<PAGE>
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 the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PRAXAIR, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[PRAXAIR LOGO]
39 Old Ridgebury Road
Danbury, Connecticut 06810-5113
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 29, 1997
Dear Praxair Shareholder:
The Annual Meeting of Shareholders of Praxair, Inc. will be held at 9:30
a.m. on Tuesday, April 29, 1997 in the Grand Ballroom of the Danbury Hilton and
Towers, 18 Old Ridgebury Road, Danbury, Connecticut, for the following
purposes:
1. To elect five directors to the Board of Directors.
2. To conduct such other business as may properly come before the
meeting.
Only holders of Common Stock of Praxair, Inc. of record at the close of
business on March 3, 1997 will be entitled to vote at the meeting or any
adjournment thereof.
TO BE SURE THAT YOUR VOTE IS COUNTED, WE URGE YOU TO COMPLETE AND SIGN AND
DATE THE PROXY/VOTING INSTRUCTION CARD ENCLOSED IN THIS PACKAGE AND RETURN IT
IN THE POSTAGE PAID ENVELOPE THAT IS PROVIDED. The giving of such proxy does
not affect your right to vote in person if you attend the meeting. The prompt
return of your signed proxy will aid the Company in reducing the expense of
additional proxy solicitation.
If you plan to attend the Annual Meeting in person, PLEASE MARK THE
APPROPRIATE BOX ON THE PROXY CARD.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ DAVID H. CHAIFETZ
DAVID H. CHAIFETZ,
Vice President, General Counsel and Secretary
March 7, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING IN PERSON, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
<PAGE>
[PRAXAIR LOGO]
39 Old Ridgebury Road
Danbury, Connecticut 06810-5113
PROXY STATEMENT
Annual Meeting of Shareholders
Tuesday, April 29, 1997
This statement is furnished to shareholders of Praxair, Inc. ("Praxair")
in connection with the solicitation of proxies for the Annual Meeting of
Shareholders to be held at The Danbury Hilton and Towers, 18 Old Ridgebury
Road, Danbury, Connecticut on April 29, 1997, at 9:30 a.m. or at any
adjournment thereof (the "Annual Meeting"). This proxy statement and the
enclosed form of proxy are first being sent to shareholders on or about March
18, 1997. The enclosed proxy is solicited on behalf of the Board of Directors
of Praxair.
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
Item 1: Election of Directors
Five directors are to be elected. Praxair's Board of Directors is divided
into three classes serving staggered terms. The terms of five of the present
directors expire this year and four of them have been nominated for reelection.
The fifth, John J. Creedon, is retiring from the Board as a result of the
Board's tenure policy. The Board has nominated Mr. Raymond W. LeBoeuf to take
Mr. Creedon's seat on the Board.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT C. FRED FETTEROLF, CLAIRE W.
GARGALLI, EDGAR G. HOTARD AND G. JACKSON RATCLIFFE, JR. BE ELECTED TO SERVE IN
THE CLASS WITH TERMS EXPIRING IN 2000, AND THAT RAYMOND W. LEBOEUF BE ELECTED
TO SERVE IN THE CLASS WITH A TERM EXPIRING IN 1999. Each nominee has agreed to
be named in this Proxy Statement and to serve if elected. Biographical data on
these nominees and the other members of the Board of Directors is presented
under the caption "Directors and Executive Officers" in this Proxy Statement.
Unless otherwise directed on the proxy form, the proxy holders intend to
vote in favor of the above listed nominees. To be elected, a nominee must
receive a plurality of the votes cast at the Annual Meeting in person or by
proxy. If one or more of the nominees becomes unavailable for election or
service as a director, the proxy holders will vote shares for one or more
substitutes designated by the Board of Directors, or the size of the Board of
Directors will be reduced.
Item 2: Other Business
Praxair knows of no other business that may be properly considered for
action at the Annual Meeting. If any other business calling for a vote of
shareholders is properly presented at the meeting, the proxy holders will vote
shares in accordance with their best judgment.
1
<PAGE>
PROXY AND VOTING PROCEDURES
Shares represented by a properly executed and returned proxy will be voted
at the Annual Meeting as indicated on the proxy card unless earlier revoked by
the shareholder. Each share of Common Stock is entitled to one vote.
Shareholders may vote on a matter by marking the appropriate box on the card.
If the card is properly signed and returned and no choice is specified for a
matter, the shares will be voted on that matter as recommended by the Board of
Directors. Execution of the proxy also confers discretionary authority to the
proxy holder to vote on other matters that may properly come before the
meeting.
Directors shall be elected by a plurality of the votes cast at the Annual
Meeting. Except as otherwise provided by law, other matters voted on at the
Annual Meeting shall be determined by the majority of votes cast at the Annual
Meeting in person or by proxy by shareholders entitled to vote on the matter.
Abstentions and broker non-votes on returned proxies and ballots are not
considered votes cast and shall be counted as neither for nor against a matter
or nominee but the shares represented by such an abstention or broker non-vote
shall be considered present at the Annual Meeting for quorum purposes. As to
matters requiring the vote of a majority of the shares either present or
outstanding, and entitled to vote on the matter, abstentions have the same
effect as a vote against the matter and broker non-votes under Delaware
Corporation Law and Securities and Exchange Commission rules are deemed to not
be entitled to vote on the matter.
A shareholder giving a proxy may revoke it at any time before it is voted
by filing with Praxair's Secretary a written revocation or a duly executed
proxy bearing a later date or by voting in person at the Annual Meeting.
2
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
Shareholders of record at the close of business on March 3, 1997 will be
entitled to vote at the Annual Meeting. As of that date, a total of 158,300,136
shares of Praxair's Common Stock were outstanding.
The only person known by Praxair to be beneficial owner of more than five
percent of Praxair's Common Stock (par value $0.01) is the following:
- -------------------------------------------------------------------------------
Name and Address of Number of Shares Percent of Shares
Beneficial Owner Beneficially Owned Outstanding(a)
- -------------------------------------------------------------------------------
FMR Corp..................... 18,633,216(b) 11.8%
82 Devonshire Street
Boston, MA 02109
- -------------------------------------------------------------------------------
Notes: (a) Based on 157,525,277 total shares outstanding on December 31,
1996.
(b) Holdings as of December 31, 1996 as reported in SEC Schedule 13G
by FMR Corp. According to this report, FMR Corp. had sole voting
power as to 1,081,862 shares and sole investment power as to
18,633,216 shares.
As of March 3, 1997, directors and executive officers of Praxair
beneficially owned shares of Praxair's Common Stock (par value $0.01) as
follows (directors and all executive officers as a group, 21 persons,
beneficially own 1.5% of the outstanding shares; directors and all officers as
a group, 28 persons, beneficially own 1.7% of the outstanding shares):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED AND OTHER EQUITY INTERESTS
Common Deferred Performance Stock
Name Position Stock(1) Stock(2) Stock(3) Total Options(4)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H. William Lichtenberger Chairman & Chief 200,701 71,955 90,000 362,656 642,000
Executive Officer
Edgar G. Hotard Director & President 114,257 28,992 54,000 197,249 286,100
John A. Clerico Director, Vice President 116,092 27,640 34,500 178,232 267,000
& Chief Financial
Officer
David H. Chaifetz Vice President,
General Counsel 48,014 5,000 21,000 74,014 98,200
& Secretary
Paul J. Bilek President, 10,200 3,928 28,500 42,628 69,800
North American
Industrial Gases
Alejandro Achaval Director 1,636 3,287 -- 4,923 2,500
John J. Creedon Director 4,349 4,011 -- 8,360 2,500
C. Fred Fetterolf Director 3,170 4,157 -- 7,327 2,500
Dale F. Frey Director 1,627 1,751 -- 3,378 2,500
Claire W. Gargalli Director 1,685 1,240 -- 2,925 2,500
Ronald L. Kuehn, Jr. Director 5,301 2,629 -- 7,930 2,500
Benjamin F. Payton Director 1,685 2,137 -- 3,822 2,500
G. Jackson Ratcliffe, Jr. Director 1,685 9,055 -- 10,780 2,500
H. Mitchell Watson, Jr. Director 1,673 1,831 -- 3,504 2,500
Raymond W. LeBoeuf Nominee 0 0 -- 0 0
- -------------------------------------------------------------------------------------------------------------------------------
Directors & Executive (21 persons) 592,559 194,371 315,000 1,101,930 1,752,800
Officers as a group
- -------------------------------------------------------------------------------------------------------------------------------
Directors & All Officers (28 persons) 652,230 204,601 408,000 1,264,831 1,968,000
as a group
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: 1) Amounts reported as COMMON STOCK include shares as follows held
by family members sharing the same household as the officer:
Edgar G. Hotard 2,679 shares; H. William Lichtenberger 25,000
shares; Directors and Executive Officers as a group 27,679
shares. Beneficial ownership is disclaimed with respect to Mr.
