<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 Rule 14a-11(c) or Rule 14a-12.
CHICAGO BRIDGE & IRON COMPANY N.V.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
CHICAGO BRIDGE & IRON COMPANY N.V.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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:
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(4) Date Filed:
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<PAGE> 2
CHICAGO BRIDGE & IRON COMPANY N.V.
POLARISAVENUE 31
2132 JH HOOFDDORP, THE NETHERLANDS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 2000
To the Shareholders of:
CHICAGO BRIDGE & IRON COMPANY N.V.
You are hereby notified that the Annual Meeting of Shareholders of Chicago
Bridge & Iron Company N.V. will be held at Amstel Inter-Continental Amsterdam,
Prof. Tulpplein 1, 1018 GX, Amsterdam, The Netherlands, at 2:00 P.M., local
time, on Thursday, May 11, 2000, for the following purposes:
1. To reappoint J. Dennis Bonney, Gerald M. Glenn and Vincent L. Kontny
as members of the Board of Supervisory Directors to serve until the
Annual Meeting of Shareholders in 2003, and until their successors
shall have been duly appointed;
2. To authorize the preparation of the annual accounts and the report in
the English language and to adopt the Dutch Statutory Annual Accounts
of the Company for the fiscal year ended December 31, 1999;
3. To approve the distribution of profits for the fiscal year ended
December 31, 1999 in the amount of US$0.24 per share previously paid
as interim dividends;
4. To approve the extension of the authority of the Management Board to
repurchase up to 30% of the issued share capital of the Company until
November 11, 2001;
5. To cancel shares to be acquired by the Company in its own share
capital;
6. To amend the Articles of Association to allow the Chairman of the
meeting of shareholders to establish the rules of order and grant
authorization to implement the amendment;
7. To determine the compensation of Supervisory Directors who are not
employees of the Company; and
8. To approve the appointment of Arthur Andersen as the Company's
independent public accountants for the fiscal year ending December
31, 2000.
Copies of the Dutch Statutory Annual Accounts, the 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 meetings of shareholders of the Company at the offices of the Company at
Polarisavenue 31, 2132 JH Hoofddorp, The Netherlands; at Kas-Associatie N.V.,
Spuistraat 172, 1012 VT Amsterdam, The Netherlands; and at the Bank of New York,
101 Barclay Street, 22nd Floor West, New York, New York 10286 from the date
hereof until the close of the Annual Meeting.
Holders of registered shares of record at the close of business on March
29, 2000, and holders of the bearer shares are entitled to receive notice of and
to vote at the Annual Meeting and any adjournment thereof. The stock transfer
books will not be closed.
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 3, 2000
<PAGE> 3
CHICAGO BRIDGE & IRON COMPANY N.V.
PROXY STATEMENT
MAY 11, 2000
This proxy statement, which is first being mailed to holders of registered
shares on or about April 5, 2000, is furnished in connection with the
solicitation of proxies on behalf of the Supervisory Board of Chicago Bridge &
Iron Company N.V. ("CB&I" or the "Company"), who ask you to complete, sign, date
and mail the enclosed proxy for use at the Annual Meeting of Shareholders to be
held May 11, 2000, 2:00 p.m. local time (the "Annual Meeting"), for the purposes
set forth in the foregoing notice. Cost of solicitation of proxies will be borne
by the Company. Proxies may be solicited personally or by telephone or telefax
by certain members of the Supervisory Board and the directors, officers and a
few regular employees of the Company and its subsidiaries, without extra
compensation.
Each share 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 the Company within the time indicated on the enclosed proxy (the
"Voter Deadline"), will be voted at the meeting or any adjourned session of the
meeting in accordance with the terms of the proxies. If no choice is indicated
on the proxy, the proxyholders will vote for Messrs. Bonney, Glenn and Kontny
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.
Only shareholders of record of the 9,229,059 registered shares of the
Company's share capital, par value NLG 0.01 (the "Registered Shares") issued at
the close of business on March 29, 2000, and the holders of the 9,782 bearer
shares (the "Bearer Shares") (the Registered Shares and the Bearer Shares
together, the "Common Stock" or "shares") are entitled to notice of and to vote
at the meeting.
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.
A copy of the Company's Annual Report on Form 10-K, including the financial
statements, schedules and exhibits thereto, may be obtained without charge by
written request to Robert H. Wolfe, Secretary, Chicago Bridge & Iron Company
N.V., Polarisavenue 31, 2132 JH Hoofddorp, The Netherlands or Investor Relations
Department c/o Chicago Bridge & Iron Company, 1501 N. Division Street,
Plainfield, IL 60544-8984 USA.
<PAGE> 4
ITEM 1
APPOINTMENT OF DIRECTORS
The general affairs and business of the Company and the board which manages
the Company (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. The Company's Articles of Association (the
"Articles of Association") provide for at least six and no more than twelve
Supervisory Directors to serve on the Supervisory Board. Effective March 26,
1997, the size of the Board is eight. Under the law of The Netherlands, a
Supervisory Director cannot be a member of the Management Board ("Managing
Directors") of the Company. The shareholders have appointed Chicago Bridge &
Iron Company B.V. as the sole member of the Management Board. Executive officers
are not Managing Directors of the Company for purposes of Dutch law.
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 reappointed. Members of the Supervisory Board must resign effective the
date of the Annual Meeting of Shareholders in the year in which the director
attains the age of 72. Pursuant to the Articles of Association, members of the
Supervisory Board may be suspended or dismissed by the general meeting of
shareholders. The Supervisory Board may make a proposal to the general meeting
of shareholders for the suspension or dismissal of one or more of its members.
If such proposal is made by the Supervisory Board, a simple majority vote of the
shareholders is required to effect a suspension or dismissal. If no such
proposal is made, the general meeting of shareholders by vote of two-thirds of
the votes cast at the meeting if such two-thirds vote constitutes more than
one-half of the issued share capital of the Company (a "Two-thirds Majority of
Quorum") is required to effect a suspension or dismissal. The members of the
Supervisory Board may receive such compensation as may be determined by the
general meeting of shareholders.
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.
Three Supervisory Directors are to be appointed. They will serve until the
Annual Meeting of Shareholders in 2003, except in the case of Mr. Bonney, who
will attain the age of 72 in 2002 and must retire at the time of the Annual
Meeting of Shareholders in 2002. For one position, the Supervisory Board has
proposed the election of J. Dennis Bonney or Stephen M. Duffy. For the second
position, the Supervisory Board has proposed the election of Gerald M. Glenn or
Kevin C. Yessian. For the third position, the Supervisory Board has proposed the
election of Vincent L. Kontny or Samuel C. Leventry. Messrs. Bonney, Glenn and
Kontny are presently members of the Supervisory Board. Mr. Duffy is Vice
President-Human Resources and Administration of Chicago Bridge & Iron Company,
Mr. Yessian is Vice President-Procurement of Chicago Bridge & Iron Company and
Mr. Leventry is Vice President-Engineering of Chicago Bridge & Iron Company.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPOINTMENT
OF MESSRS. BONNEY, GLENN AND KONTNY.
2
<PAGE> 5
Certain information with respect to the nominees for Supervisory Director
and the five Supervisory Directors whose terms do not expire this year is as
follows:
THE FOLLOWING NOMINATIONS ARE MADE FOR THREE-YEAR TERMS EXPIRING IN 2003:
FIRST POSITION
FIRST NOMINEE
J. DENNIS BONNEY, 69, has served as a Supervisory Director of the Company
since April, 1997. He served as Vice Chairman of the Board of Chevron
Corporation from 1987 to 1995. He currently serves as Chairman of the Board of
Aeromovel USA and Aeromovel Global Corporation. From 1996 to 1998 he was a
director of Alumax Inc. and United Meridian Corporation. Mr. Bonney is Chairman
of the Supervisory Board's Audit Committee, and is a member of the Organization
and Compensation Committee and the Corporate Governance Committee.
SECOND NOMINEE
STEPHEN M. DUFFY, 50, has served as Vice President-Human Resources and
Administration of Chicago Bridge & Iron Company since June, 1996. Mr. Duffy was
Vice President-Human Resources and Administration of CBI Industries, Inc. from
November, 1991, through May, 1996.
