THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Shaw Group Inc. (The) (SGR)

12/19/2005 Proxy Information

We have, from time to time, made loans to certain of our executive officers and/or entities in which the executive officers have a material interest. Each such loan in which the indebtedness exceeded $60,000 at any time since September 1, 2004 is listed below with the following information indicated for each: (i) the name of the borrower; (ii) the nature of the borrower’s relationship with the Company; (iii) the largest amount of indebtedness outstanding at any time since September 1, 2004; (iv) the amount outstanding as of August 31, 2005; and (v) the interest rate charges thereon: (a)(i) David L. Chapman, Sr.; (ii) executive officer of The Shaw Group Inc.; (iii) $194,443; (iv) $0; (v) 0%; and (b)(i) Dorsey Ron McCall; (ii) executive officer of The Shaw Group Inc.; (iii) $328,625; (iv) $78,625; (v) 0%. The foregoing loans were all made in connection with the executives’ agreement to become or remain employed by us, are evidenced by written promissory notes, will be forgiven by us in the event the executives remain employed by us for certain specified time periods, generally two to five years, but are repayable in the event such executives voluntarily terminate their employment prior to the expiration of such specified time periods.

Effective July 30, 2002, the Sarbanes-Oxley Act of 2002 prohibits the granting of any personal loans to or for the benefit of any of our executive officers and directors and the modification or renewal of any such existing personal loans. We have not granted any new personal loans or modified existing personal loans to or for executive officers and directors since the effective date of such provision.

During fiscal 2005, Albert McAlister participated in our health benefit plan. Mr. McAlister pays the premiums required to receive family coverage under our health plan.

In January 2003, our subsidiary, Stone & Webster, Inc., was awarded a subcontract to perform engineering services for a company (the “Related Company”) for whom an executive officer and a significant owner is the brother to our Chief Executive Officer for total consideration of approximately $2 million. In connection with the services agreement, we entered into a guaranty agreement with the Related Company under which we agreed, under certain circumstances, to guarantee the payment of certain sums which may be owed by the Related Company to its client under a performance-based services and equipment contract. That guaranty, by its terms, may be assigned by the Related Company to its client. We also entered into an indemnification and fee agreement between us and the Related Company pursuant to which, among other things, the Related Company must pay us an annual fee in consideration for our entering into the guaranty agreement. The amount of the annual fee varies, but totals approximately $0.8 million over the 20-year term. Although we believe the probability that we will have to make any payments under the guaranty agreement is remote, we have recorded the guarantee at its fair value of approximately $0.3 million. We have the right, but not the obligation, to take over all of the Related Company’s rights and obligations under its contract with the customer, if a demand by the customer under the contract with the Related Company ever occurs and remains unsatisfied. We expect that we will not be required to make any payments under the guaranty agreement, but the maximum potential amount of future payments (undiscounted) we could be required to make would be approximately $13 million over the 20-year term of the contract.

Effective August 1, 2002, we entered into a five-year watercraft lease agreement with a corporation owned by Dorsey Ron McCall, one of our executive officers. The lease was made in connection with Mr. McCall’s agreement to become employed by us, and the payments thereunder are $10,000 per month.

During part of fiscal 2005, Mr. John Reneau, the brother-in-law of the Company’s Chief Executive Officer, was employed by Shaw Waste Solutions, LLC, one of the Company’s affiliates. Mr. Reneau was hired with an aggregate salary of $75,000; however, only $37,204 was paid for services during fiscal 2005. Mr. Reneau resigned his employment with us on February 25, 2005; and therefore, was not eligible for a discretionary annual bonus or any award of stock options or restricted stock. The Company believes that Mr. Reneau’s compensation is reasonable and commensurate with his level of experience, expertise, responsibilities, duties and service to the Company.

On August 27, 2004, Mr. Ahmad Fatemizadeh, the brother of an executive officer, Abe Fatemizadeh, was hired by the Company as the President of the Process Industry Sector within our Engineering, Construction and Maintenance segment, which later became part of our Engineering & Chemicals and Construction Division. In fiscal 2005 Mr. Ahmad Fatemizadeh’s received an annual salary of $283,500 and a sign-on bonus of $147,000 and other compensation of $1,634 for total payments of $432,134. Fatemizadeh is also eligible to receive discretionary annual bonuses, stock options and restricted stock. The Company believes that Mr. Fatemizadeh’s compensation is reasonable and commensurate with his level of experience, expertise, responsibilities, duties and service to the Company.

