UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
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[_] Soliciting Material Pursuant to 167; 240.14a-12
Cable Design Technologies
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[LOGO OF CABLE DESIGN TECHNOLOGIES]
CABLE DESIGN TECHNOLOGIES
Foster Plaza 7 . 661 Andersen Drive FRED C. KUZNIK
Pittsburgh, PA 15220 . (412) 937-2300 Chief Executive Officer
November 8, 2002
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders on Tuesday, December 10, 2002, at 10:00 A.M.,
Eastern Standard Time. The meeting will be held at the Hilton Hotel & Towers,
600 Commonwealth Place, Pittsburgh, Pennsylvania 15222.
The matters scheduled to be considered at the meeting are the election of
directors and the election of an auditor for the Company. These matters are
more fully explained in the attached Proxy Statement, which you are encouraged
to read.
The Board of Directors values and encourages stockholder participation. It
is important that your shares be represented, whether or not you plan to attend
the meeting. Please take a moment to sign, date and return your Proxy in the
envelope provided even if you plan to attend the meeting.
We hope you will be able to attend the meeting.
Sincerely,
/s/ Fred C. Kuznik
FRED C. KUZNIK
Chief Executive Officer
Innovative Connective Technology
[LOGO OF CABLE DESIGN TECHNOLOGIES]
CABLE DESIGN TECHNOLOGIES CORPORATION
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------
Notice is hereby given that the Annual Meeting of Stockholders of Cable
Design Technologies Corporation (the "Company") will be held at the Hilton
Hotel & Towers, 600 Commonwealth Place, Pittsburgh, Pennsylvania 15222 on
Tuesday, December 10, 2002, at 10:00 A.M., Eastern Standard Time, for the
following purposes:
1. To elect seven directors to serve until the next Annual Meeting of
Stockholders;
2. To elect an Auditor for the Company for the ensuing year; the Board of
Directors of the Company has recommended Deloitte & Touche LLP, the present
Auditor, for election as Auditor; and
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
In accordance with the provisions of the Bylaws, the Board of Directors has
fixed the close of business on October 22, 2002 as the record date for the
determination of the holders of Common Stock entitled to notice of and to vote
at the Annual Meeting.
By order of the Board of Directors
/s/ Charles B. Fromm
CHARLES B. FROMM
Secretary
Pittsburgh, Pennsylvania
November 8, 2002
CABLE DESIGN TECHNOLOGIES CORPORATION
Foster Plaza 7
661 Andersen Drive
Pittsburgh, Pennsylvania 15220
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PROXY STATEMENT
Annual Meeting of Stockholders to be Held
December 10, 2002
-----------------
November 8, 2002
The Proxy is solicited by the Board of Directors of Cable Design
Technologies Corporation (the "Company") for use at the 2002 Annual Meeting of
Stockholders to be held on Tuesday, December 10, 2002, at 10:00 A.M., Eastern
Standard Time, at the Hilton Hotel & Towers, 600 Commonwealth Place,
Pittsburgh, Pennsylvania 15222. Solicitation of the Proxy may be made through
officers and regular employees of the Company by telephone or by oral
communications with some stockholders. No additional compensation will be paid
to such officers and regular employees for any such Proxy solicitation.
Expenses incurred in the solicitation of Proxies will be borne by the Company.
This Proxy Statement is first being sent to the stockholders on or about
November 8, 2002.
VOTING MATTERS
The representation in person or by proxy of a majority of the outstanding
shares of common stock of the Company, par value $.01 per share (the "Common
Stock"), entitled to a vote at the meeting is necessary to provide a quorum for
the transaction of business at the meeting. Shares can only be voted if the
stockholder is present in person or is represented by a properly signed proxy.
Each stockholder's vote is very important. Whether or not you plan to attend
the meeting in person, please sign and promptly return the enclosed proxy card,
which requires no postage if mailed in the United States. All signed and
returned proxies will be counted towards establishing a quorum for the meeting,
regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the Board of Director's proposals, and
as the individuals named as proxy holders on the proxy deem advisable on all
other matters as may properly come before the meeting.
For all matters to be voted upon at the meeting other than the election of
directors, the affirmative vote of a majority of shares present in person or
represented by proxy, and entitled to vote on the matter, is necessary for
approval. The directors are elected by a plurality of the votes of the shares
present in person or represented by proxy and entitled to vote in the election
of directors. Withholding authority to vote, or an instruction to abstain from
voting on a proposal, will be treated as shares present and entitled to vote
and, for purposes of determining the outcome of the vote, will have the same
effect as a vote against the proposal. A broker "non-vote" occurs when a
nominee holding shares for a beneficial holder does not have discretionary
voting power and does not receive voting instructions from the beneficial
owner. Broker "non-votes" will not be treated as shares present and entitled to
vote on a voting matter and will have no effect on the outcome of the vote.
