<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:
[ ] 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
MOLEX INCORPORATED
- --------------------------------------------------------------------------------
(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:
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(4) Date filed:
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<PAGE> 2
MOLEX INCORPORATED
2222 WELLINGTON COURT
LISLE, ILLINOIS 60532
(630) 969-4550
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 23, 1998
To the Stockholders of
MOLEX INCORPORATED
Notice is hereby given that the annual meeting of the stockholders of Molex
Incorporated, a Delaware corporation, will be held in the Symposium Theater at
the Radisson Hotel located at 3000 Warrenville Road, Lisle, Illinois, on Friday,
October 23, 1998 at 10:00 a.m. Central Daylight Savings Time for the following
purposes:
1. To elect the board of nine directors for the ensuing year.
2. To consider a proposal to approve an amendment and restatement of The
1991 Molex Incorporated Incentive Stock Option Plan.
3. To transact such other business as may properly come before the meeting,
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on August 28, 1998
as the record date for determination of the stockholders entitled to notice of
and to vote at the meeting, and only stockholders of record at the close of
business on said date will be entitled to notice of and to vote at the meeting.
A list of all stockholders entitled to vote is on file at the principal
executive offices of the Company, 2222 Wellington Court, Lisle, Illinois 60532.
A proxy, proxy statement and the Annual Report of Molex Incorporated are
enclosed with this notice. The Annual Report is not part of the proxy soliciting
materials.
Regardless of whether or not you plan to attend the meeting, it is
important that your shares are represented and voted. Accordingly, you are
requested to complete and sign the enclosed proxy and return it in the enclosed
envelope.
September 15, 1998
By Order of the Board Directors
MOLEX INCORPORATED
LOUIS A. HECHT
Louis A. Hecht, Secretary
<PAGE> 3
MOLEX INCORPORATED
2222 Wellington Court
Lisle, Illinois 60532
---------------------------------
PROXY STATEMENT
---------------------------------
ANNUAL MEETING OF STOCKHOLDERS
To be Held October 23, 1998
September 15, 1998
SOLICITATION AND REVOCATION OF PROXIES
The proxy that accompanies this proxy statement is being solicited by and
on behalf of the Board of Directors of MOLEX INCORPORATED ("Molex") for use at
the Annual Meeting of Stockholders to be held on Friday, October 23, 1998, at
the time and place and for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders and at any adjournment or adjournments thereof.
Any stockholder giving a proxy has the power to revoke it at any time prior to
its exercise by executing a subsequent proxy, by notifying the Corporate
Secretary of Molex of such revocation in a written notice received by him at the
above address prior to the Annual Meeting of Stockholders or by attending the
Annual Meeting of Stockholders and voting in person. This Proxy Statement and
form of proxy are first being mailed to stockholders on or about September 15,
1998.
In addition to solicitation of proxies by mail, certain officers, directors
and regular employees of Molex, none of whom will receive additional
compensation therefor, may solicit proxies by telephone, telegram, telecopier or
by personal contacts. All expenses in connection with the solicitation,
including postage, printing, handling and the actual expenses incurred by
brokerage houses, custodians, nominees and fiduciaries in forwarding proxy
material to beneficial owners, will be paid by Molex.
VOTING RIGHTS AND SECURITIES OUTSTANDING
DESCRIPTION OF THE DIFFERENT CLASSES OF STOCK
Molex has three classes of common stock. They are Common Stock, par value
$.05 per share ("Common Stock"), Class A Common Stock, par value $.05 per share
("Class A Common Stock"), and Class B Common Stock, par value $.05 per share
("Class B Common Stock"). The holders of Common Stock and Class B Common Stock
are entitled to one vote per share upon each matter submitted to the vote of the
stockholders and, subject to conditions set forth in greater detail below, vote
separately as a class as to all matters except the election of the Board of
Directors. With respect to the election of directors, the holders of Common
Stock and Class B Common Stock vote together as a class. The holders of Class A
Common Stock have no voting rights except as otherwise required by law or under
circumstances set forth in greater detail below.
Under certain circumstances, Class A Common Stock would have voting rights.
Under Delaware General Corporation Law, any amendments to Molex's Certificate of
Incorporation changing the number of authorized shares of any class, changing
the par value of the shares of any class, or altering or changing the powers,
preferences, or special rights of the shares of any class so as to adversely
affect them, including the Class A Common Stock, would require the separate
approval of the class so affected, as well as the approval of all classes
entitled to vote thereon, voting together. Class A Common Stock would
automatically convert into Common Stock on a share-for-share basis any time upon
the good faith determination by Molex's Board of Directors that either of the
following events has occurred: (i) the aggregate number of outstanding shares of
Common Stock and Class B Common Stock together is less than 10% of the aggregate
number of outstanding shares of Common Stock, Class B Common Stock
1
<PAGE> 4
and Class A Common Stock together; or (ii) any person or group, other than one
or more members of the Krehbiel Family (as defined in Molex's Certificate of
Incorporation), becomes or is the beneficial owner of a majority of the
outstanding shares of Common Stock.
SHARES OUTSTANDING ON THE RECORD DATE
Only voting stockholders of record at the close of business on August 28,
1998 (the "Record Date") are entitled to notice of and to vote at the Annual
Meeting of Stockholders or any adjournment thereof. As of the close of business
on the Record Date, there were outstanding
76,932,479 shares of Common Stock
79,378,329 shares of Class A Common Stock
94,255 shares of Class B Common Stock
VOTING
DETERMINATION OF A QUORUM
The presence at the meeting, in person or by proxy, of a majority of the
outstanding shares of each of the Common Stock and Class B Common Stock will
constitute a quorum at the meeting. Abstentions, broker non-votes and withheld
votes are counted for purposes of determining the presence or absence of a
quorum for the transaction of business. A "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote on a proposal because the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner.
ELECTION OF DIRECTORS
Directors are elected by a plurality of the vote of the shares of the
Common Stock and the Class B Common Stock voting together as a class. The
nominees who receive the most votes will be elected. Abstentions, withheld votes
and broker non-votes will not be taken into account and will have no effect in
determining the outcome of the election.
When electing directors, the holders of the shares of Common Stock and the
holders of the shares of Class B Common Stock have non-cumulative voting rights.
This means that the holders of a majority of shares of the Common Stock and
Class B Common Stock taken together, represented and entitled to vote at a
meeting where a quorum is present can elect all of the directors if they choose
to do so. In such an event, the holders of the remaining shares will not be able
to elect any person or persons to the Board of Directors.
ALL OTHER MATTERS
Subject to certain conditions, all matters, other than the election of
directors, submitted to a vote of all the stockholders must be approved
separately by both the holders of a majority of the shares of the Common Stock
entitled to vote and present in person or by proxy, voting as a class, and by
the holders of a majority of the shares of the Class B Common Stock entitled to
vote and present in person or by proxy, voting as a class. The right of the
Class B Common stockholders to vote separately as a class is subject to
applicable law and for so long as at least 50% of the authorized shares of the
Class B Common Stock are outstanding. As of the Record Date, 64.5% of the
authorized shares of Class B Common Stock were outstanding. Abstentions will
have the same effect as votes against all proposals (other than the election of
directors) presented to the stockholders. A "non-vote" will not be considered
entitled to vote as to such matters at the meeting, will not be counted as a
vote for or against any matter and, accordingly, will have no effect on any
proposal presented to the stockholders.
2
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT AND OF CERTAIN BENEFICIAL OWNERS
The following table sets forth any outstanding equity securities of Molex
beneficially owned as of the Record Date by each director, nominee for director,
the named executive officers listed in the Summary Compensation Table, all
directors, nominees and executive officers as a group and all other persons who
are known to Molex to be the beneficial owner of more than five percent of any
class of voting securities. The persons named hold sole voting and investment
power with respect to the shares of equity securities listed below, unless
otherwise indicated.
The amounts set forth in the following table reflect all of the stock
dividends declared and issued to stockholders to date.
<TABLE>
<CAPTION>
NUMBER OF SHARES
------------------------------------------------------------------
NAME AND ADDRESS COMMON CLASS A CLASS B ALL VOTING
OF BENEFICIAL OWNER NATURE OF OWNERSHIP STOCK COMMON STOCK COMMON STOCK SECURITIES(A)(B)
------------------- ------------------- ------ ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
F. A. Krehbiel Direct 124,963% 1,259% 41,949.5% %
2222 Wellington Ct. Partner (d) 32,137,075 -- --
Lisle, IL Trustee (e) 36,983 3,965 --
Trustee (f)(g) 1,559,556 1,564,674 5,103
Option (a) 18,620 -- --
Spouse (g) 2,996 2,933 --
Percent of Class (a) 2.2 2.0 49.9 2.3
J. H. Krehbiel, Jr. Direct 114,444% 5,403,697% 41,949.5% %
2222 Wellington Ct. Partner (d) 32,137,075 -- --
Lisle, IL Trustee (e) 36,983 3,965 --
Trustee (f)(g) 1,500,129 1,492,897 4,252
Trustee/Custodian (g)(h) 205,785 204,021 --
Option (a) 11,540 -- --
Spouse (g) 5,232 -- --
Percent of Class (a) 5,562 2,822 -- 2.5
2.4 8.9 49.0
F. L. Krehbiel Direct 363,194 354,602 851
2222 Wellington Ct. Trust (f) 260,434 261,290 850
Lisle, IL Option (a) 10,688 -- --
Percent of Class (a) * * * *
Krehbiel Limited Direct (d) 32,137,075% %
Partnership (c)(d)
2222 Wellington Ct.
Lisle, IL Percent of Class (a) 41.8 41.8
J. H. Krehbiel Trust (e) Direct 36,983 3,965 *
W. W. Fichtner Direct 5,026 842
Spouse (g) -- 12
Percent of Class (a) * * *
J.J. King Direct 105,470 35,304
Option (a) 24,753 --
Joint With Spouse 450 450
Spouse (g) 137 75
Children (g) -- 4,675
Percent of Class (a) * * *
M. P. Slark Direct 109,524 3,701
Option (a) 26,168 --
Joint With Spouse 645 516
Spouse (g) 137 22 *
Custodian for Children (g) 378 7,698
Percent of Class (a) * *
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NUMBER OF SHARES
------------------------------------------------------------------
NAME AND ADDRESS COMMON CLASS A CLASS B ALL VOTING
OF BENEFICIAL OWNER NATURE OF OWNERSHIP STOCK COMMON STOCK COMMON STOCK SECURITIES(A)(B)
------------------- ------------------- ------ ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
Robert J. Potter Direct 63,770 16,106
Option (a) 7,574 --
Percent of Class (a) * * *
Edgar D. Jannotta (i) Direct 59,243 37,376
Option (a) 13,493 --
Retirement Account -- 15,257
Percent of Class (a) * * *
Donald G. Lubin Direct 303 4,210
Option (a) 1,833 --
Retirement Account 2,133 3,050
Percent of Class (a) * * *
Masahisa Naitoh Direct 390
Option (a) 1,833
Percent of Class (a) * *
Michael J. Birck Direct 3,125
Option (a) 1,833
Percent of Class (a) * *
Douglas K. Carnahan Direct 0 3,000
Option (a) 156 --
Percent of Class (a) * * *
All Directors and Direct or Indirect (g) 36,761,613% 9,201,422% 94,105% %
Executive Officers as Option (a) 212,492 -- --
a
group, comprising 19
persons including Percent of Class (a) 47.9 11.6 99.8 48.0
those
listed above
The Regents of the Employee Benefit Plan 5,767,918% %
University of
California (j)
300 Lakeside Drive
Oakland, CA 94612 Percent of Class (a) 7.5 7.5
</TABLE>
- ----------------------------
* Denotes less than 1% of the outstanding shares.
