<PAGE>
PRAXAIR Praxair, Inc.
39 Old Ridgebury Road
Danbury, CT 06810-5113
H. William Lichtenberger
Chairman and
Chief Executive Officer
March 1, 2000
Dear Fellow Praxair Shareholder:
Enclosed is the Notice and Proxy Statement for the Annual Meeting of
Shareholders to be held on April 25, 2000. I thought it important to highlight
for you in this communication some significant developments regarding the
management of our company and the composition of its Board of Directors.
In anticipation of my upcoming retirement later this year, our Board for some
time has been engaged in succession planning. As a result of the thorough and
diligent hardwork of a Search Committee formed in mid-year 1999, our Board has
elected Dennis H. Reilley as President and Chief Executive Officer of Praxair,
Inc. and a member of its Board of Directors, all effective on March 6th. I will
remain as Chairman of the Board until my retirement, at which time Dennis will
assume this additional title.
I am very pleased with the Board's selection and am confident that Dennis will
provide excellent leadership as he takes our company into the 21st century.
Dennis was executive vice president and chief operating officer of DuPont Co. so
he brings broad experience that will serve Praxair well.
You will also note in the proxy statement that John Clerico is stepping down,
effective April 1st, from his positions as Executive Vice President and Chief
Financial Officer and is resigning from the Board. We have asked John to lead a
significant new e-commerce venture that the Corporation is undertaking and about
which we will have further announcements later this year.
Finally, I am very pleased that Fred Fetterolf has agreed to delay his
retirement for one year so that we may continue to have benefit of his valuable
counsel during this management transition period.
Very truly yours,
// H. William Lichtenberger
Making Our Planet More Productive
<PAGE>
PRAXAIR
39 Old Ridgebury Road
Danbury, Connecticut 06810-5113
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2000
Dear Praxair Shareholder:
The Annual Meeting of Shareholders of Praxair, Inc. will be held at 9:30
a.m. on Tuesday, April 25, 2000 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 February 28, 2000 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. Chaifet
-----------------------------------
DAVID H. CHAIFET
Vice President, General Counsel and
Secretary
March 1, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL
MEETING IN PERSON, PLEASE PROMPTLY COMPLETE AND FILE
A PROXY, EITHER BY INTERNET, BY TELEPHONE OR BY MAIL.
<PAGE>
PRAXAIR
39 Old Ridgebury Road
Danbury, Connecticut 06810-5113
PROXY STATEMENT
Annual Meeting of Shareholders
Tuesday, April 25, 2000
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 25, 2000, 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 13, 2000. 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. Effective
April 1st, John A. Clerico will resign from the Board, and will step down from
his positions as Executive Officer and Chief Financial Officer, in order to lead
a significant new e-commerce venture that the Corporation is undertaking. As a
result, the Board will consist of 11 members as of that time and will so remain
upon the election of 4 directors at this meeting.
Your Board of Directors recommends that Claire W. Gargalli, G. Jackson
Ratcliffe, Jr. and Dennis H. Reilley be elected to serve in the class with terms
expiring in 2003, and that C. Fred Fetterolf be elected to serve in the class
with a term expiring in 2001. Each nominee has agreed to be named in this Proxy
Statement and to serve if elected. Your Board is particularly pleased that Mr.
Fetterolf has agreed to delay his retirement for one year so that Praxair may
continue to have benefit of his counsel. 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 February 28, 2000 will
be entitled to vote at the Annual Meeting. As of that date, a total of
158,129,049 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, under Delaware Corporation Law and Securities and
Exchange Commission rules, broker non-votes 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 2000
Annual Report and the Proxy Statement for the 2001 Annual Meeting of
Shareholders become available, you will be notified on how to access them on the
Internet. Any prior consent you have given will remain in effect until
specifically revoked by you in the manner specified by the bank or broker that
manages your account.
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>
FMR Corp................................................... 17,442,224(b) 11.0%
82 Devonshire Street, Boston, MA 02109
Sanford C. Bernstein & Co., Inc............................ 13,741,591(c) 8.6%
767 Fifth Avenue, New York, NY 10153
Putnam Investments, Inc.................................... 8,795,585(d) 5.5%
One Post Office Square, Boston, MA 02109
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: (a) Based on 159,047,582 total shares outstanding on December 31, 1999.
