YOUR VOTE IS IMPORTANT.

Whether or not you plan to attend the meeting, please take a few minutes now to vote your shares.

Our Board has made these materials available to you over the Internet or, upon your request, has mailed you a printed version of these materials in connection with our 2012 Annual Meeting of Stockholders, which will take place on May 8, 2012. We mailed the Notice of the Annual Meeting to our stockholders on March 29, 2012, and our proxy materials were posted on the Web site referenced in the Notice on that same date.

We have sent or provided access to the materials to you because our Board is soliciting your proxy to vote your shares at our Annual Meeting. We will bear all expenses incurred in connection with this proxy solicitation, which we expect to conduct primarily by mail. We have engaged The Proxy Advisory Group, LLC to assist in the solicitation for a fee that will not exceed $15,000, plus out-of-pocket expenses. In addition, our officers and employees may solicit your proxy by telephone, by facsimile transmission or in

person and they will not be separately compensated for such services. We solicit proxies to give all stockholders an opportunity to vote on matters that will be presented at the Annual Meeting. In this proxy statement, you will find information on these matters, which is provided to assist you in voting your shares. If your shares are held through a broker or other nominee (i.e., in “street name”) and you have requested printed versions of these materials, we have requested that your broker or nominee forward this proxy statement to you and obtain your voting instructions, for which we will reimburse them for reasonable out-of-pocket expenses. If your shares are held through the Thrift Plan for Employees of B&W and Participating Subsidiary and Affiliated Companies (our “Thrift Plan”) and you have requested printed versions of these materials, the trustee of that plan has sent you this proxy statement and you should instruct the trustee on how to vote your plan shares.

Record Date and Who May Vote

Our Board selected March 12, 2012 as the record date for determining stockholders entitled to vote at the Annual Meeting. This means that if you were a registered stockholder with our transfer agent and registrar, Computershare Trust Company, N.A., on the record date, you may vote your shares on the matters to be considered at the Annual Meeting. If your shares were held in street name on that date, you should refer to the instructions provided by your broker or nominee for further information. They are seeking your instructions on how you want your shares voted. Brokers holding shares in street name can vote those shares on routine matters if the beneficial owner has not provided voting instructions at least 10 days before a meeting. Under the rules of the New York Stock Exchange, the election of directors and the advisory vote on compensation of executive officers are no longer considered routine matters. That means that brokers may not vote your shares in the election of directors or in the advisory vote on compensation if you have not given your broker specific instructions as to how to vote. Please be sure to give specific voting instructions to your broker.

On the record date, 118,497,252 shares of our common stock were outstanding. Each outstanding share of common stock entitles its holder to one vote on each matter to be acted on at the meeting.

How to Vote

Most stockholders can vote by proxy in three ways:

If you are a stockholder of record, you can vote your shares by voting by Internet, telephone, mailing in your proxy or in person at the Annual Meeting. You may give us your proxy by following the instructions included in the Notice or, if you received a printed version of these proxy materials, in the enclosed proxy card. If you want to vote by mail but have not received a printed version of these proxy materials, you may request a full packet of proxy materials through the instructions in the Notice. If you vote using either telephone or the Internet, you will save us mailing expense.

By giving us your proxy, you will be directing us how to vote your shares at the meeting. Even if you plan on attending the meeting, we urge you to vote now by giving us your proxy. This will ensure that your vote is represented at the meeting. If you do attend the meeting, you can change your vote at that time, if you then desire to do so.

If you are the beneficial owner of shares held in street name, the methods by which you can access the proxy materials and give the voting instructions to the broker or nominee may vary. Accordingly, beneficial owners should follow the instructions provided by their brokers or nominees to vote by Internet, telephone or mail. If you want to vote by mail but have not received a printed version of these proxy materials, you may request a full packet of proxy materials as instructed by the Notice. If you want to vote your shares in person at the Annual Meeting, you must obtain a valid proxy from your broker or nominee. You should contact your broker or nominee or refer to the instructions provided by your broker or nominee for further information. Additionally, the availability of telephone or Internet voting depends on the voting process used by the broker or nominee that holds your shares.

You may receive more than one Notice or proxy statement and proxy card or voting instruction form if your shares are held through more than one account (e.g., through different brokers or nominees). Each proxy card or voting instruction form only covers those shares held in the applicable account. If you hold shares in more than one account, you will have to provide voting instructions as to all your accounts to vote all your shares.

How to Change Your Vote or Revoke Your Proxy

For stockholders of record, you may change your vote or revoke your proxy entirely by written notice to our Corporate Secretary at 13024 Ballantyne Corporate Place, Suite 700, Charlotte, North Carolina 28277, granting a new later dated proxy, submitting a later dated vote by telephone or on the Internet or by voting in person at the Annual Meeting. Unless you attend the meeting and vote your shares in person, you should change your vote using the same method (by Internet, telephone or mail) that you first used to vote your shares. This will help the inspectors of election for the meeting verify your latest vote.

For beneficial owners of shares held in street name, you should follow the instructions in the information provided by your broker or nominee to change your vote or revoke your proxy entirely. If you want to change your vote as to shares held in street name by voting in person at the Annual Meeting, you must obtain a valid proxy from the broker or nominee that holds those shares for you.

Quorum

The Annual Meeting will be held only if a quorum exists. The presence at the meeting, in person or by proxy, of holders of a majority of our outstanding shares of common stock as of the record date will constitute a quorum. If you attend the meeting or vote your shares by Internet, telephone or mail, your shares will be counted toward a quorum, even if you abstain from voting on a particular matter. Shares held by brokers and other nominees as to which they have not received voting instructions from the beneficial owners and lack the discretionary authority to vote on a particular matter are called “broker non-votes” and will count for quorum purposes.

Proposals to Be Voted On

We are asking you to vote on the following:

Vote Required

In the election of directors, you may vote “FOR” all director nominees or withhold your vote for any one or more of the director nominees. Director nominees are elected by a plurality of the votes cast by the shares of our common stock entitled to vote in the election of directors. This means that the individuals nominated for election to the Board who receive the most “FOR” votes (among votes properly cast in person or by proxy) will be elected. Votes withheld, which are deemed abstentions, and broker non-votes are not counted for purposes of election of directors.

For the proposal on executive compensation, you may vote “FOR” or “AGAINST” or abstain from voting. This proposal requires the affirmative vote of a majority of the shares of our common stock present

in person or represented by proxy at the Annual Meeting and entitled to vote on the matter in order to be adopted. Abstentions are counted for purposes of determining a quorum and are considered present and entitled to votes on this proposal. As a result, abstentions have the effect of an “AGAINST” vote. Broker non-votes will not be considered as entitled to vote on this proposal, even though they are considered present for purposes of determining a quorum and may be entitled to vote on other matters. As a result, broker non-votes will not have any effect on the adoption of this proposal.

For the proposal to ratify the appointment of Deloitte, you may vote “FOR” or “AGAINST” or abstain from voting. This proposal requires the affirmative vote of a majority of the shares cast on the matter. Abstentions will not be considered as cast and, as a result, will not have any effect on the proposal.

How Votes are Counted

For stockholders of record, all shares represented by the proxies will be voted at the Annual Meeting in accordance with instructions given by the stockholders. Where a stockholder returns their proxy and no instructions are given with respect to a given matter, the shares will be voted: (1) “FOR” the election of the Board’s nominees; (2) “FOR” the approval of the compensation of our Named Executives; (3) “FOR” the ratification of the appointment of Deloitte as our independent registered public accounting firm; and (4) in the discretion of the proxy holders upon such other business as may properly come before the Annual Meeting. If you are a shareholder of record and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the Annual Meeting.

For beneficial owners of shares held in street name, the brokers, banks, or nominees holding shares for beneficial owners must vote those shares as

instructed. Absent instructions from you, brokers, banks and nominees may vote your shares only as they decide as to matters for which they have discretionary authority under the applicable New York Stock Exchange rules. A broker, bank or nominee does not have discretion to vote on the election of directors or approval of executive compensation. If you do not instruct your broker, bank or nominee how to vote, no votes will be cast on your behalf on those matters. Your broker will be entitled to vote your shares in its discretion, absent instructions from you, on the ratification of the appointment of Deloitte as our independent registered public accounting firm. Any shares of our common stock held in the Thrift Plan that are not voted or for which Vanguard does not receive timely voting instructions, will be voted in the same proportion as the shares for which Vanguard receives timely voting instructions from other participants in the Thrift Plan.

We are not aware of any other matters that may be presented or acted on at the meeting. If you vote by signing and returning the enclosed proxy card or using the telephone or Internet voting procedures, the individuals named as proxies on the card may vote your shares, in their discretion, on any other matter requiring a stockholder vote that comes before the meeting.

Confidential Voting

All voted proxies and ballots will be handled to protect your voting privacy as a stockholder. Your vote will not be disclosed except:

Our Certificate of Incorporation provides for the classification of our Board into three classes, with the term of one class expiring each year.

