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 Only (as permitted
[X] Definitive Proxy Statement 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):
[X] $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:
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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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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
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fee was paid previously. Identify the previous filing by
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Notes:
Avondale Industries, Inc.
5100 River Road
Avondale, Louisiana 70094
______________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
______________________________
TO THE 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 26, 1996, in the main conference room on the second
floor of the Company's Administration Building, 5100 River Road,
Avondale, Louisiana, to elect two directors, to consider such of
the four 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 19, 1996 (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
March 28, 1996
Avondale Industries, Inc.
5100 River Road
Avondale, Louisiana 70094
March 28, 1996
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 26, 1996, 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 shares of common stock of the
Company ("Common Stock") at the close of business on March 19,
1996 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 March 28, 1996, 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 elected at each annual shareholders' meeting. The term
of one class of two directors expires at the Annual Meeting.
Accordingly, proxies cannot be voted for more than two persons.
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 persons who have been
proposed for election by the Board of Directors. In accordance
with the Company's By-laws, if either 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 will 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 4, 1996, including
their beneficial ownership of shares of Common Stock as
determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934 (the "Exchange Act"). 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:
Number of
Name, Age, Principal Occupation Nominated Shares
and Directorships in For Term Director Beneficially
Other Public Corporations Expiring Since Owned<F1>
_______________________________ ________ _____ _________
Anthony J. Correro, III, 54 1999 1988 500
Partner, Correro, Fishman &
Casteix, L.L.P. (law firm)<F2>
Kenneth B. Dupont, 57 1999 1987 38,943<F4>
Vice President of the Company;<F3>
The Board of Directors recommends a vote
FOR each of the proposed nominees.
Other Directors:
Number of
Name, Age, Principal Occupation Serving Shares
and Directorships in Term Director Beneficially
Other Public Corporations Expiring Since Owned<F1>
_______________________________ ________ _____ _______
Albert L. Bossier, Jr., 63 1997 1985 269,879<F5>
Chairman of the Board, Chief
Executive Officer, and
President of the Company<F3>
Hugh A. Thompson, 61 1997 1988 2,500
Professor, School of Engineering,
Tulane University
Vice Admiral Francis R. Donovan, 61 1998 1994 --
Retired, U.S. Navy; Strategic
Mobility Coordinator, PRC Inc.<F6>
William A. Harmeyer, 75 1998 1993 500
Retired; Vice President of the
Company until 1986
Thomas M. Kitchen, 48 1998 1987 121,261<F7>
Vice President, Chief Financial
Officer and Secretary of the
Company<F3>
All directors and executive officers 433,583
as a group (7 persons)
_______________________
[FN]
<F1> 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 433,583 shares of Common Stock beneficially owned by all
of the Company's directors and executive officers as a group
constitute approximately 3.0% of the outstanding Common
Stock.
<F2> 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.
<F3> Messrs. Bossier, Kitchen and Dupont are the executive
officers of the Company for whom compensation information is
disclosed in this Proxy Statement.
<F4> Includes 8,739 shares allocated to Mr. Dupont's Avondale
Employee Stock Ownership Plan ("ESOP") account and 17,000
shares that he has the right to acquire under currently
exercisable stock options.
<F5> Includes 18,499 shares allocated to Mr. Bossier's ESOP
account and 139,961 shares that he has the right to acquire
under currently exercisable stock options.
<F6> Until August 31, 1992, Admiral Donovan was on 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., an information technology company.
<F7> Includes 9,284 shares allocated to Mr. Kitchen's ESOP
account and 59,160 shares that he has the right to acquire
under currently exercisable stock options.
During 1995, the Board of Directors held six regular
meetings and three special meetings. Each director of the
Company attended at least 75% of the aggregate number of meetings
held during 1995 of the Board and any committees of which he was
a member. 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. In addition to
the foregoing directors' fees, 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 Audit Committee
met twice during 1995. The Board also has a Compensation
Committee, of which Admiral Donovan and Mr. Thompson are members,
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
Compensation Committee met three times during 1995.
