<PAGE> 1
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 [ ]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
STONE & WEBSTER, INCORPORATED
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(Name of Registrant as Specified in its Charter)
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(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
LOGO
STONE & WEBSTER, INCORPORATED
245 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
March 31, 1999
DEAR SHAREHOLDER:
We cordially invite our Shareholders to attend the 1999 Annual Meeting of
Shareholders of Stone & Webster, Incorporated which will be held at the Stone &
Webster Building at 245 Summer Street, Boston, Massachusetts on Thursday, May
13, 1999, at 2:00 P.M. We ask Shareholders who plan to attend the Annual Meeting
to mark the appropriate box on the enclosed proxy card.
As more fully described in the accompanying Proxy Statement, the Board of
Directors recommends that you vote FOR the election of Directors, and FOR the
ratification of the selection of independent accountants.
It is important that your shares be represented at the Meeting whether or
not you are personally present. Accordingly, we ask that you sign, date and mail
the enclosed proxy or voting instructions card promptly, or if you prefer you
may submit your proxy or voting instructions by calling the toll-free telephone
number on the enclosed card.
As in past years, members of management will review the performance and
prospects of the Corporation and will be available to answer questions during
and after the Meeting.
Sincerely,
/s/ H. Kerner Smith
H. KERNER SMITH
Chairman of the Board, President and
Chief Executive Officer
<PAGE> 3
STONE & WEBSTER, INCORPORATED
245 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
------------------------
NOTICE OF MEETING
------------------------
March 31, 1999
To the Shareholders of
STONE & WEBSTER, INCORPORATED:
Notice is hereby given that the 1999 Annual Meeting of Shareholders of
Stone & Webster, Incorporated (the Corporation) will be held at the
Corporation's principal executive offices, the Stone & Webster Building at 245
Summer Street, Boston, Massachusetts, on Thursday, May 13, 1999, at 2:00 P.M.,
Boston time, for the purpose of considering and acting upon the following:
1. The election of three Directors for a term of three years and until
their successors are duly elected and qualified.
2. The ratification of the selection by the Corporation's Board of
Directors of the firm of PricewaterhouseCoopers LLP, independent
accountants, as auditor of the Corporation and its subsidiaries for the
year 1999.
3. Any and all other business that may properly come before the Meeting.
Only Shareholders of record at the close of business on March 15, 1999 will
be entitled to vote at the Meeting or any adjournment or postponement thereof.
IF YOU WILL NOT BE PRESENT IN PERSON AT THE MEETING, YOU ARE REQUESTED TO
SIGN AND DATE THE ENCLOSED PROXY OR VOTING INSTRUCTIONS CARD AND TO RETURN IT
PROMPTLY, OR TO SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS BY TELEPHONE AS
EXPLAINED ON THE ENCLOSED CARD.
By order of the Board of Directors,
JAMES P. JONES
Vice President, Secretary and
General Counsel
<PAGE> 4
STONE & WEBSTER, INCORPORATED
245 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
PROXY STATEMENT
The following information is furnished to each shareholder (the
Shareholder) of Stone & Webster, Incorporated (the Corporation) in connection
with the foregoing notice of the 1999 Annual Meeting of the Shareholders of the
Corporation (the Annual Meeting) to be held on Thursday, May 13, 1999, and the
enclosed proxy for use at the Annual Meeting and any adjournments or
postponements thereof. This Proxy Statement and the form of the proxy are being
mailed to Shareholders commencing on or about March 31, 1998.
The enclosed proxy is being solicited by and on behalf of the Board of
Directors of the Corporation. A proxy executed on the enclosed form or by
telephone may be revoked by the Shareholder at any time before the shares are
voted by filing with the Secretary of the Corporation an instrument revoking
such proxy, or a duly executed proxy bearing a later date, or by attending the
Annual Meeting and electing to vote in person. If a Shareholder is a participant
in the Corporation's Dividend Reinvestment Plan, the proxy represents the shares
in the Shareholder's plan account in addition to the shares registered in the
Shareholder's name. If the Shareholder is a participant in the Employee
Investment Plan, Employee Stock Ownership Plan or Payroll-based Employee Stock
Ownership Plan of Stone & Webster, Incorporated and Participating Subsidiaries,
the proxy will constitute voting instructions to the trustees under those plans
directing how the shares in the participant's accounts in the plans are to be
voted. The shares of the Corporation's Common Stock represented by all proxies
which are received by the Corporation, or voting instructions received by the
trustees under the plans, will be voted as specified. If no specification is
made, the shares represented thereby will be voted:
(1) FOR the election of the Board's nominees as Directors; and
(2) FOR the ratification of the selection of PricewaterhouseCoopers LLP,
independent accountants, as auditor of the Corporation and its
subsidiaries for the year 1999.
CONFIDENTIALITY; VOTING
The Board of Directors has adopted a policy of confidentiality regarding
the voting of shares by Shareholders. Under this policy, all Shareholder votes
by proxy or ballot will be kept permanently confidential and will not be
disclosed to the Corporation or third parties unless disclosure is required by
law or the Shareholder consents to or requests disclosure, or in the case of a
contested election or other matter, where the contesting proponent does not
agree in writing to comply with the same policy. Voting instructions given to
the trustees by a participant in the Employee Investment Plan, Employee Stock
Ownership Plan or Payroll-based Employee Stock Ownership Plan of Stone &
Webster, Incorporated and Participating Subsidiaries will be mailed or
telephoned directly to the trustees (or their representa-
1
<PAGE> 5
tives) and will be kept permanently confidential and will not be disclosed to
the Corporation or third parties unless disclosure is required by law or the
participant consents to or requests disclosure.
Votes cast by proxy or in person at the Annual Meeting will be counted by
the persons appointed by the Corporation to act as inspectors of election for
the meeting. The inspectors of election will treat shares of Common Stock
represented by proxies that specify abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum. However,
abstentions will be treated as negative votes for purposes of determining the
outcome of any matter submitted to Shareholders which requires the approval of a
majority of votes entitled to be cast on such matters.
The inspectors of election will treat shares represented by proxies for
shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or persons entitled to vote and which the
broker or nominee does not have discretionary power to vote on a particular
matter (sometimes referred to as "broker non-votes") as shares that are present
and entitled to vote for purposes of determining the presence of a quorum.
However, for the purposes of determining the outcome of any matter as to which
the broker has physically indicated on the proxy that it does not have
discretionary authority to vote, those shares will be treated as not present and
not entitled to vote with respect to that matter (even though those shares are
considered entitled to vote for quorum purposes and may be entitled to vote on
other matters).
The expenses in connection with the solicitation of proxies, including the
cost of preparing, assembling and mailing proxy material, and also the payment
or reimbursement of charges of brokerage houses and other institutions, nominees
and fiduciaries in forwarding the Corporation's proxy material to beneficial
owners, will be borne by the Corporation. In addition to solicitations by mail,
some of the officers and regular employees of the Corporation and its
subsidiaries may solicit proxies personally or by telephone, facsimile or
telegraph. The Corporation has also retained D. F. King & Co., Inc. to assist in
the solicitation of proxies by the methods referred to above at an estimated
cost of $10,000 plus out-of-pocket expenses.
SHARE OWNERSHIP
The Corporation had outstanding, as of March 15, 1999, 13,061,047 shares of
Common Stock (excluding 4,670,441 shares held in the treasury), each share of
which is entitled to one vote. Only Shareholders of record at the close of
business on March 15, 1999 will be entitled to vote at the Annual Meeting or any
adjournments or postponements thereof.
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<PAGE> 6
As of March 15, 1999, the institutional trustees under the following
employee benefit plans held of record more than 5% of the outstanding Common
Stock of the Corporation:
The Employee Investment Plan of Stone & Webster, Incorporated and
Participating Subsidiaries (the Employee Investment Plan) -- 1,355,493
shares (approximately 10.4%), with an address in care of the Corporation at
245 Summer Street, Boston, MA 02210
and
The Employee Stock Ownership Plan of Stone & Webster, Incorporated and
Participating Subsidiaries (ESOP) (including PAYSOP shares referred to
below) -- 2,460,195 shares (approximately 18.8%), with an address in care
of the Corporation at 245 Summer Street, Boston, MA 02210.
The Committee under the Employee Investment Plan (the Plan Committee) may
be considered a beneficial owner of the shares held under the Employee
Investment Plan by reason of the definition of beneficial ownership contained in
Rule 13d-3 of the Securities and Exchange Commission (the Commission)
promulgated under the Securities Exchange Act of 1934, as amended (the Exchange
Act). The Employee Investment Plan provides that shares allocated to the
investment accounts of participants will be voted as the participants direct,
and shares as to which participants have not given directions will be voted in
accordance with the direction of the Plan Committee. To the extent that the Plan
Committee shares voting power as aforesaid, the Plan Committee may be considered
a beneficial owner under the Commission definition. The Plan Committee is
presently composed of Donna F. Bethell, Chairman, David N. McCammon, J. Angus
McKee, H. Kerner Smith and Peter M. Wood, a majority of whom are non-employee
Directors of the Corporation and each of whom has a mailing address at the
Corporation. Pursuant to the ESOP, shares allocated to the accounts of
participants are voted as the participants direct, and allocated shares as to
which participants have not given directions and all unallocated shares are
voted in the proportions the allocated shares are voted by the participants.
Shares held under the ESOP may not be transferred by the trustee of that plan,
other than to meet distribution requirements of the ESOP or in connection with a
statutory reclassification of the Corporation's Common Stock or a statutory
merger, consolidation or sale of assets or in certain limited circumstances,
upon the direction of the participants.
