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Conrad Industries Inc · DEF 14A · For 5/27/99

Filed On 4/22/99 · SEC File 0-24263 · Accession Number 899243-99-777

  As Of               Filer                 Filing     On/For/As Docs:Pgs              Issuer               Agent

 4/22/99  Conrad Industries Inc             DEF 14A     5/27/99    1:41                                     899243

Definitive Proxy Solicitation Material · Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Statement                            41    202K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Board Committees and their Functions Bonus Shares Change in Control Compensation Committee Interlocks and Insider Participation Compliance with Section 16(a) Directors' Meetings and Compensation Discretionary Voting of Proxies on Other Matters Executive Compensation Louis J. Michot, Jr Nominees for Director Phantom Shares Proposal Number 2: Approval of Increase in the Number of Shares Available Under the 1998 Stock Plan Proposals Proposal Number 1: Election of Directors Report of the Compensation Committee Stockholder Proposals for the 2000 Annual Meeting Stock Plan Transactions with Certain Affiliates Voting Information General Instructions on How to Vote Your Proxy 1998 Form 10-K
1	1st Page
5	Voting Information General Instructions on How to Vote Your Proxy
8	Proposals Proposal Number 1: Election of Directors
"	Nominees for Director
"	Louis J. Michot, Jr
9	Proposal Number 2: Approval of Increase in the Number of Shares Available Under the 1998 Stock Plan
10	Phantom Shares
"	Bonus Shares
11	Change in Control
15	Directors' Meetings and Compensation
"	Board Committees and their Functions
16	Compensation Committee Interlocks and Insider Participation
17	Report of the Compensation Committee
20	Executive Compensation
24	Stock Plan
25	Transactions with Certain Affiliates
28	Compliance with Section 16(a)
"	Stockholder Proposals for the 2000 Annual Meeting
"	Discretionary Voting of Proxies on Other Matters
29	1998 Form 10-K

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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

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

CONRAD INDUSTRIES, INC.
------------------------------------------------
(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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CONRAD INDUSTRIES, INC.
1501 Front Street
Morgan City, Louisiana 70381

April 23, 1999

TO OUR STOCKHOLDERS:

You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of Conrad Industries, Inc. to be held on Thursday, May 27, 1999, at 9:00 a.m.,
local time, at the Petroleum Club of Morgan City, 500 Roderick, Morgan City,
Louisiana. A Notice of the Annual Meeting, proxy statement and form of proxy
card are enclosed with this letter.

We encourage you to read the Notice of the Annual Meeting and proxy statement
so that you may be informed about the business to come before the meeting. Your
participation in Conrad Industries' business is important, regardless of the
number of shares that you hold. To ensure your representation at the meeting,
please promptly sign and return the accompanying proxy card in the enclosed
postage-paid envelope.

We look forward to seeing you on May 27, 1999.

Sincerely,

/s/ William H. Hidalgo
----------------------------
William H. Hidalgo
President and Chief Executive
Officer

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CONRAD INDUSTRIES, INC.
1501 Front Street
Morgan City, Louisiana 70381

----------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999

To the Stockholders of Conrad Industries, Inc.:

When and Where. The 1999 Annual Meeting of Stockholders of Conrad
Industries, Inc. will be held on Thursday, May 27, 1999, at 9:00 a.m., local
time, at the Petroleum Club of Morgan City, 500 Roderick, Morgan City,
Louisiana.

Record Date. Only stockholders of record at the close of business on April
12, 1999 will be entitled to notice of and to vote at the Annual Meeting.

Purpose of the Meeting. The Annual Meeting has been called for the
following purposes:

1. To elect two Class I directors of Conrad Industries, each to serve for
three-year terms until the company's 2002 Annual Meeting of
Stockholders or until their respective successors have been duly
elected and qualified;

2. To approve an increase in the number of shares of common stock subject
to the Conrad Industries, Inc. 1998 Stock Plan;

3. To ratify the appointment of Deloitte & Touche LLP as Conrad
Industries' independent public accountants for its fiscal year ending
December 31, 1999; and

4. To consider and act upon such other business as may properly come
before the meeting or any adjournments thereof.

You will find more information on the nominees for director and the
proposals in the proxy statement. You will find further instructions on how to
vote beginning on page 2 of the proxy statement.

Your Vote Counts! It is important that your shares be represented at the
Annual Meeting regardless of whether you plan to attend. This will ensure the
presence of a quorum at the meeting. Please complete, sign and date the
enclosed proxy card and return it in the envelope provided as promptly as
possible, even if you intend to be present at the meeting. You may revoke your
proxy at any time before it is voted.

By Order of the Board of Directors,

/s/ Cecil A. Hernandez
------------------------------------
Cecil A. Hernandez
Secretary

Morgan City, Louisiana
April 23, 1999

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CONRAD INDUSTRIES, INC.
1501 Front Street
Morgan City, Louisiana 70381

----------------

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS

To Be Held May 27, 1999

· Download Table

CONTENTS OF 1999 PROXY STATEMENT Page
-------------------------------- ----

Voting Information
General Instructions on How to Vote Your Proxy.......................... 2
Voting Rules............................................................ 3
Proposals
Proposal Number 1: Election of Directors................................ 5
Proposal Number 2: Increase in the number of shares subject to 1998
Stock Plan............................................................. 6
Proposal Number 3: Appointment of Independent Public Accountants........ 10
Company Information
Information about Current and Continuing Directors...................... 11
Directors' Meetings and Compensation.................................... 12
Board Committees and their Functions.................................... 12
Compensation Committee Interlocks and Insider Participation............. 13
Report of the Compensation Committee.................................... 14
Executive Compensation.................................................. 17
Transactions with Certain Affiliates.................................... 22
Stock Ownership by Conrad Industries' Largest Stockholders and
Management............................................................. 24
Compliance with Section 16(a)........................................... 25
Stockholder Proposals for the 2000 Annual Meeting....................... 25
Discretionary Voting of Proxies on Other Matters........................ 25
1998 Form 10-K.......................................................... 26
Appendix A
Conrad Industries, Inc. Amended and Restated 1998 Stock Plan

The principal executive offices of Conrad Industries are located at 1501
Front Street, Morgan City, Louisiana 70381. This proxy statement, and the
accompanying Notice of 1999 Annual Meeting of Stockholders and proxy card,
are first being mailed to our stockholders on or about April 23, 1999.

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VOTING INFORMATION

GENERAL INSTRUCTIONS ON HOW TO VOTE YOUR PROXY:

Below are instructions on how to vote, as well as information on your
rights as a stockholder as they relate to voting. Some of the instructions
will differ depending on how your stock is held. It is important to follow the
instructions that apply to your situation.

If your shares are held in "street name," you should vote your shares in
the method directed by your broker or other nominee.

If you plan to attend the meeting and vote in person, your instructions
will depend on how your shares are held:

. Shares registered in your name--Check the appropriate box on the
enclosed proxy card and bring evidence of your stock ownership with
you to the meeting. The proxy card and the evidence of your ownership
will serve as your authorization to vote in person.

. Shares registered in the name of your broker or other nominee--Ask
your broker to provide you with a broker's proxy card in your name
(which will allow you to vote your shares in person at the meeting)
and bring evidence of your stock ownership from your broker.

Remember that attendance at the meeting will be limited to stockholders as of
the record date (or their authorized representatives) with evidence of their
share ownership and guests of Conrad Industries.

How to Revoke Your Proxy. If your shares are registered in your name, you
may revoke your proxy at any time before it is exercised by:

. filing with the Secretary of Conrad Industries a written notice
revoking it,

. executing and returning another proxy bearing a later date, or

. attending the Annual Meeting and expressing a desire to vote your
shares of common stock in person.

If your shares are held in street name, you must contact your broker to
revoke your proxy. Written notices to Conrad Industries must be addressed to
Cecil A. Hernandez, Secretary, Conrad Industries, Inc., 1501 Front Street, P.
O. Box 790, Morgan City, Louisiana 70381. No revocation by written notice will
be effective unless such notice has been received by the Secretary of Conrad
Industries prior to the day of the Annual Meeting or by the inspector of
election at the Annual Meeting.

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VOTING RULES:

Stockholders Entitled to Vote--The Record Date. The close of business on
April 12, 1999 has been fixed as the record date for the determination of
stockholders entitled to vote at the Annual Meeting and any postponement(s) or
adjournment(s) thereof. As of the record date, Conrad Industries had issued and
outstanding 7,077,723 shares of common stock of Conrad Industries. There are no
other classes of voting securities of Conrad Industries outstanding.

Quorum Required. A quorum must exist for us to hold the Annual Meeting. For
a quorum to exist, we will need the presence, either in person or by proxy, of
holders of a majority of the outstanding shares of Conrad Industries' common
stock as of the record date. Abstentions and broker non-votes are counted for
purposes of determining whether a quorum is present. Generally, broker non-
votes occur when shares held by a broker for a beneficial owner are not voted
with respect to a particular proposal because (1) the broker has not received
voting instructions from the beneficial owner and (2) the broker lacks
discretionary voting power to vote such shares.

Number of Votes. You are entitled to one vote per share of Conrad
Industries' common stock that you own as of the record date on each matter that
is called to vote at the Annual Meeting.

Voting to Elect Directors. When voting to elect directors, you have three
options:

. Vote for both of the nominees;

. Vote for only one of the nominees; or

. Withhold authority to vote for all of the nominees.

If a quorum is present at the Annual Meeting, the two persons receiving the
greatest number of votes will be elected to serve as directors. Because of this
rule, any shares that are not voted or any votes that are withheld will not
influence the outcome of the election of directors. Cumulative voting for the
election of directors is not permitted.

Voting on Other Matters. When voting on all other matters, you will also
have three options, but these options are different from those pertaining to
the election of directors:

. Vote "FOR" a given proposal;

. Vote "AGAINST" a given proposal; or

. ABSTAIN from voting on a given proposal.

Each matter, other than the election of directors, requires the affirmative
vote of a majority of the shares present or represented at the Annual Meeting
and entitled to vote on the proposal. An abstention with respect to a
particular proposal will be treated as a vote not cast with respect to such
proposal. Broker non-votes will not affect the results on a proposal because
shares held by brokers who withhold authority to vote will be considered absent
in the voting tallies on these proposals.

A duly executed proxy confers discretionary authority to the persons named
in the proxy authorizing those persons to vote, in their discretion, on any
other matters properly presented at the Annual Meeting. The Board of Directors
is not currently aware of any such other matters to be presented at the
meeting.

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Voting of Proxies with Unmarked Votes. All proxies that are properly
completed, signed and returned prior to the Annual Meeting will be voted. If
you return your proxy with no votes marked, your shares will be voted as
follows:

. "FOR" the election of each of the two nominees for director.

. "FOR" the increase in the number of shares available under the 1998
Stock Plan.

. "FOR" the appointment of Deloitte & Touche LLP as Conrad Industries'
independent public accountants.

It is possible for a proxy to indicate that some of the shares represented
are not being voted as to certain proposals. This occurs, for example, when a
broker is not permitted to vote on a proposal without instructions from the
beneficial owner of the stock. In these cases, non-voted (broker non-votes)
shares are considered absent for those proposals.

Who Counts the Votes. Votes will be counted by American Stock Transfer &
Trust Company, our transfer agent and registrar.

Information about this Solicitation of Proxies. The solicitation of the
proxy accompanying this statement is being made by Conrad Industries' Board of
Directors in connection with the 1999 Annual Meeting of Stockholders. In
addition to the solicitation of proxies by use of this proxy statement,
directors, officers and employees of Conrad Industries may solicit the return
of proxies by mail, personal interview, telephone or telegraph. Officers and
employees of Conrad Industries will not receive additional compensation for
their solicitation efforts, but they will be reimbursed for any out-of-pocket
expenses incurred. Brokerage houses and other custodians, nominees and
fiduciaries will be requested, in connection with the stock registered in
their names, to forward solicitation materials to beneficial owners of such
stock.

All costs of preparing, printing, assembling and mailing the Notice of the
1999 Annual Meeting of Stockholders, this proxy statement, the enclosed form
of proxy card and any additional materials, as well as the cost of forwarding
solicitation materials to the beneficial owners of stock and all other costs
of solicitation, will be borne by Conrad Industries.

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PROPOSALS

PROPOSAL NUMBER 1: ELECTION OF DIRECTORS

Conrad Industries' Charter divides or "classifies" its Board of Directors
into three classes (Classes I, II and III), with respect to the three-year
terms for which the directors in each class individually hold office. Each
class consists, as nearly as possible, of one third of the entire Board. Conrad
Industries' Board of Directors currently has seven members. Each director is
elected to hold office for a term ending on the date of the third annual
meeting following the annual meeting at which such director was elected, except
that the initial terms of office of the current Class I, Class II and Class III
Directors expire at the annual meetings of stockholders to be held in 1999,
2000 and 2001, respectively. The current term for Class I Directors will expire
at this year's Annual Meeting. The current terms for Class II and Class III
Directors will expire at the 2000 and 2001 Annual Meetings of Stockholders,
respectively.