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 set forth in 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 residential 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
Exchange Act. 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 4, 1996,
more than five percent of the Common Stock, calculated in
accordance with Rule 13d-3 under the Exchange Act. Unless
otherwise indicated, all shares indicated as beneficially owned
are held with sole voting and investment power.
Number of Shares
Name and Address Beneficially Owned Percent of Class
Blanche S. Barlotta, R. Dean 3,241,249<F1> 22.4%
Church and Rodney J. Duhon, Jr.,
as Trustees of the Avondale
Employee Stock Ownership Trust
P. O. Box 50280
New Orleans, Louisiana 70150
Pioneering Management Corporation 1,377,000<F2> 9.5%
60 State Street
Boston, Massachusetts 02109-1820
Gruber & McBaine Capital Management 767,500<F3> 5.3%
50 Osgood Place
San Francisco, CA 94133
____________
[FN]
<F1> The right to vote shares allocated to an ESOP participant's
account is passed through to the participant. There are
currently no unallocated shares other than a nominal number of
shares that have been forfeited by participants since January
1, 1996. 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 three 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.
<F2> 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.
<F3> Based solely upon information provided by Gruber & McBaine
Capital Management, Inc., an investment adviser registered
under the Investment Advisers Act of 1940.
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
Annual
Compensation
Name and All Other
Principal Positions Year Salary Bonus Compensation
___________________ ____ ______ _____ ____________
Albert L. Bossier, Jr. 1995 $643,632 $216,196 10,820<F1>
Chairman of the Board, 1994 621,864 46,640 12,425
Chief Executive Officer 1993 543,224 0 17,384
and President
Thomas M. Kitchen 1995 301,152 101,157 8,595<F2>
Vice President, Chief 1994 290,952 21,821 10,080
Financial Officer and 1993 254,179 0 13,551
Secretary
Kenneth B. Dupont 1995 225,768 75,835 5,785<F3>
Vice President 1994 218,112 16,358 3,329
1993 190,526 0 4,145
______________________________
[FN]
<F1> Consists of $2,020 in medical expense reimbursement and
$8,800 in group life and disability insurance premiums.
<F2> Consists of $1,495 in medical expense reimbursement and
$7,100 in group life and disability insurance premiums.
<F3> Consists of $685 in medical expense reimbursement and
$5,100 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 1995 and unexercised options and stock appreciation rights
on December 31, 1995.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION> Number of securities Value of Unexercised
underlying unexercised In-the-Money Options/SARs
Shares options/SARs at 12/31/95 at 12/31/95
acquired Value ________________________ ___________
Name on exercise realized Exercisable<F1> Unexercisable Exercisable Unexercisable
____ ___________ ________ ___________ _____________ ___________ _____________
<S> <C> <C> <C> <C> <C> <C>
Albert L. Bossier, Jr. 19,890 $130,241 139,961 0 $2,486 $ 0
Thomas M. Kitchen 8,840 57,885 59,160 0 1,105 0
Kenneth B. Dupont 0 0 17,000 0 20,549 0
</TABLE>
______________________________
[FN]
<F1> 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").
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 not subject to
reduction for Social Security but 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.
AVONDALE INDUSTRIES, INC.
Estimated Annual Retirement Benefits
(Before Reduction for ESOP Benefits)
<TABLE>
<CAPTION>
Average Years of Service
Annual _________________________________________________________________________
Earnings 15 years 20 years 25 years 30 years 35 years 40 years
________
<S> <C> <C> <C> <C> <C> <C>
$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
900,000 337,500 405,000 472,500 540,000 607,500 675,000
950,000 356,250 427,500 498,750 570,000 641,250 712,500
</TABLE>
Compensation covered by the plans consists of salary, bonus
and an 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 39, 18 and 32 years of service,
respectively, under each of the plans.
Employment and Change in Control 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 base salaries and for annual
bonuses as determined by the Board of Directors. The term of the
Employment Agreements has been extended to December 31, 1998.
