<PAGE> 1
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 [ ]
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
CTS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
CTS CORPORATION
- --------------------------------------------------------------------------------
(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)(1) 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> 2
CTS LOGO
CTS CORPORATION LETTERHEAD
March 22, 1999
Dear CTS Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of CTS Corporation. The meeting will be held on Friday, April 30, 1999, at 9:00
a.m. Eastern Standard Time at CTS' corporate office, 905 West Boulevard North,
Elkhart, Indiana 46514.
The official notice of meeting, proxy statement and form of proxy are
enclosed. We hope you will attend the meeting in person. Whether you plan to
attend the meeting or not, we encourage you to read this proxy statement and
vote your shares. The vote of every shareholder is important.
We look forward to seeing you at the meeting.
JOSEPH P. WALKER
Joseph P. Walker
Chairman of the Board
President and Chief
Executive Officer
<PAGE> 3
CTSLOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1999
To CTS Shareholders:
The Annual Meeting of Shareholders of CTS Corporation will be held at 9:00
a.m. Eastern Standard Time, Friday, April 30, 1999, at the CTS corporate office,
905 West Boulevard North, Elkhart, Indiana 46514.
Only shareholders of record at the close of business on March 12, 1999 may
vote at this meeting or any adjournments that may take place. At the meeting, we
will:
1. Elect a Board of Directors;
2. Approve the CTS Corporation Management Incentive Bonus Plan;
3. Attend to other business properly presented at the meeting.
Your Board of Directors recommends that you vote in favor of the two
proposals outlined in this proxy statement.
By Order of the Board of Directors,
JEANNINE M. DAVIS LOGO
Jeannine M. Davis
Secretary
March 22, 1999
YOUR VOTE IS IMPORTANT.
PLEASE DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
CTS CORPORATION
PROXY STATEMENT
---------------------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1999
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of CTS Corporation of proxies to be voted at the Annual
Meeting of Shareholders to be held on Friday, April 30, 1999. Following is
important information in a question-and-answer format regarding the Annual
Meeting and this proxy statement.
Q: WHAT MAY I VOTE ON?
A: (1) The election of nominees to serve on our Board of Directors; and
(2) Approval of the CTS Corporation Management Incentive Bonus Plan.
Q: HOW DOES THE BOARD RECOMMEND I VOTE ON THE PROPOSALS?
A: The Board recommends a vote FOR each of the nominees and FOR the approval of
the CTS Corporation Management Incentive Bonus Plan.
Q: HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
A: Although we do not know of any business to be considered at the 1999 Annual
Meeting other than the proposals described in this proxy statement, if any
other business is presented at the Annual Meeting, your signed proxy card
gives authority to Joseph P. Walker, CTS' Chairman, President and Chief
Executive Officer, and Jeannine M. Davis, CTS' Senior Vice President,
General Counsel and Secretary, to vote on those matters at their discretion.
Q: HOW MANY VOTES ARE NEEDED FOR APPROVAL OF EACH ITEM?
A: Assuming that at least a majority of shares are present at the Annual
Meeting, the five director-nominees receiving the most votes will be
elected. Only votes cast for a nominee will be counted, except that your
proxy will be voted for the five nominees unless the proxy contains contrary
instructions. Abstentions, broker non-votes and instructions on your proxy
to withhold authority to vote for one or more of the nominees will result in
those nominees receiving fewer votes. Assuming that a majority of shares are
present at the Annual Meeting, the CTS Corporation Management Incentive
Bonus Plan will be approved if a majority of the shares present vote to
approve it. An abstention will have the same effect as a vote against this
proposal. Broker non-votes will not be voted for or against this proposal
and will not be counted as entitled to vote.
Q: WHO IS ENTITLED TO VOTE?
A: Shareholders as of the close of business on March 12, 1999 (the Record Date)
are entitled to vote at the Annual Meeting. As of the Record Date,
13,762,935 shares of CTS common stock were issued and outstanding. Every
shareholder of common stock is entitled to one vote for each share of common
stock held on the Record Date.
3
<PAGE> 5
Q: HOW DO I VOTE?
A: Sign and date each proxy you receive and return it in the prepaid envelope.
If you return your signed proxy but do not mark the boxes showing how you
wish to vote, your shares will be voted FOR the two proposals. You have the
right to revoke your proxy any time before the meeting by:
(1) notifying CTS' Secretary;
(2) returning a later-dated proxy card; or
(3) voting in person at the meeting.
Q: WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
A: It means you hold shares registered in more than one account. Sign and
return all proxies you receive to ensure that all your shares are voted.
Q: HOW MUCH DID THIS PROXY SOLICITATION COST?
A: Georgeson & Co., Inc. was hired to assist in distribution of proxy materials
and solicitation of votes for $5,000, plus their reasonable expenses. We
also reimburse banks, brokers and other custodians, fiduciaries and nominees
for their costs of sending proxy and solicitation materials to our
shareholders.
Q: WHEN ARE SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING DUE?
A: To be considered for inclusion in next year's proxy statement, shareholder
proposals must be submitted in writing to the Secretary of CTS at the CTS
Corporate Office by November 22, 1999. In addition, CTS' advance notice
bylaw provisions require that to be presented from the floor of the 2000
Annual Meeting any shareholder proposal, including the nomination of a
candidate for director, must be submitted in writing to the CTS corporate
office no earlier than December 17, 1999 and no later than February 1, 2000.
Certain information is required to be included with shareholder proposals.
This information is described in CTS' bylaws. Copies of the bylaws may be
obtained free of charge from the CTS Secretary.