Hotard's family member holdings.
2) DEFERRED STOCK represents stock price-based units into which
deferred compensation has been invested pursuant to the deferred
compensation plans for management and for non-employee
directors. Holders have no voting rights with respect to
Deferred Stock. The value of Deferred Stock units varies with
the price of Praxair's common stock and, at the end of the
deferral period, the units are payable in stock.
3) PERFORMANCE STOCK represents unvested performance shares as to
which the holder has neither investment nor voting power.
4) STOCK OPTIONS represent shares that may be acquired upon
exercise of options exercisable within 60 days of, March 3,
1997. Amounts reported as Stock Options include options for
7,100 shares held by Mr. Hotard's wife for which he disclaims
beneficial ownership.
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Board of Directors
The following pages present information about the persons who will
comprise Praxair's Board of Directors assuming election of the five nominees.
During 1996, the Board held nine meetings.
Director Attendance
During their current 3 year terms to date, each nominee for reelection
attended Board meetings and meetings of committees of which s/he is a member as
follows: Mr. Fetterolf, 98%; Ms. Gargalli, 98%; Mr. Hotard, 100%; and Mr.
Ratcliffe, 100%. During this same period, the other directors collectively
attended 95% of such meetings.
Director Compensation
No director who is an employee of Praxair is compensated for service as a
member of the Board of Directors or any committee of the Board of Directors.
Compensation for non-employee directors consists of an annual retainer of
$51,000 effective January 1, 1997, a $1,300 fee for each Board meeting
attended, and a $1,300 fee for each committee meeting attended. A director who
is also chairman of a Board of Directors' committee is paid an additional
$5,000 annual retainer. Directors are reimbursed for travel expenses incurred
on behalf of Praxair.
Each active non-employee director is also a participant in the 1995 Stock
Option Plan for Non Employee Directors of Praxair, Inc. On or about April 1st
of each year, each Stock Option Plan participant is granted options to purchase
2,500 shares of Praxair's Common Stock. The exercise price of each option is
100% of the closing price of Praxair's stock as reported by the New York Stock
Exchange on the date of grant. Each option granted under the stock option plan
becomes exercisable on the second anniversary of its date of grant and expires
ten years from the date of grant. The plan contains provisions regarding the
exercisability and termination of outstanding options in the event of
termination of service, retirement, disability, death and change in control of
Praxair.
A Deferred Compensation Plan is also available for non-employee directors.
Under this plan, non-employee directors may, prior to the beginning of a
calendar year, elect to defer to a later date payment of some or all of the
cash fees earned in that year. This deferred payment date is fixed by the
director at the time of his or her deferral election. At the time of the
deferral election, the director also designates that the deferred fees be
credited with earnings based upon a "Cash Account" which earns interest at the
prime rate, a "Stock Unit Account", the value of which will vary with the
market price of Praxair's common stock or a "Discounted Stock Unit Account" in
which stock units are allocated at a 10% discount to the market price of
Praxair's common stock, and thereafter, their value varies with the market
price of that stock. Stock Unit Accounts and Discounted Stock Unit Accounts
will also be credited with additional stock units whenever dividends are paid
on Praxair's common stock. Stock units provide directors the economic
equivalent of stock ownership except that the units may not be transferred or
sold and they do not provide any voting or other shareholder rights. The "Cash
Account" is paid to the director in cash on the designated payment date. The
"Stock Unit Account" and the "Discounted Stock Unit Account" are both paid in
the form of Praxair common stock.
A Retirement Plan for Non-Employee Directors was also in place in 1996.
Effective 12/31/96, this plan was terminated and benefits that had been earned
in the plan to that date were mandatorily deferred into Discounted Stock Units
under the Deferred Compensation Plan until each director's termination of
service.
4
<PAGE>
- -------------------------------------------------------------------------------
ALEJANDRO ACHAVAL Age 64
Director Since 1992 Term Expires 1998
Chairman, Chief Executive Officer and Controlling Partner of IMEXTRADE SA and
TRINIDAD SCA.
[PHOTO] Mr. Achaval served as Vice Chairman & Chief Executive Officer,
IPAKO SA Industrias Petroquimicas Argentinas between 1975 and his
retirement in 1994.
Mr. Achaval also has served as Chairman of the Argentine Chamber of
Chemical and Petrochemical Industries and as a member of the Board
and Executive Committee of the Argentine Board of Industry. He is a
director of I.D.E.A. Argentine Institute for Management
Development, of the National Institute of Technology (INTI) and of
the Fundacion Invertir (an Argentine investment foundation).
Mr. Achaval is also Chairman of CINPLAST S.A. and FUNDES,
subsidiaries of Nueva-Amanco AG (Switzerland), and a director of
Praxair Argentina S.A., an indirect subsidiary of Praxair, Inc.
- -------------------------------------------------------------------------------
JOHN A. CLERICO Age 55
Director Since 1992 Term Expires 1999
Vice President and Chief Financial Officer of Praxair since 1992
[PHOTO] Mr. Clerico was elected Vice President and Treasurer of Union
Carbide Corporation in 1986 and Principal Financial Officer in
1989. In 1988 he was also elected Treasurer of Union Carbide
Industrial Gases Inc. In 1990 he was elected to the position of
Chief Financial Officer of Union Carbide Corporation. He resigned
as an officer of Union Carbide Corporation upon Praxair's spin-off
in 1992. He was the Treasurer of Praxair, Inc. between 1992 and
1994.
Mr. Clerico is a member of the International Treasurers'
Association, the National Association of Corporate Treasurers, the
Financial Executives Institute and the Multiple Sclerosis Society
and is on the Board of Directors of the Danbury Chamber of
Commerce.
- -------------------------------------------------------------------------------
C. FRED FETTEROLF Age 68
Director Since 1992 Term Expires 1997
Director of Various Corporations
[PHOTO] Mr. Fetterolf served as Director and President of Aluminum Company
of America between 1983 and 1991, adding the title of Chief
Operating Officer in 1985.
Mr. Fetterolf is a trustee of Eastern College and Carnegie Mellon
University and a director of numerous community organizations.
Mr. Fetterolf is also a director of Allegheny Teledyne Corporation,
Commonwealth Aluminum Co., Dentsply International, Mellon Bank
Corporation, Mellon Bank, N.A., Quaker State Corporation and Union
Carbide Corporation.
5
<PAGE>
- -------------------------------------------------------------------------------
DALE F. FREY Age 64
Director Since 1993 Term Expires 1999
Director of various corporations
[PHOTO] Mr. Frey served as Vice President and Treasurer of General Electric
Company from 1980 through 1984 and 1986 through 1993 and he served
as Chairman and President, General Electric Investment Corporation
from 1984 to 1997.
Mr. Frey is Chairman of the Damon Runyon-Walter Winchell Cancer
Research Fund and a trustee of Franklin & Marshall College. He is
also a member of the Forstmann Little and Company Advisory Board
and the Investment Advisory Committee of the New York State Common
Retirement Fund.
Mr. Frey is also a director of American Financial, Beacon
Properties, Doubletree Hotel Corporation, Rhone Poulenc Rorer, and
USF&G Corporation.
- -------------------------------------------------------------------------------
CLAIRE W. GARGALLI Age 54
Director Since 1992 Term Expires 1997
Vice Chairman, Diversified Search Companies since 1990
[PHOTO] Ms. Gargalli served as Director, President and Chief Operating
Officer of Equimark Corporation between 1987 and 1990. During that
period she also served as Chairman and Chief Executive Officer of
Equibank and as Chairman of Liberty Savings Bank.
Ms. Gargalli is a trustee of Carnegie Mellon University, Middlebury
College and Allegheny University of the Health Sciences.
Ms. Gargalli is also a director of Western Atlas Inc. and Renal
Treatment Centers, Inc.
- -------------------------------------------------------------------------------
EDGAR G. HOTARD Age 53
Director Since 1992 Term Expires 1997
President of Praxair since 1990
[PHOTO] Mr. Hotard served as Vice President and General Manager for Bulk
Industrial Gases of Praxair between 1985 and 1990. Mr. Hotard was
elected a Vice President of Union Carbide Corporation in 1990. He
resigned as an officer of Union Carbide Corporation upon Praxair's
spin-off in 1992.
Mr. Hotard is past Chairman of the Board of the International
Oxygen Manufacturers' Association and past Chairman of the
Compressed Gas Association. He is a director of the U.S./China
Business Council and a member of the China Economic and Technology
Alliance and the Dean's Advisory Council of the University of New
York at Buffalo.
