PHANTOM STOCK AGREEMENT
The Shaw Group Inc.

2005 Non-Employee Director Stock Incentive Plan

This Phantom Stock Agreement (“Agreement”) dated as of      , 200     (“Grant
Date”) is entered into between The Shaw Group Inc. (the “Company”) and (the
“Awardee”), pursuant to The Shaw Group Inc. 2005 Non-Employee Director Stock
Incentive Plan (the “Plan”).

THE PARTIES HERETO AGREE AS FOLLOWS:

1. Award of Phantom Stock. In consideration of the services performed and to be
performed by the Awardee, the Company hereby awards (the “Award”) to the Awardee
under the Plan a total of      phantom shares of the Company (the “Phantom
Stock”), subject to the following terms and restrictions.

2. Incorporation of Plan Provisions. The Award evidenced hereby is made under
and pursuant to the Plan, a copy of which is available from the Company’s
Secretary and incorporated herein by reference, and the Award is subject to all
of the provisions thereof. Capitalized terms used herein without definition
shall have the same meanings given such terms in the Plan. The Awardee
represents and warrants that he or she has read the Plan and is fully familiar
with all the terms and conditions of the Plan and agrees to be bound thereby.

3. Vesting of Phantom Shares The shares of Phantom Stock shall become fully
vested on the first anniversary of the Grant Date. Notwithstanding the
foregoing, in the event the Plan is not approved by the shareholders at the 2006
annual meeting of the shareholders of the Company, the Phantom Stock shall be
automatically forfeited unpaid on such date. While a share of Phantom Stock
remains “outstanding” pursuant to this Agreement, an amount equivalent to the
distributions made on a share of the Company’s no par value common stock
(“Share”) during such period shall be held by the Company without interest until
the share of Phantom Stock becomes vested or is forfeited and then paid to you
or forfeited, as the case may be.

4. Payment/Certificates. Upon vesting of the Phantom Stock, subject to Paragraph
6(c) below, the Company shall cause a certificate or certificates for Shares to
be issued without legend (except for any legend required pursuant to applicable
securities laws or any other agreement to which you are a party) in your name in
cancellation of the Phantom Stock that has vested.

5. Nontransferability of Phantom Stock. You may not sell, transfer, pledge,
exchange, hypothecate or dispose of the Phantom Stock in any manner otherwise
than by will or by the laws of descent or distribution or as otherwise provided
in the Plan. A breach of these terms of this Agreement shall cause a forfeiture
of the Phantom Stock.

6. Miscellaneous.

(a) No Representations or Warranties. Neither the Company nor the Committee or
any of their representatives or agents has made any representations or
warranties to the Awardee with respect to the income tax or other consequences
of the transactions contemplated by this Agreement, and the Awardee is in no
manner relying on the Company, the Committee or any of their representatives or
agents for an assessment of such tax or other consequences.

(b) Membership. Nothing in this Agreement or in the Plan or in the making of the
Award shall confer on the Awardee any right to or guarantee of continued
membership on the Board or in any way limit the right of the Board or the
shareholders of the Company to terminate the membership of the Awardee on the
Board at any time.

(c) Withholding of Tax. To the extent that the grant or vesting of the Phantom
Stock results in the receipt of compensation by you with respect to which the
Company or its affiliates has a tax withholding obligation pursuant to
applicable law, unless other arrangements have been made by you that are
acceptable to the Company or such affiliate which, with the consent of the
Committee, may include withholding a number of Shares that would otherwise be
delivered on vesting that have an aggregate Fair Market Value that does not
exceed the amount of taxes to be withheld, you shall deliver to the Company or
the affiliate such amount of money as the Company or the affiliate may require
to meet its withholding obligations under such applicable law. No delivery of
Shares shall be made under this Agreement until you have paid or made
arrangements approved by the Company or the affiliate to satisfy in full the
applicable tax withholding requirements of the Company or the affiliate.

(d) Necessary Acts. The Awardee and the Company hereby agree to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement.

(e) Binding Effect; Applicable Law. This Agreement shall bind and inure to the
benefit of the Company and its successors and assigns, and the Awardee and any
heir, legatee, or legal representative of the Awardee. This Agreement shall be
interpreted under and governed by and construed in accordance with the laws of
the State of Louisiana.

(f) Administration. The authority to manage and control the operation and
administration of this Agreement shall be vested in the Committee, and the
Committee shall have all powers with respect to this Agreement as it has with
respect to the Plan. Any interpretation of the Agreement by the Committee and
any decision made by it with respect to the Agreement is final and binding.

(g) Amendment. This Agreement may be amended by written agreement of the Awardee
and the Company, without the consent of any other person.

Executed in duplicate as of the day and year first above written.

THE SHAW GROUP INC.

By: Gary P. Graphia
Title: Secretary and General Counsel

DIRECTOR:

[Name of Awardee]

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