(a) Shares of Common Stock subject to stock options which may be exercised
within 60 days of the Record Date. For the purpose of computing the percent
of class owned by officers and directors individually and as a group, the
shares that could be acquired within said 60 day period have been deemed to
be outstanding as to that individual or group regardless of whether they are
actually outstanding.
(b) In the election of directors, each holder of Common Stock or Class B Common
Stock is entitled to one vote for each share registered in his or her name
without distinction as to class of stock. Class A Common Stock is generally
nonvoting. See "Voting Rights and Securities Outstanding."
(c) J. H. Krehbiel, Jr. and F. A. Krehbiel are brothers. F. L. Krehbiel is the
son of J. H. Krehbiel, Jr. who with his father and uncle collectively
comprise the "Krehbiel Family". As of the Record Date, the Krehbiel Family
exercises voting power with respect to 36,096,767 shares of Common Stock
(46.9% of the number outstanding); 94,105 shares of Class B Common Stock
(99.8% of the number outstanding); and 36,190,872 shares of all the voting
securities (47.0% of the number outstanding). In addition, the Krehbiel
Family beneficially owns 9,030,930 shares of Class A Common Stock
representing 11.4% of the outstanding shares of this class of stock.
(d) J. H. Krehbiel, Jr., F. A. Krehbiel and a trust for which they are the
trustees are each general partners and limited partners of the Krehbiel
Limited Partnership (the "Partnership") and share the power to vote and
dispose of shares held by the Partnership. Pursuant to the Partnership
agreement, all voting of the Partnership shares must be done with the
unanimous consent of the partners. For purposes of computing the percent of
a class or the percent of all voting securities owned by individual members
of the Krehbiel Family, the shares of the Partnership have not been
included.
4
<PAGE> 7
(e) J. H. Krehbiel, Jr. and F. A. Krehbiel are co-trustees of the trust referred
to in footnote (d) in which they each share an equal beneficial interest. As
trustees, they share the power to vote and dispose of the shares held by
this trust. For purposes of computing the percent of a class or the percent
of all voting securities owned by individual members of the Krehbiel Family,
the shares of this trust have not been included.
(f) F. A. Krehbiel and J. H. Krehbiel, Jr. own these shares of Common Stock,
Class A Common Stock and Class B Common Stock as trustees under various
trusts for the benefit of their respective children including F. L.
Krehbiel. They exercise voting and investment power as to the shares held in
these trusts. For purposes of computing the percent of a class or the
percent of all voting securities owned by F. L. Krehbiel, the shares of
trust in which he has a beneficial interest have not been included.
(g) Certain shares have been reported, which are included in the table above, as
owned by members of a household or as held in the capacity of trustee or
custodian. As to these shares, the persons above expressly disclaim
beneficial ownership and/or personal beneficial interest therein. For
purposes of computing the percent of class or the percent of all voting
securities, the shares held by a trustee or custodian have not been included
as being owned by an individual beneficiary, but have been included as being
owned by the trustee or custodian who exercises voting power.
(h) These shares are held for the benefit of the children of F. A. Krehbiel. J.
H. Krehbiel, Jr. exercises voting and investment power as to these shares.
(i) William Blair & Company LLC has served as Molex's investment banking advisor
and has been a market maker for the Common Stock for a number of years. The
shares of the Common Stock and Class A Common Stock shown above as owned by
Mr. Jannotta do not include shares held by William Blair & Company LLC in
its trading account, in its capacity as a market maker, or over which
William Blair & Company LLC has voting or investment power in its capacity
as a fiduciary.
(j) Pursuant to a Schedule 13G dated January 12, 1998, The Regents of the
University of California filed as an "Employee Benefit Plan, Pension Plan
which is subject to the provisions of the Employee Retirement Income
Security Act of 1974 or Endowment Fund" with the sole power to vote or to
direct the vote and sole power to dispose or to direct the disposition of
all of the shares.
5
<PAGE> 8
BOARD OF DIRECTORS
During the last fiscal year, there were four meetings of the full Board of
Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
Molex has three committees of the Board of Directors. They are the
Compensation Committee, the Audit Committee and the Executive Committee. Molex
does not have a standing Nominating Committee.
The Compensation Committee consists of three outside directors who have the
authority to approve the compensation of the executive officers of Molex.
Compensation includes base salary, cash bonus, and any awards and grants under
stock bonus or option plans. The Compensation Committee had one meeting and
agreed to two Unanimous Written Consents during the fiscal year just ended.
The Audit Committee is comprised of three directors, all of whom are not
employees of Molex. The Audit Committee oversees the creation and implementation
of internal policy and controls and is responsible for the hiring of the outside
independent auditors and the review of their findings. During the last fiscal
year, there were three meetings of the Audit Committee.
The Executive Committee presently is comprised of two directors and was
formed in order to act between meetings of the full Board of Directors. The
Executive Committee operates according to a set of By-Laws which have been
adopted by the full Board of Directors and which limit the authorized actions of
the Executive Committee. The Executive Committee customarily acts by Unanimous
Written Consents and had no regularly scheduled or special meetings during the
last fiscal year.
DIRECTORS' COMPENSATION
Each director who is not a salaried officer of Molex receives compensation
at the rate of $29,000 per year for serving as a director, $1,500 for attending
a regular or special board meeting plus all expenses associated with attending
such meeting. In addition, each director receives an automatic non-discretionary
stock option grant under The 1991 Molex Incorporated Incentive Stock Option Plan
(the "1991 Plan") as of the date of the Annual Stockholders' Meeting during the
term of the 1991 Plan with an exercise price equal to the fair market value of
the Common Stock on the date of grant. If the proposal to amend the 1991 Plan
set forth in Item 2 is approved, such automatic grants to employee directors
would be eliminated. Each option generally has a five year term and becomes
exercisable in four equal annual installments. The number of shares subject to
the option granted to each outside director is 200 multiplied by the number of
years of service or fraction thereof. The amount of shares increases to 500
multiplied by the number of years of service or fraction thereof, if the
following two financial conditions are met for the fiscal year ended immediately
prior to the grant:
(1) Molex's net profits (after taxes) are at least ten percent (10%) of
the net sales revenue; and
(2) Molex's net sales revenue increased at least one and one-half (1.5)
times the "Worldwide Growth" of the general connector market as
compared to the previous year's net sales revenue. For purposes of
determining the Worldwide Growth, one or more outside independent
connector consultants are chosen by the disinterested directors.
Notwithstanding the foregoing, the number of shares subject to the annual
option granted to each outside director under the 1991 Plan cannot exceed 3,000
shares or an amount whose fair market value on the date of grant is $100,000.
Because the 1991 Plan's financial goals were achieved for the fiscal year just
ended, the number of shares subject to the option that will be granted to the
outside directors with respect to such year will be determined by multiplying
500 by the number of years of service or fraction thereof.
Each director is eligible to participate in The Molex Incorporated Deferred
Compensation Plan under which he may elect to defer all or a portion of the
following year's compensation. A participant may elect to have the amount
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<PAGE> 9
deferred (1) accrue interest during each calendar quarter at a rate equal to the
average six month Treasury Bill rate in effect at the beginning of each calendar
quarter, or (2) credited as stock "units" whereby each unit is equal to one
share of Common Stock. Upon termination of service as a director, the
accumulated amount is distributed in a lump sum. At the time of distribution,
any stock units are converted into cash by multiplying the number of units by
the fair market value of the stock as of the payment date.
ITEM 1:
ELECTION OF DIRECTORS
The annual election of the Board of nine directors will take place at the
Annual Meeting of Stockholders. Each director will serve for the ensuing year
until the next annual meeting of stockholders, or until his successor shall be
elected and shall qualify.
The voting persons named in the enclosed proxy intend to nominate and vote
in favor of the election of the persons named below unless authorization is
withheld. If any of the nominees becomes unavailable for election, votes will be
cast for the election of such other person or persons as the proxy holders, in
their judgment, may designate. No circumstances are presently known which would
render any of the nominees named herein unavailable.
The following information is provided with respect to the nominees for
election to the Board of Directors:
F. A. KREHBIEL(a)--Chairman and Chief Executive Officer of Molex(b).
Director since 1972(c) and member of the Executive Committee. Age 57. Elected
Vice Chairman and Chief Executive Officer in 1988 and Chairman of the Board
of Directors in 1993. Mr. Krehbiel serves on the Board of Directors of
Tellabs, Inc., Northern Trust Corp., Nalco Chemical Company and DeVry Inc.
J. H. KREHBIEL, JR.(a)--President and Chief Operating Officer of Molex(b).
Director since 1966(c) and member of the Executive Committee. Age 61. Elected
President in 1975.
ROBERT J. POTTER--President and Chief Executive Officer of R. J. Potter Company
(business consulting).
Director since 1981 and Chairman of the Compensation Committee. Age 65. Prior
to founding R. J. Potter Company in 1989, Dr. Potter was President and Chief
Executive Officer of Datapoint Corporation (local area networks, video
teleconferencing and computer systems) from 1987-1989.
EDGAR D. JANNOTTA--Investment banker and Senior Director of William Blair &
Company, LLC (securities and investment banking).
Director since 1986 and Chairman of the Audit Committee. Age 67. In 1959, Mr.
Jannotta joined William Blair & Company, serving as Managing Partner from 1977
to 1994, Senior Partner from 1995 to 1996 and Senior Director since 1996 when
the firm converted from a partnership to a limited liability company. During
the last five years, William Blair & Company, LLC has performed investment
banking services for Molex. Mr. Jannotta serves on the Board of Directors of
AAR Corp., Bandag, Incorporated, Oil-Dri Corporation of America, Aon
Corporation and Commonwealth Edison Company.
F. L. KREHBIEL(a)--Assistant to the Regional President (Americas) -- Global
Desktop Business.
Director since 1993. Age 33. Mr. Krehbiel has worked as a design engineer in
the Engineering Department of the Automotive Business Unit since 1988 and
became an Engineering Manager in 1993. He was promoted to his present position
in 1998.
7
<PAGE> 10
DONALD G. LUBIN--Partner of Sonnenschein Nath & Rosenthal (private law
practice).
