<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 [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
MC DERMOTT INTERNATIONAL, INC.
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(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:
-----------------------------------------------------------------------
[ ] 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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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[McDermott International, Inc. logo]
MCDERMOTT INTERNATIONAL, INC.
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<TABLE>
<S> <C>
R. E. Tetrault 1450 Poydras Street
Chairman of the Board and P.O. Box 61961
Chief Executive Officer New Orleans, Louisiana, 70161-1961
</TABLE>
March 30, 2000
Dear Shareholder:
Last year, we changed our March 31 fiscal year end to a December 31 fiscal
year end. Consequently, this year's Annual Meeting of Shareholders will be held
earlier in the year than in the past. You are cordially invited to attend this
year's meeting, which will be held on Tuesday, May 2, 2000, in the Grand
Ballroom D and E of the Sheraton New Orleans Hotel, 500 Canal Street, New
Orleans, Louisiana, commencing at 9:30 a.m. local time. The notice of annual
meeting and proxy statement following this letter describe the matters to be
acted on at the meeting.
If your shares are held of record with First Chicago Trust Division of
EquiServe, our transfer agent and registrar, we have enclosed a proxy card for
your use. You may vote these shares by completing and returning the proxy card,
or alternatively, calling a toll-free telephone number or using the Internet as
described on the proxy card. If your shares are held by a broker or other
nominee (i.e., in "street name"), they have enclosed a voting instruction form,
which you should use to vote those shares. Whether you have the option to vote
those shares by telephone or via the Internet is indicated on the voting
instruction form.
Your vote is important. Whether or not you plan to attend the meeting,
please take a few minutes now to vote your shares. If you attend the meeting,
you may change your vote at that time.
Thank you for your interest in our Company.
Sincerely yours,
/s/ R.E. TATRAULT
R.E. TETRAULT
<PAGE> 3
McDERMOTT INTERNATIONAL, INC.
1450 POYDRAS STREET
P.O. BOX 61961
NEW ORLEANS, LOUISIANA 70161-1961
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NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
---------------------
The 2000 Annual Meeting of the Shareholders of McDermott International,
Inc., a Panama corporation (the "Company"), will be held in the Grand Ballroom D
and E of the Sheraton New Orleans Hotel at 500 Canal Street, New Orleans,
Louisiana, on Tuesday, May 2, 2000, at 9:30 a.m. local time, for the following
purposes:
1. To elect three Directors;
2. To approve the selection of PricewaterhouseCoopers LLP as our
independent accountants for the fiscal year ending December 31, 2000; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
If you were a shareholder as of the close of business on March 23, 2000,
you are entitled to vote at the meeting and at any adjournment thereof.
PLEASE INDICATE YOUR VOTE AS TO THE MATTERS TO BE ACTED ON AT THE MEETING
BY FOLLOWING THE INSTRUCTIONS PROVIDED IN THE ENCLOSED PROXY CARD OR VOTING
INSTRUCTION FORM, WHETHER OR NOT YOU PLAN ON ATTENDING THE MEETING. IF YOU
ATTEND THE MEETING, YOU MAY CHANGE YOUR VOTE AT THAT TIME.
We have enclosed a copy of our report to shareholders for the nine-month
period ended December 31, 1999 with this notice and proxy statement.
By Order of the Board of Directors,
/s/ JOHN T NESSER III
JOHN T. NESSER, III
Secretary
Dated: March 30, 2000
<PAGE> 4
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PROXY STATEMENT FOR 2000 ANNUAL
MEETING OF SHAREHOLDERS
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
General Information......................................... 1
Voting Information.......................................... 1
Record Date and Who May Vote.............................. 1
How to Vote............................................... 1
How to Change Your Vote................................... 2
Quorum.................................................... 2
Proposals to be Voted on; Vote Required and How Votes are
Counted................................................ 2
Confidential Voting....................................... 3
Election of Directors (Item 1).............................. 4
Board of Directors and its Committees..................... 6
Directors' Attendance and Compensation.................... 7
Executive Officers.......................................... 9
Security Ownership of Directors and Executive Officers...... 10
Security Ownership of Certain Beneficial Owners............. 11
Report on Executive Compensation............................ 12
Performance Graph........................................... 16
Compensation of Executive Officers.......................... 17
Summary Compensation Table................................ 17
Option Exercises and Period End Value Table............... 19
Retirement Plans.......................................... 19
Approval of Selection of Independent Accountants (Item 2)... 21
Certain Transactions........................................ 21
Compliance with Section 16(a) of the Securities Exchange Act
of 1934................................................... 22
Shareholders' Proposals..................................... 22
</TABLE>
<PAGE> 5
GENERAL INFORMATION
We are mailing this proxy statement and accompanying proxy card to our
shareholders beginning on March 30, 2000. Our Board of Directors is soliciting
your proxy to vote your shares at our Annual Meeting to be held on May 2, 2000.
We will bear all expenses incurred in connection with this proxy solicitation,
which we expect to conduct primarily by mail. We have engaged Morrow & Co., Inc.
to assist in the solicitation for a fee of $7,000, plus out-of-pocket expenses.
In addition to solicitation by mail and by Morrow & Co., our officers and
regular employees may solicit your proxy by telephone, by facsimile transmission
or in person, for which they will not be compensated. If your shares are held
through a broker or other nominee (i.e., in "street name"), we have requested
that they forward this proxy statement to you and obtain your voting
instructions, for which we will reimburse them for reasonable out-of-pocket
expenses. If your shares are held through The Thrift Plan for Employees of
McDermott Incorporated and Participating Subsidiary and Affiliated Companies
(the "McDermott Thrift Plan") or The Thrift Plan for Salaried Employees of
Babcock & Wilcox Canada, the trustees of those plans have sent you this proxy
statement and a voting instruction form with which you may direct them on how to
vote your plan shares.
VOTING INFORMATION
RECORD DATE AND WHO MAY VOTE
Our Board of Directors selected March 23, 2000 as the record date (the
"Record Date") for determining shareholders entitled to vote at the Annual
Meeting. This means that if you were a registered shareholder with our transfer
agent and registrar -- First Chicago Trust Division of EquiServe -- on the
Record Date, you may vote your shares on the matters to be considered by our
shareholders at the Annual Meeting. If your shares were held in street name on
that date, the broker or other nominee that was the record holder of your shares
has the authority to vote them at the Annual Meeting. They have forwarded to you
this proxy statement seeking your instruction on how you want your shares voted.
On the Record Date, 59,948,132 shares of our Common Stock were outstanding.
Each outstanding share of Common Stock entitles its holder to one vote on each
matter to be acted on at the meeting. McDermott Incorporated, a subsidiary of
ours, owned 100,000 shares of our Common Stock on the Record Date, but will not
vote its shares at the Annual Meeting.
HOW TO VOTE
You can vote your shares in person at the Annual Meeting or vote now by
giving us your proxy. By giving us your proxy, you will be directing us on how
to vote your shares at the meeting. Even if you plan on attending the meeting,
we urge you to vote now by giving us your proxy. This will ensure that your vote
is represented at the meeting. If you do attend the meeting, you can change your
vote at that time. If your shares are held in street name, the broker or nominee
that holds your shares has the authority to vote them and has enclosed a voting
instruction form with this proxy statement. They will vote your shares as you
direct on their voting instruction form. You can vote by completing the enclosed
proxy card or voting instruction form and returning it in the enclosed U.S.
postage prepaid envelope. If your shares are held in street name and you want to
vote your shares in person at the Annual Meeting, you must obtain a legal proxy
from your broker or nominee.
If your shares are held of record, you also will be able to give your proxy
by calling a toll-free telephone number or using the Internet -- 24 hours a day,
seven days a week. If your shares are held in street name, the availability of
telephone or Internet voting depends on the voting process used by the broker or
nominee that holds your shares. In either case, you should refer to the
instructions provided in the enclosed proxy card or voting instruction form.
Telephone and Internet voting procedures have been designed to verify your
identity through a personal identification or control number and to confirm that
your voting instructions have been properly recorded. If you vote using either
of these electronic means, you will save us return mail expense.
You will receive more than one proxy statement and proxy card or voting
instruction form if your shares are held through more than one account (i.e.,
through different names or different brokers or nominees). Each
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<PAGE> 6
proxy card or voting instruction form only covers those shares of Common Stock
held in the applicable account. If you hold shares in more than one account, you
will have to provide voting instructions as to all your accounts to vote all of
your shares.
HOW TO CHANGE YOUR VOTE
You may change your proxy voting instructions at any time prior to
shareholder vote at the Annual Meeting. For shares held of record, you may
change your vote by written notice to our Corporate Secretary, granting a new
proxy or by voting in person at the Annual Meeting. Unless you attend the
meeting and vote your shares in person, you should change your vote using the
same method (by telephone, Internet or mail) that you first used to vote your
shares. That way, the inspectors of election for the meeting will be able to
verify your latest vote.
For shares held in street name, you should follow the instructions in the
voting instruction form provided by your broker or nominee to change your vote.
If you want to change your vote as to shares held in street name by voting in
person at the Annual Meeting, you must obtain a legal proxy from the broker or
nominee that holds such shares for you.
QUORUM
The Annual Meeting will be held only if a quorum exists. The presence at
the meeting, in person or by proxy, of holders of a majority of our outstanding
shares of Common Stock as of the Record Date will constitute a quorum. If you
attend the meeting or vote your shares using the enclosed proxy card or voting
instruction form (including any telephone or Internet voting procedures
provided), your shares will be counted toward a quorum, even if you abstain from
voting. Broker non-votes (i.e., shares held by brokers and other nominees as to
which they have not received voting instructions from the beneficial owners and
lack the discretionary authority to vote on a particular matter) also will count
for quorum purposes.