As of March 15, 1999, the Payroll-based Employee Stock Ownership Plan
(PAYSOP) trust (which was merged into, but held in a separate account within,
the ESOP trust effective as of January 1, 1995) held 51,778 shares
(approximately 0.4%) of Common Stock. Shares allocated to the accounts of
participants from the PAYSOP are voted as the participants direct, and allocated
shares as to which no participant directions are given will not be voted.
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<PAGE> 7
In addition to the foregoing, the following table sets forth information
concerning beneficial owners of more than 5% of the outstanding Common Stock of
the Corporation:
<TABLE>
<CAPTION>
PERCENTAGE
REPORTED OF
NUMBER OF OUTSTANDING
NAME AND ADDRESS SHARES COMMON STOCK
- ---------------- --------- ------------
<S> <C> <C>
Frank J. A. Cilluffo(1)....................... 667,471 5.1%
Cilluffo Associates, L.P.
160 Broadway, East Building
New York, New York 10038
FMR Corp.(2).................................. 1,648,900 12.7%
82 Devonshire Street
Boston, Massachusetts 02109
Schroder Capital Management, Inc.(3).......... 658,400 5.1%
787 Seventh Avenue
New York, New York 10019
</TABLE>
- ---------------
(1) Frank J. A. Cilluffo, a Director of the Corporation, reporting for himself
and Cilluffo Associates, L.P., Zenith Associates, L.P., Frank and Irja
Cilluffo Foundation, and Edward C. Meyer, has furnished information to the
Corporation which disclosed that as of March 15, 1999, such individuals and
entities beneficially owned, taken together, 667,471 shares. Mr. Cilluffo
disclaims beneficial ownership of the 560,400 shares held by Cilluffo
Associates, L.P. and the 105,800 shares held by Zenith Associates, L.P.
except to the extent of his pecuniary interest in the securities. He also
disclaims beneficial ownership of 10,000 shares held by the Frank and Irja
Cilluffo Foundation which are not included in the total above. Mr. Cilluffo
also has options to purchase 5,000 shares issued under the Corporation's
1995 Stock Option Plan and the Stone & Webster, Incorporated Long-Term
Incentive Compensation Plan which are currently exercisable.
(2) FMR Corp., reporting for itself, and Edward C. Johnson 3d and Abigail P.
Johnson have furnished information to the Corporation which disclosed that
as of December 31, 1998 they and affiliated entities exercised investment
discretion with respect to 1,648,900 shares which were owned by their
accounts and investment advisory clients.
(3) Schroder Capital Management, Inc. has furnished information to the
Corporation which disclosed that as of December 31, 1998 it held sole voting
power with respect to, and beneficially owned, 582,100 shares, and held sole
dispositive power with respect to 658,400 shares.
To the knowledge of the Corporation, as of March 15, 1999 no other person
beneficially owned more than 5% of the outstanding Common Stock of the
Corporation.
4
<PAGE> 8
I. ELECTION OF DIRECTORS
(PROXY ITEM NO. 1)
In accordance with the Corporation's By-Laws, the Board of Directors will
consist of ten members and is divided into three classes. The three Directors to
be elected at this Annual Meeting will be elected to serve until the 2002 Annual
Meeting of the Shareholders, and until their successors are duly elected and
qualified. The vote of a majority of all votes entitled to be cast at the Annual
Meeting shall be sufficient to elect a Director. The Board recommends that
Shareholders vote FOR each of the nominees listed below. It is intended that
proxies and voting instructions which are executed without specification (other
than broker non-votes) will be voted for the election of the nominees listed
below, all of whom are now Directors of the Corporation:
JOHN P. MERRILL, JR., BERNARD W. REZNICEK AND PETER M. WOOD
Certain information, as reported to the Corporation, respecting such
persons and other persons whose term of office as Director will continue after
the Annual Meeting, and information relating to the beneficial ownership of
Common Stock of the Corporation of other Named Executives (as hereinafter
defined) who are not Directors of the Corporation, is set forth below:
<TABLE>
<CAPTION>
DIRECTORS AND NOMINEES BUSINESS EXPERIENCE FOR THE DIRECTOR
AND EXECUTIVE OFFICERS PAST FIVE YEARS, AGE AND OTHER INFORMATION SINCE
- ---------------------- --------------------------------------------------- --------
<S> <C> <C>
NOMINEES FOR TERMS EXPIRING IN 2002
John P. Merrill, Chairman, Merrill International, Ltd. 1996
Jr................. (International project development) (55).
Bernard W. Reznicek... National Director -- Utility Marketing, Central 1995
States Indemnity Co. of Omaha; Former Chairman,
President and Chief Executive Officer, Boston
Edison Company. (Insurance; Public Utilities)
(62). Also Director of State Street Corporation,
CSG Systems International, Inc., CalEnergy
Company, Inc. and Guarantee Life Insurance
Company, Inc.
Peter M. Wood........ Former Managing Director, J.P. Morgan & Co. 1996
Incorporated (Finance) (60). Also Director of
Middlesex Mutual Assurance Company and Payless
Cashways, Inc.
DIRECTORS WHOSE TERMS EXPIRE IN 2000
Donna F. Bethell..... President and Chief Executive Officer, Radiance 1994
Services Company (Microelectronics cleaning
Technology) (50).
</TABLE>
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<PAGE> 9
<TABLE>
<CAPTION>
DIRECTORS AND NOMINEES BUSINESS EXPERIENCE FOR THE DIRECTOR
AND EXECUTIVE OFFICERS PAST FIVE YEARS, AGE AND OTHER INFORMATION SINCE
- ---------------------- --------------------------------------------------- --------
<S> <C> <C>
Kent F. Hansen....... Lead Director of the Board of the Corporation. 1988
Professor of Nuclear Engineering, Massachusetts
Institute of Technology (Education) (67). Also
Director of EG&G, Inc.
Elvin R. Heiberg President, Heiberg Associates, Inc. Retired Chief 1994
III................ of Engineers, U.S. Army Corps of Engineers
(Engineering Consulting) (67).
H. Kerner Smith...... Chairman of the Board, President and Chief 1996
Executive Officer of the Corporation. Former
Managing Director of Deutsche Babcock AG and
President and Chief Executive Officer of Deutsche
Babcock Technologies, Inc., (54).
DIRECTORS WHOSE TERMS EXPIRE IN 2001
Frank J. A. Managing Partner, Cilluffo Associates, L.P. 1994
Cilluffo........... (Private investment partnership) (55). Also
Director of GRC International, Inc.
David N. McCammon.... Retired Vice President -- Finance, Ford Motor 1996
Company (Automobile manufacturing) (64). Also
Director of Pulte Corporation.
J. Angus McKee....... Chairman, Gulfstream Resources Canada Ltd. (Oil and 1984
gas) (63).
OTHER NAMED EXECUTIVE OFFICERS OF
THE CORPORATION WHO ARE NOT
DIRECTORS OR NOMINEES
Thomas L. Langford... Executive Vice President and Chief Financial --
Officer (57)
Edward J. Walsh...... Executive Vice President (47). --
Robert C. Wiesel..... Executive Vice President (48). --
James P. Jones....... Vice President, Secretary and General Counsel (55) --
</TABLE>
SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning the beneficial
ownership of the Company's Common Shares as of March 15, 1999, for: (a) each
incumbent Director and each of the nominees for Director; (b) the four most
highly compensated executive officers who are not also Directors; and (c) all
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<PAGE> 10
Directors and Executive Officers as a group. Except as otherwise noted, the
named individual or their family members have sole voting and investment power
with respect to such securities.
<TABLE>
<CAPTION>
NUMBER OF COMMON SHARES (A)
---------------------------------------------------------
MAY BE ACQUIRED
BENEFICIALLY WITHIN 60 DAYS DEFERRAL
NAME OWNED UNDER OPTIONS(B) PLANS(C) TOTAL
- ---- ------------ ---------------- -------- ---------
<S> <C> <C> <C> <C>
(a)
Donna F. Bethell...................... 1,371 5,000 0 6,371
Frank J. A. Cilluffo(D)............... 667,471 5,000 0 672,471
Kent F. Hansen........................ 1,771 5,000 0 6,771
Elvin R. Heiberg III.................. 1,371 5,000 0 6,371
David N. McCammon..................... 1,658 5,000 1,269 7,927
J. Angus McKee........................ 2,736 5,000 0 7,736
John P. Merrill, Jr................... 3,192 5,000 404 8,596
Bernard W. Reznicek................... 4,597 5,000 0 9,597
H. Kerner Smith....................... 24,519(E) 192,084 0 216,603
Peter M. Wood......................... 2,776 5,000 504 8,280
(b) f
Thomas L. Langford.................... 6,562(E) 23,500 0 30,062
Edward J. Walsh....................... 3,086(E) 34,000 0 37,086
Robert C. Wiesel...................... 6,455(E) 39,000 0 45,455
James P. Jones........................ 9,807(E) 15,000 0 24,807
(c)
All Directors and Executive Officers
as a Group (16 persons)............. 739,055 359,834 2,177 1,101,066
</TABLE>
- ---------------
(A) The information contained in this column reflects the definition of
beneficial ownership for the purposes of the proxy rules of the Securities
and Exchange Commission. The nature of beneficial ownership for shares shown
in this column is sole voting and investment power, except to the extent set
forth in footnotes (B) through (E).
(B) Shares shown include shares issuable upon exercise of stock options issued
to each non-employee Director and executive officer under the Stone &
Webster, Incorporated Long-Term Incentive Compensation Plan (the Long-Term
Incentive Compensation Plan) (prior to 1998, under the 1995 Stock Option
Plan) which are currently exercisable. Under the Rules of the Commission,
such shares are considered to be beneficially owned for the purpose of this
Proxy Statement. For the purpose of calculating percentage ownership, such
shares were also considered to be outstanding.
