NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
[PCD LOGO APPEARS HERE]
Dear Stockholder:
You are invited to attend the 2000 annual meeting of stockholders of PCD
Inc. The annual meeting will be held at PCD's headquarters, 2 Technology
Drive, Centennial Park, Peabody, Massachusetts 01960-7977, on Friday, April
28, 2000, at 10:00 a.m., local time.
The attached notice and proxy statement describe the business to be
conducted at the meeting, including the election of one director. The nominee
for a three-year term on our Board of Directors is Mr. Harold F. Faught.
Please carefully read the descriptions included in the Proxy Statement and
then complete, sign and return the accompanying proxy in the postage paid
envelope provided for that purpose.
Thank you for your prompt attention to these important matters.
Very truly yours,
/s/ John L. Dwight Jr.
John L. Dwight, Jr.
Chairman of the Board
<PAGE>
[PCD LOGO APPEARS HERE]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 28, 2000
TO THE STOCKHOLDERS OF
PCD INC.:
Notice is hereby given that the annual meeting of the stockholders of PCD
Inc., a Massachusetts corporation, will be held at PCD's Headquarters, 2
Technology Drive, Centennial Park, Peabody, Massachusetts 01960-7977, on
Friday, April 28, 2000, at 10:00 a.m., local time, for the purpose of
considering and acting upon the following:
1. The election of one member of the Board of Directors for a three-year
term.
2. Such other matters as may properly come before the meeting and any
adjournments thereof.
The Board of Directors has fixed the close of business on February 29,
2000 as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting and any adjournments thereof.
By order of the Board of Directors
PCD Inc.
/s/ John L. Dwight, Jr.
John L. Dwight, Jr.
Chairman of the Board
Peabody, Massachusetts
March 27, 2000
<PAGE>
PCD Inc.
2 Technology Drive
Centennial Park
Peabody, MA 01960-7977
---------------
PROXY STATEMENT
--------------
FOR THE ANNUAL MEETING OF THE STOCKHOLDERS TO BE HELD APRIL 28, 2000
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF
PROXIES BY THE BOARD OF DIRECTORS OF PCD INC. (the "Company"). Such proxies
will be voted at the annual meeting of stockholders of the Company to be held
on Friday, April 28, 2000, and any adjournments or postponements thereof (the
"Annual Meeting"), at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders dated March 27, 2000.
The address of the Company's principal executive office is 2 Technology Drive,
Centennial Park, Peabody, Massachusetts 01960-7977. The approximate date on
which this Proxy Statement and the enclosed form of proxy are first being sent
or given to stockholders is March 27, 2000. Stockholders of record at the
close of business on February 29, 2000 (the record date) are entitled to
notice of and to vote at said meeting and any adjournments or postponements
thereof, each share being entitled to one vote.
On February 29, 2000 the Company had 8,582,335 outstanding shares of Common
Stock, $0.01 par value, ("Common Stock"), constituting the only class of
voting securities of the Company. A majority of the shares entitled to vote
and either present in person or represented by a properly signed and returned
proxy will constitute a quorum for the transaction of business at the Annual
Meeting. Abstentions are counted as present for purposes of determining the
existence of a quorum and have no effect on the outcome of the election of
directors.
Under the rules of the National Association of Securities Dealers ("NASD")
that govern brokers using the Nasdaq National Market, brokers who hold shares
in street name generally do not have the authority to vote on any items unless
they have received instructions from beneficial owners. If the broker is also
a member of a national securities exchange, however, NASD rules permit the
broker to vote shares held in street name in accordance with the rules of the
exchange. Under the rules of the New York Stock Exchange, for example, a
broker who does not receive instructions is entitled to vote on the election
of directors.
When a broker returns a proxy card but indicates that the broker does not
have discretionary voting power and is not entitled to vote with respect to a
certain proposal, this results in what is known as a "broker non-vote" on such
proposal. In the event of a broker non-vote with respect to any proposal
coming before the Annual Meeting, the proxy will be counted as present for
purposes of determining the existence of a quorum, but the shares covered by
the broker non-vote will not be considered voted or entitled to vote as to
that proposal. Brokers generally have discretionary voting power and are
entitled to vote in the election of directors, and, accordingly, there are
generally no broker non-votes on a director election proposal. A broker non-
vote would have no effect on the outcome of the election of directors.
With regard to the election of directors, under Massachusetts law and the
Company's by-laws, each nominee for election as a director shall be elected if
he or she receives the affirmative vote of a plurality of the votes cast by
stockholders entitled to vote and either present in person or represented by
proxy at the Annual Meeting. Votes may be cast in favor of or withheld from
the nominee; votes that are withheld will be excluded entirely from the vote
and will have no effect. Stockholders are not entitled to cumulative voting
in the election of directors.