Mr. Hotard is also a director of Aquarion Company, Dexter
Corporation and Iwatani Industrial Gases.
6
<PAGE>
- -------------------------------------------------------------------------------
RONALD L. KUEHN, JR. Age 61
Director Since 1992 Term Expires 1998
Chairman, President and Chief Executive Officer of Sonat Inc. since 1986
[PHOTO] Mr. Kuehn is a trustee of Tuskegee University, Birmingham-Southern
College and the Southern Research Institute. He is a member of the
University of Alabama at Birmingham President's Council and a
director of the Gas Research Institute. Mr. Kuehn is active in
numerous community and charitable organizations.
Mr. Kuehn is also a director of AmSouth Bancorporation, Dun and
Bradstreet, Protective Life Corporation, Transocean Offshore Inc.,
Southern Natural Gas Company and Union Carbide Corporation.
- -------------------------------------------------------------------------------
RAYMOND W. LEBOEUF Age 50
Nominee to Serve with a Term Expiring in 1999
President and Chief Operating Officer of PPG Industries, Inc. since 1995.
[PHOTO] Mr. LeBoeuf was elected Vice President Finance and Chief Financial
Officer of PPG Industries, Inc. in 1988, serving in that position
until 1994 when he became Vice President, Coatings and Resins and
then Executive Vice President.
Mr. LeBoeuf is also a director of PPG Industries, Inc.
- -------------------------------------------------------------------------------
H. WILLIAM LICHTENBERGER Age 61
Director Since 1992 Term Expires 1998
Chairman and Chief Executive Officer of Praxair since 1992
[PHOTO] In 1986, Mr. Lichtenberger was elected a Vice-President of Union
Carbide Corporation and was appointed President of the Union
Carbide Chemicals and Plastics Business Group, which in 1989 became
Union Carbide Chemicals and Plastics Company Inc. He was elected
President and Chief Operating Officer and a director of Union
Carbide Corporation in 1990. He resigned as an officer and director
of Union Carbide Corporation upon Praxair's spin-off in 1992.
Mr. Lichtenberger is a member of the Conference Board, and The
Business Roundtable and its Policy Committee and is a director of
the National Association of Manufacturers. He is Chairman of United
Negro College Fund's Connecticut Corporate Campaign and is on the
Advisory Board of the Fairfield County Boy Scouts.
Mr. Lichtenberger is also a director of Olin Corporation and
Ingersoll Rand Company.
7
<PAGE>
- -------------------------------------------------------------------------------
BENJAMIN F. PAYTON Age 64
Director Since 1992 Term Expires 1999
President, Tuskegee University since 1981
[PHOTO] Dr. Payton is on the Board of Visitors of Air University. He is
also a director of the Alabama Shakespeare Festival, the United
Negro College Fund, the Southern Regional Council and National
Action Council for Minority Engineers. Dr. Payton is active in
numerous other educational and community organizations.
Dr. Payton is also a director of AmSouth Bancorporation, ITT
Corporation, Liberty Corporation, Morrisons HealthCare, Inc., Ruby
Tuesday, Inc. and Sonat Inc.
- -------------------------------------------------------------------------------
G. JACKSON RATCLIFFE, JR. Age 60
Director Since 1992 Term Expires 1997
Chairman, President and Chief Executive Officer of Hubbell Incorporated since
1987
[PHOTO] Mr. Ratcliffe is on the Board of Governors of the National
Electrical Manufacturers Association (NEMA) and is a trustee of the
Manufacturers' Alliance for Productivity and Innovation, Inc.
(MAPI).
Mr. Ratcliffe is also a director of Aquarion Company and Olin
Corporation.
- -------------------------------------------------------------------------------
H. MITCHELL WATSON, JR. Age 59
Director Since 1992 Term Expires 1998
President, Sigma Group of America since 1992
[PHOTO] Mr. Watson served as Vice President, Marketing and Service for IBM
Corporation between 1985 and 1989. In 1989, he was elected
President and Chief Executive Officer of ROLM Company, a position
he held until 1992.
Mr. Watson is President and Chairman of the Executive Committee of
Helen Keller International. He is also a trustee of the
Interdenominational Theological Center, a member of the Development
Council of the University of Tennessee and a former President of
the North Carolina Symphony.
Mr. Watson is also a director of Plasti-Line, Inc. and Caliber
System Inc.
8
<PAGE>
Executive Officers
The following Executive Officers have been elected by the Board of
Directors and serve at the pleasure of the Board. It is expected that the Board
will elect officers annually following each Annual Meeting of Shareholders.
Paul J. Bilek, 49, was designated President, North American Industrial
Gases, of Praxair in 1996 and President, Praxair Canada Inc. in 1995. Mr. Bilek
served as Vice President, North American Merchant Gases between 1995 and 1996.
Mr. Bilek served as Operations Director for Bulk Industrial Gases of Praxair
between 1988 and 1991. He served as President of Praxair Canada Inc. between
1991 and 1993 and as President of Praxair Surface Technologies, Inc. between
1993 and 1995.
David H. Chaifetz, 54, is Vice President, General Counsel and Secretary of
Praxair. Mr. Chaifetz joined the Union Carbide Corporation Law Department in
1975. In 1985, he was appointed Assistant General Counsel of Union Carbide
Corporation. In 1986, he became Group General Counsel, Industrial Gases/Carbon
Products and, in 1989, he was appointed General Counsel of Praxair. Mr.
Chaifetz assumed his current position in 1992.
John A. Clerico, 55, see description under "Board of Directors."
Felix deBulhoes, 56, has been a Vice President of Praxair since 1993. Mr.
deBulhoes is also Chairman and President of S.A. White Martins, Praxair's
Brazilian subsidiary. He has held that position since 1988.
Michael E. DeDomenico, 49, is a Vice President of Praxair and President of
Praxair Europe. Mr. DeDomenico served as Director, Sales and Commercial
Development of Praxair between 1990 and 1993 and as President, Praxair Canada,
Inc. in 1993. He assumed his current position in 1993. He is a director of the
European Industrial Gases Association.
Jesus E. Gonzalez, 55, is Vice President, North American On-Site Gases, of
Praxair. Mr. Gonzalez served as Business Director, North American On-Site
Gases, of Praxair between 1990 and 1994. He assumed his current position in
1994.
Edgar G. Hotard, 53, see description under "Board of Directors."
H. William Lichtenberger, 61, see description under "Board of Directors."
Jose R. Rivero, 51, is a Vice President of Praxair and was elected
President, Praxair Distribution, Inc. in 1996. Mr. Rivero served as General
Manager, Packaged Gases of Praxair between 1990 and 1992, as Vice-President,
Specialty Products, Packaged Gases and Latin America Business Development
between 1992 and 1993 and as Vice President, North American Packaged Gases from
1993 to the present. Mr. Rivero was also President of Praxair Canada Inc. from
1993 through 1995.
J. Robert Vipond, 51, is Vice President and Controller of Praxair. Mr.
Vipond assumed his current position in 1994 when he joined Praxair. Mr. Vipond
served as Chief Financial Officer of the Corporate Finance Group of GE Capital,
a wholly owned subsidiary of General Electric Company, between 1990 and 1994.
He was Manager, Financial Planning and Compliance of GE Aerospace between 1988
and 1990 and Manager, Finance of RCA Aerospace and Defense between 1986 and
1988.
Thomas W. von Krannichfeldt, 47, is a Vice President of Praxair and
President of Praxair Surface Technologies, Inc. Mr. von Krannichfeldt served as
President of Praxair Puerto Rico, Inc. between 1989 and 1993 and as President
of Linde de Mexico S.A. de C.V. between 1993 and 1995. He assumed his current
positions in 1995.
9
<PAGE>
Committees of the Board
AUDIT COMMITTEE. The Audit Committee is comprised of C. Fred Fetterolf as
Chairman, Alejandro Achaval, Ronald L. Kuehn, Jr., Benjamin F. Payton and H.
Mitchell Watson, Jr. The Committee met three times during 1994. The Audit
Committee supports the independence of Praxair's external and internal auditors
and the objectivity of Praxair's financial statements. The Audit Committee (1)
reviews Praxair's principal policies for accounting, internal control and
financial reporting, (2) recommends to Praxair's Board of Directors the
engagement or discharge of the independent accountants, (3) reviews with the
independent accountants the plan, scope and timing of their audit and (4)
reviews the auditor's fees and, after completion of the audit, reviews with
management and the independent accountants the auditors' report.