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<PAGE> 11
(C) Represents amounts held in stock deferral accounts under the Corporation's
Non-employee Director Deferral Plan. The value of these accounts depends
directly upon the market price of the Common Stock of the Corporation.
(D) Includes 667,471 shares held by Mr. Cilluffo and his associates as
previously set forth in this Proxy Statement, but excludes 10,000 shares
held by the Frank and Irja Cilluffo Foundation, Inc. Mr. Cilluffo disclaims
beneficial ownership of the shares held by Cilluffo Associates, L.P. and by
Zenith Associates, L.P. except to the extent of his pecuniary interest in
such securities.
(E) Includes (i) shares allocated under the Employee Investment Plan and which
are subject to its terms and provisions with respect to termination and
withdrawal and, in limited circumstances, to forfeiture, and held as of
March 15, 1999 by Putnam Fiduciary Trust Company, trustee under the plan
(with respect to such shares, investment power is determined in accordance
with the provisions of the plan); (ii) shares allocated under the ESOP and
which are subject to its terms with respect to forfeiture and held as of
March 15, 1999 by Putnam Fiduciary Trust Company, trustee under the plan;
(iii) shares allocated under the PAYSOP and which are subject to its terms
and held as of March 15, 1999 by Putnam Fiduciary Trust Company, trustee;
and (iv) restricted shares awarded under the Corporation's Long-Term
Incentive Compensation Plan (prior to 1998, under the Restricted Stock Plan)
and which are subject to their terms with respect to forfeiture. Shares held
in accounts of employees in the Employee Investment Plan, ESOP and PAYSOP,
including Messrs. Smith, Langford, Walsh, Wiesel, and Jones, are voted by
the trustee of such plans in accordance with the instructions of the
employees; in the absence of such instructions, such shares are voted by the
trustee in accordance with the terms of such plans.
As of March 15, 1999, the Directors and executive officers of the
Corporation, as a group, beneficially owned 1,101,066 shares or approximately
8.2% of the Corporation's outstanding Common Stock, including shares allocated
under the Employee Investment Plan, the ESOP and the PAYSOP, and shares issuable
with respect to options granted under the 1995 Stock Option Plan and Long-Term
Incentive Compensation Plan which are currently exercisable or which will be
exercisable within 60 days of that date. The nature of beneficial ownership for
said outstanding shares was sole voting and investment power, except (1) as
referred to in footnotes (B) through (E) above, and (2) 3,013 shares were held
under the Employee Investment Plan for which voting power was shared as
described on page 3 of this Proxy Statement. As of March 15, 1999, no Director
or Officer beneficially owned as much as 1% of the outstanding Common Stock of
the Corporation, except for Mr. Cilluffo as noted above in this Proxy Statement,
and Mr. Smith, who beneficially owned approximately 1.6% as set forth in the
foregoing table.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's Directors, its
executive officers, and persons holding (as defined in the regulations of the
Commission) more than 10% of a registered class of the Corporation's equity
securities, to file reports of ownership and reports of changes in ownership
with
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<PAGE> 12
the Commission and the New York Stock Exchange. Directors, executive officers,
and greater than 10% Shareholders are also required by Commission regulations to
furnish the Corporation with copies of all such reports that they file. Based
solely on its review of the copies of such reports received by it and written
representations from certain reporting persons, the Corporation believes that
all filing requirements applicable to its Directors, executive officers, and
greater than 10% Shareholders were complied with during the fiscal year ended
December 31, 1998.
CERTAIN COMMITTEES, ATTENDANCE, AND COMPENSATION OF DIRECTORS
The Board has appointed an Audit Committee, a Governance Committee, and a
Compensation Committee whose report appears below. All of the members of these
committees are non-employee Directors, except for Mr. Smith who is a member of
the Governance Committee. The Board has also appointed an Employee Benefits
Committee which is described below.
The Audit Committee consists of David N. McCammon (Chairman), Donna F.
Bethell, Frank J. A. Cilluffo, Kent F. Hansen and J. Angus McKee. The Audit
Committee, which met five (5) times during 1998, among other things, considers
and recommends to the full Board the selection of the independent auditor,
reviews the performance of the audit function, and reviews with the independent
and the internal auditors the scope and results of the Corporation's internal
auditing procedures and the adequacy of internal accounting policies, procedures
and controls.
The Governance Committee consists of Kent F. Hansen (Chairman), Elvin R.
Heiberg III, John P. Merrill, Jr., Bernard W. Reznicek, H. Kerner Smith and
Peter M. Wood. The Governance Committee, which met five (5) times during 1998,
considers and makes recommendations to the Board of Directors as to corporate
governance policies and procedures and criteria for Board composition and
membership, reviews and recommends candidates for election as directors and
senior executive officers, and periodically evaluates the performance of the
Chief Executive Officer and members of the Board of Directors. The Governance
Committee will consider nominees recommended by Shareholders. Such
recommendations should be submitted to the attention of the Corporate Secretary,
Stone & Webster, Incorporated, 245 Summer Street, Boston, Massachusetts 02210.
The Compensation Committee consists of Bernard W. Reznicek (Chairman),
Frank J. A. Cilluffo, Elvin R. Heiberg III, David N. McCammon, and John P.
Merrill, Jr. The Compensation Committee met three (3) times during 1998. The
Compensation Committee reviews and approves the compensation and/or method of
determining compensation of the principal officers and employees of the
Corporation and its subsidiaries, reviews the performance of and makes
recommendations to the Board concerning compensation for the Chief Executive
Officer, considers compensation plans which are subsequently presented to the
full Board, authorizes awards under the Annual Incentive Compensation Plan, and
authorizes the grant of awards of restricted stock, stock options, and
performance units/performance shares under the Long-Term Incentive Compensation
Plan. For additional information regarding the policies and mission of the
Compensation Committee, see "Report of the
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<PAGE> 13
Compensation Committee" below. There are no compensation committee interlocks or
insider participation relationships on the Compensation Committee.
The Employee Benefits Committee consists of Donna F. Bethell (Chairman),
David N. McCammon, J. Angus McKee, H. Kerner Smith, and Peter M. Wood, all of
whom are non-employee Directors of the Corporation except for Mr. Smith. The
Employee Benefits Committee met four (4) times during 1998. The Employee
Benefits Committee administers the Employee Investment Plan, the Employee Stock
Ownership Plan, and the Employee Retirement Plan of the Corporation and
Participating Subsidiaries, makes recommendations to the Board with respect to
proposed amendments to those plans, reviews the performance of the investment
managers, trustees and other fiduciaries of the plans and reports to the Board
of Directors thereon, considers allocation and diversification of plan assets,
and reviews tax-qualified employee benefit plan audits and reports. As set forth
above in this Proxy Statement, pursuant to the Employee Investment Plan the
Committee directs the voting of shares held in that plan as to which
participants in the plan have not given voting directions.
During 1998, the Board of Directors met ten (10) times. In 1998, each of
the Directors attended at least 80% of the total number of meetings of the Board
and of the committees of the Board on which the Director served. In order to
make Common Stock of the Corporation (Common Stock) a more significant portion
of the Directors' compensation, the 1997 Stock Plan for Non-Employee Directors
of Stone & Webster, Incorporated, which was in effect during 1998, provides that
Directors who, among other things, are not officers or employees of the
Corporation receive an annual retainer consisting of 400 shares of Common Stock
and $8,000 in cash, and a fee of $2,000 for each Board meeting attended and
$1,000 for each committee meeting attended, except that the Chairman of each
Committee receives a committee meeting fee of $2,000, and permits such Directors
to elect to receive all or a portion of Board and Committee meeting fees in
Common Stock in lieu of cash. In 1998, each Director who was not an employee of
the Corporation received a fee of $4,000 for attendance at a series of meetings
on corporate governance issues held over a three day period. The Long-Term
Incentive Compensation Plan (prior to 1998, the 1995 Stock Option Plan) provides
for the grant of nonqualified options to purchase 2,000 shares initially, and
1,000 shares annually thereafter, of Common Stock to each Director who is not an
officer or employee of the Corporation. Directors are reimbursed for expenses
incurred in performing services as a Director, including expenses for attending
Board, committee and other meetings. Under the non-qualified Non-Employee
Director Deferral Plan adopted by the Corporation in 1997, Directors who are not
employees of the Corporation may elect to defer all or a portion of their annual
retainer, meeting fees or other fees paid in connection with their Board service
to a cash deferral account or a stock deferral account. Amounts in a cash
deferral account accumulate interest generally at the daily average for the
preceding twelve (12) calendar quarters of the prime commercial lending rate of
The Chase Manhattan Bank, N.A., New York, plus 1%, while amounts in a stock
deferral account are valued in direct relationship to changes in the fair market
value of Common Stock (including dividends paid) of the Corporation from time to
time.
10
<PAGE> 14
In addition to the foregoing standard arrangements relating to the
compensation of Directors, Dr. Hansen receives an annual payment of $10,000,
payable on a quarterly pro-rated basis, in consideration of his additional
duties as Lead Director; this arrangement became effective as of his election as
Lead Director on May 8, 1997. Mr. McKee received fees in 1998 from Stone &
Webster Canada Limited for services as a Director of that subsidiary of the
Corporation of $3,902.44 (converted from Canadian dollars based on Cn$1.5375 per
U.S. dollar, the Noon Buying Rate in New York for cable transfers payable in
foreign currencies as of December 31, 1998), plus expenses. In addition, in 1998
the following Directors received special activity fees for participating, at
management's request, in activities relating to their services performed as a
member of the Board of Directors in the amounts stated: Mr. Hansen -- $3,000;
Mr. Heiberg -- $6,000; Mr. McCammon -- $1,000; Mr. Merrill -- $2,000; Mr.
