SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement.
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material under Rule 14a-12.
WILLBROS GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
Not Applicable
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[LOGO]
WILLBROS GROUP, INC.
PLAZA 2000 BUILDING
50TH STREET, 8TH FLOOR
P. O. BOX 0816-01098
PANAMA, REPUBLIC OF PANAMA
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 2004
To the Stockholders of WILLBROS GROUP, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Willbros
Group, Inc., a Republic of Panama corporation (the "Company"), will be held at
the Hotel Panama Marriott, Calle 52 y Ricardo Arias, Panama City, Panama, on
Thursday, May 20, 2004, at 9:00 a.m., local time, for the following purposes:
1. To elect two directors of the Company to Class II for three-year
terms;
2. To consider and act upon a proposal to approve an amendment to the
Willbros Group, Inc. 1996 Stock Plan to increase the number of
shares of Common Stock of the Company authorized for issuance
thereunder from 3,125,000 to 4,075,000 shares;
3. To consider and act upon a proposal to ratify the appointment of
KPMG LLP as the independent auditors of the Company for 2004; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 22, 2004,
as the record date for the meeting, and only holders of the Company's Common
Stock of record at such time will be entitled to vote at the meeting or any
adjournment thereof.
By Order of the Board of Directors,
Dennis G. Berryhill
Secretary
Panama City, Panama
April 23, 2004
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE, AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU
MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
[LOGO]
WILLBROS GROUP, INC.
PLAZA 2000 BUILDING
50TH STREET, 8TH FLOOR
P. O. BOX 0816-01098
PANAMA, REPUBLIC OF PANAMA
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 2004
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Willbros Group, Inc., a Republic of Panama corporation
(the "Company"), of proxies to be voted at the Annual Meeting of Stockholders of
the Company to be held on May 20, 2004, or at any adjournment thereof (the
"Annual Meeting"), for the purposes set forth in the accompanying Notice of
Annual Meeting. This Proxy Statement and accompanying proxy were first sent on
or about April 23, 2004, to stockholders of record on April 22, 2004.
If the accompanying proxy is properly executed and returned, the shares
represented by the proxy will be voted at the Annual Meeting. If a stockholder
indicates in his or her proxy a choice with respect to any matter to be acted
upon, that stockholder's shares will be voted in accordance with such choice. If
no choice is indicated, such shares will be voted "FOR" (a) the election of all
of the nominees for directors listed below, (b) the approval of the amendment to
the Willbros Group, Inc. 1996 Stock Plan, and (c) the ratification of the
appointment of the independent auditors. A stockholder giving a proxy may revoke
it by giving written notice of revocation to the Secretary of the Company at any
time before it is voted, by executing another valid proxy bearing a later date
and delivering such proxy to the Secretary of the Company prior to or at the
Annual Meeting, or by attending the Annual Meeting and voting in person.
The expenses of this proxy solicitation, including the cost of preparing
and mailing this Proxy Statement and accompanying proxy, will be borne by the
Company. Such expenses will also include the charges and expenses of banks,
brokerage firms and other custodians, nominees or fiduciaries for forwarding
solicitation material regarding the Annual Meeting to beneficial owners of the
Company's Common Stock. Solicitation of proxies may be made by mail, telephone,
personal interviews or by other means by the Board of Directors or employees of
the Company who will not be additionally compensated therefor, but who may be
reimbursed for their out-of-pocket expenses in connection therewith.
STOCKHOLDERS ENTITLED TO VOTE
Stockholders of record at the close of business on April 22, 2004, will be
entitled to vote at the Annual Meeting. As of March 31, 2004, there were issued
and outstanding 21,020,638 shares of Common Stock, par value $.05 per share of
the Company (the "Common Stock"). Each share of Common Stock is entitled to one
vote. There is no cumulative voting with respect to the election of directors.
The presence in person or by proxy of the holders of a majority of the shares
issued and outstanding at the Annual Meeting and entitled to vote will
constitute a quorum for the transaction of business. Votes withheld from
nominees for directors, abstentions and broker non-votes will be counted for
purposes of determining whether a quorum has been reached. Votes will be
tabulated by an inspector of election appointed by the Board of Directors of the
Company. With regard to the election of directors, votes may be cast in favor of
or withheld from each nominee; votes that are withheld will have the effect of a
negative vote. Abstentions, which may be specified on all proposals except the
election of directors, will have the effect of a negative vote. A broker
non-vote will have no effect on the outcome of the election of directors or the
other proposals.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Restated Articles of Incorporation of the Company (the "Charter")
provides that the Board of Directors of the Company (the "Board of Directors")
shall consist of not less than three nor more than fifteen directors, as
determined from time to time by resolution of the Board of Directors. The number
of directors is currently fixed at nine. The Board of Directors is divided into
three approximately equal classes. The terms of such classes are staggered so
that only one class is elected at the annual meeting of stockholders each year
for a three-year term. The term of the current Class II directors will expire at
the Annual Meeting. The terms of the current Class III directors and the current
Class I directors will expire at the annual meetings of stockholders to be held
in 2005 and 2006, respectively.
In accordance with the recommendation of the Nominating/Corporate
Governance Committee, the Board of Directors has nominated Rodney B. Mitchell
and S. Miller Williams for election as Class II directors. Mr. Mitchell, who
currently serves as a Class II director and whose term expires at the Annual
Meeting, is standing for re-election as a Class II director for a term expiring
at the annual meeting of stockholders in 2007. He was elected to the Board of
Directors in July 2001 and at that time was recommended to the
Nominating/Corporate Governance Committee by the Company's then Chief Executive
Officer. Mr. S. Miller Williams is a new nominee for director and is standing
for election as a Class II director for a term expiring at the annual meeting of
stockholders in 2007. He was recommended to the Nominating/Corporate Governance
Committee by the Company's President and Chief Executive Officer. John H.
Williams, age 85, and Michael J. Pink, age 66, who currently serve as Class II
directors and whose terms expire at the Annual Meeting, are not seeking
re-election as directors as they have elected to retire from the Board of
Directors as of the date of the Annual Meeting. S. Miller Williams is standing
for election to the Board position being vacated by Mr. Pink. S. Miller Williams
is the son of John H. Williams. The Board position being vacated by John H.
Williams will remain vacant. The Charter provides that any Board vacancies may
be filled by the affirmative vote of a majority of the remaining directors. The
Nominating/Corporate Governance Committee and the Board of Directors have not
yet identified anyone to fill the vacancy. Accordingly, the accompanying proxy
solicits your vote for only two directors. The persons named as proxies in the
accompanying proxy, who have been designated by the Board of Directors, intend
to vote, unless otherwise instructed in such proxy, for the election of Messrs.
Mitchell and M. Williams. Should any nominee named herein become unable for any
reason to stand for election as a director of the Company, it is intended that
the persons named in such proxy will vote for the election of such other person
or persons as the Nominating/Corporate Governance Committee may recommend and
the Board of Directors may propose to replace such nominee. The Company knows of
no reason why any of the nominees will be unavailable or unable to serve.
Guy E. Waldvogel, who has served as a director since 1990, retired from
the Board of Directors on March 10, 2004. S. Fred Isaacs was elected by the
Board of Directors on March 10, 2004, to fill the vacancy on the Board of
Directors created by Mr. Waldvogel's retirement.
The Company is grateful and appreciative of Messrs. Waldvogel's, Pink's
and J. Williams' many years of dedicated service to the Company and their
valuable counsel and business advice over the years.
On March 10, 2004, the Board of Directors elected Michael F. Curran as
Chairman of the Board of Directors. Mr. Curran succeeds Larry J. Bump who will
relinquish the Chairman's position at the Annual Meeting and remain a director
for the duration of his term, expiring in 2005. Mr. Curran will continue to
perform his duties as President and Chief Executive Officer.
The affirmative vote of the holders of a majority of the shares present in
person or by proxy at the Annual Meeting and entitled to vote is required for
the election of directors. The Board of Directors recommends a vote "FOR" each
of the following nominees for directors.
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NOMINEES FOR DIRECTORS
CLASS II
(TERM EXPIRES MAY 2007)
RODNEY B. MITCHELL, age 68, was elected to the Board of Directors in July
2001. Mr. Mitchell has over 30 years of experience in the investment management
business. He is President and Chief Executive Officer of The Mitchell Group,
Inc., an investment advisory firm he founded in 1989. Previously, Mr. Mitchell
was President and Chief Executive Officer of Talassi Management Company, another
investment advisory organization he formed in 1970.
S. MILLER WILLIAMS, age 52, has been Executive Vice President of Strategic
Development of Vartec Telecom, Inc., an international consumer
telecommunications services company, since August 2002 and Chief Financial
Officer of Vartec since November 2003. From 2000 to August 2003, he served as
Chairman of the Board of PowerTel, Inc., which provided telecommunications
services in Australia. From 1992 to 2002, he served in various executive
positions with Williams Communications Group, a subsidiary of The Williams
Companies that provided global network and broadband media services, most
recently as Senior Vice President and General Manager - International. He was
President and owner of MediaTech, Incorporated, a manufacturer and dealer of
computer tape and supplies, from 1987 until the company was sold in 1992.
One Board position in Class II will be vacant.
DIRECTORS CONTINUING IN OFFICE
CLASS III
(TERM EXPIRES MAY 2005)
LARRY J. BUMP, age 64, joined Willbros in 1977 as President and Chief
Operating Officer and was elected to the Board of Directors. Mr. Bump served as
Chief Executive Officer from 1980 until his retirement from the Company in May
2002. He was elected Chairman of the Board of Directors in 1981, and will
continue to serve in that capacity until the Annual Meeting. His 43-year career
includes significant U.S. and international pipeline construction management
experience. Prior to joining Willbros, he managed major international projects
in North Africa and the Middle East, and was Chief Executive Officer of a major
international pipeline construction company. Mr. Bump served two terms as
President of the International Pipeline & Offshore Contractors Association. He
also serves as a Director of EMCOR Group, Inc.
MICHAEL F. CURRAN, age 63, joined Willbros in March 2000 as a Director,
Vice Chairman of the Board of Directors, President and Chief Operating Officer.
