FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-12815
CHICAGO BRIDGE & IRON COMPANY N.V.
Incorporated in The Netherlands IRS Identification Number: Not Applicable
Polarisavenue 31
2132 JH Hoofddorp
The Netherlands
31-23-568-5660
(Address and telephone number of principal executive offices)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
The number of shares outstanding of a single class of common stock as of March 31, 1999 - 11,284,530
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Page
----
Consolidated Financial Statements
Statements of Income
Three Months Ended March 31, 1999 and 1998 3
Balance Sheets
March 31, 1999 and December 31, 1998 4
Statements of Cash Flows
Three Months Ended March 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6 - 8
Management's Discussion and Analysis of
Results of Operations and Financial Condition 8 - 12
PART II. OTHER INFORMATION 13 - 15
SIGNATURE PAGE 16
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS
ENDED MARCH 31,
1999 1998
Revenues $170,681 $189,881
Cost of revenues 152,679 172,993
-------- --------
Gross profit 18,002 16,888
Selling and administrative expenses 11,943 11,792
Other operating income, net (546) (328)
-------- --------
Income from operations 6,605 5,424
Interest expense (556) (993)
Interest income 268 230
-------- --------
Income before taxes and minority interest 6,317 4,661
Income tax expense (1,895) (1,305)
-------- --------
Income before minority interest 4,422 3,356
Minority interest in (income) loss (196) (6)
-------- --------
Net income $ 4,226 $ 3,350
======== ========
Net income per share
Basic $ 0.37 $ 0.27
Diluted $ 0.37 $ 0.27
Weighted average shares outstanding
Basic 11,363 12,404
Diluted 11,478 12,404
Dividends on shares
Amount $ 677 $ 736
Per share $ 0.06 $ 0.06
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The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, DECEMBER 31,
ASSETS 1999 1998
Current assets
Cash and cash equivalents $ 5,649 $ 5,636
Accounts receivable, net of allowance
for doubtful accounts of $2,446 in 1999
and $2,050 in 1998 130,974 143,911
Contracts in progress with earned revenues
exceeding related progress billings 64,720 51,953
Other current assets 10,161 6,760
-------- --------
Total current assets 211,504 208,260
-------- --------
Property and equipment 108,982 110,481
Goodwill 17,929 18,051
Other non-current assets 12,914 11,917
-------- --------
Total assets $351,329 $348,709
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 2,661 $ 3,088
Accounts payable 38,054 41,536
Accrued liabilities 42,556 50,045
Contracts in progress with progress billings
exceeding related earned revenues 63,227 77,359
Income taxes payable 2,116 2,882
-------- --------
Total current liabilities 148,614 174,910
-------- --------
Long-term debt 30,000 5,000
Other non-current liabilities 63,804 62,199
Minority interest in subsidiaries 5,141 4,944
-------- --------
Total liabilities 247,559 247,053
-------- --------
Shareholders' equity
Common stock, NLG .01 par value; 50,000,000
authorized shares; 12,517,552 issued in
1999 and 1998;
outstanding: 11,284,530 in 1999 and
11,414,294 in 1998 74 74
Additional paid-in capital 93,552 94,037
Retained earnings 32,400 28,851
Treasury stock, at cost: 1,233,022 in 1999 and
1,103,258 in 1998 (14,000) (13,144)
Cumulative translation adjustment (8,256) (8,162)
-------- --------
Total shareholders' equity 103,770 101,656
-------- --------
Total liabilities and -------- --------
shareholders' equity $351,329 $348,709
======== ========
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The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
THREE MONTHS
ENDED MARCH 31,
1999 1998
Cash flows from operating activities
Net income $ 4,226 $ 3,350
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 4,436 4,467
Decrease in deferred income taxes (536) (76)
Gain on sale of property and equipment (546) (328)
Change in operating assets and
liabilities (see below) (27,974) (5,345)
-------- --------
Net cash (used in)/provided by
operating activities (20,394) 2,068
-------- --------
Cash flows from investing activities
Proceeds from sale of property and equipment 736 873
Capital expenditures (2,884) (2,143)
-------- --------
Net cash used in investing activities (2,148) (1,270)
-------- --------
Cash flows from financing activities
(Decrease)/increase in notes payable (427) 1,418
Net borrowing under Revolving Credit Facility 25,000 13,000
Purchase of treasury stock (2,682) (3,698)
Issuance of treasury stock 1,341 -
Dividends paid (677) (736)
-------- --------
Net cash provided by financing activities 22,555 9,984
-------- --------
Increase in cash and cash equivalents 13 10,782
Cash and cash equivalents, beginning of the year 5,636 10,240
-------- --------
Cash and cash equivalents, end of the period $ 5,649 $ 21,022
======== ========
Change in operating assets and liabilities
Decrease in receivables, net $ 12,937 $ 29,082
(Increase) in contracts in progress, net (26,899) (25,818)
(Decrease) in accounts payable (3,482) (436)
-------- --------
Change in contract capital (17,444) 2,828
(Increase) in other current assets (3,401) (465)
(Decrease)/increase in income taxes payable (766) 551
(Decrease) in accrued and other non-current
liabilities (5,884) (6,780)
(Increase) in other (479) (1,479)
-------- --------
Total $(27,974) $ (5,345)
======== ========
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The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements.
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(IN THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements for Chicago Bridge & Iron Company N.V. and Subsidiaries (the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the 1998 Annual Report on Form 10-K of the Company.
In the opinion of the Company, all adjustments necessary to present fairly the financial position of the Company and the results of its operations and cash flows for the period then ended have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year.
2. SIGNIFICANT ACCOUNTING POLICIES
In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for fiscal years beginning after June 15, 1999. SFAS 133 requires all derivative instruments be recorded on the balance sheet at their fair value and that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Company has not yet determined the impact that the adoption of SFAS 133 will have on its earnings or statement of financial position. However, the Company anticipates that, due to its limited use of derivative instruments, the adoption of SFAS 133 will not have a significant effect on its results of operations or its financial position.
3. LONG-TERM DEBT
The weighted average interest rate on $30,000 of borrowings under the Company's revolving credit facility was 5.57% at March 31, 1999.
4. COMPREHENSIVE INCOME
Three Months
Ended March 31,
1999 1998
Net income $ 4,226 $ 3,350
Other comprehensive income, net of tax:
Cumulative translation adjustment (94) (350)
-------- ---------
Comprehensive income $ 4,132 $ 3,000
======== ========
5. PER SHARE COMPUTATIONS
Three Months
Ended March 31,
1999 1998
Net income - Basic and Diluted $ 4,226 $ 3,350
======== ========
Weighted average shares outstanding - Basic 11,363 12,404
Effect of Restricted Stock Units 101 -
Effect of Performance Shares 9 -
Effect of Directors Deferred Fee Shares 5 -
-------- --------
Weighted average shares outstanding - Diluted 11,478 12,404
======== ========
Net income per share - Basic and Diluted $ 0.37 $ 0.27
======== ========
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6. SEGMENT INFORMATION
Three Months
Ended March 31,
1999 1998
Revenues
North America $ 72,648 $ 90,292
Europe, Africa & Middle East 41,277 41,461
Asia Pacific 20,383 30,282
Central & South America 36,373 27,846
-------- --------
Total $170,681 $189,881
======== ========
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Three Months
Ended March 31,
1999 1998
Income From Operations
North America $ 1,945 $ 1,945
Europe, Africa & Middle East 2,850 3,567
Asia Pacific 457 183
Central & South America 1,353 (271)
-------- --------
Total $ 6,605 $ 5,424
======== ========
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
The following discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes.
RESULTS OF OPERATIONS
For the three months ended March 31, 1999, new business taken was a solid $193 million, down slightly from the very strong new business taken of $211 million reported in the year-earlier period. Of the new business taken during the first three months of 1999, 55% was for contracts awarded outside of North America. New contract awards in the quarter included a hydroelectric project in North America and tankage for a marine terminal in Russia on the Black Sea at the terminus of the Caspian pipeline. New business taken increased in North America and in the Asia Pacific (AP) area, due in part to expansion of existing work in Australia and success in winning available work in South East Asia. New business taken declined in the Europe, Africa, Middle East (EAME) area and in the Central and South America (CSA) area, with both regions coming off record new business taken levels in the comparable 1998 period. Backlog at March 31, 1999 increased to $523 million, compared with a $508 million backlog at year-end 1998.