Reznicek -- $2,000; Mr. Wood -- $6,000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation and Mr. Merrill are currently negotiating a Memorandum of
Understanding pursuant to which they will undertake to raise venture capital
with outside investors for the purpose of developing independent power producing
projects in which the Corporation might have an interest and for which
subsidiaries of the Corporation might perform services. If such venture capital
is raised, a legal entity will then be formed which will be 50% owned by Merrill
International, Ltd., of which Mr. Merrill is the controlling shareholder, and
50% by the Corporation or one of its subsidiaries. The legal entity would then
pursue such independent power projects, as the owners deem appropriate. In
addition to investing in such projects, the Corporation may provide engineering,
construction and consulting services in connection with such projects. Mr.
Merrill will at all times make full disclosure to the Board of Directors
concerning the entity's current and proposed projects and the extent of his
personal interest therein. Mr. Merrill would refrain from voting on any matter
presented to the Corporation's Board of Directors relating to any activity
involving the business of this entity. Further, the Corporation's Audit
Committee, which is composed of outside Directors, will monitor the activities
of the Corporation which involve the proposed entity to ensure that Mr.
Merrill's activities do not create any conflict of interest which would
interfere with his ability to serve the Board and the Corporation without bias.
Mr. Merrill has indicated his willingness to resign from the Board if the Board
requests his resignation, or if it becomes otherwise appropriate or necessary.
No estimate can be made at this time of the number of such projects which might
be undertaken pursuant to this arrangement, or the amount of services which
might be provided to such entity during 1999 or in the future.
REPORT OF THE COMPENSATION COMMITTEE
Under the direction of the Compensation Committee (the Committee), the
Corporation has developed and implemented compensation plans and programs which
are designed to enhance the long term growth and profitability of the
Corporation and to increase Shareholder value. The Committee is comprised of
five directors none of whom has ever been an officer or employee of the
Corporation or its
11
<PAGE> 15
subsidiaries. The following is a report of the Corporation's compensation
philosophy and practices, as directed by the Committee.
The Committee's fundamental approach is to compensate the Named Executives
(included in the Summary Compensation Table of this Proxy Statement) and other
key executives at a level commensurate with their responsibilities, while
providing compensation opportunities that are directly linked to the performance
of the Corporation. The objectives of the Corporation's executive compensation
programs are to attract and retain very highly competent individuals, to
encourage them to achieve and surpass the Corporation's challenging business
goals and to ensure that the interests of the Corporation's executives are well
aligned with the interests of Shareholders.
The Corporation, through its operating subsidiaries, is primarily engaged
in providing engineering and construction services. These businesses tend to be
cyclical in nature, driven both by general business cycles and by activity in
our clients' industries. Due to this cyclical nature, it is important to keep
our overhead costs low, while ensuring that the Corporation is able to provide
the specialized technical expertise expected by our clients. As a result, the
Committee recognizes the need to balance limited fixed compensation costs with
the ability to attract and retain highly competent professionals and to reward
them for improving the performance of the Corporation and providing a return to
Shareholders.
Accordingly, the philosophy of the Corporation has been to provide the
Named Executives and the professional and supervisory staff with base salaries
that are relatively modest, while making the balance of compensation contingent
upon the achievement of the Corporation's financial objectives.
In 1997 and 1998, the Committee retained outside consulting firms to assist
the Corporation in ensuring that its executive compensation programs provide
competitive compensation opportunities with incentives based on improving the
financial performance of the Corporation. In analyzing competitive compensation,
the firms relied upon compensation information from a broader group of companies
than are included in the performance graph of this Proxy Statement to better
reflect the Corporation's relevant market for attracting and retaining executive
talent.
1998 Compensation Programs
Base Salary
Based on the Committee's assessment of competitive market conditions, no
increases in the rate of base salary were awarded to the Named Executives in
1998.
Annual Incentives
In 1997, the Committee implemented the Executive Management Incentive
Compensation Plan, and in 1998 it implemented the Annual Incentive Compensation
Plan (which was approved by the Shareholders at the 1998 Annual Meeting of
Shareholders), which were designed to ensure that executives' interests are
strongly aligned with the interests of Shareholders and the financial success of
12
<PAGE> 16
the Corporation. Under these plans, performance is measured primarily based on
the Corporation's earnings per share and return on shareholders' equity, as well
as business division and individual performance. The Committee believes that the
current plan encourages the Corporation's management to accomplish annual
objectives, while also focusing executives on the achievement of long term goals
that will result in share price appreciation.
The Committee awarded bonuses for 1998 to the Named Executives as set forth
in the Summary Compensation Table which were paid out in March 1999. Mr. Jones
received a bonus award, as set forth in the Summary Compensation Table, in
accordance with the terms of his employment agreement.
Under the plan for 1999, Named Executives other than the CEO are eligible
to receive payments ranging from 0% to 105% of base salary. Based on its
competitive assessment of the marketplace, the Committee believes that these
award levels are competitive by industry standards. No incentive payments under
the plan will be made for 1999 if the Corporation does not attain at least 70%
of its targeted Earnings per Share.
Stock Option, Restricted Stock, Performance Share and Performance Unit
Awards
Under the Corporation's Long-Term Incentive Compensation Plan (prior to
1998, the 1995 Stock Option Plan), the Committee may make awards of stock
options, restricted stock, performance shares and performance units to key
employees in order to motivate and reward them for increases in Shareholder
value. In 1998, the Committee granted stock options to the Named Executives as
shown in the Summary Compensation Table, as well as to other key employees. No
awards of restricted stock were made to any of the Named Executives in 1998. The
Committee believes that these options, as well as restricted stock awards, are
effective ways to encourage executives since they are rewarded only if the
Corporation's share price increases.
Chief Executive Officer Compensation
At the beginning of 1996, the Corporation entered into an employment
agreement with the Corporation's new Chief Executive Officer, Mr. H. Kerner
Smith. His 1998 compensation was in accordance with the terms of his employment
agreement as amended January 15, 1997. Pursuant to his employment agreement, the
Board of Directors, in accordance with the recommendation of this Committee,
authorized Mr. Smith's bonus with respect to 1998 in the amount of $500,000 as
set forth in the Summary Compensation Table. Mr. Smith will participate in the
Corporation's Long-Term Incentive Compensation Plan which was approved by the
Shareholders at the 1998 Annual Meeting, and his compensation will be determined
based on the philosophies discussed in this report and the terms of his
employment agreement as amended, as described below.
13
<PAGE> 17
Deductibility of Executive Compensation
The Corporation believes that it is desirable that all of its executive
compensation be deductible and fall within the $1 million limit on deductible
compensation provided in Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Internal Revenue Code), although in certain circumstances it may be
appropriate to permit compensation to exceed this limitation. The Corporation
has reviewed its compensation policies with respect to its covered executives
and determined that although Section 162(m) had no impact on the ability of the
Corporation to deduct compensation paid to its Named Executives in 1997, it was
decided to submit the Annual Incentive Compensation Plan and the Long-Term
Incentive Compensation Plan for approval of the Shareholders at the 1998 Annual
Meeting of Shareholders to comply with Section 162(m). With the approval of
these plans, the impact of Section 162(m) in 1998 was expected to be limited.
The incentive compensation paid for 1998 to Mr. Smith was not paid pursuant to
the Annual or Long-Term Incentive Compensation Plans, but was paid pursuant to
his employment agreement. Accordingly, a portion of Mr. Smith's bonus payment
for 1998 is not deductible under the Section 162(m) limitation.
THE COMPENSATION COMMITTEE
Bernard W. Reznicek (Chairman)
Frank J. A. Cilluffo
Elvin R. Heiberg III
David N. McCammon
John P. Merrill, Jr.
