<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>
[LOGO] PRAXAIR
39 Old Ridgebury Road
Danbury, Connecticut 06810-5113
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1999
Dear Praxair Shareholder:
The Annual Meeting of Shareholders of Praxair, Inc. will be held at 9:30
a.m. on Tuesday, April 27, 1999 in the Grand Ballroom of the Danbury Hilton and
Towers, 18 Old Ridgebury Road, Danbury, Connecticut, for the following purposes:
1. To elect four 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 1, 1999 will be entitled to vote at the meeting or any
adjournment thereof.
It is important that your shares be represented and voted at the meeting.
You may vote your shares by means of a proxy form using one of the following
methods:
1. Electronically on the Internet (if instructions for this method
are included in this package), OR
2. By telephone (if instructions for this method are included in
this package), OR
3. By signing and dating the proxy/voting instruction card
enclosed in this package and returning 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.
We encourage you to complete and file your proxy electronically or by
telephone (if those options are available to you) as a means of reducing the
Company's expenses related to the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ David H. Chaifetz
DAVID H. CHAIFETZ,
Vice President, General Counsel and Secretary
March 6, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUALMEETING IN PERSON, PLEASE PROMPTLY
COMPLETE AND FILE A PROXY, EITHER BY INTERNET, BY TELEPHONE OR BY MAIL.
<PAGE>
[LOGO] PRAXAIR
39 Old Ridgebury Road
Danbury, Connecticut 06810-5113
PROXY STATEMENT
Annual Meeting of Shareholders, Tuesday, April 27, 1999
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 27, 1999, 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 10, 1999. The
enclosed proxy is solicited on behalf of the Board of Directors of Praxair.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Item 1: Election of Directors
Four directors are to be elected. Praxair's Board of Directors is divided
into three classes serving staggered terms. The terms of four of the present
directors expire this year and each has been nominated for reelection. As of
January 4, 1999, Edgar G. Hotard's retirement date, the Board of Directors
consists of 11 members. It will remain at 11 members upon the election of 4
directors at this meeting.
Your Board of Directors recommends that John A. Clerico, Dale F. Frey,
Raymond W. LeBoeuf and Benjamin F. Payton be elected to serve in the class with
terms expiring in 2002. 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 you otherwise direct on the proxy form (whether by Internet,
telephone or mail), the proxy holders intend to vote your shares 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 your 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 will be 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 your shares in
accordance with their best judgment.
1
<PAGE>
PROXY AND VOTING PROCEDURES
Shareholders Entitled to Vote
Shareholders of record at the close of business on March 1, 1999 will be
entitled to vote at the Annual Meeting. As of that date, a total of 157,478,221
shares of Praxair's Common Stock were outstanding. Each share of Common Stock is
entitled to one vote.
Filing of Proxies
Your vote is important. Because many shareholders cannot attend the Annual
Meeting in person, it is necessary that a large number be represented by proxy.
Most shareholders have a choice of voting over the Internet, by using a
toll-free telephone number or by completing a proxy card and mailing it in the
postage-paid envelope provided. Check your proxy card or the information
forwarded by your bank, broker or other holder of record to see which options
are available to you. Please be aware that if you vote over the Internet, you
may incur costs such as telecommunication and Internet access charges for which
you will be responsible.
The Internet and telephone voting procedures are designed to authenticate
shareholders by use of a Control Number and to allow shareholders to confirm
that their instructions have been properly recorded.
Voting of Proxies
All shares entitled to vote and represented by a properly completed proxy
(either by Internet, telephone or mail) will be voted at the Annual Meeting as
indicated on the proxy unless earlier revoked by you. If no instructions are
indicated for a matter on a properly completed proxy, the shares represented by
that proxy will be voted on that matter as recommended by the Board of
Directors. If a proxy is returned by mail unsigned, it will also be voted as
recommended by the Board of Directors. Execution of the proxy also confers
discretionary authority to the proxy holder to vote your shares on other matters
that may properly come before the meeting.
Revocation of Proxy
You may revoke your proxy at any time before it is voted by filing with
Praxair's Secretary a written revocation, by timely delivery of a properly
completed, later-dated proxy (including by Internet or telephone), or by voting
in person at the Annual Meeting.
Voting at the Annual Meeting
The method by which you vote will in no way limit your right to vote at
the Annual Meeting if you later decide to attend in person. If your shares are
held in the name of a bank, broker or other holder of record, you must obtain a
proxy, executed in your favor, from the holder of record, to be able to vote at
the Annual Meeting.
Vote Required
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 filed 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.
2
<PAGE>
HOW TO RECEIVE YOUR ANNUAL REPORT AND
PROXY STATEMENT ON-LINE
Save Praxair future postage and printing expense by consenting to receive
future annual reports and proxy statements on-line on the Internet.
