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 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
WOODHEAD INDUSTRIES, 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 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 transactions 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>
December 22, 2000
Dear Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders. The
meeting will be held at the Northbrook Hilton Hotel, 2855 North Milwaukee
Avenue, Northbrook, Illinois at 10:00 a.m. on Friday, January 26, 2001. After
the business session, we will report on current operations and other matters of
importance.
The formal Notice and Proxy Statement appear on the following pages and contain
details of the business to be conducted at the meeting. In addition to the
election of three directors, you will be asked to ratify the appointment of the
independent public accountants.
Northbrook is a northern suburb of Chicago and the Northbrook Hilton Hotel is
located just west of the Illinois Tollway near the intersection of Milwaukee
Avenue (Rt. 21) and Palatine Road.
Your vote is very important regardless of the number of shares you own. We hope
you can attend the meeting. However, whether or not you plan to attend, please
sign, date and return the accompanying proxy card as soon as possible. The
enclosed envelope requires no postage if mailed in the United States. If you
attend the meeting, you may revoke your proxy if you wish and vote personally.
Sincerely,
C. Mark DeWinter
Chairman and
Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 26, 2001
To Our Stockholders:
The Annual Meeting of the Stockholders of Woodhead Industries, Inc. (the
"Company") will be held at the Northbrook Hilton Hotel, 2855 North Milwaukee
Avenue, Northbrook, Illinois on Friday, January 26, 2001 at 10:00 a.m., Chicago
time, to consider and take action upon the following matters which are described
more fully in the enclosed Proxy Statement:
1. The election of three directors;
2. The ratification of the appointment of Arthur
Andersen LLP as independent public accountants of the
Company; and
3. The transaction of such other business as may
properly come before the meeting.
The Board of Directors has fixed December 1, 2000 as the record date for the
determination of the stockholders entitled to notice of and to vote at the
meeting and at any adjournment or postponement thereof. A list of such
stockholders will be available for examination by any stockholder at the
principal office of the Company, Three Parkway North, Suite 550, Deerfield,
Illinois, for a period of ten days prior to the meeting and at the meeting.
The Board of Directors has authorized the solicitation of proxies. Unless
otherwise directed, the proxies will be voted FOR the election of the three
persons listed in the attached Proxy Statement; FOR the ratification of the
appointment of independent public accountants; and on any other business that
may properly come before the Annual Meeting as the named proxies in their best
judgment shall decide.
Robert J. Tortorello
Secretary
Deerfield, Illinois
December 22, 2000
2
<PAGE>
WOODHEAD INDUSTRIES, INC.
PROXY STATEMENT
Deerfield, Illinois
December 22, 2000
To the Stockholders of Woodhead Industries, Inc.
The accompanying proxy is solicited by and on behalf of the Board of Directors
of Woodhead Industries, Inc., Three Parkway North, Suite 550, Deerfield,
Illinois 60015, for use at the Annual Meeting of Stockholders of the Company to
be held January 26, 2001 and at any adjournments or postponements of such
meeting. This Proxy Statement and accompanying proxy, along with the Company's
Annual Report to Stockholders, are first being sent to stockholders on or about
December 22, 2000.
Any stockholder giving a proxy has the power to revoke it at any time before it
is voted. Proxies may be revoked by filing with the Secretary of the Company
written notice of revocation bearing a later date than the proxy, by duly
executing a subsequently dated proxy relating to the same shares of Common Stock
and delivering it to the Secretary of the Company or by attending the Annual
Meeting and voting in person. Attendance at the Annual Meeting will not in and
of itself constitute revocation of a proxy. Any subsequently dated proxy or
written notice revoking a proxy should be sent to the Secretary of the Company
at Woodhead Industries, Inc., Three Parkway North, Suite 550, Deerfield,
Illinois 60015.
SHARES OUTSTANDING AND VOTING RIGHTS
Only stockholders of record at the close of business on December 1, 2000 are
entitled to vote at the meeting. On that date the Company had outstanding
11,439,958 shares of Common Stock, each of which is entitled to one vote.
Stockholders do not have cumulative voting rights with respect to the election
of directors.
The matters to be considered and acted upon at such meeting are referred to in
the preceding Notice and are more fully discussed below. All shares represented
by proxies which are returned properly signed will be voted as specified on the
proxy. If choices are not specified on the proxy, the shares will be voted as
recommended by the Board. The Company's By-laws require that the holders of a
majority of the total number of shares issued and outstanding be represented in
person or by proxy in order for the business of the meeting to be transacted.
Abstentions and broker non-votes will be counted in the determination of whether
a quorum exists.
3
<PAGE>
ITEM 1
ELECTION OF DIRECTORS
NOMINEES AND CONTINUING DIRECTORS
The Company's By-laws provide that the Board of Directors shall consist of no
more than twelve directors, but no less than five directors, divided into three
classes, the classes to be as nearly equal in number as possible. The Board of
Directors currently consists of ten members.
Class II, to be elected at this meeting, consists of three directors to serve
until the 2004 Annual Meeting of Stockholders or until their successors have
been elected and qualified. The nominees, Linda Y. C. Lim, Dale A. Miller and
Alan L. Shaffer are the current members of Class II, and their terms expire at
this meeting. C. Mark DeWinter, a current member of Class I, is retiring from
the Board on December 31, 2000. The Board of Directors has determined not to
fill the vacancy created by Mr. DeWinter's retirement at this time and has
approved a resolution reducing the size of the Board to nine members effective
immediately upon Mr. DeWinter's retirement.
Shares represented by proxies which are returned properly signed will be voted
for the nominees unless the stockholder indicates on the proxy that authority to
vote the shares is withheld. Each of the nominees has consented to serve as a
director if elected. Although it is not anticipated, if any of the nominees
should be unable or unwilling to serve as a director, it is intended that the
proxies will be voted for such other person or persons, if any, as the Board of
Directors may determine.
The affirmative vote of the majority of shares present in person or represented
by proxy at the annual meeting and entitled to vote is required to elect
directors. Abstentions and broker non-votes will have the same effect as a no
vote.
The following sets forth certain information with respect to the nominees as
well as to those directors in Classes I and III whose terms continue after the
meeting.
4
<PAGE>
THE MANAGEMENT NOMINEES FOR DIRECTOR ARE:
<TABLE>
<CAPTION>
Principal Occupation Director Term to
Name of Nominee or Employment Age Since Expire
--------------- -------------------- --- -------- -------
<S> <C> <C> <C> <C>
Class II
--------
Linda Y. C. Lim (A)(E).......... Associate Professor of Corporate 50 Nov. 1997 2004
Strategy and International
Business, University
of Michigan Business School
Dale A. Miller (A)(E)........... Retired President and Chief 53 Apr. 1993 2004
Executive Officer,
Novartis Animal Health US,Inc.
Alan L. Shaffer (A)(C).......... Vice President, Manufacturing 50 June 1996 2004
Services, American Axle &
Manufacturing, Inc.