Mr. Curran was named Chief Executive Officer in May 2002, and was elected as
Chairman of the Board of Directors in March 2004 to succeed Mr. Bump at the
Annual Meeting. He served from 1972 to 2000 as Chairman of the Board of
Directors and Chief Executive Officer of Michael Curran & Associates, a mainline
pipeline construction company in North America and West Africa, prior to joining
Willbros. Mr. Curran has over 42 years of diversified experience in pipeline
construction around the world, including 33 years as President and Chief
Executive Officer of various domestic and international pipeline construction
firms. Mr. Curran also served as President of the Pipe Line Contractors
Association.
S. FRED ISAACS, age 66, was elected to the Board of Directors in March
2004. Mr. Isaacs has been President of AI Services, Inc. (formerly SFI
Consulting, Inc.), an electrical engineering services company, since March 1997.
He was President of Computer Video Training, Inc., a consulting company, from
August 1995 to March 1997. From September 1992 to August 1995, he served as
President of SFI Consulting, Inc. and Chairman of the Board of Directors of
TranAm Systems International, Inc., a gas compression equipment company. Prior
to that time, he served in senior engineering and executive positions in the
pipeline industry for over 35 years, most recently as Senior Vice President of
Transportation of MAPCO, Inc. and President of Mid-America Pipeline Company and
Seminole Pipeline Company from January 1983 until his retirement from MAPCO,
Inc. in September 1992.
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CLASS I
(TERM EXPIRES MAY 2006)
PETER A. LEIDEL, age 47, was elected to the Board of Directors in 1992.
Since September 1997, Mr. Leidel has been a founder and partner in Yorktown
Partners, L.L.C., an investment management company. From 1983 to September 1997,
he was employed by Dillon, Read & Co., Inc., an investment banking firm, serving
most recently as a Senior Vice President.
JAMES B. TAYLOR, JR., age 65, was elected to the Board of Directors in
February 1999. Mr. Taylor is currently a Director of TMBR Sharp Drilling, Inc.
Mr. Taylor co-founded Solana Petroleum Corp., a Canadian-based public oil and
gas exploration and production company, in 1997 and served as Chairman of its
Board of Directors until December 2000. From 1996 to 1998, he was a Director and
consultant for Arakis Energy, a Canadian public company with operations in North
America and the Middle East. Prior to that time, he served for 28 years for
Occidental Petroleum Corporation in various worldwide exploration and operations
management positions before retiring in 1996 as Executive Vice President.
One Board position in Class I is currently vacant.
COMPENSATION OF DIRECTORS
Employee directors receive no additional compensation for service on the
Board of Directors or any committee thereof. Non-employee directors currently
receive an annual retainer of $30,000 plus a fee of $1,500 per meeting for
attending meetings of the Board of Directors. Non-employee directors also
receive fees for attending meetings of committees of the Board of Directors as
follows: chairman of the committee receives $2,500 per meeting and the other
members of the committee receive $1,500 per meeting.
Non-employee directors automatically receive non-qualified stock options
under the Willbros Group, Inc. Director Stock Plan, as amended (the "Director
Stock Plan"). Under the Director Stock Plan, an initial option to purchase 5,000
shares of Common Stock is granted to each new non-employee director on the date
such director is elected or appointed to the Board of Directors. Each
non-employee director also receives annually an option to purchase 5,000 shares
of Common Stock. Effective January 1, 2004, such annual option is granted on the
second Monday in January of each year during the period of such director's
incumbency. Prior to January 1, 2004, such option was granted on the annual
anniversary of the date on which such director received an initial option, and
on each succeeding annual anniversary of such date during the period of such
director's incumbency. The option exercise price of each option granted under
the Director Stock Plan is equal to the fair market value of the Common Stock on
the date of grant. A total of 225,000 shares of Common Stock is available for
issuance under the Director Stock Plan. During fiscal 2003, Mr. Taylor was
granted an option to purchase 5,000 shares of Common Stock at an exercise price
of $8.20 per share, Mr. Bump was granted an option to purchase 5,000 shares of
Common Stock at an exercise price of $9.63 per share, Mr. Mitchell was granted
an option to purchase 5,000 shares of Common Stock at an exercise price of
$10.31 per share, Messrs. Leidel and Waldvogel were each granted an option to
purchase 5,000 shares of Common Stock at an exercise price of $9.59 per share,
and Messrs. Pink and J. Williams were each granted an option to purchase 5,000
shares of Common Stock at an exercise price of $11.88 per share. No options have
been exercised under the Director Stock Plan.
All directors are reimbursed by the Company for out-of-pocket expenses
incurred by them in connection with their service on the Board of Directors and
any committee thereof.
The Company paid Mr. Bump $120,000 during 2003 for consulting services
consisting of advice and assistance rendered in connection with its business
activities.
CORPORATE GOVERNANCE AND BOARD MATTERS
The Board of Directors and corporate management utilize their best
individual efforts to adopt and implement best practices of corporate
governance. Each believes strongly that effective corporate governance practices
underpin its efforts to focus the entire organization on generating long-term
stockholder value through conscientious actions and in an ethical manner. The
directors have a wide range of business
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and industry experience, which provides insightful perspective on significant
matters and an understanding of the challenges facing the Company. The Company's
commitment to sound, independent oversight is demonstrated by the make-up of the
Board, which has been comprised of a majority of independent directors since the
Company's initial public offering in 1996.
In 2003, the Board of Directors implemented Corporate Governance
Guidelines, adopted an updated Code of Business Conduct and Ethics, and
established a Code of Ethics for the Chief Executive Officer and Senior
Financial Officers. The Corporate Governance Guidelines and Codes are available
on the Company's website at http://www.willbros.com.
The Company is committed and dedicated to employing sound, ethical
business practices, complying with the law in all areas of the world in which it
works, and demanding the highest standards of integrity from its employees.
There is common agreement that effective corporate governance requires the
checks and balances provided by a proactive Board of Directors and corporate
management actively engaged with others in the organization.
BOARD INDEPENDENCE. The Board of Directors has affirmatively determined
that each of Messrs. Isaacs, Leidel, Mitchell, Pink, Taylor and J. Williams,
current directors of the Company, and S. Miller Williams, the new nominee for
director, are "independent" under the current director independence standards of
the New York Stock Exchange. In so doing, the Board of Directors determined that
each of those individuals met the "bright line" independence standards of the
New York Stock Exchange and has no other material relationship with the Company
(either directly or as a partner, stockholder or officer of an organization that
has a relationship with the Company). In making the determination of
independence, the Board of Directors not only used the "bright line"
independence standards of the New York Stock Exchange, but also the standard
that no relationships exist that are required to be reported under the caption
"Certain Transactions" in this Proxy Statement pursuant to the rules and
regulations of the Securities and Exchange Commission. Mr. Bump is not
considered to be independent because of his former employment as a senior
executive officer of the Company and he receives more than $100,000 per year in
consulting fees. Mr. Curran is not considered to be independent because of his
employment as a senior executive officer of the Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS. During 2003, the Board
of Directors held four meetings. Each director was present at 75% or more of the
aggregate of the meetings of the Board of Directors and of the committees of the
Board of Directors on which he served during 2003.
Each director is encouraged to participate in annual meetings of
stockholders of the Company. However, since such meetings are held in Panama
City, Panama, are generally of a short duration, and the Board of Directors does
not generally have a meeting coincident with the annual meeting of stockholders,
it is often impractical and expensive for each director to attend in person.
Therefore, participation by either telephone or in person is encouraged. In
addition, as discussed below, the Board of Directors has a process in place by
which stockholders and other interested parties may communicate with the Board
of Directors or any of its directors. Two directors, Messrs. Bump and Curran,
attended the Company's 2003 Annual Meeting of Stockholders.
The Board of Directors has a standing Executive Committee, Audit
Committee, Compensation Committee and Nominating/Corporate Governance Committee.
Each of the current members of each of the committees, other than the Executive
Committee, qualifies as an "independent" director under the current listing
standards of the New York Stock Exchange.
Executive Committee. During 2003, the Executive Committee was composed of
Messrs. Curran (Chairman), Bump and J. Williams. The Executive Committee is
authorized to act for the Board of Directors in the management of the business
and affairs of the Company, except with respect to a limited number of matters
which include changing the size of the Board of Directors, filling vacancies on
the Board of Directors, amending the By-laws of the Company, disposing of all or
substantially all of the assets of the Company, and recommending to the
stockholders of the Company an amendment to the Articles of Incorporation of the
Company or a merger or consolidation involving the Company. The Executive
Committee did not meet during 2003.
5
Audit Committee. During 2003, the Audit Committee was composed of Messrs.
Leidel (Chairman), Mitchell, Taylor, and Waldvogel. The Board of Directors has
determined that it has at least one "audit committee financial expert" serving
on the Audit Committee and that person is Mr. Leidel. The Audit Committee has
adopted a written charter. In 2003, the Audit Committee amended and restated the
Audit Committee Charter to bring it current with the new regulations adopted by
the Securities and Exchange Commission and the New York Stock Exchange. This
charter is attached to this Proxy Statement as Exhibit A and is also available
on the Company's website at http://www.willbros.com. In addition, it adopted a
Procedure of the Audit Committee on Reporting and Investigating Complaints with
Regard to Possible Accounting Irregularities. The Audit Committee recommends to
the full Board of Directors the firm to be appointed each year as independent
auditors of the Company's financial statements and to perform services related
to the completion of such audit. The Audit Committee also has the responsibility
to (a) review the scope and results of the audit with the independent auditors,
(b) review with management and the independent auditors the Company's interim
and year-end financial condition and results of operations, (c) consider the
adequacy of the internal accounting, bookkeeping and other control procedures of
the Company, and (d) review and pre-approve any non-audit services and special
engagements to be performed by the independent auditors and consider the effect
of such performance on the auditors' independence. The Audit Committee also
generally reviews the terms of material transactions and arrangements, if any,
between the Company and its directors, officers and affiliates. The Audit
Committee held eight meetings during 2003.