Any stockholder giving the enclosed Proxy has the power to revoke such Proxy
prior to its exercise either by voting by ballot at the meeting, by executing a
later-dated proxy or by delivering a signed written notice of the
1
revocation to the Secretary of the Company before the meeting begins. The Proxy
will be voted at the meeting if the signer of the Proxy was a stockholder of
record on October 22, 2002 (the "Record Date").
On the Record Date, there were outstanding and entitled to vote at the
meeting 44,695,948 shares of Common Stock. Each outstanding share of Common
Stock is entitled to one vote. A list of the stockholders entitled to vote at
the meeting will be available for inspection at the meeting for purposes
relating to the meeting.
MATTERS TO BE ACTED UPON
1. Election of Directors
Pursuant to the Bylaws of the Company, the Board of Directors has determined
that the number of directors constituting the full Board of Directors shall be
eight. The Board of Directors recommends that the stockholders vote FOR each
nominee set forth below. Proxies are solicited in favor of the nominees named
on the following pages and it is intended that the Proxies will be voted for
the seven nominees. One vacancy will remain following the meeting. In the event
that any of the nominees should become unable or unwilling to serve as a
director, it is intended that the Proxies will be voted for the election of
such other person, if any, as shall be designated by the Board of Directors. It
is not anticipated that any of the nominees will be unable or unwilling to
serve as a director. Each director to be elected will serve until the next
Annual Meeting of Stockholders or until a successor is elected and shall
qualify.
Information Regarding Nominees for Election of Directors
A brief statement of the business experience and positions with the Company
for the past five years, a listing of certain other directorships and the ages
(as of September 30, 2002) of each person nominated to become a director of the
Company are set forth on the following pages. There are no family relationships
between any of the directors, nominees and executive officers of the Company or
any arrangement or understanding between any director or nominee and any other
person pursuant to which he or she was or is to be selected as a director or
nominee.
Bryan C. Cressey, 53, has been Chairman of the Board of the Company since
1988 and a director since 1985. For the past twenty-two years he has also been
a General Partner and Principal of Golder, Thoma and Cressey ("GTC") and Thoma
Cressey Equity Partners, both private equity firms. He is also a director of
Select Medical Corporation, a public company, and several private companies,
all of which are unaffiliated with the Company. Mr. Cressey received a Juris
Doctor degree and a MBA degree from Harvard University.
Ferdinand Kuznik, 61, has been a director of the Company since June 2000 and
Chief Executive Officer of the Company since December 10, 2001. In June 2001
Mr. Kuznik retired from Motorola, Inc. where he had served since 1999 as
Executive Vice President of Motorola, Inc. and President of Motorola's
operations in Europe, the Middle East and Africa. From 1997 to 1999, Mr. Kuznik
served as President of Motorola's Personal Communications Sector. Mr. Kuznik
has also served as Managing Director of Philips Telecommunications and held
management positions with A.D. Little and AT&T Switching Systems. Mr. Kuznik
has a Dipl. Ing. degree from the Technical University of Ostrava and a Master's
degree in computer science from the Illinois Institute of Technology in Chicago.
Lance Balk, 44, has been a director since March 2000. Mr. Balk has been a
partner of Kirkland & Ellis since 1989 in the securities and mergers &
acquisition practice groups. Mr. Balk received a Juris Doctor degree and a MBA
degree from the University of Chicago.
George Graeber, 60, has been a director and Chief Operating Officer of the
Company since 1998, and President of the Company since December 2001. Between
1992 and 1998, Mr. Graeber served in various other
2
positions with the Company, including Executive Vice President of the Company
and President of Montrose/CDT. From 1990 to 1992 Mr. Graeber was a Vice
President and General Manager of the Energy division of Anixter International
Inc. Mr. Graeber also was the President of the Industrial Electronic division
of Brintec Corp. and a Vice President of Brand Rex Cable. Mr. Graeber has a
Master's degree in Electrical Engineering from the University of Connecticut.
Michael F.O. Harris, 64, has been a director of the Company since 1985. For
the past twenty years he has also been a Managing Director of NGI, Inc. and The
Northern Group, Inc. ("Northern"), which act as Managing General Partners of
Northern Investment Limited Partnership ("NILP") and Northern Investment
Limited Partnership II ("NILP II"), respectively. NILP and NILP II are
investment partnerships which own several manufacturing companies unaffiliated
with the Company. Mr. Harris has a B.S. degree from Yale University and a MBA
degree from Harvard University.
Glenn Kalnasy, 59, has been a director of the Company since 1985. For the
past twenty years he has also been a Managing Director of NGI, Inc. and
Northern, which act as Managing General Partners of NILP and NILP II,
respectively. Mr. Kalnasy has a B.S. degree from Southern Methodist University.
