SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. - )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use
of Commission
[X] Definitive Proxy Statement Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Avondale Industries, Inc.
_____________________________________________________
(Name of Registrant as Specified In Its Charter)
Board of Directors of Avondale Industries, Inc.
___________________________________________________________
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
______________________________________________________
2) Aggregate number of securities to which transaction
applies:
______________________________________________________
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-
11 (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:
[X] 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>
Avondale Industries, Inc.
5100 River Road
Avondale, Louisiana 70094
______________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
______________________________
TO SHAREHOLDERS OF AVONDALE INDUSTRIES, INC.:
The Annual Meeting of Shareholders of Avondale Industries,
Inc. (the "Company") will be held at 10:00 a.m. local time on
Friday, April 28, 1995, in the main conference room on the second
floor of the Company's Administration Building, 5100 River Road,
Avondale, Louisiana, to elect three directors, to consider such
of the five shareholder proposals described in the proxy
statement as may be presented at the Annual Meeting, and to
transact such other business as may properly come before the
meeting or any adjournment thereof.
Only holders of record of common stock of the Company at the
close of business on March 21, 1995 (the "Record Date"), are
entitled to notice of, to vote at, and to attend the annual
meeting.
All shareholders of record on the Record Date are cordially
invited to attend the meeting in person. However, if you are
unable to attend in person and wish to have your stock voted,
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
IN THE ACCOMPANYING POSTPAID ENVELOPE AS PROMPTLY AS POSSIBLE.
Your proxy may be revoked by appropriate notice to the Secretary
of the Company at any time prior to the voting thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas M. Kitchen
Secretary
Avondale, Louisiana
April 3, 1995
<PAGE>
Avondale Industries, Inc.
5100 River Road
Avondale, Louisiana 70094
April 3, 1995
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of
Avondale Industries, Inc. (the "Company") in connection with the
solicitation on behalf of the Board of Directors of proxies for
use at the Annual Meeting of Shareholders of the Company
scheduled to be held on Friday, April 28, 1995, at 10:00 a.m.
local time, in the main conference room on the second floor of
the Company's Administration Building, 5100 River Road, Avondale,
Louisiana, and at any adjournment thereof (the "Annual Meeting").
Only holders of record of common stock of the Company
("Common Stock") at the close of business on March 21, 1995 are
entitled to notice of, to vote at, and to attend the Annual
Meeting. On that date, the Company had outstanding 14,464,175
shares of Common Stock, each of which is entitled to one vote
with respect to each matter considered at the Annual Meeting.
The enclosed proxy may be revoked by a shareholder at any
time prior to its exercise by filing with the Secretary of the
Company a written revocation or duly executed proxy bearing a
later date. The proxy will also be deemed revoked if the share-
holder votes in person at the Annual Meeting.
This Proxy Statement is first being mailed to shareholders
on or about April 3, 1995, and the cost of soliciting proxies
hereunder will be borne by the Company. In addition to the use
of the mails, proxies may be solicited by personal interview,
telephone or telegraph. Banks, brokerage houses and other
institutions, nominees and fiduciaries will be requested to
forward the soliciting material to their principals and to obtain
authorization for the execution of proxies, and the Company will,
upon request, reimburse them for their expenses in so acting. In
addition, proxies will be solicited by Corporate Communications,
Inc., an investor relations firm that is paid $3,000 per month
plus its out-of-pocket expenses to perform a variety of services
on behalf of the Company, including the solicitation of proxies.
ELECTION OF DIRECTORS
(Item 1 on the accompanying proxy card)
The Company's Articles of Incorporation and By-laws provide
for a Board of Directors of seven persons allocated among three
classes of directors who serve three-year staggered terms, with
one class to be elected at each annual shareholders' meeting.
The term of one class of three directors expires at the Annual
Meeting. Accordingly, proxies cannot be voted for more than
three nominees.
Unless authority to vote for the election of directors is
withheld, the persons named in the enclosed proxy will vote all
shares represented by the proxies received by them for the
election of each of the below-named nominees proposed for
election by the Board of Directors. In accordance with the
Company's By-laws, if any of these nominees should decline or
become unable to serve for any reason, votes will be cast instead
for a substitute nominee designated by the Board of Directors or,
if none is designated, the number of authorized directors shall
be automatically reduced by the total number of nominees
withdrawn from consideration. Under the Company's By-laws,
directors are elected by plurality vote.
The following table sets forth certain information relating
to the directors of the Company as of March 14, 1995, including
their beneficial ownership of shares of Common Stock as
determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934. Unless otherwise indicated, (i) each
director has been engaged in the principal occupation shown for
more than the past five years and (ii) the shares shown as being
beneficially owned are held with sole voting and investment
power.
Proposed Nominees for Election:
<TABLE>
<CAPTION>
Number of
Name, Age, Principal Occupation Nominated Shares
and Directorships in For Term Director Beneficially
Other Public Corporations Expiring Since Owned<FN1>
_______________________________ ________ ________ ____________
<S> <C> <C> <C>
Vice Admiral Francis R. Donovan, 60 1998 1994 --
Retired, U.S. Navy; Strategic
Mobility Coordinator,
PRC Inc.<FN2>
William A. Harmeyer, 74 1998 1993 500
Retired; Vice President of the
Company until 1986
Thomas M. Kitchen, 47 1998 1987 130,022<FN4>
Vice President, Chief Financial
Officer and Secretary of the
Company<FN3>
</TABLE>
The Board of Directors recommends a vote
FOR each of the proposed nominees.
Other Directors:
<TABLE>
<CAPTION>
Number of
Name, Age, Principal Occupation Shares
and Directorships in Serving Term Director Beneficially
Other Public Corporations Expiring Since Owned<FN1>
_______________________________ ____________ ________ ___________
<S> <C> <C> <C>
Anthony J. Correro, III, 53 1996 1988 500
Partner, Correro, Fishman &
Casteix, L.L.P. (law firm)<FN5>
Kenneth B. Dupont, 56 1996 1987 38,864<FN6>
Vice President of the Company;
Director of First Citizens
Bankstock, Inc. (bank holding
company)<FN3>
Albert L. Bossier, Jr., 62 1997 1985 290,259<FN7>
Chairman of the Board, Chief
Executive Officer, and President of
the Company<FN3>
Hugh A. Thompson, 60 1997 1988 2,000
Professor, School of Engineering,
Tulane University<FN8>
All directors and executive officers 462,145
as a group (7 persons)
_____________________________
</TABLE>
<FN1> None of the proposed nominees or directors beneficially owns
in excess of one percent of the Common Stock, except Mr.
Bossier, who beneficially owns two percent of such stock.
The 462,145 shares of Common Stock beneficially owned by all
of the Company's directors and executive officers as a group
constitute 3.1% of the Common Stock.
<FN2> Until August 31, 1992, Admiral Donovan was in active duty
with the U.S. Navy, most recently as Commander Military
Sealift Command. Since September 1992, he has served as a
consultant to various companies on maritime issues, and
since November 1994 he has also served as Strategic Mobility
Coordinator, PRC Inc.
<FN3> Messrs. Bossier, Kitchen and Dupont are the executive
officers of the Company for whom compensation information is
disclosed in this Proxy Statement.
<FN4> Includes 9,205 shares allocated to Mr. Kitchen's Avondale
Employee Stock Ownership Plan ("ESOP") account and 68,000
shares that he has the right to acquire under currently
exercisable stock options.
<FN5> For more than five years prior to June 1994, Mr. Correro was
a partner in the law firm of Jones, Walker, Waechter,
Poitevent, Carrere & Denegre, L.L.P.
<FN6> Includes 8,660 shares allocated to Mr. Dupont's ESOP account
and 17,000 shares that he has the right to acquire under
currently exercisable stock options.
<FN7> Includes 18,419 shares allocated to Mr. Bossier's ESOP
account and 159,851 shares that he has the right to acquire
under currently exercisable stock options.
<FN8> Mr. Thompson was the Dean of the School of Engineering,
Tulane University, from 1976 to 1991.