Revenues for the first quarter of 1999 were $170.7 million compared with $189.9 million in the first quarter of 1998. Revenues increased 31% in the CSA area as a result of work being put in place that follows from last year's record level of new business taken. Revenues were comparable in the EAME area, while declining 20% in North America and 33% in the AP area in the first quarter, as both regions began 1999 with a lower backlog compared with the prior year.
Gross profit for the three months ended March 31, 1999 increased 6.6% to $18.0 million, or 10.5% of revenues, compared with $16.9 million, or 8.9% of revenues, in the prior year quarter. Higher realized margins on work in North America and improved results in CSA and AP were the primary factors that bolstered gross profit. The future level of 1999 gross profit is dependent in part upon the volume of work, in particular, the attainment of new business taken targets.
Selling and administrative expenses for the quarter ended March 31, 1999 were $11.9 million or 7.0% of revenues, compared with $11.8 million or 6.2% of revenues in the prior year quarter.
Income from operations for the first quarter of 1999 increased 21.8% to $6.6 million compared with operating income of $5.4 million for the first quarter of 1998. Operating income was favorably impacted by significantly improved results in CSA, which more than offset lower income in the EAME area, which benefited from several large projects in the 1998 period. Operating income as a percent of revenue increased in North America.
Interest expense was $0.6 million for the first three months of 1999 compared with $1.0 million in the comparable period of 1998. The decrease was primarily due to lower debt levels. Long-term debt, which stood at $5 million at year-end 1998, increased during the quarter to a more normal level of $30 million as of March 31, 1999. Cash and cash equivalents at the end of the first quarter were $5.6 million. Interest income consists primarily of interest earned on cash balances at non-U.S. subsidiaries.
For the three months ended March 31, 1999, income tax expense was $1.9 million, or an effective income tax rate of 30%, compared with income tax expense of $1.3 million or an effective income tax rate of 28%, in the prior year quarter. Income tax expense increased in the first quarter of 1999 due to increased income and an anticipated higher effective tax rate.
Net income for the three months ended March 31, 1999 increased 26% to $4.2 million or $0.37 per share, compared with net income of $3.4 million or $0.27 per share for the same period in 1998.
FINANCIAL CONDITION
For the three months ended March 31, 1999, the Company used cash from operations of $20.4 million, primarily due to the timing of cash flows on contracts. The Company continues to carefully scrutinize capital expenditures and held first quarter capital spending to $2.9 million.
On May 12, 1999 the shareholders granted authority to the Management Board of the Company for the repurchase of up to 30% of the Company's current issued share capital through November 12, 2000. These repurchases may take place in the open market, through privately negotiated transactions, equity forward purchases, or by means of a self-tender offer or offers. The Company will evaluate any repurchase method based on current market prices for the common stock and its liquidity needs.
The Company continues to be impacted by the Tuban project in Indonesia, where work remains suspended. At March 31, 1999, the Company's backlog related to this project was approximately $50 million and the Company and its affiliates had approximately $35 million of net receivables outstanding. Similar to other major contractors involved in the project, the Company has received approval to redeploy certain material purchased for this project in order to reduce its costs. While the Company believes the Tuban project is viable, it is expected that permanent financing for the project will not be secured until the political and economic situation in Indonesia improves, which is not expected to occur until after the elections in June 1999 at the earliest. The Company believes work on the Tuban project ultimately will resume, but, no assurances can be given that this will happen, or even though the project resumes, that it will not have an adverse impact on the Company.
Management anticipates that by utilizing cash generated from operations and funds provided under the Revolving Credit Facility, the Company will be able to meet its working capital and capital expenditure needs for at least the next 24 months.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company seeks to minimize the risks from foreign currency exchange rate fluctuations through its regular operating and financing activities and, when deemed appropriate, through its limited use of foreign currency forward contracts. The Company's exposure to changes in foreign currency exchange rates arises from receivables, payables and firm commitments from international transactions, as well as intercompany loans utilized to finance non-U.S. subsidiaries. The Company does not use financial instruments for trading or speculative purposes.
Although the Company does not engage in currency speculation, it periodically uses forward contracts to hedge foreign currency transactions. Gains or losses are included in income. At March 31, 1999 and December 31, 1998 the Company had foreign currency exchange contracts of less than one year duration. Outstanding foreign currency exchange contracts to purchase Canadian dollars represented $7,830 and $10,034 and foreign currency exchange contracts to sell British pounds represented $2,819 and $2,909 at March 31, 1999 and December 31, 1998, respectively. The Company also had $1,800 and $2,400 of foreign currency exchange contracts to sell Singapore Dollars at March 31, 1999 and December 31, 1998, respectively and had $298 of foreign currency exchange contracts to sell Dutch Guilders at March 31, 1999.
YEAR 2000
The Company continues to execute its plan to address the effect of Year 2000
issues on its worldwide businesses. The plan consists of two primary phases:
Assessment (consisting of identification, business criticality ranking and
impact analysis, and remediation planning) and Remediation (consisting of
repair, testing, implementation, certification and contingency plans). This plan
involves representatives of the Company from all operational and geographical
areas and encompasses information technology (IT) systems, embedded (non-IT)
systems and suppliers.
Assessment has been completed on all of the Company's worldwide IT systems. As of March 31, 1999, 78% of the Remediation phase for the Company's IT systems was completed. The Remediation phase for all critical areas is scheduled to be completed by August 1999.
Assessment of North American non-IT systems is complete, and the Remediation phase continues and is scheduled for completion by the end of August 1999. Non-IT systems include building and mechanical systems (such as telecommunication systems, HVAC and security systems) and fabrication and field construction equipment. Assessment of non-IT systems outside North America continues on building and mechanical systems with completion scheduled by the end of June 1999. The Remediation phase is scheduled to be completed by August 1999. The Company's assessment and remediation of its fabrication and field construction equipment throughout the world has been completed.
The Company has identified key material suppliers and service providers ("suppliers"), and has initiated discussions and mailed correspondence to these suppliers to survey their state of readiness on Year 2000 issues. Completion of this assessment is dependent upon their cooperation. Responses have been received from 97% of the North American inquiries and 93% of the non-North American inquiries. The Company continues to work to get responses from suppliers. At this point, it is not possible to forecast whether there will be any significant disruption due to supplier failure to remediate their own Year 2000 issues. The Company, as part of the Remediation phase, has formulated its contingency plan. This plan includes the Company's continuous communication with suppliers to assure that they are able to continue to perform without disruption. Due to the continual change of geographic location and type of projects on which the Company is executing work, the Company is familiar with reassessing and reestablishing its supplier chain through the use of alternative sourcing of materials and services to meet its business needs.
The Company estimates that the cost to remediate its Year 2000 issues is $2.3 million, of which 51% was incurred through March 31, 1999. Approximately $0.5 million of the total cost will be capitalized for the accelerated purchase of desktop hardware. The cost estimate excludes the direct costs of the ongoing J.D. Edwards implementation (which is a Year 2000 compliant system), the costs of which are being capitalized. The decision to implement this new information system was made independent of the Company's Year 2000 compliance efforts. A portion of the J.D. Edwards system implementation will enable the Company to meet its Year 2000 remediation need and is scheduled to be completed by August 31, 1999. Over the next several years the Company will continue to integrate its other software systems into J.D. Edwards in order to fully utilize the systems capabilities.
The Company has targeted internal compliance with Year 2000 issues for all critical areas, excluding the ongoing J.D. Edwards implementation, by the second quarter of 1999. The Company believes that the current efforts to address and resolve the issues associated with Year 2000 are adequate. However, the Company cannot guarantee that all Year 2000 issues will be anticipated and corrected, and there can be no assurance that the systems of any third party on which the Company's systems and operations rely will be timely converted. It is too soon to determine whether the Company will experience disruption to transportation, communication, electric power or other infrastructure systems due to Year 2000 issues that affect the public infrastructure in the locations where it executes projects. The inability of the Company, its suppliers or the public infrastructure to effectuate solutions to their respective Year 2000 issues on a timely and cost effective basis may have a material adverse effect on the Company.