4
<PAGE> 6
PROPOSALS YOU MAY VOTE ON
1. ELECTION OF DIRECTORS
There are five nominees for election. Detailed information on each is
provided on page 6. All directors are elected annually and serve a one-year
term.
YOUR BOARD RECOMMENDS A VOTE FOR EACH OF THESE DIRECTOR-NOMINEES
2. THE CTS CORPORATION MANAGEMENT INCENTIVE BONUS PLAN
The purpose of the CTS Corporation Management Incentive Bonus Plan is to
promote the achievement of important CTS performance goals by linking
management incentive compensation directly to those goals. Detailed
information about this plan is provided on pages 16 to 17.
YOUR BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE CTS
CORPORATION MANAGEMENT INCENTIVE BONUS PLAN
5
<PAGE> 7
ITEM 1. ELECTION OF DIRECTORS
NOMINEES FOR THE BOARD OF DIRECTORS
LAWRENCE J. CIANCIA Director since 1990
Age 56
Mr. Ciancia is a partner in Corporate Development International, a corporate
search firm specializing in mergers, acquisitions and divestitures. During the
past five years he served as Vice President, Growth & Development, of Uponor
U.S., a supplier of PVC pipe products, speciality chemicals and PVC compounds,
and Chief Operating Officer of Uponor ETI Company, formerly Concorde Industries,
Inc. Mr. Ciancia is a member of the Audit Committee and Chairman of the
Compensation Committee of the Board.
THOMAS G. CODY Director since 1998
Age 57
Mr. Cody is Executive Vice President, Legal and Human Resources, of Federated
Department Stores, Inc. Mr. Cody is a member of the Compensation and Nominating
Committees of the Board.
GERALD H. FRIELING, JR. Director since 1982
Age 68
Mr. Frieling is Vice Chairman of the Board of Tokheim Corporation, a
manufacturer of petroleum dispensing equipment, systems and control devices, and
President of Frieling and Associates, a consulting firm. Previously he served as
Chairman of the Board and Chief Executive Officer of Tokheim Corporation. Mr.
Frieling is a member of the Compensation and Nominating Committees and Chairman
of the Audit Committee of the Board.
ROBERT A. PROFUSEK Director since 1998
Age 49
Mr. Profusek is a Partner and Head of the Transactions Practice Group of Jones,
Day, Reavis & Pogue, a global law firm. He is a member of the Audit Committee of
the Board.
JOSEPH P. WALKER Director since 1987
Age 60
Mr. Walker is Chairman of the Board, President and Chief Executive Officer of
CTS. He is also a member of the Nominating Committee of the Board.
- --------------------------------------------------------------------------------
YOUR BOARD RECOMMENDS A VOTE FOR EACH OF THESE DIRECTORS
- --------------------------------------------------------------------------------
6
<PAGE> 8
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
During 1998 the Board of Directors held ten meetings. Each director
attended 100% of the meetings of the Board of Directors and the committees of
which he was a member in 1998.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE
Members: Directors Ciancia, Frieling and Profusek
Number of Meetings in 1998: Four
Functions:
-- Recommends independent auditors and oversees their activities
-- Oversees internal controls, audits and compliance programs
COMPENSATION COMMITTEE
Members: Directors Ciancia, Cody and Frieling
Number of Meetings in 1998: Six
Functions:
-- Establishes executive compensation
-- Administers the CTS Corporation Management Incentive Bonus Plan, the
CTS Corporation 1988 Restricted Stock and Cash Bonus Plan and the CTS
Stock Option Plans
NOMINATING COMMITTEE
Members: Directors Cody, Frieling and Walker
Number of Meetings in 1998: Three
Functions:
-- Recommends candidates for membership on the Board
DIRECTOR COMPENSATION
Employee directors receive no additional compensation for serving on the
Board of Directors or Board Committees.
Non-employee directors receive the following fees for their service on the
Board:
<TABLE>
<S> <C>
-- Annual Board Retainer.................................. $17,500
-- Annual Retainer for each Committee..................... $ 2,500
-- Meeting Fee for each Board or Committee
Meeting attended in person............................. $ 1,500
-- Meeting Fee for subsequent meetings attended on the
same day............................................... $ 750
-- Meeting Fee for each Board or Committee
Meeting attended by telephone.......................... $ 750
</TABLE>
In 1990 CTS adopted the CTS Corporation Stock Retirement Plan for
Non-employee Directors. Under that plan, a deferred stock account is established
for each non-employee director. On January 1st of each year, 400 common stock
units are credited to each non-employee director's account in the plan. Each
account is also credited with common stock units when credits equivalent to cash
dividends
7
<PAGE> 9
on the shares in an account aggregate an amount equal to the value of a share of
common stock on a dividend payment date. Deferred common stock units are
distributable as of January 1st of the year after the director leaves the Board
of Directors. CTS expended $54,300 in 1998 for the common stock units credited
to the deferred stock accounts of non-employee directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Profusek is a Partner and Head of the Transactions Practice Group of
Jones, Day, Reavis & Pogue, a law firm which CTS has retained for specific legal
services and litigation, on a case by case basis, for over five years.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires CTS'
directors, executive officers and certain persons who own more than 10% of CTS'
common stock to file with the Securities and Exchange Commission and the New
York Stock Exchange initial reports of ownership and reports of changes in
ownership of CTS common stock. Executive officers, directors and greater than
10% shareholders are required to furnish CTS with copies of all Section 16(a)
reports they file.
CTS believes that all required Section 16(a) filings were timely made in
1998 except that reports disclosing exercises of employee stock options were
inadvertently filed late for James N. Hufford and George T. Newhart.
