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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box: | |
[ ] | Preliminary Proxy Statement |
[ ] | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
[X] | Definitive Proxy Statement |
[ ] | Definitive Additional Materials |
[ ] | Soliciting Material Pursuant to §240.14a-12 |
McDermott International | ||
(Name of Registrant as Specified In Its Charter) | ||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||
Payment of Filing Fee (Check the appropriate box): | ||
[X] | No fee required. | |
[ ] | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. | |
1) | Title of each class of securities to which transaction applies: | |
2) | Aggregate number of securities to which transaction applies: | |
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |
4) | Proposed maximum aggregate value of transaction: | |
5) | Total fee paid: | |
[ ] | Fee paid previously with preliminary materials. | |
[ ] | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |
1) | Amount Previously Paid: | |
2) | Form, Schedule or Registration Statement No.: | |
3) | Filing Party: | |
4) | Date Filed: | |
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McDermott International, Inc. | ||
Bruce W. Wilkinson | 1450 Poydras Street | |
Chairman of the Board and | P.O. Box 61961 | |
Chief Executive Officer | New Orleans, Louisiana 70161-1961 |
Sincerely yours, | |
BRUCE W. WILKINSON |
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1. To elect Class I and Class III Directors; | |
2. To ratify the decision of our Audit Committee and Board of Directors to retain PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2005; and | |
3. To transact such other business as may properly come before the meeting or any adjournment thereof. |
By Order of the Board of Directors, | |
JOHN T. NESSER, III | |
Secretary |
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• | the election of Roger A. Brown, Oliver D. Kingsley, Jr. and Bruce W. Wilkinson to Class I of our Board of Directors; | |
• | the election of Ronald C. Cambre and Bruce DeMars to Class III of our Board of Directors; and | |
• | the ratification of the decision of our Audit Committee and Board of Directors to retain PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2005. |
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• | to meet any legal requirements; | |
• | in limited circumstances such as a proxy contest in opposition to our Board of Directors; | |
• | to permit independent inspectors of election to tabulate and certify your vote; or | |
• | to adequately respond to your written comments on your proxy card. |
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Director | ||||||||
Name and Principal Occupation | Age | Since | ||||||
Class I Nominees | ||||||||
Roger A. Brown | 60 | 2005 | ||||||
Mr. Brown has been President of Smith Technologies, a business unit of Smith International, Inc., a supplier of goods and services to the oil and gas exploration and production industry, the petrochemical industry and other industrial markets, since July 1998. Mr. Brown also served as President of another business unit of Smith International, Inc., Smith Diamond Technology, from April 1995 to July 1998. | ||||||||
Oliver D. Kingsley, Jr. | 62 | 2004 | ||||||
Until his retirement in November 2004, Mr. Kingsley served as President and Chief Operating Officer of Exelon Corporation (an integrated utility company) from May 2003, Senior Executive Vice President from February 2002 and President and Chief Nuclear Officer from October 2000. Mr. Kingsley also served as President and Chief Executive Officer of Exelon’s subsidiary, Exelon Generation, from February 2000 to November 2004 and as President and Chief Nuclear Officer of Unicom Corporation (an integrated electric utility company) from November 1997 to October 2000. | ||||||||
Bruce W. Wilkinson | 60 | 2000 | ||||||
Mr. Wilkinson has been Chairman of the Board and Chief Executive Officer of McDermott since August 2000. Mr. Wilkinson served as President and Chief Operating Officer of McDermott from April 2000 to August 2000 and President and Chief Operating Officer of our subsidiary J. Ray McDermott, S.A. from July 2002 through February 2003. Previously, he was: a principal of Pinnacle Equity Partners, L.L.C. (a private equity group) from May 1999 to April 2000; Chairman and Chief Executive Officer of Chemical Logistics Corporation (a company formed to consolidate chemical distribution companies) from April 1998 to April 1999; President and Chief Executive Officer of Tyler Corporation (a diversified manufacturing and service company) from April 1997 to October 1997; Interim President and Chief Executive Officer of Proler International, Inc. (a ferrous metals recycling company) from July 1996 to December 1996; Chairman and Chief Executive Officer of CRSS, Inc. (a global engineering and construction services company) from October 1989 to March 1996; and President and Chief Executive Officer of CRSS, Inc. from 1982 to 1989. He is also a director of Cooper Cameron Corporation. |
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Director | ||||||||
Name and Principal Occupation | Age | Since | ||||||
Class III Nominees | ||||||||
Ronald C. Cambre | 66 | 2000 | ||||||
Until December 2001, Mr. Cambre was Chairman of the Board of Newmont Mining Corporation (an international mining company) from January 1995 and served as its Chief Executive Officer from November 1993 until his retirement in December 2001. He was also President of Newmont Mining Corporation from June 1994 to July 1999. Mr. Cambre is also a director of Cleveland-Cliffs Inc., W. R. Grace & Co. and Inco Limited. | ||||||||
Bruce DeMars | 69 | 1997 | ||||||
Admiral DeMars has been a Partner in RSD, LLC, a firm that introduces new products and services to industry and government, since August 2001. Previously, he was a Partner in the Trident Merchant Group and also Chief Executive Officer of the Non-Proliferation Trust, Inc. from February 1998 to June 2001. From 1988 until his retirement from the Navy in October 1996, Admiral DeMars was Director, Naval Nuclear Propulsion, a joint Department of the Navy/ Department of Energy program responsible for the design, construction, maintenance, operation and final disposal of reactor plants for the United States Navy. He is also the Non-Executive Chairman of the Board of Directors of Duratek, Inc. and a director of Exelon Corporation. |
Director | ||||||||
Name and Principal Occupation | Age | Since | ||||||
Class II Directors | ||||||||
Joe B. Foster | 70 | 1999 | ||||||
Mr. Foster served as the Non-Executive Chairman of Newfield Exploration Company (an oil and natural gas exploration and production company) from January 2000 to September 2004. Prior to that time, he served as President, Chief Executive Officer and Chairman of the Board of Newfield Exploration Company from January 1989 to May 1999 and as Chief Executive Officer and Chairman of the Board from May 1999 to January 2000. From January 2000 to August 2000, he served as Interim Chairman of the Board, President and Chief Executive Officer of Baker Hughes Incorporated (an oilfield services company). He was also Executive Vice President of Tenneco Inc. from 1981 to 1988 and a director of Tenneco Inc. from 1983 to 1988. Mr. Foster is a past Chairman of the National Petroleum Council and has been a member of the Offshore Committee of the Independent Petroleum Association of America. He currently serves on the Board of Directors of Newfield. | ||||||||
Robert L. Howard | 68 | 1997 | ||||||
Until his retirement in March 1995, Mr. Howard was Vice President of Domestic Operations, Exploration and Production of Shell Oil Company, and President of Shell Western Exploration and Production Inc. from 1992, and President of Shell Offshore, Inc. from 1985. He is also a director of Southwestern Energy Company and Devon Energy Corporation. | ||||||||