(b) Holdings as of December 31, 1999 as reported in SEC Schedule 13G by
FMR Corp. According to this report, FMR Corp. had sole voting power
as to 1,167,796 shares and sole investment power as to 17,442,224
shares.
(c) Holdings as of December 31, 1999 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 6,295,487
shares, sole investment power as to 13,741,591 shares and shared
voting power as to 1,885,187 shares.
(d) Holdings as of December 31, 1999 as reported in SEC Schedule 13G by
Putnam Investments, Inc. on behalf of itself, Putnam Investment
Management, Inc. and the Putnam Advisory Company, Inc. According to
this report, these companies collectively had shared voting power as
to 1,695,600 shares and shared investment power as to 8,795,585
shares.
<TABLE>
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Directors and Executive Officers
As of February 28, 2000,(5) 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, 19 persons, beneficially own
1.3% of the outstanding shares):
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED AND OTHER EQUITY INTERESTS
Common Deferred Stock
Name Position Stock(1) Stock(2) Total Options(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
H. William Lichtenberger Chairman & Chief 256,257 110,083 366,340 567,000
Executive Officer(4)
Dennis H. Reilley President & Chief 41,000(5) - 41,000(5) 0
Executive Officer
designate(5)
John A. Clerico Director, Executive 174,671 42,516 217,187 262,000
Vice President &
Chief Financial Officer(6)
Paul J. Bilek Executive Vice President 25,306 8,660 33,966 100,500
David H. Chaifetz Vice President, 59,397 11,013 70,410 104,700
General Counsel
& Secretary
Ricardo S. Malfitano Vice President & 8,222 - 8,222 49,000
President North American
Industrial Gases
Alejandro Achaval Director 1,675 9,097 10,772 10,000
C. Fred Fetterolf Director 3,280 10,335 13,615 10,000
Dale F. Frey Director 1,628 1,819 3,447 10,000
Claire W. Gargalli Director 1,717 3,260 4,977 10,000
Ronald L. Kuehn, Jr. Director 5,301 9,078 14,379 10,000
Raymond W. LeBoeuf Director 1,000 5,864 6,864 5,000
Benjamin F. Payton Director 1,743 2,219 3,962 10,000
G. Jackson Ratcliffe, Jr.Director 1,743 15,887 17,630 10,000
H. Mitchell Watson, Jr. Director 1,731 5,847 7,578 10,000
- ------------------------------------------------------------------------------------------------------------------------------------
584,671 235,678 820,349 1,168,200
- ------------------------------------------------------------------------------------------------------------------------------------
Directors & Executive (19 persons) 657,044 269,472 926,516 1,459,600
Officers as a group
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</TABLE>
Notes: 1) Amounts reported as Common Stock include 5000 shares held by a member
of H. William Lichtenberger's family and 12,155 shares held by a
member of John A. Clerico's family. Also included in the
reported amounts are 22,320 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) Stock Options represent shares that may be acquired upon exercise of
options exercisable within 60 days of February 28, 2000.
4) Effective March 6, 2000, Mr. Lichtenberger will resign his position
as Chief Executive Officer. He will remain Chairman of the Board of
Directors until his retirement from the company in late 2000.
5) Mr. Reilley was elected President and Chief Executive Officer and a
director of Praxair, Inc. effective March 6, 2000. He is a nominee
for reelection as director at this meeting. Mr. Reilley purchased
16,000 shares upon joining the company. Reported shares also include
25,000 restricted shares for which Mr. Reilley has sole voting power
but which vest in stages over an 8 year period.
6) Mr. Clerico will step down from these management positions, and will
resign from the Board of Directors, effective April 1, 2000.
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
1999, the Board held eight meetings.
Director Attendance
During her/his current term to date, each nominee for reelection attended
Board meetings and meetings of committees of which s/he is a member as follows:
Ms. Gargalli, 93%; Mr. Fetterolf 94%; and Mr. Ratcliffe, 98%. (Mr. Reilley was
first elected to the Board effective March 6, 2000.) During this same period,
the continuing directors collectively attended 98% 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 67
Director Since 1992 Term Expires 2001
Chairman, Chief Executive Officer and Controlling Partner of IMEXTRADE S.A. and
TRINIDAD S.C.A.