THOSE DIRECTORS WHOSE TERMS DO NOT EXPIRE THIS YEAR ARE:
Class I
-------
Charles W. Denny (C)(N)......... Chairman, Square D Company and 64 Feb. 1993 2003
Schneider Electric North
America
Ann F. Hackett(C)(N)............ Director, Horizon Consulting 46 Nov. 1997 2003
Group, LLC
Eugene P. Nesbeda (C)(N)........ President, Tetra Pak Plastic 46 June 1997 2003
Packaging
Class III
---------
Daniel T. Carroll (C)(N)........ Chairman, The Carroll Group 74 Jan. 1987 2002
Philippe Lemaitre (E)........... President and Chief Operating 51 Oct. 1999 2002
Officer of the Company
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Sarilee K. Norton (A)(N)........ Director, Dock Square 53 May 1996 2002
Consultants, Inc.
(A) Member of Audit Committee
(C) Member of Compensation and Stock Option Committee
(E) Member of Executive Committee
(N) Member of Nominating Committee
</TABLE>
6
<PAGE>
Dr. Linda Y. C. Lim is an Associate Professor of Corporate Strategy and
International Business at the University of Michigan Business School. From 1994
to 2000, she had been Associate Professor of International Business at the
school. She also has been Director of the University's Southeast Asia Business
Program since 1993.
Mr. Dale A. Miller retired in 2000 as President and Chief Executive Officer of
Novartis Animal Health US, Inc., a position he had held since 1996. Prior to
that, he was President and Chief Executive Officer of Sandoz Agro, Inc. and
Sandoz Agro, Ltd. for more than 10 years. Novartis Animal Health US, Inc., is an
international manufacturer of specialty animal health products.
Mr. Alan L. Shaffer became Vice President, Manufacturing Services, American Axle
& Manufacturing, Inc. in late 2000. Earlier in 2000, he served as Executive Vice
President at Eventory, Inc. Prior to that, he had been Group Vice President-
Metal Working Technologies at Milacron Inc. since 1986. American Axle is a world
leader in the design, engineering and manufacture of driveline and chassis
systems for autos, trucks, buses and sport utility vehicles.
Mr. Charles W. Denny is Chairman of Square D Company and Schneider Electric
North America. On January 1, 2001, Mr. Denny will become the Company's Chairman
of the Board. In 1998, he retired as Chief Executive Officer of Group Schneider
North America. Prior to May 1997, he had been President and Chief Executive
Officer of Group Schneider North America and President and Chief Operating
Officer of Square D Company since 1992. Square D Company is one of North
America's largest manufacturers of quality electrical power control and
distribution products.
Ms. Ann F. Hackett is Director, Horizon Consulting Group, LLC, which was founded
in 1996. She also has been Vice President, Soul Source, Inc. since 1996. Prior
to that she had been an independent management consultant in human resource and
strategy development from 1990 to 1996. Horizon Consulting Group and Soul
Source, Inc. provide strategic, organizational, marketing and operational advice
to clients.
Mr. Eugene P. Nesbeda, has been President, Tetra Pak Plastic Packaging at Tetra
Pak Group since 1995. Prior to that, he served as an officer of the General
Electric Company since 1989,his most recent position there being Vice President
and General Manager of GE Structured Products from 1992. Tetra Pak Plastic
Packaging is one of the world's leading suppliers of packaging to the liquid
food industry.
7
<PAGE>
Mr. Daniel T. Carroll, Chairman of The Carroll Group, has served in that
position since 1982. He currently serves as a director of A. M. Castle & Co.;
American Woodmark Corp.; Aon Corporation; Comshare, Inc.; Diversa Inc.; Oshkosh
Truck Corporation; and Wolverine World Wide, Inc. The Carroll Group is a
management consulting firm.
Mr. Philippe Lemaitre joined the Company in October 1999 as its President and
Chief Operating Officer. On January 1, 2001, Mr. Lemaitre will become the
Company's President and Chief Executive Officer. Prior to joining the Company,
he had served as the Chief Technology Officer at Amp, Inc. since 1997. Prior to
that, he had been Vice President and General Manager of the Automotive
Electronics Group of TRW, Inc. since 1994.
Ms. Sarilee K. Norton, has been a Director, Dock Square Consultants, Inc. since
May 1999. She had been Vice President-Corporate Strategy, Tenneco since January
1997. Prior to that, she had been Vice President, Quality Management and
Strategy for Tenneco Packaging for more than five years.
INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
Board of Directors
The Board normally considers dividend action in January, April, July and
October. At its October meeting it reviews the results of operations for the
fiscal year just ended and the Company's operating plan for the year ahead as
well as the capital budget for the ensuing year.
In fiscal 2000, there were nine meetings of the Board of Directors. All
directors were present for 75% or more of the total number of meetings of the
Board of Directors and Committees of the Board on which they serve, with the
exception of Mr. Nesbeda.
8
<PAGE>
Committees of the Board
The committees established by the Board to assist it in the discharge of its
responsibilities are the Audit Committee, Compensation and Stock Option
Committee, Executive Committee, and Nominating Committee. These committees and
the principal responsibilities of each are described below. Respective
memberships on the various committees are identified in the list of directors in
this Proxy Statement.
The Audit Committee currently consists of four directors who are not employees
of the Company ("non-employee directors"). The Audit Committee has a charter,
which is attached to this Proxy Statement as Appendix A. This Committee reviews
the results and costs of audits by the Company's outside auditors. Each year
this Committee recommends the appointment of an independent public accounting
firm. Periodically, it meets with representatives of that firm and with the
Company's management. It also reviews and monitors policies established to
prevent unethical, questionable or illegal activities by those associated with
the Company. All members of the Audit Committee are independent as defined by
Rule 4200(a)(14) of the National Association of Securities Dealers' listing
standards. The Audit Committee held four meetings during fiscal 2000.
The Compensation and Stock Option Committee consists of five non-employee
directors. This Committee makes recommendations to the Board of Directors as to
the salaries of the Company's officers as well as incentive plans and other
forms of compensation. This Committee also grants stock options to management
personnel and key employees of the Company and its subsidiaries, and maintains
administrative authority with respect to the Woodhead Industries, Inc. Stock
Compensation Plans. The Compensation and Stock Option Committee held two
meetings during fiscal 2000.
The Executive Committee, comprised of four directors, exercises the authority of
the Board of Directors in certain matters subject to the final approval of the
entire Board. This Committee meets periodically to discuss and review matters of
interest to the Board. The Executive Committee held no meetings during fiscal
2000.
The Nominating Committee, comprised of five directors, reviews the
qualifications of possible directors and submits its recommendations to the
Board of Directors to fill board vacancies. This Committee also reviews and
recommends board committee assignments. The By-laws provide a procedure for
9
<PAGE>
stockholder nominations. [See Proposals of Stockholders] The Nominating
Committee held one meeting during fiscal 2000.
DIRECTORS' COMPENSATION
Directors who are officers of the Company receive no additional compensation for
service on the Board of Directors or any committee thereof or on any Company
committee. Non-employee directors each receive an annual retainer of $17,000
plus an additional $900 for attendance at each meeting of the Board or a
committee of the Board. Committee chairpersons also receive an annual stipend of
$1,000.
