<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 [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
DYCOM 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)(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
[DYCOM INDUSTRIES LOGO]
DYCOM INDUSTRIES, INC.
First Union Center, Suite 500
4440 PGA Boulevard
Palm Beach Gardens, Florida 33410
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on November 22, 1999
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders (the "Meeting") of Dycom Industries, Inc.
(the "Company") will be held at 11:00 a.m. (EST), on Monday, November 22, 1999,
at the DoubleTree Hotel, 4431 PGA Boulevard, Palm Beach Gardens, Florida. The
Meeting will be held for the following purposes:
1. To elect four Directors;
2. To consider and vote to approve an amendment to the Articles of Incorporation
to increase the number of authorized shares of common stock; and
3. To transact such other business as may properly come before the Meeting or
any adjournments of the Meeting.
The Board of Directors has fixed the close of business on Friday, October 8,
1999, as the record date for the determination of the shareholders entitled to
notice of and to vote at the Meeting.
IMPORTANT
Please mark, date, sign and return the enclosed proxy card promptly so that your
shares can be voted. If you attend the Meeting you may withdraw your completed
proxy and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Marc R. Tiller
Marc R. Tiller
Secretary
October 15, 1999
<PAGE> 3
DYCOM INDUSTRIES, INC.
First Union Center, Suite 500
4440 PGA Boulevard
Palm Beach Gardens, Florida 33410
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MONDAY, NOVEMBER 22, 1999
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Dycom Industries, Inc. (the "Company") for use at
the Annual Meeting of Shareholders to be held on Monday, November 22, 1999, at
the DoubleTree Hotel in the Gardens, 4431 PGA Boulevard, Palm Beach Gardens,
Florida, at 11:00 a.m. (EST), or at any adjournments thereof (the "Meeting"),
for the purposes set forth in the accompanying notice of Annual Meeting of
Shareholders.
Only shareholders of record at the close of business on October 8, 1999 (the
"Record Date") will be entitled to notice of and to vote at the Meeting. On
September 30, 1999, the Company had 25,688,461 shares of common stock, par
value $0.33 1/3, issued and outstanding. Each share of common stock entitles the
holder thereof to one vote.
A proxy card that is properly marked, signed, dated and returned in time for the
Meeting will be voted in accordance with the instructions contained therein. If
no instructions are indicated, each share of common stock represented by proxy
will be voted for the election of the listed nominee directors and for the
approval of the amendment to the Company's Articles of Incorporation increasing
the number of authorized shares of common stock from 50,000,000 shares to
150,000,000 shares.
This Proxy Statement and the accompanying proxy card are being mailed to
shareholders on or about October 15, 1999. Any shareholder giving a proxy has
the power to revoke the proxy prior to its use. The proxy can be revoked by
filing an instrument of revocation with the Secretary of the Company or by
submitting a proxy bearing a later date than the proxy being revoked prior to
the Meeting. Additionally, shareholders who attend the Meeting may revoke a
previously granted proxy and vote in person.
The presence in person or by proxy of the holders of a majority of the common
stock will constitute a quorum. A quorum is necessary to transact business at
the Meeting. With the exception of the election of directors which requires a
plurality of the votes cast, the affirmative vote of a majority of the votes
cast at the Meeting is required to approve any other proposals. Shares of common
stock represented by proxies that reflect abstentions or "broker non-votes"
(i.e., shares held by a broker or nominee which are represented at the Meeting,
but with respect to which such broker or nominee is not empowered to vote on a
particular proposal) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum.
A copy of the Company's Annual Report to Shareholders, including financial
statements for the fiscal years ended July 31, 1999 and 1998, is enclosed with
this Proxy Statement, but such documentation does not constitute a part of the
proxy soliciting material.
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provides that the Board of
Directors shall be divided into three classes, with each class having a three
year term and a number of Directors as equal as possible. Louis W. Adams, Jr.,
Thomas R. Pledger, Thomas G. Baxter and Joseph M. Schell are serving terms which
expire at this Meeting. The Board of Directors, in accordance with the
recommendation of its Nominating Committee, have nominated as directors Thomas
G. Baxter and Joseph M. Schell for a term expiring at the year 2001 Annual
Meeting of the Shareholders and Thomas R. Pledger and Louis W. Adams, Jr. for a
term expiring at the year 2002 Annual Meeting of the Shareholders. If any herein
named nominees for the office of director becomes unable to accept nomination or
election, which is not anticipated, the persons acting under such proxies will
vote for the election of such other person as the Board of Directors may
recommend.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION TERM EXPIRES
NOMINEES FOR PAST FIVE YEARS AT ANNUAL
FOR AND DIRECTORSHIPS IN DIRECTOR MEETING
ELECTION AGE PUBLIC COMPANIES SINCE FOR YEAR
-------- --- -------------------- -------- ------------
<S> <C> <C> <C> <C>
Thomas G. Baxter 52 Operating Partner of Evercore 1999(1) 2001
Partners, an investment company
Joseph M. Schell 53 Consultant to Banc of America 1999(2) 2001
Securities LLC (formerly Nationsbanc
Montgomery Securities LLC)
Former Senior Managing Director
and Director of Investment Banking of
NationsBanc Montgomery Securities LLC
Thomas R. Pledger 61 Chairman of the Board and Executive 1981 2002
Chairman of the Company since
March 10, 1999; Chairman of the Board
and Chief Executive Officer from
January 2, 1984 to March 10, 1999
Louis W. Adams, Jr. 61 Retired Attorney 1969 2002
</TABLE>
(1) Thomas G. Baxter was elected by the Board of Directors on January 4,
1999 to fill a vacancy until this Meeting and until his successor shall
have been duly elected and shall have qualified.