Current Directors:

The term of office of our Class II directors will expire at this year’s Annual Meeting. The current Class II directors are Thomas A. Christopher, Robert W. Goldman and Stephen G. Hanks. Messrs. Goldman and Hanks were elected to our Board on July 2, 2010 in connection with our spin-off from McDermott International, Inc. (“McDermott”). Mr. Christopher was appointed to the Board in September 2011 and

assigned to Class II. Accordingly, on the nomination of our Board following the recommendation of the Governance Committee, Messrs. Christopher, Goldman and Hanks will each stand for re-election as a Class II director for a term of three years. Each nominee has consented to serve as a director if elected.

Mr. Christopher is the only director nominee standing for election for the first time at the Annual Meeting. Mr. Christopher was identified as a potential nominee by one of our directors. The Governance Committee recommended Mr. Christopher to our board of directors for nomination as a director.

Unless otherwise directed, the persons named as proxies on the enclosed proxy card intend to vote “FOR” the election of the nominees. If any nominee should become unavailable for election, the shares will be voted for such substitute nominee as may be proposed by our board of directors. However, we are not aware of any circumstances that would prevent any of the nominees from serving.

Set forth on the following pages is certain information (ages are as of May 8, 2012) with respect to each nominee for election as a director and each director of our company who will continue to serve as a director after this year’s Annual Meeting, including the specific experience, qualifications and skills considered by the Governance Committee and/or the Board in assessing the appropriateness of the person to serve as a director.

We maintain a corporate governance section on our Web site which contains copies of our principal governance documents. The corporate governance section may be found at www.babcock.com at “Investor Relations — Corporate Governance — Highlights.” The corporate governance section contains the following documents:

By-Laws

Corporate Governance Principles

Code of Business Conduct

Code of Ethics for Chief Executive

    Officer and Senior Financial Officers

Board of Directors Conflicts of Interest

    Policies and Procedures

Audit & Finance Committee Charter

Compensation Committee Charter

Governance Committee Charter

Safety & Security Committee Charter

Director Independence

The New York Stock Exchange (“NYSE”) listing standards require our Board to be comprised of at least a majority of independent directors. For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material relationship with us. The Board has established categorical standards, which conform to the independence requirements in the NYSE listing standards to assist it in determining director independence. These standards are contained in the Corporate Governance Principles found on our Web site at www.babcock.com under “Investor Relations — Corporate Governance — Highlights.”

Based on these independence standards, our Board has determined that the following directors are independent and meet our categorical standards:

In determining the independence of the directors, our Board considered ordinary course transactions between us and other entities with which the directors are associated. Those transactions are described below, although none were determined to constitute a material relationship with us. Although Mr. Weyers has no current relationship with B&W

except as a director and stockholder, he is the former chairman of the board of directors of Integrys Energy Group, Inc., with which we have transacted business in the ordinary course during the last three years. Messrs. Goldman, Hanks and Admiral Mies are directors of entities with which we transact business in the ordinary course. Ms. Pramaggiore is an executive officer of an entity, affiliates of which we transact business with in the ordinary course. Our Board also considered unsolicited contributions by us to charitable organizations with which the directors were associated. Admiral Mies serves as a director of a charitable organization to which we made unsolicited contributions between 2009 and 2011 in the usual course of our annual giving programs. Messrs. Hanks and McWilliams are both directors of McDermott, which was our parent company prior to our spin-off on July 30, 2010. McDermott does not own any shares of our common stock, however, in connection with the spin-off, we entered into a number of agreements with McDermott regarding the spin-off, which allocate responsibilities for obligations arising before and after the spin-off and provide transition services between B&W and McDermott for a limited period of time following the spin-off.

Board Function, Leadership Structure and Executive Sessions

The mission of our Board is to promote the best interests of the Company’s stockholders through oversight of the management of the Company’s business and affairs.

Our Board does not have a policy requiring either that the positions of the Chairman and the Chief Executive Officer should be separate or that they should be occupied by the same individual. Our Board believes that this issue is properly addressed as part of the succession planning process and that it is in the best interests of the Company for the Board to make a determination on these matters when it elects a new Chief Executive Officer or Chairman of the Board or at other times consideration is warranted by circumstances. Currently, the roles are separate, with Mr. Fees serving as our Chairman and Mr. Bethards as our Chief Executive Officer. Our Board believes that this leadership structure is appropriate for us at this time because it allows Mr. Bethards to set our strategic direction and manage our day-to-day operations and performance, while Mr. Fees, who has

over 30 years experience with our company and prior public company board service with McDermott, is able to set the Board’s agenda, in coordination with our Lead Independent Director, and independently lead the Board in its oversight of management.

The Lead Independent Director is appointed by the independent directors and has the following responsibilities:

Our independent directors meet in executive session without management on a regular basis.

The Role of the Board in Succession Planning

The Board believes effective succession planning, particularly for the Chief Executive Officer, is important to the continued success of the Company. As a result, the Board regularly reviews and discusses succession planning with the Chief Executive Officer during executive sessions of Board meetings. The Governance Committee assists the Board in the area of succession planning by reviewing and assessing the management succession planning process and reporting to the Board with respect to succession planning for the Chief Executive Officer and our other executive officers. From time to time, the Board also retains an executive search firm as part of its normal succession planning function.

The Role of the Board in Risk Oversight

As part of its oversight function, the Board monitors various risks that we face. To assist with aspects of that function, the Board established the Safety & Security Committee, which oversees the safety, security and reliability of our business operations with specific focus on environmental, regulatory, safety, and security matters. The Audit & Finance Committee further assists the Board in fulfilling its oversight responsibility in the areas of financial reporting and by meeting periodically with management to review financial risk exposures and discuss B&W’s policies and guidelines concerning risk assessment and risk management. The Compensation Committee also assists the Board with this function by assessing risks associated with our compensation programs with management and its outside compensation consultant. We further maintain an enterprise risk management program administered by our Risk Management group. The program reviews key external, strategic, operational and financial risks with specific focus on the effectiveness of risk mitigation. Information on the enterprise risk management program is presented to senior management and the Board by our Director of Risk Management.

Communication with the Board

Stockholders or other interested persons may send written communications to the independent members of our Board, addressed to Board of Directors (independent members), c/o The Babcock & Wilcox Company, Corporate Secretary’s Office, 13024 Ballantyne Corporate Parkway, Suite 700, Charlotte, North Carolina 28277. All such communications shall be forwarded to the independent directors for their review, except for communications that (a) are unrelated to the Company’s business, (b) contain improper commercial solicitations, (c) contain material that is not appropriate for review by the Board based upon the Company’s Bylaws and the established practice and procedure of the Board, or (d) contain other improper or immaterial information. Information regarding this process is posted on our Web site at www.babcock.com under “Investor Relations — Corporate Governance — Board of Directors.”

Board of Directors and Its Committees

Our Board met nine times during 2011. All directors attended 75% or more of the meetings of the Board and of the committees on which they served during 2011 or, in the case of Mr. Christopher, 75% or more of the meetings of the Board and of the committees on which he served that were held after he was appointed as a director in September 2011. In

addition, as reflected in our Corporate Governance Principles, we have adopted a policy that each member of our Board must make reasonable efforts to attend our Annual Meeting. All directors then serving on the Board attended our 2011 Annual Meeting.

Our Board currently has, and appoints the members of, standing Audit & Finance, Compensation, Governance and Safety & Security Committees. Each of those committees has a written charter approved by the Board. The current charter for each standing Board committee is posted on our Web site at www.babcock.com under “Investor Relations — Corporate Governance — Highlights.”

The current members of the committees are identified below. NYSE listing standards require that all members of our Audit & Finance, Compensation and Governance Committees be independent. Our Board has affirmatively determined that each member of such committees is independent in accordance with the NYSE listing standards.

Audit & Finance Committee:

Mr. Goldman (Chairman)

Mr. Hanks

Mr. McWilliams

Ms. Pramaggiore

During 2011, the Audit & Finance Committee met eight times. The Audit & Finance Committee’s role is financial oversight. Our management is responsible for preparing financial statements, and our independent registered public accounting firm is responsible for auditing those financial statements. The Audit & Finance Committee is not providing any expert or special assurance as to our financial statements or any professional certification as to the independent registered public accounting firm’s work.

The Audit & Finance Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The committee, among other

things, also reviews and discusses our audited financial statements with management and the independent registered public accounting firm. The committee provides oversight of (i) our compliance with legal and regulatory financial requirements; (ii) policies and procedures relating to financial risks; and (iii) aspects of our compliance and ethics program relating to financial matters, books and records and accounting and as required by applicable laws, rules and regulations.

The Audit & Finance Committee also reviews and oversees financial policies and financial strategies, mergers, acquisitions, financings, liabilities, investment performance of our pension plans and the capital structures of B&W and its subsidiaries. Generally, the Audit & Finance Committee has responsibility over many activities involving up to $25 million. For such activities involving amounts over $25 million, the Audit & Finance Committee will review the activity and make a recommendation to the Board.

Our Board has determined that Messrs. Goldman, Hanks and McWilliams and Ms. Pramaggiore each qualify as an “audit committee financial expert” within the definition established by the Securities and Exchange Commission (“SEC”). For more information on the backgrounds of these directors, see their biographical information under “Election of Directors” above.