Director since 1994 and member of the Audit Committee. Age 64. Mr. Lubin
joined Sonnenschein Nath & Rosenthal in 1957. He has been a partner since 1964
and was Chairman from 1991 to 1996. Sonnenschein Nath & Rosenthal is one of
Molex's principal outside law firms and has performed services on behalf of
Molex for more than five years. Mr. Lubin serves on the Board of Directors of
McDonald's Corporation.
MASAHISA NAITOH--Senior Advisor for The Institute of Energy Economics, Japan
(private think tank); Senior Managing Director of Itochu Corporation (Japanese
global trading firm); and International Advisory Board Member of Elf Acquitane
(French global financial institution)
Director since 1995 and member of the Compensation Committee. Age 60. During
the last five years, Mr. Naitoh has been associated with various Japanese
government agencies and companies and academic institutions around the world.
He has served with The Institute of Energy Economics since 1994. In 1997, he
joined Itochu first as an Advisor and then as Executive Vice President. In
1994, he became associated with Elf Acquitane. During the last fiscal year,
Mr. Naitoh attended fewer than 75% of the aggregate total number of meetings
of the board of directors and committees on which he served.
MICHAEL J. BIRCK--President and Chief Executive Officer of Tellabs, Inc.
(telecommunications equipment)
Director since 1995 and member of the Compensation Committee. Age 60. Mr.
Birck is a founder of Tellabs, Inc. and has been its President and Chief
Executive Officer since its inception in 1975. He serves on the Board of
Directors of Tellabs, Inc. and Illinois Tool Works Inc.
DOUGLAS K. CARNAHAN--Retired
Director since 1997 and member of the Audit Committee. Age 57. Mr. Carnahan
joined Hewlett-Packard (computers, computer peripherals and instrumentation)
in 1968 and served in several diverse positions in manufacturing, engineering
and management. He was promoted to the General Manager of the Printing Systems
Group in 1991 and was named Vice President in 1992. In 1993, he became a
member of the management staff and was named General Manager of Component
Products. He was elected Senior Vice President in 1995 and became the General
Manager for the Measurement Systems Organization shortly thereafter where he
was responsible for Hewlett-Packard's analytical, medical, components and
information storage businesses. Mr. Carnahan retired in 1998.
- ----------------------------
<TABLE>
<S> <C>
(a) F. A. Krehbiel and J. H. Krehbiel, Jr. are brothers and F.
L. Krehbiel is the son of J. H. Krehbiel, Jr. (collectively
the "Krehbiel Family"). The members of the Krehbiel Family
may be considered "control persons" of Molex. Other than the
Krehbiel Family, no director or executive officer has any
family relationship with any other director or executive
officer.
(b) These nominees hold positions as directors and/or officers
of one or more of the subsidiaries of Molex. Only the
principal positions are set forth.
(c) Includes period served as a director of Molex's predecessor.
</TABLE>
ITEM 2:
PROPOSAL TO APPROVE AN AMENDMENT AND RESTATEMENT OF
THE 1991 MOLEX INCORPORATED INCENTIVE STOCK OPTION PLAN
On October 25, 1991, the stockholders approved The Molex Incorporated 1991
Incentive Stock Option Plan (the "Plan"), which provides for the granting of
incentive stock options ("ISOs") within the meaning of Section 422(a) of the
Internal Revenue Code of 1986, as amended ("Internal Revenue Code"), to key
employees of Molex and its subsidiaries and nonqualified stock options to key
employees of Molex and its subsidiaries and directors. On October 21, 1994, the
stockholders approved an amendment and restatement of the Plan. Upon the
recommendation of the Compensation Committee (the "Committee"), the Board of
Directors unanimously approved an amendment and restatement of the Plan (the
"Restatement") effective July 1, 1998, subject to the approval of the
Restatement by stockholders at the next regularly scheduled annual meeting.
8
<PAGE> 11
SUMMARY OF CHANGES
The following is a brief summary of the principal differences between the
Plan as currently in effect and the proposed Restatement:
1. Makeup of the Committee. The Plan currently provides that the committee
which is authorized to administer the Plan (the "Committee") will
consist of three or more members of the Board. Under amended Rules of
the Securities and Exchange Commission, the committee can consist of two
or more outside directors in order for transactions under the Plan to be
eligible for an exemption from the short-swing trading provisions of
Section 16 of the Securities and Exchange Act of 1934. The proposed
amendment changes the makeup of the Committee to at least two or more
members of the Board.
2. Maximum Amount That Can Be Granted In One Year. Section 162(m) of the
Internal Revenue Code limits the allowable federal income tax deduction
for compensation paid or accrued with respect to certain executive
officers to $1 million per year (the "162(m) Limit"). Certain types of
compensation are exempted from the 162(m) Limit, including
"performance-based compensation" with respect to which objective goals
have been established by a committee of "outside" directors before
commencement of the services for which the compensation is paid. One
requirement that must be satisfied in order for compensation under the
Plan to qualify as "performance-based compensation" is that the material
terms of the performance goal must include either the maximum amount of
compensation to be paid under the Plan or a formula used to calculate
such an amount. In order to comply with Section 162(m) of the Internal
Revenue Code, the Plan currently provides that the maximum amount of
shares that can be granted to any person in a calendar year may not
exceed the lesser of 3% (subject to anti-dilution adjustments) of the
number of shares reserved under the Plan or 50,000 shares (subject to
anti-dilution adjustments). The proposed Amendment and Restatement
increased the annual limit to the lesser of 10% of the number of shares
reserved under the Plan (subject to anti-dilution adjustments) or
250,000 shares (subject to anti-dilution adjustments).
3. Treatment of Employee Directors. Molex presently has three employee
directors, two of whom are executive officers. The Plan currently
provides that all directors (whether employees or not) receive automatic
nondiscretionary grants every year. In the case of employee directors,
this amount is limited to $100,000 per year. The proposed Amendment and
Restatement eliminates automatic grants to employee directors and
provides that employee directors may receive discretionary grants, if
any, subject to the same standards applicable to all other employees.
4. Expiration of Options. The Plan, as currently in effect, provides that
all options expire one year after the option becomes 100% vested. The
proposed Amendment and Restatement states that ISOs will expire one year
after they become 100% vested and all other options must expire within
two years after they become fully vested.
5. Clarification Regarding Change of Vesting Schedule. Paragraph 6.2b of
the Plan has been amended to clarify that the Committee has the power to
change a Non-ISO vesting schedule of a previously granted option to one
that is more favorable so long as it is not more favorable than an ISO
vesting schedule.
6. Clarification of Option Price to 10 Percent Stockholders. F. A.
Krehbiel and J. H. Krehbiel, Jr. each controls at least 10% of the
voting power of Molex. Under the Internal Revenue Code, any ISO granted
to either of them based on their current beneficial stock ownership must
have an option price of at least 110% of the fair market value on the
date of grant. Paragraph 5.1 of the Plan has been amended to clarify
that the 110% requirement applies only to option grants intended to be
ISOs.
SUMMARY OF THE RESTATEMENT
The material features of the Restatement are summarized below. Such summary
is qualified in its entirety by reference to the full text of the Restatement, a
copy of which is attached hereto as Appendix A.
9
<PAGE> 12
PURPOSE OF THE PLAN
The purpose of the Plan is to induce the officers and the directors of
Molex to remain employed by Molex, and to encourage such officers and directors
to secure or increase on reasonable terms their ownership of Molex stock. Molex
believes that the Plan will promote continuity of management and increase
incentive and personal interest in the welfare of Molex by those who are
primarily responsible for shaping and carrying out the long-range plans of Molex
and securing its continued growth and financial success. It is also a purpose of
the Plan (except as otherwise noted in the Plan) to be qualified under Section
422(a) of the Internal Revenue Code.
SCOPE OF THE PLAN
Stock options granted under the Plan may be either ISOs or nonqualified
stock options. Except for nondiscretionary grants to nonemployee directors
(which must be nonqualified options), all options granted under the Plan shall
be ISOs unless the written agreement evidencing the option specifies otherwise.
The aggregate number of shares of Molex Common Stock ("Stock") reserved for
issuance upon the exercise of options granted under the Plan is 3,051,758 shares
adjusted for all stock dividends. If any option expires, is forfeited or
canceled for any reason without having been exercised in full, the unexercised
shares of Stock associated with such option shall be available for future option
grants under the Plan.
The aggregate number of shares reserved for issuance under the Plan, as
well as the exercise price of and number of shares subject to outstanding
options, are subject to adjustment to reflect certain subsequent stock changes,
including a stock dividend, stock split, reorganization, recapitalization,
combination of shares, merger or consolidation. The Committee is authorized to
make equitable adjustments to such amounts in the event that there is any change
in the number or kind of outstanding shares of stock of Molex (or of any stock
or other securities into which such stock shall have been changed or for which
it shall have been exchanged) not expressly specified in the Plan. In accordance
with the Plan, the 1,000,000 shares of Stock originally reserved for issuance
under the Plan when initially approved by stockholders was adjusted to reflect
five intervening 25% stock dividends.
ELIGIBLE PARTICIPANTS IN THE PLAN
Any director or officer of Molex is eligible to receive an option grant
under the Plan. As of August 31, 1998, 9 directors (6 of whom are not employees
and 2 of whom are officers) and 10 officers who are not directors were eligible
to participate in the Plan.
ADMINISTRATION OF THE PLAN
The Committee. The Plan is administered by a committee ("the Committee")
of two or more members of the Board of Directors. The Plan presently is
administered by the Compensation Committee, although the Board of Directors is
authorized to appoint other directors to serve on the Committee. Subject to the
terms of the Plan, the Committee has the complete authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to it and
to make all other determinations necessary or advisable for the administration
of the Plan.
Awards to Employees. Subject to the terms of the Plan, the Committee, in
its sole discretion, may determine the employees to whom, and the time at which,
an option shall be granted, whether such option shall be an ISO or a
nonqualified stock option, the option period, the vesting schedule, the number
of shares subject to each option, and such other terms and provisions as the
Committee deems advisable to include in the written option agreements evidencing
options (which need not be identical). In making such determinations, the
Committee may take into account the nature of the services rendered by the
employee, his present and potential contribution to Molex's success and such
other factors as it deems relevant.
Automatic Awards to Non-Employee Directors. Option grants to outside
directors are non-discretionary and are made pursuant to the formula specified
in the Plan. The Committee has no power to make discretionary option
10
<PAGE> 13
grants to outside directors or to determine the terms and conditions thereof.
The explanation of the formula, conditions and limitations of grants to outside
directors is set forth in detail above in the section entitled "DIRECTORS'
COMPENSATION."