PROPOSALS TO BE VOTED ON; VOTE REQUIRED AND HOW VOTES ARE COUNTED
We are asking you to vote on the following:
- the election of Robert L. Howard, Roger E. Tetrault and John N. Turner to
Class III of our Board of Directors, with a term expiring at our Annual
Meeting in 2003; and
- the approval of our selection of PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") as our independent accountants for the fiscal
year ending December 31, 2000.
Each proposal, including the election of directors, requires the
affirmative vote of a majority of the shares of Common Stock present, in person
or by proxy, at the Annual Meeting and entitled to vote on the matter. In the
election of directors, you may vote "FOR" all director nominees, "AGAINST" all
director nominees or withhold your vote for any one or more of the director
nominees. For the other proposal, you may vote "FOR" or "AGAINST" or abstain
from voting. Because abstentions are counted for purposes of determining whether
a quorum is present but are not affirmative votes for a proposal, they have the
same effect as an "AGAINST" vote. Your shares will be voted as you direct,
including abstentions.
If you submit a signed proxy card without specifying your vote, your shares
will be voted "FOR" the election of all director nominees and the selection of
PricewaterhouseCoopers as our independent accountants. If you hold your shares
in street name and you do not instruct your broker or nominee how to vote such
shares, they may vote your shares as they decide.
We are not aware of any other matters that may be presented or acted on at
the meeting. If you vote by signing and returning the enclosed proxy card or
using its telephone or Internet voting procedures, the individuals named as
proxies on the card may vote your shares, in their discretion, on any other
matter requiring a shareholder vote that comes before the meeting.
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<PAGE> 7
CONFIDENTIAL VOTING
All voted proxies and ballots will be handled to protect your voting
privacy as a shareholder. Your vote will not be disclosed except:
- to meet any legal requirements;
- in limited circumstances such as a proxy contest in opposition to our
Board of Directors;
- to permit independent inspectors of election to tabulate and certify your
vote; or
- to adequately respond to your written comments on your proxy card.
3
<PAGE> 8
ELECTION OF DIRECTORS
(ITEM 1)
Our Articles of Incorporation provide for the classification of our Board
of Directors into three classes, as nearly equal in number as possible, with the
term of office for each class expiring on the date of the third annual
shareholders' meeting for the election of directors following the most recent
election of directors for such class.
The term of office of our Class III Directors -- Robert L. Howard, Roger E.
Tetrault and John N. Turner -- will expire at this year's Annual Meeting. On the
nomination of our Board of Directors, Messrs. Howard, Tetrault and Turner will
stand for re-election as Class III Directors at this year's Annual Meeting.
Although Mr. Turner has reached the mandatory retirement age of 70 for directors
under our by-laws, on the recommendation of our Directors Nominating &
Governance Committee, this limitation has been waived by our Board Directors as
to Mr. Turner's continued service as a Company director for an additional
three-year term. If elected, each of Messrs. Howard, Tetrault and Turner will
hold office until our Annual Meeting in 2003 and a successor is elected and
qualified.
Unless otherwise directed, the persons named as proxies in the enclosed
proxy card intend to vote "FOR" the election of the nominees. If any nominee
should become unavailable for election, the shares will be voted for such
substitute nominee as may be proposed by our Board of Directors. However, we are
not aware of any circumstances that would prevent any of the nominees from
serving. Set forth below under "Class I Directors" and "Class II Directors" are
the names of our other directors. Class I Directors will continue to serve until
our Annual Meeting of Shareholders in 2001, and Class II Directors will continue
to serve until our Annual Meeting of Shareholders in 2002. All directors have
been previously elected by the shareholders.
Set forth below is certain information (ages as of May 2, 2000) with
respect to each nominee for election as a director and each director of the
Company.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND PRINCIPAL OCCUPATION AGE SINCE
----------------------------- --- --------
<S> <C> <C> <C>
CLASS III NOMINEES
Robert L. Howard................................... 63 1997
[Photo of Robert L.
Howard] Until his retirement in March 1995, he was Vice President
Domestic Operations, Exploration and Production, of Shell
Oil Company and President of Shell Western Exploration
and Production Inc. from 1992, and President of Shell
Offshore, Inc. from 1985. He is also a director of
Southwestern Energy Company and Ocean Energy, Inc.
Roger E. Tetrault.................................. 58 1997
[Photo of Roger E.
Tetrault] Chairman of the Board since June 1997 and Chief Executive
Officer and a director of the Company since March 1997.
Formerly, Mr. Tetrault was a Senior Vice President of
General Dynamics Corporation (a supplier of weapons
systems and services to the U.S. government and its
allies) and President of its Land Systems Division from
April 1993; Vice President of General Dynamics
Corporation and President of its Electric Boat Division
from August 1992 until April 1993; Vice President and
General Manager of General Dynamics Corporation's
Electric Boat Division from August 1991 until August
1992; and prior to that, he served as a Vice President
and Group Executive of the Company's subsidiary The
Babcock & Wilcox Company from 1990.
</TABLE>
4
<PAGE> 9
<TABLE>
<CAPTION>
DIRECTOR
NAME AND PRINCIPAL OCCUPATION AGE SINCE
----------------------------- --- --------
<S> <C> <C> <C>
John N. Turner...................................... 70 1993
[Photo of John N.
Turner] Partner, Miller Thomson (barristers & solicitors),
Toronto, Canada since 1990. Prior thereto, he was Prime
Minister of Canada and then Leader of Opposition of the
Parliament of Canada from 1984 to 1990. He is also a
director of E-L Financial Corporation, The Loewen Group
Inc. and Nexfor Inc.
CLASS I DIRECTORS
Philip J. Burguieres................................ 56 1990
[Photo of Philip J.
Burguieres] Chief Executive Officer of EMC Holdings, LLC, and Vice
Chairman, The McNair Group. Formerly, he served as
Chairman of the Board of Weatherford International, Inc.
(a diversified international energy services and
manufacturing company) from December 1992 to May 1998 and
as its President and Chief Executive Officer from April
1991 to October 1996. He is also a director of
Weatherford International, Inc., Chase Bank of Texas,
N.A., Denali Incorporated and Newfield Exploration
Company.
Bruce DeMars........................................ 64 1997
[Photo of Bruce
DeMars] Partner in the Trident Merchant Group. Admiral, United
States Navy (retired). From 1988 until his retirement
from the Navy in October 1996, he was Director, Naval
Nuclear Propulsion, a joint Department of the Navy/
Department of Energy program responsible for the design,
construction, maintenance, operation and final disposal
of reactor plants for the United States Navy. He is also
a director of Unicom Corporation and Commonwealth Edison
Corporation.
John W. Johnstone, Jr. ............................. 67 1995
[Photo of John W.
Johnstone, Jr.] Until his retirement in May 1996, he was Chairman of the
Board from 1988 and Chief Executive Officer from 1987 of
Olin Corporation (a manufacturer and supplier of
chemicals, metals, defense-related products and services,
and ammunition). He is also a director of Fortune Brands,
Inc., Phoenix Home Mutual Life Insurance Company and Arch
Chemicals, Inc.
</TABLE>
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<TABLE>
<CAPTION>
DIRECTOR
NAME AND PRINCIPAL OCCUPATION AGE SINCE
----------------------------- --- --------
<S> <C> <C> <C>
CLASS II DIRECTORS
Kathryn D. Sullivan................................. 48 1999
[Photo of Kathryn
D. Sullivan] President and Chief Executive Officer of the Ohio Center
for Science and Industry since 1996. Prior thereto, she
was Chief Scientist for the National Oceanic &
Atmospheric Administration from 1992 to 1996 and a NASA
space shuttle astronaut from 1978 to 1992. Dr. Sullivan
is also a director of American Electric Power Company,
Inc.
Richard E. Woolbert................................. 66 1996
[Photo of Richard
E. Woolbert] Until his retirement in January 1999, he was Executive
Vice President and Chief Administrative Officer of the
Company from February 1995. Previously, Mr. Woolbert was
Senior Vice President and Chief Administrative Officer of
the Company from August 1991.
Joe B. Foster....................................... 65 1999
[Photo of Joe B.
Foster] Interim Chairman of the Board, President and Chief
Executive Officer of Baker Hughes Incorporated (oilfield
services) since January 31, 2000. He is also the
non-executive Chairman of the Board of Newfield
Exploration Company (oil and gas exploration). From
January 1989 to January 31, 2000, Mr. Foster was the
Chairman of the Board and Chief Executive Officer of
Newfield Exploration Company. He was also Executive Vice
President of Tenneco Inc. from 1981 to 1988 and a
director of Tenneco Inc. from 1983 to 1988. Mr. Foster is
the immediate past Chairman of the National Petroleum
Council and a member of the Offshore Committee of the
Independent Petroleum Association of America. Mr. Foster
is also a director of New Jersey Resources Corporation.
</TABLE>
BOARD OF DIRECTORS AND ITS COMMITTEES
Our Board of Directors maintains the following committees:
Audit Committee. Our Audit Committee is currently composed of Messrs.
Turner (Chairman) and Howard and Dr. Sullivan. During the nine-month period
ended December 31, 1999, the Audit Committee met three times. The functions of
the Audit Committee currently include (1) reviewing the accounting principles
and practices we employ and, to the extent the Audit Committee deems
appropriate, employed by our subsidiaries, (2) meeting with our independent
accountants to review their report on their examination of our accounts, their
comments on our internal controls and the actions taken by our management with
regard to those comments, (3) approving professional services, including
non-audit services, rendered by our independent accountants, and (4)
recommending annually to the Board of Directors the appointment of our
independent accountants.