14
<PAGE> 18
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation awarded
to, earned by or paid to any person serving as the Corporation's Chief Executive
Officer (or any person acting in a similar capacity during the last completed
fiscal year), and each of the four most highly compensated executive officers of
the Corporation, (collectively, the Named Executives), for services rendered to
the Corporation in all capacities during each of the last three fiscal years in
which such person was an executive officer of the Corporation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION(1) AWARDS(4) PAYOUTS
------------------------------ ----------------------- -------
OTHER SECURITIES ALL
ANNUAL RESTRICTED UNDER- OTHER
COMPEN- STOCK LYING LTIP COMPEN-
(2) (2) SATION AWARD(S) OPTIONS/ PAYOUTS SATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(3) ($) SARS(#) ($) ($)(5)
- --------------------------- ---- --------- -------- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. Kerner Smith(6).............. 1998 550,000 500,000 0 0 44,000 0 3,347
Chairman, President and 1997 545,833 550,000 175,039 0 40,000 0 2,808
Chief Executive Officer 1996 342,460 450,000 0 0 137,000 0 0
Thomas L. Langford(7)........... 1998 290,000 100,000 0 0 22,000 0 3,347
Executive Vice President 1997 169,167 46,013 0 0 20,000 0 0
And Chief Financial Officer 1996 -- -- -- -- -- -- --
Edward J. Walsh(8).............. 1998 290,120 0 0 0 22,000 0 3,347
Executive Vice President 1997 282,560 26,915 0 0 20,000 0 3,668
1996 267,600 40,000 0 0 18,000 0 4,006
Robert C. Wiesel(9)............. 1998 299,600 0 0 0 22,000 0 2,907
Executive Vice President 1997 291,800 0 0 0 20,000 0 3,246
1996 275,700 40,000 0 0 18,000 0 4,002
James P. Jones(10).............. 1998 275,000 101,500 see(10) 0 24,000 0 3,347
Vice President, Secretary 1997 -- -- -- -- -- -- --
And General Counsel 1996 -- -- -- -- -- -- --
</TABLE>
- ---------------
(1) Salaries for the year 1996 were paid to certain employees of the
Corporation, including the Named Executives as indicated above, under a
plan adopted for that year for compensating the individuals selected, in
part by a fixed amount ("Salary" in the table above) and in part by a
contingent incentive amount ("Bonus"), the latter amount being measured by
a percentage, as determined by the Compensation Committee in each
individual case (in 1996, 1997 and 1998 Mr. Smith's compensation was
governed by his employment agreement described below), of the Corporation's
15
<PAGE> 19
Adjusted Consolidated Net Earnings determined as provided in the plan and
subject to certain limitations including a percentage limitation on the
total contingent amounts which may be paid. For 1997, the Compensation
Committee developed, and the Board of Directors adopted, an executive
management incentive compensation plan for the compensation of certain
executives of the Corporation and its subsidiaries in which the Named
Executives, among others, were selected to participate, and pursuant to
which the Named Executives received incentive payments, as shown in the
table above for 1997 under "Bonus", based on performance measured primarily
by the Corporation's earnings per share, return on Shareholders' equity,
business division and individual performance for the year. For 1998, the
Compensation Committee developed and the Board of Directors adopted the
Annual Incentive Compensation Plan, which was approved by the Shareholders
at the 1998 Annual Meeting of Shareholders, for the compensation of certain
executives and management personnel of the Corporation and its
subsidiaries, in which the Named Executives, among others, were selected to
participate, but, because minimum performance goals were not met, they
received no incentive payments under that plan. The Committee awarded
bonuses to the Named Executives as shown in the table above, based in part
on individual performance. Mr. Jones' employment agreement provides that he
will receive a minimum bonus for 1998, 1999 and 2000 equal to 35% of his
base salary. The "Bonus" payments shown in the table above with respect to
1996, 1997 and 1998 were actually paid in March 1997, March 1998, and March
1999, respectively, and a payment of $200,000 to Mr. Smith was paid in
August, 1997 with respect to 1996. See also the Report of the Compensation
Committee.
(2) Includes amounts deferred by the Named Executives under provisions of the
Employee Investment Plan pursuant to Section 401(k) of the Internal Revenue
Code.
(3) Perquisites and personal benefits paid to each Named Executive during 1996,
1997 and 1998 in each instance aggregated less than $50,000 or 10% of the
total annual salary and bonus payment set forth in the columns entitled
"Salary" and "Bonus" and, accordingly, are omitted from the table as
permitted by the rules of the Commission, except that, pursuant to his
employment agreement described below, Mr. Smith received personal benefits
in 1997 in the aggregate of $175,039 which included initiation, annual and
other club membership expenses of $90,000 and related tax expenses of
$77,349.
(4) Restrictions on shares awarded pursuant to the Restricted Stock Plan lapse
in equal annual installments over a vesting period, usually of five years,
commencing on the first anniversary date of each award. Restrictions on
restricted stock awarded pursuant to the Long-Term Incentive Compensation
Plan lapse in equal annual installments over a vesting period determined by
the Compensation Committee. As of December 31, 1998, no Named Executive
held any shares of restricted stock which have not fully vested under the
terms of the Restricted Stock Plan or the Long-Term Incentive Compensation
Plan. Dividends are payable on restricted stock awards directly to the
holder of restricted stock. The Corporation did not have any plans which
provide compensation in the form of stock appreciation rights (SAR's)
during the years covered by this table. A Stock Option Plan was first
adopted in 1995, and that plan was replaced by the Long-
16
<PAGE> 20
Term Incentive Compensation Plan in 1998 with respect to future stock
option grants as discussed below.
(5) Includes contributions made by the Corporation under the Employee
Investment Plan during 1998 on behalf of Messrs. Smith, Langford, Walsh,
Wiesel and Jones in the amount of $2,000, $2,000, $2,000, $1,560 and
$2,000, respectively, and contributions made by the Corporation under the
ESOP during 1998 of $1,347, $1,347, $1,347, $1,347 and $1,347,
respectively.
(6) Mr. Smith was first employed by the Corporation on February 12, 1996 in the
capacity of President and Chief Executive Officer of the Corporation.
(7) Mr. Langford was first employed by the Corporation on June 2, 1997 in the
capacity of Executive Vice President. He is also Chief Financial Officer of
the Corporation.
(8) On August 15, 1995, Mr. Walsh was elected Acting President and Chief
Executive Officer, and an Executive Vice President. He relinquished the
positions of Acting President and Chief Executive Officer on February 12,
1996 but continues to be Executive Vice President.
(9) On December 17, 1996, Mr. Wiesel was elected an Executive Vice President.
He had been Chief Executive Officer of Stone & Webster Engineering
Corporation, a subsidiary of the Corporation.
(10) Mr. Jones was first employed by the Corporation as of January 1, 1998. He
is Vice President, Secretary and General Counsel. In connection with the
commencement of his employment and his relocation in 1998, Mr. Jones
borrowed $400,000 from a subsidiary of the Corporation for use in the
purchase of his principal residence. This loan is secured by a mortgage on
the property and bears interest at the rate of 6% per annum. The largest
aggregate amount outstanding during 1998 was the original amount of the
loan plus accrued interest, and the principal amount outstanding as of the
latest practicable date is approximately $350,000.
17
<PAGE> 21
STOCK OPTIONS
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all individual grants of stock options under the
Corporation's 1995 Stock Option Plan and, for awards made after May 13, 1998,
the Long-Term Incentive Compensation Plan, to the Named Executives during the
fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM($)(3)
OPTIONS EMPLOYEES IN EXERCISE OR BASE EXPIRATION ---------------------
NAME GRANTED(#)(1) FISCAL YEAR PRICE($/SH)(2) DATE 5% 10%
(A) (B) (C) (D) (E) (F) (G)
---- ------------- ------------- ---------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
H. K. Smith.......... 44,000 17.09 43.1875 5/14/2008 1,195,057 3,024,509
T. L. Langford....... 22,000 8.54 43.1875 5/14/2008 597,529 1,514,255
E. J. Walsh.......... 22,000 8.54 43.1875 5/14/2008 597,529 1,514,255
R. C. Wiesel......... 22,000 8.54 43.1875 5/14/2008 597,529 1,514,255
J. P. Jones.......... 12,000 4.66 41.25 2/23/2008 311,303 788,903
J. P. Jones.......... 12,000 4.66 43.1875 5/14/2008 325,925 825,957
</TABLE>
- ---------------
(1) The stock options become exercisable with respect to 25% of the shares on
each of the first four anniversaries of the date of grant. All options
expire ten years from the date of grant, subject to earlier termination in
certain events related to termination of employment, death, retirement or
disability. Upon a change of control, all outstanding options become
exercisable.
(2) The initial exercise price for the options granted in 1998 is determined, as
set forth in the 1995 Stock Option Plan and the Long-Term Incentive
Compensation Plan, to be equal to 100% of the fair market value of a share
of Common Stock on the date immediately preceding the date of the grant. The
exercise price may be paid in cash, by the delivery of previously owned
shares of Common Stock, or by such other method as may be permitted by the
Compensation Committee.
(3) As required by the rules of the Commission, potential values stated are
based on the prescribed assumption that the Corporation's Common Stock will
appreciate in value from the date of the grant to the end of the option term
(ten years from the date of grant) at annualized rates of 5% and 10% (total
appreciation of 63% and 159%), respectively, and therefore are not intended
to forecast future appreciation, if any, in the price of the Corporation's
Common Stock. These dollar amounts are also calculated based on the
assumption that the options are exercised at the end of the full ten year
term of the option. The options would have no value to the option holders if
the price of the Common Stock does not increase above the exercise price of
the options. As an alternative to the assumed potential realizable values
stated in Columns (f) and (g), Commission rules would permit
18
<PAGE> 22
stating the present value of such options at the date of the grant. Methods
of computing present value suggested by different authorities can produce
significantly different results. Moreover, since stock options granted by
the Corporation are not transferable, there are no objective criteria by
which any computation of present value can be verified. Consequently, the
Corporation's management does not believe there is a reliable method of
computing the present value of such stock options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information concerning each option exercised
during the last fiscal year by each of the Named Executives and the value of
unexercised options held by such executive officers at the end of the fiscal
year.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR END (#) FISCAL YEAR END ($)(1)
--------------------------- ---------------------------
SHARES ACQUIRED VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME ON EXERCISE(#) REALIZED($) ----------- ------------- ----------- -------------
(A) (B) (C) (D) (E)
---- --------------- ------------ --------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
H. K. Smith.......... 0 $0 128,550 92,500 6,938 6,938
T. L. Langford....... 0 0 5,000 37,000 0 0
E. J. Walsh.......... 0 0 19,000 46,000 14,625 3,375
R. C. Wiesel......... 0 0 24,000 46,000 25,875 3,375
J. P. Jones.......... 0 0 0 24,000 0 0
</TABLE>
- ---------------
(1) Values stated are calculated by subtracting the option exercise price from
the closing price of $33.25 per share of the Corporation's Common Stock as
listed in the New York Stock Exchange Composite Transactions on December 31,
1998.
The Stone & Webster, Incorporated Long-Term Incentive Compensation Plan,
which was approved by the Shareholders at the 1998 Annual Meeting of
Shareholders, replaced the 1995 Stock Option Plan with respect to future stock
option grants. See the discussion of the Plan below.
PERFORMANCE GRAPH
The following graph compares the five year cumulative total Shareholder
return (assuming the reinvestment of dividends) on the Corporation's Common
Stock against the cumulative total return of the Standard & Poor's 500 Stock
Index (S&P 500) and the Dow Jones Heavy Construction Group Index. The graph
assumes an initial investment of $100 on December 31, 1993 in the Corporation's
Common Stock or in the underlying securities which comprise each of those market
indices.