Compensation Committee. During 2003, the Compensation Committee was
composed of Messrs. Taylor (Chairman), Mitchell, and Pink. The Compensation
Committee adopted a written charter in 2003. This charter is available on the
Company's website at http://www.willbros.com. The Compensation Committee reviews
and takes final action for and on behalf of the Board of Directors with respect
to compensation, bonus, incentive, and benefit provisions for the officers of
the Company and its subsidiaries, and administers the 1996 Stock Plan. The
Compensation Committee meets at such times as may be deemed necessary by the
Board of Directors or the Compensation Committee. The Compensation Committee
held four meetings during 2003.
Nominating/Corporate Governance Committee. During 2003, the
Nominating/Corporate Governance Committee was composed of Messrs. J. Williams
(Chairman), Bump, and Leidel. Mr. Bump resigned as a member of this Committee in
March 2004. In 2003, the Nominating/Corporate Governance Committee adopted a
written charter. This charter is available on the Company's website at
http://www.willbros.com. In addition, the Nominating/Corporate Governance
Committee approved and recommended, and the Board of Directors adopted,
Corporate Governance Guidelines. The Nominating/Corporate Governance Committee
is responsible for recommending candidates to fill vacancies on the Board of
Directors as such vacancies occur, as well as the slate of nominees for election
as directors by stockholders at each annual meeting of stockholders. The
Nominating/Corporate Governance Committee has the authority under its charter to
retain a professional search firm to identify candidates. It is also responsible
for developing and recommending to the Board of Directors the Corporate
Governance Guidelines applicable to the Company. Additionally, the
Nominating/Corporate Governance Committee makes recommendations to the Board of
Directors regarding changes in the size of the Board of Directors and recommends
nominees for each committee. The Nominating/Corporate Governance Committee held
two meetings during 2003.
CONSIDERATION OF DIRECTOR NOMINEES. The Nominating/Corporate Governance
Committee will consider director candidates submitted to it by other directors,
employees and stockholders. In evaluating such nominations, the
Nominating/Corporate Governance Committee seeks to achieve a balance of
knowledge, experience and capability on the Board of Directors and to address
the director qualifications discussed below. Any stockholder nominations
proposed for consideration by the Nominating/Corporate Governance Committee
should include the nominee's name and qualifications for director and should be
addressed to: Corporate Secretary, Willbros Group, Inc., c/o Willbros USA, Inc.,
4400 Post Oak Parkway, Suite 1000, Houston, Texas 77027. In addition, as
described below, the Company's Charter permits stockholders to nominate
directors for consideration at a meeting of stockholders.
The Nominating/Corporate Governance Committee regularly assesses the
appropriate size of the Board of Directors, and whether any vacancies on the
Board are expected due to retirement or otherwise. In the event that vacancies
are anticipated, or otherwise arise, the Committee considers various potential
6
candidates for director. Candidates may come to the attention of the Committee
through current directors, professional search firms, stockholders or other
persons.
Once a prospective nominee has been identified, the Committee makes an
initial determination as to whether to conduct a full evaluation of the
candidate. The initial determination focuses on the information provided to the
Committee with the recommendation of the prospective candidate and the
Committee's own knowledge of the candidate, which may be supplemented by
inquiries to the person making the recommendation or others. If the Committee
determines, after consultation with the Chairman of the Board of Directors and
other directors as appropriate, that additional consideration is warranted, it
may request a professional search firm to gather additional information about
the candidate. The Committee then evaluates the candidate against the
qualifications considered by the Committee for director candidates which include
an attained position of leadership in the candidate's field of endeavor,
business and financial experience, demonstrated exercise of sound business
judgment, expertise relevant to the Company's lines of business, and the ability
to serve the interests of all stockholders. The Committee also assesses the
candidate's qualifications as an "independent director" under the current
director independence standards of the New York Stock Exchange. The candidate
must be able to devote the time, energy and attention as may be necessary to
properly discharge his or her responsibilities as a director. As part of this
evaluation, one or more members of the Committee, and others as appropriate,
will interview the candidate. After completing this evaluation, the Committee
makes a recommendation to the full Board of Directors as to the persons who
should be nominated by the Board, and the Board determines the nominees after
considering the recommendation of the Committee.
The Company's Charter provides that nominations of candidates for election
as directors of the Company may be made at a meeting of stockholders by or at
the direction of the Board of Directors or by any stockholder entitled to vote
at such meeting who complies with the advance notice procedures set forth
therein. These procedures require any stockholder who intends to make a
nomination for director at the meeting to deliver notice of such nomination to
the Secretary of the Company not less than 45 nor more than 90 days before the
meeting. The notice must contain all information about the proposed nominee as
would be required to be included in a proxy statement soliciting proxies for the
election of such nominee, including such nominee's written consent to serve as a
director if so elected. If the Chairman of the meeting determines that a person
is not nominated in accordance with the nomination procedure, such nomination
will be disregarded. The Company expects that the annual meeting of stockholders
to be held each year will be during the early to mid part of May.
EXECUTIVE SESSIONS. Executive sessions of the non-management directors are
held periodically. The sessions are scheduled and chaired by the chairman of the
Nominating/Corporate Governance Committee. Any non-management director can
request that an additional executive session be scheduled. Executive sessions of
the independent directors only are held at least once a year.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS. The Board of Directors
provides a process by which stockholders and other interested parties may
communicate with the Board or any of the directors. Stockholders and other
interested parties may send written communications to the Board of Directors or
any of the directors at the following address: Corporate Secretary, Willbros
Group, Inc., c/o Willbros USA, Inc., 4400 Post Oak Parkway, Suite 1000, Houston,
Texas 77027. All communications will be compiled by the Company's Corporate
Secretary and submitted to the Board or the individual director on a periodic
basis.
PROPOSAL TWO
APPROVAL OF AMENDMENT NUMBER 4
TO THE WILLBROS GROUP, INC.
1996 STOCK PLAN
GENERAL
Stockholder action at the Annual Meeting will be requested with respect to
the approval of Amendment Number 4 (the "Amendment") to the Willbros Group, Inc.
1996 Stock Plan, as amended (the "1996 Stock
7
Plan"). The sole purpose of the Amendment is to increase the total number of
shares of Common Stock available for issuance under the 1996 Stock Plan from
3,125,000 shares to 4,075,000 shares. As of March 1, 2004, there were 402,588
remaining shares of Common Stock reserved for future grants of awards under the
1996 Stock Plan. If the Amendment to the 1996 Stock Plan is approved by the
stockholders of the Company, the total number of shares of Common Stock reserved
for future grants of awards under the 1996 Stock Plan would be 1,352,588 and
represent approximately 6.5% of the Company's total outstanding shares of Common
Stock on March 1, 2004.
While the Board of Directors is aware of the potential dilutive effect of
compensatory stock awards, it also recognizes the significant motivations and
performance benefits that are achieved from making such awards. Accordingly, in
determining the number of additional shares sought under the Amendment, the
Compensation Committee of the Board of Directors undertook a study of the 1996
Stock Plan and the Amendment with an internationally recognized global human
resources and compensation consulting firm. The review consisted of collecting
data from peer companies in the engineering/construction and oilfield services
industries on stock plan utilization levels, preparing information from key
published reports dealing with stock compensation, and evaluating the 1996 Stock
Plan features with respect to the market information collected. The study, among
other things, indicated that (a) the Company's utilization rates as a percentage
of shares of Common Stock outstanding, or potential dilutive effects, falls
below the peer group median; (b) the percentage of shares of Common Stock
outstanding utilized annually by the Company for stock-based pay was below the
peer group median in 2002, and was under 1% of shares of Common Stock
outstanding in the Company's January 12, 2004 grant of awards to key employees
under the 1996 Stock Plan; and (c) the request for stockholder approval of
950,000 additional shares being available for issuance under the 1996 Stock Plan
brings the Company, when compared to the peer companies, to the 50th percentile.
The additional shares represent less than 5% of the Company's Common Stock
outstanding as of March 1, 2004.
A copy of the Amendment is attached hereto as Exhibit B. A copy of the
1996 Stock Plan will be furnished by the Company to any stockholder upon written
request to: Dennis G. Berryhill, Corporate Secretary, Willbros Group, Inc., c/o
Willbros USA, Inc., 4400 Post Oak Parkway, Suite 1000, Houston, Texas 77027. The
Amendment, which was approved by the Board of Directors on March 10, 2004, will
not take effect unless approved by the affirmative vote of the holders of a
majority of the shares of Common Stock present in person or represented by proxy
at the Annual Meeting and entitled to vote.
The purpose of the 1996 Stock Plan is to strengthen the ability of the
Company to attract and retain well-qualified executive, managerial, and
professional personnel, and to encourage stock ownership by such personnel in
order to increase their proprietary interest in the Company's success. The
Company relies heavily upon stock options and restricted stock awards under the
1996 Stock Plan to compensate its executive, managerial, and professional
personnel, and to retain and motivate such personnel, and desires to continue
that practice because it believes that such awards encourage and reward
effective management that results in long-term corporate financial success, as
measured by stock price appreciation.
SUMMARY OF THE 1996 STOCK PLAN
General. In 1996, the Board of Directors adopted, and the stockholders of
the Company approved, the Willbros Group, Inc. 1996 Stock Plan. The 1996 Stock
Plan provides for awards to key employees of the Company, including officers and
directors who are also employees of the Company. The 1996 Stock Plan provides
that during any calendar year, no participant may be granted awards with respect
to more than 150,000 shares, subject to certain adjustments. The stock issuable
under the 1996 Stock Plan may be authorized and unissued shares or treasury
shares. If any shares subject to any award are forfeited or payment is made in a
form other than shares or the award otherwise terminates without payment being
made, the shares subject to such awards will again be available for issuance
under the 1996 Stock Plan. In addition, the number of shares deemed to be issued
under the 1996 Stock Plan upon exercise of a stock option will be reduced by the
number of shares surrendered in payment of the exercise or purchase price of
such stock option.