Because of the uncertainties the Company faces with regard to Year 2000 issues, it is developing contingency plans to provide for continuation of its critical operations in spite of possible Year 2000 disruptions. Development of contingency plans is expected to be complete by the end of second quarter 1999. If the Company is unsuccessful in implementing the J.D. Edwards system at remaining locations by the Year 2000, the cost of implementing the J.D. Edwards contingency plan would not be material to the Company.
This discussion and analysis contains certain forward-looking statements that involve a number of risks and uncertainties. Actual events or results may differ materially from the Company's expectations. In addition to matters described herein, including the Tuban project and Year 2000 issues, the uncertain timing of awards and contracts, operating risks, risks associated with fixed price contracts, risks associated with percentage of completion accounting, fluctuating revenues and cash flow, dependence on the petroleum and petrochemical industries, and competitive conditions, as well as risk factors listed from time to time in the Company's reports filed with the Securities and Exchange Commission (including, but not limited to its Registration Statement on Form S-1 [File No.333-18065], as amended), may affect the actual results achieved by the Company.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material developments in the legal proceedings as described in Note 7 of the Notes to Consolidated Financial Statements submitted with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders of Chicago Bridge & Iron Company N.V. was held on May 12, 1999. The following matters were voted upon and adopted at the meeting:
(i) Reelection of J. Charles Jennett, Gary L. Neale and Marsha C.
Williams as members of the Board of Supervisory Directors until
the Annual Meeting of Shareholders in 2002, and until their
successors are duly elected and qualified.
Nominees - J. Charles Jennett Gary L. Neale Marsha C. Williams
For 7,597,161 7,598,161 7,598,161 Against 2,265 1,265 1,265 Abstain 4,420 4,420 4,420 |
(ii) The authorization to prepare the annual accounts and report in the English language and the adoption of the Dutch Statutory Annual Accounts of the Company for the fiscal year ended December 31, 1998.
For 7,596,670 Against 3,201 Abstain 4,075 |
(iii) The approval of distribution of profits for fiscal year ended December 31, 1998 in the amount of US$0.24 per share of common stock previously paid as common dividends.
For 7,597,490 Against 3,976 Abstain 2,480 |
(iv) The approval to cancel shares held by the Company in its own share capital.
For 7,541,870 Against 8,175 Abstain 53,801 |
(v) The approval to extend the authority of the Management Board to repurchase up to 30% of the outstanding share capital of the Company until November 12, 2000.
For 7,548,095 Against 3,661 Abstain 52,090 |
(vi) The approval to cancel shares to be acquired by the Company in its own share capital.
For 7,515,289 Against 12,846 Abstain 55,711 |
(vii) The amendment of the Articles of Association to decrease the authorized capital of the Company.
For 7,537,363 Against 11,444 Abstain 55,039 |
(viii) The approval to extend the authority of the Supervisory Board to issue and/or grant rights on (including options to purchase) common stock of the Company until May 12, 2004.
For 7,468,218 Against 80,998 Abstain 54,630 |
(ix) The approval to extend the authority of the Supervisory Board to limit or exclude the preemptive rights of the holders of the common stock of the Company until May 12, 2004.
For 7,516,903
Against 32,928
Abstain 54,015
(x) The adoption of the Chicago Bridge & Iron 1999 Long Term-
Incentive Plan.
For 7,453,228
Against 79,988
Abstain 52,630
(xi) The adoption of the Incentive Compensation program.
For 7,468,147
Against 80,957
Abstain 54,742
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(xii) The appointment of Arthur Anderson as the Company's independent public auditors for the fiscal year ending December 31, 1999.
For 7,590,962 Against 12,104 Abstain 780 |
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.18 The Chicago Bridge & Iron 1999 Long-Term Incentive
Plan
10.19 The Company's Incentive Compensation Program
27. Financial Data Schedule
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(b) Reports on Form 8-K The Company did not file a current report on Form 8-K during the three months ended March 31, 1999.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Chicago Bridge & Iron Company N.V.
/s/ Timothy J. Wiggins
-----------------------------------
By: Chicago Bridge & Iron Company B.V.
Its: Managing Director
Timothy J. Wiggins
Managing Director
(Principal Financial Officer)
Date: May 14, 1999
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Exhibit 10.18
CHICAGO BRIDGE & IRON
1999 LONG-TERM INCENTIVE PLAN
(EFFECTIVE MAY 1, 1999)
TABLE OF CONTENTS
CHICAGO BRIDGE & IRON 1999 LONG-TERM INCENTIVE PLAN...........................1
ARTICLE 1 - ESTABLISHMENT, OBJECTIVES AND DURATION............................1
1.1. ESTABLISHMENT OF THE PLAN............................................1
1.2. OBJECTIVES OF THE PLAN................................................
1.3. DURATION OF THE PLAN..................................................
ARTICLE 2. - DEFINITIONS 1
2.1. "AFFILIATE"..........................................................1
2.2. "AWARD"..............................................................1
2.3. "AWARD AGREEMENT"....................................................2
2.4. "BENEFICIAL OWNER"OR "BENEFICIAL"....................................2
2.5. "BOARD" OR BOARD OF DIRECTORS........................................2
2.6. "CB&I"...............................................................2
2.7. "CHANGE IN CONTROL"..................................................2
2.8. "CODE................................................................2
2.9. "COMMITTEE"..........................................................2
2.10. "COMPANY"............................................................3
2.11. "DIRECTOR"...........................................................3
2.12. "DISABILITY".........................................................3
2.13. "EFFECTIVE DATE".....................................................3
2.14. "EMPLOYEE"...........................................................3
2.15. "EXCHANGE ACT".......................................................3
2.16. "FAIR MARKET VALUE"..................................................3
2.17. "FISCAL YEAR"........................................................3
2.18. "INCENTIVE STOCK OPTION"OR "ISO".....................................3
2.19. "NAMED EXECUTIVE OFFICER"............................................3
2.20. "NONEMPLOYEE DIRECTOR"...............................................4
2.21. "NONQUALIFIED STOCK OPTION"OR "NQSO".................................4
2.22. "OPTION".............................................................4
2.23. "OPTION PRICE".......................................................4
2.24. "OPTIONEE"...........................................................4
2.25. "PARTICIPANT"........................................................4
2.26. "PERFORMANCE-BASED EXCEPTION"........................................4
2.27. "PERFORMANCE SHARE"..................................................4
2.28. "PERFORMANCE UNIT"...................................................4
2.29. "PERIOD OF RESTRICTION"..............................................4
2.30. "PERSON".............................................................4
2.31. "RESTRICTED STOCK"...................................................4
2.32. "RESTRICTED STOCK SHARES"............................................5
2.33. "RESTRICTED STOCK UNITS".............................................5
2.34. "RETIREMENT".........................................................5
2.35. "SHARES".............................................................5
2.36. "SUBSIDIARY".........................................................5
2.37. "SUPERVISORY BOARD"..................................................5
2.38. "VESTING DATE".......................................................5
ARTICLE 3. - ADMINISTRATION...................................................5
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ii
3.1. THE COMMITTEE........................................................5
3.2. AUTHORITY OF THE COMMITTEE...........................................6
3.3. DECISIONS BINDING....................................................6
ARTICLE 4. - SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS....................6
4.1. NUMBER OF SHARES AVAILABLE FOR GRANTS................................6
4.2. FORFEITED AND REACQUIRED SHARES......................................6
4.3. ADJUSTMENTS IN AUTHORIZED SHARES.....................................6
4.4. FRACTIONAL SHARES....................................................6
ARTICLE 5. - ELIGIBILITY AND PARTICIPATION....................................7
5.1. ELIGIBILITY..........................................................7
5.2. ACTUAL PARTICIPATION.................................................7
ARTICLE 6. - STOCK OPTIONS....................................................7
6.1. GRANT OF OPTIONS.....................................................7
6.2. AWARD AGREEMENT......................................................7
6.3. OPTION PRICE.........................................................8
6.4. DURATION OF OPTIONS..................................................8
6.5. EXERCISE OF OPTIONS..................................................8
6.6. PAYMENT..............................................................8
6.7. RESTRICTIONS ON SHARE TRANSFERABILITY................................8
6.8. TERMINATION OF EMPLOYMENT............................................9
6.9. NONTRANSFERABILITY OF OPTIONS........................................9
(A) INCENTIVE STOCK OPTIONS
(B) NONQUALIFIED STOCK OPTIONS...........................................9