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.
- --------------------------------------------------------------------------------
C. FRED FETTEROLF Age 71
Director Since 1992 Term Expires 2000
Director of Various Corporations
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 Grove
City College and is Chairman of the Greater Pittsburgh
Working Together Consortium.
Mr. Fetterolf is also a director of Allegheny
Technologies, Commonwealth Aluminum Co., Dentsply
International, Teledyne Technologies and Union Carbide
Corporation.
- --------------------------------------------------------------------------------
DALE F. FREY Age 67
Director Since 1993 Term Expires 2002
Director of Various Corporations
Mr. Frey 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, Roadway Express,
Inc., and Goco-op.
6
<PAGE>
CLAIRE W. GARGALLI Age 57
Director Since 1992 Term Expires 2000
Director of Various Corporations
Ms. Gargalli served as Vice Chairman, Diversified Search
Companies from 1990 to 1998.
Ms. Gargalli is a trustee of Carnegie Mellon University
and Middlebury College and she is also a director of
Baker Hughes, Inc. and UNOVA, Inc.
- --------------------------------------------------------------------------------
RONALD L. KUEHN, JR. Age 64
Director Since 1992 Term Expires 2001
Chairman of the Board of El Paso Energy Corporation since 1999
Mr. Kuehn was Chairman, President and Chief Executive
Officer of Sonat Inc. from 1986 until its merger with El
Paso Energy in 1999.
Mr. Kuehn is a trustee of Tuskegee University and 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 Sedco Forex Inc. and Union
Carbide Corporation.
- --------------------------------------------------------------------------------
RAYMOND W. LEBOEUF Age 53
Director Since 1997 Term Expires 2002
Chairman and Chief Executive Officer of PPG Industries, Inc. since 1997
In 1995, Mr. LeBoeuf 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.
7
<PAGE>
H. WILLIAM LICHTENBERGER Age 64
Director Since 1992 Term Expires 2001
Chairman of Praxair since 1992
In 1992, upon Praxair's launch as a public company, Mr.
Lichtenberger was elected its Chairman and Chief
Executive Officer and served as its Chief Executive
Officer until March 6, 2000.
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 67
Director Since 1992 Term Expires 2002
President, Tuskegee University since 1981
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,
AmSouth Bank, Liberty Corporation, Morrison Management
Specialists, Inc. and Ruby Tuesday, Inc.
- --------------------------------------------------------------------------------
G. JACKSON RATCLIFFE, JR.Age 63
Director Since 1992 Term Expires 2000
Chairman, President and Chief Executive Officer of Hubbell Incorporated since
1987
Mr. Ratcliffe is also a director of Olin Corporation and
Sunoco, Inc.
8
<PAGE>
DENNIS H. REILLEY Age 47
Director Since March 2000 Term Expires 2000
President and Chief Executive Officer of Praxair since March 2000
Mr. Reilley assumed his current positions, and was
elected a director of Praxair, when he joined Praxair on
March 6, 2000. Beginning in 1989, he held senior
management positions in DuPont Co.'s Chemicals and
Specialties business including Vice President and
General Manager of Specialty Chemicals. In May 1999, Mr.
Reilley was appointed Executive Vice President and Chief
Operating Officer of DuPont with responsibility for
Pigments and Chemicals, Specialty Polymers, Nylon and
Polyester.
Mr, Reilley is Vice Chairman of the Chemical
Manufacturer's Association and is a director of Entergy
Corporation.
- --------------------------------------------------------------------------------
H. MITCHELL WATSON, JR.Age 62
Director Since 1992 Term Expires 2001
President, Sigma Group of America since 1992
Prior to his current position, Mr. Watson was President
and Chief Executive Officer of ROLM Company.
Mr. Watson is a Trustee and a member 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., is Chairman of the Board of
Identrus, LLC, and a director of DDS power.com.
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, 52, 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 assumed
his current position in 1998.
David H. Chaifetz, 57, is Vice President, General Counsel and Secretary of
Praxair. He assumed his current positions in 1992 upon Praxair's launch as a
public company.
