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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [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 Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
GULF ISLAND FABRICATION, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[GULF ISLAND LOGO APPEARS HERE]
GULF ISLAND FABRICATION, INC.
583 THOMPSON ROAD
HOUMA, LOUISIANA 70363
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2001
----------------
TO THE SHAREHOLDERS OF GULF ISLAND FABRICATION, INC.:
The annual meeting of shareholders of Gulf Island Fabrication, Inc. (the
"Company") will be held at 10:00 a.m., local time, on Wednesday, April 25,
2001, at the office of the corporation, 583 Thompson Road, Houma, Louisiana
for the following purposes, more fully described in the accompanying proxy
statement:
1. To elect two Class I directors.
2. To ratify the appointment of Ernst & Young LLP as the independent
auditors to audit the financial statements of the Company and its
subsidiaries for the year 2001.
3. To transact such other business as may properly come before the meeting
and any adjournments thereof.
The Board of Directors has fixed the close of business on March 9, 2001 as
the record date for the determination of shareholders entitled to notice of
and to vote at the annual meeting and all adjournments thereof.
Your vote is important regardless of the number of shares you own. Whether
or not you plan to attend the annual meeting, please mark, date and sign the
enclosed proxy card and return it promptly in the enclosed stamped envelope.
Furnishing the enclosed proxy will not prevent you from voting in person at
the meeting should you wish to do so.
By Order of the Board of Directors
/s/ Valarae L. Bates
VALARAE L. BATES
Secretary
Houma, Louisiana
March 23, 2001
GULF ISLAND FABRICATION, INC.
583 THOMPSON ROAD
HOUMA, LOUISIANA 70363
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2001
This Proxy Statement is furnished to shareholders of Gulf Island
Fabrication, Inc. (the "Company") in connection with the solicitation of
proxies on behalf of the Company's Board of Directors for use at its annual
meeting of shareholders to be held at the date, time and place set forth in
the accompanying notice and at any adjournment thereof (the "Meeting"). The
date of this Proxy Statement is March 23, 2001.
On March 9, 2001, the record date for determining shareholders entitled to
notice of and to vote at the Meeting, the Company had outstanding 11,700,592
shares of common stock ("Company Stock"), each of which is entitled to one
vote on all matters to be considered at the Meeting.
Shares represented by all properly executed proxies on the enclosed form
received in time for the Meeting will be voted at the Meeting. A proxy may be
revoked at any time before it is exercised by filing with the Secretary of the
Company an instrument revoking it or a duly executed proxy bearing a later
date, or by attending the Meeting and voting in person. Unless revoked, the
proxy will be voted as specified and, if no specifications are made, will be
voted in favor of the proposed nominees and for the ratification of the
appointment of auditors as described herein.
The cost of soliciting proxies in the enclosed form will be borne by the
Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone, telefax and telegraph. Banks, brokerage houses
and other institutions, nominees and fiduciaries will be requested to forward
solicitation materials to the beneficial owners of the shares of Common Stock
of the Company; upon request, the Company will reimburse such persons for
reasonable out-of-pocket expenses incurred in connection therewith.
ELECTION OF DIRECTORS
The Company's Amended and Restated Articles of Incorporation provide for a
Board of Directors consisting of three classes, with the number of directors
to be set forth in the By-laws. The By-laws provide for a Board of Directors
of seven persons. The term of office of the Class I directors will expire at
the Meeting, and the persons listed as the Class I nominees in the table below
will be nominated for election to the Board of Directors for a term expiring
in 2004. The term of office of the Class II directors will expire at the 2002
annual meeting. The term of office of the Class III directors will expire at
the 2003 annual meeting.
The Board of Directors has nominated two candidates for election at the
Meeting and recommends that shareholders vote FOR the election of the
nominees. Proxies cannot be voted for more than two candidates. In the absence
of contrary instructions, the proxy holders will vote for the election of the
two nominees listed below. In the unanticipated event that either nominee is
unavailable as a candidate for director, the persons named in the accompanying
proxy will vote for a substitute candidate nominated by the Board of
Directors.
The following table sets forth as of February 1, 2001, for each nominee,
each other director of the Company whose term will continue after the Meeting
and each of the executive officers of the Company, the age, positions with the
Company, and principal occupations and employment during the past five years
of each such person, any family relationships among such persons, and, if a
nominee or a director, each person's directorships in other public
corporations and the year that he was first elected a director of the Company
or its predecessor. All executive officers serve at the pleasure of the Board
of Directors of the Company.