(2) Joseph M. Schell was elected by the Board of Directors on April 1, 1999
to fill a vacancy until this Meeting and until his successor shall have
been duly elected and shall have qualified.
2
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTORS PRINCIPAL OCCUPATION TERM EXPIRES
WHOSE TERMS FOR PAST FIVE YEARS AT ANNUAL
CONTINUE BEYOND AND DIRECTORSHIPS IN DIRECTOR MEETING
THE MEETING AGE PUBLIC COMPANIES SINCE FOR YEAR
----------- --- -------------------- -------- ------------
<S> <C> <C> <C> <C>
Steven E. Nielsen 36 President and Chief Executive 1996 2000
Officer of the Company since
March 10, 1999; President and
Chief Operating Officer from
August 26, 1996 to March 10, 1999;
Vice President from February 26,
1996 to August 26, 1996; Officer
in various Dycom wholly-owned
subsidiaries since May 3, 1993
Walter L. Revell 64 Chairman and Chief Executive 1993 2000
Officer of H.J. Ross Associates, Inc.,
which provides engineering, architectural,
and planning consulting services
Director of The St. Joe Company
and Riscorp, Inc.
Ronald P. Younkin 57 President of Greenlawn Mobile 1975 2000
Home Sales, Inc., which sells
mobile homes and operates mobile
home parks
</TABLE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote "FOR" the election of Thomas
G. Baxter, Joseph M. Schell, Thomas R. Pledger and Louis W. Adams as Directors.
BOARD OF DIRECTORS AND ITS COMMITTEES:
The Board of Directors held ten meetings in the fiscal year ended July
31, 1999. Each incumbent director attended more than 75% of the aggregate of the
meetings held by the Board of Directors and its respective committees on which
he served, with the exception of Joseph M. Schell, who was appointed on April 1,
1999 and attended 50% of the meetings thereafter.
The Board of Directors has established four committees: an Audit and
Compensation Committee, an Executive Committee, a Finance Committee and a
Nominating Committee.
AUDIT AND COMPENSATION COMMITTEE. The Audit and Compensation Committee
currently consists of Louis W. Adams, Walter L. Revell and Ronald P. Younkin.
The functions of the Audit and Compensation Committee are to recommend to the
Board of Directors the engagement of the Company's independent auditors;
determine the scope of services provided by the independent auditors; review the
results of the annual audit and the Company's annual financial statements;
oversee the Company's internal control and internal auditing activities;
recommend to the Board of Directors the compensation of the Company's officers
and employees; and administer the Company's Incentive Stock Option Plans. The
Audit and Compensation Committee met five times during fiscal 1999.
3
<PAGE> 6
EXECUTIVE COMMITTEE. The Executive Committee currently consists of
Steven Nielsen, Thomas R. Pledger and Ronald P. Younkin. The Executive Committee
is empowered to act for the full Board of Directors during intervals between
Board meetings, with the exception of certain matters that by law may not be
delegated. The Executive Committee met once during fiscal 1999.
FINANCE COMMITTEE. The Finance Committee currently consists of Thomas
G. Baxter, Walter L. Revell and Joseph M. Schell. The functions of the Finance
Committee are to set policy for short-term investments, review borrowing
arrangements and recommend changes in the capital structure of the Company. The
Finance Committee met three times during fiscal 1999.
NOMINATING COMMITTEE. The Nominating Committee currently consists of
Steven Nielsen, Thomas R. Pledger and Ronald P. Younkin. The functions of the
Nominating Committee are to recommend to the Board of Directors nominees for
election as directors by the Company's shareholders, persons to fill vacancies
on the Board, and directors to serve on the four committees of the Board. The
Committee met three times during fiscal 1999. The Nominating Committee will
consider nominees for director that are recommended by shareholders in
accordance with the procedures set forth in the Company's By-Laws.