Michael E. DeDomenico, 52, 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. He
assumed his current position in Praxair Distribution, Inc. in 1998.
Ivan F. Garcia, 57, 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, the
International Oxygen Manufacturers Association, and the Executive Board of
Abiquim, the Brazilian Chemical Industries 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.
H. William Lichtenberger, 64, see description under "Board of Directors".
Ricardo S. Malfitano, 41, 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.
J. Robert Vipond, 54, is Vice President and Controller of Praxair. Mr.
Vipond assumed his current position in 1994 when he joined Praxair from General
Electric Company.
Thomas W. von Krannichfeldt, 50, is an Executive Vice President of Praxair.
Mr. von Krannichfeldt served as President, Praxair Surface Technologies, Inc.
from 1995 to 1999. He assumed his current position in 1999.
Dennis H. Reilley, 47, see description under "Board of Directors".
Alan J. Westendorf, 56, is a Vice President of Praxair and President,
Praxair Europe. In 1996, Mr. Westendorf was designated the North American
Industrial Gases ("NAIG") Vice President-Sales and became an NAIG Senior Vice
President in 1998. From 1994 to 1996, he served as Director, Mergers and
Acquisitions for Praxair Distribution, Inc. He assumed his current positions in
1999.
10
<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 1999. 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 five times during 1999. 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 two times during
1999. 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 two times during 1999. 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 1999 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 database that it
considers as an appropriate group of companies against which to compare Praxair
for compensation purposes. The comparator group comprises 24 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 an index focussed on the chemical industry, based
on its belief that an industry index is an appropriate 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 5.9 percent on an annualized basis, effective April 1, 1999.
13
<PAGE>
Performance-Based Annual Variable Compensation
At its January 1999 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 reviewed the current target variable compensation
levels as a percentage of base salary. A study of external market data from the
comparator group, indicated that Praxair's target levels were below market
rates. As a result, the Committee's outside compensation consultant recommended
increases in certain target levels. The new target payout percentages range from
50 percent of base salary up to a high of 75 percent of base salary for Mr.
Lichtenberger.
At its January 2000 meeting, the Committee evaluated 1999 performance of
the company against its 1999 Annual Business Plan and considered the individual
performance of each of the Senior Executives. Regarding the primary measures of
performance, namely achievement of financial targets, the Committee concluded
that the Corporation substantially achieved most of its financial goals in spite
of a continuing extraordinarily difficult external environment in the U.S. and
some of Praxair's key international markets, most significantly, Brazil. Despite
local economic difficulties, several of the Corporation's businesses
outperformed plan. The Corporation made progress on a number of operating
initiatives that will position it well for future growth. Most of the 1999
nonfinancial goals noted above were either accomplished or progress was well
under way, and a 45% increase in shareholder value from 1998 was achieved by
year end. The Committee also reviewed the performance of the Corporation in
comparison to the performance measures established by the Committee in 1999 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 1999 in relation to both
financial and non-financial plans, the Committee awarded 1999 performance-based
annual variable compensation for the Senior Executives slightly above the target
payout. Mr. Lichtenberger's variable compensation was established at $800,000
based on the foregoing considerations.
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"). Nineteen
ninety-nine was the final year of the Launch Plan II program.
Launch Plan II was a three-year program under which participating
individuals received awards of performance shares (payable in Praxair common
stock) and stock options. All or a portion of the performance shares were to
fully vest on January 1, 2000, based on Praxair's performance in meeting a
three-year cumulative 15 percent per year earnings per share growth target for
the period. The number of actual performance shares that vest was governed by a
sliding scale based on cumulative earnings per share growth achieved over the
three-year period with no maximum. Cumulative earnings per share growth over the
three year period was approximately 11 percent per year, which translated to a
71.1% pay out. The stock options became exercisable on January 1, 2000.
The Committee believes that Launch Plan II focused the management team on
achieving growth targets even in challenging economic conditions in many parts
of the world where the Corporation does business. The cost of Launch Plan II
over the three year period was $33 million dollars. As a condition for
participation in Launch Plan II, participating executives were required to sign
an agreement not to compete with Praxair after they leave the company.