D. Bradley McWilliams | 63 | 2003 | ||||||
From April 1995 until his retirement in April 2003, Mr. McWilliams was Senior Vice President and Chief Financial Officer of Cooper Industries Ltd., a worldwide manufacturer of electrical products, tools and hardware. He was Vice President of Cooper Industries from 1982 until April 1995. He is also a director of Kronos Incorporated. | ||||||||
Thomas C. Schievelbein | 51 | 2004 | ||||||
Until his retirement in November 2004, Mr. Schievelbein was President of Northrop Grumman Newport News, a subsidiary of the Northrop Grumman Corporation, a global defense company, from November 2001. From October 1995 to October 2001, he served as Executive Vice President and Chief Operating Officer of Newport News Shipbuilding, Inc. |
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Director | Audit | Compensation | Governance | |||||||||
Roger A. Brown | ü | ü | ||||||||||
Ronald C. Cambre | ü | ü | ||||||||||
Bruce DeMars | ü | Chair | ||||||||||
Joe B. Foster | ü | ü | ||||||||||
Robert L. Howard | Chair | ü | ||||||||||
Oliver D. Kingsley, Jr. | ü | ü | ||||||||||
D. Bradley McWilliams | Chair | ü | ||||||||||
Thomas C. Schievelbein | ü | ü | ||||||||||
Richard E. Woolbert | ü | ü |
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• | have a record of integrity and ethics in his/her personal and professional life; | |
• | have a record of professional accomplishment in his/her field; | |
• | be prepared to represent the best interests of our stockholders; | |
• | not have a material personal, financial or professional interest in any competitor of ours; and | |
• | be prepared to participate fully in Board activities, including active membership on at least one Board committee and attendance at, and active participation in, meetings of the Board and the committee of which he or she is a member, and not have other personal or professional commitments that would, in the Governance Committee’s sole judgment, interfere with or limit his or her ability to do so. |
• | each candidate should contribute positively to the collaborative culture among Board members; and | |
• | each candidate should possess professional and personal experiences and expertise relevant to our businesses and industry. |
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Audit Committee Charter Governance Committee Charter Compensation Committee Charter Code of Ethics for CEO and Senior Financial Officers Corporate Governance Guidelines Board of Directors Conflicts of Interest Policies and Procedures Officers, Board Members & Contact Information By-laws |
• | each nonemployee director receives an annual stipend of $40,000; | |
• | each nonemployee director receives a fee of $2,500 for each Board meeting personally attended and a fee of $1,000 for each Board meeting in which such director participates by telephone; | |
• | the lead director receives an annual fee of $5,000; | |
• | the chairman of the Audit Committee receives an annual fee of $7,500; | |
• | the chairman of each other Board committee receives an annual fee of $5,000; | |
• | each other member of a Board committee receives an annual fee of $2,500 per committee; and | |
• | each committee member also receives a fee of $1,750 for each committee meeting personally attended and a fee of $1,000 for each committee meeting in which such director participates by telephone. |
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• | each nonemployee director is granted options to purchase 900 shares of our common stock on the first day of the first year of such director’s term and 300 shares on the first day of any subsequent year of such term; | |
• | the options have an exercise price equal to the fair market value of our common stock (average of high and low trading price) on the date of grant, become fully exercisable six months after the date of grant, and remain exercisable for ten years after the date of grant; | |
• | each nonemployee director is also granted rights to purchase 450 restricted shares of our common stock on the first day of the first year of such director’s term and 150 restricted shares on the first day of any subsequent year of such term at $1.00 per share; | |
• | the shares of restricted stock are subject to transfer restrictions and forfeiture provisions, which generally lapse at the end of a director’s term; | |
• | if a change in control of our company occurs, all transfer restrictions and forfeiture provisions on the shares of restricted stock will lapse and all outstanding stock options will become immediately exercisable; and | |
• | we granted options to purchase 4,725 shares of our common stock and 2,363 shares of restricted stock during the year ended December 31, 2004. |
• | options, restricted stock, performance units and deferred stock units may be granted, from time to time, to directors in such number, and on such terms, as the Compensation Committee or the Board of Directors may determine; | |
• | any options granted must have an exercise price that is not less than the fair market value of our common stock (average of high and low trading prices) on the date of grant; | |
• | the Compensation Committee or the Board of Directors determines when the options become exercisable and the duration of the options, provided that no option may be exercisable later than the tenth anniversary of the date of grant; | |
• | any shares of restricted stock, performance units and deferred stock units granted are subject to such vesting restrictions, transfer restrictions and forfeiture provisions as the Compensation Committee or the Board of Directors establishes; | |
• | the Compensation Committee or the Board of Directors determines the treatment of awards in the event of a change in control of our company on an individual award basis; and | |
• | we granted options to purchase 35,000 shares of our common stock and 3,500 shares of restricted stock to nonemployee directors during the year ended December 31, 2004. |
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Shares | ||||
Beneficially | ||||
Name | Owned | |||
Roger A. Brown(1) | 3,025 | |||
Ronald C. Cambre(2) | 18,622 | |||
Robert A. Deason(3) | 177,709 | |||
Bruce DeMars(4) | 23,668 | |||
John A. Fees(5) | 232,395 | |||
Joe B. Foster(6) | 34,309 | |||
Robert L. Howard(7) | 28,694 | |||
Francis S. Kalman(8) | 371,154 | |||
Oliver D. Kingsley, Jr.(9) | 75 | |||
D. Bradley McWilliams(10) | 2,188 | |||
John T. Nesser, III(11) | 415,570 | |||
Thomas C. Schievelbein(12) | 1,963 | |||
Bruce W. Wilkinson(13) | 1,196,841 | |||
Richard E. Woolbert(14) | 134,341 | |||
All directors and executive officers as a group (19 persons)(15) | 3,206,001 |
(1) | Shares owned by Mr. Brown include 25 restricted shares of common stock as to which he has sole voting power but no dispositive power. |
(2) | Shares owned by Mr. Cambre include 10,859 shares of common stock that he may acquire on the exercise of stock options, as described above, and 1,100 restricted shares of common stock as to which he has sole voting power but no dispositive power. |
(3) | Shares owned by Mr. Deason include 83,334 shares of common stock that he may acquire on the exercise of stock options, as described above, and 36,500 restricted shares of common stock as to which he has sole voting power but no dispositive power. Also includes 1,732 shares of common stock held in the McDermott Thrift Plan. |
(4) | Shares owned by Admiral DeMars include 12,884 shares of common stock that he may acquire on the exercise of stock options, as described above, and 1,100 restricted shares of common stock as to which he has sole voting power but no dispositive power. |