19
<PAGE> 23
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
STONE & WEBSTER, INCORPORATED, S&P 500 AND THE
DOW JONES HEAVY CONSTRUCTION GROUP INDEX
<TABLE>
<CAPTION>
STONE & WEBSTER, DOW JONES HEAVY
INCORPORATED S&P 500 CONSTRUCTION GROUP INDEX
---------------- ------- ------------------------
<S> <C> <C> <C>
'1993' 100.00 100.00 100.00
'1994' 123.00 101.00 96.00
'1995' 135.00 139.00 134.00
'1996' 120.00 171.00 128.00
'1997' 181.00 229.00 96.00
'1998' 130.00 294.00 100.00
</TABLE>
RESTRICTED STOCK PLAN
The Stone & Webster, Incorporated Long-Term Incentive Compensation Plan,
discussed in the following section, replaced the Restricted Stock Plan with
respect to future awards of restricted stock following the approval of the
Long-Term Incentive Compensation Plan by the Shareholders in 1998.
Under the provisions of the Restricted Stock Plan approved by the
Shareholders in 1976, and amendments to the plan approved by the Shareholders in
1983 and 1988, shares of the Corporation's Common Stock have been awarded by the
Compensation Committee, subject to forfeiture provisions, to a limited number of
selected key employees. As approved by the Shareholders at the 1988 Annual
Meeting of Shareholders, the plan was amended to increase the number of shares
available for restricted stock awards to 2,400,000 shares and to extend the
termination date of the plan to June 1, 1998. Upon approval by the Shareholders
of the Corporation of the 1995 Stock Option Plan at the 1995 Annual
20
<PAGE> 24
Meeting of Shareholders, the number of shares of Common Stock available for
future awards under the Restricted Stock Plan was reduced to 250,000 shares.
Restrictions on awarded shares generally lapse in five equal annual
increments commencing on the first anniversary date of each award. Restrictions
on certain shares lapse in 1999 through 2002 on the anniversary dates of awards.
Shares subject to restrictions may not be sold or otherwise disposed of and must
be returned to the Corporation if the employee's employment is terminated for
any reason other than death or disability occurring more than one year after the
date of the award. The 1983 amendments to the plan approved by the Shareholders
also provide that restrictions on the sale or transfer of Common Stock of the
Corporation awarded pursuant to the plan will lapse upon and simultaneously with
any change in control of the Corporation occurring without the prior approval of
the incumbent Board of Directors prior to the change of control. Such a change
of control would be deemed to have taken place if (i) a third person, including
a "group" as defined in Section 13d-3 of the Exchange Act, acquires shares of
the Corporation having 20% or more of the total number of votes that may be cast
for the election of Directors of the Corporation, or (ii) as the result of any
cash tender or exchange offer, merger, consolidation, sale of assets or other
similar transaction, the persons who were Directors before such transaction
shall cease to constitute a majority of the Board or any successor to the
Corporation. In the event of such a change of control, the lapse of restrictions
on shares awarded under the plan to some or all of the Named Executives might be
deemed to constitute payments received from the Corporation.
LONG-TERM INCENTIVE COMPENSATION PLAN
The Long-Term Plan was approved by the Shareholders in 1998 and became
effective as of January 1, 1998, replacing the Restricted Stock Plan described
above and the 1995 Stock Option Plan.
Under the provisions of the Long-Term Plan, stock-based and
performance-based awards may be made by the Compensation Committee, subject to
forfeiture provisions, to any employee of the Corporation and its subsidiaries
and affiliates, as selected by the Compensation Committee. Up to six hundred and
fifty thousand (650,000) shares of Common Stock are reserved and authorized for
issuance through the Long-Term Plan, no more than three hundred thousand
(300,000) of which may be granted in the form of restricted stock. In addition,
three hundred thirty thousand, seven hundred and seventy-seven (330,777) shares
of Common Stock which were authorized under the Restricted Stock Plan and the
1995 Stock Option Plan are also available to be issued under the Long-Term Plan.
The Plan permits the replacement of stock options to the extent shares are
tendered in payment of a stock option exercise price or withheld by the
Corporation to pay taxes on an award.
Awards under the Long-Term Plan may be made in the form of incentive and
nonqualified stock options, restricted stock, performance units and performance
shares. Stock options under the Long-Term Plan expire no later than the tenth
anniversary of the date of grant and have an exercise price at least equal to
the Fair Market Value (as defined in the Long-Term Plan) of a share of Common
Stock on the date the option is granted. Other terms of stock options are as set
by the Compensation Committee at the time of grant. Restricted stock awards
under the Long-Term Plan have such
21
<PAGE> 25
conditions as are set by the Compensation Committee at the time of grant,
including the period during which restrictions are in effect, which will
normally extend over not less than three years from the date of grant. Each
non-employee Director initially receives upon election nonqualified options to
purchase 2,000 shares, and annually receives nonqualified options to purchase
1,000 shares.
Performance Shares and Performance Units under the Long-Term Plan represent
the right to receive payments based upon meeting specified performance measures.
Performance Units and Performance Shares are granted upon such terms as the
Compensation Committee determines, provided that no more than ten percent of
Performance Shares issuable under the Plan may be issued subject to a
performance period of less than one year. A performance period is the time
period during which the performance goals must be met.
All awards under the Long-Term Plan may be granted subject to the
attainment of certain pre-established objective performance goals during a
specified performance period. The duration of a performance period is set by the
Compensation Committee. The performance measures are earnings per share, net
income (before or after taxes), return measures (including return on assets,
capital, equity or sales), cash flow return on investments (net cash flows
divided by owner's equity), earnings (before or after taxes), gross revenues,
market-to-book value ratio, share price (including growth measures and total
shareholder return), working capital measures, and economic value added. The
Compensation Committee has the discretion to adjust the determinations of the
degree of attainment of the preestablished performance goals, subject, in
certain cases, to limits imposed by Section 162(m) of the Internal Revenue Code.
In general, all restrictions upon awards under the Long-Term Plan will lapse
upon a Change of Control of the Corporation (as defined in the Long-Term Plan),
and all performance criteria will be deemed to have been attained.
EMPLOYEE RETIREMENT PLAN
The Corporation's Employee Retirement Plan is a trusteed, non-contributory,
defined benefit plan which applies to all eligible employees of the Corporation.
Benefits are based upon the length of credited service and the amounts of annual
compensation (as defined in the plan) received during that period of service.
Normal retirement age is generally the employee's Social Security Retirement
Age. The formula for computing benefits provides that, for employees under the
plan who had not attained their retirement date prior to January 1, 1992, annual
retirement benefits are equal to the sum of (a) 0.75% of average annual
compensation for the years 1989, 1990 and 1991 up to $21,000 plus 1.35% of such
compensation in excess of $21,000, multiplied by the years and months of
credited service before January 1, 1992 for up to 35 years, plus (b) 1% of such
annual compensation for the years and months of credited service before January
1, 1992 in excess of 35 years, plus (c) for each year of credited service after
January 1, 1992, 1% of annual compensation up to an indexed amount (which was
$52,500 for 1998) equal to 1.75 times the "Social Security Covered Compensation"
(a 35-year average Social Security earnings base), plus 1.45% of such annual
compensation in excess of such amount; provided that employees with more than 35
years of service at retirement will be credited with a flat 1.33% of
22
<PAGE> 26
annual compensation for each year of service after the 35th year. With respect
to the Named Executives, compensation, for purposes of calculating retirement
benefits, includes both the fixed and incentive portions of salaries shown in
the Summary Compensation Table under the Salary and Bonus headings,
respectively. As of January 1, 1999, the number of full credited years of
service for Messrs. Smith, Langford, Walsh, Wiesel and Jones is 2, 1, 25, 26 and
1 years, respectively, and the estimated annual benefit payable to them upon
retirement at normal retirement age and assuming the continuance of current
rates of compensation for each until normal retirement age is $215,077, $46,258,
$116,995, $124,201 and $43,102, respectively. See "Employment and Change of
Control Agreements" below. These amounts do not reflect any limitations on
annual benefits which may be paid from a tax-qualified retirement plan at the
time of retirement imposed by Section 415 of the Internal Revenue Code, as
amended from time to time, nor do they reflect any limitations imposed by
Section 401(a)(17) of the Internal Revenue Code on the amount of compensation
upon which benefits may be determined. The Board of Directors has adopted a
Supplemental Retirement Program, which was amended in 1989, to fund the payment
of any benefits calculated under the provisions of the Employee Retirement Plan
which would be in excess of the limitations imposed by Sections 415 and
401(a)(17) of the Internal Revenue Code.
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
The Corporation entered into a three-year employment agreement with Mr.
Smith on February 12, 1996 under which Mr. Smith is to serve as President and
Chief Executive Officer of the Corporation. The agreement provides Mr. Smith
with: an annual base salary of $500,000, with increases subject to annual
review; an annual performance bonus for 1996 of $250,000 or such larger amount
based upon performance and at the discretion of the Board, and with such amounts
in years after 1996 to be based upon a long-term performance-based compensation
plan to be adopted by the Board; severance arrangements providing for three (3)
times annual compensation if employment is terminated, or deemed to be
terminated, without cause; a supplemental retirement benefit designed to provide
Mr. Smith a monthly retirement income benefit, commencing at age 60, from all of
the Corporation's pension plans equivalent to 25% of Mr. Smith's average last
three years' total compensation, with an equal benefit to be paid to Mr. Smith's
wife for her life if she survives Mr. Smith; and a 10-year stock option for
100,000 shares of Common Stock with an exercise price of $34.875 (the market
price on the trading day immediately prior to the grant date in accordance with
the Corporation's 1995 Stock Option Plan). The agreement also set forth the
intention of the Board to elect Mr. Smith as Chairman of the Board of Directors
at the Board of Directors meeting immediately following the Annual Meeting of
Shareholders in 1997 which occurred on May 8, 1997. In January 1997, the
agreement was amended to provide, among other matters, that on the first
anniversary date of the commencement of the agreement, and on each subsequent
anniversary date, the term of the agreement will be extended by one year, unless
sooner terminated by either party; the amendment also provides for the payment
to Mr. Smith of an annual bonus of 50% of his base salary for each of 1997 and
1998 if the amount payable under the
23
<PAGE> 27
Executive Management Incentive Compensation Plan and/or the long-term
performance-based incentive compensation plan to be adopted by the Board would
be less than such amount.