SECOND POSITION
FIRST NOMINEE
GERALD M. GLENN, 57, 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.
SECOND NOMINEE
KEVIN C. YESSIAN, 45, has served as Vice President-Procurement of Chicago
Bridge & Iron Company since July, 1997. Prior to joining the Company, he was
President of Indeck Energy Services from May, 1994 to July, 1997. Prior to that,
Mr. Yessian was Executive Vice President of Coastal Remediation Company and Vice
President of Coastal Chem (both units of The Coastal Company), and was employed
for over 20 years by that company and its predecessor company, American Natural
Resources Corporation.
THIRD POSITION
FIRST NOMINEE
VINCENT L. KONTNY, 62, has served as a Supervisory Director of the Company
since April, 1997. Mr. Kontny was President and Chief Operating Officer of Fluor
Corporation from 1990 until September, 1994. He is currently the owner and CEO
of the Double Shoe Cattle Company. He has held this position at Double Shoe
Cattle Company since 1992. Mr. Kontny is Chairman of the Supervisory Board's
Organization and Compensation Committee and is a member of the Audit Committee
and the Corporate Governance Committee.
SECOND NOMINEE
SAMUEL C. LEVENTRY, 50, has served as Vice President-Engineering of Chicago
Bridge & Iron Company since April, 1997. Prior to that, he was Product
Manager-Pressure Vessels and Spheres from April, 1995 to April, 1997 and Product
Engineering Manager-Special Plate Structures for Chicago Bridge & Iron Company.
3
<PAGE> 6
Mr. Leventry has been employed by Chicago Bridge & Iron Company for over 29
years in various engineering positions.
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 2001:
JERRY H. BALLENGEE, 62, has served as a Supervisory Director of the Company
since April, 1997. He served as President and Chief Operating Officer of Union
Camp Corporation from July, 1994 to May, 1999 and has served in various other
executive capacities and as a member of the Board of Directors of Union Camp
Corporation since 1988. He is Chairman of the Supervisory Board's Nominating
Committee and a member of the Corporate Governance Committee.
L. DONALD SIMPSON, 64, has served as a Supervisory Director of the Company
since April, 1997. From December, 1996 to December, 1999, Mr. Simpson has served
as Executive Vice President of Great Lakes Chemical Corporation. Prior thereto,
beginning in 1992, he served in various executive capacities at Great Lakes
Chemical Corporation. He is a member of the Supervisory Board's Audit Committee
and Corporate Governance Committee.
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 2002:
J. CHARLES JENNETT, 59, has served as a Supervisory Director of the Company
since April, 1997. He has served as President of Texas A&M International
University since 1996. He was Provost and Vice President of Academic Affairs at
Clemson University from 1992 through 1996. Mr. Jennett is a member of the
Supervisory Board's Nominating Committee and Corporate Governance Committee.
GARY L. NEALE, 60, has served as a Supervisory Director of the Company
since April, 1997. He is currently President, CEO and Chairman of the Board of
NiSource, Inc., whose primary business is the distribution of electricity, gas
and water through utility companies. Mr. Neale has served as a director of
NiSource, Inc. since 1991, a director of Northern Indiana Public Service Company
since 1989 and a director of Modine Manufacturing Company (heat transfer
products) since 1977. Mr. Neale is Chairman of the Supervisory Board's Corporate
Governance Committee and a member of the Organization and Compensation
Committee.
MARSHA C. WILLIAMS, 49, has served as a Supervisory Director of the Company
since April, 1997. Since May, 1998, she has served as Chief Administrative
Officer of Crate & Barrel, a specialty retail company. Prior to that, she served
as Vice President and Treasurer of Amoco Corporation from December, 1997 to May,
1998 and Treasurer from 1993 to 1997. Ms. Williams is a director of Selected
Funds, Davis Funds and Modine Manufacturing Company (heat transfer products).
Ms. Williams is a member of the Supervisory Board's Audit Committee and
Corporate Governance Committee.
COMMITTEES OF THE BOARD
The Audit Committee, which held four meetings in 1999, is charged with
reviewing the adequacy and effectiveness of the internal auditing, accounting
and financial controls of the Company, and coordinating the annual internal
audit plan with the auditing plan of the independent public accountants. The
Committee receives reports from the Company's Internal Audit Department, reviews
the annual report to shareholders and the financial statements contained
therein, reviews the results of the audit performed by the Company's independent
public accountants and acts as liaison between the independent public
accountants and the Supervisory Board. The Committee makes recommendations
concerning the appointment of the independent public accountant of the Company,
the scope of the audit to be performed and the fees to be paid. The Committee is
also authorized to audit and monitor the compliance by the Company and its
subsidiaries with the laws of the various jurisdictions in which the Company and
its subsidiaries conduct business and to report to the Supervisory Board and
make recommendations with respect to any problems.
The Organization and Compensation Committee, which held four meetings in
1999, reviews and makes recommendations concerning compensation philosophy and
guidelines for the executive and managerial group of the Company, reviews
compensation and benefit programs for employees of the Company and its
4
<PAGE> 7
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 plan
and advises as to which key officers of the Company or its subsidiaries should
be offered employment and/or termination agreements.
The Nominating Committee, which held two meetings in 1999, 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, JH 2132 Hoofddorp, The Netherlands, and set forth the
name, age, business and residential address, principal occupation, number of
shares of Common Stock owned and such other information concerning the nominee
as may be requested by the Nominating Committee.
The Corporate Governance Committee, which held one meeting in 1999, reviews
and makes recommendations concerning policies and practices of management
relating to corporate governance and responsibilities and is responsible for the
internal operations of the Supervisory Board.
INFORMATION REGARDING MEETINGS
The Supervisory Board held four meetings in 1999. 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.
5
<PAGE> 8
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.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------- ---------------------------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock Wellington Management Company, LLP 1,147,800(1) 11.00%
75 State Street
Boston, MA 02109
Common Stock Neuberger Berman LLC 1,130,041(2) 10.02%
605 Third Ave.
New York, NY 10158
Common Stock Skyline Asset Management L.P. 789,600(3) 7.0%
311 South Wacker Drive, Suite 4500
Chicago, IL 60606
Common Stock David L. Babson and Company Incorporated 566,800(4) 5.43%
One Memorial Drive
Cambridge, MA 02142-1300
Common Stock The Hartford Mutual Funds, Inc. 550,000(5) 5.32%
200 Hopmeadow Street
Simsbury, CT 06070
Common Stock Mellon Bank Corporation 497,384(6) 5.27%
One Mellon Bank Center
Pittsburgh, PA 15258
</TABLE>
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(1) According to an amended Schedule 13G dated February 9, 2000, filed by
Wellington Management Company, LLP and it had shared power to vote 1,101,500
shares and shared power to dispose of 1,147,800 shares.
(2) According to an amended Schedule 13G dated February 3, 2000, filed by
Neuberger Berman LLC and it had sole power to vote 916,941 shares and shared
power to dispose of 1,130,041 shares.
(3) According to an amended Schedule 13G dated February 7, 2000, filed by
Skyline Asset Management L.P. for itself and certain client accounts over
which it exercises discretion and it had shared power to vote and dispose of
789,600 shares.
(4) According to an amended Schedule 13G dated January 25, 2000 filed by David
L. Babson and Company Incorporated and it had sole power to vote and dispose
of 566,800 shares.
(5) According to an amended Schedule 13G dated February 11, 2000 filed by
Hartford Mutual Funds, Inc., on behalf of the Hartford Capital Appreciation
Fund and it had shared power to vote and to dispose of 550,000 shares.
(6) According to an amended Schedule 13G dated January 20, 2000, filed by Mellon
Bank Corporation filed for itself, Boston Group Holdings, Inc., The Boston
Company Inc. and The Dreyfus Corporation and it had sole power to vote
490,984 shares and sole power to dispose of 497,384 shares.
6
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT OF THE COMPANY
The following table sets forth certain information regarding the Company's
Common Stock beneficially owned on March 1, 2000, 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.