(5) | Shares owned by Mr. Fees include 175,770 shares of common stock that he may acquire on the exercise of stock options, as described above, 4,949 shares of common stock that he may acquire on the conversion of deferred stock units, as described above, and 36,700 restricted shares of common stock as to which he has sole voting power but no dispositive power. Also includes 5,105 shares of common stock held in the McDermott Thrift Plan. |
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(6) | Shares owned by Mr. Foster include 11,984 shares of common stock that he may acquire on the exercise of stock options, as described above, and 950 restricted shares of common stock as to which he has sole voting power but no dispositive power. |
(7) | Shares owned by Mr. Howard include 13,611 shares of common stock that he may acquire on the exercise of stock options, as described above, and 950 restricted shares of common stock as to which he has sole voting power but no dispositive power. |
(8) | Shares owned by Mr. Kalman include 237,701 shares of common stock that he may acquire on the exericise of stock options, as described above, and 79,200 restricted shares of common stock as to which he has sole voting power but no dispositive power. Also includes 1,058 shares of common stock held in the McDermott Thrift Plan and 21,000 shares held by a family limited partnership, of which he and his wife are the two sole general and limited partners. Mr. Kalman disclaims beneficial ownership of the 21,000 shares held by that family limited partnership, except to the extent of his pecuniary interest. |
(9) | Shares owned by Mr. Kingsley include 75 restricted shares of common stock as to which he has sole voting power but no dispositive power. |
(10) | Shares owned by Mr. McWilliams include 1,125 shares of common stock that he may acquire on the exercise of stock options, as described above, and 950 restricted shares of common stock as to which he has sole voting power but no dispositive power. |
(11) | Shares owned by Mr. Nesser include 275,067 shares of common stock that he may acquire on the exercise of stock options, as described above, 917 shares of common stock that he may acquire on the conversion of deferred stock units, as described above, and 71,300 restricted shares of common stock as to which he has sole voting power but no dispositive power. Also includes 4,154 shares of common stock held in the McDermott Thrift Plan. |
(12) | Shares owned by Mr. Schievelbein include 975 shares of common stock that he may acquire on the exercise of stock options, as described above, and 950 restricted shares of common stock as to which he has sole voting power but no dispositive power. |
(13) | Shares owned by Mr. Wilkinson include 833,300 shares of common stock that he may acquire on the exercise of stock options, as described above, and 172,100 restricted shares of common stock as to which he has sole voting power but no dispositive power. Also includes 3,024 shares of common stock held in the McDermott Thrift Plan. |
(14) | Shares owned by Mr. Woolbert include 56,619 shares of common stock that he may acquire on the exercise of stock options, as described above, and 650 restricted shares of common stock as to which he has sole voting power but no dispositive power. Also includes 5 shares of common stock held in a custodial account for an immediate family member under the Uniform Gifts to Minors Act as to which Mr. Woolbert disclaims beneficial ownership. |
(15) | Shares owned by all directors and executive officers as a group include 2,084,561 shares of common stock that may be acquired on the exercise of stock options, as described above, 11,749 shares of common stock that may be acquired on the conversion of deferred stock units, as described above, and 499,075 restricted shares of common stock as to which they have sole voting power but no dispositive power. Also includes 28,602 shares of common stock held in the McDermott Thrift Plan. |
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Amount and | ||||||||||
Nature of | ||||||||||
Beneficial | Percent of | |||||||||
Title of Class | Name and Address of Beneficial Owner | Ownership | Class(1) | |||||||
Common Stock | Third Point Management Company L.L.C. | 4,225,000 | (2) | 6.3 | % | |||||
360 Madison Ave., 24th Floor | ||||||||||
New York, NY 10017 | ||||||||||
Common Stock | Vanguard Fiduciary Trust Company, | 4,074,166 | (3) | 6.0 | % | |||||
in its capacity as trustee for our | ||||||||||
employee benefit plan | ||||||||||
500 Admiral Nelson Blvd. | ||||||||||
Malvern, PA 19355 | ||||||||||
Common Stock | Al A. Gonsoulin | 4,000,000 | (4) | 5.9 | % | |||||
4655 Sweetwater Blvd., Suite 300 | ||||||||||
Sugar Land, TX 77479 | ||||||||||
Common Stock | Glenview Capital Management, LLC | 3,538,362 | (5) | 5.2 | % | |||||
399 Park Ave., Floor 39 | ||||||||||
New York, NY 10022 | ||||||||||
Common Stock | American Express Financial Corporation | 3,451,000 | (6) | 5.1 | % | |||||
200 AXP Financial Center | ||||||||||
Minneapolis, MN 55474 |
(1) | Percent is based on the outstanding shares of our common stock on March 1, 2005. |
(2) | As reported on Schedule 13G and other filings filed with the SEC on April 1, 2004 and February 14, 2005. According to the filings, each of Third Point Management Company L.L.C. (“Third Point Management”) and Mr. Daniel Loeb, the managing member of Third Point Management, has shared voting and dispositive power over 4,225,000 shares and sole voting or dispositive power over no shares. |
(3) | As reported on a Schedule 13G filed with the SEC on February 2, 2005. According to the filing, Vanguard Fiduciary Trust Company has shared voting and dispositive power over 4,074,166 shares and sole voting or dispositive power over no shares. |
(4) | As reported on a Schedule 13G filed with the SEC on April 29, 2002. |
(5) | As reported on a Schedule 13G filed with the SEC on February 10, 2005. According to the filing, each of Glenview Capital Management, LLC (“Glenview Capital Management”), Glenview Capital GP, LLC (“Glenview Capital GP”), Glenview Capital Partners, L.P. (“Glenview Capital Partners”), Glenview Capital Master Fund, Ltd. (“Glenview Capital Master Fund”), Glenview Institutional Partners, L.P. (“Glenview Institutional Partners”) and Mr. Lawrence M. Robbins, the Chief Executive Officer of Glenview Capital Management and Glenview Capital GP, may be deemed to have shared voting and dispositive power over 3,358,362 shares and sole voting or dispositive power over no shares. Of the shares reported, 307,100 are held for the account of Glenview Capital Partners; 2,136,400 are held for the account of Glenview Capital Master Fund; 1,063,000 shares are held for the account of Glenview Institutional Partners; 56,700 shares are held for the account of GCM Little Arbor Master Fund, Ltd; 2,140 shares are held for the account of GCM Little Arbor Institutional Partners, L.P.; and 3,022 shares are held for the account of GCM Little Arbor Partners, L.P. |
(6) | As reported on a Schedule 13G filed with the SEC on February 11, 2005. According to the filing, American Express Financial Corporation has shared voting and dispositive power over 3,451,000 shares and sole voting and dispositive power over no shares. |
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• | Reviewing and approving the design of McDermott’s executive compensation programs and all salary arrangements that its executives receive; | |
• | Assessing the effectiveness of McDermott’s executive compensation programs in light of its compensation policies; and | |
• | Evaluating executive performance. |
• | Maximize profits; | |
• | Increase shareholder value; | |
• | Strengthen cash flow and liquidity; | |
• | Resolve B&W’s asbestos-related Chapter 11 reorganization proceeding in a timely and effective manner; | |
• | Reinforce operating discipline and excellence in each of McDermott’s operating groups; and | |