With the conclusion of Launch Plan II, the Committee decided that the long
term incentive component of pay for 2000 should be entirely in the form of stock
options. The Committee made annual stock option grants to 93 executive officers,
officers, and other key employees at its December 1999 meeting. These options
were granted at the closing market price on the date of grant, will vest in
December 2001, and have a ten year term. Mr. Lichtenberger was granted 150,000
stock options based on a competitive evaluation of the long term incentive
component of compensation for chief executive officers in the Corporation's peer
group of comparator companies.
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, stock ownership guidelines have been established for the
Corporation's officers and senior managers as follows. 103 executives are
currently covered under this stock ownership policy. Individuals are expected to
meet the applicable guideline no more than 5 years after first becoming subject
to it.
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
Other Officers and Senior Managers 1.0x Base Salary
As of the date of this Proxy Statement, all covered individuals have met
or exceeded their guidelines, or are within their 5 year transition period.
Stock ownership of the 5 most highly compensated executive officers in 1999 can
be found in the table presented in this Proxy Statement under the caption "Share
Ownership".
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.
16
<PAGE>
<TABLE>
<CAPTION>
TABLE 1
- ------------------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
Awards Payouts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Other Securities
Annual Underlying LTIP All Other
Name and Salary Bonus(1) Compensation Options Payouts(4) Compensation(3)
Principal Position Year ($) ($) ($) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
H. William Lichtenberger 1999 887,500 800,000 0 150,000 2,183,659 44,610
Chairman and Chief 1998 840,000 610,0005 0 50,000 0 42,059
Executive Officer 1997 788,750 675,000 52,500(2) 0 0 45,109
- ------------------------------------------------------------------------------------------------------------------------------------
John A. Clerico 1999 441,250 300,000 0 50,000 837,086 24,325
Executive Vice President 1998 417,500 220,000 0 27,500 0 21,661
and Chief Financial Officer 1997 375,000 225,000 20,000(2) 0 0 21,410
- ------------------------------------------------------------------------------------------------------------------------------------
Paul J. Bilek 1999 400,000 300,000 6,4442 50,000 691,509 21,603
Executive Vice President 1998 321,250 220,481 4,4442 40,000 0 15,875
1997 307,500 288,385 5,6672 0 0 14,907
- ------------------------------------------------------------------------------------------------------------------------------------
David H. Chaifetz 1999 309,000 200,000 4,1112 20,000 509,520 17,996
Vice President, 1998 293,750 160,000 3,5562 12,000 0 13,833
General Counsel 1997 271,251 175,000 3,8892 0 0 12,578
and Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
Ricardo S. Malfitano 1999 300,000 168,654 0 30,000 363,943 14,944
Vice President & President 1998(6) 233,033 67,564 427,555(7) 24,000 0 0
North American Industrial 1997(6) 250,882 103,205 40,431(8) 0 0 0
Gases
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: 1) Reported in this column are annual awards that Praxair characterizes
as Performance Based Annual Variable Compensation. Twenty percent of
the variable compensation paid for the three listed years 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 for 1997 and 1998, and for R. S. Malfitano for 1999, includes
amounts paid from North American Industrial Gases performance sharing
programs.
2) 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 the listed years
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.
3) Amounts reported in this column for 1999 are comprised of the
following items:
Savings Plan Executive Life
Company Match* Insurance Value
H. William Lichtenberger $33,281 $11,329
John A. Clerico 16,547 7,778
Paul J. Bilek 15,281 6,322
David H. Chaifetz 11,588 6,408
Ricardo S. Malfitano 9,552 5,392
*Includes both qualified and
unqualified match amounts
4) Represents the vesting of Performance Stock granted in 1996 for the
performance period 1997 through 1999. Performance Stock vested
according to a pre-established vesting schedule for earnings per
share growth performance of approximately 11% per year during the
period 1997 through 1999. Vested Performance Stock was settled in
shares of the Corporation's Common Stock. Amounts reported represent
the market value of those shares on the settlement date.
5) Mr. Lichtenberger ultimately chose not to forego $500,000 of his
total $610,000 variable compensation award for 1998 in exchange for
split dollar life insurance, as was then planned.