After December 31, 1998, 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, 1998 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 year 1993 Mr. Bossier waived his rights under
this provision and did not receive a bonus. For fiscal year 1995
and for any year for which the Management Incentive Plan adopted
by the Compensation Committee in early 1995 is in effect, Mr.
Bossier has waived his rights under this provision with the
understanding that he would instead receive the bonus that he may
become entitled to receive under the terms of such Plan.
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 $1,471,035, $1,238,895 and $928,842, 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 Internal Revenue
Code, the Company has agreed to pay to him the fair market value
of such shares upon termination of his employment.
On January 19, 1996, the Company entered into change in
control agreements with its executive officers, Albert L.
Bossier, Jr., Thomas M. Kitchen and Kenneth B. Dupont. The
agreements provide for the payment of certain benefits upon an
involuntary or constructive termination of the officers'
employment, except for cause, within three years following a
change in control. Benefits payable under the change in control
agreements include a cash payment in an amount equal to three
times salary plus bonus, continued health and life insurance
benefits for three years after termination and accelerated
vesting under the Company's supplemental retirement plans. To
the extent payments are made under these change in control
agreements, no severance payments will be made under the
Employment Agreements.
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 has 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.
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
1995:
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.
As disclosed under the heading "Executive Compensation -
Employment and Change in Control Agreements," each of the
Company's three executive officers has an employment agreement
with the Company that, as extended by the Committee in December
1995, may not be terminated prior to December 31, 1998 and that
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 during the
immediately preceding year. The decision by the Committee in
December 1995 to extend the contracts recognized such persons'
significant contributions to the improvement in the Company's
financial position and performance during 1995, evidenced by the
successful procurement of additional shipbuilding firm backlog
from the U.S. Navy and commercial ship owners, the significant
improvement in the Company's profitability and the substantial
increase in shareholder value during 1995. The Committee also
believes that the extension of the Employment Agreements will
assure that the Company will continue to benefit from this
management group's experience in order to meet future challenges
and opportunities in the shipbuilding industry, including
opportunities for the Company to participate in the next
generation of significant shipbuilding initiatives of the U.S.
Navy.
Compensation paid to the three executive officers during
1995 essentially consisted of two components, annual salary and a
performance-based cash bonus payable pursuant to a Management
Incentive Plan adopted by the Committee in early 1995 in which
the executive officers participate. With respect to salaries,
the named executive officers were given an increase of
approximately 3.5% during 1995, reflecting a cost of living
adjustment. The bonuses paid to the executive officers were
calculated as a percentage of base salary in accordance with a
formula established by the Committee at the beginning of 1995.
The formula for 1995 was based on the Company achieving certain
targets with respect to the following criteria (in order of
weight given by the Committee): operating profit less interest
charges, profit estimates at completion, direct man hour
estimates at completion, direct material estimates at completion
and composite labor rates. The formula called for the bonus to
be earned by the executive officers in increments of 1% of their
base salary based on their degree of success in achieving these
goals. It was anticipated that if all of the targets established
at the beginning of 1995 were achieved that the bonuses payable
to the executive officers would have been 25% of their respective
base salaries. However, the Company exceeded the targets
established in the beginning of 1995, and application of the
formula resulted in a corresponding increase in the bonus paid to
approximately 33% of their respective base salaries. For future
years, the Committee may establish different performance goals,
criteria and formulas for calculation of the bonus.
Although no stock options or other stock based awards were
granted to executive officers in 1995, each of the executive
officers continues to hold stock options granted in earlier
years.
Under Section 162(m) of the Internal Revenue Code, publicly
held companies may be prohibited from deducting as compensation
expense for federal income tax purposes total compensation paid
in a single year to certain executive officers that is in excess
of $1 million. When making its future compensation decisions,
the Compensation Committee intends to consider the effects of
Section 162(m) 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, 1990 to December 31, 1995 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, 1990 at the
closing price on that date and reinvestment of dividends. The
peer group index consists of Bethlehem Steel Co., General
Dynamics Corp., Litton Industries, Inc., 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.