• | Pursue internal and external initiatives for growth. |
• | Manage compensation opportunities from a total compensation perspective that emphasizes at-risk compensation, while balancing short-term and long-term compensation to support McDermott’s business and financial strategic goals; | |
• | Structure compensation opportunities that are contingent on performance measures that drive growth and, to the extent possible, are fully competitive; | |
• | Reflect positive, as well as negative, company and individual performance in compensation; | |
• | Emphasize equity-based compensation for McDermott executives to reinforce management’s focus on shareholder value; | |
• | Structure compensation programs that are flexible and focus, as appropriate, on issues that are unique to individuals and business groups; and | |
• | Provide pay opportunities that will attract and retain executive talent. |
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• | Chief executive officer, 80%; | |
• | Business group presidents, 65%; | |
• | Other senior officers of McDermott International, Inc., 55%; and | |
• | Other elected officers of McDermott International, Inc. and business groups, 45% |
• | market practices among comparable and other companies; | |
• | level of responsibility; | |
• | individual performance; and | |
• | the potential of the grant recipient to affect future outcomes. |
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• | Various accrued benefits, such as earned but unpaid salary, earned but unused vacation and reimbursements, | |
• | A cash payment equal to the product of the EICP muliplier used for the executive officer and the executive officer’s annual base salary for the applicable period, in the event an EICP bonus for the year prior to termination is paid to other EICP participants after the date of the executive’s termination. For example, for an applicable termination in 2005, the cash payment would equal the executive officer’s target award percentage multiplied by the executive officer’s 2004 annual salary. | |
• | A prorated cash payment under the EICP based upon the executive officer’s target award for the year in which the termination occurs and the number of days in which the executive was employed with McDermott during that year. For example, for an applicable termination in 2005, the cash payment would equal the product of (1) the executive officer’s 2005 annual base salary multiplied by the executive officer’s 2005 EICP target percentage and (2) the number of days employed in 2005 divided by 365). | |
• | A cash payment equal to 200% of the executive’s annual base salary immediately prior to termination plus his EICP target bonus applicable to the year in which the termination occurs. For example, for an applicable termination in 2005, the cash payment would equal two times the sum of the executive officer’s 2005 annual base salary plus the executive officer’s target bonus. |
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• | In the event any payment is subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, an additional cash payment equal to such excise tax, as well as a gross-up payment for any resulting income or excise tax. |
THE COMPENSATION COMMITTEE | |
R. L. Howard, Chairman | |
R. A. Brown | |
R. C. Cambre | |
O. D. Kingsley, Jr. | |
D. B. McWilliams | |
T. C. Schievelbein | |
R. E. Woolbert |
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* | Assuming $100 invested on December 31, 1999 and reinvestment of dividends on quarterly basis. |
12/31/99 | 12/31/00 | 12/31/01 | 12/31/02 | 12/31/03 | 12/31/04 | |||||||||||||||||||
McDermott International | $ | 100.00 | $ | 119.94 | $ | 136.90 | $ | 48.87 | $ | 133.33 | $ | 204.85 | ||||||||||||
S&P 500 | $ | 100.00 | $ | 90.89 | $ | 80.14 | $ | 62.47 | $ | 80.35 | $ | 89.07 | ||||||||||||
2003 Peer Group | $ | 100.00 | $ | 97.47 | $ | 56.73 | $ | 53.08 | $ | 73.97 | $ | 110.96 | ||||||||||||
2004 Peer Group | $ | 100.00 | $ | 111.64 | $ | 69.83 | $ | 65.34 | $ | 88.47 | $ | 124.74 |
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Annual Compensation(1) | Long-Term Compensation | |||||||||||||||||||||||||||||||||
Awards | Payouts | |||||||||||||||||||||||||||||||||
Other | Restricted | Securities | ||||||||||||||||||||||||||||||||
Period | Annual | Stock | Underlying | LTIP | All Other | |||||||||||||||||||||||||||||
Name | Principal Position | Ended | Salary | Bonus | Comp.(2) | Awards(3) | Options | Payouts | Comp.(4) | |||||||||||||||||||||||||
B.W. Wilkinson | Chairman & Chief | 12/04 | $ | 650,000 | $ | 1,339,000 | (5) | — | $ | 545,279 | 129,200 | $ | 0 | $ | 6,151 | |||||||||||||||||||
Executive Officer | 12/03 | $ | 650,000 | $ | 0 | — | $ | 85,485 | 160,100 | $ | 0 | $ | 5,001 | |||||||||||||||||||||
12/02 | $ | 600,000 | $ | 144,000 | — | $ | 2,299,676 | 200,000 | $ | 0 | $ | 3,750 | ||||||||||||||||||||||
R.A. Deason | President & Chief | 12/04 | $ | 370,008 | $ | 647,967 | (6) | — | $ | 261,843 | 50,000 | $ | 0 | $ | 6,156 | |||||||||||||||||||
Operating Officer, | 12/03 | $ | 262,500 | (7) | $ | 50,000 | (8) | — | $ | 77,998 | 100,000 | $ | 0 | $ | 5,216 | |||||||||||||||||||
J. Ray McDermott | ||||||||||||||||||||||||||||||||||
J.A. Fees | President & Chief | 12/04 | $ | 410,694 | $ | 533,000 | — | $ | 112,250 | 54,300 | $ | 0 | $ | 6,157 | ||||||||||||||||||||
Operating Officer, | 12/03 | $ | 366,667 | $ | 416,520 | — | $ | 24,959 | 46,600 | $ | 0 | $ | 6,009 | |||||||||||||||||||||
BWX Technologies | 12/02 | $ | 280,208 | $ | 195,615 | — | $ | 348,293 | 64,800 | $ | 0 | $ | 4,508 | |||||||||||||||||||||
F.S. Kalman | Executive Vice President | 12/04 | $ | 400,000 | $ | 629,000 | (9) | — | $ | 303,434 | 63,700 | $ | 0 | $ | 6,156 | |||||||||||||||||||
& Chief Financial | 12/03 | $ | 380,000 | $ | 0 | — | $ | 45,239 | 84,700 | $ | 0 | $ | 2,377 | |||||||||||||||||||||
Officer | 12/02 | $ | 307,576 | (10) | $ | 200,000 | (11) | — | $ | 572,222 | 160,000 | $ | 0 | $ | 0 | |||||||||||||||||||
J.T. Nesser, III | Executive Vice President, | 12/04 | $ | 335,000 | $ | 526,788 | (12) | — | $ | 232,475 | 42,900 | $ | 0 | $ | 6,154 | |||||||||||||||||||
General Counsel & | 12/03 | $ | 317,040 | $ | 0 | — | $ | 29,327 | 55,000 | $ | 0 | $ | 6,010 | |||||||||||||||||||||
Corporate Secretary | 12/02 | $ | 317,040 | $ | 52,312 | $ | 107,405 | $ | 649,772 | 84,000 | $ | 0 | $ | 4,508 |
(1) | Includes salary and bonus earned in a fiscal year, whether or not deferred. Bonus amounts include bonuses paid in 2005, 2004 and 2003, but earned in fiscal years 2004, 2003 and 2002, respectively. |
(2) | The aggregate value of perquisites and other personal benefits received by a Named Executive Officer during a fiscal year is not included if it does not exceed the lesser of $50,000 or 10 percent of the total amount of such officer’s salary and bonus for that period. For purposes of determining whether perquisites exceeded that threshold amount, we did not assign any value to the inclusion of family members on charter flights, because we did not incur any incremental cost for the family member(s) to accompany the executive officer on those flights. The amount shown for Mr. Nesser in 2002 is attributable to relocation expenses. |
(3) | Includes restricted stock granted in 2004, 2003 and 2002 and restricted stock issued in 2002 as a result of performance share awards granted during fiscal year 2000. The restricted stock awards are valued at the closing market price of our common stock on the date of grant. The restricted stock issued as a result of the performance share awards are valued at the closing market price of common stock on the date the restricted stock was issued. McDermott waived the $1.00 per share payment requirement for the restricted stock issued as a result of the performance share awards. |
Shares of | Market | |||||||
Name | Restricted Stock | Value | ||||||