3
<PAGE>
Any proxy given pursuant to this solicitation may be revoked in writing by
the person giving it at any time before it is exercised. Under Massachusetts
law, attendance at the Annual Meeting by a stockholder who has given a proxy
does not have the effect of revoking such proxy unless the stockholder files
at a time prior to the voting of the proxy a written notice of revocation with
the corporate Clerk at the Company's principal executive offices set forth
above or at the Annual Meeting. The timely filing of a duly executed proxy
bearing a later date or the voting of the shares subject to the proxy by
written ballot cast at the Annual Meeting constitutes such a notice of
revocation. All shares represented by valid proxies received by the Board of
Directors pursuant to this solicitation in time to be voted and not revoked
will be voted. If the proxy indicates a choice with respect to any matter to
be acted upon, the shares will be voted in accordance with the direction made
therein. Except as set forth above with respect to brokers, IF NO DIRECTION
IS MADE, THE SHARES WILL BE VOTED AS TO EACH PROPOSAL IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
I. ELECTION OF DIRECTORS
NOMINEE AND CONTINUING DIRECTORS
The Company's by-laws provide that the number of directors shall not be
less than the minimum number of individuals permitted by law and shall be
determined from time to time by majority vote of the Board of Directors. In
accordance with the by-laws, the Board of Directors has most recently fixed
the number of directors at four. The Board is divided into three classes,
with the terms of office of each class ending in successive years. One
director of the Company is to be elected at the Annual Meeting, to hold
office, subject to the by-laws, until the annual meeting of stockholders in
2003 or until his respective successor has been elected and qualified. Certain
information with respect to the nominee for election as director proposed by
the Company and the other directors whose terms of office as directors will
continue after the Annual Meeting is set forth below. Should the nominee be
unable or unwilling to serve (which is not expected), the proxies (except
proxies marked to the contrary) will be voted for such other person as the
Board of Directors of the Company may recommend.
<TABLE>
<CAPTION>
Served as
Nominee, Age, Principal Occupation or Position, Other Directorships Director Since
<S> <C>
TO CONTINUE IN OFFICE UNTIL 2003
Harold F. Faught, 75....................................................... 1983
Consultant
</TABLE>
<TABLE>
<CAPTION>
Continuing Directors, Age, Principal Occupation or Position, Other Directorships
<S> <C>
TO CONTINUE IN OFFICE UNTIL 2002
John L. Dwight, Jr., 55 ................................................... 1980
Chairman, Chief Executive Officer and President of the Company
Theodore C. York, 57 ...................................................... 1994
President, Highland Group
TO CONTINUE IN OFFICE UNTIL 2001
John E. Stuart, 58 1998
Director of Marketing and Communications, Europay International
</TABLE>
Mr. Faught has served as a director of the Company since 1983. From 1973 to
1993, when he retired, Mr. Faught served as an officer, most recently Senior
Vice President -- Technology, of Emerson Electric Co. Since retiring, he has
served Emerson in a consulting capacity.
Mr. Dwight has served as Chairman of the Board, Chief Executive Officer,
President and a director of the Company since November 1980, when Mr. Dwight
purchased a controlling interest in PCD. Mr. Dwight was previously Vice
President -- International of Burndy Company, an electronic connector
manufacturer. Mr. Dwight has over 25 years of management and operating
experience in the connector industry.
4
<PAGE>
Mr. York has served as a director of the Company since 1994. Mr. York has
been President of the Highland Group, a consulting firm, since February 1997.
From 1995 through February 1997, Mr. York was President of Saber Equipment
Corporation, a petrochemical equipment company. On February 14, 1997, Saber
Equipment Corporation filed a Chapter 11 bankruptcy petition, which, at
Saber's request, was converted into a Chapter 7 bankruptcy proceeding on
February 24, 1997. A trustee was appointed by the bankruptcy court. The
trustee retained Mr. York as a consultant and the sale of Saber's assets
concluded in July 1997. From 1984 to 1994, Mr. York was President of Burndy
Corporation. From 1992 to 1994, he was also Executive Vice President of
Framatome Connectors International, a manufacturer of electrical and
electronic connectors and tools. Mr. York is also a director of Robroy
Industries, Inc.
Mr. Stuart has served as a director of the Company since 1998. Mr. Stuart
is the General Manager - Communications and has served on the Executive
Committee of Europay International since 1997. From 1995 to 1997, Mr. Stuart
was Senior Vice President - Business Development for Rural/Metro Corporation.
Previously, Mr. Stuart was employed with American Express for 15 years in the
Europe/Middle East/Africa (EMEA) Region where he served as General Manager of
Northern Europe, President and General Manager of the United Kingdom and
Ireland, and as Senior Vice President of Marketing for EMEA region.
Mr. C. Wayne Griffith resigned as a director of the Company in March 2000.
Although the Board of Directors contemplates that the nominee for election
as director will be able to serve, if a vacancy in the original slate of
nominees is occasioned by death or other unexpected occurrence, shares
represented by proxies (except proxies marked to the contrary) shall be voted
for the election of such other nominee as may be designated by the Board of
Directors.