Most shareholders can elect to view future proxy statements and annual
reports over the Internet instead of receiving paper copies in the mail. Those
shareholders will be given the opportunity to consent to future Internet
delivery when they vote their proxy. (For some shareholders, this option is only
available if you vote by Internet.)
If you are not given an opportunity to consent to Internet delivery when
you vote your proxy, contact the bank, broker or other holder of record through
which you hold your shares and inquire about the availability of such an option
for you.
If you consent, your account will be so noted and, when Praxair's 1999
Annual Report and the Proxy Statement for the 2000 Annual Meeting of
Shareholders become available, you will be notified on how to access them on the
Internet.
If you do elect to receive your Praxair materials via the Internet, you
can still request paper copies by contacting the Assistant Corporate Secretary
at Praxair, Inc., 39 Old Ridgebury Road, M1, Danbury, CT 06810-5113.
3
<PAGE>
SHARE OWNERSHIP
Principal Holders
The only persons known by Praxair to be beneficial owners of more than
five percent of Praxair's Common Stock (par value $0.01) are the following:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Name and Address of Number of Shares Percent of Shares
Beneficial Owner Beneficially Owned Outstanding(a)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Capital Research and Management Company................ 12,918,050(b) 8.2%
333 South Hope Street, Los Angeles, CA 90071
Sanford C. Bernstein & Co., Inc............................ 9,562,030(c) 6.1%
767 Fifth Avenue, New York, NY 10153
Ark Asset Management Co., Inc.............................. 8,089,600(d) 5.1%
125 Broad Street, New York, NY 10004
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Notes: (a) Based on 157,571,199 total shares outstanding on December 31,
1998.
(b) Holdings as of December 31, 1998 as reported in SEC Schedule 13G
by Capital Research and Management Company. According to this
report, Capital Research and Management Company had sole
investment power as to 12,918,050 shares.
(c) Holdings as of December 31, 1998 as reported in SEC Schedule 13G
by Sanford C. Bernstein & Co., Inc. According to this report,
Sanford C. Bernstein & Co., Inc. had sole voting power as to
4,811,937 shares, sole investment power as to 9,562,030 shares and
shared voting power as to 1,046,447 shares.
(d) Holdings as of December 31, 1998 as reported in SEC Schedule 13G
by Ark Asset Management Co., Inc. According to this report, Ark
Asset Management Co., Inc. had sole voting power as to 5,896,800
shares and sole investment power as to 8,089,600 shares.
- --------------------------------------------------------------------------------
Directors and Executive Officers
As of March 1, 1999, 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, 20 persons, beneficially own
1.3% of the outstanding shares):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED AND OTHER EQUITY INTERESTS
- ---------------------------------------------------------------------------------------------------------------------------
Common Deferred Performance Stock
Name Position Stock Stock(2) Stock(3) Total Options(4)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H. William Lichtenberger Chairman & Chief 209,465(1) 108,215 90,000 407,680 502,000
Executive Officer
- ---------------------------------------------------------------------------------------------------------------------------
John A. Clerico Director, Executive 155,969 36,505 34,500 226,974 215,000
Vice President &
Chief Financial Officer
- ---------------------------------------------------------------------------------------------------------------------------
David H. Chaifetz Vice President, 51,252 9,676 21,000 81,928 86,700
General Counsel
& Secretary
- ---------------------------------------------------------------------------------------------------------------------------
Paul J. Bilek Executive Vice President 12,222 7,038 28,500 47,760 66,650
- ---------------------------------------------------------------------------------------------------------------------------
Alejandro Achaval Director 1,660 6,686 -- 8,346 7,500
- ---------------------------------------------------------------------------------------------------------------------------
C. Fred Fetterolf Director 3,238 7,733 -- 10,971 7,500
- ---------------------------------------------------------------------------------------------------------------------------
Dale F. Frey Director 1,627 1,793 -- 3,420 7,500
- ---------------------------------------------------------------------------------------------------------------------------
Claire W. Gargalli Director 1,715 2,381 -- 4,096 7,500
- ---------------------------------------------------------------------------------------------------------------------------
Ronald L. Kuehn, Jr. Director 5,301 6,212 -- 11,513 7,500
- ---------------------------------------------------------------------------------------------------------------------------
Raymond W. LeBoeuf Director 1,000 3,164 -- 4,164 2,500
- ---------------------------------------------------------------------------------------------------------------------------
Benjamin F. Payton Director 1,721 2,187 -- 3,908 7,500
- ---------------------------------------------------------------------------------------------------------------------------
G. Jackson Ratcliffe,
Jr. Director 1,721 12,872 -- 14,593 7,500
- ---------------------------------------------------------------------------------------------------------------------------
H. Mitchell Watson, Jr. Director 1,709 4,098 -- 5,807 7,500
- ---------------------------------------------------------------------------------------------------------------------------
Directors & Executive (20 persons) 512,316 250,230 297,000 1,059,546 1,186,350
Officers as a group
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: 1) Amounts reported as Common Stock include 5,000 shares held by a member
of H. William Lichtenberger's family. Also included in the reported
amounts are 23,950 shares held by the Lichtenberger Foundation over
which Mr. Lichtenberger had shared voting and investment power.