The 1996 Stock Plan is administered by the Compensation Committee of the
Board of Directors (the "Committee"). The members of the Committee are not
eligible for awards under the 1996 Stock Plan. The Committee is authorized to
determine plan participants, the types and amount of awards to be granted and
the
8
terms, conditions and provisions of awards, prescribe forms of award agreements,
interpret the 1996 Stock Plan, establish, amend and rescind rules and
regulations relating to the 1996 Stock Plan, and make all other determinations
which may be necessary or advisable for the administration of the 1996 Stock
Plan. Although a determination has not been made as to the number of employees
currently eligible for consideration as participants in the 1996 Stock Plan, as
of March 1, 2004, there were 136 employees who held awards under the 1996 Stock
Plan.
If the Amendment is approved, under the terms of the 1996 Stock Plan, no
more than 1,018,750 shares may be issued under the 1996 Stock Plan pursuant to
awards of restricted stock and/or restricted stock rights.
Summary of Awards. The 1996 Stock Plan permits the granting of any or all
of the following types of awards: (a) stock options, (b) stock appreciation
rights ("SARs"), and (c) restricted stock or restricted stock rights. Generally,
awards under the 1996 Stock Plan are granted for no consideration other than
prior and future services. Awards granted under the 1996 Stock Plan may, in the
discretion of the Committee, be granted alone or in addition to, in tandem with,
or in substitution for any other award under the 1996 Stock Plan or other plan
of the Company. Such grants could include grants of options after a decline in
the market price of the Company's Common Stock in substitution for previously
granted options having a higher exercise price. The Company, however, has never
"repriced" options previously granted.
Stock options granted pursuant to the 1996 Stock Plan may, at the
discretion of the Committee, be either incentive stock options ("ISOs"), within
the meaning of Section 422 of the U.S. Internal Revenue Code, or non-qualified
stock options. The exercise price of an ISO may not be less than the fair market
value of the Common Stock on the date of grant (or 110% of such fair market
value in the case of ISOs granted to employees who possess more than 10% of the
combined voting power of all classes of stock of the Company (a "10%
employee")). In the case of non-qualified stock options, the exercise price
shall be as determined by the Committee in its sole discretion, except that it
shall not be less than 85% of the fair market value of the Common Stock on the
date of grant. The Committee, however, does not intend to grant non-qualified
stock options below the fair market value of the Common Stock on the date of
grant. Options granted pursuant to the 1996 Stock Plan are exercisable in whole
or in part at such time or times as determined by the Committee, except that
ISOs may not be exercised after the expiration of 10 years from the date granted
(five years in the case of a 10% employee). Generally, options may be exercised
by the payment of cash, promissory notes or stock or a combination thereof.
SARs granted under the 1996 Stock Plan will give the holder the right to
receive cash or stock in an amount equal to the difference between the fair
market value of a share of Common Stock on the date of exercise and the grant
price. The grant price of an SAR is determined by the Committee but may not be
less than the fair market value of a share of Common Stock on the date of grant.
Methods of exercise and settlement and other terms of SARs are determined by the
Committee. The Committee has never granted SARs under the 1996 Stock Plan.
The Committee may award restricted stock, generally consisting of shares
of Common Stock which may not be disposed of by participants until certain
restrictions established by the Committee lapse. Such restrictions may lapse in
whole or in installments as the Committee determines. A participant receiving
restricted stock will have all of the rights of a stockholder of the Company,
including the right to vote the shares and the right to receive any dividends,
unless the Committee otherwise determines. Upon termination of employment during
the restriction period, restricted stock will be forfeited, subject to such
exceptions, if any, as are authorized by the Committee. The Committee, in its
discretion, may also issue restricted stock rights, which represent the right to
receive shares of Common Stock upon vesting. The rights are considered
"restricted" because they are subject to forfeiture and restrictions on transfer
prior to vesting and the related issuance of shares. A participant receiving
restricted stock rights will not be a stockholder of the Company and will not be
entitled to vote or receive dividends, if any, until the rights vest, at which
time the related shares will be issued to the participant.
Awards generally are not transferable other than by will or the laws of
descent and distribution; however, the Committee may permit the transfer of
awards (other than ISOs and SARs in tandem therewith) for estate planning
purposes. In the event of any change affecting the shares of Common Stock by
reason of
9
any stock dividend or split, recapitalization, merger, consolidation, spin-off,
combination or exchange of shares, or other corporate change or any
distributions to Common Stock holders, the Committee may make such substitution
or adjustment in the aggregate number or kind of shares which may be distributed
under the 1996 Stock Plan and in the number, kind and exercise, grant or
purchase price of shares subject to the outstanding awards granted under the
1996 Stock Plan, or make provisions for a cash payment relating to any award, as
it deems to be appropriate in order to maintain the purpose of the original
grant.
Amendment to and Termination of the 1996 Stock Plan. The Board of
Directors may amend, alter, suspend, discontinue or terminate the 1996 Stock
Plan without the consent of stockholders or participants, except that
stockholder approval of such action will be sought if such approval is required
by any federal or state law or regulation, to the extent the action is required
to be approved by stockholders in connection with having any outstanding awards
comply with the requirements of Section 162(m) of the U.S. Internal Revenue
Code, or if the Board of Directors in its discretion determines that obtaining
such stockholder approval is advisable. Unless earlier terminated by the Board
of Directors, the 1996 Stock Plan will terminate when no shares remain reserved
and available for issuance, and the Company has no further obligation with
respect to any award granted under the 1996 Stock Plan.
Change of Control. In the event of a Change of Control of the Company, all
outstanding awards under the 1996 Stock Plan, regardless of any limitations or
restrictions, become fully exercisable and freed of all restrictions. For
purposes of the 1996 Stock Plan, a Change of Control is deemed to have occurred:
(a) upon the acquisition by any person of 20% or more of the Company's
outstanding voting stock; (b) if individuals constituting the Board of
Directors, or those nominated by at least two-thirds of such individuals or
successors nominated by them, cease to constitute a majority of the Board; (c)
upon stockholder approval of a merger, consolidation or similar transaction or
consummation of any such transaction if stockholder approval is not required;
(d) upon approval of a plan of liquidation or the sale or disposition of
substantially all of the Company's assets; or (e) if the Board adopts a
resolution to the effect that a Change of Control has occurred.
U.S. Federal Income Tax Consequences. The Company believes that under
present U.S. tax laws the following are the U.S. federal income tax consequences
generally arising with respect to awards granted under the 1996 Stock Plan. The
grant of an option or SAR will create no tax consequences for the participant or
the Company. The participant will have no taxable income upon exercising an ISO
(except that the alternative minimum tax may apply) and the Company will receive
no deduction at that time. Upon exercising an option other than an ISO, a
participant will recognize ordinary income equal to the difference between the
exercise price and the fair market value of the stock acquired on the date of
exercise. Upon exercising an SAR, a participant will recognize ordinary income
equal to the cash or the fair market value of the stock received on the date of
exercise. In the case of the exercise of a non-qualified stock option or SAR,
the employer of the participant, if it is a subsidiary of the Company and a U.S.
taxpayer ("U.S. subsidiary employer"), generally will be entitled to a deduction
for the amount recognized as ordinary income by the participant, unless such
deduction is limited by Section 162(m) of the Internal Revenue Code. The
treatment to a participant of a disposition of shares acquired upon the exercise
of an SAR or option depends on how long the shares have been held and on whether
such shares are acquired by exercising an ISO or by exercising an option other
than an ISO. Generally, there will be no tax consequences to a U.S. subsidiary
employer in connection with a disposition of shares acquired under an option
except that the U.S. subsidiary employer may be entitled to a deduction (and the
employee will recognize ordinary income) if shares acquired under an ISO are
disposed of before the applicable ISO holding periods have been satisfied.
With respect to awards granted under the 1996 Stock Plan involving stock
or stock rights that is restricted as to transferability and subject to a
substantial risk of forfeiture, a participant will recognize ordinary income
equal to the fair market value of the shares received at the earlier of the time
at which the shares or stock rights become transferable or not subject to a
substantial risk of forfeiture unless, in the case of a restricted stock award,
but not in the case of restricted stock rights, the participant elects to be
taxed at the time of the award notwithstanding the restrictions (to minimize the
tax payable in respect of the appreciation in the value of the stock from the
time it is awarded until the restrictions lapse). The U.S. subsidiary employer,
if any, generally will be entitled to a deduction for the same amount unless
such deduction is limited by Section 162(m) of the Internal Revenue Code.
10
The foregoing provides only a very general description of the application
of U.S. federal income tax laws to awards under the 1996 Stock Plan. The summary
does not address the effects of foreign, state and local tax laws.
Awards Granted. As of March 1, 2004, incentive and non-qualified stock
options and restricted stock and restricted stock rights for a total of
1,578,463 shares are outstanding under the 1996 Stock Plan. All of the
outstanding options expire at various times during the years 2006 to 2013. Since
inception of the 1996 Stock Plan through March 1, 2004, (a) options for a total
of 1,191,963 shares have been exercised, and (b) options and restricted stock
and restricted stock rights awards for the following number of shares have been
granted under the 1996 Stock Plan to the named executive officers of the Company
and specified groups: Michael F. Curran (who will become the Chairman of the
Board at the Annual Meeting, and will thereby be the Chairman, President, Chief
Executive Officer and Chief Operating Officer), 225,000 shares; John K. Allcorn
(Executive Vice President), 180,625 shares; James K. Tillery (Executive Vice
President of Willbros International, Inc.), 140,625 shares; Warren L. Williams
(Senior Vice President, Treasurer, and Chief Financial Officer), 130,625 shares;
John T. Dalton (Senior Vice President and General Counsel), 107,000 shares; all
current executive officers as a group, 783,875 shares; and all employees,
excluding current executive officers, as a group, 793,000 shares. All current
directors who are not employees of the Company are not eligible to receive
awards under the 1996 Stock Plan. Future awards under the 1996 Stock Plan are
not yet determinable. The closing price for the Common Stock on the New York
Stock Exchange on March 1, 2004, was $15.67 per share.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares present in
person or by proxy at the Annual Meeting and entitled to vote is required for
the adoption of this proposal. The Board of Directors recommends a vote "FOR"
approval of this proposal.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has appointed KPMG LLP as the independent auditors of
the Company for the fiscal year ending December 31, 2004. KPMG has been the
independent auditors of Willbros since 1987. A proposal will be presented at the
Annual Meeting asking the stockholders to ratify the appointment of KPMG as the
Company's independent auditors. If the stockholders do not ratify the
appointment of KPMG, the Audit Committee will reconsider the appointment.