ARTICLE 7. - RESTRICTED STOCK.................................................9
7.1. GRANT OF RESTRICTED STOCK............................................9
7.2. RESTRICTED STOCK AGREEMENT...........................................9
7.3. TRANSFERABILITY......................................................9
7.4. OTHER RESTRICTIONS..................................................10
7.5. VOTING RIGHTS.......................................................10
7.6. DIVIDEND AND OTHER DISTRIBUTIONS....................................10
7.7. TERMINATION OF EMPLOYMENT...........................................11
7.8. RIGHTS PERSONAL TO PARTICIPANT......................................11
ARTICLE 8. - PERFORMANCE UNITS AND PERFORMANCE SHARES........................11
8.1. GRANT OF PERFORMANCE UNITS/SHARES...................................11
8.2. VALUE OF PERFORMANCE UNITS/SHARES...................................11
8.3. EARNING OF PERFORMANCE UNITS/SHARES.................................11
8.4. FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES..............12
8.5. TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT...12
8.6. TERMINATION OF EMPLOYMENT FOR OTHER REASONS.........................12
8.7. NONTRANSFERABILITY..................................................12
ARTICLE 9. - PERFORMANCE MEASURES............................................13
ARTICLE 10. - BENEFICIARY DESIGNATION........................................13
ARTICLE 11. - DEFERRALS......................................................13
ARTICLE 12. - RIGHTS OF EMPLOYEES............................................14
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12.1. EMPLOYMENT..........................................................14
12.2. PARTICIPATION.......................................................14
ARTICLE 13. - CHANGE IN CONTROL..............................................14
13.1. TREATMENT OF OUTSTANDING AWARDS.....................................14
13.2. TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL
PROVISIONS..........................................................14
ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION.........................14
14.1. AMENDMENT, MODIFICATION, AND TERMINATION............................15
14.2. ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS.................................................15
14.3. AWARDS PREVIOUSLY GRANTED...........................................15
ARTICLE 15 - WITHHOLDING.....................................................15
15.1. TAX WITHHOLDING.....................................................15
15.2. SHARE WITHHOLDING...................................................15
ARTICLE 16. - INDEMNIFICATION................................................16
ARTICLE 17. - SUCCESSORS.....................................................16
ARTICLE 18. - LEGAL CONSTRUCTION.............................................16
18.1. GENDER AND NUMBER...................................................16
18.2. SEVERABILITY........................................................16
18.3. REQUIREMENTS OF LAW.................................................16
18.4. SECURITIES LAW COMPLIANCE...........................................16
18.5. GOVERNING LAW.......................................................17
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CHICAGO BRIDGE & IRON
1999 LONG-TERM INCENTIVE PLAN
ARTICLE 1 - ESTABLISHMENT, OBJECTIVES AND DURATION
1.1. ESTABLISHMENT OF THE PLAN. Chicago Bridge & Iron Company, a Delaware corporation ("CB&I"), a wholly owned subsidiary of Chicago Bridge & Iron Company N.V., a Netherlands corporation (the "Company"), hereby establishes an incentive compensation plan to be known as the "Chicago Bridge & Iron 1999 Long-Term Incentive Plan" (the "Plan"), as set forth in this document. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock Shares, Restricted Stock Units, Performance Shares and Performance Units.
1.2. OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize the profitability and growth of CB&I, the Company and their respective Subsidiaries, through incentives which are consistent with CB&I's goals and which link the personal interests of Participants to those of the Company's shareholders; to provide Participants with an incentive for excellence in individual performance; and to promote teamwork among Participants.
The Plan is further intended to provide flexibility to CB&I in its ability to motivate, attract, and retain the services of Participants who make significant contributions to CB&I's success and to allow Participants to share in the success of CB&I.
1.3. DURATION OF THE PLAN. The Plan shall become effective as of May 1, 1999 (the "Effective Date"), subject to its approval by the shareholders of the Company, and shall remain in effect, subject to the right of the Board of Directors to amend or terminate the Plan at any time pursuant to Article 14 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan's provisions.
ARTICLE 2. - DEFINITIONS
Whenever and wherever used in the Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized:
2.1. "AFFILIATE" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
2.2. "AWARD" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock Shares, Restricted Stock Units, Performance Shares or Performance Units.
2.3. "AWARD AGREEMENT" an agreement setting forth the terms and provisions applicable to an Award granted to a Participant under this Plan.
2.4. "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
2.5 "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of CB&I.
2.6. "CB&I" means Chicago Bridge & Iron Company, a Delaware corporation and the sponsor of the Plan.
2.7. "CHANGE IN CONTROL" will be deemed to have occurred as of the first day any one or more of the following paragraphs shall have been satisfied:
(a) Any Person, other than the Company, any Subsidiary or any employee benefit plan (or related trust) of the Company or any such Subsidiary, becomes the Beneficial Owner of 25% or more of the total voting power of the Company's outstanding securities;
(b) During any period of two years or less, individuals who at the beginning of such period constituted the Supervisory Board of the Company cease for any reason to constitute at least a majority thereof; provided that any new member of the Supervisory Board who is nominated for election to the Supervisory Board with the approval of at least 75% of the other members then still in office who were members at the beginning of the period shall be considered for purposes of this paragraph (b) as having been a member at the beginning of such period; or
(c) Upon the consummation of (i) any merger or other business combination of the Company with or into another corporation pursuant to which the persons who were shareholders of the Company immediately before such consummation, do not own immediately after such consummation, more than 70% of the voting power and the value of the stock of the surviving corporation in substantially the same respective proportions as their ownership of the common stock of the Company immediately prior to such consummation, or (ii) the sale, exchange or other disposition of all or substantially all the consolidated assets of the Company.
2.8. "CODE" means the Internal Revenue Code of 1986, as amended from time to time.
2.9. "COMMITTEE" means the Committee appointed by the Board to administer the Plan as provided in Article 3 herein or, to the extent it functions as the Committee as provided in Article 3 herein, the Organization and Compensation Committee of the Supervisory Board.
2.10. "COMPANY" means Chicago Bridge & Iron Company N.V., a Netherlands corporation, including, as may be applicable to the context, any and all Subsidiaries and Affiliates, and any successor thereto.
2.11. "DIRECTOR" means any individual who is a member of the Board of Directors of CB&I or any Subsidiary or Affiliate.
2.12. "DISABILITY" shall mean a mental or physical condition of a Participant which the Committee, on the basis of information satisfactory to it, finds to be a permanent condition which renders such member unfit to perform the duties of an Employee, as such duties shall be
determined by the Committee. Any determination of whether any condition of a Participant constitutes Disability shall be made under rules uniformly applied to all Participants.
2.13. "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.3 hereof.
2.14. "EMPLOYEE" means any employee of CB&I or the Company or their respective Subsidiaries and Affiliates. Directors who are not employed by any of the foregoing shall not be considered Employees under this Plan.
2.15. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
2.16. "FAIR MARKET VALUE" of Shares as of any date shall be determined on the basis of the closing sale price of Shares on the principal securities exchange on which the Shares are traded or if there is no such sale on the relevant date, then on the last previous day on which a sale was reported.
2.17. "FISCAL YEAR" means a fiscal year of CB&I.
2.18. "INCENTIVE STOCK OPTION" or "ISO" means an option to purchase Shares which is designated as an Incentive Stock Option and which is intended to meet the requirements of Code Section 422, granted to a Participant pursuant to Article 6 herein.
2.19. "NAMED EXECUTIVE OFFICER" means a Participant who, as of the last date of a taxable year of CB&I, is one of the group of "covered employees," as defined in the regulations promulgated under Code Section 162(m), or any successor statute.
2.20. "NONEMPLOYEE DIRECTOR" means an individual who is a member of the Supervisory Board but who is not an Employee.
2.21. "NONQUALIFIED STOCK OPTION" or "NQSO" means an option to purchase Shares which is not intended to meet the requirements of Code Section 422, granted to a Participant pursuant to Article 6 herein.
2.22. "OPTION" means an Incentive Stock Option or a Nonqualified Stock Option.
2.23. "OPTION PRICE" means the price at which a Share may be purchased by a Participant pursuant to an Option.