Under a deferred compensation arrangement, non-employee directors may elect to
defer payment of their annual retainers and fees until termination of their
services as directors. Deferred amounts accrue interest at the Federal Reserve
Discount Rate until paid. The Company has established a trust to ensure payment
to all directors of their deferred compensation and retirement benefits.
Pursuant to the 1999 Stock Awards Plan, non-employee directors are eligible to
receive grants of either stock options or restricted stock. Under this plan, the
Compensation and Stock Option Committee determines the number of shares covered
by an option and the option price, which price, however, may not be less than
the fair market value of the stock at the time of the grant. Grants of 2,000
options (16,000 in aggregate) were made to each non-employee director on October
24, 2000 with an exercise price of $20.57.
During fiscal 2000, Mr. Denny exercised an option for 2,250 shares with an
exercise price of $9.333 per share. At the time of this exercise the fair market
value of the stock was $10.25. Mr. Miller exercised three options, one for 2,250
shares and two for 1,500 shares each with exercise prices of $9.33, $14.31 and
$13.19, respectively. At the time of these exercises the fair market value of
the stock was $9.88, $21.47 and $21.47, respectively. Also, Ms. Norton exercised
two options, for 1,400 and 525 shares with exercise prices of $10.03 and $11.38,
respectively. At the time of these exercises the fair market value of the stock
was $20.06. Finally, Mr. Carroll exercised an option for 1,500 shares with an
exercise price of $14.31. At the time of this exercise the fair market value of
the stock was $20.81.
10
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission and
NASDAQ. Executive officers and directors are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based on a
review of the copies of such forms furnished to the Company and written
representations from the Company's executive officers and directors, all forms
were filed on a timely basis except that: Dr. Linda Y. C. Lim, a director, filed
one required form late with respect to three transactions; Sarilee K. Norton, a
director, filed one required form late with respect to four transactions; and W.
Arwel Rees, Vice President, President of Woodhead Connectivity Europe, filed
five required forms late with respect to six transactions.
11
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
MANAGEMENT
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned as of December 1, 2000, by each director, each
executive officer named in the Summary Compensation Table and all directors and
executive officers as a group.
Number of Shares Percent of
Beneficially Owned(1)(2) Class
------------------------ ----------
Charles P. Andersen 41,000 *
Daniel T. Carroll 26,252 *
Charles W. Denny 14,850 *
C. Mark DeWinter 484,505 4.2%
Ann F. Hackett 7,000 *
Philippe Lemaitre 70,000(3) *
Linda Y. C. Lim 8,344 *
Dale A. Miller 9,250(4) *
Eugene P. Nesbeda 9,000(4) *
Sarilee K. Norton 8,389 *
W. Arwel Rees 56,250(5) *
Alan L. Shaffer 11,500(4) *
Robert J. Tortorello 94,688(4) *
All directors and executive
officers as a group
(16 persons) including
above-named 971,231 8.5%
----------------
*Less than 1%.
(1) Except as otherwise indicated, each director and executive officer has
sole voting and investment power over the shares he or she beneficially
owns.
(2) Includes shares which may be acquired within 60 days pursuant to option
grants as follows: Mr. Andersen - 36,500 shares, Mr. Carroll - 7,500
shares, Mr. Denny - 7,500 shares, Mr. DeWinter - 403,000 shares, Ms.
Hackett - 4,000 shares, Mr. Lemaitre - 40,000 shares, Ms. Lim - 4,000
shares, Mr. Miller - 6,000 shares, Mr. Nesbeda - 6,000 shares, Ms.
Norton - 5,500 shares, Mr. Rees - 54,250 shares, Mr. Shaffer - 7,500
shares, Mr. Tortorello - 68,000 shares, and all directors and officers
as a group - 743,825 shares. Stock options carry no voting or
investment rights.
(3) Includes 30,000 shares granted as a restricted stock award under the
1996 Stock Awards Plan. 5,000 shares vest on October 1, 2001, 5,000
vest on October 1, 2003 and the balance vests on October 1, 2006. Mr.
Lemaitre has the right to vote such shares.
12
<PAGE>
(4) Shared voting and investment power as follows: Mr. Miller - 3,250
shares, Mr. Nesbeda - 3,000 shares, Mr. Shaffer - 4,000 shares, and
Mr. Tortorello - 19,450 shares.
(5) Excludes 3,500 shares owned by Mr. Rees' spouse for which he disclaims
any beneficial ownership.
OTHER BENEFICIAL OWNERS
The following table shows persons or groups who are known to the Company to be
beneficial owners of more than 5% of the outstanding Common Stock of the Company
as of December 1, 2000:
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
T. Rowe Price Associates, Inc........ 939,400(1) 8.2
100 East Pratt Street
Baltimore, Maryland 21202
Credit Suisse Asset Management....... 735,950(2) 6.4
277 Park Avenue, 24th Floor
New York, New York 10172
Lord, Abbett & Co.................... 714,529(3) 6.2
90 Hudson Street
Jersey City, New Jersey 07302
Mary W. Eklund....................... 619,301(4) 5.4
666 Hilary Drive
Tiburon, California 94920
Dimensional Fund Advisors Inc........ 611,900(5) 5.4
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
(1) These securities are owned by various individual and institutional
investors including T. Rowe Price Small-Cap Fund, Inc., which owns
578,000 shares, representing 5.1% of the shares outstanding, for which
T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment adviser with power to direct investments and/or sole power
to vote the securities. For purposes of the reporting requirements of
the Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates
expressly disclaims that it is, in fact, the beneficial owner of such
securities. Price Associates has sole dispositive power for the entire
holding of 939,400 shares and has sole voting power for 268,400 shares.
(2) Information provided by Credit Suisse Asset Management ("Credit
Suisse") and stockholder records indicates that Credit Suisse has sole
dispositive power as to the entire 735,950 shares and sole voting power
as to 563,056 shares. Credit Suisse has shared voting power as to
38,000 shares.
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<PAGE>
(3) Information provided by Lord, Abbett & Co. indicates that Lord, Abbett
& Co. has sole voting and sole dispositive power as to 714,529 shares.
(4) Information provided by Mary W. Eklund and stockholder records
indicates that Mary W. Eklund has shared voting and dispositive power
as to 565,201, and sole voting and dispositive power as to 53,600
shares. Included are 500 shares owned by Ms. Eklund's spouse for which
she disclaims any beneficial interest.
(5) Dimensional Fund Advisors, Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered
under the Investment Company Act of 1940, and serves as investment
manager to certain other investment vehicles, including commingled
group trusts. (These investment companies and investment vehicles are
the "Portfolios"). In its role as investment advisor and investment
manager, Dimensional possessed both voting and investment power over
611,900 shares of Woodhead Industries, Inc. stock as of September 30,
2000. The Portfolios own all securities reported in this statement, and
Dimensional disclaims beneficial ownership of such securities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 20, 1999 the Company provided Philippe Lemaitre, the Company's
President and Chief Operating Officer, with a loan of $350,000, bearing interest
at 6.3% per annum, with accrued interest due and payable on September 20th of
each of the next three years, and principal payments of $150,000 and $200,000
due on or about November 14, 2000 and September 20, 2002, respectively. The loan
was made to assist Mr. Lemaitre in the purchase of his principal residence upon
his relocation to the Chicago area and is secured by a mortgage on such
residence. The largest aggregate indebtedness during the period was $373,258.22
and the amount outstanding on November 30, 2000 was $204,289.18.