The Audit Committee also reviews, before publication, the annual financial
statements of Praxair, the independence of the independent accountants, the
adequacy of Praxair's internal accounting control system and internal audit
function and Praxair's policies on business integrity and ethics and conflicts
of interest. The Audit Committee also performs a number of other review
functions related to auditing the financial statements and internal controls.
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE. The Compensation and
Management Development Committee is comprised of Ronald L. Kuehn, Jr. as
Chairman, John J. Creedon, Claire W. Gargalli and H. Mitchell Watson, Jr. The
Committee met five times during 1994. The Compensation and Management
Development Committee (1) determines the direct and indirect compensation,
incentive plans and employee benefits of the Chairman of the Board and other
elected officers of Praxair, (2) determines, and recommends to Praxair's Board
of Directors, Praxair's policies relating to the compensation of Executive
Officers and, generally, other employees. In addition, the Committee reviews
management's long-range planning for executive development and succession, and
performs certain other review functions relating to management compensation and
employee relations policies.
FINANCE AND PENSION COMMITTEE. The Finance and Pension Committee is
comprised of John J. Creedon as Chairman, John A. Clerico, Dale F. Frey, Claire
W. Gargalli, Edgar G. Hotard, and G. Jackson Ratcliffe, Jr. The Committee met
three times during 1994. The Finance and Pension Committee (1) reviews
periodically Praxair's financial policies and objectives, (2) monitors
Praxair's financial condition and its requirements for funds, (3) reviews
management recommendations as to the amounts, timing, types and terms of public
stock issues and public and private debt issues, and (4) reviews periodically
Praxair's dividend policy, insurance program and foreign exchange operations.
The Finance and Pension Committee also reviews the financial, investment and
actuarial policies and objectives of the pension program and, periodically,
other employee benefit programs, and the investment performance of the fund
established for the pension program. The Finance and Pension Committee also
performs certain other review functions related to finance and pension matters.
PUBLIC POLICY AND NOMINATING COMMITTEE. The Public Policy and Nominating
Committee is comprised of G. Jackson Ratcliffe, Jr. as Chairman, C. Fred
Fetterolf, Dale F. Frey, H. William Lichtenberger and Benjamin F. Payton. The
Committee met three times during 1994. The Public Policy and Nominating
Committee recommends to Praxair's Board of Directors nominees for election as
directors, and periodically reviews potential candidates, including incumbent
directors. The Public Policy and Nominating Committee reviews policies with
respect to the composition, organization and practices of Praxair's Board of
Directors, and developments in corporate governance matters generally.
10
<PAGE>
The Public Policy and Nominating Committee also reviews Praxair's policies
and responses to important social, political and public issues, including
matters relating to international operations, equal employment opportunity,
charitable contributions, and legislative issues, as well as policies on and
responses to important shareholder issues, including management and shareholder
proposals offered for shareholder approval. The Public Policy and Nominating
Committee reviews Praxair's policies for health, safety and environmental
affairs and Praxair's performance and compliance with its policies and legal
requirements in this area. The Public Policy and Nominating Committee also
performs various other functions relating to public policy matters generally.
The Public Policy and Nominating Committee will consider candidate
nominees for election as director who are recommended by shareholders.
Recommendations should be sent to the Secretary of Praxair and should include
the candidate's name and qualifications and a statement from the candidate that
he or she consents to being named in the Proxy Statement and will serve as a
director if elected. In order for any candidate to be considered by the Public
Policy and Nominating Committee and, if nominated, to be included in the Proxy
Statement, such recommendation must be received by the Secretary on or before
the November 1 preceding the annual meeting at which directors will be elected
by the shareholders.
EXECUTIVE COMPENSATION
Compensation Policy and Decisions
Compensation of executive officers is determined by the Compensation and
Management Development Committee of the Board of Directors (see a description
of the Committee and a list of its members under the caption "Committees of the
Board" in this Proxy Statement). This Committee is comprised of four
non-employee directors, all of whom have considerable experience in executive
compensation issues and management development. None of the members of the
Committee has ever been an officer or employee of Praxair or any of its
subsidiaries. In discharging its responsibilities, the Committee employs the
services of an independent compensation consultant. The consultant reports
directly to the Committee regarding these matters.
The following is a report of the Compensation and Management Development
Committee. This report discloses the Committee's policies with respect to
compensation of Praxair's executive officers, and the specific factors and
criteria upon which the Chief Executive Officer's compensation for the last
fiscal year was based.
11
<PAGE>
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
This report addresses Praxair's compensation policies and practices, and
the Committee's decisions regarding 1996 compensation and long term incentives
as they affected the Chief Executive Officer and the four other most highly
paid executive officers of Praxair (the five individuals collectively called
"the Senior Executives.") These policies and practices also generally affect
the compensation of Praxair's other officers and high level executives.
Executive Compensation Policies and Practices
Praxair's executive compensation policies are designed to (1) align
compensation with the company's annual and long term performance goals, (2)
attract and retain a highly qualified and motivated management team, (3) reward
individual performance and (4) link the interests of the Senior Executives
directly with those of shareholders through the use of Praxair stock as a
compensation vehicle.
The Committee uses the services of an outside compensation consultant to
review the competitiveness of the company's compensation programs. Praxair has
selected a comparator group of companies from the consultant's data base that
it considers as an appropriate group of companies against which to compare
Praxair for compensation purposes. The comparator group comprises 25 companies
from various industries that represent the competitive marketplace for Praxair
executives. Since the size of the comparator companies measured by sales varies
somewhat, the consultant adjusts its competitive analysis to account for that
variable. For purposes of the shareholder return comparisons elsewhere in this
proxy statement, Praxair uses the Dow Jones Specialty Chemicals Index, based on
its belief that that Index provides an appropriate industry peer group for
investment comparisons.
In determining the total compensation opportunity for each Senior
Executive, the Committee takes into account the mix of base salary, variable
compensation and long term incentives. It targets its compensation decisions to
achieve a median total compensation opportunity for comparable jobs within the
comparator group. However, since a large portion of the compensation
opportunity is determined by performance-based variable compensation, total
compensation may be above or below the median based on individual, business
unit and/or total company performance.
Salary
The Committee reviewed the base salaries of each of the Senior Executives
in comparison to the size adjusted salaries paid for comparable jobs by the
companies in the comparator group. Generally, the Committee found that the
salaries of the Senior Executives were at approximately the market average. The
Committee approved salary adjustments for the Senior Executives based on their
individual performance and their salaries relative to the market. On an
annualized basis, the adjustments averaged 6.8 percent for the Senior
Executives other than the CEO. Mr Lichtenberger's salary was adjusted by 13.3
percent on an annualized basis, effective September 1, 1996.
12
<PAGE>
Performance-Based Annual Variable Compensation
At its February 1996 meeting, the Committee reviewed its method of
determining annual variable compensation awards. First, the Committee
established the net income after tax, earnings per share, operating profit and
cash flow targets in the company's Annual Business Plan as the primary measures
against which performance would be judged for purposes of annual
performance-based variable compensation. Secondary measures established by the
Committee included shareholder value creation in comparison to the S&P 500
Index and achievement of agreed upon goals in the areas of growth strategies,
safety and environmental protection, people excellence, marketing, operations
excellence and strategic planning.
Second, the Committee adjusted the target variable compensation payouts as
a percentage of base salary to reflect its view that a larger portion of the
total compensation of the Senior Executives should be at risk based upon
performance. The target payout percentages range from 45 percent of base salary
up to a high of 65 percent of base salary for Mr. Lichtenberger. Third, the
Committee determined that achievement of the 1996 Annual Business Plan would
warrant variable compensation above the target level in view of the
aggressiveness of the Plan, especially when coupled with the need to promptly
integrate the newly acquired Liquid Carbonic business and dispose of the
non-strategic CBI Industries business.
At its January 1997 meeting, the Committee evaluated 1996 performance of
the company against its aggressive 1996 Annual Business Plan and considered the
individual performance of each of the Senior Executives. Regarding the primary
measures of performance, namely achievement of the financial targets in the
1996 Plan, the Committee noted that the company exceeded the Plan on net
income. Net income was a record $335 million, a 27.9 percent increase from 1995
before adjustments for the integration of CBI. Operating profit was $732
million, up 33.6 percent from 1995. In terms of delivering shareholder value,
the full year return to Praxair's shareholders was more than 38 percent
compared to 23 percent for the S&P 500 Index. Most of the company's 1996
nonfinancial goals noted above were either accomplished or progress was well
under way. The Committee also reviewed the performance of the Corporation in
comparison to the performance measures established by the Committee in 1996 for
the Senior Executives under the Senior Executive Performance Award Plan,
approved by the shareholders in 1996 to comply with Section 162(m) of the
Internal Revenue Code.