DIRECTORS' AND OFFICERS' INDEMNIFICATION AGREEMENTS
CTS has entered into Indemnification Agreements with each of its executive
officers and directors, which provide that CTS will indemnify them to the
fullest extent allowed by CTS' bylaws and the Indiana Business Corporation Law,
in the event that he or she was or is made a party or threatened to be made a
party to any action, suit or proceeding by reason of the fact that he or she is
an executive officer or director of CTS. The indemnification agreements provide
indemnification for acts occurring prior to the execution of the agreements.
8
<PAGE> 10
STOCK PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
The following graph compares the cumulative total shareholder return on CTS
common stock with Standard & Poor's 500 Stock Index and the Technology 500 Stock
Index for the years 1994 through 1998. The graph assumes that $100 was invested
on December 31, 1993 in each of CTS common stock, the S&P 500 Stock Index and
the Technology 500 Stock Index.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Growth in Value 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
CTS Corporation $100 $142.99 $198.14 $228.05 $516.19 $708.16
S&P 500 $100 $101.32 $139.40 $171.40 $228.59 $293.91
Technology-500 $100 $116.55 $167.88 $238.17 $300.32 $519.48
- ------------------------------------------------------------------------------------------------------
</TABLE>
STOCK OWNERSHIP INFORMATION
Five Percent Owners of Common Stock. The table below lists the persons
known by CTS to beneficially own at least 5% of CTS' common stock as of March 5,
1999.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF CLASS
- -------------------------------------------------------------------------
<S> <C> <C>
Gabelli Funds, Inc., 1,165,012(1) 8.5%
GAMCO Investors, Inc.,
Gemini Capital Management Ltd.
One Corporate Center
Rye, NY 10580
Marc J. Gabelli and Mario J. Gabelli
Joseph P. Walker 689,262(2) 5.0%
</TABLE>
- -------------------------------------
(1) Includes 326,000 shares held by Gabelli Funds, Inc., 829,012 shares held by
GAMCO Investors, Inc., and 10,000 shares held by Gemini Capital Management
Ltd. which were reported on a joint Schedule 13D Amendment filed March 3,
1999, the most recent filing by such Reporting Persons. According to the
Schedule 13D, each of the Reporting Persons and Covered Persons
9
<PAGE> 11
has the sole power to vote or direct the vote and sole power to dispose or
to direct the disposition of the Securities reported for it, either for its
own benefit or for the benefit of its investment clients or its partners, as
the case may be, except that GAMCO Investors, Inc. does not have authority
to vote 25,000 of the reported shares, and except that Gabelli Funds, Inc.
has sole dispositive and voting power with respect to the 326,000 reported
shares held by the Funds, so long as the aggregate voting interest of all
joint filers does not exceed 25% of their total voting interest in CTS and,
in that event, the Proxy Voting Committee of each of the Funds will
respectively vote the Fund's shares, and except that, at any time, the Proxy
Voting Committee of each such Fund may take and exercise in its sole
discretion the entire voting power with respect to the shares held by such
Fund under special circumstances such as regulatory considerations, and
except that the power of Mario Gabelli, Marc Gabelli and Gabelli Funds, Inc.
is indirect with respect to Securities beneficially owned directly by other
Reporting Persons.
(2) Includes 12,253 shares held in Mr. Walker's account in the CTS Corporation
Retirement Savings Plan as of December 31, 1998. Also includes 600,000
shares subject to currently exercisable employee stock options and 2,250
shares owned by Mr. Walker's spouse, beneficial ownership of which Mr.
Walker disclaims.
DIRECTORS' & OFFICERS' STOCK OWNERSHIP
The following table shows how much CTS common stock each Named Executive
Officer and director-nominee owned as of March 5, 1999. Please note that, as
reported in this table, beneficial ownership includes those shares a director or
officer has the power to vote or transfer, as well as shares owned by immediate
family members that reside in the same household with the director or officer.
Additionally, the shares shown as beneficially owned by directors Ciancia, Cody
and Frieling, who are members of the Compensation Committee, do not include
597,450 shares held by the Northern Trust Company as Trustee of the CTS
Corporation Employee Benefit Plans Master Trust. The Compensation Committee has
voting and investment authority over those shares.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SHARES
HELD IN
OPTIONS 401(K) DIRECTORS'
SHARES EXERCISABLE PLAN AS OF DEFERRED % OF
BENEFICIALLY WITHIN DECEMBER 31, COMMON SHARES
NAME OWNED 60 DAYS 1998 STOCK UNITS TOTAL OUTSTANDING
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence J. Ciancia 1,500 0 0 5,894 7,394 *
- -------------------------------------------------------------------------------------------------------------------------
Thomas G. Cody 500 0 0 300 800 *
- -------------------------------------------------------------------------------------------------------------------------
James L. Cummins 42,043 0 1,285 0 43,328 *
- -------------------------------------------------------------------------------------------------------------------------
Jeannine M. Davis 49,219 150,000 1,020 0 200,239 1.5%
- -------------------------------------------------------------------------------------------------------------------------
Gerald H. Frieling, Jr. 3,000 0 0 7,163 10,163 *
- -------------------------------------------------------------------------------------------------------------------------
William J. Kaska 38,000 25,500 0 0 63,500 *
- -------------------------------------------------------------------------------------------------------------------------
Robert A. Profusek 1,700 0 0 300 2,000 *
- -------------------------------------------------------------------------------------------------------------------------
Donald R. Schroeder 19,500 15,600 19,363 0 54,463 *
- -------------------------------------------------------------------------------------------------------------------------
Joseph P. Walker 77,009 600,000 12,253 0 689,262 5.0%
- -------------------------------------------------------------------------------------------------------------------------
All Directors and Officers
as a Group 313,735 832,500 37,383 13,657 1,197,275 8.7%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Less than 1%.