On October 18, 1999 the Company provided C. Mark DeWinter, the Company's
Chairman and Chief Executive Officer, with a loan of $127,000, bearing interest
at 6.3% per annum, with principal and accrued interest due and payable on July
18, 2000. The loan was made to assist Mr. DeWinter in the exercise of certain
stock options and the payment of related withholding taxes and is secured by the
pledge of the Company's common stock issued pursuant to such exercise. The
largest aggregate indebtedness during the period was $133,904.97 and that amount
has been repaid in full.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation received by the Chief Executive
Officer and the four other most highly compensated executive officers of the
Company (the "Named Executives") for services to the Company and its
subsidiaries during the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- ----------------------
OTHER
ANNUAL RESTRICTED ALL OTHER
COMPEN- STOCK COMPENSA-
SALARY BONUS SATION AWARDS(3) OPTIONS TION(4)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
C. M. DeWinter 2000 380,000 252,700 (1) 0 44,000 17,275
Chairman and 1999 360,000 37,800 (1) 0 55,000 14,387
Chief Executive Officer 1998 335,000 0 (1) 0 45,000 16,520
P. J. Lemaitre 2000 340,000 209,950 (1) 0 0 16,100
President and 1999 - - - 309,300 40,000 -
Chief Operating Officer 1998 - - - - - -
C. P. Andersen 2000 162,000 127,170 (1) 0 7,000 15,764
Vice President, President of 1999 157,981 0 109,265(2) 0 10,000 12,091
Woodhead Connectivity, 1998 133,500 0 (1) 0 7,500 12,152
North America
W. A. Rees 2000 162,000 64,428 (1) 0 7,000 10,747
Vice President, President of 1999 121,725 78,944 (1) 0 10,000 8,521
Woodhead Connectivity, Europe 1998 111,199 74,424 (1) 0 7,000 7,783
R. J. Tortorello 2000 157,200 59,660 (1) 0 3,200 15,877
Vice President, 1999 151,200 9,072 (1) 0 4,000 12,009
General Counsel and 1998 148,200 0 16,097(2) 0 5,500 13,353
Secretary
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No disclosure is required pursuant to applicable Securities and
Exchange Commission Regulations, as the aggregate value of perquisites
and other personal benefits covered by this column does not exceed the
lesser of $50,000, or 10% of the annual salary and bonus shown for the
indicated Named Executives.
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<PAGE>
(2) Includes amounts for (a) membership dues, (b) Company automobiles and
(c) relocation reimbursement as follows: Mr. Tortorello - 1998
(a)$6,162 and (b)$8,995; and Mr. Andersen - 1999 (c)$98,933.
(3) The aggregate number and value of restricted shares granted to Mr.
Lemaitre in 1999, valued as of the last day of the fiscal year, are
30,000 and $624,375, respectively.
(4) Reflects amounts for(a) the Company's defined contribution plans and
(b) life insurance premium payments as follows: Mr. DeWinter - 2000
(a)$15,134 and (b)$2,141, 1999 (a)$11,449 and (b)$2,938, 1998
(a)$12,785 and (b)$3,735; Mr. Lemaitre - 2000 (a)$15,134 and (b)$966;
Mr. Andersen - 2000 (a)$15,134 and (b)$630, 1999 (a)$11,091 and
(b)$1,000, 1998 (a)$11,563 and (b)$589; Mr. Rees - 2000 (a)$10,510 and
(b) $237, 1999 (a)$8,521, 1998 (a)$7,783; and Mr. Tortorello - 2000
(a)$14,925 and (b)$952, 1999 (a)$10,819 and (b)$1,190, 1998 (a)$12,413
and (b)$940.
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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information on option grants in fiscal 2000 to
the Named Executives.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL RATES OF
TOTAL STOCK PRICE APPRECIATION
OPTIONS FOR OPTION TERM(2)
OPTIONS GRANTED TO EXERCISE OR --------------------------
GRANTED(1) EMPLOYEES IN BASE PRICE(1) EXPIRATION 5% 10%
NAME (#) FISCAL 2000 ($/SHARE) DATE ($) ($)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C.M. DeWinter 30,000 18.9% 10.03 10/26/09 189,300 479,700
14,000 8.8% 12.33 01/28/10 108,500 275,100
P.J. Lemaitre 0 - - - 0 0
C.P. Andersen 5,000 3.2% 10.03 10/26/09 31,550 79,950
2,000 1.3% 12.33 01/28/10 15,500 39,300
W.A. Rees 5,000 3.2% 10.03 10/26/09 31,550 79,950
2,000 1.3% 12.33 01/28/10 15,500 39,300
R.J. Tortorello 2,300 1.5% 10.03 10/26/09 14,513 36,777
900 .6% 12.33 01/28/10 6,975 17,685
------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All such options were granted on October 26, 1999 and January 28, 2000
respectively, at fair market value on such dates and were not
exercisable until one year after the grant.
(2) Amounts shown assume a 5% and 10% annual rate of appreciation on the
price of the Company's Common Stock throughout the option term. There
can be no assurance that the rate of appreciation assumed for purposes
of this table will be achieved. However, an increase of approximately
$72 million and $182 million, respectively, in the "Potential
Realizable Value" would be realized by all shareholders under the
prescribed 5% and 10% stock price appreciation rates.
17
<PAGE>
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
The following table sets forth information regarding stock option exercises
during fiscal 2000 and the unexercised options held as of the end of fiscal
2000.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE YEAR END AT FISCAL YEAR END(1)
EXERCISE REALIZED (#) ($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
C.M. DeWinter 78,000 851,640 373,000/44,000 3,364,460/442,200
P.J. Lemaitre 0 0 0/40,000 0/420,000
C.P. Andersen 2,500 16,535 31,500/ 7,000 173,302/ 70,840
W.A. Rees 3,880 39,476 49,250/ 7,000 402,373/ 70,840
R.J. Tortorello 20,000 244,006 65,700/ 3,200 692,478/ 32,416
---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Value represents the fair market value as of the end of fiscal 2000 of
the shares subject to such options less the exercise price of such
options.
18
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Company's primary financial objective is to increase shareholder value. To
achieve this objective, the Company has created a comprehensive business
strategy. The purpose of the Compensation and Stock Option Committee of the
Board of Directors (the "Committee") is to establish and administer total
executive compensation policies which are aligned with the Company's strategic
business objectives. The Committee, which is composed entirely of non-employee
directors, recommends compensation actions for all corporate officers to the
Board of Directors for approval.
