<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
FOSTER WHEELER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
NOTICE OF MEETING AND PROXY STATEMENT
FOSTER WHEELER CORPORATION
PERRYVILLE CORPORATE PARK
CLINTON, NEW JERSEY 08809-4000
---------------------------------
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1998
---------------------------------
The Annual Meeting of Stockholders of Foster Wheeler Corporation will be
held at the Hunterdon Hills Playhouse, 88 Route 173 West, Hampton, New Jersey,
on Monday, April 27, 1998, at 10:30 a.m. for the following purposes:
1. To elect four Directors.
2. To ratify the selection of independent auditors.
3. To transact such other business as may properly come before the
meeting or adjournments thereof.
The Board of Directors has fixed the close of business on March 10, 1998,
as the record date for determination of stockholders entitled to notice of, and
to vote at, the meeting or adjournments thereof.
Admission to the meeting will be by ticket only. If you are a stockholder
of record and plan to attend, please check the appropriate box on the proxy
card. The ticket attached to the proxy card will admit you to the meeting. If
you are a stockholder whose shares are held through an intermediary such as a
bank or broker and you plan to attend, you may request a ticket by writing to
the office of the Secretary, Foster Wheeler Corporation, Perryville Corporate
Park, Clinton, New Jersey 08809-4000, and including proof of ownership, such as
a bank or brokerage firm account statement or a letter from the broker, bank or
nominee holding your stock, confirming beneficial ownership.
By Order of the Board of Directors
LISA FRIES GARDNER
Vice President & Secretary
March 19, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE PROMPTLY RETURN YOUR
SIGNED PROXY IN THE ENCLOSED ENVELOPE. STOCKHOLDERS WHO EXPECT TO ATTEND THE
MEETING IN PERSON SHOULD CHECK THE APPROPRIATE BOX ON THE PROXY CARD.
<PAGE> 3
FOSTER WHEELER CORPORATION
PERRYVILLE CORPORATE PARK
CLINTON, NEW JERSEY 08809-4000
---------------------------------
PROXY STATEMENT
---------------------------------
For the 1998 Annual Meeting of Stockholders
to be held April 27, 1998
---------------------------------
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 for use at the 1998 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 1998 Annual Meeting of
Stockholders. This Proxy Statement and the accompanying proxy are being sent to
stockholders on or about March 19, 1998.
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, a duly executed
proxy bearing a later date delivered to the Inspectors of Election at any time
prior to the shares represented by such earlier proxy being voted or if the
stockholder executing the proxy is present at the meeting, voting in person.
A copy of the Corporation's Annual Report to Stockholders for the fiscal
year ended December 26, 1997, is enclosed with this Proxy Statement.
The Board of Directors has fixed the close of business on March 10, 1998,
as the record date for determination of stockholders entitled to notice of and
to vote at the meeting or adjournments thereof. As of March 10, 1998, the
outstanding voting securities of the Corporation consist of 40,717,273 shares of
Common Stock, $1.00 par value, holders of which are entitled to one vote per
share.
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation divides the Board of Directors
into three classes, with one class of directors elected each year for a
three-year term. The term of directors in one class expires in 1998. The four
directors in this class have been nominated for election for terms expiring in
2001. The proxy agents of the Board of Directors intend to vote for the election
of the nominees named below, unless instructed otherwise. If any 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 27, 1998, shall be fixed at 10.
1
<PAGE> 4
The following table of Director nominees is based upon information
furnished by the nominees as of March 10, 1998:
<TABLE>
<CAPTION>
SHARES OF
YEAR PRINCIPAL OCCUPATION COMMON STOCK
FIRST DURING PAST FIVE YEARS OWNED
NAME AGE ELECTED AND OTHER DIRECTORSHIPS BENEFICIALLY(1)
---- --- ------- ----------------------- ---------------
<S> <C> <C> <C> <C>
Eugene D. Atkinson 53 1995 Limited Partner, Goldman, Sachs & Co. and 12,000
Chairman of Goldman Sachs (International). (7,000)
Formerly held several executive positions
with Goldman, Sachs & Co. (Investment
Banking).
E. James Ferland 56 1993 Chairman of the Board, President and Chief 15,000
Executive Officer of Public Service (11,000)
Enterprise Group Incorporated 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.
Joseph J. Melone 66 1988 Chairman of the Executive Committee, The 18,500
Equitable Companies, Incorporated (15,000)
(Insurance and Financial Services).