Compensation Committee:

Mr. Hanks (Chairman)

Mr. Christopher

Mr. Goldman

Mr. Weyers

During 2011, the Compensation Committee met six times. The Compensation Committee has overall responsibility for our officer and non-employee director compensation plans, policies and programs and has the authority to retain, terminate, compensate and oversee any compensation consultant or other advisors to assist the committee in the discharge of its responsibilities. Hay Group, Inc. serves as the Compensation Committee’s outside consultant on executive and non-employee director compensation, and has served in that role since November 2010. The Compensation Committee oversees the annual evaluation of our Chief Executive Officer in conjunction with the Governance Committee. See the “Compensation Discussion and Analysis” and “Compensation of Executive Officers” sections of

this proxy statement for information about our 2011 executive officer compensation, including a discussion of the role of the compensation consultant.

The Compensation Committee regularly reviews the design of our significant compensation programs with the assistance of its compensation consultant. We believe our compensation programs work to retain and to motivate our employees at appropriate levels of business risk, which risks are generally mitigated through some of the following features:

The Compensation Committee administers our Executive Incentive Compensation Plan (the “EICP”), under which it awards annual cash-based incentive compensation to our officers based on the attainment of annual performance goals. Our Compensation Committee approves, among other things, target EICP compensation for each officer and financial goals and individual goals for EICP compensation for our Chief Executive Officer. Our Chief Operating Officer establishes EICP individual goals for the Presidents of principal operating groups and our Chief Executive Officer establishes EICP individual goals for our other executive officers. This committee also administers our 2010 Long-Term Incentive Plan (as amended, the “2010 LTIP”), and may delegate some of its duties (other than awards to directors under the 2010 LTIP) to our Chief Executive Officer or other senior officers.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee (1) was, during the year ended December 31, 2011, or had previously been, an officer or employee of B&W or any of its subsidiaries or (2) had any material interest in a transaction of B&W or a business relationship with, or any indebtedness to, B&W. None of our executive officers have served as members of a compensation committee (or if no committee performs that function, the board of directors) of any other entity that has an executive officer serving as a member of our Board.

Governance Committee:

Mr. McWilliams (Chairman)

Adm. Mies

Ms. Pramaggiore

During 2011, the Governance Committee met six times. This committee, in addition to other matters, has overall responsibility to (1) establish and assess director qualifications; (2) recommend nominees for election to our Board; (3) oversee the annual evaluation of our Board and management, including the Chief Executive Officer in conjunction with our Compensation Committee; and (4) oversee our company’s ethics and compliance program, excluding certain oversight responsibilities assigned to the Audit and Finance Committee of the Board under applicable statutes, rules or regulations. This committee will consider individuals recommended by stockholders for nomination as directors in accordance with the procedures described under “Stockholders’

Proposals.” This committee also assists our Board with management succession planning and director and officer insurance coverage.

Director Nomination Process

Our Governance Committee is responsible for assessing the qualifications, skills and characteristics of candidates for election to the Board. In making this assessment, the Governance Committee generally considers a number of factors, including each candidate’s:

Our bylaws provide that (1) a person shall not be nominated for election or reelection to our Board if such person shall have attained the age of 72 prior to the date of election or re-election and (2) any director who attains the age of 72 during his or her term shall be deemed to have resigned and retired at the first Annual Meeting following his or her attainment of the age of 72. Accordingly, a director nominee may stand for election if he or she has not attained the age of 72 prior to the date of election or reelection.

The Board recognizes the benefits of a diversified board and believes that any search for potential director candidates should consider diversity as to gender, ethnic background, education, viewpoint and personal and professional experiences.

The Governance Committee solicits ideas for possible candidates from a number of sources — including members of the Board, our Chief Executive Officer and other senior level executive officers, individuals personally known to the members of the Board and independent director candidate search firms.

In addition, any stockholder may nominate one or more persons for election as one of our directors at an annual meeting of stockholders if the stockholder complies with the notice, information and consent provisions contained in our By-Laws. See “Stockholders’ Proposals” in this proxy statement and our By-Laws, which may be found on our Web site at www.babcock.com at “Investor Relations — Corporate Governance — Highlights.”

The Governance Committee will evaluate properly identified candidates, including nominees recommended by stockholders, based on the assessment and factors described above. The Governance Committee also takes into account the contributions of incumbent directors as Board members and the benefits to us arising from the experience of incumbent

directors on the Board. Although the Governance Committee will consider candidates identified by stockholders, the Governance Committee has sole discretion whether to recommend those candidates to the Board.

Safety & Security Committee:

Adm. Mies (Chairman)

Mr. Christopher

Mr. Fees

Mr. Weyers

During 2011, the Safety & Security Committee met five times. This committee has general oversight responsibility regarding the safety, security and reliability of our business operations with specific focus on environmental, regulatory, safety and security matters. In the performance of its responsibilities the committee will review reports and information from management and others and visit key operating facilities and, where appropriate, meet with regulatory authorities. The Safety & Security Committee has the authority to engage outside consultants or other advisors to assist it in the discharge of its responsibilities.

During 2011, non-employee director compensation generally consisted of cash and equity. Our Board adopted a new compensation program for non-employee directors on May 12, 2011. As a result, in 2011 our non-employee directors were compensated under our previous non-employee director compensation program until May 12, 2011 and under the new non-employee director compensation program beginning on May 12, 2011 and continuing thereafter. The compensation of our non-employee directors under our current non-employee director compensation program is described in more detail below and the differences from our previous non-employee director plan are noted in parenthesis.

Fees Earned or Paid in Cash.    Under our current director compensation program, non-employee directors are eligible to receive the following cash compensation:

The chairs of Board committees, the Lead Independent Director and the Non-Executive Chairman receive additional annual retainers, paid in quarterly installments, as follows (prorated for partial terms):

We also reimburse directors for travel and other expenses incurred in connection with their service on the Board.

Under the terms of our Supplemental Executive Retirement Plan (as amended and restated, “SERP”), our Compensation Committee has the discretion to permit SERP participants, including our directors, to elect to defer payment of their cash compensation in a given year. A director may elect to defer up to 100% of his or her annual retainer and fees payable in the year in which deferrals are permitted. Amounts elected to be deferred are credited as a bookkeeping entry into a notional account, which we refer to as a deferral account. The balance of a director’s deferral account consists of deferral contributions made by the director and hypothetical credited gains or losses attributable to investments elected by the director, or by our Compensation Committee if the director fails to make investment elections. Directors are 100% vested in their deferral accounts at all times. Our Compensation Committee permitted deferrals under our SERP in 2011 and Admiral Mies and Ms. Pramaggiore made deferral elections with respect to their 2011 retainer and fees. No other director made a deferral election with respect to their retainer or fees in 2011. Amounts reported in the Director Compensation Table include amounts deferred in 2011.

Stock Awards.    In addition to the cash payments provided to our directors, each non-employee director was entitled to receive a number of restricted stock units equal to $110,000 (prorated for partial terms) divided by the closing price of our common stock on the grant date, rounded down to the nearest whole share. The amount reported for Ms. Pramaggiore also includes a prorated award of restricted stock received in connection with her appointment to our Board in January 2011. The awards of restricted stock units and restricted stock were granted under our 2010 LTIP and vested immediately on the date of grant.

The amounts reported in the “Stock Awards” column represent the grant date fair value computed in accordance with FASB ASC Topic 718. Grant date fair values are determined using the closing price of our common stock on the date of grant.

Under the terms of our 2010 LTIP, our Compensation Committee has the discretion to permit selected participants to defer payment of all or a portion of their stock and option awards. The award amounts that a director has elected to defer are not reported as income for the year in which they are granted. In 2011, our directors were permitted to make deferral elections on their 2011 stock awards and Mr. Fees and Admiral Mies each elected to defer 100% of their 2011 stock awards.

All Other Compensation.    We have a travel and reimbursement policy under which we reimburse directors for travel and other expenses incurred in connection with business of the Board. The presence of a director’s spouse may be appropriate or necessary at certain meetings, conferences or other business-related functions. In those cases, pursuant to our policy, we will bear the travel, meals and other expenses of the director’s spouse incurred while attending such functions. To the extent the expenses of a spouse are imputed to the director as income, pursuant to our reimbursement policy, we will also reimburse the director for the taxes resulting from any such imputed income. The amounts reported in this column for Admiral Mies and Mr. Weyers are

attributable to a tax gross-up for income imputed to each as a result of spousal expenses incurred in connection with a Board meeting. In 2011, the incremental cost to the company to provide reimbursement for spousal travel under our policy was less than $10,000 per director and the aggregate cost for all directors as a group was $4,519. The aggregate amount paid to all directors as a group for reimbursement of taxes on imputed income was $3,449.

The amounts reported in this column for Mr. Kingsley resulted from gifts of $16,447 provided to him by our company in connection with his retirement from our Board, and a related tax gross-up of $4,250.

