<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
The Shaw Group 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)(l) 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:
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(4) Date Filed:
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<PAGE> 2
[LOGO]
THE SHAW GROUP INC.
11100 Mead Road, Second Floor
Baton Rouge, Louisiana 70816
To the Shareholders of
The Shaw Group Inc.
Enclosed is a Notice of the 1997 Annual Meeting of Shareholders of The
Shaw Group Inc. and a Proxy and Proxy Statement relating to the Annual Meeting.
The Annual Meeting will be held on January 29, 1997, at 2:00 p.m., at the
Radisson Hotel, 4728 Constitution Avenue, Baton Rouge, Louisiana. The Proxy
Statement describes the matters to be acted upon at the meeting.
You are urged to sign and return the accompanying Proxy so that you
may be sure that your shares will be voted.
Sincerely,
/s/ J. M. BERNHARD, JR.
-----------------------------------------
J. M. Bernhard, Jr.
Chairman of the Board, President
and Chief Executive Officer
Baton Rouge, Louisiana
December 31, 1996
<PAGE> 3
NOTICE OF THE 1997 ANNUAL MEETING
OF SHAREHOLDERS OF
THE SHAW GROUP INC.
To the Holders of the Common Stock:
PLEASE TAKE NOTICE that the 1997 Annual Meeting of Shareholders of The
Shaw Group Inc., a Louisiana corporation (the "Company"), will be held at the
Radisson Hotel, 4728 Constitution Avenue, Baton Rouge, Louisiana, on January
29, 1997, at 2:00 p.m. to consider and act upon:
(1) the election of nine members to the Board of Directors;
(2) a proposal to approve the Company's 1996 Non-Employee Director Stock
Option Plan; and
(3) such other business as may properly come before the meeting or any
adjournments thereof.
The Board of Directors has fixed the close of business on December 13,
1996, as the record date for the determination of shareholders entitled to
notice of, and to vote at, the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ T. A. BARFIELD, JR.
-------------------------------------
T. A. Barfield, Jr.
Secretary
Baton Rouge, Louisiana
December 31, 1996
IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE INDICATE YOUR WISHES,
DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY, FOR WHICH A RETURN ENVELOPE IS
PROVIDED.
<PAGE> 4
THE SHAW GROUP INC.
11100 Mead Road, Second Floor
Baton Rouge, Louisiana 70816
PROXY STATEMENT
The accompanying Proxy is solicited on behalf of the Board of Directors of
The Shaw Group Inc. (the "Company") for use at the 1997 Annual Meeting of
Shareholders to be held on January 29, 1997, at 2:00 p.m., at the Radisson
Hotel, 4728 Constitution Avenue, Baton Rouge, Louisiana, and any adjournments
thereof. Only shareholders of record at the close of business on December 13,
1996 will be entitled to notice of, and to vote at, this Annual Meeting. The
Company anticipates that this Proxy Statement and the accompanying Proxy will
be first sent or given to the Company's shareholders on approximately December
31, 1996.
GENERAL
The purpose of the Annual Meeting is to consider and act upon the matters
which are listed in the accompanying Notice of Annual Meeting and set forth in
this Proxy Statement. The holders of shares having a majority of the voting
power of the Company's common stock, no par value (the "Common Stock"), issued
and outstanding and entitled to vote thereat shall be present in person or
represented by proxy to constitute a quorum for the transaction of business at
the Annual Meeting. The shares held by each shareholder who signs and returns
the enclosed form of Proxy will be counted, in accordance with the voting
procedures outlined below, for purposes of determining the presence of a quorum
at the meeting, whether or not the shareholder abstains on all matters or any
matter to be acted on at the meeting. Abstentions are counted toward the
calculation of a quorum. Broker non-votes (which result when a broker holding
shares for a beneficial owner has not received voting instructions on certain
matters from such beneficial owners) will be counted toward fulfillment of
quorum requirements. Any shareholder giving a Proxy has the power to revoke it
at any time before it is exercised by providing written notice of revocation to
the Secretary of the Company or by filing a Proxy of a later date with the
Secretary of the Company.
The enclosed form of Proxy provides a means for a shareholder to vote for
all the nominees for director listed thereon, to withhold authority to vote for
one or more of such nominees, or to withhold authority to vote for all of such
nominees. The Company's by-laws provide that directors are elected by a
plurality of the votes cast. There is no cumulative voting. Accordingly, the
withholding of authority by a shareholder (including broker non-votes) will not
be counted in computing a plurality and thus will have no effect on the results
of the election of such nominees. Each Proxy will be voted in accordance with
the shareholder's directions.
The enclosed form of Proxy also provides a means for a shareholder to vote
for, against or abstain from voting on a proposal to approve the Company's 1996
Non-Employee Director Stock Option Plan ("Proposal 2") and approval of any
other matters as may properly come before the Annual Meeting or any
adjournments thereof. The affirmative vote of a majority of the voting power of
the Common Stock, present in person or represented by proxy and entitled to
vote at the meeting, is required for approval of Proposal 2. Approval of any
other matters as may properly come before the Annual Meeting will also require
the affirmative vote of a majority of the voting power present in person or
represented by proxy and entitled to vote at the Annual Meeting. An abstention
with respect to Proposal 2 will have the same effect as a vote against it.
Broker non-votes will not be counted with regard to Proposal 2, but have the
effect of reducing the number of affirmative votes required to approve the
Proposal because they reduce the number of shares present or represented from
which a majority is calculated.
Unless the shareholder specifies otherwise, a Proxy in the accompanying
form which is properly executed and duly returned will be voted FOR the
election of the nine nominees listed hereinafter under the caption "Election of
Directors" and FOR Proposal 2, which is discussed more fully under the caption
"Proposal to Approve the Company's 1996 Non-Employee Director Stock Option
Plan."
The cost of preparing, assembling, printing and mailing this Proxy
Statement, the form of Proxy, and the Notice of Annual Meeting of Shareholders
will be paid by the Company. In addition to solicitation by use of the mails,
solicitation of Proxies may also be made personally by certain directors,
officers and employees of the Company, and no additional compensation will be
paid to such individuals. Proxies will also be solicited by Corporate Investor
Communications, Inc., whose fee of $3,000 plus out-of-pocket expenses will be
paid by the Company. The Company will also supply brokers or persons holding
stock in their names or in the names of their nominees with such number of
Proxies, proxy materials and annual reports as they may require for mailing to
beneficial owners and will reimburse them for their reasonable expenses
incurred in connection therewith.
On November 30, 1996, the Company had issued and outstanding and entitled
to vote 9,524,552 shares of the Common Stock. The Common Stock is the only
outstanding class of voting securities of the Company.
- 1 -
<PAGE> 5
VOTING RIGHTS OF COMMON STOCK
The Company's articles of incorporation, as restated, provide that each
outstanding share of Common Stock will entitle the holder thereof to five
votes, except that holders of outstanding shares of Common Stock with respect
to which there have been certain specified changes in beneficial ownership
during the four years immediately preceding the record date (December 13, 1996)
will be entitled to one vote per share. Thus, shares owned on or before
December 12, 1992 and as to which there has been no such changes in beneficial
ownership since that date, are entitled to five votes per share. Under these
provisions, shares issued in the Company's initial public offering in December
1993 are entitled to only one vote per share. See "Determination of Beneficial
Ownership" on page 13 for a more detailed discussion of the provisions of the
Company's articles of incorporation, as restated, relating to the voting rights
of the holders of the shares of Common Stock and the manner of determination
thereof.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Common Stock as of November 30, 1996 (except as otherwise noted) with
respect to (i) each person known by the Company to own beneficially more than
5% of the outstanding shares of Common Stock, (ii) each named executive
officer, director and nominee for director of the Company, and (iii) all
executive officers and directors as a group. Each of the following shareholders
has sole voting and investment power with respect to shares beneficially owned
by such shareholder, except to the extent that authority is shared by spouses
under applicable law or as otherwise noted. The Common Stock constitutes the
only class of equity securities of the Company which is outstanding. On
December 23, 1996, the Company closed the sale of 2,000,000 shares of Common
Stock in an underwritten public offering, and Messrs. Bernhard and Brown sold
300,000 and 94,118 shares of Common Stock, respectively, in such offering. See
"Certain Relationships and Related Transactions."