TERMS OF OPTIONS GRANTED UNDER THE PLAN
Option Price. The option price of any option granted under the Plan shall
be the fair market value (i.e., the closing price) of the Stock on the grant
date of the option. At the close of trading on August 31, 1998, the closing
price of the Stock as reported by Nasdaq was $24.125 per share. Notwithstanding
the foregoing, if an optionee owns more than 10% of the total voting power of
Molex, then the option price is 110% of the fair market value of the Stock on
the grant date of the option, if the option is an ISO. Because F.A. Krehbiel and
J.H. Krehbiel, Jr. own more than ten percent (10%) of the total voting power of
Molex, their option price for an ISO grant is 110% of the fair market value of
the Stock on the grant date.
Transferability. In general, any option granted under the Plan is not
transferable and can be exercised only by the optionee during his lifetime.
However, upon the death of an optionee while totally disabled, retired or still
employed by Molex or a parent or subsidiary, his option, to the extent
exercisable on the date of his death, may be exercised by the personal
representative of his estate in certain circumstances.
Vesting Schedule. Options granted under the Plan may not become
exercisable until at least one year after its grant date, except that under
certain circumstances relating to the death, total disablement or retirement of
the optionee (see paragraph 6.4, in Appendix A), all outstanding options of a
particular optionee will immediately vest and become exercisable for a period of
one year. Subject to this initial waiting period, the vesting schedule of an
option depends upon whether the optionee is an employee or outside director and
whether the option is an ISO.
In the case of an ISO or nonqualified option grant to an outside director,
the optionee may exercise up to 25% of the number of shares granted each year
commencing one year after the date of grant.
In the case of an option not covered by the preceding paragraph, the shares
subject to such option shall vest in amounts at times the Committee, in its sole
discretion, shall determine. The Committee is authorized to change the vesting
schedule of any previously granted options to a schedule which is more favorable
to the optionee, provided that no such option may vest in amounts greater than,
or at times prior to, the amounts and times such options would have vested if
such options vested in accordance with the provisions described in the preceding
paragraph. However, all options granted under the Plan must fully vest within
ten years from its grant date.
Exercise. Subject to the terms of the Plan, an option may be exercised by
delivering written notice of exercise, along with the aggregate option purchase
price, to Molex. The option purchase price may be paid either in cash or Molex
stock (valued at its closing price on the date of exercise).
Termination of Options. An option granted under the Plan expires at the
earliest of: (a) the expiration date specified when the option was granted, (b)
one year after the death, total disablement or retirement of the optionee upon
the satisfaction of certain conditions or (c) upon termination from employment
or service as a director for any reason other than those specified in clause
(b), provided, however, that no option may be exercised more than two years
after the date it becomes fully vested except that ISOs will expire one year
after the date it becomes fully vested.
11
<PAGE> 14
LIMITATIONS OF SHARES GRANTED.
The number of shares for which options may be granted to any person in any
calendar year cannot exceed the following:
Overall Limitation. With respect to any option (whether an ISO or
nonqualified stock option), the lesser of 10% of the number of shares
reserved under the Plan (subject to anti-dilution adjustments) or 250,000
shares (subject to anti-dilution adjustments).
ISOs. With respect to ISOs, the number of shares which are subject to
options that are first exercisable in any given succeeding calendar year
shall not have a fair market value (determined at the time of grant) that
exceeds (a) $100,000 less (b) the aggregate fair market value (determined
at the respective time of their grants) of those shares of all prior ISOs
that are first exercisable in said succeeding calendar year.
Such limitations are merely ceilings as to the amount of the total awards
or an award to an individual. When making discretionary option grants under the
Plan, the Committee may grant an amount less than the maximum amount or grant no
shares at all.
DURATION, MODIFICATION OR TERMINATION OF THE PLAN
The Plan is scheduled to terminate on June 30, 2000, although the Board of
Directors can terminate it effective as of an earlier date. Termination of the
Plan would not affect options granted prior to such a termination. The Board of
Directors may amend the Plan at any time, subject to stockholder approval if
required by Securities and Exchange Commission rules or the listing requirements
of any national securities exchanges or trading systems on which are listed any
of Molex's equity securities.
FEDERAL INCOME TAX IMPLICATIONS OF THE PLAN
The following is a brief summary of the principal federal income tax
implications of awards under the Plan. This summary is not intended to be
exhaustive and does not describe state, local or foreign tax laws.
NON-QUALIFIED STOCK OPTIONS.
General Rule. Generally, an individual receiving a non-qualified stock
option does not realize any taxable income for federal income tax purposes at
the time of grant. Upon exercise of an option, the excess of the fair market
value on the date of exercise over the option exercise price will be taxable to
the optionee as ordinary income. The optionee will have a capital gain (or loss)
upon the subsequent sale of the stock in an amount equal to the sale price
reduced by the fair market value of the stock on the date the option was
exercised. The holding period for purposes of determining whether the capital
gain (or loss) is a long or short-term capital gain (or loss) will commence on
the date the option is exercised.
The Company. Molex is entitled to a tax deduction in the same amount and
in the same year in which the optionee recognizes ordinary income resulting from
the exercise of an option.
Tax Withholding. The amount of income that is taxable to an optionee upon
the exercise of a non-qualified stock option will be treated as compensation.
Such amount will be subject to applicable withholding of federal, state and
local income taxes and Social Security taxes (in the case of an optionee who is
an employee) or federal self-employment tax and applicable federal, state and
local estimated tax payments (in the case of an optionee who is a non-employee
director).
If the Optionee Uses Molex Stock to Pay the Option Exercise Price. If the
optionee pays the option exercise price by tendering stock of Molex and receives
back a larger number of shares, the optionee will realize taxable income in an
amount equal to the fair market value of the additional shares received on the
date of exercise, less any
12
<PAGE> 15
cash paid in addition to the shares tendered. Upon a subsequent sale of the
stock, the number of shares equal to the number delivered as payment of the
option exercise price will have a tax basis equal to that of the shares
originally tendered. The additional newly-acquired shares obtained upon exercise
of the option will have a tax basis equal to the fair market value of such
shares on the date of exercise.
INCENTIVE STOCK OPTIONS.
General Rule. Generally, an optionee will not realize any taxable income
for federal income tax purposes at the time an ISO is granted. Upon exercise of
the ISO, the optionee will incur no income tax liability (other than pursuant to
the alternative minimum tax, if applicable). If the optionee transfers shares
received upon the exercise of an ISO within a period of two years from the date
of grant of such ISO or one year from the date of receipt of the shares of Stock
(the "Holding Period"), then, in general, the optionee will have taxable
ordinary income in the year in which the transfer occurs in an amount equal to
the excess of the fair market value on the date of option exercise over the
option exercise price, and will have long-term or short-term capital gain (or
loss) in an amount equal to the difference between the sale price of the shares
and the fair market value of the shares on the date of exercise. However, if the
sale price is less than the fair market value of the shares on the date of
option exercise, the ordinary income will be not more than the difference
between the sale price and the option exercise price. If the optionee transfers
the shares after the expiration of the Holding Period, he or she will recognize
income taxable at the capital gains tax rates at the difference between the sale
price and the option exercise price.
The Company. Molex is not entitled to a tax deduction upon grant, exercise
or subsequent transfer of shares of common stock acquired upon exercise of an
ISO, provided that the optionee holds the shares received upon the exercise of
such option for the Holding Period. If the optionee transfers the stock acquired
upon the exercise of an ISO prior to the end of the Holding Period, Molex is
entitled to a deduction at the time the optionee recognizes ordinary income in
an amount equal to the amount of ordinary income recognized by such optionee as
a result of such transfer subject to Section 162(m) of the Internal Revenue
Code.
Tax Withholding. If the optionee transfers the Stock acquired upon
exercise of an ISO prior to the end of the Holding Period (a "disqualifying
disposition"), the optionee must remit to Molex an amount sufficient to satisfy
all federal, state and local income taxes and Social Security taxes.
If the Optionee Uses Molex Stock to Pay the Option Exercise Price. If an
optionee pays the option exercise price by tendering stock of Molex, such
optionee will generally incur no income tax liability (other than pursuant to
the alternative minimum tax, if applicable), provided the Holding Period
requirement is met. If the tendered stock were subject to the Holding Period
requirement when tendered, payment of the option exercise price with such stock
constitutes a disqualifying disposition. If the optionee pays the option
exercise price by tendering Molex stock and the optionee receives back a larger
number of shares, under proposed Treasury Regulations, the optionee's basis in
the number of shares of newly acquired stock equal to the number of shares
delivered as payment of the option exercise price will be equal to that of the
shares originally tendered. The additional newly acquired shares obtained upon
exercise of the option will have a tax basis of zero. All stock acquired upon
exercise will be subject to the Holding Period requirement, including the number
of shares equal to the number tendered to pay the exercise price.
SECURITIES REGISTRATION
There is no present intention to register the shares covered by the Plan
under the Securities Act of 1933 (the "1933 Act"). Thus, without registration,
as a practical matter, all sales of stock acquired under the Plan will require
compliance with an exemption under the 1933 Act. Certain participants could
comply with Rule 144 for such an exemption, which provides, among other things,
for a one-year holding period from the date of exercise of an option. A one-year
holding period would effectively preclude most disqualifying dispositions.
13
<PAGE> 16
PLAN BENEFITS
IN GENERAL
The size of future option grants to officers under the Plan is not
determinable as of the date of this proxy statement because of the discretionary
nature of such grants. The size of future option grants to outside directors is
also not determinable as of the date of this proxy statement because the amounts
of such grants depend upon the fair market value of the Stock on the grant date
and the achievement of certain objective performance goals.
LONG-TERM OPTIONS
On July 1, 1998, the Committee granted, subject to the approval of the
restatement by the stockholders, long-term nonqualified stock options
("Long-Term Options") to J.J. King, Executive Vice President of Molex and M.P.
Slark, Vice President of Molex. Both of the Long-Term Options provide for the
following vesting schedule: 25% after two years; 50% after four years; and 100%
after eight years. The options expire ten years after the grant date.
The aggregate amount of the Long-Term Options granted to the executive
officers as a group were options to acquire 400,000 shares of Stock subject to
stockholder approval of the Restatement. J.J. King and M.P. Slark each was
granted a Long-Term Option to acquire 200,000 shares of Stock at an exercise
price of $26.00 per share. If the Restatement is not approved by the
stockholders, all such Long-Term Options shall be deemed not to have been
granted, and the shares of Stock subject to such options will be available for
future grants under the Plan.
VOTE NECESSARY TO ADOPT RESTATEMENT
Adoption of the Restatement will require the affirmative vote of the
holders of a majority of the outstanding shares of the Common Stock entitled to
vote and present in person or by proxy, voting as a class, and of the Class B
Common Stock entitled to vote and present in person or by proxy, voting as a
class. Directors and officers of Molex, who control approximately 48% of the
outstanding stock entitled to vote, intend to vote for this proposal.
Abstentions will have the same effect as votes against the Restatement. A
"non-vote" will not be considered entitled to vote as to this matter and will
have no effect on the adoption of the Restatement.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. The enclosed
Proxy will be voted for the proposal unless a contrary specification is made.