The Board of Directors has nominated and urges you to vote for the election
of the two nominees identified below to serve as Class I directors for a three-
year term or until their successors are duly elected and qualified. Each of the
nominees listed below is a member of Conrad Industries' present Board of
Directors. Proxies solicited hereby will be voted for both nominees unless
stockholders specify otherwise in their proxies.

If, at the time of or prior to the Annual Meeting, any of the nominees
should be unable or decline to serve, the discretionary authority provided in
the proxy may be used to vote for a substitute or substitutes designated by the
Board of Directors. The Board of Directors has no reason to believe that any
substitute nominee or nominees will be required.

Nominees for Director

Class I--Terms Expiring at 2002 Annual Meeting

The two nominees for re-election as Class I directors, and certain
additional information with respect to each of them, are as follows:

· Enlarge/Download Table

Year First
Name Age Position with Conrad Industries Became a Director
---- --- ------------------------------- -----------------

Cecil A. Hernandez...... 42 Vice President--Finance and 1998
Administration, Chief Financial Officer
and Director (Class I)

Louis J. Michot, Jr..... 76 Director (Class I) 1998

Cecil A. Hernandez joined Conrad Industries in January 1998. Mr. Hernandez
has served as Vice President--Finance and Administration, Chief Financial
Officer and Director of Conrad Industries since March 1998. Mr. Hernandez
founded Hernandez & Blackwell CPAs in 1983 and served as its Managing Partner
until December 1997. Hernandez & Blackwell CPAs merged with Darnall, Sikes &
Frederick CPAs in 1996. Additionally, Mr. Hernandez provided accounting and
consulting services for Conrad Industries as the outside Certified Public
Accountant from 1993 until 1997. From 1982 to 1983, Mr. Hernandez served as
Assistant Controller for Oceaneering International, a publicly traded diving
company. Mr. Hernandez was employed at Deloitte Haskins & Sells, an
international accounting firm, from 1979 to 1982.

Louis J. Michot, Jr. has been a Director of Conrad Industries since the
consummation of the initial public offering in June 1998. Since 1991, Mr.
Michot has been Chairman of the Board of Louis J. Michot & Associates, Inc., a
family-owned holding company which at present deals principally in real estate
sales, development and rentals. From 1952 to 1991, Mr. Michot served as its
President and CEO, during which time

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he developed a chain of 45 fast food restaurants in Louisiana, Mississippi and
Texas and became actively engaged in other business ventures. Mr. Michot was
one of the organizers of the Bank of Lafayette and served on its Board of
Directors from 1975 to 1980. He served in the Louisiana Legislature from 1960
to 1964, on the State Board of Education from 1968 to 1972 and as the State
Superintendent of Education from 1972 to 1976. Mr. Michot's wife is a first
cousin of J. Parker Conrad.

The Board of Directors recommends that stockholders vote "FOR" the election
of Messrs. Hernandez and Michot as directors to hold office until the 2002
Annual Meeting of Stockholders and until their successors are elected and
qualified. Proxies executed and returned will be so voted unless contrary
instructions are indicated thereon.

PROPOSAL NUMBER 2: APPROVAL OF INCREASE IN THE NUMBER OF SHARES
AVAILABLE UNDER THE 1998 STOCK PLAN

In March 1998, the Board of Directors and the stockholders approved and
adopted the Conrad Industries, Inc. 1998 Stock Plan. The 1998 Stock Plan
permits the granting of any or all of the following types of awards: stock
appreciation rights, stock options, restricted stock, dividend equivalents,
performance units, automatic director options, phantom shares, limited stock
appreciation rights, bonus stock and cash tax rights.

The Board believes the 1998 Stock Plan provides an enhanced mechanism for
compensating officers and employees of, and any consultants to, Conrad
Industries and its affiliates on the basis of individual and corporate
performance. As of the date of this Proxy Statement, there are 207,457 shares
of common stock remaining for grants of awards under the 1998 Stock Plan.

Conrad Industries' philosophy with respect to management and employee
compensation has been to attract and retain executive and employee talent of
the highest quality through emphasizing equity appreciation incentives without
incurring excessive cash obligations. We expect to continue to emphasize stock-
based incentive compensation in order to closely align the interests of the
executive officers and key members of its workforce with the interests of
Conrad Industries' stockholders. The Board of Directors believes that it is the
recruitment and retention of such individuals upon whom, in large measure, the
sustained progress, growth and profitability of Conrad Industries will depend.
By providing relatively higher stock incentives, Conrad Industries is also able
to maintain salaries of management personnel at reasonable levels. The Board of
Directors believes that its compensation strategy can be implemented for the
foreseeable future if Proposal Number 2 is approved.

The Board has adopted and recommended for approval by the stockholders an
increase in the number of shares of common stock available under the 1998 Stock
Plan. The amendment will increase the number of shares of common stock that may
be issued pursuant to the 1998 Stock Plan from 700,000 to 950,000. Options to
purchase an aggregate of 492,543 shares of common stock have been granted as of
the date of this Proxy Statement under the 1998 Stock Plan. The Board believes
it is in the best interests of Conrad Industries to increase the number of
shares available under the 1998 Stock Plan so as to enable Conrad Industries to
make future grants of options and certain other awards pursuant to the 1998
Stock Plan. Additionally, during the third quarter of 1998, certain executives
of Conrad Industries surrendered and the company canceled 247,277 shares of
restricted stock, decreasing the total number of shares of Conrad Industries
common stock outstanding. A copy of the proposed amended and restated 1998
Stock Plan is set forth as Appendix A to this Proxy Statement. The following
summary of the 1998 Stock Plan is qualified in its entirety to the more
detailed provisions of the 1998 Stock Plan.

Eligibility for Participation. All employees, including officers, of Conrad
Industries and its subsidiaries are eligible for participation in all Awards
under the 1998 Stock Plan, other than automatic Director options. Only
nonemployee directors of Conrad Industries will receive automatic grants of
Director options.

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Administration. The 1998 Stock Plan is administered by the Compensation
Committee of the Board of Directors. Except with respect to the automatic grant
of Director options, the Compensation Committee will select the employees who
will receive Awards, determine the type and terms of Awards to be granted and
interpret and administer the 1998 Stock Plan.

Employee Stock Options. Stock options granted to employees are subject to
such terms and conditions as may be established by the Compensation Committee,
which may include conditioning the exercisability of an option on the
achievement of one or more performance goals, except that in all events: (1) no
stock options may be granted after the termination of the 1998 Stock Plan; (2)
the option exercise price cannot be less than the market value per share of the
common stock of Conrad Industries at the date of grant (unless it is a
replacement option granted to new employees in conjunction with an acquisition
of the stock or property of another corporation); and (3) no stock option may
be exercised more than 10 years after it is granted. Stock options may be
granted either as incentive stock options ("ISOs") under Section 422 of the
Internal Revenue Code of 1986 (the "Code"), non-qualified stock options or a
combination thereof.

The Compensation Committee will determine the form in which payment of the
optionee's exercise price may be made, which may include cash, shares of common
stock of Conrad Industries already owned by the optionee for more than six
months, a "cashless broker exercise" through procedures established by Conrad
Industries, other property approved by the Compensation Committee or any
combination thereof.

Director Stock Options. The 1998 Stock Plan provides that each nonemployee
director of Conrad Industries shall automatically receive on the date of each
annual meeting of Conrad Industries' stockholders (beginning with the 1999
Annual Stockholders' Meeting) an immediately vested option to purchase 1,000
shares of common stock of Conrad Industries at an exercise price per share
equal to the fair market value of the common stock of Conrad Industries on the
date of grant. Each person who becomes a nonemployee director of Conrad
Industries shall automatically receive an immediately vested option to purchase
1,000 shares of common stock of Conrad Industries on the date of such person's
election or appointment at an exercise price per share equal to the fair market
value of the common stock of Conrad Industries on the date of grant. Neither
the Compensation Committee nor the Board of Directors has any discretion with
respect to Director options. Each Director option shall have a term of 10
years, subject to earlier termination depending upon continuity of service on
the Board.

Phantom Shares. The Compensation Committee may grant phantom shares of
common stock of Conrad Industries to employees, which may be payable in cash,
shares of common stock of Conrad Industries or a combination thereof, subject
to the achievement of specified performance goals. The Compensation Committee
shall determine the performance goals to be achieved and the length of the
performance period.

Performance Awards. The Compensation Committee may also grant performance
awards to employees. Performance awards are units equivalent to such value as
the Compensation Committee determines and may consist of payments in cash,
shares of common stock of Conrad Industries or a combination thereof, payable
upon the achievement of specified performance goals. The Compensation Committee
shall determine the performance goals to be achieved and the length of the
performance period.

Bonus Shares. The Compensation Committee may deliver unrestricted shares of
common stock of Conrad Industries to an employee as additional compensation for
the person's services to the company or a subsidiary in lieu of or in addition
to a cash bonus.

Other Stock-Based Awards. The Compensation Committee, in its discretion, may
grant other forms of Awards based on, or payable in, shares of common stock of
Conrad Industries. Subject to certain limitations, participants, including
directors, may elect to defer the receipt of an Award or other compensation in
the form of phantom shares for limited periods.

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Performance Goals. The Compensation Committee shall subject grants of
phantom shares and performance units and, in its discretion, may condition the
exercisability of employee stock options, on the attainment of certain
performance goals. Such performance goals, which may be described in terms of
company-wide objectives, in terms of objectives that are related to performance
of the division, department or function within the company or a subsidiary in
which the employee receiving the Award is employed or in individual or other
terms, and which will relate to a period of time determined by the Compensation
Committee. The performance goals that may be used include one or more of the
following: net income; earnings before interest, taxes, depreciation, and
amortization expenses and noncash compensation expense related to the issuance
of stock and stock options to employees; profit margins, economic value added,
sales; return on equity; return on assets; earnings per share; and cash flows.
Which objectives to use with respect to an Award, the weighting of the
objectives if more than one is used, and whether the objective is to be
measured against a company-established budget or target, an index or a peer
group of companies, shall be determined by the Compensation Committee in its
discretion at the time of grant of the Award. A performance goal need not be
based on an increase or a positive result and may include, for example,
maintaining the status quo or limiting economic losses.

Annual Award Limits. The maximum number of shares of common stock of Conrad
Industries with respect to which any employee can receive stock options, bonus
stock, phantom shares, and other stock-based awards during any calendar year is
250,000. In addition, no employee can receive performance award grants having a
value in excess of $2 million in any calendar year.

Transferability. Awards under the 1998 Stock Plan generally will not be
transferable other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order; provided, however, the
Compensation Committee may, in its discretion, permit a participant to transfer
nonqualified stock options to the participant's "immediate family members", as
defined in the 1998 Stock Plan.

Adjustments. The Compensation Committee may provide for adjustment of Awards
under the 1998 Stock Plan if it determines such adjustment is required to
prevent dilution or enlargement of the rights of participants in the 1998 Stock
Plan that would otherwise result from a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, reorganization
or other similar corporate transaction.

Term of the Plan. Unless sooner terminated, the 1998 Stock Plan will
terminate on March 31, 2008 after which date no additional Awards may be made
under it; however all then outstanding Awards will continue pursuant to their
terms.

Tax Withholding. The 1998 Stock Plan permits the Compensation Committee to
allow a participant, upon exercise of an option or payment of an Award, to
satisfy any applicable federal tax withholding requirements in the form of
shares of common stock of Conrad Industries, including shares issuable upon
exercise or payment of such Award.

Change in Control. The 1998 Stock Plan provides that upon a "change in
control" of Conrad Industries, all Awards will become immediately exercisable
or payable, as the case may be. A "change in control" of Conrad Industries
shall be deemed to occur if a person or group acquires 30% or more of the
Company's voting securities, the directors at the beginning of the 1998 Stock
Plan cease to constitute a majority of the Board of Directors (but a director
whose election or nomination was approved by a majority of the current
directors will be deemed a continuing director), the stockholders of the
company approve a merger or consolidation of the Company with any other company
(with certain exceptions), the stockholders of Conrad Industries approve an
agreement for the sale, exchange or disposition by the company of all or a
substantial portion of the company's assets or the stockholders of the Conrad
Industries adopt a plan of complete liquidation of the company, or the date
Conrad Industries files a report or proxy statement with the Securities and
Exchange Commission that a change in control has or may occur pursuant to any
then existing contract or transaction.

