<PAGE>
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 Prospectus Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
DRAVO CORPORATION
(Name of Registrant as Specified In Its Charter)
DRAVO CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:*
(4) Proposed maximum aggregate value of transaction:
- --------
*Set forth the amount on which the filing is calculated and state how it was
determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF DRAVO CORPORATION]
March 16, 1994
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders at
2:00 p.m. on Thursday afternoon, April 28, 1994, in the Monongahela Room on the
seventeenth floor of the Westin William Penn Hotel located in downtown
Pittsburgh.
A Proxy Card or Voter Direction Card is enclosed with the notice of
meeting and proxy statement. Whether or not you now plan to attend the annual
meeting, we urge you to sign, date and mail the enclosed card and return it in
the enclosed envelope at your earliest convenience. Regardless of the size of
your holding, it is important that your shares be represented.
Admission to the meeting will be by Admission Card only. If you plan to
attend, you may obtain an Admission Card by completing the Admission Card
Request Form and returning it along with your Proxy Card or Voter Direction
Card.
We look forward with pleasure to seeing you on April 28th.
Sincerely,
<TABLE>
<S> <C>
/S/ William G. Roth /S/ Carl A. Torbert, Jr.
William G. Roth Carl A. Torbert, Jr.
Chairman of the President and Chief
Board of Directors Executive Officer
</TABLE>
<PAGE>
DRAVO CORPORATION
Notice of Annual Meeting of Shareholders
April 28, 1994
The 1994 annual meeting of the shareholders of Dravo Corporation, a
Pennsylvania corporation (the "Corporation"), will be held in the Monongahela
Room on the seventeenth floor of the Westin William Penn Hotel, Pittsburgh,
Pennsylvania, on Thursday, April 28, 1994 at 2:00 p.m., Eastern Daylight Savings
Time, for the purpose of:
1. Electing three Directors to the class of the Board of Directors
whose term expires at the 1997 annual meeting of shareholders;
2. In a separate election, electing one Director to the class of the
Board of Directors whose term expires at the 1996 annual meeting of
shareholders;
3. Considering and taking action on the proposed Stock Option Plan of
1994, set forth as Appendix A to the accompanying Proxy Statement;
4. Electing certified public accountants to examine the financial
statements of the Corporation and its subsidiaries as of December 31, 1994,
and to report upon the financial statements to the shareholders as of
December 31, 1994; and
5. Transacting such other business as may properly be brought before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 9, 1994 as
the record date for determining shareholders entitled to notice of and to vote
at the annual meeting or any adjournment thereof.
A copy of the Corporation's Annual Report for the year ended December 31,
1993 is being mailed herewith to each shareholder.
Please sign, date and return the enclosed Proxy Card or Voter Direction
Card in the postage-paid and addressed envelope provided.
By Order of the Board of Directors
JAMES J. PUHALA,
Secretary
3600 One Oliver Plaza
Pittsburgh, Pennsylvania 15222-2682
March 16, 1994
<PAGE>
PROXY STATEMENT
This proxy statement and the related letter to shareholders, notice of
meeting and Proxy Card or Voter Direction Card are being mailed to the
shareholders of Dravo Corporation, a Pennsylvania corporation (the
"Corporation"), on or about March 16, 1994 in connection with the solicitation
by the Board of Directors of the Corporation of proxies to be voted at the
annual meeting of shareholders to be held at 2:00 p.m., Eastern Daylight Savings
Time, on Thursday, April 28, 1994 in the Monongahela Room on the seventeenth
floor of the Westin William Penn Hotel, Pittsburgh, Pennsylvania and any
adjournments thereof (the "1994 Annual Meeting"). Proxies are revocable until
exercised, but under Pennsylvania law such revocation is not effective until
notice thereof has been given to the Secretary of the Corporation at 3600 One
Oliver Plaza, Pittsburgh, Pennsylvania 15222-2682 or at the 1994 Annual Meeting.
The Board of Directors has fixed the close of business on March 9, 1994 as
the record date (the "Record Date") for determining shareholders entitled to
vote at the meeting.
On the Record Date the Corporation had outstanding 14,851,819 shares of
Common Stock, par value $1.00 per share (the "Common Stock"), 31,386 shares of
$2.475 Cumulative Convertible Series B Preference Stock, par value $1.00 per
share (the "Series B Preference Stock") and 200,000 shares of Series D
Cumulative Convertible Exchangeable Preference Stock, par value $1.00 per share
(the "Series D Preference Stock"). Each holder of record at the close of
business on the Record Date of Common Stock, Series B Preference Stock and
Series D Preference Stock is entitled to one vote for each share of any class
held. The holders of Common Stock and of Series B and Series D Preference Stock
vote as a single class on the elections of Directors and of certified public
accountants and on the adoption of the Stock Option Plan of 1994.
ELECTIONS OF DIRECTORS
The Corporation has a staggered Board of Directors (the "Board"), so that
the Directors are divided into classes whose members' terms expire in different
years. The Board has three classes with terms expiring presently at the annual
meetings of shareholders in 1994, 1995 and 1996. Pennsylvania law requires that
each class of Directors to be elected at a meeting of shareholders be elected in
a separate election.
Directors will be elected at the 1994 Annual Meeting to serve until the
annual meeting in the year their term expires and until their successors are
duly elected and qualified. The following are the Board's nominees for the three
positions in the class of the Board whose members' terms presently expire at the
1994 Annual Meeting, and after the election whose members' terms will expire at
the 1997 annual meeting of shareholders (the "1997 Class of Directors"):
<TABLE>
<CAPTION>
Nominee Term Term Expires
------- ---- ------------
<S> <C> <C>
Jack Edwards 3 years 1997
William E. Kassling 3 years 1997
Konrad M. Weis 3 years 1997
</TABLE>
A separate election is being held in accordance with the provisions of the
By-Laws of the Corporation and Pennsylvania law for one position in the class of
the Board of Directors whose members' terms expire at the 1996 annual meeting of
shareholders (the "1996 Class of Directors"). The following is the Board of
Directors' nominee for the one position in the 1996 Class of Directors:
<TABLE>
<CAPTION>
Nominee Term Term Expires
------- ---- ------------
<S> <C> <C>
Arthur E. Byrnes 2 years 1996
</TABLE>
Although it is expected that each of the four nominees of the Board listed
above will be available for election, if any of them is not a candidate at the
time the election occurs, it is intended that proxies solicited by the Board
will be voted for the election of a substitute nominee designated by the Board
upon the recommendation of the Nominating Committee of the Board unless the
number of Directors has been reduced, in which event such proxies will be voted
for the reduced number of nominees.
1
<PAGE>
Messrs. Edwards and Weis have previously been elected Directors by the
shareholders. Mr. Kassling was elected a Director on January 28, 1993, when the
Board was increased from nine to ten. Mr. Byrnes was elected a Director on
December 9, 1993, when the Board was increased from ten to eleven. Mr. Kassling
was subsequently designated as a member of the 1997 Class of Directors and Mr.
Byrnes was subsequently designated as a member of the 1996 Class of Directors.
In accordance with Board policy and having attained age 70, Mr. John E.
Dolan will not stand for re-election when his current term expires at the 1994
Annual Meeting. As a consequence of Mr. Dolan's retirement, the Board, at its
meeting on January 27, 1994, voted to reduce the number of Directors from eleven
to ten immediately after the elections at the 1994 Annual Meeting. As a result,
following the election of Directors at the 1994 Annual Meeting, the Board will
consist of ten members, divided into three classes with three Directors each in
the Classes of 1995 and 1997 and four Directors in the Class of 1996.
Record holders of the Corporation's Common Stock, Series B Preference Stock
and Series D Preference Stock have cumulative voting rights in the elections of
Directors. In the election to take place at the 1994 Annual Meeting for
positions in the 1997 Class of Directors, each shareholder entitled to vote
shall have the number of votes equal to the number of shares of Common Stock,
Series B Preference Stock and Series D Preference Stock owned by the shareholder
on the Record Date, multiplied by three (being the number of Directors to be
elected to positions in the 1997 Class of Directors); the shareholder may
allocate those votes in favor of any one or more candidates in such election as
the shareholder determines. The candidates receiving the highest number of votes
in such election up to the number of Directors to be elected will be elected.
Cumulative voting will not be applicable in the election for the one position in
the 1996 Class of Directors.
Under cumulative voting for Directors, unless otherwise indicated by the
shareholder, a vote for the nominees of the Board will give the named
proxyholders (the "Proxies") discretionary authority to cumulate all votes to
which the shareholder is entitled and to allocate them after the total vote
counts are available in favor of any one or more such nominees as the Proxies
determine, with a view to maximizing the number of nominees of the Board who are
elected. Except to the extent otherwise specifically indicated, the Proxies will
have the authority to cumulate in their discretion the maximum number of votes
represented by each holder's shares, including "withheld" votes. If a
shareholder desires specifically to allocate votes among one or more nominees,
the shareholder should so specify on the Proxy Card.
Nominations for Directors at the annual meeting, other than those made by
or on behalf of the Board of Directors, must be submitted in writing and
received by the Secretary of the Corporation at least 90 days prior to the
anniversary date of the immediately preceding annual meeting, and must comply
with certain other requirements as set forth in the By-Laws of the Corporation,
a copy of which may be obtained upon written request to the Secretary of the
Corporation at 3600 One Oliver Plaza, Pittsburgh, Pennsylvania 15222-2682.
In November, 1993, a shareholder submitted to the Corporation in accordance
with the By-Laws, a notice of nomination of a candidate for election as a
Director at the 1994 Annual Meeting. The Board is not soliciting proxies for the
election of this nominee.
Information Concerning Directors and Nominees for Director
There follows certain information, including business experience during the
past five years, concerning the nominees for Director and Directors of the
Corporation whose terms of office will extend beyond the 1994 Annual Meeting.
E. Eugene Bishop, Age 63, Director since December 10, 1992. Present term
expires 1995. Chairman of the Board, Morrison Restaurants, Inc. (food service
company) since June 1, 1992. Prior thereto Chairman and Chief Executive Officer
of Morrison Restaurants, Inc. Director of Delchamps Incorporated and SouthTrust
Bank of Mobile.
2
<PAGE>
Arthur E. Byrnes, Age 49, Director since December 9, 1993. Present term
expires 1994. Chairman, Deltec Asset Management Corp. (independent investment
counselors) since May, 1988. Director of Deltec International, S.A.(1) and Home
Federal Financial Corporation.
Jack Edwards, Age 65, Director since July 26, 1990. Present term expires
1994. Attorney. Partner in the firm of Hand, Arendall, Bedsole, Greaves &
Johnston since January, 1985.(2) Director of The Southern Company, Holnam, Inc.
and Northrop Corporation.
James C. Huntington, Jr., Age 65, Director since January 28, 1988. Present
term expires 1996. Independent businessman since August, 1988. Senior Vice
President of American Standard, Incorporated (manufacturer of air conditioning,
building products and transportation equipment) from January, 1977 until
retirement in August, 1988. Director of Cyprus AMAX Minerals Company, Alumax
Inc. and Aztec Mining Company Limited.