__________________________
During 1994, the Board of Directors held five regular
meetings and seven special meetings. Each director of the
Company attended at least 75% of the aggregate number of meetings
held during 1994 of the Board and any committees on which he
served. Members of the Board who are not officers receive an
annual fee of $12,000 and an additional fee of $1,500 for each
meeting of the Board or committee thereof attended, and they are
permitted to defer all or some of their fees under a Directors'
Deferred Compensation Plan adopted by the Company in 1989.
Deferred fees earn interest at a rate of 8.5% per annum
compounded annually, and are payable in five equal installments
or a lump sum upon the earliest of the director's resignation,
removal, attainment of age 65, or death. The provisions of the
plan, including the interest rate payable on deferred fees, may
be amended at any time by the Board of Directors. Each director
is reimbursed for expenses incurred in attending meetings.
The Board has an Audit Committee, of which Messrs. Correro,
Harmeyer and Thompson are members, that meets periodically with
the Company's management, independent public accountants and
internal auditors to obtain an assessment of the financial
condition and results of operations of the Company, to ensure the
independence of the Company's independent accountants and to
report to the Board with respect thereto. The committee met once
during 1994. The Board also has a Compensation Committee, on
which Admiral Donovan and Mr. Thompson serve, that determines the
general compensation policies of the Company, determines the
compensation to be paid to the executive officers and other
employees of the Company and administers the Company's
Performance Share Plan and Stock Appreciation Plan. The
committee met once during 1994.
The Board of Directors does not have a nominating committee.
Any shareholder desiring to nominate persons for election to the
Board must comply with the procedures established by the
Company's Articles of Incorporation and By-laws. Such
nominations must be made by written notice delivered to the
Company's Secretary at its principal executive offices, 5100
River Road, Avondale, Louisiana 70094, and generally must be
received no later than the close of business on the tenth day
following the date on which notice of the annual meeting is
mailed; provided that if notice or public disclosure of the date
of the meeting is given or made to shareholders more than 55 days
prior to the meeting, such nominations must be delivered to the
Company's Secretary not less than 45 days nor more than 90 days
prior to the meeting. The notice must include the following
information with respect to each person the shareholder proposes
to nominate: (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares
of capital stock of the Company of which such person is the
beneficial owner (determined in accordance with Article VA. of
the Company's Articles of Incorporation), and (iv) any other
information relating to such person that would be required to be
disclosed in solicitations of proxies for election of directors,
or would be otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934. The
notice must also include the following information with respect
to the shareholder giving the notice: (i) the name and address of
such shareholder and (ii) the class and number of shares of
capital stock of the Company of which such shareholder is the
beneficial owner (determined in accordance with Article VA. of
the Company's Articles of Incorporation).
PRINCIPAL SHAREHOLDERS
The following persons are, to the knowledge of the Company,
the only persons that beneficially owned, as of March 14, 1995,
more than five percent of the Common Stock, calculated in
accordance with Rule 13d-3 under the Securities Exchange Act of
1934. Unless otherwise indicated, all shares indicated as
beneficially owned are held with sole voting and investment
power.
<TABLE>
<CAPTION>
Number of Shares
Name and Address Beneficially Owned Percent of Class
________________ __________________ ________________
<S> <C> <C>
Blanche S. Barlotta, R. Dean 7,095,734<FN1> 49.1%
Church and Rodney J. Duhon, Jr.,
as ESOP Trustees
P. O. Box 50280
New Orleans, Louisiana 70150
R. B. Haave Associates, Inc. 1,153,900<FN2> 8.0%
270 Madison Avenue,
13th Floor
New York, New York 10016
Pioneering Management Corporation 1,312,000<FN3> 8.8%
60 State Street
Boston, Massachusetts 02109-1820
</TABLE>
<FN1> Voting rights of all shares allocated to ESOP participants'
accounts are passed through to the participants. There are
currently no unallocated shares other than a nominal number of
shares that have been forfeited by participants since January 1,
1995. Voting rights of unallocated shares are exercised by the
ESOP Trustees at the direction of the ESOP Administrative
Committee, the members of which are the ESOP Trustees and two
other officers of the Company, Ernest F. Griffin, Jr. and Eugene
E. Blanchard, Jr. Investment power over the ESOP shares is
exercised by the ESOP Trustees at the direction of the ESOP
Administrative Committee, provided the ESOP Trustees determine
such direction to be consistent with their fiduciary duties.
<FN2> Based solely upon information contained in a Schedule 13G
filed by R. B. Haave Associates, Inc. on January 30, 1995. R. B.
Haave Associates, Inc. is an investment adviser registered under
the Investment Advisers Act of 1940.
<FN3> Based solely upon information provided by Pioneering
Management Corporation. Pioneering Management Corporation is an
investment adviser registered under the Investment Advisers Act
of 1940 and shares investment power with respect to all of the
shares reported.
EXECUTIVE COMPENSATION
Summary of Executive Compensation
The following table sets forth certain information regarding
the compensation of the Company's Chief Executive Officer and
each of the Company's other executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual
Compensation Long Term Compensation
Awards Payouts
Name Securities
and Underlying
Principal Options/ LTIP All Other
Positions Year Salary Bonus SARs(#)<FN1> Payouts<FN1><FN2> Compensation
_________ ____ ______ _____ ___________ ______________ ____________
<S> <C> <C> <C> <C> <C> <C>
Albert L. Bossier, Jr. 1994 $621,864 $46,640 0 $ 0 $12,425<FN3>
Chairman of the Board, 1993 543,224 0 0 0 17,384
Chief Executive Officer 1992 545,728 0 7,650 35,640 17,718
and President
Thomas M. Kitchen 1994 290,952 21,821 0 0 10,080<FN4>
Vice President, Chief 1993 254,179 0 0 0 13,551
Financial Officer and 1992 255,350 0 3,400 15,840 14,565
Secretary
Kenneth B. Dupont 1994 218,112 16,358 0 0 3,329<FN5>
Vice President 1993 190,526 0 0 0 4,145
1992 191,404 0 850 3,960 6,424
</TABLE>
________________________
<FN1> Each of the named executive officers is a
participant in the Company's Performance Share
Plan and in the Company's Stock Appreciation
Plan, both of which were adopted by the Company
in 1985 prior to the sale (the "Spin-Off") of
its Common Stock by its former corporate parent
to a newly-formed Employee Stock Ownership Plan
of which the Company's employees are
participants. The ESOP borrowed a substantial
portion of the purchase price from the Company
(which in turn borrowed funds from a bank
group) and, as an incentive to reduce this
debt, at the time of the Spin-Off Mr. Bossier
was awarded, pursuant to the terms of the
Performance Share Plan, rights to acquire
shares of the Company's Common Stock. Messrs.
Kitchen and Dupont were awarded similar rights
shortly before the execution of their
respective Employment Agreements. The rights
vested as certain Company performance goals,
principally the reduction of the ESOP loan,
were achieved. The LTIP Payouts disclosed in
the Long-Term Compensation columns were non-
discretionary and reflect, as of the date such
shares were earned, the fair market value of
the shares of Common Stock earned in accordance
with the terms of each executive officer's
award. Under the Performance Share Plan, each
participant received cash, in lieu of shares of
Common Stock, equal to the assumed income tax
liability resulting from the settlement of the
award. Options awarded in 1992 were granted
pursuant to the terms of the Stock Appreciation
Plan, which permits the Company to award
options to acquire that number of shares of
Common Stock for which cash has been received
under the Performance Share Plan. With the
retirement of the remaining balance of the ESOP
loan in 1992, all rights awarded pursuant to
the Performance Share Plan vested and all
shares have been delivered to the participants.
<FN2> Reflects the value of awards settled during the
year indicated pursuant to the Company's
Performance Share Plan. Awards are valued as
of the date performance goals are met, and are
settled with Common Stock and cash. The cash
portion is equal to the assumed income tax
liability resulting from the settlement of the
award.
<FN3> Consists of $3,584 in medical expense
reimbursement and $8,841 in group life and
disability insurance premiums.
<FN4> Consists of $2,937 in medical expense
reimbursement and $7,143 in group life and
disability insurance premiums.