Formerly President and Chief Executive
Officer, The Equitable Companies
Incorporated. Director -- The Equitable
Companies Incorporated, AT&T Capital.
Richard J. Swift 53 1993 Chairman, President and Chief Executive 200,719
Officer of the Corporation since April (184,167)
1994. Formerly held several executive
positions with the Corporation and its
subsidiaries. Director -- Public Service
Enterprise Group Incorporated,
Ingersoll-Rand Company.
</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. All shares are owned with sole voting and sole investment
powers. 27,451 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 1998 Annual Meeting is as follows:
<TABLE>
<CAPTION>
SHARES OF
YEAR PRINCIPAL OCCUPATION COMMON STOCK
FIRST DURING PAST FIVE YEARS OWNED
NAME AGE ELECTED AND OTHER DIRECTORSHIPS BENEFICIALLY(1)
---- --- ------- ----------------------- ---------------
<S> <C> <C> <C> <C>
Louis E. Azzato 67 1978 Retired, formerly Chairman and Chief 111,765
(Term ends 1999) Executive Officer of the Corporation; (77,416)
Director -- First Union North Bank.
David J. Farris 62 1996 Chief Operating Officer of Beneficial 8,000
(Term ends 1999) Corporation and President and Chief (5,000)
Executive Officer of Beneficial Management
Corporation (Financial Services);
Director -- Beneficial Corporation.
Martha Clark Goss 48 1994 Vice President and Chief Financial Officer 10,700
(Term ends 2000) of Booz Allen & Hamilton, Inc. (Management (9,000)
Consulting). Prior to 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.
Constance J. Horner 56 1996 Guest scholar at The Brookings Institution 6,015
(Term ends 1999) since 1993. Commissioner, U.S. Commission (5,000)
on Civil Rights since 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.
David J. Roberts 54 1994 Vice Chairman, since April 1, 1994, and 75,255
(Term ends 2000) Chief Financial Officer of the Corporation, (66,667)
since April 1987. Formerly held several
financial positions with the Corporation
and its subsidiaries.
John E. Stuart 54 1997 Chairman and Chief Executive Officer of 4,000
(Term ends 2000) IKON Office Solutions (Office Products). (3,000)
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.
</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, 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. 27,451 shares owned by the Officers of the Corporation
have restrictions on the sale of such shares.
3
<PAGE> 6
Following is stock ownership information as of March 10, 1998 for Messrs.
N. William Atwater, Henry E. Bartoli and Claudio Ferrari, Officers of the
Corporation who are listed in the compensation tables that follow, but are not
included in the Director tabulations above:
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
OWNED
NAME TITLE BENEFICIALLY(1)
---- ----- ---------------
<S> <C> <C>
N. William Atwater Executive Vice President -- 78,685
Engineering & Construction Group (72,500)
Henry E. Bartoli Senior Vice President -- 51,919
Energy Equipment Group (47,500)
Claudio Ferrari Senior Vice President -- 16,394
Power Systems Group (16,194)
All current Directors, Director nominees and Officers of the Corporation 770,520
as a group (20 persons) as of March 10, 1998. (666,132)
</TABLE>
No individual Director, Director nominee or Officer of the Corporation owns
1% or more of the Corporation's Common Stock. The 20 members of the group own
less than 1% of the Corporation's Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth each stockholder 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 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. 27,451 shares owned by the Officers of the Corporation
have restrictions on the sale of such shares.
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OF STOCK
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
-------------- ------------------- ------------------ ----------------
<S> <C> <C> <C>
Common The Regents of the University of 3,254,650(1) 7.99%
California
300 Lakeside Drive, 17th Floor
Oakland, CA 94612
Common Wellington Management Company, LLP 3,036,100(2) 7.45%
75 State Street
Boston, MA 02109
Common Equinox Capital Management, Inc. 2,493,300(3) 6.12%
590 Madison Avenue, 41st Floor
New York, NY 10022
Common Palley-Needelman Asset Management, 2,460,650(4) 6.05%
Inc.
800 Newport Center Drive, Suite 450
Newport Beach, CA 92660
</TABLE>
- ---------------------------------------
(1) The beneficial owner reported this information as of January 12, 1998.
(2) The reported beneficial ownership is indirectly through Wellington
Management Company's subsidiary, Wellington Trust Company, NA (collectively
"Wellington"). Wellington reported that it had shared voting power as to
1,776,275 shares and shared dispositive power as to 3,036,100 shares. The
beneficial owner reported this information as of January 13, 1998.