Willard L. Hurley, Age 67, Director since June 26, 1986. Present term
expires 1996. Retired. Chairman of the Board and Chief Executive Officer of
First Alabama Bancshares, Inc. (banking) from January, 1984 until retirement in
August, 1990.
William E. Kassling, Age 50, Director since January 28, 1993. Present term
expires 1994. Chairman, Chief Executive Officer and President of Westinghouse
Air Brake Company (supplier of air brake systems and related products) since
March 9, 1990. Prior thereto Vice President, Group Executive, Railway Products
Group, American Standard, Incorporated. Director of Scientific Atlantic, Inc.
William G. Roth, Age 55, Director since June 25, 1987. Present term expires
1995. Chairman of the Board of Directors of the Corporation since December,
1989. Prior thereto Chairman of the Board of Directors and Chief Executive
Officer of the Corporation. Director of Amcast Industrial Corporation and
Teknowledge Corp.
Carl A. Torbert, Jr., Age 58, Director since June 23, 1988. Present term
expires 1995. President and Chief Executive Officer of the Corporation since
December, 1989 and since June, 1984 President of Dravo Natural Resources
Company. Prior thereto Senior Vice President of the Corporation.
Konrad M. Weis, Age 65, Director since October 22, 1981. Present term
expires 1994. Retired. President, Chief Executive Officer and Director, Bayer
USA Inc. (specialty chemicals, pharmaceuticals, imaging and graphic systems)
from June, 1984 until retirement in July, 1991. Director of Michael Baker Corp.
Robert C. Wilburn, Age 50, Director since April 23, 1987. Present term
expires 1996. President and Chief Executive Officer, The Colonial Williamsburg
Foundation (educational and cultural institution) since August 17, 1992. Prior
thereto President, Carnegie Institute and Carnegie Library of Pittsburgh.
Director of HARSCO, Inc.
Security Ownership of Certain Beneficial Owners
The following table sets forth information, as of January 21, 1994, as to
beneficial ownership of shares of the outstanding Common Stock, Series B
Preference Stock and Series D Preference Stock of the Corporation:
- ---------
1. See "Security Ownership of Certain Beneficial Owners" at page 4.
2. Hand, Arendall, Bedsole, Greaves & Johnston provides legal services to the
Corporation.
3
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership (1)
Title of Name and Address Aggregate Percent of
Class of Beneficial Owner Shares Held Class (2)
----- ------------------- ----------- ---------
<S> <C> <C> <C>
Common Stock Cowen & Company 969,300(3) 6.5%
Financial Square
New York, NY 10005-3597
Common Stock Deltec International, S.A. 929,300(4) 6.3%
535 Madison Avenue
New York, NY 10022
Common Stock Neuberger & Berman 857,600(5) 5.8%
605 Third Street
New York, NY 10158-3698
Common Stock Norwest Corporation 1,673,971(6) 11.3%
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-1026
Common Stock The Prudential Insurance 1,609,700(7) 9.8%
Company of America, Inc.
Prudential Plaza
Newark, NJ 07102-3777
Series B Floyd A. Mechling 21,000 66.9%
Preference Stock 5 North Calibogue Cay
Hilton Head Island, SC 29928-2913
Series B Nations Bank of South 10,386 33.1%
Preference Stock Carolina, N.A.
P.O. Box 16
Hilton Head Island, SC 29938
as Trustee U/A with D.L. Mechling
for the Benefit of Gladys H. Hale
Series D The Prudential Insurance 200,000(7) 100%
Preference Stock Company of America, Inc.
Prudential Plaza
Newark, NJ 07102-3777
</TABLE>
- ---------
1. For purposes of the foregoing table, a "beneficial owner" includes any
person who directly or indirectly has or shares the power to vote or to
direct the voting of shares of the Corporation's stock or who directly or
indirectly has or shares the power to dispose of or to direct the
disposition of such shares.
2. As of January 21, 1994 there were 14,848,603 shares of Common Stock, 31,386
shares of Series B Preference Stock and 200,000 shares of Series D
Preference Stock of the Corporation outstanding.
3. Cowen & Company has filed with the Securities & Exchange Commission under
the Securities Exchange Act of 1934 Schedule 13G which disclosed that as of
December 31, 1993 Cowen & Company had sole voting and investment power with
respect to 260,900 shares, shared voting power with respect to 162,500
shares, and shared investment power with respect to 708,400 shares of
Common Stock of the Corporation.
4. On November 9, 1993 Deltec International, S.A. filed with the Securities
and Exchange Commission under the Securities Exchange Act of 1934 Amendment
No. 1 to Schedule 13D which disclosed that as of October 28, 1993 Deltec
International, S.A., through its subsidiaries, Deltec Asset Management
Corporation, The Deltec Banking Corporation Limited and Deltec Panamerica
Trust Company Limited,
4
<PAGE>
(the address of each of which is the same as Deltec International, S.A.),
has sole voting and investment power with respect to 218,100 shares and
shared voting and investment power with respect to 711,200 shares of Common
Stock of the Corporation. Arthur E. Byrnes, a Director of the Corporation
and a nominee for election at the 1994 Annual Meeting, is the Chairman of
Deltec Asset Management Corporation and a director of Deltec International,
S.A.
5. Neuberger & Berman has filed with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 Schedule 13G which disclosed that
as of December 31, 1993 Neuberger & Berman had sole voting power with
respect to 333,261 shares and shared investment power with respect to
857,600 shares of Common Stock of the Corporation.
6. Norwest Corporation has filed with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 Amendment No. 9 to Schedule 13G
on behalf of itself and its directly and indirectly owned subsidiaries,
Norwest Colorado, Inc., One United Bank Center, 1700 Lincoln Street,
Denver, Colorado 80274, and Norwest Bank Colorado, National Association,
1700 Broadway, Denver, Colorado 80274, which disclosed that as of December
31, 1993 Norwest Corporation, directly and indirectly through its
subsidiaries, had sole voting power with respect to 1,469,471 shares, sole
investment power with respect to 1,668,625 shares, shared voting power with
respect to 10,200 shares, and shared investment power with respect to 4,646
shares of Common Stock of the Corporation.
7. The Prudential Insurance Company of America has filed with the Securities
and Exchange Commission Amendment No. 6 to Schedule 13G which disclosed
that the 200,000 shares of Series D Preference Stock owned by it are
presently convertible into a total of 1,600,000 shares of Common Stock of
the Corporation. Said Amendment No. 6 also disclosed that as of December
31, 1993 The Prudential Insurance Company of America had sole investment
and voting power with respect to 7,500 additional shares and shared voting
and investment power with respect to 2,200 additional shares of Common
Stock. The total of the foregoing, 1,609,700 shares, would represent 9.8%
of the Corporation's Common Stock.
Ownership by Management of Equity Securities
The following table sets forth information as of January 21, 1994
concerning the beneficial ownership, direct or indirect, of shares of Common
Stock of the Corporation, including shares of Common Stock as to which a right
to acquire beneficial ownership exists (for example, through the exercise of
stock options, conversions of securities or various trust arrangements) within
the meaning of Rule 13d-3(d)(1) of the Securities Exchange Act of 1934, of each
nominee for Director, each Director whose term will extend beyond the 1994
Annual Meeting, each of the five most highly compensated executive officers of
the Corporation named in the Summary Compensation Table on page 7 hereof ("Named
Executives") and all Directors, nominees for Director and executive officers as
a group. No shares of Series B Preference Stock or Series D Preference Stock are
beneficially owned by any Director, nominee for Director or executive officer of
the Corporation.
5
<PAGE>
<TABLE>
<CAPTION>
Number of Shares of Common Stock
Beneficially Owned on January 21, 1994
-------------------------------------------------------
Number of Percent of
Shares Stock Outstanding
Beneficially Options and Aggregate Common Stock
Owned SARs (1) Total Owned (2)
----- -------- ----- ---------
<S> <C> <C> <C> <C>
E. Eugene Bishop 1,000 -- 1,000 --
Arthur E. Byrnes 10,000 -- 10,000 --
Jack Edwards 200 -- 200 --
Carl A. Gilbert 94 64,500 64,594 --
James C. Huntington, Jr. 6,000 -- 6,000 --
Willard L. Hurley 516(3) -- 516 --
William E. Kassling 3,000 -- 3,000 --
Ernest F. Ladd, III 7,852(4) 97,000 104,852 --
John R. Major 734 33,400 34,134 --
H. Donovan Ross 2,994 78,500 81,494 --
William G. Roth 48,000 420,000 468,000 3.16%
Carl A. Torbert, Jr. 6,177 192,300 198,477 1.34%
Konrad M. Weis 1,705(5) -- 1,705 --
Robert C. Wilburn 200 -- 200 --
All Directors, nominees for Director
and executive officers as a group
(17 persons) 93,157 947,050 1,040,207 7.02%
</TABLE>
- ---------
1. Includes stock options of the persons and group named above which are
currently exercisable. No separately granted SARs are presently
outstanding. See page 8 for further information under the heading
"Option/SAR Exercises and Holdings."
2. Percentages of less than 1 percent are omitted.
3. Owned jointly with his wife. Includes 5 shares owned by Mr. Hurley's wife,
as to which beneficial ownership is disclaimed.
4. Includes 3,439 shares owned by Mr. Ladd's wife, as to which beneficial
ownership is disclaimed.
5. Owned jointly with his wife.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following summary compensation table sets forth the compensation
awarded, accrued or paid for each of the Named Executives as of December 31,
1993, for services rendered in all capacities during the fiscal year ended
December 31, 1993 and for the previous two years.
6
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------- -----------------------------------
Awards Payouts
--------------------- ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted All
Annual Stock Options/ LTIP Other
Name and Salary Bonus Compensation Award(s) SARs Payouts Compensation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Carl A. Torbert, Jr. 1993 300,000 -- -- -- 40,000 -- --
President & 1992 300,000 -- -- -- 35,000 -- --
Chief Executive 1991 300,000 -- -- -- 37,000 -- --
Officer
Ernest F. Ladd, III 1993 188,700 -- -- -- 10,000 -- --
Executive Vice 1992 185,000 -- -- -- 10,000 -- --
President, 1991 185,000 -- -- -- 12,500 -- --
Finance & Adm.