On the basis of the outstanding performance during 1996, the Committee
awarded 1996 performance-based annual variable compensation for the Senior
Executives at a level above the target amount. The variable compensation award
for Mr. Lichtenberger was set at $1,200,000 which represents 255 percent of
target, and an increase of $200,000 from 1995. The Committee believed that Mr
Lichtenberger's leadership in focusing Praxair on achievement of its vision of
becoming the best performing company in its industry, driving the internal and
external changes required to achieve that vision and the successful integration
of the Liquid Carbonic business into Praxair, without any dilution of 1996
earnings, as well as the progress being made on the disposition of the
non-strategic businesses of CBI Industries were reflected in the 1996 results
and supported the increase in his variable compensation award for 1996.
13
<PAGE>
Long Term Incentives
The Committee reviewed the status of the grant of performance stock that
it made to the Senior Executives and 65 other officers and key employees after
the spin-off in 1992 and the 1994 program providing for stock equivalent units
(together called the "Launch Plan"). Nineteen ninety-six was the final year of
the Launch Plan. The performance stock and the stock equivalent units were
intended to focus Praxair's executives on, and incent them to achieve and
exceed Praxair's net income growth objectives for the first five years of its
existence. The amount of stock and units earned by each participant was
directly related to the extent to which Praxair's net income growth objective
for its first five years was achieved or exceeded. The full amount of the
performance stock grant and a number of stock equivalent units equal to 87
percent of the performance stock grant vested on February 1, 1997 since the
cumulative net income growth target for the five year period was exceeded.
The Committee believes that the Launch Plan was extremely successful in
forcefully focussing the management team on achieving substantial and immediate
improvements in the profitability of the company. The Committee particularly
notes that during the five year period covered by the Launch Plan, Praxair's
market capitalization has more than tripled from about $2 billion in 1992 to
more than $7 billion in 1997. The cost of the Launch Plan over the five year
program period was approximately $53 million, or about one percent of the
increase in shareholder value created. With the conclusion of the Launch Plan
at the end of 1996, the Committee decided that a new long term incentive
program designed to incent the management team to drive for continued
improvement in profitability was consistent with the corporate goal to further
increase shareholder value. In view of the success of the Launch Plan, the
Committee determined that the new program should be similar in design to the
Launch Plan. The major difference between the new program and the Launch Plan
is that the performance target under the new program is based on cumulative
EARNINGS PER SHARE over the program period rather than cumulative net income
after tax.
The Committee approved the new program (Launch Plan II) and made grants to
the Senior Executives and over 90 other officers and key managers at its
October 1996 meeting. Specifically, Launch Plan II is a three-year program
under which participating individuals receive awards of performance stock
equivalents (payable in Praxair common stock) and stock options. The
performance stock equivalents will fully vest on January 1, 2000, provided that
Praxair meets its three-year cumulative 15 percent per year earnings per share
growth target for the period. The number of actual common stock equivalents
that vest is governed by a sliding scale based on cumulative earnings per share
achieved over the three-year period with no maximum. If cumulative earnings per
share growth during the three year period averages less than 6.5 percent per
year, none of the common stock equivalents will vest. The stock options become
exercisable on January 1, 2000. The number of performance stock equivalents and
stock options awarded to each participant, including the Senior Executives, was
determined based on competitive market data for long term incentive grants for
similar positions compiled by the Committee's compensation consultant. As a
condition for participation in the new plan, participating executives are
required to sign an agreement not to compete with Praxair after they leave the
company.
14
<PAGE>
Policy With Respect to Deductibility of Compensation Expense
Section 162(m) of the Internal Revenue Code, enacted in 1993, limits the
tax deduction that Praxair may take with respect to the compensation of certain
executive officers, unless the compensation is "performance based" as defined
in the Code. In order to insure full deductibility for 1996 and future years,
the Board proposed, and the shareholders adopted at the 1996 Annual Meeting of
Stockholders, (1) an amendment to the Corporation's Long Term Incentive Plan
and (2) a new performance based plan for annual and long term incentives, both
designed to comply with the IRS requirements for deductibility.
Conclusion
The Praxair compensation program described above closely links pay with
performance and the creation of shareholder value. The Committee believes that
the program has been and will continue to be successful in supporting Praxair's
financial, growth and other business objectives.
THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
Ronald L. Kuehn, Jr., Chairman
John J. Creedon
Claire W. Gargalli
G. Jackson Ratcliffe, Jr.
H. Mitchell Watson, Jr.
------------------
15
<PAGE>
Executive Stock Ownership
The Board of Directors of Praxair believes that it is important for
executive officers to acquire a substantial ownership position in Praxair. In
this way, they will bear the same type of risks as are typically incurred by
shareholders, and their interests will be more closely aligned with those of
shareholders. Significant stock ownership focuses the executives' attention on
managing Praxair as equity owners.
Accordingly, at its first meeting in July 1992, the Compensation and
Management Development Committee of the Board of Directors adopted guidelines
for stock ownership by executive officers. Executives are expected to reach the
following targeted ownership levels before 1998. As of the date of this Proxy
Statement, these guidelines have been met or exceeded by each Executive
Officer.
Value of Shares Owned
---------------------
Chief Executive Officer 4.0x Base Salary
President 3.0x Base Salary
Chief Financial Officer 3.0x Base Salary
Other Executive Officers 1.5x Base Salary
In 1993, the Chief Executive Officer extended stock ownership guidelines
to include approximately 60 of the Corporation's senior managers. Each of these
employees will be expected to hold, before 1998, shares of Praxair stock equal
in value to his or her annual base salary.
In addition to the guidelines, Praxair's compensation programs and benefit
plans have many features designed to encourage and enable executive officers
and other employees to build stock ownership. For example, stock option grants
form a major part of executive compensation.
Other means used by Praxair to encourage employee stock ownership include:
(1) Praxair's matching contributions for employee deposits in Praxair's Savings
Program made in the form of Praxair's Common Stock, (2) a Dividend Reinvestment
and Stock Purchase Plan ("DRISP") in which dividends are automatically
reinvested in additional shares of Praxair's stock and a participant may make
optional cash purchases of Praxair's stock without incurring broker's fees, (3)
a deferred compensation program for management whereby participants have the
option to defer salary and variable compensation into "Deferred Stock" units
(the value of the stock units will vary with the value of Praxair's Common
Stock assuming reinvestment of dividends), (4) payment of 20% of annual
variable compensation (unless deferred into "Deferred Stock" units) in the form
of Praxair Common Stock deposited in the recipient's DRISP account, and (5)
performance stock programs which provide incentive in the form of Common Stock.
Under these performance stock programs, shares of Praxair Common Stock are
earned based on the financial performance of Praxair over a multi-year
performance period (See description of Performance Stock in the section
captioned "Long Term Incentive Plan Awards").
Annual Compensation
Table 1 presents a summary of compensation earned by the Chief Executive
Officer and the four other most highly paid executive officers (the "named
executives") over the past three years. The table shows amounts paid to such
persons in all capacities in which they served.
16
<PAGE>
Long Term Incentive Plan Awards
(a) Launch Compensation Plan Performance Stock (1992-1996 Performance
Period).
Table 1 reports in the column headed "LTIP Payouts" the vesting on
February 1, 1997 of Performance Stock and Performance Awards granted as part of
the Launch Compensation Plan. The amount reported reflects the pre-established
vesting schedule for Performance Stock and Performance Awards related to a net
income growth performance of 26% per year during the period 1992 through 1996.
Senior executives received a special grant of Performance Stock in
connection with the 1992 spin-off as part of what was called the "Launch
Compensation Plan". Performance Stock was subject to vesting conditions based
on Praxair's cumulative net income performance for the period 1992 through
1996. The entire grant was forfeitable for below-threshold performance which
was established as net income growth equivalent to 6.1% per year. The full
number of shares would vest only if Praxair achieved net income growth
equivalent to 15% per year for the measurement period. 100% of the Performance
Stock vested since actual net income growth exceeded 15% per year.
In 1994 the Corporation implemented an incentive program involving cash
incentives ("Performance Awards") for cumulative 1992-1996 net income growth
performance in excess of the 15% per year target. The number of Performance
Awards to be awarded were to be determined by a sliding scale based on the net
income performance above the 15% per year threshold performance target. Each
Performance Award has a value equal to the average closing price of Praxair's
Common Stock during the last twenty trading days in January, 1997. There was no
maximum payment established under the Performance Award Plan. Based on this
preestablished vesting schedule and an actual net income growth performance of
26% per year, 87 Performance Awards were granted for each 100 shares of
Performance Stock vested.
(b) Performance Stock for the 1997-1999 Performance Period.