THE BOARD OF DIRECTORS AND COMMITTEES
There were four meetings of the Board of Directors during 1999. All
members of the Board of Directors attended at least 75% of all of the meetings
of the Board and the committees on which they served. Directors who are
employees of the Company do not receive any compensation for service as
director. Each non-employee director is currently paid $750 for each Board
meeting or committee meeting attended (except for those committee meetings
held in advance of the Board meeting) plus an annual retainer fee in the
amount of $5,000. For 1999, each non-employee director received a total of
$8,750 for his services.
The 1996 Eligible Directors Stock Plan of the Company (the "Directors Stock
Plan") was approved by the Board of Directors on January 30, 1996 and
thereafter by the Company's stockholders. Under the Directors Stock Plan,
each newly-elected director who is not an officer or employee of the Company
or any subsidiary of the Company (an "Outside Director") who has not
previously been granted an option to purchase shares of Common Stock will be
granted, on the thirtieth day after the Annual Meeting, an option to purchase
3,000 shares of Common stock at an exercise price equal to the fair market
value on the date of grant. In addition, on the thirtieth day after re-
election, each continuing Outside Director will be granted an option as of the
date of each annual meeting of the stockholders to purchase 1,500 shares of
Common Stock at an exercise price equal to the fair market value on the date
of grant. A total of 36,000 shares of Common Stock are available for awards
under the Directors Stock Plan. Each such option vests six months after, and
expires 10 years from, the date of grant of such option. No options may be
granted under the Directors Stock Plan after January 29, 2006. A total of
16,500 shares remain available for grant pursuant to the Directors Stock Plan.
The Board of Directors has two standing committees: the Audit Committee and
the Compensation Committee. The Audit Committee reviews the Company's
accounting practices, internal accounting controls and financial results and
oversees the engagement of the Company's independent auditors. The members of
the Audit Committee are Mr. Faught, Mr. Stuart and Mr. York. The Compensation
Committee reviews and recommends to the Board of Directors the salaries,
bonuses and other forms of compensation for executive officers of the Company
and administers various compensation and benefit plans, including the 1992
Stock Option Plan, the 1996 Stock Plan and the 1998 Employee Stock Purchase
Plan. The members of the Company's Compensation Committee are Mr. Faught and
Mr. Stuart (who replaced Mr. Griffith in March 2000).
None of the members of the Audit Committee or the Compensation Committee is
a past or current officer or employee of the Company. The Board of Directors
does not maintain a nominating committee or a committee performing similar
functions.
5
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Mr. Faught and Mr.
Stuart. Except for Mr. Dwight, the Company's Chairman of the Board, Chief
Executive Officer and President, no officer or employee of the Company has
participated in deliberations of the Board of Directors concerning executive
officer compensation. No executive officer of the Company serves as a member
of the board of directors or compensation committee of any entity that has one
or more executive officers serving as a member of the Company's Board of
Directors or Compensation Committee.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
INTRODUCTION
The following report is provided by the Compensation Committee (the
"Committee") of the Board of Directors. The Committee supervises the Company's
Executive Compensation Program and is directly responsible for compensation
actions affecting the Chairman, President and Chief Executive Officer (the
"Chief Executive Officer"), other executive officers and other senior
executives of the Company. The Committee, which consists entirely of
non-employee directors, met one time in 1999.
EXECUTIVE COMPENSATION PHILOSOPHY
The Company's Executive Compensation Program (the "Program") is designed and
administered to relate executive compensation to four basic objectives:
* COMPETITIVE POSITION: The Program is designed to pay competitive
compensation so the Company can attract and retain highly qualified
executives. To assist it in determining competitive compensation
practices, the Committee frequently utilizes information about
compensation levels of other companies (including some, but not all,
of the companies that comprise the performance graph peer group
described below), including information provided by qualified
independent surveys.
* COMPANY PERFORMANCE: The Program is designed to reflect the overall
performance of the Company, with appropriate consideration of
conditions that exist in the industry. In determining compensation
levels and compensation changes, the Committee considers the
Company's overall performance in meeting both short-term and
long-term objectives. The Committee considers achievement of
operating objectives in areas such as sales, earnings, entered orders
and cash management, as well as progress toward long-term strategic
objectives.
* STOCKHOLDER RETURN: The Program has been designed to establish a
direct link between the interests of the Company's executives and its
stockholders by allocating a portion of senior management
compensation to stock option plans.
* INDIVIDUAL PERFORMANCE: In addition to the above factors, the
Committee considers the executive's individual performance and
contributions to the Company's results in determining appropriate
compensation levels.
THE EXECUTIVE COMPENSATION PROGRAM
Three general components of executive compensation are used to achieve the
principles set forth above: base salary, a management incentive plan and a
long-term incentive plan. PCD's Chief Executive Officer, Mr. Dwight, is
evaluated and his compensation administered in the same general fashion as the
other executive officers.
* BASE SALARY: The base salary of each executive is reviewed annually
by the Committee. Salary changes reflect the overall performance of
the Company, pay competitiveness and the individual's performance.