Carl A. Gilbert 1993 178,750 41,500 -- -- 10,000 -- --
Senior Vice 1992 175,000 66,500 -- -- 10,000 -- --
President & 1991 175,000 33,800 -- -- 12,500 -- --
President, Dravo
Lime Company
H. Donovan Ross 1993 178,500 -- -- -- 10,000 -- --
Senior Vice 1992 175,000 -- -- -- 10,000 -- --
President & 1991 175,000 -- -- -- 12,500 -- --
President, Dravo
Basic Materials
Company
John R. Major 1993 133,000 -- -- -- 5,000 -- --
Vice President, 1992 130,000 -- -- -- 5,000 -- --
Administration 1991 130,000 -- -- -- 7,000 -- --
</TABLE>
Stock Options and Stock Appreciation Rights
The following table presents information concerning the grant of stock
options and stock appreciation rights in the fiscal year ended December 31, 1993
to the Named Executives.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
Number of
Securities % of Total
Underlying Options/SARs
Options/ Granted to Exercise or Grant Date
SARs Granted Employees in Base Price Present Value
Name (#) (1) Fiscal Year ($/Sh) Expiration Date ($) (2)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
C.A. Torbert, Jr. 40,000 25.3% 11.1250 7/21/03 255,600
E.F. Ladd, III 10,000 6.3% 11.1250 7/21/03 63,900
C.A. Gilbert 10,000 6.3% 11.1250 7/21/03 63,900
H.D. Ross 10,000 6.3% 11.1250 7/21/03 63,900
J.R. Major 5,000 3.2% 11.1250 7/21/03 31,950
</TABLE>
- ---------
(1) All grants shown were in the form of non-statutory stock options granted at
100% of the fair market value of the Corporation's Common Stock at the date
of grant. The options may be exercised after one year but no more than ten
years from the date of grant and only while in the employ of the
Corporation or within three (3) months following termination of employment
and only to the extent that the option would be exercisable by the grantee
at the time of termination. Notwithstanding the foregoing, in the
7
<PAGE>
event that termination is by reason of retirement, permanent disability or
death, the option may be exercised in whole or in part until the earlier of
(1) the expiration of the term of the option, or (2) five years after said
termination. In the event the grantee dies within five years following
retirement or termination by reason of permanent disability, the estate may
exercise the option until the earlier of (1) the expiration of the term of
the option, or (2) five years after said employee's termination. For this
purpose, the grantee may designate to the Compensation Committee the person
or persons to whom the rights under the option shall pass in the event of
death. In the event of a change in control, the holder may be entitled to
payments in respect of certain unexercised options, and certain unmatured
options may become immediately exercisable. See "Severance Arrangements" at
page 9 below.
(2) Grant date present value determined using Black-Scholes valuation
methodology. In accordance with the Securities and Exchange Commission's
guidelines, the following assumptions were used with the Black-Scholes
methodology to determine the present values: Expected volatility .3831;
Risk-free rate of return 5.25%; Dividend yield 0%; Option term 10 years;
One year vesting discount 3%. In order to recognize this gain, the value of
the Corporation's Common Stock would increase 57.4% (i.e., the stock price
would increase from the grant price of $11.125 to approximately $17.51).
Option/SAR Exercises and Holdings
The following table presents information with respect to the Named
Executives concerning the exercise of options and/or SARs during the fiscal year
ended December 31, 1993, and unexercised options and SARs held by such
individuals as of December 31, 1993.
Aggregate Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Value
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Value Realized Unexercised In-the-Money
(market price Options/SARs Options/SARs
Shares at exercise at FY-End at FY-End
Acquired on date less option (#) ($)
Exercise price) Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
C.A. Torbert, Jr. 0 0 192,300/ 174,125/
40,000 0
E.F. Ladd, III 0 0 97,000/ 53,594/
10,000 0
C.A. Gilbert 0 0 64,500/ 53,594/
10,000 0
H.D. Ross 0 0 78,500/ 53,594/
10,000 0
J.R. Major 0 0 33,400/ 30,688/
5,000 0
</TABLE>
Executive Benefit Plan
The Corporation's Executive Death and Disability Income Plan, as adopted in
October 1980, was amended and restated by the Board effective July 1, 1984, and
redesignated the Executive Benefit Plan.
Participation in the Plan is limited to high-ranking officers of the
Corporation and its subsidiaries as selected by the Compensation Committee of
the Board. The Plan, which is noncontributory, affords retirement,
pre-retirement death, and disability benefits. The benefits under the Executive
Benefit Plan supplement and are offset by benefits payable from the
Corporation's broad-based benefit programs.
Retirement benefits are calculated pursuant to a final average earnings
formula reduced by benefits payable under the Corporation's pension plan at
normal retirement (age 65). The Compensation
8
<PAGE>
Committee of the Board may approve early retirement benefits after age 55. The
following chart shows the estimated straight-life annual benefits payable at
normal retirement age to eligible participants in specified earnings and years
of service classifications. These estimates are before reduction for benefits
payable under the Corporation's pension plan and are not subject to any
deduction for Social Security benefits or other offset amounts. Messrs. Gilbert,
Ladd, Major, Ross and Torbert are participants in the Plan, having 20, 32, 8, 30
and 35 years of credited service, respectively.
<TABLE>
<CAPTION>
Estimated Annual Retirement Benefit
Annual Average Earnings*
Years of ------------------------------------------------------------------------
Service $100,000 $200,000 $300,000 $400,000 $500,000 $600,000
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
5 $ 15,000 $ 30,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000
10 30,000 60,000 90,000 120,000 150,000 180,000
15 45,000 90,000 135,000 180,000 225,000 270,000
20 47,500 95,000 142,500 190,000 237,500 285,000
25 50,000 100,000 150,000 200,000 250,000 300,000
30 52,500 105,000 157,500 210,000 262,500 315,000
35 55,000 110,000 165,000 220,000 275,000 330,000
40 57,500 115,000 172,500 230,000 287,500 345,000
</TABLE>
- ---------
* Earnings for this purpose are amounts reported as Annual Compensation in the
Summary Compensation Table, averaged over the five years preceding
retirement.
In the event of the participant's death, the Plan provides a surviving
spouse an annual benefit equal to 45% of the participant's compensation (basic
annual salary at death plus any incentive compensation paid in the 12-month
period preceding death), reduced by the periodic surviving spouse benefit
payable under the Corporation's pension plan, if applicable.
The disability benefit provided under the Plan is an annual amount equal to
60% of the participant's compensation (basic annual salary at the onset of
disability plus any incentive compensation paid in the 12-month period preceding
the onset of disability), reduced by benefits payable under, and by amounts used
as an offset in, the Corporation's long-term disability plan.
Directors' Compensation
Directors who are not officers or employees of the Corporation receive, for
all services as Directors, remuneration of $14,400 per year plus $1,000 per
meeting for attendance at Committee meetings and regular and special meetings of
the Board. The Chairmen of the Standing Committees of the Board are compensated
an additional $1,000 per year for serving as Chairmen. Directors who are also
officers or employees of the Corporation do not receive any additional
remuneration for so serving.
A new stock option plan will be presented to the shareholders for approval
at the 1994 Annual Meeting. Under that plan each Director who is not an officer
or employee of the Corporation will annually be granted options to purchase
1,500 shares of Common Stock of the Corporation. See "Proposal to Approve the
Dravo Corporation Stock Option Plan of 1994" at page 14 below.
Severance Arrangements
The Corporation has entered into severance arrangements with Messrs.
Gilbert, Ladd, Major, Ross, Torbert and three other executive officers,
including the Chairman of the Board of the Corporation, William G. Roth. An
executive receives benefits under these agreements only in the event of a change
in control (as defined in the agreements) of the Corporation followed by either
a termination of such officer's employment by the Corporation other than
termination due to death, disability, retirement at normal retirement age
(usually 65), or for cause (all as defined in the agreements), or by a
termination of employment at the option of the executive for good reason (as
defined in the agreements). In such event, the executive (except for Mr. Roth,
whose agreement affords only the benefits set forth in (ii) below) is entitled
to receive in addition to any amounts otherwise payable to him (i) three (or a
proportionately
9
<PAGE>
smaller multiple if the executive's age is within three years of his normal
retirement age) times the sum of his base salary (as defined) plus the average
cash award received by him under the Corporation's Incentive Compensation Plan
for the prior two years; (ii) payments with respect to stock options which were
outstanding for at least six months prior to the date of termination measured by
the difference between the higher of the then market price or the highest price
paid per share in the transaction resulting in the change in control and the
exercise price of the options, and acceleration of certain unmatured options;
(iii) credit for purposes of the Corporation's pension plan as though he had
remained in the employ of the Corporation for three years after the date of
termination, at his then covered remuneration plus certain annual increases;
(iv) continued participation in the Corporation's Executive Benefit Plan as
though the executive were continuously an employee of the Corporation at his
then compensation for a period of three years after the date of termination; and
(v) continued participation in all other benefit plans for three years after the
date of termination. The agreements are for a five-year term, and all of the
agreements provide for an automatic renewal for an additional five-year term
unless notice of termination is provided to the executive prior thereto.
Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
Objectives of the Executive Compensation Program
In order to attain its short-and long-term performance objectives, the
Corporation must attract, motivate and retain outstanding individuals.
Accordingly, the Corporation will provide a total executive compensation package
that will enable it to attract, motivate and retain such individuals and align
their success with that of shareholders.
The following general principles guide all of the Corporation's executive
officer compensation programs. The programs are designed in the aggregate to
support a consistent, organization-wide philosophy which is internally equitable
and externally competitive. The programs are directed toward securing and
retaining the services of outstanding individuals who exhibit a high degree of
business responsibility, personal integrity and professionalism. The programs
provide key executives with a mix of total cash compensation, including base
salaries targeted at the middle of the competitive salary market and a
formula-determined Incentive Compensation Program (ICP) opportunity supportive
of the business planning process and targeted to produce awards at the 50th
percentile of competitor organizations based on appropriate corporate results.
The base salaries are based upon general industry data for companies with
comparable revenues reflecting positions with comparable responsibilities. The
award targets under the Incentive Compensation Plan are similarly established.
The Company annually reviews published surveys in the competitive market (e.g.,
Wyatt ECS, Towers Perrin Compensation Data Bank). Competitor organizations are
defined annually as part of the planning process and include selected natural
resource companies engaged in the production and sale of selected construction
materials, as well as companies selected on the basis of broader industry
comparison (e.g., comparably sized general industry companies). Variability of
actual payments in the ICP, both up and down, is a function of business
objectives approved each year by the Compensation Committee of the Board. The
long-term incentive component of the program is provided by the Dravo
Corporation Employee Stock Option Plan of 1988 ("Long-Term Incentives") and
emphasizes long-term incentive opportunity for the key individuals at the 50th
percentile of competitor organizations. The Long-Term Incentives are designed to
encourage stock ownership and executive retention. Executive benefits are
provided on a competitive basis but are not emphasized.
All programs are developed and administered in such a fashion as to fulfill
the commitment of the Corporation to nondiscrimination as to race, age, sex, or
other factors unrelated to an individual's performance, and to comply with all
applicable federal, state and local laws and regulations.
Base Salary Program
The level of base salary paid to executive officers in general and to the
Chief Executive Officer in particular is determined on the basis of performance,
experience and such other factors that may, from
10
<PAGE>
time to time, be appropriately considered by the Compensation Committee of the
Board. Specific marketplaces which the Corporation uses in the analysis of base
salary competitiveness are determined on the basis of the nature and level of
the position(s) in question and the labor market(s) from which the qualified
individuals would be recruited. The primary marketplace in which the Corporation
desires to be competitive for key executives is the construction-related,
natural resource industry. For positions which are not specific to the
construction-related, natural resource industry (e.g., human resources, finance,
etc.), the relevant marketplace(s) is expanded to include general industry
companies of comparable size. Annual salary increase budgets are based on such
factors as corporate performance, general economic conditions, marketplace
compensation trends, and the appropriateness of aggregate individual pay levels.