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Amendment and Termination. The Board of Directors of Conrad Industries may
amend or terminate the 1998 Stock Plan at any time without stockholder
approval, except for any amendment that applicable law or stock exchange rules
require stockholder approval. Unless the term of the 1998 Stock Plan is
extended or earlier terminated, the 1998 Stock Plan will terminate on March 31,
2008.

Certain Federal Income Tax Consequences. The following is a brief summary of
certain of the federal income tax consequences of certain transactions under
the 1998 Stock Plan based on current federal income tax laws. This summary is
not intended to be exhaustive and does not describe state or local tax
consequences. Additional or different federal tax consequences to the employee,
director or Conrad Industries may result depending upon other considerations
not described below.

In general: (1) no income will be recognized by an optionee at the time a
non-qualified stock option (an option not qualified under Section 422 of the
Code) ("NQO") is granted; (2) at the time of exercise of a NQO, ordinary income
will be recognized by the optionee in an amount equal to the difference between
the option price paid for the shares and the fair market value of the shares if
they are nonrestricted on the date of exercise; (3) at the time of sale of
shares acquired pursuant to the exercise of a NQO, any appreciation (or
depreciation) in the value of the shares after the date of exercise will be
treated as either short term or long term capital gain (or loss) depending on
how long the shares have been held.

No income generally will be recognized by an optionee upon the grant or
exercise of an ISO, although the excess of the fair market value on the date of
exercise over the option price is included in alternative minimum taxable
income for alternative minimum tax purposes. However, if the optionee exercises
the ISO and disposes of the shares of common stock of Conrad Industries in the
same year and the amount realized is less than the fair market value on the
date of exercise, only the difference between the amount realized and the
adjusted basis of the stock will be included in alternative minimum taxable
income. If shares of common stock of Conrad Industries are issued to an
optionee pursuant to the exercise of an ISO and no disposition of the shares is
made by the optionee within two years after the date of grant or within one
year after the transfer of the shares to the optionee (the "Holding Periods"),
then, upon the sale of the shares, any amount realized in excess of the option
price will be taxed to the optionee as long term capital gain and any loss
sustained will be a long term capital loss.

If shares of common stock of Conrad Industries acquired upon the exercise of
an ISO are disposed of prior to the expiration of either Holding Period
described above, the optionee generally will recognize ordinary income in the
year of disposition in an amount of equal to any excess of the fair market
value of the shares at the time of exercise (or, if less, the amount realized
on the disposition of the shares in a sale or exchange) over the option price
paid for the shares. Any further gain (or loss) realized by the optionee
generally will be taxed as short term or long term capital gain (or loss)
depending on the holding period.

No income generally will be recognized upon the grant of phantom shares or
performance awards. Upon payment in respect of phantom shares or earned
performance awards, the recipient generally will be required to include as
taxable ordinary income in the year of receipt an amount equal to the amount of
cash received and the fair market value of any nonrestricted shares of common
stock of Conrad Industries received less any amount paid for such award at the
time of payment or transfer pursuant to the fulfillment of the specified
conditions or the achievement of the performance goals.

The recipient of bonus stock generally will be subject to tax at ordinary
income rates on the fair market value of the shares of common stock of Conrad
Industries on the date that such shares are transferred to the recipient, and
the capital gain or loss holding period for such shares will also commence on
that date.

To the extent that a participant recognizes ordinary income in the
circumstances described above, Conrad Industries or subsidiary for which the
participant performs services will be entitled to a corresponding

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deduction for federal income tax purposes provided that, among other things,
(1) the income meets the test of reasonableness, is an ordinary and necessary
business expense, (2) is not an "excess parachute payment" within the meeting
of Section 280G of the Code, (3) if the $1.0 million limitation of Section
162(m) of the Code is exceeded, the compensation qualifies as "performance
based" under such section, and (4) Conrad Industries has timely and properly
reported such compensation income to the Internal Revenue Service.

The Board of Directors recommends that stockholders vote "FOR" the approval
of an increase in the number of shares available under the 1998 Stock Plan.
Proxies executed and returned will be so voted unless contrary instructions are
indicated thereon.

PROPOSAL NUMBER 3: RATIFICATION AND APPROVAL OF INDEPENDENT PUBLIC
ACCOUNTANTS

The Board of Directors has appointed the firm of Deloitte & Touche LLP as
Conrad Industries' independent public accountants to make an examination of the
accounts of Conrad Industries for the fiscal year ending December 31, 1999,
subject to ratification by Conrad Industries' stockholders. Representatives of
Deloitte & Touche LLP will be present at the Annual Meeting and will have an
opportunity to make a statement, if they desire to do so. They will also be
available to respond to appropriate questions from stockholders attending the
Annual Meeting.

The Board of Directors recommends that stockholders vote "FOR" ratification
and approval of Deloitte & Touche LLP's appointment. Proxies executed and
returned will be so voted unless contrary instructions are indicated thereon.

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COMPANY INFORMATION

INFORMATION ABOUT THE CURRENT AND CONTINUING DIRECTORS

· Enlarge/Download Table

Name Age Position
---- --- --------

J. Parker Conrad.................... 83 Co-Chairman of the Board of Directors (Class III)

John P. Conrad, Jr.................. 55 Co-Chairman of the Board of Directors (Class III)

William H. Hidalgo.................. 59 President, Chief Executive Officer and Director (Class II)

Cecil A. Hernandez.................. 42 Vice President--Finance and Administration,
Chief Financial Officer and Director (Class I)

Michael J. Harris................... 49 Director (Class II)

Louis J. Michot, Jr................. 76 Director (Class I)

Richard E. Roberson, Jr............. 63 Director (Class III)

Information regarding the business experience of Mr. Hernandez and Mr.
Michot is set forth above under the heading "--Nominees for Director."

J. Parker Conrad founded Conrad Industries and has served as Chairman of the
Board of Conrad Industries from its inception in 1948 and as President of
Conrad Industries from 1948 until 1994. Mr. Conrad has served as Co-Chairman of
the Board of Conrad Industries since March 1998. Mr. Conrad is the father of
John P. Conrad, Jr.

John P. Conrad, Jr. has been with Conrad Industries since 1962, serving as
Vice President of Conrad Industries since 1982 and as Co-Chairman of the Board
of Conrad Industries since March 1998. Mr. Conrad founded Johnny's Propeller
Shop, a marine-related service company, in 1963 and has been Chairman of the
Board of this Company since its inception. Mr. Conrad is also the Chairman and
President of Bay Star, a Houston-based paging company which Mr. Conrad founded
in 1986. Additionally, Mr. Conrad is founder of Venture Transport, Inc., a
specialized carrier in oil field and energy equipment, and has served on its
Board of Directors since its inception in 1987.

William H. Hidalgo has served as President and Chief Executive Officer of
Conrad Industries since May 1994. Mr. Hidalgo has served as President, Chief
Executive Officer and Director of Conrad Industries since March 1998. Prior to
joining Conrad Industries, Mr. Hidalgo was employed by Oil & Gas Marine
Service, Inc., a marine-related service company, from 1977 to 1994, and from
1988 to 1994 was responsible for all marine operations as Vice President and
General Manager. Mr. Hidalgo has 35 years experience in the marine business and
has been actively involved in the design, construction, repair, conversion,
modification, and operation of marine vessels throughout his career. Mr.
Hidalgo is a licensed professional Civil Engineer with extensive experience in
the design and construction of energy related marine structures.

Michael J. Harris has been a Director of Conrad Industries since the
consummation of the initial public offering in June 1998. Mr. Harris is a
Managing Director of Morgan Keegan & Company, Inc., where he has been employed
since 1986. Morgan Keegan & Company, Inc. is a subsidiary of Morgan Keegan,
Inc., a publicly traded firm providing securities brokerage, investment banking
and other financial services. Mr. Harris has headed the Energy Investment
Banking Group of Morgan Keegan since 1994 and prior to 1994 was the senior
energy securities analyst.

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Richard E. Roberson, Jr. has been a Director of Conrad Industries since the
consummation of the initial public offering in June 1998. Mr. Roberson served
as Vice President, Chief Financial Officer, Treasurer and director of Global
Industries, Ltd. from December 1992 to May 1996, when he retired. From March
1986 until September 1991, Mr. Roberson served as Vice President--Finance for
Ocean Drilling & Exploration Company. Additionally, Mr. Roberson served as a
director of UNIFAB International, Inc. from September 1997 to August 1998. Mr.
Roberson has over 30 years of experience in the oil and gas and oil service
industry, including over 20 years as an accounting and financial officer.

DIRECTORS' MEETINGS AND COMPENSATION

During 1998, the Board of Directors met three times and took certain
additional actions by unanimous written consent in lieu of meetings. During
1998, no director of Conrad Industries attended fewer than 75 percent of the
meetings of the Board of Directors.

Conrad Industries' directors who are employees do not receive any cash
compensation for service on the Board of Directors or any committee. The
directors are, however, reimbursed for expenses incurred in connection with
attending each board and committee meeting, and for other expenses incurred in
their capacity as Directors. Directors who are not employees of Conrad
Industries receive a fee of $12,000 annually, $1,000 for attendance at each
Board of Directors meeting and $500 for each committee meeting attended
(unless held on the same day as the Board of Directors meeting). Under the
1998 Stock Plan, each non-employee director receives (1) the grant of options
to purchase 1,000 shares of Conrad Industries' common stock upon his initial
election to the Board and (2) an annual grant of options to purchase 1,000
shares of Conrad Industries' common stock, in each case at the closing sales
price of the common stock on the date of grant.

BOARD COMMITTEES AND THEIR FUNCTIONS

Conrad Industries' Board of Directors has an Audit Committee and a
Compensation Committee, and does not have a Nominating Committee.

The Audit Committee's functions include:

. overseeing the performance and reviewing the scope of the audit
function of the company's independent auditors;

. reviewing audit plans and procedures;

. reviewing the company's policies with respect to conflicts of
interest;

. reviewing the prohibition on the use of corporate funds or assets for
improper purposes;

. reviewing changes in accounting policies; and

. reviewing the use of independent auditors for non-audit services.

In addition, the Audit Committee makes annual recommendations to the Board
of Directors for the appointment of independent public accountants for the
ensuing year. Messrs. Harris, Roberson and Michot served as the members of the
Audit Committee during 1998.

The Compensation Committee's functions include:

. reviewing salaries and other compensation of officers and key
employees on an annual basis or whenever it is requested by the Board
of Directors or the Chief Executive Officer;

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. preparing a report and submitting recommendations to the Board of
Directors regarding salaries and compensation;

. selecting officers and key employees for participation in incentive
compensation plans and establishing performance goals for those
officers and key employees and reporting to the full Board of
Directors;

. reviewing and monitoring benefits under all employee plans of the
company and reporting, if the Compensation Committee deems it
appropriate, to the full Board of Directors;

. considering and making recommendations to the Board of Directors from
time to time with respect to the management organization of the
company, including recommending the election and appointment of
officers of the company and reviewing plans providing for the orderly
succession of the officers of the company; and

. administering incentive compensation and stock plans, including the
1998 Stock Plan, as may be required by such plans, subject to the
continuing supervision and control of the Board of Directors.

The Compensation Committee also administers Conrad Industries' 1998 Stock
Plan or other similar plan benefiting the employees and officers of Conrad
Industries. Messrs. Harris, Roberson and Michot served as members of the
Compensation Committee during 1998.

During 1998, the Audit Committee met two times and the Compensation
Committee met two times. During 1998, no director of Conrad Industries attended
fewer than 75 percent of the number of meetings of committees on which he
served.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to April 1998, the Board of Directors had no Compensation Committee,
and J. Parker Conrad, John P. Conrad Jr., William H. Hidalgo and Cecil A.
Hernandez participated in deliberations of Conrad Industries' Board of
Directors concerning executive officer compensation.

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REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee of the Board of Directors currently consists of
Michael J. Harris, Louis Michot, Jr. and Richard E. Roberson, Jr., none of whom
are officers or employees of Conrad Industries. The Compensation Committee is
responsible for evaluating the performance of management, determining salaries
and bonuses for certain executive officers and key employees of Conrad
Industries and administering Conrad Industries' 1998 Stock Plan. The Committee
has furnished the following report on executive compensation for 1998:

Under the supervision of the Compensation Committee, Conrad Industries has
developed a compensation policy which is designated to attract and retain
talented executives and employees responsible for the success of Conrad
Industries and to motivate management to enhance long-term stockholder value.
The annual compensation package for executive officers primarily consists of:

. a cash salary which reflects the responsibilities relating to the
position and individual performance;

. variable performance awards payable in cash or stock and tied to the
individual's or the company's achievement of certain goals or
milestones; and

. long-term stock based incentive awards which strengthen the mutuality
of interests between the executive officers and key employees and the
company's stockholders.