10
<PAGE> 12
EXECUTIVE COMPENSATION: REPORT OF THE COMPENSATION COMMITTEE
THE COMMITTEE'S RESPONSIBILITIES: The Compensation Committee of the Board
has responsibility for setting and administering CTS' executive compensation
policies. The Committee is composed entirely of non-employee, outside directors.
Reports of the Committee's actions and decisions are presented to the full
Board. The purpose of this report is to summarize the principles, specific
program objectives and other factors considered by the Committee in reaching its
determinations regarding executive compensation.
COMPENSATION PHILOSOPHY: The Committee has implemented executive
compensation programs which:
- Encourage strong financial and operational performance of CTS;
- Link compensation to the interests of shareholders;
- Emphasize performance-based compensation;
- Provide a competitive level of total compensation necessary to attract
and retain talented and experienced executives.
COMPENSATION METHODOLOGY: The Committee believes that CTS' executive
compensation programs reflect this philosophy and provide executives strong
incentives to maximize CTS' performance and enhance shareholder value. The
executive compensation programs consist of both annual and long-term components
and include performance-based and equity-based components. Periodically the
Committee reviews market data and assesses CTS' competitive position in the area
of executive compensation. CTS also retains independent compensation and
benefits consultants to assist in evaluating executive compensation programs.
The use of independent consultants provides additional assurance that CTS'
programs are reasonable and appropriate.
COMPONENTS OF COMPENSATION:
- Base Salary: Annual base salary is designed to compensate CTS executives
for their qualifications, responsibilities and performance. CTS'
objective is to compensate executives within the mid-level of the range
of base salaries paid for similar positions at similar companies.
- Annual Incentives: CTS has maintained an annual management incentive
bonus plan for a number of years which provides cash compensation
incentives based on the financial performance of CTS. Specifically,
awards have historically been made based on the achievement of pre-
established return on assets (ROA) targets. For 1998, CTS achieved 166%
of the ROA target established by the Compensation Committee. As a result,
the Named Executive Officers received formula bonuses equal to between
66% and 83% of their base salaries. Presented for shareholder approval in
1999 is the CTS Corporation Management Incentive Bonus Plan which is
described under the caption Item 2. Approval of the CTS Corporation
Management Incentive Bonus Plan, on pages 16 to 17 of this proxy
statement.
- Long Term Stock-Based Compensation: CTS uses two forms of stock-based
long-term incentives, restricted stock grants and stock options, under
plans previously approved by the shareholders. The Committee believes
that stock ownership and stock-based compensation are valuable tools for
motivating employees to improve the long-term performance of CTS. We also
believe that they are the best way to tie a significant amount of an
executive's potential income to enhanced shareholder value. CTS'
stock-compensation plans have change of control provisions under which,
upon a change of control of CTS, plan benefits accelerate and vest
immediately.
Stock options are generally awarded on an annual basis by the
Compensation Committee at fair market value and vest over a four year
period. Stock options were granted to all CTS executive
11
<PAGE> 13
officers in 1998 except for Joseph P. Walker. Those granted to the Named
Executive Officers are summarized in the table captioned Option Grants in
Last Fiscal Year on page 15 of this proxy statement. Restricted stock
grants are used selectively to provide incentive to key employees who
contribute or are expected to contribute materially to the success of CTS.
No restricted stock grants were awarded in 1998. The number of shares
previously awarded to the Named Executive Officers, their market value,
vesting schedules and related bonuses, are set forth in the Summary
Compensation Table on page 13 of this proxy statement.
DEDUCTIBILITY OF CERTAIN EXECUTIVE COMPENSATION: Federal income tax law
caps at $1,000,000 the deductible compensation per year for the Named Executive
Officers in the proxy statement, subject to certain exceptions. In developing
and implementing executive compensation policies and programs, the Compensation
Committee considers whether particular payments and awards are deductible for
federal income tax purposes, along with other relevant factors. Consistent with
this policy, the Committee has taken what it believes to be appropriate steps to
maximize the deductibility of executive compensation. Awards under the CTS
Corporation Management Incentive Bonus Plan will qualify for deductibility if
the plan is approved by the shareholders at the 1999 Annual Meeting. While it is
the general intention of the Committee to meet the requirements for
deductibility, the Committee may approve payment of non-deductible compensation
from time to time if circumstances warrant. The Committee will continue to
review and monitor its policy with respect to the deductibility of compensation.
CTS CORPORATION COMPENSATION COMMITTEE
Lawrence J. Ciancia, Thomas G. Cody
and Gerald H. Frieling, Jr.