[Performence Graph Here]
Cummulative Total Shareholder Return
INDEX December 31,
______ ________________________________________________
1991 1992 1993 1994 1995
____ ____ ____ ____ ____
The Company 70.21 40.43 125.53 131.91 246.81
Pear Group 90.00 132.16 208.79 186.82 227.53
NASDAQ 160.56 186.87 214.51 209.69 296.30
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 one of the partners, was paid $690,805
in 1995 by the Company for legal services rendered.
Section 16(a) of the Exchange Act requires the Company's
directors, executive officers and 10% shareholders to file with
the Securities and Exchange Commission initial reports of
beneficial ownership, and changes in beneficial ownership, of the
Common Stock of the Company. Mr. Eugene E. Blanchard, a member
of the Administrative Committee of the ESOP, inadvertently filed
late a Statement of Changes in Beneficial Ownership on Form 4 to
report the sale of 1,353 shares of Common Stock in the month of
November 1995.
SHAREHOLDER PROPOSALS
Set forth under this heading are four shareholder proposals,
all of which are unanimously opposed by the Company's Board of
Directors. As noted in further detail below all of these
proposals were submitted to the Company pursuant to Rule 14a-8 of
the Exchange Act, 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.
Your Board of Directors unanimously recommends a vote AGAINST
each of the shareholder proposals.
STATEMENT BY THE BOARD OF DIRECTORS IN
OPPOSITION TO ALL FOUR SHAREHOLDER PROPOSALS
The proposals submitted under Rule 14a-8 (the "Rule 14a-8
Proposals"), and the statements in support thereof, were
submitted by four Company employees, Messrs. Donald Mounsey,
Steve Rodriguez, Roger McGee, Sr. and Angus Fountain, each of
whom holds his shares of the Company's Common Stock as a
participant in the Avondale Employee Stock Ownership Plan (the
"ESOP"). All four of the proposals submitted for the 1996 Annual
Meeting are substantially identical to proposals submitted by the
same nominal proponents for the 1995 Annual Meeting (and two of
them are also substantially identical to proposals submitted by a
"Shareholders Committee" for the 1994 Annual Meeting), and all
were overwhelmingly rejected by the Company's shareholders at the
1994 and 1995 Annual Meetings. The Board believes that the
submission of these four proposals is a continuation of the
"corporate campaign" waged against the Company by 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"), and follows
upon similar campaigns sponsored by the Union during the
Company's last two Annual Meetings.
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, the Board believes that in 1994 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, and that in 1995
the Union was behind the submission by five nominal shareholders
and the same "Shareholders Committee" of five shareholder
proposals at the Company's 1995 Annual Meeting.
The Board of Directors unanimously opposes each of the four
shareholder proposals that are described below. The specific
"corporate governance" reasons for the Board's opposition to
these proposals are set forth under the heading "Board of
Directors' Statement in Opposition" that follows each of the
proposals. However, the Board of Directors also believes that
the continuing sponsorship of these resolutions by the Union has
everything to do with the Union's frustration over the continuing
status of the Company as a non-union shipyard, and, very little,
if anything, to do with the promotion of shareholder interests.
Each of these proposals attempts to undermine the authority of
the Board of Directors to manage the Company, and thereby
diminish the ability of the Board to deal resolutely with the
Union. The Board believes that it is the Union's hope that
success in obtaining support for any of the four proposals will
demonstrate a lack of confidence by the Company's shareholders in
the Board of Directors. While the Board of Directors believes
that it has the support of the overwhelming majority of its
shareholders, it believes it is appropriate to briefly review
some of the Company's more recent significant achievements that
the Union has conveniently ignored.