In determining the level and composition of compensation of each of Conrad
Industries' executive officers, including its Chief Executive Officer, the
Compensation Committee takes into account various qualitative and quantitative
indicators of corporate and individual performance. Although no specific target
has been established, the Compensation Committee may review salaries of
comparable peer group companies. In setting such salaries, the Compensation
Committee considers its peer group to be certain companies in the ship building
industry with market capitalizations similar to that of Conrad Industries.
Consequently, in evaluating the performance of management, including that of
the Chief Executive Officer, the Compensation Committee takes into
consideration such factors as the company's financial results and operating
performance in comparison with those of other companies in the industry. In
addition, the Compensation Committee recognizes performance and achievements
that are more difficult to quantify, such as the successful supervision of
major corporate projects, demonstrated leadership ability and contributions to
the industry and community development.

Base compensation for executive officers, including the Chief Executive
Officer, is generally established through negotiation between Conrad Industries
and the executive officer at the time the executive is hired, and then
subsequently adjusted when such officer's base compensation is subject to
review or reconsideration. In 1998, Conrad Industries entered into employment
agreements with J. Parker Conrad, John P. Conrad, Jr., William H. Hidalgo and
Cecil A. Hernandez, and a subsidiary of Conrad Industries entered into an
employment agreement with Ralph C. Thon. Such agreements provide for annual
base salaries of $220,500, $200,000, $195,290, $150,000 and $85,000,
respectively, which base salaries may be increased by the Board of Directors.
The Board of Directors has not taken any action to increase the base salaries
of such executive officers for the 1999 calendar year. When establishing or
reviewing base compensation levels for each executive officer, the Compensation
Committee, in accordance with its general compensation policy, considers
numerous factors, including the responsibilities relating to the position, the
qualifications of the executive and the relevant experience the individual
brings to Conrad Industries, strategic goals for which the executive has
responsibility, and compensation levels of comparable companies, and annual
performance of the individual. No pre-determined weights are given to any one
of such factors.

In the first quarter of 1998, Conrad Industries issued shares of common
stock to William H. Hidalgo, the President and Chief Executive Officer, and
Cecil A. Hernandez, the Vice President--Finance and

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Administration and Chief Financial Officer, in consideration of past services
rendered. The agreements related to such restricted stock provided that 50% of
the shares of common stock issued to each such executive would be subject to
forfeiture in the event of the voluntary termination of employment by such
executive for other than "good reason" prior to the expiration of the initial
three-year term of employment specified in the employment agreement of such
executive, provided that such restriction would lapse in the event of (1) the
termination by the company of such executive's employment for reasons other
than "cause" (as defined) or (2) the death, disability or retirement (at or
after the age of 65) of such executive and would also lapse with respect to
33 1/3% of such restricted shares on each of the first three anniversaries of
the completion of the company's initial public offering in June 1998. The shares
of common stock of Conrad Industries issued to Mr. Hidalgo and Mr. Hernandez
were exchanged, respectively, for 385,695 and 153,819 shares of common stock of
the company pursuant to the reorganization of the company completed prior to the
initial public offering. In connection with the issuance of shares of Conrad
Industries common stock, Mr. Hidalgo and Mr. Hernandez, executed promissory
notes in the amounts of $239,870 and $97,400, respectively, representing their
tax liabilities paid by the company. These tax notes were repaid in full by Mr.
Hidalgo and Mr. Hernandez in July 1998. In connection with the issuance of these
shares to Messrs. Hidalgo and Hernandez, the company estimated it would
recognize aggregate compensation expense of $8.6 million, of which $4.3 million
was recognized in the first quarter of 1998 and the remainder was estimated to
be recognized over a three-year vesting period, of which $360,000 was expended
in the second quarter of 1998. During the third quarter of 1998, the executives
surrendered and the company canceled 247,277 of their restricted shares in order
to eliminate the recurring compensation expense associated with the lapse of the
restrictions. As a result of the cancellation of the shares, the remainder of
the estimated compensation expense of $4.0 million will not be recognized in the
future. On November 3, 1998, Mr. Hidalgo and Mr. Hernandez were granted stock
options to purchase 250,000 and 114,043 shares, respectively, of common stock at
$6.75 per share, the market price of the stock on the date of the award.

In addition to each executive officer's base compensation, the Compensation
Committee may award cash bonuses under an annual incentive plan and/or grant
awards under Conrad Industries' 1998 Stock Plan to chosen executive officers
depending on the extent to which certain defined personal and corporate
performance goals are achieved. The Board of Directors has determined not to
pay any cash bonuses under the annual incentive plan or make any award under
the 1998 Stock Plan to any executive officer for 1998, except as described
above.

All employees of Conrad Industries, including its executive officers, are
eligible to receive long-term stock based incentive awards under Conrad
Industries' 1998 Stock Plan as a means of providing such individuals with a
continuing proprietary interest in Conrad Industries. Such grants further the
mutuality of interest between Conrad Industries' employees and its stockholders
by providing significant incentives for such employees to achieve and maintain
high levels of performance. Conrad Industries' 1998 Stock Plan enhances the
company's ability to attract and retain the services of qualified individuals.
Factors considered in determining whether such awards are granted to an
executive officer of Conrad Industries include:

. the executive's position in Conrad Industries, his or her performance
and responsibilities;

. the amount of stock options, if any, currently held by the officer;

. the vesting schedules of any such options; and

. the executive officer's other compensation.

While the Compensation Committee does not adhere to any firmly established
formulas or schedules for the issuance of awards such as options or restricted
stock, the Compensation Committee will generally tailor the terms of any such
grant to achieve its goal as a long-term incentive award by providing for a
vesting schedule encompassing several years or tying the vesting dates to
particular corporate or personal milestones.

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The management of Conrad reviewed with the Compensation Committee the
substantial decline in the price of Conrad common stock from the date of the
initial public offering to November 3, 1998, compared the Conrad common stock
performance during this period with the common stock performance of Conrad's
peer group, noted that given these facts, competitors could make job offers to
key Conrad employees which could include stock option awards more valuable than
the Conrad stock option awards held by employees, and recommended that the
Compensation Committee consider repricing all of the Conrad stock option awards
outstanding. In the fourth quarter of 1998, 125,500 employee stock options
which had previously been issued to employees with an original exercise price
of $12.00 per share were repriced at $6.75 per share, the market price of the
common stock of Conrad Industries on the date of repricing. These included
12,000 options originally issued to Mr. Ralph C. Thon. Additionally, the Board
of Directors determined that it was advisable to reprice options to the non-
employee directors in order to encourage their continued involvement as
directors of Conrad Industries. As a result, 1,000 employee stock options which
had been issued to each of the non-employee directors, Messrs. Harris, Roberson
and Michot, with an original exercise price of $12.00 per share, were also
repriced during the fourth quarter of 1998. The new exercise price of the stock
options, $6.75, represents the market price of the common stock of Conrad
Industries on the date of repricing. The stock option repricing was approved or
ratified by the entire Board of Directors.

The foregoing report is given by the following members of the Compensation
Committee:

Michael J. Harris
Richard E. Roberson, Jr.
Louis Michot, Jr.

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EXECUTIVE COMPENSATION

Executive Officers

Set forth below is certain information concerning the executive officers of
Conrad Industries, including the business experience of each during the past
five years.

· Download Table

Name Age Position with Conrad Industries
---- --- -------------------------------

J. Parker Conrad.................... 83 Co-Chairman of the Board
John P. Conrad, Jr.................. 56 Co-Chairman of the Board
William H. Hidalgo.................. 58 President and Chief Executive Officer
Cecil A. Hernandez.................. 42 Vice President--Finance and Administration,
Chief Financial Officer
Ralph C. Thon....................... 56 General Manager--Orange Shipbuilding

Information regarding the business experience of Messrs. Conrad, Conrad,
Jr., Hidalgo and Hernandez is set forth above under the heading "Information
about Current and Continuing Directors."

Ralph C. Thon has been employed by Orange Shipbuilding as Chief Engineer
from 1980 until 1997 and as General Manager since 1997. Mr. Thon has 37 years
of experience in shipbuilding management.

Compensation of Executive Officers

Summary Compensation Table

The following table provides certain summary information concerning
compensation paid or accrued during the last two fiscal years to Conrad
Industries' Chief Executive Officer and to each of the other executive officers
of the company, determined as of the end of the last fiscal year, whose annual
compensation exceeded $100,000. Further information with respect to each of the
named executive officer's compensation is described below the table.

· Enlarge/Download Table

Annual Compensation Long-Term Compensation
-------------------------------------- ----------------------
Other Restricted Securities
Name and Principal Annual Stock Underlying All Other
Position Year Salary Bonus Compensation(1) Awards Options (#) Compensation(2)
------------------ ---- -------- -------- --------------- ---------- ----------- ---------------

J. Parker Conrad........ 1998 $220,500 -- -- -- -- --
Co-Chairman of the 1997 $210,000 -- -- -- -- --
Board
John P. Conrad, Jr. .... 1998 $200,000 -- -- -- -- --
Co-Chairman of the 1997 $150,000 $ 75,000 -- -- -- --
Board
William H. Hidalgo...... 1998 $195,290 -- -- (4) 250,000 $2,500
President and Chief 1997 $185,990 $245,000 -- -- -- $2,375
Executive Officer
Cecil A. Hernandez(3)... 1998 $150,000 -- -- (4) 114,043 $1,515
Vice President--Finance
and Administration and
Chief Financial Officer
Financial Officer
Ralph C. Thon........... 1998 $ 85,000 $ 32,000 -- -- 12,000 $2,500
General Manager--Orange
Shipbuilding

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--------
(1) None of the executive officers has received perquisites, the value of which
exceeded the lesser of $50,000 or 10% of the salary of such executive
officer.
(2) Consists of payments made by Conrad Industries under the company's 401(k)
plan for the benefit of the executive officers.
(3) Cecil A. Hernandez was not an employee of Conrad Industries in 1997.
(4) Prior to the initial public offering of Conrad Industries, Messrs. Hidalgo
and Hernandez were issued 385,695 and 153,819 shares of restricted common
stock of Conrad Industries, respectively. Subsequently, 176,777 and 70,500
shares of such restricted stock, respectively, were surrendered by such
executive officers. As of December 31, 1998, Messrs. Hidalgo and Hernandez
held 208,918 and 83,319 shares of restricted common stock, respectively,
which at the time of grant, prior to the initial public offering of Conrad
Industries and therefore the existence of a public market for such stock,
were valued at $401,123 and $159,972, respectively. As of March 31, 1999,
using the closing sales price of Conrad Industries' common stock as
reported by the Nasdaq Stock Market of $3.625, such shares of restricted
stock were valued at $757,328 and $302,031, respectively. Of the 208,918
and 83,319 shares of restricted stock held by Messrs. Hidalgo and
Hernandez, respectively, 192,848 and 76,910 shares of restricted stock,
respectively, vested on March 31, 1998, and 16,070 and 6,409 shares of
restricted stock, respectively, will vest on June 10, 1999. Dividends will
be paid on the restricted stock reported if any are declared by the
company.

Option Grants During 1998

The following table provides certain information with respect to options
granted to the Chief Executive Officer and to each of the executive officers
named below during the fiscal year ended December 31, 1998, under our 1998
Stock Plan. The Securities and Exchange Commission requires disclosure of the
potential realizable value or present value of each grant. The disclosure
assumes the options will be held for the full 10-year term prior to exercise.
These options may be exercised prior to November 2, 2008. The actual value, if
any, an executive officer may realize will depend upon the excess of the stock
price over the exercise price on the date the option is exercised. There can be
no assurance that the stock price will appreciate at the rates shown in the
table. As of March 31, 1999, the closing sales price of our common stock, as
reported by the Nasdaq Stock Market, was $3.625 per share.

· Enlarge/Download Table

Individual Grants
----------------------------------------------------
Potential Realizable
Value at Assumed
Number of Percent of Annual Rates of Stock
Securities Total Options Price Appreciation
Underlying Granted to Exercise for Option Term
Options Employees in Price per Expiration ---------------------
Name Granted (#) Fiscal Year Share Date 5% 10%
------------------------ ----------- ------------- --------- ---------------- ---------- ----------

William H. Hidalgo...... 250,000 100% $6.75 November 2, 2008 $1,062,500 $2,690,000
Cecil A. Hernandez...... 114,043 100% $6.75 November 2, 2008 $ 484,683 $1,227,103

Fiscal Year-End Option Values

The following table sets forth certain information regarding (1) the number
of shares of common stock underlying unexercised options held by the Chief
Executive Officer and each Named Executive Officer as of December 31, 1998, and
(2) the value, at December 31, 1998, of exercisable and unexercisable "in-the-
money" stock options held by the Chief Executive Officer and each executive
officer named in the Summary Compensation Table. Neither the Chief Executive
Officer nor any other Named Executive Officer exercised any stock options
during the year ended December 31, 1998. A stock option is "in-the-money" if
the closing market price of the company's common stock exceeds the exercise
price of the stock option. The value of "in-the-money" unexercised stock
options set forth in the foregoing table represents the difference between the
exercise price of these options and the closing sales price of our common stock
on December 31, 1998, as reported by the Nasdaq Stock Market, $3.906 per share.