As indicated in the Summary Compensation Table, there was no salary increase for
the Chief Executive Officer in 1993.
Incentive Compensation Program (ICP)
The purposes of the ICP are to encourage and reward management achievements
that contribute to the value of the Corporation; focus participants' efforts on
specific performance areas and objectives established by the organization
recognizing individual and team performance which support overall corporate
success; communicate key corporate and subsidiary company priorities through the
compensation program; provide an element of compensation which varies directly
with performance on both the upside and the downside; provide managers and other
key employees a competitive 50th percentile of competitor organizations' annual
incentive compensation opportunity; utilize programs and approaches which are
consistent with industry and other competitors' practices; and provide
additional motivation toward achievement of predetermined levels of excellence.
The ICP was adopted by the Board in January, 1989, to replace the Executive
Incentive Compensation Plan which had been adopted in 1983.
The ICP is a target incentive plan which provides for the establishment of
threshold, target and maximum levels of awards based on performance against
specific predetermined performance objectives. The business objectives include
Earnings per Share from continuing operations, pre-allocation earnings and gross
profit for Corporate, Divisional and Sub-unit objectives, respectively. For the
Chief Executive Officer, the performance objective is based upon earnings per
share from continuing operations. For the other Named Executives, there are
three performance components: earnings per share from continuing operations;
individual performance; and, as appropriate, division operating performance. The
Plan is administered by the Compensation Committee of the Board, which is
comprised exclusively of Directors who are not past or current employees. Awards
may be made under the Plan to officers and key employees of the Corporation and
its subsidiaries who are in a position to make significant contributions to the
financial success of the Corporation. The Chairman does not participate in the
ICP.
Prior to the beginning of the 1993 Plan year, financial measures were
established for corporate, divisional and profit center performance for the
year, and certain personal objectives were established for each participant
except the Chief Executive Officer. Recommendations for 1993 as to proposed
participants, threshold, target and maximum award levels and allocation of
awards among the performance components for each individual were made by the
Chief Executive Officer to the Compensation Committee. The final determination
as to participants and awards was made solely by the Committee.
In January of 1994, each participant's award was determined based upon
performance against the preestablished performance objectives. Unless the
established performance objectives had been met, the awards to affected
employees would have been reduced or eliminated entirely. If the Corporation's
profit from continuing operations for a Plan year had been less than 75% of the
threshold corporate objective established for that year, the awards to all Plan
participants would have been reduced, with the amount of reduction being tied to
the shortfall in earnings. If the Corporation had failed to earn a profit from
continuing operations for a Plan year, no awards could have been made. For 1993,
neither Dravo Corporation nor Dravo Basic Materials Company achieved threshold
performance. Consequently, no awards were paid to either group (i.e., the Chief
Executive Officer and corporate staff executives and Dravo Basic Materials
Company executives).
11
<PAGE>
In the event of extraordinary circumstances the Committee may make
adjustments to incentive award amounts as appropriate to maintain the fairness
of the Plan. Awards are paid in cash.
The amount available for incentive awards in any Plan year is the aggregate
of individual awards for the year. The only award to any of the Named Executives
under the Plan in respect of 1993 was an award of $41,500 to Mr. Gilbert because
Dravo Lime Company achieved operating earnings performance above the
pre-determined threshold objective.
Long-Term Incentives
The purposes of long-term incentive compensation at the Corporation are to
focus key executives' efforts on performance which will increase the value of
the Corporation for its shareholders; align the interests of key executives with
those of the shareholders by encouraging share ownership; provide a 50th
percentile of competitor organizations long-term incentive and capital
accumulation opportunity; and provide a significant retention incentive for key
individuals.
The Corporation's Stock Option Plan of 1978 (the "1978 Plan"), which
terminated in January, 1988, the Long-Term Incentive Award Plan of 1983 (the
"1983 Plan"), which terminated in July, 1993, and the Employee Stock Option Plan
of 1988 (the "1988 Plan") authorize the granting of options and stock
appreciation rights ("SARs"), whether separately or in tandem with each other.
The 1978 Plan, the 1983 Plan and the 1988 Plan are hereinafter collectively
referred to as the "Plans." The Compensation Committee administers the Plans.
Officers and other key employees of the Corporation and its subsidiaries
were eligible for awards under the 1978 Plan and the 1983 Plan, and are eligible
for awards under the 1988 Plan. The Committee selects the participants under
each Plan and the amount and form of each award. The Committee also determines
the terms of options and SARs. Options and SARs may be granted for terms up to
ten years.
No stock options or SARs were exercised by any executive officer during
1993. During 1993 no stock options in tandem with SARs or separate SARs were
granted. Options without tandem SARs were granted during 1993 as set forth in
the previous Option/SAR Grants Table. As the Table indicates, Mr. Torbert
received 40,000 non-statutory stock options at market in accordance with the
provisions of the 1988 Plan. This is a grant level substantially below the 50th
percentile of competitor standards.
The Corporation is introducing a new Stock Option Plan in 1994. Discussion
of that Plan is included elsewhere in this document.
Other
The Compensation Committee of the Board of Directors, in exercising its
responsibility to review and establish the compensation levels of the
Corporation's executive officers, to administer the Corporation's various
incentive plans and to authorize bonuses, grants of stock options and other
forms of remuneration, has solicited the advice and counsel of KPMG Peat
Marwick; Towers Perrin; and Buchanan Ingersoll Professional Corporation to
assist with issues related to accounting, design and legal considerations,
respectively.
Respectfully submitted by the Compensation Committee of the Board of
Directors of Dravo Corporation.
James C. Huntington, Jr., Chairman
E. Eugene Bishop
Willard L. Hurley
Robert C. Wilburn
Company Performance
In accordance with requirements of the Securities and Exchange Commission,
the following line-graph presents a comparison of the cumulative, five-year
shareholder returns (including reinvestment of dividends) with the S&P 500 Stock
Index and a market capitalization weighted index of peer companies.
12
<PAGE>
The peer company group is based on the Value Line Investment Survey's Cement and
Aggregates Industry Grouping, which is the same group as used last year.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG DRAVO CORPORATION, S&P 500 INDEX AND VALUE LINE CEMENT AND AGGREGATE INDUSTRY GROUP(1)
<CAPTION>
Value Line
Cement and
Aggregate
Industry
Measurement period Dravo S&P 500 Group
(Fiscal Year Covered) Corporation Index Index
- --------------------- ---------------- ------- ---------
<S> <C> <C> <C>
Measurement PT -
12/31/88 $ 100 $ 100 $ 100
FYE 12/31/89 $ 97 $ 133 $ 109
FYE 12/31/90 $ 73 $ 121 $ 79
FYE 12/31/91 $ 53 $ 158 $ 81
FYE 12/31/92 $ 43 $ 175 $ 79
FYE 12/31/93 $ 69 $ 198 $ 107
</TABLE>
Assumes $100 invested on 12/31/88 in the Corporation's Common Stock, S&P 500
index and peer group index assuming dividend reinvestment.
- ---------
(1) The Value Line Investment Survey's Cement and Aggregates Industry Grouping
includes the following companies: CalMat, Florida Rock, Lafarge, Lone Star,
Medusa, Southdown, Texas Industries and Vulcan Materials. Giant Group Ltd.,
which was part of the 1992 group, was excluded by Value Line in 1993
because of a reduction in number of shares traded.
ACTIVITIES AND FUNCTIONS OF THE BOARD OF DIRECTORS
During 1993 the Board of the Corporation held 5 regularly scheduled and
special meetings. All of the Directors attended at least 75% of the aggregate of
the total number of meetings of the Board and of Committees of the Board on
which they served (during the periods that each of them served) except Mr. Weis.
13
<PAGE>
The By-Laws of the Corporation provide that there shall be, as Standing
Committees of the Board, an Audit Committee, a Compensation Committee, a Finance
Committee and a Nominating Committee, each comprised exclusively of Directors
who are not current officers or employees of the Corporation.
The Audit Committee is comprised of Messrs. Edwards, Chairman, Dolan,
Kassling and Weis. The Audit Committee's duties include recommending, for
nomination by the Board and election at the annual shareholders' meeting, the
firm of independent accountants to audit the Corporation's financial records,
and reviewing the overall approach followed by the independent accountants and
the Corporation's internal auditors to insure the integrity with which the
Corporation's published financial statements are prepared. In discharging these
duties the Committee reviews the audit plans for the fiscal year and reviews
reports from the independent auditors to determine, among other things, whether
there have been any material changes in accounting principles and, if so, the
effect of such changes on the valuation of the Corporation's assets or the
determination of its earnings. After the end of each fiscal year, the Committee
meets separately with the independent auditors and with the Chief Financial
Officer of the Corporation to review the audit report and their comments with
respect thereto. During 1993 the Audit Committee held 2 meetings.
The Compensation Committee of the Board is empowered to fix the
compensation of the top officers of the Corporation. This Committee also selects
the participants in the Corporation's Executive Benefit Plan and discharges the
functions of the Committee under the Corporation's Incentive Compensation Plan
and of the Committee which determines awards under the Corporation's Employee
Stock Option Plan of 1988. The Compensation Committee held 4 meetings in 1993.
Otherwise, its work was performed informally, through conferences,
correspondence and telephone conversations among Committee members. The
Committee members are Messrs. Huntington, Chairman, Bishop, Hurley and Wilburn.
The Finance Committee is comprised of Messrs. Edwards, Chairman, Dolan,
Kassling and Weis. The function of the Finance Committee is to assist and
counsel the Chief Executive Officer and Chief Financial Officer of the
Corporation in the formulation and development of financial policies and plans.
The Finance Committee held 2 meetings in 1993.
The Nominating Committee is comprised of Messrs. Huntington, Chairman,
Bishop, Hurley and Wilburn. The Nominating Committee recommends, for nomination
by the Board and election by the shareholders, individuals to serve as members
of the Board. The Nominating Committee held 4 meetings in 1993. The Committee
would consider shareholder recommendations for positions on the Board. Any
shareholder wishing to recommend a nominee for consideration by the Nominating
Committee may do so by letter addressed to the Secretary of the Corporation,
3600 One Oliver Plaza, Pittsburgh, Pennsylvania 15222-2682.
PROPOSAL TO APPROVE THE DRAVO CORPORATION
STOCK OPTION PLAN OF 1994
On January 27, 1994, the Board adopted the Stock Option Plan of 1994 (the
"1994 Plan"), subject to shareholder approval. The 1994 Plan is intended to be
the successor to the Employee Stock Option Plan of 1988 which has no shares
remaining available for the granting of options and stock appreciation rights
("SARs"). Although the 1994 Plan is similar to the 1988 Plan and previous stock
option plans approved by the Corporation's shareholders in that it provides for
the granting of Incentive Stock Options ("ISOs"), Non-Statutory Stock Options
and SARs, the 1994 Plan also incorporates a new feature providing for automatic
annual grants of Non-Statutory Stock Options to acquire 1,500 shares of Common
Stock to non-employee Directors. Awards to non-employee Directors shall be made
on the first Friday following each Annual Meeting.