Richard C. Tuttle, 47, has been a director of the Company since 1989. Since
1997, Mr. Tuttle has been a Principal of Prospect Partners, L.L.C., a private
equity investment firm. From 1992 to 1996, Mr. Tuttle was an Executive Vice
President at Health Care & Retirement Corp., a publicly traded health care
company that is unaffiliated with the Company. From 1987 to 1992, he was a
Principal at GTC, a private equity investment firm. Mr. Tuttle has a B.A.
degree and MBA degree from Stanford University.
2. Election of Auditors
The Board of Directors recommends that the stockholders vote FOR the
election of the firm of Deloitte & Touche LLP as the auditors to audit the
financial statements of the Company and certain of its subsidiaries for the
fiscal year ending July 31, 2003. It is intended that the Proxies in the form
enclosed with this Proxy Statement will be voted for such firm unless
stockholders specify to the contrary in their Proxies or specifically abstain
from voting on this matter.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting of Stockholders. They will have the opportunity to make
statements if they desire to do so and will be available to respond to
appropriate questions.
3. Other Business
The Board of Directors does not know of any other business to be presented
at the Annual Meeting of Stockholders. If any other matters properly come
before the meeting, however, it is intended that the persons named in the
enclosed form of Proxy will vote said Proxy in accordance with their best
judgment.
3
DIRECTORS MEETINGS AND COMPENSATION
Directors Meetings
The Board of Directors held four regular meetings and six special telephonic
meetings during the year ended July 31, 2002 ("fiscal 2002"). The Audit
Committee, which consists of Richard C. Tuttle, Michael F.O. Harris and Glenn
Kalnasy, oversees actions taken by the Company's independent auditors,
recommends the engagement of auditors and reviews the Company's internal
audits. The Compensation Committee approves the compensation of executives of
the Company, makes recommendations to the Board of Directors with respect to
standards for setting compensation levels and administers the Company's
incentive plans. The Compensation Committee consists of Bryan C. Cressey and
Richard C. Tuttle. The Nominating Committee consists of Bryan C. Cressey and
Lance Balk. During fiscal 2002, each of the Company's incumbent directors
participated in at least 75% of the aggregate of the meetings of the Board of
Directors and the meetings of committees of the Board of Directors of which
such director was a member. During fiscal 2002, the Compensation and Nominating
Committees met informally, either in person or by phone, on a number of
occasions (with formal actions by the Compensation Committee being taken by
written consent) and the Audit Committee met, either in person or by telephonic
meeting, six times.
Compensation of Directors
Directors who are also officers of the Company do not currently receive
compensation from the Company for their services as directors. Those directors
who are not officers of the Company receive $2,500 quarterly for their services
as directors. All directors are reimbursed for expenses incurred in connection
with their attendance at meetings. Under the Company's Non-Employee Director
Stock Plan (the "Director Plan") each participating director under such plan is
entitled to receive shares of common stock annually with a fair market value of
$15,000. Also, on the first day of each of the Company's 2/nd/, 3/rd/ and 4/th/
fiscal quarters each non-employee director receives an option grant of 1,500
shares of Common Stock and, for each Committee on which a director serves, an
option grant of an additional 500 shares. Grants are made under the 2001
Long-Term Performance Incentive Plan. The option grants vest 33 1/3% each year
following grant and have an exercise price equal to the fair market value of
the Common Stock on the date of grant.
4
MANAGEMENT COMPENSATION AND CERTAIN TRANSACTIONS
Summary Compensation Table
The following Summary Compensation Table discloses, for the fiscal years
indicated, individual compensation information for Mr. Kuznik (CDT's current
chief executive officer), Mr. Olson (who retired as CDT's chief executive
officer on December 10, 2001) and the four other most highly compensated
executive officers who were serving as executive officers at the end of fiscal
2002 (collectively, the "named executives").
Annual Long-Term
Compensation Compensation
--------------- --------------------
Option Other Incentive
Fiscal Salary Bonus Awards Compensation Payments
Name and Principal Position Year ($)(1) ($)(2) (#) ($)(3) ($)
--------------------------- ------ ------- ------- ------- ------------ ---------
Fred C. Kuznik......................... 2002 392,308 150,000 501,500 183 --
Chief Executive Officer 2001 -- -- -- -- --
Effective December 10, 2001 2002 -- -- -- -- --
Paul M. Olson.......................... 2002 359,616 41,650 -- 30,600 --
President, Chief Executive Officer 2001 500,000 77,613 -- 28,572 --
Retired, December 10, 2001 2000 496,616 695,334 -- 30,009 --
George C. Graeber...................... 2002 475,769 26,180 -- 27,048 --
President, Chief Operating Officer 2001 428,750 46,383 -- 25,548 --
2000 364,339 364,500 -- 26,102 --
David R. Harden........................ 2002 304,500 13,748 -- 27,922 --
Senior Vice President 2001 301,991 36,913 -- 26,376 --
2000 286,331 229,110 -- 27,259 --
Normand Bourque........................ 2002 244,746 407,543(4) -- 21,661 --
Executive Vice President 2001 257,792 335,773(4) -- 20,886 --
(Employment ceased on October 4, 2002) 2000 252,219 478,461(4) -- 20,135 --
Ian Mack............................... 2002 243,830 254,985(5) -- 25,728 --
Group President-Europe 2001 241,887 282,471(5) 75,000 25,376 --
2000 -- -- -- -- --
--------
(1) Amounts in this column reflect salaries paid in the applicable fiscal year.
