SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT
OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COMMSCOPE, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
COMMSCOPE, INC.
March 20, 1998
Dear Stockholder:
You are cordially invited to the first Annual Meeting of Stockholders (the
"Annual Meeting") of CommScope, Inc., a Delaware corporation (the "Company"), to
be held on May 1, 1998 at 1:30 p.m., local time, at the Chase Manhattan Bank,
270 Park Avenue - 11th Floor, New York, New York 10017.
At the meeting we will review the Company's activities in 1997, as well as
the outlook for 1998. Details of the business to be conducted and the matters to
be considered at the Annual Meeting are given in the attached Notice of Annual
Meeting and Proxy Statement.
It is important that your shares be represented at the Annual Meeting,
whether or not you are able to attend personally. You are therefore urged to
complete, sign, date and return the enclosed proxy card promptly in the
accompanying envelope, which requires no postage if mailed in the United States.
You are, of course, welcome to attend the Annual Meeting and vote in
person, even if you have previously returned your proxy card.
Sincerely,
/s/ Frank M. Drendel
Frank M. Drendel
Chairman of the Board and
Chief Executive Officer
<PAGE>
COMMSCOPE, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders (the "Annual Meeting") of CommScope,
Inc. (the "Company") will be held on May 1, 1998, at 1:30 p.m., local time, at
the Chase Manhattan Bank, 270 Park Avenue - 11th Floor, New York, New York
10017.
The Meeting will be conducted:
1. To consider and act on the following proposals, which are described in
the accompanying Proxy Statement:
Proposal One: To elect two Class I directors for terms
ending at the 2001 Annual Meeting of
Stockholders;
Proposal Two: To approve the CommScope, Inc. Amended and
Restated 1997 Long-Term Incentive Plan;
Proposal Three: To approve the CommScope, Inc. Annual
Incentive Plan; and
Proposal Four: To ratify the appointment by the Board of
Directors of the Company of Deloitte & Touche LLP
as independent auditor for the Company for the
1998 fiscal year.
2. To transact such other business as may properly come before the Annual
Meeting.
Stockholders of record at the close of business on March 16, 1998 will be
entitled to notice of and to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/S/ Frank B. Wyatt, II
Frank B. Wyatt, II
Secretary
March 20, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ACCOMPANYING ENVELOPE
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY REVOKE YOUR
PROXY AT ANY TIME BEFORE IT IS VOTED BY DELIVERY TO THE COMPANY OF A
SUBSEQUENTLY EXECUTED PROXY OR A WRITTEN NOTICE OF REVOCATION OR BY VOTING IN
PERSON AT THE ANNUAL MEETING.
-i-
<PAGE>
COMMSCOPE, INC.
1375 LENOIR-RHYNE BOULEVARD
HICKORY, NORTH CAROLINA 28601
---------------------------------
PROXY STATEMENT
This Proxy Statement (the "Proxy Statement") is being furnished to the
stockholders of CommScope, Inc., a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at the Annual Meeting of Stockholders (the "Annual Meeting") of
the Company to be held on May 1, 1998 at 1:30 p.m., local time, at the Chase
Manhattan Bank, 270 Park Avenue - 11th Floor, New York, New York 10017, and any
adjournment or postponement thereof.
At the Annual Meeting, stockholders will be asked to consider and vote upon
the following proposals: PROPOSAL ONE: To elect two Class I directors for terms
ending at the 2001 Annual Meeting of Stockholders; PROPOSAL TWO: To approve the
CommScope, Inc. 1997 Amended and Restated Long-Term Incentive Plan; PROPOSAL
Three: To approve the CommScope, Inc. Annual Incentive Plan; PROPOSAL FOUR: To
ratify the appointment by the Board of Directors of the Company of Deloitte &
Touche LLP as independent auditor for the Company for the 1998 fiscal year.
The Board of Directors of the Company recommends a vote FOR approval of
each of the proposals.
The Board of Directors of the Company has fixed the close of business on
March 16, 1998 (the "Annual Meeting Record Date") as the record date for
determining the holders of outstanding shares of Common Stock entitled to
receive notice of, and to vote at, the Annual Meeting or any adjournment
thereof. On that date, there were 49,154,751 shares of Common Stock issued and
outstanding and entitled to vote at the Annual Meeting, each entitled to one
vote on all matters to be acted upon. The Notice of Annual Meeting of
Stockholders, this Proxy Statement and the form of proxy are first being mailed
to each stockholder entitled to vote at the Annual Meeting on or about March 27,
1998.
Effective July 28, 1997, the Company was spun-off (the "Spin-off") from its
parent company, General Instrument Corporation (the "Distributing Company"),
through a distribution of the Company's shares to the then stockholders of the
Distributing Company. Upon the Spin-off, the Distributing Company changed its
corporate name to General Semiconductor, Inc. On February 2, 1998, NextLevel
Systems, Inc. (which was also spun-off from the Distributing Company) changed
its name to General Instrument Corporation.
-1-
<PAGE>
VOTING AND REVOCATION OF PROXIES
Only holders of record of shares of Common Stock as of the close of
business on the Annual Meeting Record Date will be entitled to notice of and to
vote at the Annual Meeting or any adjournment thereof. The presence, either in
person or by properly executed proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting and to permit action to be taken by the stockholders at the
Annual Meeting.
The affirmative vote of a plurality of the shares of Common Stock entitled
to vote thereon, present in person or represented by proxy, at the Annual
Meeting is required to elect the directors nominated pursuant to Proposal One.
The affirmative vote of a majority of the votes cast on each of Proposals Two
and Three is required to approve such proposals, provided that the total votes
cast on each such proposal represents a majority of the shares entitled to vote
on such proposals. The affirmative vote of a majority of the shares of Common
Stock entitled to vote thereon, present in person or represented by proxy, is
required to approve Proposal Four.
For purposes of determining the number of votes cast with respect to any
voting matter, only those cast "for" or "against" are included; abstentions and
broker non-votes are excluded. For purposes of determining whether the
affirmative vote of the holders of a majority of the shares entitled to vote on
a proposal and present at the Annual Meeting has been obtained, abstentions will
be included in, and broker non-votes will be excluded from, the number of shares
present and entitled to vote. Accordingly, abstentions will have the effect of a
vote "against" the matter (other than the election of directors) and broker
non-votes will have the effect of reducing the number of affirmative votes
required to achieve the majority vote.
All shares of Common Stock that are represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxies. If no instructions are indicated for a particular
proposal on a proxy, such proxy will be voted in accordance with the Board of
Directors' recommendations as set forth herein with respect to such proposal(s).
In the event that a quorum is not present at the time the Annual Meeting is
convened, or if for any other reason the Company believes that additional time
should be allowed for the solicitation of proxies, the stockholders entitled to
vote at the Annual Meeting, present in person or represented by proxy, will have
the power to adjourn the meeting from time to time, without notice other than
announcement at the meeting. If the Company proposes to adjourn the Annual
Meeting by a vote of the stockholders, the persons named in the enclosed form of
proxy will vote all shares of Common Stock for which they have voting authority
in favor of such adjournment.
Any stockholder who executes and returns a proxy may revoke it at any time
prior to the voting of the proxies by giving written notice to the Secretary of
the Company, by executing a later-day proxy, or by attending the Annual Meeting
in person and giving oral advice to the Secretary of the Company.
-2-
<PAGE>
PROPOSAL ONE: ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of six directors
divided into three classes, Class I, Class II and Class III, with members of
each class holding office for staggered three-year terms and until their
successors have been duly elected and qualified. There are currently: two Class
I Directors, whose terms expire at the Annual Meeting; two Class II Directors,
whose terms expire at the 1999 Annual Meeting of Stockholders; and two Class III
Directors, whose terms expire at the 2000 Annual Meeting of Stockholders (in all
cases subject to the election and qualification of their successors and to their
earlier death, resignation or removal).
If any one or more of the nominees is unable to serve for any reason or
withdraws from nomination, proxies will be voted for the substitute nominee or
nominees, if any, proposed by the Board of Directors. The Board of Directors has
no knowledge that any nominee will or may be unable to serve or will or may
withdraw from nomination. All of the following nominees are presently serving as
directors of the Company and have served since the Spin-off. Information
concerning the nominees for director is set forth below.
NOMINEES FOR TERMS ENDING AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS
BOYD L. GEORGE, age 56. Mr. George is Chairman of the Board and Chief
Executive Officer of Alex Lee, Inc. (subsidiaries of Alex Lee, Inc. include:
Merchants Distributors, Inc., a wholesale food distributor; Institution Food
House, a foodservice distributor; and Lowes Food Stores, Inc., a retail
operation). Mr. George has been Chairman and Chief Executive Officer of Alex
Lee, Inc. since the company was founded in 1992 and served as President from
1992 to 1995. Mr. George joined a subsidiary of Alex Lee, Inc. in 1969 and has
served, and continues to serve, in various positions, including President,
Chairman and Chief Executive Officer for such subsidiary.
GEORGE N. HUTTON, JR., age 68. Mr. Hutton is and has been a private
investor for more than 10 years. He is a former director of Sprint Corporation
and of M/A Com Inc.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" EACH OF THE
FOREGOING NOMINEES AS A DIRECTOR OF THE COMPANY. PROXIES WILL BE VOTED "FOR"
EACH OF THE FOREGOING NOMINEES AS A DIRECTOR OF THE COMPANY, UNLESS OTHERWISE
SPECIFIED IN THE PROXY.
-3-
<PAGE>
MANAGEMENT OF THE COMPANY
BOARD OF DIRECTORS OF THE COMPANY
The following table sets forth names, in alphabetical order, and
information as to the persons who currently serve as directors of the Company,
each of whom has served since the Spin-off.
<TABLE>
<CAPTION>
NAME, AGE AND CURRENT TERM
PRINCIPAL OCCUPATION EXPIRES INFORMATION
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Edward D. Breen, 43 1999 Edward D. Breen is Chairman and Chief Executive
Chairman and Chief Executive Officer Officer of General Instrument Corporation ("GI"). He
of General Instrument Corporation has served in such capacity since December 1997,
after having served as Acting Chief Executive Officer
and President of GI since October 1997. He was
President of the Distributing Company's Broadband
Networks Group from February 1996 and Vice President of
the Distributing Company from November 1994 until the
Spin-off. He continued in such positions for GI through
October 1997. He was Executive Vice President,
Terrestrial Systems of the Distributing Company, from
October 1994 to January 1996 and Senior Vice President
of Sales of the Distributing Company from June 1988 to
October 1994.
Frank M. Drendel, 53 2000 Frank M. Drendel has been Chairman and Chief Chairman
Chairman and Chief and Chief Executive Officer of the Company since the
Executive Officer of Spin-off. He served as a director of General Instrument
the Company Company Corporation of Delaware, Inc. ("GI Delaware"),
a subsidiary of the Distributing Company, and its
predecessors from 1987 to March 1992, and was a
director of the Distributing Company until the
Spin-off. He has served as President and Chairman of
CommScope, Inc. of North Carolina ("CommScope NC"),
currently a subsidiary of the Company, from 1986 to
1997, and Chief Executive Officer of CommScope NC since
1976. He is a director of GI and Nextel Communications,
Inc.
Nicholas C. Forstmann, 51 2000 Nicholas C. Forstmann served as a director of GI Delaware
General Partner, from August 1990 to March 1992, and was a director of
Forstmann Little & Co. the Distributing Company until the Spin-off. He has
been a General Partner of FLC Partnership, L.P., the
General Partner of Forstmann Little & Co., since he
co-founded Forstmann Little & Co. in 1978. He is a
director
-4-
<PAGE>
of Gulfstream Aerospace Corporation.
Boyd L. George, 56 Boyd L. George is Chairman of the Board and Chief Executive
Chairman of the Board Officer of Alex Lee, Inc. (subsidiaries of Alex Lee,
and Chief Executive Inc. include: Merchants Distributors, Inc., Alex Lee,
Officer of Alex Lee, Inc. a wholesale food distributor; Institution Food
Inc. House, a foodservice distributor; and Lowes Food
Stores, Inc., a retail operation). Mr. George has been
Chairman and Chief Executive Officer of Alex Lee, Inc.
since the company was founded in 1992 and served as
President from 1992 to 1995. Mr. George joined a
subsidiary of Alex Lee, Inc. in 1969 and has served,
and continues to serve, in various positions, including
President, Chairman and Chief Executive Officer for
such subsidiary.
George N. Hutton, Jr., 68 1998 George N. Hutton, Jr. is and has been a private
Private Investor investor for more than 10 years. He is a former
director of Sprint Corporation and of M/A Com Inc.
James N. Whitson, 64 1999 James N. Whitson has served as a director of Sammons
Director of various Enterprises, Inc. ("SEI"), a privately-owned company
organizations engaged in life insurance, industrial and oil field
distribution, equipment sales and rentals, and bottled
water, since 1973, and as Executive Vice President and
Chief Operating Officer of SEI from 1989 until March
1998 when he retired. He is a director/trustee of the
Seligman Group of Investment Companies and a director
of C-SPAN.
</TABLE>
COMPENSATION OF DIRECTORS
Employee directors (and nonemployee directors who are general partners in
partnerships affiliated with Forstmann Little & Co.) do not receive additional
compensation for serving on the Company's Board of Directors. Nonemployee
directors receive an annual retainer of $25,000, and committee chairmen receive
an additional $5,000 quarterly retainer. The nonemployee directors' remuneration
is paid quarterly unless payment is deferred. In addition, each nonemployee
director, upon initial election to the Board of Directors, receives 1,000 shares
of Common Stock that vest immediately and is granted an option to purchase
20,000 shares of Common Stock at an exercise price per share equal to the fair
market value on the date of grant, which option becomes exercisable with respect
to one-third of the underlying shares on each of the first three anniversaries
of the grant date. If a director remains in office, a similar option is granted
every three years.
-5-
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS - BOARD MEETINGS
The Board of Directors of the Company held 4 meetings in 1997. All
incumbent directors attended all of the meetings of the Board of Directors and
of the Board Committees on which they served.
The Company has Audit, Compensation and Executive Committees of the Board
of Directors. Members of the Audit and Compensation Committees are not employees
of the Company. The Company has no nominating or similar committee.
AUDIT COMMITTEE. The Audit Committee's principal functions are to review
the scope of the annual audit of the Company by its independent auditors, review
the annual financial statements of the Company and the related audit report as
prepared by the independent auditors, recommend the selection of independent
auditors each year and review any non-audit fees paid to the independent
auditors. The members of the Audit Committee are the following nonemployee
directors: Mr. Whitson, Chairman, Mr. Breen and Mr. George. The Audit Committee
held 1 meeting in 1997.
COMPENSATION COMMITTEE. The Compensation Committee administers the stock
option and incentive plans of the Company, and in this capacity it makes or
recommends option grants or awards under these plans. In addition, the
Compensation Committee makes recommendations to the Company's Board of Directors
with respect to the compensation of the Chief Executive Officer and determines
the compensation of the other senior executives. The Compensation Committee also
recommends the establishment of policies dealing with various compensation and
employee benefit plans for the Company. The members of the Compensation
Committee are the following nonemployee directors: Mr. Hutton, Jr., Chairman,
and Mr. Forstmann. The Compensation Committee held 3 meetings in 1997.
EXECUTIVE COMMITTEE. The Executive Committee has the authority to exercise
all powers and authority of the Company's Board of Directors that may be
lawfully delegated to it under Delaware law. It meets between regularly
scheduled meetings of the Company's Board of Directors to take such action as is
necessary for the efficient operation of the Company. The members of the
Executive Committee are: Mr. Drendel, Chairman, Mr. Breen and Mr. Forstmann. The
Executive Committee held no meetings in 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Distribution the Company entered into a Transition
Services Agreement with GI. Subsequent to the Distribution in 1997, GI provided
transition services to the Company and charged the Company approximately
$345,000 for such services in 1997. Frank M. Drendel, Chairman and Chief
Executive Officer of the Company, is a director of GI and Edward D. Breen,
Chairman and Chief Executive Officer of GI, is a director of the Company. The
Company believes that the terms of these transactions were no less favorable to
the Company than the terms which could be obtained from an unrelated third
party.
Mr. Drendel, is also a director of Nextel Communications, Inc., a leading
provider of fully integrated wireless communications and related all digital
wireless network. In 1997, Nextel Communications, Inc. purchased products from
the Company for an aggregate payment of approximately $1.7 million. The Company
believes the terms of these transactions are no less favorable to the Company
than the terms which could be obtained from an unrelated third party.
-6-
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers and
holders of more than 10% of the Common Stock to file with the Securities and
Exchange Commission (the "Commission") reports of ownership and changes in
ownership of Common Stock and other equity securities of the Company on Forms 3,
4 and 5. The Company undertakes to make such filings on behalf of its directors
and officers. Based on written representations of reporting persons and a review
of those reports, the Company believes that during the year ended December 31,
1997, its officers and directors and holders of more than 10% of the Common
Stock complied with all applicable Section 16(a) filing requirements.
EXECUTIVE OFFICER COMPENSATION
SUMMARY OF COMPENSATION. The table below sets forth a summary of the
compensation paid by the Company for the last three fiscal years to the Chief
Executive Officer of the Company and the four additional most highly compensated
executive officers of the Company (based, for the period prior to July 25, 1997,
on their historical compensation from the Distributing Company).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation(a) Options(#)(b) Compensation
--------------------------- ---- ------ ----- ----------------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
FRANK M. DRENDEL.............. 1997 $ 431,680 $ -0- $ -- 303,337 $ 14,707 (C)
CHAIRMAN AND CHIEF EXECUTIVE 1996 410,016 93,275 -- 43,558 17,796
OFFICER 1995 410,016 114,185 -- 43,558 19,937
BRIAN D. GARRETT........... 1997 $ 202,780 $ -0- $ -- 150,011 $ 14,630 (C)
PRESIDENT AND CHIEF OPERATING 1996 169,842 37,866 -- -- 16,603
OFFICER 1995 156,864 71,457 -- 39,202 21,844
JEARLD L. LEONHARDT........... 1997 $ 200,600 $ -0- $ -- 112,510 $ 13,079 (C)
EXECUTIVE VICE PRESIDENT, 1996 185,025 51,224 -- -- 17,198
FINANCE AND ADMINISTRATION 1995 179,400 17,456 -- 37,750 22,329
LARRY W. NELSON............... 1997 $ 208,864 $ -0- $ -- 102,916 $ 14,225 (C)
EXECUTIVE VICE PRESIDENT, 1996 205,092 71,208 -- -- 17,224
DEVELOPMENT 1995 198,912 22,119 -- 56,626 23,059
FRANK J. LOGAN................ 1997 $ 166,664 $ -0- $ -- 78,959 $ 13,886 (C)
EXECUTIVE VICE PRESIDENT, 1996 143,898 37,471 -- -- 15,113
INTERNATIONAL 1995 127,368 10,622 -- 27,588 18,237
</TABLE>
-7-
<PAGE>
- ------------------------------
(a) Unless otherwise indicated, with respect to any individual named in the
above table, the aggregate amount of perquisites and other personal
benefits, securities or property was less than the lesser of $50,000 or 10%
of the total annual salary and bonus reported for the named executive
officer.
(b) Reflects the number of shares of Common Stock underlying options granted.
Certain of these options were granted pursuant to the Distributing
Company's 1993 Long-Term Incentive Plan and were replaced with options for
Common Stock in connection with the Spin-off. The number of shares of
Common Stock covered by replacement options was calculated by dividing the
number of shares of the Distributing Company's Common Stock by 0.551, and
the exercise price of the options was determined by multiplying the
original exercise price by 0.551.