The Board of Directors believes that the adoption of the 1994 Plan will
strengthen the Corporation's ability to attract, motivate and retain Directors,
officers and other key employees of high caliber and will increase the interest
of such persons in the Corporation's welfare through the added incentive created
by offering them long-range incentive compensation opportunities which identify
with the interests of the shareholders.
14
<PAGE>
Because executive officers and members of the Board are eligible to receive
awards under the 1994 Plan, each of them has a personal interest in the adoption
of this proposal.
Summary of the 1994 Plan
The following general description of certain features of the 1994 Plan is
qualified in its entirety by reference to the complete text of the Stock Option
Plan of 1994 which appears as Appendix A hereto.
Term
The Plan would become effective on the date it was approved by the Board,
subject to approval by the shareholders of the Corporation, and has no fixed
expiration date. No awards may be granted under the 1994 Plan after January 28,
2004.
Administration
The Plan is administered by the Compensation Committee of the Board (the
"Committee"), which has the exclusive authority to make awards under the Plan
and all interpretations and determinations affecting the Plan.
Employee Participation and Award Estimates
Employee participation in the 1994 Plan is limited to officers and other
key employees of the Corporation and its subsidiaries who are selected from time
to time by the Committee. Employee participants in the 1994 Plan are also
eligible to participate in other incentive plans of the Corporation. Because the
grant of awards to employee participants under the 1994 Plan is at the
discretion of the Committee, it is not possible to indicate which persons may
receive awards under the Plan or the amount of such awards.
Non-Employee Director Participation and Award Estimates
Non-employee Directors of the Corporation elected to the Board at each
annual meeting of the shareholders commencing with the 1994 Annual Meeting and
each non-employee Director who continues as a Director following each such
Annual Meeting, shall be automatically awarded non-statutory stock options to
acquire 1,500 shares of Common Stock. Such awards shall be made on the first
Friday following each Annual Meeting.
Types of Awards
Awards under the Plan may be in the form of stock options (including ISOs)
and SARs, either alone or in tandem with each other.
Shares Available for Awards and Closing Quotation
No more than 1,000,000 shares of Common Stock may be issued under the Plan
(subject to adjustment as described below for a stock split, stock dividend,
recapitalization, merger and the like).
As of January 21, 1994, the closing price of the Corporation's Common Stock
as reported on the New York Stock Exchange Composite Transactions was $11.25.
Stock Options and Stock Appreciation Rights Awarded to Employee Participants
The Committee may authorize the granting of stock options (including ISOs)
and SARs, either alone or in tandem with each other. No grantee may be granted
ISOs to purchase Common Stock in any year to the extent that the aggregate
market value of the Common Stock, determined at the time of grant, with respect
to which ISOs are exercisable for the first time by the grantee (under all Plans
of the Corporation) exceeds $100,000 during such calendar year. If granted in
tandem with an option, each SAR will relate to a specific option and will be for
the same number of shares as the specific option to which it relates. An
15
<PAGE>
SAR may be granted concurrently with the option to which it relates, or, in the
case of a Non-Statutory Stock Option, at any time prior to the exercise,
termination or expiration of such option.
The price at which each share covered by an option or SAR may be purchased
will be determined in each case by the Committee, but shall not be less than
100% of the fair market value at the time the option is granted. Upon exercise
of the option, the option price is payable in cash or in the Corporation's
Common Stock.
For each SAR granted to an employee, he will, upon the exercise thereof,
receive in Common Stock, or in a combination of Common Stock and cash as the
Committee shall determine, an amount equal to the amount by which the market
value of one share of Common Stock at the exercise date exceeds the price at
which the SAR was granted.
If the SAR is granted in tandem with a stock option under the Plan, the
number of shares subject to the option will be reduced share for share to the
extent that a related SAR is exercised, and vice versa.
Options or SARs may be exercised at such times as the Committee determines,
provided they may not be exercisable prior to one year from the date of grant
and the exercise period with respect to any ISO shall not exceed ten years. The
Committee is authorized (although not required) to grant options and SARs
exercisable in installments and to impose specific performance criteria upon the
exercise of options and SARs. The Committee has the discretion to provide, at
the time of granting any option or SAR, that in the event of a change in control
of the Corporation all or any part of the option or SAR shall become immediately
exercisable.
When shares are issued under the 1994 Plan (or shares acquired upon
exercise of an ISO are disposed of prior to the expiration of the required ISO
holding period), the Corporation has the right to require the grantee to remit
to the Corporation an amount sufficient to satisfy the required tax withholding.
The grantee of a Non-Statutory Stock Option may elect to satisfy this
withholding obligation by requesting that the Corporation withhold shares of
Common Stock otherwise issuable to him. All such elections will be subject to
the approval of the Committee.
Stock Options Awarded to Non-employee Directors
The price at which each share covered by a Non-Statutory Stock Option
awarded to a non-employee Director may be purchased will be 100% of the fair
market value at the time the option is granted. Upon exercise of the option, the
option price is payable in cash or in shares of the Corporation's Common Stock.
Options awarded to non-employee Directors become exercisable one year from
the date of grant and expire ten years from the date of grant. Following a
non-employee Director's death, those options that were exercisable on the date
of death may be exercised within 36 months from the date of death. Following a
non-employee Director's cessation of service, he or she may exercise options
which were exercisable on the date service as a Director terminated within 90
days of such date.
Accounting Treatment
SARs will, in most cases, require a charge against the earnings of the
Corporation based on the difference between the exercise price specified in the
related option and the current market price of the Common Stock. In the event of
a decline in the market price of the Common Stock subsequent to a charge against
earnings related to the estimated costs of stock appreciation rights, a reversal
of prior charges is made in the amount of such decline (but not to exceed
aggregate prior charges).
Neither the grant nor the exercise of an ISO or a Non-Statutory Stock
Option under the 1994 Plan currently requires any charge against earnings under
generally accepted accounting principles. In certain circumstances, shares
issuable pursuant to outstanding options under the 1994 Plan might be considered
outstanding for purposes of calculating earnings per share.
The Financial Accounting Standards Board ("FASB") has issued an exposure
draft proposing that companies be required to recognize an expense for all
stock-based compensation awards, including stock options. As of the date of this
proxy statement, the FASB has not adopted this proposal.
16
<PAGE>
Adjustments
In the event of any stock dividend, stock split, recapitalization,
reorganization, merger, consolidation, or other change in the capitalization of
the Corporation or similar corporate transaction or event affecting the
Corporation's Common Stock the Committee shall, in such manner as it deems
equitable, adjust the number of shares that may be available under the 1994
Plan.
Amendment and Termination
The Board may modify, amend, or terminate the 1994 Plan at any time except
that: (i) to the extent then required by applicable law, rule, or regulation,
approval of the holders of a majority of shares of Common Stock represented in
person or by proxy at a meeting of the shareholders will be required to increase
the maximum number of shares of Common Stock available for distribution under
the Plan (other than increases due to adjustments in accordance with the Plan
and a one time increase that would not increase the amount of Common Stock
issuable under the 1994 Plan by more than 10%); and (ii) amendments revising the
price, date of exercisability, option period or amount of shares subject to
annual option awards to non-employee Directors shall not be made more frequently
than once every six months unless necessary to comply with the Internal Revenue
Code of 1986, as amended, or with the Employee Retirement Income Security Act of
1974, as amended, or the rules promulgated thereunder, respectively. No
modification, amendment, or termination of the 1994 Plan shall adversely affect
the rights of a participant under a grant previously made to him without the
consent of such participant.
Federal Income Tax Consequences
Non-Statutory Options
Under the current applicable provisions of the Internal Revenue Code, no
tax will be payable by the recipient of an option at the time of grant. Upon
exercise of a Non-Statutory Option, the excess, if any, of the fair market value
of the shares with respect to which the option is exercised over the total
option price of such shares will be treated for Federal tax purposes as ordinary
income. Any profit or loss realized on the sale or exchange of any share
actually received will be treated as a capital gain or loss. The Corporation
will be entitled to deduct the amount, if any, by which the fair market value on
the date of exercise of the shares with respect to which the option was
exercised exceeds the exercise price.
Incentive Stock Options
With respect to an ISO, generally, no taxable gain or loss will be
recognized when the option is granted or exercised.
If the shares acquired upon the exercise of an ISO are held for at least
one year, any gain or loss realized upon their sale will be treated as long-term
capital gain or loss. The Corporation will not be entitled to a deduction. If
the shares are not held for the one-year period, ordinary income will be
recognized in an amount equal to the difference between the exercise price and
the fair market value of the Common Stock on the date the option is exercised.
The Corporation will be entitled to a deduction equal to the amount of any
ordinary income so recognized.
Stock Appreciation Rights
Upon the grant of an option which has a tandem SAR, no taxable income is
realized by the holder and no deduction is available to the Corporation. Upon
exercise of an option through an SAR election, the tax consequences to the
holder and the Corporation are the same as for exercise of a Non-Statutory Stock
Option.
The Board of Directors recommends a vote FOR approval of the 1994 Plan. The
Proxy Holders will vote all proxies received FOR approval of the Plan unless
instructed otherwise.
The affirmative vote of a majority of the shares voting at the meeting is
required for approval of the 1994 Plan.
17
<PAGE>
ELECTION OF AUDITORS
The Board of Directors of the Corporation proposes that KPMG Peat Marwick
be elected as independent certified public accountants to examine the financial
statements of the Corporation and its subsidiaries as of December 31, 1994 and
to report upon the financial statements to the shareholders as of December 31,
1994. The election of KPMG Peat Marwick was recommended by the Audit Committee
of the Board, which is composed of Directors who are not officers or employees
of the Corporation. One or more representatives of KPMG Peat Marwick will be
present at the 1994 Annual Meeting with the opportunity to make a statement if
they desire to do so. It is expected that such representatives will be available
to respond to appropriate questions.
KPMG Peat Marwick is a member of the SEC Practice Section of the American
Institute of Certified Public Accountants.
Although election of independent certified public accountants by the
shareholders is not required by Pennsylvania law or the Articles of
Incorporation or By-Laws of the Corporation, the Board believes that the
shareholders should have an opportunity to express themselves on this subject.
In the event that the vote on this matter is negative, the Board, acting upon
advice from its Audit Committee, will select other independent certified public
accountants.
PROPOSALS OF SECURITY HOLDERS FOR CONSIDERATION
AT THE 1995 ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals for the 1995 Annual Meeting of the shareholders of
the Corporation must be submitted to the Corporation, in care of the Secretary,
3600 One Oliver Plaza, Pittsburgh, Pennsylvania 15222-2682 on or before November
16, 1994 in order to be considered for inclusion in the 1995 proxy statement.