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP PERCENT OF
NAME OF BENEFICIAL OWNER SHARES PERCENT VOTING POWER
- ------------------------ ------ ------- ------------
<S> <C> <C> <C>
J. M. Bernhard, Jr ................................ 1,708,146 17.9% 40.3%
11100 Mead Road
Baton Rouge, Louisiana 70816
R. Dale Brown, Sr ................................. 394,118 4.1% 1.9%
G. Ray Wilkie, Jr (1) ............................. 318,238 3.3% 7.3%
A. W. Angelo ...................................... 282,757 3.0% 6.7%
Bret M. Talbot (2) ................................ 148,002 1.6% *
Frank Fronek (3) .................................. 89,000 * *
Albert McAlister .................................. 69,042 * 1.6%
George R. Shepherd (4) ............................ 19,150 * *
Michael H. Wootton (5) ............................ 16,250 * *
David W. Hoyle (6) ................................ 10,000 * *
John W. Sinders, Jr ............................... 9,500 * *
John W. Dalton, Sr ................................ 4,450 * *
L. Lane Grigsby ................................... 3,850 * *
All executive officers and directors as a group
(13 persons) (7) .................................. 3,072,503 32.0% 59.0%
</TABLE>
* less than 1%
(1) Includes 7,500 shares of which Mr. Wilkie may be deemed to be beneficial
owner as a result of rights that he may exercise to acquire beneficial
ownership within 60 days.
(2) includes 8,750 shares of which Mr. Talbot may be deemed to be beneficial
owner as a result of rights that he may exercise to acquire beneficial
ownership within 60 days.
(3) Includes 12,500 shares owned of record by Mr. Fronek's spouse and 14,000
shares of which Mr. Fronek may be deemed to be the beneficial owner as a
result of rights that Mr. Fronek may exercise to acquire beneficial
ownership within 60 days.
(4) Includes 17,500 shares of which Mr. Shepherd may be deemed to be
beneficial owner as a result of rights that he may exercise to acquire
beneficial ownership within 60 days.
(5) Includes 16,250 shares of which Mr. Wootton may be deemed to be beneficial
owner as a result of rights that he may exercise to acquire beneficial
ownership within 60 days.
(6) Includes 2,000 shares owned of record by Mr. Hoyle's spouse.
- 2 -
<PAGE> 6
(7) Includes 14,500 shares owned of record by spouses of executive officers
and directors and 64,000 shares of which executive officers and directors
may be deemed to be the beneficial owners as a result of rights they may
exercise to acquire beneficial ownership within 60 days.
ELECTION OF DIRECTORS
At its March 12, 1996 meeting, the Board of Directors increased the number
of directors to nine from eight and filled the vacancy thereby created on the
Board with R. Dale Brown, Sr., to serve until the Annual Meeting to which this
Proxy Statement relates. All of the nominees for directors are presently
directors of the Company. Each director is to be elected for a term of one year
and to serve until the next annual meeting of shareholders or until his
successor is elected and qualified. The enclosed form of Proxy confers
discretionary authority with respect to the election of directors, but no
authority under the Proxy will be exercised to vote for the election of any
person as a director, other than the persons named in this Proxy Statement who
have been nominated by the present Board of Directors, unless, for some reason
not presently known, one or more of such nominees should become unavailable. In
such event, it is intended that the Proxy would be voted for a substitute
nominee or nominees who would be designated by the Board of Directors prior to
the shareholders' meeting. In order to be elected as a director, a nominee must
receive a plurality of the votes cast by the holders of Common Stock. The name
and age, principal occupation or employment, and other data regarding each
nominee, based on information received from the respective nominees, are set
forth below:
J. M. BERNHARD, JR., age 42, founder of the Company, has been
President and Chief Executive Officer of the Company since its inception
in September 1987. He has also been a director of the Company since its
inception. Mr. Bernhard has been Chairman of the Board since August 1990.
Mr. Bernhard has spent the last 20 years in the pipe fabrication business.
Immediately prior to his position with the Company, Mr. Bernhard was Vice
President and General Manager of Sunland Services and served on the Board
of Directors of Barnard and Burk Engineers & Constructors.
BRET M. TALBOT, age 36, has been Vice President, Chief Financial
Officer and Treasurer of the Company since February 1989. Mr. Talbot has
been a director of the Company since January 1993. He also served as
Secretary for the Company from February 1989 until March 1994. Prior to
his position with the Company, Mr. Talbot was Audit Manager for Hannis T.
Bourgeois & Co., L.L.P.
GEORGE R. SHEPHERD, age 58, joined the Company in August 1993 as its
Vice President of Operations and has been its Chief Operating Officer
since November 1995. Mr. Shepherd has been a director of the Company since
March 1995. Prior to joining the Company, Mr. Shepherd served as President
of International Piping Systems, Inc. from March 1984 to July 1993. He has
spent the last 39 years in the pipe fabrication business.
FRANK FRONEK, age 48, has served the Company as the President of
Fronek Company and F.C.I. Pipe Support Sales since April 1994, when such
businesses were acquired by the Company. Prior to joining the Company, Mr.
Fronek was the owner and President of such businesses, which he founded in
1980 and 1986, respectively. He has 26 years experience in the engineering
and design of piping systems and piping support systems.
R. DALE BROWN, SR., age 62, has served the Company as Chairman of
Alloy Piping Products, Inc. since April 1996, when such business was
acquired by the Company. Prior to joining the Company, Mr. Brown was the
owner and Chairman of such business, which he founded in 1972. Mr. Brown
has been a director of the Company since March 1996. He has 42 years of
experience in the manufacture and distribution of specialty pipe fittings.
ALBERT MCALISTER, age 45, has been a director of the Company since
April 1990 and has served on the Company's Audit Committee since November
1993. He also served on the Company's Compensation Committee from November
1993 to March 1995. Since 1975, Mr. McAlister has been a partner in the
law firm of McAlister & McAlister, P.A. in Laurens, South Carolina. He
also served as Chairman of the Democratic Party in South Carolina from
1990 until 1994.
L. LANE GRIGSBY, age 55, has served as a director of the Company
since January 1995 and a member of its Compensation Committee since March
1995. Mr. Grigsby is also the Chairman of the Board of Cajun Contractors,
Inc., for which he also served as President and Chief Executive Officer
from April 1973 to June 1994. He has 30 years of experience in the
industrial construction industry. He also serves as an officer or director
for several industry and charitable organizations, including the
Associated Builders and Contractors and the Louisiana Association of
Business and Industry.
- 3 -
<PAGE> 7
DAVID W. HOYLE, age 58, has served as a director of the Company since
January 1995 and a member of its Compensation Committee since March 1995.
He has also served as a member of the Audit Committee since September
1996. For the past eleven years, he has been self-employed primarily as a
real estate developer and has been a member of the Senate Chamber of the
North Carolina General Assembly since 1992. Senator Hoyle serves as a
director of several private corporations, as well as several civic,
educational and charitable organizations.
JOHN W. SINDERS, JR., age 43, has served as a director of the Company
since March 1995. He also served as a member of the Audit Committee from
March 1995 to September 1996. He has served as a managing director of
Jefferies & Company, Inc. since 1993. From 1987 to 1993, Mr. Sinders
served as a managing director of Howard Weil Labouisse Friedrichs
Incorporated and a member of the Board of Directors of Howard Weil from
1990 to 1993. Prior to joining Howard Weil, he was a partner with the law
firm of McGlinchey, Stafford, Mintz, Cellini & Lang.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NINE
NOMINEES FOR DIRECTOR.
BOARD MEETINGS, COMMITTEES AND COMPENSATION
During the fiscal year ended August 31, 1996 ("fiscal 1996"), eight
meetings of the Board of Directors were held. Each incumbent director who is a
nominee for re-election attended at least 75% of aggregate of the total number
of meetings of the Board of Directors and the total number of meetings held by
all committees of the Board on which each such director served during fiscal
1996. The Board of Directors has no nominating or other committee performing
similar functions at this time. The following directors presently serve on the
Audit Committee: Albert McAlister and David W. Hoyle. In September 1996, Mr.
Hoyle replaced John W. Sinders, Jr. on the Audit Committee. The Audit Committee
met four times during fiscal 1996. The primary functions of the Audit Committee
are as follows: to review the scope and timing of the audit and non-audit
services rendered by the Company's independent accountants; to review their
reports upon completion of their audits; to review the appropriateness of the
Company's accounting policies, the adequacy of its financial controls and the
reliability of the financial information reported to the public; and to report
to the Board of Directors on its activities. The following directors presently
serve on the Compensation Committee: L. Lane Grigsby and David W. Hoyle. The
Compensation Committee met six times in fiscal 1996. The primary functions of
the Compensation Committee are to provide a general review of the Company's
compensation and benefit plans to determine if they meet corporate objectives.
In addition, the Compensation Committee reviews the Chief Executive Officer's
recommendations on (i) compensation of all officers of the Company, (ii)
granting of awards under the Company's 1993 Employee Stock Option Plan and its
other benefit plans, and (iii) the adoption of and/or changes to major Company
compensation policies and practices.
MANAGEMENT OF THE COMPANY
The following table provides information with respect to the Company's
executive officers. Each executive officer has been elected to serve until his
successor is duly appointed or elected by the Board of Directors or his earlier
removal or resignation from office.