Positions with the Company, Principal Occupations,
Directorships in Other Public Corporations, and Family Director
Name and Age Relationships Since
------------ ------------------------------------------------------- --------
Nominees for Election as Class I Directors (for term expiring in 2004)
Thomas E. Fairley, 52 Director of the Company. Director, President and Chief 1997
Executive Officer of Trico Marine Services, Inc., a
marine vessel operator.
Hugh J. Kelly, 75 Director of the Company. Consultant to the oil and gas 1997
industry. Chief Executive Officer of ODECO, Inc., an
offshore drilling contractor, until 1989. Director of
Chieftain International, Inc., an oil and gas
exploration and development company.
Continuing Class II Directors (term expires in 2002)
Gregory J. Cotter, 52 Director and financial advisor to the Company. 1985
Director, President and Chief Operating and Financial
Officer of Huey Wilson Interests, Inc. ("Wilson
Interests"), a financial and business management
company, and Director, President, and Chief Financial
Officer of Wilson Jewelers, Inc. ("Wilson Jewelers"), a
jewelry merchandiser.
John P. ("Jack") Director of the Company. Chief Executive Officer of All 1997
Laborde, 51 Aboard Development Corporation ("All Aboard"), an
independent oil and gas exploration and production
company, since 1996 and President of All Aboard since
1998. Vice President of All Aboard from November, 1993,
to March, 1996. Consultant to the Company from April,
1996, to December, 1996, and International Marketing
Manager of the Company from April, 1992, to March,
1996. Son of Alden J. Laborde.
Continuing Class III Directors (term expires in 2003)
Kerry J. Chauvin, 53 Director, President and Chief Executive Officer of the 1985
Company.
Alden J. ("Doc") Director and Chairman of the Board of the Company. 1985
Laborde, 85 Father of John P. Laborde.
Huey J. Wilson, 72 Director of the Company. Chairman of the Board and 1997
Chief Executive Officer of Wilson Interests and of
Wilson Jewelers.
Executive Officers not Serving as Directors
Murphy A. Bourke, 56 Executive Vice President--Marketing of the Company. N/A
Vice President--Marketing of the Company until
December, 1999.
Kirk J. Meche, 38 Executive Vice President--Operations of the Company. N/A
President of Gulf Island, L.L.C., a wholly-owned
fabrication subsidiary of the Company.
Joseph P. Gallagher, Vice President--Finance, Chief Financial Officer, and N/A
III, 50 Treasurer of the Company
During 2000, the Board of Directors of the Company held six meetings. The
Board of Directors has an Audit Committee (the "Audit Committee"), of which
Gregory J. Cotter, Chairman, Thomas E. Fairley, and Hugh J. Kelly are members,
and a Compensation Committee (the "Compensation Committee"), of which Huey J.
Wilson, Chairman, Mr. Cotter, Alden J. Laborde, and John P. Laborde, are
members. The Board of Directors does not have a Nominating Committee. The
Audit Committee, which met twice during 2000, reviews the Company's annual
audit and meets with the Company's independent auditors to review the
Company's internal controls and financial management practices. The
Compensation Committee, which met twice during 2000, recommends to the Board
of Directors compensation for the Company's key employees, administers the
2
Company's stock incentive plan, and performs such other functions as may be
prescribed by the Board of Directors. The composition of Board committees is
reviewed and re-determined each year at the initial meeting of the Board after
the annual meeting of shareholders. Each of the present directors attended at
least 75% of the aggregate number of the 2000 meetings of the Board and of the
committees on which he served during the periods of his Board membership and
committee service.
In 2000 each non-employee director received an annual fee of $12,000 for
his services as a director and an attendance fee of $1,000 for each Board or
committee meeting. In 2001 each non-employee director will receive $15,000 for
his services as a director and an attendance fee of $1,200 for each Board or
committee meeting. All directors are reimbursed for reasonable out-of-pocket
expenses incurred in attending Board and committee meetings.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, controller, and beneficial owners of more than
10% of the Common Stock to file certain beneficial ownership reports with the
Securities and Exchange Commission. Each of Messrs. Chauvin, Bourke and
Gallagher failed to file timely a statement on Form 5 for 2000 reporting a
grant of employee stock options. These transactions were reported late on a
Form 4 filed for February 2001.