<TABLE>
<CAPTION>
NUMBER OF RIGHTS TO RESTRICTED PERCENTAGE OF
NAME OF BENEFICIAL OWNER SHARES OWNED (1) ACQUIRE (2) STOCK (3) STOCK OWNED
------------------------ ---------------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Gerald M. Glenn............................... 9,130 12,800 571,338 6.3%
Stephen P. Crain.............................. 11,484 2,650 *
Stephen M. Duffy.............................. 25,058 1,450 *
Robert B. Jordan.............................. 44,650 5,125 18,750 *
Samuel C. Leventry............................ 4,905 525 *
Timothy J. Wiggins............................ 1,243 3,075 136,121 1.5%
Robert H. Wolfe............................... 46,808 2,150 *
Kevin C. Yessian.............................. 5,600 525 *
Jerry H. Ballengee............................ 2,017 1,500 *
J. Dennis Bonney.............................. 9,000 1,500 *
J. Charles Jennett............................ 2,000 1,500 *
Vincent L. Kontny............................. 1,000 1,500 *
Gary L. Neale................................. 1,000 1,500 *
L. Donald Simpson............................. 1,000 1,500 *
Marsha C. Williams............................ 2,000 1,500 *
All directors, nominees for directors and
executive officers as a group (17 in
number)..................................... 173,864 38,800 726,209 9.7%
</TABLE>
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* Beneficially owns less than one percent of the Company's Common Stock.
(1) Include shares held pursuant to the CB&I Management Defined Contribution
Plan and shares held by immediate family members.
(2) Shares that can be acquired through stock options exercised through May 11,
2000, but excludes presently exercisable stock options under the Company's
Stock Purchase Plan which will be exercised pursuant to that plan on April
3, 2000.
(3) 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Supervisory Directors, executive officers and
persons who own more than 10% of the Common Stock to file initial reports of
ownership and reports of changes in ownership of Common Stock (Forms 3, 4 and 5)
with the Securities and Exchange Commission (the "SEC") and the New York Stock
Exchange. Supervisory Directors, Executive Officers and greater than 10%
shareholders are required by SEC regulation to furnish the Company with copies
of all such forms that they file.
To the Company's knowledge based solely on its review of the copies of such
reports received by it and on written representations by certain reporting
persons that no reports on Form 5 were required, the Company believes that
during the fiscal year ended December 31, 1999, its Supervisory Directors,
executive officers and 10% shareholders complied with all Section 16(a) filing
requirements applicable to them, except Mr. Bonney who filed one Form 4 which
was ten days late with respect to one transaction.
7
<PAGE> 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 of the Company and the four other most highly compensated executive
officers of the Company.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- ----------------------- -------
(A) (B) (C) (D) (E) (G) (H) (I)
(F) SECURITIES
RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3) ($)(4) (# SHARES) ($) ($)(5)
--------------------------- ---- ------- ------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gerald. M Glenn................. 1999 441,000 350,000 -- 671,875 51,200 258,935 83,157
Chairman of the Supervisory 1998 420,000 330,000 -- -- 51,200 73,935 1,268,993
Board; President, Chief
Executive 1997 400,000 155,000 -- -- 92,094 -- 8,640,347
Officer and Chairman of
Chicago Bridge & Iron Company;
and Managing Director of
Chicago Bridge & Iron Company
B.V.
Stephen P. Crain................ 1999 185,000 100,000 38,135 -- 10,600 53,625 22,633
Vice President -- Global Sales 1998 146,000 87,500 -- -- 7,400 15,311 15,842
and Marketing of Chicago
Bridge & Iron Company and
Managing Director of Chicago
Bridge & Iron Company B.V.
Robert B. Jordan................ 1999 300,000 160,000 46,923 -- 23,000 104,181 35,200
Vice President -- Operations
of 1998 250,082 140,000 -- 275,000 70,500 29,745 121,448
Chicago Bridge & Iron Company;
and Managing Director of
Chicago Bridge & Iron Company
B.V.
Timothy J. Wiggins.............. 1999 255,000 127,500 -- -- 12,300 62,816 185,528
Vice President and Chief
Financial 1998 242,008 125,000 -- -- 12,300 17,932 318,578
Officer of Chicago Bridge & 1997 220,012 75,000 -- -- 21,489 -- 2,057,273
Iron Company; and Managing
Director of Chicago Bridge &
Iron Company B.V.
Robert H. Wolfe................. 1999 195,000 68,250 -- -- 8,600 42,900 22,021
Secretary of the Company; 1998 187,252 65,538 -- -- 8,600 12,251 116,668
Vice President, General
Counsel 1997 175,000 35,000 -- -- 17,094 -- 721,090
and Secretary of Chicago
Bridge & Iron Company; and
Secretary of Chicago Bridge &
Iron Company B.V.
</TABLE>
- ---------------
(1) Salary paid in 1998 for actual period of employment by the Company: Robert
B. Jordan -- February 9, 1998.
(2) Bonus amounts include payments under the Incentive Compensation Plan (as
described under the caption "Organization and Compensation Committee Report
on Executive Compensation").
(3) Amounts reported are personal benefits and include club dues as follows:
Stephen P. Crain $29,742; Robert B. Jordan $39,480. Persons for whom no
amount is reported did not receive personal benefits, the value of which
exceeded the lesser of $50,000 or 10% of their annual salary and bonus.
(4) Restricted stock awards or units are valued at the closing price on the date
of grant. Participants receive dividends on the grants reported in this
column. Restricted stock awards granted to Robert B. Jordan vest in four
equal annual installments starting in September, 1999. Restricted stock
units granted to Gerald M. Glenn vest April 1, 2002 (as described under the
caption "Organization and Compensation
8
<PAGE> 11
Committee Report on Executive Compensation"). The number and value of the
aggregate restricted share holdings at the end of the last completed fiscal
year, based on the NYSE composite closing price of $13.75/share on December
31, 1999, for each named executive officer who held such shares are: Gerald
M. Glenn, 50,000, $671,875; Robert B. Jordan, 18,750, $257,800.
(5) The compensation reported for 1999 represents (a) the value of shares
reallocated to each named executive officer resulting from forfeitures of
other Participants pursuant to the Management Plan (as described below), (b)
contributions pursuant to the Chicago Bridge & Iron Savings Plan (the
"401(k) Plan") allocated to the executive officer's account, and (c) the
cost of allocations to each executive officer's account in a benefit
restoration plan (described under the caption "Pension and other retirement
benefits") for allocations pursuant to the 401(k) Plan which otherwise
exceed the maximum limit imposed upon such plan by the Internal Revenue Code
of 1986, as amended (the "Code"). For 1999, those three amounts, expressed
in the same order identified above, for each named executive officer are as
follows: Gerald M. Glenn, $21,477, $12,800 $48,880; Stephen P. Crain $233,
$12,800, $9,600; Robert B. Jordan $0, $12,800, $22,400; Timothy J. Wiggins
$5,128, $12,800, $17,600; Robert H. Wolfe $1,178, $12,800, $8,043. With
respect to Timothy J. Wiggins, the compensation reported also includes
$150,000 paid to him pursuant to an agreement whereby his receipt of
Management Plan Shares would be deferred.
MANAGEMENT PLAN
The Company has established the Chicago Bridge & Iron Management Defined
Contribution Plan (the "Management Plan"). The Management Plan is not qualified
under Section 401(a) of the Code and each participant's account is treated as a
separate account under Section 404(a)(5) of the Code. The designation of
participants, the amount of Company contributions, and the amount allocated to
individual participants was determined by the Management Board. Restrictions on
the Management Plan shares lapse on March 27, 2000, for all participants (except
with respect to one participant whose restrictions lapsed January, 1999).
Dividends are payable to the participants during that period.
As an incentive to increasing the long-term value of the Company, Mr. Glenn
had an agreement with Praxair, and Messrs. Duffy, Wiggins, and Wolfe have
agreements with CB&I, whereby each received special compensation related to the
initial public offering of the Company by Praxair, in March, 1997 (the "IPO"),
in the amounts of 462,835, 18,383, 110,298, and 36,766 shares, respectively.