During 1994 and 1995, the Company achieved an impressive
return to profitability that was translated into an increased
stock price of the Company that is reflected in the Performance
Graph elsewhere in this Proxy Statement. In addition, the
Company secured a firm backlog of $1.4 billion as of December 31,
1995, and recently completed a $20 million plant modernization
program to enhance the Company's ability to obtain contracts to
build and deliver vessels at a lower, more competitive cost. In
addition, a highly successful secondary offering of 3,581,000
shares of the Company's Common Stock by the ESOP for $15.75 per
share was recently completed. As a result of this offering, the
Company's employees continue to have a significant ownership
stake in the Company while also having a substantial portion of
their retirement benefit now invested in a diversified investment
portfolio.
With a substantial portion of the Company's firm backlog
scheduled for completion by 1998, it is important that the
Company be a competitive bidder as new opportunities are
presented in order to maintain its current level of shipbuilding
activity beyond 1998. To that end, 1996 will be an important
year for the Company's management, shareholders and employees to
work together to continue the Company's success.
The Company's industry is highly competitive and it is the
Board's firm belief that remaining non-Union has been and
continues to be a significant competitive advantage. If the
Union is certified and the Company is compelled by federal labor
law to bargain in good faith with the Union, it will only agree
to bargaining demands that can be economically justified.
However, Union certification may result in an increased risk that
the Union will engage in potentially disruptive activities such
as strikes or picketing, or that the Company may incur higher
labor and operating costs that will impair the Company's
competitive position. In fact, such a strike has been recently
publicized with respect to one of the Company's unionized
competitors. The Company believes that this strike was in
response to the competitor's publicized efforts to reduce labor
costs to improve its competitive posture.
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 the best interests of the
Company's shareholders. 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
four shareholder proposals in order to discourage the Union from
continuing to employ its abusive tactics. However, in addition
to objecting to these proposals because the Board believes they
are Union-sponsored, the 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 four proposals and the proponent's statement in support
thereof.
SHAREHOLDER PROPOSALS
The following four shareholder proposals were submitted by
Messrs. Donald Mounsey, Steve Rodriguez, Roger McGee, Sr. and
Angus Fountain, 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 1996 Annual
Meeting. 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 four proposals.
A. Shareholder Proposal Regarding Shareholder Rights Plan
(Item 2 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 would make an offer to all
shareholders to buy their holdings at a fixed price above the
market value. 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 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
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 Corporation, Reebok International, Inc.,
Philip Morris Companies Inc., Georgia Pacific Corporation,
General Dynamics Corporation, Lockheed Corp., Martin Marietta
Corporation, Tenneco, Inc. 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.
B. Shareholder Proposal Regarding Confidential Voting
(Item 3 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. Any 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. Additionally, the Board believes that it is to the
Company's benefit that the Board have the ability to know the
opinion of the Company's major shareholders on important
initiatives because it enables the Board to better communicate
with the Company's shareholders with respect to initiatives it
deems important to the Company and its shareholders as a whole,
as well as to better understand the reasons for any opposition to
such initiatives by major shareholders. Moreover, 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. Finally, the Board believes that the proponent's
expressed concern that the absence of confidential voting
protection has a potentially chilling effect on the free exercise
of voting rights by the Company's shareholders is naive and
misplaced. It has not been the experience of the Company's
management that its shareholders are reluctant to communicate
with management because of the absence of confidential voting
procedures. Thus, the Board of Directors does not believe the
adoption of a system of confidential voting is warranted.
C. Shareholder Proposal Regarding Board Declassification
(Item 4 on the accompanying Proxy Card)
The resolution submitted by Mr. McGee, Sr., is as follows:
RESOLVED: To amend Section 3.3 of Avondale Industries,
Inc.'s ("Company") bylaws by replacing existing language
with the following:
All directors shall stand for election annually.
Shareholder's Supporting Statement
Avondale Industries currently divides its board into three
classes. Each class of directors have three year terms and the
terms are staggered so that only one-third of the board of
directors is elected at any given time.