(2) Amounts in this column reflect bonuses paid with respect to the applicable
fiscal year.
(3) Figures in this column include amounts with respect to Company
contributions to the West Penn Wire Division Incentive Profit Sharing Plan
and Trust (the "Incentive Plan") (which is a defined contribution plan) and
term life insurance premiums paid by the Company (both of which reflect
payments made in the 2001 calendar year), which for each of the named
executives other than Mr. Kuznik, Mr. Bourque and Mr. Mack are: Mr. Olson,
Incentive Plan $25,500, term life insurance premium $5,100; Mr. Harden,
Incentive Plan $25,500, term life insurance premium $2,422; and Mr.
Graeber, Incentive Plan $25,500, term life insurance premium $1,548.
Figures in this column for Mr. Kuznik represent term life insurance premium
of $183. Figures in this column for Mr. Bourque represent term life
insurance and medical benefit premium, $5,670, and earned amounts with
respect to projected benefits under NORDX/CDT, Inc. defined benefit plans,
$15,991. Mr. Bourque is entitled to an annual pension of Cdn. $19,400
payable commencing at the end of his severance period (April 4, 2004). Such
amount is based on 7 years of service with the Company and includes Cdn
$5,300 annual supplemental retirement payment pursuant to his employment
agreement. Mr. Bourque will also be entitled to a one-time transitional
retirement allowance of Cdn. $112,600. Figures in this column for Mr. Mack
represent Company pension contribution, $24,019 and medical benefit
premium, $1,709.
(4) Bonus includes $112,500 and $206,250 in 2001 and 2000, respectively, of
signing bonus paid pursuant to Mr. Bourque's employment agreement entered
into on February 5, 1996, and $400,000 and $200,000 in fiscal 2002 and
2001, respectively, under a retention bonus plan adopted in fiscal 2001 and
expiring in fiscal 2002.
(5) Bonus includes $243,830 and $241,887 in 2002 and 2001, respectively, of
signing bonus paid pursuant to Mr. Mack's employment agreement entered into
on August 1, 2000. The last payment of such signing bonus was made in
August 2002.
5
Option Grants in Fiscal Year 2002
The following table shows information regarding the grant of stock options
during fiscal 2002 to the named executives.
Potential Realizable Value
% of Total at Assumed Annual Rates
Number of Options of Stock Price Appreciation
Securities Granted to Exercise for Option Term
Underlying Employees in Price Expiration ---------------------------
Name Options (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
---- ----------- ------------ -------- ---------- --------- ---------
Fred C. Kuznik 1,500(1) 0.3% $12.99 11/01/11 12,254 31,054
Fred C. Kuznik 200,000(2) 35.7% $14.79 12/21/11 1,860,270 4,714,290
Fred C. Kuznik 200,000(2) 35.7% $14.25 12/28/11 1,792,350 4,542,166
Fred C. Kuznik 100,000(2) 17.9% $15.23 1/04/12 957,807 2,427,270
--------
(1) Such options were issued as part of the director option grants prior to Mr.
Kuznik becoming CEO. Such options vest ratably over three years.
(2) Such options were vested 20% on the date of grant, and vest ratably over
the remaining 4 years.
Option Exercises and Year End Values for Fiscal Year 2002
The following table shows information regarding the number and value of any
unexercised stock options held by the named executives as of July 31, 2002.
None of named executives exercised stock options in fiscal 2002.
Value of
Number of Unexercised in
Unexercised the Money
Options at Options at
FY-End(#) FY-End ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable(1)
---- --------------- ----------------
Fred C. Kuznik... 101,500/404,500 0/0
Paul M. Olson.... 363,000/42,000 0/0
David R. Harden.. 225,000/0 0/0
George C. Graeber 67,500/45,000 0/0
Normand Bourque.. 197,550/0 0/0
Ian Mack......... 15,000/60,000 0/0
--------
(1) Based on the closing price of the Common Stock on July 31, 2002 of $6.45.