The Securities and Exchange Commission ("SEC") and the New York Stock
Exchange recently adopted new rules relating to audit committee duties,
responsibilities and independence for publicly traded companies. We have
reviewed and are currently updating our Audit Committee charter to comply with
these new rules beginning with the first quarter of fiscal year 2000.
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Directors Nominating & Governance Committee. Our Directors Nominating &
Governance Committee is currently composed of Messrs. Burguieres (Chairman),
Foster and Woolbert. During the nine-month period ended December 31, 1999, the
Directors Nominating & Governance Committee met two times. This committee
recommends to our Board of Directors (1) for approval and adoption, the
qualifications, term limits and nomination and election procedures relating to
our directors, and (2) nominees for election to our Board of Directors.
Compensation Committee. Our Compensation Committee is currently composed of
Messrs. Howard (Chairman), DeMars and Johnstone and Dr. Sullivan. During the
nine-month period ended December 31, 1999, the Compensation Committee met six
times. The Compensation Committee (1) determines the salaries of all our
officers elected to their positions by our Board of Directors, and reviews and
makes recommendations regarding the salaries of officers of our subsidiaries,
(2) administers and makes awards under our stock and supplemental compensation
plans and programs, and (3) monitors and makes recommendations with respect to
our and our subsidiaries' various employee benefit plans, such as retirement and
pension plans, thrift plans, health and medical plans, and life, accident and
disability insurance plans.
Special Committee. Our Special Committee is currently composed of Messrs.
DeMars (Chairman), Turner and Woolbert. The Special Committee oversees and
monitors the ongoing investigations by the Company, the U.S. Department of
Justice and the SEC into alleged anti-competitive activity in our marine
construction business, other possible violations of law and related matters. The
Special Committee also monitors our overall compliance program.
Finance Committee. Our Finance Committee is currently composed of Messrs.
Johnstone (Chairman), Burguieres and Foster. The Finance Committee reviews and
recommends for approval by the Board our strategic business and financial
initiatives.
DIRECTORS' ATTENDANCE AND COMPENSATION
Directors' Attendance and Fees; Insurance. During the nine-month period
ended December 31, 1999, our Board of Directors held five meetings. Each
incumbent director attended 75% or more of the aggregate number of meetings of
the Board and of the committees on which he served. Employee directors are not
paid for their services as a director or as a member of any committee of the
Board. All other directors are compensated as follows:
- an annual stipend of $28,000, plus a fee of $2,500 for each Board meeting
attended;
- a fee of $1,000 for each telephonic Board meeting in which such director
participates;
- the Chairman of the Audit Committee receives an annual fee of $3,000;
- each other member of the Audit Committee receives an annual fee of
$2,000;
- the Chairman of each other Board committee receives an annual fee of
$2,500;
- each other member of the other Board committees receives an annual fee of
$1,750; and
- each committee member also receives a fee of $1,650 for each committee
meeting attended and a fee of $1,000 for each telephonic committee
meeting in which such director participates.
We also provide travel accident insurance and health care benefits to
non-employee directors under the same terms and conditions applicable to
employees.
Directors Stock Plan. In addition to the fees and benefits provided to our
directors described above, we have a directors stock plan under which we grant
stock options and issue restricted stock to our non-employee directors. A
maximum of 100,000 shares of our Common Stock may be issued under this plan,
which we adopted and our shareholders approved in 1997. Under the directors
stock plan:
- each non-employee director is granted options to purchase 900, 300 and
300 shares of our Common Stock on the first day of the first, second and
third years, respectively, of such director's term;
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<PAGE> 12
- the options are granted at the fair market value of our Common Stock
(average of high and low trading price) on the date of grant, become
exercisable in full six months after the date of grant, and remain
exercisable for ten years and one day after the date of grant;
- each non-employee director also is granted rights to purchase 450, 150
and 150 restricted shares of our Common Stock on the first day of the
first, second and third years, respectively, of such director's term at
$1.00 per share;
- shares of restricted stock are subject to transfer restrictions and
forfeiture provisions, which generally lapse at the end of a director's
term;
- if a change in control of the Company occurs, all transfer restrictions
and forfeiture provisions on restricted stock lapse and all outstanding
stock options become immediately exercisable; and
- for the nine-month period ended December 31, 1999, we granted 4,250
options to acquire Common Stock and 2,125 shares of restricted stock.
8
<PAGE> 13
EXECUTIVE OFFICERS
Set forth below is the age (as of May 2, 2000), the principal positions
held with the Company or certain subsidiaries, and certain other business
experience information for each of our executive officers who is not a director
of the Company.
Daniel R. Gaubert, 51, Senior Vice President and Chief Financial Officer of
the Company since February 1997. Prior thereto, he was Vice President and Chief
Financial Officer of the Company from September 1996; Vice President, Finance
and Controller of the Company from February 1995; and Vice President and
Controller of the Company from February 1992.
John T. Nesser, III, 51, Senior Vice President, General Counsel and
Corporate Secretary of the Company since January 2000, prior to which he was
Vice President and Associate General Counsel from June 1999 and Associate
General Counsel from October 1998. Prior thereto, he served as managing partner
of Nesser, King & LeBlanc, a New Orleans law firm, which he co-founded in 1985.
Robert H. Rawle, 52, President of the Company's subsidiary J. Ray
McDermott, S.A. ("J. Ray McDermott") since January 1997. Previously, he was Vice
President and Group Executive of J. Ray McDermott's North, Central and South
America Operations from January 1996, prior to which, he was Vice President,
Domestic Operations, of J. Ray McDermott from January 1995. From March 1993 to
January 1995, he was Vice President of the Domestic Operations of the Company's
Marine Construction Services Division.
E. Allen Womack, Jr., 57, President of the Company's subsidiaries BWX
Technologies, Inc. and McDermott Technology, Inc. and Chief Technical Officer.
He was also an Executive Vice President of the Company from April 1998 until
August 1999. Previously, he was Senior Vice President and Group Executive,
Industrial Group, from September 1996; Senior Vice President and Group
Executive, Shipbuilding and Industrial Group, from August 1995; and Senior Vice
President, Research and Development and Contract Research Divisions, of The
Babcock & Wilcox Company from February 1993.
James F. Wood, 58, President of The Babcock & Wilcox Company. He was also
an Executive Vice President of the Company and President of its Babcock & Wilcox
Power Generation Group from October 1996 until August 1999. Prior thereto, he
was Vice President and General Manager, Global Ventures and Power, of the
Babcock & Wilcox Power Generation Group from June 1996. From January 1989 until
January 1996, he was an officer of Wheelabrator Technologies, Inc. and certain
of its subsidiaries.
J. R. Woolsey, 52, Senior Vice President and Chief Administrative Officer
of the Company since January 1999. Previously, he was Vice President, Business
Venture Relations, of the Company from October 1997; and Vice President and
General Manager, Nuclear Equipment Division, of the Company's Government Group
from 1990. He has also been the Company's Compliance Director since November
1997.
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<PAGE> 14
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of February 29, 2000 (except as
otherwise noted), the number of shares of our Common Stock beneficially owned by
each director or nominee as a director, each Named Executive Officer, as we
define that term below under the caption "COMPENSATION OF EXECUTIVE OFFICERS,"
and all our directors and executive officers as a group, including shares which
such persons have the right to acquire within 60 days on the exercise of stock
options.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
NAME OWNED
- ---- ------------
<S> <C>
Philip J. Burguieres(1)..................................... 29,000
Bruce DeMars(2)............................................. 4,736
Joe B. Foster(3)............................................ 3,425
Daniel R. Gaubert(4)........................................ 112,655
Robert L. Howard(5)......................................... 5,810
John W. Johnstone, Jr.(6)................................... 9,055
Robert H. Rawle(7).......................................... 108,640
Kathryn D. Sullivan(8)...................................... 1,575
Roger E. Tetrault(9)........................................ 404,813
John N. Turner(10).......................................... 13,210
E. Allen Womack, Jr.(11).................................... 136,864
James F. Wood(12)........................................... 39,796
Richard E. Woolbert(13)..................................... 255,313
All directors and executive officers as a group (15
persons).................................................. 1,184,438
</TABLE>
- ---------------
(1) Shares owned by Mr. Burguieres include 4,350 shares of Common Stock that he
may acquire on the exercise of stock options as described above, and 600
restricted shares of Common Stock as to which he has sole voting power but
no dispositive power.
(2) Shares owned by Mr. DeMars include 1,850 shares of Common Stock that he may
acquire on the exercise of stock options as described above, and 600
restricted shares of Common Stock as to which he has sole voting power but
no dispositive power.
(3) Shares owned by Mr. Foster include 950 restricted shares of Common Stock
that he may acquire on the exercise of stock options as described above,
and 450 restricted shares of Common Stock as to which he has sole voting
power but no dispositive power.
(4) Shares owned by Mr. Gaubert include 88,842 shares of Common Stock that he
may acquire on the exercise of stock options as described above, and 14,385
restricted shares of Common Stock as to which he has sole voting power but
no dispositive power. Also includes 1,244 shares of Common Stock held in
the McDermott Thrift Plan as of December 31, 1999.
(5) Shares owned by Mr. Howard include 2,577 shares of Common Stock that he may
acquire on the exercise of stock options as described above, and 775
restricted shares of Common Stock as to which he has sole voting power but
no dispositive power.