The election of corporate directors is the primary avenue in
the American corporate governance system for shareholders to
influence corporate affairs and exert accountability on
management. We strongly believe that our Company's financial
performance is closely linked to its corporate governance
policies and procedures, and the level of management
accountability they impose. Therefore, as shareholders concerned
about the value of our investment, we are very disturbed by our
Company's current system of electing only one-third of the board
of directors each year. We believe this staggering of director
terms prevents shareholders from annually registering their views
on the performance of the board collectively and each director
individually.
Concerns that the annual election of all directors would
leave our Company without experienced Board members in the event
that all incumbents are voted out is unfounded. If the owners
should choose to replace the entire board, it would be obvious
that the incumbent directors' contributions were not valued.
Most alarming is that the staggered Board can help insulate
directors and senior executives from the consequences of poor
performance by denying shareholders the opportunity to replace an
entire Board which is pursuing failed policies. Regardless of
whether you believe the current Board and management team is
performing satisfactorily or not, we believe it is clearly in the
best interest of the Company and its shareholders that a process
be in place that allows shareholders to take definitive action if
they believe the Board is failing to realize the full potential
of the Company's assets.
We believe that allowing shareholders to annually register
their views on the performance of the Board collectively and each
director individually is one of the best method's to insure that
our Company will be managed in the best interests of the
shareholders.
We urge you to VOTE FOR THIS RESOLUTION.
Board of Directors' Statement in Opposition
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, a
stability that has been fundamental in the Company's restored
financial health. Stability and continuity at the Board level
also 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 points out that this provision is contained not only in the
Company's By-laws but also in its Articles of Incorporation and
that the shareholder proposal, by seeking only an amendment to
the Company's By-laws, would result in a direct conflict between
the Company's Articles of Incorporation and By-laws which would
be unlawful under the Louisiana Business Corporation Law.
Moreover, 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 re-incorporation of
the Company in Louisiana.
D. Shareholder Proposal Regarding Articles of Incorporation and
By-law Adoption, Amendment and Repeal Process (Item 5 on the
accompanying Proxy Card)
Mr. Fountain's proposal is as follows:
RESOLVED: The shareholders of Avondale Industries,
Inc. ("Company") urge the Board of Directors to amend the
Company's articles of incorporation and by-laws to include
the following procedures in the articles of incorporation
and by-law amendment processes:
Shareholders may propose the adoption of new amendments
or bylaws
The shareholder vote required for passage is lowered
from three quarters to two-thirds of the total voting
power
The Board of Directors is prohibited from amending or
repealing article or by-law changes that received the
affirmative vote of two-thirds of the total voting
power for a period of one year following such vote.
Shareholder's Supporting Statement
Our Company's articles of incorporation and by-laws help
define the legal rights, responsibilities and relationships
between directors, officers and shareholders. Over the past few
years, Avondale's directors and officers have opposed efforts by
shareholders to enact corporate governance reforms such as
confidential proxy voting, the annual election of all directors,
redemption of its anti-takeover defense commonly called a "poison
pill," and requirements that a majority of the Board of Directors
be composed of "independent" directors defined as those without
personal or financial dealings with the Company. Fortunately,
shareholders advocacy has helped prompt a removal of the Chairman
and CEO from the Board's Compensation Committee and a
reconstitution of the Committee with independent directors.
Under the current by-law and article amendment process,
shareholders are virtually powerless to affect change at the
Company. The three-fourths vote requirement for passage of an
article or by-law amendment is an extremely difficult requirement
to meet in the face of Board opposition. We believe a two-thirds
vote requirement to adopt a new by-law or article or to amend or
revoke a current provision would be fair to all shareholders.
Further, since the Board of Directors has the power to change the
articles or by-laws through unanimous action, any change voted in
by two-thirds of the shareholders may be reversed instantly by
the Board. Accordingly, the proposal recommends that the Board
of Directors be prohibited for a period of one year from amending
or repealing an article or by-law adopted by a two-thirds or
greater vote of shareholders.