3
STOCK OWNERSHIP
The following table sets forth, as of February 1, 2001, certain information
regarding beneficial ownership of Company Common Stock by (i) each director of
the Company, (ii) each executive officer of the Company, (iii) all directors
and executive officers of the Company as a group, and (iv) each other
shareholder known by the Company to be the beneficial owner of more than 5% of
the outstanding Common Stock. Unless otherwise indicated, the Company believes
that the shareholders listed below have sole investment and voting power with
respect to their shares based on information furnished to the Company by such
shareholders.
Number of Shares Percent of
Beneficially Outstanding
Name of Beneficial Owner Owned (1) Common Stock
------------------------ ---------------- ------------
Murphy A. Bourke................................ 36,800 *
Kerry J. Chauvin................................ 145,800 1.2%
Gregory J. Cotter............................... 5,000(2) *
Thomas E. Fairley............................... 10,000 *
Joseph P. Gallagher, III........................ 57,000 *
Hugh J. Kelly................................... 4,000 *
Alden J. Laborde (3)............................ 1,524,900 13.0%
John P. Laborde................................. 83,100(4) *
Kirk J. Meche................................... 8,030 *
Huey J. Wilson (5).............................. 2,201,000(6) 18.8%
All directors and executive officers as a group
(10 persons)................................... 4,075,830 34.5%
New South Capital Management, Inc. (7).......... 1,174,000(8) 10.0%
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* Less than one percent.
(1) Includes shares that could be acquired within sixty days after February 1,
2001 upon the exercise of options granted pursuant to the Company stock
option plan, as follows: Mr. Bourke, 14,600 shares; Mr. Chauvin, 81,800
shares; Mr. Gallagher, 27,000 shares; Mr. Meche, 7,280 shares; all
directors and executive officers as a group, 130,680 shares.
(2) Does not include any of the shares referred to in note (6) below.
(3) The address of Mr. Laborde is 210 Baronne Street, Suite 822, New Orleans,
Louisiana 70112.
(4) Includes 51,000 shares owned by Mr. Laborde's two children.
(5) The address of Mr. Wilson is 3636 South Sherwood Forest Boulevard, Suite
650, Baton Rouge, Louisiana 70816.
(6) Includes 135,000 shares held by a charitable foundation of which Messrs.
Cotter and Wilson are trustees. Messrs. Cotter and Wilson disclaim
beneficial ownership of these shares.
(7) The address of New South Capital Management, Inc. is 100 Ridgeway Loop
Road, Suite 233, Memphis, Tennessee 38120.
(8) Based on the Schedule 13G dated January 9, 2001 filed by New South Capital
Management, Inc. with the Securities and Exchange Commission.
4
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid in 2000, 1999, and
1998 by the Company to its Chief Executive Officer and each of its most highly
compensated executive officers whose salary and bonus exceeded $100,000 for
2000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Annual
Compensation Securities
----------------- Underlying All Other
Name and Principal Position Year Salary Bonus(1) Options(#) Compensation(2)
--------------------------- ---- -------- -------- ---------- ---------------
Kerry J. Chauvin............ 2000 $262,882 $69,839 50,000 $6,868
President and Chief
Executive Officer 1999 259,448 35,037 15,000 6,985
1998 262,917 271,994 15,000 7,974
Murphy A. Bourke............ 2000 $138,202 $29,442 23,000 $6,092
Executive Vice President-- 1999 137,396 14,808 6,000 6,985
Marketing 1998 139,167 114,956 6,000 7,974
Joseph P. Gallagher, III.... 2000 $131,338 $28,073 23,000 $5,771
Vice President--Finance,
Chief 1999 129,572 13,962 6,000 6,985
Financial Officer, and
Treasurer 1998 131,000 108,387 6,000 7,974
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(1) For 2000, the Company's executive officers were paid bonuses equal to a
specified percentage of the Company's income before taxes and before
deduction of the executive bonuses. The percentages for Messrs. Chauvin,
Bourke and Gallagher were 1.02%, .43% and .41%, respectively.
(2) Includes (i) matching and profit-sharing contributions of $6,468, $5,692
and $5,371 in 2000, $6,596, $6,596, and $6,596 in 1999, $7,574, $7,574 and
$7,574 in 1998 to the Company's 401(k) plan on behalf of Messrs. Chauvin,
Bourke and Gallagher, respectively, and (ii) premium payments of $400,
$400, and $400 in 2000, $389, $389 and $389 in 1999, and $400, $400 and
$400 in 1998 for Messrs. Chauvin, Bourke and Gallagher, respectively,
under a long-term disability insurance plan, which premium payments are
attributable to benefits in excess of those benefits provided generally
for other employees.