PROXY SOLICITATION
The expenses of soliciting proxies will be paid by the Corporation which
will also reimburse banks, brokerage houses and other persons holding stock in
their names, or in the names of nominees, for their expenses in sending proxy
material to principals and obtaining their proxies. The Corporation has retained
Morrow & Co., Inc. to assist in the solicitation of proxies for shares in
broker, bank and other nominee names for a fee of approximately $15,000 plus
expenses. Some of the officers and other regular employees of the Corporation
may solicit proxies personally, by telephone and by mail if deemed appropriate.
EFFECT OF ABSTENTIONS AND BROKER NON-VOTES
Abstentions and broker non-votes on any matter submitted to the
shareholders for approval have no effect on the vote on such matter since, under
Pennsylvania law, the affirmative vote of at least a majority of the votes cast
by shareholders at the meeting, in person or by proxy, is necessary for approval
of the matter. Broker non-votes as to any matter are shares held by brokers and
other nominees which are voted at the meeting on matters as to which the nominee
has discretionary authority, but which are not voted on the matter in question
because the nominee does not have discretionary voting authority as to such
matter.
18
<PAGE>
OTHER BUSINESS
As far as is known, no matters other than the matters hereinabove mentioned
will come before the 1994 Annual Meeting. However, if any other matters should
properly come before the 1994 Annual Meeting, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their judgment for the
best interests of the Corporation.
By Order of the Board of Directors
JAMES J. PUHALA,
Secretary
3600 One Oliver Plaza
Pittsburgh, Pennsylvania 15222-2682
March 16, 1994
19
<PAGE>
APPENDIX A
DRAVO CORPORATION
Stock Option Plan of 1994
Section 1. Establishment of the Plan. There is hereby established the Dravo
Corporation Stock Option Plan of 1994 (hereinafter called the "Plan"), pursuant
to which officers, other key employees and non-employee directors of Dravo
Corporation and its subsidiaries may be granted options to purchase shares of
common stock of the Corporation or rights to share in the improvement in the
Corporation's stock price performance, in order to provide a long-range
incentive and a shareholder's perspective to those persons principally
responsible for the continued growth and financial success of the Corporation.
Section 2. Definitions. For purposes of the Plan, the following definitions
shall control:
(a) Corporation--Dravo Corporation and its Subsidiaries.
(b) Board--the Board of Directors of Dravo Corporation.
(c) Change in Control--a change in control of the Corporation of such
a nature that it would be required to be reported by the Corporation in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934, as in effect on the date hereof
("Exchange Act"); provided, however, that without respect to the foregoing,
such a change in control shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Corporation representing 20% or more
of the combined voting power of the Corporation's then outstanding
securities; or
(ii) during any period of three consecutive years, individuals who at the
beginning of such period constitute the Board, cease for any reason
to constitute at least a majority thereof unless the election, or the
nomination for election by the Corporation's shareholders, of each
new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
the period.
(d) Committee--the Compensation Committee appointed by the Board
consisting of directors who are not present or former employees of the
Corporation. The Committee shall be constituted so that at all relevant
times it meets the then applicable requirements of Rule 16b-3 (or its
successor) promulgated under the Exchange Act.
(e) Common Stock--the $1.00 par value shares of common stock of the
Corporation.
(f) Employee Participant--any employee who has met the eligibility
requirements set forth in Section 7(a) hereof and to whom a grant has been
made and is outstanding under the Plan.
(g) Fair Market Value--the mean between the highest and lowest quoted
selling prices of the Common Stock on the New York Stock Exchange on the
relevant date for valuation, or, if no sale of Common Stock shall have been
made on that day, the next preceding day on which there was such a sale. If
the Common Stock is not listed on the New York Stock Exchange, the Fair
Market Value of the Common Stock shall be as determined by the Committee in
its discretion.
(h) IRC--Internal Revenue Code of 1986, as amended.
(i) Incentive Stock Option--an option which meets the qualifications
of Section 422 of the IRC.
(j) Non-Statutory Stock Option--an option which is not an Incentive
Stock Option.
(k) Retirement--retirement at or after age 55 under a retirement plan
of the Corporation.
A-1
<PAGE>
(l) SAR or Stock Appreciation Right--an award under which the grantee
may earn additional compensation based upon the market performance of the
Common Stock.
(m) Subsidiary--a corporation the majority of the outstanding voting
stock of which is directly or indirectly owned by the Corporation.
Section 3. Types of Options. Options granted pursuant to the Plan may be
either Incentive Stock Options or Non-Statutory Stock Options. Incentive Stock
Options and Non-Statutory Stock Options shall be granted separately hereunder.
Subject to the provisions of the Plan, the Committee, in its sole discretion,
shall determine whether and to what extent options granted under the Plan shall
be designated as Incentive Stock Options or Non-Statutory Stock Options.
Section 4. Duration. All awards granted under this Plan must be granted
within ten years from the effective date set forth in Section 25 hereof. Any
awards outstanding after the expiration of such ten-year period may be exercised
within the option periods prescribed for such options.
Section 5. Administration. The Plan shall be administered by the Committee.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
the acts approved in writing by a majority of the Committee, shall be deemed the
acts of the Committee. Subject to the provisions of the Plan and to policies
determined by the Board of Directors, the Committee is authorized to interpret
the Plan, adopt such rules and regulations and take such action in the
administration of the Plan as it shall deem proper. Decisions of the Committee
shall be binding on all persons claiming rights under the Plan. Subject to the
provisions of the Plan, recommendations as to the operation and administration
of the Plan, eligible employees, type and amount of incentive awards and
performance criteria may be made by a Management Compensation Committee which
shall consist of senior executives of the Corporation selected by the Committee.
Section 6. Authority of the Committee. Subject to the provisions of the
Plan, the Committee shall have full and final authority to determine the persons
to whom options and SARs shall be awarded and the number of shares to be covered
by each option or SAR. The Committee may determine that options or SARs shall be
exercisable in one or more installments during the term of the option or SAR and
the right to exercise may be cumulative as determined by the Committee.
Section 7. Eligibility.
(a) Officers and other key employees of the Corporation (including
officers and other employees who are directors of the Corporation) who, in
the opinion of the Committee, are mainly responsible for the continued
growth and development and future financial success of the business shall
be eligible to participate in the Plan. The Committee shall, in its sole
discretion, from time to time select from such eligible persons those to
whom options or SARs shall be granted and determine the type of option and
the number of shares to be included in such option or SAR. No officer or
other employee shall have any right to receive an option or SAR except as
the Committee in its discretion shall determine.
(b) Non-employee directors shall be eligible to receive awards only
pursuant to and in accordance with Section 12 of the Plan.
Section 8. Shares Subject to the Plan. The total number of shares of Common
Stock which may be issued or on which SARs may be calculated pursuant to the
Plan shall be One Million (1,000,000) shares of Common Stock (subject to
adjustment as provided in Section 13), which may be either authorized and
unissued shares or shares held in the treasury of the Corporation, and which
shares are hereby reserved for the purposes of the Plan. To the extent that
options or SARs granted under the Plan shall expire or terminate without being
exercised, shares covered thereby shall remain available for purposes of the
Plan. To the extent that options are terminated by reason of the exercise of a
related SAR, the shares covered by such option shall not be available for grant
of further options or SARs under the Plan.
Section 9. Terms of Options and SARs Awarded to Employee Participants. Each
option and SAR granted to an Employee Participant under the Plan shall be
evidenced by a stock option or Stock Appreciation Rights agreement between the
Corporation and the grantee and shall be subject to the following terms and
conditions:
A-2
<PAGE>
(a) Subject to adjustment as provided in Section 13 of the Plan, the
price at which each share covered by an option or SAR may be purchased
shall be determined in each case by the Committee but shall not be less
than the Fair Market Value thereof at the time the option is granted. If a
grantee owns (or is deemed to own under applicable provisions of the IRC
and rules and regulations promulgated thereunder) more than 10% of the
combined voting power of all classes of the stock of the Corporation (or
any parent or Subsidiary corporation of the Corporation) and an option
granted to such grantee is intended to qualify as an Incentive Stock
Option, the option price shall be not less than 110% of the Fair Market
Value of the shares covered by the option on the date the option is
granted.
(b) During the lifetime of the grantee, the option or SAR may be
exercised only by the grantee or by his or her guardian or legal
representative. The option or SAR shall not be transferable by the grantee
otherwise than by will or by the laws of descent and distribution.
(c) Except as otherwise provided herein, an option or SAR may be
exercised in whole at any time, or in part from time to time, within such
period or periods from the granting of the option or SAR as may be
determined by the Committee and set forth in the stock option or Stock
Appreciation Rights agreement (such period or periods being hereinafter
referred to as the exercise period), provided that except as otherwise
provided in Section 11 hereof, options and SARS may not be exercisable
prior to one (1) year from the date of grant and the exercise period shall
not exceed ten years. Notwithstanding the foregoing:
(i) An option or SAR may be exercised during the lifetime of the grantee
only while he or she is in the employ of the Corporation or within
three (3) months following termination of employment and only to the
extent that the option or SAR would be exercisable by the grantee at
the time of termination. Notwithstanding the foregoing, in the event
that termination is by reason of Retirement, permanent disability or
death, the option or SAR may be exercised in whole or in part until
the earlier of (1) the expiration of the term of the option or SAR,
or (2) five years after said termination. In the event the grantee
dies within five years following Retirement or termination by reason
of permanent disability, his or her estate may exercise the option or
SAR until the earlier of (1) the expiration of the term of the option
or SAR, or (2) five years after said employee's retirement or
termination. For this purpose, the grantee may designate to the
Committee the person or persons to whom his or her rights under the
option or SAR shall pass in the event of his or her death;
(ii) The option or SAR may not be exercised for more shares (subject to
adjustment as provided in Section 13) after the termination of the
grantee's employment or his or her death than the grantee was
entitled to acquire thereunder at the time of the termination of the
grantee's employment or his or her death;
(iii) If a grantee owns (or is deemed to own under applicable provisions of
the IRC and rules and regulations promulgated thereunder) more than
10% of the combined voting power of all classes of the stock of the
Corporation (or any parent or Subsidiary corporation of the
Corporation) and an option granted to such grantee is intended to
qualify as an Incentive Stock Option, the option by its terms may not
be exercisable after the expiration of five years from the date such
option is granted.
(d) Subject to the limitations herein set forth, the option or SAR may
be exercised in whole or in part from time to time by written request made
to the Corporation in the manner determined from time to time by the
Committee. Payment in full for the number of shares purchased upon exercise
of an option shall be made to the Corporation at the time of each exercise.
Payment may be made in cash or by delivering to the Corporation shares of
Common Stock of the Corporation or any combination of such shares and cash,
having in any case an aggregate Fair Market Value equal to the option price
of the shares being purchased pursuant to the exercise of the option.