The targeted percentage of cash compensation represented by base
salary varies based on the level of the position, with a target of
approximately 60% for the Chief Executive Officer and approximately
70% for the other executive officers. 1999 base salaries for the
Chief Executive Officer and the other four most highly paid executive
6
<PAGE>
officers are shown in the summary compensation table. Mr. Dwight's
annual base salary was not increased after January 1, 1999. In
deciding to leave Mr. Dwight's base salary unchanged, the Committee
took into account the Company's financial performance during 1999.
* ANNUAL MANAGEMENT INCENTIVE PLAN: The Company's Chief Executive
Officer and other executive officers are eligible for annual cash
bonuses. Payments of bonuses are based upon achievement of specified
financial objectives determined by the Board of Directors at the
beginning of each year. Financial objectives are based on the
Company's budget and results of operations. Mr. Dwight's bonus was
determined by comparing PCD's financial results to the financial
goals described above. Mr. Dwight was not awarded a cash bonus for
1999 but may receive a special bonus during the year if specific
Company achievements are met.
* LONG-TERM INCENTIVE PLAN: To ensure that management's interests are
closely tied to stockholder return, a portion of senior executive
total compensation is provided through stock-based, long-term
incentive plans. To place emphasis on stockholder return, the Company
has implemented two stock option plans, the 1992 Stock Option Plan
and the 1996 Stock Plan. Both plans provide for the award of
incentive stock options and non-qualified stock options. No further
shares are available for grant pursuant to the 1992 Stock Option
Plan. Awards to executive officers under these plans are included in
the accompanying tables.
The Company does not have an employment agreement with the Chief Executive
Officer or any of its other executive officers providing for their employment
for any specific term.
No specific actions have been taken with respect to the $1 million
compensation deduction limit under section 162(m) of the Internal Revenue Code
because the Company's compensation levels have never exceeded the limits and
are not expected to exceed the limit by a material amount over the next
several years.
SUMMARY
The Committee believes the Company's compensation program has been designed
and managed by the Committee to directly link the compensation of the
Company's executives to the performance of the Company, individual performance
and stockholder return. The current levels of compensation for the Company's
senior executives are generally below market levels for similar electronic
connector companies. The Committee expects to address these compensation
levels over time, consistent with Company and individual performance, and will
continue to emphasize performance-based and stock-based compensation linking
management and stockholder interests.
The Compensation Committee
H.F. Faught
J.E. Stuart
7
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding the Company's
Chief Executive Officer and each of the other four most highly compensated
executive officers during the year ended December 31, 1999 (the "Named Executive
Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation(2)
Number of
Shares
Underlying
Annual Compensation (1) Options All-Other
Name and Principal Position Year Salary($) Bonus($)(3) Granted(#) Compensation($)(4)
<S> <C> <C> <C> <C> <C>
John L. Dwight, Jr............. 1999 $229,919 $ - - $10,269
Chairman of the Board 1998 219,685 30,000 - 8,151
Chief Executive Officer 1997 204,068 100,000 - 8,189
and President
Michael S. Cantor (5).......... 1999 105,617 16,800 - 10,825
Assistant to the President 1998 128,041 52,100 - 9,410
1997 122,000 39,500 - 10,125
Jeffrey A. Farnsworth.......... 1999 120,125 16,900 10,000 10,736
Vice President - Sales and 1998 113,438 - - 9,670
Marketing, Wells-CTI Division 1997 113,577 32,000 - 10,026
Richard J. Mullin (6).......... 1999 197,000 - 25,000 10,419
Vice President and President, 1998 190,625 10,000 - 12,545
Wells-CTI Division 1997 - - 50,000 -
Roddy J. Powers................ 1999 117,990 - - 13,093
Vice President, 1998 115,932 13,000 - 13,104
Operations 1997 111,833 39,500 - 7,694
____________________
</TABLE>
(1) In accordance with the rules of the Securities and Exchange
Commission, other compensation in the form of perquisites and
other personal benefits has been omitted because such perquisites
and other personal benefits constituted less than the lesser of
$50,000 or ten percent of the total annual salary and bonus
reported for the executive officer during the years reported.
(2) The Company did not grant any restricted stock awards or stock
appreciation rights during the years reported. The Company does
not have any "long term incentive plan" within the meaning set
forth in Item 402(a)(7) of Regulation S-K.
(3) The Company's officers are eligible for annual cash bonuses under
the terms of the Company's Management Incentive Plan, adopted
each year. Payments of bonuses are based upon achievement of
specified individual and Company objectives determined by the
Board of Directors at the beginning of each year.
(4) Includes amounts awarded pursuant to the Company's 401(k) Salary
Savings Plan, life insurance premium remainders and automobile
allowances. For 1999, such amounts were, respectively, Mr.
Dwight, $4,750, $1,493 and $4,026; Mr. Cantor, $4,750, $1,683 and
$4,392; Mr. Farnsworth, $4,750, $708 and $5,278; Mr. Mullin,
$2,500, $522, $7,397; and Mr. Powers, $4,750, $1,237 and $7,106.
(5) Resigned as Vice President and General Manager,
Industrial/Avionics Division effective July 30, 1999 and
subsequently has served the Company in the capacity of Assistant
to the President.
(6) Mr. Mullin joined the Company on December 26, 1997 following the
acquisition of Wells Electronics, Inc.