<FN5> Consists of $1,108 in medical expense
reimbursement and $2,221 in group life and
disability insurance premiums.
Stock Options and Stock Appreciation Rights
The following table sets forth certain
information concerning the exercise of options and
stock appreciation rights during 1994 and
unexercised options and stock appreciation rights
on December 31, 1994.
AGGREGATED OPTION/SAR EXERCISES IN 1994 AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Number of Underlying Unexercised In-the-Money Options/SARs
Shares Options/SARs at 12/31/94 at 12/31/94
Acquired Value _______________________________ ____________________________
Name on Exercise Realized Exercisable<FN1> Unexercisable Exercisable Unexercisable
____ ___________ ________ _______________ _____________ ___________ _____________
<S> <C> <C> <C> <C> <C> <C>
Albert L. Bossier, Jr. None $0 159,851 0 $55,080 $ 0
Thomas M. Kitchen None 0 68,000 0 24,480 0
Kenneth B. Dupont None 0 17,000 0 6,120 0
________________________
</TABLE>
<FN1> All options are in tandem with stock appreciation rights.
Pension Plans
Messrs. Bossier, Kitchen and Dupont participate
in a qualified defined-benefit pension plan (the
"Qualified Pension Plan"), a non-qualified
supplemental pension plan (the "Supplemental
Pension Plan") and a non-qualified executive
excess retirement plan (the "Excess Retirement
Plan"), each of which is described below.
Qualified Pension Plan. The Qualified Pension
Plan covers all employees of the Company and
certain subsidiaries who have attained the age of
21 and completed one year of service other than
certain employees covered by collective bargaining
agreements. The annual benefit payable to each
participant upon retirement at age 65 is based
upon (i) his or her total years of service with
the Company, including credit for employment by
the former corporate parent of the Company, and
(ii) his or her average annual total compensation
for the five consecutive calendar year period that
is within the ten consecutive calendar years
immediately preceding the calendar year of the
earlier of his or her retirement or termination of
employment and that results in the highest
aggregate earnings. Reduced benefits are also
payable upon a participant's death, disability or
early retirement at age 55.
A participant's benefit, which becomes vested
after five years of service, is not subject to
reduction for social security benefits but is
reduced by the amount of an annuity purchased for
each participant in 1985. The balance of a
participant's benefit is then compared with the
actuarially equivalent value of the shares of
Common Stock and other assets allocated to his or
her ESOP account. If the actuarially equivalent
value of such shares is equal to or greater than
the benefit (reduced as described above), no
benefit is payable under the Qualified Pension
Plan. If the actuarially equivalent value of such
shares is less than the benefit (reduced as
described above), the Qualified Pension Plan pays
a benefit equal to the difference.
The Internal Revenue Code of 1986, as amended
(the "Code") limits the annual compensation upon
which benefits may be calculated under a qualified
pension plan to $150,000 for 1994 and restricts a
participant's maximum annual benefit under a
qualified pension plan to $118,800 for 1994.
These limits are adjusted annually for inflation.
Supplemental Pension Plan. The Supplemental
Pension Plan covers those officers of the Company
selected by the Board of Directors and certain
participants in a prior pension plan of a
predecessor corporation of the Company. Each
participant receives a monthly benefit, payable
when he attains age 65, equal to 15% of his total
average monthly compensation for the five
consecutive years out of the last ten consecutive
years of his employment that results in the
highest total monthly average compensation
multiplied by a fraction (which cannot exceed one)
the numerator of which is the participant's actual
years of service and the denominator of which is
the years of service the participant would have if
his employment continued until he was at least 55
and had ten years of service. The benefit is not
subject to reduction for amounts paid under the
Qualified Pension Plan, social security benefits
or the compensation and benefit limits imposed by
the Code. Benefits are payable in reduced amounts
to employees who retire between the ages of 55 and
65 and in further reduced amounts to employees
with at least ten years of service who terminate
their employment prior to the attainment of age
55.
Excess Retirement Plan. The Excess Retirement
Plan covers those participants in the Qualified
Pension Plan and ESOP that the Board of Directors
designates as participants in the Excess
Retirement Plan. The benefits payable under this
plan are derived from a formula that is designed
to reimburse participants for certain benefits not
otherwise payable under the Qualified Pension Plan
and ESOP, including benefits not otherwise payable
because of the (i) annual compensation and benefit
limits imposed by the Code on qualified plans,
which are discussed above in the sections
describing the Qualified Pension Plan and
(ii) provisions of the Qualified Pension Plan that
operate to reduce benefits for participants who
retire or terminate their service prior to age 65.
Benefits payable under the plan are in addition to
amounts payable under the Qualified Pension Plan
and the Supplemental Pension Plan, and are not
subject to reduction for social security benefits.
Aggregate Benefits Payable Under the Pension
Plans. The following table reflects the aggregate
annual benefits under the Qualified Pension Plan,
Supplemental Pension Plan and Excess Retirement
Plan that an executive officer with the years of
service and average annual earnings (as calculated
in accordance with the Qualified Pension Plan and
Supplemental Pension Plan) indicated can expect to
receive under the plans upon retirement at age 65.
The benefits under the Qualified Pension Plan and
the Excess Retirement Plan are offset by the
actuarially equivalent value of the shares of
Common Stock and other assets allocated to the
ESOP account of each participant. This offset is
not reflected in the table below.
<TABLE>
<CAPTION>
Avondale Industries, Inc.
Estimated Annual Retirement Benefits
(Before Reduction for ESOP Benefits)
Years of Service
Average _______________________________________________________________________________________
Annual 15 years 20 years 25 years 30 years 35 years 40 years
Earnings _______ _______ ________ ________ ________ ________
________
<S> <C> <C> <C> <C> <C> <C>
$200,000 $75,000 $90,000 $105,000 $120,000 $135,000 $150,000
250,000 93,750 112,500 131,250 150,000 168,750 187,500
300,000 112,500 135,000 157,500 180,000 202,500 225,000
350,000 131,250 157,500 183,750 210,000 236,250 262,500
400,000 150,000 180,000 210,000 240,000 270,000 300,000
450,000 168,750 202,500 236,250 270,000 303,750 337,500
500,000 187,500 225,000 262,500 300,000 337,500 375,000
550,000 206,250 247,500 288,750 330,000 371,250 412,500
600,000 225,000 270,000 315,000 360,000 405,000 450,000
650,000 243,750 292,500 341,250 390,000 438,750 487,500
700,000 262,500 315,000 367,500 420,000 472,500 525,000
750,000 281,250 337,500 393,750 450,000 506,250 562,500
800,000 300,000 360,000 420,000 480,000 540,000 600,000
850,000 318,750 382,500 446,250 510,000 573,750 637,500
</TABLE>
Compensation covered by the plans consists of
salary, bonus and automobile allowance. Covered
compensation for Messrs. Bossier, Kitchen and
Dupont equals the amount reported in the Summary
Compensation Table under the heading "Annual
Compensation" plus the automobile allowance.
Messrs. Bossier, Kitchen and Dupont have 38, 17
and 31 years of service, respectively, under each
of the plans. The Company may establish a trust
to fund the amounts accruing under the
Supplemental Pension Plan and the Excess
Retirement Plan, but participants' rights to these
trust assets would be no greater than the rights
of unsecured creditors.
Employment Agreements
All amounts set forth under the heading
"Salary" in the Summary Compensation Table were
paid under employment agreements between the
Company and each executive officer (the
"Employment Agreements") which provide for fixed
base salaries and for annual bonuses as determined
by the Board of Directors. The Company entered
into the Employment Agreement with Mr. Bossier at
the time of the Spin-Off in 1985 and with Messrs.