(e) No grantee may be granted Incentive Stock Options to purchase
Common Stock of the Corporation in any year to the extent that the
aggregate Fair Market Value of the Common Stock, determined at the time of
grant, with respect to which Incentive Stock Options are exercisable for
the
A-3
<PAGE>
first time by the grantee (under all plans of the Corporation) exceeds
$100,000 during such calendar year. If any option designated as an
Incentive Stock Option either alone or in conjunction with any other option
or options exceeds the foregoing limitation, options in excess of such
limitation shall automatically be reclassified as Non-Statutory Stock
Options by whole number of shares, with later granted options being so
reclassified first.
(f) The Committee, in its discretion, may provide that any option
intended to be an Incentive Stock Option shall also be subject to such
additional or more restrictive terms and conditions as may, from time to
time, be required to constitute such option an Incentive Stock Option under
the provisions of Section 422 of the IRC. This Plan shall be construed in a
manner consistent with Section 422 of the IRC and Treasury Regulations
promulgated or proposed thereunder.
(g) The Committee may include such other terms and conditions not
inconsistent with the foregoing as the Committee shall approve. Without
limiting the generality of the preceding sentence, the Committee shall be
authorized to impose conditions to the exercise of options relating to the
performance of the Corporation or any Subsidiary or of grantee(s) or any
combination of the foregoing. The Committee shall, in its sole judgment,
determine whether such conditions have been fulfilled and may require that
the Committee receive from the Corporation a written certificate as to the
fulfillment of such conditions before shares are issued and sold pursuant
to options or SARs which have been exercised.
Section 10. Stock Appreciation Rights.
(a) The Committee, in its discretion, may provide that any option
granted to an Employee Participant includes a tandem Stock Appreciation
Right; provided, however, that a grantee may elect to exercise the tandem
Stock Appreciation Right with respect to an Incentive Stock Option only
when the Fair Market Value of the shares subject to such option exceeds the
option price. The right to elect such Stock Appreciation Right granted in
tandem with an option shall entitle the grantee to receive an amount equal
to the excess of the Fair Market Value of one share of Common Stock over
the option price per share, multiplied times the number of shares as to
which the option, or portion thereof, is surrendered. This amount shall be
paid in cash or in Common Stock, or in such combination of Common Stock and
cash as the Committee shall from time to time determine, having in any case
an aggregate Fair Market Value equal to the amount required to be paid. All
SARs granted in tandem with options shall be subject to the same terms and
conditions as the related option.
(b) The Committee, in its discretion, may grant Stock Appreciation
Rights which do not relate to an option. Such "stand-alone" SARs shall be
governed by the provisions of the Plan relating to Non-Statutory Stock
Options and by the terms of a Stock Appreciation Rights Agreement between
the Corporation and the grantee setting forth the number of shares as to
which such stand-alone SARs are granted and such other terms and conditions
as the Committee may determine. Upon exercise of a stand-alone SAR, the
grantee shall be entitled to receive an amount equal to the excess of the
Fair Market Value of one share of Common Stock determined at the date of
exercise over the Fair Market Value of one share of Common Stock determined
at the date of grant, multiplied times the number of shares as to which the
SAR was granted. This amount shall be paid in cash or in Common Stock, or
in such combination of Common Stock and cash as the Committee shall from
time to time determine, having in any case an aggregate Fair Market Value
equal to the amount required to be paid.
Section 11. Acceleration of Right of Exercise. Except with respect to
options granted to non-employee directors, the Committee shall have discretion
to provide, at the time of granting any option or SAR, that in the event of a
Change in Control of the Corporation all or any part of the option or SAR shall
become immediately exercisable.
Section 12. Provisions Applicable to Non-employee Directors Options.
(a) Each non-employee director shall automatically receive a
Non-Statutory Stock Option to purchase 1,500 shares of Common Stock on the
first Friday following the Corporation's annual meeting of shareholders at
which such director is elected to serve and on the first Friday following
each annual meeting of shareholders thereafter so long as such director
continues as a member of the
A-4
<PAGE>
Board. Any non-employee director whose initial term commenced prior to the
effective date of this Plan who is serving as a director on such effective
date shall automatically receive a Non-Statutory Stock Option to purchase
1,500 shares of Common Stock on the first Friday following each annual
meeting of shareholders so long as such director continues as a member of
the Board.
(b) Each option granted to a non-employee director shall be evidenced
by written documentation containing its terms and conditions.
(c) The exercise price for options granted to non-employee directors
shall not be less than 100% of the Fair Market Value of the underlying
shares of Common Stock on the date the stock option is granted.
(d) Stock options granted to non-employee directors under this Plan
shall become exercisable one year after the date of grant, shall expire ten
years after the date of grant and shall not be transferable otherwise than
by will or by the laws of descent and distribution.
(e) Payment may be made in cash or by delivering to the Corporation
shares of Common Stock of the Corporation or any combination of such shares
and cash, having in any case an aggregate Fair Market Value equal to the
option price of the shares being purchased pursuant to the exercise of the
option.
(f) Upon cessation of service of a non-employee director (other than
for death), only those options exercisable at the date of cessation of
service shall continue to be exercisable by the grantee. Such options must
be exercised within 90 days of cessation of service, but in no event after
the expiration of the option period.
(g) Upon the death of a non-employee director, those options which
were exercisable on the date of death may be exercised within 36 months
from the date of death, but in no event after the expiration of the option
period, by the grantee's estate. For this purpose, the grantee may
designate to the Committee the person or persons to whom his or her rights
under the option shall pass in the event of his death.
Section 13. Adjustment of Number and Price of Shares.
(a) In the event that a dividend shall be declared upon the Common
Stock of the Corporation payable in shares of said stock, the number of
shares of Common Stock covered by each outstanding option and SAR and the
number of shares available for issuance pursuant to the Plan but not
covered by options or SARs shall be adjusted by adding thereto the number
of shares which would have been distributable thereon if such shares had
been outstanding on the date fixed for determining the shareholders
entitled to receive such stock dividend.
(b) In the event that the outstanding shares of Common Stock of the
Corporation shall be changed into or exchanged for a different number or
kind of shares of stock or other securities of the Corporation or of
another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, merger or consolidation, then there
shall be substituted for the shares of Common Stock covered by each
outstanding option and SAR and for the shares available for issuance
pursuant to the Plan but not covered by an option or SAR, the number and
kind of shares of stock or other securities which would have been
substituted therefor if such shares had been outstanding on the date fixed
for determining the shareholders entitled to receive such changed or
substituted stock, SAR or other securities.
(c) In the event there shall be any change, other than specified above
in this Section 13, in the number or kind of outstanding shares of Common
Stock of the Corporation or of any stock or other securities into which
such Common Stock shall be changed or for which it shall have been
exchanged, then if the Committee shall determine, in its discretion, that
such change equitably requires an adjustment in the number or kind of
shares covered by outstanding options or SARs or which are available for
issuance pursuant to the Plan but not covered by options or SARs, such
adjustment shall be made by the Committee and shall be effective and
binding for all purposes of the Plan and on each outstanding stock option
and SAR agreement.
A-5
<PAGE>
(d) In the event that, by reason of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or
liquidation, the Board of Directors shall authorize the issuance or
assumption of a stock option or stock options in a transaction to which
Section 424(a) of the IRC applies, then, notwithstanding any other
provision of the Plan, the Committee may grant an option or options upon
such terms and conditions as it may deem appropriate for the purpose of
assumption of the old option, in conformity with the provisions of such
Section 424(a) and the regulations thereunder, as they may be amended from
time to time; provided, however, that no such grant may be made to a
non-employee director.
(e) No adjustment or substitution provided for in this Section 13
shall require the Corporation to issue or to sell a fractional share under
any stock option or Stock Appreciation Rights agreement and the total
adjustment or substitution with respect to each stock option or Stock
Appreciation Rights agreement shall be limited accordingly.
(f) In the case of any adjustment or substitution provided for in this
Section 13, the price per share in each stock option and SAR agreement
shall be equitably adjusted by the Committee to reflect the greater or
lesser number of shares of stock or other securities into which the stock
covered by the option or SAR may have been changed or which may have been
substituted therefor.
Section 14. Amendment and Termination. The Board of Directors may modify,
amend, or terminate the Plan at any time except that, to the extent then
required by applicable law, rule, or regulation, approval of the holders of a
majority of shares of Common Stock represented in person or by proxy at a
meeting of the stockholders will be required to increase the maximum number of
shares of Common Stock available for distribution under the Plan (other than
increases due to adjustments in accordance with the Plan and a one time increase
that would not increase the amount of Common Stock issuable under the Plan by
more than 10%). Notwithstanding the foregoing, an amendment revising the price,
date of exercisability, option period of or amount of shares under a stock
option granted to a non-employee director shall not be made more frequently than
once every six months unless necessary to comply with the IRC or with the
Employee Retirement Income Security Act of 1974, as amended, or the Rules
promulgated thereunder, respectively. No modification, amendment, or termination
of the Plan shall adversely affect the rights of a participant under a grant
previously made to him or her without the consent of such participant.
Section 15. Compliance with Governmental Regulations. Notwithstanding any
provision of the Plan or the terms of any stock option or SAR agreement issued
under the Plan, the Corporation shall not be required to issue any shares
hereunder prior to the registration of the shares subject to the Plan under the
Securities Act of 1933 or the Exchange Act, if such registration shall be
necessary, or before compliance by the Corporation or any participant with any
other provisions of either of those acts or of regulations or rulings of the
Securities and Exchange Commission thereunder, or before compliance with all
other applicable Federal and state laws and regulations and rulings thereunder.
The Corporation shall use its best efforts to effect such registrations and to
comply with such laws, regulations and rulings forthwith upon advice by its
counsel that any such registration or compliance is necessary.
Section 16. Compliance with Rule 16b-3. It is the Corporation's intent that
the Plan comply in all respects with Rule 16b-3 of the Exchange Act and any
regulations promulgated thereunder. If any provision of this Plan is later found
not to be in compliance with the Rule, the provisions shall be deemed null and
void. All grants and exercises of options under this Plan by individuals subject
to Section 16 of the Exchange Act shall be executed in accordance with the
requirements of Section 16, as amended, and any regulations promulgated
thereunder.
Section 17. Tax Withholding.
(a) Whenever shares are to be issued under the Plan, the Corporation
shall have the right to require the grantee to remit to the Corporation an
amount sufficient to satisfy Federal, state and local tax withholding
requirements prior to the delivery of any certificate for such shares. If a
grantee makes a disposition of shares acquired upon the exercise of an
Incentive Stock Option within either two years after grant or one year
after the receipt of Common Stock by the grantee, the grantee shall
promptly notify the Corporation and the Corporation shall have the right to
require the grantee to pay to the
A-6
<PAGE>
Corporation an amount sufficient to satisfy Federal, state and local tax
withholding requirements. Whenever payments are to be made in cash, such
payments shall be net of an amount sufficient to satisfy Federal, state and
local tax withholding requirements and authorized deductions.