5
Stock Option Grants
The following table sets forth information with respect to all stock
options granted in 2000 by the Company to each of the Named Executive
Officers.
Option Grants in 2000
Grant Date
Individual Grants Value
---------------------------------------------------------- ----------
Number of % of Total
Securities Options Granted Exercise or Grant Date
Underlying Options To Employees in Base Expiration Present
Name Granted (1) 2000 Price ($/Sh) Date Value ($)
---- ------------------ --------------- ------------ ---------- ----------
Kerry J. Chauvin........ 25,000 33.3% 9.50 1/3/10 162,000(2)
25,000 7.8% 15.00 11/17/10 255,750(3)
Murphy A. Bourke........ 9,000 12.0% 9.50 1/3/10 58,320(2)
14,000 4.4% 15.00 11/17/10 143,220(3)
Joseph P. Gallagher
III.................... 9,000 12.0% 9.50 1/3/10 58,320(2)
14,000 4.4% 15.00 11/17/10 143,220(3)
- --------
(1) Each of the stock options granted in 2000 by the Company to the Named
Executive Officers will become exercisable over a five-year period. The
stock options will become immediately exercisable in their entirety upon
(i) a reorganization, merger or consolidation of the Company in which the
Company is not the surviving entity, (ii) the sale of all or substantially
all of the assets of the Company, (iii) a liquidation or dissolution of
the Company, (iv) a person or group of persons, other than Alden J.
Laborde or Huey J. Wilson or any employee benefit plan of the Company,
becoming the beneficial owner of 30% or more of the Company's voting stock
or (v) the replacement of a majority of the Board of Directors in a
contested election (a "Significant Transaction"). The Compensation
Committee also has the authority to take several actions regarding
outstanding stock options upon the occurrence of a Significant
Transaction, including requiring that outstanding stock options remain
exercisable only for a limited time, providing for mandatory conversion of
outstanding stock options in exchange for either a cash payment or Common
Stock, making equitable adjustments to stock options or providing that
outstanding stock options will become stock options relating to securities
to which a participant would have been entitled in connection with the
Significant Transaction if the stock options had been exercised.
(2) The Black-Scholes option-pricing model was used to determine the grant
date present value of the stock options granted in January 2000 by the
Company to the Named Executive Officers. Under the Black-Scholes option-
pricing model, the grant date present value of each stock option referred
to in the table was calculated to be $6.48. The following facts and
assumptions were used in making such calculation: (i) an exercise price of
$9.50 for each such stock option; (ii) a fair market value of $9.50 for
one share of Common Stock on the date of grant; (iii) no dividend payments
on Common Stock; (iv) a stock option term of 10 years; (v) a stock
volatility of 58.8%, based on an analysis of monthly closing stock prices
of shares of Common Stock during a 45-month period; and (vi) an assumed
risk-free interest rate of 5.79%, which is equivalent to the yield on a
ten-year treasury note on the date of grant. No other discounts or
restrictions related to vesting or the likelihood of vesting of stock
options were applied. The resulting grant date present value of $6.48 for
each stock option was multiplied by the total number of stock options
granted to each of the Named Executive Officers to determine the total
grant date present value of such stock options granted to each Named
Executive Officer, respectively.
(3) The Black-Scholes option-pricing model was used to determine the grant
date present value of the stock options granted in November 2000 by the
Company to the Named Executive Officers. Under the Black-Scholes option-
pricing model, the grant date present value of each stock option referred
to in the table was calculated to be $10.23. The following facts and
assumptions were used in making such calculation: (i) an exercise price of
$15.00 for each such stock option; (ii) a fair market value of $15.00 for
one share of Common Stock on the date of grant; (iii) no dividend payments
on Common Stock; (iv) a stock option term of 10 years; (v) a stock
volatility of 58.8%, based on an analysis of monthly closing stock prices
of shares of Common Stock during a 45-month period; and (vi) an assumed
risk-free interest rate of 5.80%, which is equivalent to the yield on a
ten-year treasury note on the date of grant. No other discounts or
restrictions related to vesting or the likelihood of vesting of stock
options were applied. The resulting grant date present value of $10.23 for
each stock option was multiplied by the total number of stock options
granted to each of the Named Executive Officers to determine the total
grant date present value of such stock options granted to each Named
Executive Officer, respectively.