Kitchen and Dupont in 1987, the year preceding the
Company's initial public offering. In December
1994 the Company extended the term of the
Employment Agreements from December 31, 1996 to
December 31, 1997. After December 31, 1997, the
employment of each executive officer continues
from year to year, subject to the right of the
Company or the employee to terminate such
employment without cause at December 31, 1997 or
on any subsequent December 31 (a "normal
termination date"), by giving at least 60 days
prior written notice to the other. Termination of
employment that is properly effected by either
party with respect to a normal termination date is
not a breach of the Employment Agreement. Under
the Employment Agreements, base salaries may be
increased but not decreased by the Board and
bonuses are fixed from time to time by the Board,
provided that Mr. Bossier may not be paid a bonus
in an amount less than the bonus paid for the
immediately preceding year. For fiscal years
1991 through 1993 Mr. Bossier waived his rights
under this provision and did not receive a bonus.
Under the Employment Agreements, if the
employment of an executive officer is terminated
by the executive officer for certain specified
reasons or by the Company (at any time other than
a normal termination date) for any reason other
than cause (as defined therein), the executive
officer is entitled to a lump sum severance
payment equal to three times the sum of his annual
salary and annual bonus, which amount is reduced
if the executive officer's employment is
terminated after age 62. If the employment of any
of Messrs. Bossier, Kitchen or Dupont is
terminated under circumstances giving rise to
their entitlement to claim their severance
benefits, the lump sum severance payments to which
each would currently be entitled are approximately
$2,005,512, $968,919 and $726,378, respectively.
The severance benefits payable under the
Employment Agreements also include the
continuation of health and insurance benefits, and
supplemental lump sum pension benefits. These
supplemental pension benefits are based upon
compensation and are reduced by benefits earned
under the Qualified Pension Plan. If supplemental
pension benefits are paid as part of an executive
officer's severance benefits under an Employment
Agreement, benefits otherwise payable to him under
the Excess Retirement Plan are reduced. To the
extent that any executive officer had shares of
Common Stock withheld from allocation to his ESOP
account because of the limits imposed by the Code,
the Company has agreed to pay to him the fair
market value of such shares upon termination of
his employment.
Compensation Committee Interlocks and Insider
Participation
The members of the Compensation Committee of
the Board of Directors are Mr. Thompson and
Admiral Donovan, neither of whom is, or was
formerly, an officer or employee of the Company or
any of its subsidiaries, nor has or had any other
significant relationship with the Company. The
Compensation Committee determines the general
compensation policies of the Company, determines
the compensation to be paid to the executive
officers and other employees of the Company and
administers the Company's Performance Share Plan
and Stock Appreciation Plan. No executive officer
of the Company served in the last fiscal year as a
director or member of the compensation committee
of another entity, one of whose executive officers
served as a director or on the Compensation
Committee of the Company.
Mr. Correro was also a member of the
Compensation Committee until July 25, 1994,
although the Compensation Committee did not meet
during 1994 at any time when he was a member. For
more than five years prior to June 1994, Mr.
Correro was one of 85 partners of the law firm of
Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P., which was paid $210,280 during
the first five months of 1994 by the Company for
legal services rendered. Since June 1994, Mr.
Correro has been one of three partners of the law
firm of Correro, Fishman & Casteix, L.L.P., which
was paid $650 during the last seven months of 1994
by the Company for legal services rendered.
Compensation Committee Report on Executive
Compensation
The Compensation Committee (the "Committee")
of the Board of Directors furnished the following
report with respect to compensation paid to the
executive officers of the Company in 1994:
Under the By-laws of the Company, the
Committee, which is required to be made up of
outside independent directors, determines the
general compensation policies of the Company,
determines the compensation to be paid to the
executive officers and other employees of the
Company and administers the Company's Performance
Share Plan and Stock Appreciation Plan. Since
August 11, 1994, the Committee has been comprised
of Mr. Thompson and Admiral Donovan. Prior to
that date, Messrs. Correro and Thompson made up
the Committee.
As disclosed under the heading "Executive
Compensation - Employment Agreements," each of the
Company's three executive officers has an
employment agreement with the Company that, as
extended by the Committee in December 1994, may
not be terminated prior to December 31, 1997 and
provides among other things, that the Board of
Directors has only the authority to increase, and
not decrease, each executive officer's base salary
(and, in the case of Mr. Bossier, his annual
bonus) as compared to the amount paid for the
immediately preceding year. The Committee
approved the contract extension in recognition of
such persons' significant contributions to the
improvement in the Company's financial position
during 1994, including the establishment of a new
line of credit, the settlement of a tax
controversy and other contingencies with the
former corporate parent of the Company, and the
successful refinancing (and corollary reduction in
interest expense) of Industrial Revenue Bonds
issued on behalf of the Company. The Committee
also believes that through the extension of the
Employment Agreements the Company will be assured
of the continued benefit of this management
group's experience in order to meet future
challenges in the shipbuilding industry.
Mr. Bossier entered into his Employment Agreement
at the time of the Spin-Off in 1985, and Messrs.
Kitchen and Dupont entered into their respective
Employment Agreements in 1987, the year preceding
the Company's initial public offering.
In February 1992, each executive officer
agreed to a ten percent reduction in his cash
compensation as part of an overall ten percent
reduction in compensation paid to all of the
officers of the Company. The ten percent
reduction was rescinded in December 1993 following
the successful settlement of certain Requests for
Equitable Adjustment that the Company had filed
with the U.S. Navy relating to certain significant
shipbuilding contracts of the Company.
Accordingly, 1994 salaries were restored to 1991
levels and were increased an additional 3.5% as a
cost of living adjustment, in conjunction with an
overall increase in salaries for Company employees
generally.
No bonuses were paid to executive officers
from 1990 until 1994. In order to reward the
executive officers for their contributions to the
Company's return to profitability in 1994, the
Committee awarded cash bonuses to each of the
executive officers. Each of the three executive
officers received a bonus equal to 7.5% of his
annual salary.
Although no stock options or other stock
based awards were granted to executive officers in
1994, each of the executive officers continues to
hold stock options granted in earlier years.
Under the Omnibus Budget Reconciliation Act
enacted in 1993, publicly held companies may be
prohibited from deducting as compensation expense
for federal income tax purposes total remuneration
paid in a single year to certain executive
officers that is in excess of certain statutory
limits. When making its future compensation
decisions, the Compensation Committee intends to
consider the effects of this new law on the
Company.
Hugh A. Thompson Francis R. Donovan
Performance Graph
The graph and corresponding table below
compare the cumulative total shareholder return on
the Company's Common Stock from December 31, 1989
to December 31, 1994 with the cumulative total
return on a NASDAQ index and a peer group index,
in each case assuming the investment of $100 on
December 31, 1989 at the closing price on that
date and reinvestment of dividends. The peer
group index consists of Bethlehem Steel Co.,
General Dynamics Corp., McDermott International
Inc., Tenneco Inc., Todd Shipyards Corp. and
Trinity Industries Inc., and the returns of each
issuer are weighted according to its stock market
capitalization at the beginning of each period for
which a return is indicated.
[insert graph here]
<TABLE>
<CAPTION>
Cumulative Total Shareholder Return
Index December 31,
_____ ______________________________________________
1990 1991 1992 1993 1994
____ ____ ____ ____ ____
<S> <C> <C> <C> <C> <C>
The Company 50.79 35.66 20.53 63.76 67.00
Peer Group 79.68 71.15 104.39 164.91 147.54
NASDAQ 81.12 104.14 105.16 126.14 132.44
_______________________________________________
</TABLE>
CERTAIN TRANSACTIONS
The law firm of Blue Williams, L.L.P., of
which a son of Mr. Albert L. Bossier, Jr., a
director and the chief executive officer of the
Company, is a partner, was paid $679,161 in 1994
by the Company for legal services rendered.
Section 16(a) of the Securities Exchange Act
of 1934 requires the Company's directors and
executive officers to file with the Securities and
Exchange Commission reports of beneficial
ownership, and changes in beneficial ownership, of
the Common Stock of the Company. Messrs. Bossier,
Kitchen, Dupont and Bruce L. Hicks (chief
accounting officer of the Company), and Messrs.
Blanchard, Church, Duhon and Griffin and Ms.
Barlotta (members of the Administrative Committee
of the ESOP) inadvertently filed late their Annual
Statement of Beneficial Ownership (Form 5) for the
1994 fiscal year to report the allocation of
shares of Common Stock to each of their individual
ESOP accounts.