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1998 Option Values

· Download Table

Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Year-End Fiscal Year End
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------

William H. Hidalgo.......... -- 250,000 -- --
Cecil A. Hernandez.......... -- 114,043 -- --
Ralph C. Thon............... 4,000 8,000 -- --

Report on Repricing of Options

The following table sets forth information concerning options to purchase
common stock held by executive officers which were repriced on November 3,
1998. Amounts represent new stock options granted under Conrad Industries' 1998
Stock Plan and include both incentive and non-qualified stock options. One-
third of such options become exercisable on each of December 10, 1998, June 10,
1999 and June 10, 2000. The exercise price of each option represents the market
price of the common stock on the date of grant.

· Download Table

Length of
Original
Option
Term
Number of Market Remaining
Securities Price of Exercise at Date of
Date Underlying Stock at Price at New Repricing
Name and Principal Options Options Time of Time of Exercise----------
Position Repriced Repriced Repricing Repricing Price Years Days
------------------ -------- ---------- --------- --------- -------- ----- ----

Ralph C. Thon........... 11/3/98 12,000 $6.75 $12.00 $6.75 9 219
General Manager--Orange
Shipbuilding

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Performance Graph

The following performance graph compares Conrad Industries' cumulative total
stockholder return on its common stock to the cumulative total return of the
Nasdaq Composite Index and to a peer group stock index which consists of the
publicly-traded companies which perform construction, conversion and repair of
marine vessels. The companies that comprise the peer group index are: Halter
Marine Inc. and Friede Goldman International Inc. The graph covers the period
from June 10, 1998 (the initial trading date of the common stock) to December
31, 1998. The graph assumes that the value of the investment in Conrad
Industries' common stock and each index was 100 at June 10, 1998 and that all
dividends were reinvested.

COMPARISON OF 6 MONTH CUMULATIVE TOTAL RETURN*
AMONG CONRAD INDUSTRIES, INC., THE S & P SMALLCAP 600 INDEX
AND A PEER GROUP

[Performance Graph Appears Here]

6/10/98 12/31/98
--------- ----------
Conrad Industries, Inc. 100 33
Peer Group 100 34
S&P Smallcap 600 100 97

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Stock Plan

The Conrad Industries, Inc. 1998 Stock Plan was adopted by the Board of
Directors of the company and approved by the company's stockholders in March
1998. The 1998 Stock Plan permits the granting of any or all of the following
types of awards ("Awards"): stock appreciation rights, stock options,
restricted stock, dividend equivalents, performance units, automatic director
options, phantom shares, limited stock appreciation rights ("LSARs"), bonus
stock and cash tax rights. All officers and employees of, and any consultants
to, the company or any affiliate of the company will be eligible for
participation in all Awards under the 1998 Stock Plan other than director
options. Each non-employee director of the company is entitled to receive (1)
the grant of options to purchase 1,000 shares of Conrad Industries' common
stock upon his initial election to the Board and (2) an annual grant of options
to purchase 1,000 shares of Conrad Industries' common stock, in each case at
the closing sale price of the common stock on the date of grant.

An aggregate of 700,000 shares of common stock have been authorized and
reserved for issuance pursuant to the 1998 Stock Plan. As of the date of this
Proxy Statement, options to purchase an aggregate of 492,543 shares of common
stock have been granted under the 1998 Stock Plan. The 1998 Stock Plan is
administered by the Compensation Committee of the company's Board of Directors.
The Compensation Committee selects the participants who will receive Awards,
determine the type and terms of Awards to be granted and interpret and
administer the 1998 Stock Plan. No Awards may be granted under the 1998 Stock
Plan after March 31, 2008.

The Board of Directors has approved, subject to stockholder approval, an
amendment to the 1998 Stock Plan to increase the maximum number of shares of
common stock issuable under the 1998 Stock Plan from 700,000 shares to 950,000
shares. See "Proposal Number 2: Approval of Increase in the Number of Shares
Available Under the 1998 Stock Plan."

401(k) Plan

Conrad Industries maintains a retirement savings plan, effective as of
August 1997, in which eligible employees of Conrad Industries may elect to
participate. The plan is an individual account plan providing for deferred
compensation as described in Section 401(k) of the Code and is subject to, and
intended to comply with, the Employee Retirement Income Security Act of 1974.
Each eligible employee is permitted to defer receipt of up to 15% of his annual
salary up to the applicable statutory maximum prescribed in the Code. Conrad
Industries may, in its discretion, match employee deferrals in cash, but this
company contribution may not exceed an amount equal to five percent of the
employee's salary. Conrad Industries currently has elected to match $0.25 for
each $1.00 of employee deferral. The amounts held under the 401(k) Plan are
invested among various investment funds maintained under the 401(k) Plan in
accordance with the directions of each participant. Salary deferral
contributions under the 401(k) Plan are 100% vested. Matching contributions
vest over a period of four years after an employee completes two years of
service with Conrad Industries. Participants or their beneficiaries are
entitled to payment of vested benefits upon termination of employment. Conrad
Industries made contributions of approximately $88,000 under the 401(k) plan in
1998.

Annual Incentive Plan

Conrad Industries has established an annual incentive plan under which key
employees will be awarded cash payments based upon the achievement of certain
performance goals. The aggregate amount shall not exceed five percent of the
company's EBITDA (defined as operating income before depreciation, amortization
and non-cash compensation expenses related to issuance of stock and stock
options to employees). The Board of Directors will determine the actual amount
of the bonus pool, subject to this limitation, and the key employees who would
be recipients of any such cash bonuses and the individual amount of the cash
bonus for each such key employee.

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Employment Agreements with Directors and Executive Officers

Conrad Industries has entered into employment and non-competition agreements
with each of J. Parker Conrad, John P. Conrad, Jr., William H. Hidalgo and
Cecil A. Hernandez. Orange Shipbuilding has entered into a similar agreement
with Ralph C. Thon. These agreements prohibit such officers from disclosing
Conrad Industries' confidential information and trade secrets and generally
restrict these individuals from competing with Conrad Industries for a period
of two years after the termination of their employment. Each of these
agreements has an initial term of three years and provides for annual
extensions at the end of its initial term, subject to the parties' mutual
agreement, and is terminable by the employer for "cause" upon ten day's notice
and without "cause" (1) by the employee upon 30 days' written notice and (2) by
the employer upon approval by a majority of the Board of Directors. The
employment agreements provide that the employer shall pay a base salary of
$220,500 to J. Parker Conrad, $200,000 to John P. Conrad, Jr., $195,290 to
William H. Hidalgo, $150,000 to Cecil A. Hernandez and $85,000 to Ralph C.
Thon, which base salaries may be increased by the Board of Directors. Such
agreements also provide that each executive officer will be reimbursed for out-
of-pocket business expenses and that each executive officer shall be eligible
to participate in all benefit plans and programs as are maintained from time to
time by the employer. Each employment agreement provides that if the officer's
employment is terminated by the employer without "cause" or is terminated by
the officer for "good reason," the officer shall be entitled to receive a lump
sum severance payment at the effective time of termination equal to the base
salary (at the rate then in effect) for the greater of (1) the time period
remaining under the term of the agreement or (2) one year. In addition, the
time period during which such officer is restricted from competing with Conrad
Industries will be shortened from two years to one year.

The employment agreements also provide that if the officer's employment is
terminated within two years following a change in control by Conrad Industries
other than for "cause" or by the officer for "good reason," or the officer is
terminated by Conrad Industries within three months prior to the change in
control at the request for the acquirer in anticipation of the change in
control, (1) the officer will be entitled to receive a lump sum severance
amount equal to the greater of (a) in the case of J. Parker Conrad, John P.
Conrad, Jr., and William H. Hidalgo, three years' base salary and, in the case
of Cecil A. Hernandez and Ralph C. Thon, two years' base salary or (b) the base
salary for whatever period is then remaining on the initial term; (2) the
provisions which restrict competition with Conrad Industries shall not apply;
and (3) if any payment to the officer is subject to the 20% excise tax on
excess parachute payments, the officers shall be made "whole" on a net after
tax basis. A change in control is generally defined to occur upon (1) the
acquisition by any person of 50% or more of the total voting power of the
outstanding securities of Conrad Industries, (2) the first purchase pursuant to
a tender or exchange offer for Common Stock, (3) the approval by the
stockholders of Conrad Industries of certain mergers, sale of substantially all
the assets, or dissolution of Conrad Industries or (4) a change in a majority
of the members of Conrad Industries' Board of Directors.

In general, a "parachute payment" is any payment made by Conrad Industries
in the nature of compensation that is contingent on a change in control of
Conrad Industries and includes the present value of the accelerations of
vesting and the payment of options and other deferred compensation amounts upon
a change in control. If the aggregate present value of the parachute payments
to certain individuals, including officers, equals or exceeds three times that
individual's "base amount" (generally, the individual's average annual
compensation from Conrad Industries for the five calendar years ending before
the date of the exchange in control), then all parachute amounts in excess of
the base amount are "excess" parachute payments. An individual will be subject
to a 20% excise tax on excess parachute amounts and Conrad Industries will not
be entitled to a tax deduction for such payments.

TRANSACTIONS WITH CERTAIN AFFILIATES

During 1998, Conrad Industries purchased in its ordinary course of business
certain components from Johnny's Propeller Shop, a company wholly owned by John
P. Conrad, Jr., Co-Chairman of the Board of

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Directors, in the aggregate amount of approximately $171,000. The Company
believes that such transactions were made on a competitive basis at market
prices.

Conrad Industries operated as an S corporation for federal and state income
tax purposes prior to the initial public offering and made cash distributions
to its then current shareholders in order to provide a cash return to them and
to fund their federal and state income tax liabilities relating to Conrad
Industries' S corporation status. In accordance with this practice, during the
first quarter of 1998, Conrad Industries distributed approximately $506,000 to
its then current shareholders and distributed an additional $1.8 million prior
to the effective date of the initial public offering to fund the shareholders'
federal and state income tax liabilities estimated through the date of
termination of its S corporation status. On May 22, 1998, Conrad Industries
made and additional $10 million distribution to its shareholders, which amount
represented undistributed earnings of Conrad Industries estimated through the
date of the termination of Conrad Industries' S corporation status. Conrad
Industries' shareholders incurred federal and state income taxes on such
distribution. Prior to its initial public offering, Conrad Industries also
distributed certain non-operating assets with an aggregate fair market value of
approximately $406,000 to certain stockholders. These assets included certain
vehicles and boats.

In 1991, Conrad Industries and J. Parker Conrad, Co-Chairman of the Board of
Directors, entered into a Key Executive Insurance Agreement pursuant to which
each year Conrad Industries has paid $20,000 of the annual premium due under an
insurance policy on Mr. Conrad's life. Conrad Industries was the beneficiary of
$650,000 of the death benefit under the policy. Conrad Industries and Mr.
Conrad terminated this agreement on January 1, 1998, thereby allowing Mr.
Conrad to select the beneficiary of the death benefit.

J. Parker Conrad has guaranteed up to $2 million of the indebtedness under a
Loan Agreement dated as of May 22, 1998 between Conrad Industries and Whitney
National Bank, for which he has not received any compensation. Mr. Conrad has
also guaranteed indebtedness of Conrad Industries from time to time for which
he has not received any compensation.

Certain members of the immediate families of the company's executive
officers, directors and principal stockholders are employees of Conrad
Industries or its subsidiaries. William A. Hidalgo, Jr., the son of William A.
Hidalgo, the President and Chief Executive Officer, is an employee of Conrad
Industries and was paid aggregate compensation of $82,500 during 1998. James
Court, the husband of Katherine Court, was an employee of Conrad Industries
until September 30, 1998, and was paid aggregate compensation of $55,000 during
1998. Katherine Court is a principal stockholder of Conrad Industries, the
daughter of J. Parker Conrad and the sister of John P. Conrad, Jr. Daniel
Conrad, the son of John P. Conrad, Jr., is an employee of Conrad Industries and
was paid aggregate compensation of $97,500 during 1998.