Each of such officers, along with a group of approximately 48 other key
management employees, are participants in the Management Plan. In fulfillment of
Praxair's commitment, upon consummation of the IPO, the Company made a
contribution to the Management Plan in the form of 925,670 shares.
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 participating employees' 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 has adopted the Chicago Bridge & Iron Long-Term Incentive Plan
(the "Incentive Plan") for its executive officers, other management employees
and Supervisory Directors, which is a so-called "omnibus" plan. The Incentive
Plan allows the Company to provide long-term compensation in the following
forms: non-qualified options to purchase shares; 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 would be cash payments based on either the value
of the shares or appreciation in the price of the shares upon achievement of
specific financial goals. Selection of
9
<PAGE> 12
participating employees and the number of options to be granted are subject to
the approval of the Organization and Compensation Committee of the Supervisory
Board.
The exercise price of all options granted under the Incentive Plan may not
be less than the fair market value of the shares subject to the option on the
date the option is granted. Options are exercisable in accordance with the terms
set forth in individual award agreements. The expiration date of each option
shall not exceed 10 years from the date of grant.
Awards of restricted stock shall be subject to a period of restriction
during which the transfer shall be limited. Such restrictions shall lapse based
on the passage of time, the achievement of performance goals, or the occurrence
of other events as determined by the Organization and Compensation Committee.
Each performance unit shall have an initial value that is established by
the Organization and Compensation Committee at the time of grant. Holders of
performance units and shares shall be entitled to receive a payout on the number
and value of performance units and shares, based on the achievement during the
performance period of specified performance goals.
In the event of a change in control (as defined in the Incentive Plan),
unless otherwise prohibited under applicable law, all options shall become
immediately exercisable, the restriction period imposed on any restricted stock
award shall lapse and the payout opportunities attainable under all outstanding
awards of restricted stock, performance units and shares shall be deemed to have
been fully earned for the entire performance period.
OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables summarize option grants and exercises pursuant to the
Incentive Plan during the fiscal year 1999 to and by the executive officers
named in the Summary Compensation Table above, and the value of the options held
by such persons at the end of fiscal 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT VALUE
INDIVIDUAL GRANTS DATE
- ------------------------------------------------------------------------------------------------- ------------
(A) (B) (C) (D) (E)
NUMBER OF (F)
SECURITIES GRANT VALUE
UNDERLYING % OF TOTAL OPTIONS/ DATE
OPTIONS/SARS SARS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN FISCAL BASE PRICE EXPIRATION PRESENT
NAME (# SHARES)(1) YEAR ($/SHARE) DATE VALUE ($)(2)
---- ------------- ------------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Gerald M. Glenn.................. 51,200 30.0% 13.125 5/13/09 $266,240
Stephen P. Crain................. 10,600 6.2% 13.125 5/13/09 55,120
Robert B. Jordan................. 20,500 12.0% 13.125 5/13/09 106,600
Robert B. Jordan................. 2,500(3) 1.5% 13.500 9/10/09 13,400
Timothy J. Wiggins............... 12,300 7.2% 13.125 5/13/09 66,560
Robert H. Wolfe.................. 8,600 5.0% 13.125 5/13/09 44,720
</TABLE>
- ---------------
(1) All options were granted at market value and vest 25% per year starting May
13, 2000. 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).
(2) The estimated grant date present value reflected in the above table for all
options is determined using the following Black-Scholes model. The material
assumptions and adjustments incorporated in the Black-Scholes model in
estimating the value of the options reflected in the above table, other than
the grant of 2,500 options to Mr. Jordan, include the following: (a) an
exercise price of the option of $13.125 equal to the fair market value of
the underlying stock on the date of grant; (b) an interest rate of 5.54%
that represents the interest rate on a U.S. treasury security with a
maturity date corresponding to that of the
10
<PAGE> 13
option term; (c) volatility of 44.30% calculated using daily stock prices
for the thirty six months prior to the date of grant; (d) dividends at the
rate of $0.24 per share, representing the annualized dividends paid with
respect to a share of Common Stock at the date of grant; (e) an
approximately 11.53% reduction to reflect the probability of forfeiture due
to termination prior to vesting and approximately 9.63% reduction to reflect
the probability of a shortened option term due to termination of employment
prior to the option expiration date; and (f) an option term of ten years.
The ultimate values of options will depend on the future market price of
Common Stock, which cannot be forecast with reasonable accuracy. The actual
value, if any, an optionee will realize upon exercise of an option will
depend on the excess of the market value of the Common Stock over the
exercise price on the date the option is exercised.
The material assumptions and adjustments incorporated in the Black-Scholes
model in estimating the value of the 2,500 options granted to Mr. Jordan
reflected in the above table include the following: (a) an exercise price of
the option of $13.50 equal to the fair market value of the underlying stock
on the date of grant; (b) an interest rate of 5.92% that represents the
interest rate on a U.S. treasury security with a maturity date corresponding
to that of the option term; (c) volatility of 43.10% calculated using daily
stock prices for the thirty six months prior to the date of grant; (d)
dividends at the rate of $0.24 per share, representing the annualized
dividends paid with respect to a share of Common Stock at the date of grant;
(e) an approximately 11.53% reduction to reflect the probability of
forfeiture due to termination prior to vesting and approximately 9.78%
reduction to reflect the probability of a shortened option term due to
termination of employment prior to the option expiration date; and (f) an
option term of ten years. The ultimate values of options will depend on the
future market price of Common Stock, which cannot be forecast with
reasonable accuracy. The actual value, if any, an optionee will realize upon
exercise of an option will depend on the excess of the market value of the
Common Stock over the exercise price on the date the option is exercised.
(3) The option vests on September 10, 2006, but may vest on September 10, 2002
if the executive officer has held continuously until such date certain
shares granted as restricted stock for which the restrictions have lapsed.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE (1)
---- --------------- ------------ -------------------- --------------------
<S> <C> <C> <C> <C>
Gerald M. Glenn................... 0 NA 12,800/181,694 8,000/56,000
Stephen P. Crain.................. 0 NA 2,650/25,261 1,656/11,594
Robert B. Jordan.................. 0 NA 5,125/88,375 3,203/22,422
Timothy J. Wiggins................ 0 NA 3,075/43,014 1,922/13,453
Robert H. Wolfe................... 0 NA 2,150/32,144 1,344/9,406
</TABLE>
- ---------------
(1) Value is based on the NYSE composite closing price of $13.75 per share on
December 31, 1999.
11
<PAGE> 14
LONG-TERM INCENTIVE PLANS -- PERFORMANCE SHARE AWARDS IN LAST FISCAL YEAR
In 1999, under the Chicago Bridge & Iron Long-Term Incentive Plan, target
awards were allocated one third for each year beginning in the fiscal year 1999.
Target awards are subject to adjustment based upon measurement of earnings per
share for each fiscal year in which the measurement of performance is made.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK
PRICE-BASED PLANS
-------------------------------
(A) (C) (D) (E) (F)
(B) PERFORMANCE
NUMBER OF OR OTHER
SHARES, UNITS PERIOD UNTIL
OR OTHER MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS (#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- ------------- ------------ --------- -------- --------
<S> <C> <C> <C> <C> <C>
Gerald M. Glenn............................. 16,900 1999 2,816 5,633 8,450
2000 2,816 5,633 8,450
2001 2,816 5,634 8,450
Stephen P. Crain............................ 3,500 1999 583 1,116 1,749
2000 583 1,116 1,749
2001 583 1,117 1,749
Robert B. Jordan............................ 6,800 1999 1,133 2,266 3,399
2000 1,133 2,266 3,399
2001 1,133 2,267 3,399
Timothy J. Wiggins.......................... 4,100 1999 683 1,366 2,049
2000 683 1,366 2,049
2001 683 1,367 2,049
Robert H. Wolfe............................. 2,800 1999 466 933 1,400
2000 466 933 1,400
2001 466 934 1,400
</TABLE>
Actual performance against the performance goal for the fiscal year ended
December 31, 1999 has been determined and the stock earned has been allocated.