The Corporation entered into an agreement with Mr. Jones in connection with
the commencement of his employment in January 1998 under which Mr. Jones is to
serve as Vice President, Secretary and General Counsel of the Corporation. The
agreement provides Mr. Jones with: an initial annual base salary of $275,000, an
annual performance bonus for 1998, 1999, and 2000 equal to 35% of base salary or
such larger amount as may be determined under the Corporation's incentive
compensation plans; severance arrangements providing for eighteen months
compensation if employment is terminated without cause; a supplemental
retirement benefit designed to provide Mr. Jones a minimum retirement income
benefit commencing at age 65 from the Corporation and its pension plans
equivalent to $100,000 per year at the end of ten years of service, to vest at
the rate of $10,000 per year of service, with 50% of that benefit to be paid to
Mr. Jones' wife for her life if she survives Mr. Jones; a 10-year stock option
for 12,000 shares of Common Stock vesting at a rate of 25% per year, and
mortgage financing for Mr. Jones' principal residence, as discussed above in the
Summary Compensation Table and footnote (10) thereto.
Each of Messrs. Smith, Langford, Walsh, Wiesel, and Jones has entered into
a special Change of Control Agreement providing for severance pay and a
continuation of certain benefits should a "Change of Control" occur. Entry into
these agreements, as amended, was unanimously approved by the independent
members of the Board of Directors. In order to receive benefits under these
special agreements, a "Change of Control" must have occurred as a result of any
of the following circumstances:
a. Accumulation by any individual, entity or group of 20% or more of
the outstanding voting stock of the Corporation;
b. A change in the make-up of a majority of the persons serving as
Directors of the Corporation from the majority currently in office (with
such majority including those replacements or additions subsequently
approved by a majority of Directors currently in office);
c. A merger or other business combination resulting in persons other
than current shareholders of the Corporation owning more than 50% of the
resulting entity;
d. Approval of a liquidation or dissolution of the Corporation.
In order for severance benefits to be payable under these agreements, in
addition to the Change of Control, the executive's employment must be terminated
either involuntarily without cause (actual or "constructive") or if, after a
Change of Control, the executive remains in the employ of the Corporation for a
one year period, the executive may, for a thirty day period subject to the terms
of such agreements, voluntarily terminate his employment and receive the
severance benefits in a lump sum.
Under the special Change of Control Agreements, severance payments would
equal, in the case of Messrs. Smith, Langford, Walsh, Wiesel, and Jones, an
amount equal to three times the executive's most recent annual base salary and
highest recent bonus, which generally is the highest bonus paid in the last
three years. In addition, medical, life and disability benefits would be
provided at the expense of the
24
<PAGE> 28
Corporation for the applicable period of three years. The executive would also
receive an amount equal to the actuarial equivalent of the benefit that such
executive would have received under the Corporation's qualified defined benefit
retirement plan assuming that the executive had remained in the employ of the
Corporation during the three-year period following the right to receive benefits
under these agreements. All options outstanding on the date of a change of
control would become immediately and fully exercisable and all restrictions upon
any restricted shares would lapse immediately and all such shares would become
fully vested.
Payments to executives under these Change of Control Agreements may be
subject to the imposition of the excise tax required by Section 4999 of the
Internal Revenue Code, if payments under these agreements are deemed to be an
"excess parachute payment" pursuant to Section 280G of the Internal Revenue
Code. Under the agreements as amended, such payments can be increased so that
the employee is in the same after-tax position as if there was no excise tax.
However, in order to avoid excessive costs to the employer while providing
little after-tax benefit to the executive, the amendment requires a minimum
after-tax benefit to be delivered to the executive before the gross-up is
operative.
II. SELECTION OF INDEPENDENT ACCOUNTANTS
(PROXY ITEM NO. 2)
The Shareholders will be asked to ratify the selection, on the
recommendation of the Audit Committee, by the Corporation's Board of Directors
of the firm of PricewaterhouseCoopers LLP, independent accountants, as auditor
of the Corporation and its subsidiaries for the year 1999. A representative of
PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting and
will have the opportunity to make a statement if he or she desires to do so and
to respond to appropriate questions raised at the Annual Meeting.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE CORPORATION'S INDEPENDENT
ACCOUNTANTS FOR 1999. PROXIES AND VOTING INSTRUCTIONS WILL BE VOTED IN FAVOR OF
THE RATIFICATION UNLESS THE SHAREHOLDER SPECIFIES OTHERWISE.
III. AS TO OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
(PROXY ITEM NO. 3)
Management knows of no business which will be presented to the Annual
Meeting other than as set forth in the accompanying Notice of Meeting. However,
if any other matters properly come before the Annual Meeting or any adjournments
or postponements thereof, it is intended that the persons named in the enclosed
form of proxy, or their respective substitutes, shall have authority to vote the
proxy in accordance with their judgment on such matters. In the event that one
or more of the nominees for election as Directors should become unavailable for
election for any reason, it is intended that the persons named in the proxy, or
their respective substitutes, shall have authority to vote according to their
25
<PAGE> 29
judgment for other persons. Management has no present knowledge that any of the
nominees for election as a Director will be unavailable to serve.
IV. LAST DATE TO SUBMIT SHAREHOLDER PROPOSALS FOR
2000 ANNUAL MEETING
At a meeting of the Board of Directors on February 23, 1999, the Board of
Directors amended the By-Laws of the Corporation to change the date on which the
Annual Meeting of Shareholders will be held, starting with the 2000 Annual
Meeting. In the future, the Annual Meeting will be held on the Tuesday before
the last Monday in May of each year, unless the Board of Directors determines
that the Annual Meeting of Shareholders shall be held on some other day in May
of that year. Thus, the Annual Meeting of Shareholders is expected to be held
next year on Tuesday, May 23, 2000 at a time and place to be announced.
Pursuant to Rule 14a-8 of the Securities and Exchange Commission, proposals
of Shareholders intended to be presented at the 2000 Annual Meeting of
Shareholders must be received by the Corporation, to the attention of the
Corporate Secretary, Stone & Webster, Incorporated, 245 Summer Street, Boston,
Massachusetts 02210 by November 29, 1999 in order to be considered for inclusion
in the Corporation's Proxy Statement and form of proxy relating to that Meeting.
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULE BUT WITHOUT EXHIBITS, WILL BE FURNISHED UPON REQUEST WITHOUT CHARGE TO
ANY PERSON WHO WAS A BENEFICIAL OWNER OF COMMON STOCK OF THE CORPORATION AS OF
MARCH 15, 1999, THE RECORD DATE FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS. ALL
REQUESTS SHOULD BE DIRECTED TO THE CORPORATION TO THE ATTENTION OF THE CORPORATE
SECRETARY, STONE & WEBSTER, INCORPORATED, 245 SUMMER STREET, BOSTON,
MASSACHUSETTS 02210.
IN KEEPING WITH OUR CONCERN FOR THE ENVIRONMENT, THIS PROXY STATEMENT IS PRINTED
ON RECYCLED PAPER.
(LOGO)
26
LOGO
<PAGE> 30
STONE & WEBSTER, INCORPORATED
245 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
March 31, 1999
To Participants in the Employee Investment Plan,
Employee Stock Ownership Plan (ESOP), and
Payroll-based Employee Stock Ownership
Plan (PAYSOP) of Stone & Webster, Incorporated and
Participating Subsidiaries
VOTING RIGHTS
As a participant in the Employee Investment Plan and/or the Employee Stock
Ownership Plan (which includes the Payroll-based Employee Stock Ownership Plan),
you may instruct Putnam Fiduciary Trust Company (Trustee under the Employee
Investment Plan and under the ESOP and PAYSOP) to vote the shares of Stone &
Webster, Incorporated standing to your credit under the Plans at the Annual
Shareholders' Meeting of the Corporation to be held May 13, 1999.
Enclosed for your information and use are:
1. Combined Notice and Proxy Statement.
2. A form of Voting Instructions to Trustee card.
3. A postage-paid, pre-addressed envelope to return your card directly to
the Trustee in care of its tabulator of Voting Instructions.
To give voting instructions, please mark and sign the enclosed Voting
Instructions card and return it to the Trustee in the enclosed envelope, or if
you prefer you may submit your voting instructions to the Trustee by calling the
toll-free telephone number on the enclosed card.
Voting rights with respect to shares in the Employee Investment Plan Trust
as to which voting instructions are not given by participants will be exercised
by the Trustee in accordance with the directions of the Committee under the
Employee Investment Plan. With respect to shares in the Employee Stock Ownership
Plan Trust, shares allocated to the accounts of participants are voted as the
participants direct, and allocated shares as to which voting instructions are
not given by the participants and all unallocated shares are voted in the
proportions the allocated shares are directed by the participants. Allocated
shares in the Payroll-based Employee Stock Ownership Plan Trust are voted as the
participants direct, and allocated shares as to which voting instructions are
not given by participants will not be voted.