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 1, 1999.
4
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Board of Directors
The following pages present information about the persons who comprise
Praxair's Board of Directors; including the four nominees for reelection. During
1998, the Board held seven meetings.
Director Attendance
During his current term to date, each nominee for reelection attended
Board meetings and meetings of committees of which he is a member as follows:
Mr. Clerico, 100%; Mr. Frey, 93%; Mr. LeBoeuf, 100%; and Dr. Payton, 93%. During
this same period, the continuing directors collectively attended 97% 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, 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.
5
<PAGE>
- --------------------------------------------------------------------------------
ALEJANDRO ACHAVAL Age 66
Director Since 1992 Term Expires 2001
Chairman, Chief Executive Officer and Controlling Partner of IMEXTRADE S.A. and
TRINIDAD S.C.A.
[GRAPHIC]
Mr. Achaval served as Vice Chairman & Chief Executive Officer, IPAKO Industrias
Petroquimicas Argentinas S.A. between 1975 and his retirement in 1994.
Mr. Achaval also has served as Chairman of the Argentine Chamber of Chemical and
Petrochemical Industries, as a member of the Board and Executive Committee of
the Argentine Board of Industry and as a director of I.D.E.A. Argentine
Institute for Management Development, the National Institute of Technology
(INTI), and FIPLASTO S.A.
Mr. Achaval is Chairman of FUNDES, a subsidiary of Nueva A.G. (Switzerland), a
director of Minetti S.A., a company controlled by Holderbank A.G. (Switzerland),
a director of Praxair Argentina S.A., an indirect subsidiary of Praxair, Inc.
and a director of the Fundacion Invertir, an Argentine investment foundation.
- --------------------------------------------------------------------------------
JOHN A. CLERICO Age 57
Director Since 1992 Term Expires 1999
Executive Vice President since 1997 and Chief Financial Officer of Praxair
since 1992.
[GRAPHIC]
In 1990, Mr. Clerico 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 and assumed the position of Vice
President and Chief Financial Officer of Praxair. He was also the Treasurer of
Praxair between 1992 and 1994. In 1997, he was elected Executive Vice President
of the Company.
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 70
Director Since 1992 Term Expires 2000
Director of Various Corporations
[GRAPHIC]
Mr. Fetterolf served as a director and as 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
Chairman of the Greater Pittsburgh Working Together Consortium.
Mr. Fetterolf is also a director of Allegheny Teledyne Corporation, Commonwealth
Aluminum Co., Dentsply International, Mellon Bank Corporation, Mellon Bank,
N.A., Pennzoil-Quaker State Corporation and Union Carbide Corporation.
6
<PAGE>
- --------------------------------------------------------------------------------
DALE F. FREY Age 66
Director Since 1993 Term Expires 1999
Director of Various Corporations
[GRAPHIC]
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.
He is a trustee of Franklin & Marshall College and a member of New York
University Stern School of Business Advisory Board. He is also a member of the
Forstmann Little Company and the Aurora Capital Partners advisory boards.
Mr. Frey is also a director of Aftermarket Technology Corporation, Community
Health Systems, First American Financial Corporation, Promus Hotel Corporation
and Roadway Express, Inc.
- --------------------------------------------------------------------------------
CLAIRE W. GARGALLI Age 56
Director Since 1992 Term Expires 2000
Director of Various Corporations
[GRAPHIC]
Ms. Gargalli served as Vice Chairman, Diversified Search Companies from 1990 to
1998 and as Director, President and Chief Operating Officer of Equimark
Corporation between 1987 and 1990. During 1987 - 1990, 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 and Middlebury College.
Ms. Gargalli is also a director of Baker Hughes, Inc. and UNOVA, Inc.
- --------------------------------------------------------------------------------
RONALD L. KUEHN, JR. Age 63
Director Since 1992 Term Expires 2001
Chairman, President and Chief Executive Officer of Sonat Inc. since 1986
[GRAPHIC]
Mr. Kuehn is a trustee of Tuskegee University. He is also 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
Corporation, Protective Life Corporation, Transocean Offshore Inc., Southern
Natural Gas Company and Union Carbide Corporation.
7
<PAGE>
- --------------------------------------------------------------------------------
RAYMOND W. LEBOEUF Age 52
Director Since 1997 Term Expires 1999
Chairman and Chief Executive Officer of PPG Industries, Inc. since 1997
[GRAPHIC]
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. In 1995,
he was elected President and Chief Operating Officer and a director of PPG
Industries, Inc. and he assumed his current positions in 1997.