(c) Amounts for 1997 reflect (i) the matching contribution under the CommScope,
Inc. of North Carolina Savings Plan in the amount of $3,000, $4,574,
$2,967, $3,066 and $3,750 for 1997 on behalf of Messrs. Drendel, Garrett,
Leonhardt, Nelson and Logan, respectively (including 1996 contribution
adjustments made in 1997), (ii) the allocation of $9,628, $9,628, $9,628,
$9,628 and $9,236 to the account of Messrs. Drendel, Leonhardt, Nelson,
Garrett and Logan, respectively, under the Savings Plan for 1997 and (iii)
payment by the Company in 1997 of premiums of $2,079, $428, $484, $1,531
and $900 for term life insurance on behalf of Messrs. Drendel, Garrett,
Leonhardt, Nelson and Logan, respectively.
STOCK OPTIONS
GRANT OF OPTIONS. The table below sets forth information with respect to
grants of options to purchase Common Stock during the year ended December 31,
1997 to the executives listed in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(f)
----------------- --------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ----------- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Frank M. Drendel... 150,637 (a) 12.5% (d) $12.7419 01/10/07 $1,207,102 $3,059,032
152,700 (b) 9.1% (e) $12.0625 12/12/07 $1,158,389 $2,935,584
Brian D. Garrett... 44,411 (a) 3.7% (d) $12.7419 01/10/07 $355,880 $901,869
43,000 (c) 2.6% (e) $13.4380 10/17/07 $363,397 $920,919
62,600 (b) 3.7% (e) $12.0625 12/12/07 $474,887 $1,203,456
Jearld L. Leonhardt 49,910 (a) 4.2% (d) $12.7419 01/10/07 $399,944 $1,013,537
62,600 (b) 3.7% (e) $12.0625 12/12/07 $474,887 $1,203,456
Larry W. Nelson.... 62,216 (a) 5.2% (d) $12.7419 01/10/07 $498,556 $1,263,439
40,700 (b) 2.4% (e) $12.0625 12/12/07 $308,752 $782,438
Frank J. Logan..... 38,259 (a) 3.2% (d) $12.7419 01/10/07 $306,581 $776,937
40,700 (b) 2.4% (e) $12.0625 12/12/07 $308,752 $782,438
</TABLE>
(a) Represents options originally granted under the Distributing Company's
1993 Long-Term Incentive Plan and repriced by the Distributing Company as
of January 10, 1997 ("repriced options"). The number of shares and price
reported here reflect options to purchase Common Stock which replaced the
repriced options as of the Spin-off. The number of shares of Common Stock
covered by replacement options was calculated by dividing the number of
shares of the Distributing Company's Common Stock by 0.551, and the
exercise price of the options was determined by multiplying the original
exercise price by 0.551. Two- thirds of these options are currently
exercisable and the remaining one-third becomes exercisable on January
10, 1999.
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<PAGE>
(b) These options become exercisable with respect to one-quarter of the
shares covered thereby on December 12, 1998, 1999, 2000 and 2001.
(c) These options become exercisable with respect to one-third of the shares
covered thereby on October 17, 1998, 1999 and 2000.
(d) Percentages shown are based on a total of 1,202,495 options granted
(including repriced options) to employees of the Company during 1997,
while the Company was an indirect wholly-owned subsidiary of the
Distributing Company.
(e) Percentages are based on a total of 1,674,200 options granted to
employees of the Company during 1997 after the Spin-off.
(f) The assumed 5% and 10% annual rates of appreciation over the term of the
options are set forth in accordance with rules and regulations adopted by
the Commission and do not represent the Company's estimate of stock price
appreciation.
AGGREGATED OPTION EXERCISES AND YEAR-END VALUE. The following table sets
forth as of December 31, 1997, for each of the executives listed in the Summary
Compensation Table (i) the total number of unexercised options for Common Stock
(exercisable and unexercisable) held and (ii) the value of such options which
were in-the-money at December 31, 1997 (based on the difference between the
closing price of Common Stock at December 31, 1997 and the exercise price of the
option on such date).
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED STOCK IN-THE-MONEY STOCK
OPTIONS AT FISCAL YEAR-END OPTIONS AT FISCAL
(#)(A) YEAR-END ($)(B)
------ ---------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank M. Drendel... -- $ -- 175,139 274,297 $ 100,897 $ 345,976
Brian D. Garrett... -- -- 52,634 150,010 74,827 139,303
Jearld L. Leonhardt -- -- 57,927 112,025 105,367 136,118
Larry W. Nelson.... 5,400(c) 42,525 56,022 102.431 8,548 109,988
Frank J. Logan..... -- -- 40,716 79,443 72,903 93,533
</TABLE>
(a) Reflects the number of shares of Common Stock underlying options granted.
Certain of these options were granted pursuant to the Distributing
Company's 1993 Long-Term Incentive Plan and were replaced with options for
Common Stock in connection with the Spin-off. The number of shares of
Common Stock covered by replacement options was calculated by dividing the
number of shares of the Distributing Company's Common Stock by 0.551, and
the exercise price of the options was determined by multiplying the
original exercise price by 0.551. See the table above, "Option Grants in
Last Fiscal Year."
(b) Based on the difference between the closing price of $13.625 per share at
December 31, 1997, as reported on the NYSE Composite Tape and the exercise
price of the option on such date.
(c) On February 18, 1997, Mr. Nelson exercised an option for 5,400 shares of
the Distributing Company's Common Stock.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company maintains the CommScope, Inc. Supplemental Executive Retirement
Plan (the "SERP") for the benefit of certain executives of the Company and its
subsidiaries. The SERP provides for the payment of a monthly retirement (or
early retirement) benefit to participants who retire from the Company
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<PAGE>
on or after age 65 (or, for early retirement benefits, on or after age 55 with
ten years of service). All individuals who were participants in the SERP on
August 22, 1990, including Messrs. Drendel, Garrett, Leonhardt, Nelson and
Logan, are fully vested in their benefits under the SERP and, thus, could retire
prior to attaining age 65 (or age 55 in the case of early retirement) and
receive a deferred benefit.
The benefits provided under the SERP are payable over 15 years and are
equal to a specified percentage, which does not exceed 50%, of the participant's
highest consecutive 12 months earnings during the participant's final 60 months
of employment. Early retirement benefits are subject to actuarial reductions.
Based on compensation earned for the calendar year which ended December 31,
1997, the estimated annual benefit payable to Messrs. Drendel, Garrett,
Leonhardt, Nelson and Logan on or after attaining age 65 are $143,893, $67,593,
$66,867, $69,621, and $55,555, respectively.
EMPLOYMENT AGREEMENTS
In November 1988, Frank M. Drendel entered into an employment agreement
(the "Agreement") with GI Delaware and CommScope NC, providing for his
employment as President and Chief Executive Officer of CommScope NC for an
initial term ending on November 28, 1991. The Agreement provides for a minimum
salary, which is less than Mr. Drendel's current salary, and provides that Mr.
Drendel will participate in any management incentive compensation plan for
executive officers that CommScope NC maintains. Commencing on November 29, 1989,
subject to early termination by reason of death or disability or for cause (as
defined in the Agreement), the Agreement extends automatically so that the
remaining term is always two years, unless either party gives notice of
termination, in which case the Agreement will terminate two years from the date
of such notice. As of the date of this Proxy Statement, neither party has given
notice of termination. Pursuant to the Agreement, Mr. Drendel is eligible to
participate in all benefit plans available to other CommScope NC senior
executives. The Agreement prohibits Mr. Drendel, for a period of five years
following the term of the Agreement, from engaging in any business in
competition with the business of CommScope NC, in any country where CommScope NC
then conducts business. Effective as of the Spin-off, GI Delaware ceased to be a
party to the Agreement.
SEVERANCE PROTECTION AND SEPARATION AGREEMENTS
The Company has entered into severance protection agreements with its Chief
Executive Officer and its other executive officers. These agreements have a
two-year term which is automatically extended for one year upon the first
anniversary of the agreement and every anniversary thereafter unless
notification is given to either the Company or the executive.
The agreements provide severance pay and other benefits in the event of a
termination of employment within 24 months of a Change in Control (as defined in
the agreement) of the Company if such termination is (i) for any reason other
than by the Company for cause or disability or by reason of the executive's
death or (ii) by the executive for Good Reason (as defined in the agreement).
Such severance pay will be in an amount equal to two times the sum of the
executive's base salary and the highest bonus that would be payable to the
executive in the year of termination in the case of the Chief Executive Officer
and one and one-half times such sum in the case of all other executive officers.
In addition, the Company will pay the executive all accrued but unpaid
compensation and a PRO RATA bonus (calculated up to the executive's termination
date). The executive's benefits will be continued for either 24 months, in the
case of the Chief Executive Officer, or 18 months in the case of all other
executive officers (in each case, a "Continuation Period"). If, at the end of
the Continuation Period, the executive is not employed by another employer
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<PAGE>
(including self-employment), the executive will receive for up to six months, an
amount equal to one-twelfth (1/12) of the sum of the executive's base amount and
the executive's bonus amount. The executive will also receive limited
reimbursement for out placement, tax and financial planning assistance and
reimbursement for relocation under certain circumstances. The severance pay and
benefits provided for under the severance protection agreements shall be in lieu
of any other severance pay to which the executive may be entitled under any
severance plan or any other plan, agreement or arrangement of the Company or any
of its affiliates. If the executive's employment is terminated without cause (i)
within six months prior to a Change in Control or (ii) prior to the date of a
Change in Control but (A) at the request of a third party who effectuates a
Change in Control or (B) otherwise in connection with, or in anticipation of, a
threatened Change in Control which actually occurs, such termination shall be
deemed to have occurred after the Change in Control.
If the executive's employment is terminated by the Company for cause or
disability, by reason of the executive's death or by the executive other than
for Good Reason, the Company shall pay to the executive his accrued
compensation. In addition, in the case of a termination by the Company for
disability or due to the executive's death, the executive will receive a PRO
RATA bonus in addition to accrued compensation.
The agreements provide for a gross-up payment by the Company in the event
that the total payments the executive receives under the agreement or otherwise
are subject to the excise tax under Section 4999 of the Code. In such an event,
the Company will pay an additional amount so that the executive is made whole on
an after-tax basis from the effect of the excise tax.
COMPENSATION COMMITTEE REPORT ON COMPENSATION OF EXECUTIVE OFFICERS
The Compensation Committee of the Board of Directors is comprised entirely
of nonemployee directors. The Compensation Committee considers and recommends to
the Board of Directors the base salary to be paid to the Chief Executive
Officer, determines the base salary for all other executive officers, makes
recommendations to the Board of Directors with respect to the Company's overall
compensation policies, administers and grants awards under the CommScope, Inc.
Amended and Restated 1997 Long-Term Incentive Plan (the "1997 LTIP") and
administers the CommScope, Inc. Annual Incentive Plan (the "Annual Incentive
Plan") with respect to executive officers and performs such duties as the Board
of Directors may from time to time request.
In establishing and administering the Company's compensation policies and
programs, the Compensation Committee considered the compensation plans and
arrangements of the Distributing Company prior to the Spin-off, including the
levels of individual compensation and the recommendations and commitments made
by the Distributing Company and its Board of Directors with respect to the
Company, as set forth in the Distributing Company's Proxy Statement distributed
in connection with the Spin-off, as well as factors specifically relevant to the
Company. The basic objective of the Compensation Committee is to formulate
compensation policies and programs intended to attract, retain, and motivate
highly qualified key employees, including executive officers. Compensation of
executive officers and other key employees, including the Chief Executive
Officer, is comprised of three principal elements: (i) stock ownership, (ii)
base salary and (iii) annual bonuses.
STOCK OWNERSHIP. The Compensation Committee believes that executive
officers and other significant employees, who are in a position to make a
substantial contribution to the long-term success of the Company and to build
stockholder value, should have a significant stake in the Company's on-going
success. This focuses attention on managing the Company as an owner with an
equity position in the business and seeks to align these employees' interests
with the long-term interests of stockholders.
-11-
<PAGE>
Accordingly, one of the Company's principal methods to motivate executive
officers and other significant employees is through a broad and deep stock
option program.
The CommScope, Inc. 1997 Long-Term Incentive Plan was adopted by the
Company's Board of Directors, and GI Delaware as sole stockholder of the
Company, prior to the Spin-off. Effective upon the Spin-off, all of the
outstanding options for Distributing Company Common Stock held by employees of
the Company were replaced with substitute options for Common Stock in a manner
designed to preserve the economic value of such options, and to retain the
existing vesting and expiration dates. Subsequent to the Spin-off, during 1997,
the Company awarded options to purchase an aggregate of approximately 522,900
shares of Common Stock to 9 executive officers (including executive officers
named in the Summary Compensation Table). The exercise price of each of these
options as of the date of grant was the closing market price per share of Common
Stock on the date of grant. On February 12, 1998, the Board of Directors
approved the 1997 LTIP, including amendments thereto.
Management recommends to the Compensation Committee those executive
officers and other significant employees to whom options should be granted and
the number of options to be granted to them. The recommendations are based on a
review of each employee's individual performance, position and level of
responsibility in the Company, long-term potential contribution to the Company
and the number of options previously granted to the employee. Neither management
nor the Compensation Committee assigned specific weights to these factors,
although the executive's position and a subjective evaluation of his performance
were considered most important. Generally, the number of options granted to an
executive reflects his or her level of responsibility and position in the
Company.
To encourage key employees to remain in the employ of the Company, options
generally vest and become exercisable over a three- or four-year period and are
not exercisable until one year after the date of grant. It is expected that
future awards under the 1997 LTIP will be made periodically in furtherance of
goals described above.
BASE SALARY. The Compensation Committee believes that it is important to
pay reasonable and competitive salaries. Salaries paid to executive officers are
based on the Chief Executive Officer's recommendations to the Compensation
Committee, which is responsible for reviewing and approving or disapproving
those recommendations. Generally, an executive's base salary reflects his level
of responsibility and position in the Company.
Following the Spin-off, 9 executive officers (including executive officers
named in the Summary Compensation Table) received base salary increases in
connection with their new positions and increased responsibilities with the
Company effective September 1, 1997.
ANNUAL INCENTIVE BONUS. The Annual Incentive Plan is intended to provide a
means of annually rewarding certain key employees, including the executives
listed in the Summary Compensation Table, based on the performance of the
Company. In addition, awards for each officer (other than the Chief Executive
Officer) may be adjusted based on the officer's achievement of a personal
performance percentage. This approach allows management to focus on key business
objectives in the short-term, and to support the long-term performance
orientation of stock ownership.
Under the Annual Incentive Plan, in 1997 management recommended, and the
Compensation Committee established, for each executive officer a bonus target
percentage of that officer's salary. That percentage was based on the officer's
position in the Company and was the percentage of the officer's salary that
would be paid if the performance targets were met. The target award percentage
for executive
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<PAGE>
officers (other than the Chief Executive Officer) for 1997 ranged from 25% to
60%. The target award percentage for the Chief Executive Officer was 65%.
However, no awards will be paid to any executive officers in 1998 with respect
to performance in 1997.
CHIEF EXECUTIVE OFFICER COMPENSATION. Frank M. Drendel has served as
Chairman and Chief Executive Officer of the Company since the Spin-off.
Effective at September 1, 1997, the Board of Directors of the Company
established Mr. Drendel's 1997 annual salary rate at $475,000 and his target
bonus percentage under the Annual Incentive Plan of 65%. Prior to the Spin-off,
in 1997, Mr. Drendel served as Chairman, Chief Executive Officer and President
of CommScope NC and his annual salary rate was $410,000 and his target bonus
percentage under the Distributing Company's Annual Incentive Plan was 50%. On
December 12, 1997, Mr. Drendel was granted an option to purchase 152,700 shares
of Common Stock with a per share exercise price of $12.0625, the closing market
price of the Common Stock on the date of the grant.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), which was enacted in
1993, generally disallows a federal income tax deduction to any publicly held
corporation for compensation paid in excess of $1 million in any taxable year to
the chief executive officer or any of the four other most highly compensated
executive officers who are employed by the Company on the last day of the
taxable year. Section 162(m), however, does not disallow a federal income tax
deduction for qualified "performance-based compensation," the material terms of
which are disclosed to and approved by stockholders.
The Compensation Committee has considered the tax deductibility of
compensation awarded under the 1997 LTIP and the Annual Incentive Plan in light
of Section 162(m). A transition rule currently applies so that the compensation
attributable to options and restricted stock granted, and other compensation
paid, pursuant to the 1997 LTIP and compensation paid pursuant to the Annual
Incentive Plan prior to the 1999 Annual Meeting of Stockholders will qualify as
"performance-based compensation." The Company structured and intends to
administer the stock option, performance unit and performance share portions of
the 1997 LTIP with the intention that the resulting compensation payable
thereafter can qualify as "performance-based compensation" and would be
deductible. The Company has structured the Annual Incentive Plan with the
intention that awards payable thereafter to the Chief Executive Officer qualify
as "performance-based" compensation and, if so qualified, would be deductible.
The 1997 LTIP and the Annual Incentive Plan are being submitted to the Company's
stockholders for approval at the Annual Meeting. No executive officer's
compensation in 1997 exceeded $1 million. It is not expected that any executive
officer's compensation will be non-deductible in 1998 by reason of the
application of Section 162(m).
Respectfully submitted,
COMPENSATION COMMITTEE
George N. Hutton, Jr. Nicholas C. Forstmann
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<PAGE>
PERFORMANCE GRAPH
The following graph compares cumulative total return on $100 invested on
July 28, 1997, the first day the Common Stock began trading after the Spin-off,
in each of the Common Stock, the Standard & Poor's 500 Stock Index and the
Standard & Poor's 600 Communication Equipment Index. The return of the Standard
& Poor's indices is calculated assuming reinvestment of dividends. The Company
has not paid any dividends. The stock price performance shown on the graph below
does not include "when-issued" trading prior to the Spin-off and is not
necessarily indicative of future price performance.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
28-JUL-97 7/97 8/97 9/97 10/97 11/97 12/97
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMMSCOPE 100 104.07 112.2 88.21 71.54 71.13 88.62
- -------------------------------------------------------------------------------------------------------------------
S&P 600 COMMUNICATION EQUIPMENT INDEX 100 101.82 107.5 116.74 98.86 91.65 90.22
- -------------------------------------------------------------------------------------------------------------------
S&P 500 INDEX 100 101.02 95.36 100.58 97.22 101.72 103.47
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
*$100 INVESTED ON JULY 28, 1997--INCLUDING REINVESTMENT OF DIVIDENDS.
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<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The table below sets forth information as to the beneficial ownership of
Common Stock as of the Annual Meeting Record Date (except as otherwise
specified) by all directors and the persons listed in the Summary Compensation
Table as well as by directors and executive officers of the Company as a group
and, to the best knowledge of the Company's management, beneficial owners of 5%
or more of the outstanding Common Stock.