Director Compensation
Directors who are employees of the Company do not receive fees for
service on the Board of Directors or any Board committee. All other directors
receive a $15,000 annual fee for service; $1,500 for each meeting of the Board
of Directors attended; $750 for each committee meeting attended in conjunction
with a meeting of the Board of Directors; $750 for each telephonic meeting of
the Board of Directors or a Board committee; $1,500 for all other committee
meetings; and reimbursement of reasonable expenses incurred in connection with
all such meetings. In addition, upon the initial election of directors who are
not employees of the Company, each such director receives a non-qualified option
to purchase 12,000 shares of common stock at an exercise price equal to the fair
market value of the common stock on the date the option is granted. Each option
is exercisable at a rate of 4,000 shares per year beginning on the first
anniversary of the option's grant date.
4
<PAGE> 7
PROPOSAL 2
INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Company's Articles of Incorporation currently authorize the
issuance of 50,000,000 shares of common stock, $0.33 1/3 par value, and
1,000,000 shares of Preferred Stock, $1.00 par value. On August 23, 1999, the
Board of Directors unanimously approved a proposal to increase the number of
authorized shares of common stock from 50,000,000 shares to 150,000,000 shares.
As of September 30, 1999, 25,688,461 shares of common stock were outstanding and
1,124,067 shares of common stock were reserved for issuance upon the exercise
of stock options. No shares of preferred stock have been issued to date.
The additional shares of common stock would have rights identical to
the shares of common stock currently outstanding or reserved for issuance.
Holders of the common stock of the Company are entitled to one vote for each
share of common stock held and are entitled to receive such dividends as may be
declared from time to time by the Board of Directors. In addition, upon a
liquidation, dissolution or winding up of the Company, the holders of common
stock are entitled to receive a pro rata portion of the net assets of the
Company which remain, if any, after the payment of any debts, obligations and
liquidation preferences. There are no preemptive rights associated with any of
the Company's stock.
The Board of Directors believe that the availability of the proposed
amount of additional authorized shares of common stock will provide the Company
with the flexibility to issue common stock in connection with possible future
acquisitions, equity financing, stock options, stock splits or other appropriate
general corporate purposes, without the expense and delay of a special meeting
of the shareholders. If the proposal is approved, the additional shares will be
available for issuance without further authorization of the shareholders, unless
such action is required by applicable law or the rules of the New York Stock
Exchange. At this time, the Company has no present plans, understandings or
agreements for the issuance or use of the proposed additional shares of common
stock.
The issuance of additional shares of common stock or the rights to
acquire such shares would have the effect of diluting the Company's earnings per
share and would dilute the voting power of current shareholders who do not
acquire sufficient additional shares to maintain their percentage of share
ownership. Additional shares of common stock could also be used by the Company
to oppose a hostile takeover attempt; however, the Board of Directors presently
knows of no such attempt to obtain control of the Company.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote "FOR" the proposal to increase
the number of authorized shares of common stock from 50,000,000 shares to
150,000,000 shares.
5
<PAGE> 8
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
As of August 24, 1999, the following table sets forth certain
information regarding the beneficial ownership of common stock by each director,
each of the executive officers named in the Summary Compensation Table, each
person known to the Company to be the beneficial owner (as determined under the
rules of the Securities and Exchange Commission (the "SEC")) of more than five
percent (5%) of such shares and by all such directors and executive officers of
the Company. The Company understands that, except as otherwise noted, each such
person has sole voting and investment power with respect to such shares.
<TABLE>
<CAPTION>
Number of Shares and Nature Percent
Name of Beneficial Ownership Of Class(1)
- ---- ----------------------------------- --------
<S> <C> <C>
DIRECTORS:
Louis W. Adams, Jr. 15,351 *
Thomas G. Baxter 500 *
Steven E. Nielsen 111,789(2) *
Thomas R. Pledger 728,058(3) 2.83%
Walter L. Revell 9,000 *
Joseph M. Schell -0- -0-
Ronald P. Younkin 169,505(4) *
Other Named Executive Officers:
Douglas J. Betlach 16,318(5) *
All directors and executive officers
as a group of 10 persons, including
the above 1,073,021 4.18%
</TABLE>
- ----------
* Less than 1%.
1 Class includes outstanding shares and stock options held by directors
and executive officers that are exercisable within 60 days after
August 24, 1999.
2 Includes shares that may be acquired within 60 days after August 24,
1998 upon the exercise of stock options (Mr. Nielsen - 86,739).
3 Excludes 18,378 shares owned by Thomas R. Pledger, Jr., Mr. Pledger's
son, as to which Mr. Pledger disclaims beneficial ownership.