Table 4 reports the grant of Performance Stock for a 3 year incentive
program adopted in 1996 ("Launch Plan II") as a successor program to the 1992
Launch Compensation Plan described above. Performance Stock is subject to
vesting conditions based on the Corporation's cumulative earnings per share
performance for the period 1997 through 1999. Other terms of the Performance
Stock are described in the footnote to Table 4.
(c) Stock Option Grants
Table 2 reports stock options granted to the named executives in 1996. The
reported options represent multi-year grants as part of Launch Plan II.
Consistent with the 3 year performance period of that program, these options do
not become exercisable until January 1, 2000.
Stock Option Exercises and Unexercised Holdings
Stock options exercised by the named executives during 1996 are shown in
Table 3. Table 3 also illustrates the value of unexercised options held by the
five named executives based on the price of Praxair common stock at year-end
1996. Of course, that value may increase or decrease based on changes in the
price of Praxair common stock over the remaining term of the unexercised
options.
Shareholder Return
Table 5 presents a comparison of Praxair's stock performance (assuming
reinvestment of dividends) with a broad based market index (Standard and Poors
500) and with the Dow Jones Specialty Chemicals Index, a published index
currently covering seventeen companies, including Praxair.
17
<PAGE>
TABLE 1
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
Awards(1) Payouts
- -------------------------------------------------------------------------------------------------------------------------
Other Securities
Annual Underlying LTIP All Other
Name and Salary Bonus(2) Compensation(3) Options Payouts(4) Compensation(5)
Principal Position Year ($) ($) ($) (#) ($) ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
H. William Lichtenberger 1996 668,300 1,200,000 93,332 115,000 12,611,873 94,501
Chairman and Chief 1995 626,700 1,000,000 77,778 95,000 0 86,970
Executive Officer 1994 593,360 685,000 60,888 0 0 79,122
- -------------------------------------------------------------------------------------------------------------------------
Edgar G. Hotard 1996 415,000 700,000 15,555 70,000 7,206,874 56,493
President 1995 395,000 675,000 15,000 50,000 0 50,507
1994 370,035 400,000 31,111 0 0 44,371
- -------------------------------------------------------------------------------------------------------------------------
John A. Clerico 1996 356,300 450,000 40,000 37,000 4,504,240 41,289
Vice President and 1995 345,100 410,000 36,444 25,000 0 39,127
Chief Financial Officer 1994 338,796 240,000 21,333 0 0 35,209
- -------------------------------------------------------------------------------------------------------------------------
David H. Chaifetz 1996 254,000 350,000 7,778 28,000 2,522,975 23,541
Vice President, 1995 230,800 310,000 6,889 20,000 0 20,198
General Counsel 1994 212,070 160,000 3,556 0 0 17,885
and Secretary
- -------------------------------------------------------------------------------------------------------------------------
Paul J. Bilek 1996 242,200 313,700 6,222 37,000 608,039 14,546
President, North 1995 196,900 250,904 4,889 30,000 0 11,007
American Industrial Gases 1994 166,800 140,000 3,111 10,000 0 9,740
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: 1) As of December 31, 1996, the named executive officers held
Performance Stock as follows. The following represents
performance stock granted in 1996 for the performance period
1997-1999. Not included is performance stock granted in 1992 for
the performance period 1992-1996; the vesting of which is
reported in the "LTIP Payouts" column of this table. All
performance shares held are subject to performance-based vesting
conditions which are described at Table 4: H.W. Lichtenberger
90,000 shares ($4,151,250); E.G. Hotard 54,000 shares
($2,490,750); J.A. Clerico 34,500 shares ($1,591,313); D. H.
Chaifetz 21,000 shares ($968,625); P. J. Bilek 28,500 shares
($1,314,563). Parenthetical figures represent the "value" of
Performance Stock holdings calculated according to S.E.C. rules
by assuming 100% of the Performance Shares vest in 2000 at the
end of the performance period and by using the December 31, 1996
closing market price of Praxair Common Stock ($46.125 per
share).
2) Reported in this column are annual awards that the Company
characterizes as Performance Based Annual Variable Compensation.
Twenty percent of the variable compensation paid for 1994, 1995
and 1996 was paid in the form of Praxair Common Stock or, at the
officer's option, at least 20% was deferred into "deferred
stock" units. Data for P.J. Bilek includes amounts paid from
Praxair and Praxair Surface Technologies performance sharing
programs.
3) Represents the value of the discount from the market value of
the Corporation's Common Stock that is, in effect, received by
individuals who have deferred variable compensation earned in
1994, 1995 and 1996 into discounted "deferred stock" units under
Praxair's deferred compensation plan for management.
Compensation that is placed in this option must be so deferred
for a minimum of 5 years.
4) Represents the 1997 vesting of Performance Stock and Awards
granted in 1992 and 1994 for the performance period 1992-1996.
The amount reported reflects the pre-established vesting
schedule for net income growth performance of 26% per year
during the period 1992 through 1996. See description of
Performance Stock and Performance Awards under the caption
"Long-Term Incentive Plan Awards: Launch Compensation Plan
Performance Stock (1992-1996 Performance Period)".
5) Amounts reported in this column for 1996 are comprised of the
following items:
<TABLE>
<CAPTION>
Savings Plan Executive Life Dividends on
Company Match* Insurance Value Performance Stock**
<S> <C> <C> <C>
H. William Lichtenberger $24,803 $13,588 $56,109
Edgar G. Hotard 15,692 8,739 32,062
John A. Clerico 12,962 8,288 20,039
David H. Chaifetz 8,951 3,368 11,222
Paul J. Bilek 9,531 2,330 2,685
</TABLE>
* Includes both qualified and unqualified match amounts
** Dividends on "Launch Compensation Plan" Performance Stock were
automatically reinvested for the officer's account into shares
of additional Performance Stock having the same
performance-based vesting conditions. Launch Compensation Plan
Performance Stock is described under the caption "Long Term
Incentive Plan Awards: Launch Compensation Plan Performance
Stock (1992-1996 Performance Period)".
18
<PAGE>
TABLE 2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------------------------
Percent of Potential Realizable Value at
Number of Total Assumed Annual Rates of
Securities Options Stock Price Appreciation for
Underlying Granted to Option Term(1)
Options Employees -----------------------------
Granted in Fiscal Exercise Expiration
Name (#) Year Price Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assumed Stock
Price As of
10/22/2006: $75.135/Sh $119.695/Sh
- ------------------------------------------------------------------------------------------------------------------------
H. William Lichtenberger 115,000 4.4% $46.125 10/22/2006 $3,336,150 $8,460,550
- ------------------------------------------------------------------------------------------------------------------------
Edgar G. Hotard 70,000 2.7% $46.125 10/22/2006 $2,030,700 $5,149,900
- ------------------------------------------------------------------------------------------------------------------------
John A. Clerico 37,000 1.4% $46.125 10/22/2006 $1,073,370 $2,722,090
- ------------------------------------------------------------------------------------------------------------------------
David H. Chaifetz 28,000 1.1% $46.125 10/22/2006 $812,280 $2,059,960
- ------------------------------------------------------------------------------------------------------------------------
Paul J. Bilek 37,000 1.4% $46.125 10/22/2006 $1,073,370 $2,722,090
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: 1) Potential realizable value is the pre-tax gain that an option
holder would realize at the time of the option expiration date
if (a) he or she would exercise all of the options on their
expiration date, and (b) Praxair's stock price grew between the
date of grant and the exercise date at the annual rates assumed
in the column (the "Assumed Stock Price"). This pre-tax gain is
calculated by multiplying the number of options by the
difference between the Assumed Stock Price on the option
expiration date and the option exercise price. THE HYPOTHETICAL
VALUES REFLECTED IN THIS TABLE REPRESENT ASSUMED RATES OF
APPRECIATION ONLY; WHICH RATES ARE SET BY S.E.C. RULES. ACTUAL
GAINS, IF ANY, ON STOCK OPTION EXERCISES AND COMMON STOCK
HOLDINGS ARE DEPENDENT ON, AMONG OTHER FACTORS, THE FUTURE
PERFORMANCE OF THE COMMON STOCK AND OVERALL STOCK MARKET
CONDITIONS. THERE CAN BE NO ASSURANCE THAT THE AMOUNTS REFLECTED
IN THIS TABLE WILL BE ACHIEVED.