6
Stock Option Exercises and Outstanding Stock Options
The following table sets forth information with respect to all Company
stock option exercises in 2000 by each of the Named Executive Officers and all
outstanding Company stock options held by each of the Named Executive Officers
as of December 31, 2000.
Aggregated Option Exercises in 2000 and Option Values as of December 31, 2000
Number of Securities Value of Unexercised
Number of Underlying Unexercised In-the-Money Options
Shares Options at 12/31/00 (#) at 12/31/00 ($)
Acquired Value ------------------------- -------------------------
on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
--------------- ------------ ----------- ------------- ----------- -------------
Kerry J. Chauvin........ 0 0 51,600 109,400 489,626 841,767
Murphy A. Bourke........ 17,200 138,050 2,400 47,400 451 347,611
Joseph P. Gallagher,
III.................... 0 0 16,400 44,200 150,533 313,410
Compensation Committee Interlocks and Insider Participation
Huey J. Wilson, Chairman, Gregory J. Cotter, Alden J. Laborde, and John P.
Laborde, who comprise the Compensation Committee, are non-employee directors
of the Company. Alden J. Laborde has been Chairman of the Board of the Company
since 1986 and was Chief Executive Officer of the Company from 1986 to 1990.
In connection with the initial public offering of its Common Stock, the
Company entered into registration rights agreements (the "Registration Rights
Agreements") with Alden J. Laborde and Huey J. Wilson, pursuant to which each
of them has one remaining right to require the Company to register shares of
Common Stock owned by him under the Securities Act. If either one of them
makes such a demand, the other one is entitled to include his shares in such
registration. If the Company proposes to register any Common Stock under the
Securities Act in connection with a public offering, each of Messrs. Laborde
and Wilson may require the Company to include all or a portion of the shares
of Common Stock held by such shareholder. The Company has agreed under the
Registration Rights Agreements to pay all the expenses of registration, other
than underwriting discounts and commissions.
Compensation Committee Report on Executive Compensation
The Compensation Committee has the authority, among other things, to
review, analyze, and recommend compensation programs to the Board of Directors
and to administer and grant awards under the Company's employee benefit plans.
Four directors of the Company, Huey J. Wilson, Gregory J. Cotter, Alden J.
Laborde, and John P. Laborde, comprise the Compensation Committee. Alden J.
Laborde is Chairman of the Board of the Company and was Chief Executive
Officer of the Company from 1986 to 1990. Neither Mr. Wilson, Mr. Cotter, nor
John P. Laborde are present or former officers of the Company, and none of the
members of the Compensation Committee are employees of the Company.
The Company's executive compensation is comprised primarily of (i)
salaries, (ii) annual cash incentive bonuses and (iii) long-term incentive
compensation in the form of stock options granted under the Long-Term
Incentive Plan of the Company. The salaries of Kerry J. Chauvin, the President
and Chief Executive Officer, and the other executive officers of the Company
are based on their levels of responsibility and the subjective assessment of
their performance.
The Company has no formal bonus plan, but it has adopted an executive
compensation policy that ties a portion of executive compensation to the
short-term performance of the Company. This policy is described in footnote 1
to the "Summary Compensation Table."
7
The Company also provides long-term incentives to executive officers in the
form of stock options granted under the Long-Term Incentive Plan. The stock
option awards are intended to reinforce the relationship between compensation
and increases in the market price of the Company's common stock and to align
the executive officers' financial interests with that of the Company's
stockholders. The size of awards is based upon the position of each
participating officer and a subjective assessment of each participant's
individual performance. The table entitled "Option Grants in 2000" under the
heading "Executive Compensation" sets forth the stock options granted in 2000
to three executive officers, including Mr. Chauvin, the Chief Executive
Officer, based upon position and subjective assessment.
Section 162(m) of the Internal Revenue Code limits the tax deduction to $1
million for compensation paid to certain highly compensated executive
officers. Qualified performance-based compensation is excluded from this
deduction limitation if certain requirements are met. No executive officer of
the Company reached the deductibility limitation for 2000. The Compensation
Committee believes that the stock options granted to executive officers, as
discussed above, qualify for the exclusion from the deduction limitation under
Section 162(m). The Compensation Committee anticipates that the remaining
components of individual executive compensation that do not qualify for an
exclusion from Section 162 (m) should not exceed $1 million in any year and
therefore will continue to qualify for deductibility.