12
<PAGE> 14
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
-------------------------------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
SALARY BONUS AWARD(S)(1) OPTIONS COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Joseph P. Walker(3)(5) 1998 $519,231 $431,000 $0 0 $7,228
Chairman of the Board, 1997 $441,977 $386,700 $0 600,000 $7,006
President and Chief 1996 $342,167 $205,300 $0 0 $6,007
Executive Officer
- ---------------------------------------------------------------------------------------------------------------
William J. Kaska(4)(5) 1998 $202,742 $125,400 $0 5,000 $8,064
Group Vice President 1997 $ 63,219 $116,600 $0 0 $4,689
- ---------------------------------------------------------------------------------------------------------------
Jeannine M. Davis(5) 1998 $157,682 $104,700 $0 5,000 $6,561
Senior Vice President, 1997 $131,279 $ 91,900 $0 150,000 $4,707
General Counsel and 1996 $121,179 $ 72,700 $0 0 $4,005
Secretary
- ---------------------------------------------------------------------------------------------------------------
Donald R. Schroeder(5) 1998 $148,701 $ 98,700 $0 3,000 $5,622
Vice President, Sales 1997 $130,594 $ 91,400 $0 0 $4,766
and Marketing 1996 $126,692 $ 76,000 $0 0 $4,464
- ---------------------------------------------------------------------------------------------------------------
James L. Cummins(5) 1998 $136,951 $ 90,900 $0 3,000 $4,753
Vice President 1997 $116,965 $ 81,900 $0 0 $4,638
Human Resources 1996 $110,423 $ 66,300 $0 0 $4,348
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) At December 31, 1998 the Named Executive Officers held the following
restricted shares on which transfer restrictions had not lapsed:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
NUMBER OF VALUE AT
SHARES DECEMBER 31, 1998
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Joseph P. Walker 6,000 $261,000
- -----------------------------------------------------------------------------------------
William J. Kaska 5,400 $234,900
- -----------------------------------------------------------------------------------------
Jeannine M. Davis 1,200 $ 52,200
- -----------------------------------------------------------------------------------------
Donald R. Schroeder 600 $ 26,100
- -----------------------------------------------------------------------------------------
James L. Cummins 2,400 $104,400
- -----------------------------------------------------------------------------------------
</TABLE>
The table below reflects cash payments made to the Named Executive Officers in
connection with the lapse of transfer restrictions on restricted shares for the
years 1996-1998.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
JOSEPH P. WILLIAM J. JEANNINE M. DONALD R. JAMES L.
WALKER KASKA DAVIS SCHROEDER CUMMINS
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1998 $92,500 $70,025 $14,950 $11,200 $27,450
- --------------------------------------------------------------------------------------------------
1997 $92,500 $37,375 $32,150 $11,200 $24,775
- --------------------------------------------------------------------------------------------------
1996 $75,000 - $23,325 $ 8,175 $15,750
- --------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 15
(2) The table below shows the components of the All Other Compensation column
for 1998:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
CTS MATCH IMPUTED INCOME
UNDER 401(K) ON TERM
PLAN LIFE INSURANCE TOTAL
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Joseph P. Walker $3,600 $3,628 $7,228
- ------------------------------------------------------------------------------------------
William J. Kaska $3,600 $4,464 $8,064
- ------------------------------------------------------------------------------------------
Jeannine M. Davis $3,600 $2,961 $6,561
- ------------------------------------------------------------------------------------------
Donald R. Schroeder $3,600 $2,022 $5,622
- ------------------------------------------------------------------------------------------
James L. Cummins $3,600 $1,153 $4,753
- ------------------------------------------------------------------------------------------
</TABLE>
(3) Mr. Walker has an employment agreement with CTS which provides that for five
years, beginning on May 9, 1997, Mr. Walker will be employed by CTS as
Chairman of the Board, President and Chief Executive Officer, at an initial
annual salary of $500,000. During the term of the agreement, if Mr. Walker's
employment is terminated as a result of his death or disability, for good
reason (as defined) or by CTS without cause (as defined), Mr. Walker will
receive severance benefits equal to his then current annual salary for the
remainder of the term, plus an annual bonus for each year remaining in the
term equal to the largest cash and stock bonus that he received during the
five fiscal years preceding the date of termination. In addition, if Mr.
Walker's employment is terminated by Mr. Walker for good reason or by the
Corporation without cause, Mr. Walker may instead receive a lump sum equal
to 3 1/3 times the sum of his then current annual salary and the largest
cash and stock bonus that he received during the five fiscal years preceding
the date of the employment agreement. Any payments to Mr. Walker upon a
change in control are increased to compensate Mr. Walker for any excise tax
payable by him pursuant to Section 280G of the Internal Revenue Code of 1986
(the "Code"). The payments and benefits to Mr. Walker under his employment
agreement are reduced automatically by any corresponding payments or
benefits under his severance agreement described below.
(4) Mr. Kaska was elected an officer of CTS on August 13, 1997.
(5) The Named Executive Officers have executed severance agreements with CTS,
which have a rolling three-year term which is automatically extended each
January 1 unless notice is given otherwise. The severance agreements become
operative only upon a change in control of CTS. Severance benefits are
provided if, upon a change in control, CTS terminates a covered executive's
employment without cause or the executive terminates his or her employment
for good reason (each as defined). Severance compensation under the
agreements includes a multiple (two or three, depending upon level of job
responsibility) of base salary, a multiple (two or three, depending upon
level of job responsibility) of the average annual incentive compensation
awarded to the executive during the three fiscal years preceding the fiscal
year in which the change in control occurred, the continued participation
for a number of months following termination in welfare benefit plans and
other similar benefit programs, a lump sum payment equal to the increase in
actuarial value of the benefits under CTS' qualified and supplemental
retirement plans that the executive would have received had he or she
remained employed, outplacement services, and, in lieu of perquisites
provided immediately prior to the change in control, the payment of the
lesser of $50,000 or 10% of the total base salary and incentive
compensation. In addition, if any payments made to the executive are subject
to the excise tax under Section 280G of the Code, CTS will make an
additional payment in an amount to put the executive in the same after-tax
position as if no excise tax had been imposed.