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
J. M. Bernhard, Jr. .............. President and Chief Executive Officer
Bret M. Talbot ................... Chief Financial Officer and Treasurer
George R. Shepherd ............... Chief Operating Officer
Frank Fronek ..................... President of Fronek Company* and F.C.I. Pipe Support Sales*
R. Dale Brown, Sr................. Chairman of Alloy Piping Products, Inc.*
A. W. Angelo ..................... Executive Vice President
G. Ray Wilkie, Jr................. Executive Vice President
John W. Dalton, Sr................ Executive Vice President
Michael H. Wootton ............... President of Shaw International, Inc.*
</TABLE>
- -----------
*wholly-owned subsidiaries of the Company
J. M. BERNHARD, JR. - See "Election of Directors".
BRET M. TALBOT - See "Election of Directors".
GEORGE R. SHEPHERD - See "Election of Directors".
FRANK FRONEK - See "Election of Directors".
- 4 -
<PAGE> 8
R. DALE BROWN, SR. - See "Election of Directors".
A. W. ANGELO, age 64, joined the Company in September 1987 and has
been Executive Vice President of the Company since September 1990. Mr.
Angelo served as a director of the Company from August 1990 to March 1995.
Mr. Angelo served as President of Lone Star Fabricators, Inc., a
wholly-owned subsidiary of the Company located in Texas City, Texas which
was closed in August of 1994, from March 1990 until July 1993. Mr. Angelo
has spent the last 41 years in the pipe fabrication business.
G. RAY WILKIE, JR., age 51, joined the Company in March 1988 and
served as Vice President of B. F. Shaw, Inc., a wholly-owned subsidiary of
the Company, from September 1990 until May 1993 and President of B. F.
Shaw, Inc. from May 1993 until November 1995, when he was appointed
Executive Vice President of the Company. Mr. Wilkie also served as a
director of the Company from January 1993 to March 1995. Mr. Wilkie has
spent the last 30 years in the pipe fabrication business.
JOHN W. DALTON, SR., age 46, has been an Executive Vice President of
the Company since April 1995. Immediately prior to joining the Company, he
was employed by the Bechtel Group (an engineering and construction firm)
in various positions for 19 years, most recently as Manager of Business
Development. His experience includes, among other things, positions in
construction, manufacturing, project management, procurement and
contracts, as well as managerial and financial functions.
MICHAEL H. WOOTTON, age 50, has been employed by the Company since
October 1991 and has been President of Shaw International, Inc., a
wholly-owned subsidiary of the Company, since April 1993. Prior to his
employment with the Company, Mr. Wootton was President of Connex Piping
Systems. Mr. Wootton has spent the last 28 years in the pipe fabrication
business.
EXECUTIVE COMPENSATION
The following table contains compensation data for the last three
fiscal years for the Company's Chief Executive Officer and its four other most
highly compensated executive officers during fiscal 1996:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(1) SALARY BONUS OPTIONS (#) COMPENSATION
- --------------------------- ---- ------ ----- ----------- ------------
<S> <C> <C> <C> <C> <C>
J. M. Bernhard, Jr. 1996 $500,000 -- -- $ 2,630(6)
President, Chief Executive 1995 $500,000 -- -- $ 2,265
Officer and Chairman of 1994 $479,164 -- -- $ 3,125
the Board
Frank Fronek 1996 $219,231 $50,000(2) 9,000(4) $ 4,750(6)
President of Fronek 1995 $200,000 -- 5,000(4) $ 4,620
Company and F.C.I. Pipe 1994 $ 66,668 -- 5,000(4) --
Support Sales
George R. Shepherd 1996 $183,750 -- -- $ 2,928(7)
Chief Operating Officer 1995 $165,000 --(3) 35,000(5) $ 2,984
1994 $135,000 -- 35,000(5) $ 1,125
Bret M. Talbot 1996 $179,166 -- -- $ 3,500(6)
Chief Financial Officer 1995 $162,500 --(3) 35,000(5) $ 3,894
and Treasurer 1994 $125,000 -- -- $ 1,406
Michael H. Wootton 1996 $178,333 -- -- $ 3,208(6)
President of Shaw 1995 $162,500 --(3) 65,000(5) $ 3,805
International, Inc. 1994 $125,000 -- 65,000(5) $ 1,563
</TABLE>
(1) The Company's fiscal year ends on August 31.
- 5 -
<PAGE> 9
(2) The bonus for fiscal 1996 was awarded to Mr. Fronek under his employment
agreement with the Company. See "Employment Agreement."
(3) Bonuses were awarded for fiscal 1995 to several named executive officers
under the Company's Annual Incentive Compensation Plan. The fiscal 1995
bonuses, however, were awarded in performance shares and not cash. Such
performance shares will vest in three years, have a value that increases
or decreases proportionally with the Company's book value and are to be
redeemed in cash within 90 days after the end of the fiscal year ending
August 31, 1998. The values as of August 31, 1995 of the performance
shares awarded to Messrs. Shepherd, Talbot and Wootton were $6,600, $6,400
and $6,400, respectively.
(4) Denotes shares of Common Stock of the Company that may be purchased upon
exercise of options granted under Mr. Fronek's employment agreement with
the Company. The options awarded to Mr. Fronek during fiscal 1994 were
"repriced" during fiscal 1995, and, as a result, have been reported again
in the fiscal 1995 column. The options awarded during fiscal 1996 are also
subject to the Company's 1993 Employee Stock Option Plan. See "Employment
Agreement."
(5) Denotes shares of Common Stock of the Company that may be purchased upon
exercise of options granted under the Company's 1993 Employee Stock Option
Plan. The options awarded to Messrs. Shepherd and Wootton during fiscal
1994 were "repriced" during fiscal 1995, and, as a result, have been
reported again in the fiscal 1995 column.
(6) Represents the Company's contribution on behalf of the officer to the
Company's 401(k) plan.
(7) Of such amount, $1,803 represents the Company's contribution on behalf of
Mr. Shepherd to the Company's 401(k) plan and $1,125 represents term life
insurance premiums paid by the Company for life insurance coverage for
him.
EMPLOYMENT AGREEMENTS
The Company and Mr. Bernhard are parties to an Employment Agreement (the
"Employment Agreement") pursuant to which Mr. Bernhard has agreed to serve as
the Company's President and Chief Executive Officer. The term of the Employment
Agreement expires on December 31, 1996 but is subject to an automatic
three-year extension unless the Employment Agreement is otherwise terminated by
either party in accordance with its terms. The Employment Agreement provides
that Mr. Bernhard will receive, among other things, an annual base salary in
the amount of $500,000, participation in the Company's bonus plan as determined
by the Compensation Committee of the Board of Directors and the inclusion of
Mr. Bernhard in all plans and programs of the Company which are made available
to the Company's executives and other salaried employees generally, including
group life insurance, accidental death and dismemberment insurance,
hospitalization, long-term disability, vacations and holidays. Mr. Bernhard is
also entitled under the Employment Agreement to other benefits in addition to
those made available to the Company's management, including providing him with
acceptable Company vehicles and other means of transportation for his personal
use and benefit.
In the event Mr. Bernhard's employment is terminated as a result of his
death or disability (as defined in the Employment Agreement), he or his legal
representative will receive, among other payments, all amounts owed under his
Employment Agreement as of the date of his death or disability. In the event
Mr. Bernhard's employment is terminated by the Company for Cause (as defined in
the Employment Agreement), Mr. Bernhard will receive all amounts owed to him
under his Employment Agreement as of the date of termination. In the event Mr.
Bernhard's employment is terminated by the Company other than for Cause, Mr.
Bernhard will receive a lump sum payment equal to the full amount payable under
the Employment Agreement.
In connection with the Company's acquisition from Mr. Fronek in April 1994
of the businesses of Fronek Company and F.C.I. Pipe Support Sales, Mr. Fronek
entered into a three-year employment agreement with the Company under which he
is to receive an annual base salary of $200,000 and participation in the
Company's bonus plan as determined by the Compensation Committee of the Board
of Directors. He is also entitled to participation in all plans and programs of
the Company which are made available to the Company's executives and other
salaried employees generally. In addition, Mr. Fronek received options to
acquire 5,000 shares of Common Stock, and the Company agreed to award other
options to acquire up to 57,000 shares of Common Stock and make cash payments
of up to $300,000 conditioned upon the future performance of the acquired
businesses through the fiscal year ending August 31, 1997. Mr. Fronek did not
receive any options or cash payments for the fiscal year ended August 31, 1995
because the acquired businesses did not attain the minimum performance set
forth in his Employment Agreement. For fiscal 1996, the performance of the
acquired businesses resulted in the award of options to purchase 9,000 shares
of Common Stock at an exercise price of $9.59 per share (the fair market value
at the date of award) and a bonus of $50,000 in cash.