4 Excludes 17,103 shares owned by Ronald P. Younkin's wife and children,
as to which Mr. Younkin disclaims beneficial ownership. Excludes
814,642 shares beneficially owned by Mary Irene Younkin as to which Mr.
Younkin disclaims beneficial ownership. Mr. Younkin is the son of Mary
Irene Younkin.
5 Douglas J. Betlach resigned as Vice President, CFO and Treasurer on
June 23, 1999.
6
<PAGE> 9
MANAGEMENT COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company for services rendered during each of
the last three fiscal years by the Company's Chief Executive Officer and three
executive officers whose compensation exceeded $100,000 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
NAME AND COMPENSATION AWARDS
PRINCIPAL FISCAL OTHER ANNUAL STOCK OPTIONS ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION # OF SHARES COMPENSATION(1)
- ------------------ ----- ------ ---------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Thomas R. Pledger(2) 1999 $468,000 $468,000 -0- -0- $123,311
Executive Chairman 1998 $416,000 $416,000 -0- -0- $101,192
1997 $416,000 $120,000 -0- -0- $101,616
Steven E. Nielsen(3) 1999 $337,431 $337,431 -0- 187,500 $ 13,914
President and CEO 1998 $259,000 $259,000 -0- 150,000 $ 3,415
1997 $207,250 $208,000 -0- 49,500 $ 3,751
Douglas J. Betlach(4) 1999 $134,856 -0- -0- 9,000 $ 2,941
Vice President, CFO 1998 $124,789 $ 40,000 -0- 6,000 $ 1,736
and Treasurer 1997 $113,808 $ 25,000 -0- 5,250 $ 1,207
Robert J. Gluck(5) 1999 $131,923 -0- $72,9236 37,500 $ 1,037
Executive Vice President,
Finance and Administration
</TABLE>
(1) All other compensation for fiscal year 1999 consists of: (i) an annual
insurance premium of $97,777 for a whole life insurance policy owned by
Thomas R. Pledger; (ii) Company contributions to the Dycom retirement
savings plan (Thomas R. Pledger $4,993; Steven E. Nielsen $4,415; and
Douglas J. Betlach $1,515); (iii) Company paid premiums for group term
life insurance and long-term disability (Thomas R. Pledger $2,299;
Steven E. Nielsen $2,299; Douglas J. Betlach $1,426; and Robert J.
Gluck $1,037); (iv) car allowance (Thomas R. Pledger $3,000 and Steven
E. Nielsen $7,200); and (v) deferred compensation of $15,242 for Thomas
R. Pledger.
(2) Effective as of March 10, 1999, Mr. Pledger resigned as the Company's
Chief Executive Officer and was appointed the Company's Executive
Chairman. See "Pledger Employment Agreement" on page 10.
(3) Effective as of March 10, 1999, Mr. Nielsen was appointed the Company's
Chief Executive Officer. See "Nielsen Employment Agreement" on page 10.
(4) Douglas J. Betlach resigned as Vice President, CFO and Treasurer on
June 23, 1999.
(5) Robert J. Gluck was appointed Executive Vice President, Finance and
Administration on November 23, 1998, and he resigned this position on
December 23, 1998.
(6) This amount represents the payment made to Mr. Gluck with respect to
his resignation as Executive Vice President, Finance and
Administration.
7
<PAGE> 10
OPTION GRANTS IN FISCAL YEAR ENDED JULY 31, 1999
The following table sets forth additional information concerning the
options granted to the Named Executive Officers of the Company during fiscal
year 1999 under the Company's 1991 and 1998 Incentive Stock Option Plans.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
------------------------------------------------------------ ---------------------------
% of
Total
Options Options Exercise
Granted(1) Granted to Price(2) Expiration
Name (# of Shares) Employees ($/Share) Date 5% 10%
- ----------------- ------------- ---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Steven E. Nielsen 37,500(3) 8.1% $21.2083 8/24/2003 $ 219,730 $ 485,545
President and CEO 150,000(4) 32.4% $41.3125 3/10/2009 $3,897,181 $9,876,223
Douglas J. Betlach 9,000(3) 1.9% $21.2083 8/24/2003 $ 52,735 $ 116,531
Vice President,
CFO and Treasurer
Robert J. Gluck 37,500(4) 8.1% $27.0417 11/23/2008 $ 637,739 $1,616,156
Executive Vice President,
Finance and Administration
</TABLE>
- -------------------------
(1) Adjusted to reflect 3-for-2 stock split distributed on January 4, 1999.
(2) The exercise price is the closing price of Company's Common Stock as
reported on the NYSE Composite Transactions Tape on the date of grant.
(3) Options under the 1991 Plan vest in 25 percent increments beginning on
the first anniversary of the date of grant and have a term of five
years. Stock options reported here were granted on August 24, 1998 (Mr.