14
<PAGE> 16
STOCK OPTIONS
The following table reflects information about stock options awarded to the
Named Executive Officers in 1998:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR
OPTION TERM(1)
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
% OF
TOTAL
OPTIONS
SECURITIES GRANTED
UNDERLYING TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED IN 1998 ($)/SHARE) DATE 5%($) 10%($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Walker 0 0% N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------
William J. Kaska 5,000 3.6% $28.00 6-25-2003 $38,679 $ 85,471
- ----------------------------------------------------------------------------------------------------------
Jeannine M. Davis 5,000 3.6% $28.00 6-25-2003 $38,679 $ 85,471
- ----------------------------------------------------------------------------------------------------------
Donald R. Schroeder 3,000 2.1% $28.00 6-25-2003 $23,208 $ 51,283
- ----------------------------------------------------------------------------------------------------------
James L. Cummins 3,000 2.1% $28.00 6-25-2003 $23,208 $ 51,283
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Potential realizable value is determined by assuming an initial value of
$28.00 per share, the market closing price for CTS common stock on the date
of grant, and applying the stated annual appreciation rate compounded
annually for the remaining term of the option, subtracting the exercise
price and multiplying the remainder by the number of shares subject to
options granted. Actual gains, if any, on stock option exercises are
dependent on the future performance of the common stock and overall stock
market conditions.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
VALUE OF
NUMBER OF NUMBER OF UNEXERCISED
SHARES SECURITIES UNDERLYING IN-THE-MONEY
ACQUIRED VALUE UNEXERCISED OPTIONS OPTIONS AT
ON EXERCISE REALIZED AT FISCAL YEAR END (#) FISCAL YEAR END ($)
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Joseph P. Walker 22,500 $452,775 600,000 7,500 $13,602,000 $232,800
---------------------------------------------------------------------------------------------------------
William J. Kaska 6,000 $172,500 25,500 11,000 $ 823,095 $263,740
---------------------------------------------------------------------------------------------------------
Jeannine M. Davis 12,600 $286,284 150,000 9,500 $ 3,400,500 $217,180
---------------------------------------------------------------------------------------------------------
Donald R.
Schroeder 0 $ 0 15,600 6,900 $ 496,854 $167,556
---------------------------------------------------------------------------------------------------------
James L. Cummins 17,700 $536,115 0 7,500 $ 0 $186,180
---------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 17
PENSION PLAN
The table below shows the estimated annual retirement benefits payable to a
covered participant in the CTS Corporation Salaried Employees' Pension Plan. The
benefit formula is calculated as 1% of highest average monthly pay during any
three calendar years of a participant's last ten calendar years of service,
multiplied by a participant's credited service.
<TABLE>
<CAPTION>
YEARS OF PARTICIPATION
COMPENSATION 15 20 25 30 35
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 30,000 $ 40,000 $ 50,000 $ 60,000 $ 70,000
--------------------------------------------------------------------------
$ 300,000 $ 45,000 $ 60,000 $ 75,000 $ 90,000 $105,000
--------------------------------------------------------------------------
$ 400,000 $ 60,000 $ 80,000 $100,000 $120,000 $140,000
--------------------------------------------------------------------------
$ 600,000 $ 90,000 $120,000 $150,000 $180,000 $210,000
--------------------------------------------------------------------------
$ 800,000 $120,000 $160,000 $200,000 $240,000 $280,000
--------------------------------------------------------------------------
$1,000,000 $150,000 $200,000 $250,000 $300,000 $350,000
--------------------------------------------------------------------------
$1,200,000 $180,000 $240,000 $300,000 $360,000 $420,000
--------------------------------------------------------------------------
</TABLE>
The years of service credited to the Named Executive Officers as of
December 31, 1998 are: Joseph P. Walker - 10.78 years; William J. Kaska - 6.78
years; Jeannine M. Davis - 18.78 years; Donald R. Schroeder - 26.44 years; and
James L. Cummins - 21.78 years.
Section 415 of the Internal Revenue Code generally places a limit of
$130,000 on the amount of annual pension benefits that may be paid at age 65
from a plan like CTS'. The Code also places a $10,000 limit, subject to
adjustment by the Internal Revenue Service, on annual contributions by an
employee to the CTS Corporation Retirement Savings Plan, and in addition,
imposes a combined limitation when an employee is covered by both types of
plans. Under a supplemental benefit in this plan and an unfunded plan adopted in
1996, however, CTS will make payments as permitted by the Code to certain
participants in CTS' pension plan in an amount equal to the difference, if any,
between the benefits that would have been payable under this plan without regard
to the limitations imposed by the Code and the actual benefits payable under the
plan.
ITEM 2: APPROVAL OF THE CTS CORPORATION
MANAGEMENT INCENTIVE BONUS PLAN
You are asked to consider and approve adoption of the CTS Corporation
Management Incentive Bonus Plan. A summary of this plan follows. Please refer to
Exhibit A to this proxy statement for the full text of the plan.
Shareholder approval of this plan will allow payments made under it to be
fully tax deductible as "performance-based" compensation under section 162(m) of
the Internal Revenue Code. As discussed on page 12 in the section entitled
"Deductibility of Certain Executive Compensation" section 162(m) of the Code
disallows the corporate tax deduction for certain compensation in excess of $1
million per year paid to an executive officer whose compensation is required to
be reported in the proxy statement. However, certain compensation, including
compensation based on the attainment of performance goals, is excluded from this
deduction limit if the material terms of the plan are approved by the
shareholders.
16
<PAGE> 18
PURPOSE. The purpose of the Plan is to promote the attainment of pre-established
performance goals for CTS by providing incentive compensation for certain key
executives of CTS and its subsidiaries.
ADMINISTRATION. The Plan is administered by the Compensation Committee of the
Board of Directors, which is comprised solely of non-employee, outside directors
of CTS.
ELIGIBLE PARTICIPANTS. All officers, general managers and managing directors of
CTS or a strategic business unit or subsidiary of CTS, are eligible to
participate in the Plan, as are key functional managers approved by the
Compensation Committee.