- 6 -
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding the grants of options
to purchase shares of the Company's Common Stock that were made under the
Company's 1993 Employee Stock Option Plan to any of the Company's Chief
Executive Officer and its four other most highly compensated executive officers
during fiscal 1996:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATE OF
UNDERLYING GRANTED TO EXERCISE STOCK PRICE
OPTIONS EMPLOYEES IN PRICE APPRECIATION FOR
NAME GRANTED(1) FISCAL YEAR $/SHARE(2) EXPIRATION DATE OPTION TERM
---- ---------- ----------- ---------- --------------- -----------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Frank Fronek 9,000 7.9% $9.59 Aug. 31, 2005 $54,280 $137,556
</TABLE>
(1) The options are subject to the terms of the 1993 Employee Stock Option
Plan.
(2) Based upon the closing price of a share of the Company's Common Stock
listed on the Nasdaq Stock Market on the last trading day of the Company's
fiscal year ended August 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth (i) the shares acquired upon exercise of
options by any of the Company's Chief Executive Officer and its four other most
highly compensated executive officers during fiscal 1996 and the aggregate
value realized therefrom and (ii) the value at August 31, 1996 of the
unexercised options held by any of such executive officers during fiscal 1996:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
SHARES ACQUIRED VALUE AT FISCAL YEAR-END FISCAL YEAR-END
NAME ON EXERCISE (#) REALIZED ($)(1) EXERCISABLE/UNEXERCISABLE (#) EXERCISABLE(2)(3) UNEXERCISABLE(3)(4)
---- --------------- --------------- ----------------------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C>
Frank Fronek -- -- 14,000/0 $344,565 --
Bret M. Talbot -- -- 8,750/26,250 $228,594 $ 685,781
George R. Shepherd -- -- 8,750/26,250 $236,250 $ 708,750
Michael H. Wootton 16,250 $223,213 0/48,750 -- $1,316,250
</TABLE>
(1) The exercise price of each reported option exercise was $5.875 per share,
and the fair market value of the Common Stock at the time of each exercise
ranged from $17.50 to $22.625 per share with a weighted average fair
market value of $19.62 per share.
(2) The exercise prices of the reported options range from $5.875 per share to
$9.59 per share with a weighted average exercise price of $7.18.
(3) The values are based upon the closing price reported on the Nasdaq Stock
Market of the Common Stock on August 31, 1996 ($32.875).
(4) The exercise prices of the reported options range from $5.875 per share to
$6.75 per share with a weighted average exercise price ------ of $6.10.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The persons serving as members of the Compensation Committee of the Board
of Directors during fiscal 1996 were L. Lane Grigsby and David W. Hoyle. No
member of the Compensation Committee was an officer or employee of the Company
or any of its subsidiaries during fiscal 1996. No executive officer of the
Company served during fiscal 1996 as a director or as a member of the
Compensation Committee of another entity, one of whose executive officers
served as a director or on the Compensation Committee of the Company.
- 7 -
<PAGE> 11
DIRECTOR COMPENSATION
Each non-employee director of the Company receives a fee of $10,000 per
year and $750 for each meeting of the Company's Board of Directors attended.
Each non-employee director serving on a committee of the Board receives a fee
of $250 for each committee meeting attended. Directors are also reimbursed for
certain expenses in connection with their attendance at board and committee
meetings. In addition, the Board of Directors is recommending for approval of
the shareholders the Company's 1996 Non-Employee Director Stock Option Plan.
See "Proposal to Approve the Company's 1996 Non-Employee Director Stock Option
Plan."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General. The Compensation Committee of the Board of Directors (the
"Committee") has been appointed by the Board as the administrator of the
Company's compensation program for executive officers and key employees. During
fiscal 1996, the Committee was comprised of two non-employee directors, L. Lane
Grigsby and David W. Hoyle.
The duties of the Committee generally are to review (a) the Company's
compensation and benefit plans to determine if they meet corporate objectives
and (b) the Chief Executive Officer's recommendations regarding (i) the
compensation of all officers of the Company; (ii) awards under the Company's
1993 Employee Stock Option Plan (for which the Committee serves as
administrator) and its other benefit plans; and (iii) the adoption of and/or
changes to major Company compensation policies and practices.
In performing the above described duties, the Committee seeks to attain
the following corporate objectives: (i) to attract, motivate and retain
competent employees focused on enhancing shareholder value; (ii) to correlate
compensation with Company objectives and strategies; (iii) to provide
compensation opportunities that are linked to the performance of the Company;
and (iv) to align employee incentives with those of the Company's shareholders.
No specific weighting is assigned to any of these objectives by the Committee
in making decisions regarding compensation for the Chief Executive Officer (the
"CEO") or executives or key employees of the Company.
Set forth below is a discussion of the Company's executive compensation
program, including a description of the decisions and actions of the Committee
during fiscal 1996 with respect to compensation for the CEO and executive
officers and key employees of the Company as a group.
Management Compensation
Base Salary. In determining appropriate base salaries, the Committee
considers competitive market forces as they relate to attracting and retaining
highly talented executives. The Committee also considers job responsibility,
experience, tenure and the cost of living in the areas where the Company's
offices and facilities are located, among other factors, in setting base salary
levels. During the fiscal year ended August 31, 1995 ("fiscal 1995"), the
Company retained an independent firm to perform a study of the Company's
executive compensation practices and to make recommendations thereon. As a
result of this study and the recommendations resulting therefrom, in fiscal
1995 the Committee approved raises for certain members of the Company's
executive and senior management, which raises brought such salaries more in
line with the employees' levels of responsibility. Late in fiscal 1996, based
upon recommendations of the CEO and in light of additional responsibilities
necessitated by the Company's recent acquisitions and growth, the Committee
approved additional raises for certain members of the Company's executive and
senior management, including Messrs. Fronek, Shepherd, Talbot and Wootton. The
Committee believes that such raises will encourage such persons to continue in
the employ of the Company.
Cash Bonuses. Prior to the fiscal year ended August 31, 1994 ("fiscal
1994"), the Company historically distributed 16% to 20% of its annual earnings
in bonuses, which were discretionary, and the amounts of any such bonus awarded
to particular executives, other than the CEO, were determined by the CEO in
consultation with other executive officers of the Company based on factors such
as performance and overall contributions to the Company. During fiscal 1994,
the performance of the Company was significantly lower than its expectations,
and, as a result, no bonuses were paid to employees. During fiscal 1995, as
noted above, the Company retained the services of an independent firm to
evaluate the compensation practices of the Company. This firm recommended, and
the Committee approved, the adoption of an Annual Incentive Compensation Plan
(the "Incentive Plan") for the Company. The Incentive Plan provides for annual
bonuses to all salaried employees (other than the CEO) of the Company and its
domestic subsidiaries, if the Company achieves certain targets, which are based
upon a minimum return on equity. The Incentive Plan provides that the bonus
pool awarded for payment shall be 50% of the amount that net profit after taxes
exceeds the target. Any such bonuses will be paid out partially in cash (to be
paid as soon as practical after the end of the fiscal year to which the bonus
relates) and partially in performance shares, which will (i) vest in three
years; (ii) have a value that increases or decreases proportionally with the
Company's book value; and (iii) be paid in cash within 90 days after the third
anniversary of the fiscal year end to which the bonus relates. The Incentive
Plan also establishes certain caps on the aggregate bonus (cash plus
performance shares) that can be awarded to any employee thereunder. The caps
are based upon a percentage of the employee's salary, with
- 8 -
<PAGE> 12
the percentages ranging from 15% to 50% depending upon the employee's position
in the Company. Those employees with a higher position in the Company may
receive a greater percentage of their salary in bonuses awarded under the
Incentive Plan.
In fiscal 1996, the Company did not attain the threshold required for
payment of bonuses under the Incentive Plan, which threshold was based on net
book value at the beginning of the fiscal year multiplied by the treasury rate
plus 2%. Subsidiaries that were acquired during fiscal 1996 were not included
in the Company's financial results that were used in determining whether the
threshold under the Incentive Plan was achieved for fiscal 1996.
Stock Options. The Company's 1993 Employee Stock Option Plan (the "Option
Plan") is maintained by the Company to provide key employees, including
employee-directors, with an additional incentive to promote the financial
success of the Company as reflected in increased value in the Company's Common
Stock. Stock options granted to key employees and executives have generally
been long-term (10 years) and vest in 25% annual increments beginning one year
from the date of grant. The Company has used, and plans to continue to use the
award of stock options to align the interests of the recipients with the
interests of the Company's shareholders and to provide an incentive for the key
employees or executives to remain in the employ of the Company. During fiscal
1996, the Committee granted options covering a total of 114,000 shares of
Common Stock.