Mr. LeBoeuf is a director of Magee-Womens Hospital, a trustee of Robert Morris
College and a board member of the Allegheny Conference on Community Development,
the Business Roundtable and the Extra Mile Education Foundation.
- --------------------------------------------------------------------------------
H. WILLIAM LICHTENBERGER Age 63
Director Since 1992 Term Expires 2001
Chairman and Chief Executive Officer of Praxair since 1992
[GRAPHIC]
Mr. Lichtenberger 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 and
assumed his current positions.
Mr. Lichtenberger is a member of the Conference Board, and The Business
Roundtable and its Policy Committee. He is also a director of the National
Association of Manufacturers and a member of its Executive Committee. He is on
the Advisory Board of the Connecticut Yankee Council of Boy Scouts.
Mr. Lichtenberger is also a director of Arch Chemicals, Inc. and Ingersoll Rand
Company.
- --------------------------------------------------------------------------------
BENJAMIN F. PAYTON Age 66
Director Since 1992 Term Expires 1999
President, Tuskegee University since 1981
[GRAPHIC]
Dr. Payton is a member of The Business-Higher Education Forum and a director of
the National Action Council for Minority Engineers. He is also on the Board of
Directors of the Tuskegee Chamber of Commerce and is on the Royal Council,
Alabama Shakespeare Festival.
Dr. Payton is also a director of AmSouth Bancorporation, Liberty Corporation,
Morrison Healthcare, Inc., Ruby Tuesday, Inc. and Sonat Inc.
8
<PAGE>
- --------------------------------------------------------------------------------
G. JACKSON RATCLIFFE, JR. Age 62
Director Since 1992 Term Expires 2000
Chairman, President and Chief Executive Officer of Hubbell Incorporated since
1987
[GRAPHIC]
Mr. Ratcliffe is a trustee of the Manufacturers' Alliance for Productivity and
Innovation, Inc. (MAPI).
Mr. Ratcliffe is also a director of Aquarion Company, Olin Corporation and
Sunoco, Inc.
- --------------------------------------------------------------------------------
H. MITCHELL WATSON, JR. Age 61
Director Since 1992 Term Expires 2001
President, Sigma Group of America since 1992
[GRAPHIC]
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 and the non-executive Chairman of MAPICS, Inc.
9
<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, 51, is an Executive Vice President of Praxair. Mr. Bilek
served as President, North American Industrial Gases from 1996 to 1998, as Vice
President, North American Merchant Gases between 1995 and 1996, and as
President, Praxair Surface Technologies, Inc. between 1993 and 1995. He served
as President, Praxair Canada Inc. between 1991 and 1993, and 1995 through 1998.
He assumed his current position in 1998.
David H. Chaifetz, 56, is Vice President, General Counsel and Secretary of
Praxair. In 1989, Mr. Chaifetz was appointed General Counsel of Praxair. He
assumed his current positions in 1992.
John A. Clerico, 57, see description under "Board of Directors."
Michael E. DeDomenico, 51, is a Vice President of Praxair and President,
Praxair Distribution, Inc. Mr. DeDomenico was elected a Vice President of
Praxair in 1993. He served as President, Praxair Europe from 1993 to 1998, 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
1998.
Ivan F. Garcia, 56, has been a Vice President of Praxair since 1997. Mr.
Garcia is also Chief Executive Officer of S.A. White Martins, Praxair's
Brazilian subsidiary. Prior to his election as Chief Executive Officer in 1997,
he was its Vice President and Chief Operating Officer. Mr. Garcia currently
serves as a director of the Brazilian Air Gases Industries Association and the
International Oxygen Manufacturers Association. He also is on the board of the
Brazilian Business Council for Sustainable Development and sits on the Executive
Committee and Business Affairs Committee of the American Chamber of Commerce in
Rio de Janeiro. Mr. Garcia is also on the board of the Brazilian Pulp and Paper
Technical Association and is a member of the Energy Business Council of Rio de
Janeiro Trade Chamber.
Jesus E. Gonzalez, Jr., 57, is Vice President, Chemicals and Refining
Business and Steel Markets, of Praxair. Mr. Gonzalez served as Business
Director, North American On-Site Gases of Praxair between 1990 and 1994. He was
elected Vice President, North American On-Site Gases in 1994 and assumed his
current position in 1997.
H. William Lichtenberger, 63, see description under "Board of Directors."
Ricardo S. Malfitano, 40, is a Vice President of Praxair, President, North
American Industrial Gases and President, Praxair Canada Inc. Mr. Malfitano
served as Chief Operating Officer of S.A. White Martins ("SAWM"), Praxair's
Brazilian subsidiary, from 1997 to 1998, as Director of SAWM's Brazilian
industrial gases business in 1996 and as Director, Electronic Gases for Praxair
from 1994 to 1996. He assumed his current positions in 1998.