The affirmative vote of the holders of a majority of the shares present in
person or by proxy at the Annual Meeting and entitled to vote is required for
the adoption of this proposal. The Board of Directors recommends a vote "FOR"
the ratification of KPMG as the Company's independent auditors for 2004.
A representative of KPMG will be present at the Annual Meeting. Such
representative will be given the opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions.
AUDIT AND OTHER FEES PAID TO INDEPENDENT AUDITORS
Audit Fees. The aggregate fees billed for the years ended December 31,
2003 and 2002, by KPMG for professional services rendered for the audit of the
Company's annual financial statements, and for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q or services
that are normally provided by the accountants in connection with statutory and
regulatory filings or engagements for those years were $433,000 and $512,000,
respectively.
Audit-Related Fees. The aggregate fees billed for the years ended December
31, 2003 and 2002, for assurance and related services by KPMG that are
reasonably related to the performance of the audit or review of the Company's
financial statements and are not reported above under "Audit Fees" were $23,000
and
11
$127,000, respectively. These services consisted principally of audits of
financial statements of certain employee benefit plans, consultation regarding
internal controls over financial reporting in 2003, and due diligence services
related to an acquisition in 2002.
Tax Fees. The aggregate fees billed for the years ended December 31, 2003
and 2002, for professional services by KPMG for tax compliance, tax advice, and
tax planning were $-0- and $10,000, respectively.
All Other Fees. There were no fees billed for the years ended December 31,
2003 and 2002, by KPMG for products and services rendered to the Company, other
than the services described above.
AUDIT COMMITTEE PRE-APPROVAL POLICY
It is the policy of the Audit Committee to pre-approve audit,
audit-related, tax and all other services specifically described by the Audit
Committee on a periodic basis up to a specified dollar amount. All other
permitted services, as well as proposed services exceeding such specified dollar
amount, are separately pre-approved by the Audit Committee.
PRINCIPAL STOCKHOLDERS AND
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of March 1, 2004 by (a)
each person who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (b) each director and nominee for director
of the Company, (c) each of the executive officers of the Company named in the
Summary Compensation Table below, and (d) all executive officers and directors
of the Company as a group. Except as otherwise indicated, the Company believes
that the beneficial owners of the Common Stock listed in the table, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares.
SHARES
BENEFICIALLY PERCENTAGE
NAME OF OWNER OR IDENTITY OF GROUP OWNED (1) OF CLASS (1)
---------------------------------- --------- ------------
Third Avenue Management LLC ................................. 2,196,975 (2) 10.5
Heartland Advisors, Inc. .................................... 1,732,800 (3) 8.3
Strong Capital Management, Inc. ............................. 1,045,699 (4) 5.0
Michael F. Curran ........................................... 607,999 (5) 2.9
Larry J. Bump ............................................... 571,694 (6) 2.7
John K. Allcorn ............................................. 210,354 (7) 1.0
Warren L. Williams .......................................... 122,653 (8) *
James K. Tillery ............................................ 101,625 (9) *
Peter A. Leidel ............................................. 57,872 (10) *
John H. Williams ............................................ 35,000 (11) *
John T. Dalton .............................................. 32,470 (12) *
Guy E. Waldvogel ............................................ 29,000 (13) *
Michael J. Pink ............................................. 20,000 (14) *
Rodney B. Mitchell .......................................... 15,000 (15) *
James B. Taylor, Jr. ........................................ 14,000 (16) *
S. Fred Isaacs .............................................. 0 --
S. Miller Williams .......................................... 0 --
All executive officers and directors as a group (12 people) . 1,817,667 (17) 8.4
--------------
* Less than 1%
(1) Shares beneficially owned include restricted stock held by the executive
officers of the Company over which they have voting power but not
12
investment power. Shares of Common Stock which were not outstanding but
which could be acquired by a person upon exercise of an option within 60
days of March 1, 2004, are deemed outstanding for the purpose of computing
the percentage of outstanding shares beneficially owned by such person.
Such shares, however, are not deemed to be outstanding for the purpose of
computing the percentage of outstanding shares beneficially owned by any
other person.
(2) Information is as of December 31, 2003, and is based on the Schedule 13G
dated January 22, 2004, which was filed by Third Avenue Management LLC
("TAM"). TAM's address is 622 Third Avenue, 32nd Floor, New York, New York
10017-2023. TAM is a registered investment advisor. Of the shares shown,
TAM has sole voting power over 1,718,075 shares and sole dispositive power
over 2,196,975 shares.
(3) Information is as of December 31, 2003, and is based on the Schedule 13G
dated February 13, 2004, which was filed by Heartland Advisors, Inc.
("Heartland") and William J. Nasgovitz ("Nasgovitz"). Their address is 789
North Water Street, Milwaukee, Wisconsin 53202. Heartland is a registered
investment advisor and the shares shown are held for its clients and other
managed accounts. Nasgovitz is President and principal shareholder of
Heartland. Of the shares shown, Heartland and Nasgovitz have shared voting
power over 1,579,800 shares and shared dispositive power over 1,732,800
shares.
(4) Information is as of December 31, 2003, and is based on the Schedule 13G
dated February 16, 2004, which was filed by Strong Capital Management,
Inc. ("Strong Capital") and Richard S. Strong ("Strong"). Strong Capital's
address is 100 Heritage Reserve, Menomonee Falls, Wisconsin 53051, and
Strong's address is c/o Godfrey & Kahn S.C., 780 N. Water Street,
Milwaukee, Wisconsin 53202. Strong Capital is a registered investment
advisor. Strong Capital and Strong have shared voting and dispositive
power over the shares shown.
(5) Includes (a) 428,155 shares held in a corporation controlled by Mr.
Curran, (b) 150,000 shares subject to stock options which are currently
exercisable at an average exercise price of $9.08 per share, and (c) 4,844
shares held in the Willbros Employees' 401(k) Investment Plan (the "401(k)
Plan") for the account of Mr. Curran.
(6) Includes 150,000 shares subject to stock options which are currently
exercisable at an average exercise price of $7.87 per share.
(7) Includes (a) 125,000 shares subject to stock options which are currently
exercisable at an average exercise price of $7.30 per share, and (b) 4,729
shares held in the 401(k) Plan for the account of Mr. Allcorn.
(8) Includes (a) 87,150 shares subject to stock options which are currently
exercisable at an average exercise price of $13.68 per share, and (b)
2,028 shares held in the 401(k) Plan for the account of Mr. W. Williams.
(9) Includes 29,808 shares subject to stock options which are currently
exercisable at an average exercise price of $12.19 per share.
(10) Includes 24,000 shares subject to stock options which are currently
exercisable at an average exercise price of $10.83 per share.
(11) Includes 20,000 shares subject to stock options which are currently
exercisable or exercisable within 60 days of March 1, 2004, at an average
exercise price of $9.73 per share.
(12) Includes (a) 14,500 shares subject to stock options which are currently
exercisable at an average exercise price of $8.32 per share, and (b) 2,970
shares held in the 401(k) Plan for the account of Mr. Dalton.
(13) Includes 24,000 shares subject to stock options which are currently
exercisable at an average exercise price of $10.83 per share.
13
(14) Represents 20,000 shares subject to stock options which are currently
exercisable or exercisable within 60 days of March 1, 2004, at an average
exercise price of $9.73 per share.
(15) Represents 15,000 shares subject to stock options which are currently
exercisable at an average exercise price of $12.67 per share. Does not
include 948,853 shares held as of December 31, 2003, by The Mitchell
Group, Inc., a registered investment advisor who holds these shares in
investment advisory accounts managed by it for numerous clients. The
Mitchell Group has full investment discretion with respect to such
accounts. Mr. Mitchell is a director and executive officer of The Mitchell
Group. Mr. Mitchell disclaims beneficial ownership of these shares.
(16) Represents (a) 1,000 shares held by the James and Sarah Taylor Trust, and
(b) 13,000 shares subject to stock options which are currently exercisable
at an average exercise price of $7.42 per share.
(17) For specific information regarding each of the listed individuals, see
footnotes (5) through (16) above.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
compensation of the Company's Chief Executive Officer and each of the Company's
four most highly compensated executive officers other than the Chief Executive
Officer, based on salary and bonus earned during fiscal 2003, for services in
all capacities to the Company and its subsidiaries during each of the Company's
last three fiscal years.
LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------------- ------------------------- ---------
SECURITIES
RESTRICTED UNDERLYING LONG-TERM
OTHER ANNUAL STOCK OPTIONS/ INCENTIVE ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) ($) (#)(3) ($) ($)
-------------------------- ---- --------- ---------- ------------ ----------- ------------ --------- ------------
Michael F. Curran.......... 2003 425,000 -0- -0- -0- -0- -0- 15,000(4)
President and 2002 408,333 860,000 -0- -0- -0- -0- 8,992
Chief Executive Officer 2001 305,000 500,000 -0- -0- 100,000 -0- 4,765
John K. Allcorn............ 2003 275,000 -0- -0- -0- -0- -0- 10,070(4)
Executive Vice President 2002 275,000 315,000 -0- -0- 15,625 -0- 12,955
2001 240,000 260,000 -0- -0- 50,000 -0- 7,570
James K. Tillery........... 2003 258,710 -0- -0- -0- -0- -0- 8,372(4)
Executive Vice President 2002 250,008 240,000 -0- -0- 15,625 -0- 68,928
of Willbros 2001 192,666 211,000 -0- -0- 38,000 -0- 16,832
International, Inc.
Warren L. Williams......... 2003 225,000 -0- -0- -0- -0- -0- 11,500(4)
Senior Vice President 2002 213,542 270,000 -0- -0- 15,625 -0- 12,687
and Chief Financial 2001 189,129 180,000 -0- -0- 70,000 -0- 11,748
Officer
John T. Dalton (5)......... 2003 330,000 -0- -0- -0- -0- -0- 8,000(4)
Senior Vice President 2002 82,500 200,000 -0- -0- 50,000 -0- -0-
and General Counsel
14
--------------------
(1) Consists of compensation paid as discretionary bonuses.