Compensation of the Chief Executive Officer
In September 1993, prior to the creation of the Committee, the Company's
Board of Directors (other than Mr. Bernhard) determined that Mr. Bernhard's
base salary should be $500,000 annually. At such time, the Board, in setting
his base salary, sought to ensure that Mr. Bernhard would continue with the
same strategies and manner of operating the Company as he had in the past and
to ensure that he would not leave the employ of the Company. The Board, other
than Mr. Bernhard, also determined in 1993 that Mr. Bernhard would be entitled
to such annual bonuses as determined by the Compensation Committee (which, at
that time had not yet been formed), plus other various prerequisites and
benefits. The Board believed at such time, and the Committee continues to
believe, that Mr. Bernhard's actions create value for the Company and its
shareholders. The Board, later in 1993, approved an Employment Agreement
between the Company and Mr. Bernhard that incorporated the compensation package
previously approved by the Board, among other things. See "Employment
Agreement" elsewhere in this Proxy Statement, where Mr. Bernhard's Employment
Agreement is discussed in greater detail.
While Mr. Bernhard may be awarded such bonuses as the Committee, in its
discretion, may determine, no bonus was awarded to Mr. Bernhard for fiscal
1996. Moreover, the Committee has not awarded any stock options to Mr.
Bernhard. Because of Mr. Bernhard's significant holdings in the Company's
Common Stock, the Committee believes that his interests are sufficiently
aligned with those of the Company's shareholders.
THE COMPENSATION COMMITTEE
L. Lane Grigsby
David W. Hoyle
- 9 -
<PAGE> 13
STOCK PERFORMANCE GRAPH
The following line graph provides a comparison of the total shareholder
return on the Company's Common Stock with the return of a broad equity market
index and an index of industry "peer" group companies for the period commencing
December 8, 1993 (the date of the Company's initial inclusion in the Nasdaq
Stock Market) and ending August 31, 1996. The broad equity market index chosen
by the Company is the Nasdaq Stock Market - U.S. & Foreign Index (also called
the Nasdaq Composite Index). Because the Company is the only company with
securities publicly traded in the United States securities markets that is
primarily engaged in the business of fabricating piping systems, there is no
similar industry peer group with which to compare the Company. Thus, the
Company has selected as the most appropriate peer group the Russell 2000 Index,
which is an index of companies with comparable market capitalizations. All
amounts have been calculated as if all dividends, if any, were reinvested.
COMPARISON OF THE 33 MONTH CUMULATIVE TOTAL RETURN
AMONG THE SHAW GROUP INC., THE NASDAQ STOCK MARKET-U.S. & FOREIGN INDEX
AND THE RUSSELL 2000 INDEX
[GRAPH]
The chart above was plotted using the following data:
<TABLE>
<CAPTION>
DECEMBER 8, 1993 AUGUST 31, 1994 AUGUST 31, 1995 AUGUST 31, 1996
---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
The Shaw Group Inc. (1) $100 $ 88 $ 66 $227
Nasdaq Stock Market-U.S. & Foreign Index $100 $102 $136 $152
Russell 2000 Index $100 $104 $125 $139
</TABLE>
- -------------------
(1) Based upon the price of $14.50 per share, the initial public offering
price per share of the Common Stock.
On October 17, 1996, the Company delisted the Common Stock from the Nasdaq
Stock Market, and the Common Stock commenced trading on the New York Stock
Exchange on October 18, 1996.
- 10 -
<PAGE> 14
PROPOSAL TO APPROVE THE COMPANY'S 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
General. The Board of Directors is recommending for approval of the
shareholders the Company's 1996 Non-Employee Director Stock Option Plan (the
"Option Plan").
On July 14, 1996, the Company's Board of Directors, with the non-employee
directors abstaining, adopted the Option Plan subject to the approval of the
shareholders at the 1997 Annual Meeting of Shareholders. The purpose of the
Option Plan is to assist the Company in attracting and retaining highly
qualified and experienced directors who are not officers or employees of the
Company or any of its subsidiaries or affiliates. Each member of the Board who
is not, and who has not been during the one year period immediately preceding
the date the director is first elected to the Board, an officer or employee of
the Company or any of its subsidiaries or affiliates shall be eligible to
participate in the Option Plan.
An aggregate of 50,000 shares of Common Stock, less than 1% of the
outstanding shares of Common Stock as of November 30, 1996, have been reserved
for issuance under the Option Plan, subject to adjustment as a result of any
stock dividend, stock split, combination of shares, exchange of shares, merger,
consolidation, reorganization, recapitalization or other change in capital
structure of the Company. Currently outstanding under the Option Plan are
options to purchase an aggregate of 20,000 shares of Common Stock, which
options will be forfeited if the Option Plan is not approved by the
shareholders at the 1997 Annual Meeting.
A committee of two or more members of the Board who are not eligible to
receive grants under the Option Plan administers, construes and interprets the
Option Plan. Shares released upon forfeiture of an option shall again be
available for grants of options under the Option Plan. All options under the
Option Plan are non-transferable other than by will or the laws of descent and
distribution in the event of the death of an optionee or by a qualified
domestic relations order; however, the committee has the authority to grant
options that are transferable to members of an eligible director's immediate
family, including trusts for their benefit and partnerships in which they are
the only members. Each option granted under the Option Plan shall remain
exercisable for a period of ten years after the date of grant, and in the event
that an optionee ceases to be a member of the Board prior to the vesting of an
option or applicable part thereof, the option or the unvested portion thereof
shall be forfeited.
New Plan Benefits. Pursuant to the terms of the Option Plan, on its
effective date (July 14, 1996), each eligible director was granted an option to
purchase 5,000 shares of Common Stock at an exercise price of $21.75 per share,
which was the closing price for the Common Stock listed on the Nasdaq Stock
Market on July 12, 1996 (the preceding trading day to the date of grant). Each
option becomes exercisable in 25% increments on each of July 14, 1997, 1998,
1999 and 2000 and is subject to the approval of the Option Plan by the
shareholders at the 1997 Annual Meeting. Listed below are the recipients of
such options:
NEW PLAN BENEFITS
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
<TABLE>
<CAPTION>
ELIGIBLE DIRECTOR NUMBER OF STOCK OPTIONS
----------------- -----------------------
<S> <C>
Albert McAlister 5,000
L. Lane Grigsby 5,000
David W. Hoyle 5,000
John W. Sinders, Jr. 5,000
</TABLE>
On December 23, 1996, the closing price for the Common Stock reported by the
New York Stock Exchange was $24.25 per share. On October 17, 1996, the Company
delisted the Common Stock from the Nasdaq Stock Market, and the Common Stock
commenced trading on the New York Stock Exchange on October 18, 1996.
In addition, each eligible director shall be granted an option to acquire
1,500 shares of Common Stock on an annual basis upon his election or
re-election to the Board beginning with the election at the 1997 Annual
Meeting. The exercise price of such option shall be the fair market value as of
the date the option is granted. Each such option shall be fully exercisable one
year after the date of grant.
Federal Income Tax Consequences. The following statements are based on
current interpretation of existing federal income tax law. The law is technical
and complex and the statements below represent only a general summary of some
of the applicable provisions. The following discussion sets forth federal tax
consequences on the grant and exercise of an option under the Option Plan.
- 11 -
<PAGE> 15
Options awarded under the Option Plan shall be nonstatutory options. An
eligible director of the Company who is awarded an option under the Option Plan
will generally incur no taxable income as a result of the grant. The Company
can claim no tax deduction on the date the option is granted. The option cannot
be transferred by the optionee except as provided in the Option Plan. If the
option is transferred in a non-arm's length transaction, the optionee may be
required to realize ordinary income at the time of the transfer to the extent
of the amount realized from the disposition of the option. Upon the exercise of
the option, the optionee will be required to recognize ordinary income equal to
the excess of the fair market value of the shares of Common Stock on the
exercise date over the exercise price of the option. The Company will be
entitled to a corresponding deduction in the amount of the income recognized by
the optionee.
Amendment or Termination of the Option Plan. The Board of Directors may
amend the Option Plan from time to time in its sole discretion, provided that
no such amendment shall impair the rights of any person to whom an option has
been granted, without such person's consent. The Option Plan terminates on July
14, 2006, and the Board may suspend or terminate the Option Plan at any earlier
time; however, the terms of the Option Plan shall continue in full force and
effect with respect to outstanding and unexercised options issued thereunder.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 1996
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 5, 1996, the Company purchased all of the outstanding capital
stock of Alloy Piping Products, Inc. ("APP") from R. Dale Brown, Sr. ("Dale
Brown") and his wife Mildred Gayle O'Pry Brown, APP's sole shareholders
(collectively, the "Sellers"). In connection with the transaction, the Company
issued 394,118 shares of Common Stock and paid $7.1 million in cash to the
Sellers. The transaction was made pursuant to a Stock Purchase Agreement (the
"Purchase Agreement") dated as of March 1, 1996 between the Company and the
Sellers. The Purchase Agreement contains certain representations, warranties
and covenants by the Sellers, including, among other things, representations
regarding APP and a covenant by the Sellers not to compete for a period of two
years.