Nielsen - 37,500; Mr. Betlach - 9,000). Mr. Nielsen's options will be
fully vested and immediately exercisable upon a "change in control" of
the Company.
(4) Options under the 1998 Plan vest in 25 percent increments beginning on
the first anniversary of the date of grant and have a term of 10 years.
Stock options reported here were granted on November 23, 1998 (Mr.
Gluck - 37,500) and March 10, 1999 (Mr. Nielsen - 150,000). Mr.
Nielsen's options will be fully vested and immediately exercisable upon
a "change in control" of the Company.
8
<PAGE> 11
STOCK OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth additional information with respect to
the Named Executive Officers of the Company, concerning the exercise of options
during fiscal year 1999 and unexercised options held as of the fiscal year ended
July 31, 1999.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY OPTIONS
NUMBER OF SECURITIES UNDERLYING UNEXERCISED AT JULY 31, 1999
SHARES ACQUIRED OPTIONS AT JULY 31, 1999(2) ($)3
ON EXERCISE VALUE -------------------------- -----------------------------
NAME (# OF SHARES)(1) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- -------------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas R. Pledger 25,000 $ 912,188 -0- -0- -0- -0-
Executive Chairman
Steven E. Nielsen 43,974 $1,099,386 27,489 324,750 $1,126,624 $6,923,123
President and CEO
Douglas J. Betlach 4,000 $ 119,687 -0- -0- -0- -0-
Vice President,
CFO and Treasurer
Robert J. Gluck -0- -0- -0- 37,500 -0- $ 776,561
Executive Vice President,
Finance and Administration
</TABLE>
- ----------
(1) Reflects actual number of shares received upon exercise.
(2) Adjusted to reflect 3-for-2 stock split distributed on January 4, 1999.
(3) The closing market value of the Company's common stock on July 30,
1999, as reported on the NYSE Composite Transactions Tape, was $47.75.
9
<PAGE> 12
EMPLOYMENT AGREEMENTS
PLEDGER EMPLOYMENT AGREEMENT
Effective as of March 10, 1999, the Company entered into an amended and
restated employment agreement with Thomas R. Pledger (the "Pledger Employment
Agreement"). Pursuant to the Pledger Employment Agreement, Mr. Pledger resigned
as Chief Executive Officer of the Company and was appointed Executive Chairman.
The employment agreement between Mr. Pledger and the Company provides for a term
of employment that began on March 10, 1999 and continues until March 9, 2004.
Under the terms of the employment agreement, Mr. Pledger is provided with the
following: (i) a minimum annual base salary of $468,000; (ii) an annual bonus as
determined within the sole discretion of the Board of Directors; and (iii) a
non-tax qualified retirement benefit in the amount of $133,000 for each year of
employment under the employment agreement. Mr. Pledger is also eligible to
participate in all employee benefit plans or programs of the Company, including
stock option plans as well as an automobile allowance and reimbursement of
reasonable travel and business expenses. Upon the Company's termination of Mr.
Pledger's employment without "cause" or upon Mr. Pledger's resignation for "good
reason," Mr. Pledger will be entitled to a cash severance payment equal to three
times the sum of his annual base salary then in effect, plus the highest bonus
paid to him during the three fiscal years preceding such termination or
resignation. This cash severance payment will be payable as soon as is
administratively practical in substantially equal installments over the 12-month
period following the termination or resignation. If Mr. Pledger resigns his
employment or is terminated for cause, he will not be entitled to any severance
pay. Mr. Pledger has the right to resign for six months following a "change in
control," which will entitle him to the aforementioned cash severance payment
upon such resignation of employment. This cash severance payment, triggered upon
a change in control, will be payable in a lump sum within five (5) days of the
change in control. If the severance payment would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, the
Company will pay Mr. Pledger a gross-up payment such that the net amount of the
severance payment retained by Mr. Pledger after the deduction of any excise tax
will be equal to the amount of such payment prior to the imposition of such
excise tax. Mr. Pledger is subject to noncompete and nondisclosure of
proprietary information covenants, however, in the event of a change in control,
the noncompete covenant will not be applicable.
NIELSEN EMPLOYMENT AGREEMENT
Effective as of March 10, 1999, the Company entered into an amended and
restated employment agreement with Steven E. Nielsen (the "Nielsen Employment
Agreement"). Pursuant to the Nielsen Employment Agreement, Mr. Nielsen will
serve as President and Chief Executive Officer of the Company. The employment
agreement between Mr. Nielsen and the Company provides for a term of employment
that began on March 10, 1999 and continues until March 9, 2004. Under the terms
of the employment agreement, Mr. Nielsen is provided with the following: (i) a
minimum annual base salary of $364,000; (ii) an annual bonus as determined
within the sole discretion of the Board of Directors; and (iii) effective as of
March 10, 1999, the Company granted Mr. Nielsen an option to acquire 150,000
shares of common stock of the Company pursuant to the Company's 1998 Incentive
Stock Option Plan. The option will vest in equal 25% increments on each of the
first four anniversaries of the date of grant if Mr. Nielsen is employed with
the Company on such dates (provided that the option, as well as all other stock
options granted to Mr. Nielsen, will fully vest immediately upon a "change in
control" of the Company), have a ten-year term and an exercise price per share
equal to the closing price of the Company's common stock as of March 10, 1999.