14
<PAGE> 17
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth information on
compensation awarded to, earned by, or paid to F. A. Krehbiel, Chief Executive
Officer of Molex, and the four other most highly compensated executive officers
of Molex (collectively, the "Executives") for the fiscal years ended June 30,
1996, 1997 and 1998 for services in all capacities to Molex and its
subsidiaries.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(D)
-------------------------------------- ------------
FISCAL OTHER ANNUAL OPTIONS(E) ALL OTHER
NAME AND PRINCIPAL POSITIONS(A) YEAR SALARY BONUS(B) COMPENSATION(C) (NO. SHARES) COMPENSATION(F)
------------------------------- ------ ------ -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
F. A. Krehbiel............................. 1998 $486,942 $487,429 * 2,849 $123,522
Chairman and 1997 $459,379 $507,192 * 4,222 $106,742
Chief Executive Officer 1996 $434,803 $359,225 $136,640 4,464 $108,883
J. H. Krehbiel, Jr......................... 1998 $427,470 $429,104 * 2,849 $114,608
President and 1997 $396,973 $454,010 * 4,222 $101,035
Chief Operating Officer 1996 $373,402 $324,002 $ 55,768 4,464 $ 94,267
J. J. King................................. 1998 $339,669 $403,887 * 37,500(g) $ 57,057
Executive Vice President 1997 $312,526 $341,172 * 71,875(g) $ 46,125
1996 $292,079 $255,898 * 10,742 $ 46,077
W. W. Fichtner............................. 1998 $337,434 $326,295 $ 59,971 25,000(h) $ 17,979
Vice President and Regional 1997 $333,526 $299,568 * 0 $ 18,688
President, Europe 1996 $372,782 $187,403 * 0 $ 17,633
M. P. Slark................................ 1998 $325,000 $372,453 $ 75,338 37,500(g) $ 64,953
Vice President and Regional 1997 $293,142 $333,996 $ 81,343 70,313(g) $ 32,863
President, Americas 1996 $255,032 $162,408 $222,110 9,766 $ 31,607
</TABLE>
- ----------------------------
(a) The positions set forth in this Table are the principal positions held in
Molex or its subsidiaries for which compensation has been paid.
(b) Includes cash merit bonus, the fair market value of the shares awarded under
the 1990 Molex Incorporated Executive Stock Bonus Plan and the tax offset
bonus awarded under that Stock Bonus Plan.
(c) The column includes the dollar amount of the following three categories:
perquisites and other personal benefits, securities or property but only to
the extent that the aggregate sum for the Executive is at least a threshold
amount equal to the lesser of $50,000 or 10% of the total of annual salary
and bonus. An "*" appears in the column if the amount for an Executive in a
given fiscal year is less than the threshold. For each Executive meeting the
threshold for a fiscal year, those specific items that exceed 25% of the
total reported amount in this column are set forth below.
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C> <C>
F.A. Krehbiel Thirty year service award................................... -- -- $75,667
W.W. Fichtner Value of personal use of company car........................ $30,829 -- --
Value of below market interest on loan...................... $25,900 -- --
Value of loan principal and interest forgiven and tax
M.P. Slark gross-up.................................................... $57,805 $58,148 $80,255
</TABLE>
(d) Molex does not have any restricted stock awards or long-term plan payouts.
The only type of long-term compensation is in the form of stock options
granted under the 1991 Molex Incorporated Incentive Stock Option Plan.
(e) The number of shares granted are under the 1991 Molex Incorporated Incentive
Stock Option Plan. All figures have been adjusted to reflect any stock
dividends.
(f) Includes the following amounts paid or accrued by Molex or any of its
subsidiaries:
<TABLE>
<CAPTION>
FISCAL
YEAR F. A. KREHBIEL J. H. KREHBIEL, JR. J. J. KING
------ -------------- ------------------- ----------
<S> <C> <C> <C> <C> <C>
(i) Amounts accrued pursuant to matters discussed in 1998 $41,149 $48,481 --
the Section entitled "INDIVIDUAL ARRANGEMENTS 1997 $42,248 $50,336 --
INVOLVING FUTURE COMPENSATION" 1996 $38,346 $42,991 --
(ii) Amounts contributed pursuant to defined 1998 $14,720 $14,720 $14,720
contribution retirement plans 1997 $13,800 $13,800 $13,800
1996 $13,800 $13,800 $13,800
(iii) The value of any insurance premiums with respect 1998 $ 7,455 $ 0 $ 5,845
to any term life insurance or the residual cash 1997 $ 6,870 $ 0 $ 5,395
value for which coverage is paid 1996 $10,710 $ 0 $ 4,790
(iv) Matching contributions to The Molex Incorporated 1998 $ 1,500 $ 1,000 $ 1,500
401(k) Savings Plan 1997 $ 1,500 $ 950 $ 1,524
1996 $ 1,500 $ 950 $ 1,600
(v) Company contributions to The Molex Incorporated 1998 $58,698 $50,407 $34,992
Supplemental Executive Retirement Plan 1997 $42,324 $35,949 $25,406
1996 $44,527 $36,526 $25,887
<CAPTION>
W. W. FICHTNER M. P. SLARK
-------------- -----------
<S> <C> <C>
(i) -- --
-- --
-- --
(ii) $11,109 $14,720
$13,158 $13,800
$13,158 $13,800
(iii) $ 6,870 $ 2,720
$ 5,530 $ 2,535
$ 4,475 $ 1,200
(iv) -- $ 1,000
-- $ 950
-- $ 950
(v) -- $33,513
-- $15,578
-- $15,657
</TABLE>
(g) Includes two long-term stock options to acquire Common Stock: 18,750 shares
in 1998; and 62,500 shares in 1997.
(h) This is a long-term stock option to acquire 25,000 shares of Common Stock.
15
<PAGE> 18
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
AT JUNE 30, 1998
--------------------------------------------------------------
NUMBER OF NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES ACQUIRED OPTIONS(A) IN-THE-MONEY OPTIONS(C)
UPON VALUE ---------------------------- ----------------------------
NAME EXERCISE(A) REALIZED(B) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
F. A. Krehbiel.......... 8,239 $195,287 14,393 9,593 $ 90,298 $ 8,061
J. H. Krehbiel, Jr...... 5,310 $ 75,366 7,314 9,593 $ 22,559 $ 8,061
J. J. King.............. 12,206 $269,491 25,411 175,272(d) $232,749 $867,154(d)
W. W. Fichtner.......... 0 $ 0 0 25,000(f) $ 0 $ 0
M. P. Slark............. 12,206 $239,954 14,522 174,346(e) $ 94,826 $863,279(e)
</TABLE>
- ----------------------------
(a) Shares of Common Stock.
(b) The difference between the aggregate fair market value of the shares
acquired on the date of exercise and the aggregate option price for such
shares.
(c) The difference between the aggregate fair market value of the shares for
which options were unexercised as of June 30, 1998 (based on a value on that
date of $25.00/share for Common Stock) less the aggregate option exercise
price for such shares. Any options whose exercise would result in a loss
(i.e., the option price is greater than the value on June 30, 1998) are
excluded.
(d) Includes three long-term stock options to acquire an aggregate of 142,285
shares of Common Stock.
(e) Includes three long-term stock option to acquire an aggregate of 142,285
shares of Common Stock.
(f) Includes one long-term stock option to acquire an aggregate of 25,000 shares
of Common Stock.
OPTION GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(A) VALUE AT ASSUMED
--------------------------------------------------------- ANNUAL
PERCENTAGE OF RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM(D)
GRANTED EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME (NO. SHARES) FISCAL 1998(C) ($/SHARE) DATE 5% 10%
---- ------------ -------------- --------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
F. A. Krehbiel.......... 2,849 0.3248% $38.61(b) 10/24/2002 $ 17,627 $ 51,046
J. H. Krehbiel, Jr...... 2,849 0.3248% $38.61(b) 10/24/2002 $ 17,627 $ 51,046
J. J. King.............. 18,750 2.1378% $29.50 07/03/2002 $152,818 $ 337,688
18,750(e) 2.1378% $29.50 07/03/2008 $392,906(e) $1,025,005(e)
W. W. Fichtner.......... 25,000(e) 2.8504% $29.50 07/03/2002 $523,875(e) $1,366,673(e)
M. P. Slark............. 18,750 2.1378% $29.50 07/03/2002 $152,818 $ 337,688
18,750(e) 2.1378% $29.50 07/03/2008 $392,906(e) $1,025,005(e)
</TABLE>
- ----------------------------
(a) All options were granted pursuant to The 1991 Molex Incorporated Incentive
Stock Option Plan. Except where otherwise noted, all options set forth in
this table relate to the right to acquire Common Stock for an exercise price
equal to the fair market value of the Common Stock on the grant date and may
not be exercised for one year after the grant date. Each year after the
grant, 25% of the shares subject to the option become exercisable either by
delivery of cash or stock of Molex. The options expire 5 years after grant.
(b) Because F.A. Krehbiel and J.H. Krehbiel, Jr. each owned at least 10% of the
voting power of the Common Stock, their exercise price is equal to 110% of
the fair market value on the date of grant.
(c) Total options granted to all employees (887,076 shares) includes options
granted to all employees under all of the stock option plans for the stated
period.
(d) Based on a compounded annual increase of the stated percentage of the market
price on the date of grant over the term of the option (5 years). The amount
in the column represents the difference between the aggregate increased
value and the aggregate option exercise price.
(e) This is a long-term option to acquire Common Stock for an exercise price
equal to the fair market value on the date of grant and may not be exercised
for 10 years after the grant date. The option expires 11 years after grant.
Accordingly, the potential realizable value is calculated over a term of 11
years.
INDIVIDUAL ARRANGEMENTS INVOLVING FUTURE COMPENSATION
J. H. Krehbiel, Jr., President and Chief Operating Officer of Molex, and F.
A. Krehbiel, Chairman and Chief Executive Officer of Molex, each has an
agreement with Molex pursuant to which Molex has agreed that if he dies while
employed by Molex, it will pay his wife, if she survives him, a given amount per
year for the remainder of her life. The annual amount will be automatically
adjusted every January 1 to reflect an increase (or decrease) in the Consumer
Price Index for the preceding calendar year at the rate of said increase or
decrease. As of January 1 of
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<PAGE> 19
this year, the annual amount is $149,512. Each agreement terminates in the event
that employment with Molex terminates for any reason other than death.
G. Tokuyama, a Vice President of Molex, has an agreement with Molex-Japan
Co., Ltd. ("Molex-Japan"), a subsidiary of Molex International, Inc., pursuant
to which it is agreed that if he dies while employed by Molex-Japan, it will pay
his wife, if she survives him, 17,500,000 Yen (approximately $122,300) per year
for the remainder of her life not to exceed five years. The agreement terminates
in the event that employment terminates for any reason other than death.