<TABLE>
<CAPTION>
Shares of Common % of Shares Outstanding
Name Stock Beneficially Owned(1) Beneficially Owned
- -------------------------------------- --------------------------- ------------------------
<S> <C> <C>
MBO-IV(2) 3,387,219 6.9
Instrument Partners(2) 3,849,002 7.8
Brinson Partners, Inc.(3) 4,821,737 9.8
J.P. Morgan & Co. Incorporated(4) 2,456,604 5.0
Reich & Tang Asset Management LP(5) 2,773,200 5.6
Edward D. Breen(6) 1,877 *
Frank M. Drendel(7)(13) 529,006 1.1
Nicholas C. Forstmann(2) 7,236,221 14.7
Theodore J. Forstmann(2) 7,236,221 14.7
Brian D. Garrett(8)(13) 84,052 *
Boyd L. George(9) 7,000 *
Winston W. Hutchins(2) 7,236,221 14.7
George N. Hutton, Jr. 1,333 *
Steven B. Klinsky(2) 7,236,221 14.7
Jearld L. Leonhardt(10)(13) 98,054 *
Wm. Brian Little(2) 3,849,002 7.8
Frank J. Logan(11)(13) 58,533 *
Larry W. Nelson(12)(13) 82,904 *
John A. Sprague(2) 3,849,002 7.8
James N. Whitson 1,000 *
All current directors and executive officers
of the Company as a group
(14 persons)(2)(14) 8,233,327 16.8
</TABLE>
* The percentage of shares of the Common Stock beneficially owned does not
exceed one percent of the shares of Common Stock outstanding.
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock which such person has
the right to acquire within 60 days following March 16, 1998. For purposes
of computing the percentage of outstanding shares of Common Stock held by
each person or group of persons named above, any security which such person
or persons has or have the right to acquire within 60 days following March
16, 1998 is deemed to be outstanding, but is not deemed to be outstanding
for the purpose of computing the percentage ownership of any other person.
The table does not include shares of Common Stock subject to options to be
awarded in the future under the 1997 LTIP.
(2) The general partner of Instrument Partners, a New York limited partnership
("Instrument Partners"), is FLC XXII Partnership, a general partnership of
which Messrs. Wm. Brian Little, Nicholas C. Forstmann, John A. Sprague,
Steven B. Klinsky and Winston W. Hutchins, and TJ/JA L.P., a Delaware
limited partnership ("TJ/JA L.P."), are general partners.
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<PAGE>
The general partner of TJ/JA L.P. is Theodore J. Forstmann. The general
partner of Forstmann Little & Co. Subordinated Debt and Equity Management
Buyout Partnership-IV, a New York limited partnership ("MBO-IV"), is FLC
Partnership, L.P., a New York limited partnership of which Messrs. Theodore
J. Forstmann, Nicholas C. Forstmann, Steven B. Klinsky, Winston W.
Hutchins, Ms. Sandra J. Horbach and Mr. Thomas H. Lister are general
partners. Accordingly, each of such individuals and partnerships (other
than Ms. Horbach and Mr. Lister, for the reasons described below) may be
deemed the beneficial owners of shares owned by MBO-IV and Instrument
Partners in which such individual or partnership is a general partner and,
for purposes of this table, such beneficial ownership is included. Ms.
Horbach and Mr. Lister do not have any voting or investment power with
respect to, or any economic interest in, the shares of Common Stock held by
MBO-IV; and, accordingly Ms. Horbach and Mr. Lister are not deemed to be
beneficial owners thereof. Theodore J. Forstmann and Nicholas C. Forstmann
are brothers. Mr. Little is a special limited partner in FLC Partnership,
L.P. and each of FLC Partnership, L.P. and FLC XXII Partnership is a
limited partner of Instrument Partners. None of the other limited partners
in each of MBO-IV and Instrument Partners is otherwise affiliated with the
Company or Forstmann Little & Co. The address of MBO-IV and Instrument
Partners is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, New
York 10153.
(3) This information is obtained from a Schedule 13G, dated February 11, 1998,
filed with the Commission by Brinson Partners, Inc. ("BPI") on behalf of
itself, Brinson Holdings, Inc. ("BHI"), SBC Holding (USA), Inc. ("SBUSA")
and Swiss Bank Corporation ("SBC"). The Schedule 13G states that: BPI is a
wholly owned subsidiary of BHI; BHI is a wholly owned subsidiary of SBUSA;
and SBUSA is a wholly owned subsidiary of SBC. BPI reports beneficial
ownership of 4,801,659 shares of Common Stock and claims shared voting
power and shared dispositive power with respect to all of such shares. BHI
reports beneficial ownership of 4,801,659 shares of Common Stock and claims
shared voting power and shared dispositive power with respect to all of
such shares. SBUSA reports beneficial ownership of 4,821,737 shares of
Common Stock and claims shared voting power and shared dispositive power
with respect to all of such shares. SBC reports beneficial ownership of
4,821,737 shares of Common Stock and claims shared voting power and shared
dispositive power with respect to all such shares. The Schedule 13G states
that by virtue of their corporate relationships SBC, SBUSA, BHI and BPI may
be deemed to beneficially own and have the power to dispose and vote or
direct the disposition or voting of the Common Stock held by BPI. BPI and
BHI's principal business office is located at 209 South LaSalle, Chicago,
Illinois 60604-1295. SBUSA's principal business office is located at 222
Broadway, New York, New York 10038. SBC's principal business office is
located at Aeschemplatz 6, CH-4022, Basel, Switzerland.
(4) This information is obtained from a Schedule 13G, dated February 17, 1998,
filed with the Commission by J.P. Morgan & Co. Incorporated ("J.P.
Morgan"). J.P. Morgan reports beneficial ownership of 2,456,604 shares of
Common Stock. J.P. Morgan claims sole voting power with respect to
1,903,626 shares, shared voting power with respect to 33 shares, sole
dispositive power with respect to 2,446,205 shares and shared dispositive
power with respect to 10,366 shares. J.P. Morgan's principal business
office is located at 60 Wall Street, New York, New York 10260.
(5) This information is obtained from a Schedule 13G, dated February 13, 1998,
filed with the Commission by Reich & Tang Asset Management LP ("Reich &
Tang"). Reich & Tang reports beneficial ownership of 2,773,200 shares of
Common Stock. Reich & Tang claims shared voting power with respect to all
2,773,200 shares and shared dispositive power with respect to all 2,773,200
shares. Reich & Tang's principal business office is located at 600 5th
Avenue, New York, New York 10020.
(6) Includes 877 shares of Common Stock which were held by the trustee of the
General Instrument Corporation Savings Plan and were allocated to the
account of Mr. Breen as of March 5, 1998.
(7) Includes 225,353 shares subject to options which are exercisable for Common
Stock currently or within 60 days of March 16, 1998. Also includes 100
shares held by a child of Frank M. Drendel and 100 shares held by the
spouse of Frank M. Drendel.
(8) Includes 67,438 shares subject to options which are exercisable for Common
Stock currently or within 60 days of March 16, 1998.
(9) Includes 2,000 shares of Common Stock held by the children of Boyd L.
George, as to which shares Boyd L. George disclaims beneficial ownership.
(10) Includes 74,564 shares subject to options which are exercisable for Common
Stock currently or within 60 days of March 16, 1998. Also includes 1,000
shares held by the spouse of Jearld L. Leonhardt.
(11) Includes 53,469 shares subject to options which are exercisable for Common
Stock currently or within 60 days of March 16, 1998.
-16-
<PAGE>
(12) Includes 76,761 shares subject to options which are exercisable for Common
Stock currently or within 60 days of March 16, 1998.
(13) Includes the number of shares of Common Stock which were held by the
trustee of the Savings Plan and were allocated to the individual's
respective account under the Savings Plan as of March 5, 1998 as follows:
Frank M. Drendel, 341 shares; Brian D. Garrett, 414 shares; Jearld L.
Leonhardt, 1,041 shares; Frank J.
Logan, 297 shares; and Larry W. Nelson, 1,077 shares.
(14) Includes 604,381 shares subject to options which are exercisable for Common
Stock currently or within 60 days of March 16, 1998. Includes an aggregate
of 7,136 shares of Common Stock which were held by the trustees of the
Savings Plan and were allocated to the current officers' respective
accounts under the Savings Plan as of March 5, 1998. Also includes 877
shares of Common Stock which were held by the trustee of the General
Instrument Corporation Savings Plan and were allocated to the account of
Edward D. Breen under the General Instrument Corporation Savings Plan as of
March 5, 1998.
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<PAGE>
PROPOSAL TWO: APPROVAL OF THE COMMSCOPE, INC. AMENDED AND RESTATED
1997 LONG-TERM INCENTIVE PLAN
GENERAL
The CommScope, Inc. 1997 Long-Term Incentive Plan was approved by the
Company's Board of Directors and GI Delaware, as sole stockholder of the
Company, prior to the Spin-off. The Board of Directors of the Company approved
an amendment and restatement of this plan, the CommScope, Inc. Amended and
Restated 1997 Long-Term Incentive Plan (the "1997 LTIP"), on February 12, 1998,
subject to stockholder approval at the Annual Meeting. The 1997 LTIP, among
other things, increases the number of shares of Common Stock available for grant
under the plan by 2.4 million shares (the "Additional Shares"). Prior to the
amendment and restatement of the plan, as of March 5, 1998, only approximately
524,350 shares of Common Stock were available for future grant.
The 1997 LTIP provides for the granting of stock options, restricted stock,
performance units, performance shares, and phantom stock to employees of the
Company and its Subsidiaries and the granting of stock options and stock awards
to certain nonemployee directors (collectively or individually, "Awards").
The Company now submits the 1997 LTIP for stockholder approval. If such
stockholder approval is not obtained, no Awards will be granted in respect of
Additional Shares. Moreover, stockholder approval is being sought so that the
compensation attributable to options and certain other Awards granted after the
1999 Annual Meeting of Stockholders may qualify as "performance-based
compensation" for purposes of Section 162(m) of the Code (see "Certain Federal
Income Tax Consequences Relating to Awards under the 1997 LTIP," below).
The principal provisions of the 1997 LTIP are summarized below. This
summary, however, does not purport to be complete and is qualified in its
entirety by the terms of the 1997 LTIP, included as Annex A to this Proxy
Statement. All capitalized terms used below and not defined herein have the
meaning set forth in the 1997 LTIP, unless otherwise indicated.
PURPOSE OF THE 1997 LTIP
The Company Board of Directors believes that Awards will provide a means by
which employees and directors of the Company and its Subsidiaries can acquire
and maintain stock ownership, thereby strengthening their commitment to the
success of the Company and its Subsidiaries and their desire to remain employed
by the Company and its Subsidiaries, focusing their attention on managing the
Company as equity owners, and aligning their interest with those of the
Company's stockholders. The 1997 LTIP is also intended to attract and retain
employees and to provide those employees with additional incentive and reward
opportunities designed to encourage them to enhance the profitable growth of the
Company and its Subsidiaries.
DESCRIPTION OF THE 1997 LTIP
The 1997 LTIP will be administered initially by the Committee, consisting
of at least two directors of the Company who are "nonemployee directors' within
the meaning of Rule 16b-3 promulgated under Section 16(b) of the Exchange Act,
but the number of directors of the Committee may be changed in accordance with
law. In addition, with respect to Awards to be granted to participants who are
not subject
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<PAGE>
to Section 16 of the Exchange Act, the authority of the Committee may be
exercised by the full Board or by a committee, consisting of at least one
individual, appointed by the Board. The Committee will (i) select those
employees to whom Awards will be granted, and (ii) determine the type, size and
the terms and conditions of Awards, including the per share purchase price of
restricted stock and Options, and the restrictions or performance criteria
relating to restricted stock, phantom stock, performance units and performance
shares. The Committee will also construe and interpret the 1997 LTIP. The
Committee will have the authority to cancel outstanding Awards and make
adjustments to outstanding Awards with the consent of the Grantee and to
accelerate the exercisability of Awards or to waive the restrictions and
conditions applicable to Awards.
The maximum number of shares of Common Stock that may be made the subject
of Options and Awards granted under the 1997 LTIP is 4.6 million (in addition to
the Substitute and Spin-off Options that, as described below, were issued
pursuant to the 1997 LTIP in connection with the Spin-off); PROVIDED, HOWEVER,
that in the aggregate, not more than 200,000 shares of Common Stock may be made
the subject of Awards other than Options. The maximum number of Shares with
respect to which Options (other than Substitute and Spin-off Options) and Awards
may be granted to any individual in any three calendar year period is 500,000.
The maximum dollar amount of cash or the Fair Market Value of shares of Common
Stock that may be granted to any individual in any calendar year with respect to
Performance Units denominated in dollars may not exceed $1 million. In the event
of a Change in Capitalization, however, the Committee may adjust the maximum
number and class of shares which are subject to outstanding Awards and the
purchase price therefor. In addition, if any Award (including the Substitute and
Spin-off Options) is canceled or expires or terminates without having been
exercised, the shares of Common Stock subject to that Company Award again become
available for granting under the 1997 LTIP. If any Option is exercised by
tendering shares of Common Stock, either actually or by attestation, to the
Company as full or partial payment of the exercise price, the maximum number of
Shares available under the 1997 LTIP will be increased by the number of shares
so tendered. In addition, if any Award is canceled, is settled in cash
(including the settlement of tax withholding obligations using shares of Common
Stock) or expires or terminates without having been exercised, the shares
subject to that Option or Award again become available for grant under the 1997
LTIP.
ELIGIBILITY
Any of the Company's and its Subsidiaries' approximately 2,500 employees
and any of the Company's nonemployee directors are eligible to participate in
the 1997 LTIP.
OPTIONS
Pursuant to the 1997 LTIP, the Committee will grant to each nonemployee
director of the Company (other than a director who is a general partner of a
Forstmann Little Company) Nonqualified Stock Options to purchase 20,000 shares
of Common Stock in connection with his or her initial election to the Board and
an additional Option in respect of 20,000 shares of Common Stock on each third
anniversary of each nonemployee director's (other than a director who is a
general partner of a Forstmann Little Company) first appointment to the Board,
if such nonemployee director is still serving on the Board ("Formula Director
Options"). The per share exercise price of the Formula Director Options is equal
to 100% of the Fair Market Value on the Grant Date. Each Formula Director Option
will have a ten year term and will become exercisable with respect to one-third
of the underlying shares on each of the first, second and third anniversaries of
the Grant Date. If a nonemployee director ceases to serve as a director of the
Company for any reason, his or her Formula Director Options will be exercisable,
during their remaining terms, to the extent that they were exercisable on the
date the director ceased to serve as a director.
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In addition, the Committee may grant Nonqualified Stock Options and
Incentive Stock Options to any eligible employee of the Company or its
Subsidiaries. The per share exercise price of the Options is fixed by the
Committee when the Options are granted and must be at least, and in the case of
Options granted to nonemployee directors will be, 100% of the Fair Market Value
of the Common Stock on the Option Grant Date (110% in the case of an Incentive
Stock Option granted to a 10% owner).
Each Option (other than Formula Director Options) will be exercisable at
the times and in the installments determined by the Committee, commencing not
earlier than the first anniversary of the Option Grant Date. All outstanding
Options will become fully exercisable upon a Change in Control. A "Change of
Control" under the 1997 LTIP means, generally: (i) the acquisition by any
person, other than the Forstmann Little Companies, of beneficial ownership of
(A) voting securities resulting in such person beneficially owning 33% or more
of the combined voting power of the Company's then outstanding voting
securities, and (B) a number of voting securities greater than the aggregate
number then beneficially owned by the Forstmann Little Companies; (ii) the
individuals who, as of July 23, 1997, the date the 1997 LTIP was adopted, are
members of the Board (the "Incumbent Board") cease for any reason to constitute
at least two-thirds of the Board; or (iii) approval by stockholders of the
Company of: (A) a merger, consolidation or reorganization involving the Company
unless: (1) the stockholders of the Company, immediately before such merger,
consolidation etc. own, following such merger, consolidation or reorganization
at least a majority of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger, consolidation or
reorganization in substantially the same proportion as before the merger,
consolidation or reorganization; and (2) the members of the Incumbent Board
immediately prior to the merger, consolidation or reorganization constitute at
least a majority of the Board of the surviving corporation; and (3) no person
has beneficial ownership of 33% or more of the combined voting power of the
surviving corporation's then outstanding voting securities; (B) a complete
liquidation or dissolution of the Company; or (C) the disposition of all or
substantially all of the assets of the Company.
In addition, the Committee reserves the authority to accelerate the
exercisability of any Option (other than Formula Director Options). Each Option
(other than Formula Director Options) terminates at the time determined by the
Committee, except that the term of each Option may not exceed ten years (five
years in the case of an Incentive Stock Option granted to a 10% owner). Options
are not transferable by the Grantee except by will or the laws of descent and
distribution or pursuant to a domestic relations order (within the meaning of
Rule 16a-12 promulgated under the Exchange Act) and may be exercised during the
Grantee's lifetime only by the Grantee or the Grantee's guardian or legal
representative; PROVIDED, HOWEVER, that the Committee may set forth in the Award
Agreement evidencing an Award (other than an Incentive Stock Option) at the time
of the grant or thereafter, that the Award may be transferred to members of the
Grantee's immediate family, to trusts solely for the benefit of such immediate
family members and to partnerships in which such family members and/or trusts
are the only partners. In the discretion of the Committee, the purchase price
for shares acquired pursuant to the exercise of an option may be paid (i) in
cash, (ii) by transferring shares of unrestricted Common Stock to the Company,
or (iii) by a combination of the foregoing.
RESTRICTED STOCK
The Committee will determine when each restricted stock Award is made, the
terms of the restricted stock Award, including the price, if any, to be paid by
the Grantee for the restricted stock, the restrictions placed on the shares and
the time or times when the restrictions will lapse, provided, however, that,
except in the case of shares of restricted stock issued in full or partial
settlement of another Award or other earned compensation, or in the event of the
Grantee's termination of employment, as determined by the Committee and set
forth in an Agreement, such restrictions shall not lapse prior to the third
anniversary of the Grant
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Date. In addition, when restricted stock is granted under the 1997 LTIP, the
Committee may, in its discretion, decide: (i) whether dividends paid on the
restricted stock will be remitted to the Grantee or deferred until the
restrictions on the restricted stock Award lapse; (ii) whether any deferred
dividends will be invested in additional shares of the Common Stock; (iii)
whether interest will be accrued on any dividends not reinvested in additional
shares of restricted stock; (iv) whether any dividends paid on the restricted
stock Award will be subject to the restrictions applicable to the restricted
stock Award; and (v) whether, and to what extent, the restrictions on the
restricted stock shall lapse upon a Change in Control.
PERFORMANCE UNITS AND PERFORMANCE SHARES
The Committee may grant performance units or performance shares to any
eligible individual. Before the grant of any performance unit or performance
share, the Committee will (i) designate a Measuring Period, of not less than one
year nor more than five years, for the measurement of the extent to which
performance goals are attained; (ii) determine performance goals applicable to
such grant; and (iii) assign a Performance Percentage to each level of
attainment of performance goals during the Measuring Period. The performance
goals applicable to performance units or performance shares may, in the
discretion of the Committee, be based on earnings per share, operating income,
return on equity or assets, cash flow, EBITDA or any combination of the
foregoing. Such performance goals may be absolute or relative (to prior
performance or to the performance of one or more other entities or external
indices) and may be expressed in terms of a progression within a specified
range. At the time of grant or at any time thereafter, in either case to the
extent permitted under Section 162(m) of the Code and the regulations thereunder
without adversely affecting the treatment of the performance unit or performance
share as Performance-Based Compensation, the Committee may provide for the
manner in which performance will be measured against the performance goals (or
may adjust the performance goals) to reflect the impact of specified corporate
transactions, special charges, foreign currency effects, accounting or tax law
changes and other extraordinary or nonrecurring events. Prior to the vesting,
payment, settlement or lapsing of any restrictions with respect to any
performance unit or performance share that is intended to constitute
Performance-Based Compensation made to a Grantee who is subject to Section
162(m) of the Code, the Committee shall certify in writing that the applicable
performance goals have been satisfied. The agreements evidencing Awards of
performance units and performance shares will set forth the terms and conditions
of Awards, including those applicable in the event of the Grantee's Termination
of Employment or a Change of Control. Performance units may be denominated in
dollars or in shares of Common Stock, and payments in respect of vested
performance units will be made in cash, shares of Common Stock or any
combination of the foregoing, as determined by the Committee. Performance shares
are initially denominated in shares of Common Stock, but the Committee may
ultimately settle performance share Awards in cash, shares of Common Stock or a
combination thereof, at its discretion.