(6) Shares owned by Mr. Johnstone include 2,700 shares of Common Stock that he
may acquire on the exercise of stock options as described above, and 600
restricted shares of Common Stock as to which he has sole voting power but
no dispositive power.
(7) Shares owned by Mr. Rawle include 72,765 shares of Common Stock that he may
acquire on the exercise of stock options as described above, and 26,481
restricted shares of Common Stock as to which he has sole voting power but
no dispositive power. Also includes 1,670 shares of Common Stock held in
the McDermott Thrift Plan as of December 31, 1999.
(8) Shares owned by Dr. Sullivan include 1,050 shares of Common Stock that she
may acquire on the exercise of stock options as described above, and 450
restricted shares of Common Stock as to which she has sole voting power but
no dispositive power.
10
<PAGE> 15
(9) Shares owned by Mr. Tetrault include 320,596 shares of Common Stock that he
may acquire on the exercise of stock options as described above, and 33,122
restricted shares of Common Stock as to which he has sole voting power but
no dispositive power. Also includes 570 shares of Common Stock held in the
McDermott Thrift Plan as of December 31, 1999.
(10) Shares owned by Mr. Turner include 3,350 shares of Common Stock that he may
acquire on the exercise of stock options as described above, and 750
restricted shares of Common Stock as to which he has sole voting power but
no dispositive power.
(11) Shares owned by Mr. Womack include 97,600 shares of Common Stock that he
may acquire on the exercise of stock options as described above, and 15,445
restricted shares of Common Stock as to which he has sole voting power but
no dispositive power. Also includes 2,330 shares of Common Stock held in
the McDermott Thrift Plan as of December 31, 1999.
(12) Shares owned by Mr. Wood include 38,995 shares of Common Stock that he may
acquire on the exercise of stock options as described above. Also includes
776 shares of Common Stock held in the McDermott Thrift Plan as of December
31, 1999.
(13) Shares owned by Mr. Woolbert include 185,152 shares of Common Stock that he
may acquire on the exercise of stock options as described above, and 450
restricted shares of Common Stock as to which he has sole voting power but
no dispositive power. Also includes 5 shares of Common Stock held in a
custodial account for an immediate family member under the Uniform Gifts to
Minors Act as to which Mr. Woolbert disclaims beneficial ownership. Also
includes 1,779 shares of Common Stock held in the McDermott Thrift Plan as
of December 31, 1999.
Shares beneficially owned in all cases constituted less than one percent of
the outstanding shares of our Common Stock, except that the 1,184,438 shares of
Common Stock beneficially owned by all directors and executive officers as a
group constituted approximately 1.95% of the outstanding shares of our Common
Stock on February 29, 2000, less shares held by McDermott Incorporated, plus
those shares deemed to be outstanding pursuant to Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table furnishes information concerning all persons known by
us to beneficially own 5% or more of our outstanding shares of Common Stock,
which is our only class of voting stock:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS(1)
- -------------- ------------------------------------ ---------- -----------
<S> <C> <C> <C>
Common Stock.... The Prudential Insurance Company of America 8,482,334(2) 14.2%
751 Broad Street
Newark, NJ 07102-3777
Common Stock.... Wellington Management Company, LLP 3,242,500(3) 5.4%
75 State Street
Boston, MA 02109
</TABLE>
- ---------------
(1) Percent of class based on the outstanding shares of our Common Stock on
February 29, 2000, less shares held by McDermott Incorporated, plus those
shares deemed to be outstanding pursuant to Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934.
(2) As reported on a Schedule 13G (Amendment No. 5) dated January 31, 2000.
(3) As reported on a Schedule 13G dated December 31, 1999.
11
<PAGE> 16
REPORT ON EXECUTIVE COMPENSATION
TO OUR SHAREHOLDERS
Our Compensation Committee is comprised of four independent, non-employee
directors who have no "interlocking" relationships with the Company. The
Compensation Committee exists to develop executive compensation policies that
support our strategic business objectives and values. The duties of this
committee include:
- Reviewing and approving the design of our executive compensation programs
and all salary arrangements that our executives receive;
- Assessing the effectiveness of our executive compensation programs in
light of our compensation policies; and
- Evaluating executive performance.
COMPENSATION PHILOSOPHY
The Compensation Committee adheres to an executive compensation philosophy
that supports the Company's business strategies. These strategies are to:
- Maximize profits;
- Increase shareholder value;
- Strengthen cash flow;
- Be the high-tech, low-cost provider of products and services within our
markets; and
- Pursue internal and external initiatives for growth.
The Compensation Committee's philosophy for executive compensation is to:
- Emphasize at-risk compensation, while balancing short-term and long-term
compensation to support the Company's business and financial strategic
goals;
- Reflect positive, as well as negative, Company and individual performance
in pay;
- Emphasize equity-based compensation for Company executives to reinforce
our management's focus on shareholder value; and
- Provide competitive pay opportunities that will attract, retain and
develop executive talent.
Our executives participate in a comprehensive compensation program built
around this four-pronged philosophy. The key components of this program include
base salary, annual bonus opportunities, long-term equity-based incentives
(stock options and performance stock awards of restricted shares) and benefits.
To ensure that our executive compensation levels are comparable to median
market practices, competitive market data is collected from multiple external
sources. The data is collected both on an industry-specific basis and an overall
industrial basis. The industry-specific comparison is collected using a group of
companies that have national and international business operations and sales
volumes, market capitalizations, employment levels and one or more lines of
business that are similar to ours. The Compensation Committee reviews and
approves the selection of companies used for this purpose. This comparison group
is more broad-based than the companies included in the peer group reflected in
the performance graph included in this proxy statement. This market information,
which the Compensation Committee reviews annually, is used for assessing all
components of our executive compensation program. In connection with our annual
review, we utilized the services of The Hay Consulting Group, an executive
compensation consulting firm to provide an independent overcheck of our own
analysis. The Compensation Committee believes that, taken as a whole, our
executive compensation program is competitive within our industries.
12
<PAGE> 17
When setting compensation levels, the Compensation Committee considers each
component of an executive's pay. Certain quantitative formulas have been adopted
for individual compensation plans. The Compensation Committee uses a combination
of the results of performance-based compensation formulas and discretion,
depending on the particular component involved. Each component of our executive
compensation program is discussed in greater detail below.
BASE SALARY
Generally, salaries reflect an individual's level of responsibility, prior
experience, breadth of knowledge, personal contributions, position within the
Company's executive structure and market pay practices. Overall, salaries are
targeted at the median of the market practice, with annual adjustments based on
performance. When making annual adjustments, a qualitative assessment of
performance is conducted, which considers many factors including individual
performance, both past and present. The factors used in making this evaluation
may vary by position.
For the nine-month period ended December 31, 1999, Mr. Tetrault's
annualized base salary was $740,040. On March 1, 2000, his salary was increased
8.1% to $800,000. Mr. Tetrault's salary reflects the Compensation Committee's
evaluation of Mr. Tetrault's individual contribution to the Company's financial
performance for the last year as well as competitive data for chief executive
officers of comparable companies as previously described. Mr. Tetrault's base
salary approximates the median base salary for comparable chief executive
officer positions.
ANNUAL BONUS
As part of the short-term component of our overall executive compensation
program, we provide annual bonus opportunities under our Variable Supplemental
Compensation Plan. Our shareholders initially approved the current version of
this plan in 1994. Payments under the plan are intended to comply with the tax
deductibility requirements under Section 162(m) of the Internal Revenue Code. In
accordance with the requirements of Section 162(m), our shareholders reapproved
the plan in 1999.
For the nine-month period ended December 31, 1999, as in the prior fiscal
year, the bonuses under the plan were tied to net income return on capital. The
plan is formula driven and self-funded, based on a minimum level of financial
performance to be achieved each year (8% adjusted net income return on capital
for the corporate staff, including the Chief Executive Officer). Our executive's
bonus opportunities under the plan are expressed as a targeted percent of base
salary based on his or her title and position within the Company or its
subsidiaries. These targets, like base salary, are set at approximately the
median market levels, as indicated by a survey of a group of similar companies.
For a full 12-month fiscal year, the Chief Executive Officer had a bonus target
of 80% of base salary. The Compensation Committee believes the goals associated
with target bonus payments are achievable yet require considerable effort and
innovation on the part of each executive. Executives only receive payments under
the plan if the minimum level of financial performance is reached. Financial
performance at the minimum level results in bonuses of one-half the targeted
amounts. If the minimum level of financial performance is exceeded, bonus
payments are increased. The Compensation Committee considers annual bonus awards
when it reviews the Company's financial performance after the close of each
fiscal year. Adjustments to net income for determination of bonus awards usually
exclude the negative impact of any changes in accounting principles, any unusual
or nonrecurring events and extraordinary items.
For the nine-month period ended December 31, 1999, the Chief Executive
Officer's bonus target was 60% of his base salary. Mr. Tetrault's bonus payment
for that period was $293,056, which represents 39.6% of his base salary in
effect at the beginning of that period. The Compensation Committee determined
bonus amounts for other executives (including executives of The Babcock & Wilcox
Company) based on the same general factors.
13
<PAGE> 18
LONG-TERM INCENTIVES
Our 1996 Officer Long-Term Incentive Plan provides our executives with
equity-based opportunities to earn additional compensation based on Company and
stock performance over the mid- to long-term. The Compensation Committee
believes that our use of these incentives focuses management on the best
interests of shareholders.
The Compensation Committee considers the following factors when determining
award sizes:
- Various financial performance criteria (which may include return on
capital or assets, profitability and shareholder return);
- Level of responsibility;
- Prior experience;
- Historical award data; and
- Market practices among similar companies.