In accordance with recently adopted Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are asking stockholders to approve an advisory resolution on our executive compensation as reported in this proxy statement. Our Board has adopted a policy to hold annual advisory votes on executive compensation until the next advisory vote on the frequency of stockholder votes on executive compensation at the 2017 annual meeting of stockholders, or until our Board determines to hold such an advisory vote at a different frequency.

It is our belief that our ability to hire, retain and motivate employees is essential to the success of the company and its stockholders. Therefore, we generally seek to provide reasonable and competitive compensation for our executives with a substantial portion in the form of performance-based compensation.

As a result, our executive compensation is structured in the manner that we believe best serves the interests of the company and its stockholders. We encourage stockholders to read the Compensation Discussion and Analysis section of this proxy statement, which provides a more thorough review of our compensation philosophy and how that philosophy was implemented in 2011. We have given considerable attention to how, why and what we pay our executives. Recognizing that no single compensation structure will match perfectly with all stockholders, we believe that our executive compensation is reasonable and provides appropriate incentives to our executives to achieve results that we expect to drive stockholder value without encouraging them to take excessive risks in their business decisions.

Accordingly, we submit the following resolution to stockholders at the 2012 Annual Meeting:

RESOLVED, that the stockholders of The Babcock & Wilcox Company approve, on an

advisory basis, the compensation of executives, as such compensation is disclosed pursuant to Item 402 of Regulation S-K in this proxy statement under the sections entitled “Compensation Discussion and Analysis” and “Compensation of Executive Officers.”

Effect of Proposal

The resolution to approve our executive compensation is non-binding on us and our Board and Compensation Committee. Accordingly, even if the resolution is approved, the Board and Compensation Committee retain discretion to change executive compensation from time to time if it concludes that such a change would be in the best interest of the company. No determination has been made as to what action, if any, would be taken if our stockholders fail to approve executive compensation. However, our Board and its Compensation Committee value the opinions of stockholders on important matters such as executive compensation and will carefully consider the results of this advisory vote when evaluating our executive compensation programs.

Recommendation and Vote Required

Our Board recommends that stockholders vote “FOR” the approval of executive compensation. The proxy holders will vote all proxies received for approval of this proposal unless instructed otherwise. Approval of this proposal requires the affirmative vote of a majority of the outstanding shares of common stock present in person or represented by proxy and entitled to vote on this proposal at the Annual Meeting. Because abstentions are counted as present for purposes of the vote on this matter but are not votes “FOR” this proposal, they have the same effect as votes “AGAINST” this proposal. Broker non-votes will not have any effect on this proposal.

Executive Summary

We structure compensation of our Named Executives principally around annual base salary, annual incentive compensation and long-term incentive compensation, and refer to these collectively as total direct compensation. We benchmark an executive’s compensation against median compensation of similar positions to ensure we are providing competitive and reasonable target compensation and deliver a substantial portion of that compensation in the form of performance-based compensation to promote “pay-for-performance.” We believe our executive pay is reasonable and provides appropriate incentives to our executives to achieve results that we expect to drive stockholder value without encouraging them to take excessive risks in their business decisions. This Executive Summary provides an overview of 2011 executive compensation to assist in the understanding of how we pay our Named Executives.

2011 Compensation Highlights and Changes

2011 represented our first full year as a public company following our spin-off from McDermott. Facing challenges from regulatory uncertainty in our Power Generation segment and a near doubling of our investment in our B&W mPower™ program at the start of 2011, the Compensation Committee of our Board challenged management to grow operating income 10% as one target for annual incentive compensation, while adding new focus on long-term utilization of assets and earnings per share. Our Nuclear Operations and Technical Services segments exceeded expectations in 2011, with each segment producing record operating income. Our Power Generation segment produced solid results nearly exceeding expectations and our Nuclear Energy segment remained resolute in support of the development of the B&W mPower™ reactor while resolving operational challenges. The results produced a payout on annual incentive compensation for Named Executives slightly above target.

We held our first stockholder advisory vote on executive compensation in May 2011, which received the support of more than 95% of the votes cast. The strong support of stockholders affirmed our approach to executive compensation and the

Compensation Committee maintained the same general approach for 2011, with a few improvements, including:

Finally, we hired a new Chief Financial Officer, Mr. Anthony S. Colatrella, in November 2011. Our former Chief Financial Officer, Mr. Michael S. Taff, exercised his right to terminate his employment under a retention agreement entered into with McDermott in connection with the spin-off. Mr. Taff received severance benefits under that agreement and payments under a consulting agreement for financial and transition services. For information regarding Mr. Taff’s compensation under those agreements, see “Employment, Severance and Other Arrangements” below.

Alignment of Pay & Performance

The ratio of performance-based compensation to non-performance-based compensation of our Chief Executive Officer’s target total direct compensation was almost 2:1. As shown in the chart that follows, the ratio was approximately 1.3:1 for our other Named Executives other than Mr. Colatrella, who was excluded since he was hired in November and did not receive annual incentive compensation for 2011.

The alignment between pay and performance is also evident in long-term incentive compensation. For that element, the ratio of performance-based to non-performance-based compensation was 3:1 as shown in the chart below.

Stock options are granted with an exercise price equal to 100% of the fair market value of our common stock on the date of grant. As a result, an option’s value is based exclusively on improvements in stock price from the price on the date of grant, which for the 2011 annual grants was $34.55. Unless our Named Executives can execute on strategies that drive shareholder value, 25% of their 2011 long-term incentive compensation will be worthless, although it may be vested. For that reason, we consider stock options to be performance-based. Excluding stock options, performance-based compensation still represented 50% of our Chief Executive Officer’s target total direct compensation and 50% of his 2011 target long-term incentive compensation. For more information regarding target total direct compensation, see “2011 Target Total Direct Compensation” below.

Performance Metrics Used in 2011 Total Direct Compensation

The performance-based components of total direct compensation consisted of annual incentive and long-term incentive compensation. Financial performance represented 70% of a Named Executive’s target 2011 annual incentive compensation and was based on the following performance measures:

The other 30% of target compensation was split between individual (20%) and safety (10%) performance. For more information, see “Annual Incentive Compensation” below.

In addition to stock options, we used performance shares to deliver performance-based long-term incentive compensation. Vesting of performance shares granted in 2011 is based on the following performance measures:

For more information, see “Long-Term Incentive Compensation” below.

Reasonable Pay and Governance Practices

We have also instituted the following practices in our compensation programs:

Philosophy and Objectives

of Executive Compensation

We believe that our ability to attract, retain and motivate qualified executives is essential to the success of our company. As a result, we seek to provide reasonable and competitive compensation to executives through programs structured to:

We also subscribe to a pay-for-performance philosophy when designing executive compensation. For us that means a substantial portion of an executive’s target compensation should be performance-based so that the value of one or more compensation elements is tied to the achievement of financial and/or other results we consider important drivers in the creation of shareholder value.

Roles in Determining Executive Compensation

With these objectives in mind, the Compensation Committee annually determines the total direct compensation of our executives, including the Named Executives, and administers our post-employment and other benefit programs. The compensation committee receives support from an outside compensation consultant and company management in connection with executive compensation matters.

Role of Outside Consultant.     The Compensation Committee has engaged Hay Group Inc. (“Hay Group”) as its consultant on executive compensation matters since November 2010. The Hay Group provides the Compensation Committee with advice and analysis on the design, structure and level of executive and director compensation. It also advises the Compensation Committee on external market factors, including evolving compensation trends, peer companies and market survey data. The consultant

attends the Compensation Committee meetings, including executive sessions. Although Hay Group works with our management on various matters for which the Compensation Committee is responsible, our management does not direct or oversee the retention or activities of Hay Group. Hay Group did not perform any other services for us during 2011.

Role of Management.     Our Senior Vice President of Human Resources and his team, in consultation with the Compensation Committee chair and the compensation consultant, prepare information and materials for the Compensation Committee relevant to matters under consideration by the committee, including market data and recommendations of our Chief Executive Officer regarding compensation of the other executives. He also attends committee meetings and participates in its deliberations on executive compensation (except with respect to his own or the Chief Executive Officer’s compensation). Our Chief Executive Officer usually attends the Compensation Committee meetings to provide his perspective and recommendation on executive compensation matters under consideration but otherwise does not attend or participate in the committee’s deliberations on executive compensation. No member of our management attends executive sessions of the Compensation Committee, unless at the direction of the committee.

Role of Stockholder Vote on Executive Compensation.     We provide our stockholders with the opportunity to cast an annual advisory vote on the compensation of our named executives. At our 2011 annual meeting of stockholders, over 95% of the votes cast at that meeting on the executive compensation proposal were voted in favor. The Compensation Committee considered the result of that vote and believes it affirms stockholders’ support of our philosophy and approach to executive compensation. The vote did not affect compensation decisions and policies regarding 2011 Named Executive compensation because those decisions and policies (other than in respect of Mr. Colatrella) were made before the advisory vote was held. We value the opinions of stockholders on executive compensation and will continue to consider the results of future advisory votes on executive compensation.

The Compensation Committee also administers several other benefit programs, including qualified and non-qualified deferred compensation plans, post-employment compensation and perquisites. These programs are designed and administered to reward long-term service and to promote retention.