The Company also acquired, on April 5, 1996, the assets of an APP-related
entity, Speedline, a Louisiana partnership ("Speedline"), pursuant to an Asset
Purchase Agreement dated as of March 1, 1996 between the Company, Speedline and
the sole partners of Speedline, Ronald D. Brown, Jr. ("Ron Brown") and Susan
Nance Brown ("Susan Nance"). Ron Brown and Susan Nance are children of Dale
Brown. In consideration for the sale, the Company delivered 147,059 shares of
Shaw Common Stock to Ron Brown, paid $2.5 million to Susan Nance and paid off a
$1.3 million loan made by Dale Brown to Speedline.
The shares of Shaw Common Stock received by the Sellers and Ron Brown
pursuant to the transactions described above are the subject of a Stock
Registration Agreement dated as of April 5, 1996, among the Company, the
Sellers and Ron Brown, whereby the Company has agreed to file a shelf
registration statement with the Securities and Exchange Commission and to take
such other steps as are necessary to register such shares for transfer
(including such filings or qualifications as may be required under state blue
sky or securities laws). The Company has agreed to keep such registration
statement effective for a period of up to two years. In addition, certain
"piggyback" registration rights are also provided thereunder.
Furthermore, APP entered into an Employment Agreement with Ron Brown
whereby APP has agreed to employ him at an annual salary of $150,000 per year
for a term of three years. Under the Agreement, Ron Brown is also subject to
certain non-competition and confidentiality covenants. The Company has also
entered into a Consulting and Non-Competition Agreement (the "Non-Compete
Agreement") with Ron Brown under which the Company has agreed to retain Ron
Brown as a consultant and Ron Brown has agreed to certain non-competition and
confidentiality covenants in favor of the Company and its affiliates. The term
of the Non-Compete Agreement is sixty (60) months, each month during which Shaw
has agreed to pay Ron Brown $41,667. In connection with their employment, the
Company also awarded to Dale Brown and Ron Brown, respectively, options to
purchase 50,000 and 35,000 shares of Shaw Common Stock under the Company's 1993
Employee Stock Option Plan. The options have an exercise price of $19.50 per
share and are exercisable in 25% increments on each of April 5, 1997, 1998,
1999 and 2000 based upon continued employment.
During fiscal 1996, construction work valued at $243,058 was performed for
a subsidiary of the Company by a company in which L. Lane Grigsby, a director
of the Company, has a 17.75% equity interest.
John W. Sinders, Jr., a director of the Company, is a managing director of
Jefferies & Company, Inc., an investment banking firm that was an underwriter
and acted as one of the representatives of the underwriters for the public
offering of 2,659,118 shares of Common Stock, 2,000,000 of which were offered
by the Company and 659,118 of which were offered by certain selling
shareholders of the Company. The closing of such public offering was completed
on December 23, 1996 at a price of $21.00 per share, less the underwriting
discounts
- 12 -
<PAGE> 16
and commissions set forth in the Prospectus dated December 17, 1996 relating
thereto. The Company has granted to the underwriters an option to purchase up
to an additional 398,000 shares of Common Stock pursuant to such terms to cover
over-allotments, if any. The selling shareholders included J.M. Bernhard, Jr.,
Dale Brown and Ron Brown, who sold 300,000; 94,118; and 100,000 shares of
Common Stock, respectively, in such offering.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Section
16"), requires the Company's directors and certain officers and beneficial
owners of the Common Stock (collectively, the "reporting persons") to file with
the Securities and Exchange Commission (the "SEC") reports of ownership and
changes in ownership of the Common Stock. The reporting persons are required to
furnish the Company with copies of all reports filed pursuant to Section 16(a).
Based solely upon a review of such reports received by it, or written
representations from certain reporting persons that no Form 5 reports were
required for those persons, the Company believes that, during fiscal 1996, all
filing obligations applicable to the reporting persons were complied with,
except as follows: Mr. Bernhard failed to file timely a Form 4 report for four
sales of Common Stock in May 1996 and a Form 4 report for three sales in July
1996. Mr. Talbot failed to file timely a Form 4 report for a sale of Common
Stock in May 1996 and a Form 4 report for a sale in July 1996. Mr. Grigsby
failed to file timely a Form 4 report for a purchase of Common Stock in May
1996. Mr. Hoyle failed to file timely a Form 4 report for two purchases of
Common Stock in January 1996. Mr. Angelo failed to file timely a Form 4 report
for four sales of Common Stock in July 1996. Mr. Wilkie failed to file timely a
Form 4 report for three sales of Common Stock in July 1996. Mr. Dalton failed
to file timely a Form 4 report for a sale of Common Stock in July 1996. Mr.
Wootton failed to file timely a Form 4 report for three sales of Common Stock
in May 1996 and a Form 4 report for a sale in July 1996. The Company is
implementing a new compliance program to help ensure timely filings of reports
by its officers and directors.
AUDITOR SERVICES
The Company's consolidated financial statements for the fiscal year ended
August 31, 1996 were audited by the firms of Arthur Andersen LLP and Hannis T.
Bourgeois & Co., L.L.P., and such firms will remain as the Company's auditors
until replaced by the Board of Directors. A representative of each such firm
will be present at the 1997 Annual Meeting of Shareholders to respond to any
appropriate questions and will have the opportunity to make a statement, if
either of them so desires.
SHAREHOLDER PROPOSALS
Any shareholder proposal to be considered by the Company for inclusion in
the proxy materials for the 1998 Annual Meeting of Shareholders must be
submitted in accordance with applicable regulations of the Securities and
Exchange Commission and received by the Company at its principal executive
offices no later than September 2, 1997.
In order for a shareholder to bring any business or nominations before the
1997 Annual Meeting of Shareholders, certain conditions set forth in Section
7(b) of the amended and restated by-laws of the Company must be complied with,
including, but not limited to, the delivery of a notice to the Secretary of the
Company not less than 30 nor more than 60 days in advance of the 1997 Annual
Meeting, or if fewer than 40 days notice or prior disclosure of the date of the
1997 Annual Meeting is given or made to the shareholders, not later than the
tenth day following the day on which the notice of the date of the 1997 Annual
Meeting was mailed or such prior disclosure was made. The requirements as to
the form and content of such advance notice are set forth in Section 7(b) of
the Company's amended and restated by-laws, a copy of which may be obtained by
contacting the Company's Secretary at (504) 296-1140.
DETERMINATION OF BENEFICIAL OWNERSHIP
As described below, the number of votes that each shareholder will be
entitled to cast at the Annual Meeting will depend on when the shares were
acquired and whether or not there has been a change in beneficial ownership
since the date of acquisition with respect to each of such holder's shares.
In certain cases record ownership may change but beneficial ownership for
voting purposes does not change. The Company's articles of incorporation, as
restated, states the exceptions where beneficial ownership is deemed not to
have changed upon the transfer of shares of Common Stock.
The Company's articles of incorporation, as restated, provide that each
outstanding share of Common Stock will entitle the holder thereof to five votes
on each matter properly submitted to the shareholders of the Company for their
vote, waiver, release or other action;
- 13 -
<PAGE> 17
except that no holder of outstanding shares of Common Stock will be entitled to
exercise more than one vote on any such matter in respect of any share of
Common Stock with respect to which there has been a change in beneficial
ownership during the four years immediately preceding the date on which a
determination is made of the shareholders of the Company who are entitled to
vote or to take any other action. A change in beneficial ownership of an
outstanding share of Common Stock will be deemed to have occurred whenever a
change occurs in any person or persons who, directly or indirectly, through any
contract, agreement, arrangement, understanding, relationship or otherwise has
or shares any of the following:
(a) voting power, which includes, without limitation, the power to vote
or to direct the voting power of such share of Common Stock;
(b) investment power, which includes, without limitation, the power to
direct the sale or other disposition of such share of Common Stock;
(c) the right to receive or to retain the proceeds of any sale or other
disposition of such share of Common Stock; or
(d) the right to receive or retain any distributions, including, without
limitation, cash dividends, in respect of such share of Common Stock.