8
<PAGE>
OPTION GRANTS IN THE LAST YEAR
Options granted to the Named Executive Officers during 1999 are as set
forth in the following table:
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
------------------------ Value at Assumed
Number of Percent of Annual Rates
shares Total Options of Stock Price
Underlying Granted to Exercise Appreciation
Options Employees Price Expiration for Option Term (1)
Granted(#) in 1999 ($/share) Date 5%($) 10%($)
----------- ------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
John L. Dwight, Jr........ - - - - - -
Michael S. Cantor......... - - - - - -
Jeffrey A. Farnsworth..... 10,000 6.7% $5.875 10/29/09 $36,948 $ 93,632
Richard J. Mullin......... 20,000 3.4% $5.875 10/29/09 73,895 187,265
5,000 13.5% $16.25 2/5/09 51,098 129,492
Roddy J. Powers........... - - - - - -
___________________
</TABLE>
(1) These amounts represent hypothetical gains that could be achieved for
the respective options if they are exercised at the end of their
respective terms. The assumed 5% and 10% rates of stock price
appreciation are provided by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
the future Common Stock price. This table does not reflect any actual
appreciation in the price of the Common Stock to date.
AGGREGATED OPTION EXERCISES IN LAST YEAR
Shares Acquired Value Realized
Name on Exercise (#) ($)(1)
----------------------- --------------- --------------
John L. Dwight, Jr..... - $ -
Michael S. Cantor...... 10,000 88,542
Jeffrey A. Farnsworth.. 41,000 318,312
Richard J. Mullin - -
Roddy J. Powers........ - -
_______________
(1) The values in this column represent the last reported sale price of the
Company's Common Stock on the Nasdaq National Market on the exercise
date, less the respective option exercise price.
AGGREGATED YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options (#) In-the-Money Options ($)(1)
at Fiscal Year End at Fiscal Year End
---------------------------------- --------------------------
Name: Exercisable Unexercisable Exercisable Unexercisable
---------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John L. Dwight, Jr.... 42,000 - $235,375 $ -
Michael S. Cantor..... 35,000 - 196,146 -
Jeffrey A. Farnsworth. 98,500 7,500 525,938 6,563
Richard J. Mullin 31,251 43,749 4,375 13,125
Roddy J. Powers 76,600 - 429,279 -
_______________
</TABLE>
(1) Solely for purposes of this table, the values in these columns have
been calculated on the basis of the price of $6.75 per share, the
last reported sale price of the Common Stock on December 31, 1999,
less the option exercise price. An "in-the-money" option is an option
for which the exercise price is less than such fair market value.
9
<PAGE>
PERFORMANCE GRAPH
The graph set forth below provides comparisons of the quarterly change in
the cumulative total shareholder return on PCD's Common Stock with the
cumulative return of the Nasdaq Stock Market and a Peer Group Index (see note
(3) below) from March 26, 1996 (the effective date of PCD's initial public
offering) through December 31, 1999.
[STOCK PERFORMANCE GRAPH APPEARS HERE]
COMPARISON OF CUMULATIVE TOTAL RETURN (1)
CRSP
Measurement Period Total Return Peer
Fiscal Quarter Covered) PCD Inc. Index for Nasdaq(2) Group(3)
----------------------- ------- ------------------- --------
As at 3/26/96..... 100 100 100
QE - 3/96......... 108 101 99
QE - 6/96......... 120 109 98
QE - 9/96......... 109 113 113
QE - 12/96........ 118 118 111
QE - 3/97......... 143 115 107
QE - 6/97......... 150 132 128
QE - 9/97......... 223 155 146
QE - 12/97........ 214 145 139
QE - 3/98......... 186 169 132
QE - 6/98......... 164 174 106
QE - 9/98......... 114 150 96
QE - 12/98........ 118 204 114
QE - 3/99......... 82 232 101
QE - 6/99......... 73 255 128
QE - 9/99......... 70 255 137
QE - 12/99........ 61 369 170
- ----------
(1) Assumes $100 invested on March 26, 1996 in PCD Common Stock, the Nasdaq
Stock Market and the Peer Group Index, as defined below in note (3), and
the reinvestment of all dividends.
(2) Cumulative returns are calculated using data from the Nasdaq Stock
Market Total Return Index, maintained by the Center for Research in
Security Prices (CRSP) at the University of Chicago.
(3) The Peer Group is comprised of all independent "electronic connector"
companies which are traded on the New York Stock Exchange or listed by
The Nasdaq Stock Market (five companies excluding PCD). The electronic
connector companies are: Amphenol Company; Methode Electronics, Inc.;
Molex Inc.; Robinson Nugent, Inc.; and Thomas & Betts Company. The Peer
Group's total return has been recalculated back to March 26, 1996 so as
to exclude AMP Incorporated, which is no longer listed on the New York
Stock Exchange.