(See Summary Compensation Table -- LTIP -- Payouts).
PENSION AND OTHER RETIREMENT BENEFITS
Effective January 1, 1997, the Company adopted the Chicago Bridge & Iron
Savings Plan (the "401(k) Plan"), a tax qualified defined contribution pension
plan for eligible employees, including, but not limited to, the named executive
officers. Such plan consists of a typical voluntary pretax salary deferral
feature under Section 401(k) of the 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
the 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
12
<PAGE> 15
primary social security benefits and a portion of the value of benefits under
the terminated CBI Salaried Employee Stock Ownership Plan (1987) previously
sponsored by CBI Industries, Inc. The estimated annual benefit payable upon
retirement at normal retirement age for each of the named executive officers who
participate in the plan is: Stephen P. Crain, $16,673.
The Code limited the compensation used to determine benefits under the
401(k) Plan to $160,000 for 1999. Chicago Bridge & Iron Company adopted the
Chicago Bridge & Iron Company Excess Benefit Plan through which it contributes
benefits which would be paid under the 401(k) Plan in the absence of the IRS
limit. Such contributions are paid into a trust, with an independent trustee,
established for this purpose.
COMPENSATION OF DIRECTORS
Supervisory Directors who were not employees of the Company received an
annual retainer of $20,000, paid in quarterly installments, and $1,500 for
attendance at each Supervisory Board meeting, as well as an annual grant of
options to purchase 500 shares at an exercise price equal to the fair market
value of the shares at the time of the grant. Supervisory Directors who were
chairpersons of committees received 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 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.
TERMINATION AND EMPLOYMENT AGREEMENTS
The Company and Messrs. Crain, Jordan, Wiggins and Wolfe entered into
change of control severance agreements each providing that, in the event of a
termination of their respective employment with the Company (other than by
reason of the employee's willful misconduct or gross negligence) or a
significant reduction in their respective responsibilities, salary or benefits
or a substantive change in the respective location of their employment, within
the two-year period following a change of control of the Company, each will
receive a special lump-sum payment following separation equal to $750,000,
$1,000,000, $1,000,000 and $750,000, respectively. In addition, upon termination
for any reason (other than by reason of the employee's willful misconduct or
gross negligence) during the six-month period prior to a change of control, each
employee will be entitled to receive a special lump-sum payment (in the amount
previously set forth) minus the gross amount of any severance payments otherwise
paid to such employee, within ten days following a change of control. Each
employee who receives a special lump-sum payment is also entitled to receive
outplacement services at the expense of the Company. The agreements provide that
the Company will pay an amount necessary to reimburse each employee, on an
after-tax basis, for any excise tax due under Section 4999 of the Code, as a
result of such payment being treated as a "parachute payment" under Section 280G
of the Code. The receipt by each employee of any of the amounts payable pursuant
to the agreements is contingent upon the employee's execution of a release of
claims in favor of the Company. A change of control for purposes of such
agreements is deemed to occur if, other than in connection with the IPO, (i) any
person or group of persons other than Praxair or one of its subsidiaries becomes
the beneficial owner of 25% or more of the total voting power of the Company's
or any such subsidiary's outstanding securities, (ii) upon consummation of any
merger or other business combination of the Company or any subsidiary with or
into another person pursuant to which the shareholders of the Company or any
such subsidiary do not own, upon consummation of such combination, more than 50%
of the voting power and value of the stock of the surviving person, or (iii) if,
during any period of two years or less, a majority of the members of the
Company's Supervisory Board changes and new members were not nominated by at
least 75% of the Supervisory Directors then still in office who were Supervisory
Directors at the beginning of such period.
In addition, the Company has entered into employment arrangements with
Messrs. Glenn, Jordan, Wiggins and Wolfe to serve the Company as President and
Chief Executive Officer, Vice President -- Operations, Vice
President -- Treasurer and Chief Financial Officer, and Vice
President -- General Counsel
13
<PAGE> 16
and Secretary, respectively. Pursuant to these arrangements, Mr. Glenn's base
salary is $400,000 per year, Mr. Jordan's base salary is $265,000 per year, Mr.
Wiggins' base salary is $220,000 per year and Mr. Wolfe's base salary is
$175,000 per year. Such arrangements do not establish any required term of
employment. The arrangements provide for, among other things, participation in
Company bonus and incentive compensation programs, lump-sum payments, in the
amounts specified above, and in the case of Mr. Jordan, $1,000,000, in the event
of termination (or a significant reduction in levels of responsibility) within
two years of a sale of the Company and, except for Mr. Jordan, for a special
stock-based compensation award relating to the IPO (as described under the
caption "Management Plan"). Each employee is also entitled to participate in the
Company's relocation program and to receive either an automobile allowance of
$500 per month or the use of a Company-owned vehicle.
14
<PAGE> 17
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 three 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 1999
fiscal year as described below.
COMPENSATION PHILOSOPHY
The Company is committed to increasing shareholder value by growing its
business in the global marketplace. The Committee seeks to ensure that the
Company's compensation policies and practices are used effectively to support
the achievement of the Company's short- and long-term business objectives.
The Company's overall compensation philosophy is to remain competitive with
comparable companies while focusing on performance-based compensation. This
philosophy is premised on the fact that the Company must compete with a wide
variety of construction, engineering, heavy industrial and related firms in
order to attract and develop a pool of talented employees. The philosophy also
acknowledges the need to focus employees on the Company's financial performance.
The Company's compensation philosophy includes the following factors:
- Programs that will attract new talent and retain key people;
- Competitive pay with significant focus on incentive compensation;
- Equity compensation for top managers to motivate value creation for
all shareholders; and
- Plans with a higher percentage of pay "at-risk" (based on performance)
than typical marketplace practices.
In evaluating competitive practices, the Company considers competitive
market data provided by an independent compensation consultant, Hewitt
Associates LLC of Lincolnshire, Illinois. The data provided compares the
Company's compensation practices to a group of "comparator" companies. These are
companies that tend to have national and international business operations and
lines of business, and also include companies operating in the same geographic
areas and competing for management employees in the same areas of expertise as
the Company. The Committee reviews and approves the selection of comparator
companies based on its assessment of the comparability of the above factors. In
1999, the Committee reviewed and refined the selection of comparator companies
in light of the above factors.
The companies chosen for the comparator group used for compensation
purposes generally are not the same companies which comprise the peer group
index in the Performance Graph included in this Proxy Statement. Considering the
factors described above, the Committee believes that the Company's most direct
- ---------------
(1) The relevant SEC rule, Item 402(j) or Regulation S-K, does not define the
term "interlocking relationship."
15
<PAGE> 18
competitors for executive talent are not necessarily all of the companies that
would be included in a peer group established for comparing shareholder returns.
The four key elements of the Company's executive compensation are base
salary, annual incentives, long-term compensation, 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 the
executives' levels of responsibility, prior experience, breadth of knowledge,
internal equity within the Company, and external pay considerations.
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 1999 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 1999, Mr. Glenn received an increase in his rate of base salary of
$21,000 per year, or an increase of 5% to his base rate of $420,000 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
$441,000 as reflected in the Summary Compensation Table on page 8.
ANNUAL INCENTIVES
The Company adopted an Incentive Compensation Plan (the "Bonus Plan") which
took effect in fiscal 1997, and was revised in 1999. The Bonus Plan is an annual
short-term 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 1999, 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 150% of the aggregate of all participants' target amounts for that source.
The total pool for
16
<PAGE> 19
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. The CEO's individual performance bonus was determined by the
Committee.
For fiscal 1999, Mr. Glenn and the Company's other executive officers
received bonus payments pursuant to the Bonus Plan. Mr. Glenn received a bonus
payment of $350,000. Mr. Glenn's bonus payment was above his target bonus and
reflects the achievement of the corporate goals for 1999. In 1999, Mr. Glenn's
annual bonus payment represented 83% of his base salary as reflected in the
Summary Table on page 8, and depending on achievement of the respective goals
under the Plan, could have ranged from 0% to 113% of his base pay. Mr. Glenn's
bonus is somewhat above the median of annual incentive compensation paid other
executives at comparator companies for 1999. 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 the areas of leadership,
initiatives for new business development, and management development of the
other Company executives under Mr. Glenn's direction.