COMPENSATION PHILOSOPHY
There are certain guiding principles to which the Committee adheres in
structuring the compensation packages of key executives including the Named
Executives. These are:
PAY FOR PERFORMANCE - A high percentage of executives' total
compensation is composed of short-term and long-term variable pay
directly linked to the performance of the Company. The Committee
believes that this structure aligns the executives' interests with the
interest of the stockholders.
COMPETITIVENESS - Total compensation programs are designed to provide
executives with an opportunity to earn at a level above the median
industry practices and market competitors, when Company performance
exceeds industry norms and that of its competitors. This enables the
Company to significantly challenge its management team.
EXECUTIVE OWNERSHIP - A major component of variable pay is equity based
compensation. This links management's interests with stockholders'
interests and properly balances rewards for long-term vs. short-term
results.
MANAGEMENT DEVELOPMENT - Total compensation programs are designed to
attract and retain individuals with the leadership skills and other key
competencies required to shape the Company's future. This is based on
the belief that the Company's human resources can provide a competitive
advantage in the marketplace.
19
<PAGE>
COMPONENTS OF EXECUTIVE PAY
The components of total pay for all executives are base salary, annual
incentives, long-term incentives, and benefits. The Committee annually reviews
total compensation for the Company's executives, as well as each component of
compensation. This involves a market comparison of compensation and changes in
compensation for equivalent positions in related industrial groups, including
companies of comparable size. Competitive data are provided by independent
compensation consultants at the request of the Committee.
BASE SALARY - Base salary is generally set at a range of ten percent plus or
minus the median salary offered by companies of comparable size. An individual
executive's base salary, as well as increases, are based on the executive's
performance, experience, and reference to competitive rates for jobs with
comparable content. Actual salary adjustments for executives are determined on a
case by case basis and vary based on factors including performance, job content,
and pay position within a range, with no one factor given any particular
weighting.
ANNUAL INCENTIVES - Under the Company's annual Management Incentive Plan, a
target annual incentive is established for all participants in the form of a
percentage of base salary. Target awards under the annual incentive plan vary
from 20% to 70% of base salary, with the maximum awards varying from 30% to 120%
of base salary. There is no minimum award under the plan. These targets provide
executives with the opportunity to exceed competitive annual incentive levels if
the Company's performance significantly exceeds standard industry benchmarks.
Performance is measured against predetermined financial goals as reviewed and
approved by the Committee.
For the Chief Executive Officer and the corporate officers, incentive awards are
based on two equally weighted components. One is year-over-year growth in net
income and the other is return on stockholders' equity. For operating
executives, incentive awards are based on two key criteria. One is year-
over-year growth in income from operations and the other is return on funds
employed. Company performance is measured against a predetermined scale with
minimum thresholds applicable to each performance component under which no
portion of an incentive award is earned. An absolute threshold, related to
year-over-year growth in net income, must be achieved before any incentive award
may be earned by the Named Executives.
LONG-TERM INCENTIVES - Long-term incentives are provided in the form of stock
options and restricted stock under the 1999 Stock Awards Plan and predecessor
plans.
20
<PAGE>
STOCK OPTIONS - Incentive stock options or non-qualified stock options
may be granted to provide executives with the opportunity to acquire an
equity interest in the Company and to share in the appreciation of the
stock. Market surveys of long-term incentives are reviewed to establish
competitive practices. Management makes recommendations to the
Committee on the size of a grant, if any, for each executive based on
the individual's ability to affect financial performance, the
executive's past performance, and expectations of the executive's
future contributions. All individual stock option grants are reviewed
and approved by the Committee.
Normally stock options are granted annually to executive officers and
key management personnel. The exercise price of such stock options has
always been set at the fair market value on the date of the grant. The
Company has never re-priced any stock option grant.
RESTRICTED STOCK - Restricted stock awards are intended to be a
mechanism for aligning management and stockholders' interests and to
assure retention of key selected executives. The Company's long-term
performance ultimately determines the compensation value derived from
restricted stock, since the value is dependent on the long-term growth
of the Company's stock price. Only two restricted stock awards have
been granted in the last eight years. These awards were made to retain
the Chief Executive Officer and the Chief Operating Officer as part of
the Company's management succession process.
BENEFITS - Certain employee benefits are provided to executives as part of the
total compensation program. Generally the benefits offered to executives are
largely those offered to the general employee population, except for incremental
amounts of life insurance. Additionally, executive officers are provided
non-cash personal benefits such as tax and financial planning, health exams,
club memberships, and company cars. Two of the Named Executives are also covered
by a Supplemental Executive Retirement Plan.
SECTION 162(m) COMPLIANCE - Section 162(m) of the Internal Revenue Code of 1986
places a $1,000,000 cap on the amount of compensation which may be deducted for
each of the Named Executives. The Company has studied this cap and intends to
take the necessary steps to conform its compensation to comply with Section
162(m).
21
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. DeWinter's base salary was increased during fiscal 2000 to an annual rate of
$380,000, competitive with the median base salary paid to chief executive
officers of comparably sized corporations.
In fiscal 2000, Mr. DeWinter had a target annual incentive level of 70% of base
salary. In accordance with the annual Management Incentive Plan and based on the
Company's growth in net income of 20.6% and return on shareholders' equity of
15.4% for fiscal 2000, Mr. DeWinter was awarded an incentive of $252,700, or 67%
of his base salary.
During fiscal 2000, the Committee approved a stock option grant to Mr. DeWinter
of 44,000 shares. This grant is consistent with competitive practices of
companies in related industries, and of comparable size. The grant also reflects
the Committee's recognition of Mr. DeWinter's leadership in achieving the
Company's past performance, as well as its expectation for his future
contributions.
The Committee believes that the policies and programs described above have
supported the strategic business objectives leading to the increased shareholder
value of the Company over the last five-year period.
COMPENSATION AND STOCK OPTION
COMMITTEE
Charles W. Denny, Chairman
Daniel T. Carroll
Eugene P. Nesbeda
Ann F. Hackett
Alan L. Shaffer
22
<PAGE>
AUDIT COMMITTEE REPORT
To the Board of Directors of Woodhead Industries, Inc.:
We have reviewed and discussed the Company's audited financial statements as of
and for the year ended September 30, 2000.
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, COMMUNICATION WITH AUDIT
COMMITTEES, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We also have received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Standard No. 1, INDEPENDENCE
DISCUSSIONS WITH AUDIT COMMITTEES, as amended, by the Independence Standards
Board, and we have discussed with the independent auditors their independence.
As a result of the review and discussions referred to above, we recommend to the
Board of Directors the inclusion of the Company's audited financial statements
in the Company's Annual Report on Form 10-K for the year ended September 30,
2000.
AUDIT COMMITTEE
Dale A. Miller, Chairman
Linda Y. C. Lim
Sarilee K. Norton
Alan L. Shaffer
23
<PAGE>
The following graph compares the cumulative total shareholder return on the
Company's Common Stock for the last five fiscal years with the cumulative total
return on the Russell 2000 Index and the Dow Jones Electrical Components Group
over the same period (assuming the investment of $100 in the Company's Common
Stock, the Russell 2000 Index and the Dow Jones Electrical Components Group on
October 1, 1995 with all dividends reinvested).