W. W. Fichtner, Vice President of Molex, has entered into an agreement with
Molex dated December 11, 1991 (the "Agreement") whereby he has acquired a 10%
share (the "Share") of the quotas (or equity) in Molex GmbH, a German subsidiary
of Molex. Since the initial acquisition of an equity interest in Molex GmbH,
Fichtner has made additional capital contributions to maintain his pro rata 10%
interest in Molex GmbH. Molex has extended Fichtner a credit arrangement
(described in the section entitled "INDEBTEDNESS OF MANAGEMENT") to provide
funds for the acquisition of the Share. The amount of funds invested by Fichtner
as of August 31, 1998 is DM2,294,444 (approximately $1,268,690; the
"Investment").
Molex has the right to purchase Fichtner's Share at any time upon any one
of the following events: termination of Fichtner's employment with Molex;
Fichtner's death, disablement or retirement; or foreclosure of the Share as
security for any loan. The price at which Molex may purchase Fichtner's Share is
calculated as set forth below.
Until June 30, 1999, the amount which Fichtner may receive for his Share is
the Investment plus any interest actually paid to Molex for the loan. For the
period July 1, 1997 to June 30, 2002 the amount which Fichtner may receive as
the purchase price for the Share is based on the increase in book value of Molex
GmbH. Specifically, Fichtner is entitled to receive a percent (the "Multiplier")
times the increase in book value, plus the Investment, plus any interest paid
for the loan. The Multiplier starts at 0% and increases to 100% as the time the
Share is held by Fichtner increases. After June 30, 2002, the price per quota is
equal to eight times the average net after-tax profit of Molex GmbH for the
three previous full fiscal years, divided by the number of shares or quotas of
Molex GmbH.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Molex's Compensation Committee of the Board of Directors (the "Committee")
approves compensation for the executive officers (the "Executive Officers") of
Molex, including the Chief Executive Officer ("CEO"). The guiding principles
governing the philosophies behind the compensation of Executive Officers are as
follows:
- Provide compensation that is competitive for an individual's
performance and level of responsibility.
- Reward performance that exceeds industry norms.
- Retain the management talent needed to achieve Molex's business
objectives, particularly to improve its position within the connector
industry.
- Align management actions with shareholder interests in order to focus
on the long-term success of Molex.
There are three general components of executive compensation which are used
to achieve the principles set forth above. They are base salary, merit bonus and
stock plans. Molex seeks to have the overall executive compensation be somewhat
above that of the industry average. When compared to industry norms, Executive
Officers' base salaries are higher than average while their merit bonuses and
grants under the stock plans described herein are below average.
F. A. Krehbiel, Molex's CEO, is evaluated and his compensation administered
in the same general fashion as the other Executive Officers.
ANNUAL BASE SALARY
The performance of all Executive Officers is reviewed annually and any
salary increases are based upon the competitive base salary range described
below and the individual's performance during the previous year. While there is
no specific weight given to a particular factor in determining salary increases,
individual performance is the principal factor. Generally, the Committee
recommends base salaries in the second highest quartile paid by
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<PAGE> 20
manufacturing/electronics companies of comparable size. This data is based on a
survey conducted by outside consultants for positions similar to those held by
the Executive Officers. The companies surveyed for compensation purposes are not
the same as those in the Peer Group in the section entitled "Stockholder Return
Performance Presentation" included in this proxy statement, as Molex's most
direct competitors for executive talent are not necessarily all of the companies
that would be included in a peer group established to compare stockholder
returns.
For the next fiscal year, F. A. Krehbiel's annual base salary was increased
6.8% to $525,000 effective September 1, 1998. With respect to setting F. A.
Krehbiel's base salary, the Committee took into account his leadership and
direct contributions, which resulted in the Company's strong financial
performance for the fiscal year ended June 30, 1998.
MERIT BONUS
The merit bonus is a short-term incentive calculated as a percentage of
base salary according to a plan that covers all Executive Officers, including
the CEO. The merit bonus percentage for each Executive Officer is based on two
financial components and one discretionary non-financial component. The goals on
which these components are based are established by the Executive Committee and
approved by the Board of Directors at the beginning of each fiscal year.
The financial performance components of the merit bonus are a net sales
goal and a profitability goal expressed as a percent of net sales. Each of the
two financial components can be further divided with respect to a particular
officer. For example, in addition to worldwide Company financial performance, an
individual may also have one or more additional goals for specific business
regions or divisions for which the individual is responsible.
If more than 85% of the net sales goal or more than 90% of the profit goal
is achieved, then the individual is entitled to a merit bonus. The merit bonus
percentage for each financial component increases to a maximum amount when 120%
of each financial goal is achieved. The maximum bonus percentage that can be
paid to any Executive Officer is in a range from 20% to 60% of base salary
depending upon the position and responsibilities of the individual.
In addition to net sales and profitability goals, each Executive Officer
has certain non-financial goals. The achievement of or progress toward achieving
these non-financial goals can increase an individual's merit bonus up to an
additional 12% of base salary. The non-financial goals vary from individual to
individual depending upon the particular area of responsibility. In some cases,
discretionary adjustments were made.
F. A. Krehbiel's bonus was determined by comparing Molex's financial
results to the financial goals described above and by progress toward
non-financial goals in key functions including engineering, marketing, quality
and manufacturing operations. Both the net sales goal and the profitability goal
were achieved. Mr. Krehbiel was awarded a merit bonus of $267,813 which was
54.5% of his annual base salary rate for the fiscal year just ended.
STOCK PLANS
Molex has two stock-based equity plans in which an Executive Officer may
participate, The 1991 Molex Incorporated Incentive Stock Option Plan (the "1991
Plan") and The 1990 Molex Incorporated Executive Stock Bonus Plan (the "1990
Plan"). These two stock plans provide long-term incentives to Executive Officers
and encourage long-term growth of the Company.
The 1991 Molex Incorporated Incentive Stock Option Plan. Each Executive
Officer who is also a Director automatically receives an annual grant of options
to acquire the number of shares of Common Stock whose fair market value on the
date of grant does not exceed $100,000. During last fiscal year, F. A. Krehbiel
and J. H. Krehbiel, Jr. each received automatic grants of options to acquire
2,849 shares of Common Stock under the 1991 Plan at an exercise price of $38.61
per share (110% of fair market value on the date of grant).
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<PAGE> 21
The number of options granted to an Executive Officer who is not a member
of the Board of Directors is at the discretion of the Committee based on the
same criteria used to determine the merit bonuses, except that a longer time
frame (i.e., more than three years) is used. Using these long-term performance
criteria provides a strong link between management interests and those of the
Company's shareholders. The Committee considers previous grants when determining
stock option grants for a given year.
The 1990 Molex Incorporated Executive Stock Bonus Plan. The 1990 Plan
provides for the award of a stock bonus at the end of a fiscal year during which
Molex's financial performance has been exemplary. The Committee, which also
administers the 1990 Plan, may, in its sole discretion, award a stock bonus to
eligible persons subject to the financial goal limitations set forth below.
No shares can be awarded for a given fiscal year if (a) the increase in
Molex's net sales revenue did not either equal at least 15% or exceed two times
the worldwide connector market growth or (b) the effect of an award would be to
lower Molex's net profit (after taxes) as a percent of sales below 10%. In a
given year, an eligible person can receive a maximum amount of stock whose fair
market value on June 30 is equal to: 25% of the person's base salary if the
increase in Molex's sales exceeded either 15% or two times the worldwide
connector market growth but was less than 20%; or 50% of the person's base
salary if Molex's sales increased 20% or more.
The Committee may award a cash bonus to offset taxes, thereby encouraging
the recipient to hold the stock awarded. The stock and tax offset bonuses are
distributed in four equal annual installments commencing on the June 30 ending
the fiscal year for which the bonus has been awarded or as soon thereafter as
practicable. If an individual who is awarded a bonus has not yet received his
completed distribution and voluntarily leaves Molex before retirement, the
balance due him is subject to forfeiture.
For the fiscal year just ended, Molex achieved a 5.4% sales growth and a
11.3% net profit as a percent of sales. The worldwide connector market growth
was -0.9%. Accordingly, the Committee awarded stock bonuses for the fiscal year
just ended. In view of the foregoing, the Executive Officers received stock
bonuses equal to 25% of their respective base salaries and a cash tax offset
bonus equal to 78.731% of the value of the stock. Pursuant to this award F. A.
Krehbiel received an award of 4,915 shares of Common Stock and a cash tax offset
bonus of $96,741 distributable over the next four years.
EFFECT OF SECTION 162(M)
Molex will continue to analyze its executive compensation practices and
plans on an ongoing basis with respect to Section 162(m) of the Internal Revenue
Code. Where it deems advisable, Molex will take appropriate action to maintain
the tax deductibility of its executive compensation.
Robert J. Potter, Chairman
Masahisa Naitoh
Michael J. Birck
INDEBTEDNESS OF MANAGEMENT
F. A. Krehbiel, Chairman, Chief Executive Officer and Director, received
compensation advances from time to time during the last fiscal year with
interest payable at the floating six month federal interest rate. The range of
interest charged during the period from July 1, 1997 to August 31, 1998 was
6.8% - 8.0%. The largest aggregate amount of such advances outstanding at any
time during such period was $797,584. As of August 31, 1998, the aggregate
advance to F. A. Krehbiel was $38,667.
R. C. Wieser, Vice President, received a $175,000 interest free loan which
represents the balance of a loan given as an inducement to take his present
position in order to purchase a new residence. The loan is payable when the new
residence is sold. The largest aggregate amount of the loan outstanding at any
time from July 1, 1997 to August 31, 1998 was $175,000. As of August 31, 1998
$175,000 was outstanding.
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<PAGE> 22
J.H. Krehbiel, Jr., President, Chief Operating Officer and Director,
received compensation advances from time to time during the last fiscal year
with interest payable at the floating six month federal interest rate. The range
of interest charged during the period from July 1, 1997 to August 31, 1998 was
6.8%-8.0%. The largest aggregate amount of such advances outstanding at any time
during such period was $134,359. As of August 31, 1998, the aggregate advance to
J.H. Krehbiel Jr. was $46,006.
G. Tokuyama, Vice President, received a loan due June 30, 1999 in the
amount of $92,782 in order to exercise stock options. Interest accrues at the
prime rate. The largest aggregate amount outstanding (including accrued
interest) at any time from July 1, 1997 to August 31, 1998, was $101,238. As of
August 31, 1998, $101,238 was outstanding.
W. W. Fichtner, Vice President, received various loans at 6% interest per
annum in order to exercise stock options. The loan is due on or before November
30, 1998. The largest aggregate amount of loans outstanding at any time from
July 1, 1997 to August 31, 1998 was $184,690. As of August 31, 1998, $184,690
was outstanding.