(2) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation, if any, does not exceed
the lesser of $50,000 or 10% of the total amount of annual salary and
bonus for any named individual.
(3) Consists solely of options to acquire shares of Common Stock.
(4) Consists of Company contributions to the Company's (a) 401(k) Plan in the
amount of $8,000 for each of Messrs. Curran, Allcorn, Tillery, W.
Williams, and Dalton, and (b) Executive Life Plan in the amount of $7,000
for Mr. Curran, $2,070 for Mr. Allcorn, $372 for Mr. Tillery, and $3,500
for Mr. Williams.
(5) Mr. Dalton joined the Company in October 2002 as Senior Vice President and
General Counsel.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
There were no options granted to any of the named executive officers of
the Company during fiscal 2003. The Company has never granted any stock
appreciation rights.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The following table sets forth certain information with respect to options
exercised by the named executive officers of the Company during fiscal 2003, and
the number and value of unexercised options held by such executive officers at
the end of the fiscal year. The Company has never granted any stock appreciation
rights.
SHARES VALUE OF UNEXERCISED
ACQUIRED NUMBER OF SECURITIES IN-THE-MONEY
ON VALUE UNDERLYING UNEXERCISED OPTIONS/SARS AT FY-END
EXERCISE REALIZED OPTIONS/SARS AT FY-END ($)(1)(2)
-------- -------- --------------------------- ---------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------------------- -------- -------- ----------- ------------- ----------- -------------
Michael F. Curran............... -0- -0- 150,000 50,000 589,500 -0-
John K. Allcorn................. -0- -0- 125,000 25,000 664,000 -0-
James K. Tillery................ -0- -0- 29,808 19,000 53,900 -0-
Warren L. Williams.............. -0- -0- 87,150 10,000 156,655 -0-
John T. Dalton.................. -0- -0- 14,500 37,500 59,500 178,500
--------------------
(1) Market value of the underlying securities at exercise date or fiscal
year-end, as the case may be, minus the option exercise price.
(2) The closing price for the Common Stock on the New York Stock Exchange on
December 31, 2003, the last trading day of the fiscal year, was $12.02.
15
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2003,
concerning shares of the Company's Common Stock authorized for issuance under
the Company's existing equity compensation plans.
NUMBER OF
SECURITIES
REMAINING
NUMBER OF AVAILABLE FOR
SECURITIES TO WEIGHTED FUTURE ISSUANCE
BE AVERAGE UNDER EQUITY
ISSUED UPON EXERCISE PRICE COMPENSATION
EXERCISE OF OF PLANS
OUTSTANDING OUTSTANDING (EXCLUDING
OPTIONS, OPTIONS, SECURITIES
WARRANTS WARRANTS REFLECTED IN
PLAN CATEGORY AND RIGHTS AND RIGHTS COLUMN (A))
------------- ---------------- -------------- ---------------
EQUITY COMPENSATION PLANS (A)
APPROVED BY SECURITY HOLDERS 1,447,399 $ 10.68 714,588
EQUITY COMPENSATION PLANS
NOT APPROVED BY SECURITY HOLDERS -- -- --
----------- ---------- ----------
-----
TOTAL 1,447,399 $ 10.68 714,588 (1)
----------- ---------- ----------
-----------------------
(1) Represents the total number of shares available for issuance under (a) our
1996 Stock Plan pursuant to stock options, stock appreciation rights or
restricted stock or restricted stock rights, and (b) our Director Stock
Plan pursuant to stock options. All of the 610,588 shares available for
issuance under our 1996 Stock Plan may be awarded as restricted stock or
restricted stock rights.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
None of the named executive officers of the Company have an employment
agreement with the Company.
In October 1998, the Compensation Committee approved and recommended, and
the Board of Directors adopted, the Willbros Group, Inc. Severance Plan (the
"Severance Plan"), effective January 1, 1999. The Board of Directors adopted the
Severance Plan in lieu of entering into new employment agreements with the
executive officers at that time. Since the Severance Plan was scheduled to
expire on December 31, 2003, the Compensation Committee approved and
recommended, and the Board of Directors adopted, a restated and amended
Severance Plan (the "Restated Severance Plan"), effective September 25, 2003.
Each of the named executive officers of the Company is a participant in the
Restated Severance Plan. The Restated Severance Plan, which will remain in
effect until December 31, 2006, provides that a participant whose employment is
terminated other than for cause or who resigns due to (a) reduction of
compensation or other benefits, including incentive plans, (b) reduction in
scope of participant's authorities, duties, or title, or (c) material change in
the location of a participant's principal place of employment by the Company,
when a change in control of the Company is imminent or within three years after
a change in control of the Company has occurred, shall be entitled to severance
compensation (a) equal to 300% of the participant's annual base compensation,
(b) equal to 300% of the participant's greatest annual cash bonus received
during the 36-month period ending on the date of the change in control, (c)
equal to the aggregate annual incentive plan target opportunity that could have
been earned in the year termination of employment occurs, (d) that provides full
vesting of all of the participant's outstanding stock options, restricted stock
awards and other equity-based awards, and (e) that extends the participant's and
his dependents' coverage under the benefit plans for 24 months. The Restated
Severance Plan also provides that a participant who voluntarily terminates his
employment for reasons similar to termination of employment by the Company
within 18 months after a change in control of the Company has occurred shall be
entitled to a severance payment equal to the same severance compensation
applicable to the entitlement provided by termination of employment by the
16
Company. Finally, the Restated Severance Plan provides that a participant whose
employment is terminated other than for cause prior to a change in control of
the Company shall be entitled to a severance payment equal to 100% of his base
salary then in effect. A participant who receives a severance payment under the
Restated Severance Plan will be subject to either a one year or two year
competition restriction depending on the basis for the termination. All taxes on
severance payments made under the Restated Severance Plan are the participant's
responsibility.
All outstanding awards under the Company's 1996 Stock Plan, regardless of
any limitations or restrictions, become fully exercisable and free of all
restrictions, in the event of a change in control of the Company, as defined in
such Plan.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") administers the compensation program for executive officers of the
Company. The duties of the Compensation Committee include reviewing and
evaluating the Company's executive compensation program to assess its
effectiveness in attracting, motivating and retaining highly skilled executive
officers. The Compensation Committee also administers the Company's 1996 Stock
Plan and has access to outside compensation consulting firms and compensation
information.
Compensation Philosophy
The objectives of the Company's executive compensation program include:
- Providing a total executive compensation plan that is
performance-driven and rewards business success based on an
executive's individual performance;
- Aligning the financial interests of the executive officers with the
performance of the Company;
- Emphasizing equity-based compensation for Company executives to
reinforce management's focus on stockholder value; and
- Attracting, motivating, and retaining executive officers and key
management personnel to achieve the Company's business objectives.
The Compensation Committee adheres to an executive compensation philosophy
that supports the Company's business strategies. Compensation decisions under
the executive compensation program are made by the Compensation Committee and
approved by the Board of Directors.
Compensation Program
Company executives participate in a comprehensive compensation program
comprised of base salary, potential for annual discretionary incentive
compensation awards, and long-term equity-based opportunities in the form of
stock options and restricted stock awards.
Base Salary. The level of base salary paid to executive officers is
determined on the basis of performance, experience and such other factors as may
be appropriately considered by the Compensation Committee. Each year the
Compensation Committee reviews the base salaries of the executives and considers
salary adjustments based on individual performance, overall financial results of
the Company, competitive position relative to the marketplace, and
cost-of-living indicators. As a result of that review, Mr. Tillery received a
salary increase in September 2003. Mr. Tillery received a raise because of his
promotion to Executive Vice President. None of the other executive officers of
the Company received a salary increase for 2003.
Annual Incentive Program. In 2003, the Company's executive officers were
eligible for discretionary annual cash incentive awards based on performance
guidelines tied to annual operating performance levels. Each executive officer
is eligible to earn an individual award expressed as a percentage of base
salary.
17
Executive officer incentive award opportunities vary by level of responsibility.
There is no minimum incentive award. The maximum percentage of base salary
payable as an incentive award ranges from 100% to 300%, depending on the
executive officer's position. The awards are based on the financial performance
of the Company and individual performance. Several factors are considered in
evaluating an executive's individual performance, which include achievement of
business strategy, successful accomplishment of business goals and objectives,
contribution toward the Company's profitability, and enhancement of stockholder
value. Due to the financial performance of the Company in 2003, none of the
executive officers were paid cash incentive bonus awards for 2003.
Long-Term Incentive Program. In 1996, the Board of Directors and the
stockholders of the Company approved the 1996 Stock Plan (the "Stock Plan"). The
Stock Plan permits the Compensation Committee to grant various stock-based
awards, including options, stock appreciation rights, and restricted stock, to
executive officers and key management employees of the Company based on
competitive practices and the Company's overall performance. Stock options and
restricted stock awards are designed to provide grantees with the opportunity to
acquire a proprietary interest in the Company and to give such persons a
stronger incentive to work for the continued success of the Company. An option
award may be either an incentive stock option ("ISO") or a non-qualified stock
option ("NSO"). The Compensation Committee takes into account management's
recommendations regarding the number of shares or options and the number of
shares of restricted stock to be awarded to specific employees. There were no
awards granted under the Company's 1996 Stock Plan to the executive officers
during 2003.
To date, the Compensation Committee has granted ISO, NSO and restricted
stock awards to executive officers from time to time. Both ISO and NSO awards
entitle the employee to purchase a specified number of shares of the Company's
Common Stock at a specified price during a specified period. Both the ISO awards
and the NSO awards have a 10-year term. Both types of awards are designed as an
incentive for future performance by the creation of stockholder value over the
long-term since the greatest benefit of the options is realized only if stock
price appreciation occurs. Restricted stock awards are grants of a specified
number of shares of the Company's Common Stock in which the employee's rights to
the shares are limited until the shares vest and cease to be subject to the
restrictions. The employee obtains full ownership of the unrestricted shares of
stock when it vests. Vesting may be tied to a specified time period or the
achievement of certain performance goals. The Company uses stock options and
restricted stock awards as its long-term incentive devices since stock options
and restricted stock awards provide the clearest tie between enhanced
stockholder wealth and executive pay.