PRINCIPAL FEATURES OF THE PLAN. The Compensation Committee establishes
performance objectives under the plan in writing within 90 days following the
beginning of each fiscal year, for CTS and for each operating unit and group.
These performance objectives are based on one or more of the following measures
of performance: (1) return on assets; (2) net profit after tax return on assets;
(3) stock price appreciation; (4) earnings per share; (5) earnings before
interest and taxes; or (6) earnings before interest, taxes, depreciation and
amortization. The performance objectives may be expressed in terms of absolute
levels or percentages or ratios expressing relationships between two or more of
the performance measures, period-to-period changes, relative to business plans
or budgets or relative to one or more companies or indices.
Target bonuses are between 10% and 50% of a participant's salary. Bonus
awards may range from 0% to 200% of the target bonus amount based on the level
of performance against the pre-established objectives.
Following the year end audit, the Compensation Committee will certify in
writing that the material terms of the performance goals have been satisfied
before any bonuses are paid under the Plan.
Bonuses under the Plan will be made in a lump sum payment in cash and/or
CTS common stock or to a deferred plan established for this purpose.
The complete text of the CTS Corporation Management Incentive Bonus Plan is
included as Exhibit A to this proxy statement.
It is not possible at this time to determine the bonuses that may become
payable under the Plan for 1999. Notwithstanding any other provision of the
Plan, in no event will any bonus award under the Plan exceed $1,000,000 with
respect to any fiscal year. No bonuses will be paid unless you approve the Plan.
- --------------------------------------------------------------------------------
YOUR BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE
CTS CORPORATION MANAGEMENT INCENTIVE BONUS PLAN
- --------------------------------------------------------------------------------
CORPORATION'S INDEPENDENT ACCOUNTANTS
The Corporation's independent accountants are PricewaterhouseCoopers.
Representatives of the independent accountants will attend the Annual Meeting,
to be available to respond to appropriate questions by shareholders and to have
the opportunity to make statements, if they desire.
17
<PAGE> 19
1998 ANNUAL REPORT ON S.E.C. FORM 10-K
Upon the written request of a CTS shareholder owning shares of common stock
on the Record Date, to Jeannine M. Davis, Secretary of CTS Corporation, 905 West
Boulevard North, Elkhart, Indiana 46514, CTS will provide to such shareholder,
without charge, a copy of its 1998 Annual Report on S.E.C. Form 10-K, including
the financial statements and financial statement schedules.
By Order of the Board of Directors,
/s/ Jeannine M. Davis
Jeannine M. Davis
Secretary
Elkhart, Indiana
March 22, 1999
18
<PAGE> 20
EXHIBIT A
CTS CORPORATION
MANAGEMENT INCENTIVE BONUS PLAN
SECTION 1. OBJECTIVE: The CTS Corporation Management Incentive Bonus Plan's
objective is to increase the focus of key executives and managers of the Company
on improving the financial performance of CTS to provide all of the
Corporation's shareholders with an optimum return on their investment, while
also providing the financial resources to support the Corporation's growth
objectives.
SECTION 2. PHILOSOPHY: The compensation of certain key executives and managers
should be based, in part, on pre-established financial objectives of the
Corporation. This incentive Plan is intended to focus the effort of the Plan
participants on achieving the goals approved by the Compensation Committee to
ensure the profitability and long-term growth of CTS.
SECTION 3. ADMINISTRATION: The Compensation Committee shall consider and, if
appropriate, approve a plan annually pursuant to this Plan. The Plan shall be
administered by the Compensation Committee. The decision of the Compensation
Committee shall be final as to the interpretation of the Plan or any rule,
procedure or action related thereto.
SECTION 4. ELIGIBILITY: Categories of eligible Plan participants are President;
Group Vice Presidents, Sr. Vice Presidents, and Chief Financial Officer;
Corporate Vice Presidents and SBU General Managers-Vice Presidents; Managing
Directors and other Corporate Officers; and Key Functional Managers.
To receive a bonus under this Plan, a participant must be an active, full-time
employee on the last business day of the Company's fiscal year. Those joining
during the year will be awarded a pro-rata bonus based upon days in the Plan.
If a participant dies, and such death occurs during the last two fiscal quarters
of the year, a bonus, pro-rated in accordance with the number of days in the
year in which he participated before his death, will be paid to his beneficiary
at the same time and in the same manner as bonuses for the year are paid to Plan
participants. The beneficiary shall be the beneficiary designated for the
employee's group life insurance plan. If no such beneficiary has been
designated, the bonus will be paid to the employee's estate.
If a participant retires prior to the last day of the Plan year, a bonus,
pro-rated in accordance with the number of days in the year in which he
participated before his retirement, shall be paid to such participant at the
same time and in the same manner as bonuses for the year are paid to other
participants.
SECTION 5. BONUS PERCENTAGES AND COMPONENTS: The target bonus payable to each
participant will be between 10% and 50% of a participant's salary. Bonus awards
may range from 0% to 200% of the target bonus amount depending on the level of
attainment of the established performance goals.
Salary, as used to determine an employee's bonus, shall mean the employee's
total base salary earned in the bonus year, before deductions for salary
reduction benefit plans, but excluding any and all items or forms of special
compensation, bonuses, commissions or reimbursed expenses. Notwithstanding any
other provision of this Plan to the contrary, in no event will a bonus award
paid to any Covered Employee exceed $1,000,000.
<PAGE> 21
The above provisions notwithstanding:
A. If an extraordinary event results in a loss for the bonus year, the
Chief Executive Officer, Chief Operation Officer and Chief Financial
Officer shall not be eligible for a bonus.