The Compensation Committee does not set a specific target allocation among the elements of total direct compensation; however, consistent with our philosophy, long-term incentive compensation typically represents the largest single element of target total direct compensation and performance-based compensation constitutes the bulk of a Named Executive’s target total direct compensation, as demonstrated in the chart below.

Mr. Colatrella did not receive annual incentive compensation for 2011 because he was hired in November 2011.

Determining Target Total Direct Compensation

Median Compensation Targeted.    We believe that compensation is generally competitive at or near the median compensation paid by the market. Accordingly, we seek to target compensation for each Named Executive at approximately +/-15% of median compensation. The Compensation Committee sets the amount of target compensation for each element of a Named Executive’s total direct compensation. In this CD&A, “market range” compensation means target compensation at approximately +/-15% of the median compensation paid to an executive’s peers determined through benchmarking. For annual and long-term incentive compensation, the Compensation Committee determines the threshold and maximum payouts and any other conditions relevant to such compensation. Because a significant portion of a Named Executive’s target compensation consists of these two elements, Named Executives are capable of earning compensation above or below market range depending on the achievement of performance goals, fluctuations in our stock price and/or satisfaction of applicable vesting conditions.

The Compensation Committee may set elements of total direct compensation above or below the market range to account for a Named Executive’s performance, tenure, experience, internal equity and other factors or situations that are not typically captured by looking at standard market data and practices that the Compensation Committee may deem relevant to the appropriateness and/or competitiveness of the compensation of a Named Executive.

When making decisions regarding individual compensation elements, the Compensation Committee also considers the impact of the element on a Named Executive’s target total direct compensation to ensure that the target total direct compensation for a Named Executive overall is reasonable and competitive.

Benchmarking. To identify median compensation and the relevant market range, we engage in “benchmarking” — a practice of reviewing the compensation of comparable positions at other companies as a reference point for compensation decisions on our Named Executives. The annual base salary, target annual incentive and target long-term incentive compensation for each of our Named Executives is benchmarked. However, the specific performance measures and goals used in performance-based compensation are designed for the principal purpose of supporting goals and strategies specific to us and/or

driving the creation of shareholder value, and, as a result, are not generally benchmarked.

Survey Groups.    When the Compensation Committee determines the total direct compensation of our Named Executives, Hay Group prepares a compensation analysis detailing compensation for each Named Executive at the 25^th, 50^th (median) and 75^th percentiles using Hay Group survey data. To determine median compensation for our Named Executives other than Mr. Colatrella, the Compensation Committee used survey data from Hay Group’s 2010 Industrial Executive Compensation Survey, which we refer to in this CD&A as the 2010 Survey. For Mr. Colatrella, who was hired in November 2011, the Compensation Committee used Hay Group’s 2011 Industrial Executive Compensation Survey, which we refer to in this CD&A as the 2011 Survey. The Industrial Executive Compensation Survey represents Hay Group’s proprietary annual compensation survey tracking executive compensation data from over 300 general industry organizations. Hay Group increased the compensation of the applicable survey 2.75% to age the data and adjusted the compensation using regression analysis based on revenues to account for the size of our operations relative to the companies comprising the survey. The component companies comprising the 2010 and 2011 Surveys were not considered by the Compensation Committee.

Custom Peer Groups.    In addition to survey data, Hay Group supplements its compensation analysis with similar information regarding companies comprising a custom peer group based on information reported by those companies in publicly available Securities and Exchange Commission filings. Hay Group used two separate custom peer groups. For our Named Executives other than Mr. Colatrella, Hay Group used a custom peer group adopted by the Compensation Committee in connection with our spin-off, which we refer to as the 2010 Custom Peer Group. The 2010 Custom Peer Group consisted of 13 companies with a focus on the construction and engineering industry and with median and average annual revenues of $5.1 billion and $6.6 billion, respectively.

At the request of the Compensation Committee, Hay Group reviewed the 2010 Custom Peer Group and, in consultation with management and the Compensation Committee, recommended a revised group in August 2011. We refer to the revised group as the 2011 Custom Peer Group. It consists of 17 compa-

nies from the engineering and construction, aerospace and defense, heavy electrical and industrial machinery industries, and with median and average annual revenues of $6.7 billion and $9.2 billion, respectively. Since Mr. Colatrella was hired after this revision, Hay Group used the 2011 Custom Peer Group when preparing his compensation analysis for the Compensation Committee.

The compensation information from custom peer groups was used to supplement the survey data in benchmarking. In most cases median compensation in the custom peer groups was considerably higher than the corresponding survey data and we

used that custom peer group to track compensation practices among companies with which we compete for executive talent. As a result, neither the 2010 Custom Peer Group nor the 2011 Custom Peer Group were weighted in the determination of median compensation, except to the extent any of their component companies were also a component company in either the 2010 Survey or 2011 Survey. Accordingly, unless the context indicates otherwise, references in this CD&A to “market” are references to the median compensation of the companies within the 2010 Survey or, in respect of Mr. Colatrella, the 2011 Survey.

In Ms. Salomone’s case, she was promoted to Chief Operating Officer in 2010. In the context of promotions, the compensation increase necessary to bring an executive within his or her applicable market range can be substantial. Generally, the Compensation Committee will phase-in compensation adjustments in those circumstances over more than one year and, as a result, it is not unusual for target compensation of our newly promoted executives to trail their benchmark for a short time. Consistent with that approach, Ms. Salomone’s target 2011 total direct compensation represented an increase of approximately 17% from her 2010 target, although it was substantially below the market range for her position.

In Mr. Taff’s case, his 2011 target total direct compensation was significantly above the market range for his position, although his 2011 target compensation represented an increase of only 1% from his 2010 target compensation, which was the result of a modest percentage increase in his annual base salary for 2011. The above-market position of his target total compensation was almost entirely the result of his target 2011 long-term incentive compensation. Mr. Taff’s 2011 target long-term incentive compensation was unchanged from the prior year target compensation set by McDermott prior to the spin-off.

Annual Base Salary

2011 Annual Base Salaries.    In February 2011, the Compensation Committee conducted its annual review of executive compensation and set 2011 annual base salaries to be effective April 1, 2011. The following table shows the base salaries applicable to each of our Named Executives during 2011.

2011 Annual Base Salary*

Ms. Salomone and Mr. Canafax received a significant increase to more closely align their respective annual base salary with market-median compensation. The 2011 annual base salaries of our Named Executives were generally within the market range indicated by the applicable survey data.

The following table shows the 2011 annual base salary for each Named Executive and its relation to median compensation indicated by the 2010 Survey or 2011 Survey, as applicable.

Annual Incentive Compensation

Overview.    Our Compensation Committee administers the annual incentive compensation element of total direct compensation primarily through our Executive Incentive Compensation Plan, which we refer to as the EICP. The EICP is a cash-based plan designed to motivate and reward our executives for their contributions to business goals and other factors that we believe drive our earnings and/or create shareholder value.

Each year, the Compensation Committee sets target annual incentive compensation under the EICP by establishing a target percentage for each executive. The target percentage is a percentage of the executive’s annual base salary for that year, although the actual target award is based on the executive’s wages earned from salary during the year. As a result, the amount paid can be affected by changes to an executive’s annual base salary during the year. The Compensation Committee then establishes short-term performance goals, which determine the threshold, target and maximum payouts under the EICP. An executive’s actual award is based on the degree to which he or she achieves relevant performance goals. For performance between threshold and target or target and maximum, the payout is determined by linear interpolation. No amount is paid out if performance is below threshold. Regardless of the level of performance, however, the Compensation Committee retains the right to decrease the amount of

annual incentive compensation payable in its discretion.

Mr. Taff did not receive an annual incentive compensation payment in 2011 as a result of his election to terminate employment pursuant to his retention agreement. See the “Potential Payments Upon Termination or Change in Control” tables under “Compensation of Executive Officers” below and the accompanying narratives for information regarding the payments made to Mr. Taff in connection with his termination.

Mr. Colatrella was hired in November 2011, at the end of the performance period relevant to 2011 annual incentive compensation. As a result, the Compensation Committee determined that he would not participate in the 2011 EICP.

2011 Annual Incentive Design.     In consultation with Hay Group, the Compensation Committee based 2011 performance goals on financial performance, safety performance and individual performance. The target performance goals were weighted as follows:

The final weighting of each performance goal could range between 0% and 200% of the above target weighting, depending on the performance achieved. Accordingly, a Named Executive was eligible to earn 0-200% of his or her target EICP compensation.

Financial performance is the largest factor because the Compensation Committee considers it to

more directly influence the creation of shareholder value. However, the committee included safety and individual performance goals because these factors are important in achieving strategic and operational goals.

To maintain the emphasis on financial results, the Compensation Committee incorporated two features into the 2011 EICP design:

The Compensation Committee established threshold, target and maximum goals to determine financial performance. As a result, Named Executives were eligible to earn the following amounts under the 2011 EICP based on attaining the following levels of financial performance:

2011 EICP Award Analysis.    In February 2011, the Compensation Committee conducted its annual review of executive compensation and set the target percentages for participating executives. The following table shows the 2011 target percentages applicable to each Named Executive.

