FOSTER WHEELER CORP, DEF 14A, 1997-03-21

FOSTER WHEELER CORP
DEF 14A, 1997-03-21
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<PAGE> 1

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:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>

FOSTER WHEELER CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(4) Date Filed:

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<PAGE> 2
NOTICE OF MEETING AND PROXY STATEMENT

FOSTER WHEELER CORPORATION
PERRYVILLE CORPORATE PARK
CLINTON, NEW JERSEY 08809-4000
______________________________

NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
April 28, 1997
______________________________

The Annual Meeting of Stockholders of Foster Wheeler Corporation will
be held in the Ambassador Ballroom of the Hamilton Park Conference Center, 175
Park Avenue, Florham Park, New Jersey, on Monday, April 28, 1997, at 10:30 a.m.
for the following purposes:

1. To elect four Directors.

2. To act upon a proposal to amend The Directors' Stock Option
Plan.

3. To ratify the selection of independent auditors.

4. To transact such other business as may properly come before
the meeting or adjournments thereof.

By Order of the Board of Directors

LISA FRIES GARDNER
Vice President & Secretary

March 21, 1997

IT WILL GREATLY ASSIST MANAGEMENT IN REDUCING EXPENSES IN CONNECTION
WITH THE MEETING IF YOU PROMPTLY RETURN YOUR SIGNED PROXY IN THE ENCLOSED
ENVELOPE WHETHER YOU OWN FEW OR MANY SHARES. STOCKHOLDERS WHO EXPECT TO ATTEND
THE MEETING IN PERSON SHOULD CHECK THE APPROPRIATE SPACE ON THE PROXY CARD. A
RESERVATION CARD WILL BE SENT TO YOU UPON RECEIPT OF THE PROXY CARD SO MARKED.
<PAGE> 3
FOSTER WHEELER CORPORATION
PERRYVILLE CORPORATE PARK
CLINTON, NEW JERSEY 08809-4000

------------------------------

PROXY STATEMENT

------------------------------

For the 1997 Annual Meeting of Stockholders
to be held April 28, 1997

------------------------------

GENERAL INFORMATION

This statement is furnished in connection with the solicitation by the
Board of Directors of Foster Wheeler Corporation (hereinafter the "Corporation"
or "Foster Wheeler") of proxies to be used at the 1997 Annual Meeting of
Stockholders of the Corporation, to be held at the time, place and for the
purposes set forth in the accompanying Notice of 1997 Annual Meeting of
Stockholders. This Proxy Statement and the accompanying proxy are being sent to
Stockholders on or about March 21, 1997.

Shares represented by valid proxies will be voted in accordance with
instructions contained therein or, in the absence of such instructions, in
accordance with the recommendations of the Board of Directors. A proxy may be
revoked by a Stockholder by written notice of such revocation, or by a
later-dated proxy, delivered to the Inspectors of Election at any time prior to
the shares represented by such earlier proxy being voted.

A copy of the Corporation's Annual Report to Stockholders for the
fiscal year ended December 27, 1996, is enclosed with this Proxy Statement.

The Board of Directors has fixed the close of business on March 14,
1997, as the record date for determination of Stockholders entitled to notice of
and to vote at the meeting or adjournments thereof. As of March 14, 1997, the
outstanding voting securities of the Corporation consist of 40,624,646 shares of
Common Stock, $1.00 par value, holders of which are entitled to one vote per
share.

ELECTION OF DIRECTORS

Pursuant to an Amendment to the Corporation's Certificate of
Incorporation adopted by Stockholders at the 1983 Annual Meeting which provided,
among other things, for the classification of Directors with respect to the term
for which they shall severally hold office, the number of Directors to be
elected at this meeting is four. With the exception of Mr. Charles Y. C. Tse,
each is to be elected for a three-year term. Mr. Tse is to be elected for a
one-year term, because of a Director age restriction in the By-Laws which will
require Mr. Tse to retire on March 22, 1998. The proxy agents of the Board of
Directors intend to vote for the election of the nominees below named, unless
instructed otherwise. With the exception of Mr. John E. Stuart, all nominees
were previously elected by the Stockholders. All terms of office of nominees,
other than Mr. Tse, if elected, will expire at the 2000 Annual Meeting of
Stockholders or when their successors are duly elected and qualified. Mr. Tse's
term will end on the date of his retirement, March 22, 1998. If any
<PAGE> 4
eligible nominee becomes unable to accept nomination or election, proxies will
be voted for those remaining, and the Board of Directors will either reduce the
size of the Board, or select substitute nominees after identifying suitable
candidates. The Restated Certificate of Incorporation of the Corporation
provides that the Board of Directors shall consist of not less than 9 nor more
than 20 Directors as shall be fixed from time to time by the Board. The number
of Directors, effective April 28, 1997, shall be fixed at 12.

The following table of Director nominees is based upon information
furnished by the nominees as of March 14, 1997.
<TABLE>
<CAPTION>
FIRST PRINCIPAL OCCUPATION SHARES OF COMMON
YEAR DURING PAST FIVE YEARS STOCK OWNED
NAME AGE ELECTED AND OTHER DIRECTORSHIPS BENEFICIALLY(1)
---- --- ------- ------------------------ ---------------
<S> <C> <C> <C> <C>
Martha Clark Goss.... 47 1994 Vice President and Chief Financial Officer of Booz Allen 7,700
& Hamilton, Inc. (Management Consulting). Prior to (6,000)
July 1995, Senior Vice President of The Prudential
Insurance Company of America. From 1981 to July
1995, an officer of various Prudential companies;
Director-Dexter Corporation.

David J. Roberts..... 53 1994 Vice Chairman, since April 1, 1994, and Chief Financial 50,065
Officer of the Corporation, since April 1987. Formerly (41,667)
held several financial positions with the Corporation
and its subsidiaries.

John E. Stuart....... 53 1997 Chairman and Chief Executive Officer of Ikon Office 1,000
Solutions (Office Products). From August 1993 to
December 1996, Chairman, President and Chief
Executive Officer of Alco Standard Corporation. Prior
to August 1993, President of Alco Office Products.

Charles Y. C. Tse.... 71 1982 Retired, formerly Vice Chairman and President, 12,200
International Operations, Warner-Lambert Company (12,000)
(Health Care); Director-Superior Telecom Inc.
</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE-NAMED
NOMINEES.

- - -------
(1) The tabulation of the number of shares of Common Stock owned beneficially
includes shares which the named individuals have options to acquire within 60
days pursuant to the Corporation's 1984 Stock Option Plan, the Corporation's
1995 Stock Option Plan and/or The Directors' Stock Option Plan. Of the total
number of shares owned beneficially, the number of such shares which are under
options exercisable within 60 days is indicated in parentheses. Virtually all
shares are owned with sole voting and sole investment powers. 28,655 shares
owned by the Officers of the Corporation have restrictions on the sale of such
shares.