B. If Corporate, an SBU, operating unit or plant forecasts or sustains a
loss for the year, Plan participants at that location shall not be
eligible for a formula bonus.
C. Except for a Plan participant who is the Chief Executive Officer or
acting in such capacity at the close of the taxable year and except for
Plan participants whose total compensation for the taxable year is
required to be reported to shareholders of the Corporation under the
Securities Exchange Act of 1934 by reason of such participants being
among the four highest compensated officers for the taxable year (other
than the Chief Executive Officer), collectively referred to hereafter
as the "Named Executive Officers" (the Chief Executive Officer and the
Named Executive Officers are referred to collectively hereafter as the
"Covered Employees"), management may recommend and the Committee may
approve discretionary bonuses based on a participant's individual
performance or other circumstances which warrant recognition.
SECTION 6. FINANCIAL OBJECTIVES: The Compensation Committee will establish
performance objectives each fiscal year for the Corporation and each operating
unit and group based solely on one or more of the following measures:
A. Return on Assets (ROA);
B. Net profit after tax ROA;
C. Stock price appreciation;
D. Earnings per share;
E. Earnings before interest and taxes; or
F. Earnings before interest, taxes, depreciation and amortization.
Such performance objectives may be expressed with respect to the Corporation or
one or more operating units or groups and may be expressed in terms of absolute
levels or percentages or ratios expressing relationships between two or more of
the foregoing measures of performance, period-to-period changes, relative to
business plans or budgets or relative to one or more other companies or indices.
This section is intended to comply with the exception from Section 162 (m) of
the Internal Revenue Code of 1986, as amended, for qualified performance based
compensation and will be construed, applied and administered accordingly.
When determining formula bonuses, actual performance against pre-established
performance objectives may be adjusted only to the extent necessary to prevent
dilution or enlargement of any bonus award as a result of extraordinary events
or circumstances, as determined by the Compensation Committee, or to exclude the
effects of extraordinary, unusual or nonrecurring events, changes in accounting
principles, discontinued operations, acquisitions, divestitures and material
restructuring charges; provided, however, in the case of a Covered Employee, no
such adjustment will be made if the effect of such adjustment would be to cause
the related bonus award to fail to qualify as "performance based compensation"
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended.
SECTION 7. CALCULATION, APPROVAL AND PAYMENT: Upon completion of the annual
audit and certification of results by the Company's independent auditors, the
CEO shall recommend bonuses for Plan participants to the Compensation Committee.
Except with respect to the Covered Employees, the CEO may recommend increases in
individual bonuses or the addition or deletion of a participant to or from the
Plan in view of extraordinary or unusual events or circumstances.
<PAGE> 22
The Committee shall review the CEO's recommendations and, except with respect to
the Covered Employees, make such adjustments as it deems appropriate. The
Committee shall certify in writing that the material terms of the performance
goals for the Covered Employees have been satisfied before any bonuses are paid
to the Covered Employees.
Payment of bonuses under this Plan, as approved by the Committee and reviewed by
the Board of Directors, shall be made in a lump sum payment in cash and/or CTS
Common Stock promptly after such approval, or to such deferred plan as the
Corporation may establish for such purposes. The Corporation may deduct from any
payment such amounts as may be required to be withheld under any federal, state
or local tax laws.
SECTION 8. NO CONTRACT: This Plan is not and shall not be construed as an
employment contract or as a promise or contract to pay bonuses to participants
or their beneficiaries. The Plan shall be approved by the Compensation Committee
and reviewed at least annually by the Board of Directors, and the Plan may be
amended from time to time by the Compensation Committee without notice. No
participant or beneficiary may sell, assign, transfer, discount or pledge as
collateral for a loan, or otherwise anticipate any right to payment or a bonus
under this Plan.
SECTION 9. EFFECTIVENESS: This Plan will become effective as of February 19,
1999; provided, however, that no bonus award will be paid under the Plan unless
prior to such payment, the holders of a majority of the shares of the
Corporation's Common Stock actually voting on the matter approves this Plan at a
meeting of the shareholders of the Corporation.
<PAGE> 23
CTS CORPORATION PROXY
905 West Boulevard North, Elkhart, THIS PROXY IS SOLICITED ON BEHALF OF
Indiana 46514 THE BOARD OF DIRECTORS The
undersigned, having received the
1999 Annual Meeting of Shareholders Notice of Annual Meeting of
Shareholders and the Proxy Statement
hereby appoints Joseph P. Walker and
Jeannine M. Davis as proxies, each
with the power to appoint his or her
substitute, and hereby authorizes
them to represent and to vote, as
designated below, all of the shares
of Common Stock of CTS Corporation
held of record by the undersigned on
March 12, 1999, at the Annual Meeting
of Shareholders originally convened
on April 30, 1999 and at any
adjournment thereof.
- ------------------------------------
1. ELECTION OF DIRECTORS [ ] FOR ALL nominees listed below
[ ] WITHHOLD AUTHORITY to vote for all nominees
listed below
[ ] FOR SOME of the nominees listed
below (See INSTRUCTION)
L.J. Ciancia, T.G. Cody, G.H. Frieling, Jr., R.A. Profusek, J.P. Walker
INSTRUCTION: To withhold authority to vote on any individual nominee, write
that nominee's name in the space provided below.
This proxy will be voted for all nominees listed above except:
- --------------------------------------------------------------------------------
If not otherwise marked, this Proxy will be voted
for the election of all nominees.
<PAGE> 24
2. APPROVAL OF THE CTS CORPORATION MANAGEMENT INCENTIVE BONUS PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting, or any adjournment
thereof.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder.
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 ___________________________________
If Held Jointly
Dated ________________________________ , 1999