(3) Equinox Capital Management, Inc., in its capacity as investment advisor, has
advised that with respect to such shares they have (i) sole voting power for
2,159,900 shares, (ii) shared voting power for 333,400 shares and (iii) sole
dispositive power for 2,493,300 shares. The beneficial owner reported this
information as of January 29, 1998.
(4) The beneficial owner reported this information as of December 31, 1997.
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.
5
<PAGE> 8
The members of the Audit Committee are Mr. Charles Y. C. Tse, Chairman; Mr.
David J. Farris; Ms. Constance J. Horner; Mr. Joseph J. Melone and Mr. John E.
Stuart. During the last fiscal year, this Committee held three 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.
Richard J. Swift and Mr. Charles Y. C. Tse. During the last fiscal year, this
Committee held three 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 24, 1998 for the 1999 Annual Meeting of
Stockholders.
The Compensation Committee consists of Mr. Joseph J. Melone, Chairman; Mr.
David J. Farris; Mr. E. James Ferland; Ms. Martha Clark Goss; Dr. Frank E.
Perkins and Mr. Charles Y. C. Tse. During the last fiscal year, this Committee
held three 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.
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;
Dr. Frank E. Perkins and Mr. David J. Roberts. Four 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: Ms. Martha Clark Goss,
Chairman; Messrs. Eugene D. Atkinson; Louis E. Azzato; E. James Ferland; Ms.
Constance J. Horner; Dr. Frank E. Perkins 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; set investment manager guidelines and objectives and recommend
appropriate action to the Board if guidelines and objectives are not being met.
6
<PAGE> 9
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 95%. 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 86% 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, 1997, 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 $323,000.
The Corporation's stockholders, at the 1990 Annual Meeting, approved The
Directors' Stock Option Plan ("Directors' Plan") and at the April 28, 1997
Annual Meeting, the stockholders approved amending the Directors' Plan. Pursuant
to the Directors' Plan, each director who is not an employee of the Corporation
or one of its subsidiaries receives, following the Annual Meeting each year, a
nonqualified option to purchase 3,000 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.
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 (the "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 reward those executives
if their performance and the Corporation's results so warrant. The 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.
7
<PAGE> 10
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 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 93.75
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 is 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 1997 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. There was no annual or long-term
incentive payout for
8
<PAGE> 11
1997. In 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, 1997, exercisable in installments over a three-year period.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE:
<S> <C>
Joseph J. Melone, Chairman Martha Clark Goss
David J. Farris Frank E. Perkins
E. James Ferland Charles Y. C. Tse
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following Directors served on the Compensation Committee during the
last fiscal year: Messrs. Joseph J. Melone, Chairman; David J. Farris; E. James
Ferland; Ms. Martha Clark Goss; Messrs. Frank E. Perkins and Charles Y. C. Tse.
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) $100 was invested on December 24, 1992 in Foster Wheeler Common Stock,
the S&P 500 Index, and the Industry Group, (ii) dividends were reinvested and
(iii) the investment is weighted on the basis of market capitalization.
<TABLE>
<CAPTION>
Measurement Period Foster Wheeler
(Fiscal Year Covered) Corp. S&P 500 Index Industry Group
<S> <C> <C> <C>
Dec. 92 100.00 100.00 100.00
Dec. 93 120.52 109.06 102.99
Dec. 94 109.17 110.50 101.19
Dec. 95 159.39 152.03 138.28
Dec. 96 144.83 190.65 130.37
Dec. 97 106.28 244.67 111.37
</TABLE>
9
<PAGE> 12
SUMMARY COMPENSATION TABLE
The following is a tabulation of compensation paid or set aside by the
Corporation and its subsidiaries during each of the Corporation's last three
fiscal years for the Chief Executive Officer ("CEO") and the four most
highly-compensated executive officers of the Corporation, other than the CEO,
who were serving as executive officers at the end of the last fiscal year.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
<CAPTION>
------------------------------------------------------------
AWARDS PAYOUTS
----------------------------------
SECURITIES ALL
UNDERLYING LONG-TERM OTHER
NAME AND PRINCIPAL OPTIONS/ INCENTIVE COMPENSATION
POSITION YEAR SALARY($) BONUS($) SARS(#) PAYOUTS($)(1) ($)(2)
<S> <C> <C> <C> <C> <C> <C>