Mr. Wilkinson | 196,243 | $ | 3,603,021 | |||||
Mr. Deason | 50,243 | $ | 922,461 | |||||
Mr. Fees | 36,700 | $ | 673,812 | |||||
Mr. Kalman | 86,057 | $ | 1,580,007 | |||||
Mr. Nesser | 77,043 | $ | 1,414,509 |
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Dividends, if any, would be paid on restricted stock at the same time and at the same rate as dividends paid to all stockholders. Grants of restricted stock in 2004 vest over a period of three to five years from the grant date, based upon the attainment of predetermined financial goals. The above share amounts include grants of restricted stock of 37,143, 21,143, 22,857 and 19,143 to Messrs. Wilkinson, Deason, Kalman and Nesser, respectively, granted in May 2004 under our Key Executive Retention Program (“KERP”), discussed above under “Compensation Committee Report,” and which vested in quarterly installments through March 1, 2005. |
(4) | Amounts shown for each Named Executive Officer for the fiscal years ended 2002, 2003 and 2004 are attributable to our matching contributions to the officer’s contribution under the McDermott Thrift Plan. |
(5) | Includes cash retention payments made to Mr. Wilkinson of $325,000 under our KERP. |
(6) | Includes cash retention payments made to Mr. Deason of $185,004 under our KERP. |
(7) | Reflects only the compensation paid to Mr. Deason from the time he joined our company in March 2003. |
(8) | Reflects a $50,000 signing bonus. |
(9) | Includes cash retention payments made to Mr. Kalman of $200,000 under our KERP. |
(10) | Reflects only the compensation paid to Mr. Kalman from the time he joined our company in February 2002. |
(11) | Includes a $100,000 signing bonus. |
(12) | Includes cash retention payments made to Mr. Nesser of $167,500 under our KERP. |
Individual Grants(1) | ||||||||||||||||||||||||
Number of | Potential Realizable Value | |||||||||||||||||||||||
Securities | % of Total | at Assumed Annual Rates | ||||||||||||||||||||||
Underlying | Options | of Stock Price Appreciation | ||||||||||||||||||||||
Options | Granted to | for Option Term(4) | ||||||||||||||||||||||
Granted | Employees | Exercise Price | Expiration | |||||||||||||||||||||
Name | in 2004 | in 2004(2) | (per Share)(3) | Date | 5% | 10% | ||||||||||||||||||
B.W. Wilkinson | 129,200 | 14.53 | $ | 9.01 | 03/18/14 | $ | 732,091 | $ | 1,855,263 | |||||||||||||||
R.A. Deason | 50,000 | 5.62 | $ | 9.01 | 03/18/14 | $ | 283,317 | $ | 717,981 | |||||||||||||||
J.A. Fees | 54,300 | 6.11 | $ | 9.01 | 03/18/14 | $ | 307,682 | $ | 779,727 | |||||||||||||||
F.S. Kalman | 63,700 | 7.16 | $ | 9.01 | 03/18/14 | $ | 360,946 | $ | 914,708 | |||||||||||||||
J.T. Nesser, III | 42,900 | 4.82 | $ | 9.01 | 03/18/14 | $ | 243,086 | $ | 616,028 |
(1) | Options granted in the year ended December 31, 2004 vest in equal installments of one-third on the first, second and third anniversaries of the date of grant and expire ten years from the date of grant. In general, vesting is contingent on continuing employment with us or one of our subsidiaries. In the event of a “change in control” of our company, all outstanding options will vest and become immediately exercisable. |
(2) | Based on options to acquire 889,131 shares of common stock granted to all employees of McDermott and its subsidiaries during the year ended December 31, 2004. |
(3) | Fair market value on the date of grant, based on the average of the high and low sales prices reported on the New York Stock Exchange on that date. |
(4) | Potential Realizable Value is based on the assumed annual growth rates for each of the grants shown over their ten-year option term. For example, if the exercise price is $9.01, a 5% annual growth rate over ten |
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years results in a stock price of $14.68 per share, and a 10% rate results in a price of $23.37 per share. Actual gains, if any, on stock option exercises depend on the future performance of our common stock. Zero percent appreciation in the price of our common stock will result in no gain. |
Total Number of | Total Value of Unexercised, | |||||||||||||||||||||||
Unexercised Options | In-the-Money Options | |||||||||||||||||||||||
Shares | at Fiscal Year-End | at Fiscal Year-End | ||||||||||||||||||||||
Acquired on | Value | |||||||||||||||||||||||
Name | Exercise | Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
B.W. Wilkinson | 0 | $ | 0 | 670,200 | 302,600 | $ | 5,112,602 | $ | 3,081,199 | |||||||||||||||
R.A. Deason | 0 | $ | 0 | 33,334 | 116,666 | $ | 506,177 | $ | 1,478,573 | |||||||||||||||
J.A. Fees | 0 | $ | 0 | 131,204 | 106,966 | $ | 922,992 | $ | 1,142,843 | |||||||||||||||
F.S. Kalman | 0 | $ | 0 | 134,901 | 173,499 | $ | 1,066,965 | $ | 1,770,551 | |||||||||||||||
J.T. Nesser, III | 0 | $ | 0 | 214,434 | 107,566 | $ | 1,210,688 | $ | 1,064,196 |
• | Various accrued benefits, such as earned but unpaid salary, earned but unused vacation and reimbursements. | |
• | A cash payment equal to the product of the Executive Incentive Compensation Plan (“EICP”) muliplier used for the executive officer and the executive officer’s annual base salary for the applicable period, in the event an EICP bonus for the year prior to termination is paid to other EICP participants after the date of the executive’s termination. For example, for an applicable termination in 2005, the cash payment would equal the executive officer’s target award percentage multiplied by the executive officer’s 2004 annual salary. | |
• | A prorated cash payment under the EICP based upon the executive officer’s target award for the year in which the termination occurs and the number of days in which the executive was employed with McDermott during that year. For example, for an applicable termination in 2005, the cash payment would equal the product of (1) the executive officer’s 2005 annual base salary multiplied by the executive officer’s 2005 EICP target percentage and (2) the number of days employed in 2005 divided by 365). |
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• | A cash payment equal to 200% of the executive’s annual base salary immediately prior to termination plus his EICP target bonus applicable to the year in which the termination occurs. For example, for an applicable termination in 2005, the cash payment would equal two times the sum of the executive officer’s 2005 annual base salary plus the executive officer’s target bonus. | |
• | In the event any payment is subject to the excise tax imposed by section 4999 of the Internal Revenue Code of 1986, as amended, an additional cash payment equal to such excise tax, as well as a gross-up payment for any resulting income or excise tax. |
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Annual Benefits at Age 65 for Years of Service Indicated | ||||||||||||||||||||||||||||
Final Average Earnings | 10 | 15 | 20 | 25 | 30 | 35 | 40 | |||||||||||||||||||||
$275,000 | 43,585 | 65,377 | 87,169 | 108,961 | 130,754 | 152,546 | 174,338 | |||||||||||||||||||||
$300,000 | 47,751 | 71,627 | 95,502 | 119,378 | 143,254 | 167,129 | 191,005 | |||||||||||||||||||||
$325,000 | 51,918 | 77,877 | 103,836 | 129,795 | 155,754 | 181,713 | 207,671 |
Annual Benefits at Age 65 for Years of Service Indicated | ||||||||||||||||||||||||||||
B&W Final Average Earnings | 10 | 15 | 20 | 25 | 30 | 35 | 40 | |||||||||||||||||||||
400,000 | 50,000 | 75,000 | 100,000 | 125,000 | 150,000 | 175,000 | 200,000 | |||||||||||||||||||||
500,000 | 62,500 | 93,750 | 125,000 | 156,250 | 187,500 | 218,750 | 250,000 | |||||||||||||||||||||
600,000 | 75,000 | 112,500 | 150,000 | 187,500 | 225,000 | 262,500 | 300,000 |
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Initial | 2005 | Aggregate | Vested | |||||||||||||
Name | Contribution | Contribution | Account Value | Percentage | ||||||||||||
B.W. Wilkinson | $ | 552,277 | $ | 32,500 | $ | 600,032 | 0 | % | ||||||||