2.24. "OPTIONEE" means the Participant or, if the Participant has died, his or her Beneficiary, or other person determined under Section 6.9, entitled to exercise any Option.
2.25. "PARTICIPANT" means an Employee or Nonemployee Director who has outstanding an Award.
2.26. "PERFORMANCE-BASED EXCEPTION" means the performance-based exception from the tax deductibility limitations of Code Section 162(m).
2.27. "PERFORMANCE SHARE" means an Award providing for the payment of a variable number of Shares depending on the achievement of performance goals, granted to a Participant pursuant to Article 8 herein.
2.28. "PERFORMANCE UNIT" means an Award providing for the payment of an amount based on either the Fair Market Value of Shares or the appreciation in Fair Market Value of Shares upon the achievement of performance goals, granted to a Participant, pursuant to Article 8 herein.
2.29. "PERIOD OF RESTRICTION" means the period during which the transfer of Restricted Stock Shares or Restricted Stock Units is limited in some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events, as determined by the Committee, at its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 7 herein.
2.30. "PERSON" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall include a "group" as defined in Section 13(d) thereof.
2.31. "RESTRICTED STOCK" means Restricted Stock Shares or Restricted Stock Units.
2.32. "RESTRICTED STOCK SHARES" means Shares which are issued and awarded to Participants subject to a substantial risk of forfeiture and restrictions on such Shares during the Period of Restriction as provided in Article 7 herein.
2.33. "RESTRICTED STOCK UNIT" means a bookkeeping unit that represents the right of a Participant to be issued and to receive a Share upon lapse of risks of forfeiture and restrictions on such Units during the Period of Restriction, or at such later time as shall be determined by the Committee in its discretion upon grant of the Award or, with the consent of the Participant, after grant of the Award, as provided in Article 7 herein.
2.34. "RETIREMENT" means a termination of employment after (i) age 55 and at least a 10 year period of employment by CB&I or the Company or their respective present or former Subsidiaries or Affiliates, (ii) a 30-year period of such employment, or (iii) age 65; provided, however, that the Committee as part of an Award Agreement or otherwise may provide that for purposes of this Section, a Participant may be credited with such additional years of age and employment as the Committee in its sole discretion shall determine is appropriate, and may provide such additional or different conditions for Retirement as the Committee in its sole discretion shall determine is appropriate.
2.35. "SHARES" means shares of common stock of the Company.
2.36. "SUBSIDIARY" means any corporation in which CB&I or the Company owns directly, or indirectly through subsidiaries, at least 50% of the total combined voting power of all
classes of stock, or any other entity (including, but not limited to, partnerships and joint ventures) in which CB&I or the Company owns at least 50% of the combined equity thereof.
2.37. "SUPERVISORY BOARD" means the Supervisory Board of the Company.
2.38. "VESTING DATE" means with respect to Restricted Stock and Restricted Stock Units the date (if any) on which the risks of forfeiture and restrictions on such Restricted Stock Shares or Units during the Period of Restriction have terminated (by their terms or by other action of the Committee consistent with this Plan) and all other conditions or restrictions applicable to such Restricted Stock Shares or Units have been satisfied.
ARTICLE 3. - ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by a Committee, the members of which shall be appointed from time to time by, and shall serve at the discretion of, the Board; provided, however, that (i) with respect to grants and Awards made or to be made to or held by any member of such Committee or any Named Executive Officer, the Plan shall be administered by the Organization and Compensation Committee of the Supervisory Board; and (ii) the Organization and Compensation Committee of the Supervisory Board may in its sole discretion exercise directly any power, right, duty or function of the Committee, including but not limited to the grant or amendment of an Award to any Employee or Nonemployee Director.
3.2 AUTHORITY OF THE COMMITTEE. Except as limited by law or by the Certificate of Incorporation or bylaws of CB&I, and subject to the provisions herein, the Committee shall have full power to select Employees and Nonemployee Directors who shall participate in the Plan; determine the sizes and types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan; construe and interpret the Plan and any agreement or instrument entered into under the Plan as they apply to Employees; establish, amend, or waive rules and regulations for the Plan administration as they apply to Employees; and (subject to the provisions of Article 14 herein) amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the discretion of the Committee as provided in the Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. As permitted by law, the Committee may delegate its authority as specified herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the Committee pursuant to the Plan and all related orders and resolutions of the Board shall be final, conclusive and binding on all Persons, including CB&I, the Company, their respective shareholders, Directors, members of the Supervisory Board, Employees, Participants, and their estates and beneficiaries.
ARTICLE 4. - SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
4.1. NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as provided in Section 4.3 herein, the number of Shares reserved for issuance to Participants under the Plan is 1,130,000. The maximum aggregate number of Shares with respect to which Awards may be granted in any fiscal year to any Participant in the form of Stock Options is 250,000. The maximum aggregate number of Shares with respect to which Awards may be granted in the form of Restricted Stock Shares, Restricted Stock Units, Performance Shares and Performance Units combined in any fiscal year to any Participant is 125,000.
4.2. FORFEITED AND REACQUIRED SHARES. If any Shares subject to any Award are forfeited or such Award otherwise terminates without the issuance of such Shares or of other consideration in lieu of such Shares, the Shares subject to such Award, to the extent of any such forfeiture or termination, shall again be available for grant under the Plan. If Shares are applied to pay the Option price upon exercise of an Option or to satisfy federal, state or local tax withholding requirements pursuant Section 15.2, the Shares so applied shall be added to the Shares permitted under the limitations of Section 4.1 in determining the number of Shares remaining for issuance and for grants of Awards with respect to such Shares under the Plan.
4.3. ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as a merger, consolidation, separation, spin-off, or other distribution of stock or property of the Company, or any reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368) or any partial or complete liquidation of the Company, the Committee shall adjust the number and class of Shares which may be issued under Section 4.1 and in the limitation of Section 4.1 on grants of Awards with respect to Shares, in the number, class and/or price of Shares subject to outstanding Awards, as the Committee in its sole discretion determines to be appropriate and equitable to prevent dilution or enlargement of rights; provided, however, that the number of Shares subject to any Award shall always be a whole number.
4.4. FRACTIONAL SHARES. No fractional Shares shall be issued to Participants under the Plan. If for any reason an Award or adjustment thereto would otherwise result in the issuance of a fractional Share to a Participant, the Company shall pay the Participant in cash the Fair Market Value of such fractional Share.
ARTICLE 5. - ELIGIBILITY AND PARTICIPATION
5.1. ELIGIBILITY. Persons eligible to participate in this Plan include all Employees, including Employees who are members of the Board, and Nonemployee Directors.
5.2. ACTUAL PARTICIPATION. Subject to the terms and provisions of the Plan, the Committee may, from time to time, select from all eligible individuals those to whom Awards shall be granted and shall determine the nature and amount of each Award.
ARTICLE 6. - STOCK OPTIONS.
6.1. GRANT OF OPTIONS. Subject to the terms and provisions of the Plan, the Committee may grant Options to Participants in such number, and upon such terms, and at any time and from time to time, as the Committee in its discretion may determine. The date an Option is granted shall be the day on which the Committee acts to award a specific number of Shares to a Participant at a specific Option Price, and shall be specified in each Award Agreement.
6.2. AWARD AGREEMENT. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the expiration date of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Award Agreement also shall specify whether or not the Option is intended to be an ISO.
6.3. OPTION PRICE. The Option Price for each grant of an Option under this Plan shall be at least equal to 100% of the Fair Market Value of a Share on the date the Option is granted.
6.4. DURATION OF OPTIONS. Each Option shall expire at such time (not later than the 10th anniversary of its date of grant) as the Committee shall determine at the time of grant. If an Award Agreement does not specify an expiration date, the Option shall expire on the 10th anniversary of its date of grant.
6.5. EXERCISE OF OPTIONS. Options shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant.
6.6. PAYMENT. If the Award Agreement does not otherwise specify the manner of exercise, Options shall be exercised by the delivery of a written notice of exercise to CB&I identifying the Option(s) being exercised, completed by the Optionee and delivered during regular business hours to the office of the Secretary of CB&I, or sent by certified mail to the Secretary of CB&I, accompanied by a negotiable check or other cash equivalent in full payment for the Shares. A copy of such notice of exercise shall also be delivered by the Optionee to the office of the Secretary of the Company.