SHAREHOLDER PROPOSALS
Set forth under this heading are five
shareholder proposals, all of which are
unanimously opposed by the Company's Board of
Directors. As noted in further detail below under
the headings "Shareholder Proposals Submitted
Pursuant to Rule 14a-8 of the Proxy Rules" and
"Additional Shareholder Proposals," three of the
proposals were submitted to the Company pursuant
to Rule 14a-8, and therefore, in accordance with
such rule, each of those proposals is set forth in
full below and is accompanied by the proponent's
statement in support thereof. With respect to the
other two proposals, the Company was notified in
early March by a so-called "Avondale Shareholder
Committee" of such committee's intention to
present these two additional proposals at the
Annual Meeting. In accordance with the proxy
rules, the two proposals of the "Avondale
Shareholder Committee" are not set forth in this
proxy statement and have not been accompanied by
any supporting statements. Your board of
directors unanimously recommends a vote AGAINST
each of the shareholder proposals.
STATEMENT BY THE BOARD OF DIRECTORS IN
OPPOSITION TO ALL FIVE SHAREHOLDER PROPOSALS
The Board of Directors believes that the
shareholders of the Company are entitled to know
who is responsible for the five shareholder
proposals. The three proposals submitted under
Rule 14a-8 (the "Rule 14a-8 Proposals"), and the
statements in support thereof, were submitted to
the Company by three Company employees, Messrs.
Preston Jack, Donald Mounsey and Steve Rodriguez,
each of whom holds his shares of the Company's
Common Stock as participants in the Avondale
Employee Stock Ownership Plan (the "ESOP"). The
Board of Directors is convinced that the three
nominal shareholder proponents are acting at the
direction of the United Brotherhood of Carpenters
and Joiners of America (the "UBC") and its
affiliate, the Metal Trades Department, AFL-CIO
(the "AFL-CIO", and collectively with the UBC, the
"Union"). The two additional proposals (the
"Additional Proposals") were submitted by a
committee that is controlled by Union organizers.
The author of the letter notifying the Company of
these "Additional Proposals" is Mr. Ed Durkin,
Director Special Programs Department of the Union,
who is a full-time Union professional, and, who,
to the Company's knowledge, is not a shareholder
of the Company. The submission of these five
shareholder proposals follows last year's Union-
sponsored proxy campaign and is consistent with
the Union's intention to use the proxy process as
a tactic in its "corporate campaign" against the
Company to advance Union-related goals.
To understand why the Union continues to
pursue its corporate campaign, it is necessary to
view the proposals in the context of the Union's
continuing efforts to organize certain of the
Company's employees. As previously reported, in
June 1993 an election was held to determine
whether certain employees of the Company desired
to be represented by the Union. The National
Labor Relations Board is in the process of
determining the final outcome of the election.
Since the 1993 election, the Union has conducted a
much-publicized "corporate campaign" against the
Company. As part of that campaign, in 1994 the
Board believes the Union was behind the
organization of a "Shareholders Committee" that
unsuccessfully attempted to garner support for six
shareholder proposals that the "Shareholders
Committee" caused to be introduced at the
Company's 1994 Annual Meeting.
Moreover, the Union has not limited its
corporate campaign to the periodic harassment of
the Company through the proxy process. Indeed,
during the past 18 months, the Union has also
employed a variety of other tactics to harass
management and call negative attention to the
Company, including filing numerous and redundant
unfounded complaints with various regulatory
agencies, the overwhelming majority of which were
dismissed as being without any basis. The Board
of Directors believes that it is clear that none
of these actions is motivated by concern over the
well-being of the Company or its employees, or by
a desire to promote the interests of the
shareholders, but instead are merely tactical acts
intended to distract and harass the Company's
management and cause unwarranted negative
publicity for the Company.
The Union has acknowledged that it was the
driving force behind the proposals submitted at
the Company's 1994 Annual Meeting. Three of the
five proposals submitted for the 1995 Annual
Meeting ("Compensation Committee," "Confidential
Voting" and "Board Declassification") are
substantially identical to proposals submitted by
the Union's Shareholders Committee at the 1994
Annual Meeting, all three of which, along with
three additional proposals submitted by the
Shareholders Committee for the 1994 Annual
Meeting, were overwhelmingly rejected by the
Company's shareholders. Notwithstanding its
undeniable lack of success at the 1994 Annual
Meeting, the Union's "Shareholders Committee"
publicly vowed to attend the next annual meeting
and continue its "shareholder activity," and the
Union has continued its abusive practices in
connection with the 1995 Annual Meeting.
As evidence of the Union's substantial
manipulation of the three nominal proponents of
the Rule 14a-8 Proposals for its own ends, it is
worth noting that all three Rule 14a-8 Proposals
for the 1995 Annual Meeting were delivered to the
Company by courier in a single envelope bearing
the Union's legal counsel's address as the return
address. The transmittal letters accompanying the
three proposals were identical and we note that
the three statements in support of the proposals
have been written in the plural voice using such
terms as "it is our belief" and "we urge you to
vote for . . ." (emphasis added). Identical
letters setting forth proof of each proponent's
claim of eligibility were mailed together in a
single envelope containing the Union's address as
the return address. And, in additional
correspondence in support of the proposals, Mr. Ed
Durkin, one of three Union spokesmen at the 1994
Annual Meeting and co-chair of the Council of
Institutional Investors and director of special
programs at the United Brotherhood of Carpenters,
wrote on behalf of all of the proponents.
With respect to the individual nominal
proponents of the Rule 14a-8 Proposals, we note
that Messrs. Mounsey and Rodriguez were named as
members of the Union's "Shareholders Committee" in
the Union's proxy materials for the 1994 Annual
Meeting. Additionally, all three of the
proponents, each of whom has a small amount of
Avondale common stock allocated to his ESOP
account, have caused unfair labor practice charges
to be filed against the Company by the Union on
their behalf. In each case the charges allege
that the Company discriminated against the
proponent because of his Union membership and/or
activities. In the case of Messrs. Jack and
Rodriguez, these charges were withdrawn. In the
case of Mr. Mounsey, many charges have been filed
with the NLRB on his behalf by the Union against
the Company alleging that the Company
discriminated against or harassed Mr. Mounsey
because of his Union support and activity,
however, nearly all of these charges have been
withdrawn or the NLRB has refused to issue a
complaint on them.
The Company has opposed the Union because the
Board of Directors and management believe the
Union is not in the best interests of the
Company's employees or shareholders. The Company
believes that remaining non-union positively
contributes to its current competitive posture.
The Company's Board of Directors and management
believe that the goals of the Union, through the
activities of the so-called "Shareholders
Committee" in 1994 and through the foregoing
shareholders proposals of the Union's nominal
proponents and its Shareholders Committee in 1995,
are to attempt to discredit the Company's
management and weaken the Company's resolve in
opposing the Union. The Company is just one of
many companies that have recently been the target
of this union tactic of fostering proxy contests
or sponsoring so-called "reform resolutions,"
which the Company's Board of Directors and
management believe is an inappropriate way to
address labor matters.
It is apparent to your Board of Directors
that the proposals and the Union's corporate
campaign are not in any sense motivated by a
legitimate desire to advance your best interests
as a shareholder. Instead, the Union's tactics
are a misguided effort to pressure management to
accede to the Union's demands as well as to give
to the Company's employees the appearance that the
Union is actively working on their behalf. The
Board of Directors asks for your vote against each
of the five shareholder proposals in order to
discourage the Union from continuing to employ its
abusive tactics. However, in addition to
objecting to these proposals because they are
Union-sponsored, the Company's Board of Directors
and management also believe that each of the
proposals should be rejected by the shareholders
for the reasons set forth under the Company's
specific "Statements in Opposition" which
immediately follow each of the five proposals or,
as applicable, the proponent's statement in
support thereof.
SHAREHOLDER PROPOSALS SUBMITTED PURSUANT
TO RULE 14A-8 OF THE PROXY RULES
The following three shareholder proposals
were submitted by Messrs. Preston Jack, Donald
Mounsey and Steve Rodriguez, respectively, each of
whom has notified the Company that he is the
beneficial owner of more than $1,000 of the
Company's common stock and intends to remain a
beneficial holder of these shares through the date
of the 1995 annual meeting of shareholders.