LONG-TERM INCENTIVES
In keeping with the Company's commitment to provide a total compensation
package that favors at-risk components of pay, long-term incentives comprise a
significant portion of an executive's total compensation package. The
Committee's objective is to provide executives with long-term incentive award
opportunities that are at or above the median of comparator companies, with the
actual realization of the opportunity dependent on the degree of achieving the
performance or other conditions of the award. As a key element of this
objective, it is the desire of the Committee to encourage continued executive
ownership of incentive award stock in order to align their long-term interests
with those of other shareholders.
Long-term incentives are provided pursuant to the Company's Long-Term
Incentive Plan ("Incentive Plan"). A new 1999 Incentive Plan was adopted by the
Company and approved by the shareholders in 1999. 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 1999
were: non-qualified stock options, Performance Shares and Restricted Stock
Units.
Stock options are granted under the Incentive Plan at an option price not
less than the fair market value of the Common Stock on the date of grant.
Accordingly, stock options generally have value only if the stock price
appreciates from the date the options are granted. This design focuses
executives on the creation of shareholder value over the long term,
identification with shareholders' interests and encourages equity ownership in
the Company. Stock options granted in 1999 to senior executives under the
Incentive Plan become exercisable beginning May 13, 2000, at a rate of 25% of
such options on such date, and an additional 25% on May 13 of each of the
following three years.
In order to provide employees with an incentive to retain ownership of
vested shares from Performance Share or Restricted Stock grants, in 1999 the
Committee approved a program, pursuant to the Incentive Plan, to grant
non-qualified stock options ("Retention Options") upon the vesting of
Performance Shares or Restricted Stock Shares. Retention Options granted in 1999
vest and become exercisable on the seventh (7th) anniversary of date of grant.
However, this vesting and exercisability is accelerated to the third (3rd)
anniversary of date of grant, if the participant still retains ownership of 100%
of the vested shares in connection with which the Retention Options have been
awarded.
Performance Shares are granted under the Incentive Plan subject to specific
Company performance goals set by the Committee and made a part of each
participant's grant, to be achieved over a defined Performance Period, and which
determine the number of Performance Shares actually to be earned and issued to a
participant. Accordingly, Performance Shares are issued and the award has value
only to the extent the performance goals are achieved. Performance goals are
generally set to achieve the same objectives of creation of long-term
shareholder value as in the case of stock options, with an additional focus on
the specific performance goal utilized.
17
<PAGE> 20
During 1999, participants were granted a "target" number of Performance
Shares to be earned based on the compound growth of Company earnings per share
(EPS) as compared to fiscal year 1997 results, at a rate of one-third (1/3) of
the total target for each of fiscal years 1999, 2000 and 2001. Such target
Performance Shares, or a portion thereof ranging from a minimum of 0% to a
maximum of 150% of such target, will be earned for each of such fiscal years if
the compound growth in EPS over the 1997 fiscal year falls in a specified range.
Restricted Stock Units are bookkeeping units kept on the books of the
Company, each of which, upon award to a participant, represents the right of the
participant to receive a share in the future upon the lapse of restrictions
subject to conditions set by the Committee. Restricted Stock Units are 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. Upon vesting, a participant is issued one share
for each Restricted Stock Unit vested. During the period of restriction,
participants are paid cash amounts corresponding to the time and amount of
actual dividends paid on issued shares. Awards of Restricted Stock Units made in
1999, subject to other conditions of forfeiture, will vest at a rate of 25% of
the number of Units awarded on each of the first four anniversaries of the date
of award.
In 1999, Mr. Glenn received options to purchase 51,200 shares with an
exercise price of $13.125, and a target award of 16,900 Performance Shares, both
of which were granted in accordance with the conditions described above, and as
detailed in the table on pages 10 and 12. The size and estimated value of such
grant and award is slightly above the median of comparator companies. Mr. Glenn
currently owns or has beneficial ownership of 580,468 shares, as shown on page
7. This equity interest provides an appropriate link to the interests of
shareholders.
In 1999, the Committee approved and the Company agreed to a change in
outstanding long term incentive arrangements with Mr. Glenn. As a special
incentive to performance and the success of the Company in the period during the
initial public offering of the Company's Common Stock by Praxair, Inc., the
Company's former parent, in March, 1997, a designated group of management
employees, including Mr. Glenn, received from Praxair a grant of shares under
the Chicago Bridge & Iron Management Defined Contribution Plan ("Management Plan
Shares"). In the absence of other contingent events provided for in the
Management Plan, such shares would otherwise have vested on March 26, 2000.
After thorough discussion, and considering the advice of its outside consultants
and legal counsel, the Committee determined that it was in the best interests of
the Company and shareholders to provide an incentive to Mr. Glenn to retain
ownership of such shares for a longer time period and to remain in the
employment of the Company. Accordingly, in September, 1999, the Company entered
into an agreement with Mr. Glenn whereby the receipt of his Management Plan
Shares would be deferred until April 1, 2002, or his termination of employment,
if earlier. For purposes of such incentive, Mr. Glenn was granted an award of
50,000 Restricted Stock Units. Such Restricted Stock Units will vest April 1,
2002, but will be forfeited if Mr. Glenn leaves the Company before that date for
reasons other than death, disability, or dismissal for the convenience of the
Company.
BENEFITS
In general, benefits provide a safety net of protection against financial
catastrophes that can result from illness, disability, or death. The benefits
offered by the Company to key executives are generally those offered to the
general employee population with some variation to promote replacement of
benefit opportunities lost to regulatory limits, as discussed on page 13. Data
provided to the Committee under a study conducted for it by Hewitt Associates
LLC indicates that the nature and value of the benefits being so provided by the
Company are competitive and in line with those offered by the comparator
companies and those within the Company's industry.
INTERNAL REVENUE CODE 162(M) CONSIDERATIONS
Section 162(m) of the U.S. Internal Revenue Code of 1986 ("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
18
<PAGE> 21
purposes of U.S. corporate income taxes unless it is "performance-based"
compensation and is paid pursuant to a plan meeting certain requirements of the
Code. The Committee's primary obligation is to promote, recognize and reward
performance which increases shareholder value, and accordingly will continue to
rely on performance-based compensation programs which are designed to achieve
that goal. The Committee believes that all compensation paid in respect of 1999
and earlier years was deductible, primarily because the aggregate amount of such
compensation for each executive officer was below the $1 million threshold under
Section 162(m). In 1999, upon the Company's recommendation, the Company's
shareholders approved a new Incentive Compensation Program and the 1999
Long-Term Incentive Plan that permit the Company to provide annual bonuses,
stock options and other stock-based awards to its executive officers. Such plans
were designed in a form that payments under such plans would qualify as
deductible performance-based compensation. Certain compensation paid in 1999 and
in future years pursuant to the Company's prior Bonus Plan and Long-Term
Incentive Plan may not be deductible to the extent such compensation causes the
$1,000,000 threshold to be exceeded for any of Company's five highest paid
executive officers. The Committee intends to give appropriate consideration to
the requirements of Section 162(m) in the operation of the Plan and Program, but
will also exercise its discretion to determine, according to the best overall
interests of the Company, whether to satisfy such requirements.
CONCLUSION
The Committee believes these executive compensation policies and programs
serve the interests of shareholders and the Company effectively. The various pay
vehicles offered are appropriately balanced to provide increased motivation for
executives to contribute to the Company's overall future success, thereby
enhancing the value of the Company for the shareholders' benefit.
We will continue to monitor the effectiveness of the Company's total
compensation program to meet the current needs of the Company.
Vincent L. Kontny (Chairman)
J. Dennis Bonney
Gary L. Neale
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<PAGE> 22
STOCK PERFORMANCE CHART
The Stock Performance Chart below shall not be deemed incorporated by
reference by a general statement incorporating by reference this proxy statement
into any filing under the Securities Act of 1933 or under the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts. There can be no assurance that the Common Stock performance will
continue into the future with the same or similar trends depicted in the graph
below. The Company will not make or endorse any predictions as to future
performance of the Common Stock.