Gabriel Toledo Ugarte, 59, is a Vice President of Praxair and President,
Praxair Europe. Mr. Toledo served as General Manager of Argon SA, now known as
Praxair Espana, S.L., Praxair's Spanish subsidiary, from 1994 to 1998. He
assumed his current positions in 1998.
J. Robert Vipond, 53, is Vice President and Controller of Praxair. Mr.
Vipond assumed his current position in 1994 when he joined Praxair. Between 1990
and 1994, Mr. Vipond served as Chief Financial Officer of the Corporate Finance
Group of GE Capital, a wholly owned subsidiary of General Electric Company.
Thomas W. von Krannichfeldt, 49, is a Vice President of Praxair and
President, Praxair Surface Technologies, Inc. Mr. von Krannichfeldt served as
President, Praxair Mexico, S.A. de C.V. between 1993 and 1995. He assumed his
current positions in 1995.
10
<PAGE>
Certain Relationships and Related Transactions
In connection with his transfer from Europe to the United States, Praxair
extended to Mr. DeDomenico a short-term advance in the amount of $100,000 to
facilitate his purchase of a house. The advance was repaid in full by Mr.
DeDomenico on July 31, 1998, approximately three and one-half months after it
was made. No interest was charged to Mr. DeDomenico for this advance.
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 1998. 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, Claire W. Gargalli, Raymond W. LeBoeuf, G. Jackson Ratcliffe, Jr. and
H. Mitchell Watson, Jr. The Committee met four times during1998. 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 the Executive Officers of Praxair, and (2) determines, and
recommends to Praxair's Board of Directors, Praxair's policies relating to the
compensation of the other elected 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 Dale F. Frey as Chairman, Alejandro Achaval, John A. Clerico,
Claire W. Gargalli and Raymond W. LeBoeuf. The Committee met three times during
1998. 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.
11
<PAGE>
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 1998. 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.
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 five
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.
12
<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 1998 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 28 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 this Index provides an appropriate industry peer group for
investment comparisons. The companies chosen for the compensation comparator
group are not necessarily those represented in the shareholder return
comparisons. The Committee believes that Praxair's competitors for executive
talent are a broader group of companies and not limited only to the companies in
the investment comparison.
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, their salaries relative to the market and in recognition
of certain increased responsibilities. Mr Lichtenberger's salary was adjusted by
4.9 percent on an annualized basis, effective April 1, 1998.
13
<PAGE>
Performance-Based Annual Variable Compensation
At its January 1998 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 achievement of agreed upon goals in the areas of growth
strategies and strategic planning, safety and environmental performance, people
excellence, marketing and customer focus, operational excellence and shareholder
value creation.
Second, the Committee approved the continuation of the current target
variable compensation payouts as a percentage of base salary. 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 1998 Annual Business Plan would warrant variable compensation
at the target level.
At its January 1999 meeting, the Committee evaluated 1998 performance of
the company against its 1998 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 1998 Plan, the
Committee noted that although the company fell somewhat short of its net income
plan, 1998 results again reached record levels at $425 million. Operating profit
was $885 million, up 4.4 percent from 1997. These results were achieved in spite
of an extraordinarily difficult external environment in the U.S. and some of
Praxair's key international markets, most significantly, Brazil. Most of the
company's 1998 nonfinancial goals noted above were either accomplished or
progress was well under way, although shareholder value delivery was clearly a
disappointment. Notably the Corporation's performance on personnel safety, a
significant area of focus, showed considerable improvement during 1998. The
Committee also reviewed the performance of the Corporation in comparison to the
performance measures established by the Committee in 1998 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 overall performance during 1998 in relation to both
financial and non-financial plans, the Committee awarded 1998 performance-based
annual variable compensation for the Senior Executives at a level slightly above
the target payout percentage noted above. During 1998, the Corporation
instituted a split dollar life insurance program for certain executives under
which they could elect to forego receipt of all or a portion of salary or
variable compensation in exchange for this insurance. The variable compensation
award for Mr. Lichtenberger was set at $610,000 of which Mr. Lichtenberger
elected to forego $500,000 in exchange for split dollar life insurance.
14
<PAGE>
Long Term Incentives
The Committee reviewed the status of the grant of performance shares and
stock options that it made to the Senior Executives and 90 other officers and
key employees in October 1996 (together called "Launch Plan II").
Launch Plan II is a three-year program under which participating
individuals receive awards of performance shares (payable in Praxair common
stock) and stock options. The performance shares 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
performance shares 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 performance shares will vest. The stock
options become exercisable on January 1, 2000.
When the Launch II awards were made in 1996, the Committee, with the
advice of its compensation consultant, sized the grants with the expectation
that they would remain competitive with the market in the area of long term
incentives over the three year life of this program. However, based on analysis
provided by the Committee's compensation consultant, it became apparent that a
higher equity component was necessary to keep Praxair executive compensation
competitive with peer companies. Accordingly, supplemental stock option grants
were made to most Launch Plan II participants in December 1998 to maintain
competitive market positioning. Mr. Lichtenberger was granted additional stock
options on 50,000 shares for this purpose. The Committee believes that Launch
Plan II has successfully focused the management team on achieving the required
growth targets even in challenging economic conditions. As a condition for
participation in Launch Plan II, participating executives are required to sign
an agreement not to compete with Praxair after they leave the company.