Employment Agreements
Fred Kuznik, Normand Bourque and Ian Mack have employment agreements with
the Company. Pursuant to an employment agreement between Mr. Kuznik and the
Company, effective as of December 10, 2001, and Mr. Mack and the Company
effective August 1, 2000, Messrs. Kuznik and Mack are entitled to participate
in certain bonus plans, and are entitled to termination payments if terminated
without cause. Termination pay is based upon prior compensation and would be
paid for a period of 12 months. The Company also entered into Senior Management
Agreements with each of Messrs. Olson and Harden in 1988, pursuant to which
each purchased shares of common stock. Messrs. Kuznik's and Mack's employment
agreements and the Senior Management Agreements also impose certain additional
restrictions upon the executives, including confidentiality obligations,
assignment of the benefit of inventions and patents to the Company and a
requirement that such executives devote substantially all of their business
time to the Company.
Following Mr. Olson's retirement as CEO, Mr. Olson was appointed as Vice
Chairman of the Board of Directors and continued as a director. Mr. Olson
retired as a director effective March 20, 2002. Mr. Olson and the
6
Company entered into a consulting agreement whereby Mr. Olson would be
available for 3 years as a consultant to the Company (as directed by the Board
or the Company's CEO). Mr. Olson will receive $300,000 annually and retain all
of his stock options (with any requirement that he remain as an employee
waived). Certain other benefits are also payable, including health benefits,
reimbursement of club dues (provided the Company has access to such club) and
car allowance. Such agreement also contains a non-compete agreement for the
term of the consulting period.
Mr. Bourque's employment terminated on October 4, 2002. Mr. Bourque is being
paid severance (salary and benefits) for a period of 18 months following such
termination in accordance with his employment agreement.
Messrs. Kuznik, Graeber and Mack are also parties to agreements whereby in
the event their employment is terminated other than for cause after a change of
control or they resign for good reason following a change of control (i) they
would receive an amount equal to 2 times the sum of (a) their highest annual
compensation (excluding bonuses) over the prior 3 calendar years and (b) their
average annual bonus over the prior 3 calendar years and (ii) be provided
health benefits for 2 years following such change of control. In addition,
certain unvested options and other long-term incentives would vest.
Certain Transactions
Until August 2000, the Company purchased converted copper from an entity
controlled by family members of David Harden, an officer of the Company, and
purchases, from time to time, production equipment from a Company controlled by
Mr. Harden. Purchases are made on an "as needed" basis, and there is no
contract relating to such purchases. There were no purchases by the Company
from such entities in fiscal 2002.
Lance Balk, a director, is a partner of the law firm of Kirkland & Ellis.
Kirkland & Ellis performed legal services for the Company prior to and during
fiscal 2002.
Compensation Committee Report
Compensation Policies Applicable to Executive Officers
During fiscal 2002, the Compensation Committee continued to follow
established compensation policies. The compensation program for salaried
employees has been designed and is administered to ensure that employee
compensation motivates superior job performance and the achievement of business
objectives. The main policy objective of executive officer compensation is the
maximization of stockholder value over the long term. The Compensation
Committee believes that this can best be accomplished by an executive
compensation program which reflects the following three principles:
First, base salaries should be sufficient to attract and retain qualified
management talent.
Second, annual bonus and incentive programs should provide opportunity
for significant increases in compensation, based on meeting or exceeding
pre-determined performance targets.
Third, a substantial portion of total long-term compensation should
reflect performance on behalf of the Company's stockholders, as measured by
increases in the Company's stock price.
The Compensation Committee made no fundamental changes in the basic
executive compensation program during fiscal 2002.
Base Salary
The Compensation Committee meets in the fall of each year. Annual base
salaries of the executive officers for fiscal 2002 were reviewed by the
Compensation Committee at its October 2001 meeting. Salary increases were not
made due to then current economic and industry conditions.
7
Bonus Plan
Each of the named executive officers and certain other key personnel of the
Company participate in an executive/management bonus plan (the "Bonus Plan").
The Bonus Plan provides for annual bonus awards based upon financial results
compared to a projected budget prepared at the beginning of each fiscal year.
Employees at each of the Company's operating units receive bonuses determined
by the financial results of their respective division and/or by the overall
financial results of the Company. Other participants, including the Chief
Executive Officer (the "CEO"), receive bonuses based on the overall financial
results of the Company. The individual's Target Bonus ranges from 15% to 60% of
base salary, as determined by the Compensation Committee, and based primarily
on the employee's position and place of employment within the Company. An
individual participant's actual bonus is determined as a percentage ranging
from 0% to 200% of the Target Bonus based upon (i) the relevant performance
target(s) achieved, and (ii) the weight given to the relevant operating unit
and overall Company performance targets. Bonus amounts are prorated for new
participants who are added during the course of a given year. One half of the
Bonus Plan bonuses earned are paid quarterly, with the balance paid after final
fiscal year results are available. Bonus payments under the Bonus Plan are
subject to modification at the discretion of the Compensation Committee. All
senior executive/management bonus plans are approved by the Board of Directors.