PHANTOM STOCK
The Committee may grant phantom stock to employees employed outside the
United States, subject to the terms and conditions established by the Committee.
Upon the vesting of a phantom stock Award, the Grantee will be entitled to
receive a cash payment in respect of each share of phantom stock equal to the
Fair Market Value of a share of Common Stock as of the date the phantom stock
Award was granted or such other date as determined by the Committee when the
phantom stock Award was granted. The Committee may, when a phantom stock Award
is granted, provide a limitation on the amount payable in respect of each share
of phantom stock.
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TANDEM AWARDS
The 1997 LTIP provides that the Committee may grant any Award in tandem
with another Award. Unless otherwise provided by the Committee, upon the
exercise, payment or forfeiture of one tandem Award, the related tandem Award
will be canceled to the extent of the number of shares as to which the tandem
Award is so exercised, paid or forfeited.
AMENDMENT AND TERMINATION
The 1997 LTIP will terminate on July 23, 2007, the tenth anniversary of its
adoption. However, the Board of the Directors may sooner terminate or amend the
1997 LTIP at any time without stockholder approval, except where stockholder
approval is required to retain the favorable tax treatment of Incentive Stock
Options under the Code, to qualify the shares offered under the 1997 LTIP for
listing on any securities exchange, or as otherwise required by law. The
termination of the 1997 LTIP will not affect then outstanding Awards.
SUBSTITUTE OPTIONS AND SPIN-OFF OPTIONS
On August 1, 1997, Substitute Options were issued under the 1997 LTIP to
officers, key employees and certain nonemployee directors of the Company and
Spin-off Options were issued to certain former directors of the Distributing
Company to replace options awarded under the Distributing Company's 1993
Long-Term Incentive Plan. The terms and conditions of each Substitute and
Spin-off Option issued under the 1997 LTIP, including, without limitation, the
time or times when, and the manner in which, each shall be exercisable, the
duration of the exercise period, the permitted method of exercise, settlement
and payment, and the rules that shall apply in the event of termination of
employment, were the same as those of the surrendered award it replaced.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES RELATING TO AWARDS UNDER THE 1997 LTIP
Incentive Stock Option ("ISO"). In general, a Grantee will not recognize
taxable income upon the grant or exercise of an ISO, and the Company and its
Subsidiaries will not be entitled to any business expense deduction with respect
to the grant or exercise of an ISO. (However, upon the exercise of an ISO, the
excess of the Fair Market Value on the date of exercise of the shares received
over the exercise price of the option will be treated as an adjustment to
alternative minimum taxable income.) In order for the exercise of an ISO to
qualify as an ISO, a Grantee generally must be an employee of the Company or a
subsidiary (within the meaning of Section 422 of the Code) from the date the ISO
is granted through the date three months before the date of exercise (one year
preceding the date of exercise in the case of an Grantee whose employment is
terminated due to disability). The employment requirement does not apply where a
Grantee's employment is terminated due to his or her death.
If a Grantee has held the shares acquired upon exercise of an ISO for at
least two years after the date of grant and for at least one year after the date
of exercise, when the Grantee disposes of the shares, the difference, if any,
between the sales price of the shares and the exercise price of the option will
be treated as long-term capital gain or loss subject to reduced rates of tax,
provided that any gain will be subject to further reduced rates of tax if shares
are held for more than eighteen months after the date of exercise. If a Grantee
disposes of the shares prior to satisfying these holding period requirements (a
"Disqualifying Disposition"), the Grantee will recognize ordinary income
(treated as compensation) at the time of the Disqualifying Disposition,
generally in an amount equal to the excess of the Fair Market Value of the
shares at the time the option was exercised over the exercise price of the
option. The balance of the gain
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realized, if any, will be short-term or long-term capital gain, depending upon
whether the shares have been held for at least twelve months after the date of
exercise, with the lowest capital gain rates available if shares are held for
more than eighteen months after the date of exercise. If the Grantee sells the
shares in a Disqualifying Disposition at a price below the Fair Market Value of
the shares at the time the option was exercised, the amount of ordinary income
(treated as compensation) will be limited to the amount realized on the sale
over the exercise price of the option. In general, if the Company and its
Subsidiaries comply with applicable income reporting requirements, the Company
and its Subsidiaries will be allowed a business expense deduction to the extent
a Grantee recognizes ordinary income.
Nonqualified Stock Option. In general, a Grantee who receives a
Nonqualified Stock Option will recognize no income at the time of the grant of
the option. In general, upon exercise of a Nonqualified Stock Option, a Grantee
will recognize ordinary income (treated as compensation) in an amount equal to
the excess of the Fair Market Value of the shares on the date of exercise over
the exercise price of the option. The basis in shares acquired upon exercise of
a Nonqualified Stock Option will equal the Fair Market Value of such shares at
the time of exercise, and the holding period of the shares (for capital gain
purposes) will begin on the date of exercise. In general, if the Company and its
Subsidiaries comply with applicable income reporting requirements, they will be
entitled to a business expense deduction in the same amount and at the same time
as the Grantee recognizes ordinary income. In the event of a sale of the shares
received upon the exercise of a Nonqualified Stock Option, any appreciation or
depreciation after the exercise date generally will be taxed as capital gain or
loss, provided that any gain will be subject to reduced rates of tax if the
shares were held for more than twelve months and will be subject to further
reduced rates if the shares were held for more than eighteen months. Special
rules may apply with respect to persons who may be subject to Section 16(b) of
the Exchange Act.
Excise Taxes. Under certain circumstances, the accelerated vesting or
exercise of options in connection with a Change in Control might be deemed an
"excess parachute payment" for purposes of the golden parachute tax provisions
of Section 280G of the Code. To the extent it is so considered, a Grantee may be
subject to a 20% excise tax and the Company and its Subsidiaries may be denied a
tax deduction.
Section 162(m) of the Code generally disallows a federal income tax
deduction to any publicly-held corporation for compensations paid in excess of
$1 million in any taxable year to the chief executive officer or any of the four
other most highly compensated executive officers who are employed by the Company
on the last day of the taxable year, but does not disallow a deduction for
qualified "performance-based compensation," the material terms of which are
disclosed to and approved by stockholders. A transition rule currently applies
so that the compensation attributable to options and restricted stock granted,
and other compensation paid, pursuant to the 1997 LTIP prior to the 1999 Annual
Meeting of Stockholders will qualify as "performance-based compensation." The
Company has structured the 1997 LTIP with the intention that compensation
resulting from Options, and performance shares and performance units payable
thereafter, can qualify as "performance-based compensation" and, if so
qualified, would be deductible. Such treatment is subject to, among other
things, stockholder approval of the 1997 LTIP and accordingly the Company is
seeking such approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL TWO TO QUALIFY
CERTAIN COMPENSATION PAID UNDER THE 1997 LTIP FOR TAX DEDUCTIBILITY UNDER
SECTION 162(M) OF THE CODE. PROXIES WILL BE VOTED "FOR" APPROVAL OF THE 1997
LTIP UNLESS OTHERWISE SPECIFIED IN THE PROXY.
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PROPOSAL THREE: APPROVAL OF THE COMMSCOPE, INC. ANNUAL INCENTIVE PLAN
GENERAL
The Annual Incentive Plan, as amended to date, was approved by the Board
and the Compensation Committee on February 12, 1998. The Annual Incentive Plan
is intended to provide a means of annually rewarding certain employees based on
the performance of the Company and/or its Operating Units. The Annual Incentive
Plan is designed to qualify the compensation payable to the Company's Chief
Executive Officer ("CEO") under the Annual Incentive Plan as "performance-based
compensation" eligible for exclusion from the tax deduction limitation of
Section 162(m) of the Code. See "Certain Federal Income Tax Consequences,"
below. To qualify for this exclusion, the Company is disclosing to stockholders
the material terms of the performance goals under the Annual Incentive Plan and
is seeking their approval. The approval by stockholders, and certification by
the Compensation Committee that the performance goals and other material terms
were in fact satisfied, will be a condition to the payment of compensation to
the CEO pursuant to the Annual Incentive Plan.
The principal provisions of the Annual Incentive Plan are summarized below.
This summary, however, does not purport to be complete and is qualified in its
entirety by the terms of the Annual Incentive Plan, included as Annex B to this
Proxy Statement. All capitalized terms used below and not otherwise defined
herein have the meaning set forth in the Annual Incentive Plan, unless otherwise
indicated.
PURPOSE OF ANNUAL INCENTIVE PLAN
The purpose of the Annual Incentive Plan is to enhance the Company's
ability to attract, motivate, reward and retain key employees, to strengthen
their commitment to the success of the Company and to align their interests with
those of the Company's stockholders by providing additional compensation to
designated key employees of the Company based on the achievement of performance
objectives. To this end, the Annual Incentive Plan provides a means of annually
rewarding participants primarily based on the performance of the Company and/or
its Operating Units and secondarily based on the achievement of personal
performance objectives. The adoption of this Plan as it relates to the CEO is
subject to the approval of the stockholders of the Company.
ELIGIBILITY
Any of the Company's and its Subsidiaries approximately 400 exempt
employees are currently eligible to participate in the Annual Incentive Plan for
any Performance Period. However, participation is generally limited to those key
Employees who, because of their significant impact on the current and future
success of the Company, the Compensation Committee or CEO selects.
Generally, to be eligible to participate in the Annual Incentive Plan in
any Performance Period an Employee shall have had at least three months active
tenure during such Performance Period and be actively employed by the Company on
the Award payment date. If an Employee becomes a Participant during a
Performance Period, such Participant's Award will be pro-rated based on the
number of days that he or she is a Participant, unless, with respect to
Employees other than the CEO, the Compensation Committee otherwise determines.
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ADMINISTRATION
The Annual Incentive Plan will be administered by the Compensation
Committee with respect to Participants who are officers of the Company and by
the CEO with respect to all other Participants. Each member of the Compensation
Committee shall be an "outside director" within the meaning of Treasury
Regulations promulgated under Section 162(m) of the Code. The Compensation
Committee and the CEO, as the case may be, shall have full authority to
establish the rules and regulations relating to the Annual Incentive Plan, to
interpret the Annual Incentive Plan and those rules and regulations, to select
Participants in the Annual Incentive Plan, to determine the Company's and, if
applicable, each Operating Unit's, Financial Target(s) and each Participant's
Target Award Percentage for each Performance Period, to approve all the Awards,
to decide the facts in any case arising under the Annual Incentive Plan and to
make all other determinations and to take all other actions necessary or
appropriate for the proper administration of the Annual Incentive Plan,
including the delegation of such authority or power, where appropriate.
DETERMINATION OF AWARDS
Prior to, or as soon as practicable following, the commencement of each
Performance Period, the Compensation Committee with respect to officers of the
Company and the CEO with respect to all other Employees shall determine the
Employees who shall be Participants during that Performance Period and determine
each Participant's Target Award Percentage and the Financial Target(s) for that
Performance Period. Financial Targets, for any Performance Period, may be
expressed in terms of (i) earnings per share, (ii) operating income, (iii)
return on equity or assets, (iv) cash flow, (v) EBITDA or (vi) any combination
of the foregoing. Financial Targets may be absolute or relative (to prior
performance or to the performance of one or more other entities or external
indices) and may be expressed in terms of a progression within a specified
range.
Generally, a Participant earns an Award for a Performance Period based on
the Company's and/or his or her Operating Unit's achievement of the applicable
Financial Target(s). In addition, the Award for each Participant (other than the
CEO) may be adjusted based on the Participants' Personal Performance Percentage.
The maximum Award any Participant (other than the CEO) may receive for any
Performance Period is 150% of the Participant's Target Award for that
Performance Period. The maximum award the CEO may receive for any Performance
Period is $1.5 million.
CHANGES TO THE TARGET
The Compensation Committee, with respect to Participants who are officers
of the Company, and the CEO, with respect to all other Participants, may at any
time prior to the final determination of Awards change the Target Award
Percentage of any Participant (other than the CEO) or assign a different Target
Award Percentage to a Participant (other than the CEO) to reflect any change in
the Participant's responsibility level or position during the course of the
Performance Period.
The Compensation Committee, with respect to Participants who are officers,
and the CEO, with respect to all other Participants, may at the time Financial
Target(s) are determined for a Performance Period, or at any time prior to the
final determination of Awards in respect of that Performance Period to the
extent permitted under Section 162(m) of the Code and the regulations
promulgated thereunder without adversely affecting the treatment of the Award as
Performance-Based Compensation, provide for the manner in which performance will
be measured against the Financial Target(s) or personal performance goal, if
applicable, (or to the extent permitted under Section 162(m) of the Code and the
regulations promulgated thereunder without adversely affecting the treatment of
an Award as Performance Based
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Compensation, may adjust the Financial Target(s)) to reflect the impact of
specified corporate transactions (such as a stock-split or stock dividend),
special charges, foreign currency effects, accounting or tax law changes and
other extraordinary or nonrecurring events.
PAYMENT OF AWARDS
Generally, each Award to the extent earned is paid in a single lump sum
cash payment, in no event later than 120 days following the Performance Period.
The Committee certifies the amount of the CEO's Award prior to payment thereof.
If a Change of Control (which definition is the same as that under the 1997
LTIP) occurs, the Company, within 60 days thereafter, pays to each Participant
an Award which is calculated assuming that all performance percentages are 100
percent, prorated to the date of the Change of Control based on the number of
days that have elapsed during the Performance Period through the date of the
Change of Control.
LIMITATIONS ON RIGHTS TO PAYMENT OF AWARDS
No Participant shall have any right to receive payment of an Award under
the Annual Incentive Plan for a Performance Period unless the Participant
remains in the employ of the Company through the payment date of the Award for
such Performance Period. However, if the Participant has active service with the
Company or a Subsidiary for at least three months during any Performance Period,
but, prior to payment of the Award for such Performance Period, a Participant's
employment with the Company terminates due to the Participant's death,
Disability or, except in the case of the CEO, Retirement or such other special
circumstances as determined by the CEO on a case by case basis, the Participant
(or, in the event of the Participant's death, the Participant's estate or
beneficiary) shall remain eligible to receive a prorated portion of any earned
Award.
AMENDMENT AND TERMINATION
The Compensation Committee may at any time amend or terminate (in whole or
in part) the Annual Incentive Plan. No such amendment which adversely affects
any Participant's rights to or interest in an Award earned prior to the date of
the amendment shall be effective unless the Participant shall have agreed
thereto.
NON-TRANSFERABILITY
Except in connection with the death of a Participant, a Participant's right
and interest under the Annual Incentive Plan may not be assigned or transferred.
Any attempted assignment or transfer will be null and void and will extinguish,
in the Company's sole discretion, the Company's obligation under the Annual
Incentive Plan to pay awards with respect to the Participant.
UNFUNDED STATUS
The Plan will be unfunded. The Company will not be required to establish
any special or separate fund, or to make any other segregation of assets, to
assure payment of Awards.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The amount of an Award under the Annual Incentive Plan generally will be
includible in income by the recipient and deductible by the Company (subject to
any deduction limitation under Section 162(m) of the
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Code). The Company has structured the annual cash bonus paid to the CEO pursuant
to the Annual Incentive Plan with the intention that compensation resulting
therefrom (other than in connection with a change of control of the Company)
would be qualified "performance-based compensation" under Section 162(m) of the
Code and would be deductible. To qualify, the Company is seeking stockholder
approval of the Annual Incentive Plan.
Under certain circumstances, the payment of an Award under the Annual
Incentive Plan in connection with a Change of Control (as defined in the 1997
LTIP) might be deemed an "excess parachute payment" for purposes of the golden
parachute tax provisions of Section 280G of the Code. To the extent it is so
considered, the Participant may be subject to a 20% excise tax and the Company
may be denied a tax deduction.
The Annual Incentive Plan requires approval by the affirmative vote of a
majority of the votes cast at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL THREE TO QUALIFY
COMPENSATION PROVIDED TO THE CEO UNDER THE ANNUAL INCENTIVE PLAN FOR TAX
DEDUCTIBILITY UNDER SECTION 162(M) OF THE CODE. PROXIES WILL BE VOTED "FOR"
APPROVAL OF THE ANNUAL INCENTIVE PLAN UNLESS OTHERWISE SPECIFIED IN THE PROXY.
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AWARDS MADE UNDER THE 1997 LTIP AND THE ANNUAL INCENTIVE PLAN
Grants under the 1997 LTIP are made at the discretion of the Compensation
Committee; and, accordingly, future grants under the 1997 LTIP are not yet
determinable. Future awards under the Annual Incentive Plan are not determinable
because they depend upon certain unknown factors, including the extent to which
the Financial Targets for any Performance Period are achieved. The following
table sets forth information concerning (i) the amounts that will be paid
pursuant to the Annual Incentive Plan with respect to performance in 1998,
assuming the Financial Targets are achieved at the 100% level (without regard to
any other factors such as personal performance) and (ii) Options granted under
the 1997 LTIP (including the CommScope, Inc. 1997 Long-Term Incentive Plan) as
of the date of this Proxy Statement.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
SHARES SUBJECT
TARGET AWARDS TO OPTIONS
UNDER ANNUAL GRANTED UNDER
NAME AND POSITION INCENTIVE PLAN ($) THE 1997 LTIP (#)(A)
- ----------------- ------------------ --------------------
<S> <C> <C>
Frank M. Drendel $309,000 152,700
Chairman and Chief Executive Officer
Brian D. Garrett $171,000 105,600
President and Chief Operating Officer
Jearld L. Leonhardt $135,000 62,600
Executive Vice President, Finance and Administration
Larry W. Nelson $100,000 40,700
Executive Vice President, Development
Frank J. Logan $100,000 40,700
Executive Vice President, International
All current executive officers as a group (includes 9 $1,086,000 522,900
persons with respect to both the Annual Incentive Plan
and the 1997 LTIP, in each case, including those named above)
All current directors (including nominees for director) who $0 80,000
are not executive officers as a group (5 persons)
All employees (other than current executive officers and $1,191,000 1,071,300
directors who are not executive officers) as a group who may
be awarded bonuses under the Annual Incentive Plan (95 persons)
or were granted options under the 1997 LTIP (358 persons)
</TABLE>
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(a) Target Award amounts shown may range from 0% to 150% of each Target Award
based on the Company's achievement of Financial Targets and a participant's
(other than Mr. Drendel) personal performance.
(b) Represents options granted under the 1997 LTIP (including the CommScope,
Inc. 1997 Long-Term Incentive Plan) subsequent to the Spin-off.
PROPOSAL FOUR: RATIFICATION OF APPOINTMENT OF AUDITOR
The Board of Directors, based on the recommendation of the Audit Committee,
appointed the firm of Deloitte & Touche LLP as independent auditor to examine
the books of account and other records of the Company and its consolidated
subsidiaries for the 1998 fiscal year. The Board of Directors is asking the
stockholders to ratify and approve this action. Deloitte & Touche LLP have been
the Company's independent auditor since July, 1997, and were the independent
auditor of the Distributing Company from 1991 until the Spin-off.
Representatives of the auditing firm will be present at the Annual Meeting and
will be afforded the opportunity, if they so desire, to make a statement or
respond to appropriate questions that may come before the Annual Meeting.
Although such ratification is not required by law, the Board of Directors
believes that stockholders should be given the opportunity to express their
views on the subject. While not binding on the Board of Directors, the failure
of the stockholders to ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditor would be considered by the Board of Directors in
determining whether to continue with the services of Deloitte & Touche LLP.