10
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of February 29, 2000, certain information with
respect to the security ownership of the Common Stock by officers and directors
of the Company:
Amount and Nature
of Beneficial
Ownership (1) Percent
Directors and Executive Officers ----------------- -------
--------------------------------
John L. Dwight, Jr. (2)............... 916,600 10.6%
Harold F. Faught (3).................. 4,500 *
C. Wayne Griffith (4)................. 85,300 *
John E. Stuart (5).................... 9,500 *
Theodore C. York (6).................. 40,500 *
Michael S. Cantor (7)................. 95,000 1.0
John T. Doyle (8)..................... 7,500 *
Jeffrey A. Farnsworth (9)............. 132,000 1.5
Richard J. Mullin (10)................ 31,351 *
Roddy J. Powers (11).................. 91,000 1.1
John J. Sheehan III (12).............. 5,000 *
All directors and executive
officers as a group (11 persons) (13) 1,418,251 15.9
__________________
Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment
power with respect to the shares. Stock subject to options currently
exercisable or exercisable within 60 days following February 29, 2000 are
deemed outstanding for the purpose of completing the share ownership and
percentage of the person holding such options, but are not deemed
outstanding for the purpose of computing the percentage of any other
person.
(2) John L. Dwight, Jr.'s beneficial ownership of Common Stock of the Company
consists of 857,300 shares over which he has both sole voting and
dispositive powers and 17,300 shares (held by his son) over which he is
deemed to have shared voting and dispositive powers. Mr. Dwight disclaims
beneficial ownership with respect to such 17,300 shares. Also includes
42,000 shares issuable upon exercise of stock options.
(3) Comprised of 4,500 shares issuable upon exercise of stock options.
(4) Includes 40,500 shares issuable upon exercise of stock options.
(5) Includes 4,500 shares issuable upon exercise of stock options.
(6) Comprised of 40,500 shares issuable upon exercise of stock options.
(7) Includes 25,000 shares issuable upon exercise of stock options.
(8) Comprised of 7,500 shares issuable upon exercise of stock options.
(9) Includes 96,000 shares issuable upon exercise of stock options.
(10) Includes 31,251 shares issuable upon exercise of stock options.
(11) Includes 66,000 shares issuable upon exercise of stock options.
(12) Comprised of 5,000 shares issuable upon exercise of stock options.
(13) Includes a total of 362,751 shares issuable upon the exercise of stock
options.
11
<PAGE>
PRINCIPAL STOCKHOLDERS
As of December 31, 1999, the only persons known to management to own
beneficially 5% or more of the outstanding Common Stock of the Company are
named below. The information in this table is based solely on Schedules 13G
filed with the Securities and Exchange Commission by these persons:
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership (1) Percent
- ------------------------------------ ------------------------ -------
Emerson Electric Co................. 2,068,080 (2) 23.7%
8000 West Florissant Avenue
St. Louis, MO 63136
Wasatch Advisors, Inc............... 1,004,330 (3) 11.7%
150 Social Hall Avenue
Salt Lake City, UT 84111
John L. Dwight, Jr.................. 916,600 (4) 10.7%
c/o PCD Inc.
2 Technology Drive
Centennial Park
Peabody, MA 01960-7977
Wellington Management Company, LLP.. 845,500 (5) 9.9%
75 State Street
Boston, MA 02109
Thomson Horstmann & Bryant, Inc..... 687,800 (6) 8.0%
Park 80 West Plaza Two
Saddle Brook, NJ 07663
Fleet Boston Corporation............ 470,470 (7) 5.5%
One Federal Street
Boston, MA 02110
________________________
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment
power with respect to the shares. Stock subject to options or warrants
exercisable currently or within 60 days following December 31, 1999 are
deemed outstanding for the purpose of completing the share ownership and
percentage of the person holding such options, but are not deemed
outstanding for the purpose of computing the percentage of any other
person.
(2) Includes 1,174,800 shares owned by Emerson Electric Co. and 743,280
shares owned by its wholly-owned subsidiary InnoVen III Corporation and
over which it has sole voting and dispositive power. Also includes
150,000 shares issuable upon exercise of a warrant issued to Emerson in
December 1997.
(3) Wasatch Advisors, Inc.'s beneficial ownership of Common Stock of the
Company consists of 1,004,330 shares over which it has sole voting and
dispositive power.
(4) John L. Dwight, Jr.'s beneficial ownership of Common Stock of the Company
consists of 857,300 shares over which he has sole voting and dispositive
power and 17,300 shares over which he is deemed to have shared voting and
dispositive power. Also includes 42,000 shares issuable upon exercise of
stock options. Mr. Dwight disclaims beneficial ownership with respect to
the 17,300 shares which are held by his son.
(5) Wellington Management LLP's beneficial ownership of Common Stock of the
Company consists of 495,500 shares over which it has shared voting power
and 845,500 shares over which it has shared dispositive power. Shares of
Common Stock beneficially owned by Wellington Management are owned by a
variety of investment advisory clients of Wellington Management. No such
client is known to have an interest in more than 5% of the Common Stock.
(6) Thomson, Hortsmann and Bryant Inc.'s beneficial ownership of Common
Stock of the Company consists of 437,000 shares over which it has sole
voting power, 10,400 shares over which it has shared voting power and
687,800 shares over which it has sole dispositive power.