The chart below compares the cumulative total shareholder return on the
Common Stock from the date of the IPO to the end of the last fiscal year with
the cumulative total return on the Russell 2000 Index and the Dow Jones Heavy
Construction Industry Index ("Peer Group Index") for the same period. The
comparison assumes $100 was invested in the Common Stock, the Peer Group Index
and the Russell 2000 Index on March 27, 1997, and reinvestment of all dividends.
COMPARISON OF TOTAL RETURNS
VALUE FOR EACH ONE HUNDRED DOLLARS INVESTED ON MARCH 27, 1997
(GAINS IN STOCK PRICE, DIVIDENDS AND REINVESTED DIVIDENDS)
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
03/27/97 12/31/97 12/31/98 12/31/99
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Chicago Bridge & Iron Company N.V. $100.00 $ 91.14 $ 69.59 $ 80.06
Peer Group Index $100.00 $ 83.28 $ 86.74 $ 81.47
Russell 2000 Index $100.00 $129.01 $125.40 $149.96
</TABLE>
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, 1999 (the "Annual Accounts"), as required under Dutch law and
the Articles of Association. Copies of the Annual Accounts and the report of the
Management Board
20
<PAGE> 23
can be obtained free of charge by shareholders and other persons entitled to
attend meetings of shareholders of the Company at the offices of the Company at
Polarisavenue 31, 2132 JH Hoofddorp, The Netherlands; at Kas-Associatie N.V.,
Spuistraat 172, 1012 VT Amsterdam, The Netherlands; and at the Bank of New York,
101 Barclay Street, 22nd Floor West, New York, New York 10286 USA from the date
hereof until the close of the Annual Meeting.
The Annual Accounts are prepared in accordance with Dutch law and
International Accounting Standards ("IAS"). However, the Annual Accounts are
substantially similar to the Financial Statements contained in the Company's
1999 Annual Report to Shareholders (the "Annual Report") accompanying this Proxy
Statement, which were prepared in accordance with generally accepted accounting
principals in the United States ("U.S. GAAP"). The Annual Accounts contain
certain disclosures not required under U.S. GAAP. In addition, the Management
Report required by Dutch law, although substantially similar to Management's
Discussion and Analysis of Financial Conditions and Results of Operations
included in the Annual Report, also contains information included in the
Company's Annual Report on Form 10-K and other information required by Dutch
law.
Under the Articles of Association, adoption of the Annual Accounts by the
shareholders discharges the members of the Management Board and the Supervisory
Board from liability in respect of the exercise of their duties during the
financial year concerned, unless an explicit reservation is made by the Annual
Meeting and without prejudice to the provisions of the law of The Netherlands
relating to liability upon bankruptcy. This discharge from liability does not
extend to matters not disclosed to shareholders.
The affirmative vote of a majority of the votes cast at the meeting is
required to adopt the Annual Accounts.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ADOPTION
OF THE ANNUAL ACCOUNTS, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 3
DISTRIBUTION OF PROFITS
The Company's Articles of Association provide that "from the profits
appearing from the annual accounts as adopted, such an amount shall be reserved
by the company as shall be determined by the management board which resolution
requires the approval of the supervisory board. The profits remaining after
(such) reservation ... are at the disposal of the general meeting for
distribution on the shares equally and proportionally and/or reservation." As
permitted under the Company's Articles of Association, interim dividends were
paid in 1999 on March 30, June 30, September 30 and December 30 ("interim
dividends").
It is proposed that the shareholders resolve on the distribution of 1999
profits in the amount of $0.24 per share and on the transfer of the balance of
the profits to retained earnings.
The affirmative vote of a majority of the votes cast at the meeting is
required to resolve on the distribution of profits.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
DISTRIBUTION OF PROFITS EQUAL TO INTERIM DIVIDENDS, AND PROXIES EXECUTED AND
RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
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<PAGE> 24
ITEM 4
EXTENSION OF AUTHORITY OF MANAGEMENT BOARD TO REPURCHASE UP TO 30% OF
THE ISSUED SHARE CAPITAL OF THE COMPANY UNTIL NOVEMBER 11, 2001
Under Dutch law and the Articles of Association, the Management Board may,
with the prior approval of the Supervisory Board, and subject to certain Dutch
statutory provisions, be authorized to repurchase issued shares on behalf of the
Company in amounts, at prices and in the manner authorized by the general
meeting of shareholders. Adoption of this proposal will allow the Company to
have the flexibility to repurchase its shares without the expense of calling
special shareholder meetings. Such authorization may not continue for more than
18 months, but may be given on an annual rolling basis. At the 1999 Annual
Meeting, the general meeting of shareholders authorized the Management Board to
repurchase up to 30% of the Company's issued share capital on behalf of the
Company in open market purchases, through privately negotiated transactions 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 21, 2000, the Company
had repurchased 2,171,000 shares under this authority. Such authority expires on
November 12, 2000.
The Management Board believes that the Company would benefit by extending
and expanding the authority of the Management Board to repurchase its share
capital. For example, to the extent the Management Board believes that the
Company's stock may be undervalued at the market levels at which it is then
trading, repurchases of its own share capital may represent an attractive
investment for the Company. Such shares, to the extent they are not canceled
pursuant to the authority requested in Item 5 below, could be used for any valid
corporate purpose, including use under the Company's compensation plans, sale in
connection with the exercise of outstanding options, or for acquisitions,
mergers or similar transactions. The reduction in the Company's issued capital
resulting from any such purchases (assuming such repurchased shares are
subsequently canceled) will increase the proportionate interest of the remaining
shareholders in the Company's net worth and whatever further profits the Company
may earn. However, the number of shares repurchased, if any, and the timing and
manner of any repurchases would be determined by the Management Board in light
of prevailing market conditions, the Company's available resources and other
factors that cannot now be predicted. The nominal value of the shares to be
acquired by the Company, already held by the Company or held by a subsidiary may
never exceed 10% of the issued share capital.
In order to provide the Company with sufficient flexibility, the Management
Board proposes that the general meeting of shareholders grant extended authority
for the repurchase of up to 30% of the current issued share capital (or over 2.7
million shares) in the open market, through privately negotiated transactions or
by means of a self-tender offer or offers and 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 2000 Annual Meeting until November 11,
2001.
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 11, 2001 to repurchase up to 30% of the Company's issued
share capital on behalf of the Company in the open market, through privately
negotiated transactions or by means of a self-tender offer or offers at prices
ranging up to 150% of the market price at the time of the transaction.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO GRANT EXTENDED AUTHORITY TO THE MANAGEMENT BOARD TO REPURCHASE SHARES OF THE
COMPANY'S SHARE CAPITAL, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
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<PAGE> 25
ITEM 5
CANCELLATION OF SHARES TO BE ACQUIRED BY THE
COMPANY IN ITS OWN SHARE CAPITAL
Under Dutch law and the Articles of Association, the Company may hold no
more than 10% of its issued share capital at any time. In order to allow
implementation of proposed repurchases contemplated by the authorization
requested in Item 4 above which would be in excess of 10% (and up to 30%) of the
then issued share capital, the Company must 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. This
resolution will replace last years resolution.
Prospective cancellation of shares shall occur if and when the Company
holds in excess of 9% of its issued share capital, at which time the Company
will cancel all or a portion of such shares, as determined by the Management
Board. The Company proposes to cancel such shares in two tranches, or such
higher number of tranches as the Management Board shall determine, with no
tranche to exceed 10% of the then issued share capital of the Company. The total
number of shares to be prospectively canceled by the Company will not exceed 20%
of the current issued share capital, or a total of approximately 1,900,000
shares.
With regard to the requirements of Section 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 after publication of such filing
in a daily newspaper distributed nationally in The Netherlands, provided no
opposition is instituted by creditors against such resolution. If opposition is
instituted, such resolution shall become effective as soon as possible, with due
observance of the law. Upon effectiveness of such resolution, the capital
decrease will be filed with the Commercial Register, the shareholders register
of the Company will reflect the cancellation of registered shares and bearer
share certificates and registered share certificates, if any, will be destroyed.