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
shareholders adopted at the 1996 Annual Meeting of Stockholders, a performance
based plan for annual and long term incentives, 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
Claire W. Gargalli
Raymond W. LeBoeuf
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 types of risks as are 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, in July 1992, at its first meeting, the Compensation and
Management Development Committee of the Board of Directors adopted guidelines
for stock ownership by executive officers. These guidelines have been met or
exceeded by each Executive Officer.
Value of Shares Owned
---------------------
Chief Executive Officer 4.0x Base Salary
President and Chief Operating Officer 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 was expected to hold shares of Praxair stock equal in value to his or
her annual base salary by 1998. All of those senior managers have met the
ownership guidelines. In 1997, the same stock ownership guidelines were extended
to all the senior managers now participating in Launch Plan II (see the
Compensation Committee Report, "Long Term Incentives") who were not part of the
original senior manager group. These managers are expected to meet the
guidelines within 5 years.
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, performance stock grants
and stock options form an important 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) special recognition
awards granted in the form of stock options. As a result of all of these
programs, as a group, Praxair employees have become the Corporation's fourth
largest shareholder.
16
<PAGE>
TABLE 1
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation(1)
- ---------------------------------------------------------------------------------------------------------------------------
Awards Payouts
- ---------------------------------------------------------------------------------------------------------------------------
Other Securities
Annual Underlying LTIP All Other
Name and Salary Bonus(2) Compensation(3) Options Payouts Compensation(5)
Principal Position Year ($) ($) ($) (#) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
H. William Lichtenberger 1998 840,000 110,000(6) 0 50,000 0 42,059
Chairman and Chief 1997 788,750 675,000 52,500 0 0 45,109
Executive Officer 1996 668,300 1,200,000 93,332 115,000 12,611,873(4) 94,501
- ---------------------------------------------------------------------------------------------------------------------------
Edgar G. Hotard 1998 515,000 325,000 0 40,000(8) 0 29,776
Former President and 1997 457,500 350,000 7,778 0 0 26,105
Chief Operating Officer(7) 1996 415,000 700,000 15,555 70,000 7,206,874(4) 56,493
- ---------------------------------------------------------------------------------------------------------------------------
John A. Clerico 1998 417,500 220,000 0 27,500 0 21,661
Executive Vice
President 1997 375,000 225,000 20,000 0 0 21,410
and Chief Financial
Officer 1996 356,300 450,000 40,000 37,000 4,504,240(4) 41,289
- ---------------------------------------------------------------------------------------------------------------------------
David H. Chaifetz 1998 293,750 160,000 3,556 12,000 0 13,833
Vice President, 1997 271,251 175,000 3,889 0 0 12,578
General Counsel 1996 254,000 350,000 7,778 28,000 2,522,975(4) 23,541
and Secretary
- ---------------------------------------------------------------------------------------------------------------------------
Paul J. Bilek 1998 321,250 220,481 4,444 40,000 0 15,875
Executive Vice President 1997 307,500 288,385 5,667 0 0 14,907
1996 242,200 313,700 6,222 37,000 608,039(4) 14,546
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: 1) As of December 31, 1998, the named executive officers held
Performance Shares as follows: H.W. Lichtenberger 90,000 shares
($3,172,500); E.G. Hotard 54,000 shares ($1,903,500); J.A. Clerico
34,500 shares ($1,216,125); D. H. Chaifetz 21,000 shares ($740,250);
P. J. Bilek 28,500 shares ($1,004,625). The foregoing represent
Performance Shares granted in 1996 for the performance period 1997
through 1999. Parenthetical figures represent the "value" of those
Performance Share 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, 1998 closing
market price of Praxair Common Stock ($35.25 per share). Performance
Shares are subject to vesting conditions based on Praxair's
cumulative earnings per share ("EPS") performance for the period
1997 through 1999. 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 this footnote
1 will vest to the extent that EPS performance exceeds 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 Performance Shares until such shares are
vested. Participation in this program is conditioned on the
recipient's execution of a non-compete agreement.
2) Reported in this column are annual awards that Praxair characterizes
as Performance Based Annual Variable Compensation. Twenty percent of
the variable compensation paid for 1996, 1997 and 1998 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 the North American Industrial Gases
performance sharing program.
3) Represents the value of the discount from the market value of
Praxair's Common Stock that is, in effect, received by individuals
who have deferred variable compensation earned in 1996, 1997 and
1998 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.