6) Mr. Malfitano was employed in Brazil during 1997 and 1998. His
compensation was paid in Brazilian Reais and was converted to US
dollars for this table using an average exchange rate for each year
based on daily exchange rates. The rate used was 1.16018 Reais per US
dollar in 1998 and 1.07764 Reais per US dollar in 1997.
7) Of which $37,555 represents the value Mr. Malfitano received by the
use of company paid automobiles during his assignment in Brazil. In
addition, during December 1998, he received a lump sum in the amount
of $390,000 which was equivalent to thirty months of expatriate
differential pay that Praxair would otherwise provide Mr. Malfitano
during his US assignment.
8) Represents the value Mr. Malfitano received by the use of company
paid automobiles during his assignment in Brazil.
17
<PAGE>
<TABLE>
<CAPTION>
TABLE 2
- ------------------------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value
INDIVIDUAL GRANTS at Assumed Annual Rates of
Stock Price Appreciation for
Option Term(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted (#) Fiscal Year Price Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Assumed Stock Price as of
12/14/09: $72.79/sh $115.91/sh
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H. William Lichtenberger 150,000 5.13% $44.6875 12/14/09 $4,215,375 $10,683,375
John A. Clerico 50,000 1.71 44.6875 12/14/09 1,405,125 3,561,125
Paul J. Bilek 50,000 1.71 44.6875 12/14/09 1,405,125 3,561,125
David H. Chaifetz 20,000 0.68 44.6875 12/14/09 562,050 1,424,450
Ricardo S. Malfitano 30,000 1.03 44.6875 12/14/09 843,075 2,136,675
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes: 1) Potential realizable value is the pre-tax gain that an option holder
would realize at the time of the option expiration date if (a) he or
she would exercise all of the options on their expiration date, and
(b) Praxair's stock price grew between the date of grant and the
exercise date at the annual rate assumed in the column (yielding the
"Assumed Stock Price"). This pre-tax gain is calculated by
multiplying the number of options by the difference between the
Assumed Stock Price on the option expiration date and the option
exercise price. The hypothetical values reflected in this table
represent assumed rates of appreciation only; which rates are set by
SEC rules. Actual gains, if any, on stock option exercises and common
stock holdings are dependent on, among other factors, the future
performance of the common stock and overall stock market conditions.
There can be no assurance that the amounts reflected in this Table
will be achieved.
<TABLE>
<CAPTION>
TABLE 3
- ------------------------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Securities
Shares Underlying Value(1) of Unexercised
Acquired on Value Unexercised Options In-the-Money Options
Name Exercise (#) Realized ($) at FY-End (#) at FY-End ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Exercisable Unexercisable Exercisable Unexercisable
H. William Lichtenberger 50,000 $2,021,395 452,000 315,000 $15,712,507 $2,165,938
John A. Clerico 12,000 $ 220,042 215,000 114,500 $ 7,693,993 $ 827,906
Paul J. Bilek 3,150 $ 105,078 63,500 127,000 $ 2,015,508 $1,108,688
David H. Chaifetz 10,000 $ 426,115 76,700 60,000 $ 2,607,314 $ 431,500
Ricardo S. Malfitano 0 0 30,000 73,000 $ 966,587 $ 651,813
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
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
31,1999. The market price on this date was $50.3125 per share.
18
<PAGE>
<TABLE>
TABLE 4
- ------------------------------------------------------------------------------------------------------------------------------------
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG PRAXAIR, INC.,
S&P 500 INDEX, S&P CHEMICALS INDEX & DOW JONES SPECIALTY CHEMICALS INDEX
[CHART]
<CAPTION>
Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
1994 1995 1996 1997 1998 1999
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Praxair $100 $166 $230 $226 $179 $259
S&P 500 $100 $137 $169 $225 $289 $350
S&P Chem. $100 $130 $169 $209 $196 $232
Dow Jones $100 $131 $148 $170 $163 $190
</TABLE>
ASSUMES $100 INVESTED ON DECEMBER 31, 1994 IN PRAXAIR COMMON STOCK, THE S&P
CHEMICALS INDEX, 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 sixteen
companies, including Praxair. The Standard and Poor's (S&P) Chemicals
Index is a published index currently covering nine companies, including
Praxair.