TABLE 3
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
- ---------------------------------------------------------------------------------------------------------------------------
Number of Securities
Shares Underlying Value1 of Unexercised
Acquired on Value Unexercised Options In-the-Money Options
Name Exercise (#) Realized ($) at FY-End (#) at FY-End ($)
- ---------------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H. William Lichtenberger 30,000 $928,650 547,000 210,000 $17,744,202 $2,410,625
- ---------------------------------------------------------------------------------------------------------------------------
Edgar G. Hotard 10,500 $340,116 229,000 120,000 $7,300,194 $1,268,750
- ---------------------------------------------------------------------------------------------------------------------------
John A. Clerico 8,500 $226,661 242,250 62,000 $7,931,362 $634,375
- ---------------------------------------------------------------------------------------------------------------------------
David H. Chaifetz 9,500 $235,218 67,700 48,000 $2,174,074 $507,500
- ---------------------------------------------------------------------------------------------------------------------------
Paul J. Bilek 3,000 $82,176 39,800 67,000 $1,185,151 $761,250
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: 1) Before Taxes. The dollar value reported is based on the
difference between the exercise price of the outstanding option
and the market price of Praxair's Common Stock at the close of
trading on December 31, 1996. The market price on this date was
$46.125 per share.
19
<PAGE>
TABLE 4
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUTS
- --------------------------------------------------------------------------------------------------------------
Name Number of Shares Performance Period Threshold (#) Target (#)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
H. William Lichtenberger 90,000(1) 1/1/97 to 12/31/99 30,000 90,000
- --------------------------------------------------------------------------------------------------------------
Edgar G. Hotard 54,000(1) 1/1/97 to 12/31/99 18,000 54,000
- --------------------------------------------------------------------------------------------------------------
John A. Clerico 34,500(1) 1/1/97 to 12/31/99 11,500 34,500
- --------------------------------------------------------------------------------------------------------------
David H. Chaifetz 21,000(1) 1/1/97 to 12/31/99 7,000 21,000
- --------------------------------------------------------------------------------------------------------------
Paul J. Bilek 28,500(1) 1/1/97 to 12/31/99 9,500 28,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: 1) Performance Stock is subject to vesting conditions based on
Praxair's cumulative earnings per share ("EPS") performance for
the period 1997 through 1999, measured in accordance with
generally accepted accounting principles in effect at the time
of the grant. The entire grant is forfeitable for
below-threshold performance. The threshold level for vesting is
EPS growth equivalent to 6.5% per year. Vesting thereafter is
governed by a sliding scale. Shares in addition to those
reported in the first column of this table will vest to the
extent that EPS performance exceeds 15% per year. The target
payout reported in this table corresponds to an EPS growth rate
of 15% per year. There is no maximum future payout in that the
payout is solely a function of EPS performance without a cap.
Dividend and voting rights do not attach to shares of
Performance Stock until such shares are vested. Participation in
this program is conditioned on the recipient's execution of a
non-compete agreement.
TABLE 5
COMPARISON OF CUMULATIVE TOTAL RETURN(a) AMONG
PRAXAIR, INC., S&P 500 INDEX & DOW JONES SPECIALTY CHEMICALS INDEX
[LINE CHART]
Dow Jones
Specialty
Praxair, S&P 500 Chemicals
Inc. Index Index
-------- ------- ---------
Jun 30 1992 $100
July 1 1992 $100 $100
Dec 31 1992 107 108 106
Dec 31 1993 108 119 112
Dec 31 1994 135 121 108
Dec 31 1995 225 167 142
Dec 31 1996 310 204 160
ASSUMES $100 INVESTED ON JULY 1, 1992(b) IN PRAXAIR COMMON STOCK AND THE DOW
JONES SPECIALTY CHEMICALS INDEX, AND ON JUNE 30, 1992(c) IN THE S&P 500 INDEX
Notes: (a) Total return assumes reinvestment of dividends.
(b) First Trading Day after Praxair's June 30, 1992 spin-off from Union
Carbide Corporation (when-issued trading; regular way trading
commenced on July 6, 1992).
(c) Nearest date for which published index data is available.
20
<PAGE>
Defined Benefit or Actuarial Plans
Table 6 illustrates the estimated annual benefits payable from Praxair's
Retirement Program at retirement at age 65 based on the assumptions shown.
Calculation of benefits is uniform for all participants in the Retirement
Program, including the five named executives.
TABLE 6
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
PENSION PLAN TABLE
- ----------------------------------------------------------------------------------------------------
Average Annual Estimated Annual Retirement Benefits at Age 65
Remuneration Used for the Years of Company Service Credit Indicated
for Calculating ---------------------------------------------------------------------------
Retirement Benefits 15 yrs 20 yrs 25 yrs 30 yrs 35 yrs 40 yrs 45 yrs
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 250,000 $ 56,250 $ 75,000 $ 93,750 $112,500 $ 131,250 $ 150,000 $ 168,750
- ----------------------------------------------------------------------------------------------------
500,000 112,500 150,000 187,500 225,000 262,500 300,000 337,500
- ----------------------------------------------------------------------------------------------------
750,000 168,750 225,000 281,250 337,500 393,750 450,000 506,250
- ----------------------------------------------------------------------------------------------------
1,000,000 225,000 300,000 375,000 450,000 525,000 600,000 675,000
- ----------------------------------------------------------------------------------------------------
1,250,000 281,250 375,000 468,750 562,500 656,250 750,000 843,750
- ----------------------------------------------------------------------------------------------------
1,500,000 337,500 450,000 562,500 675,000 787,500 900,000 1,012,500
- ----------------------------------------------------------------------------------------------------
1,750,000 393,750 525,000 656,250 787,500 918,750 1,050,000 1,181,250
- ----------------------------------------------------------------------------------------------------
2,000,000 450,000 600,000 750,000 900,000 1,050,000 1,200,000 1,350,000
- ----------------------------------------------------------------------------------------------------
</TABLE>
o Amounts shown are computed based upon straight life annuity amounts and
are subject to an offset for Social Security benefits. Annual retirement
benefits for program participants are based on salary and bonus (variable
compensation) payments as set forth in Table 1. No other forms of
remuneration are included. This table reflects the combination of
qualified and non-qualified pension benefits.
o Credited years of service as of March 1, 1997 are as follows: H. William
Lichtenberger 37 years; Edgar G. Hotard 32 years; John A. Clerico 13
years; David H. Chaifetz 21 years; Paul J. Bilek, 28 years.
Employment Contracts and Termination of Employment and
Change in Control Arrangements
Praxair has entered into identical Severance Compensation Agreements (the
"Agreements") with H. William Lichtenberger, Edgar G. Hotard, John A. Clerico,
David H. Chaifetz, Paul J. Bilek and certain other employees. The Agreements
are designed to retain the executives and provide continuity of management in
the event of any actual or threatened change in control of Praxair. The
Agreements specify circumstances which shall constitute a "Change in Control"
for these purposes. These circumstances include, among others and subject to
the qualifications set forth in the Agreements: (1) any consolidation or merger
in which Praxair is not the continuing or surviving corporation, (2) the sale,
lease, exchange or transfer of all or substantially all of the assets of the
Corporation, (3) acquisition by a person or group of more than 20% of Praxair's
outstanding shares and (4) a change in the majority composition of the Board
not approved by two-thirds of the directors in office prior to the change. The
Agreements provide that if the executive's employment is terminated under
specified conditions after such a change in control, then the executive will be
entitled to receive: (a) accrued salary, incentive compensation and benefits;
(b) enhanced life, disability, accident, health insurance and pension benefits;
(c) a lump sum payment equal to three times the sum of the executive's salary,
bonus and annualized long term incentive grants (stock options and performance
stock awards); (d) reimbursement for certain of the executive's tax
liabilities; and (e) outplacement and financial counseling benefits. Payments
will be made by Praxair or through a grantor trust adopted by Praxair.
The Agreements will expire on December 31, 1998. Thereafter, the
Agreements renew automatically for one year terms, unless Praxair or the
executive gives notice of termination of the Agreement. Notwithstanding any
such notice of termination, if a change in control occurs during the original
or extended term of an Agreement, then the Agreement is automatically renewed
for a period of 24 months beyond the term then in effect. The Agreements
terminate if the executive's employment with Praxair is terminated by the
executive or Praxair prior to a change in control.
21
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of SEC Forms 3, 4 and 5 furnished to Praxair
and written representations that no Form 5 is required, Praxair believes that
during the period January 1, 1996 to December 31, 1996, all reports required by
Section 16(a) of the Securities and Exchange Act of 1934 have been filed by its
officers and directors.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP served as Praxair's independent accountants for the
year ended December 31, 1996 and has been selected by the Board of Directors to
serve in such capacity for the year ending December 31, 1997. Representatives
of Price Waterhouse LLP are expected to be present at the Annual Meeting to be
available to respond to appropriate questions and to make a statement if they
desire.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Proposals of shareholders intended to be presented to Praxair's 1998
Annual Meeting of Shareholders must be received at Praxair's principal
executive offices by November 14, 1997 for inclusion in Praxair's proxy
statement and form of proxy for that meeting. Shareholder proposals should be
directed to the Assistant Corporate Secretary, Praxair, Inc., 39 Old Ridgebury
Road, M-1, Danbury, CT 06810-5113.