STOCKHOLDER PROPOSALS FOR THE COMPANY'S 1999 ANNUAL MEETING
Stockholders who intend to present proposals at the 1999 Annual Meeting of
Stockholders, and who wish to have such proposals included in the proxy
statement for such meeting, must submit such proposals in writing by notice
delivered or mailed by first-class United States mail, postage prepaid, to the
Secretary, CommScope, Inc., 1375 Lenoir-Rhyne Boulevard, Hickory, North Carolina
28601, and such notice must be received no later than November 25, 1998. Such
proposals must meet the requirements set forth in the rules and regulations of
the Commission in order to be eligible for inclusion in the Company's proxy
statement for its 1999 Annual Meeting of Stockholders.
SOLICITATION OF PROXIES
Proxies will be solicited by mail, telephone, or other means of
communication. Solicitation of proxies also may be made by directors, officers
and regular employees of the Company. The Company has retained Morrow & Co.,
Inc. to assist in the solicitation of proxies from stockholders. Morrow & Co.,
Inc. will receive a fee of $5,500 plus reimbursement of certain out-of-pocket
expenses. The Company will reimburse brokerage firms, custodians, nominees and
fiduciaries in accordance with the rules of the NYSE, for reasonable expenses
incurred by them in forwarding materials to the beneficial owners of shares. The
entire cost of solicitations will be borne by the Company.
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<PAGE>
OTHER MATTERS
The Company knows of no other matter to be brought before the Annual
Meeting. If any other matter requiring a vote of the stockholders should come
before the Annual Meeting, it is the intention of the persons named in the proxy
to vote with respect to any such matter in accordance with their best judgment.
The Company will furnish, without charge, to each person whose proxy is
being solicited upon written request, a copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, as filed with the Commission
(excluding exhibits). Copies of any exhibits thereto also will be furnished upon
the payment of a reasonable duplicating charge. Requests in writing for copies
of any such materials should be directed to CommScope, Inc., 1375 Lenoir-Rhyne
Boulevard, Hickory, North Carolina 28601, Attention: Investor Relations.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Frank B. Wyatt, II
Frank B. Wyatt, II
Secretary
Dated: March 20, 1998
Hickory, North Carolina
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<PAGE>
ANNEX A
AMENDED AND RESTATED
COMMSCOPE, INC.
1997 LONG-TERM INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Establishment, Purpose and Effective Date...........................................1
(a) Establishment.............................................................1
(b) Purpose...................................................................1
(c) Effective Date............................................................1
2. Definitions.........................................................................1
3. Scope of the Plan...................................................................7
(a) Number of Shares Available Under the Plan.................................7
(b) Reduction in the Available Shares in Connection with Award Grants.........7
(c) Effect of the Expiration or Termination of Awards.........................8
4. Administration......................................................................8
(a) Committee Administration..................................................8
(b) Board Reservation and Delegation..........................................8
(c) Committee Authority.......................................................8
(d) Committee Determinations Final............................................9
5. Eligibility........................................................................10
6. Conditions to Grants...............................................................10
(a) General Conditions.......................................................10
(b) Grant of Options and Option Price........................................10
(c) Grant of Incentive Stock Options.........................................11
(d) Grant of Shares of Restricted Stock......................................12
(e) Grant of Performance Units and Performance Shares........................15
(f) Grant of Phantom Stock...................................................16
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(g) Grant of Director's Shares...............................................16
(h) Tandem Awards............................................................16
7. Non-transferability................................................................17
8. Exercise...........................................................................17
(a) Exercise of Options......................................................17
(b) Exercise of Performance Units............................................18
(c) Payment of Performance Shares............................................19
(d) Payment of Phantom Stock Awards..........................................20
(e) Exercise, Cancellation, Expiration or Forfeiture of Tandem Awards........20
9. Spin-off and Substitute Options....................................................20
10. Effect of Certain Transactions....................................................20
11. Mandatory Withholding Taxes.......................................................20
12. Termination of Employment.........................................................21
13. Securities Law Matters............................................................21
14. No Funding Required...............................................................22
15. No Employment Rights..............................................................22
16. Rights as a Stockholder...........................................................22
17. Nature of Payments................................................................22
18. Non-Uniform Determinations........................................................22
19. Adjustments.......................................................................23
20. Amendment of the Plan.............................................................23
21. Termination of the Plan...........................................................23
22. No Illegal Transactions...........................................................24
23. Governing Law.....................................................................24
-ii-
<PAGE>
24. Severability......................................................................24
</TABLE>
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1. ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE.
(a) ESTABLISHMENT. The Company hereby establishes the Amended
and Restated CommScope, Inc. 1997 Long-Term Incentive Plan (as set forth herein
and from time to time amended, the "Plan").
(b) PURPOSE . The primary purpose of the Plan is to provide a
means by which key employees and directors of the Company and its Subsidiaries
can acquire and maintain stock ownership, thereby strengthening their commitment
to the success of the Company and its Subsidiaries and their desire to remain
employed by the Company and its Subsidiaries, focusing their attention on
managing the Company as an equity owner, and aligning their interests with those
of the Company's stockholders. The Plan also is intended to attract and retain
key employees and to provide such employees with additional incentive and reward
opportunities designed to encourage them to enhance the profitable growth of the
Company and its Subsidiaries.
(c) EFFECTIVE DATE . The Plan shall become effective upon its
adoption by the Board.
2. DEFINITIONS.
As used in the Plan, terms defined parenthetically immediately after
their use shall have the respective meanings provided by such definitions and
the terms set forth below shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
(a) "Award" means Options, shares of restricted Stock,
performance units, performance shares or Director's
Shares granted under the Plan.
(b) "Award Agreement" means the written agreement by
which an Award is evidenced.
(c) "Beneficial Owner," "Beneficially Owned" and
"Beneficially Owning" shall have the meanings
applicable under Rule 13d-3 promulgated under the
1934 Act.
(d) "Board" means the board of directors of the Company.
(e) "Change in Capitalization" means any increase or
reduction in the number of shares of Stock, or any
change in the shares of Stock or exchange of shares
of Stock for a different number or kind of shares or
other securities by reason of a stock dividend,
extraordinary dividend, stock split, reverse stock
split, share combination, reclassification,
recapitalization, merger, consolidation, spin-off,
split-up, reorganization, issuance of warrants or
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rights, liquidation, exchange of shares, repurchase
of shares, change in corporate structure, or similar
event, of or by the Company.
(f) "Change of Control" means, any of the following:
(i) the acquisition by any Person other than
Instrument Partners or Forstmann Little & Co. Subordinated
Debt and Equity Management Buyout Partnership IV or any of
their affiliates (collectively, the "Forstmann Little
Companies") of Beneficial Ownership of Voting Securities
which, when added to the Voting Securities then Beneficially
Owned by such Person, would result in such Person Beneficially
Owning (A) 33% or more of the combined Voting Power of the
Company's then outstanding Voting Securities, and (B) a number
of Voting Securities greater than the aggregate number of
Voting Securities then Beneficially Owned by the Forstmann
Little Companies; PROVIDED, HOWEVER, that for purposes of this
paragraph (i), a Person shall not be deemed to have made an
acquisition of Voting Securities if such Person: (1) acquires
Voting Securities as a result of a stock split, stock dividend
or other corporate restructuring in which all stockholders of
the class of such Voting Securities are treated on a pro rata
basis; (2) acquires the Voting Securities directly from the
Company; (3) becomes the Beneficial Owner of 33% or more of
the combined Voting Power of the Company's then outstanding
Voting Securities solely as a result of the acquisition of
Voting Securities by the Company or any Subsidiary which, by
reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially Owned
by such Person, provided that if (x) a Person would own at
least such percentage as a result of the acquisition by the
Company or any Subsidiary and (y) after such acquisition by
the Company or any Subsidiary, such Person acquires Voting
Securities, then an acquisition of Voting Securities shall
have occurred; (4) is the Company or any corporation or other
Person of which a majority of its voting power or its equity
securities or equity interest is owned directly or indirectly
by the Company (a "Controlled Entity"); or (5) acquires Voting
Securities in connection with a "Non-Control Transaction" (as
defined in paragraph (iii) below); or
(ii) the individuals who, as of the Effective Date,
are members of the Board (the "Incumbent Board") cease for any
reason to constitute at least two-thirds of the Board;
PROVIDED, HOWEVER, that if either the election of any new
director or the nomination for election of any new director by
the Company's stockholders was approved by a vote of at least
two-thirds of the Incumbent Board prior to such election or
nomination, such new director shall be considered as a member
of the Incumbent Board; PROVIDED FURTHER, HOWEVER, that no
individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or
other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other
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than the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
(iii) approval by stockholders of the Company of:
(A) a merger, consolidation or
reorganization involving the Company (a "Business
Combination"), unless
(1) the stockholders of the Company,
immediately before the Business Combination, own,
directly or indirectly immediately following the
Business Combination, at least a majority of the
combined voting power of the outstanding voting
securities of the corporation resulting from the
Business Combination (the "Surviving Corporation")
in substantially the same proportion as their
ownership of the Voting Securities immediately
before the Business Combination, and
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution
of the agreement providing for the Business
Combination constitute at least a majority of the
members of the Board of Directors of the Surviving
Corporation, and
(3) no Person (other than the Company or any
Controlled Entity, a trustee or other fiduciary
holding securities under one or more employee
benefit plans or arrangements (or any trust
forming a part thereof) maintained by the Company,
the Surviving Corporation or any Controlled
Entity, or any Person who, immediately prior to
the Business Combination, had Beneficial Ownership
of 33% or more of the then outstanding Voting
Securities) has Beneficial Ownership of 33% or
more of the combined voting power of the Surviving
Corporation's then outstanding voting securities
(a Business Combination satisfying the conditions
of clauses (1), (2) and (3) of this subparagraph
(A) shall be referred to as a "Non-Control
Transaction");
(B) a complete liquidation or dissolution of
the Company; or
(C) the sale or other disposition of all or
substantially all of the assets of the Company (other
than a transfer to a Controlled Entity).
Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely because 33% or more of the then outstanding Voting Securities is
Beneficially Owned by (x) a trustee or other fiduciary holding securities under
one or more employee benefit plans or arrangements (or any trust forming a part
thereof) maintained by the Company or any Controlled Entity or (y) any
corporation which, immediately prior to its acquisition of such interest, is
owned
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directly or indirectly by the stockholders of the Company in the same
proportion as their ownership of stock in the Company immediately prior to such
acquisition.
(g) "Committee" means the committee of the Board
appointed pursuant to Article 4.
(h) "Company" means CommScope, Inc., a Delaware
corporation.
(i) "Director's Shares" means the shares of Stock awarded
to a nonemployee director of the Company pursuant to
Article 6(h).
(j) "Disability" means a mental or physical condition
which, in the opinion of the Committee, renders a
Grantee unable or incompetent to carry out the job
responsibilities which such Grantee held or the
duties to which such Grantee was assigned at the time
the disability was incurred, and which is expected to
be permanent or for an indefinite duration.
(k) "Effective Date" means the date that the Plan is
adopted by the Board.
(l) "Fair Market Value" of any security of the Company or
any other issuer means, as of any applicable date:
(i) if the security is listed for trading on the New
York Stock Exchange, the closing price, regular way, of the
security as reported on the New York Stock Exchange Composite
Tape, or if no such reported sale of the security shall have
occurred on such date, on the next preceding date on which
there was such a reported sale, or
(ii) if the security is not so listed, but is listed
on another national securities exchange or authorized for
quotation on the National Association of Securities Dealers
Inc.'s NASDAQ National Market System ("NASDAQ/NMS"), the
closing price, regular way, of the security on such exchange
or NASDAQ/NMS, as the case may be, or if no such reported sale
of the security shall have occurred on such date, on the next
preceding date on which there was such a reported sale, or
(iii) if the security is not listed for trading on a
national securities exchange or authorized for quotation on
NASDAQ/NMS, the average of the closing bid and asked prices as
reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or, if no such prices
shall have been so reported for such date, on the next
preceding date for which such prices were so reported, or
(iv) if the security is not listed for trading on a
national securities exchange or is not authorized for
quotation on NASDAQ/NMS or NASDAQ, the fair market value of
the security as determined in good faith by the Committee.
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<PAGE>
(m) "Grant Date" means the date of grant of an Award
determined in accordance with Article 6.
(n) "Grantee" means an individual who has been granted an
Award.
(o) "Incentive Stock Option" means an Option satisfying
the requirements of Section 422 of the Internal
Revenue Code and designated by the Committee as an
Incentive Stock Option.
(p) "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, and regulations and rulings
thereunder. References to a particular Section of the
Internal Revenue Code shall include references to
successor provisions.
(q) "Measuring Period" has the meaning specified in
Article 6(f)(ii)(B).
(r) "Minimum Consideration" means the $.0l par value per
share of Stock or such larger amount determined
pursuant to resolution of the Board to be capital
within the meaning of Section 154 of the Delaware
General Corporation Law.
(s) "1934 Act" means the Securities Exchange Act of 1934,
as amended.
(t) "Nonqualified Stock Option" means an Option which is
not an Incentive Stock Option or other type of
statutory stock option under the Internal Revenue
Code.
(u) "Option" means an option to purchase Stock granted or
issued under the Plan, including Substitute and
Spin-off Options.
(v) "Option Price" means the per share purchase price of
(i) Stock subject to an Option or (ii) restricted
Stock subject to an Option.
(w) "Performance-Based Compensation" means any Option or
Award that is intended to constitute "performance
based compensation" within the meaning of Section
162(m)(4)(C) of the Code and the regulations
promulgated thereunder.
(x) "Performance Percentage" has the meaning specified in
Article 6(f)(ii)(C).
(y) "Person" means a person within the meaning of
Sections 13(d) and 14(d) of the 1934 Act.
(z) "Plan" has the meaning set forth in Article 1(a).
(aa) "SEC" means the Securities and Exchange Commission.
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(bb) "Section 16 Grantee" means a person subject to
potential liability with respect to equity securities
of the Company under Section 16(b) of the 1934 Act.
(cc) "Spin-off Option" means an Option that has been
issued under this Plan to certain named persons
pursuant to the Employee Benefits Allocation
Agreement between General Semiconductor, Inc. ("GS"),
CommScope, Inc. and the Company, dated June 25, 1997,
as amended, modified, or otherwise supplemented (the
"Benefits Agreement").
(dd) "Stock" means common stock, par value $.01 per share,
of the Company.
(ee) "Subsidiary" means a corporation as [defined in
Section 424(f) of the Internal Revenue Code, with the
Company being treated as the employer corporation for
purposes of this definition].
(ff) "Substitute Option" means an Option that has been
issued under this Plan to certain persons pursuant to
the Benefits Agreement.
(gg) "10% Owner" means a person who owns stock (including
stock treated as owned under Section 424(d) of the
Internal Revenue Code) possessing more than 10% of
the Voting Power of the Company.
(hh) "Termination of Employment" occurs the first day on
which an individual is for any reason no longer
employed by the Company or any of its Subsidiaries,
or with respect to an individual who is an employee
of a Subsidiary, the first day on which the Company
no longer owns Voting Securities possessing at least
50% of the Voting Power of such Subsidiary.
(ii) "Voting Power" means the combined voting power of the
then outstanding Voting Securities.
(jj) "Voting Securities" means, with respect to the
Company or any Subsidiary, any securities issued by
the Company or such Subsidiary, respectively, which
generally entitle the holder thereof to vote for the
election of directors of the Company.
3. SCOPE OF THE PLAN.
(a) NUMBER OF SHARES AVAILABLE UNDER THE PLAN. The maximum
number of shares of Stock that may be made the subject of Awards granted under
the Plan is 4,600,000 plus the number of shares of Stock that are covered by
Substitute Options and Spin-off Options (or the number and kind of shares of
Stock or other securities to which such shares of Stock are adjusted upon a
Change in Capitalization pursuant to Article 18); PROVIDED, HOWEVER, that in the
aggregate, not more than 200,000 shares of Stock may be made the subject of
Awards other than Options.
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The maximum number of shares of Stock that may be the subject of Options (other
than Substitute Options and Spin-off Options) and Awards granted to any
individual pursuant to the Plan in any three (3) calendar year period may not
exceed 500,000. The maximum dollar amount of cash or the Fair Market Value of
Stock that any individual may receive in any calendar year in respect of
performance units denominated in dollars may not exceed $1,000,000. The Company
shall reserve for the purpose of the Plan, out of its authorized but unissued
shares of Stock or out of shares held in the Company's treasury, or partly out
of each, such number of shares as shall be determined by the Board. The Board
shall have the authority to cause the Company to purchase from time to time
shares of Stock to be held as treasury shares and used for or in connection with
Awards. The issuance of Substitute Options and Spin-off Options shall not reduce
the shares available for grants under the Plan or to a Grantee in any calendar
year.
(b) REDUCTION IN THE AVAILABLE SHARES IN CONNECTION WITH AWARD
GRANTS . Upon the grant of an Award, the number of shares of Stock available
under Article 3(a) for the granting of further Awards shall be reduced as
follows:
(i) PERFORMANCE UNITS DENOMINATED IN DOLLARS. In
connection with the granting of each performance unit
denominated in dollars, the number of shares of Stock
available under Article 3(a) for the granting of further
Awards shall be reduced by the quotient of (x) the dollar
amount represented by the performance unit divided by (y) the
Fair Market Value of a share of Stock on the date immediately
preceding the Grant Date of the performance unit.
(ii) OTHER AWARDS. In connection with the granting of
each Award, other than a performance unit denominated in
dollars, the number of shares of Stock available under Article
3(a) for the granting of further Awards shall be reduced by a
number of shares equal to the number of shares of Stock in
respect of which the Award is granted or denominated;
PROVIDED, HOWEVER, that if any Award is exercised by tendering
shares of Stock, either actually or by attestation, to the
Company as full or partial payment of the exercise price, the
maximum number of shares of Stock available under Section 3(a)
shall be increased by the number of shares of Stock so
tendered.
Notwithstanding the foregoing, where two or more Awards are granted
with respect to the same shares of Stock, such shares shall be taken into
account only once for purposes of this Article 3(b).
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(c) EFFECT OF THE EXPIRATION OR TERMINATION OF AWARDS . If and
to the extent an Option or Award (including a Substitute Option or a Spin-off
Option) expires, terminates or is canceled, settled in cash (including the
settlement of tax withholding obligations using shares of Stock) or forfeited
for any reason without having been exercised in full (including, without
limitation, a cancellation of an Option pursuant to Article 4(c)(vi)), the
shares of Stock associated with the expired, terminated, canceled, settled or
forfeited portion of the Award (to the extent the number of shares available for
the granting of Awards was reduced pursuant to Article 3(b)) shall again become
available for Awards under the Plan.
4. ADMINISTRATION.
(a) COMMITTEE ADMINISTRATION . Subject to Article 4(b), the
Plan shall be administered by the Committee, which shall consist of not less
than two "non-employee directors" within the meaning of Rule 16b-3, and to the
extent necessary for any Award intended to qualify as Performance-Based
Compensation to so qualify, each member of the Committee shall be an "outside
director" within the meaning of Section 162(m) of the Internal Revenue Code.
(b) BOARD RESERVATION AND DELEGATION . The Board may, in its
discretion, reserve to itself or exercise any or all of the authority and
responsibility of the Committee hereunder. It may also delegate to another
committee of the Board any or all of the authority and responsibility of the
Committee with respect to Awards to Grantees who are not Section 16 Grantees at
the time any such delegated authority or responsibility is exercised. Such other
committee may consist of one or more directors who may, but need not be,
officers or employees of the Company or of any of its Subsidiaries. To the
extent that the Board has reserved to itself, or exercised the authority and
responsibility of the Committee, or delegated the authority and responsibility
of the Committee to such other committee, all references to the Committee in the
Plan shall be to the Board or to such other committee.