Chief Executive Officer Compensation for 2003
Mr. Curran's overall compensation is determined in the same manner as is
the compensation for the other executive officers. As a result of the depressed
state of the energy industry, Mr. Curran did not receive a salary increase nor a
bonus for 2003. As a significant stockholder of the Company, Mr. Curran
continues to have strong incentive to create value for the Company's
stockholders. There were no awards granted under the Company's 1996 Stock Plan
to Mr. Curran during 2003.
Policy Regarding Tax Deductibility of Executive Compensation
Section 162(m) of the U.S. Internal Revenue Code places a $1 million per
person limitation on the United States tax deduction a U.S. subsidiary employer
of a publicly-held corporation may take for compensation paid to the Company's
Chief Executive Officer and its four other highest paid executive officers,
except compensation which constitutes performance-based compensation as defined
by the U.S. Internal Revenue Code is not subject to the $1 million limit. The
Compensation Committee generally intends to grant awards under the Company's
1996 Stock Plan consistent with the terms of Section 162(m) so that such awards
will not be subject to the $1 million limit. While the Company intends to pursue
a strategy of maximizing the deductibility of compensation paid to executive
officers in the future, it also intends to maintain the flexibility to take
actions that it considers to be in the Company's best interests and to take into
consideration factors other than deductibility. In doing so, the Compensation
Committee may utilize alternatives such as deferring compensation to qualify
compensation for deductibility and may rely on grandfathering provisions with
respect to existing compensation commitments. If any executive officer
18
compensation exceeds this limitation, it is expected that such cases will
represent isolated, nonrecurring situations arising from special circumstances.
The Compensation Committee and the Board of Directors believe that the
executive compensation policies promote the interest of the stockholders and the
Company effectively, and the various compensation opportunities afforded the
executive officers are appropriately balanced to provide motivation for
executives to contribute to the profitability and overall success of the
Company.
COMPENSATION COMMITTEE
James B. Taylor, Jr. (Chairman)
Rodney B. Mitchell
Michael J. Pink
The Report on Executive Compensation shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2003, the Compensation Committee was composed of James B. Taylor,
Jr., Rodney B. Mitchell, and Michael J. Pink, all of whom are non-employee
directors of the Company. During 2003, none of the Company's executive officers
served on the board of directors or on the compensation committee of any other
entity who had an executive officer that served either on the Company's Board of
Directors or on its Compensation Committee.
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock during the
period commencing January 1, 1999, and ending on December 31, 2003, with the
cumulative total return on the S&P 500 Index and the S&P 500 Construction &
Engineering Index. The comparison assumes $100 was invested December 31, 1998,
in the Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
[LINE CHART]
19
INDEXED RETURNS
BASE YEARS ENDING
PERIOD ---------------------------------------------
COMPANY / INDEX DEC98 DEC99 DEC00 DEC01 DEC02 DEC03
--------------- ----- ----- ----- ----- ----- -----
WILLBROS GROUP, INC. 100 83.15 114.61 287.64 147.78 216.09
S&P 500 INDEX 100 121.04 110.02 96.95 75.52 97.18
S&P 500 CONSTRUCTION & ENGINEERING 100 85.50 96.01 109.86 74.73 104.45
The above performance graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
REPORT OF THE AUDIT COMMITTEE
Securities and Exchange Commission rules require that a company's proxy
statement contain a report of its audit committee. The Company's Audit Committee
consisted of four directors until the retirement of Mr. Waldvogel in March 2004.
The role of the Audit Committee is to assist the Board of Directors in its
oversight of the Company's financial reporting process.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year 2003 with management and with the
Company's independent auditors. Specifically, the Audit Committee has discussed
with the independent auditors matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees.
The Audit Committee has received the written disclosures and the letter
from the Company's independent accountants, KPMG LLP, required by Independence
Standards Board No. 1, Independence Discussions With Audit Committees.
Additionally, the Audit Committee has discussed with KPMG the issue of its
independence from the Company and has concluded that KPMG is independent.
Based on its review of the audited financial statements and the various
discussions noted above, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2003, to be
filed with the Securities and Exchange Commission.
AUDIT COMMITTEE
Peter A. Leidel (Chairman)
Rodney B. Mitchell
James B. Taylor, Jr.
Guy E. Waldvogel (until March 10, 2004)
The Report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
CERTAIN TRANSACTIONS
The Board of Directors previously approved an Employee Stock Purchase
Program (the "Program"). Under the Program, selected executives and officers of
the Company were given the opportunity to borrow funds on an interest free basis
for the purpose of exercising vested stock options granted to the executives
under the Company's 1996 Stock Plan. All such loans are full recourse and
therefore secured by Company
20
stock. The maximum amount that could be loaned to individual executives under
the Program is $250,000. Each loan has a maximum term of five years and does not
bear interest unless not repaid on the due date. The loan will become due 90
days after termination of employment or on the normal due date of the loan,
whichever is first. Pursuant to the Program, in March 2002, certain executive
officers of the Company became indebted to the Company in amounts in excess of
$60,000 under various notes. The following table sets forth, as to the persons
shown, the largest amounts of their indebtedness outstanding, the interest
rates, the final maturity dates and the outstanding balances of such
indebtedness as of March 1, 2004:
LARGEST FINAL OUTSTANDING
AMOUNT OF INTEREST MATURITY BALANCE AT
NAME INDEBTEDNESS RATE DATE MARCH 1, 2004
---- ------------ ---- ---- -------------
John K. Allcorn $232,188 0% March 2007 $232,188
James K. Tillery $249,995 0% March 2007 $249,995
Warren L. Williams $250,000 0% March 2007 $250,000
In accordance with the Sarbanes-Oxley Act of 2002, the Company in the
future will no longer make loans to executive officers of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of the Common Stock, to report their initial ownership of the Common Stock
and any subsequent changes in that ownership to the Securities and Exchange
Commission and the New York Stock Exchange, and to furnish the Company with a
copy of each such report. The Securities and Exchange Commission regulations
impose specific due dates for such reports, and the Company is required to
disclose in this Proxy Statement any failure to file by these dates during and
with respect to fiscal 2003.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during and with respect to fiscal 2003, all Section 16(a)
filing requirements applicable to its officers, directors and more than 10%
stockholders were complied with.
OTHER MATTERS
MATTERS WHICH MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no matters other than those described in
this Proxy Statement which will be brought before the Annual Meeting for a vote
of the stockholders. If any other matter properly comes before the Annual
Meeting for a stockholder vote, the persons named in the accompanying proxy will
vote thereon in accordance with their best judgment.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the Company's 2005
Annual Meeting of Stockholders must be received at the principal executive
offices of the Company, Plaza 2000 Building, 50th Street, 8th Floor, P.O. Box
0816-01098, Panama, Republic of Panama, on or before December 24, 2004, to be
considered for inclusion in the Company's proxy statement and accompanying proxy
for that meeting.
If a stockholder, who intends to present a proposal at the Company's 2005
Annual Meeting of Stockholders and has not sought inclusion of the proposal in
the Company's proxy materials pursuant to Rule 14a-8, fails to provide the
Company with notice of such proposal by March 9, 2005, then the persons named in
the proxies solicited by the Company's Board of Directors for its 2005 Annual
Meeting of Stockholders may exercise discretionary voting power with respect to
such proposal.
21
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2003, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO STOCKHOLDERS UPON WRITTEN REQUEST TO: MICHAEL W.
COLLIER, INVESTOR RELATIONS, C/O WILLBROS USA, INC., 4400 POST OAK PARKWAY,
SUITE 1000, HOUSTON, TEXAS 77027.
By Order of the Board of Directors,
Dennis G. Berryhill
Secretary
April 23, 2004
Panama City, Panama
22
WILLBROS GROUP, INC. EXHIBIT A
AUDIT COMMITTEE CHARTER
REVISED DECEMBER 15, 2003
1. COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors (the "Board")
to assist the Board in monitoring (i) the integrity of the financial statements
of the Company; (ii) the independent auditor's qualifications and independence;
(iii) the performance of the Company's internal audit function; and (iv) the
Company's compliance with legal and regulatory requirements. The Audit Committee
shall prepare the report required by the rules of the Securities and Exchange
Commission (the "Commission") to be included in the Company's annual proxy
statement.
Although the Committee has the powers and responsibilities set forth in
this Charter, the role of the Committee is oversight. It is not the duty of the
Committee to plan or conduct audits or to determine that the Company's financial
statements and disclosures are complete and accurate and are in accordance with
generally accepted accounting principles and applicable rules and regulations.
These are the responsibilities of management and the independent auditor.
2. COMMITTEE MEMBERSHIP
The Audit Committee shall consist of no fewer than three members, each of
whom shall meet the independence and experience requirements of the New York
Stock Exchange, Section 10A(m)(3) of the Securities and Exchange Act of 1934
(the "Exchange Act"), and the rules and regulations of the Commission. Audit
Committee members shall not simultaneously serve on the audit committees of more
than two other public companies. At least one member of the Audit Committee
shall be an "audit committee financial expert" as defined by the Commission.
The members of the Audit Committee shall be appointed by the Board on the
recommendation of the Nominating/Corporate Governance Committee. Audit Committee
members may be replaced by the Board.
3. COMMITTEE AUTHORITY AND RESPONSIBILITIES
The Audit Committee shall have the sole authority to appoint or replace
the independent auditor. The Audit Committee shall be directly responsible for
the compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor
regarding financial reporting) for the purpose of preparing or issuing an audit
report or related work. The independent auditor shall report directly to the
Audit Committee.
The Audit Committee shall pre-approve all auditing services and permitted
non-audit services (including the fees and terms thereof) to be performed by the
Company by its independent auditor, subject to the de minimus exceptions
described in Section 10A(i)(1)(B) of the Exchange Act and the rules and
regulations of the Commission which are approved by the Committee prior to the
completion of the audit.