In the discretion of the Committee and as set forth in the Award Agreement, the Optionee may pay the Option Price to CB&I upon exercise of any Option by tendering previously acquired Shares which have been held by the Optionee for at least six months and which have an aggregate Fair Market Value at the time of exercise equal to the total Option Price, or by a combination of such Shares and a check or other cash equivalent.
The Committee also may allow cashless exercise as permitted under Federal Reserve Board's Regulation T, subject to applicable securities law restrictions, or exercise by any other means which the Committee determines to be consistent with the Plan's purpose and applicable law.
Subject to any governing rules or regulations, as soon as practicable after receipt of a written notification of exercise and full payment, CB&I shall deliver, or have delivered, to the, Optionee, in the Optionee's name, certificates for an appropriate number of Shares based upon the number of Shares purchased under the Option(s).
6.7. RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option under this Article 6 as it may deem advisable, including, without limitation, restrictions under applicable securities laws and under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded.
6.8. TERMINATION OF EMPLOYMENT. Each Participant's Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant's employment as an Employee or service as a Director. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination of employment.
6.9. NONTRANSFERABILITY OF OPTIONS.
(A) INCENTIVE STOCK OPTIONS. No ISO may be sold, transferred, pledged, assigned, or otherwise alienated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant or by designation of a Beneficiary in accordance with Article 10.
(B) NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a Participant's
Award Agreement, no NQSO may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant's Award Agreement, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant or by designation of a Beneficiary in accordance with Article 10.
ARTICLE 7. - RESTRICTED STOCK.
7.1. GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the Plan, the Committee may grant Awards of Restricted Stock Shares or Restricted Stock Units to Participants in such amounts and upon such terms, and at any time and from time to time, as the Committee shall in its discretion determine.
7.2. RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be evidenced by a Restricted Stock Award Agreement that shall specify whether the grant is an Award of Restricted Stock Shares or Restricted Stock Units, the Period(s) of Restriction, the number of Shares or Units of Restricted Stock granted, and such other provisions as the Committee shall determine.
7.3. TRANSFERABILITY. Except as otherwise provided in this Article 7, Restricted Stock Units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated; and Restricted Stock Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee
and specified in the Restricted Stock Award Agreement, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Restricted Stock Award Agreement. Except as otherwise provided in this Article 7, Restricted Stock Shares shall become freely transferable by the Participant upon the Vesting Date, and Shares issued in respect of Restricted Stock Units shall be freely transferable by the Participant upon issuance to the Participant on or after the Vesting Date.
7.4. OTHER RESTRICTIONS. The Committee may impose such other conditions and/or restrictions on any Shares or Units of Restricted Stock granted pursuant to the Plan as it may deem advisable, including, without limitation, a requirement that Participants pay a stipulated purchase price at a stipulated time for each Share or Unit of Restricted Stock, restrictions and conditions of vesting or forfeiture based upon the achievement of specific performance goals (Company-wide, divisional, and/or individual), time-based restrictions on vesting following the attainment of the performance goals, and/or restrictions under applicable Federal or state securities laws.
If the Restricted Stock Award is made in Restricted Stock Shares, CB&I shall retain the certificates representing Shares in CB&I's possession until the Vesting Date. If the Restricted Stock Award is made in Restricted Stock Units, no Shares shall be issued until the Vesting Date, but Shares shall be issued in respect of such Units as of or after the Vesting Date. In either case, certificates for Shares shall be delivered to the Participant on or as soon as practicable after the Vesting Date, or at such later time or times as shall be determined by the Committee in its discretion upon grant of the Award or, with the consent of the Participant, after grant of the Award.
7.5. VOTING RIGHTS. Unless otherwise provided in the Award Agreement, Participants awarded Restricted Stock Shares hereunder which have not been forfeited may exercise full voting rights with respect to those Shares during the Period of Restriction. Restricted Stock Units shall not confer any voting rights (unless and until Shares are issued therefor on or after the Vesting Date).
7.6. DIVIDEND AND OTHER DISTRIBUTIONS. Unless otherwise provided in the Award Agreement, if during the Period of Restriction prior to a Vesting Date or forfeiture of Restricted Stock:
(a) Cash dividends are paid on Shares, (i) the Company shall pay Participants holding Restricted Stock Shares the regular cash dividends paid with respect to the Shares; and (ii) the Company shall pay Participants holding Restricted Stock Units an amount equal to the cash dividends paid on an equivalent number of Shares;
(b) Dividends in Shares are paid in Shares, (i) Participants holding Restricted Stock Shares shall be credited with such dividends as additional Restricted Stock Shares subject to the same restrictions as the underlying Shares; and (ii) Participants holding Restricted Stock Units shall be credited with additional Restricted Stock Units equivalent to such dividends, subject to the same restrictions as the underlying Units.
The Committee may in its discretion apply any restrictions to the dividends that the Committee deems appropriate.
7.7. TERMINATION OF EMPLOYMENT. Except as otherwise provided in the Award Agreement, if the Participant's employment as an Employee or service as a Director with CB&I
or the Company or their respective Subsidiaries and Affiliates terminates for any reason during the Period of Restriction, all Restricted Stock as to which the Period of Restriction has not yet expired or as to which a Vesting Date has not otherwise occurred shall be forfeited. The Committee in its discretion may set forth in the Award Agreement the extent to which the Participant shall nevertheless have the right to receive vested unrestricted Shares at or after termination of the Participant's employment as an Employee or service as a Director. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares or Units of Restricted Stock issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment.
7.8. RIGHTS PERSONAL TO PARTICIPANT. All rights prior to the Vesting Date with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant, or in the event of the Participant's death prior to the Vesting Date, to the Beneficiary designated in accordance with Article 10.
ARTICLE 8. - PERFORMANCE UNITS AND PERFORMANCE SHARES
8.1. GRANT OF PERFORMANCE UNITS/SHARES. Subject to the terms and provisions of the Plan, the Committee may grant Awards of Performance Units and/or Performance Shares to Participants in such amounts and upon such terms, and at any time and from time to time, as the Committee shall in its discretion determine.
8.2. VALUE OF PERFORMANCE UNITS/SHARES. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Units/Shares that will be paid out to the Participant. For purposes of this Article 8, the time period during which the performance goals must be met shall be called a "Performance Period."
8.3. EARNING OF PERFORMANCE UNITS/SHARES. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units/Shares shall be entitled to receive payout on the number and value of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.
8.4. FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES. Payment of earned Performance Units/Shares shall be made in a single lump sum, as soon as practicable after the Committee has certified the number of Performance Units/Shares earned for the Performance Period, or at such later time or times as shall be determined by the Committee in its discretion upon grant of the Award or, with the consent of the Participant, after grant of the Award. Subject to the terms of this Plan and except as otherwise provided in an Award Agreement, the Committee shall pay earned Performance Shares in Shares but may in its sole discretion pay earned Performance Units in the form of cash or in Shares (or in a combination thereof) which have an aggregate Fair Market Value equal to the value as of the date of distribution of the number of earned Performance Units at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed appropriate by the Committee.
Unless otherwise provided in the Award Agreement, Participants shall be entitled to receive any dividends paid with respect to Shares which have been earned in connection with grants of Performance Units/Shares but not yet distributed to Participants, such dividends to be subject to the same terms and conditions as apply to dividends earned with respect to Restricted Stock, as set forth in Section 7.6 herein.
8.5. TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT. Unless determined otherwise by the Committee and set forth in the Participant's Award Agreement, in the event the employment or service as a Director of a Participant is terminated by reason of death, Disability, or Retirement during a Performance Period, the Participant shall receive a payout of the Performance Units/Shares in a reduced amount prorated according to the ratio of the length of Participant's employment or service in the Performance Period to the length of the Performance Period, as specified by the Committee in its discretion. Payment of earned Performance Units/Shares shall be made at a time specified by the Committee in its sole discretion and set forth in the Participant's Award Agreement. Notwithstanding the foregoing, with respect to Named Executive Officers who retire during a Performance Period, payments shall be made at the same time as payments are made to Participants who did not terminate employment or service during the applicable Performance Period.
8.6. TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a Participant's employment or service terminates for any reason other than those reasons set forth in Section 8.5 herein, all Performance Units/Shares shall be forfeited by the Participant to CB&I unless determined otherwise by the Committee, as set forth in the Participant's Award Agreement.