Weighting between the factors listed above is informal, not quantitative.
Stock Options. Stock options are granted to our executives to provide an
equity-based incentive component to their compensation. Under our 1996 Officer
Long-Term Incentive Plan, the Company grants stock options at exercise prices
equal to fair market value of the underlying common stock on the date of grant.
Executives do not realize value unless the stock price rises above the price on
the date of grant.
We did not grant any stock options to any of the Company's or its
subsidiaries' current officers or employees during the nine-month period ended
December 31, 1999. However, in connection with our acquisition of the publicly
held minority interest in our subsidiary J. Ray McDermott in July 1999 (the "JRM
merger"), several executive officers of J. Ray McDermott (including Mr.
Tetrault) received Company stock options with an equivalent value for their
outstanding J. Ray McDermott stock options. In that connection, Mr. Tetrault
received 46,672 Company stock options in exchange for the 36,360 J. Ray
McDermott stock options that he held at the time of the JRM merger.
The Compensation Committee anticipates that, in late March 2000, we will
grant stock options to our officers and senior managers with ten-year terms that
vest in three equal annual installments beginning on the first anniversary of
the grant date. Additionally, because of its concern about the Company's ability
to retain key employees in the current business environment, the Compensation
Committee is considering providing officers and all other key employees of the
Company and its subsidiaries (including The Babcock & Wilcox Company and its
subsidiaries) with the opportunity to convert their outstanding stock options
into deferred restricted stock units of equivalent economic value, 50% of which
would vest upon The Babcock & Wilcox Company's emergence from its Chapter 11
reorganization proceeding with the other 50% vesting a year later (and all
amounts vesting no later than five years after grant).
Performance Shares. Beginning in 1998, the Compensation Committee increased
the "at risk" component of the Company's restricted stock program by tying the
number of restricted shares awarded, if any, to future stock performance. Under
this program, our executives receive performance stock awards of restricted
stock ("Performance Shares") based on salary multiples corresponding to their
titles and positions with the Company and its subsidiaries. Performance Shares
are made as notional grants of restricted stock. No shares are issued by the
Company at the time of the grant. The number of shares of restricted stock
actually received by a participant, if any, is determined on the second
anniversary of the grant date by calculating the difference between the fair
market value of a share of our Common Stock (based on the preceding 30
trading-day average) and the fair market value on the grant date. The difference
is multiplied by the number of shares in an executive's notional grant, and the
resulting product is divided by the fair market value of the Common Stock as of
the second anniversary of the grant date, calculated as described above. The
resulting number is added to (in the case of an increase in share price) or
subtracted from (in the case of a decrease in share price) the number of shares
in an executive's notional grant. The notional grant, as adjusted (to the extent
not reduced to zero), is then issued to the executive as restricted stock on the
second anniversary of the grant date, for which the executive is required to pay
$1.00 per share. The restricted stock vests two years thereafter. Until
14
<PAGE> 19
then, the restricted shares are nontransferable and are subject to forfeiture
under certain circumstances. The Compensation Committee believes that this
program reinforces the importance of creating shareholder value because the
ultimate size of each annual restricted stock award, if any, is based upon the
future performance of the Common Stock.
We did not grant any Performance Shares to any of the Company's or its
subsidiaries' current officers or employees during the nine-month period ended
December 31, 1999. In addition, no shares of Company restricted stock were
issued during that period as a payout under any past Performance Share award.
However, in connection with the JRM merger in July 1999, several J. Ray
McDermott executive officers (including Mr. Tetrault) received, at their
election, shares of Company restricted stock in lieu of pro-rata cash payments
for their outstanding J. Ray McDermott Performance Shares. In that connection,
Mr. Tetrault received 14,222 shares of Company restricted stock in lieu of a
pro-rata cash payment (based on a $35.62 per share cash price) for his then
outstanding 11,080 J. Ray McDermott Performance Shares. These shares of Company
restricted stock will vest at the earlier of Mr. Tetrault's retirement or July
2001.
BENEFITS
Benefits offered to our key executives serve a different purpose than the
other elements of our compensation program. In general, they provide a safety
net of protection against financial catastrophes that can result from illness,
disability or death. Benefits we offer to key executives are generally the same
as those we offer to our general employee population, with some variation to
promote tax efficiency and replacement of benefit opportunities lost due to
regulatory limits.
POLICY WITH RESPECT TO SECTION 162(m)
Section 162(m) of the Internal Revenue Code limits our tax deductions
relating to the compensation we pay certain executive officers, unless the
compensation is performance-based and the material terms of the applicable
performance goals are disclosed to and approved by our shareholders. Our
executive compensation plans have received shareholder approval and were
prepared with the intention that our incentive compensation would qualify as
performance-based compensation under Section 162(m).
While the Compensation Committee intends to continue to rely on
performance-based compensation programs, it is cognizant of the need for
flexibility in making executive compensation decisions, based on the relevant
facts and circumstances, so that the best interests of the Company are achieved.
To the extent consistent with this goal, the Compensation Committee anticipates
those programs will continue to satisfy the requirements of Section 162(m).
CONCLUSION
The Compensation Committee believes our executive compensation policies and
programs serve the interests of our shareholders and the Company effectively,
and that the various pay vehicles we offer are appropriately balanced to provide
appropriate motivation for executives to contribute to our overall future
success, thereby enhancing the value of the Company for our shareholders'
benefit.
We will continue to monitor the effectiveness of the Company's total
compensation programs to meet the current needs of the Company.
March 1, 2000 COMPENSATION COMMITTEE
R.L. Howard, Chairman
B. DeMars
J.W. Johnstone, Jr.
K.D. Sullivan
15
<PAGE> 20
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total stockholder
return on our Common Stock from March 31, 1995 through December 31, 1999 with
the cumulative total return of the Standard & Poor's 500 Index and a Peer Group
Index reflecting our primary business segments. The Peer Group Index is composed
of Chicago Bridge & Iron Company N.V., Fluor Corporation, Foster Wheeler
Corporation, Halliburton Company, Ingersoll-Rand Company, Jacobs Engineering
Group, Inc., Schlumberger Limited, Stone & Webster Inc. and Weatherford
International Inc.
COMPARISON OF CUMULATIVE TOTAL RETURN*
MCDERMOTT INTERNATIONAL, INC; S&P 500; AND PEER GROUP
[PERFORMANCE GRAPH]
* Assumes $100 invested on March 31, 1995 in our Common Stock; S&P 500; and
the Peer Group and the reinvestment of dividends as they are paid.
<TABLE>
<CAPTION>
3/31/95 3/31/96 3/31/97 3/31/98 3/31/99 12/31/99
------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
McDermott International,
Inc.................... $100.00 $ 73.71 $ 84.22 $163.71 $101.04 $ 36.53
S&P 500.................. $100.00 $132.00 $158.13 $233.85 $276.95 $319.26
Peer Group............... $100.00 $139.82 $169.05 $236.93 $191.43 $209.27
</TABLE>
16
<PAGE> 21
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table summarizes the annual and long-term compensation of our
Chief Executive Officer ("CEO") and our other four highest paid executive
officers (collectively, the "Named Executive Officers") for the nine-month
period ended December 31, 1999 and the three fiscal years ended March 31, 1999,
1998 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION(1) ----------------------- -------
------------------------------------- SECURITIES
UNDERLYING
PERIOD OTHER ANNUAL RESTRICTED STOCK LTIP ALL OTHER
NAME PRINCIPAL POSITION ENDED SALARY BONUS COMPENSATION(2) STOCK(3) OPTIONS(4) PAYOUT COMP.(5)
- ---- ------------------- ------ -------- -------- --------------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
R.E. Tetrault(6)... Chairman & Chief 12/99 $555,030 $293,056 $ 11,446 $ 0 0 $0 $3,858
Executive Officer 3/99 $666,670 $924,000 $ -- $ 0 125,720 $0 $5,709
3/98 $550,000 $756,000 $122,031 $ 0 49,500 $0 $5,550
3/97 $ 45,000 $336,000(7) $ -- $582,863 422,340 $0 $1,413
R.H. Rawle......... President, J. Ray 12/99 $266,715 $ 44,339 $ -- $ 0 0 $0 $3,762
McDermott 3/99 $343,800 $378,180 $ -- $ 0 36,040 $0 $5,508
3/98 $275,040 $302,544 $ -- $ 0 12,460 $0 $5,228
3/97 $192,540 $ 0 $ -- $ 0 10,090 $0 $4,614
E.A. Womack, Jr. ... President, BWX 12/99 $277,830 $244,490 $ -- $ 0 0 $0 $4,314
Technologies, Inc. 3/99 $359,640 $359,640 $ -- $ 0 26,930 $0 $7,230
and McDermott 3/98 $332,140 $329,640 $ -- $ 0 14,540 $0 $7,230
Technology, Inc. 3/97 $300,315 $ 0 $ 32,530 $ 0 17,290 $0 $5,594
J.F. Wood(8)....... President, The 12/99 $251,910 $164,875 $ -- $ 0 0 $0 $3,788
Babcock & Wilcox 3/99 $305,040 $305,040 $ -- $ 0 22,850 $0 $5,550
Company 3/98 $275,040 $275,040 $ -- $ 0 12,130 $0 $5,550
3/97 $186,472 $ 0 $ 29,192 $ 0 15,440 $0 4,890
D.R. Gaubert....... Senior VP & 12/99 $233,325 $ 84,697 $ 741 $ 0 0 $0 $3,762
Chief Financial 3/99 $292,200 $292,200 $ -- $ 0 17,960 $0 $5,168
Officer 3/98 $272,160 $272,160 $ -- $ 0 15,270 $0 $4,914
3/97 $242,280 $ 0 $ -- $ 0 18,290 $0 $4,614
</TABLE>
- ---------------
(1) Includes salary and bonus earned in a fiscal period, whether or not
deferred. Bonuses are paid after the fiscal period during which they are
earned.