Stock Options
Options for 500,000 shares were granted under the certain of the Company's
long-term performance incentive plans to Mr. Kuznik upon commencement of his
employment with the Company. No other stock options were issued to senior
management during fiscal 2002. Shares of common stock that remain reserved for
grant under the Company's stock option plans as of October 22, 2002 are: for
the Long-Term Performance Incentive Plan, 3,983 shares; for the Supplemental
Long-Term Performance Incentive Plan, 278,950 shares; for the 1999 Long-Term
Performance Incentive Plan, 74,230 shares and for the 2001 Long-Term
Performance Incentive Plan, 801,292 shares.
In order to create and provide an option incentive structure similar to that
for its employees, the Company adopted the Director Plan in 1995. Under this
plan, the Company's outside Directors are eligible to receive shares of common
stock in an amount and at a price set by a pre-arranged formula. Under the
Director Plan 132,341 shares of common stock remain reserved for grant to the
Company's outside Directors.
Compensation of Chief Executive Officer
The compensation policies described above apply as well to the compensation
of the CEO. The Compensation Committee is directly responsible for determining
the CEO's salary level and for all awards and grants to the CEO under the
incentive components of the compensation program. The overall compensation
package of the CEO is designed to recognize that the CEO bears primary
responsibility for increasing the value of stockholders' investments.
Accordingly, a substantial portion of the CEO's compensation is
incentive-based, providing greater compensation as direct and indirect
financial measures of stockholder value increase. The CEO's compensation is
thus structured and administered to motivate and reward the successful exercise
of these responsibilities.
Mr. Kuznik accepted the position of Chief Executive Officer of the Company
effective December 10, 2001. The terms of Mr. Kuznik's employment were based on
the compensation package for the Company's retiring CEO with such changes that
the Compensation Committee determined were necessary to make the package
competitive. Mr. Kuznik's base salary is $600,000. He was entitled to a
guaranteed bonus of $150,000 for the period of December 10, 2001 to July 31,
2002. Mr. Kuznik was granted options and a change of control agreement, each
described above.
8
Internal Revenue Code Section 162(m)
The Compensation Committee has determined that it is unlikely that the
Company would pay any material amounts in fiscal 2002 that would result in the
loss of a federal income tax deduction under Section 162(m) of the Internal
Revenue Code of 1986, as amended, and accordingly, has not recommended that any
special actions be taken or that any plans or programs be revised at this time
in light of such tax law provision.
Conclusion
Through the programs described above and the stock ownership of management
through options, the Compensation Committee believes that a significant portion
of the Company's executive compensation is linked directly to corporate
performance.
Respectfully submitted,
COMPENSATION COMMITTEE MEMBERS
Bryan C. Cressey Richard C. Tuttle
* * * * * *
9
Performance Graph
The following graph compares the cumulative total return on $100 invested on
July 31, 1997 through July 31, 2002 in the common stock of the Company, the S&P
500 Index and the S&P Smallcap Telecommunications Index (which replaced the S&P
Smallcap Communications Equipment Index effective January 1, 2002). The return
of the indices is calculated assuming reinvestment of dividends during the
period presented. The Company has not paid any dividends since its initial
public offering. The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
[CHART]
Cable Design S&P Smallcap
Date Technologies Corporation S&P 500 Index Telecommunications Index
------ ------------------------ ------------- ------------------------
7/31/97 $100.00 $100.00 $100.00
7/31/98 $61.65 $117.43 $79.45
7/31/99 $79.82 $139.23 $62.97
7/30/00 $103.67 $149.93 $93.40
7/31/01 $99.41 $126.92 $41.04
7/31/02 $42.61 $95.53 $15.86
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth certain information regarding beneficial
ownership of common stock as of October 22, 2002, by each person or entity
known to the Company who owns of record or beneficially five percent or more of
the common stock, by each named executive officer and director nominee and all
executive officers and director nominees as a group.
Number of Shares Percentage of
of Common Outstanding
Name Stock(1) Common Stock(1)
---- ---------------- ---------------
Fidelity Research and Management Corporation........................ 6,658,120 14.9%
Capital Guardian Trust Company...................................... 2,916,500 6.5%
Wellington Management Co. LLP....................................... 2,298,650 5.1%
T. Rowe Price Associates, Inc....................................... 2,283,750 5.1%
Bryan C. Cressey(2)(4).............................................. 313,980 *
Paul M. Olson(5).................................................... 636,521 1.4%
Lance C. Balk(2)(6)................................................. 14,884 *
George C. Graeber(2)(7)............................................. 136,563 *
David R. Harden (8)................................................. 800,202 1.8%
Michael F.O. Harris(2)(3)(9)........................................ 39,513 *
Glenn Kalnasy(2)(3)(6).............................................. 22,343 *
Ferdinand Kuznik(2)(10)............................................. 210,670 *
Ian Mack(11)........................................................ 58,148 *
Richard C. Tuttle(2)(3)(12)......................................... 54,058 *
Normand Bourque(13)................................................. 207,549 *
All executive officers and director nominees as a group (15 persons) 2,808,839 6.3%
--------
* Represents less than 1%.