(7) Fleet Boston Corporation's beneficial ownership of Common Stock of the
Company consists of 468,250 over which it has sole voting power, and
470,470 shares over which it has sole dispositive power.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own beneficially ten percent or
more of any class of equity security in the Company to file with the
Securities and Exchange Commission initial reports of such ownership and
reports of changes in such ownership. Such officers, directors and beneficial
owners are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) filings made by them.
Based solely upon a review of the copies of such filings furnished to the
Company and each executive officer's written representation that no Form 5 was
required, the Company believes that during 1999, its executive officers,
directors and ten percent or greater beneficial owners complied with all
applicable Section 16(a) filing requirements.
EMPLOYMENT, SEVERANCE AND CHANGE-IN-CONTROL AGREEMENTS
Effective March 6, 2000, the Company adopted its Executive Separation
Benefits Plan (the "Executive Plan"), which provides for severance benefits to
certain members of the Company's senior management in the event of termination
of the eligible employee's employment under certain circumstances. The
Executive Plan provides for payment to certain of the Named Executive Officers
and other executive officers of the Company, for 12 months, of annual base
salary and acceleration of the vesting of 50% of any unvested stock options
then held by such employees, upon termination by the Company for reasons other
than disability or "good cause," or by the employee for "good reason," in each
case as defined in the Executive Plan and only on or after a change in control
of the Company. Mr. Dwight is entitled, if so terminated on or after a change
in control of the Company, to receive a lump sum payment equal to 24 months'
annual base salary, as well as acceleration of the vesting of 50% of any
unvested stock options he then holds.
In connection with the hiring of Richard J. Mullin as President of Wells-
CTI, Inc. and Vice President of PCD Inc., the Company entered into a letter
agreement (the "Letter Agreement") with Mr. Mullin, effective December 26,
1997 describing the terms of Mr. Mullin's employment. Mr. Mullin's employment
is on an "at will" basis, for no specific period. The Letter Agreement
provides for a base salary, a bonus under the Company's Management Incentive
Plan, in each case subject to annual review by the Company's Compensation
Committee, and an award of non-qualified options to purchase Common Stock. The
Letter Agreement also provides that if Mr. Mullin's employment is terminated
for reasons of performance or Company decision to eliminate the position for
any reason, Mr. Mullin will receive a severance payment in an amount equal to
one year's base pay, payable in semi-monthly installments. Mr. Mullin will not
receive severance pay if he resigns or if his employment is terminated by the
Company due to gross misconduct.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 26, 1997, the Company entered into a Subordinated Debenture and
Warrant Purchase Agreement (the "Purchase Agreement") with Emerson Electric
Co. ("Emerson"), the Company's largest stockholder. Pursuant to the Purchase
Agreement, the Company issued to Emerson a Subordinated Debenture (the
"Debenture") with a principal amount of $25 million at an annual rate of
interest of 10% and a Common Stock Purchase Warrant (the "Emerson Warrant")
for the purchase of up to 525,000 shares of PCD Common Stock at a purchase
price of $1.00 per share. On April 22, 1998, the Company repaid 100% of the
outstanding principal amount of the Debenture using a portion of the proceeds
of a public offering of its Common Stock. Prepayment of the principal amount
under the Debenture was subject to a penalty, paid at the time of prepayment,
in an amount equal to 3.25% of the principal sum prepaid. Because the
Debenture was paid in full before December 31, 1998, the Emerson Warrant is
exercisable only to the extent of 150,000 shares of Common Stock. In
connection with the Purchase Agreement, the Company granted registration
rights to Emerson pursuant to a Registration Rights Agreement dated as of
December 26, 1997.
The Company has a policy that all material transactions between the Company
and its officers, directors and other affiliates must (i) be approved by a
majority of the members of the Company's Board of Directors and by a majority
of the disinterested members of the Company's Board of Directors and (ii) be
on terms no less favorable to the Company than could be obtained from
unaffiliated third parties. In addition, this policy requires that any loans
by the Company to its officers, directors or other affiliates be for bona fide
business purposes only.
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III. INDEPENDENT ACCOUNTANTS
The Company has reaffirmed the selection of PricewaterhouseCoopers LLP as
the independent accountants of the Company for 2000. PricewaterhouseCoopers
LLP has no financial interest, direct or indirect, in the Company or any of
its subsidiaries.
A representative of PricewaterhouseCoopers LLP will attend the Annual
Meeting with the opportunity to make a statement if he desires to do so and to
answer questions that may be asked of him or her by the stockholders.
IV. OTHER GOVERNANCE INFORMATION
Any stockholder, whether of record or a beneficial owner, desiring to
submit a proposal for consideration to appear in the Company's Proxy Statement
for the annual meeting of stockholders of the Company to be held in 2001 shall
submit such proposal, typewritten or printed, addressed to the Clerk of the
Company on or before November 28, 2000. Such proposal must identify the name
and address of the stockholder, the number of the Company's shares held of
record or beneficially, the dates upon which the stockholder acquired such
shares and documentary support for a claim of beneficial ownership. Proposals
should be sent by certified mail - return receipt requested to the attention
of the Clerk of the Company, PCD Inc., 2 Technology Drive, Centennial Park,
Peabody, MA 01960-7977.