(2) Except as otherwise provided, the aggregate value of perquisites and other
personal benefits received by a Named Executive Officer during a fiscal
period are not included if they do not exceed the lesser of $50,000 or 10%
of the total amount of such officer's annual salary and bonus for such
period. For the nine-month period ended December 31, 1999, the amounts shown
for Messrs. Tetrault and Gaubert are attributable to reimbursement for taxes
relating to their personal use of Company aircraft. Fiscal year 1998
includes relocation expenses of $111,754 for Mr. Tetrault. Fiscal year 1997
includes $20,439 for cost of personal use of Company aircraft by Mr. Womack
and $29,192 for relocation expenses for Mr. Wood.
(3) We stopped granting annual restricted stock awards to our officers in fiscal
year 1997. However, Mr. Tetrault did receive a restricted stock award in
fiscal year 1997 when he joined the Company. As of December 31, 1999, the
total number of shares of restricted stock held by the Named Executive
Officers (other than Mr. Wood, who holds no such shares) and their market
values (based upon a closing market price on December 31, 1999 of $9.0625,
less a $1.00 per share purchase price) are as follows:
<TABLE>
<CAPTION>
SHARES OF MARKET
NAME RESTRICTED STOCK VALUE
---- ---------------- --------
<S> <C> <C>
Tetrault............................................ 33,122 $267,046
Rawle............................................... 26,481 $213,503
Womack.............................................. 16,215 $130,733
Gaubert............................................. 14,385 $115,979
</TABLE>
Dividends are paid on restricted stock at the same time and at the same
rate as dividends paid to all shareholders. Grants of restricted stock
generally vest 50% in five years with the remaining 50% vesting in three to
ten years based on Company financial performance. In the event of a change
of control of the Company, the Compensation Committee may cause all
restrictions to lapse.
Beginning with fiscal year 1998, we began granting Performance Shares
(rights to receive restricted stock based upon future stock performance) to
our officers on an annual basis; however, no Performance Shares were
granted to our officers during the nine-month period ended December 31,
1999.
(4) No options to purchase our Common Stock were granted during the nine-month
period ended December 31, 1999. Stock option grants for previous fiscal
years include options to acquire J. Ray McDermott common stock ("JRM Common
Stock") granted to Messrs. Tetrault, Rawle and Gaubert in their capacity as
officers of J. Ray McDermott as follows:
17
<PAGE> 22
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
NAME 1999 1998 1997
---- ----------- ----------- -----------
<S> <C> <C> <C>
Tetrault.................................... 26,860 9,500 108,000
Rawle....................................... 36,040 12,460 10,090
Gaubert..................................... 5,950 3,260 3,740
</TABLE>
In connection with the JRM merger in July 1999, all unexercised options to
acquire JRM Common Stock ("JRM stock options") became vested options to
purchase a comparable amount of our Common Stock. As a result of the JRM
merger, Messrs. Tetrault, Rawle and Gaubert received Company stock options
for JRM stock options as follows:
<TABLE>
<CAPTION>
JRM COMPANY
NAME STOCK OPTIONS STOCK OPTIONS
---- ------------- -------------
<S> <C> <C>
Tetrault.......................................... 36,360 46,672
Rawle............................................. 48,500 62,255
Gaubert........................................... 12,950 16,623
</TABLE>
(5) Amounts shown for the nine-month period ended December 31, 1999 include (a)
our matching contributions to the McDermott Thrift Plan in the amount of
$3,600 for each Named Executive Officer and (b) the value of insurance
premiums we paid for Messrs. Tetrault, Rawle, Womack, Wood, and Gaubert in
the amounts of $258, $162, $714, $188, and $162, respectively.
(6) Compensation information for fiscal year 1997 only reflects the amounts we
paid Mr. Tetrault from the time he joined the Company on March 1, 1997 to
March 31, 1997.
(7) Bonus paid to Mr. Tetrault in connection with his election as the Company's
Vice Chairman of the Board and CEO on March 1, 1997.
(8) Compensation information for fiscal year 1997 only reflects the amounts we
paid Mr. Wood from the time he joined the Company in June 1996 through
March 1997.
18
<PAGE> 23
OPTION EXERCISES AND PERIOD END VALUE TABLE
The following table provides information concerning the exercise of stock
options during the nine-month period ended December 31, 1999 by each of the
Named Executive Officers and the value at December 31, 1999 of unexercised
options held by those persons. As of December 31, 1999 (when the fair market
value of our Common Stock was $9.0625, per share), none of the stock options
currently held by our officers were "in the money." The actual value realized on
option exercise will depend on the value of our Common Stock at the time of
exercise. Our Compensation Committee is considering providing officers and other
key employees of the Company and its subsidiaries with the opportunity to
convert their stock options into units of deferred restricted stock. See "Report
on Executive Compensation -- Long Term Incentives -- Stock Options."
AGGREGATED OPTION EXERCISES DURING THE NINE-MONTH PERIOD
ENDED DECEMBER 31, 1999
AND PERIOD END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF TOTAL NUMBER OF TOTAL VALUE OF UNEXERCISED,
SHARES UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS HELD
ACQUIRED AT 12/31/99 AT 12/31/99
ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R.E. Tetrault
Common Stock.............. 0 $-- 300,596 174,176 $0 $0
R.H. Rawle
Common Stock.............. 0 $-- 72,765 0 $0 $0
E.A. Womack, Jr.
Common Stock.............. 0 $-- 84,567 26,498 $0 $0
J.F. Wood
Common Stock.............. 0 $-- 27,784 22,636 $0 $0
D.R. Gaubert
Common Stock.............. 0 $-- 77,987 21,795 $0 $0
</TABLE>
RETIREMENT PLANS
Pension Plans. We maintain funded retirement plans covering substantially
all our regular full-time employees, except certain non-resident alien employees
who are not citizens of a European Community country or who do not earn income
in the United States, Canada or the United Kingdom. Officers who are employees
of the Company or certain of its subsidiaries, including McDermott Incorporated
and The Babcock & Wilcox Company ("B&W"), are covered under The Retirement Plan
for Employees of McDermott Incorporated and Participating Subsidiary and
Affiliated Companies (the "McDermott Retirement Plan"). Under the McDermott
Retirement Plan, salaried B&W employees hired prior to April 1, 1998, regardless
of whether they subsequently became employees of the Company or another
participating subsidiary ("B&W Tenured Employees"), accrue pension benefits
under a different formula than other salaried employees. Officers who are
employed by J. Ray McDermott or certain of its subsidiaries or affiliates are
covered under The Retirement Plan of Employees of J. Ray McDermott Holdings,
Inc. (the "J. Ray McDermott Plan"). Employees do not contribute to either of
these plans, and company contributions are determined on an actuarial basis. An
employee must be employed by the applicable company or a subsidiary for one year
prior to participating in the plans and must have five years of continuous
service to vest in any accrued benefits under the plans. To the extent benefits
payable under these qualified plans are limited by Section 415(b) or 401(a)(17)
of the Internal Revenue Code, pension benefits will be paid directly by the
applicable company or a subsidiary under the terms of unfunded excess benefit
plans maintained by them (the "Excess Plans").
The benefit amounts payable under the McDermott Retirement Plan to any
covered employee hired after April 1, 1998 are the same as those payable to
employees covered under the J. Ray McDermott Retirement Plan. The following
table shows the annual benefit payable to such employees under the McDermott
Retirement Plan and to J. Ray McDermott employees under the J. Ray McDermott
Retirement Plan, at
19
<PAGE> 24
age 65 (the normal retirement age), who retire in 2000 in accordance with the
lifetime only method of payment and before profit sharing plan offsets. Benefits
are based on the formula of a specified percentage (dependent on years of
service) of average annual basic earnings (exclusive of bonus and allowances)
during the 60 successive months out of the 120 successive months before
retirement in which such earnings were highest ("Final Average Earnings") less a
specified percentage of anticipated social security benefits. As of December 31,
1999, Mr. Rawle had Final Average Earnings of $254,209 and 21.3 years of
credited service under the J. Ray McDermott Retirement Plan and Mr. Gaubert had
Final Average Earnings of $254,816 and 28.4 years of credited service under the
McDermott Retirement Plan. Unless elected otherwise by the employee, payment
will be made in the form of a joint and survivor annuity of equivalent actuarial
value to the amount shown below.
MCDERMOTT RETIREMENT PLAN BENEFITS FOR NON-B&W TENURED EMPLOYEES
AND J. RAY MCDERMOTT RETIREMENT PLAN BENEFITS
<TABLE>
<CAPTION>
FINAL ANNUAL BENEFITS (IN DOLLARS) AT AGE 65 FOR YEARS OF SERVICE INDICATED
AVERAGE ----------------------------------------------------------------------------------
EARNINGS 10 15 20 25 30 35 40
- -------- ------ ------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
200,000 31,614 47,421 63,227 79,034 94,841 110,648 126,455
250,000 39,947 59,921 79,894 99,868 119,841 139,815 159,788
300,000 48,280 72,421 96,561 120,701 144,841 168,981 193,122
</TABLE>
The following table shows the annual benefit payable under the McDermott
Retirement Plan at age 65 (the normal retirement age) to B&W Tenured Employees
who retire in 2000 in accordance with the lifetime only method of payment. B&W
benefits are based on the formula of a specified percentage (dependent on the
level of wages subject to social security taxes during the employee's career) of
average annual earnings (inclusive of bonuses) during the 60 successive months
out of the 120 successive months prior to retirement in which such earnings were
highest ("B&W Final Average Earnings"). B&W Final Average Earnings and credited
service under the McDermott Retirement Plan at December 31, 1999 for Messrs.
