
We have included the amounts of the incentive bonuses awarded to certain
executive officers in fiscal 1999, 1998 and 1997 in the "Summary Compensation
Table" under the heading "Executive Compensation."
We also provide long-term incentives to our executive officers in the form
of stock options granted under our long-term incentive plan. The stock option
awards are intended to reinforce the relationship between
8
<PAGE> 11
compensation and increases in the market price of our common stock and to align
our executive officers' financial interests with that of our shareholders. We
based the size of the award in fiscal 1999 to each of our executive officers on
the position of each participating officer and a subjective assessment of each
participant's individual performance. The table entitled "Option Grants in
Fiscal 1999" under the heading "Executive Compensation" sets forth the stock
options granted in fiscal 1999 to our executive officers.
Section 162(m) of the Internal Revenue Code limits the tax deduction to $1
million for compensation paid to certain highly compensated executive officers.
Qualified performance-based compensation is excluded from this deduction
limitation if certain requirements are met. None of our executive officers
reached the deductibility limitation for fiscal 1999. Our compensation committee
believes that the stock options granted to our executive officers, as discussed
above, qualify for the exclusion from the deduction limitation under Section
162(m). Our compensation committee anticipates that the remaining components of
individual executive compensation that do not qualify for an exclusion from
Section 162(m) should not exceed $1 million in any year and therefore will
continue to qualify for deductibility.
The Compensation Committee
Charles E. Broussard George C. Yax
9
<PAGE> 12
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on our
common stock from September 19, 1997, which is the date that our common stock
initially traded publicly, to March 31, 1999, with the cumulative total return
of the Standard & Poor's 500 Stock Index and the Standard & Poor's Oil & Gas
(Drilling & Equipment) Index for the same period. The returns are based on an
assumed investment of $100 on September 19, 1997 in our common stock and in each
of the indexes and on the assumption that dividends were reinvested. The assumed
$100.00 investment in our common stock is made at $32.00 per share, the closing
price on September 19, 1997, the first day of trading after the effective date
of our initial public offering. Our common stock was sold in the initial public
offering at $18.00 per share.
COMPARISON OF CUMULATIVE TOTAL RETURN*
UNIFAB INTERNATIONAL, INC., S&P 500 INDEX &
S&P OIL & GAS (DRILLING & EQUIPMENT) INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
SEPTEMBER 19, 1997 MARCH 31, 1998 MARCH 31, 1999
------------------ -------------- --------------
<S> <C> <C> <C>
UNIFAB International, Inc....................... $100.00 $ 54.69 $ 25.39
S&P 500......................................... 100.00 116.87 138.44
S&P Oil & Gas (Drilling & Equipment)............ 100.00 94.56 73.15
</TABLE>
ASSUMES $100 INVESTED ON SEPTEMBER 19, 1997 IN UNIFAB INTERNATIONAL, INC. COMMON
STOCK, S&P 500 INDEX & S&P OIL & GAS (DRILLING & EQUIPMENT) INDEX
* TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
[LEGEND]
10
<PAGE> 13
RATIFICATION OF THE APPOINTMENT OF AUDITORS
Our board of directors seeks shareholder ratification of its appointment of
Ernst & Young LLP to act as the independent auditors of our financial statements
for fiscal 2000. Our board has not determined what, if any, action it would take
should the appointment of Ernst & Young LLP not be ratified. One or more
representatives of Ernst & Young LLP will be available at our 1999 annual
meeting to respond to appropriate questions, and those representatives will also
have an opportunity to make a statement.
By Order of the Board of Directors
Peter J. Roman
Secretary
New Iberia, Louisiana
August 19, 1999
11
<PAGE> 14
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
UNIFAB INTERNATIONAL, INC.
The undersigned hereby constitutes and appoints Dailey J. Berard and Peter
J. Roman or either of them proxy for the undersigned, with full power of
substitution, to represent the undersigned and to vote, as designated on the
reverse side, all of the shares of Common Stock of UNIFAB International, Inc.
(the "Company") that the undersigned is entitled to vote held of record by the
undersigned on August 5, 1999, at the annual meeting of shareholders of the
Company to be held on September 17, 1999 (the "Annual Meeting"), and at all
adjournments thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE NOMINEES AND FOR THE PROPOSAL LISTED ON THE REVERSE SIDE. THE
INDIVIDUALS DESIGNATED ABOVE WILL VOTE IN THEIR DISCRETION ON ANY OTHER MATTER
THAT MAY PROPERLY COME BEFORE THE MEETING.
(Please See Reverse Side)
<PAGE> 15
UNIFAB INTERNATIONAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW AND FOR
PROPOSAL 2.
FOR WITHHOLD
all nominees listed to the AUTHORITY
left (except as marked to to vote for all nominees
the contrary below) listed to the left
[ ] [ ]
1. Election of the nominees for directors.
Nominees: Charles E. Broussard
George C. Yax
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.
2. Ratification of appointment of Ernst & Young LLP as independent auditors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion to vote upon such other business as may properly come
before the Annual Meeting or any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
,1999
- ------------------------------------------------
Signature of Shareholder Date
,1999
- ------------------------------------------------
Signature if held jointly Date
Note: Please sign exactly as name appears on the certificate or certificates
representing shares to be voted by this proxy, as shown on the label above. When
signing as executor, administrator, attorney, trustee or guardian, please give
full title as such. If a corporation, please sign full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized persons.