On March 31, 1998, Messrs. Hidalgo and Hernandez executed promissory notes
payable to Conrad Industries bearing interest at 9.0% per annum in the amounts
of $239,870 and $97,400, respectively, representing their tax liabilities paid
by Conrad Industries in connection with the issuance of shares of common stock
of Conrad Industries to them. These notes were repaid in full by Messrs.
Hidalgo and Hernandez in July 1998. See "Report of the Compensation Committee."
On March 2, 1999, Messrs. Hidalgo and Hernandez executed promissory notes
payable to Conrad Industries bearing interest at 9.0% per annum in the amounts
of $126,337 and $139,277, respectively, representing their tax liabilities in
connection with common shares issued to them and surrendered during the third
quarter of 1998.

Michael J. Harris, a director of Conrad Industries, is a Managing Director
of Morgan Keegan & Company, Inc. Morgan Keegan was the lead managing
underwriter of the initial public offering of Conrad Industries, which was
completed in June 1998, and has provided and may in the future provide
financial advisory services to Conrad Industries.

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STOCK OWNERSHIP BY CONRAD INDUSTRIES' STOCKHOLDERS AND MANAGEMENT

The following table presents certain information regarding the beneficial
ownership of equity securities of Conrad Industries (which includes shares that
may be acquired on the exercise of stock options vesting within 60 days of
April 23, 1999) at March 31, 1999 by:

. each person who is known by us to own beneficially more than five
percent of the outstanding shares of common stock;

. each director of Conrad Industries;

. our chief executive officer and each of the other executive officers
of Conrad Industries named in the tables under Executive Compensation;
and

. all directors and officers as a group, including all stock options
vesting within 60 days of April 23, 1999.

Except as described below, each of the persons listed in the table has sole
voting and investment power with respect to the shares listed.

· Download Table

% of Total
Outstanding
Number of Stock (including
Name Shares Options options)
------------------------------------------------ --------- ------- -----------

J. Parker Conrad................................ 1,170,270 -- 16.5%
John P. Conrad, Jr. (1)......................... 1,779,403 -- 25.1%
Katherine C. Court (2).......................... 1,744,813 -- 24.7%
William H. Hidalgo ............................. 213,918 77,927 4.1%
Cecil A. Hernandez ............................. 85,319 31,103 1.6%
Ralph C. Thon .................................. 5,000 8,000 *
Michael J. Harris (3)........................... 13,000 2,000 *
Louis J. Michot, Jr. ........................... 833 2,000 *
Richard E. Roberson, Jr......................... 3,000 2,000 *
All directors and executive officers as a group
(4) (8 persons)................................ 3,270,743 123,030 47.1%

--------
* Less than one percent.

(1) Includes 374,216 shares held by The John P. Conrad, Jr. Trust, 268,609
shares held by The Daniel T. Conrad Trust, 268,609 shares held by The Glenn
Alan Conrad Trust and 268,609 shares held by The Kenneth C. Conrad Trust.
Mr. Conrad, Jr. exercises voting and investment control over these shares
as Trustee for each of these trusts.
(2) Includes 459,161 shares held by The Katherine C. Court Trust and 275,497
shares held by The James P. Court Trust. Ms. Court exercises voting and
investment control over these shares as Trustee for each of these trusts.
(3) Includes 2,000 shares beneficially owned by Mr. Harris' daughters.
(4) Excludes shares beneficially owned by Katherine Court, who is the daughter
of J. Parker Conrad and the sister of John P. Conrad, Jr.

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COMPLIANCE WITH SECTION 16(a)

Section 16(a) of the Securities Exchange Act of 1934 requires the company's
directors and officers, and persons who own more than 10% of the company's
common stock, to file initial reports of ownership and reports of changes in
ownership (Forms 3, 4, and 5) of common stock with the Securities and Exchange
Commission and The Nasdaq Stock Market. Officers, directors and greater than
10% stockholders are required by SEC regulations to furnish Conrad Industries
with copies of all such forms that they file.

To Conrad Industries' knowledge, based solely on the company's review of the
copies of such reports received by Conrad Industries and on written
representations by certain reporting persons that no reports on Form 5 were
required, Conrad Industries believes that during the fiscal year ended December
31, 1998, all Section 16(a) filing requirements applicable to its officers,
directors and 10% stockholders were complied with in a timely manner, with the
exception of one late filing on Form 5 by Richard E. Roberson, Jr.

STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING

Under our Bylaws, if you wish to bring any matter (other than stockholder
nominations of director candidates) before the 2000 Annual Meeting, you must
notify the Secretary of Conrad Industries in writing between 60 and 90 days
prior to the anniversary of the 1999 Annual Meeting. However, if the date of
the Annual Meeting of Stockholders is changed by more than 30 calendar days
from the date contemplated at the time of this proxy statement, the notice must
be received by us at least 45 days prior to the date we intend to distribute
our proxy statement with respect to such meeting. Conrad Industries plans to
hold its 2000 Annual Meeting on May 24, 2000.

Notices regarding each matter must contain:

. a brief description of the business to be brought before the Annual
Meeting and the reason for conducting the business at the Annual
Meeting;

. the name and address of record of the stockholder proposing the
business;

. the class and number of shares of stock that are beneficially owned by
the stockholder; and

. any material interest of the stockholder in the business to be
conducted.

If you do not provide the proper notice by March 24, 2000, the Chairman of
the meeting may exclude the matter and thus, it will not be acted upon at the
meeting. If the Chairman does not exclude the matter, the proxies may vote in
the manner they believe appropriate, as the SEC's rules allow.

For a stockholder proposal to be considered for possible inclusion in the
proxy statement for the 2000 Annual Meeting, the proposal must be received by
the Secretary of Conrad Industries no later than December 24, 1999. A
nomination or proposal that does not supply adequate information about the
nominee or proposal will be disregarded.

DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS

Conrad Industries' management does not currently intend to bring any
proposals to the 1999 Annual Meeting other than the election of directors and
the proposals described in this proxy statement. If new proposals requiring a
vote of the stockholders are brought before the meeting in a proper manner, the
persons named in the accompanying proxy card intend to vote the shares
represented by them in accordance with their best judgement.

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1998 FORM 10-K

A copy of the Conrad Industries' Annual Report on Form 10-K, including any
financial statements and schedules and exhibits thereto, may be obtained
without charge by written request to Cecil A. Hernandez, Chief Financial
Officer and Secretary, Conrad Industries, Inc., 1501 Front Street, Morgan City,
Louisiana 70381.

By Order of the Board of Directors

/s/ Cecil A. Hernandez
------------------------------------
Cecil A. Hernandez
Secretary

April 23, 1999
Morgan City, Louisiana

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APPENDIX A

CONRAD INDUSTRIES, INC.
Amended and Restated 1998 STOCK PLAN
(First Amendment)

SECTION 1. Purpose of the Plan.

The Conrad Industries, Inc. 1998 Stock Plan (the "Plan") is intended to
promote the interests of Conrad Industries, Inc., a Delaware corporation (the
"Company"), by encouraging officers, employees, directors and consultants of
the Company, its subsidiaries and affiliated entities to acquire or increase
their equity interest in the Company and to provide a means whereby they may
develop a sense of proprietorship and personal involvement in the development
and financial success of the Company, and to encourage them to remain with and
devote their best efforts to the business of the Company thereby advancing the
interests of the Company and its stockholders. The Plan is also contemplated
to enhance the ability of the Company, its subsidiaries and affiliated
entities to attract and retain the services of individuals who are essential
for the growth and profitability of the Company.

SECTION 2. Definitions.

As used in the Plan, the following terms shall have the meanings set forth
below:

"Affiliate" shall mean (i) any entity that, directly or through one or more
intermediaries, is controlled by the Company and (ii) any entity in which the
Company has a significant equity interest, as determined by the Committee.

"Award" shall mean any Option, Restricted Stock, Performance Award, Phantom
Shares, Bonus Shares or Other Stock-Based Award.

"Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.

"Board" shall mean the Board of Directors of the Company.

"Bonus Shares" shall mean an award of Shares granted pursuant to Section
6(e) of the Plan.

"Change in Control" shall mean, and shall be deemed to have occurred if:

(i) any person, other than (1) the Company or an Affiliate, (2) any
benefit plan of the Company or an Affiliate, or (3) any stockholders of the
Company or any affiliates thereof (as defined in the Exchange Act) as of
the effective date of the Plan, acquires, directly or indirectly, the
beneficial ownership (as defined in Section 13(d) of the Exchange Act) of
any voting security of the Company and immediately after such acquisition
such person is, directly or indirectly, the beneficial owner of voting
securities representing 30% or more of the total voting power of all of the
then-outstanding voting securities of the Company; or

(ii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization or reorganization of the Company, or a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not obtained, other than
any such transaction which would result in at least 75% of the total voting
power represented by the voting securities of the surviving entity
outstanding immediately after such transaction being beneficially owned by
at least 75% of the holders of outstanding voting securities of the Company
immediately prior to the transactions with the voting power of each such
continuing holder relative to other such continuing holders not
substantially altered in the transaction; or

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(iii) the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or a substantial portion of the Company's assets (i.e.,
50% or more of the total assets of the Company); or

(iv) the individuals who constitute the Board as of the effective date
of the Plan (the "Incumbent Board") shall cease for any reason to
constitute at least a majority of the members of the Board, provided that
any person becoming a director the effective date of the Plan whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board (other than any individual whose nomination for
election to Board membership was not endorsed by the Company's management
prior to, or at the time of, such individual's initial nomination for
election) shall be, for purposes of this Plan, considered as though such
person were a member of the Incumbent Board; or

(v) the Company files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in response
to Form 8-K or Schedule 14A (or any successor schedule, form or report or
item therein) that a change in control of the Company has or may have
occurred or will or may occur in the future pursuant to any then-existing
contract or transaction.

"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations thereunder.

"Committee" shall mean the Board or any committee of the Board designated,
from time to time, by the Board to act as the Committee under the Plan.

"Consultant" shall mean any individual who renders consulting services or
advice to the Company or an Affiliate for a fee, excluding any individual who
is a Director.

"Director" shall mean each individual who is a member of the Board, other
than an Employee.

"Director Option" shall mean an NQO granted under Section 6(b) of the Plan.

"Employee" shall mean any employee of the Company or an Affiliate.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

"Fair Market Value" shall mean, with respect to Shares, at any date, the
closing sale price of a Share on that date as quoted on the Composite Tape, or
if the Shares are not listed on the New York Stock Exchange, on the principal
United States securities exchange registered under the Exchange Act on which
such stock is listed, or if the Shares are not listed on any such stock
exchange, the last sale price, or if none is reported, the highest closing bid
quotation on the Nasdaq Stock Market or any successor system then in use on
the date of grant, or if none are available on such day, on the next preceding
day for which such reports or quotations are available, or if no such reports
or quotations are available, the fair market value on the date of grant of a
Share as determined in good faith by the Committee. In the event the Shares
are not publicly traded at the time a determination of its fair market value
is required to be made hereunder, the determination of fair market value shall
be made in good faith by the Committee.

"Incentive Stock Option" or "ISO" shall mean an option granted under
Section 6(a) of the Plan that is intended to qualify as an "incentive stock
option" under Section 422 of the Code or any successor provision thereto.

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"Non-Qualified Stock Option" or "NQO" shall mean an option granted under
Sections 6(a) or 6(b) of the Plan that is not intended to be an Incentive
Stock Option.

"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.

"Other Stock-Based Award" shall mean an award granted pursuant to Section
6(g) of the Plan that is not otherwise specifically provided for, the value of
which is based in whole or in part upon the value of a Share.

"Participant" shall mean any Employee, Consultant or Director granted an
Award under the Plan.

"Performance Award" shall mean any right granted under Section 6(d) of the
Plan.

"Person" shall mean individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or
political subdivision thereof or other entity.

"Phantom Shares" shall mean an Award of the right to receive Shares issued
at the end of a Restricted Period which is granted pursuant to Section 6(f) of
the Plan.

"Restricted Period" shall mean the period established by the Committee with
respect to an Award during which the Award either remains subject to
forfeiture or is not exercisable by the Participant.

"Restricted Stock" shall mean any Share, prior to the lapse of restrictions
thereon, granted under Section 6(c) of the Plan.

"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from
time to time.

"SEC" shall mean the Securities and Exchange Commission, or any successor
thereto.

"Shares" or "Common Shares" or "Common Stock" shall mean the common stock
of the Company, $0.01 par value, and such other securities or property as may
become the subject of Awards of the Plan.

"Substitute Award" shall mean Awards granted pursuant to Section 6(h) of
the Plan in assumption of, or in substitution for, outstanding awards
previously granted by (i) a company acquired by the Company or one or more of
its Affiliates, or (ii) a company with which the Company or one or more of its
Affiliates combines.

SECTION 3. Administration.