In addition to the foregoing procedure for inclusion of a stockholder
proposal in the Company's Proxy Statement, the Company will consider other
items of business and nominations for election as director of the Company that
are properly brought before an annual meeting by a stockholder. To be
properly brought before an annual meeting, items of business must be
appropriate subjects for stockholder consideration, timely notice thereof must
be given in writing to the Clerk of the Company, and other applicable
requirements must be met. In general, such notice is timely if it is received
at the principal executive offices of the Company at least 60 days in advance
of the anniversary date of the previous year's annual meeting (for the 2001
annual meeting, the deadline for receipt of such notice is February 27, 2001,
provided that if the annual meeting is to be held on a date prior to the date
the annual meeting was held in the previous year and if less than 70 days
notice is given of the date of the meeting, a stockholder will have ten days
from the notice of the date of the meeting to give notice of the proposals for
stockholder consideration. The by-laws of the Company specify the
information to be included in the stockholder's notice.
Stockholders may nominate persons for election to the Board by complying
with the notice provisions set forth in the by-laws. In general, such notice
is timely if it is received by the Clerk of the Company at least 60 days in
advance of the anniversary date of the previous year's annual meeting (for the
2001 annual meeting, the deadline for receipt of such notice is February 27,
2001), provided that if the annual meeting is to be held on a date prior to
the date the annual meeting was held in the prior year and if less than 70
days notice is given of the date of this meeting, a stockholder will have ten
days from the notice of the date of the meeting to give notice of the planned
nomination. The by-laws of the Company specify the information to be included
in the stockholder's notice of nomination.
Interested stockholders can obtain full copies of the by-laws by making a
written request therefor to the Clerk of the Company.
EXPENSES OF SOLICITATION
All expenses of soliciting proxies will be paid by the Company. Proxies
may be solicited personally or by telephone by employees of the Company, but
the Company will not pay any additional compensation for such solicitations.
The Company will reimburse brokers, banks and other persons holding shares in
their names or in the names of nominees for their reasonable expenses for
sending material to principals and obtaining their proxies.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's annual report on Form 10-K for the year ended
December 31, 1999, as filed with the Securities and Exchange Commission,
excluding exhibits thereto, is enclosed with the materials containing this
proxy statement. Exhibits may be obtained without charge by contacting John
J. Sheehan, III, PCD Inc., 2 Technology Drive, Centennial Park, Peabody,
Massachusetts 01960-7977.
The Board of Directors of
PCD Inc.
John L. Dwight, Jr.
Chairman
Dated: March 27, 2000
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APPENDIX A
FRONT OF PROXY CARD
PCD Inc.
2 Technology Drive
Centennial Park
Peabody, Massachusetts 01960-7977
Annual Meeting of Stockholders - April 28, 2000
Proxy Solicited on Behalf of the Board of Directors
The undersigned, revoking all prior proxies, hereby appoints John L. Dwight,
Jr., John J. Sheehan III and Thomas C. Chase as Proxies, with full power of
substitution to each, to vote for and on behalf of the undersigned all shares
of stock of PCD Inc. (the "Company") which the undersigned may be entitled to
vote at the 2000 Annual Meeting of Stockholders of PCD Inc. to be held at the
offices of the Company, 2 Technology Drive, Centennial Park, Peabody,
Massachusetts 01960-7977, on Friday, April 28, 2000 at 10:00 a.m., and at any
adjournment or adjournments thereof. The undersigned hereby directs the said
proxies to vote in accordance with their judgement on any matters which may
properly come before the Annual Meeting, all as indicated in the Notice of
Annual Meeting, receipt of which is hereby acknowledged, and to act upon the
following matters set forth in such notice as specified by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
"FOR" PROPOSAL 1.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE
Please sign exactly as your name(s) appear(s) on the books of the Company.
Joint owners should each sign personally. Trustees, custodians, and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If the shareholder is a
corporation, the signature should be that of an authorized officer who should
indicate his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
__________________________________ _________________________
__________________________________ _________________________
__________________________________ _________________________
<PAGE>
BACK SIDE OF PROXY CARD
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR Withhold
1. Election of
Director for [ ] [ ] Nominee: Harold F. Faught
A 3 year term.
2. In their discretion, the proxies are authorized to vote upon any other
business that may properly come before the meeting or at any adjournment(s)
thereof.
Mark box at right if an address
change or comment has been noted [ ]
on the reverse of this card
RECORD DATE SHARES:
--------
Please be sure to sign and date this Proxy. | Date |
- --------------------------------------------------------------
| |
| |
- ------- Stockholder sign here --- Co-owner sign here ---------
DETACH CARD DETACH CARD
PCD Inc.
Dear Stockholder,
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Corporation that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, April
28, 2000.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
PCD Inc.
- -9-