The above-mentioned filing with the Commercial Register will show which number
of shares have been canceled in the relevant tranche. For every cancellation
tranche, a filing will be made.
The affirmative vote of a majority of the votes cast, or the affirmative
vote of 2/3 of the votes cast if less than 50% of the issued capital is
represented at the meeting, is required to adopt the proposal to prospectively
cancel shares to be acquired by the Company of its share capital.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO PROSPECTIVELY CANCEL SHARES TO BE ACQUIRED BY THE COMPANY OF ITS SHARE
CAPITAL, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY
INSTRUCTIONS ARE INDICATED THEREON.
ITEM 6
AMEND THE ARTICLES OF ASSOCIATION TO ALLOW THE CHAIRMAN
OF THE MEETING OF SHAREHOLDERS TO SET THE RULES OF ORDER
FOR THE MEETING OF SHAREHOLDERS
It is desirable to the shareholders to have orderly proceedings at meetings
of the shareholders. The Supervisory Board believes that this can be best
accomplished if the Chairman of the meeting of shareholders is given clear
authority to establish the rules of conduct of the meeting. Therefore, the
Supervisory Board proposes that the Articles of Association be amended by adding
paragraph 3 to Article 38 to read as follows (unofficial English translation):
3. The chairman may adopt rules regarding, inter alia, the length of
time for which persons in attendance may speak. The chairman may
determine other rules if he considers this desirable with a view to
the orderly proceedings of the meeting. Any matters regarding the
proceedings at
23
<PAGE> 26
the general meeting of shareholders for which these articles of association
contain no provisions shall be decided upon by the chairman with due observance
of the provisions of Article 13 of Book 2 of the Civil Code.
The affirmative vote of a majority of the votes cast is required to adopt
the proposal to amend the Articles of Association to allow the Chairman to set
the rules of order at general shareholder meetings.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO AMEND THE ARTICLES OF ASSOCIATION TO ALLOW THE CHAIRMAN TO SET THE RULES OF
ORDER AT GENERAL SHAREHOLDER MEETINGS, AND PROXIES EXECUTED AND RETURNED WILL BE
SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 7
DETERMINE THE COMPENSATION OF SUPERVISORY DIRECTORS
WHO ARE NOT EMPLOYEES OF THE COMPANY
Under the Company's Articles of Association, the shareholders determine the
compensation of Supervisory Directors, including changes to their compensation.
As approved by the shareholders in 1997, Supervisory Directors who are not
employees of the Company receive an annual retainer of $20,000, a meeting
attendance fee of $1,500 and an annual grant of options to purchase 500 shares.
Committee chairmen receive an annual retainer of $3,000 and committee members
receive a meeting attendance fee of $1,000. Supervisory Director fees are more
fully described under the caption "Compensation of Directors".
The Company proposes to increase the remuneration of Supervisory Directors
who are not employees so that each director will receive annual grants of
options, which vest after one year, to purchase 2,000 shares and an annual
retainer of $22,000. The remainder of the remuneration for each Supervisory
Director will remain the same. If this proposal is not adopted, the Company will
continue to pay the compensation and fees previously established.
The affirmative vote of a majority of the votes cast is required to adopt
the proposal to establish the compensation of Supervisory Directors who are not
employees of the Company.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSAL
TO ESTABLISH COMPENSATION OF SUPERVISORY DIRECTORS WHO ARE NOT EMPLOYEES OF THE
COMPANY, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY
INSTRUCTIONS ARE INDICATED THEREON.
ITEM 8
RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN
AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR 2000
The Supervisory Board has appointed the firm of Arthur Andersen as the
Company's independent public accountants for the year ending December 31, 2000,
subject to ratification by the shareholders. Arthur Andersen has acted as the
Company's independent public accountants since inception and of the Company's
predecessors since 1939. Representatives of Arthur Andersen are expected to be
present at the Annual Meeting. They will have an opportunity to make a
statement, if they desire, and are expected to be available to respond to
appropriate questions.
The affirmative vote of a majority of the votes cast at the meeting is
required to ratify the appointment of Arthur Andersen as the Company's
independent public accountants for 2000.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF ARTHUR ANDERSEN'S APPOINTMENT AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR 2000, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
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<PAGE> 27
SHAREHOLDER PROPOSALS
Any proposal of a shareholder intended to be presented at the 2001 Annual
Meeting of Shareholders must be received at the Company's principal executive
offices no later than December 13, 2000, if the proposal is to be considered for
inclusion in the Company's proxy statement relating to such meeting, without
prejudice to shareholder's rights to cause a general meeting of shareholders to
be convened or to convene one under article 34.2 of the Articles of Association.
By Order of the Board of Supervisory
Directors
Gerald M. Glenn
Chairman of the Board of Supervisory
Directors
Amsterdam, The Netherlands
April 3, 2000
25
<PAGE> 28
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 4, 2000)
The undersigned registered holder of Shares of New York Registry (each
representing one Common Share of NLG 0.01 nominal amount of Chicago Bridge &
Iron Company N.V.), hereby appoints The Bank of New York, as New York Transfer
Agent and Registrar, through its agent, as the proxy of the undersigned to
attend and address the Annual General Meeting of Shareholders of Chicago Bridge
& Iron Company N.V. to be held in Amsterdam, The Netherlands on May 11, 2000
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 March 29, 2000, at such Meeting in
respect of the resolutions specified on the reverse side hereof.
NOTE: PLEASE DIRECT YOUR PROXY HOW IT IS TO VOTE BY PLACING AN X IN THE
APPROPRIATE BOX OPPOSITE THE RESOLUTIONS SPECIFIED ON THE REVERSE SIDE HEREOF.
CHICAGO BRIDGE & IRON COMPANY N.V.
P.O. BOX 11436
NEW YORK, NEW YORK 10203-0436
(Continued and to be dated and signed on the reverse side)
<PAGE> 29
1. To reappoint the following members of the Board of Supervisory
Directors to serve until the Annual Meeting of Shareholders in
2003 and until their successors shall have been duly appointed:
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
J. Dennis Bonney [ ] [ ] [ ]
Gerald M. Glenn [ ] [ ] [ ]
Vincent L. Kontny [ ] [ ] [ ]
2. To authorize the preparation of the annual [ ] [ ] [ ]
accounts and the report in the English
language and to adopt the Dutch Statutory
Annual Accounts of the Company for the fiscal
year ended December 31, 1999;
3. To approve the distribution of profits for [ ] [ ] [ ]
the fiscal year ended December 31, 1999 in the
amount of US$0.24 per share of Common Stock
previously paid as interim dividends;
4. To approve the extension of the authority [ ] [ ] [ ]
of the Management Board to repurchase up to
30% of the issued share capital of the
Company until November 11, 2001;
5. To cancel shares to be acquired by the [ ] [ ] [ ]
Company in its own share capital;
6. To amend the Articles of Association to allow [ ] [ ] [ ]
the Chairman to establish the rules of order
and grant authorization to implement the
amendment;
7. To determine the compensation of Supervisory [ ] [ ] [ ]
Directors who are not employees of the Company;
and
8. To approve the appointment of Arthur Andersen [ ] [ ] [ ]
as the Company's independent public accountants
for the fiscal year ending December 31, 2000.
Change of Address and
or Comments Mark Here [ ]
This Form must be signed by the
person in whose name the relevant
Common Share is registered on the
books of New York Transfer Agent and
Registrar. In the case of a
Corporation, the Form should be
executed by a duly authorized
Officer or Attorney.
Dated; __________________________________, 2000
-----------------------------------------------
-----------------------------------------------
Signature of Registered holder
Vote MUST be Indicated (x) in Black or Blue Ink. [X]
</TABLE>
THE SUPERVISORY BOARD RECOMMENDS A VOTE FOR MESSRS BONNEY, GLENN AND KONTNY AND
FOR ITEMS 2 - 8.
Sign, Date and Return the Form Promptly Using the Enclosed Envelope.