5) Amounts reported in this column for 1998 are comprised of the
following items:
<TABLE>
<CAPTION>
Savings Plan Company Match* Executive Life Insurance Value
<S> <C> <C>
H. William Lichtenberger $31,500 $10,559
Edgar G. Hotard 19,313 10,463
John A. Clerico 15,656 6,005
David H. Chaifetz 11,016 2,817
Paul J. Bilek 12,952 2,923
</TABLE>
*Includes both qualified and unqualified match amounts
6) Mr. Lichtenberger elected to forego $500,000 of his total $610,000
variable compensation award for 1998 in exchange for split dollar
life insurance. Praxair has created a split dollar insurance program
for its senior officer group whereby officers may voluntarily forego
portions of their future salary and/or bonus; substituting a split
dollar life insurance benefit of equal value. Under Praxair's split
dollar plan, these arrangements will only run for a fixed and
limited duration of years (typically the active working years of the
officer) and then be terminated by the pay-off of the insurance
premium advanced by Praxair. During the term of the split dollar
policy, Praxair is always secured for its advances and the officer
pays tax on imputed income generated by his or her portion of the
split dollar death benefit during the life of the split dollar
arrangement. Based upon reasonable financial and mortality
assumptions used to construct the arrangement, Praxair expects that
each arrangement will not incur a cost greater than if it had paid
the amounts as current cash compensation at the date of the exchange
and so will be cost neutral for Praxair.
7,8) Mr. Hotard retired effective January 4, 1999. Mr. Hotard's stock
option grant was awarded in January 1998.
17
<PAGE>
TABLE 2
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- ---------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value
INDIVIDUAL GRANTS at Assumed Annual Rates of
Stock Price Appreciation for
Option Term(1)
- ---------------------------------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted (#) Fiscal Year Price Date 5% ($) 10% ($)
- ---------------------------------------------------------------------------------------------------------------------------
Assumed Stock Price as of
12/18/08: $54.57/sh $ 86.89/sh
1/27/08: $66.07/sh $105.21/sh
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H. William Lichtenberger 50,000 2.51% $33.500 12/18/08 $1,053,500 $2,669,500
- ---------------------------------------------------------------------------------------------------------------------------
Edgar G. Hotard 40,000 2.01 40.5625 1/27/08 1,020,300 2,585,900
- ---------------------------------------------------------------------------------------------------------------------------
John A. Clerico 10,000 0.50 40.5625 1/27/08 255,075 646,475
- ---------------------------------------------------------------------------------------------------------------------------
17,500 0.88 33.500 12/18/08 368,725 934,325
- ---------------------------------------------------------------------------------------------------------------------------
David H. Chaifetz 12,000 0.60 33.500 12/18/08 252,840 640,680
- ---------------------------------------------------------------------------------------------------------------------------
Paul J. Bilek 40,000 2.01 33.500 12/18/08 842,800 2,135,600
- ---------------------------------------------------------------------------------------------------------------------------
</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 rate assumed in the column (yielding 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>
TABLE 3
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
- ---------------------------------------------------------------------------------------------------------------------------
Number of Securities
Shares Underlying Value(1) 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 40,000 $868,480 502,000 165,000 $10,017,057 $87,500
- ---------------------------------------------------------------------------------------------------------------------------
Edgar G. Hotard 0 0 267,000 110,000 $ 5,311,402 0
- ---------------------------------------------------------------------------------------------------------------------------
John A. Clerico 0 0 227,000 64,500 $ 4,678,971 $30,625
- ---------------------------------------------------------------------------------------------------------------------------
David H. Chaifetz 5,500 $127,496 86,700 40,000 $ 1,688,135 $21,000
- ---------------------------------------------------------------------------------------------------------------------------
Paul J. Bilek 3,150 $ 74,790 66,650 77,000 $ 1,128,679 $70,000
- ---------------------------------------------------------------------------------------------------------------------------
</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, 1998. The market price on this date was $35.25 per share.
18
<PAGE>
TABLE 4
- --------------------------------------------------------------------------------
Line chart of COMPARISON OF CUMULATIVE TOTAL RETURN AMONG PRAXAIR, INC., S&P 500
INDEX & DOW JONES SPECIALTY CHEMICALS INDEX
Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
1993 1994 1995 1996 1997 1998
-------------------------------------------------------
Praxair $100 $125 $208 $287 $283 $224
S&P 500 $100 $101 $139 $171 $229 $294
Dow Jones $100 $ 96 $126 $143 $164 $157
ASSUMES $100 INVESTED ON DECEMBER 31, 1993 IN PRAXAIR COMMON STOCK,
THE DOW JONES SPECIALTY CHEMICALS INDEX, AND THE S&P 500 INDEX
Notes: Total return assumes reinvestment of dividends. The Dow Jones Specialty
Chemicals Index is a published index currently covering seventeen companies,
including Praxair.