The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum, and the acts of the members of the
Committee who are present at any meeting thereof at which a quorum is present,
or acts unanimously approved by the members of the Committee in writing, shall
be the acts of the Committee. Subject to the following, the Committee, in its
sole discretion, may delegate any or all of its powers and duties under the
Plan, including the power to grant Awards under the Plan, to the Chief
Executive Officer of the Company, subject to such limitations on such
delegated powers and duties as the Committee may impose. Upon any such
delegation all references in the Plan to the "Committee", other than in
Section 7, shall be deemed to include the Chief Executive Officer; provided,
however, that such delegation shall not limit the Chief Executive Officer's
right to receive Awards under the Plan. Notwithstanding the foregoing, the
Chief Executive Officer may not grant Awards to, or take any action with
respect to any Award previously granted to, a person who is subject to Rule
16b-3. Subject to the terms of the Plan and applicable law, and in addition to
other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to a
Participant;

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(iii) determine the number of Shares to be covered by, or with respect to
which payments, rights, or other matters are to be calculated in connection
with, Awards; (iv) determine the terms and conditions of any Award; (v)
determine whether, to what extent, and under what circumstances Awards may be
settled or exercised in cash, Shares, other securities, other Awards or other
property, or canceled, forfeited, or suspended and the method or methods by
which Awards may be settled, exercised canceled, forfeited, or suspended; (vi)
determine whether, to what extent, and under what circumstances cash, Shares,
other securities, other Awards, other property, and other amounts payable with
respect to an Award shall be deferred either automatically or at the election
of the holder thereof or of the Committee; (vii) interpret and administer the
Plan and any instrument or agreement relating to an Award made under the Plan;
(viii) establish, amend, suspend, or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan. Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee,
may be made at any time and shall be final, conclusive, and binding upon all
Persons, including the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, any stockholder and any Employee.

SECTION 4. Shares Available for Awards.

(a) Shares Available. Subject to adjustment as provided in Section 4(c),
the number of Shares with respect to which Awards may be granted under the
Plan shall be 950,000. If any Award is forfeited or otherwise terminates or is
canceled without the delivery of Shares or other consideration, then the
Shares covered by such Award, to the extent of such forfeiture, termination or
cancellation, shall again be Shares with respect to which Awards may be
granted.

(b) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.

(c) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in
such manner as it may deem equitable, adjust any or all of (i) the number and
type of Shares (or other securities or property) with respect to which Awards
may be granted, (ii) the number and type of Shares (or other securities or
property) subject to outstanding Awards, and (iii) the grant or exercise price
with respect to any Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, in each case, that
with respect to Awards of Incentive Stock Options and Awards intended to
qualify as performance based compensation under Section 162(m)(4)(C) of the
Code, no such adjustment shall be authorized to the extent that such authority
would cause the Plan to violate Section 422(b)(1) of the Code or would cause
such Award to fail to so qualify under Section 162(m) of the Code, as the case
may be, or any successor provisions thereto; and provided, further, that the
number of Shares subject to any Award denominated in Shares shall always be a
whole number.

SECTION 5. Eligibility.

Any Employee or Consultant shall be eligible to be designated a
Participant; a Director shall automatically be a Participant pursuant to
Section 6(b).

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SECTION 6. Awards.

(a) Options. Subject to the provisions of the Plan, the Committee shall
have the authority to determine the Participants (other than Directors) to
whom Options shall be granted, the number of Shares to be covered by each
Option (no Employee or Consultant may receive Options with respect to more
than 250,000 Shares during any calendar year), the purchase price therefor and
the conditions and limitations applicable to the exercise of the Option,
including the following terms and conditions and such additional terms and
conditions, as the Committee shall determine, that are not inconsistent with
the provisions of the Plan.

(i) Exercise Price. The purchase price per Share purchasable under an
Option shall be determined by the Committee at the time the Option is
granted, but, except for an Option that is a Substitute Award, shall not be
less than the Fair Market Value per Share on such date.

(ii) Time and Method of Exercise. The Committee shall determine the time
or times at which an Option may be exercised in whole or in part, and the
method or methods by which, and the form or forms (which may include,
without limitation, cash, check acceptable to the Company, Shares already-
owned for more than six months, a "cashless-broker" exercise (through
procedures approved by the Company), other securities or other property, or
any combination thereof, having a Fair Market Value on the exercise date
equal to the relevant exercise price) in which payment of the exercise
price with respect thereto may be made or deemed to have been made.

(iii) Incentive Stock Options. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the provisions of
Section 422 of the Code, or any successor provision, and any regulations
promulgated thereunder. Incentive Stock Options may be granted only to
employees of the Company and its "parent corporation" and "subsidiary
corporations", as defined in Section 424 of the Code. To the extent the
aggregate Fair Market Value of the Shares (determined as of the date of
grant) of a Participant's Option that are exercisable for the first time
during any calendar year (under all plans of the Company and its parent and
subsidiary corporations) exceeds $100,000, such Shares in excess of
$100,000 shall not be Incentive Stock Options as to such Participant.

(b) Director Options. Each Director automatically shall be a Participant
and receive Options as provided below. A Director shall not be eligible to
receive any Award under the Plan other than Options granted pursuant to this
Section 6(b).

(i) Initial Grants. Each Director who serves in such capacity
immediately following the closing of the initial public offering of the
Shares (the "IPO Date") shall automatically receive, on such date, an NQO
for 1,000 Shares. Each individual who is elected or appointed as a Director
for the first time after the IPO Date shall automatically receive, on the
date of his or her election or appointment, an NQO for 1,000 Shares.

(ii) Annual Grants. Each Director who serves in such capacity on the day
following the Annual Meeting of the Stockholders of the Company in each
year that this Plan is in effect, beginning with the 1999 Annual Meeting
(other than a Director who received a grant pursuant to Section 6(b)(i) on
the preceding day), shall automatically receive on such day an NQO for
1,000 Shares.

(iii) Exercise Price. Subject to adjustment pursuant to Section 4(c),
the purchase price per Share purchasable under a Director Option shall be
the Fair Market Value per Share on the date the Director Option is granted.

(iv) Vesting. Each Director Option shall be 100% vested (exercisable) on
the date of grant of such Director Option.

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(v) Method of Exercise. A Director Option may be exercised in whole or
in part by cash, check acceptable to the Company, Shares already owned for
more than six months, a "cashless-broker" exercise (through procedures
approved by the Company), or any combination thereof, having a Fair Market
Value on the exercise date equal to the relevant exercise price.

(vi) Term. Each Director Option shall expire 10 years from its date of
grant, but shall be subject to earlier termination as follows: Director
Options must be exercised within three months of the date the Participant
ceases to serve as a member of the Board, unless such termination results
from the Participant's death or disability (as determined by the
Committee), in which case the Participant's Director Options may be
exercised by the Participant's legal representative or the person to whom
the Participant's rights shall pass by will or the laws of descent and
distribution, as the case may be, within one year from the date of
termination; provided, however, that such event shall not extend the normal
expiration date of such Director Options.

(vii) Automatic Limits. In the event that the number of Shares available
for grants under this Plan is insufficient to make all automatic grants
provided for in paragraphs (i) or (ii) above on the applicable date, then
all Directors who are entitled to a grant on such date shall share ratably
in the number of Shares then available for grant under this Plan, and shall
have no right to receive a grant with respect to the deficiencies in the
number of available Shares and all future grants under this Section 6(b)
shall terminate.

(c) Restricted Stock. Subject to the provisions of the Plan, the Committee
shall have the authority to determine the Participants (other than Directors)
to whom Restricted Stock shall be granted, the number of Shares of Restricted
Stock to be granted to each such Participant, the duration of the Restricted
Period during which, and the conditions, including the performance criteria,
if any, under which, the Restricted Stock may be forfeited to the Company, and
the other terms and conditions of such Awards.

(i) Dividends. Dividends paid on Restricted Stock may be paid directly
to the Participant, may be subject to risk of forfeiture and/or transfer
restrictions during any period established by the Committee or sequestered
and held in a bookkeeping cash account (with or without interest) or
reinvested on an immediate or deferred basis in additional shares of Common
Stock, which credit or shares may be subject to the same restrictions as
the underlying Award or such other restrictions, all as determined by the
Committee in its discretion.

(ii) Registration. Any Restricted Stock may be evidenced in such manner
as the Committee shall deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or certificates.
In the event any stock certificate is issued in respect of Restricted Stock
granted under the Plan, such certificate shall be registered in the name of
the Participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted Stock.

(iii) Forfeiture and Restrictions Lapse. Except as otherwise determined
by the Committee or the terms of the agreement that granted the Restricted
Stock, upon termination of a Participant's employment (as determined under
criteria established by the Committee) for any reason during the applicable
Restricted Period (other than a Change in Control), all Restricted Stock
shall be forfeited by the Participant and re-acquired by the Company. The
Committee may, when it finds that a waiver would be in the best interests
of the Company and not cause such Award, if it is intended to qualify as
performance based compensation under Section 162(m) of the Code, to fail to
so qualify under Section 162(m) of the Code, waive in whole or in part any
or all remaining restrictions with respect to such Participant's Restricted
Stock. Unrestricted Shares, evidenced in such manner as the Committee shall
deem appropriate, shall be issued to the holder of Restricted Stock
promptly after the applicable restrictions have lapsed or otherwise been
satisfied.

(iv) Transfer Restrictions. During the Restricted Period, Restricted
Stock will be subject to the limitations on transfer as provided in Section
6(i)(iii).

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(v) Limit. The maximum number of Shares of Restricted Stock that may be
granted to any Participant during any year shall not exceed 250,000 Shares.

(d) Performance Awards. The Committee shall have the authority to determine
the Participants (other than Directors) who shall receive a Performance Award,
which shall be denominated as a cash amount at the time of grant and confer on
the Participant the right to receive payment of such Award, in whole or in
part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish with respect to the Award.

(i) Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the performance
goals to be achieved during any performance period, the length of any
performance period, the amount of any Performance Award and the amount of
any payment or transfer to be made pursuant to any Performance Award.

(ii) Payment of Performance Awards. Performance Awards may be paid (in
cash and/or in Shares, in the sole discretion of the Committee) in a lump
sum or in installments following the close of the performance period, in
accordance with procedures established by the Committee with respect to
such Award.

(iii) Limit. The maximum number of Performance Awards that may be
granted to any Participant during any year shall not exceed $2 million.

(e) Bonus Shares. The Committee shall have the authority, in its
discretion, to grant Bonus Shares to Participants (other than Directors). Each
Bonus Share shall constitute a transfer of an unrestricted Share to the
Participant, without other payment therefor.

(f) Phantom Shares. The Committee shall have the authority to grant Awards
of Phantom Shares to Participants (other than Directors) upon such terms and
conditions as the Committee may determine.

(i) Terms and Conditions. Each Phantom Share Award shall constitute an
agreement by the Company to issue or transfer a specified number of Shares
or pay an amount of cash equal to a specified number of Shares, or a
combination thereof to the Participant in the future, subject to the
fulfillment during the Restricted Period of such conditions, including
performance objectives, if any, as the Committee may specify at the date of
grant. During the Restricted Period, the Participant shall not have any
right to transfer any rights under the subject Award, shall not have any
rights of ownership in the Phantom Shares and shall not have any right to
vote such shares.

(ii) Dividends. Any Phantom Share award may provide that any or all
dividends or other distributions paid on Shares during the Restricted
Period be credited in a cash bookkeeping account (without interest) or that
equivalent additional Phantom Shares be awarded, which account or shares
may be subject to the same restrictions as the underlying Award or such
other restrictions as the Committee may determine.

(iii) Limit. The maximum number of Phantom Shares that may be awarded to
any Participant during any year shall not exceed 250,000 Phantom Shares.

(g) Other Stock-Based Awards. The Committee may also grant to Participants
(other than Directors) an Other Stock-Based Award, which shall consist of a
right which is an Award denominated or payable in, valued in whole or in part
by reference to, or otherwise based on or related to, Shares as is deemed by
the Committee to be consistent with the purposes of the Plan. Subject to the
terms of the Plan, the Committee shall determine the terms and conditions of
any such Other Stock-Based Award. A Participant may not receive an Other
Stock-Based Award in any calendar year with respect to more than 250,000
Shares.

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(h) Substitute Awards. Awards may be granted from time to time in
substitution for similar awards held by employees of other corporations who
become Participants as the result of a merger or consolidation of the
employing corporation with the Company or any subsidiary, or the acquisition
by the Company or any subsidiary of the assets of the employing corporation,
or the acquisition by the Company or any subsidiary or an affiliate of stock
of the employing corporation. The terms and conditions of Substitute Awards
granted may vary from the terms and conditions set forth in the Plan, to the
extent the Committee, at the time of grant, deems it appropriate to conform,
in whole or in part, to the provisions of awards in substitution for which
they are granted. To the extent reasonably practical, as determined by the
Committee, a Substitute Award shall not change the intended benefit of the
award it replaces.