The Compensation Committee
Huey J. Wilson, Gregory J. Cotter Alden J. Laborde John P. Laborde
Chairman
8
Performance Graph
The following graph compares the cumulative total stockholder return on the
Common Stock from April 3, 1997, which is the date that the Common Stock was
initially offered to the public and registered pursuant to Section 12 of the
Securities Exchange Act of 1934, to December 31, 2000, with the cumulative
total return of the Standard & Poor's 500 Stock Index and Standard & Poor's
500 Oil & Gas (Drilling & Equipment) Index for the same period. The returns
are based on an assumed investment of $100 on April 3, 1997 in Common Stock
and in each of the indexes and on the assumption that dividends were
reinvested.
Comparison of Cumulative Total Return*
Gulf Island Fabrication, Inc., S&P 500 Index &
S&P 500 Oil & Gas (Drilling & Equipment) Index
April 3, December 31, December 31, December 31, December 31,
1997 1997 1998 1999 2000
-------- ------------ ------------ ------------ ------------
Gulf Island
Fabrications, Inc. .... $100.00 $266.67 $103.33 $125.00 $242.51
S&P 500 Index........... 100.00 130.90 168.31 203.72 185.18
S&P 500 Oil & Gas
(Drilling & Equipment)
Index.................. 100.00 151.14 86.43 117.94 160.29
ASSUMES $100 INVESTED ON APRIL 3, 1997 IN GULF ISLAND FABRICATION, INC. COMMON
STOCK, S&P 500 INDEX & S&P 500 OIL & GAS (DRILLING & EQUIPMENT) INDEX
* TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
9
Audit Committee Report
The Audit Committee of the Board of Directors of the Company (the "Audit
Committee") is composed of three directors and operates under a written
charter adopted by the Board of Directors, which is attached as Appendix A to
this proxy statement. The members of the Audit Committee are independent for
purposes of the National Association of Security Dealers' listing standards.
The members of the Audit Committee are Gregory J. Cotter, Chairman, Thomas E.
Fairley, and Hugh J. Kelly. The Audit Committee recommends to the Board of
Directors, subject to shareholder ratification, the selection of the
independent auditors of the Company.
Management is responsible for the internal controls and the financial
reporting process of the Company. The independent auditors are responsible for
performing an independent audit of the consolidated financial statements of
the Company in accordance with generally accepted auditing standards and to
issue a report thereon. The Audit Committee's responsibility is to monitor and
to oversee these processes.
In this context, the Audit Committee met and held discussions with
management and the independent auditors. Management represented to the
Committee that the consolidated financial statements of the Company for 2000
were prepared in accordance with generally accepted accounting principles, and
the Audit Committee reviewed and discussed the audited consolidated financial
statements for 2000 with management and the independent auditors. The
Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgements as to the
quality, not just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the Audit
Committee under generally accepted auditing standards. The Audit Committee
discussed with the independent auditors the matters required to be discussed
by Statement on Auditing Standards No. 61 (Communication with Audit
Committees). The independent auditors of the Company also provided to the
Audit Committee the written disclosures and the letter required by
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), and the Audit Committee discussed with the independent
auditors that firm's independence. The Audit Committee considered whether the
provision of the services covered below under the caption "All Other Fees" is
compatible with maintaining the principal auditor's independence.
Based upon the Audit Committee's review and discussions described above and
the Audit Committee's review of the report of the independent auditors to the
Audit Committee, the Audit Committee recommended that the Board of Directors
include the audited consolidated financial statements in the Annual Report on
Form 10-K of the Company for the year ended December 31, 2000 filed with the
Securities and Exchange Commission.
The Audit Committee
Gregory J. Cotter, Chairman Thomas E. Fairley Hugh J. Kelly
RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors seeks shareholder ratification of the Board's
appointment of Ernst & Young LLP to act as the independent auditors of the
financial statements of the Company and its subsidiaries for 2001. The Board
has not determined what, if any, action would be taken should the appointment
of Ernst & Young LLP not be ratified. One or more representatives of Ernst &
Young LLP will be available at the Meeting to respond to appropriate
questions, and those representatives will also have an opportunity to make a
statement.