A copy of the Corporation's 1998 Annual Report to Shareholders has been
furnished to you.
PLEASE NOTE: THE CORPORATION HAS ALWAYS HAD AND CONTINUES TO MAINTAIN A STRICT
POLICY OF PERMANENT CONFIDENTIALITY REGARDING THE VOTING INSTRUCTIONS AND VOTING
OF SHARES IN THESE THREE EMPLOYEE BENEFIT PLANS. NO EMPLOYEE OF THE STONE &
WEBSTER ORGANIZATION HAS ACCESS TO THE VOTING INSTRUCTIONS OF ANY PLAN
PARTICIPANT, WHICH ARE AVAILABLE ONLY TO THE TRUSTEE AND THEIR INDEPENDENT
VOTING INSTRUCTIONS TABULATOR. DISCLOSURE TO THE CORPORATION OR TO THIRD PARTIES
IS NOT PERMITTED UNLESS REQUIRED BY LAW OR THE PARTICIPANT REQUESTS OR CONSENTS
TO DISCLOSURE.
Employee Benefits Committee
Stone & Webster, Incorporated
<PAGE> 31
STONE & WEBSTER EMPLOYEE INVESTMENT PLAN TRUST
STONE & WEBSTER EMPLOYEE STOCK OWNERSHIP PLAN TRUST
STONE & WEBSTER PAYROLL-BASED EMPLOYEE STOCK OWNERSHIP PLAN TRUST
VOTING INSTRUCTIONS TO TRUSTEE
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
To the Trustee:
In accordance with provisions of the Employee Investment Plan, the
Employee Stock Ownership Plan, and the Payroll-based Employee Stock Ownership
Plan of Stone & Webster, Incorporated and Participating Subsidiaries, I hereby
instruct you, Putnam Fiduciary Trust Company, as Trustee, to vote or cause to be
voted at the Annual Meeting of Shareholders of Stone & Webster, Incorporated to
be held on May 13, 1999 and at any and all adjournments and postponements
thereof, all shares in said Corporation standing to my credit in each of the
trusts under the foregoing Plans in which I may be a participant and which I am
entitled to direct the vote at such Meeting as follows:
(continued and to be SIGNED on the Reverse Side)
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE> 32
Please mark
your votes as [X]
indicated in
this example
THESE VOTING INSTRUCTIONS WILL BE VOTED FOR ITEMS 1 AND 2 UNLESS A CONTRARY
CHOICE IS SPECIFIED
THE BOARD RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
WITHHOLD
FOR AUTHORITY
1. The election of (01) John P. Merrill, Jr., [ ] [ ]
(02) Bernard W. Reznicek and (03) Peter M.
Wood as Directors to serve until the 2002
Annual Meeting of Shareholders.
You may withhold authority to vote for
any nominee by writing the nominee's
name on the line below.
-------------------------------------
FOR AGAINST ABSTAIN
2. The ratification of the selection of [ ] [ ] [ ]
PricewaterhouseCoopers LLP, independent
accountants, as auditor for the year 1999.
3. Upon all such other matters as may properly come
before the Meeting.
-----------------------------------------------
Please mark this box if you plan to attend the Meeting. [ ]
SIGNATURE DATE , 1999
------------------------------------------- ------------
NOTE: PLEASE SIGN AS NAME APPEARS HEREON.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
VOTING BY TELEPHONE - FAST, EASY AND TOLL-FREE
Participants in the Employee Investment Plan, ESOP and PAYSOP can use the
telephone to direct Putnam Fiduciary Trust Company as Trustee to vote their
shares in the Plans at the Company's Annual Shareholders' Meeting to be held May
13, 1999. Please read the accompanying Proxy Statement and voting instructions
card. Your telephone call authorizes the Trustee under the Plans to vote your
shares in the same manner as if you marked, signed and returned your voting
instructions card. The Company's confidential voting policy also applies to
telephone voting.
TO VOTE BY TELEPHONE: Dial 1-800-840-1208, a toll-free call, on a
touch-tone telephone. Follow the spoken instructions. You will be asked to enter
the "Control Number" which is located on your voting instructions card.
OPTION A: To vote as the Board of Directors recommends on ALL proposals,
PRESS 1. when you are asked to confirm your vote, please PRESS
1.
OPTION B: If you choose to vote on each proposal separately, PRESS 0 and
follow the instructions.
ITEM 1: To vote FOR ALL nominees, PRESS 1; to WITHHOLD for all
Nominees, PRESS 9; to WITHHOLD FOR AN INDIVIDUAL NOMINEE, press
0 and follow the instructions.
ITEM 2: To vote FOR, PRESS 1; to vote AGAINST, PRESS 9; to ABSTAIN,
PRESS 0. When you are asked to confirm your vote, please PRESS
1.
YOUR CONTROL NUMBER IS:
THE PLANS' TELEPHONE VOTING FACILITIES WILL CLOSE AT 8:00 AM, EDT, ON MAY
10, 1999.
PLEASE DO NOT MAIL IN YOUR VOTING INSTRUCTIONS CARD IF YOU HAVE VOTED BY
TELEPHONE.
THANK YOU FOR VOTING.
STONE & WEBSTER, INCORPORATED
<PAGE> 33
PROXY
STONE & WEBSTER INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints H. KERNER SMITH, THOMAS L. LANGFORD and
JAMES P. JONES, or any one of them, as attorneys, with full power of
substitution, for and in the name of the undersigned, to vote, or withhold from
voting, all shares of the undersigned in Stone & Webster, Incorporated at the
Annual Meeting of its Shareholders to be held, in accordance with notice and
proxy statement received, in Boston, Massachusetts, on May 13, 1999, and at any
and all adjournments and postponements thereof.
(continued and to be SIGNED on the Reverse Side)
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE> 34
Please mark
your votes as [X]
indicated in
this example
THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2 UNLESS A CONTRARY CHOICE IS SPECIFIED
THE BOARD RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
WITHHOLD
FOR AUTHORITY
1. The election of (01) John P. Merrill, Jr., [ ] [ ]
(02) Bernard W. Reznicek and (03)Peter M.
Wood as Directors to serve until the 2002
Annual Meeting of Shareholders.
You may withhold authority to vote for
any nominee by writing the nominee's
name on the line below.
-------------------------------------
FOR AGAINST ABSTAIN
2. The ratification of the selection of [ ] [ ] [ ]
PricewaterhouseCoopers LLP, independent
accountants, as auditor for the year 1999.
3. Upon all such other matters as may properly come
before the Meeting.
Please mark this box if you plan to attend the Meeting. [ ]
SIGNATURE ___________________________________________ DATE ___________ , 1999
NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
VOTING BY TELEPHONE - FAST, EASY AND TOLL-FREE
Shareholders of record can use the telephone to vote their shares at the
Company's Annual Shareholders' Meeting to be held May 13, 1999. Please read the
accompanying Proxy Statement and proxy card. Your telephone call authorizes the
named proxies to vote your shares in the same manner as if you marked, signed
and returned your proxy card. The Company's confidential voting policy also
applies to telephone voting.
TO VOTE BY TELEPHONE: DIAL 1-800-840-1208, a toll-free call, on a
touch-tone telephone. Follow the spoken instructions. You will be asked to enter
the "Control Number" which is located on your proxy card.
OPTION A: To vote as the Board of Directors recommends on ALL proposals,
PRESS 1. When you are asked to confirm your vote, please PRESS
1.
OPTION B: If you choose to vote on each proposal separately, PRESS 0 and
follow the instructions.
ITEM 1: To vote FOR ALL nominees, PRESS 1; to WITHHOLD for all Nominees,
PRESS 9; to WITHHOLD FOR AN INDIVIDUAL NOMINEE, press 0 and
follow the instructions.
ITEM 2: To vote FOR, PRESS 1; to vote AGAINST, PRESS 9; to ABSTAIN,
PRESS 0. When you are asked to confirm your vote, please PRESS
1.
YOUR CONTROL NUMBER IS:
SHAREHOLDERS' TELEPHONE VOTING FACILITIES WILL CLOSE AT 8:00 AM, EDT, ON
MAY 13, 1999.
PLEASE DO NOT MAIL IN YOUR PROXY CARD IF YOU HAVE VOTED BY TELEPHONE.
THANK YOU FOR VOTING.
STONE & WEBSTER, INCORPORATED
<PAGE> 35
PROXY
STONE & WEBSTER INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints H. KERNER SMITH, THOMAS L. LANGFORD, and JAMES
P. JONES, or any one of them, as attorneys, with full power of substitution, for
and in the name of the undersigned, to vote, or withhold from voting, all shares
of the undersigned in Stone & Webster, Incorporated at the Annual Meeting of its
Shareholders to be held, in accordance with notice and proxy statement received,
in Boston, Massachusetts, on May 13, 1999, and at any and all adjournments and
postponements thereof.
(continued and to be SIGNED on Reverse Side)
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE> 36
THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2 UNLESS A CONTRARY CHOICE IS SPECIFIED
THE BOARD RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
FOR WITHHOLD
AUTHORITY
1. The election of (01) John P. Merrill Jr., [ ] [ ]
(02) Bernard W. Reznicek and
(03) Peter M. Wood as Directors
to serve until the 2002 Annual Meeting
of Shareholders.
You may withhold authority to vote for any nominee
by writing the nominee's name on the line below.
__________________________________________________
FOR AGAINST ABSTAIN
2. The ratification of the selection of [ ] [ ] [ ]
PricewaterhouseCoopers LLP, Independent
accountants, as auditor for the year 1999.
3. Upon all such other matters as may properly come before the Meeting.
Please mark this box if you plan to attend the Meeting. [ ]
SIGNATURE________________________________________ DATE________________, 1999
NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