19
<PAGE>
Defined Benefit or Actuarial Plans
Table 5 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 5
<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
- ---------------------------------------------------------------------------------------------------------------------------
<C> <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, 1999 are as follows: H. William
Lichtenberger 39 years; Edgar G. Hotard 33 years; John A. Clerico 15 years;
David H. Chaifetz 23 years; Paul J. Bilek 30 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, 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 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 Agreement terminates if
the executive's employment with Praxair is terminated by the executive or
Praxair prior to a change in control.
20
<PAGE>
Edgar G. Hotard retired on January 4, 1999 as the president and chief
operating officer of Praxair after thirty three years of service. He will
receive pension and other retirement benefits as provided under Praxair's
qualified and non-qualified pension plans and other programs. Mr. Hotard has
agreed to provide consulting services to Praxair for one year from his
retirement date for a fee equal to his final annual salary. In addition, Mr.
Hotard will receive payments in the amount of approximately $2,500,000 in
exchange for an extension of his existing non-compete agreement with the company
and other consideration.
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, 1998 to December 31, 1998, 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
PricewaterhouseCoopers LLP served as Praxair's independent accountants for
the year ended December 31, 1998 and has been selected by the Board of Directors
to serve in such capacity for the year ending December 31, 1999. Representatives
of PricewaterhouseCoopers 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 2000 ANNUAL MEETING
To be included in Praxair's proxy statement and form of proxy, proposals
of shareholders intended to be presented to Praxair's 2000 Annual Meeting of
Shareholders must be received at Praxair's principal executive offices by
November 15, 1999. Otherwise, in order for a shareholder to bring other business
before that shareholder meeting, Praxair's Certificate of Incorporation requires
that proper written notice be received by Praxair before February 28, 2000.
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 1, 1999 should have received a copy of
Praxair's 1998 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, 1998 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.
21
<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 6, 1999
YOU ARE URGED TO PROMPTLY COMPLETE AND FILE A PROXY
<PAGE>
VOTE BY INTERNET OR TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
You may vote your shares by proxy using any of the following methods. Please
consider the convenience of Internet or telephonic voting. These methods also
reduce Praxair's expenses.
The Internet and telephone voting facilities will close at 8:00 AM Eastern time
on April 27, 1999.
BY INTERNET
Access the website
Http://proxy.shareholder.com/px
and follow the instructions. You will be asked to enter the number located below
in the box labeled "Control Number".
BY TELEPHONE
On a touch-tone phone, dial the toll-free number
1-800-481-9825
and follow the instructions. You will be asked to enter the number located below
in the box labeled "Control Number".
BY MAIL
Mark, sign and date the proxy form attached below, detach it, and return it
promptly in the enclosed envelope.
If you have submitted your proxy by Internet or by telephone, there is no need
for you to mail back the proxy card attached below.
HOW TO RECEIVE YOUR ANNUAL REPORT AND PROXY STATEMENT ON-LINE
Save Praxair future postage and printing expense by consenting to receive future
annual reports and proxy statements on-line on the Internet. Whether you vote by
Internet, by telephone or by mail, you will be given the opportunity to consent
to future electronic delivery. See page 3 of the proxy statement for more
information about this option
USE THE INTERNET TO VOTE. IT'S FAST AND CONVENIENT
HTTPS://PROXY.SHAREHOLDER.COM/PX Control Number
DETACH PROXY CARD HERE ONLY IF YOU ARE NOT VOTING BY INTERNET OR BY TELEPHONE
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<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1999 AT 9:30AM
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 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.
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 car or ground transportation service to Danbury from Westchester
Airport (White Plains, NY) or Windsor-Bradley Airport (Hartford, CT).
DETACH PROXY CARD HERE ONLY IF YOU ARE NOT VOTING BY INTERNET OR BY TELEPHONE
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(Reverse side of Voting Instructions)
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<PAGE>
1. Election of Directors
FOR all nominees / / WITHHOLD AUTHORITY to vote / / *EXCEPTIONS / /
listed below for all nominees listed below
The Board of Directors recommends a vote "FOR" the nominees listed below:
Nominees: 01 - John A. Clerico, 02 - Dale F. Frey, 03 - Raymond W. LeBoeuf,
04 - Benjamin F. Payton
(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
Consent to future electronic
delivery of Annual
Report/Proxy Statement (see
explanation at page 3 of the
Proxy Statement) / /
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
----------------------------
----------------------------
Vote MUST be indicated
(X) in Black or Blue Ink /X/
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope
- --------------------------------------------------------------------------------
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<PAGE>
PRAXAIR
PROXY/VOTING INSTRUCTION CARD
- --------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors of Praxair, Inc.
for the Annual Meeting on April 27, 1999
I(we) hereby authorize H. W. Lichtenberger, G. Jackson Ratcliffe, 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 27, 1999 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 Distribution, 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.
P. O. BOX 11140
NEW YORK, NY 10203-0140
(Continued and to be dated and
signed on the reverse side)
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