8.7. NONTRANSFERABILITY. Except as otherwise provided in a Participant's Award Agreement, Performance Units/Shares may not be sold, transferred, pledged, assigned, or otherwise alienated, other than by will or by the laws of descent and distribution or by designation of a Beneficiary in accordance with Article 10. Further, except as otherwise provided in a Participant's Award Agreement, a Participant's rights under the Plan shall be exercisable during the Participant's lifetime only by the Participant or the Participant's legal representative.
ARTICLE 9. - PERFORMANCE MEASURES.
The performance measure(s) to be used for purposes of Awards to Named Executive Officers which are designed to qualify for the Performance-Based Exception shall be chosen from among net income (either before or after interests, taxes, depreciation and amortization), share price, earnings per share, operating income, return on net assets, return on equity, return on capital or investments, total shareholder return, savings in working capital, reduction in expense levels, operating cash flow, free cash flow, or economic value added, in each case where applicable determined either on a Company-wide basis or in respect of any one or more business units.
The Committee shall have the discretion to adjust the determinations of the degree of attainment of the pre-established performance goals; provided, however, that Awards to Named Executive Officers, which are designed to qualify for the Performance-Based Exception, may not be adjusted upward (the Committee shall retain the discretion to adjust such Awards downward).
In the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m).
ARTICLE 10. - BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid, to exercise any Stock Option, or succeed to the ownership of any Restricted Stock Performance Units/Shares or other Award as provided in this Plan, in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate.
ARTICLE 11. - DEFERRALS
The Committee may, subject to Section 14.3, in the Award Agreement or otherwise, permit or require a Participant to defer such Participant's receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option, the lapse or waiver of restrictions with respect to Restricted Stock, or the satisfaction of any requirements or goals with respect to Performance Units/Shares. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals.
ARTICLE 12. - RIGHTS OF EMPLOYEES
12.1. EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any way the right of CB&I to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of CB&I.
12.2. PARTICIPATION. No Employee or Director shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.
ARTICLE 13. - CHANGE IN CONTROL
13.1. TREATMENT OF OUTSTANDING AWARDS. Upon the occurrence of a Change in Control, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges:
(a)Any and all Options granted hereunder shall become immediately exercisable, and shall remain exercisable throughout their entire term;
(b)Any restriction periods and restrictions imposed on Restricted Shares shall lapse;
(c)The target payout opportunities attainable under all outstanding Awards of Restricted Stock, Performance Units and Performance Shares shall be deemed to have been fully earned for the entire Performance Period(s) as of the effective date of the Change in Control. The vesting of all Awards denominated in Shares shall be accelerated as of the effective date of the Change in Control, and there shall be paid out in cash to Participants within 30 days following the effective date of the Change in Control an amount based upon an assumed achievement of all relevant performance goals.
13.2. TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE-IN-CONTROL PROVISIONS. Notwithstanding any other provision of this Plan or any provision of any Award Agreement, the provisions of this Article 13 may not be terminated, amended, or modified on or after the date of Change in Control to affect adversely any Award theretofore granted without the prior written consent of the Participant with respect to said Participant's outstanding Awards; provided, however, the Board, upon recommendation of the Committee, may terminate, amend, or modify this Article 13 at any time and from time to time prior to the date of a Change of Control.
ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION
14.1. AMENDMENT, MODIFICATION, AND TERMINATION. The Board may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part.
14.2. ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.3 hereof) affecting CB&I or the Company, or the financial statements
of CB&I or the Company, or of changes in applicable laws, regulations or
accounting principles, whenever the Committee determines that such adjustments
are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
14.3. AWARDS PREVIOUSLY GRANTED. The Committee may amend or modify any outstanding Award Agreement in any manner consistent with this Plan for an original Award Agreement, provided, however, that no amendment or modification of an Award Agreement shall adversely affect in any material way the Award previously granted without the written consent of the Participant holding such Award. No termination, amendment or modification of the Plan shall adversely affect in any material way any Award previously granted without the written consent of the Participant holding such Award.
ARTICLE 15 - WITHHOLDING
15.1. TAX WITHHOLDING. CB&I shall have the power and the right to deduct or withhold, or require a Participant to remit to CB&I, an amount sufficient to satisfy Federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan.
15.2. SHARE WITHHOLDING. With respect to withholding required upon the exercise of Options, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of Awards granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having CB&I withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be irrevocable, made in writing, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
ARTICLE 16. - INDEMNIFICATION
Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by CB&I against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be party or in which he or she may be involved by reasons of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with CB&I's approval, or paid by him or her in satisfaction of any judgment of any such action, suit, or proceeding against him or her, provided he or she shall give CB&I an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Association, CB&I's Certificate of Incorporation or bylaws, any agreement, as a matter of law, or otherwise, or any power that CB&I may have to indemnify them or hold them harmless.
ARTICLE 17. - SUCCESSORS
All obligations of CB&I under the Plan with respect to Awards granted hereunder shall be binding on any successor to CB&I, whether such successor arises as a result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of CB&I.
ARTICLE 18. - LEGAL CONSTRUCTION
18.1. GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.
18.2. SEVERABILITY. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
18.3. REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
18.4. SECURITIES LAW COMPLIANCE. Transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 under the Exchange Act (or any successor rule). The extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.
18.5. GOVERNING LAW. To the extent not preempted by federal law, the Plan and all agreements hereunder, shall be construed in accordance with and governed by the laws of the state of Illinois, without regard to its provisions regarding conflict of laws.
Exhibit 10.19
CHICAGO BRIDGE & IRON COMPANY N.V.
INCENTIVE COMPENSATION PROGRAM
This Incentive Compensation Program (the "Incentive Program") is designed to align the activities of key managers and other key employees of Chicago Bridge & Iron Company N.V. and its affiliates (the "Company") with the achievement of specific financial performance goals, business unit performance goals, and individual performance objectives. The Company's overall financial goals are (1) to provide an above average return to shareholders and (2) to provide sufficient capital for reinvestment in the business. The Incentive Program's financial targets are set in accordance with these goals. Annual incentive bonuses are paid in cash to eligible Participants depending upon the achievement of financial performance, business performance and individual targets. Achieving these goals will increase the Company's overall competitiveness within the industry, and create increased value for shareholders. The Incentive Program provides a method of rewarding the necessary contributions and leadership behaviors to achieve those results.
The bonus opportunity of a Participant will generally comprise either or both of a "Financial Performance Incentive" (defined below) and a "Unit Performance Incentive" (defined below). However, the Committee reserves the right to grant a "Discretionary Incentive" (defined below) in limited circumstances.
The Incentive Program is administered by the Organization and Compensation Committee (the "Committee") of the Supervisory Board of Chicago Bridge & Iron Company N.V. The Committee in its discretion construes and interprets the Incentive Program and determines all questions arising under the Incentive Program. The Committee in its discretion directly determines Company-wide financial performance goals, targets and payout percentages for the Financial Performance Incentive for all Participants, and certifies the achievement of such financial performance goals. For the Chief Executive Officer and any other individual who is among the five highest compensated officers of the Company (together with the Chief Executive Officer, the "Covered Executives") in the fiscal year of the Company for which a bonus is payable (the "Bonus Year), the Committee directly determines in its discretion the target Financial Performance Incentive and the extent to which bonus otherwise payable under the Incentive Program shall be reduced on the basis of nonattainment of individual performance goals or other factors. The Committee may in its discretion delegate other administrative responsibilities under the Incentive Program to the management of the Company.
Management of the Company shall make such recommendations to the Committee as the Committee may deem necessary or appropriate for the administration of this Incentive Program.
Employees of the Company and its affiliates who are in salary grades 16 and above are eligible to be selected to become participants ("Participants") in the Incentive Program. The Committee in its discretion will directly select Covered Executives who may be Participants. Company management with the approval of the Committee in its discretion will select other eligible employees to become Participants. Selection as a Participant for any Bonus Year shall not entitle the individual to be a Participant for any subsequent Bonus Year unless again selected to be a Participant in such subsequent Bonus Year.