Board of Directors' Statement in Opposition
The Board does not believe the implementation of this
proposal is justified. Currently the Company's Articles of
Incorporation provision regarding amendments to the Articles of
Incorporation generally requires any such amendment or repeal to
be approved by the holders of at least 80% of the total voting
power of the Company unless such amendment or repeal has been
recommended by the Board of Directors, in which case the
affirmative vote of the holders of only a majority of the voting
power present is required. The Board believes that this
provision is in the best interests of the Company and its
shareholders because it ensures that any proposed amendment to
the Company's Articles of Incorporation that is not supported by
the Board of Directors must receive the support of a significant
percentage of the Company's shareholders before it will be
adopted.
The provisions of the Company's Articles and By-laws
regarding By-law amendments permit the By-laws 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 By-laws so made. Other than the specific
percentage vote of the shareholders required, these provisions
follow 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 By-law provisions adopted by the Board, strikes the
appropriate balance between shareholders and the Board regarding
By-law amendments.
In so concluding, we note that the board of directors of a
Louisiana corporation is vested under the law with the
responsibility for managing the business and affairs of the
corporation, and the Board believes it can best fulfill its
statutory duties and participate in the management and control of
the Company under the current Articles and By-law amendment
process. 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 follow the expressed wishes of the
majority of the Company's 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 Articles and By-laws currently existing.
Additionally, these provisions of the Company's Articles of
Incorporation were 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,
(a) directors will be elected by plurality vote;
(b) the Shareholder Proposals proposing amendments to
the Company's By-laws with respect to:
(i) Confidential Voting (Item 3), and
(ii) Board Declassification (Item 4)
must receive the affirmative vote of 80% of the total outstanding
Common Stock; and
(c) (i) the Shareholder Proposal urging the Board of
Directors to redeem the Shareholder Rights
Plan (Item 2),
(ii) the Shareholder Proposal urging the Board of
Directors to adopt amendments to the
Company's Articles of Incorporation and By-
laws with respect to Articles and By-law
Adoption, Amendment and Repeal Process (Item
5), and
(iii)any other matters properly brought before
such meeting
must receive the approval of a majority of the shares of Common
Stock present or represented at the Annual 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 four
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 or any of the
Shareholder Proposals. With respect to each of the Shareholder
Proposals identified as Items 3 and 4, that require the
affirmative vote of 80% of the outstanding Common Stock in order
to be adopted, abstentions and broker non-votes will have the
effect of a vote against the proposal, and with respect to the
Shareholder Proposals identified as Items 2 and 5 and any other
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 and therefore will not
have an effect on the outcome of the vote with respect to such
proposals.
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 four 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, 1996. 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 1997 Annual Meeting
Any shareholder who desires to present a proposal qualified
for inclusion in the Company's proxy materials relating to the
1997 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 28, 1996. The Company's By-laws also require
any shareholder who desires to present a proposal before the 1997
annual shareholders' meeting to notify the Secretary of the
Company of such intent no later than November 28, 1996.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Thomas M. Kitchen
Thomas M. Kitchen
Secretary
Avondale, Louisiana
March 28, 1996
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 19, 1996 at the annual meeting of
shareholders to be held on April 26, 1996, or any adjournment
thereof.
COMPANY PROPOSALS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR BOTH 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.
Anthony J. Correro, III Kenneth B. Dupont
SHAREHOLDER PROPOSALS
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST SHAREHOLDER
PROPOSALS 2 THROUGH 5, BY CHECKING THE BOX MARKED "AGAINST."
2. Shareholder Rights Plan Proposal
[ ]AGAINST [ ]FOR [ ]ABSTAIN
3. Confidential Voting Proposal
[ ]AGAINST [ ]FOR [ ]ABSTAIN
4. Board of Directors Declassification Proposal
[ ]AGAINST [ ]FOR [ ]ABSTAIN
5. Articles of Incorporation and By-Law Adoption, Amendment and Repeal
Process 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 BOTH OF THE
DIRECTOR NOMINEES NAMED ABOVE AND AGAINST PROPOSALS 2 THROUGH
5. 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:____________________, 1996
_____________________________________________
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.