Audit Fees
The aggregate fees billed by Ernst & Young LLP for professional services
rendered for the audit of the annual financial statements of the Company for
2000 and the reviews of the financial statements included in the quarterly
reports on Form 10-Q of the Company for 2000 were $59,000.
10
All Other Fees
The aggregate fees billed for all other services rendered by Ernst & Young
LLP for 2000 were $86,000.
OTHER MATTERS
Quorum and Voting
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock of the Company is necessary to constitute a quorum.
Shareholders voting, or abstaining from voting, by proxy on any issue will be
counted as present for purposes of constituting a quorum. If a quorum is
present, (i) the election of the two directors to be elected at the Meeting
will be determined by plurality vote (that is, the two nominees receiving the
largest number of votes will be elected) and (ii) a majority of votes actually
cast will decide any other matter properly brought before the Meeting for a
vote of shareholders. Shareholders for which proxy authority to vote for any
nominee for election as a director is withheld by the shareholder and shares
that have not been voted by brokers who may hold shares on behalf of the
beneficial owners ("broker non-votes") will not be counted as voted for the
affected nominee. With respect to all other matters, shares not voted as a
result of abstentions will have the same effect as votes against those
matters, but broker non-votes will not be considered as voted for purposes of
determining whether or not a majority of votes were cast for such matters.
Other Business
Management has not received any notice that a shareholder desires to
present any matter for action by shareholders at the Meeting and is unaware of
any matter for action by shareholders at the Meeting other than the matters
described in the accompanying notice. The enclosed proxy will, however, confer
discretionary authority with respect to any other matter that may properly
come before the Meeting or any adjournment thereof. It is the intention of the
persons named in the enclosed proxy to vote in accordance with their best
judgment on any such matter.
Shareholder Proposals
Any shareholder who desires to present a proposal qualified for inclusion
in the Company's proxy materials for the annual meeting of shareholders to be
held in 2002 (the "2002 Annual Meeting") must forward the proposal in writing
to the Secretary of the Company at the address shown on the first page of this
proxy statement in time to arrive at the Company no later than November 23,
2001. The Amended and Restated Articles of Incorporation of the Company
provide that shareholders intending to nominate a director must furnish timely
written notice containing specified information concerning, among other
things, information about the nominee and the shareholder making the
nomination. In general, to be timely a shareholder's notice must be received
by the Secretary of the Company not less than 45 days nor more than 90 days
prior to the shareholder's meeting. The Company will be permitted to disregard
any nomination that fails to comply with these procedures. Proxies solicited
on behalf of the Board of Directors for the 2002 Annual Meeting will confer
discretionary authority to vote with respect to any other matter properly
submitted by a shareholder for action at the 2002 Annual Meeting if the
Company does not, on or before February 6, 2002, receive written notice,
addressed to the Secretary of the Company at the address shown on the first
page of this proxy statement, that the shareholder intends to do so.
By Order of the Board of Directors
/s/ Valarae L. Bates
VALARAE L. BATES
Secretary
Houma, Louisiana
March 23, 2001
11
Appendix A
THE CHARTER OF
THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS OF
GULF ISLAND FABRICATION, INC.
Organization
This charter governs the operations of the audit committee. The charter
complies with certain rules adopted by the Securities and Exchange Commission,
the Auditing Standards Board, and the National Association of Securities
Dealers, Inc. (the "NASD") relevant to audit committees, including rules
derived from recommendations made by the Blue Ribbon Committee on Improving
the Effectiveness of Corporate Audit Committees. The committee shall review
and reassess the charter at least annually and report its recommendations to
the board of directors. The committee shall be appointed by the board of
directors and shall comprise at least three directors, each of whom shall be
an "independent director" under NASD Rule 4200(a)(14). All committee members
shall meet the financial literacy requirements set forth in the first sentence
of NASD Rule 4310(c)(26)(B)(i), and at least one member shall have the
accounting or related financial management expertise described in the second
sentence of NASD Rule 4310(c)(26)(B)(i).
Statement of Policy
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, and
the annual independent audit of the Company's financial statements. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, the internal
auditors and management of the Company. In discharging its oversight role, the
committee is empowered to investigate any matter brought to its attention with
full access to all books, records, facilities, and personnel of the Company
and the power to retain outside counsel or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the audit committee is to oversee the
Company's financial reporting process on behalf of the board and report the
results of their activities to the board. The committee in carrying out its
responsibilities believes its policies and procedures should remain flexible
in order to react to changing conditions and circumstances.