(c) COMMITTEE AUTHORITY . The Committee shall have full and
final authority, in its discretion, but subject to the express provisions of the
Plan, as follows:
(i) to grant Awards,
(ii) to determine (A) when Awards may be granted, and
(B) whether or not specific Awards shall be identified with
other specific Awards, and if so, whether they shall be
exercisable cumulatively with, or alternatively to, such other
specific Awards,
(iii) to issue Substitute Options and Spin-off
Options,
(iv) to interpret the Plan and to make all
determinations necessary or advisable for the administration
of the Plan,
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(v) to prescribe, amend, and rescind rules and
regulations relating to the Plan, including, without
limitation, rules with respect to the exercisability and
nonforfeitability of Awards upon the Termination of Employment
of a Grantee,
(vi) to determine the terms and provisions of the
Award Agreements, which need not be identical and, with the
consent of the Grantee, to modify any such Award Agreement at
any time,
(vii) to cancel, with the consent of the Grantee,
outstanding Awards,
(viii) to accelerate the exercisability of, and to
accelerate or waive any or all of the restrictions and
conditions applicable to, any Award,
(ix) to make such adjustments or modifications to
Awards to Grantees working outside the United States as are
necessary and advisable to fulfill the purposes of the Plan,
(x) to authorize any action of or make any
determination by the Company as the Committee shall deem
necessary or advisable for carrying out the purposes of the
Plan, and
(xi) to impose such additional conditions,
restrictions, and limitations upon the grant, exercise or
retention of Awards as the Committee may, before or
concurrently with the grant thereof, deem appropriate,
including, without limitation, requiring simultaneous exercise
of related identified Awards, and limiting the percentage of
Awards which may from time to time be exercised by a Grantee.
(d) COMMITTEE DETERMINATIONS FINAL . The determination of the
Committee on all matters relating to the Plan or any Award Agreement shall be
conclusive and final. No member of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Award.
5. ELIGIBILITY.
Awards may be granted to any employee of the Company or any of its
Subsidiaries. In selecting the individuals to whom Awards may be granted, as
well as in determining the number of shares of Stock subject to, and the other
terms and conditions applicable to, each Award, the Committee shall take into
consideration such factors as it deems relevant in promoting the purposes of the
Plan. In addition, Nonqualified Stock Options will be granted to nonemployee
directors of the Company, as set forth in Article 6(b)(ii), and Director's
Shares will be issued to nonemployee directors of the Company pursuant to
Article 6(h).
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6. CONDITIONS TO GRANTS.
(a) GENERAL CONDITIONS.
(i) The Grant Date of an Award shall be the date on
which the Committee grants the Award or such later date as
specified in advance by the Committee.
(ii) The term of each Award (subject to Article 6(c)
with respect to Incentive Stock Options) shall be a period of
not more than ten years from the Grant Date and shall be
subject to earlier termination as provided herein or in the
applicable Award Agreement; PROVIDED, HOWEVER, that the
Committee may provide that an Option (other than an Incentive
Stock Option) may, upon the death of the Grantee, be exercised
for up to one year following the date of the Grantee's death
even if such period extends beyond ten years from the date the
Option is granted.
(iii) A Grantee may, if otherwise eligible, be
granted additional Awards in any combination.
(iv) The Committee may grant Awards with terms and
conditions which differ among the Grantees thereof. To the
extent not set forth in the Plan, the terms and conditions of
each Award shall be set forth in an Award Agreement.
(b) GRANT OF OPTIONS AND OPTION PRICE. The Committee may, in
its discretion, and shall as provided in Article 6(b)(ii), grant Options as
follows:
(i) EMPLOYEE OPTIONS. Options to acquire unrestricted
Stock or restricted Stock may be granted to any employee
eligible under Article 5 to receive Awards. No later than the
Grant Date of any Option, the Committee shall determine the
Option Price which shall not be less than 100% of the Fair
Market Value of the Stock on the Grant Date.
(ii) NONEMPLOYEE DIRECTOR OPTIONS. Nonqualified Stock
Options with respect to 20,000 shares of unrestricted Stock
shall be granted to each nonemployee director of the Company
(other than a nonemployee director who is a general partner of
any of the Forstmann Little Companies or any of their
affiliates) upon his or her initial election to the Board and
every three years thereafter on the anniversary of such
nonemployee director's initial election to the Board as long
as such nonemployee director is then still serving on the
Board, at an Option Price equal to 100% of the Fair Market
Value of the Stock on the Grant Date; PROVIDED, HOWEVER, that
the Grant Date of the first grants of Nonqualified Stock
Options to nonemployee directors under this Plan shall be the
fifth trading day after the NextLevel Systems Distribution
Date (as defined in the Benefits Agreement). Each Nonqualified
Stock Option granted to a nonemployee director will become
exercisable with respect to one-third of the underlying shares
on each
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of the first, second and third anniversaries of the Grant
Date, and will have a term of ten years. If a nonemployee
director ceases to serve as a director of the Company for any
reason, any Nonqualified Stock Option granted to such
nonemployee director shall be exercisable during its remaining
term, to the extent that such Nonqualified Stock Option was
exercisable on the date such nonemployee director ceased to be
a director.
(c) GRANT OF INCENTIVE STOCK OPTIONS. At the time of the grant
of any Option, the Committee may designate that such Option
shall be an Incentive Stock Option. Any Option designated as
an Incentive Stock Option:
(i) shall have an Option Price of (A) not less than
100% of the Fair Market Value of the Stock on the Grant Date
or (B) in the case of a 10% Owner, not less than 110% of the
Fair Market Value of the Stock on the Grant Date;
(ii) shall have a term of not more than ten years
(five years, in the case of a 10% Owner) from the Grant Date,
and shall be subject to earlier termination as provided herein
or in the applicable Award Agreement;
(iii) shall, if, with respect to any grant, the
aggregate Fair Market Value of Stock (determined on the Grant
Date) of all Incentive Stock Options granted under the Plan
and "incentive stock options" (within the meaning of Section
422 of the Code) granted under any other stock option plan of
the Grantee's employer or any parent or subsidiary thereof (in
either case determined without regard to this Article 6(c))
are exercisable for the first time during any calendar year
exceeds $100,000, be treated as Nonqualified Stock Options.
For purposes of the foregoing sentence, Incentive Stock
Options shall be treated as Nonqualified Stock Options
according to the order in which they were granted such that
the most recently granted Incentive Stock Options are first
treated as Nonqualified Stock Options.
(iv) shall be granted within ten years from the
earlier of the date the Plan is adopted by the Board or the
date the Plan is approved by the stockholders of the Company;
and
(v) shall require the Grantee to notify the
Committee of any disposition of any Stock issued pursuant to
the exercise of the Incentive Stock Option under the
circumstances described in Section 421(b) of the Internal
Revenue Code (relating to certain disqualifying dispositions),
within ten days of such disposition.
(d) GRANT OF SHARES OF RESTRICTED STOCK.
(i) The Committee may, in its discretion, grant
shares of restricted Stock to any employee eligible under
Article 5 to receive Awards.
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(ii) Before the grant of any shares of restricted
Stock, the Committee shall determine, in its discretion:
(A) whether the certificates for such shares
shall be delivered to the Grantee or held (together
with a stock power executed in blank by the Grantee)
in escrow by the Secretary of the Company until such
shares become nonforfeitable or are forfeited,
(B) the per share purchase price of such
shares, which may be zero, PROVIDED, HOWEVER, that
the per share purchase price of all such shares
(other than treasury shares) shall not be less than
the Minimum Consideration for each such share;
(C) the restrictions applicable to such
grant and the time or times upon which any applicable
restrictions on the restricted Stock shall lapse;
PROVIDED, HOWEVER, that except in the case of shares
of restricted Stock issued in full or partial
settlement of another Award or other earned
compensation, or in the event of the Grantee's
termination of employment, as determined by the
Committee and set forth in an Award Agreement, such
restrictions shall not lapse prior to the third
anniversary of the Grant Date of the restricted
Stock; and
(D) whether the payment to the Grantee of
dividends, or a specified portion thereof, declared
or paid on such shares by the Company shall be
deferred until the lapsing of the restrictions
imposed upon such shares and shall be held by the
Company for the account of the Grantee, whether such
dividends shall be reinvested in additional shares of
restricted Stock (to the extent shares are available
under Article 3) subject to the same restrictions and
other terms as apply to the shares with respect to
which such dividends are issued or otherwise
reinvested in Stock or held in escrow, whether
interest will be credited to the account of the
Grantee with respect to any dividends which are not
reinvested in restricted or unrestricted Stock, and
whether any Stock dividends issued with respect to
the restricted Stock to be granted shall be treated
as additional shares of restricted Stock.
(iii) Payment of the purchase price (if greater than
zero) for shares of restricted Stock shall be made in full by
the Grantee before the delivery of such shares and, in any
event, no later than ten days after the Grant Date for such
shares. Such payment may be made, as determined by the
Committee in its discretion, in any one or any combination of
the following:
(A) cash, or
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(B) with the prior approval of the
Committee, shares of restricted or unrestricted Stock
owned by the Grantee prior to such grant and valued
at its Fair Market Value on the business day
immediately preceding the date of payment;
PROVIDED, HOWEVER, that, in the case of payment in shares of
restricted or unrestricted Stock, if the purchase price for
restricted Stock ("New Restricted Stock") is paid with shares
of restricted Stock ("Old Restricted Stock"), the restrictions
applicable to the New Restricted Stock shall be the same as if
the Grantee had paid for the New Restricted Stock in cash
unless, in the judgment of the Committee, the Old Restricted
Stock was subject to a greater risk of forfeiture, in which
case a number of shares of New Restricted Stock equal to the
number of shares of Old Restricted Stock tendered in payment
for New Restricted Stock shall be subject to the same
restrictions as the Old Restricted Stock, determined
immediately before such payment.
(iv) The Committee may, but need not, provide that
all or any portion of a Grantee's Award of restricted Stock
shall be forfeited
(A) except as otherwise specified in the
Award Agreement, upon the Grantee's Termination of
Employment within a specified time period after the
Grant Date, or
(B) if the Company or the Grantee does not
achieve specified performance goals within a
specified time period after the Grant Date and before
the Grantee's Termination of Employment, or
(C) upon failure to satisfy such other
restrictions as the Committee may specify in the
Award Agreement.
(v) If a share of restricted Stock is forfeited,
then
(A) the Grantee shall be deemed to have
resold such share of restricted Stock to the Company
at the lesser of (1) the purchase price paid by the
Grantee (such purchase price shall be deemed to be
zero dollars ($0) if no purchase price was paid) or
(2) the Fair Market Value of a share of Stock on the
date of such forfeiture;
(B) the Company shall pay to the Grantee the
amount determined under clause (A) of this sentence,
if not zero, as soon as is administratively
practicable, but in any case within 90 days after
forfeiture; and
(C) such share of restricted Stock shall
cease to be outstanding, and shall no longer confer
on the Grantee thereof any rights as a stockholder of
the Company, from and after the date of the Company's
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tender of the payment specified in clause (B) of this
sentence, whether or not such tender is accepted by
the Grantee, or the date the restricted Stock is
forfeited if no purchase price was paid for the
restricted Stock.
(vi) Any share of restricted Stock shall bear an
appropriate legend specifying that such share is
non-transferable and subject to the restrictions set forth in
the Plan and the Award Agreement. If any shares of restricted
Stock become nonforfeitable, the Company shall cause
certificates for such shares to be issued or reissued without
such legend and delivered to the Grantee or, at the request of
the Grantee, shall cause such shares to be credited to a
brokerage account specified by the Grantee.
(e) GRANT OF PERFORMANCE UNITS AND PERFORMANCE SHARES.
(i) The Committee may, in its discretion, grant
performance units or performance shares to any employee
eligible under Article 5 to receive Awards.
(ii) Before the grant of any performance unit or
performance share, the Committee shall:
(A) designate a period, of not less than one
year nor more than five years, for the measurement of
the extent to which performance goals are attained
(the "Measuring Period");
(B) determine performance goals applicable
to such grant; PROVIDED, HOWEVER, that the
performance goals with respect to a Measuring Period
shall be established in writing by the Committee by
the earlier of (x) the date on which a quarter of the
Measuring Period has elapsed or (y) the date which is
ninety (90) days after the commencement of the
Measuring Period, and in any event while the
performance relating to the performance goals remain
substantially uncertain; and
(C) assign a "Performance Percentage" to
each level of attainment of performance goals during
the Measuring Period, with the percentage applicable
to minimum attainment being zero percent (0%) and the
percentage applicable to optimum attainment to be
determined by the Committee from time to time.
(iii) The performance goals applicable to performance
units or performance shares shall, in the discretion of the
Committee, be based on stock price, earnings per share,
operating income, return on equity or assets, cash flow,
EBITDA or any combination of the foregoing. Such performance
goals may be absolute or relative (to prior performance or to
the performance of one or more other entities or external
indices) and may be expressed in terms of a progression within
a specified range. At the time of the granting of performance
units or performance shares, or at any time thereafter, in
either case to the extent permitted
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under Section 162(m) of the Code and the regulations
thereunder without adversely affecting the treatment of the
performance unit or performance share as Performance-Based
Compensation, the Committee may provide for the manner in
which performance will be measured against the performance
goals (or may adjust the performance goals) to reflect the
impact of specified corporate transactions, special charges,
foreign currency effects, accounting or tax law changes and
other extraordinary or nonrecurring events.
(iv) Prior to the vesting, payment, settlement or
lapsing of any restrictions with respect to any performance
unit or performance share that is intended to constitute
Performance-Based Compensation made to a Grantee who is
subject to Section 162(m) of the Code, the Committee shall
certify in writing that the applicable performance goals have
been satisfied.
(v) Unless otherwise expressly stated in the relevant
Award Agreement, each performance unit and performance share
granted under the Plan is intended to be Performance-Based
Compensation and the Committee shall interpret and administer
the applicable provisions of the Plan in a manner consistent
therewith. Any provisions inconsistent with such treatment
shall be inoperative and shall not adversely affect the
treatment of performance units or performance shares granted
hereunder as Performance-Based Compensation. The Committee
shall not be entitled to exercise any discretion otherwise
authorized hereunder with respect to such performance unit or
performance share if the ability
to exercise such discretion or the exercise of such discretion
itself would cause the compensation attributable to such
performance unit or performance share to fail to qualify as
Performance-Based Compensation.
(f) GRANT OF PHANTOM STOCK . The Committee may, in its
discretion, grant shares of phantom stock to any employee who is eligible under
Article 5 to receive Awards. Such phantom stock shall be subject to the terms
and conditions established by the Committee and set forth in the applicable
Award Agreement.
(g) GRANT OF DIRECTOR'S SHARES . There shall be granted
Director's Shares with respect to 1,000 shares of Stock to each nonemployee
director of the Company (other than a nonemployee director who is a general
partner of any of the Forstmann Little Companies or any of their affiliates)
upon his or her initial election to the Board. Director's Shares shall be fully
vested and transferable upon issuance.
(h) TANDEM AWARDS . The Committee may grant and identify any
Award with any other Award granted under the Plan ("Tandem Award"), other than a
Substitute Option or a Spin-off Option, on terms and conditions determined by
the Committee.
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7. NON-TRANSFERABILITY.
Unless set forth in the applicable Award Agreement, no Award (other
than an Award of restricted Stock) granted hereunder shall by its terms be
assignable or transferable except by will or the laws of descent and
distribution or, in the case of an Option other than an Incentive Stock Option,
pursuant to a domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act). An Option may be exercised during the
lifetime of a Grantee only by the Grantee or his or her guardian or legal
representatives. Notwithstanding the foregoing, the Committee may set forth in
the Award Agreement evidencing an Award (other than an Incentive Stock Option)
at the time of grant or thereafter, that the Award may be transferred to members
of the Grantee's immediate family, to trusts solely for the benefit of such
immediate family members and to partnerships in which such family members and/or
trusts are the only partners, and for purposes of this Plan, a transferee of an
Award shall be deemed to be the Grantee. For this purpose, immediate family
means the Grantee's spouse, parents, children, stepchildren and grandchildren
and the spouses of such parents, children, stepchildren and grandchildren. The
terms of an Award shall be final, binding and conclusive upon the beneficiaries,
executors, administrators, heirs and successors of the Grantee. Each share of
restricted Stock shall be non-transferable until such share becomes
nonforfeitable.
8. EXERCISE.
(a) EXERCISE OF OPTIONS . Subject to Articles 4(c)(vii), 12
and 13 and such terms and conditions as the Committee may impose, each Option
shall be exercisable in one or more installments commencing not earlier than the
first anniversary of the Grant Date of such Option; PROVIDED, HOWEVER, that all
Options held by each Grantee shall become fully (100%)
exercisable upon the occurrence of a Change of Control regardless of whether the
acceleration of the exercisability of such Options would cause such Options to
lose their eligibility for treatment as Incentive Stock Options. Notwithstanding
the foregoing, Options may not be exercised by a Grantee for twelve months
following a hardship distribution to the Grantee, to the extent such exercise is
prohibited under Treasury Regulation ss.1.401(k)-1(d)(2)(iv)(B)(4). Each Option
shall be exercised by delivery to the Company of written notice of intent to
purchase a specific number of shares of Stock subject to the Option. The Option
Price of any shares of Stock as to which an Option shall be exercised shall be
paid in full at the time of the exercise. Payment may be made, as determined by
the Committee in its discretion with respect to Options granted to eligible
employees and in all cases with respect to Options granted to nonemployee
directors pursuant to Article 6(b)(ii), in any one or any combination of the
following:
(i) cash,
(ii) shares of unrestricted Stock held by the Grantee
for at least six months (or such lesser period as may be
permitted by the Committee) prior to the exercise of the
Option, and valued at its Fair Market Value on the last
business day immediately preceding the date of exercise, or
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(iii) through simultaneous sale through a broker of
shares of unrestricted Stock acquired on exercise, as
permitted under Regulation T of the Federal Reserve Board.
Shares of unrestricted Stock acquired by a Grantee on exercise of an
Option shall be delivered to the Grantee or, at the request of the Grantee,
shall be credited directly to a brokerage account specified by the Grantee.
(b) EXERCISE OF PERFORMANCE UNITS.
(i) Subject to Articles 4(c)(vii), 12 and 13 and such
terms and conditions as the Committee may impose, and unless
otherwise provided in the applicable Award Agreement, if, with
respect to any performance unit, the Committee has determined
in accordance with Article 6(f)(iv) that the minimum
performance goals have been achieved during the applicable
Measuring Period, then such performance unit shall be deemed
exercised on the date on which it first becomes exercisable.
(ii) The benefit for each performance unit exercised
shall be an amount equal to the product of
(A) the Unit Value (as defined below),
multiplied by
(B) the Performance Percentage attained
during the Measuring Period for such performance
unit.
(iii) The Unit Value shall be, as specified by the
Committee,
(A) a dollar amount,
(B) an amount equal to the Fair Market Value
of a share of Stock on the Grant Date,
(C) an amount equal to the Fair Market Value
of a share of Stock on the exercise date of the
performance unit, plus, if so provided in the Award
Agreement, an amount ("Dividend Equivalent Amount")
equal to the Fair Market Value of the number of
shares of Stock that would have been purchased if
each dividend paid on a share of Stock on or after
the Grant Date and on or before the exercise date
were invested in shares of Stock at a purchase price
equal to its Fair Market Value on the respective
dividend payment date, or
(D) an amount equal to the Fair Market Value
of a share of Stock on the exercise date of the
performance unit (plus, if so specified in the Award
Agreement, a Dividend Equivalent Amount), reduced by
the
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Fair Market Value of a share of Stock on the
Grant Date of the performance unit.