Information regarding the addresses of each of
these shareholders will be furnished by the
Company to any person, orally or in writing as
requested, promptly upon the receipt of any oral
or written request therefor. For the reasons set
forth in its Statement in Opposition above and its
individual Statements in Opposition immediately
following each proposal, none of these proposals
is supported by the Board of Directors and the
Board of Directors unanimously urges you to vote
AGAINST each of the three proposals.
A. Shareholder Proposal Regarding Composition of
Compensation Committee (Item 2 on the
accompanying Proxy Card)
The resolution submitted by Mr. Jack is as
follows:
RESOLVED: To amend Section 5.2 and
Section 5.4 of Avondale Industries, Inc.'s
("Corporation") bylaws by replacing the
existing language with the following combined
Section:
5.2 Compensation Committee
The Board shall establish a
Compensation Committee consisting of
three independent directors. For these
purposes, the definition of independent
director shall mean a director who:
. has not been employed by the
Corporation or an affiliate in an
executive capacity within the last
five years;
. is not an employee of a corporation
or member of a firm that is one of
the Corporation's paid advisers or
consultants;
. is not employed by a significant
customer, supplier or provider of
professional services;
. has no personal services contract
with the Corporation;
. is not employed by a foundation or
university that receives
significant grants or endowments
from our Corporation;
. is not a relative of an executive
officer of the Corporation.
The Compensation Committee shall
determine the general compensation to be
paid to employees of the Corporation and
shall administer the Performance Share
Plan and the Stock Appreciation Plan.
Members of the Compensation Committee
shall be selected by the entire Board.
Shareholder's Supporting Statement
The methods and criteria for evaluating and
compensating managers sets the incentive structure
for how those managers will direct our Corporation
and therefore has a major impact on overall
Corporation performance. Accordingly, the
interests of shareholders are best served when
management compensation decisions are made by
independent-minded individuals free from potential
conflicts of interest.
Currently, Section 5.2 of our Corporation's
by-laws establishes a "Compensation Committee,"
composed of two directors, to determine "general
compensation" for employees and Section 5.4
establishes a "Stock Awards Committee," composed
of three directors, to administer the Performance
Share Plan and the Stock Appreciation Plan.
Section 5.2 and Section 5.4 both grant the
Chairman, President and CEO the sole authority to
appoint members of each of these committees.
Section 8.1 (Designations) of the by-laws provides
that the offices of Chairman, Chief Executive
Officer and President are to be held by a single
person, currently Al Bossier.
One of the members of both committees, Mr.
Anthony J. Correro, III, is a partner in the law
firm of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre which was paid $813,879 in 1993
by our Corporation for legal services rendered.
It is our opinion that Mr. Correro's presence on
these committees, based on his law firm's business
with the Corporation, raises fair questions about
this objectivity in making decisions concerning
Mr. Bossier's compensation.
It is our belief that our Corporation's
Chairman, Chief Executive Officer and President
should not be selecting the members of the Board
committees that determine executive compensation.
We believe that this selection process raises
potential conflicts of interest and compromises
the integrity of the management compensation
process. Accordingly, we contend that directors
who meet the standards of independence set for in
the above by-law amendment are best able to pass
judgment on the type and level of compensation for
executive officers.
Board of Directors' Statement in Opposition
Prior to receipt of the shareholder
proposals, the Company amended its bylaws to
provide that its Compensation Committee would
consist entirely of independent directors. The
Company's definition of independence is modeled on
Rule 16b-3 under the Securities Exchange Act of
1934 and Section 162(m) of the Internal Revenue
Code, both of which are legislative and regulatory
initiatives designed to foster the independence of
the compensation committee from management. The
Company's definition of independence excludes,
among others, any person who receives remuneration
from the Company, directly or indirectly, in any
capacity other than as a director, including
payments to an entity by which the director is
employed if the amount of such remuneration
exceeds the lesser of $60,000 or 5% of the gross
income of the employing entity. This definition
provides a clear and objective standard of
independence that achieves the goal of assuring
that the Compensation Committee has as its members
directors who are independent of management.
After it received the proposal, the Company made
the Union aware that it had already taken steps to
ensure the independence of its Compensation
Committee through its bylaw amendment but the
Union has continued to support its own proposal.
If the Board were to adopt the narrow definition
of independence proposed by the Union, it would be
precluded from appointing to its Compensation
Committee many persons who, precisely because of
their relationship with the Company, are often the
most knowledgeable and familiar with the Company
and its operations, and thus are in the best
position to advance the interests of the Company
and its shareholders.
Since September 1994, the Compensation
Committee has consisted solely of Mr. Hugh
Thompson and Vice Admiral Francis Donovan (U.S.
Navy Retired), both of whom meet the definition of
independence set forth in the by-laws. We note
that Mr. Jack's statement in support of his
proposal incorrectly states that Mr. Anthony J.
Correro, III is a member of the Company's
Compensation Committee.
B. Shareholder Proposal Regarding Shareholder
Rights Plan (Item 3 on the accompanying Proxy
Card)
The resolution submitted by Mr. Mounsey is as
follows:
RESOLVED: That the shareholders of
Avondale Industries, Inc. ("Company") urge
the Board of Directors to redeem the rights
issued pursuant to the Stockholder Protection
Rights Plan (unilaterally adopted by our
Board of Directors on September 26, 1994)
unless a majority of voting shares approve of
these rights at a meeting of shareholders
held as soon as is practical.
Shareholder's Supporting Statement
Our Company's Stockholder Protection Rights
Plan, commonly referred to as a "poison pill," is
an extremely powerful anti-takeover device that
was unilaterally adopted by Avondale Industries,
Inc.'s board of directors on September 26, 1994.
We believe anti-takeover defenses like poison
pills reduce shareholder value over the long-run
by (1) entrenching management, thus reducing the
ability of shareholders to replace management in
the event of poor performance; and (2) reducing
the probability that someone will make a bid for
Company shares at above market value.
While our Company's rights plan is written in
complicated legal jargon, it can be explained
quite simply. Absent a poison pill, a bidder for
our Company could make an offer to all
shareholders to buy their holdings at a fixed
price above the market value without the prior
approval of the board of directors. Shareholders
have the option to either accept the offer and
tender their shares or reject the offer if they
believe the premium offered is insufficient
compensation. With a poison pill in place, a
bidder must de facto receive the blessing of the
board of directors prior to making an offer to
shareholders. Absent that blessing, the board of
directors can declare the bidder unfriendly and
trigger the poison pill.
Avondale's poison pill will be triggered when
an "acquiring person" acquires 15% of our
Company's outstanding common stock. Once
triggered, the poison pill allows all
shareholders, EXCEPT THE ACQUIRING PERSON, to buy
shares of Company common stock at half the current
market price. This will dilute the value of the
acquiring person shareholdings by about 50%. This
threat of dilution poses such a risk to a bidder,
that they are forced to negotiate a takeover with
the board of directors.
The argument that a board of directors needs
a poison pill in order to negotiate a better offer
from bidders or prevent so-called "abusive
takeover practices" is deceptive. In 1986, the
Office of the Chief Economist of the U.S.
Securities and Exchange Commission issued a study
entitled The Effects of Poison Pills on the Wealth
of Target Shareholders that concluded "Poison
pills are not in the best interest of
shareholders."
We strongly believe that it is the
shareholders (who are the owners of the Company),
not the directors and managers (who merely act as
agents for the owners), who should have the right
to decide what is or is not a fair price for their
shareholdings. Our Company's poison pill takes
this decision away from shareholders by forcing
bidders to negotiate with the board.
We urge you to VOTE FOR THIS RESOLUTION.
Board of Directors' Statement in Opposition
In adopting a shareholder protection rights
plan (the "Rights Plan"), the Company's goal was
(and still is) to protect the interests of the
Company and all shareholders. The Rights Plan is
designed to protect against attempts to acquire
the Company for an inadequate price and to protect
against abusive practices that do not treat all
shareholders equally. Such practices can, and are
often intended to, pressure shareholders into
tendering their investments prior to realizing the
full value or total potential of such investments.