R.A. Deason | $ | 77,643 | $ | 18,500 | $ | 98,921 | 0 | % | ||||||||
J.A. Fees | $ | 33,825 | $ | 41,326 | $ | 77,286 | 0 | % | ||||||||
F.S. Kalman | $ | 124,603 | $ | 20,000 | $ | 148,945 | 0 | % | ||||||||
J. T.Nesser, III | $ | 347,037 | $ | 16,750 | $ | 372,864 | 0 | % |
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• | We discussed with PricewaterhouseCoopers LLP (“PWC”), McDermott’s independent registered public accounting firm for the year ended December 31, 2004, those matters required to be discussed by Statements on Auditing Standards Nos. 61 and 90, each as amended, issued by the Auditing Standards Board of the American Institute of Certified Public Accountants, including information regarding the scope and results of the audit. These communications and discussions are intended to assist us in overseeing the financial reporting and disclosure process. | |
• | We conducted periodic executive sessions with PWC, with no members of McDermott management present during those discussions. PWC did not identify any material audit issues, questions or discrepancies, other than those previously discussed with management, which were resolved to the satisfaction of all parties. | |
• | We conducted periodic executive sessions with McDermott’s internal audit department and regularly received reports regarding McDermott’s internal control procedures. | |
• | We required periodic reviews of improvements to McDermott’s project management systems, and supported and monitored management’s initiatives to revise, improve, and upgrade its project management systems, controls, and personnel. | |
• | We reviewed, and discussed with McDermott’s management and PWC, management’s report and PWC’s report and attestation on internal control over financial reporting, each of which was prepared in accordance with Section 404 of the Sarbanes-Oxley Act. | |
• | We received and reviewed the written disclosures and the letter from PWC required by the Independent Board’s Standard No. 1,Independence Discussions with Audit Committees, as amended, and we discussed with PWC its independence from McDermott. We also considered whether the provision of nonaudit services to McDermott is compatible with PWC’s independence. | |
• | During 2004, McDermott continued its migration to an internal audit function staffed primarily with company employees rather than outsourcing internal audit services. While McDermott increased the number of company internal audit employees in 2004, consultants continue to be engaged on an as-needed basis to provide particular areas of expertise. | |
• | We determined that there were no former PWC employees, who previously participated in the McDermott audit, engaged in the financial function of McDermott. |
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• | We reviewed, and discussed with McDermott’s management and PWC, McDermott’s audited consolidated balance sheet at December 31, 2004, and consolidated statements of income (loss), comprehensive income (loss), cash flows, and stockholders’ equity (deficit) for the year ended December 31, 2004. |
THE AUDIT COMMITTEE | |
D. Bradley McWilliams (Chairman) | |
Ronald C. Cambre | |
Bruce DeMars | |
Joe B. Foster | |
Thomas C. Schievelbein |
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2004 | 2003 | |||||||
Audit | ||||||||
The Audit fees for the years ended December 31, 2004 and 2003, respectively, were for professional services rendered for the audits of the consolidated financial statements of McDermott, internal control over financial reporting, statutory and subsidiary audits, reviews of the quarterly consolidated financial statements of McDermott, and assistance with review of documents filed with the SEC. | $ | 7,342,622 | $ | 4,368,562 | ||||
Audit Related | ||||||||
The Audit Related fees for the years ended December 31, 2004 and 2003, respectively, were for assurance and related services for employee benefit plan audits, agreed upon procedures engagements, accounting consultations, advisory services related to Sarbanes-Oxley Section 404 compliance, and professional services in connection with the issuance of J. Ray McDermott, S.A.’s 11% Senior Secured Notes during 2003. | $ | 1,442,216 | $ | 1,296,430 | ||||
Tax | ||||||||
The Tax fees for the years ended December 31, 2004 and 2003, respectively, were for professional services rendered for consultations on various U.S. federal, state and international tax matters, international tax compliance and tax planning, and assistance with tax examinations. | $ | 602,233 | $ | 437,046 | ||||
All Other | ||||||||
The fees for All Other services for the years ended December 31, 2004 and 2003, respectively, were for professional services rendered for risk management advisory services, translation services and other advisory or consultation services not related to audit or tax. | $ | 25,207 | $ | 96,920 | ||||
Total | $ | 9,412,278 | $ | 6,198,958 |
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By Order of the Board of Directors, | |
JOHN T. NESSER, III | |
Secretary |
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• | A director who is, or has been within the last three years, an employee, or whose immediate family member is, or has been within the last three years, an executive officer, of the Company shall not be determined to be independent. Employment as an interim Chairman or Chief Executive Officer or other executive officer of the Company shall not disqualify a director from being considered independent following that employment. | |
• | A director who received, or whose immediate family member received, during any twelve-month period within the last three years, more than $100,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), shall not be determined to be independent. Compensation received by a director for former service as an interim Chairman or Chief Executive Officer or other executive officer need not be considered in determining independence under this test. Compensation received by an immediate family member for service as an employee of the Company (other than an executive officer) shall not be considered in determining independence under this test. | |
• | A director shall not be determined to be independent if: (A) the director or an immediate family member is a current partner of a firm that is the Company’s internal or external auditor; (B) the director is a current employee of such a firm; (C) the director has an immediate family member who is a current employee of such a firm and who participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice; or (D) the director or immediate family member was within the last three years (but is no longer) a partner or employee of such a firm and personally worked on the Company’s audit within that time. | |
• | A director or an immediate family member who is, or has been with the last three years, employed as an executive officer of another entity where any of the Company’s current executive officers at the same time serves or served on that entity’s compensation committee shall not be determined to be independent. | |
• | A director who is a current employee, or whose immediate family member is a current executive officer, of an entity that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other entity’s consolidated gross revenues, shall not be determined to be independent. | |
• | A director who is a partner of or of counsel to a law firm that performs legal services for the Company on a regular basis shall not be determined to be independent. | |
• | A director who is a partner, officer or employee of an investment bank or consulting firm that performs substantial services for the Company on a regular basis shall not be determined to be independent. |