During fiscal 2005, David Chapman, Jr., the son of an executive officer, David Chapman, Sr., was employed by the Company as a manager in our Fabrication, Manufacturing & Distribution Division. David Chapman, Jr. was paid an aggregate salary and bonus of approximately $112,104 for services during fiscal 2005. The Company believes that David Chapman, Jr.’s compensation is reasonable and commensurate with his level of experience, expertise, responsibilities, duties and service to the Company. Mr. Chapman’s son-in-law, Anthony Garcia, is employed by Stone & Webster, Inc. as a Client Program Manager. Mr. Garcia’s annual salary including bonuses for fiscal 2005 was $92,043. Mr. Garcia is also eligible to receive stock options and restricted stock beginning in fiscal 2005. The Company believes that Mr. Garcia’s compensation is reasonable and commensurate with his level of experience, expertise, responsibilities, duties and service to the Company.

Mr. Kenneth Paul Neal, Jr., the son-in-law of Richard Gill, our Executive Vice President, Chairman of the Company’s Executive Committee and President of our Shaw Stone & Webster Nuclear Services Division, has been employed with us as an environmental manager since the acquisition of Mr. Gill’s company, MERIT, in 1997. Prior to that date, Mr. Neal had been employed by MERIT since 1983. Mr. Neal’s aggregate salary in fiscal 2005 was $79,144. The Company believes that Mr. Neal’s compensation is reasonable and commensurate with his level of experience, expertise, responsibilities, duties and service to the Company.

On October 24, 2005, Mr. Eric Dalvandi, the brother-in-law of an executive officer, Abe Fatemizadeh, was hired by the Company as a Project Engineer at an annual salary of $102,000. Dalvandi is also eligible to receive discretionary annual bonuses, stock options and restricted stock. The Company believes that Mr. Dalvandi’s compensation is reasonable and commensurate with his level of experience, expertise, responsibilities, duties and service to the Company.

12/17/2004 Proxy Information

We have, from time to time, made loans to certain of our executive officers and/or entities in which the executive officers have a material interest. Each such loan in which the indebtedness exceeded $60,000 at any time since September 1, 2003 is listed below with the following information indicated for each: (i) the name of the borrower; (ii) the nature of the borrower's relationship with the Company; (iii) the largest amount of indebtedness outstanding at any time since September 1, 2003; (iv) the amount outstanding as of August 31, 2004; and (v) the interest rate charges thereon: (a)(i) David L. Chapman, Sr.; (ii) executive officer of The Shaw Group Inc.; (iii) $1,000,000; (iv) $194,443; (v) 0%; and (b)(i) Dorsey Ron McCall; (ii) executive officer of The Shaw Group Inc.; (iii) $750,000; (iv) $328,625; (v) 0%. The foregoing loans were all made in connection with the executives' agreement to become or remain employed by us, are evidenced by written promissory notes, will be forgiven by us in the event the executives remain employed by us for certain specified time periods, generally two to five years, but are repayable in the event such executives voluntarily terminate their employment prior to the expiration of such specified time periods.

Effective July 30, 2002, the Sarbanes-Oxley Act of 2002 prohibits the granting of any personal loans to or for the benefit of any of our executive officers and directors and the modification or renewal of any such existing personal loans. We have not granted any new personal loans or modified existing personal loans to or for executive officers and directors since the effective date of such provision.

In January 2003, our subsidiary, Stone & Webster, Inc., was awarded a subcontract to perform engineering services for a company (the "Related Company") for whom an executive officer and a significant owner is the brother to our Chief Executive Officer for total consideration of approximately $2 million. In connection with the services agreement, we entered into a guaranty agreement with the Related Company under which we agreed, under certain circumstances, to guarantee the payment of certain sums which may be owed by the Related Company to its client under a performance-based services and equipment contract. That guaranty, by its terms, may be assigned by the Related Company to its client. We also entered into an indemnification and fee agreement between us and the Related Company pursuant to which, among other things, the Related Company must pay us an annual fee in consideration for our entering into the guaranty agreement. The amount of the annual fee varies, but totals approximately $0.8 million over the 20-year term. Although we believe the probability that we will have to make any payments under the guaranty agreement is remote, we have recorded the guarantee at its fair value of approximately $0.3 million. We have the right, but not the obligation, to take over all of the Related Company's rights and obligations under its contract with the customer, if a demand by the customer under the contract with the Related Company ever occurs and remains unsatisfied. We expect that we will not be required to make any payments under the guaranty agreement, but the maximum potential amount of future payments (undiscounted) we could be required to make would be approximately $13 million over the 20-year term of the contract.

Effective August 1, 2002, we entered into a five-year watercraft lease agreement with a corporation owned by Dorsey Ron McCall, one of our executive officers. The lease was made in connection with Mr. McCall's agreement to become employed by us, and the payments thereunder are $10,000 per month.