Tetrault, Womack and Wood were $770,054 and 24.4 years, $477,523 and 24.3 years
and $341,325 and 27.4 years, respectively. Unless elected otherwise by the
employee, payment will be made in the form of a joint and survivor annuity of
equivalent actuarial value to the amount shown below.
MCDERMOTT RETIREMENT PLAN BENEFITS FOR B&W TENURED EMPLOYEES
<TABLE>
<CAPTION>
B&W
FINAL ANNUAL BENEFITS (IN DOLLARS) AT AGE 65 FOR YEARS OF SERVICE INDICATED
AVERAGE -------------------------------------------------------------------------------------
EARNINGS 10 15 20 25 30 35 40
- -------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
300,000 37,500 56,250 75,000 93,750 112,500 131,250 150,000
400,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000
500,000 62,500 93,750 125,000 156,250 187,500 218,750 250,000
600,000 75,000 112,500 150,000 187,500 225,000 262,500 300,000
700,000 87,500 131,250 175,000 218,750 262,500 306,250 350,000
800,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000
</TABLE>
Supplemental Executive Retirement Plan. The Company maintains an unfunded
Supplemental Executive Retirement Plan (the "SERP"). The SERP covers certain
officers of the Company and other designated companies, including McDermott
Incorporated, J. Ray McDermott and B&W. Generally, benefits are based on a
specified percentage (determined by age, years of service and date of initial
participation in the SERP) of final three-year average cash compensation (salary
plus supplemental compensation for the highest three out of the last ten years
of service) or three-year average cash compensation prior to the SERP scheduled
retirement date, whichever is greater. The maximum benefit may not exceed 60-65%
(dependent upon date of initial participation in the SERP) of such three-year
average cash compensation. Payments under the SERP are reduced by an amount
equal to pension benefits payable under any other retirement plan maintained by
the
20
<PAGE> 25
Company or any of its subsidiary companies. The SERP also provides a surviving
spouse death benefit. Before giving effect to such reductions, the approximate
annual benefit payable under the SERP to Messrs. Gaubert, Rawle, Tetrault,
Womack and Wood at retirement age is 60% of each such person's final three-year
average cash compensation.
We have established a trust (the assets of which constitute corporate
assets) designed to ensure the payment of benefits arising under the SERP, the
Excess Plans and certain other contracts and arrangements (collectively, the
"Plans") in the event of an effective change in control of the Company. Although
we would retain primary responsibility for such payments, the trust would
provide for payments to designated participants, in the form of lump sum
distributions, if certain events occur following an effective change in control
of the Company, including but not limited to our failure to make such payments
and the termination of a participant's employment under certain specified
circumstances. In addition, with respect to benefits which otherwise would have
been paid in the form of an annuity, the trust provides for certain lump sum
equalization payments which, when added to the basic lump sum payments described
above, would be sufficient, after payment of all applicable taxes, to enable
each active participant receiving a lump sum distribution to purchase an annuity
that would provide such participant with the same net after-tax stream of
annuity benefits that such participant would have realized had he retired as of
the date of the lump sum distribution and began receiving annuity payments at
that time under the terms of the applicable Plan, based on salary and service
factors at the time of the effective change in control. With respect to
designated participants who retire before an effective change in control and who
receive a basic lump sum distribution under the circumstances described above,
the trust provides for similar lump sum equalization payments, based on salary
and service factors at the time of actual retirement.
APPROVAL OF SELECTION OF
INDEPENDENT ACCOUNTANTS FOR
FISCAL YEAR 2000
(ITEM 2)
Upon the recommendation of the Audit Committee, our Board of Directors has
approved the selection of PricewaterhouseCoopers to serve as independent
accountants to audit our accounts for the fiscal year ending December 31, 2000.
Although not required to do so, our Board of Directors is submitting the
selection of PricewaterhouseCoopers to our shareholders for their approval.
PricewaterhouseCoopers served as our independent accountants for the nine-month
period ended December 31, 1999 and the fiscal year ended March 31, 1999.
Representatives of PricewaterhouseCoopers will be present at the Annual Meeting
and will have an opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
The affirmative vote of a majority of the outstanding shares of Common
Stock present, in person or by proxy, at the Annual Meeting and entitled to vote
on the matter is required to approve this proposal. Our Board of Directors
recommends that shareholders vote "FOR" the selection of PricewaterhouseCoopers
as our independent accountants.
CERTAIN TRANSACTIONS
Newfield Exploration Company ("Newfield"), a company of which Joe B.
Foster, one of our directors, is the Non-executive Chairman of the Board,
manages and operates an offshore producing oil and gas property for one of J.
Ray McDermott's subsidiaries under a production and operation agreement. Under
the agreement, this subsidiary is required to pay Newfield (i) an operations
management fee of $10,580 per month, (ii) a marketing services fee at a rate of
$.01/MMBTU with a minimum monthly fee of $1,500, (iii) a minimum accounting and
property supervision fee of $5,000 per month and (iv) certain other costs
incurred by Newfield in connection with the agreement. During the nine-month
period ended December 31, 1999, this subsidiary paid approximately $464,000 to
Newfield under the agreement. We estimate that this subsidiary will pay Newfield
approximately $720,000 under the agreement in the current year.
21
<PAGE> 26
Another subsidiary of J. Ray McDermott periodically enters into agreements
to design, fabricate or install offshore pipelines or structures for Newfield.
Newfield paid that subsidiary approximately $1.9 million for the work performed
under these agreements during the nine-month period ended December 31, 1999. We
estimate that approximately $1.8 million will be paid by Newfield to this
subsidiary for work performed in the current year pursuant to these types
agreements.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own 10% or more of our voting stock, to
file reports of ownership and changes in ownership of our equity securities with
the SEC and the New York Stock Exchange. Directors, executive officers and 10%
or more holders are required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file. Based solely on a review of the copies of those
forms furnished to us, or written representations that no forms were required,
we believe that our directors, executive officers and 10% or more beneficial
owners complied with all Section 16(a) filing requirements during the nine-month
period ended December 31, 1999.
SHAREHOLDERS' PROPOSALS
Any shareholder who wishes to have a qualified proposal considered for
inclusion in our 2001 proxy statement must send notice of the proposal to our
Corporate Secretary at our principal executive office no later than November 30,
2000. With such proposal, you must provide your name, address, the number of
shares of Common Stock held of record or beneficially, the date or dates upon
which such Common Stock was acquired and documentary support for any claim of
beneficial ownership.
Moreover, any shareholder who intends to submit a proposal for
consideration at our 2001 Annual Meeting, but not for inclusion in our proxy
materials, or intends to submit nominees for election as directors at the
meeting must notify our Corporate Secretary. Under our by-laws, such notice must
(1) be received at our executive offices no earlier than January 3, 2001 or
later than February 1, 2001 and (2) satisfy certain requirements. A copy of the
pertinent by-law provisions can be obtained from our Corporate Secretary on
written request.
By Order of the Board of Directors,
/s/ JOHN T. NESSER, III
JOHN T. NESSER, III
Secretary
Dated: March 30, 2000
22
<PAGE> 27
[McDermott International, Inc. logo]
<PAGE> 28
MCDERMOTT INTERNATIONAL, INC.
P SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints John T. Nesser, III and Daniel R.
R Gaubert, or either of them, as attorneys, agents and proxies of the
undersigned, with full power of substitution, to vote all the shares
of common stock of McDermott International, Inc. (the "Company") which
O the undersigned may be entitled to vote at the Company's Annual
Meeting of Shareholders to be held on May 2, 2000 and at any
adjournment of such meeting, with all powers which the undersigned
X would possess if personally present.
PLEASE MARK, SIGN AND DATE THE REVERSE SIDE OF THIS PROXY CARD AND
Y PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
The undersigned acknowledges receipt of the Company's Report for the
Nine-month Period ended December 31, 1999 and its Notice of Annual
Meeting of Shareholders and related Proxy Statement.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
o PLEASE FOLD AND DETACH HERE IF YOU ARE NOT VOTING BY INTERNET OR TELEPHONE o
MCDERMOTT INTERNATIONAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 2, 2000
9:30 A.M.
SHERATON NEW ORLEANS HOTEL
GRAND BALLROOM D AND E
500 CANAL STREET
NEW ORLEANS, LOUISIANA
<PAGE> 29
[X} Please mark your 1317
votes as in this
example.
IMPORTANT-PLEASE MARK APPROPRIATE BOXES ONLY IN BLUE OR BLACK INK AS SHOWN:
1. Nominees as Class III Directors: 01. Robert L. Howard, 02. Roger E.
Tetrault, and 03. John N. Turner.
<TABLE>
<CAPTION>
<S> <C>
WITHHOLD AUTHORITY
FOR for all nominees
[ ] [ ]
INSTRUCTION: To withhold authority to 2. Selection of PricewaterhouseCoopers LLP as the FOR AGAINST ABSTAIN
vote for any individual nominee, Company's independent accountants for the fiscal [ ] [ ] [ ]
write that nominee's name in the year ending December 31, 2000.
space provided below:
- -----------------------------------
-------------------------------------------
ANNUAL REPORT
MARK here to discontinue annual report
mailing for the account (for multiple- [ ]
account holders only).