==============================================================================================================
Richard J. Swift 1997 $630,000 $ 0 50,000 $ 0 $4,750
Chairman, President 1996 $605,000 $320,650 50,000 $465,215 $4,500
& CEO 1995 $575,000 $338,886 50,000 $411,114 $4,500
- --------------------------------------------------------------------------------------------------------------
David J. Roberts 1997 $374,000 $ 0 25,000 $ 0 $4,750
Vice Chairman & 1996 $362,500 $153,700 25,000 $307,230 $4,500
Chief Financial Officer 1995 $343,500 $200,000 25,000 $300,000 $4,500
- --------------------------------------------------------------------------------------------------------------
N. William Atwater 1997 $373,000 $ 0 25,000 $ 0 $4,750
Executive Vice
President 1996 $362,000 $184,656 25,000 $275,250 $4,500
1995 $347,500 $182,000 25,000 $269,250 $4,500
- --------------------------------------------------------------------------------------------------------------
Henry E. Bartoli 1997 $310,000 $ 0 25,000 $ 0 $4,750
Senior Vice President 1996 $291,500 $103,144 25,000 $299,854 $4,500
1995 $270,500 $148,775 25,000 $255,750 $4,500
- --------------------------------------------------------------------------------------------------------------
Claudio Ferrari 1997 $306,000 $ 0 25,000 $ 0 $4,750
Senior Vice
President(3) 1996 $262,000 $250,000 14,583 $ 0 $ 0
- --------------------------------------------------------------------------------------------------------------
</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.
(3) Mr. Ferrari became an executive officer of the Corporation effective as of
June 1, 1996. His 1996 salary includes payments which Mr. Ferrari received
from Foster Wheeler Italiana, S.p.A. in his position as President and Chief
Executive Officer of that company from January 1, 1996 to May 31, 1996.
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 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 1997 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
10
<PAGE> 13
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>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Estimated Future Payouts Under
Non-Stock Price-Based Plans
--------------------------------------------------
<CAPTION>
Performance or
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 335 3 Years 0 $335,000 $670,000
- ----------------------------------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------
C. Ferrari 150 3 Years 0 $150,000 $300,000
- ----------------------------------------------------------------------------------------------------------
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Following is a table dealing with stock option grants which were made to
the named individuals during the last completed fiscal year. The options were
granted pursuant to the terms of the Corporation's Executive Compensation Plan
and the 1995 Stock Option Plan, which provides that ten-year term options are to
be awarded at market value on the date of the award. One-third of an option
becomes exercisable after one year, two-thirds after two years and the entire
option is exercisable after three years.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted Exercise or Grant Date
Options to Employees in Base Price Expiration Present Value
Name Granted(#) Fiscal Year ($/Share) Date ($)(1)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
R. J. Swift 50,000 14.3% $36.9375 1/1/07 $538,500
- ----------------------------------------------------------------------------------------------------------
D. J. Roberts 25,000 7.15% $36.9375 1/1/07 $269,250
- ----------------------------------------------------------------------------------------------------------
N. W. Atwater 25,000 7.15% $36.9375 1/1/07 $269,250
- ----------------------------------------------------------------------------------------------------------
H. E. Bartoli 25,000 7.15% $36.9375 1/1/07 $269,250
- ----------------------------------------------------------------------------------------------------------
C. Ferrari 25,000 7.15% $36.9375 1/1/07 $269,250
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Based on the Black-Scholes option pricing model, using the following
assumptions: 1) the average of the high and low of the price of Foster
Wheeler Common Stock on the day the options were issued was $36.9375; 2) the
option exercise price is $36.9375 per share, the average of the high and low
of the price of the stock on the date of option issue; 3) the dividend yield
of the stock was 2.22%. (This was based upon the actual dividend yield as of
January 2, 1997); 4) the expected term of the options is 5 years; 5) the
risk free rate of return on the issuance date for the term of the option was
6.21% (the Treasury Bond Rate for 5 years as of January 2, 1997); and 6) the
volatility of the stock was calculated empirically to be .2813, using Foster
Wheeler stock pricing data for the 90 trading days immediately preceding the
date of issuance of the options.
11
<PAGE> 14
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.