The Compensation Committee maintained the same target percentage for 2011 as it set for respective executives in 2010, with the exception of Mr. Bethards, whose target percentage increased from 100% to 105%. As indicated by the chart above, 2011 target annual incentive compensation based on the target percentage and the Named Executive’s 2011 annual base salary were within the market range indicated by the 2010 Survey for all applicable executives.

2011 Annual Incentive Performance Measures and Goals.

2011 Financial Measures.    The Compensation Committee has historically based EICP financial goals entirely on operating income. For 2011, the committee included return on invested capital as well. The Compensation Committee believes that operating income is an appropriate performance measure to use in annual incentive compensation because it is a measure of our profitability, which the committee expects to drive our stock price. In comparison to net income, operating income is more directly influenced by the revenues generated and costs incurred as a result of management action, which helps drive accountability at our operations. While the Compensation Committee considers operating income the optimum income statement measure, the Compensation Committee incorporated return on invested capital into the 2011 EICP to help manage the balance sheet and maximize the utilization of assets.

For corporate Named Executives, including Messrs. Bethards, Taff and Canafax and Ms. Salomone, the 70% financial performance component was allocated among the following goals:

To maintain the focus of segment executives on successful operational performance, their operating income goals included both segment and consolidated goals. Accordingly, for Mr. Killion, the 70% financial performance component was allocated as follows:

2011 Financial Goals.    The financial goals applicable to our Named Executives are described below.

Operating Income.    The operating income goals for 2011 annual incentive compensation were as follows:

The Compensation Committee sought to set the 2011 B&W target operating income goal at a level that represented a 10% increase over our 2010 operating income, excluding B&W mPower™ development expenses. These development expenses have increased significantly from initial levels and can fluctuate from year to year as we work to position the B&W mPower reactor for commercial deployment by the end of this decade. To help drive year-over-year growth in our core business and to avoid creating potential conflicts between incentive compensation and a strategic goal like B&W mPower, the Compensation Committee excluded those expenses from our 2010 operating income for purposes of calculating the target operating income goal.

To express the target goal in a manner consistent with GAAP, B&W target operating income for 2011 included management’s estimated B&W mPower development expenses of approximately $82.9 million. The B&W target operating income was fully allocated among our segments (including corporate) based on management’s internal projections for 2011. The threshold and maximum goals represented operating income at 80% and 120%, respectively, of the target goal.

Return on Invested Capital (ROIC).    ROIC is a ratio measure of the company’s net income in relation to its invested capital. Believing that a company’s ROIC should be at least equal to its cost of capital, the Compensation Committee set the threshold ROIC at our estimated weighted cost of capital for 2011. The committee then set target and maximum goals at 20% and 40% improvements, respectively, from threshold. The ROIC goals for 2011 annual incentive compensation were as follows:

2011 Safety Goals.    For purposes of our annual incentive compensation, safety is evaluated on three equal measures: Total Recordable Incident Rate (“TRIR”), Lost Time Incident Rate (“LTIR”) and Cost Severity Index (“CSI”). When determining goals for a given year, our practice has been to set the current year goal for each measure based on a 10% improvement over the prior year goal, regardless of the prior year result. We met all goals for safety measures applicable to our Named Executives in 2010 and the Compensation Committee established specific goals for each measure based on a 10% improvement from its 2010 goal. The following charts show the relationship between 2010 goals, 2011 goals and 2011 actual by measure applicable to our Named Executives, bearing in mind that a decrease represents improvement.

2011 Individual Goals.    The individual goals of participating Named Executives and their target weightings are set forth in the table below.

2011 Annual Incentive Compensation Payments.    In February 2012, the Compensation Committee considered (1) our 2011 consolidated and segment operating income results relative to the pre-established operating income performance goals; (2) our 2011 consolidated return on invested capital; (3) the assessment of the individual performance of Mr. Bethards; (4) Mr. Bethards’ self-assessment of his individual performance relative to his individual goals; (5) our 2011 consolidated and segment safety performance results; and (6) Mr. Bethards’ recommendation of each other participating Named Executive’s 2011 EICP compensation based on his assessment of the financial, individual and safety performance applicable to each.

For 2011, we produced GAAP consolidated operating income of approximately $236.0 million. For purposes of comparing 2011 operating income results to 2011 operating income goals, the 2011 GAAP consolidated operating income was adjusted to the extent 2011 actual B&W mPower development expenses were in excess of or below the amount of management’s estimated 2011 expenses included in the B&W consolidated target goal. For 2011, the actual B&W mPower development expenses exceeded our estimated expenses by approximately $4.9 million. As result, our 2011 GAAP operating income was increased by that amount for purposes of assessing financial performance under annual incentive compensation. Accordingly, the adjusted B&W operating income for 2011 was approximately $240.9 million. Our Power Generation segment produced operating income of approximately $140.0 million, which results were unaffected by B&W mPower development expenses. For 2011, we produced a return on invested capital of 13.5%. B&W and our Power Generation segment met or exceeded its respective safety goals for 2011. The following paragraphs contain a description of the evaluation and calculation of each Named Executive’s 2011 annual incentive compensation.

Mr. Bethards.    Mr. Bethards’ target annual incentive compensation was $931,875, calculated by multiplying his target percentage (105%) by his earnings from annual base salary during 2011 ($887,500). Based on the financial results discussed above, Mr. Bethards was eligible to earn 118.36% of his target award, subject to the assessment of his individual goals. Mr. Bethards met or exceeded his individual goals. As a result, Mr. Bethards was eligible to earn $1,102,967. However, the Compensation Committee exercised its discretion under the EICP and modified Mr. Bethards’ 2011 EICP compensation to $1,050,000 as a result of the operational challenges experienced by our Nuclear Energy segment.

Ms. Salomone.    Ms. Salomone’s target annual incentive compensation was equal to $323,400, calculated by multiplying her target percentage (70%) by her earnings from annual base salary during 2011 ($462,000). Based on the financial results discussed above, Ms. Salomone was eligible to earn 118.36% of her target award, subject to the assessment of her individual goals. Ms. Salomone met or

exceeded her individual goals, except with respect to one goal (new bookings), which was only partially achieved. As a result, Ms. Salomone earned 116.47% of her 2011 target EICP compensation, or $376,664.

Mr. Killion.    Mr. Killion’s target annual incentive compensation was $220,203, calculated by multiplying his target percentage (60%) by his earnings from annual base salary during 2011 ($367,005). Based on the financial results discussed above, Mr. Killion was eligible to earn 121.79% of his target award, subject to the assessment of his individual goals. Mr. Killion only partially achieved each of his individual goals. As a result, Mr. Killion was eligible to earn 115.09% of his 2011 target EICP compensation, or $253,432. However, the Compensation Committee exercised its discretion under the EICP and modified Mr. Killion’s 2011 EICP compensation to $240,000 after considering the financial and non-financial results of our Power Generation segment.

Mr. Canafax.    Mr. Canafax’s target annual incentive compensation was $188,073, calculated by multiplying his target percentage (55%) by his earnings from annual base salary during 2011 ($341,950). Based on the financial results discussed above, Mr. Canafax was eligible to earn 118.36% of his target award, subject to the assessment of his individual goals. Mr. Canafax met or exceeded his individual goals. As a result, Mr. Canafax earned $222,602.

Mr. Colatrella did not participate in 2011 annual incentive compensation as a result of his hire date and Mr. Taff’s employment with us terminated prior to the completion of the performance period. For a discussion of Mr. Taff’s compensation following his termination, see “— Post-Employment Compensation — Employment, Severance and Other Arrangements” below.

Long-Term Incentive Compensation

Analysis of 2011 Target Long-Term Incentive Awards.

Mix of 2011 Equity.    In determining the type and mix of equity granted to our Named Executives, the Compensation Committee seeks to maintain a strong correlation between pay and performance while promoting retention of employees. In 2010, the Compensation Committee allocated long-term incentive compensation equally between stock options and time-based restricted stock units. To

emphasize its commitment to performance-based compensation, the Compensation Committee changed the mix and type of long-term compensation by adding performance shares in 2011. As a result, 75% of value of 2011 target long-term incentive compensation for 2011 total direct compensation was performance-based. Except in respect of supplemental awards discussed below, when granting equity to our Named Executives, the Compensation Committee allocated long-term incentive compensation as follows:

Performance shares generally vest between 0% and 200% of the amount of target shares granted depending equally on the level of cumulative diluted earnings per share and average return on invested capital attained over the three-year period. To tie performance more directly with stockholder return, the 2011 performance shares used earnings per share because we expect the measure to drive stock price but, as compared to stock price, earnings per share is more directly attributable to management action. Additionally, by using a different performance measure than used in annual incentive compensation, it also had the intended effect of reducing risk related to incentive compensation by reducing incentives to focus on a single metric at the expense of others. For each measure, performance at the threshold, target and maximum level will result in vesting of 25%, 50% and 100%, respectively, of the target shares granted. The Compensation Committee set the cumulative diluted earnings per share at the target and maximum vesting levels at amounts that represent 10% and 15% year-over-year increases, respectively, from management’s estimated non-GAAP 2011 earnings per share. The 2011 non-GAAP estimate was based on the target consolidated operating income goal used in 2011 annual incentive compensation to complement and leverage returns that may be achieved under that element, but excluded the projected 2011 B&W mPower development expenses. The goal for threshold level was set at 80% of target, consistent with the structure of our annual incentive compensation. The Compensation Committee set threshold, target and maximum vesting levels for average return on invested capital at 10%, 12% and 14%, mirroring levels set in connection with 2011 annual incentive compensation. No amount vests with respect to either performance measure unless threshold level results are attained.