[PLOT POINTS CHART]
DOW JONES
ELECTRICAL
FISCAL WOODHEAD COMPONENTS RUSSELL
YEAR INDUSTRIES GROUP 2000
---------------------------------------------------------
10/95 $ 100 $ 100 $ 100
10/96 $ 93 $ 123 $ 113
10/97 $ 151 $ 163 $ 151
10/98 $ 78 $ 158 $ 122
10/99 $ 81 $ 205 $ 144
10/00 $ 164 $ 226 $ 144
24
<PAGE>
SEVERANCE AGREEMENTS
The Company has entered into severance agreements with certain key employees,
including Messrs. DeWinter, Lemaitre, Andersen, Rees and Tortorello, which
provide for the payment of compensation and benefits in the event of termination
of employment following a change in control of the Company. The agreements
generally define "change in control of the Company" as (i) the acquisition of
25% or more of the combined voting power of the Company's then outstanding
securities; (ii) a change in the majority of the Company's Board of Directors
over a two-year period; or (iii) shareholder approval of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets or the merger or
consolidation of the Company with any other corporation, unless the Company's
shareholders continue to hold at least 80% of the combined voting power of the
voting securities of the Company or the surviving entity.
The original term of the severance agreements is three years; provided, however,
that each October 1 the agreements will be extended for an additional year
unless the Company provides proper notice of its intention not to extend the
agreements. If a change in control of the Company occurs during the original or
extended term, the agreements will continue in effect until the later of (i) the
original or extended term or (ii) twenty-four months beyond the month in which
the change in control occurs. In no event will the term of an agreement extend
beyond the date the executive attains age sixty-five.
An executive whose employment is terminated following a change in control of the
Company generally will receive compensation pursuant to the severance agreement
only if the termination was by the Company without "cause" or by the executive
for "good reason" as those terms are defined in the agreements. In addition to
the ordinary compensation and benefits (excluding severance) to which any
terminating employee would be entitled, the severance agreements provide the
following additional benefits payable after a change in control of the Company
to executives who are terminated without cause or who resign for good reason:
(i) three times the sum of the executive's base salary and target bonus,
provided, however, that if the executive is within three years of normal
retirement age, then this amount is reduced pro rata; (ii) continued health care
coverage and life insurance coverage for up to 36 months; (iii) a cash payment
equal to the difference between the fair market value of the Company's stock and
the exercise price of unexercised options for the Company's stock times the
number of shares represented by the unexercised options; (iv) a cash payment
equal to the present value of the accrued benefit under the Retirement Plan and
the
25
<PAGE>
account balance in the Profit Sharing Plan to the extent that either is not
fully vested; (v) the payment of any federal excise taxes; and (vi) the
reimbursement of all legal and accounting fees and expenses incurred as a result
of such termination.
The Company has established a trust which, in the event of a change in control
of the Company, will be funded to ensure payment to all key employees of the
compensation and benefits described herein.
RETIREMENT PLANS
The Company provides Retirement Plans which cover the employees of the Company
and its subsidiaries; excluding, however, those employees who are members of
groups which have not adopted the Plans, groups covered by collective bargaining
agreements that do not provide for participation in the plans and the employees
of certain foreign subsidiaries(including Mr. Rees). The Plans are funded
entirely by the Company and provide pension benefits upon retirement at age 65.
Estimated Annual Normal Retirement Pension
Five-Year Based Upon the Indicated Benefit Service
Average ----------------------------------------
Compensation 10 Years 15 Years 20 Years 25 Years 30 Years
------------ -------- -------- -------- -------- --------
$ 50,000 $ 3,894 $ 5,841 $ 7,788 $ 9,735 $11,682
75,000 6,894 10,341 13,788 17,235 20,682
100,000 9,894 14,841 19,788 24,735 29,682
125,000 12,894 19,341 25,788 32,235 38,682
150,000 15,894 23,841 31,788 39,735 47,682
170,000 18,294 27,441 36,588 45,735 54,882
The Plan for the Company and its U.S. subsidiaries provides pension benefits
upon retirement at age 65 equal to 1.2% of the participant's average annual
compensation multiplied by years of credited service up to 30 years, reduced by
.6% of final average compensation (which reflects reductions for social security
benefits) up to covered compensation multiplied by years of credited service up
to 30 years. Participants are fully vested in their accrued pension benefits
after five years of service. The Plans provide for early retirement at age 55
with 10 years' continuous employment. In the event of the death of an active
participant who has completed 5 years of service, provision is made to pay a
benefit of monthly income for life to the participant's surviving spouse equal
to 50% of the benefit which would have been payable to the participant.
26
<PAGE>
Annual amounts of normal retirement pension payable under the Plans are
illustrated in the above table. The illustration assumes retirement as of
October 1, 2000 at the normal retirement age of 65. Benefits were computed on a
straight life annuity basis. The number of years of service, as of October 1,
2000 for each of the executive officers listed in the summary compensation
table(excluding Mr. Rees) was as follows: Mr. DeWinter-14 years, Mr. Lemaitre-1
year, Mr. Tortorello-13 years, and Mr. Andersen-6 years.
27
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Woodhead Industries, Inc. Supplemental Executive Retirement Plan ( the
"SERP") is a non-qualified and unfunded plan designed to provide supplemental
retirement benefits to selected key employees of the Company who have forfeited
potential retirement benefits from former employers and/or who are subject to
statutory or regulatory restrictions on qualified plan benefits. The
supplemental benefit payable to each participant who retires on or after his
normal retirement age is equal to sixty percent (60%) of his average monthly
compensation, less the sum of (i) his "Primary Social Security Benefit" and (ii)
the actuarial equivalent of any retirement benefits to which such participant is
then entitled under any other retirement plan or arrangement maintained by the
Company. A participant's average monthly compensation is one-sixtieth (1/60) of
the aggregate of such participant's base salary and bonus award for the five
highest consecutive Plan Years (as defined in the Retirement Plan). The SERP
provides for early retirement (before age 65) under certain conditions with
reduced benefits. The supplemental benefit to which a participant may be
entitled under the SERP will be paid as a lump sum benefit at retirement.
Messrs. DeWinter and Jennings are the only Named Executives currently covered by
the SERP who would be entitled to benefits thereunder. The estimated lump sum
benefits under the SERP that would be received by these Named Executives, if
each retired at age 65, are as follows: Mr. DeWinter, $2,055,078; Mr. Lemaitre,
$2,160,996. The amounts assume that these Named Executives will continue to work
for the Company until their normal retirement dates and that their earnings will
remain the same as in fiscal year 2000.
The Company has established a trust which, in the event of a change in control
of the Company, will be funded to ensure payment to all participants of the
benefits described herein.