Without limiting the generality of the foregoing, the following events or
conditions will be deemed to involve a change in beneficial ownership of a
share of Common Stock:
(a) in the absence of proof to the contrary provided in accordance with
certain procedures set forth below, a change in beneficial ownership
will be deemed to have occurred (i) whenever an outstanding share of
Common Stock is transferred of record into the name of any other
person and (ii) upon the issuance of shares in a public offering;
(b) in the case of an outstanding share of Common Stock held of record in
the name of a corporation, general partnership, limited partnership,
voting trustee, bank, trust company, broker, nominee or clearing
agency, if it has not been established pursuant to the procedures set
forth below that there has been no change in the person or persons
who or that direct the exercise of the rights referred to in
subparagraphs (a) through (d), inclusive, of the preceding paragraph
with respect to such outstanding share of Common Stock during the
four years immediately preceding the date on which a determination is
made of the shareholders of the Company entitled to vote or to take
any other action, then a change in beneficial ownership of such share
of Common Stock shall be deemed to have occurred during such period;
(c) in the case of an outstanding share of Common Stock held of record in
the name of any person as a trustee, agent, guardian or custodian
under the Uniform Gifts to Minors Act as in effect in any
jurisdiction, a change in beneficial ownership will be deemed to have
occurred whenever there is a change in the beneficiary of such trust,
the principal of such agent, the ward of such guardian, the minor for
whom such custodian is acting or a change in such trustee agent,
guardian or custodian; or
(d) in the case of outstanding shares of Common Stock beneficially owned
by a person or group of persons who, after acquiring, directly or
indirectly, the beneficial ownership of 5% of the outstanding shares
of Common Stock, fails to notify the Company of such ownership within
ten days after such acquisition, a change in beneficial ownership of
such shares of Common Stock will be deemed to occur on each day while
such failure continues.
Notwithstanding any other provision in the Company's articles of
incorporation, as restated, to the contrary, no change in beneficial ownership
of an outstanding share of Common Stock shall be deemed to have occurred solely
as a result of:
(a) any transfer of any interest in an outstanding share of Common Stock
pursuant to a bequest or inheritance, by operation of law upon the
death of any individual, or by any other transfer without valuable
consideration, including, without limitation, a gift that is made in
good faith and not for the purpose of circumventing the provisions of
the Company's articles of incorporation, as restated;
- 14 -
<PAGE> 18
(b) any changes in beneficiary of any trust, or any distribution of an
outstanding share of Common Stock from trust, by reason of the birth,
death, marriage or divorce of any natural person; the adoption of any
natural person prior to age 18; or the passage of a given period of
time or the attainment by any natural person of a specific age; or
the creation or termination of any guardianship or custodial
arrangement;
(c) any appointment of a successor trustee, agent, guardian or custodian
with respect to an outstanding share of Common Stock if neither such
successor has, nor its predecessor had, the power to vote or to
dispose of such share of Common Stock without further instructions
from others;
(d) any change in the person to whom dividends or other distributions in
respect of an outstanding share of Common Stock are to be paid
pursuant to the issuance or modification of a revocable dividend
payment order;
(e) any issuance of a share of Common Stock by the Company or any
transfer by the Company of a share of Common Stock held in treasury
other than in a public offering thereof, unless otherwise determined
by the Board of Directors at the time of authorizing such issuance or
transfer;
(f) any giving of a proxy in connection with a solicitation of proxies
subject to the provisions of Section 14 of the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated
thereunder;
(g) any transfer, whether or not with consideration, among individuals
related or formerly related by blood, marriage or adoption
("relatives") or between a relative and any person controlled by one
or more relatives where the principal purpose for the transfer is to
further the estate tax planning objectives of the transferor or of
relatives of the transferor;
(h) any appointment of a successor trustee as a result of the death of
the predecessor trustee (which predecessor trustee shall have been a
natural person);
(i) any appointment of a successor trustee who or which was specifically
named in a trust instrument prior to December 8, 1993; or
(j) any appointment of a successor trustee as a result of the
resignation, removal or failure to qualify of a predecessor trustee
or as a result of mandatory retirement pursuant to the express terms
of a trust instrument; provided, that less than 50% of the trustees
administering any single trust will have changed (including in such
percentage the appointment of the successor trustee) during the
four-year period preceding the appointment of such successor trustee.
All determinations concerning changes in beneficial ownership, or the
absence of any such change, shall be made by the Board of Directors of the
Company or, at any time when the Company employs a transfer agent with respect
to the shares of Common Stock, at the Company's request, by such transfer agent
on the Company's behalf. In accordance with the Company's articles of
incorporation, as restated, written procedures designated to facilitate such
determinations are to be established and may be amended from time to time by
the Board of Directors. Such procedures will provide, among other things, the
manner of proof of facts that will be accepted and the frequency with which
such proof may be required to be renewed. The Company and any transfer agent
will be entitled to rely on any and all information concerning beneficial
ownership of the outstanding shares of Common Stock coming to their attention
from any source and in any manner reasonably deemed by them to be reliable, but
neither the Company nor any transfer agent shall be charged with any other
knowledge concerning the beneficial ownership of outstanding shares of Common
Stock.
In the event of any stock split or stock dividend with respect to the
outstanding shares of Common Stock, each share of Common Stock acquired by
reason of such split or dividend will be deemed to have been beneficially owned
by the same person from the same date as that on which beneficial ownership of
the outstanding share or shares of Common Stock, with respect to which such
share of Common Stock was distributed, was acquired. Each outstanding share of
Common Stock, whether at any particular time the holder thereof is entitled to
exercise five votes or one vote, shall be identical to all other shares of
Common Stock in all respects, and together the outstanding shares of Common
Stock constitute a single class of shares of the Company.
By resolution duly adopted by the Board of Directors of the Company
pursuant to the foregoing provisions of the Company's articles of
incorporation, as restated, the following procedures have been adopted for use
in determining the number of votes to which a shareholder is entitled:
- 15 -
<PAGE> 19
(i) The Company may accept the written and signed statement of a
shareholder to the effect that no change in beneficial ownership has
occurred during the period following December 12, 1992, and until the
date (December 13, 1996) on which a determination is made of the
shareholders of the Company who are entitled to vote or take any
other action at the Annual Meeting. Such statement may be abbreviated
to state only the number of shares as to which such shareholder is
entitled to exercise five votes or one vote.
(ii) In the event the General Counsel of the Company, in his sole
discretion, taking into account the standards set forth in the
Company's articles of incorporation, as restated, deems any such
statement to be inadequate or for any reason deems it in the best
interest of the Company to require further evidence of the absence of
change of beneficial ownership during such period preceding the
record date, he may require such additional evidence and, until it is
provided in form and substance satisfactory to him, a change in
beneficial ownership during such period shall be deemed to have taken
place.
(iii) Information supplementing that contemplated by paragraph (i) and
additional evidence contemplated by paragraph (ii) may be provided by
a shareholder at any time but must be furnished at least three
business days prior to any meeting of shareholders at which such
shares are to be voted for any change to be effective at such
meeting.
OTHER MATTERS
The Board of Directors knows of no other matters which may be properly, or
are likely to be, brought before the meeting. However, if any proper matters
are brought before the meeting, the persons named in the enclosed Proxy will
vote thereon as the Board of Directors recommends.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ T. A. BARFIELD, JR.
-------------------------------------
T. A. Barfield, Jr.
Secretary
Baton Rouge, Louisiana
December 31, 1996
- 16 -
<PAGE> 20
THE SHAW GROUP INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
This 1996 Non-Employee Director Stock Option Plan (the "Plan") is
intended to assist The Shaw Group Inc. (the "Company") in attracting and
retaining highly qualified and experienced persons, who are not officers or
employees of the Company or any of its subsidiaries or affiliates, for service
as directors of the Company by providing such directors with a proprietary
interest in the Company's success through the grant to such directors of
nonstatutory stock options (the "Options") to acquire shares of the common
stock, no par value per share, of the Company (the "Shares").
2. PARTICIPATION.
Each member of the Company's Board of Directors (the "Board") who is
not, and who has not been during the one-year period immediately preceding the
Effective Date (as defined below), or the date the director is first elected to
the Board, whichever is later, an officer or employee of the Company or of any
of its subsidiaries or affiliates (each, an "Eligible Director") shall be
eligible to participate in the Plan.
3. ADMINISTRATION OF PLAN.
The Plan shall be administered, construed and interpreted by a committee
(the "Committee") which shall be comprised of two or more members of the Board
appointed by the Board, who are not eligible under Section 2 hereof to receive
grants of Options under the Plan. The Committee shall prescribe the form of
stock option agreement to be used to evidence grants of Options under the Plan,
consistent with the terms of the Plan and all applicable laws and regulations,
including, without limitation, Rule 16b-3 (or successor provision) promulgated
by the Securities and Exchange Commission.
4. SHARES SUBJECT TO PLAN.
(a) Maximum Shares. The number of Shares which are hereby reserved for
purposes of the Plan shall be, in the aggregate, 50,000 Shares, subject to
further adjustment as provided in Section 4(b) hereof. Shares issued under the
Plan may be either authorized but unissued Shares or Shares which have been or
may be reacquired by the Company, including treasury shares. Shares released
upon forfeiture of an Option shall again be available for grants of future
Options under the Plan.