2
<PAGE> 5
SIMILAR INFORMATION CONCERNING THE DIRECTORS WHOSE TERMS OF OFFICE CONTINUE
AFTER THE 1997 ANNUAL MEETING IS AS FOLLOWS:

FIRST PRINCIPAL OCCUPATION SHARES OF COMMON
YEAR DURING PAST FIVE YEARS STOCK OWNED
NAME AGE ELECTED AND OTHER DIRECTORSHIPS BENEFICIALLY(1)
---- --- ------- ------------------------ ---------------
<S> <C> <C> <C> <C>
Eugene D. Atkinson ... 52 1995 Limited Partner, Goldman, Sachs & Co. and Chairman 6,000
(Term ends 1998) of Goldman Sachs (International). Formerly held several (4,000)
executive positions with Goldman, Sachs & Co.
(Investment Banking).

Louis E. Azzato ...... 66 1978 Retired, formerly Chairman and Chief Executive Officer 108,765
(Term ends 1999) of the Corporation; Director-Blue Cross and Blue Shield (74,416)
of New Jersey, First Union North Bank.

David J. Farris ...... 61 1996 Chief Operating Officer of Beneficial Corporation and 3,000
(Term ends 1999) President and Chief Executive Officer of Beneficial (2,000)
Management Corporation (Financial Services); Director-
Beneficial Corporation.

E. James Ferland ..... 55 1993 Chairman of the Board, President and Chief Executive 10,000
(Term ends 1998) Officer of Public Service Enterprise Group Incorporated (6,000)
and Chairman of the Board and Chief Executive Officer
of Public Service Electric and Gas Company (Utilities);
Director-Public Service Enterprise Group Incorporated,
The Hartford Steam Boiler Inspection and Insurance
Company.

Constance J. Horner .. 55 1996 Guest scholar at The Brookings Institution since 1993. 3,015
(Term ends 1999) Commissioner, U.S. Commission on Civil Rights since (2,000)
1993 (Government). From 1991 to 1993, Assistant to the
President and Director of Presidential Personnel at the
White House; Director-Ingersoll-Rand Company, Pfizer, Inc.,
Prudential Insurance Company of America.

Joseph J. Melone ..... 65 1988 President and Chief Executive Officer, The Equitable 13,500
(Term ends 1998) Companies Incorporated and Chairman of The Equitable (12,000)
Life Assurance Society of the United States. (Insurance
and Financial Services). Formerly Chief Executive
Officer of the Equitable Life Assurance Society of the
United States and Chief Operating Officer, The
Equitable Companies Incorporated. Director-The
Equitable Companies Incorporated, AT&T Capital.
</TABLE>

- - --------

(1) The tabulation of the number of shares of Common Stock owned beneficially
includes shares which the named individuals have options to acquire within 60
days pursuant to the Corporation's 1984 Stock Option Plan and/or The Directors'
Stock Option Plan. Of the total number of shares owned beneficially, the number
of such shares which are under options exercisable within 60 days is indicated
in parentheses. All shares are owned with sole voting and sole investment
powers.

3
<PAGE> 6
<TABLE>
<CAPTION>

FIRST PRINCIPAL OCCUPATION SHARES OF COMMON
YEAR DURING PAST FIVE YEARS STOCK OWNED
NAME AGE ELECTED AND OTHER DIRECTORSHIPS BENEFICIALLY(1)
---- --- ------- ------------------------ ---------------
<S> <C> <C> <C> <C>
Frank E. Perkins ..... 63 1981 Professor Emeritus of Civil Engineering, Massachusetts 12,480
(Term ends 1999) Institute of Technology (Educator). Formerly Dean of (12,000)
the Graduate School, Massachusetts Institute of
Technology.

Richard J. Swift ..... 52 1993 Chairman, President and Chief Executive Officer of the 150,719
(Term ends 1998) Corporation since April 1994. Formerly held several (134,167)
executive positions with the Corporation and its
subsidiaries. Director-Public Service Enterprise Group
Incorporated, Ingersoll-Rand Company.
</TABLE>

Following is stock ownership information as of March 14, 1997 for
Messrs. N. William Atwater, Henry E. Bartoli and Thomas R. O'Brien, Officers of
the Corporation who are listed in the compensation tables that follow, but are
not included in the Director tabulations above:

SHARES OF
COMMON STOCK
OWNED
NAME TITLE BENEFICIALLY(1)
---- ----- ---------------
<S> <C> <C>
N. William Atwater Executive Vice President - 64,845
Engineering & Construction Group (58,660)

Henry E. Bartoli Senior Vice President - 36,919
Energy Equipment Group (32,500)

Thomas R. O'Brien Senior Vice President and 22,155
General Counsel (19,555)
All current Directors, Director nominees
and Officers of the Corporation
as a group (22 persons) as of 615,021
March 14, 1997............................................................... (517,430)
</TABLE>

No individual Director, Director nominee or Officer of the Corporation
owns 1% or more of the Corporation's Common Stock. The 22 members of the group
own less than 1% of the Corporation's Common Stock.
The following table sets forth each shareholder which is known by
Foster Wheeler to be the beneficial owner of more than five percent of the
outstanding Common Stock of the Corporation. The information is based on reports
filed with the Securities and Exchange Commission.

- - -------
(1) The tabulation of the number of shares of Common Stock owned beneficially
includes shares which the named individuals and the group have options to
acquire within 60 days pursuant to the Corporation's 1984 Stock Option Plan, the
Corporation's 1995 Stock Option Plan and/or The Directors' Stock Option Plan.
Of the total number of shares owned beneficially, the number of such shares
which are under options exercisable within 60 days is indicated in parentheses.
Virtually all shares are owned with sole voting and sole investment powers.
28,655 shares owned by the Officers of the Corporation have restrictions on the
sale of such shares.

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<PAGE> 7
<TABLE>
<CAPTION>

AMT. AND NATURE OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
-------------- ------------------------------------ -------------------- ----------------
<S> <C> <C> <C>
Common Stock Wellington Management Company, LLP 2,894,750(1) 7.12%
75 State Street
Boston, MA 02109

Common Stock The Regents of the University of California 2,206,550(2) 5.43%
300 Lakeside Drive, 17th Floor
Oakland, CA 94612

Common Stock Palley-Needelman Asset 2,155,312(3) 5.30%
Management, Inc.
800 Newport Center Drive, Suite 450
Newport Beach, CA 92660
</TABLE>

COMMITTEES OF THE BOARD

The Board of Directors of the Corporation has established standing
committees to consider various matters and to make recommendations to the full
Board as to proposed courses of action for the Board. Among the standing
committees that have been established are the Audit Committee, the Committee on
Nominees for Directors and Officers, the Compensation Committee, the Finance
Committee and the Retirement Plan Committee.

The members of the Audit Committee are Mr. Charles Y. C. Tse, Chairman;
Mr. John A. Hinds; Ms. Constance J. Horner; Mr. Joseph J. Melone and Dr. Frank
E. Perkins. During the last fiscal year, this Committee held five meetings. The
functions of this Committee are to review Management's recommendations for the
engagement or discharge of independent auditors; to review the audit programs
planned by the independent auditors and the internal auditors, and to monitor
program progress; to review compliance with Corporate policies; to review, in
connection with the independent auditors, the results of the audit, the
Corporation's financial statements and the Corporation's system of internal
accounting control; to review fees of the independent auditors; and to report
the Committee's findings to the full Board of Directors.