PROFIT SHARING PLANS
The Company provides Profit Sharing Plans which cover the employees of the
Company and its subsidiaries excluding those employees who are members of groups
which have not adopted the Plans, groups covered by collective bargaining
agreements that do not provide for participation in the plans and employees of
certain other subsidiaries(including Mr. Rees). The plans are funded by the
Company and annual profit sharing contributions are, under most plans, 5% of
annual pretax profits, as defined, but not exceeding 15% of the aggregate
compensation paid to participants during the year. The contributions, together
with non-vested amounts forfeited by reason of terminations of
28
<PAGE>
employment during the year, are allocated among the accounts of participants in
accordance with a formula based on participants' covered compensation. The
amounts so allocated are invested by the plan trustee, at the direction of each
participant, in various investment alternatives. A participant's account is
vested in annual increments of 20% for each of five years in which the
participant completes 1,000 hours of service, and is fully vested after five
years of service. The accounts, however, are automatically vested upon death,
permanent disability or reaching age 65. Distribution of a participant's vested
account balances is normally made upon termination of employment in the form of
a single payment or installment payments.
The Plan for the Company and its U.S. subsidiaries also provides employees the
opportunity for tax-deferred savings pursuant to Section 401(k) of the Internal
Revenue Code of 1986. The Plan allows participants to make elective deferrals of
up to 15% of their eligible compensation, not to exceed the maximum amount
allowable by law. The Company will make matching contributions of 50% of the
amount (up to 4% of the participant's eligible compensation) a participant
defers to the Plan.
Employee contributions and income derived therefrom are 100% vested and
nonforfeitable. Amounts credited to participant accounts which are attributable
to the Company's matching contributions (and any income derived therefrom) are
vested in annual increments of 20% for each of five years in which the
participant completes 1,000 hours of service, and are fully vested after five
years of service.
MANAGEMENT INCENTIVE PLAN
The Management Incentive Plan is administered by a Corporate Management
Committee under the direction of the Compensation and Stock Option Committee of
the Board of Directors. Participants include officers and other key employees
who can make significant contributions to the profitable growth of the Company.
In general, a minimum increase in the Company's net income over the prior year
must be achieved before any payments can be made under the Plan.
Each eligible participant shall have defined in advance of the fiscal year a
range of incentive opportunity, including a maximum bonus amount, which is
expressed as a percent of the participant's base salary. Corresponding with the
incentive opportunity are pre-established performance targets that must be
achieved before the incentive award is earned. These performance targets are
related to the specific strategic objectives of each of the business units.
These targets may include, but are not limited to, return on stockholders'
equity, return on funds employed, achievement of key organizational goals and
income from operations. Maximum payments may range from 30% to 120% of a
participant's base salary.
29
<PAGE>
STOCK COMPENSATION PLANS
The Company has adopted stock compensation plans, from time to time, for the
benefit of certain key employees of the Company and its subsidiaries. There are
currently four plans, the 1990, 1993, 1996 and 1999 Stock Awards Plans (the
"1990 Plan", "1993 Plan", "1996 Plan" and "1999 Plan") under which options have
been granted and remain unexercised. No shares are currently available for the
granting of options under the 1990 Plan. Presently there are approximately 330
employees eligible to participate. These plans are administered by the
Compensation and Stock Option Committee of the Board of Directors. Under these
plans, options are granted to eligible employees to purchase Company stock. The
employees who are granted options, the number of shares covered by an option,
and the option price are determined by the Compensation and Stock Option
Committee. The option price, however, may not be less than the fair market value
of the stock at the time of the grant. Options under all plans expire not later
than ten years after grant. The optionee generally must exercise his option
within 30 days of termination of employment with the Company or one of its
subsidiaries. Termination of employment for death or disability may extend the
post-employment period in which options may be exercised to up to two years,
while retirement at age 55 or older may extend that period to up to five years.
Options are not transferable except in the case of the optionee's death.
The plans permit an optionee to acquire stock pursuant to an option either by
paying cash or by exchanging Company stock at its then fair market value, or by
a combination of cash and stock. The plans provide for the granting of
non-qualified options in addition to or instead of incentive stock options.
Also, the 1990 Plan, 1993 Plan, 1996 Plan and 1999 Plan authorize the
Compensation and Stock Option Committee to grant restricted stock with such
restriction periods as it may designate. During the restriction period, the
restricted stock may not be sold, assigned, pledged or otherwise transferred.
Except for the restrictions on transfer and such other restrictions as the
Compensation and Stock Option Committee may impose, a participant has all the
rights of a holder of the Company's Common Stock including, but not limited to,
voting and receiving dividends. To date, only two awards of restricted shares
have been granted.
30
<PAGE>
ITEM 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors has
reappointed Arthur Andersen LLP as independent public accountants for the fiscal
year ending September 29, 2001, subject to ratification by the stockholders.
Arthur Andersen LLP has examined the financial statements of the Company each
fiscal year since 1961. A representative of Arthur Andersen LLP will be present
at the Annual Meeting to respond to appropriate questions from stockholders and
to make a statement if such person desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF
THE SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next Annual Meeting
must be received by the Secretary, Woodhead Industries, Inc., Three Parkway
North, Suite 550, Deerfield, Illinois 60015, no later than August 25, 2001.
The Company's By-laws provide that nominations for the election of directors may
be made by the Board of Directors or a committee appointed by the Board of
Directors. Stockholders intending to nominate director candidates for election
must deliver written notice thereof to the Secretary of the Company not later
than (i) with respect to an election to be held at an annual meeting of
stockholders, 90 days in advance of such meeting, and (ii) with respect to an
election to be held at a special meeting of stockholders, the close of business
on the seventh day following the date on which notice of such meeting is first
given to stockholders. Stockholders wishing to make such nominations may contact
the Secretary of the Company to determine the proposed date of such annual
meeting. The By-laws further provide that the notice shall set forth certain
information concerning such stockholder and his nominee(s), including their
names and addresses, a representation that the stockholder is entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice, a description of all
arrangements or understandings between the stockholder and each nominee, such
other information as would be required to be included in a proxy statement
soliciting proxies for the election of the nominees of such stockholder and the
consent of each nominee to serve as a director of the Company if so elected. The
chairman of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedure.
31
<PAGE>
GENERAL
The Company has mailed to all stockholders, concurrently with this Proxy
Statement, its annual report for the year ended September 30, 2000. Proxies will
be solicited by mail. Proxies may be solicited by directors, officers and a
small number of regular employees of the Company personally or by mail,
telephone or telegraph, but such persons will not be specially compensated for
such service. It is contemplated that brokerage houses, custodians, nominees and
fiduciaries will be requested to forward the soliciting material to the
beneficial owners of stock held of record by such persons. The expense of such
solicitation will be paid by the Company. In addition, the Company has retained
D. F. King & Co., Inc. to assist them in the solicitation of proxies from
stockholders. For such services, the Company will pay D. F. King & Co., Inc. a
fee not to exceed $5,000 plus out-of-pocket expenses. If any matters other than
those referred to in the Notice of Annual Meeting should properly come before
the meeting, it is the intention of the persons named in the accompanying form
of proxy to vote the proxies held by them in accordance with their best
judgment. Management does not know of any business other than that referred to
in the Notice which may properly be considered at the meeting.