Beginning with this proxy statement, Praxair is changing the peer
company index for this performance graph from the Dow Jones Specialty
Chemicals Index to the S&P Chemicals Index. Praxair is making this
change because the S&P Chemicals Index is much more widely used and
available, and better reflects Praxair's position as one of the largest
capitalization U.S. chemical companies. The S&P Chemicals Index is a
capitalization-weighted index of all chemical company stocks included
in the S&P 500 Index.
During this transition year, Praxair is showing both peer group indexes
so that shareholders may compare them for the most recent 5 year
performance period.
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>
<CAPTION>
TABLE 5
- ------------------------------------------------------------------------------------------------------------------------------------
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, 2000 are as follows: H. William
Lichtenberger 40 years; John A. Clerico 16 years; Paul J. Bilek 31 years;
David H. Chaifetz 24 years; Ricardo S. Malfitano 19 years.
o Credited years of service reported for Ricardo Malfitano represent combined
service with Praxair, Inc. and S. A. White Martins ("SAWM"), a
majority-owned indirect subsidiary of Praxair, Inc. Assuming he remains in
the U.S. until at least 1/1/01, Mr. Malfitano will, on that date, become
eligible for retirement benefits under the Praxair, Inc. Retirement Plan.
Then, upon his retirement, he will receive retirement benefits under such
plan based on his combined Praxair and SAWM service, less an offset for his
benefits under the SAWM retirement plan.
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, Paul J. Bilek,
David H. Chaifetz, Ricardo S. Malfitano 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>
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, 1999 to December 31, 1999, all reports required by Section
16(a) of the Securities and Exchange Act of 1934 have been filed by its officers
and director, except for one late report pertaining to one deferred compensation
payment to Thomas W. von Krannichfeldt.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP served as Praxair's independent accountants for
the year ended December 31, 1999 and has been selected by the Board of Directors
to serve in such capacity for the year ending December 31, 2000. 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 2001 ANNUAL MEETING
To be included in Praxair's proxy statement and form of proxy, proposals of
shareholders intended to be presented to Praxair's 2001 Annual Meeting of
Shareholders must be received at Praxair's principal executive offices by
November 6, 2000. 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 on or before February 23,
2001. 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 February 28, 2000 should have received a copy of
Praxair's 1999 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, 1999 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 DIRECTOR
/s/ David H. Chaifetz
---------------------------------------------
DAVID H. CHAIFETZ,
Vice President, General Counsel and Secretary
March 1, 2000
YOU ARE URGED TO PROMPTLY COMPLETE AND FILE A PROXY
22
<PAGE>
[LOGO] Printed on Recycled Paper. Printed in U.S.A.
<PAGE>
[GRAPHIC OMITTED] 39 Old Ridgebury Road, Danbury, CT, 06810-5113
AS PRINTED
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 5:00 P.M. Eastern
Time on April 24, 2000.
<TABLE>
<CAPTION>
BY INTERNET BY TELEPHONE BY MAIL
----------- ------------ -------
<S> <C> <C>
Access the website On a touch-tone phone, Mark, sign and date the
dial the toll-free number proxy form attached
http://proxy.shareholder. below, detach it, and
doom/px 1-800-481-9825 return it promptly in the
enclosed envelope.
and follow the instructions. and follow the
You will be asked to enter instructions. You will be
the number located below asked to enter the number
in the box labeled "Control located below in the box
Number". labeled "Control
Number".
</TABLE>
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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 o IT'S FAST AND CONVENIENT
- ------------------------------- ---------------------------
HTTP://PROXY.SHAREHOLDER.COM/PX Control Number for Internet
or Telephone Voting
- ------------------------------- ---------------------------
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 25, 2000 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 - C Fred Fetterolf, 02 - Claire W. Gargalli,
03 - G. Jackson Ratcliffe, Jr., 04 - Dennis H. Reilley
(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 if
You Do Not Vote by Internet or Telephone
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<PAGE>
================================================================================
[GRAPHIC OMITTED]
PROXY/VOTING INSTRUCTION CARD
- --------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors of Praxair, Inc.
for the Annual Meeting on April 25, 2000
I(we) hereby authorize H. W. Lichtenberger, John A. Clerico 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
25, 2000 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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