(1) Figures are based upon 44,695,948 shares of common stock outstanding as of
October 22, 2002. The figures assume exercise by only the stockholder or
group named in each row of all options for the purchase of common stock
held by such stockholder or group which are exercisable within 60 days of
October 22, 2002. Figures for Fidelity Research and Management Corporation,
Capital Guardian Trust Company, Wellington Management Co. LLP and T. Rowe
Price Associates, Inc. are as of June 30, 2002, which represents the latest
available data.
(2) Messrs. Cressey, Balk, Graeber, Harris, Kalnasy, Kuznik and Tuttle are
directors of the Company.
(3) Member of the Audit Committee.
(4) Includes 3,331 shares covered by options and 70,000 shares held by the
Bryan and Christina Cressey Foundation (the "Foundation"). Mr. Cressey is
the President of the Foundation and may be deemed to be a beneficial owner
of the common stock of the Company owned by the Foundation, but Mr. Cressey
disclaims any such beneficial ownership.
(5) Based on information provided by Mr. Olson. Mr. Olson is no longer required
to report his ownership following his resignation as a director. Includes
363,000 shares covered by options.
(6) Includes 2,500 shares covered by options for each of Mssrs. Balk and
Kalnasy.
(7) Includes 67,500 shares covered by options and 55,926 restricted shares
granted on October 15,2002 (but subject to three year vesting).
(8) Includes 225,000 shares covered by options.
(9) Includes 3,331 shares covered by options.
(10) Includes 134,499 shares covered by options and 67,037 restricted shares
granted on October 15,2002 (but subject to three year vesting).
(11) Includes 30,000 shares covered by options and 28,148 restricted shares
granted on October 15,2002 (but subject to three year vesting).
(12) Includes 21,234 shares covered by options.
(13) Includes 197,550 shares covered by options.
11
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is comprised of the three
directors named below. Each member of the Audit Committee is an independent
director as defined by New York Stock Exchange rules. The Audit Committee has
adopted a written charter which has been approved by the Board of Directors.
The Audit Committee has reviewed and discussed the Company's audited financial
statements with management, which has primary responsibility for the financial
statements. Deloitte & Touche LLP, the Company's independent auditor for fiscal
2002, is responsible for expressing an opinion on the conformity of the
Company's audited financial statements with generally accepted accounting
principles. The Audit Committee has discussed with Deloitte & Touche LLP the
matters that are required to be discussed by Statement on Auditing Standards
No. 61 (Communication With Audit Committees). Deloitte & Touche LLP has
provided to the Audit Committee the written disclosures and the letter required
by Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), and the Audit Committee discussed with Deloitte & Touche LLP
that firm's independence.
Effective April 8, 2002, the Board of Directors, upon recommendation of the
Audit Committee, approved the engagement of Deloitte & Touche LLP as the
Company's independent accountants for the fiscal year ending July 31, 2002 and
dismissed the firm of Arthur Andersen LLP ("Andersen"). In connection with the
audits for the two most recent fiscal years and through April 8, 2002, there
have been no disagreements with Andersen on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure
which, if not resolved to Andersen's satisfactions, would have caused Andersen
to make reference thereto in its report on the consolidated financial
statements of the Company for such time period. Also, there were no reportable
events as described in Item 304(a)(1)(v) of Regulation S-K. Andersen's reports
on the financial statements of the Company for the last two fiscal years
neither contained an adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or accounting principles.
During the Company's two most recent fiscal years ended July 31, 2001 and the
subsequent interim period through April 8, 2002, the Company did not consult
with Deloitte & Touche LLP regarding any of the matters or events set forth in
Item 304(a)(2)(i) and (ii) of Regulation S-K.
During fiscal 2002, the Company engaged its principal accounting firm,
Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their
respective affiliates to provide services in the following categories and
amounts:
Audit Fees:
Audit of the consolidated financial statements of the Company. $587,073
Financial Information Systems Design/Implementation.................. $ 0
Other Fees:
Audit-related fees(1)............................................. $243,397
Tax related fees.................................................. $278,000
--------
Total Other Fees(2).................................................. $521,397
--------
(1) This amount includes fees for foreign statutory audits, employee benefit
plan audits, and internal audit evaluation services.
(2) The Company's Audit Committee considered whether the provision of non-audit
services rendered by Deloitte & Touche LLP to the Company was compatible
with maintaining Deloitte & Touche LLP's independence and concluded that
Deloitte & Touche LLP's independence was not impaired.