By order of the Board of Directors
Robert J. Tortorello
Secretary
32
<PAGE>
APPENDIX A
WOODHEAD INDUSTRIES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
PURPOSE
The purpose of this statement is to set forth the mission, composition, and
responsibilities of the Audit Committee of the Board of Directors.
MISSION
The mission of the Audit Committee is to provide assistance to the Board of
Directors in fulfilling its responsibilities to the shareholders, potential
shareholders, and investment community relating to corporate accounting,
reporting policies, and the quality and integrity of the financial reports of
the Corporation. In so doing, the Audit Committee is charged with understanding,
assessing, and monitoring the corporate control environment and with overseeing
the ethical behavior of the Corporation and its employees. The Audit Committee
must maintain free and open lines of communication between the directors, the
independent auditors, the internal auditors, and the management of the
Corporation in order to facilitate its mission.
COMPOSITION
The Board of Directors shall designate annually at least three outside directors
to serve as members of the Audit Committee and appoint one of such directors as
the Chairperson of the Committee. Membership on the Audit Committee shall be
restricted to "independent" directors within the meaning of the NASDAQ rules
and, as such, shall be free of any relationship that, in the opinion of the
Board of Directors, would interfere with their exercise of independent judgment
as a Committee member. All members of the Committee shall be financially
literate. "Financial literacy" shall be determined by the Board in the exercise
of its business judgment, and shall include a working familiarity with basic
finance and accounting practices and an ability to read and understand
fundamental financial statements. At least one member of the Committee shall
have past employment experience in finance or accounting, requisite professional
certification in accounting or any other comparable experience or background
which results in the individual's financial sophistication, including being or
having been a chief executive officer, chief financial officer or senior officer
with financial oversight responsibilities.
A-1
<PAGE>
Two Committee members shall constitute a quorum of the Committee.
RESPONSIBILITIES
The Audit Committee shall meet at least two times annually, or more frequently
as circumstances dictate. The Committee shall review and reassess the adequacy
of the Committee's Charter annually. To fulfill its responsibilities and duties,
the Audit Committee shall:
1. Review and recommend the independent auditors to be selected to audit
the books of the Corporation and its subsidiaries, the proposed scope
and timing, and the fees to be paid for the work performed.
2. Review the performance of the Corporation's independent auditors and
make recommendations to the Board regarding of the replacement or
termination of the independent auditors when circumstances warrant.
3. Oversee the independence of the Corporation's independen auditors by,
among other things:
(i) requiring the independent auditors to deliver to the Committee
on a periodic basis a formal written statement from the
independent auditors delineating all relationships between the
independent auditors and the Corporation; and
(ii) actively engaging in a dialog with the independent auditors
with respect to any relationships or services that may impact
the objectivity and independence of the independent auditors
and recommending that the Board take appropriate action to
satisfy itself of the auditor's independence.
4. Instruct the Corporation's independent auditors that they are
ultimately accountable to the Board of Directors and the Audit
Committee, And that the Board and Committee are responsible for the
selection (subject to shareholder approval), evaluation and termination
of the Corporation's independent auditors.
5. Meet with the independent auditors and financial management of the
Corporation to review the results of the audit for the current year.
Also, review the financial statements of the annual report with the
independent auditors and the Corporation's management to determine that
the disclosures and content are complete and accurate.
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<PAGE>
6. Ensure that the Corporation's interim financial statemen included in
Quarterly Reports on Form 10-Q have been reviewed by the Corporation's
independent auditors using professional standards and procedures for
conducting such reviews.
7. Review the performance of the Internal Audit Department including the
independence and authority of its reporting obligations, the proposed
programs for the coming year and the coordination of such programs with
the independent auditors, with particular attention to maintaining the
most effective balance between the external and internal auditing
resources.
8. Review with the independent auditors, the internal auditors, and
financial and accounting personnel, the quality and effectiveness of
the accounting and financial controls of the Corporation, and elicit
any recommendations they may have for the improvement of such internal
control procedures or particular areas where new or more detailed
controls are desirable. Particular emphasis should be given to the
quality of such internal controls to expose any payments, transactions,
or procedures that might be deemed illegal or otherwise improper. The
Committee shall ascertain that the independent auditors'
recommendations have been implemented timely.
9. Review periodically the Corporation's conformance to its policy on Code
of Ethical Business Conduct.
10. Provide sufficient opportunity for the independent and internal
auditors to meet separately with the members of the Committee without
members of management present. Among the items to be discussed in these
meetings are the independent auditors' evaluation of the Corporation's
financial, accounting, and auditing personnel, and the cooperation
which the independent auditors received during the course of their
audit.
11. Prepare a report to be included in each annual proxy statement of the
Corporation which states, among other things, whether the Committee
has:
(i) reviewed and discussed the audited financial statements with
management;
(ii) discussed with the independent auditor the matters that the
auditors are required to discuss with the Audit Committee;
(iii) received of the written disclosure from the independent
auditors regarding the relationships that
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<PAGE>
the auditors are required to deliver and has discussed with
the auditors the auditor's independence and light of that
disclosure; and
(iv) recommended to the Board of Directors, based on the review and
discussions referred to in (i) through (iii) above, that the
audited financial statements be included in the Corporation's
Annual Report on Form 10-K for the last fiscal year for filing
with the SEC.
12. Upon adoption of a final rule by NASDAQ, the Committee shall ensure
that the Corporation promptly provide NASDAQ with written confirmation
regarding:
(i) Any determination that the Board has made regarding the
independence of the Committee members;
(ii) The financial literacy of the Committe members;
(iii) The determination that at least one of the Committee members
has accounting or related financial management expertise;
(iv) The annual review and reassessment of the adequacy of the
Committee's charter.
13. Report to the Board of Directors at its next regular meeting all
activities of the Audit Committee since its previous report.
14. Perform such other duties as the Board of Directors may so direct.
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<PAGE>
WOODHEAD INDUSTRIES, INC.
Proxy Solicited on Behalf of the Board of Directors of
Woodhead Industries, Inc. for Annual Meeting on January 26, 2001
The undersigned holder of Common Stock of Woodhead Industries, Inc.
hereby appoints Philippe Lemaitre and Sarilee K. Norton or either of them, with
full power of substitution, to act as proxy for and to vote the stock of the
undersigned at the Annual Meeting of Stockholders of Woodhead Industries, Inc.
to be held at the Northbrook Hilton Hotel, 2855 North Milwaukee Avenue,
Northbrook, Illinois on January 26, 2001, or any adjournment or postponement
thereof:
1. ELECTION OF DIRECTORS
Nominees:
Linda Y. C. Lim Dale A. Miller Alan L. Shaffer
_____FOR ALL _____WITHHOLD ALL _____FOR ALL (Except Nominee(s)
inserted below)
-----------------------------------
2. Ratification of the appointment of Arthur Andersen LLP as independent public
accountants.
_____FOR _____AGAINST _____ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder.
If no direction is made, this proxy will be voted FOR Proposals 1 and 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
-----------------------------------
Signature
-----------------------------------
Signature
Dated_______________________, 200__
Please mark, sign, date and return
this proxy card promptly using the
enclosed envelope.