Mr. Nielsen is also eligible to participate in all employee benefit plans or
programs of the Company, including an automobile allowance and reimbursement of
reasonable travel and business expenses. Upon the Company's termination of Mr.
Nielsen's employment without "cause" or upon Mr. Nielsen's
10
<PAGE> 13
resignation for "good reason," Mr. Nielsen will be entitled to a cash severance
payment equal to three times the sum of his annual base salary then in effect,
plus the highest bonus paid to him during the three fiscal years preceding such
termination or resignation. This cash severance payment will be payable as soon
as is administratively practical in substantially equal installments over the
12-month period following termination or resignation. If Mr. Nielsen resigns or
terminates employment for cause, he will not be entitled to any severance pay.
Mr. Nielsen has the right to resign for six months following a "change in
control," which will entitle him to the aforementioned cash severance payment
upon such resignation of employment. This cash severance payment, triggered upon
a change in control, will be payable in a lump sum within five (5) days of the
change in control. If the severance payment would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue code of 1986, as amended, the
Company will pay Mr. Nielsen a gross-up payment such that the net amount of the
severance payment retained by Mr. Nielsen after the deduction of any excise tax
will be equal to the amount of such payment prior to the imposition of such
excise tax. Mr. Nielsen is subject to noncompete and nondisclosure of
proprietary information covenants, however, in the event of a change in control,
the noncompete covenant will not be applicable.
GERAGHTY EMPLOYMENT LETTER
Effective as of August 1, 1999, the Company entered into an employment
letter with Kenneth G. Geraghty setting forth the terms of his employment (the
"Geraghty Employment Letter"). Pursuant to the Geraghty Employment Letter, Mr.
Geraghty was appointed Executive Vice President, Finance and Administration of
the Company. The Geraghty Employment Letter has a term of one (1) year from
August 1, 1999 to July 31, 2000 and provides Mr. Geraghty with the following:
(i) an annual base salary of $200,000; (ii) a discretionary annual incentive
bonus based upon the satisfaction of certain individual and Company performance
criteria; provided, however, that Mr. Geraghty will receive a minimum annual
incentive bonus of $50,000 conditioned on his continued employment through the
term of the employment letter; (iii) a severance payment equal to his guaranteed
annual incentive bonus and the greater of: (1) six months of his annual base
salary or (2) the amount of annual base salary remaining over the term of the
employment letter if Mr. Geraghty's employment is terminated for any reason
other than for "cause;" and (iv) all reasonable relocation expenses associated
with Mr. Geraghty's relocation to South Florida.
GLUCK EMPLOYMENT LETTER
On November 3, 1998, the Company entered into a letter agreement with
Robert J. Gluck setting forth the terms of his employment (the "Gluck Employment
Letter"). Pursuant to the Gluck Employment Letter, Mr. Gluck was appointed the
Executive Vice President, Finance and Administration of the Company. Under the
terms of the Gluck Employment Letter, Mr. Gluck was provided with the following:
(i) an annual base salary of $200,000; (ii) a discretionary annual incentive
bonus based upon the satisfaction of certain individual and Company performance
criteria; provided, however, that for the first year of his employment, Mr.
Gluck was guaranteed a minimum bonus of $60,000; and (iii) effective as of
November 23, 1998, the Company granted Mr. Gluck an option to acquire 37,500
shares (adjusted to reflect 3-for-2 stock split distributed on January 4, 1999)
of common stock of the Company pursuant to the Company's 1998 Incentive Stock
Option Plan. Such option will vest in equal 25% increments on each of the first
four anniversaries of the date of grant; provided, Mr. Gluck is employed with
the Company on such dates, have a ten-year term and an exercise price per share
equal to the closing price of the Company's common stock as of November 23,
1998. In addition, if Mr. Gluck's employment with the Company is terminated for
any reason other than "cause" during his first year of employment, he would be
entitled to receive a severance payment equal to the greater of: (1) the unpaid
portion of his base salary for such year plus the guaranteed portion of his
annual incentive bonus or (2) six months of his base salary plus the guaranteed
portion of his annual incentive bonus.