A Participant hired during a Bonus Year shall have a prorated target Financial Performance Incentive and (if applicable) a prorated target Unit Performance Incentive, based on the number of weeks worked from the date of hire to the end of the year. A Participant whose employment terminates before the last day of the Bonus Year by reason of a reduction-in-force program, death, disability or retirement, and whose employment terminates on or after April 1 of the Bonus Year, shall have a prorated target Financial Performance Incentive and (if applicable) a prorated target Unit Performance Incentive based on the number of weeks worked from the beginning of the year to the date of termination. A Participant whose employment terminates during the Bonus Year under circumstances not described in the preceding sentence shall not be entitled to a Financial Performance Incentive or Unit Performance Incentive for such Bonus Year.
As a condition to receipt of a bonus a Participant must keep both his or her eligibility and bonus targets strictly confidential. Neither of these may be discussed with, or disclosed to, any individual other than (i) the Vice President of Human Resources, Human Resources staff administering the program, or superiors in the Participant's chain of command, (ii) a Participant's spouse, attorney or accountant who undertake not to further disclose the Participant's eligibility and bonus target, or (iii) in a disclosure required by law.
Notwithstanding anything in this Incentive Program to the contrary, no Participant shall have any vested right to a bonus. The Committee in its sole discretion may reduce or cancel a Participant's incentive bonus for any reason at any time prior to actual payment.
A Participant may receive an incentive bonus (a "Financial Performance Incentive") based on his or her bonus target and the achievement by the Company of the Company-wide financial performance goals described below.
The Committee may assign each Participant an individual Financial Performance Incentive target for each Bonus Year. The target for the Financial Performance Incentive is set at a percentage of the Participant's base salary at the time the performance goal is established ("Base Salary") based on the Participant's position and job level. The target amount shall not exceed 100% of Base Salary.
The Committee selects Company-wide financial performance goals from among (i)
operating income, (ii) earnings (before or after any of interest, taxes,
depreciation and amortization), (iii) return on net assets, (iv) net income
(before or after taxes), (v) after-tax return on investment, (vi) sales, (vii)
revenues, (viii) earnings per share, (ix) total shareholder return, (x) return
on equity, (xi) total business return, (xii) return on gross investment, (xiii)
operating cash flow, (xiv) free cash flow, and (xv) economic value added.
The Committee may adjust the attainment of any performance goal to reflect or offset (i) a change in accounting standards, (ii) a significant acquisition or divestiture, (iii) a significant capital transaction, or (iv) any other unusual, nonrecurring item; provided in any such case such item is separately identified on the Company's audited financial statements in accordance with generally accepted accounting principles, and is attributable to an event occurring after the performance goals for the year have been established. However, the actual cost of this Incentive Program will be part of the calculation of income from operations.
The Committee selects minimum, target and maximum thresholds for the performance goal it has selected. If performance is less than minimum, no Financial Performance Incentive will be paid. If performance is at the minimum, 20% of the target Financial Performance Incentive may be paid. If performance is at target, 100% of target Financial Performance Incentive may be paid. If performance is at or above maximum, 200% percent of target Financial Performance Incentive may be paid. If performance results fall between two designated thresholds, the Financial Performance Incentive will be determined by interpolation as determined or approved by the Committee. In no event will the Financial Performance Incentive exceed 200% of target Financial Performance Incentive; and in no event will the Financial Performance Incentive exceed 200% of Base Salary.
A single specific financial performance goal (or fixed combination of more than one financial performance goal) and designated thresholds and payout percentages for that goal or goals selected by the Committee for Company-wide financial performance for any Bonus Year shall be uniformly applicable to all Participants entitled to a Financial Performance Incentive for that Bonus Year. The Committee shall establish the Company-wide financial performance goal or goals, designated thresholds and payout percentages, within the first 90 days of the each year. Prior to the payment of a Financial Performance Incentive and within the first 90 days of the year following the Bonus Year, the Committee shall certify the extent of achievement of the Company-wide financial performance goal or goals for the Bonus Year.
The Committee in its sole and absolute discretion may reduce the Financial Performance Incentive otherwise determined under this Financial Performance Incentive for any Participant for any reason.
A Participant may receive an incentive bonus (a "Unit Performance Incentive") based on his or her Unit Performance Incentive target and the achievement by the Participant's business unit or subunit of the performance goals determined as described below.
The Committee may assign each Participant an individual Unit Performance Incentive target for each Bonus Year. The target for the Unit Performance Incentive is set at a percentage of the Participant's Base Salary based on the Participant's position and job level. The sum of the target amounts for the Financial Performance Incentive and the Unit Performance Incentive shall not exceed 100% of Base Salary.
The Committee selects business unit performance goals from among (1) the financial performance goals specified above for the Financial Performance Incentive but applied to the business unit or subunit in which the Participant is employed, (2) functional non-financial operating goals specific to such business unit or subunit, (3) operating safety management of the business unit or subunit, or (4) such similar factors as the Committee deems appropriate. To the extent the Committee in its discretion deems feasible, the criteria for measuring attainment of business unit performance goals shall be objective and relate to matters which can be influenced by the Participant in his or her area of responsibilities, and chosen to contribute to meeting the Company's short-and long-term financial goals. The performance goals for the Unit Performance Incentive may be different for each Participant.
The Unit Performance Incentive will be adjusted for unit performance based on the achievement of the applicable performance goals between 20% and 200% of target in the same manner as the Financial Performance Incentive. The Unit Performance Incentive shall also be adjusted for Company-wide financial performance, such that the total of all Unit Performance Incentives does not exceed such amount as the Committee in its discretion shall specify, on the basis of the achievement of Company-wide financial performance. In no event will the Unit Performance Incentive exceed 200% of target Unit Performance Incentive; and in no event will the aggregate
Financial Performance Incentive and Unit Performance Incentive for any employee exceed 200% of Base Salary.
The Committee in its sole and absolute discretion may reduce the Unit Performance Incentive otherwise determined under this Incentive Program for any Participant for any reason.
The Committee may determine that a Participant or any class or group of Participants shall be entitled to a bonus (a "Discretionary Incentive") in an amount determined by the Committee upon a determination by the Committee in its sole discretion, which may take into account individual efforts and contributions of the Participant not necessarily reflected in Company-wide financial performance or business unit performance. The sum of the actual Financial Performance Incentive, Unit Performance Incentive and Discretionary Incentive for any Participant for a Bonus Year will not exceed 200% of Base Salary for the Bonus Year.
Incentive Bonus under this Incentive Program will be payable in cash as soon as practicable after the Committee has certified the achievement of the Company-wide financial performance goal for the Bonus Year and the amount of the incentive bonus is determined.
This Incentive Program shall be effective, beginning with the Company's fiscal year 2000, upon its approval by the shareholders of Chicago Bridge & Iron Company N.V.
The Committee may, without further action by the shareholders, amend this Incentive Program from time to time, effective prospectively or retroactively, in any manner the Committee deems desirable provided, however, that no such amendment shall enlarge the class of employees who may be Participants in this Incentive Program, add to the permitted performance measures for the Financial Performance Incentive, or increase the maximum bonus payable under this Incentive beyond 200% of any Participant's base salary, without the consent of the shareholders of Chicago Bridge & Iron Company N.V.
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF MARCH 31, 1999, AND THE INCOME STATEMENT FOR THE THREE MONTHS ENDED MARCH 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | DEC 31 1999 |
| PERIOD END | MAR 31 1999 |
| CASH | 5,649 |
| SECURITIES | 0 |
| RECEIVABLES | 133,420 |
| ALLOWANCES | 2,446 |
| INVENTORY | 1,398 |
| CURRENT ASSETS | 211,504 |
| PP&E | 154,942 |
| DEPRECIATION | (45,960) |
| TOTAL ASSETS | 351,329 |
| CURRENT LIABILITIES | 148,614 |
| BONDS | 30,000 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 74 |
| OTHER SE | 103,696 |
| TOTAL LIABILITY AND EQUITY | 351,329 |
| SALES | 0 |
| TOTAL REVENUES | 170,681 |
| CGS | 0 |
| TOTAL COSTS | 152,679 |
| OTHER EXPENSES | (546) |
| LOSS PROVISION | 396 |
| INTEREST EXPENSE | 0 |
| INCOME PRETAX | 6,317 |
| INCOME TAX | 1,895 |
| INCOME CONTINUING | 4,226 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 4,226 |
| EPS PRIMARY | 0.37 |
| EPS DILUTED | 0.37 |