ANNUAL REPORTS
Shareholders of record on March 3, 1997 should have received a copy of
Praxair's 1996 Annual Report to Shareholders either with this Proxy Statement
or prior to its receipt. If, upon receipt of this proxy material, you have not
received the Annual Report to Shareholders, please write to the Assistant
Corporate Secretary at the address below and a copy will be sent to you.
IN ADDITION, A COPY OF PRAXAIR'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1996 IS AVAILABLE TO EACH RECORD AND BENEFICIAL OWNER
OF PRAXAIR'S SECURITIES WITHOUT CHARGE UPON WRITTEN REQUEST TO THE ASSISTANT
CORPORATE SECRETARY, PRAXAIR, INC., 39 OLD RIDGEBURY ROAD, M-1, DANBURY, CT
06810-5113.
22
<PAGE>
COST OF PROXY SOLICITATION
The entire cost of soliciting proxies will be borne by Praxair including
the expense of preparing, printing and mailing this Proxy Statement.
Solicitation costs include payments to brokerage firms and others for
forwarding solicitation materials to beneficial owners of Praxair's stock and
reimbursement of out-of-pocket costs incurred for any follow up mailings.
Praxair also has engaged Morrow & Co., Inc. to assist in the solicitation of
proxies from shareholders at a fee of $7,500 plus reimbursement of
out-of-pocket expenses. In addition to use of the mail, proxies may be
solicited personally or by telephone by employees of Praxair without additional
compensation, as well as by employees of Morrow & Co., Inc.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ DAVID H. CHAIFETZ
DAVID H. CHAIFETZ,
Vice President, General Counsel and Secretary
March 7, 1997
YOU ARE URGED TO SEND IN YOUR EXECUTED PROXY PROMPTLY
23
<PAGE>
[LOGO] PRINTED ON RECYCLED PAPER. PRINTED IN U.S.A.
<PAGE>
[PRAXAIR LOGO]
39 OLD RIDGEBURY ROAD
DANBURY, CONNECTICUT 06810-5113
H. William Lichtenberger
Chairman & Chief Executive Officer
Dear Praxair Shareholder:
You are cordially invited to attend our 1997 Annual Meeting of Shareholders
at 9.30 A.M. on Tuesday, April 29, 1997. The meeting will be held in the Grand
Ballroom of the Danbury Hilton and Towers, 18 Old Ridgebury Road, Danbury,
Connecticut. Directions to the meeting are on the reverse side.
You will find information about the meeting in the enclosed Notice and Proxy
Statement. Your participation at the meeting, either through return of your
proxy of your attendance, is important. Five directors are standing for
election at this meeting, including Mr. Raymond W. LeBoeuf, who would be new to
the Board. Please return your proxy card promptly.
I wish to acknowledge the significant contribution of John Creedon who is
retiring from the Board of Directors after serving Praxair since it first
became an independent, publicly traded company. We thank him for his valuable
counsel.
If you plan to attend, please so indicate by checking the appropriate box on
the proxy card.
Whether or not you plan to attend, I encourage you to please complete, sign
and date the proxy/voting instruction card below, detach it from this letter and
return it in the postage paid envelope enclosed in this package.
Sincerely,
/s/ H. William Lichtenberger
----------------------------
H. William Lichtenberger
Chairman and
Chief Executive Officer
March 7, 1997
Detach Proxy Card Here
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
[BOX]
<S> <C> <C> <C>
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote * EXCEPTIONS
listed below for all nominees listed below
</TABLE>
The Board of Directors recommends a vote "FOR" the nominees listed below:
Nominees: C. Fred Fetterolf, Claire W. Gargalli, Edgar G. Hotard, Raymond W.
LeBoeuf and G. Jackson Ratcliffe, Jr.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.
Such a mark will be deemed a vote "FOR" all nominees other than those listed as
exceptions.)
*Exceptions ___________________________________________________________________
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
Check here if you
Plan to attend the Annual Meeting
Have written comments or change of
address on this card
Please sign name exactly as it
appears on this card. Joint owners
should each sign. Attorneys,
trustees, executors, administrators,
custodians, guardians or corporate
officers should give full title.
DATED: _____________________________
SIGNED _____________________________
_____________________________
Votes MUST be indicated
(x) in Black or Blue ink. X
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
<PAGE>
[PRAXAIR LOGO]
ANNUAL MEETING OF SHAREHOLDERS
APRIL 29, 1997 AT 9:30 AM
DANBURY HILTON AND TOWERS
DANBURY, CT
Directions:
From New Jersey:
Danbury is about one hour from the Tappan Zee Bridge. After crossing the
bridge, follow signs to New England and the Cross-Westchester Parkway (I-287).
From I-287, take I-684 North towards Brewster. Take Exit 9E (I-84 East to
Danbury). Get off I-84 at Exit 2 (Mill Plain Road). Go to the bottom of the ramp
and turn left, go to the second light and turn right, go to the next light, turn
right (Old Ridgebury Road) and go up the hill. The Hilton is on your left.
From Boston:
Take Massachusetts Turnpike (Route 90) to Sturbridge, Exit 9. Proceed onto I-84
West through Hartford and Waterbury to Danbury. Take Exit 2A (Old Ridgebury
Road). The exit ramp circles around and over the highway. The Hilton is on your
left.
From Hartford:
Take I-84 West towards Waterbury/Danbury. Take Exit 2A (Old Ridgebury Road). The
exit ramp circles around and up over the highway. The Hilton is on your left.
From New Haven:
Take Route 34 West to Newtown where you pick up I-84 West to Danbury. Take Exit
2A (Old Ridgebury Road). The exit ramp circles around and up over the highway.
The Hilton is on your left.
From White Plains/Westchester:
Take I-684 North towards Brewster and proceed to Exit 9E (I-84 East to Danbury).
Get off I-84 at Exit 2 (Mill Plain Road). Go to the bottom of the ramp and turn
left, go to the second light and turn right, go to the next light, turn right
(Old Ridgebury Road) and go up the hill. The Hilton is on your left.
From NY City Airports & Long Island:
Follow signs to Whitestone Bridge. Cross over bridge and bear left onto the
Hutchinson River Parkway to White Plains and I-684 North towards Brewster. Take
Exit 9E (I-84 East to Danbury). Get off I-84 at Exit 2 (Mill Plain Road). Go to
the bottom of the ramp and turn left, go to second light and turn right, go to
the next light, turn right (Old Ridgebury Road) and go up the hill. The Hilton
is on your left.
Airport Arrival:
From the Ground Transportation Center for Connecticut Limousine Service to
Danbury. At the Danbury depot, call the Danbury Hilton and they will provide
shuttle service for you.
There is no limo service to Danbury from Westchester Airport (White Plains, NY)
or Windsor-Bradley Airport (Hartford, CT).
Detach Proxy Card Here
[PRAXAIR LOGO] PROXY/VOTING INSTRUCTION CARD
- -------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors of Praxair, Inc.
for the Annual Meeting on April 29, 1997
I(we) hereby authorize John A. Clerico, Ronald L. Kuehn, Jr., and David H.
Chaifetz, or any of them, and each with the power to appoint his substitute, to
vote as Proxy for me(us) at the Annual Meeting of Shareholders to be held at The
Danbury Hilton and Towers, 18 Old Ridgebury Road, Danbury, Connecticut on April
29, 1997 at 9:30 A.M., or any adjournment thereof, the number of shares which
I(we) would be entitled to vote if personally present. The proxies shall vote
subject to the directions indicated on the reverse side of this card and proxies
are authorized to vote in their discretion upon such other business as may
properly come before the meeting and any adjournments thereof. The proxies will
vote as the Board of Directors recommends where I (we) do not specify a choice.
For Participants in the Praxair, Praxair Puerto Rico, Union Carbide, UCAR, or
OSi Savings Programs: As to those shares of Praxair, Inc., if any, that are held
for me in the aforementioned Savings Programs, I instruct the Trustee of the
applicable Savings Program to sign a proxy for me in substantially the form set
forth above and on the reverse side. The Trustee shall mark the proxy as I
specify. Where I do not specify a choice, my shares will be voted in the same
proportion as the trustee votes the shares for which it receives instructions.
PRAXAIR, INC.
(Continued and to be dated and P.O. BOX 11140
signed on the reverse side.) NEW YORK, N.Y. 10203-0140