The Rights Plan is intended to create an incentive
for a potential acquiror to negotiate in good
faith with the Board. The Rights Plan is not
intended to, and will not, prevent unsolicited,
non-abusive offers to acquire the Company at a
fair price. The Rights Plan simply strengthens
the ability of the Board to fulfill its fiduciary
responsibilities to the Company's shareholders
because it provides the Board with the opportunity
to evaluate the fairness of any unsolicited offer
and the credibility of the bidder. Of course, in
deciding whether to redeem the rights in
connection with any unsolicited offer, the Board
will be bound by its fiduciary obligations to act
in the best interests of the Company and its
shareholders.
The Board of Directors adopted the Rights
Plan in September 1994 following its review of
comprehensive analytical materials presented to
the Board by a well-regarded independent
investment banking firm and special outside legal
counsel and a face-to-face presentation made by
such investment banking firm and legal counsel to
the Board. Based on such review and the
respective advice of such firms, the Board
believes that the adoption and continuing
existence of the Rights Plan is in the best
interests of the Company and shareholders and will
not deter a suitably-financed offer that is made
at a fair price to all shareholders. The success
of any such offer will of course depend on various
factors, including the source of the bidder's
financing. More than 1,000 U.S. corporations,
including other companies engaged in businesses
similar to the Company's, have adopted shareholder
protection plans similar to the Rights Plan,
including Western Atlas, Inc., Litton Industries
Inc., McDermott International Inc., McDonnell
Douglas Corp., Reebok International Ltd., Philip
Morris Cos. Inc., Georgia-Pacific Corp and Walt
Disney Co.
Under Louisiana law, the Board has the
responsibility to manage and direct the Company's
business and affairs, and the Board believes that
the adoption of the Rights Plan was a valid
exercise of that responsibility. The Board
believes that the decision to redeem the rights
should be made in the context of a specific
acquisition proposal. To do so at this time would
be to strip the Company's shareholders of
protection in the event of an unsolicited offer
and, in the Board's view, potentially reduce the
long-term value for all shareholders.
C. Shareholder Proposal Regarding Confidential
Voting (Item 4 on the accompanying Proxy
Card)
The resolution submitted by Mr.
Rodriguez is as follows:
RESOLVED: To amend Section 2.7 of
Avondale Industries, Inc.'s ("Corporation")
by-laws by adding the following language
after the existing language:
The voting of all proxies, consents and
authorizations be secret, and no such
document shall be available for examination
nor shall the vote or identity of any
shareholder be disclosed except to the extent
necessary to meet the legal requirements, if
any, of the Corporation's state of
incorporation. Further, the receipt,
certification and tabulation of such votes
shall be performed by independent election
inspectors.
Shareholder's Supporting Statement
It is the proponent's believe that it is
vitally important that a system of confidential
proxy voting be established at our Corporation.
Confidential balloting is a basic tenet of our
political electorial process that ensures its
integrity. The integrity of corporate board
elections should also be protected against
potential abuses given the importance of corporate
policies and practices to corporate owners and our
national economy.
The implementation of a confidential voting
system would enhance shareholder rights in several
ways.
First, absent confidential voting, incumbent
managers and directors have the power to review
incoming proxies prior to a tabulation of votes
and resolicit proxies from shareholders voting
against management. Independent board candidates
and shareholders submitting advisory proposals or
by-law changes are not allowed to see proxy votes.
This non-confidential system provides an unfair
advantage to incumbents.
Second, in protecting the confidentiality of
the corporate ballot, shareholders would feel free
to oppose management nominees and issue positions
without fear of retribution. This is especially
important for professional money managers whose
business relationships can be jeopardized by their
voting positions.
Finally, it is our belief that the
enhancement of the proxy voting process would
change the system where too often shareholders
vote "with their feet," not with their ballots.
This change would help to develop a long-term
investment perspective where corporate assets
could be deployed, and used in a more effective
and efficient manner.
Confidential voting is gaining popularity.
Approximately 156 major U.S. publicly-traded
companies had adopted confidential proxy voting
procedures for corporate elections. The list of
Fortune 500 companies with confidential voting
includes AT&T, U.S. West, American Express,
American Brands, Coca Cola, CitiCorp, Gillette,
Exxon, Sara Lee, J.P. Morgan, Bear Stearns,
General Electric, General Mills, General Motors,
Colgate-Palmolive, American Home Products,
Honeywell, Avon Products, 3M, Du Pont, Boeing,
Lockheed, Rockwell International, Amoco, Mobil,
Eastman Kodak, IBM, Xerox and many others. It's
time for our Corporation to do the same.
For the reasons outlined above, we urge you
to VOTE FOR THIS PROPOSAL.
Board of Directors' Statement in Opposition
The Board does not believe that the
implementation of this proposal is justified.
Under the terms of the ESOP, employees and other
participants in the ESOP already vote
confidentially, with their votes tabulated by a
"Big Six" auditing firm. The participant's voting
cards are returned directly to the auditing firm
and no information regarding how individual
participants vote is provided to the Company's
management. Moreover, any other shareholder
desiring to have his or her ownership and vote
confidential has a means readily available to do
so merely by placing his or her shares in a
nominee account. Thus, the Board of Directors
does not believe the adoption of a system of
confidential voting is warranted.
ADDITIONAL SHAREHOLDER PROPOSALS
On March 13, 1995, the Company was advised by
the UBC that a so-called "Shareholder Committee,"
which includes as its members the UBC, John Meese,
President of the AFL-CIO, and certain other
participants in the ESOP, would also present the
following two additional shareholder proposals for
a vote of the Company's shareholders at the 1995
Annual Meeting:
1. Shareholder Proposal Regarding
Declassification of the Board of
Directors (item 5 on the
accompanying Proxy Card); and
2. Shareholder Proposal Regarding
Bylaw Adoption, Amendment or Repeal
Process (item 6 on the accompanying
Proxy Card).
For the reasons set forth in its Statement in
Opposition above and in its individual Statements
in Opposition to each of these proposals set forth
below, neither of these proposals is supported by
the Board of Directors and the Board of Directors
unanimously urges you to vote AGAINST each of the
proposals, if they are presented at the Annual
Meeting.
Board of Directors' Statement in Opposition to
Board Declassification Proposal
The Company's Board is divided into three
classes of directors serving three-year staggered
terms, with one class being elected each year.
The Board believes the election of directors by
classes is advantageous to the Company and its
shareholders because, by providing that the
directors will serve three-year terms rather than
one-year terms, it enhances the likelihood of
continuity and stability in the composition of the
Board of Directors and in the policies formulated
by the Board. This, in turn, permits the Board to
represent more effectively the interests of all
shareholders, including responding to
circumstances created by demands or actions of a
single shareholder or a small group of
shareholders. Board classification is also
intended to deter any person seeking to acquire
control of the Company from initiating such action
through a surprise proxy contest designed to
result in a change of control of the Company in a
single election. Finally, the Board notes that
this provision of the Company's Articles of
Incorporation was approved by the Company's
shareholders in 1990 when they voted upon the
reincorporation of the Company in Louisiana.
Board of Directors' Statement in Opposition to
Bylaw Adoption, Amendment or Repeal Process
Proposal
The Board does not believe the implementation
of this proposal is justified. Currently the
Company's Articles and bylaws provisions regarding
bylaw amendments permit the bylaws to be adopted,
amended, or repealed by a majority of the Board,
subject to the power of the holders of 80% of the
voting power of the Company to amend or repeal any
bylaws so made. Other than the specific
percentage vote of the shareholders required, this
provision follows the Louisiana Business
Corporation Law. The Board believes that vesting
the Board of Directors with this authority,
subject to the right of a substantial majority of
shareholders to undo any bylaw provisions adopted
by the Board, strikes the appropriate balance
between shareholders and the Board regarding bylaw
amendments.