11
<PAGE> 14
REPORT ON EXECUTIVE COMPENSATION
The Audit and Compensation Committee ("Committee") of the Board of
Directors administers the compensation of the executive officers. During fiscal
year 1999, the Committee was composed of three directors who were not employed
by the Company. The Committee's recommendations are subject to approval by the
full Board of Directors. The following report is submitted by the Committee
regarding compensation paid during fiscal year 1999.
The compensation program of the Company is designed to (1) allow the
Company to attract, motivate and retain the highest quality executives, (2)
align their financial interests with those of the Company's shareholders and (3)
reward behaviors that enhance shareholder return. The program is intended to put
a substantial amount of executive compensation "at risk" based on the
performance of the Company, its subsidiaries and the executive.
Each year the Committee establishes compensation guidelines for base
salary, annual incentive bonus awards and stock options for each executive
officer. These guidelines reflect the competitive pay practices of other
companies, job responsibility and the need to attract, retain and reward
executive talent. After establishing the compensation guidelines, the Committee
used its assessment of the Company and individual performance to set actual
compensation relative to the guidelines.
EXECUTIVE OFFICER COMPENSATION GUIDELINES:
BASE SALARY ADJUSTMENTS
Salaries for executive officers were established based on the
individual's performance and general market conditions. Salary levels are
intended to recognize the challenge of different positions taking into
consideration the type of activity of the position, the responsibility
associated with the job and the relative size of the operation. The salaries of
Messrs. Pledger and Nielsen, the Company's former and current Chief Executive
Officer, respectively, were fixed by employment agreements which expire on
March 9, 2004.
ANNUAL INCENTIVE BONUS AWARDS
In addition to paying a base salary, the Company in recent years has
provided for incentive compensation as a component of overall compensation.
Incentive compensation as a component of overall compensation is tied to overall
performance, usually with a heavy emphasis on the profitability of the Company.
In fiscal year 1999, the maximum incentive compensation pool was established by
formula based upon the Company's consolidated financial performance. The fiscal
year 1999 key financial performance measures were total revenue and income
before income taxes ("IBT"). Individual awards from the incentive compensation
pool are recommended by senior management for consideration and approval by the
Committee.
STOCK OPTIONS
Incentive Stock Option awards reward executives only to the extent that
the Company's share price increases for all shareholders. The exercise price per
share is set at the fair market value per share on the date of grant. Subject to
employment requirements, the options become fully exercisable over a period of
four years after the grant. During fiscal year 1999, stock options in the total
amount of xxx shares were granted under the 1991 and 1998 Incentive Stock Option
Plans.
Ronald P. Younkin, Chairman
Louis W. Adams, Jr.
Walter L. Revell
12
<PAGE> 15
PERFORMANCE PRESENTATION
Set forth below is a graph which compares the cumulative total returns
for Dycom's common stock against the cumulative total return (including
reinvestment of dividends) of the Standard & Poors (S&P) 500 Composite Stock
Index and respective peer group indices for the last five fiscal years, assuming
an investment of $100 in the Company's common stock and each of the respective
peer group indices noted on July 31, 1994. For the Company's common stock, a
peer group consisting of MasTec, Inc. has been used. This graph is not intended
to predict the Company's forecast of future financial performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG DYCOM INDUSTRIES, INC., THE S & P 500 INDEX AND A PEER GROUP
Research Data Group Peer Group Total Return Worksheet
Dycom Inds Inc. (DY)
Cumulative Total Return
---------------------------------------------
7/94 7/95 7/96 7/97 7/98 7/99
---- ---- ---- ---- ---- -----
DYCOM INDUSTRIES, INC. 100 268 468 747 1,447 3,016
PEER GROUP 100 155 321 962 564 988
S&P 500 100 126 147 224 267 321
13
<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal year ended July 31, 1999, the brother-in-law of Thomas G.
Baxter, a member of the Board of Directors, was employed by Communications
Construction Group, Inc., a wholly owned subsidiary of the Company. Mr. Baxter's
brother-in-law earned approximately $122,928 as a cable splicer.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent (10%) of the Company's common stock, to file with the SEC initial
reports of ownership and reports of changes in ownership of common stock and
other equity securities of the Company. Certain officers, directors and greater
than ten percent (10%) stockholders are required by SEC regulation to furnish
the Company with all Section 16(a) forms they file. Based on the Company's
review of such reports, the Company believes that there was compliance with all
filing requirements of Section 16(a) applicable to directors and executive
officers of the Company during fiscal year 1999, except one late Form 3 filed by
Mr. Marc R. Tiller.
INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of its Audit and
Compensation Committee, has selected Deloitte & Touche LLP to serve as the
Company's independent auditors for the next fiscal year. Representatives of
Deloitte & Touche LLP are expected to be present at the Meeting for the purposes
of responding to shareholders' questions and making statements that they
consider appropriate.