Based on the considerations referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for fiscal 2002 and that
Deloitte & Touche LLP be appointed independent auditors for the Company for
fiscal 2003. The foregoing report is provided by the following independent
directors, who constitute the Audit Committee:
Michael F.O. Harris (Chairman)
Richard C. Tuttle
Glenn Kalnasy
12
DIRECTOR AND OFFICER AND TEN PERCENT STOCKHOLDER SECURITIES REPORTS
The federal securities laws require the Company's directors and officers,
and persons who own more than ten percent of the Company's Common Stock, to
file with the Securities and Exchange Commission, the New York Stock Exchange
and the Secretary of the Company initial reports of ownership and reports of
changes in ownership of the common stock of the Company. To the Company's
knowledge, based solely on review of the copies of such reports furnished to
the Company and representations that no other reports were required, during the
fiscal year 2002, all of the Company's officers, directors and
greater-than-ten-percent beneficial owners made all required filings.
STOCKHOLDER PROPOSALS
Proposals of stockholders to be presented at the 2003 Annual Meeting of
Stockholders must be received by the Secretary of the Company by July 10, 2003
to be considered for inclusion in the Company's Proxy Statement and form of
proxy relating to that meeting. It is anticipated that the 2003 Annual Meeting
will be scheduled for December 10, 2003. The Nominating Committee will consider
persons recommended by shareholders for nomination for election to the
Company's Board of Directors. Shareholders must submit any such recommendation
in writing prior to the date set forth above to: Nominating Committee
Chairperson, c/o Corporate Secretary, Cable Design Technologies, Foster Plaza
7, 661 Andersen Drive, Pittsburgh, Pennsylvania 15220.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not know
of any business to come before the Annual Meeting other than the matters
described in the notice. If other business is properly presented for
consideration at the Annual Meeting, the enclosed Proxy authorizes the persons
named therein to vote the shares in their discretion.
SOLICITATION OF PROXIES
Solicitation of the Proxies may be made through officers and regular
employees of the Company by telephone or by oral communications with some
stockholders following the original solicitation period. No additional
compensation will be paid to such officers and regular employees for proxy
solicitation. Expenses incurred in the solicitation of Proxies will be borne by
the Company, including the charges and expenses of brokerage firms and others
of forwarding solicitation material to beneficial owners of Common Stock. In
addition to use of the mails, Proxies may be solicited by officers and
employees of the Company in person or by telephone. The Company has no present
plans to hire special employees or paid solicitors to assist in obtaining
proxies, but reserves the option of doing so if it should appear that a quorum
might otherwise not be obtained or for solicitation of proxies in connection
with any of the proposed matters.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report for the fiscal year ended July 31, 2002,
including the financial information included therein, has been filed with the
Securities and Exchange Commission and is incorporated in this Proxy Statement
by reference.
13
DETACH HERE ZCABC:
PROXY
CABLE DESIGN TECHNOLOGIES CORPORATION
For Annual Meeting of Stockholders - December 10, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Fred C. Kuznik, George Graeber and Charles B.
Fromm, and each or any of them, as the true and lawful attorneys of the
undersigned, with full power of substitution and revocation, and authorizes
them, and each of them, to vote all the shares of capital stock of the
Corporation which the undersigned is entitled to vote at said meeting and any
adjournment thereof upon the matters specified below and upon such other matters
as may be properly brought before the meeting or any adjournments thereof,
conferring authority upon such true and lawful attorneys to vote in their
discretion on such other matters as may properly come before the meeting and
revoking any proxy heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR THE
--- ---
PROPOSALS IN ITEM 2 AND AUTHORITY WILL BE DEEMED GRANTED UNDER PROPOSAL 3.
------------------- ---------------------
SEE REVERSE CONTINUED AND TO BE SIGNED SEE REVERSE
SIDE ON REVERSE SIDE SIDE
------------------- ---------------------
CABLE DESIGN TECHNOLOGIES
CORPORATION
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
DETACH HERE ZCAB:
Please mark
[X] votes as in
this example.
1. To elect a Board of Directors for the ensuing year.
Nominees: (01) Bryan C. Cressey, (02) Lance Balk, (03) George Graeber,
(04) Michael F.O. Harris, (05) Glenn Kainasy, (06) Ferdinand Kuznik,
(07) Richard C. Tuttle.
FOR WITHHELD
[ ] [ ]
[ ]
-----------------------------------------------------
For all nominees except as noted above
2. To elect Deloitte & Touche LLP as auditors FOR AGAINST ABSTAIN
for the fiscal year ending July 31, 2003. [ ] [ ] [ ]
3. To transact such other business as may properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
(If signing as attorney, executor, trustee or
guardian, please give your full title as such. If
shares are held jointly, each holder should sign.)
Signature: ________________________ Date: ____________________________
Signature: ________________________ Date: ____________________________