The Audit Committee shall make regular reports to the Board. The Audit
Committee shall review and assess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval. The Audit Committee
shall annually review the Audit Committee's own performance.
A-1
To the extent it deems necessary and appropriate, the Audit Committee
shall:
a. At least annually, obtain and review a report by the independent
auditor describing (i) the independent auditor's internal
quality-control procedures; (ii) any material issues raised by the
most recent internal quality-control review, or peer review, of the
firm, or by any inquiry or investigation by governmental or
professional authorities within the preceding five years respecting
one or more independent audits carried out by the firm; (iii) any
steps taken to deal with any such issues; and (iv) all relationships
between the independent auditor and the Company. Evaluate the
independent auditor's qualifications, performance, and independence,
including considering whether the auditor's quality controls are
adequate and the provision of permitted non-audit services is
compatible with maintaining the auditor's independence, taking into
account the opinions of management and the internal auditors. The
Audit Committee shall present its conclusions with respect to the
independent auditor to the full Board.
b. Review and discuss the annual audited financial statements with
management and the independent auditor, including the Company's
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations." Recommend to the Board whether
the annual financial statements should be included in the Company's
Form 10-K.
c. Review and discuss the Company's quarterly financial statements with
management and the independent auditor prior to the filing of its
Form 10-Q, including the results of the independent auditor's review
of the quarterly financial statements.
d. Discuss with management and the independent auditor significant
financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements, including any
significant changes in the Company's selection or application of
accounting principles, any major issues as to the adequacy of the
Company's internal controls, and any special steps adopted in light
of material control deficiencies.
e. Review and discuss quarterly reports from the independent auditors
on (i) all critical accounting policies and practices to be used;
(ii) all alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
independent auditor; and (iii) other material written communications
between the independent auditor and management, such as any
managerial letter or schedule of unadjusted differences.
f. Discuss with management the Company's earnings press releases,
including the use of "pro forma" or "adjusted" non-GAAP information,
as well as financial information and earnings guidance provided to
analysts and rating agencies. Such discussion may be done generally
(consisting of the types of information to be disclosed and the
types of presentations to be made). The Audit Committee need not
discuss in advance each earnings release or each instance in which
the Company may provide earnings guidance.
g. Discuss with management and the independent auditor the effect of
regulatory and accounting initiatives as well as off-balance sheet
structures on the Company's financial statements.
A-2
h. Discuss with management the Company's major financial risk exposures
and the steps management has taken to monitor and control such
exposures, including the Company's risk assessment and risk
management policies.
i. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit, including any difficulties encountered in the
course of the audit work, restrictions on the scope of activities or
access to requested information, and any significant disagreements
with management.
j. Review disclosures made to the Audit Committee by the Company's CEO
and CFO during their certification process for the Form 10-K and
Forms 10-Q about any significant deficiencies in the design or
operation of internal controls or material weaknesses therein and
any fraud involving management or other employees who have a
significant role in the Company's internal controls.
k. Review and evaluate the lead partner of the independent auditor
team.
l. Ensure the rotation of the lead (or coordinating) audit partner
having primary responsibility for the audit and audit partner
responsible for reviewing the audit, as required by law. Consider
whether, in order to assure continuing auditor independence, it is
appropriate to adopt a policy of rotating the independent auditing
firm on a regular basis.
m. Recommend to the Board policies for the hiring of employees or
former employees of the independent auditor who participated in any
capacity in the audit of the Company.
n. Discuss with the national office of the independent auditor issues
on which they were consulted by the Company's audit team and matters
of audit quality and consistency.
o. Meet with the independent auditor prior to the audit to discuss the
planning and staffing of the audit.
p. Review the appointment and replacement of the senior internal
auditing executive.
q. Review the significant reports to management prepared by the
internal audit department and management's responses.
r. Discuss with the independent auditor and management the internal
audit department responsibilities, budget and staffing, and any
recommended changes in the planned scope of the internal audit.
s. Obtain from the independent auditor assurance that Section 10A(b) of
the Exchange Act has not been impacted.
t. Obtain reports from management, the Company's senior internal
auditing executive, and the independent auditor that the Company and
its subsidiary/foreign affiliated entities are in conformity with
applicable legal requirements and the Company's Code of Business
Conduct and Ethics. Review reports and disclosures of insider and
affiliated party transactions. Advise the Board with respect to the
Company's policies and procedures regarding
A-3
compliance with applicable laws and regulations, and with the
Company's Code of Business Conduct and Ethics.
u. Establish procedures for the receipt, retention, and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential,
anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
v. Discuss with management and the independent auditor any
correspondence with regulators or governmental agencies and any
published reports which raise material issues regarding the
Company's financial statements or accounting policies.
w. Discuss with the Company's General Counsel legal matters that may
have a material effect on the financial statements or the Company's
compliance policies.
4. COMMITTEE MEETINGS
The Audit Committee shall meet as often as it determines, but not less
frequently than quarterly. The Audit Committee shall meet periodically with
management, the internal auditors, and the independent auditor in separate
executive sessions. The Audit Committee may request any officer or employee of
the Company or the Company's outside counsel or independent auditor to attend a
meeting of the Committee or to meet with any members of, or consultants to, the
Committee.
The Audit Committee may form and delegate authority to subcommittees
consisting of one or more members when appropriate, including the authority to
grant pre-approvals of audit and permitted non-audit services, provided that the
decisions of such subcommittee to grant pre-approvals shall be presented to the
full Audit Committee at its next meeting.
5. AUDIT COMMITTEE RESOURCES
The Audit Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain independent legal, accounting, or other
advisors. The Company shall provide for appropriate funding, as determined by
the Audit Committee, for payment of compensation to the independent auditor for
the purpose of rendering or issuing an audit report and to any advisors employed
by the Audit Committee.
A-4
EXHIBIT B
AMENDMENT NUMBER 4
TO THE
WILLBROS GROUP, INC.
1996 STOCK PLAN
1. Introduction. On April 16, 1996, the Board of Directors of Willbros
Group, Inc. (the "Company") adopted, and on May 21, 1996, the stockholders of
the Company approved, the Willbros Group, Inc. 1996 Stock Plan (as amended, the
"Plan"). The Plan permits the granting of awards, including stock options, to
key employees (including officers and directors who are employees) of the
Company or its subsidiaries.
The Board of Directors of the Company adopted on February 24, 1999,
and the stockholders of the Company approved on May 6, 1999, Amendment Number 1
to the Plan which increased the total number of shares of Common Stock of the
Company available for issuance pursuant to awards granted under the Plan from
1,125,000 shares to 2,125,000 shares. The Board of Directors of the Company
adopted on March 7, 2001, and the stockholders of the Company approved on May 9,
2001, Amendment Number 2 to the Plan which increased the total number of shares
of Common Stock of the Company available for issuance pursuant to awards granted
under the Plan from 2,125,000 shares to 3,125,000 shares.
Under the terms of the Plan, a total of 3,125,000 shares of Common
Stock of the Company are available for issuance pursuant to awards granted under
the Plan (subject to adjustment in the event of certain corporate transactions
such as a stock split, etc.).
2. Purpose. The sole purpose of this Amendment is to increase the total
number of shares of Common Stock of the Company available for issuance pursuant
to awards granted under the Plan from 3,125,000 shares to 4,075,000 shares,
which will enable the Company to continue to grant awards under the Plan to
attract and retain key employees of the Company and its subsidiaries.
3. Amendment. In the first paragraph of Section 4 of the Plan, the number
"3,125,000" is deleted and the number "4,075,000" is substituted therefor.
4. No Change. Except as specifically set forth herein, this Amendment does
not change the terms of the Plan.
5. Effective Date. This Amendment shall take effect and be adopted on the
date that the stockholders of the Company approve this Amendment.
Executed this 10th day of March, 2004.
ATTEST: WILLBROS GROUP, INC.
/s/ Dennis G. Berryhill By: /s/ Michael F. Curran
-------------------------------------- ----------------------------------
Dennis G. Berryhill Michael F. Curran
Secretary President and Chief Executive
Officer
B-1
[WILLBROS LOGO]
WILLBROS GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 20, 2004
The undersigned hereby appoints LeRoy W. Watson, III, Gian Castillero and
Ernesto Duran, and each of them, with full power of substitution, as proxies to
represent and vote all of the shares of Common Stock the undersigned is entitled
to vote at the Annual Meeting of Stockholders of Willbros Group, Inc. to be held
on the 20th day of May, 2004, at 9:00 a.m., local time, at the Hotel Panama
Marriott, Calle 52 y Ricardo Arias, Panama City, Panama, and at any and all
adjournments thereof, on all matters coming before said meeting.
PLEASE MARK, SIGN AND DATE THE PROXY ON THE OTHER SIDE
AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED ON OTHER SIDE)
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ADDRESS CHANGE/(COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS
1, 2 AND 3.
Please
Mark Here
for Address [ ]
Change or
Comments
SEE REVERSE SIDE
FOR all nominees listed WITHHOLD AUTHORITY
below (except as to vote for all nominees
marked to the contrary) listed below
1. Election of Directors Nominees: [ ] [ ]
01 Rodney B. Mitchell and
02 S. Miller Williams
as Class II Directors.
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below.
________________________________________________________________________________
FOR AGAINST ABSTAIN
2. Approval of Amendment Number 4 to Willbros [ ] [ ] [ ]
Group, Inc. 1996 Stock Plan, which increases
the total number of shares of the Common
Stock of the Company authorized for issuance
thereunder from 3,125,000 to 4,075,000
shares.
FOR AGAINST ABSTAIN
3. Ratification of KPMG LLP as independent [ ] [ ] [ ]
auditors of the Company for 2004.
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and at any and all
adjournments thereof.
Dated:____________________________________________________________________,2004
________________________________________________________________________________
Signature
________________________________________________________________________________
Signature if held jointly
Please sign exactly as name appears herein, date and return promptly. When
shares are held by joint tenants, both must sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by duly authorized officer and
give title of officer. If a partnership, please sign in partnership name by
authorized person and give title or capacity of person signing.
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