14
<PAGE> 17
PROPOSALS FOR YEAR 2000
ANNUAL MEETING OF SHAREHOLDERS
Proposals by shareholders intended to be presented at the Year 2000
Annual Meeting of Shareholders must be received by the Secretary of the Company
no later than June 17, 2000 to be considered for inclusion in the Company's
proxy materials for that meeting.
In addition, shareholders who desire to propose an item of business for
action at an annual meeting of shareholders (other than proposals submitted by
inclusion in the Proxy Statement), including the election of a director, must
follow certain procedures set forth in the Company's By-Laws. In general, notice
must be received by the Secretary of the Company not less than sixty (60) days
nor more than ninety (90) days prior to the anniversary date of the immediately
preceding annual meeting of shareholders. The notice should contain a brief
description of the proposal and the reason for conducting such business; the
name and address of the shareholder proposing such business, as it appears in
the Company's books; the class and number of shares of the Company that are
beneficially owned by the shareholder; and any financial interest of the
shareholder in such business. Shareholders should, however, consult the
Company's By-Laws to ensure that the specific requirements of such notice are
met. A copy of the Company's By-Laws may be obtained by any shareholder, without
charge, upon written request to the Secretary of the Company at 4440 PGA
Boulevard, Suite 500, Palm Beach Gardens, Florida 33410.
EXPENSES OF SOLICITATION
The Company will bear the cost of this solicitation of proxies. Proxies
may be solicited by directors, officers and regular employees of the Company,
without compensation, in person or by mail, telephone, facsimile transmission,
telephone or electronic transmission. The Company will reimburse brokers and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses incurred in forwarding proxy material to beneficial owners.
OTHER MATTERS
The Board of Directors knows of no matters to come before the Meeting
other than the matters referred to in this Proxy Statement. If, however, any
matters properly come before the Meeting, the persons named as proxies and
acting thereon will have discretion to vote on those matters according to their
judgment to the same extent as the person delivering the proxy would be entitled
to vote.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Marc R. Tiller
Marc R. Tiller
Secretary
October 15, 1999
15
<PAGE> 18
Appendix A
DYCOM INDUSTRIES, INC.
First Union Center, Suite 500
4440 PGA Boulevard, Palm Beach Gardens, Florida 33410-6542
PROXY FOR THE 1999
ANNUAL MEETING OF SHAREHOLDERS - November 22, 1999
This Proxy is solicited on behalf of the Board of Directors of Dycom Industries,
Inc. (the "Company"). The undersigned hereby appoints Thomas R. Pledger and
Steven Nielsen, and each of them, proxies and attorneys-in-fact, with the power
of substitution (the action of both of them or their substitutes present and
acting or if only one be present and acting, then the action of such one to be
in any event controlling) to vote all shares of common stock held of record by
the undersigned on October 8, 1999 at the 1999 Annual Meeting of Shareholders of
the Company scheduled to be held on November 22, 1999, and at any adjournments
thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED,
SUCH SHARES WILL BE VOTED "FOR" THE NOMINEES NAMED HEREON AND "FOR" THE INCREASE
IN THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK. THE SHARES WILL BE VOTED AT
THE DISCRETION OF THE PROXIES AND ATTORNEYS-IN-FACT ON THE TRANSACTION OF SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT
THEREOF.
PLEASE VOTE, SIGN, AND RETURN.
<PAGE> 19
The election of four nominees for director as set forth in the Proxy Statement
accompanying the Notice of Meeting and listed below. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
[ ] FOR THE NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
<S> <C> <C> <C>
Thomas G. Baxter Joseph M. Schell Thomas R. Pledger Louis W. Adams, Jr.
</TABLE>
To withhold authority to vote for any individual nominee, list the name:
- --------------------------------------------------------------------------------
The proposal to approve an amendment to the Articles of Incorporation to
increase the number of authorized shares of common stock from 50,000,000 shares
to 150,000,000 shares. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE INCREASE
IN THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
To vote at the discretion of the proxies and attorneys-in-fact on the
transaction of such other business as may properly come before the meeting and
any adjournments thereof.
Dated: ,1999
--------------------------------
-------------------------------------------
Signature
-------------------------------------------
Signature (if held jointly)
PLEASE DATE AND SIGN AS YOUR NAME APPEARS
HEREON, AND RETURN IN THE ENCLOSED
ENVELOPE. IF ACTING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, OR GUARDIAN, YOU
SHOULD SO INDICATE WHEN SIGNING. IF THE
SIGNER IS A CORPORATION, PLEASE SIGN THE
FULL CORPORATE NAME BY A DULY AUTHORIZED
OFFICER. IF THE SHARES ARE HELD JOINTLY,
EACH SHAREHOLDER NAMED IS REQUIRED TO SIGN.