During fiscal 2004, Mr. John Reneau, the brother-in-law of the Company's Chief Executive Officer, was employed by Shaw Waste Solutions, LLC, one of the Company's affiliates. Mr. Reneau was hired with an aggregate salary of $75,000; however, only $51,942 was paid for services during fiscal 2004. Mr. Reneau is also eligible for a discretionary annual bonus, although decisions with respect to bonuses for fiscal 2004 had not yet been made with respect to certain employees as of the date of this proxy statement. He is also eligible to receive stock options and restricted stock, although decisions with respect to the issuance of stock options and restricted stock had not yet been made as of the date of this proxy statement.

On August 27, 2004, Mr. Ahmad Fatemizadeh, the brother of an executive officer, Abe Fatemizadeh, was hired by the Company as the President of the Process Industry Sector within our Engineering, Construction and Maintenance segment. Mr. Ahmad Fatemizadeh's annual salary is $283,500; however, no payments were made in fiscal 2004. Mr. Fatemizadeh also received a sign-on bonus of $147,000 which was paid in fiscal 2005. Mr. Fatemizadeh is also eligible to receive discretionary annual bonuses, stock options and restricted stock beginning in fiscal 2005.

During fiscal 2004, David Chapman, Jr., the son of an executive officer, David Chapman, Sr., was employed by the Company as a manager in our Fabrication, Manufacturing and Distribution segment. David Chapman, Jr. was paid an aggregate salary of approximately $95,000 for services during fiscal 2004. David Chapman, Jr. is also eligible for a discretionary annual bonus, although decisions with respect to certain employees, bonuses for fiscal 2004 had not yet been made as of the date of this proxy statement. Mr. Chapman is also eligible to receive stock options and restricted stock, although decisions with respect to the issuance of stock options and restricted stock had not yet been made as of the date of this proxy statement.

Mr. Kenneth Paul Neal, Jr., the son-in-law of Richard Gill, our Executive Vice President, Chairman of the Company's Executive Committee and Acting President of our Shaw Stone & Webster Nuclear Services Division, has been employed with us as an environmental manager since the acquisition of Mr. Gill's company, MERIT, in 1997. Prior to that date, Mr. Neal had been employed by MERIT since 1983. Mr. Neal's aggregate salary in fiscal 2004 was $77,477.

12/24/2003 Proxy Information

L. Lane Grigsby, one of our directors, is the majority owner of a construction company which we have used on certain projects, primarily as a subcontractor. Mr. Grigsby also had a minority interest in a company that provided services to the contractor of our leased building; the director has since divested himself of this interest. During fiscal 2002, the Company made total payments of approximately $20,825,000 to the two companies in which Mr. Grigsby had an interest, and owed one of the companies approximately $7,750,000 as of August 31, 2002. The contract with this construction company pursuant to which we owed $7,750,000 as of August 31, 2002, was terminated as a result of a project cancellation and no additional payments were made pursuant to it in fiscal 2003. During fiscal 2001, the Company made payments of approximately $266,000 to one of these companies. The Company did not make any payments to any of these companies during fiscal 2003 and owed no amounts to any of these companies as of August 31, 2003.

Effective August 1, 2002, we entered into a five-year watercraft lease agreement with a corporation owned by Dorsey Ron McCall, one of our executive officers. The lease was made in connection with Mr. McCall’s agreement to become employed by us, and the payments thereunder are $10,000 per month.

We have, from time to time, made loans to certain of our executive officers and/or entities in which the executive officers have a material interest. Each such loan in which the indebtedness exceeded $60,000 at any time since September 1, 2002 is listed below with the following information indicated for each: (i) the name of the borrower; (ii) the nature of the borrower’s relationship with the Company; (iii) the largest amount of indebtedness outstanding at any time since September 1, 2002; (iv) the amount outstanding as of August 31, 2003; and (v) the interest rate charges thereon: (a)(i) David L. Chapman, Sr.; (ii) executive officer of The Shaw Group Inc.; (iii) $1,000,000; (iv) $527,778; (v) 0%; (b)(i) Nicholas C. Gallinaro; (ii) executive officer of The Shaw Group Inc.; (iii) $1,000,000; (iv) $555,556; (v) 0%; and (c)(i) Dorsey Ron McCall; (ii) executive officer of The Shaw Group Inc.; (iii) $750,000; (iv) $578,625; (v) 0%. The foregoing loans were all made in connection with the executives’ agreement to become or remain employed by us, are evidenced by written promissory notes, will be forgiven by us in the event the executives remain employed by us for certain specified time periods, generally two to five years, but are repayable in the event such executives voluntarily terminate their employment prior to the expiration of such specified time periods.

Effective July 30, 2002, the Sarbanes-Oxley Act of 2002 prohibits the granting of any personal loans to or for the benefit of any of our executive officers and directors and the modification or renewal of any such existing personal loans. We have not granted any new personal loans or modified existing personal loans to or for executive officers and directors since the effective date of such provision.