The members of the Committee on Nominees for Directors and Officers are
Mr. Joseph J. Melone, Chairman; Mr. Eugene D. Atkinson; Mr. Louis E. Azzato; Mr.
John A. Hinds; Dr. Frank E. Perkins; Mr. Richard J. Swift and Mr. Charles Y. C.
Tse. During the last fiscal year, this Committee held six meetings. The
functions of this Committee are to recommend to the Board the nominees for
election as Directors and Officers, and to consider performance of incumbent
Directors and Officers to determine whether to nominate them for re-election.
The Committee will consider Director nominees recommended by Stockholders. Such
recommendations should be made by letter, including a description of the
proposed nominee's qualifications, biographical information and willingness to
serve, and sent to the attention of the Secretary, Foster Wheeler Corporation,
Perryville Corporate Park, Clinton, New Jersey 08809-4000 by November 21, 1997
for the 1998 Annual Meeting of Stockholders.

The Compensation Committee consists of Mr. Joseph J. Melone, Chairman;
Mr. E. James Ferland; Ms. Martha Clark Goss; Dr. Frank E. Perkins; Mr. Charles
Y. C. Tse and Mr. Robert Van Buren. During the last fiscal year, this Committee
held six meetings. The functions of this Committee are to recommend to the Board
compensation arrangements for Directors and Officers, and to approve specific
benefits under such arrangements.

- - --------

(1) The reported beneficial ownership is indirectly through Wellington
Management Company's subsidiary, Wellington Trust Company, NA (collectively
"Wellington"). Wellington reported that it had shared dispositive power as to
all shares beneficially owned and shared voting power as to 1,791,200 shares.
The information was reported as of January 24, 1997.

(2) The information was reported as of January 13, 1997.

(3) The information was reported as of February 10, 1997.

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<PAGE> 8
Following are the members of the Finance Committee: Mr. E. James
Ferland, Chairman; Mr. Eugene D. Atkinson; Mr. David J. Farris; Ms. Martha Clark
Goss; Mr. David J. Roberts and Mr. Robert Van Buren. Five meetings of this
Committee were held during the last fiscal year. This Committee reviews the
consolidated financial results of the Corporation; establishes payment schedules
for dividends; and reviews matters that may have an impact on the Corporation's
financial statements, including cash flows.

The members of the Retirement Plan Committee are: Mr. Robert Van Buren,
Chairman; Messrs. Louis E. Azzato; E. James Ferland; Ms. Martha Clark Goss; Mr.
John A. Hinds; Ms. Constance J. Horner and Mr. David J. Roberts. Messrs. Robert
D. Iseman and James E. Schessler are Ex Officio members. During the last fiscal
year, three meetings of the Retirement Plan Committee were held. The Committee's
authority is to recommend the allocation of pension fund assets to the Board of
Directors; recommend qualified investment managers and/or trustees for pension
fund assets to the Board of Directors; monitor the results of the investment
managers and/or trustees and meet during the year to discuss their performance;
and set investment manager guidelines and objectives and recommend appropriate
action to the Board if guidelines and objectives are not being met.

COMPENSATION OF DIRECTORS

Ten regular meetings of the Board of Directors were held during the
last fiscal year. The average attendance of all directors at the ten Board
meetings was 97%. The average attendance of all directors at all meetings of the
Board and Committees of the Board held during the last fiscal year was 96%.
During this period, each incumbent director attended 75% or more of all meetings
of the Board of Directors and of the Committees on which they served. Directors
who are employees of the Corporation received no additional compensation for
their services as directors. Nonemployee directors receive an annual retainer of
$26,000 and $1,200 for each Board meeting attended. In addition, each
nonemployee director receives $1,200 for each meeting of a Committee of the
Board attended; the Committee Chairman receives $2,000 for each such meeting.
Nonemployee directors are permitted to defer all or part of their retainer or
Board and Committee fees until their retirement or other termination of status
as a director. Deferred amounts accrue interest at an annual rate equal to the
rate charged by First Union National Bank for prime commercial loans of 90-day
maturity.

Effective October 15, 1996, for a term of one year, the Corporation has
obtained insurance policies through National Union Fire Insurance Company of
Pittsburgh, Pennsylvania and Continental Casualty Corporation in respect of
indemnification of Directors and Officers. The scope of these policies is
similar to coverage under prior policies held by the Corporation. The annual
premium for this coverage is $340,000.

The Corporation's Shareholders, at the 1990 Annual Meeting, approved
The Directors' Stock Option Plan. Pursuant to The Directors' Stock Option Plan,
each director who is not an employee of the Corporation or one of its
subsidiaries currently receives, following the Annual Meeting each year, a
nonqualified option to purchase 2,000 shares of the Corporation's Common Stock.
Such options have ten-year terms and become exercisable beginning one year after
the date of grant at an option exercise price equal to the fair market value of
the shares on the date of grant. Subject to stockholder approval, the amendment
of The Directors' Stock Option Plan, as set forth later in this Proxy Statement,
will increase the annual award of stock options from 2,000 shares to 3,000
shares to commence following the 1997 Annual Meeting of Stockholders.

COMPENSATION OF EXECUTIVE OFFICERS

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Executive Compensation Plan (the "Plan") for executives of the
Corporation was originally designed in 1987 by an independent consultant. It was
reviewed, modified, and in 1988 approved and adopted by the Compensation
Committee and the Board of Directors. Since then it has been regularly reviewed
and modified by the Committee and the Board. The Plan is intended to meet two
primary objectives: to attract and retain highly-qualified executives to manage
the Corporation's business and to

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<PAGE> 9
reward those executives if their performance and the Corporation's results so
warrant. The Compensation Committee, subject to review by the Board, is
responsible for the implementation and administration of all aspects of the
Plan. Any payments made under this Plan are ultimately at the discretion of the
Board. The Committee has considered the effects of certain provisions of the
federal income tax laws relative to the deductibility of compensation to
executive officers exceeding $1,000,000. The Committee has determined that there
is no material impact on the Corporation at this time as a result of these
provisions.

BASE SALARY

The first component of each executive's compensation is base salary. As
part of its consideration relative to salary, the Committee reviews data for
executives in similar positions in comparable companies as provided by an
independent consultant and by the Corporation's staff, and in consultation with
the Chief Executive Officer establishes a salary range for each executive.
Comparable companies are those of similar size as well as those providing
similar services and products to similar markets and customers. The Chief
Executive Officer then proposes to the Committee a specific salary, within that
range, for each executive. The Committee considers that proposal, and then
recommends a salary for each executive to the Board for its consideration and
approval. The Committee similarly recommends a salary within the appropriate
range for the Chief Executive Officer, but without the participation of the
Chief Executive Officer. In determining such salaries, the performance of each
such executive, his or her experience and the performance of the business unit
for which he or she is responsible, as well as performance of the Corporation as
a whole, are all taken into account. The Corporation does not have a policy to
predetermine specific compensation relative to the compensation paid by other
companies. Actual salaries of the Chief Executive Officer and other officers
were neither the highest nor lowest of salaries paid to officers of comparable
companies.