The following shall be the principal recurring processes of the audit
committee in carrying out its oversight responsibilities. The processes are
set forth as a guide with the understanding that the committee may supplement
them as appropriate.
. The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit committee, as representatives of
the Company's shareholders. The board and the committee shall have the
ultimate authority and responsibility to select, to evaluate and, if
appropriate, to replace the independent auditors. The committee shall
(i) receive from the auditors the letter and the written disclosures
delineating all relationships between the auditor and the Company, as
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, (ii) discuss with the auditors their
independence from management and the Company and the matters included in
those written disclosures, including any disclosed relationships or
services that may impact the objectivity and independence of the
auditor, and (iii) take, or recommend that the board take, appropriate
action to oversee the independence of the auditor. Annually, the
committee shall review and recommend to the board the selection of the
Company's independent auditors, subject to shareholder approval.
A-1
. The committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits including the adequacy of staffing and compensation. The internal
audit function may be contracted to a third party, which may be the
independent auditors. Also, the committee shall discuss with management,
the internal auditors, and the independent auditors the adequacy and
effectiveness of the accounting and financial controls. Further, the
committee shall meet separately with the internal auditors and the
independent auditors, with and without management present, to discuss
the results of their examinations.
. The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the committee shall
discuss the results of the quarterly review and any other matters
required to be communicated to the committee by the independent auditors
under generally accepted auditing standards. The chair of the committee
may represent the entire committee for the purposes of this review.
. The committee shall review and discuss with management and the
independent auditors the financial statements proposed to be included in
the Company's Annual Report on Form 10-K and, based on the review and
discussions, recommend to the board whether they are acceptable for
inclusion in the Annual Report on Form 10-K. The committee shall discuss
the results of the annual audit and any other matters required to be
communicated to the committee by the independent auditors under
Statements on Auditing Standard No. 61, Communication with Audit
Committees.
A-2
This Proxy is Solicited on Behalf of the Board of Directors of
GULF ISLAND FABRICATION, INC.
The undersigned hereby constitutes and appoints Kerry J. Chauvin and Joseph P.
Gallagher, III, or either of them, proxy for the undersigned, with full power
of substitution, to represent the undersigned and to vote, as designated on the
reverse side, all of the shares of Common Stock of Gulf Island Fabrication, Inc.
(the "Company") that the undersigned is entitled to vote held of record by the
undersigned on March 9, 2001, at the annual meeting of shareholders of the
Company to be held on April 25, 2001 (the "Annual Meeting"), and at all
adjournments thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES AND FOR THE PROPOSAL LISTED ON THE REVERSE SIDE. THE
INDIVIDUALS DESIGNATED ABOVE WILL VOTE IN THEIR DISCRETION ON ANY OTHER MATTER
THAT MAY PROPERLY COME BEFORE THE MEETING.
(Please See Reverse Side)
Please mark, sign, date and return your
proxy card as soon as possible!
Annual Meeting of Shareholders
Gulf Island Fabrication, Inc.
April 25, 2001
Please Detach and Mail in the Envelope Provided
A [X] Please mark your
votes as in this
example.
WITHHOLD
AUTHORITY
FOR all nominees to vote for
listed to the right all nominees
(except as marked to listed to
the contrary below) the right The Board of Directors recommends a vote FOR
the nominees listed below and FOR Proposal 2.
1. Election of the [ ] [ ] Nominees: FOR AGAINST ABSTAIN
nominees for Thomas E. Fairley [ ] [ ] [ ]
directors. Hugh J. Kelly 2. Ratification of
appointment of
INSTRUCTIONS: To withhold authority to vote for any Ernst & Young LLP as
individual nominee, strike a line through the nominee's independent auditors.
name in the list to the right.
3. In their discretion
to vote upon such
other business as may
properly come before
the Annual Meeting or
any adjournment
thereof.
Please mark, sign, date and return this proxy
promptly using the enclosed envelope.
Signature of Shareholder ______________________________ Signature if held jointly _________________________ Date:_____________, 2001
NOTE: Please sign exactly as name appears on the certificate or certificates representing shares to be voted by this proxy, as
shown on the label above. When signing as executor, administrator, attorney, trustee or guardian, please give full title as
such. If a corporation, please sign full corporate name president or other authorized officer. If a partnership, please sign
in partnership name by authorized persons.