W. W. Fichtner, Vice President, received a credit arrangement with Molex to
finance the initial acquisition of the 10% equity interest in Molex GmbH as
described in the section entitled "INDIVIDUAL ARRANGEMENTS INVOLVING FUTURE
COMPENSATION." Fichtner may draw against the credit line from time to time to
provide his pro rata share of any additional funds required to maintain his 10%
equity interest in Molex GmbH. The initial amount of the arrangement was
DM1,750,000 (approximately $967,653). The outstanding loan balance accrues
interest at the rate of 5% per annum. The loan balance is secured by the Share,
i.e., his investment in Molex GmbH. During the last fiscal year, the arrangement
was amended to increase the credit line to DM3,000,000 (approximately
$1,658,833) and extend the maturity date to December 31, 1999, when all
outstanding principal and interest are due. The largest aggregate amount
outstanding under this credit arrangement during the period from July 1, 1997
through August 31, 1998 was DM2,233,313 (approximately $1,234,898). As of August
31, 1998, DM1,584,704 (approximately $876,253) was outstanding.
K. M. Regas, Vice President, obtained compensation advances totaling an
aggregate principal amount of $60,000 with interest payable at the six month
federal interest rate. The loan principal and any accrued interest is due on or
before June 30, 1999. The range of interest charged during the period from July
1, 1997 to August 31, 1998 was 6.8%-8.0%. The largest aggregate amount of such
advances outstanding (including unpaid interest charges) at any time during such
period was $78,580. As of August 31, 1998, the aggregate advance to K. M. Regas
was $69,975.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Robert J. Potter, Masahisa
Naitoh and Michael J. Birck. All of the Committee members are outside directors.
Mr. Birck is the President and Chief Executive Officer of Tellabs, Inc. F. A.
Krehbiel, Chairman and Chief Executive Officer of Molex, serves as a director of
Tellabs, Inc.
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<PAGE> 23
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The graph set forth below provides comparisons of the yearly percentage
change in the cumulative total shareholder return on Molex's Common and Class A
Common Stock with the cumulative total return of Standard & Poor's MidCap 400
Stock Index and a Peer Group Index for the five fiscal years ended June 30,
1998.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(A)
(MOLEX INCORPORATED, S&P MIDCAP 400 INDEX AND PEER GROUP)
<TABLE>
<CAPTION>
MOLEX MOLEX CLASS
MEASUREMENT PERIOD COMMON A COMMON S&P MIDCAP
(FISCAL YEAR COVERED) STOCK STOCK 400 PEER GROUP
<S> <C> <C> <C> <C>
1993 100.00 100.00 100.00 100.00
1994 122.70 131.34 99.94 108.98
1995 156.57 163.30 122.27 150.70
1996 160.66 164.58 148.66 131.40
1997 231.25 244.77 183.34 177.41
1998 198.38 205.46 233.12 173.37
</TABLE>
- -------------------------
(a) Assumes $100 invested on June 30, 1993 in Molex Common Stock, Molex Class A
Common Stock, the S&P MidCap 400 Index, and a Peer Group Index, (as defined
below in footnote (c)) and the reinvestment of all dividends.
(b) Cumulative returns calculated from the S&P MidCap Total Return Index
maintained by Standard & Poor's Corporation. Molex is one of the companies
comprising the S&P MidCap 400.
(c) The Peer Group is comprised of all of the companies in the S&P MidCap 400
currently classified in the following Industry Groups: "Electrical
Equipment"; "Electronics (Component Distributors)"; and "Equipment
(Semiconductor)" (11 companies excluding Molex) and all of the "electronic
connector" companies which are independently traded on the New York Stock
Exchange or listed by Nasdaq (6 companies excluding Molex). The S&P MidCap
400 companies are: American Power Conversion; Hubbell Inc. (Class B);
Magnetek, Inc.; SCI Systems Inc.; Sensormatic Electronics; Solectron Corp.;
Symbol Technologies; Vishay Intertechnology; Arrow Electronics; Avnet, Inc.;
and Teradyne, Inc. The connector companies are: Amphenol Corporation; AMP
Incorporated; Berg Electronics, Inc.; Methode Electronics Inc.; Robinson
Nugent Inc.; and Thomas & Betts Corporation.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in next year's proxy material, any
stockholder proposal to be presented at Molex's 1999 Annual Stockholders'
Meeting must be submitted to the Corporate Secretary, Molex Incorporated, 2222
Wellington Court, Lisle, Illinois 60532 on or before May 18, 1999. Molex's
by-laws provide that stockholder
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nominations for persons for election to Molex's board of directors and proposals
for business to be considered at an annual stockholders meeting must satisfy
certain conditions including generally submitting notice to Molex not more than
90 days or less than 60 days prior to the anniversary of the preceding year's
annual meeting of stockholders. Proxies solicited with respect to next year's
Annual Stockholders Meeting may confer discretionary authority to vote on
various matters, including any matter with respect to which Molex did not
receive notice by August 1, 1999.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Molex has selected Deloitte & Touche LLP as its principal independent
auditors for the current fiscal year. Deloitte & Touche LLP has served in that
capacity since December, 1986.
A representative of Deloitte & Touche LLP is expected to be present at the
upcoming Annual Meeting of Stockholders and will be offered the opportunity to
make a statement if desired and will be available to respond to appropriate
questions. Molex has been advised by Deloitte & Touche LLP that no member of the
firm has any financial interest, either direct or indirect, in Molex or any of
its subsidiaries, during the time period that it has served in the capacity as
independent auditor of Molex, and that it has no connection with Molex or any of
its subsidiaries in any capacity other than as public accountants.
OTHER INFORMATION
No business other than that herein specifically mentioned is intended to be
presented by management at the Annual Meeting of Stockholders. Management knows
of no other business which may be properly presented by others. If, however, any
other business properly comes up for action at the meeting, the proxy holders
will vote with respect thereto in their discretion.
By Order of the Board of Directors of
MOLEX INCORPORATED
Frederick A. Krehbiel
Frederick A. Krehbiel
Dated at Lisle, Illinois
September 15, 1998
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<PAGE> 25
APPENDIX A
THE 1991 MOLEX INCORPORATED INCENTIVE STOCK OPTION PLAN
(As amended July 1, 1998)
ARTICLE I -- GENERAL
1.1 NAME OF PLAN -- The name of the plan described in detail herein shall
be The 1991 Molex Incorporated Incentive Stock Option Plan (the "PLAN").
1.2 PURPOSE -- The purpose of the Plan is to induce certain designated
employees and the directors to remain in the employ of Molex Incorporated, a
Delaware corporation (the "COMPANY"), and any of its subsidiaries, and to
encourage such employees and directors to secure or increase on reasonable terms
their stock ownership in the Company. The Company believes the Plan will promote
continuity of management and increase incentive and personal interest in the
welfare of the Company by those who are primarily responsible for shaping,
carrying out the long-range plans of the Company and securing its continued
growth and financial success.
It is also the purpose of the Plan (except where otherwise noted) to be
qualified under sec.422(a) of the Internal Revenue Code, as amended. Thus, all
provisions of the Plan shall be interpreted and construed with this goal in
mind.
1.3 ELIGIBILITY -- The following persons shall be eligible to receive a
grant under the Plan: any director or officer of Molex Incorporated.
ARTICLE II -- TERM OF PLAN
2.1 EFFECTIVE DATE -- The Plan, as amended, effective July 1, 1998, shall
become effective upon adoption by the Board of Directors of the Company subject
to the subsequent approval by the stockholders of the Company within one (1)
year of adoption by the Board of Directors. If the stockholders do not approve
the Plan, as amended, within one (1) year of adoption, then this Plan, as
amended, shall cease to exist and all options granted hereunder on or after July
1, 1998 shall become void.
2.2 EXPIRATION -- This Plan shall expire June 30, 2000 and no option shall
be granted on or after such expiration date. However, expiration of the Plan
shall not affect outstanding unexpired options previously granted.
ARTICLE III -- STOCK SUBJECT TO PLAN
3.1 CLASS OF STOCK -- The stock that shall be subject to option under the
Plan shall be Molex Incorporated Common Stock, par value 5c per share (the
"STOCK").
3.2 NUMBER OF SHARES -- THREE MILLION-FIFTY ONE THOUSAND-SEVEN
HUNDRED-FIFTY EIGHT (3,051,758) shares of the Stock shall be reserved for issue
upon the exercise of options granted under the Plan.
3.3 EXPIRED, FORFEITED OR CANCELED OPTIONS -- If any such options granted
under the Plan shall expire, be forfeited or canceled for any reason without
having been exercised in full, the unexercised shares subject thereto shall
again be available for the purpose of the Plan.
ARTICLE IV -- ADMINISTRATION
4.1 COMMITTEE -- The Plan shall be administered by a committee (the
"COMMITTEE") under the terms and conditions and powers set forth herein.
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<PAGE> 26
4.2 MAKEUP OF THE COMMITTEE -- The Committee shall consist of two or more
members of the Board of Directors of the Company. The Committee shall be the
Compensation Committee of the Board of Directors or any other Board members
appointed by the Board of Directors.
4.3 ACTION BY THE COMMITTEE -- A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members of the Committee shall be fully as effective
as if it had been made by a majority vote at a meeting duly called and held.
4.4 POWER TO GRANT OPTIONS -- Subject to the express provisions of the
Plan, the Committee shall have complete authority, in its sole discretion, to
determine the employees to whom, and the time or times at which, options shall
be granted, the option periods, the vesting schedule and the number of shares to
be subject to each option, and such other terms and provisions of the option
agreements (which need not be identical). In making such determinations, the
Committee may take into account the nature of the services rendered by the
respective employee, his present and potential contribution to the Company's
success, and such other factors as the Committee in its discretion shall deem
relevant. The Committee shall have no power to grant options to directors who
are not employees of the Company or to set the terms and conditions thereof.
4.5 GRANTS OF INCENTIVE STOCK OPTION AND NONQUALIFIED STOCK OPTIONS -- The
Committee shall have complete authority, in its sole discretion, to determine at
the time an option is granted whether such option shall be an incentive stock
option qualified under sec. 422 of the Internal Revenue Code, as amended,
("ISO") or whether such option shall be a nonqualified stock option. Unless the
option agreement says otherwise, all options granted shall be ISOs. The number
of share for which options may be granted to any one person in any calendar year
shall be limited and cannot exceed the following:
a. OVERALL LIMITATION -- With respect to any option (whether ISOs or
nonqualified), ten percent (10%) of the number of shares reserved for the
Plan as set forth in Paragraph 3.2 (adjusted as set forth in Article IX)
or two hundred-fifty thousand (250,000) shares (adjusted as set forth in
Article IX), whichever is less.
b. INCENTIVE STOCK OPTION -- In addition, with respect to ISOs, the number
of shares which are subject to options that are first exercisable in any
given succeeding calendar year shall not have a fair market value (as
determined on the date of grant) that exceeds:
-- One Hundred Thousand Dollars ($100,000)
LESS
-- the aggregate fair market value (as determined at the respective time
of their grants) of those shares of all prior ISOs that are first
exercisable in said succeeding calendar year.