ANNUAL INCENTIVE

The second component of each executive's compensation is an annual
incentive payment. At the beginning of each year, corporate and business-unit
earnings targets are formulated by the Chief Executive Officer, then reviewed by
the Compensation Committee and, as proposed or modified, are recommended to the
Board for its consideration and approval. The actual incentive payment is solely
determined by measurement of actual performance of the Corporation and each
business unit against the established targets. This payment can range from zero
to 75 percent of annual salary in the case of the Chief Executive Officer and
from zero to 60 percent of annual salary in the case of other officers depending
upon the extent to which earnings targets are deficient, achieved, or exceeded.

LONG-TERM INCENTIVES

The Plan also provides for long-term incentives comprised of long-term
performance units and stock options. Under the Plan, each executive is assigned
long-term performance units which are valued and payable at the end of a
three-year period. The value of a long-term unit is performance-based and is
determined by the growth in earnings and return on equity during the three-year
period. The number of performance units were determined in a manner such that
certain growth in earnings and returns on equity would result in an incentive to
the executives which together with salary and annual incentives would provide
competitive total compensation. The actual payout was determined by the
achievement of considerable earnings growth combined with a reasonable return on
equity over a three-year cycle.

The Plan also provides for long-term incentives to executives in the
form of annual grants of stock options. Such options are exercisable in
installments over three-year periods at the per-share market price of the
Corporation's stock on the date of the award and, of course, become valuable
only if the market price of the Corporation's stock increases.

As outlined above, pursuant to the Plan, the 1996 base salary for Mr.
Swift was determined by the Committee within a range of salaries paid to chief
executive officers of comparable companies, based on data provided by an
independent consultant and by the Corporation's staff, and then recommended to
the Board for its consideration and approval. The annual incentive payment, and
long-term incentive payment were likewise determined by the Committee and
recommended to the Board for its consideration and approval. The actual
incentive awards were based, as the Plan provides, on the Corporation's
performance in 1996 and on the Corporation's performance over the three-year
period ended December 27, 1996, and were thus tied directly to factors tending
to enhance shareholder value. In addition, in

7
<PAGE> 10
accordance with the Plan, the Committee recommended, and the Board approved, a
stock option grant to Mr. Swift of 50,000 shares at the market price on January
2, 1996, exercisable in installments over a three-year period.

The Committee and the Board considered that Mr. Swift's performance as
Chief Executive Officer and the results achieved by the Corporation as of
December 27, 1996, and over the 36-month period ended December 27, 1996, well
supported the salary, incentive payments and stock options awarded, as his
salary was in range with industry executives of similar responsibility, and
since the Corporation performed satisfactorily with respect to its earnings
targets and since long-term earnings growth and return on equity were
substantial and resulted in an incentive payout per the Plan.

COMPENSATION COMMITTEE:

Joseph J. Melone, Chairman Frank E. Perkins
E. James Ferland Charles Y. C. Tse
Martha Clark Goss Robert Van Buren

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The following Directors served on the Compensation Committee during the
last fiscal year: Messrs. Joseph J. Melone, Chairman; E. James Ferland; Ms.
Martha Clark Goss; Messrs. Frank E. Perkins; Charles Y.C. Tse and Robert Van
Buren. Mr. Swift serves as a director of Public Service Enterprise Group
Incorporated. Mr. Ferland is the Chairman, President, Chief Executive Officer
and a director of that company.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN

The following line graph compares the five-year cumulative total
shareholder return of (i) Foster Wheeler Corporation Common Stock, (ii) the S&P
500 Index, and (iii) a line-of-business index consisting of the Dow Jones Heavy
Construction Industry Group and McDermott International, Inc. (the "Industry
Group").

In the preparation of the line graph, the following assumptions have
been used: (i) $100 was invested on December 27, 1991 in Foster Wheeler Common
Stock, the S&P 500 Index, and the Industry Group, and (ii) dividends were
reinvested. Foster Wheeler Corporation Common Stock was trading at $27.00 on
December 27, 1991 and $37.875 on December 27, 1996.

[GRAPH]

DEC. 91 DEC. 92 DEC. 93 DEC. 94 DEC. 95 DEC. 96
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Foster Wheeler 100 107.30 129.32 117.14 171.03 155.40
S&P 500 Index 100 111.22 121.30 122.91 169.09 212.05
Industry Group 100 104.62 107.75 105.87 144.67 136.39
</TABLE>

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<PAGE> 11
SUMMARY COMPENSATION TABLE

The following is a tabulation of compensation paid or set aside by the
Corporation and its subsidiaries during each of the Corporation's last three
fiscal years for the Chief Executive Officer ("CEO") and the four most
highly-compensated executive officers of the Corporation, other than the CEO,
who were serving as executive officers at the end of the last fiscal year.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ---------------------------
AWARDS PAYOUTS
---------- ---------
NAME SECURITIES ALL
AND UNDERLYING LONG-TERM OTHER
PRINCIPAL OPTIONS/ INCENTIVE COMPEN-
POSITION YEAR SALARY ($) BONUS ($) SARS (#) PAYOUTS($)(1) SATION($)(2)
--------- ---- ---------- --------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Swift 1996 $605,000 $320,650 50,000 $465,215 $4,500
Chairman, President 1995 $575,000 $338,886 50,000 $411,114 $4,500
& CEO 1994 $490,449 $223,109 64,167 $301,891 $4,500

David J. Roberts 1996 $362,500 $153,700 25,000 $307,231 $4,500
Vice Chairman & 1995 $343,500 $200,000 25,000 $300,000 $4,500
Chief Financial 1994 $325,288 $120,120 9,167 $209,880 $4,500
Officer

N. William Atwater 1996 $362,000 $184,656 25,000 $275,250 $4,500
Executive Vice 1995 $347,500 $182,000 25,000 $269,250 $4,500
President 1994 $315,000 $ 99,540 7,500 $215,460 $4,500

Henry E. Bartoli 1996 $291,500 $103,144 25,000 $299,854 $4,500
Senior Vice President 1995 $270,500 $148,775 25,000 $255,750 $4,500
1994 $260,000 $117,260 7,500 $111,750 $4,500

Thomas R. O'Brien 1996 $270,000 $116,600 14,167 $237,000 $4,500
Senior Vice President 1995 $250,000 $100,000 12,500 $148,000 $4,500
1994 $250,000 $ 91,000 7,500 $84,000 $4,500
</TABLE>

(1) No specified performance target, goal or condition to payout was waived
with respect to any amount included in this column.

(2) Corporation match on Employee 401(k) contribution.

LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR

As part of the long-term incentive portion of the Corporation's
Executive Compensation Plan, "performance units", which ultimately may pay out
in cash upon completion of a three-year cycle, are awarded annually to Corporate
Officers. The following table sets forth awards in 1996 to the named
individuals, along with the assumed values of the awards at the end of the
three-year Plan cycle. The ultimate value of the award will be based upon the
Corporation's earnings growth rate and return on equity. For a discussion of
award criteria see the Long-Term Incentives section of the Compensation
Committee Report on Executive Compensation which appears earlier in this Proxy
Statement.
<TABLE>
<CAPTION>

ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PLANS
NUMBER OF OTHER PERIOD ------------------------------
SHARES, UNITS OR UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME OTHER RIGHTS (#) OR PAYOUT ($) ($) ($)
---- ---------------- ---------------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
R. J. Swift 300 3 Years 0 $300,000 $600,000
D. J. Roberts 200 3 Years 0 $200,000 $400,000
N. W. Atwater 150 3 Years 0 $150,000 $300,000
H. E. Bartoli 150 3 Years 0 $150,000 $300,000
T. R. O'Brien 150 3 Years 0 $150,000 $300,000
</TABLE>

9
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR

Following is a table dealing with stock option grants which were made
to the named individuals during the last completed fiscal year. The options were
granted pursuant to the terms of the Corporation's Executive Compensation Plan
and the 1995 Stock Option Plan, which provides that ten-year term options are to
be awarded at market value on the date of the award. One-third of an option
becomes exercisable after one year, two-thirds after two years and the entire
option is exercisable after three years.

NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED GRANT DATE
OPTIONS TO EMPLOYEES IN EXERCISE OR BASE EXPIRATION PRESENT VALUE
NAME GRANTED (#) FISCAL YEAR PRICE ($/SHARE) DATE $ (1)
---- ----------- --------------- ---------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
R. J. Swift 50,000 21% $42.1875 1/1/06 $723,000
D. J. Roberts 25,000 10.5% $42.1875 1/1/06 $361,500
N. W. Atwater 25,000 10.5% $42.1875 1/1/06 $361,500
H. E. Bartoli 25,000 10.5% $42.1875 1/1/06 $361,500
T. R. O'Brien 14,167 6% $42.1875 1/1/06 $204,855

<FN>
(1) Based on the Black-Scholes option pricing model, using the
following assumptions: 1) the stock price on the day the options were
issued was $42.1875; 2) the option exercise price is $42.1875 per
share, the price of the stock on the date of option issue; 3) the
dividend yield of the stock was 1.85%. (This was based upon the actual
dividend yield as of January 2, 1996); 4) the expected term of the
options is 7.5 years; 5) the risk free rate of return on the issuance
date for the term of the option was 5.484% (the Treasury Bond Rate for
7.5 years as of January 2, 1996); and 6) the volatility of the stock
was calculated empirically to be .2750, using Foster Wheeler stock
pricing data for the 90 trading days immediately preceding the date of
issuance of the options.
</TABLE>

PENSION PLAN TABLE

The following table shows estimated annual benefits payable upon normal
retirement (including amounts attributable to any defined benefit supplementary
or excess pension award plans) in specified average annual compensation and
years of service classifications.

YEARS OF SERVICE AFTER APRIL 1, 1976
-----------------------------------------------------------------------------------------
10 15 20 25 30 35
-- -- -- -- -- --
Average Annual
Remuneration
<S> <C> <C> <C> <C> <C> <C>
$ 500,000.......... $ 60,000 $ 90,000 $120,000 $150,000 $180,000 $210,000
$ 600,000.......... $ 72,000 $108,000 $144,000 $180,000 $216,000 $252,000
$ 700,000.......... $ 84,000 $126,000 $168,000 $210,000 $252,000 $294,000
$ 800,000.......... $ 96,000 $144,000 $192,000 $240,000 $288,000 $336,000
$ 900,000.......... $108,000 $162,000 $216,000 $270,000 $324,000 $378,000
$ 1,000,000.......... $120,000 $180,000 $240,000 $300,000 $360,000 $420,000
$ 1,100,000.......... $132,000 $198,000 $264,000 $330,000 $396,000 $462,000
$ 1,200,000.......... $144,000 $216,000 $288,000 $360,000 $432,000 $504,000
$ 1,300,000.......... $156,000 $234,000 $312,000 $390,000 $468,000 $546,000
$ 1,400,000.......... $168,000 $252,000 $336,000 $420,000 $504,000 $588,000
$ 1,500,000.......... $180,000 $270,000 $360,000 $450,000 $540,000 $630,000
$ 1,600,000.......... $192,000 $288,000 $384,000 $480,000 $576,000 $672,000
$ 1,700,000.......... $204,000 $306,000 $408,000 $510,000 $612,000 $714,000
</TABLE>

10
<PAGE> 13
The Corporation's current pension plan was last amended as of November
1, 1995, and is solely noncontributory. For service after April 1, 1976, the
retirement benefit is based on average monthly earnings (which would include
amounts in the "Salary," "Bonus" and "Long-Term Incentive Payouts" columns in
the Summary Compensation Table which appears earlier in this Proxy Statement)
during the 60 highest consecutive months in the last 120 months of employment.
The benefits in the foregoing table are not subject to any deduction for Social
Security or other offset amounts. The (i) credited years of service after April
1, 1976, assuming retirement at the normal retirement age of 65, and (ii) the
amount of annual "frozen benefits" earned prior to the current plan (which would
be additive to benefits under the current plan) for those individuals named in
the Summary Compensation Table are as follows: R. J. Swift: 31 1/2 years - $399;
D. J. Roberts: 21 years - $427; N. W. Atwater: 23 1/2 years - $10,259; H. E.
Bartoli: 18 1/2 years - $0; T. R. O'Brien: 0 years - $0.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

The following table sets forth, for the named individuals, the number
of shares of Foster Wheeler Common Stock acquired upon option exercise during
1996, the value realized (spread between the market price on the date of
exercise and the option price) as a result of such option exercises, and the
number and value of unexercised options (both exercisable and unexercisable) as
of December 31, 1996.

NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT FY-END
OPTIONS AT FY-END (#) ($)
SHARES ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- ------------------ ------------ ----------------- ------------------
<S> <C> <C> <C> <C>
R. J. Swift -0- -0- 96,112/88,055 $370,231/$285,812
D. J. Roberts 17,760 $361,406 21,944/44,723 $167,514/$146,342
N. W. Atwater -0- -0- 39,493/44,167 $416,241/$143,596
H. E. Bartoli 7,500 $127,938 13,333/44,167 $ 90,320/$143,596
T. R. O'Brien 1,000 $11,063 8,167/25,000 $ 52,565/$77,966
</TABLE>

CHANGE OF CONTROL ARRANGEMENTS

On September 26, 1995, the Board of Directors authorized the
Corporation to enter into change of control employment agreements (the
"Agreements") with its top eleven Officers, including the Officers listed in the
preceding tables (the "Executives"). The Agreements provide that if, within
three years of a "change of control", as defined in the Agreements, the
Corporation terminates an Executive's employment other than for "cause" (defined
as failure to perform the Executive's duties or engaging in illegal or gross
misconduct) or disability or if the Executive terminates employment for "good
reason," (defined as diminution of duties or responsibilities, the Corporation's
failure to compensate the Executive, a change in workplace, the Corporation's
purported termination of the Agreement or failure to comply with the Agreement),
the Executive will be entitled to receive a lump sum cash payment of the
following amounts: (a) the Executive's base salary through the date of
termination, plus (b) a proportionate annual bonus, plus (c) three times the sum
of the Executive's base salary, the highest annual bonus and the highest
long-term bonus for any of the most recent three cycles completed before the
change of control, plus (d) unpaid deferred compensation and vacation pay. The
Agreements also provide for a five-year continuation of certain employee welfare
benefits and a lump sum payment equal to the actuarial value of the service
credit under the Corporation's qualified and supplemental retirement plans the
Executive would have received if the Executive had remained employed for three
years after the date of the Executive's termination. The Corporation will also
provide the Executive with outplacement services. Finally, the Executive may
tender restricted stock (whether vested or not) in exchange for cash. However,
if any payments to the Executive, whether under the Agreement or otherwise,
would be subject to the "golden

11
<PAGE> 14
parachute" excise tax under Section 4999 of the Internal Revenue Code of 1986,
as amended, the Corporation will make an additional payment to put the Executive
in the same after-tax position as if no excise tax had been imposed. Any legal
fees and expenses arising in connection with any dispute under the Agreements,
will be paid by the Corporation.

In addition to the Agreements, there are other contracts and
arrangements whereunder the Executives listed in the foregoing tables will
receive payments from the Corporation in the event of a change of control. Under
the Executive Compensation Plan, which is discussed in detail in the
Compensation Committee Report on Executive Compensation set forth in this Proxy
Statement, individual participant accruals are paid to the participants within
ten days after a change of control. This Plan also provides that transfer
restrictions on Corporation Common Stock received by an executive, at the
Executive's option in lieu of a cash incentive payment, lift upon a change of
control. "Units" (limited stock appreciation rights) which may have been granted
under the 1984 Stock Option Plan of Foster Wheeler Corporation become
exercisable upon a change in control. Under the 1995 Stock Option Plan of Foster
Wheeler Corporation, the Executive has the right to surrender his or her option
to the Corporation and receive, in cash, the difference between the fair market
value of the shares covered by the option and the exercise price of the option.
The Management Incentive Life Program ("Incentive Program") and the Supplemental
Executive Retirement Plan ("SERP") are annuity contracts between the Corporation
and employees that contain change of control provisions. If a participant in the
Incentive Program is terminated within three years after a change of control,
the participant may continue in the program until the latter of (i) three years
from such termination date or (ii) attainment of age 56. A participant in the
SERP receives the equivalent actuarial value of his or her benefit immediately
upon a change of control.

AMENDMENT OF THE DIRECTORS' STOCK OPTION PLAN

On the recommendation of management, on January 28, 1997, the Board of
Directors adopted, subject to approval of the Stockholders, amendments to The
Directors' Stock Option Plan (the "Directors' Plan"). The amendments increase
the annual stock option grant under the Directors' Plan to nonemployee directors
from 2,000 shares to 3,000 shares, commencing with the 1997 Annual Meeting, and
increase the aggregate number of shares available for issuance under the
Directors' Plan from 150,000 to 400,000.

Under the Directors' Plan, each year following the Annual Meeting, each
director who is not an employee of the Corporation or any of its subsidiaries
receives an option to purchase 2,000 shares (3,000 shares if the amendments are
approved) of Common Stock. The exercise price of such options is the fair market
value of the Common Stock on the date of grant. The exercise price may be paid
in cash or by tendering shares of Common Stock having a fair market value equal
to the exercise price. Each option will be non-transferable except upon death,
will expire 10 years after the date of grant and will become exercisable on the
first anniversary of the date of grant. Any vested options will remain
exercisable for a period of three years following the director's death, but in
no event beyond the tenth anniversary of the date of grant. A total of 150,000
shares (400,000 shares if the amendments are approved) of Common Stock has been
reserved for issuance under the Directors' Plan, subject to adjustment for stock
splits and similar events.

Because the businesses of the Corporation are managed under the
direction of the Board of Directors, decisions of the Board have a direct and
substantial impact on the value of the Corporation's shares. Management believes
that the grant of nonqualified stock options at fair market value has been a
desirable and useful means of aligning the interests of nonemployee directors
with those of the stockholders of the Corporation. Management believes that
increasing the number of annual option grants from 2,000 shares to 3,000 shares
will help the Corporation attract and retain nonemployee directors who will be
able to contribute meaningfully to the creation of stockholder value. It is
therefore proposed that Article 4 of the Directors' Plan be amended to increase
the number of options awarded annually to 3,000 shares of Common Stock.

At this time, there are only 21,000 shares currently available for
grant of new options under the Directors' Plan. It is therefore proposed,
subject to the approval of Stockholders, that the issuable number of shares be
increased from the 150,000 shares originally authorized to an aggregate of
400,000 shares. If the Amendment is approved, the first two sentences of Section
2 of the Directors' Plan will read as follows:

12
<PAGE> 15
"The stock subject to the options shall be shares of the Company's authorized
but unissued or reacquired common stock (the "Common Stock"). The total amount
of the Common Stock on which options may be granted is 400,000 shares."

The Corporation believes the principal federal income tax consequences
to nonemployee directors and the Corporation under the Directors' Plan, under
current law, should generally be as follows: A director to whom a stock option
is granted should recognize no income at the time of the grant. When a director
exercises a stock option, the director should recognize ordinary compensation
income equal to the difference, if any, between the exercise price of the option
and the fair market value of the Common Stock on the date of exercise. The tax
basis of such shares to the director should be equal to the exercise price paid
plus the amount includable in the director's gross income as compensation, and
the director's holding period of such shares should normally commence on the day
following the date on which the director recognizes taxable income in respect of
such shares. The Corporation will be entitled to a deduction for federal income
tax purposes at the same time and in the same amount as a director is considered
to realize income.

A copy of the Directors' Plan, including the proposed increased option
award provision and the increased aggregate number of shares, is attached as
Exhibit A.

PLAN BENEFITS

If the amendments are approved, following the 1997 Annual Meeting, ten
nonemployee directors will each receive an option to purchase 3,000 shares of
common stock as set forth below:

THE DIRECTORS' STOCK OPTION PLAN
<TABLE>
<CAPTION>

Shares of Common Stock
Name Underlying Options
- - ------------------------------------ -------------------------------------
<S> <C>
All nonemployee directors 30,000
as a group (10 individuals)
</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENTS TO
THE DIRECTORS' STOCK OPTION PLAN.

SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has selected Coopers & Lybrand L.L.P. as
auditors of the Corporation for 1997, subject to the approval of the
Stockholders. Coopers & Lybrand L.L.P. is a firm of independent certified public
accountants, with a broad international practice, which has no direct or
indirect financial interest in the Corporation or its subsidiaries. Coopers &
Lybrand L.L.P. was first selected as auditors of the Corporation for the year
1977.

With exception of tax-related matters, the services provided by the
auditors to Foster Wheeler and its subsidiaries for 1996 were substantially
audit-related. These audit functions included review of the financial statements
for the year 1996, Securities and Exchange Commission periodic filings, the 1996
Annual Report to Stockholders and special reports required by loan agreements.
Coopers & Lybrand L.L.P. was paid $1,413,000 for audit-related services for
1996.

A member of Coopers & Lybrand L.L.P. will attend the Annual Meeting and
will be available to answer questions of the Stockholders present, and to make a
statement if he desires to do so.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF INDEPENDENT AUDITORS.

13
<PAGE> 16
VOTING PROCEDURE

In 1992, the Corporation adopted a confidential voting policy in
connection with Annual Meetings of Stockholders. In essence, the policy provides
for independent vote tabulations and inspectors, and that, with exceptions,
Stockholder votes not be disclosed to the Corporation.

Under Securities and Exchange Commission Rules, boxes and a designated
blank space are provided on the proxy card for Stockholders to mark if they wish
either to vote "for," "against" or "abstain" on one or more of the proposals, or
to withhold authority to vote for one or more of the nominees for Director. New
York law and the Corporation's By-Laws require the presence of a quorum for the
Annual Meeting, which is defined as a majority of the shares entitled to vote at
the Meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.

Assuming a quorum has been reached, a determination must be made as to
the results of the vote on each matter submitted for shareholder approval: (1)
The election of Directors, (2) The amendment of The Directors' Stock Option
Plan, and (3) The ratification of the selection of independent auditors. A
plurality of the votes cast is required for the election of directors.
Abstentions and broker non-votes will have no effect on the outcome of the
election of directors. The affirmative vote of a majority of the votes cast at
the meeting on each matter by the holders of shares entitled to vote thereon is
required to approve the amendment of The Directors' Stock Option Plan and the
selection of the Corporation's independent auditors. Abstentions and broker
non-votes are not counted in determining the number of votes cast in connection
with these two items.

None of the items being voted upon is such as to afford a right of
appraisal or similar right to Stockholders who fail to vote or dissent as to any
action taken with respect thereto.

1998 ANNUAL MEETING

The 1998 Annual Meeting of Stockholders is scheduled to be held on
April 27, 1998. The location has not yet been determined. Stockholder proposals
must be received by the Secretary of the Corporation on or before November 21,
1997, to be included in the proxy material for the 1998 Annual Meeting of
Stockholders.

OTHER MATTERS

The expense of preparing, printing and mailing this Proxy Statement and
the accompanying material will be borne by the Corporation. Solicitation of
individual Stockholders may be made by mail, personal interviews, telephone,
facsimile, or other telecommunications by Officers and regular employees of the
Corporation who will receive no additional compensation therefor. In addition,
the Corporation has engaged Georgeson & Company Inc. to solicit proxies from
brokers and nominees at a cost of $5,500, plus out-of-pocket expenses. The
Corporation will reimburse brokers and other nominees for their expenses in
forwarding solicitation material to beneficial owners.

The Board of Directors of Foster Wheeler knows of no other business to
be presented at the meeting, but if matters other than those referred to above
do properly come before the meeting, it is intended that the persons named in
the proxy will vote with respect thereto in accord with their best judgment.

By Order of the Board of Directors

LISA FRIES GARDNER
Vice President and Secretary

March 21, 1997

14
<PAGE> 17
EXHIBIT A

FOSTER WHEELER CORPORATION
THE DIRECTORS' STOCK OPTION PLAN
(As Amended on January 28, 1997)

1. PURPOSE

The Directors' Stock Option Plan (the "Plan") is intended to advance
the interests of FOSTER WHEELER CORPORATION (the "Company") and its stockholders
by encouraging increased share ownership by members of the Board of Directors of
the Company (the "Board") who are not employees of the Company or any of its
subsidiaries, in order to promote long-term shareholder value through ownership
of the Company's common stock.

2. STOCK

The stock subject to the options shall be shares of the Company's
authorized but unissued or reacquired common stock (the "Common Stock"). The
total amount of the Common Stock on which options may be granted is 400,000
shares. In the event that any outstanding option under the Plan expires or is
terminated, shares of Common Stock allocable to the unexercised portion of such
option may again become subject to an option under the Plan.

3. ADMINISTRATION

The Plan is intended to be self-operative to the maximum extent
consistent with prudent business practice. Under no circumstances shall any
individual or group of individuals exercise discretion with respect to
designating the recipient of an option, the number of shares of Common Stock
that are subject to an option, the date of grant for an option or the exercise
price for an option.

All matters relating to the administration of the Plan and the options
granted pursuant thereto are delegated to the Compensation Committee of the
Board of Directors (the "Committee"). Any determination reduced to writing and
signed by a majority of the Committee shall be fully effective as if made by a
majority vote at a meeting thereof duly called and held. The Committee may make
such other rules and regulations for the conduct of its business as it shall
deem advisable. The interpretation and construction by the Committee of
provisions of the Plan or of options granted pursuant thereto shall be final and
conclusive. No member of the Committee or of the Board of Directors shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted pursuant thereto.

4. PARTICIPATION AND AWARDS UNDER THE PLAN

Each member of The Board of the Company who is not an employee of the
Company or any of its subsidiaries shall automatically receive an option to
acquire 3,000 share of Common Stock each year following the Annual Meeting of
Stockholders.

5. TERMS AND CONDITIONS OF OPTIONS

Stock options granted pursuant to the Plan shall be evidenced by
agreements (which need not be identical) in such form as the Committee from time
to time shall determine, which agreements shall not contain conditions and terms
more favorable to the Director than the following:

(a) Exercise of Options

An option may not be exercised:

(i) within one year from the date of grant of such option; or

(ii) if, in the opinion of counsel for the Company, exercise
of this option or delivery of shares pursuant thereto might
result in a violation of any law or regulation of an agency of
government or
<PAGE> 18
have an adverse effect on the listing status or qualification of the
Company shares on any securities exchange.

(b) Option Price

The option shall state the option price which shall be 100% of the fair
market value of the shares of Common Stock on the date of the granting of the
option. The mean of the high and low sale prices of the Common Stock on the New
York Stock Exchange on the day an option is granted shall be taken by the
Committee as the fair market value.

The option price shall be paid upon exercise (i) in U.S. dollars, or
(ii) in shares of Common Stock of the Company owned of record by the Director on
the exercise date, at the option of the Director optionee. Such stock shall be
valued at the mean of the high and low sale prices of such stock on the New York
Stock Exchange on the day of exercise.

(d) Term of Options

No option shall be exercisable after ten years from the date granted.