<TABLE>
<CAPTION>
Years of Service After April 1, 1976
----------------------------------------------------------------
15 20 25 30 35
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Average Annual
Remuneration
$ 300,000 $ 54,000 $ 72,000 $ 90,000 $108,000 $126,000
$ 400,000 $ 72,000 $ 96,000 $120,000 $144,000 $168,000
$ 500,000 $ 90,000 $120,000 $150,000 $180,000 $210,000
$ 600,000 $108,000 $144,000 $180,000 $216,000 $252,000
$ 700,000 $126,000 $168,000 $210,000 $252,000 $294,000
$ 800,000 $144,000 $192,000 $240,000 $288,000 $336,000
$ 900,000 $162,000 $216,000 $270,000 $324,000 $378,000
$1,000,000 $180,000 $240,000 $300,000 $360,000 $420,000
$1,100,000 $198,000 $264,000 $330,000 $396,000 $462,000
$1,200,000 $216,000 $288,000 $360,000 $432,000 $504,000
</TABLE>
The Corporation's current pension plan was last amended as of November 25,
1997, 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; C. Ferrari is not a participant in
the current pension plan -- $0.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth, for the named individuals, the number of
shares of Foster Wheeler Common Stock acquired upon option exercise during 1997,
the value realized (spread between the market price on the date of exercise and
the option price) as a result of such option exercises, and the number and value
of unexercised options (both exercisable and unexercisable) as of December 31,
1997.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Number of Securities Value of
Underlying Unexercised
Unexercised Options In-the-Money Options
at FY-End(#) at FY-End ($)
------------------------ ------------------------
<CAPTION>
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
R. J. Swift 0 0 134,167/100,000 $0/$0
- -------------------------------------------------------------------------------------------------------------
D. J. Roberts 0 0 41,667/50,000 $0/$0
- -------------------------------------------------------------------------------------------------------------
N. W. Atwater 11,160 $289,418 47,500/50,000 $0/$0
- -------------------------------------------------------------------------------------------------------------
H. E. Bartoli 10,000 $154,531 22,500/50,000 $0/$0
- -------------------------------------------------------------------------------------------------------------
C. Ferrari 0 0 7,861/34,722 $0/$0
- -------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
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 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.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P. as auditors of
the Corporation for 1998, 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.
13
<PAGE> 16
With exception of tax-related matters, the services provided by the
auditors to Foster Wheeler and its subsidiaries for 1997 were substantially
audit-related. These audit functions included review of the financial statements
for the year 1997, Securities and Exchange Commission periodic filings, the
Annual Report to Stockholders and special reports required by loan agreements.
Coopers & Lybrand L.L.P. was paid $1,491,000 for audit-related services for
1997.
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.
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 the proposal, or to withhold
authority to vote for one or more of the nominees for Director. New York law and
the Corporation's Amended 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 stockholder approval: (1) The
election of Directors and (2) 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 by the holders of shares entitled to vote thereon is
required to approve 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 the selection of independent auditors.
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.
1999 ANNUAL MEETING
The 1999 Annual Meeting of Stockholders is scheduled to be held on April
26, 1999. The location has not yet been determined. Stockholder proposals must
be received by the Secretary of the Corporation on or before November 24, 1998,
to be included in the proxy material for the 1999 Annual Meeting of
Stockholders.
14
<PAGE> 17
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 19, 1998
15
<PAGE> 18
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
Please mark
your votes
as indicated
in this example. [X]
ITEM 1. Election of Four Directors
Nominees are: Eugene D. Atkinson, E. James Ferland, Joseph J. Melone and Richard
J. Swift.
WITHHOLD INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR
FOR AUTHORITY ANY INDIVIDUAL NOMINEE, MARK A LINE THROUGH THE
[ ] [ ] NOMINEE'S NAME IN THE LIST ABOVE.
ITEM 2. Ratify selection of Coopers & Lybrand LLP.
as independent auditors.
[ ] [ ] [ ]
I WILL ATTEND THE ANNUAL MEETING. [ ]
Discontinue mailing of duplicate Annual Report. [ ]
Signature(s) should be exactly as name(s) appear on this proxy. Joint owners
should each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Dated: ________________________________, 1998
_____________________________________________
Signature
_____________________________________________
Signature
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
FOLD AND DETACH HERE
<PAGE> 19
PROXY
FOSTER WHEELER CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - MONDAY, APRIL 27, 1998
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 full power
of substitution, to represent and 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 10, 1998, at the Annual Meeting of
Stockholders to be held at the Hunterdon Hills Playhouse, 88 Route 173 West,
Hampton, New Jersey at 10:30 a.m. on Monday, April 27, 1998 or any adjournments
thereof.
Please vote on the reverse side hereof, 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 directions are given, this Proxy
will be voted for Items 1 and 2.
(Continued, and to be signed and dated, on the other side)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
FOLD AND DETACH HERE