-------------------------------------------
Every properly signed Proxy will be voted in accordance with the
specifications made thereon. If not otherwise specified, this Proxy
will be voted FOR the election of Directors and each other proposal.
The proxy holders named on the reverse side also will vote in their
discretion on any other matter that may properly come before the
meeting.
</TABLE>
SIGNATURE(S) DATE
----------------------- ------------
(Signature(s) should agree with name(s) on stock certificates
as specified hereon. Executors, administrators, trustees, etc.,
should indicate when signing.)
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE IF YOU ARE NOT VOTING BY INTERNET OR TELEPHONE o
MCDERMOTT INTERNATIONAL, INC.
Dear Shareholder:
McDermott International, Inc. encourages you to vote your shares electronically
through the Internet or the telephone 24 hours a day, 7 days a week. This
eliminates the need to return the proxy card.
To vote your shares electronically you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear in
the box above must be used to access the system.
1. To vote over the Internet:
o Log on the Internet and go to the web site
http://www.eproxyvote.com/mdr
2. To vote over the telephone:
o On a touch-tone telephone call 1-877-PRX-VOTE (1-877-779-8683)
o Outside of the U.S. and Canada call 201-536-8073.
Your electronic vote authorizes the names proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need for you to
mail back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
<PAGE> 30
MCDERMOTT INTERNATIONAL, INC.
THRIFT PLAN FOR EMPLOYEES OF MCDERMOTT INCORPORATED
AND PARTICIPATING SUBSIDIARY AND AFFILIATED COMPANIES
MARCH 30, 2000
To those individuals ("Plan Participants") who have an interest in McDermott
International, Inc. Common Stock, par value $1.00 per share (the "Common
Stock"), under the Thrift Plan for Employees of McDermott Incorporated and
Participating Subsidiary and Affiliated Companies (the "Thrift Plan"):
We would like to give Plan Participants having an interest in shares of our
Common Stock through the Thrift Plan the right to instruct the Trustee how to
vote the shares of Common Stock representing their interest in the Thrift Plan.
In order that you may have the same information as a shareholder outside
the Thrift Plan, we have enclosed a copy of the Notice of McDermott
International, Inc.'s Annual Meeting of Shareholders and the related Proxy
Statement. This information is being mailed to all shareholders of record as of
March 23, 2000. This material is for your information only and need not be
returned.
Also enclosed is a voting instruction form with which you may instruct the
Trustee how to vote your interest in the shares of Common Stock held in the
Thrift Plan. Please return this voting instruction form in the envelope provided
as soon as possible.
If the Trustee does not receive your instructions by April 25, 2000, the
Trustee will vote your interest, in its discretion, in a manner consistent with
its fiduciary responsibility under the Employee Retirement Income Security Act
of 1974 or other legal requirements.
This letter and the enclosed material relate only to your interest in the
shares of Common Stock held in the Thrift Plan. It has no reference to other
shares of our Common Stock which you may own. If you own other shares of Common
Stock, you will receive proxy materials in a separate mailing, which should be
returned in the envelope provided for that purpose.
Very truly yours,
/s/ Roger E. Tetrault
R.E. Tetrault
Chairman of the Board and
Chief Executive Officer
<PAGE> 31
o Please fold and detach card at perforation before mailing o
CONFIDENTIAL VOTING INSTRUCTIONS
TO: THE VANGUARD GROUP, TRUSTEE
UNDER THE THRIFT PLAN FOR EMPLOYEES OF McDERMOTT INCORPORATED
AND PARTICIPATING SUBSIDIARY AND AFFILIATED COMPANIES
The undersigned participant in the Thrift Plan for Employees of McDermott
Incorporated and Participating Subsidiary and Affiliated Companies (the "Thrift
Plan") hereby directs The Vanguard Group, the Trustee of the Thrift Plan, to
vote all the shares of common stock of McDermott International, Inc. (the
"Company") held in the undersigned's Thrift Plan account at the Company's Annual
Meeting of Shareholders to be held in the Grand Ballroom D and E of the Sheraton
New Orleans Hotel, 500 Canal Street, New Orleans, Louisiana, on Tuesday, May 2,
2000, at 9:30 a.m. local time and at any adjournment of such meeting, as
indicated on the reverse side of this voting instruction form.
Every properly signed voting instruction form will be voted in accordance with
the specifications made thereon. If not otherwise specified, properly signed
voting instruction forms will be voted "FOR" the election of all directors and
each other proposal.
The undersigned acknowledges receipt of the Company's Report for the Nine-month
Period ended December 31, 1999, and its Notice of Annual Meeting of Shareholders
and related Proxy Statement.
PLEASE MARK, SIGN AND DATE THE REVERSE SIDE OF THIS VOTING INSTRUCTION FORM AND
PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 32
[THE VANGUARD GROUP LOGO] [POSTAGE STAMP]
<TABLE>
<S> <C> <C> <C> <C> <C>
o Please fold and detach card at perforation before mailing o
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN DARK INK AND SIGN AND DATE BELOW. FOR WITHHOLD AUTHORITY
FOR ALL NOMINEES
[ ] [ ]
1. NOMINEES OF CLASS III DIRECTORS:
01. Robert L. Howard 02. Roger E. Tetrault 03. John N. Turner.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW:
- ----------------------------------------------------------------------------------- FOR AGAINST ABSTAIN
2. Selection of PricewaterhouseCoopers LLP as the Company's independent accountants [ ] [ ] [ ]
for the fiscal year ending December 31, 2000.
(Signature should be the same as the
name on the Thrift Plan accounts.
Executors, administrators, trustees,
etc., should indicate when signing.)
-------------------------------------
SIGNATURE
DATE
---------------------------------
</TABLE>
<PAGE> 33
McDERMOTT INTERNATIONAL, INC.
THRIFT PLAN FOR SALARIED EMPLOYEES OF BABCOCK & WILCOX CANADA
MARCH 30, 2000
To those individuals ("Plan Participants") who have an interest in McDermott
International, Inc. Common Stock, par value $1.00 per share (the "Common
Stock"), under the Thrift Plan for Salaried Employees of Babcock & Wilcox Canada
(the "Thrift Plan"):
We would like to give Plan Participants having an interest in shares of our
Common Stock through the Thrift Plan the right to instruct the Trustee how to
vote the shares of Common Stock representing their interest in the Thrift Plan.
In order that you may have the same information as a shareholder outside
the Thrift Plan, we have enclosed a copy of the Notice of McDermott
International, Inc.'s Annual Meeting of Shareholders and the related Proxy
Statement. This information is being mailed to all shareholders of record as of
March 23, 2000. This material is for your information only and need not be
returned.
Also enclosed is a voting instruction form with which you may instruct the
Trustee how to vote your interest in the shares of Common Stock held in the
Thrift Plan. Please return this voting instruction form in the envelope provided
as soon as possible.
If the Trustee does not receive your instructions by April 20, 2000, the
Trustee will not vote your shares.
This letter and the enclosed material relate only to your interest in the
shares of Common Stock held in the Thrift Plan. It has no reference to other
shares of our Common Stock which you may own. If you own other shares of Common
Stock, you will receive proxy materials in a separate mailing, which should be
returned in the envelope provided for that purpose.
Very truly yours,
/s/ ROGER E. TETRAULT
Roger E. Tetrault
Chairman of the Board and
Chief Executive Officer
<PAGE> 34
CONFIDENTIAL VOTING INSTRUCTIONS
TO: THE TRUST COMPANY OF BANK OF MONTREAL, TRUSTEE
UNDER THE THRIFT PLAN FOR SALARIED EMPLOYEES OF BABCOCK & WILCOX CANADA
The undersigned participant in the Thrift Plan for Salaried Employees of Babcock
& Wilcox Canada (the "Thrift Plan") hereby directs The Trust Company of Bank of
Montreal, the Trustee of the Thrift Plan, to vote all the shares of common stock
of McDermott International, Inc. (the "Company") held in the undersigned's
Thrift Plan account at the Company's Annual Meeting of Shareholders to be held
in the Grand Ballroom D and E of the Sheraton New Orleans Hotel, 500 Canal
Street, New Orleans, Louisiana, on Tuesday, May 2, 2000, at 9:30 a.m. local time
and at any adjournment of such meeting, as indicated below.
Every properly signed voting instruction form will be voted in accordance with
the specifications made thereon. If not otherwise specified, properly signed
voting instruction forms will be voted "FOR" the election of all directors and
each other proposal.
The undersigned acknowledges receipt of the Company's Report for the Nine-month
Period ended December 31, 1999, and its Notice of Annual Meeting of Shareholders
and related Proxy Statement.
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN DARK INK AND SIGN AND DATE WHERE
INDICATED BELOW AND PROMPTLY RETURN THIS VOTING INSTRUCTION FORM IN THE ENCLOSED
ENVELOPE.
<TABLE>
<S> <C> <C> <C>
1. NOMINEES OF CLASS III DIRECTORS
[ ] VOTE FOR ALL [ ] WITHHOLD FROM
(except as marked [X] to VOTING FOR ALL
the contrary below)
[ ] Robert L. Howard
[ ] Roger E. Tetrault
[ ] John N. Turner
2. Selection of PricewaterhouseCoopers LLP as the For Against Abstain
Company's independent accountants for the fiscal [ ] [ ] [ ]
year ending December 31, 2000.
(Signature should be the same as the name on Thrift
Plan accounts. Executors, administrators, trustees,
etc., should indicate when signing.)
----------------------------------- ---------
SIGNATURE DATE
</TABLE>