• | Is the director, or an immediate family member of the director, affiliated with or employed by a tax exempt organization that receives significant contributions (i.e., more than 2% of the annual contributions received by the organization, or more than $200,000 in a single fiscal year, whichever amount is lower) from the Company or any of its affiliates within the preceding fiscal year? |
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• | Does the director serve on so many other public company boards that his ability to devote sufficient time and attention to the Company’s affairs is compromised? |
• | The term “affiliate” of the Company is a person (including a partnership, corporation or other legal entity such as a trust or estate) that controls, is controlled by or is under common control with the Company. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person (whether through ownership of capital stock of that person, by contract or otherwise). | |
• | The term “immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than a domestic employee) who shares such person’s home. | |
• | References to the “Company” include any parent of subsidiary in a consolidated group with the Company. |
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I. | Purpose |
• | Serve as an independent and objective party to monitor the Company’s financial reporting process and internal control system. | |
• | Oversee the integrity of the financial statements of the Company. | |
• | Monitor the compliance by the Company with legal and regulatory financial requirements. | |
• | Evaluate the independence, qualifications and performance of the Company’s independent auditors. | |
• | Oversee the performance of the Company’s internal audit function. | |
• | Oversee certain aspects of the Company’s Compliance and Ethics Program relating to financial matters, books and records and accounting and as required by applicable statutes, rules and regulations. | |
• | Provide an open avenue of communication among the Company’s outside auditors, financial and senior management, the internal audit department and the Board. | |
• | Comply with the applicable reporting requirements established by the Securities and Exchange Commission (the “SEC”). |
II. Committee Composition |
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III. Meetings |
IV. Responsibilities and Duties |
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(1) reviewed and discussed the audited financial statements with management; | |
(2) discussed with the outside auditors matters requiring discussions by the Statement on Audit Standards (SAS) No. 61,Communication with Audit Committees; | |
(3) received the written disclosures and letter from the outside auditors required by Independence Standards Board No. 1, and discussed with the outside auditors their independence; and | |
(4) based on that review and discussion, recommended to the full Board that the audited financial statements be included in McDermott’s Annual Report on Form 10-K. |
(1) any determination the Board has made regarding the independence of directors; | |
(2) financial literacy of Committee members; | |
(3) the determination that at least one of the Committee members has accounting or related financial management expertise; and | |
(4) the annual review and reassessment of the adequacy of the Committee charter. |
• | Major issues regarding accounting principles and financial statement presentations, including any significant changes in the selection or application of accounting principles, any major issues concerning the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies. | |
• | Analyses prepared by management and/or the Company’s outside auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including analyses of the effects of alternative methods of generally accepted accounting principles on the financial statements. |
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McDERMOTT INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS
Wednesday, May 4, 2005
9:30 a.m.
Hotel Inter-Continental
Pelican I Room
444 St.Charles Avenue
New Orleans, Louisiana
Dear Stockholder:
McDermott International, Inc. encourages you to vote your shares electronically through the Internet or the telephone 24 hours a day, 7 days a week. This eliminates the need to return the proxy card.
1. | To vote over the Internet: |
• | Log on the Internet and go to the web site http://www.eproxyvote.com/mdr |
2. | To vote over the telephone: |
• | On a touch-tone telephone call 1-877-PRX-VOTE (1-877-779-8683) | |||
• | Outside of the U.S. and Canada call 201-536-8073. |
Your electronic vote authorizes the named proxies in the same manner as if you marked, signed, dated and returned the proxy card.
If you choose to vote your shares electronically, there is no need for you to mail back your proxy card.
Your vote is important. Thank you for voting.
PLEASE FOLD AND DETACH HERE IF YOU ARE NOT VOTING BY INTERNET OR TELEPHONE
McDERMOTT INTERNATIONAL, INC.
This Proxy Is Solicited on Behalf of the Board of Directors
P
R
O
X
Y
The undersigned hereby appoints John T. Nesser III and Francis S. Kalman, and each of them individually, as attorneys, agents and proxies of the undersigned, with full power of substitution and resubstitution, to vote all the shares of common stock of McDermott International, Inc. (“McDermott”) that the undersigned may be entitled to vote at McDermott’s Annual Meeting of Stockholders to be held on May 4, 2005, and at any adjournment or postponement of such meeting, as indicated on the reverse side hereof, with all powers which the undersigned would possess if personally present.
The undersigned acknowledges receipt of McDermott’s Annual Report for the fiscal year ended December 31, 2004 and its Notice of 2005 Annual Meeting of Stockholders and related Proxy Statement.
PLEASE MARK, SIGN AND DATE THE REVERSE SIDE OF THIS PROXY CARD AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
SEE REVERSE SIDE
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McDermott International, Inc.
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8242
EDISON, NJ 08818-8242
The EquiServe Vote by Telephone and Vote by Internet systems can be accessed
24-hours a day, seven days a week until 11:59 PM on 05/03/05.
Your vote is important. Please vote immediately.
Vote-by-Internet | ||
1. Log on to the Internet and go to http://www.eproxyvote.com/mdr | ||
2. Follow the easy steps outlined on the secured website. | ||
OR
Vote-by-Telephone | ||
1. Call toll-free 1-877-PRX-VOTE (1-877-779-8683) | ||
2. Follow the easy recorded instructions. | ||
If you vote over the Internet or by telephone, please do not mail your card.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
x | Please mark votes as in this example |
IMPORTANT–PLEASE MARK APPROPRIATE BOXES ONLY IN BLUE OR BLACK INK AS SHOWN ABOVE.
McDERMOTT INTERNATIONAL, INC. |
1. | Election of Directors: (the Directors recommend a vote “FOR”). |
FOR ALL NOMINEES | o | o | WITHHOLD FROM ALL NOMINEES |
o | ||
For all nominees except as written above |
FOR | AGAINST | ABSTAIN | ||||
2. Ratification of retention of PricewaterhouseCoopers LLP as McDermott’s independent registered public accounting firm for the year ending December 31, 2005 (the Directors recommend a vote “FOR”). | o | o | o |
Annual Report | ||
Mark here to discontinue annual report mailing for the account (for multiple-account holders only). | o |
Every properly signed Proxy will be voted in accordance with the specifications made thereon.If not otherwise specified, this Proxy will be voted FOR (1) the election of Directors to Class I, the election of Directors to Class III, and (2) the ratification of retention of PricewaterhouseCoopers LLP as McDermott’s independent registered public accounting firm. The proxy holders named on the reverse side also will vote in their discretion on any other matter that may properly come before the meeting.