(i) General.

(i) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for any other Award granted under the Plan
or any award granted under any other plan of the Company or any Affiliate.
Awards granted in addition to or in tandem with other Awards or awards
granted under any other plan of the Company or any Affiliate may be granted
either at the same time as or at a different time from the grant of such
other Awards or awards.

(ii) Forms of Payment by Company Under Awards. Subject to the terms of
the Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or payment of
an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other securities,
other Awards or other property, or any combination thereof, and may be made
in a single payment or transfer, in installments, or on a deferred basis,
in each case in accordance with rules and procedures established by the
Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installment or deferred payments.

(iii) Limits on Transfer of Awards.

(A) Except as provided in (C) below, each Award, and each right
under any Award, shall be exercisable only by the Participant during
the Participant's lifetime, or, if permissible under applicable law, by
the Participant's guardian or legal representative as determined by the
Committee.

(B) Except as provided in (C) below, no Award and no right under any
such Award may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant otherwise than (i)
by will or by the laws of descent and distribution or (ii) pursuant to
a qualified domestic relations order (or, in the case of Restricted
Stock, to the Company), and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Affiliate.

(C) Notwithstanding anything in the Plan to the contrary, to the
extent specifically provided by the Committee with respect to a grant,
a Nonqualified Stock Option may be transferred to immediate family
members or related family trusts, limited partnerships or similar
entities or Persons or on such terms and conditions as the Committee
may establish.

(iv) Term of Awards. The term of each Award shall be for such period as
may be determined by the Committee; provided, that in no event shall the
term of any Award exceed a period of 10 years from the date of its grant.

(v) Share Certificates. All certificates for Shares or other securities
of the Company or any Affiliate delivered under the Plan pursuant to any
Award or the exercise thereof shall be subject to such stop transfer

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orders and other restrictions as the Committee may deem advisable under the
Plan or the rules, regulations, and other requirements of the SEC, any
stock exchange upon which such Shares or other securities are then listed,
and any applicable Federal or state laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

(vi) Consideration for Grants. Awards may be granted for no cash
consideration or for such consideration as the Committee determines
including, without limitation, such minimal cash consideration as may be
required by applicable law.

(vii) Delivery of Shares or other Securities and Payment by Participant
of Consideration. No Shares or other securities shall be delivered pursuant
to any Award until payment in full of any amount required to be paid
pursuant to the Plan or the applicable Award Agreement (including, without
limitation, any exercise price, tax payment or tax withholding) is received
by the Company. Such payment may be made by such method or methods and in
such form or forms as the Committee shall determine, including, without
limitation, cash, Shares, other securities, other Awards or other property,
withholding of Shares, cashless exercise with simultaneous sale, or any
combination thereof; provided that the combined value, as determined by the
Committee, of all cash and cash equivalents and the Fair Market Value of
any such Shares or other property so tendered to the Company, as of the
date of such tender, is at least equal to the full amount required to be
paid pursuant to the Plan or the applicable Award Agreement to the Company.

(viii) Performance Criteria. The Committee shall establish performance
goals applicable to those Awards (other than Options) the payment of which
is intended by the Committee to qualify as "performance-based compensation"
as described in Section 162(m)(4)(C) of the Code. The performance goals
shall be based upon the attainment of such target levels of net income,
cash flows, earnings before deduction of interest, taxes, depreciation,
amortization and non-cash compensation expense related to the issuance of
stock and stock options to employees, return on equity, profit margin,
sales, stock price, return on assets, economic value added, and/or earnings
per share as may be specified by the Committee. Which factor or factors to
be used with respect to any grant, and the weight to be accorded thereto if
more than one factor is used, shall be determined by the Committee at the
time of grant. A performance objective need not be based on an increase or
a positive result and may include, for example, maintaining the status quo
or limiting economic losses. The Committee, in its sole discretion and
without the consent of the Participant, may amend (i) any stock-based Award
to reflect (1) a change in corporate capitalization, such as a stock split
or dividend, (2) a corporate transaction, such as a corporate merger, a
corporate consolidation, any corporate separation (including a spinoff or
other distribution of stock or property by a corporation), any corporate
reorganization (whether or not such reorganization comes within the
definition of such term in Section 368 of the Code), (3) any partial or
complete corporate liquidation, or (4) a change in accounting rules
required by the Financial Accounting Standards Board and (ii) any Award
that is not intended to meet the requirements of Section 162(m) of the
Code, to reflect a significant event that the Committee, in its sole
discretion, believes to be appropriate to reflect the original intent in
the grant of the Award.

SECTION 7. Amendment and Termination.

Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:

(a) Amendments to the Plan. The Board or the Committee may amend, alter,
suspend, discontinue, or terminate the Plan without the consent of any
stockholder, Participant, other holder or beneficiary of an Award, or other
Person; provided, however, notwithstanding any other provision of the Plan
or any Award Agreement, without the approval of the stockholders of the
Company no such amendment, alteration, suspension, discontinuation, or
termination shall be made that would increase the total number of Shares
available for Awards under the Plan, except as provided in Section 4(c) of
the Plan.

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(b) Amendments to Awards. The Committee may waive any conditions or
rights under, amend any terms of, or alter any Award theretofore granted,
provided no change in any Award shall reduce the benefit to Participant
without the consent of such Participant. Notwithstanding the foregoing,
with respect to any Award intended to qualify as performance-based
compensation under Section 162(m) of the Code, no adjustment shall be
authorized to the extent such adjustment would cause the Award to fail to
so qualify.

SECTION 8. Change in Control.

In the event of a Change in Control, except as provided below, all
outstanding Awards automatically shall become fully vested immediately prior
to such Change in Control (or such earlier time as set by the Committee), all
restrictions, if any, with respect to such Awards shall lapse, including,
without limitation, any service, longevity or year-end employment
requirements, and all performance criteria, if any, with respect to such
Awards shall be deemed to have been met in full to the maximum extent without
regard to any proration provisions in such Award or Award Agreement; provided,
however, notwithstanding the foregoing, the Board may provide that any such
accelerations or lapse of restrictions shall not occur if it would render
unavailable "pooling of interest" accounting treatment for any reorganization,
merger or consolidation of the Company.

SECTION 9. General Provisions.

(a) No Rights to Awards. Except as provided in Section 6(b), no Participant
or other Person shall have any claim to be granted any Award, there is no
obligation for uniformity of treatment of Participants, or holders or
beneficiaries of Awards and the terms and conditions of Awards need not be the
same with respect to each recipient.

(b) Withholding. The Company or any Affiliate is authorized to withhold
from any Award, from any payment due or transfer made under any Award or under
the Plan or from any compensation or other amount owing to a Participant the
amount (in cash, Shares, other securities, Shares that would otherwise be
issued pursuant to such Award, other Awards or other property) of any
applicable taxes payable in respect of an Award, its exercise, the lapse of
restrictions thereon, or any payment or transfer under an Award or under the
Plan and to take such other action as may be necessary in the opinion of the
Company to satisfy all obligations for the payment of such taxes. In addition,
the Committee may provide, in an Award Agreement, that the Participant may
direct the Company to satisfy such Participant's tax obligation through the
withholding of Shares otherwise to be acquired upon the exercise or payment of
such Award.

(c) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate or to remain on the Board, as the case may be. Further, the
Company or an Affiliate may at any time dismiss a Participant from employment,
free from any liability or any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award Agreement.

(d) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware and applicable federal law.

(e) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or
as to any Person or Award, or would disqualify the Plan or any Award under any
law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to the applicable laws, or if it cannot be construed
or deemed amended without , in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.

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(f) Other Laws. The Committee may refuse to issue or transfer any Shares or
other consideration under an Award if, acting in its sole discretion, it
determines that the issuance of transfer or such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary
in connection with the exercise of such Award shall be promptly refunded to
the relevant Participant, holder or beneficiary.

(g) No Trust or Fund Created. Neither the Plan nor the Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any
other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any general unsecured creditor of the
Company or any Affiliate.

(h) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.

(i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.

(j) Parachute Tax Gross-Up. To the extent that the grant, payment, or
acceleration of vesting or payment, whether in cash or stock, of any Award
made to a Participant under the Plan (a "Benefit") is subject to an excise tax
under Section 4999(a) of the Code (a "Parachute Tax"), the Company shall pay
such person an amount of cash (the "Gross-up Amount") such that the "net"
Benefit received by the person under this Plan, after paying all applicable
Parachute Taxes (including those on the Gross-up Amount) and any taxes on the
Gross-up Amount, shall be equal to the Benefit that such person would have
received if such Parachute Tax had not been applicable.

SECTION 10. Effective Date of the Plan/First Amendment.

The Plan became effective on March 31, 1998. This First Amendment shall
become effective as of the date of its approval by the stockholders of the
Company.

SECTION 11. Term of the Plan.

No Award shall be granted under the Plan after March 31, 2008 and, further,
unless and until this First Amendment is approved by the stockholders of the
Company, no Awards may be made with respect to Shares in excess of the 700,000
Shares approved by the stockholders on the initial establishment of the Plan.
However, unless otherwise expressly provided in the Plan or in an applicable
Award Agreement, any Award granted prior to such termination, and the
authority of the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights
under such Award, shall extend beyond such termination date.

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CONRAD INDUSTRIES, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS

SOLICITED BY THE BOARD OF DIRECTORS OF CONRAD INDUSTRIES, INC.

The undersigned hereby appoints William H. Hidalgo and Cecil A. Hernandez,
and each of them individually, as proxies, each with power to act without the
other and with full power of substitution, to vote all shares of Common Stock of
Conrad Industries, Inc. that the undersigned would be entitled to vote if
personally present at the 1999 Annual Meeting of Stockholders to be held on May
27, 1999, at 9:00 a.m., local time, at the Petroleum Club of Morgan City, 500
Roderick, Morgan City, Louisiana, or at any adjournment or postponement thereof,
on the proposals listed below, and, in their discretion, on any other matter
that may properly come before the meeting, or any adjournment or postponement
thereof, and any matter presented at the meeting which was not known to the
Board of Directors a reasonable time before the solicitation of this proxy:

Any executed proxy which does not designate a vote shall be deemed to grant
authority for any item not designated.

PROPOSAL 1: ELECTION OF DIRECTORS

[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY for all
nominees listed below

Cecil A. Hernandez and Louis J. Michot, Jr. to hold office until the 2002 Annual
Meeting and until their successors are elected and qualified.

INSTRUCTION: To withhold authority to vote for any individual nominee or
nominees, write the appropriate name or names in the space provided here.

PROPOSAL 2: APPOINTMENT OF DELOITTE & TOUCHE LLP AS AUDITORS FOR THE COMPANY

[ ] FOR [ ] AGAINST [ ] ABSTAIN

PROPOSAL 3: INCREASE THE NUMBER OF SHARES SUBJECT TO THE 1998 STOCK PLAN

[ ] FOR [ ] AGAINST [ ] ABSTAIN

Please check the following box if you plan to attend the Annual Meeting of
Stockholders in person. [ ]

ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED,
WILL BE VOTED "FOR" PROPOSAL 1 (ALL NOMINEES), "FOR" PROPOSAL 2, "FOR" PROPOSAL
3, AND IN ACCORDANCE WITH THE DISCRETION OF THE PERSON VOTING THE PROXY WITH
RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING.

YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO A VOTE THEREON.

Dated: _____________________________, 1999

________________________________________
Signature
Please sign exactly as name appears on this card. Joint owners should each sign.
Executors, administrators, trustees, etc., should give their full titles.

PLEASE COMPLETE, SIGN AND PROMPTLY MAIL THIS PROXY CARD IN THE ENCLOSED
ENVELOPE.

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This DEF 14A Filing	Date	First	Last	Other Filings

	1/1/98	26
	3/31/98	21	40
	5/22/98	26
	6/10/98	23		424B1
	9/30/98	26		10-Q
	11/3/98	18	22
	12/10/98	22
	12/31/98	21	28	10-K405
	3/2/99	26
	3/31/99	21	27	10-Q, 10-K405
	4/12/99	3	6
Filed On / Filed As Of	4/22/99
	4/23/99	2	29
For The Period Ended	5/27/99	2	41
	6/10/99	21	22
	12/24/99	28
	12/31/99	3	13	10-K405
	3/24/0	28
	5/24/0	28
	6/10/0	22
	3/31/8	11	40
	11/2/8	21

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Filing Submission - Alternative Formats (Word / Rich Text, HTML, Plain Text, SGML, XML, et al.)

Conrad Industries Inc · DEF 14A · For 5/27/99

Filed On 4/22/99 · SEC File 0-24263 · Accession Number 899243-99-777

Definitive Proxy Solicitation Material · Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Definitive Proxy Solicitation Material · Schedule 14A
Filing Table of Contents