(b) Adjustments in Event of Changes in Capitalization. In the event
that the Shares are changed into or exchanged for a different kind or number of
shares of stock or securities of the Company as the result of any stock
dividend, stock split, combination of shares, exchange of shares, merger,
consolidation, reorganization, recapitalization or other change in capital
structure of the Company (each, a "Capitalization Change"), then the number of
Shares subject to this Plan and the number of Shares subject to Options
previously granted hereunder shall be equitably adjusted by the Committee to
prevent the dilution or enlargement of such previously granted Options, and any
new stock or securities into which the Shares are changed or for which they are
exchanged shall be substituted for the Shares subject to this Plan and to
Options granted hereunder; provided, however,
<PAGE> 21
that fractional shares may be deleted from any such adjustment or substitution.
There shall be no such equitable adjustment for the number of Shares subject to
Options as set forth in Section 5(a) in the event the effective date of the
Capitalization Change occurs prior to the grant of the Option.
5. OPTIONS GRANTED UNDER THE PLAN.
(a) Option Grants. On the Effective Date, each Eligible Director shall
be and hereby is granted an Option (an "Initial Option") to acquire 5,000
Shares. In addition, each Eligible Director shall be granted an Option (an
"Annual Option") to acquire 1,500 Shares on an annual basis upon his or her
election or re-election to the Board. The price at which Shares may be
acquired pursuant to each Option (the "Exercise Price") shall be the Fair
Market Value of the Shares, as defined in Section 5(d) hereof, as of the date
such Option is granted.
(b) Exercise Rights. (i) Each Initial Option shall be exercisable
after the following dates with respect to the following portions of the Shares:
<TABLE>
<CAPTION>
Portion of
After Shares Exercisable
--------------- ------------------
<S> <C>
July 14, 1997 25% (1,250 shares)
July 14, 1998 25% (1,250 shares)
July 14, 1999 25% (1,250 shares)
July 14, 2000 25% (1,250 shares)
</TABLE>
(ii) Each Annual Option shall be fully exercisable one year
after the date of grant. Once vested, each Option (or vested portion thereof)
shall be fully exercisable, and shall remain exercisable for a period of ten
years from the date such Option is granted, at which time any unexercised
portion of the Option shall terminate. In the event that the optionee ceases
to be a member of the Board prior to the vesting of the Option (or applicable
portion thereof), the Option (or the unvested portion thereof) shall be
forfeited.
(c) Exercise of Options. Subject to Section 5(b), an Option may be
exercised with respect to all or part of the Shares covered by the Option, but
in no event with respect to less than 100 Shares, unless the exercise relates
to all Shares covered by the Option at the date of exercise. Options may be
exercised by delivery of a signed written notice to the Company, which notice
shall state the election to exercise the Option and the number of whole Shares
in respect to which it is being exercised, together with payment in full of the
Exercise Price, which payment shall be made either (i) in cash (by a certified
check, bank draft or money order); (ii) with the consent of the Committee, by
delivering Shares already owned by the optionee valued at Fair Market Value;
(iii) by electing to have the Company withhold from the Shares otherwise
issuable upon exercise of the Option that number of Shares valued at Fair
Market Value as of the date of exercise; or (iv) by a combination of the
foregoing forms of payment. Notice of exercise and payment of the Exercise
Price shall be delivered to the Company at the following address:
The Shaw Group Inc.
11000 Mead Road, Second Floor
- 2 -
<PAGE> 22
Baton Rouge, La 70816
Attn: Secretary
(d) Fair Market Value. The term "Fair Market Value" means the fair
market value of a Share as determined in good faith by the Committee in the
following manner:
(i) If the Shares are then listed on any national or
regional stock exchange or traded in the over-the-counter market
and prices are quoted on the Nasdaq National Market, the Fair
Market Value shall be the last quoted sales price of a Share on
the date in question, or if there are no reported sales on such
date, on the last preceding date on which sales were reported;
(ii) If the Shares are not so listed or quoted, then the
Fair Market Value shall be the mean between the bid and ask
prices quoted by a market maker or other recognized specialist in
the Shares at the close of the date in question; or
(iii) In the absence of either of the foregoing, the Fair
Market Value shall be determined by the Committee in its absolute
discretion after giving consideration to the book value, the
revenues, the earnings history and the prospects of the Company
in light of market conditions generally.
The Fair Market Value determined in such manner shall be final, binding and
conclusive on all parties.
6. RESTRICTIONS ON TRANSFERS.
(a) Limitations on Transfer. (i) Except as provided in Section
6(a)(ii) below, no Option granted under the Plan may be assigned, encumbered or
transferred, except by will or the laws of descent and distribution in the
event of the death of the optionee, or pursuant to a qualified domestic
relation order as defined by the Internal Revenue Code of 1986, as amended or
Title I of the Employee Retirement Income Security Act, or the rules
thereunder. (ii) The Committee shall have the discretionary authority to grant
Options that would be transferable to members of an Eligible Director's
immediate family, including trusts for the benefit of such family members and
partnerships in which such family members are the only partners. For purposes
of Section 5(c), a transferred Option may be exercised by the transferee to the
extent that the Eligible Director would have been entitled had the Option not
been transferred.
(b) Government Regulations. This Plan and Options granted under the
Plan are subject to all applicable federal and state laws, rules and
regulations and to such approvals by any regulatory or governmental agency
(including without limitation "no action" positions of the Securities and
Exchange Commission) which may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Without limiting the
generality of the foregoing, no Options may be granted or exercised under the
Plan unless and until all applicable legal requirements have, in the opinion of
counsel to the Company, been complied with. In connection with any Shares
issued pursuant to the exercise of Options, the person acquiring such Shares
shall, if requested by the Company, give assurances satisfactory to counsel to
the Company in respect to such matters as the
- 3 -
<PAGE> 23
Company may deem desirable to assure compliance with all applicable legal
requirements. The Company shall not be required to deliver any Shares under
the Plan prior to (i) the admission of such Shares to listing on any stock
exchange or Nasdaq Stock Market, as applicable, on which Shares may then be
listed, and (ii) the completion of such registration or other qualification of
such Shares under any state or federal law, rule or regulation, as the
Committee shall determine to be necessary or advisable.
7. TERMINATION.
The Plan shall terminate automatically on the tenth anniversary of the
Effective Date, and the Board may suspend or terminate the Plan at any earlier
time. Upon termination of the Plan, no additional Options shall be granted
under the Plan; provided, however, that the terms of the Plan shall continue in
full force and effect with respect to outstanding and unexercised Options
issued under the Plan.
8. AMENDMENT.
The Board may amend the Plan from time to time in its sole discretion.
No amendment, however, shall impair the rights of any Eligible Director or
other person or persons to whom an Option has been granted, without such
person's consent.
9. INDEMNIFICATION.
In addition to such other rights of indemnification as they may have,
the members of the Committee and the officers and employees of the Company who
may take actions relating to the Plan shall be indemnified by the Company to
the fullest extent permitted by law against the reasonable expenses, including
attorney's fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
thereof, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member, officer
or employee is liable for gross negligence or willful misconduct in the
performance of his duties, provided that within sixty (60) days after
institution of any such action, suit or proceeding, a Committee member, officer
or employee shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
10. EFFECTIVE DATE.
The Effective Date of the Plan shall be July 14, 1996, subject to
receipt, within one year of such date, of the approval of the Plan by the
affirmative vote of a majority of the total voting power present in person or
represented by proxy at the meeting of the shareholders at which the Plan is
considered. All Options granted prior to such shareholder approval shall be
subject to receipt of such approval and may not be exercised prior to receipt
of such approval. If such shareholder approval is not received, all such
Options shall automatically terminate.
- 4 -
<PAGE> 24
THE SHAW GROUP INC.
11100 MEAD ROAD, SECOND FLOOR, BATON ROUGE, LA 70816
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J. M. Bernhard, Jr. and Bret M. Talbot
as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of common stock of The Shaw Group Inc. held of record by the undersigned on
December 13, 1996, at the annual meeting of shareholders to be held on January
29, 1997, or any adjournment hereof.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing an attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed in this in this block
(except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed in this block
NOMINEES: J.M. Bernhard, Jr., R. Dale Brown, Sr., Frank Fronek, L. Lane
Grigsby, David W. Hoyle, Albert McAlister, George R. Shepherd,
John W. Sinders, Jr. and Bret M. Talbot
(INSTRUCTION: To withhold authority to vote any individual nominee
write that nominee's name on the space provided below:)
-------------------------
2. Proposal to approve The Shaw Group Inc. 1996 Non-Employee Director Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Please Date and Sign on Reverse)
<PAGE> 25
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER, IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2, AND 3.
I PLAN TO ATTEND MEETING [ ]
Dated
----------------------------------
----------------------------------------
----------------------------------------
Signature
----------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