NOTE: | Signature(s) should agree with name(s) on stock certificates as specified hereon. Executors, administrators, trustees, etc., should indicate when signing. All proxies heretofore given by the signatory to vote at such meeting or any adjournment or postponement thereof are hereby revoked. |
Signature: | Date: | Signature: | Date: |
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NOTICE TO PARTICIPANTS OF
THE THRIFT PLAN FOR EMPLOYEES OF McDERMOTT INCORPORATED
AND PARTICIPATING SUBSIDIARY AND AFFILIATED COMPANIES
April 8, 2005
Dear Thrift Plan Participant:
The Annual Meeting of Stockholders of McDermott International, Inc. (“McDermott”) will be held on Wednesday, May 4, 2005. Enclosed for your review are the Notice of McDermott’s Annual Meeting of Stockholders and the related Proxy Statement.
YOUR VOTE IS IMPORTANT!
As a participant in The Thrift Plan for Employees of McDermott Incorporated and Participating Subsidiary and Affiliated Companies (the “Thrift Plan”), you are strongly encouraged to direct Vanguard Fiduciary Trust Company (“Vanguard”), the trustee of your Thrift Plan, to vote your shares of McDermott common stock held in your separate Thrift Plan account.
PROVIDING YOUR INSTRUCTIONS TO VANGUARD
To instruct Vanguard how to vote the shares of McDermott common stock in your Thrift Plan account, you may vote by mail, telephone or the Internet. To vote by mail, complete, sign, and date the enclosed instruction form and mail it to Vanguard in the enclosed postage-paid reply envelope. If you wish to vote via telephone, please call1-888-221-0697and follow the appropriate prompts. If you wish to vote via the Internet, log on towww.401kproxy.comand follow the instructions provided. Regardless of the method you choose, your instructions must be received at Vanguard by the Thrift Plan Deadline, which is 4:00 p.m. Eastern time on Friday, April 29, 2005. Please note, should you elect to vote via telephone or Internet, there is no need to mail in your proxy card. Your telephone or Internet vote serves as an electronic ballot and provides instruction to vote your shares in the same manner as if you signed and returned your proxy card.
Your proxy voting direction will apply to shares held in your Thrift Plan account at the close of the New York Stock Exchange on the record date, March 28, 2005.
THE TERMS OF YOUR THRIFT PLAN
Please note the terms of your Thrift Plan provide that Vanguard will vote the shares of McDermott common stock held in your Thrift Plan account as directed. Additionally, any shares of McDermott common stock held in the Thrift Plan for which Vanguard does not receive timely participant directions generally will be voted by Vanguard in the same proportion as the shares for which Vanguard receives timely voting instructions from participants within the Thrift Plan.
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The enclosed information relates only to shares of McDermott common stock held in your Thrift Plan account. If you own other shares outside of the Thrift Plan, you should receive separate mailings relating to those shares.
YOUR DECISION IS CONFIDENTIAL
All instructions received by Vanguard from individual participants will be held in confidence and will not be divulged to any person, including McDermott, or any of their respective directors, officers, employees or affiliates.
FOR ADDITIONAL QUESTIONS
If you have any questions about the proxy solicitation by McDermott, please direct all inquiries to:
McDermott International, Inc.
1450 Poydras Street
New Orleans, LA 70112-6050
Attention: Corporate Secretary
Or call (504) 587-5400
Additionally, all proxy-solicitation materials are available online atwww.sec.gov. If you have questions on how to provide voting instructions to Vanguard, please contact Vanguard Participant Services weekdays during normal business hours at 1-800-523-1188.
Sincerely,
Vanguard Fiduciary Trust Company
Table of Contents
3 Easy Ways to Vote Your Voting Instruction Form
VOTE ON THE INTERNET | VOTE BY PHONE | VOTE BY MAIL | ||||||||||||||||
• Read the Proxy Statement and have | • Read the Proxy Statement and have | • Read the Proxy Statement and have | ||||||||||||||||
this card at hand | this card at hand | this card at hand | ||||||||||||||||
• Log on towww.401kproxy.com | • Call toll-free1-888-221-0697 | • Check the appropriate boxes on reverse | ||||||||||||||||
• Follow the on-screen instructions | • Follow the recorded instructions | • Sign and date proxy card | ||||||||||||||||
• Do not return this paper ballot | • Do not return this paper ballot | • Return promptly in the enclosed envelope | ||||||||||||||||
6 Please fold and detach card at perforation before mailing 6
CONFIDENTIAL VOTING INSTRUCTION FORM
The undersigned participant in The Thrift Plan for Employees of McDermott Incorporated and Participating Subsidiary and Affiliated Companies (the “Thrift Plan”) hereby directs Vanguard Fiduciary Trust Company (“Vanguard”), the trustee for the Thrift Plan, to vote all the shares of common stock (“common stock”) of McDermott International, Inc. (“McDermott”) held in the undersigned’s Thrift Plan account at McDermott’s Annual Meeting of Stockholders to be held in the Pelican I Room of the Hotel Inter-Continental, 444 St. Charles Avenue, New Orleans, Louisiana, on Wednesday, May 4, 2005, at 9:30 a.m. local time, and at any adjournment or postponement of such meeting, as indicated on the reverse side of this voting instruction form.
Every properly signed voting instruction form will be voted in accordance with the specifications made thereon. If your voting instruction form is not properly signed or dated or if no direction is provided, your shares generally will be voted in the same proportion as the shares for which Vanguard receives timely voting instructions from participants in the Thrift Plan.
THIS INSTRUCTION FORM MUST BE RECEIVED AT VANGUARD BY 4:00 p.m. Eastern time, Friday, April 29, 2005.
The undersigned acknowledges receipt of McDermott’s Annual Report for the fiscal year ended December 31, 2004 and its Notice of 2005 Annual Meeting of Stockholders and related Proxy Statement.
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Dated , 2005
SIGNATURE | (Please sign in Box) |
ê | ê | 131 kc |
Table of Contents
6 Please fold and detach card at perforation before mailing 6
ê | Please fill in box(es) as shown using black or blue ink. x PLEASE DO NOT USE FINE POINT PENS. | ê |
1. | Election of Directors: (the Directors recommend a vote “FOR”). | |
Nominees as Class I Directors: | ||
(01) Roger A. Brown, (02) Oliver D. Kingsley, Jr. and (03) Bruce W. Wilkinson. | ||
Nominees as Class III Directors: | ||
(04) Ronald C. Cambre and (05) Bruce DeMars. | ||
INSTRUCTION: To withhold authority to vote for any individual nominee(s), write the number(s) of the nominee(s) in the space provided above. |
FOR all nominees, except as specified at left. | WITHHOLD AUTHORITY for all nominees | |||
o | o |
2. | Ratification of retention of PricewaterhouseCoopers LLP as McDermott’s independent registered public accounting firm for the year ending December 31, 2005 (the Directors recommend a vote “FOR”). |
FOR | AGAINST | ABSTAIN | ||
o | o | o |
The terms of your Thrift Plan provide that Vanguard will vote the shares of McDermott common stock held in your Thrift Plan account as directed. Additionally, McDermott common stock held in the Thrift Plan for which Vanguard does not receive direction before 4:00 p.m. Eastern time, on Friday, April 29, 2005, generally will be voted by Vanguard in the same proportion as the shares for which Vanguard receives timely voting instructions from participants in the Thrift Plan.
ê | PLEASE SIGN AND DATE THE FRONT SIDE OF THIS VOTING INSTRUCTION FORM AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. | 131 kc | ê |