(iv) The benefit upon the exercise of a performance
unit shall be payable as soon as is administratively
practicable (but in any event within 90 days) after the later
of (A) the date the Grantee is deemed to exercise such
performance unit, or (B) the date (or dates in the event of
installment payments) as provided in the applicable Award
Agreement. Such benefit shall be payable in cash, except that
the Committee, with respect to any particular exercise, may,
in its discretion, pay benefits wholly or partly in Stock
delivered to the Grantee or credited to a brokerage account
specified by the Grantee. The number of shares of Stock
payable in lieu of cash shall be determined by valuing the
Stock at its Fair Market Value on the business day next
preceding the date such benefit is to be paid.
(c) PAYMENT OF PERFORMANCE SHARES . Subject to Articles
4(c)(vii), 12 and 13 and such terms and conditions as the Committee may impose,
and unless otherwise provided in the applicable Award Agreement, if the
Committee has determined in accordance with Article 6(f)(iv) that the minimum
performance goals with respect to an Award of performance shares have been
achieved during the applicable Measuring Period, then the Company shall pay to
the Grantee of such Award (or, at the request of the Grantee, deliver to a
brokerage account specified by the Grantee) shares of Stock equal in number to
the product of the number of performance shares specified in the applicable
Award Agreement multiplied by the Performance Percentage achieved during such
Measuring Period, except to the extent that the Committee in its discretion
determines that cash be paid in lieu of some or all of such shares of Stock. The
amount of cash payable in lieu of a share of Stock shall be determined by
valuing such share at its Fair Market Value on the business day next preceding
the date such cash is to be paid. Payments pursuant to this Article 8(d) shall
be made as soon as administratively practicable (but in any event within 90
days) after the end of the applicable Measuring Period. Any performance shares
with respect to
which the performance goals have not been achieved by the end of the applicable
Measuring Period shall expire.
(d) PAYMENT OF PHANTOM STOCK AWARDS . Upon the vesting of a
phantom stock Award, the Grantee shall be entitled to receive a cash payment in
respect of each share of phantom stock which shall be equal to the Fair Market
Value of a share of Stock as of the date the phantom stock Award was granted, or
such other date as determined by the Committee at the time the phantom stock
Award was granted. The Committee may, at the time a phantom stock Award is
granted, provide a limitation on the amount payable in respect of each share of
phantom stock. In lieu of a cash payment, the Committee may settle phantom stock
Awards with shares of Stock having a Fair Market Value equal to the cash payment
to which the Grantee has become entitled.
(e) EXERCISE, CANCELLATION, EXPIRATION OR FORFEITURE OF TANDEM
AWARDS . Upon the exercise, cancellation, expiration, forfeiture or payment in
respect of any Award which is identified with any Tandem Award pursuant to
Article 6(i), the Tandem Award shall automatically terminate to the extent of
the number of shares in respect of which the Award is so
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exercised, cancelled, expired, forfeited or paid, unless otherwise provided by
the Committee at the time of grant of the Tandem Award or thereafter.
9. SPIN-OFF AND SUBSTITUTE OPTIONS.
Spin-off Options and Substitute Options shall be issued under this Plan
pursuant to and in accordance with the terms of the Benefits Agreement. Spin-off
Options and Substitute Options shall be governed by the terms of the Plan to the
extent that the terms of the Plan do not conflict with the terms of the
agreements evidencing the Spin-off Options and Substitute Options.
10. EFFECT OF CERTAIN TRANSACTIONS.
With respect to any Award which relates to Stock, in the event of (i)
the liquidation or dissolution of the Company or (ii) a merger or consolidation
of the Company (a "Transaction"), the Plan and the Awards issued hereunder shall
continue in effect in accordance with their respective terms and each Grantee
shall be entitled to receive in respect of each share of Stock subject to any
outstanding Awards, upon the vesting, payment or exercise of the Award (as the
case may be), the same number and kind of stock, securities, cash, property, or
other consideration that each holder of a share of Stock was entitled to receive
in the Transaction in respect of a share of Stock.
11. MANDATORY WITHHOLDING TAXES.
The Company shall have the right to deduct from any distribution of
cash to any Grantee an amount equal to the federal, state and local income taxes
and other amounts as may be required by law to be withheld (the "Withholding
Taxes") with respect to any Award. If a Grantee is to experience a taxable event
in connection with the receipt of shares pursuant to an
Option exercise or the vesting or payment of another type of Award (a "Taxable
Event"), the Grantee shall pay the Withholding Taxes to the Company prior to the
issuance, or release from escrow, of such shares or payment of such Award.
Payment of the applicable Withholding Taxes may be made, as determined by the
Committee in its discretion, in any one or any combination of (i) cash, (ii)
shares of restricted or unrestricted Stock owned by the Grantee prior to the
Taxable Event and valued at its Fair Market Value on the business day
immediately preceding the date of exercise, or (iii) by making a Tax Election
(as described below). For purposes of this Article 11, the Committee may provide
in the Award Agreement at the time of grant, or at any time thereafter, that the
Grantee, in satisfaction of the obligation to pay Withholding Taxes to the
Company, may elect to have withheld a portion of the shares then issuable to him
or her having an aggregate Fair Market Value equal to the Withholding Taxes.
12. TERMINATION OF EMPLOYMENT.
The Award Agreement pertaining to each Award shall set forth the terms
and conditions applicable to such Award upon a Termination of Employment of the
Grantee by the Company, a
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Subsidiary or an operating division or unit, which, except for Options granted
to nonemployee directors pursuant to Article 6(b)(ii), shall be as the Committee
may, in its discretion, determine at the time the Award is granted or
thereafter.
13. SECURITIES LAW MATTERS.
(a) If the Committee deems it necessary to comply with the
Securities Act of 1933, the Committee may require a written investment intent
representation by the Grantee and may require that a restrictive legend be
affixed to certificates for shares of Stock.
(b) If, based upon the opinion of counsel for the Company, the
Committee determines that the exercise or nonforfeitability of, or delivery of
benefits pursuant to, any Award would violate any applicable provision of (i)
federal or state securities law or (ii) the listing requirements of any national
securities exchange on which are listed any of the Company's equity securities,
then the Committee may postpone any such exercise, nonforfeitability or
delivery, as the case may be, but the Company shall use its best efforts to
cause such exercise, nonforfeitability or delivery to comply with all such
provisions at the earliest practicable date.
(c) Notwithstanding any provision of the Plan or any Award
Agreement to the contrary, no shares of Stock shall be issued to any Grantee in
respect of any Award prior to the time a registration statement under the
Securities Act of 1933 is effective with respect to such shares.
14. NO FUNDING REQUIRED.
Benefits payable under the Plan to any person shall be paid directly by
the Company. The Company shall not be required to fund, or otherwise segregate
assets to be used for payment of, benefits under the Plan.
15. NO EMPLOYMENT RIGHTS.
Neither the establishment of the Plan, nor the granting of any Award
shall be construed to (a) give any Grantee the right to remain employed by the
Company or any of its Subsidiaries or to any benefits not specifically provided
by the Plan or (b) in any manner modify the right of the Company or any of its
Subsidiaries to modify, amend, or terminate any of its employee benefit plans.
16. RIGHTS AS A STOCKHOLDER.
A Grantee shall not, by reason of any Award (other than restricted
Stock), have any right as a stockholder of the Company with respect to the
shares of Stock which may be deliverable upon exercise or payment of such Award
until such shares have been delivered to him. Shares of restricted Stock held by
a Grantee or held in escrow by the Secretary of the Company shall confer
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on the Grantee all rights of a stockholder of the Company, except as otherwise
provided in the Plan.
17. NATURE OF PAYMENTS.
Any and all grants, payments of cash, or deliveries of shares of Stock
hereunder shall constitute special incentive payments to the Grantee and shall
not be taken into account in computing the amount of salary or compensation of
the Grantee for the purposes of determining any pension, retirement, death or
other benefits under (a) any pension, retirement, profit-sharing, bonus, life
insurance or other employee benefit plan of the Company or any of its
Subsidiaries or (b) any agreement between the Company or any Subsidiary, on the
one hand, and the Grantee, on the other hand, except as such plan or agreement
shall otherwise expressly provide.
18. NON-UNIFORM DETERMINATIONS.
Neither the Committee's nor the Board's determinations under the Plan
need be uniform and may be made by the Committee or the Board selectively among
persons who receive, or are eligible to receive, Awards (whether or not such
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, to enter into non-uniform and
selective Award Agreements as to (a) the identity of the Grantees, (b) the terms
and provisions of Awards, and (c) the treatment of Terminations of Employment.
19. ADJUSTMENTS.
In the event of Change in Capitalization, the Committee shall, in its
sole discretion, make equitable adjustment of
(a) the aggregate number and class of shares of Stock or
other stock or securities available under Article 3,
(b) the number and class of shares of Stock or other
stock or securities covered by an Award and to be
covered by Options granted to nonemployee directors
pursuant to Article 6(b)(ii),
(c) the Option Price applicable to outstanding Options,
(d) the terms of performance unit and performance share
grants (to the extent permitted under Section 162(m)
of the Code and the regulations thereunder without
adversely affecting the treatment of the performance
unit or performance share as Performance-Based
Compensation, and
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(e) the Fair Market Value of Stock to be used to
determine the amount of the benefit payable upon
exercise of performance units, performance shares or
phantom stock.
(f) the maximum number and class of shares of Stock or
other securities with respect to which Awards may be
granted to any individual in any three calendar year
period
(g) the number and class of shares of Stock or other
securities with respect to which Director Shares are
to be granted under Article 6(h).
20. AMENDMENT OF THE PLAN.
The Board may from time to time in its discretion amend or modify the
Plan without the approval of the stockholders of the Company, except as such
stockholder approval may be required (a) to retain Incentive Stock Option
treatment under Section 422 of the Internal Revenue Code, (b) to permit
transactions in Stock pursuant to the Plan to be exempt from potential liability
under Section 16(b) of the 1934 Act or (c) under the listing requirements of any
securities exchange on which any of the Company's equity securities are listed.
21. TERMINATION OF THE PLAN.
The Plan shall terminate on the tenth (10th) anniversary of the
Effective Date or at such earlier time as the Board may determine. Any
termination, whether in whole or in part, shall not affect any Award then
outstanding under the Plan.
22. NO ILLEGAL TRANSACTIONS.
The Plan and all Awards granted pursuant to it are subject to all laws
and regulations of any governmental authority which may be applicable thereto;
and notwithstanding any provision
of the Plan or any Award, Grantees shall not be entitled to exercise Awards or
receive the benefits thereof and the Company shall not be obligated to deliver
any Stock or pay any benefits to a Grantee if such exercise, delivery, receipt
or payment of benefits would constitute a violation by the Grantee or the
Company of any provision of any such law or regulation.
23. GOVERNING LAW.
Except where preempted by federal law, the law of the State of Delaware
shall be controlling in all matters relating to the Plan, without giving effect
to the conflicts of law principles thereof.
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24. SEVERABILITY.
If all or any part of the Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of the Plan not declared to be unlawful or
invalid. Any Article or part of an Article so declared to be unlawful or invalid
shall, if possible, be construed in a manner which will give effect to the terms
of such Article or part of an Article to the fullest extent possible while
remaining lawful and valid.
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ANNEX B
COMMSCOPE, INC.
ANNUAL INCENTIVE PLAN
1. Purpose
The purpose of the Annual Incentive Plan is to enhance
CommScope, Inc.'s ability to attract, motivate, reward and retain employees, to
strengthen their commitment to the success of the Company and to align their
interests with those of the Company's stockholders by providing additional
compensation to designated employees of the Company based on the achievement of
performance objectives. To this end, the Annual Incentive Plan provides a means
of annually rewarding participants primarily based on the performance of the
Company and its Operating Units and secondarily based on the achievement of
personal performance objectives. The adoption of this Plan as it relates to the
CEO is subject to the approval of the stockholders of the Company.
2. Definitions
(a) "Award" shall mean the incentive award earned by a
Participant under the Plan for any Performance Period.
(b) "Base Salary" shall mean the Participant's annual base
salary actually paid by the Company and received by the Participant during the
applicable Performance Period. Annual base salary does not include (i) Awards
under the Plan, (ii) long-term incentive awards, (iii) signing bonuses or any
similar bonuses, (iv) cash payments received pursuant to the Company's Profit
Sharing and Savings Plan, (v) imputed income from such programs as executive
life insurance, or (vi) nonrecurring earnings such as moving expenses, and is
based on salary earnings before reductions for such items as contributions under
Section 401(k) of the Internal Revenue Code of 1986, as amended.
(c) "Beneficial Owner", "Beneficially Owned" and "Beneficially
Owning" shall have the meanings applicable under Rule 13d-3 promulgated under
the 1934 Act.
(d) "Board" shall mean the Board of Directors of the Company.
(e) " CEO" shall mean the Chief Executive Officer of the
Company.
(f) "Change of Control" shall mean any of the following:
(i) the acquisition by any Person other than
Instrument Partners or Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership IV or any of their affiliates (collectively, the
"Forstmann Little Companies") of Beneficial Ownership of Voting Securities
which, when added to the Voting Securities then Beneficially Owned by such
Person, would result in such Person Beneficially
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Owning (A) 33% or more of the combined Voting Power of the Company's then
outstanding Voting Securities, and (B) a number of Voting Securities greater
than the aggregate number of Voting Securities then Beneficially Owned by the
Forstmann Little Companies; PROVIDED, HOWEVER, that for purposes of this
paragraph (i), a Person shall not be deemed to have made an acquisition of
Voting Securities if such Person: (1) acquires Voting Securities as a result of
a stock split, stock dividend or other corporate restructuring in which all
stockholders of the class of such Voting Securities are treated on a pro rata
basis; (2) acquires the Voting Securities directly from the Company; (3) becomes
the Beneficial Owner of 33% or more of the combined Voting Power of the
Company's then outstanding Voting Securities solely as a result of the
acquisition of Voting Securities by the Company or any Subsidiary which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by such Person, provided that if (x) a
Person would own at least such percentage as a result of the acquisition by the
Company or any Subsidiary and (y) after such acquisition by the Company or any
Subsidiary, such Person acquires Voting Securities, then an acquisition of
Voting Securities shall have occurred; (4) is the Company or any corporation or
other Person of which a majority of its voting power or its equity securities or
equity interest is owned directly or indirectly by the Company (a "Controlled
Entity"); or (5) acquires Voting Securities in connection with a "Non-Control
Transaction" (as defined in paragraph (iii) below); or
(ii) the individuals who, as of the Effective Date,
are members of the Board (the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board; PROVIDED, HOWEVER, that if either
the election of any new director or the nomination for election of any new
director by the Company's stockholders was approved by a vote of at least
two-thirds of the Incumbent Board prior to such election or nomination, such new
director shall be considered as a member of the Incumbent Board; PROVIDED
FURTHER, HOWEVER, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule l4a-11
promulgated under the 1934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(iii) approval by stockholders of the Company of:
(A) a merger, consolidation or reorganization
involving the Company (a "Business Combination"), unless
(1) the stockholders of the Company,
immediately before the Business Combination, own, directly or indirectly
immediately following the Business Combination, at least a majority of the
combined voting power of the outstanding voting securities of the corporation
resulting from the Business Combination
B-2
<PAGE>
(the "Surviving Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before the Business Combination,
and
(2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for the Business Combination constitute at least a majority of the members of
the Board of Directors of the Surviving Corporation, and
(3) no Person (other than the Company or
any Controlled Entity, a trustee or other fiduciary holding securities under one
or more employee benefit plans or arrangements (or any trust forming a part
thereof) maintained by the Company, the Surviving Corporation or any Controlled
Entity, or any Person who, immediately prior to the Business Combination, had
Beneficial Ownership of 33% or more of the then outstanding Voting Securities)
has Beneficial Ownership of 33% or more of the combined voting power of the
Surviving Corporation's then outstanding voting securities (a Business
Combination satisfying the conditions of causes (1), (2) and (3) of this
subparagraph (A) shall be referred to as a "Non-Control Transaction");
(B) a complete liquidation or dissolution of
the Company; or
(C) the sale or other disposition of all or
substantially all of the assets of the Company (other than a transfer to a
Controlled Entity).
Notwithstanding the foregoing, a Change of Control shall not
be deemed to occur solely because 33% or more of the then outstanding Voting
Securities is Beneficially Owned by (x) a trustee or other fiduciary holding
securities under one or more employee benefit plans or arrangements (or any
trust forming a part thereof) maintained by the Company or any Controlled Entity
or (y) any corporation which, immediately prior to its acquisition of such
interest, is owned directly or indirectly by the stockholders of the Company in
the same proportion as their ownership of stock in the Company immediately prior
to such acquisition.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(h) "Committee" shall mean the Compensation Committee of the
Board.
(i) "Company" shall mean CommScope, Inc., its successors and
assigns.
(j) "Disability" shall mean permanent disability, as provided
in the Company's long-term disability plan.
(k) "Effective Date" shall mean the date that the Plan is
adopted by the Board.
B-3
<PAGE>
(l) "Employee" shall mean any person (including an officer)
employed by the Company or any of its subsidiaries on a full-time salaried
basis.
(m) "Financial Target", for any Performance Period, shall mean
the one or more of the financial performance goals of the Company, or an
Operating Unit, if applicable, as determined in accordance with Section 5.
Financial Targets may be expressed in terms of (i) earnings per share, (ii)
operating income, (iii) return on equity or assets, (iv) cash flow, (v) EBITDA
or (vi) any combination of the foregoing. Financial Targets may be expressed as
a combination of Company and/or Operating Unit performance goals and may be
absolute or relative (to prior performance or to the performance of one or more
other entities or external indices) and may be expressed in terms of a
progression within a specified range.
(n) "Financial Target Award Earned", for any Performance
Period, shall mean the percentage of Target Awards earned based on the Company's
and/or, if applicable, an Operating Unit's achievement of Financial Target(s)
for that Performance Period.
(o) "1934 Act" shall mean the Securities Exchange Act of 1934,
as amended.
(p) "Participant", for any Performance Period, shall mean an
Employee selected to participate in the Plan for such Performance Period.
(q) "Performance-Based Compensation" shall mean any Award that
is intended to constitute "performance based compensation" within the meaning of
Section 162(m)(4)(C) of the Code and the regulations promulgated thereunder.
(r) "Performance Period" shall mean the fiscal year of the
Company.
(s) "Person" shall mean a person within the meaning of
Sections 13(d) and 14(d) of the 1934 Act.
(t) "Personal Performance Percentage", with respect to
Participants (other than the CEO) for any Performance Period, shall mean the
percentage based on the Participant's personal performance, as determined in
accordance with Section 5(e) of the Plan.
(u) "Plan" shall mean this CommScope, Inc. Annual Incentive
Plan, as from time to time amended and in effect.
(v) "Operating Unit", for any Performance Period, shall mean a
division, Subsidiary, group, product line or product line grouping for which an
income statement reflecting sales and operating income is produced.
B-4
<PAGE>
(w) "Retirement" shall mean retirement at or after age 65 or
early retirement with the prior written approval of the Company.
(x) "Schedules" for any Performance Period, shall mean the
schedules described in Section 5(a) of the Plan.
(y) "Subsidiary" shall mean a corporation as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended, with the
Company being treated as the employer corporation for purposes of this
definition.