(b) A grantee who is obligated to pay to the Corporation an amount
required to be withheld under applicable income tax laws in connection with
the exercise of Non-Statutory Stock Options under the Plan may elect to
satisfy this withholding obligation, in whole or in part, by requesting
that the Corporation withhold shares of Common Stock otherwise issuable to
the grantee upon exercise of the option or by delivering to the Corporation
already owned shares of Common Stock of the Corporation having a Fair
Market Value on the date on which the amount of tax to be withheld is
determined (the "Tax Date") equal to the amount of the tax required to be
withheld. Any fractional amount shall be paid to the Corporation by the
grantee in cash or shall be withheld from the grantee's next regular
paycheck.
(c) An election by a grantee to have shares of Common Stock withheld
or to deliver to the Corporation already owned shares of Common Stock of
the Corporation to satisfy Federal, state and local tax withholding
requirements pursuant to subparagraph (b) above (the "Election"), shall be
subject to the following restrictions:
(i) The Election must be in writing and delivered to the Corporation
prior to the Tax Date;
(ii) The Election shall be irrevocable by the grantee; and
(iii) The Election shall be subject to approval by the Committee, which
approval may be granted or withdrawn at any time prior to the Tax
Date.
(d) Notwithstanding the provisions of subparagraphs (a)-(c) above, if
a grantee is an officer or director of the Corporation, as defined for
purposes of Rule 16b-3 under the Exchange Act, as amended, and withholding
of any Federal, state or local taxes is required, the Corporation shall
hold back from the shares of Common Stock to be delivered that number of
shares having a Fair Market Value equal to the amount of tax to be withheld
to satisfy the tax withholding obligation.
Section 18. Governing Law. The Plan shall be construed and its provisions
enforced and administered in accordance with the laws of the Commonwealth of
Pennsylvania applicable to contracts entered into and performed entirely in such
state.
Section 19. Designation of Beneficiary. An Employee Participant may
designate, in a writing delivered to the Corporation before his or her death, a
person or persons to receive, in the event of the Employee Participant's death,
any rights to which he or she would be entitled under the Plan. An Employee
Participant may also designate an alternate beneficiary to receive payments if
the primary beneficiary does not survive the Employee Participant. An Employee
Participant may designate more than one person as his or her beneficiary or
alternate beneficiary, in which case such persons would receive payments as
joint tenants with a right of survivorship. A beneficiary designation may be
changed or revoked by an Employee Participant at any time by filing a written
statement of such change or revocation with the Corporation. If an Employee
Participant fails to designate a beneficiary, then his estate shall be deemed to
be his beneficiary.
Section 20. Employment Rights. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee of the Corporation the right
to become a Employee Participant, and a grant under the Plan shall not be
construed as giving any Employee Participant any right to be retained in the
employ of the Corporation.
Section 21. Expenses. The expenses of administering the Plan shall be borne
by the Corporation.
Section 22. Indemnification. Service on the Committee shall constitute
service as a member of the Board so that members of the Committee shall be
entitled to indemnification and reimbursement as directors of the Corporation
pursuant to its Articles of Incorporation, By-Laws, or resolutions of the Board
or shareholders.
A-7
<PAGE>
Section 23. Relationship to Other Benefits. No payment under the Plan shall
be taken into account in determining any benefits under any retirement, group
insurance, or other employee benefit plan of the Corporation. The Plan shall not
preclude the shareholders of the Corporation, the Board or any committee
thereof, or the Corporation from authorizing or approving other employee benefit
plans or forms of incentive compensation, nor shall it limit or prevent the
continued operation of other incentive compensation plans or other employee
benefit plans of the Corporation or the participation in any such plans by
Employee Participants in the Plan.
Section 24. No Trust or Fund Created. Neither the Plan nor any grant made
hereunder shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Corporation and an Employee
Participant or any other person. To the extent that any person acquires a right
to receive payments from the Corporation pursuant to a grant under the Plan,
such right shall be no greater than the right of any unsecured general creditor
of the Corporation.
Section 25. Effective Date of the Plan. The Plan shall become effective
immediately upon approval of the Plan by the Board provided that the Plan shall
thereafter be approved by a majority of the outstanding shares of the
Corporation at the annual meeting of the shareholders of the Corporation on
April 28, 1994. No options shall be granted hereunder until the Committee shall
have been advised by the Corporation's counsel that all applicable legal
requirements have been satisfied and that appropriate rulings, if any, which are
required from governmental agencies, have been obtained.
A-8
<PAGE>
[LOGO OF DRAVO CORPORATION]
- -----------------------
Notice of the
1994 Annual Meeting and
Proxy Statement
- -----------------------
<PAGE>
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 28, 1994
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ernest F. Ladd, III, William G. Roth and Carl
A. Torbert, Jr., and each of them, with full power of substitution, as proxies
(the "Proxies") to vote all shares of Common Stock which the undersigned is
entitled to vote at the above stated Annual Meeting of shareholders, and any
adjournments thereof, upon the matters set forth in the Notice and Proxy
Statement, as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4 BELOW
1. ELECTION OF DIRECTORS to the class of the Board of Directors whose term
expires at the 1997 Annual Meeting of shareholders (check one box only).
[_] FOR all nominees listed below: [_] WITHHOLD AUTHORITY to vote
for all nominees listed below:
Jack Edwards, William E. Kassling, Konrad M. Weis
(to withhold authority for any individual nominee, check the "FOR all nominees"
box above and write that nominee's name in the space provided below)
_______________________________________________________________________________
2. ELECTION OF DIRECTOR to the class of the Board of Directors whose term
expires at the 1996 Annual Meeting of shareholders (check one box only).
[_] FOR the nominee listed below: [_] WITHHOLD AUTHORITY to vote
for the nominee:
Arthur E. Byrnes
3. APPROVAL OF THE ADOPTION OF THE STOCK OPTION PLAN OF 1994.
[_] FOR [_] AGAINST [_] ABSTAIN
4. APPROVAL OF THE APPOINTMENT OF KPMG PEAT MARWICK AS INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR THE YEAR 1994.
[_] FOR [_] AGAINST [_] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the Annual Meeting of shareholders, and any
adjournments thereof.
(Continued and to be signed on reverse side)
<PAGE>
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS GIVEN THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2, 3 AND 4 AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF, INCLUDING WITHOUT
LIMITATION THE ELECTION OF ANY PERSON TO EITHER CLASS OF THE BOARD OF DIRECTORS
FOR WHICH A BONA FIDE NOMINEE IS NAMED IN THE ACCOMPANYING PROXY STATEMENT AND
IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE. A VOTE FOR THE NOMINEES
LISTED WILL GIVE THE PROXIES DISCRETIONARY AUTHORITY TO CUMULATE ALL VOTES TO
WHICH THE UNDERSIGNED IS ENTITLED AND ALLOCATE THEM IN FAVOR OF ANY ONE OR MORE
OF THE NOMINEES, AS THE PROXIES DETERMINE. Any proxy heretofore given by the
undersigned with respect to such stock is hereby revoked.
Receipt of Notice of the Annual Meeting and Proxy Statement is hereby
acknowledged.
PLEASE SIGN, DATE, AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
Dated................................., 1994
PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.
............................................
(Signature)
............................................
(Signature if held jointly)
............................................
IMPORTANT: WHEN STOCK IS IN TWO OR MORE
NAMES, ALL SHOULD SIGN. WHEN SIGNING AS
EXECUTOR, TRUSTEE, GUARDIAN OR OFFICER OF A
CORPORATION, GIVE FULL TITLE AS SUCH.
<PAGE>
VOTER DIRECTION CARD DRAVO CORPORATION SAVINGS PLAN
FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 28, 1994
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TO: THE VANGUARD GROUP, TRUSTEE
The undersigned, a Participant having Common Stock of Dravo Corporation
credited to my account, does hereby instruct the Trustee that in voting all
shares of Common Stock held in the Dravo Corporation Stock Fund at the above
stated Annual Meeting of shareholders, and any adjournments thereof, upon the
matters set forth in the Notice and Proxy Statement, the shares of Common Stock
indicated on the reverse side hereof shall be counted as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4 BELOW
1.ELECTION OF DIRECTORS to the class of the Board of Directors whose term
expires at the 1997 Annual Meeting of shareholders (check one box only).
[_] FOR all nominees listed below: [_] WITHHOLD AUTHORITY to vote
for all nominees listed below:
Jack Edwards, William E. Kassling, Konrad M. Weis
(to withhold authority for any individual nominee, check the "FOR all nominees"
box above and write that nominee's name in the space provided below)
_______________________________________________________________________________
2. ELECTION OF DIRECTOR to the class of the Board of Directors whose term
expires at the 1996 Annual Meeting of shareholders (check one box only).
[_] FOR the nominee listed below: [_] WITHHOLD AUTHORITY to vote
for the nominee:
Arthur E. Byrnes
3. APPROVAL OF THE ADOPTION OF THE STOCK OPTION PLAN OF 1994.
[_] FOR [_] AGAINST [_] ABSTAIN
4. APPROVAL OF THE APPOINTMENT OF KPMG PEAT MARWICK AS INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS FOR THE YEAR 1994.
[_] FOR [_] AGAINST [_] ABSTAIN
The Trustee shall vote upon such other matters as may properly come before
the Annual Meeting of shareholders, and any adjournments thereof, as the proxies
named in the solicitation of the Board of Directors (the "Board Named Proxies")
determine, including without limitation the election of any person to either
class of the Board of Directors for which a bona fide nominee is named in the
accompanying Proxy Statement and is unable to serve or for good cause will not
serve.
(Continued and to be signed on reverse side)
<PAGE>
THE TRUSTEE WILL VOTE THE SHARES IN THE DRAVO CORPORATION STOCK FUND IN
ACCORDANCE WITH THE PLAN. IN DETERMINING HOW TO VOTE THE FUND'S SHARES, THE
SHARES INDICATED BELOW WILL BE COUNTED AS DIRECTED ON THE REVERSE SIDE HEREOF.
IF NO DIRECTION IS GIVEN, THE SHARES INDICATED BELOW WILL BE COUNTED AS BEING
FOR PROPOSALS 1, 2, 3 AND 4. IF THE UNDERSIGNED VOTES FOR THE NOMINEES LISTED,
THE TRUSTEE WILL CUMULATE ALL VOTES WHICH THE UNDERSIGNED IS ENTITLED TO DIRECT
AND ALLOCATE THEM IN FAVOR OF ANY ONE OR MORE OF THE NOMINEES, AS THE BOARD
NAMED PROXIES DETERMINE. THE TRUSTEE MAY APPOINT THE BOARD NAMED PROXIES TO VOTE
THE SHARES IN THE DRAVO CORPORATION STOCK FUND IN THE MANNER DIRECTED BY THE
TRUSTEE. Any voter direction card heretofore given by the undersigned with
respect to such stock is hereby revoked.
Receipt of Notice of the Annual Meeting and Proxy Statement is hereby
acknowledged.
PLEASE SIGN, DATE, AND RETURN THIS VOTER DIRECTION CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
Dated................................., 1994
PLEASE SIGN EXACTLY AS NAME APPEARS AT LEFT.
............................................
(Signature)
............................................
............................................