(e) Death of Optionee

If an optionee shall die, the option may be exercised (to the extent
that the optionee shall have been entitled to do so at his death) by a legatee
or legatees of the optionee under his last will, or by his personal
representatives or distributees, at any time within three years after his death
(but not later than the expiration date of the option).

(f) Assignability

No option shall be assignable or transferable by the optionee except by
will or by the laws of descent and distribution. During the lifetime of an
optionee, the option shall be exercisable only by him.

(g) Rights as a Stockholder

An optionee shall have no rights as a stockholder with respect to any
shares covered by his option until the date of the issuance of a stock
certificate to him for such shares.

6. NON-STATUTORY STOCK OPTIONS

All options granted under the Plan shall be non-statutory options not
intended to qualify under Section 422A of the Internal Revenue Code of 1986, as
amended.

7. TERM OF PLAN

Subject to Article 9, the Plan shall remain in effect until all options
granted under the Plan have been exercised or expire.

8. RECAPITALIZATION

In the event of changes in the Common Stock by reason of stock
dividends, split-ups or combination of shares, reclassifications,
recapitalizations, mergers, consolidations, reorganizations or liquidations,
appropriate adjustments shall be made by the Committee in (a) the number and
class of shares available under the Plan in the aggregate, (b) the option price
provided for in the Plan, (c) the number and class of
<PAGE> 19
shares to which optionees will thenceforth be entitled upon exercise of their
options, and (d) the price which optionees shall be required to pay upon such
exercise.

Whether any adjustment or modification is required as a result of the
occurrence of any of the events hereinbefore specified, and the amount thereof,
shall be determined by the Committee, which determination shall be final,
binding and conclusive.

9. AMENDMENT OF THE PLAN

The Board of Directors of the Company may from time to time suspend,
discontinue or abandon the Plan or revise or amend it in any respect whatsoever
except that (a) no revision or amendment shall change the selection or
eligibility of Directors to receive options under the Plan, the purchase price
thereunder, or materially increase the benefits accruing to participants under
the Plan, (b) without approval of the stockholders of the Company the number of
shares subject to the Plan shall not be increased and the price at which options
may be granted shall not be decreased, other than appropriate adjustments
necessary to reflect stock dividends, split-ups, or combinations of shares,
reclassifications, recapitalizations, mergers, consolidations, reorganizations
or liquidations, and (c) an outstanding option shall not be amended in any
respect without the consent of the optionee to whom granted. The Plan may not be
revised or amended more often than once every six months with regard to the
number of shares in Director option awards, or the price or timing of such
awards.

10. ADOPTION OF PLAN

The Plan shall become effective when adopted by the Board of Directors
and approved by the Stockholders of the Company at a duly held stockholders
meeting by favorable vote of holders of shares representing a majority of the
votes entitled to be cast on matters submitted to stockholders.

<PAGE> 20
PROXY

FOSTER WHEELER CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - MONDAY, APRIL 28, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of Foster Wheeler Corporation hereby
appoints Richard J. Swift, Thomas R. O'Brien, and Lisa Fries Gardner, each with
the full power of substitution, to vote as designated on the reverse side, all
of the shares of common stock of Foster Wheeler Corporation held of record in
the name of the undersigned as of March 14, 1997, at the Annual Meeting of
Stockholders to be held in the Ambassador Ballroom of the Hamilton Park
Conference Center, 175 Park Avenue, Florham Park, New Jersey at 10:30 a.m. on
Monday, April 28, 1997 or any adjournments thereof.

Please Mark, Sign, Date and promptly return this proxy card using the
enclosed envelope.

This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made, this
proxy will be voted for Proposals 1, 2 and 3.

(Continued, and to be dated and signed, on other side)

- FOLD AND DETACH HERE -

HAMILTON PARK CONFERENCE CENTER
-------------------------------

175 PARK AVENUE, FLORHAM PARK, N.J. 07932
201-377-2424

DIRECTONS TO THE HAMILTON PARK CONFERENCE CENTER

FROM NEWARK AIRPORT:
Follow signs to I-78 West. Take I-78 West for approximately 9 miles to NJ 24
West. Follow directions from NJ 24 West below.

FROM NJ 24 WEST:
Follow NJ 24 West to exit 2-A for Morristown Rt. 510 West (Columbia Turnpike).
Make a left at the first light onto Park Ave. At the fourth light make a right
into Hamilton Park.

FROM I-287 SOUTH TO NORTH:
Follow I-287 North to Exit 37 (24 East, Springfield). Take exit 2-A for
Morristown/Rt. 510 West. At the first light make a left onto Park Ave. At the
fourth light make a right into Hamilton Park.

FROM I-287 NORTH TO SOUTH:
Follow I-287 South to exit 37 (24 East). Take exit 2-A for Morritown/Rt. 510
West. At the first light make a left onto Park Ave. At the fourth light make
a right into Hamilton Park.

FROM GARDEN STATE PARKWAY SOUTH OR NORTH:
Take Garden State Parkway to exit 142. Follow signs for I-78 West. Take I-78
West to NJ 24 West. Follow directions from NJ 24 West.

FROM NEW YORK CITY:
From Holland Tunnel take NJ Turnpike (I-95) South to I-78 West (exit 14). Take
I-78 West to NJ 24 West. Follow directions from NJ 24 West.

From Lincoln Tunnel take NJ Turnpike (I-95) South to I-78 West (exit 14). Take
I-78 West to NJ 24 West. Follow directions for NJ 24 West.
<PAGE> 21
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1,2 AND 3.

PLEASE MARK
YOUR VOTES AS /X/
INDICATED IN
THIS EXAMPLE.

1. ELECTION OF FOUR DIRECTORS
Nominees are Ms. Martha Clark Goss and Messrs. David J. Roberts, John E.
Stuart and Charles Y.C. Tse

FOR WITHHELD (INSTRUCTIONS: To withhold authority to vote
/ / / / for any individual nominee, line through the
nominee's name in the list above.)

2. Act upon a proposal to amend The Directors' Stock Option Plan.

FOR AGAINST ABSTAIN
/ / / / / /

3. Ratify selection of Coopers & Lybrand L.L.P. as independent auditors.

FOR AGAINST ABSTAIN
/ / / / / /

I PLAN TO ATTEND THE MEETING / /

Signature(s) should be exactly as
name(s) appear on this proxy. If stock
is held jointly, each holder should
sign. If signing is by attorney,
executor, administrator, trustee or
guardian, please give full title.

Dated: __________________________, 1997

_______________________________________
Signature

- FOLD AND DETACH HERE-

ANNUAL MEETING
OF
FOSTER WHEELER CORPORATION STOCKHOLDERS

MONDAY, APRIL 28, 1997
10:30 A.M.
AMBASSADOR BALLROOM
HAMILTON PARK CONFERENCE CENTER
175 PARK AVENUE
FLORHAM PARK, NEW JERSEY

AGENDA
------

* Election of Directors

* Act upon a proposal to amend The Directors' Stock Option Plan

* Ratification of the selection of independent auditors

* Report on the progress of the Corporation

* Question and answer period