Stock options and restricted stock units generally vest ratably over three years. The exercise price for stock options is equal to 100% of the fair market value of our common stock at the date of grant. As a result, although options may vest based on time, unlike restricted stock units, an option’s value is based exclusively on improvements in stock price from the date of grant. For that reason, the Compensation Committee considers stock options to be performance-based compensation for purposes of total direct compensation. For more information regarding the 2011 performance shares, restricted stock units and stock options, see the Grants of Plan-Based Awards table under “Compensation of Executive Officers” below and disclosures under “Compensation of Executive Officers — Estimated Future Payouts Under Equity Incentive Plan Awards.”

Value of 2011 Target Long-Term Incentive Compensation.     The following table shows the value of 2011 target long-term incentive compensation for each Named Executive and its relation to median compensation indicated by the applicable survey data. The amounts shown for target long-term incentive compensation represents the expected value at the time the compensation is award by the Compensation Committee, and does not equal the grant date fair value computed for financial reporting purposes in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC 718”). For a discussion of the grant date fair values, see “Summary Compensation Table” in “Executive Compensation” below.

The 2011 target long-term incentive compensation for each of our Named Executives was within the market range applicable to the executive, except in respect of Ms. Salomone and Mr. Taff. The Compensation Committee set Ms. Salomone’s 2011 target long-term incentive compensation at a value approximately 17% higher than her 2010 compensation to more closely align her long-term incentive compensation with market-median compensation. The value of Mr. Taff’s 2010 target long-term incentive compensation on the other hand was considerably above the market range for his position as indicated by the 2010 Survey. As a result, he did not receive an increase in his target long-term incentive compensation for 2011. Instead, the Compensation Committee set his 2011 target at the same value as his 2010 target, which had been set by McDermott prior to Mr. Taff joining B&W.

Supplemental Long-Term Incentive Compensation.     In August 2010, following our spin-off, management recommended granting several executives, including Ms. Salomone and Mr. Canafax, supplemental equity awards to reflect their 2010 promotions. Our Compensation Committee deferred action on those supplemental awards until our normal annual review cycle in February 2011. At that time, management renewed its recommendation for supplemental equity awards to the same executives. The Compensation Committee granted certain executives, including Ms. Salomone and Mr. Canafax, supplemental equity awards around the following principles:

The chart below shows the number and value of the supplemental equity awards. For a discussion of

the grant date fair values computed in accordance with FASB ASC 718 for financial reporting purposes, see “Summary Compensation Table” and the “Grants of Plan Based Awards” table in “Executive Compensation” below.

2011 Supplemental Equity Awards

Sizing Long-Term Incentive Compensation.     When granting equity, the Compensation Committee generally seeks to target a dollar value to grant, rather than granting a targeted number of shares. The number of restricted stock units, stock options and target performance shares granted can be expressed through the following formula: target value of award divided by discounted fair market value of stock.

For sizing purposes, the fair market value of one restricted stock unit, performance share and stock option was determined by Hay Group based on the closing price of our common stock on the date of the grant but reflecting a discount from the market price as a result of the vesting conditions and restrictions on transfer. Hay Group used a Black-Scholes model to value options. For the long-term incentive compensation awards granted in February 2011, the fair market value of our common stock on the date of grant was $34.55 (based on the closing price of our common stock on the New York Stock Exchange on that date), compared to the discounted value of $31.93 for one performance share, $31.44 for one restricted stock unit and $9.95 for an option to acquire one share of our common stock. To ensure that restricted stock units and stock options vest in equal installments each year of a three-year vest term, the number of shares calculated was rounded to the nearest multiple of three.

Because FASB ASC 718 does not calculate grant date fair values for financial reporting purposes using the same discounted price, the target values of long-term incentive compensation may differ from the grant date fair values reported on the Summary Compensation Table and Grants of Plan Based Awards table.

Timing of Equity Grants.    To avoid timing equity grants ahead of the release of material nonpublic information, the Compensation Committee generally approves stock option and other equity awards effective as of the third day following the filing of our annual report on Form 10-K or quarterly report on Form 10-Q with the Securities and Exchange Commission. This practice was followed for all long-term incentive compensation grants to Named Executives in 2011.

Perquisites

Perquisites are not factored into the determination of total direct compensation of our Named Executives because they are typically not material in light of a Named Executive’s total compensation. Our Named Executives received the following perquisites and other benefits, as described in the Summary Compensation Table under “Compensation of Executive Officers” below: relocation assistance, annual physicals, tax and financial planning services, limited personal use of corporate aircraft and other miscellaneous items. In February 2011, we ceased providing for club membership and dues. Instead, the Compensation Committee provided a limited transition by including a one-time payment of $14,000 as part of Mr. Bethards’ annual base salary increase for 2011. We believe the personal benefits offered to our Named Executives are reasonable and appropriate.

We own a fractional interest in two aircraft through an aircraft management company. We acquired these interests and we use the aircraft to facilitate travel to and from our operations, a number of which have infrequent or limited access to commercial flights as a result of their location. We do make the aircraft available to our Named Executives for limited personal use, which use is typically limited to permitting the executive’s spouse to accompany the executive on business travel.

Under current Internal Revenue Service rules, we may impute to the executive officer the actual cost incurred by us for any personal aspects of the flight or an amount based on Standard Industry Fare Level (“SIFL”) rates set by the U.S. Department of Transportation. Imputing income based on SIFL rates

usually results in less income tax liability to the executive officer but higher income taxes to us due to limitations on deducting aircraft expenses that exceed the income imputed to employees. To minimize our cost of permitting the personal use of the aircraft, we

impute income for personal use of aircraft to our Named Executives in an amount that results in the least amount of tax burden for us.

In addition, the presence of an employee’s spouse may be appropriate or necessary at certain meetings, conferences or other business-related functions. In those cases, we will bear the expenses of the employee’s spouse, including the provision of a gross-up for any imputed income to the employee.

We incurred higher than normal relocation expenses in 2011 and 2010 in connection with the spin-off. In preparation of the spin-off, we established our headquarters in Charlotte, North Carolina and relocated a number of our employees principally from Ohio and Virginia and former McDermott employees from Texas. We have reported relocation amounts as a “perquisite” in the Summary Compensation Table in adherence with the U.S. Securities and Exchange Commission’s rules relating to executive compensation. However, the Named Executives who relocated in connection with the spin-off received our standard relocation package provided to all other employees who relocated in connection with the spin-off. Our relocation package includes gross-up of related employment and income taxes in order to ensure that the relocation is cost neutral to the employee.

Post-Employment Compensation

Retirement Plans

Overview.    We provide retirement benefits through a combination of qualified defined benefit pension plans, which we refer to as our Retirement Plans, and a qualified defined contribution 401(k) plan, which we refer to as our Thrift Plan, for most of our U.S. employees, including our Named Executives. In respect of our Named Executives, we sponsor the following two Retirement Plans:

We sponsor the Government Operations Retirement Plan through Babcock & Wilcox Investment Company and the Commercial Operations Retirement Plan through B&W PGG.

In addition to the broad-based qualified plans described above, we maintain unfunded, nonqualified excess retirement plans, which we refer to as the Excess Plans. The Excess Plans cover a small group of highly compensated employees, including Messrs. Bethards and Killion and Ms. Salomone, whose ultimate benefits under the applicable Retirement Plan are reduced by Internal Revenue Code limits on the amount of benefits which may be provided under qualified plans, and on the amount of compensation which may be taken into account in computing benefits under qualified plans. Benefits under the excess plans are paid from the general assets of the B&W company employing the participant, which is not necessarily the plan sponsor. We sponsor the Commercial Operations Excess Plan and the Government Operations Excess Plan through the same subsidiaries that sponsor the respective qualified plan. See the “Pension Benefits” table under “Compensation of Executive Officers” below for more information regarding the Retirement Plans.

Recent Changes to Retirement Plans.    Due to the volatility, cost and complexity associated with defined benefit plans and evolving employee preferences, we have taken steps over the past several years to shift away from traditional defined benefit plans toward a defined contribution approach. In 2006, the Commercial Operations and Government Operations Retirement Plans were closed to new salaried participants and benefit accruals were frozen for existing salaried participants with less than five years of credited service as of March 31, 2006, subject to specific annual cost-of-living increases. In lieu of future defined benefit plan accruals under those plans, our qualified defined contribution 401(k) plan provides an automatic cash contribution to plan accounts of affected employees and new hires in an amount between 3% and 8% of the employee’s base pay, plus overtime pay, expatriate pay and commissions, based on their length of service. Mr. Canafax and Mr. Colatrella did not participate in a Retirement Plan or an Excess Plan because they did not meet the eligibility requirements prior to the time the plans were closed to new participants. However, Messrs. Canafax and Colatrella do receive the supplemental cash contribution to their Thrift Plan account.