(z) "Target Award", for any Participant with respect to any
Performance Period, shall mean the Participant's Base Salary multiplied by his
or her Target Award Percentage.
(aa) "Target Award Percentage" for any Participant with
respect to any Performance Period, shall mean the percentage of the
Participant's Base Salary that the Participant would earn as an Award for that
Performance Period if each of the Financial Target Award Earned and Personal
Performance Percentage (if applicable) for that Performance Period is 100%, and
shall be determined by the Committee with respect to Participants who are
officers and the CEO with respect to all other Participants, based on the
Participant's responsibility level or the position or positions held during the
Performance Period; PROVIDED, HOWEVER, that if any Participant held more than
one position during the Performance Period, then the Committee or CEO, as
applicable, may designate different Target Award Percentages with respect to
each position and the Award will be pro-rated to reflect the number of days
during which such Participant had each Target Award Percentage.
(bb) "Voting Power" shall mean the combined voting power of
the then outstanding Voting Securities.
(cc) "Voting Securities" shall mean, with respect to the
Company or any Subsidiary, any securities issued by the Company or such
Subsidiary, respectively, which generally entitle the holder thereof to vote for
the election of directors of the Company or such Subsidiary, respectively.
3. Eligibility
Generally, all Employees are eligible to participate in the
Plan for any Performance Period. However, participation may be limited to those
Employees who, because of their significant impact on the current and future
success of the Company, the Committee or CEO selects, in accordance with Section
5 of this Plan, to participate in the Plan for that Performance Period.
Notwithstanding the foregoing, the CEO shall participate in the Plan in every
Performance Period.
B-5
<PAGE>
To be eligible to participate in the Plan in any Performance
Period an Employee shall have had at least three months active tenure during
such Performance Period and be actively employed by the Company on the Award
payment date. The CEO may approve, for Participants other than the CEO and in
accordance with Sections 7 and 8 of this Plan, exceptions for special
circumstances.
If an Employee becomes a Participant during a Performance
Period, such Participant's Award will be pro-rated based on the number of days
that he or she is a Participant, unless, with respect to Employees other than
the CEO, the Committee otherwise determines.
4. Administration
The administration of the Plan shall be consistent with the
purpose and the terms of the Plan. The Plan shall be administered by the
Committee with respect to Participants who are officers and by the CEO with
respect to all other Participants. Each member of the Committee shall be an
"outside director" within the meaning of Treasury Regulations promulgated under
Section 162(m) of the Code. The Committee and the CEO, as the case may be, shall
have full authority to establish the rules and regulations relating to the Plan,
to interpret the Plan and those rules and regulations, to select Participants in
the Plan, to determine the Company's and, if applicable, each Operating Unit's
Financial Target(s) and each Participant's Target Award Percentage for each
Performance Period, to approve all the Awards, to decide the facts in any case
arising under the Plan and to make all other determinations and to take all
other actions necessary or appropriate for the proper administration of the
Plan, including the delegation of such authority or power, where appropriate;
PROVIDED, HOWEVER, that the Committee shall not be authorized to increase the
amount of the Award payable to the CEO that would otherwise be payable pursuant
to the terms of the Plan but may in its sole discretion decrease the amount of
an Award that would otherwise be payable to the CEO pursuant to the terms of the
Plan, and PROVIDED, FURTHER, that the Committee shall only exercise such
discretion over the Plan and the Awards granted thereunder, to the extent
permitted under Section 162(m) of the Code and the regulations thereunder
without adversely affecting the treatment of the CEO's Award as
Performance-Based Compensation.
The Committee's and the CEO's administration of the Plan,
including all such rules and regulations, interpretations, selections,
determinations, approvals, decisions, delegations, amendments, terminations and
other actions, shall be final and binding on the Company, the Subsidiaries,
their respective stockholders and all employees of the Company and the
Subsidiaries, including the Participants and their respective beneficiaries.
B-6
<PAGE>
5. Determination of Awards
(a) Prior to, or as soon as practicable following, the
commencement of each Performance Period, the Committee with respect to officers
and the CEO with respect to all other Employees shall determine the Employees
who shall be Participants during that Performance Period and determine each
Participant's Target Award Percentage. The Committee shall also establish the
Financial Target(s) for that Performance Period (which shall be established in
writing by the earlier of (1) the date on which one-quarter of the Performance
Period has elapsed or (2) the date which is 90 days after the commencement of
the Performance Period, and in any event while the performance relating to the
Financial Target(s) remains substantially uncertain). The Participants, each
Participant's Target Award Percentage and the Financial Targets for each
Performance Period shall be set forth on a Schedule. The Company shall notify
each Participant of his or her Target Award Percentage and the applicable
Financial Targets for the Performance Period.
(b) Generally, a Participant earns an Award for a Performance
Period based on the Company's and/or his or her Operating Unit's achievement of
applicable Financial Target(s). In addition, the Award for any Participant
(other than the CEO) may be adjusted based on the Participant's Personal
Performance Percentage. The Committee may determine that different Financial
Targets are applicable to different Participants, groups of Participants,
Operating Units or groups of Operating Units with respect to a specific
Performance Period. The Committee may also establish minimum threshold of
Company or Operating Unit performance which must be achieved in order for any
portion of an Award to be earned for that Performance Period, provided such
threshold is established by the earlier of (1) the date on which one-quarter of
the Performance Period has elapsed or (2) the date which is 90 days after the
commencement of the Performance Period, and in any event while the performance
relating to the Financial Target(s) remains substantially uncertain).
Notwithstanding the foregoing, if in any Performance Period a minimum threshold
of Company and/or Operating Unit performance is established and the Company's
and/or any Operating Unit's actual performance as measured against that minimum
threshold would otherwise preclude the earning of Awards for that Performance
Period, the Committee may upon consideration of the events of the Performance
Period, determine that Awards may be earned by Participants (other than the CEO)
for that Performance Period.
(c) The maximum Award any Participant (other than the CEO) may
receive for any Performance Period is 150% of the Participant's Target Award for
that Performance Period. The maximum award the CEO may receive for any
Performance Period is $1.5 million.
(d) Awards shall be earned by Participants in accordance with
the following formula:
B-7
<PAGE>
Personal
Target Financial Performance
Award x Base x Target x Percentage (other
Percentage Salary Award Earned than the CEO)
Where:
o Target Award Percentage is as defined in Section 2(aa) of the Plan.
o Base Salary is as defined in Section 2(b) of the Plan.
o Financial Target Award Earned is as defined in Section 2(n) of the
Plan and is determined based on the Company's and/or, if applicable
an Operating Unit's performance as measured against the applicable
Financial Target(s).
o Personal Performance Percentage ranges from 0 to 120 percent and is
determined, in accordance with subsection (e) below.
(e) Personal Performance Percentage The CEO is not eligible
for an adjustment based on personal performance. Each other Participant's
performance shall be evaluated and a Personal Performance Percentage for such
Participant shall be recommended for approval by the CEO. The Personal
Performance Percentage may range from 0 to 120 percent to reflect the
Participant's personal performance during the Performance Period; PROVIDED,
HOWEVER, that the application of this Section 5(f) shall not result in (i) the
Participant's Award exceeding 150% of his or her or Target Award for the
Performance Period; or (ii) an increase in the aggregate dollar amount of all
Awards earned by all Participants for that Performance Period.
6. Changes to the Target Award Percentage
The Committee, with respect to Participants who are officers,
and the CEO, with respect to all other Participants, may at any time prior to
the final determination of Awards change the Target Award Percentage of any
Participant (other than the CEO) or assign a different Target Award Percentage
to a Participant (other than the CEO) to reflect any change in the Participant's
responsibility level or position during the course of the Performance Period.
The Committee, with respect to Participants who are officers,
and the CEO, with respect to all other Participants, may at the time Financial
Target(s) are determined for a Performance Period, or at any time prior to the
final determination of Awards in respect of that Performance Period to the
extent permitted under Section 162(m) of the Code and the regulations
promulgated thereunder without adversely affecting the treatment of the Award as
Performance-Based Compensation, provide for the manner in
B-8
<PAGE>
which performance will be measured against the Financial Target(s) (or to the
extent permitted under Section 162(m) of the Code and the regulations
promulgated thereunder without adversely affecting the treatment of an Award as
Performance Based Compensation, may adjust the Financial Target(s)) to reflect
the impact of specified corporate transactions (such as a stock-split or stock
dividend), special charges, foreign currency effects, accounting or tax law
changes and other extraordinary or nonrecurring events.
7. Payment of Awards
As soon as practicable after the close of a Performance Period
and prior to the payment of any Award that is intended to constitute
Performance-Based Compensation, the Committee, with respect to Participants who
are officers, and the CEO, with respect to all other Participants, shall review
each Participant's Award and certify in writing that the applicable Financial
Targets have been satisfied. Subject to the provisions of Section 8 of the Plan,
each Award to the extent earned shall be paid in a single lump sum cash payment,
as soon as practicable following the Performance Period, but in no event later
than 120 days following the Performance Period. The Committee shall certify in
writing the amount of the CEO's Award prior to payment thereof.
If a Change of Control occurs, the Company shall, within 60
days thereafter, pay to each Participant in the Plan immediately prior to the
Change of Control (regardless of whether the Participant remains employed after
the Change of Control) an Award which is calculated assuming that all
performance percentages are 100 percent, and such Award shall be prorated to the
date of the Change of Control based on the number of days that have elapsed
during the Performance Period through the date of the Change of Control.
8. Limitations on Rights to Payment of Awards
No Participant shall have any right to receive payment of an
Award under the Plan for a Performance Period unless the Participant remains in
the employ of the Company through the payment date of the Award for such
Performance Period, except as provided in the last paragraph of Section 7 of the
Plan. However, if the Participant has active service with the Company or the
Subsidiary for at least three months during any Performance Period, but, prior
to payment of the Award for such Performance Period, a Participant's employment
with the Company terminates due to the Participant's death, Disability or,
except in the case of the CEO, Retirement or such other special circumstances as
determined by the CEO on a case by case basis, the Participant (or, in the event
of the Participant's death, the Participant's estate, beneficiary or
beneficiaries as determined under Section 9 of the Plan) shall remain eligible
to receive a prorated portion of any earned Award, based on the number of days
that the Participant was actively employed and performed services during such
Performance Period.
B-9
<PAGE>
9. Designation of Beneficiary
A Participant may designate a beneficiary or beneficiaries
who, in the event of the Participant's death prior to full payment of any Award
hereunder, shall receive payment of any Award due under the Plan. Such
designation shall be made by the Participant on a form prescribed by the
Committee. The Participant may, at any time, change or revoke such designation.
A beneficiary designation, or revocation of a prior beneficiary designation,
will be effective only if it is made in writing on a form provided by the
Company, signed by the Participant and received by the Secretary of the Company.
If the Participant does not designate a beneficiary or the beneficiary dies
prior to receiving any payment of an Award, Awards payable under the Plan shall
be paid to the Participant's estate.
10. Amendments
The Committee may at any time amend (in whole or in part) this
Plan. No such amendment which adversely affects any Participant's rights to or
interest in an Award earned prior to the date of the amendment shall be
effective unless the Participant shall have agreed thereto.
11. Termination
The Committee may terminate this Plan (in whole or in part) at
any time. In the case of such termination of the Plan, the following provisions
of this Section 11 shall apply notwithstanding any other provisions of the Plan
to the contrary:
(i) The Committee shall promulgate administrative rules
applicable to Plan termination, pursuant to which each affected
Participant (other than the CEO) shall receive, with respect to each
Performance Period which has commenced on or prior to the effective
date of the Plan termination (the "Termination Date") and for which the
Award has not yet been paid, the amount described in such rules and the
CEO shall receive an amount equal to the amount his Award would have
been had the Plan not been terminated (prorated for the Performance
Period in which the Termination Date occurred), subject to reduction in
the discretion of the Committee.
(ii) Each Award payable under this Section 11 shall be paid as
soon as practicable, but in no event later than 120 days after the
Termination Date.
12. Miscellaneous Provisions
(a) This Plan is not a contract between the Company and the
Employees or the Participants. Neither the establishment of this Plan, nor any
action taken hereunder, shall be construed as giving any Employee or any
Participant any right to be
B-10
<PAGE>
retained in the employ of the Company or any of its Subsidiaries. Neither, the
Company nor any of its Subsidiaries is under any obligation to continue the
Plan.
(b) A Participant's right and interest under the Plan may not
be assigned or transferred, except as provided in Section 9 of the Plan, and any
attempted assignment or transfer shall be null and void and shall extinguish, in
the Company's sole discretion, the Company's obligation under the Plan to pay
Awards with respect to the Participant.
(c) The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund, or to make any other
segregation of assets, to assure payment of Awards.
(d) The Company shall have the right to deduct from Awards
paid and any interest thereon, any taxes or other amounts required by law to be
withheld.
(e) Nothing contained in the Plan shall limit or affect in any
manner or degree the normal and usual powers of management, exercised by the
officers and the Board of Directors or committees thereof, to change the duties
or the character of employment of any employee of the Company or any of its
Subsidiaries or to remove the individual from the employment of the Company or
any of its Subsidiaries at any time, all of which rights and powers are
expressly reserved.
B-11
<PAGE>
COMMSCOPE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 1, 1998
The undersigned hereby authorizes and directs Vanguard Fiduciary Trust Company,
as trustee (the "Trustee") of the CommScope, Inc. of North Carolina Employees
Profit Sharing and Savings Plan, to vote as Proxy for the undersigned as herein
stated at the Annual Meeting of Stockholders of CommScope, Inc. (the "Company")
to be held at Chase Manhattan Bank, 270 Park Avenue, 11th Floor, New York, New
York 10017, on Friday, May 1, 1998 at 1:30 p.m., local time, and at any
adjournment thereof, all shares of Common Stock of CommScope, Inc. allocated to
the account of the undersigned under such Plan, on the proposals set forth on
the reverse hereof and in accordance with the Trustee's discretion on any other
matters that may properly come before the meeting or any adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice and Proxy Statement,
dated March 20, 1998.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION
IS MADE, THE PROXY WILL BE VOTED BY THE TRUSTEE IN ITS SOLE DISCRETION IN THE
BEST INTEREST OF THE PLAN PARTICIPANTS AND BENEFICIARIES.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE)
SEE REVERSE
SIDE
<PAGE>
The Board of Directors recommends that stockholders vote "FOR" Proposals One,
Two, Three and Four.
PROPOSAL ONE: To elect two Class I directors for terms ending at the 2001
Annual Meeting of Stockholders.
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
(except as marked to the contrary) ----- to vote for all nominees -----
listed below
Nominees: George N. Hutton, Jr., Boyd L. George.
INSTRUCTION: To withhold your vote for any individual nominee, strike a line
through the nominee's name.
PROPOSAL TWO: To approve the adoption of the CommScope, Inc. Amended and
Restated 1997 Long-Term Incentive Plan.
FOR / / AGAINST / / ABSTAIN / /
---- ---- ----
PROPOSAL THREE: To approve the adoption of the CommScope, Inc. Annual Incentive
Plan.
FOR / / AGAINST / / ABSTAIN / /
---- ---- ----
PROPOSAL FOUR: To ratify the appointment by the Board of Directors of the
Company of Deloitte & Touche LLP as independent auditor for
the Company for the 1998 fiscal year.
FOR / / AGAINST / / ABSTAIN / /
---- ---- ----
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as your name appears. If
acting as attorney, executor, administrator,
trustee, guardian, etc., you should so
indicate when signing. If a corporation,
please sign the full corporate name by
President or other duly authorized officer.
If a partnership, please sign in full
partnership name by authorized person. If
shares are held jointly, both parties must
sign and date.
Signature(s):_______________________________________ Date:_____________________
Signature(s):_______________________________________ Date:_____________________
<PAGE>
COMMSCOPE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 1, 1998
The undersigned hereby appoints Frank B. Wyatt, II and Jearld L. Leonhardt and
each or either of them his attorneys and agents, with full power of substitution
to vote as Proxy for the undersigned as herein stated at the Annual Meeting of
Stockholders of CommScope, Inc. (the "Company") to be held at the Chase
Manhattan Bank, 270 Park Avenue, 11th Floor, New York, New York 10017 on Friday,
May 1, 1998 at 1:30 p.m., local time, and at any adjournment thereof, according
to the number of votes the undersigned would be entitled to vote if personally
present, on the proposals set forth on the reverse hereof and in accordance with
their discretion on any other matters that may properly come before the meeting
or any adjournments thereof. The undersigned hereby acknowledges receipt of the
Notice and Proxy Statement, dated March 20, 1998. If this proxy is returned
without direction being given, this proxy will be voted "FOR" Proposals One,
Two, Three and Four.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE)
SEE REVERSE
SIDE
<PAGE>
The Board of Directors recommends that stockholders vote "FOR" Proposals One,
Two, Three and Four.
PROPOSAL ONE: To elect two Class I directors for terms ending at the 2001
Annual Meeting of Stockholders.
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
(except as marked to the contrary) ---- to vote for all nominees -----
listed below
Nominees: George N. Hutton, Jr., Boyd L. George.
INSTRUCTION: To withhold your vote for any individual nominee,
strike a line through the nominee's name.
PROPOSAL TWO: To approve the adoption of the CommScope, Inc.
Amended and Restated 1997 Long-Term Incentive Plan.
FOR / / AGAINST / / ABSTAIN / /
---- ---- ----
PROPOSAL THREE: To approve the adoption of the CommScope, Inc. Annual
Incentive Plan.
FOR / / AGAINST / / ABSTAIN / /
---- ---- ----
PROPOSAL FOUR: To ratify the appointment by the Board of Directors of the
Company of Deloitte & Touche LLP as independent auditor for
the Company for the 1998 fiscal year.
FOR / / AGAINST / / ABSTAIN / /
---- ---- ----
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as your name appears. If
acting as attorney, executor, administrator,
trustee, guardian, etc., you should so
indicate when signing. If a corporation,
please sign the full corporate name by
President or other duly authorized officer.
If a partnership, please sign in full
partnership name by authorized person. If
shares are held jointly, both parties must
sign and date.
Signature(s):________________________________________ Date:____________________
Signature(s):________________________________________ Date:____________________
<PAGE>
[Fried, Frank, Harris, Shriver & Jacobson Letterhead]
212-859-8823
March 20, 1998 (FAX: 212-859-8586)
BY ELECTRONIC TRANSMISSION
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: CommScope, Inc.
Ladies and Gentlemen:
On behalf of CommScope, Inc., a Delaware corporation (the
"Company"), pursuant to Rule 14a-6(a) of the Securities Exchange Act of 1934, as
amended, we are filing by direct electronic transmission the following
definitive proxy materials (the "Proxy Materials") in connection with the 1998
Annual Meeting of Stockholders of the Company:
(i) Notice of Annual Meeting of Stockholders;
(ii) Proxy Statement;
(iii) Forms of Proxy; and
(iv) Letter to Stockholders
Pursuant to Rule 304(d) of Regulation S-T, the performance
graph required to appear in the Proxy Statement is presented in tabular form
within the electronic filing and a paper copy of the performance graph which is
included in the Proxy Statement is being submitted supplementally on the date
hereof.
The Proxy Materials and the Company's 1997 Annual Report to
Stockholders are being mailed to stockholders on or about March 27, 1998.
<PAGE>
Securities and Exchange Commission -2- March 20, 1997
Please direct any questions or comments with regard to the
filing to the undersigned at the above-referenced number.
Very truly yours,
/s/ Brian Whaley
Brian Whaley
Enclosures
cc: Frank B. Wyatt, Esq.,
CommScope, Inc.