In so concluding, we note that the Louisiana
Business Corporation Law provides that the
business and affairs of a corporation is to be
managed by a board of directors, and the Board
believes it can best fulfill its statutory duties
and participate in the management and control of
the Company under the current bylaw amendment
process. The Board believes that in order to
properly discharge its responsibilities, it needs
the ability to effect amendments to the bylaws,
the set of rules governing the internal affairs of
the Company, without the limitations set forth in
the proposal, which would prevent the Board from
adopting bylaws with any lasting effect without
ratification by a vote of two-thirds of the total
voting power of the Company. Such a provision is
extremely unusual and cumbersome for a public
company and would unduly burden the Board in
exercising its statutory and fiduciary duties with
respect to the Company. In conjunction with the
broad management powers given to the Board by
Louisiana law, each member of the Board owes
fiduciary duties to the Company and its
shareholders. Under Louisiana law, members of the
Board may breach their fiduciary responsibility
even if they followed the expressed wishes of the
majority of shareholders. Because of this risk of
liability and the statutorily imposed duty of the
Board to manage the affairs of the Company, the
Board believes it requires the degree of
independence of decisions and discretion regarding
changes to the Company's bylaws currently
existing. Additionally, this provision of the
Company's Articles of Incorporation was approved
by the Company's shareholders in 1990 when they
voted upon the reincorporation of the Company in
Louisiana.
OTHER MATTERS
Quorum and Voting of Proxies
The presence, in person or by proxy, of a
majority of the outstanding shares of Common Stock
of the Company is necessary to constitute a
quorum. If a quorum is present, directors will be
elected by plurality vote and the vote of a
majority of the shares of Common Stock present or
represented at the Annual Meeting will decide all
other questions properly brought before such
meeting. If a quorum is not present, those
shareholders present may adjourn the meeting to
such time and place as they may determine;
however, with respect to the election of
directors, the meeting may be adjourned only from
day to day until such directors are elected.
Those shareholders who attend the second of such
adjourned meetings will constitute a quorum for
the purpose of electing directors.
All proxies in the form enclosed that are
received by the Board of Directors will be voted
as specified and, in the absence of instructions
to the contrary, will be voted for the election of
the nominees named above and against each of the
five shareholder proposals.
Shares as to which proxy authority to vote
for any nominee for election as a director is
withheld by a shareholder and shares that have not
been voted by brokers who hold shares on behalf of
the beneficial owner ("broker non-votes") will not
be counted as voted for any affected nominees.
With respect to any matter other than the election
of directors that is properly before the Annual
Meeting, abstentions will have the effect of a
vote against the proposal and broker non-votes
will be counted as not present with respect to the
proposal.
The Board of Directors does not know of any
matters to be presented at the Annual Meeting
other than the election of directors and the five
shareholder proposals. However, if any other
matters properly come before the meeting or any
adjournment thereof, it is the intention of the
persons named in the enclosed proxy to vote the
shares represented by them in accordance with
their best judgment.
Independent Public Auditors
The Board of Directors has appointed Deloitte
& Touche LLP as independent auditors of the
Company for the fiscal year ended December 31,
1995. Deloitte & Touche LLP and its predecessors
have served as the Company's auditors since 1987.
Representatives of Deloitte & Touche LLP are
expected to be present at the Annual Meeting. They
will have the opportunity to make a statement if
they desire to do so and will be available to
respond to appropriate questions.
Shareholder Proposals for 1996 Annual Meeting
Any shareholder who desires to present a
proposal qualified for inclusion in the Company's
proxy materials relating to the 1996 annual
shareholders' meeting must forward the proposal to
the Secretary of the Company at the address shown
on the first page of this Proxy Statement in time
to arrive at the Company prior to November 30,
1995.
BY ORDER OF THE BOARD OF DIRECTORS
Thomas M. Kitchen
Secretary
Avondale, Louisiana
April 3, 1995
<PAGE>
AVONDALE INDUSTRIES, INC.
POST OFFICE BOX 50280
AVONDALE, LOUISIANA 70150
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AVONDALE INDUSTRIES, INC.
The undersigned hereby appoints Bruce L. Hicks and Kenneth
G. Myers, Jr., or either of them, as proxies, each with full
power of substitution, and hereby authorizes each of them to
represent and to vote, as designated below, all shares of common
stock of Avondale Industries, Inc. held of record by the
undersigned on March 21, 1995 at the annual meeting of
shareholders to be held on April 28, 1995, or any adjournment
thereof.
COMPANY PROPOSALS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES LISTED BELOW:
1. Election of Directors
[ ] FOR all nominees listed below (except [ ] WITHHOLD AUTHORITY
as marked to the contrary below) to vote for all
nominees listed
below
INSTRUCTIONS: To withhold authority to vote for any nominee, strike a line
through the nominee's name listed below.
Francis R. Donovan William A. Harmeyer Thomas M. Kitchen
SHAREHOLDER PROPOSALS
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST SHAREHOLDER PROPOSALS
2 THROUGH 6, BY CHECKING THE BOX MARKED "AGAINST."
2. Composition of Compensation Committee Proposal
[ ] AGAINST [ ] FOR [ ] ABSTAIN
3. Shareholder Rights Plan Proposal
[ ] AGAINST [ ] FOR [ ] ABSTAIN
4. Confidential Voting Proposal
[ ] AGAINST [ ] FOR [ ] ABSTAIN
5. Board of Directors Declassification Proposal
[ ] AGAINST [ ] FOR [ ] ABSTAIN
6. By-Law Adoption, Amendment or Repeal Proposal
[ ] AGAINST [ ] FOR [ ] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTIONS
ARE GIVEN, THIS PROXY WILL BE VOTED FOR ALL OF THE DIRECTOR
NOMINEES NAMED ABOVE AND AGAINST PROPOSALS 2 THROUGH 6. THE
PROXY HOLDERS NAMED ABOVE WILL VOTE IN THEIR DISCRETION ON ANY
OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
THE UNDERSIGNED HEREBY REVOKES ANY PRIOR PROXY HERETOFORE GIVEN
TO ANY PERSON OR PERSONS.
Date: ____________________, 1995
_____________________________________
Signature of Shareholder
_____________________________________
Additional Signature, if held jointly
PLEASE SIGN EXACTLY AS NAME APPEARS
HEREON. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS
SUCH. IF A CORPORATION, PLEASE SIGN
FULL CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
VOTING INSTRUCTIONS
The undersigned hereby directs the Administrative Committee
of the Avondale Industries, Inc. Employee Stock Ownership Plan
(the "ESOP") to instruct R. Dean Church, Rodney J. Duhon, Jr. and
Blanche S. Barlotta, as trustees of the Avondale Industries, Inc.
Employee Stock Ownership Trust, to vote, as designated below, all
shares of common stock of Avondale Industries, Inc. held by such
Trust for the account of the undersigned on March 21, 1995 at the
annual meeting of shareholders to be held on April 28, 1995, or
any adjournment thereof.
COMPANY PROPOSALS
NOMINEES PROPOSED FOR ELECTION BY THE BOARD OF DIRECTORS:
1. Election of Directors
[ ] FOR [ ] ABSTAIN
all nominees listed below (except as marked to the contrary below)
INSTRUCTIONS: To direct an "ABSTAIN" as to any individual nominee, strike
a line through the nominee's name in the list below.
Francis R. Donovan William A. Harmeyer Thomas M. Kitchen
SHAREHOLDER PROPOSALS
2. Composition of Compensation Committee
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Shareholder Rights Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Confidential Voting
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Board of Directors Declassification
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. By-Laws Adoption, Amendment or Repeal Proposal
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Upon receipt of these instructions properly executed, the
________ Shares allocated to the account of the undersigned
participant will be voted in the manner directed. If no specific
directions are given as to any one or more items, such Shares
will not be voted as to such items.
Date: ____________________, 1995
__________________________________
Signature of Participant
__________________________________
Name: (Please Print)
Please mark, sign, date and return
these Voting Instructions promptly
using the enclosed postpaid return
envelope.
ONLY INSTRUCTIONS GIVEN ON THIS FORM
WILL BE FOLLOWED. ANY OTHER
INSTRUCTIONS WILL BE DISREGARDED.