Supplemental Plans.     We maintain a supplemental executive retirement plan, which we refer to as the SERP, in which selected officers of B&W and our subsidiaries participate, including Messrs. Bethards, Canafax, Killion and Taff and Ms. Salomone.

The SERP is an unfunded, nonqualified defined contribution plan through which we provide annual contributions to participants’ notional accounts. Participants include our Chief Executive Officer and other B&W officers and certain officers of our subsidiaries selected by our Compensation Committee. Under eligibility guidelines for the SERP adopted by the Compensation Committee, officers must generally have completed at least one year of service with us or one of our subsidiaries as a “reporting person” for purposes of Section 16 of the Securities Exchange Act of 1934, as amended, or as an officer with direct responsibility over operations. As a result of these guidelines, Ms. Salomone and Mr. Killion were selected to participate in the SERP for 2011 and Mr. Canafax was selected to participate for 2012. Mr. Colatrella has not yet met the requirements for eligibility under the guidelines.

In addition, participants may, if permitted by the Compensation Committee, elect to defer the payment of certain compensation earned from us. For purposes of compensation deferral, members of our Board are also participants in the SERP. Under the SERP, an officer selected by our Compensation Committee may elect to defer up to 50% of his or her annual salary and/or up to 100% of any bonus earned in any plan year and a member of the Board may elect to defer up to 100% of his or her retainers and fees earned in any plan year. See the Nonqualified Deferred Compensation table and accompanying narrative under “Compensation of Executive Officers” below for more information about the B&W SERP and our contributions to our Named Executives’ B&W SERP accounts.

Employment, Severance and Other Arrangements

Employment and Severance Agreements.    Except as discussed below, we did not have any employment or severance agreements with any of our Named Executives during 2011.

Babcock & Wilcox Severance Plan.    We maintain a broad-based severance plan to provide a measure of financial assistance to eligible employees who are involuntarily terminated in connection with a permanent reduction in force. The severance benefit is determined based on the length of the employee’s service and the employee’s base salary. Full-time salaried employees of B&W and our participating subsidiaries and affiliates, including our Named Executives, are generally eligible to participate in the plan.

Change-in-Control Agreements.     The Compensation Committee has offered change-in-control agreements to executives, including Named Executives, since 2010. We believe change-in-control agreements protect stockholders’ interests by serving the following objectives:

Our change-in-control agreements contain what is commonly referred to as a “double trigger,” that is, they provide benefits only upon a qualified termination of the executive within one year following a change in control. However, equity awards are subject to separate agreements which vest outstanding equity immediately on the occurrence of a change of control, regardless of whether there is a subsequent termination of employment. Additionally, the change-in-control agreements do not provide any tax gross-up on the benefits following a qualified termination. Instead, the agreements contain a “modified cutback” provision, which acts to reduce the benefits payable to an executive to the extent necessary so that no excise tax would be imposed on the benefits paid, but only if doing so would result in the executive retaining a larger after-tax amount. The provision was included with the intent of benefiting us by seeking to preserve the tax deductibility of the benefits paid under the agreement, without compromising the objectives for which the agreement was approved.

In respect of our Named Executives, the change in control agreements generally provide a cash severance payment of two (2.99 for Mr. Bethards) times the sum of the Named Executive’s annual base salary and target annual incentive compensation; a pro-rated annual incentive compensation payment at target for the year in which the qualified termination occurs; a cash payment equal to three years of medical benefits; full vesting in any outstanding and unvested equity and full vesting in the executive’s supplemental executive retirement plan account balance. See the “Potential Payments Upon Termination or Change in Control” tables under “Compensation of Executive Officers” below and the accompanying disclosures for more information regarding the

change in control agreements with our Named Executives, events considered to be change in control events and other plans and arrangements that have different trigger mechanisms that relate to a change in control.

Retention Agreements.    Following McDermott’s announcement of the spin-off in December 2009, McDermott sought to retain key employees and executives in connection with the spin-off by entering into Restructuring Transaction Retention Agreements (“Retention Agreements”) with selected executives and employees, including Messrs. Bethards and Taff. We assumed the rights and obligations arising under the Retention Agreements in respect of Messrs. Bethards and Taff on the spin-off.

In general, the Retention Agreements contained retention and severance provisions. The retention provision provided that if the executive remained employed through the spin-off, he would receive a restricted stock grant that would vest on the first anniversary of the spin-off. Accordingly, the Compensation Committee granted restricted shares of our common stock to Messrs. Bethards and Taff, which shares vested on July 30, 2011.

The severance provision provided for cash payments to the executive of two times the sum of their annual base salary and target annual incentive compensation, prorated target annual incentive compensation and a cash payment equal to two years of medical benefits as well as the full vesting of outstanding equity and supplemental executive retirement plan account balance in the event of a qualifying termination prior to the first anniversary of the spin-off. It was contemplated in the Retention Agreement that Mr. Taff’s employment with McDermott would terminate following the spin-off (which was completed July 30, 2010) and he would serve as our chief financial officer. Moreover, the Retention Agreement provided that such change in service would not constitute a qualifying termination, and instead Mr. Taff may terminate his employment with us on the first anniversary of the spin-off and that such termination would constitute a qualifying termination entitling him to the severance benefits set forth in the Retention Agreement. In accordance with the provisions of the Retention Agreement, Mr. Taff notified us in June 2011 of his decision to terminate his employment effective July 30, 2011. See the “Potential Payments Upon Termination or Change in Control” tables under “Compensation of Executive Officers” below and the accompanying disclosures

for more information regarding the payments made to Mr. Taff under the Retention Agreement. Mr. Bethards’ Retention Agreement terminated by its terms on July 30, 2011, the first anniversary following the spin-off.

Consulting Agreement with Mr. Taff.     In connection with Mr. Taff’s election to terminate employment under his Retention Agreement, we entered into a Consulting Agreement with Mr. Taff dated as of June 29, 2011 (the “Consulting Agreement”), under which he provided us financial services, including as our Chief Financial Officer, and assisted us in the search for a successor chief financial officer. Under the Consulting Agreement, Mr. Taff received (1) consulting payments of $112,629 per month, (2) a furnished apartment and a car in Charlotte, North Carolina for use during the consulting period and (3) a per diem based on the monthly consulting fee for transition assistance, if any, following the consulting period. The monthly consulting fee represented the approximate monthly value of Mr. Taff’s annual base salary, target annual incentive compensation, and benefits at of the date of his termination. The Consulting Agreement also included restrictions on Mr. Taff’s ability to solicit our employees during the consulting period and for a period of 12 months thereafter and to compete with us during the consulting period.

Other Compensation Policies / Practices

Stock Ownership Guidelines.    Our Board has adopted stock ownership guidelines to further align the interests of our officers and directors with the interests of our stockholders and promote our commitment to sound corporate governance. Under these guidelines, our officers and non-management directors are expected to maintain minimum stock ownership in our company. The minimum ownership level is between two and five times annual base salary for officers depending on their position, and five times annual base retainer for non-management directors.

Directors and officers have five years from the effective date of the stock ownership guidelines or their initial election as a director/officer, whichever is later, to comply with the guidelines. The Governance Committee annually reviews the compliance with these guidelines and has discretion to waive or modify the stock ownership guidelines for directors and officers. No officer or director is authorized to sell any shares of our common stock (other than to satisfy

applicable tax obligations resulting from a transaction involving such stock or to cover the exercise price of stock options) until they have met their respective guideline.

Trading Controls.    We maintain a trading policy that prohibits employees from trading in company securities while in possession of material non-public information about the company and its securities. Generally, trading is permitted only outside of designated trading blackout periods. Executive officers, including the Named Executives, are required to receive the permission of our General Counsel prior to entering into any transactions in company securities. Employees who are subject to trading restrictions, including the Named Executives, may enter into a trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. Pursuant to our trading policy, these trading plans, including any amendments thereto, (1) may be entered into only outside of a designated trading

blackout period and at a time when the individual is not in possession of material non-public information; (2) must be approved by the company in advance; (3) must be for a minimum duration of one year; and (4) must provide for at least a 30 day waiting period between adoption and the first trade executed under the plan. These plans may be terminated or amended only after consultation with our General Counsel. Mr. Bethards adopted a trading plan on March 9, 2012.

Hedging, Pledging and Short Sale Policies.    We also maintain a policy that prohibits all directors, officers and employees from trading in puts, calls or other options on B&W’s common stock and otherwise engaging in hedging transactions that are designed to hedge or offset any decrease in the market value of our common stock. The directors, officers and employees are also prohibited from pledging company securities and engaging in short sales of company securities.