4.6 AUTOMATIC GRANT OF OPTIONS TO OUTSIDE DIRECTORS -- Notwithstanding
paragraphs 4.4 and 4.5, each director who is not an employee of the Company
shall receive only an automatic nondiscretionary stock option grant on the date
of the Annual Stockholders Meeting every year during the term of the Plan. Any
option granted to a director who is not an employee of the Company shall be a
nonqualified stock option. The amount of shares subject to the options that will
be automatically granted to each outside director each year shall be the amount
of shares equal to 200 multiplied by the number of years of service or fraction
thereof that does not exceed 3,000 shares and whose fair market value on the
date of grant does not exceed $100,000.00. The amount of shares shall increase
to 500 multiplied by the number of years of service or fraction thereof that
does not exceed 3,000 shares and whose fair market value on the date of grant
does not exceed $100,000.00 if all of the following financial conditions are met
for the fiscal year immediately ended prior to the grant:
a. The Company's net profits (after taxes) are at least ten percent (10%)
of the net sales revenue as reported in the audited financial statements;
and
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<PAGE> 27
b. The Company's net sales revenue increase as compared to the prior year's
net sales revenue as reported in the audited financial statements exceeds
one and one-half (1.5) times the "Worldwide Growth" of the general
connector market as determined by at least one outside independent
connector consultant. If more than one consultant is used, the average
growth shall be the Worldwide Growth. The disinterested directors shall
have the authority to choose the consultant or consultants.
4.7 OTHER POWERS -- Subject to the express provisions of the Plan, the
Committee shall also have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions of the respective option agreements (which need not be
identical), and to make all other determinations necessary or advisable for the
administration of the Plan.
ARTICLE V -- GRANT OF OPTION
5.1 OPTION PRICE -- The option price shall be the fair market value of the
Stock on the date of granting the option. Notwithstanding the foregoing, only in
the case of an ISO grant, if an optionee owns more than ten percent (10%) of the
voting power of all classes of the Company's Stock, then the option price shall
be one hundred-ten percent (110%) of the fair market value of the Stock on the
date of granting the option.
5.2 FAIR MARKET VALUE -- For the purposes of this Plan, fair market value
shall be the closing price of the Stock on the date of granting the option as
reported by the Wall Street Journal.
5.3 EVIDENCE OF OPTION -- Options granted shall be evidenced by
agreements, warrants, and/or other instruments in such form as the Committee
shall deem advisable and shall contain such terms, provisions and conditions not
inconsistent herewith as may be determined by the Committee.
ARTICLE VI -- EXERCISE OF OPTION
6.1 INITIAL WAITING PERIOD -- No option shall be exercisable until at
least one (1) year after the date of grant unless one of the events set forth in
paragraph 6.4 occurs.
6.2 VESTING PERIODS -- After the initial waiting period, an optionee may
exercise his option to the extent that shares covered by said option become
vested. The vesting schedule is as follows:
a. If an option grant is an ISO, or if an option is granted to an outside
director, the shares covered by such an option shall vest to the maximum
extent of 25% of the total number of shares covered thereby during each
of the succeeding four (4) years, each commencing with the anniversary of
the grant.
b. In all other options not falling within the scope of subparagraph 6.2a,
the shares covered by an option shall vest in amounts and at times the
Committee, in its sole discretion, shall determine. The Committee shall
also specifically have the power to change the vesting schedule of any
previously granted options to a schedule which is more favorable to the
option holder; provided, however, that no such options shall vest in
amounts greater than, or at times prior to, the amounts and times such
options would have vested if such options were within the scope of
subparagraph 6.2a.
c. Notwithstanding the foregoing, all options must vest one hundred percent
(100%) within ten (10) years from the date of grant.
6.3 CUMULATIVE RIGHTS -- The right to exercise any option as set forth in
paragraph 6.2 shall be cumulative. That is, an optionee may exercise in any
given year those unexpired shares he could have exercised in a previous year but
did not.
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6.4 ACCELERATED VESTING -- Notwithstanding the foregoing, all options
shall immediately vest and become immediately exercisable for a period of one
(1) year after one of the following events:
a. Death; or
b. Total disablement; or
c. Retirement, if all of the following conditions are met at the time of
termination of employment:
(1) The optionee has reached age 59 1/2; and
(2) The optionee was employed at least fifteen (15) consecutive years
with the Company and/or any of its subsidiaries; and
(3) The Committee has determined that the reason for termination is due
to retirement; and
(4) The shares subject to the option are intended to be an ISO.
Notwithstanding the foregoing, if the shares subject to the option
are not intended to be an ISO, the Committee, in its sole discretion,
may allow accelerated vesting to any extent it desires.
6.5 EXPIRATION -- No option may be exercised after two (2) years from the
date the option becomes one hundred percent (100%) vested. Notwithstanding the
foregoing, all ISOs must be exercised within one (1) year from the date the
option becomes one hundred percent (100%) vested.
6.6 FORM OF EXERCISE -- The option may only be exercised according to the
terms and conditions established by the Committee, consistent with the limits
set forth herein, at the time the option is granted. Subject to the foregoing
terms and conditions, an option may be exercised by a written notice delivered
to the Company's principal office of intent to exercise the option with respect
to a specified number of shares of Stock and payment to the Company of the
amount of the option purchase price for the number of shares of Stock with
respect to which the option is then exercised. The payment may be either in cash
or in stock of the Company. If stock is used for payment, such stock shall be
valued at the closing price as reported by the Wall Street Journal on the date
of exercise.
6.7 RIGHTS AS A SHAREHOLDER -- An optionee shall have no rights as a
stockholder with respect to shares covered by his option until the day of
issuance of a stock certificate to him and until after such shares are fully
paid.
ARTICLE VII -- TERMINATION OF OPTION
7.1 Every option granted to each optionee under this Plan shall terminate
and expire at the earliest of:
a. the date of expiration set when such option was granted; or
b. one (1) year after one of the events set forth in paragraph 6.4; or
c. immediately upon termination of employment of the optionee with the
Company (or termination of position as an outside director) or any of
its subsidiaries for any reason except if his employment is terminated
by reason of one of the events set forth in paragraph 6.4.
ARTICLE VIII -- TRANSFERABILITY
8.1 NON-TRANSFERABLE -- Any option granted under the Plan is not
transferable and can be exercised only by the optionee during his life subject
to paragraph 8.2 of this Article.
8.2 DEATH -- In the event of the death of an optionee while totally
disabled, retired, or still employed by the Company or a parent or a subsidiary,
his option, to the extent he could have exercised it on the date of this death,
may be exercised by the personal representative of the estate of the optionee
within one (1) year after the date of his
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<PAGE> 29
death in accordance with the terms established by the Committee at the time the
option was granted, but (as set forth in Article VII) not later than the
expiration date set forth in paragraph 6.5.
ARTICLE IX -- ADJUSTMENT OF NUMBER OF SHARES
9.1 STOCK DIVIDENDS -- In the event that a dividend shall be declared upon
the Stock payable in shares of stock of the Company, the number of shares of
stock then subject to any such option and the number of shares reserved for
issuance pursuant to the Plan, but, not yet covered by an option, shall be
adjusted by adding to each such share the number of shares which would be
distributable thereon (or any equivalent value of Stock as determined by the
Committee in its sole discretion) if such share had been outstanding on the date
fixed for determining the stock holders entitled to receive such stock dividend.
9.2 REORGANIZATION -- In the event that the outstanding shares of Stock
shall be changed into or exchanged for a different number or kind of shares of
stock or other securities of the Company, or of another corporation, whether
through reorganization, recapitalization, stock split up, combination of shares,
merger or consolidation, then, there shall be substituted for each share of
Stock subject to any such option and for each share of Stock reserved for
issuance pursuant to the Plan, but, not yet covered by an option, the number and
kind of shares of stock or other securities into which each outstanding share of
Stock shall be so changed or for which each such share of Stock shall be
exchanged.
9.3 OTHER CHANGES -- In the event there shall be any change, other than as
specified above in this Article, in the number or kind of outstanding shares of
stock of the Company or of any stock or other securities into which such stock
shall have been changed or for which it shall have been exchanged, then, if the
Committee shall, in its sole discretion, determine that such change equitably
requires an adjustment in the number or kind of shares theretofore reserved for
issuance pursuant to the Plan, but, not yet covered by an option and of the
shares then subject to an option or options, such adjustments shall be made by
the Committee and shall be effective and binding for all purposes of the Plan
and of each stock option agreement. Notwithstanding the foregoing, with respect
to options granted to directors, the Committee shall make those adjustments
under this Article IX only to the extent necessary to preserve the economic
benefit of an unexercised option.
9.4 ADJUSTED OPTION PRICE -- In the case of any substitution or adjustment
as provided for in this Article, the option price in each stock option agreement
for each share covered thereby prior to such substitution or adjustment will be
the option price for all shares of Stock or other securities which shall have
been substituted for such share or to which such share shall have been adjusted
pursuant to this Article.
9.5 FRACTIONAL SHARES -- No adjustment or substitutions provided for in
this Article shall require the Company to sell a fractional share, and the total
substitution or adjustment with respect to each stock option agreement shall be
limited accordingly.
ARTICLE X -- SECURITIES REGULATION
10.1 REGISTERED STOCK -- The Company shall not be obligated to sell or
issue any shares under any option granted hereunder unless and until the shares
with respect to which the option is being exercised are effectively registered
or exempt from registration under the Securities Act of 1933 and from any other
federal or state law governing the sale and issuance of such shares or any
securities exchange regulation to which the Company might be subject.
10.2 UNREGISTERED STOCK -- In the event the shares are not effectively
registered, but, can be issued by virtue of an exemption, the Company may issue
option shares to an optionee if the optionee represents that he is acquiring
such shares as an investment and not with a view to, or for sale in connection
with, the distribution of any such shares. Certificates for shares of Stock thus
issued shall bear an appropriate legend reciting such representation.
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<PAGE> 30
ARTICLE XI -- MISCELLANEOUS
11.1 NO CONTRACT OF EMPLOYMENT -- A grant or participation under the Plan
shall not be construed as giving an optionee a future right of employment with
the Company. Employment remains at the will of the Company.
11.2 GOVERNING LAW -- This Plan and all matters relating to the Plan shall
be interpreted and construed under the laws of the State of Illinois.
11.3 AMENDMENT OF PLAN -- The Board of Directors, at its discretion, may
amend the Plan at any time, subject to stockholder approval if required by SEC
rules or the listing requirements of any national securities exchanges or
trading systems on which are listed any of the Company's equity securities.
11.4 TERMINATION OF PLAN -- The Board of Directors may, at its discretion,
terminate the Plan at any time for any reason. Termination of the Plan shall not
affect unexpired outstanding options previously granted.
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<PAGE> 31
MOLEX INCORPORATED
1998 ANNUAL MEETING OF STOCKHOLDERS
October 23, 1998 10:00 a.m.
[RADISSON HOTEL LOGO]
3000 Warrenville Road, Lisle, IL 60532
(630) 505-1000
GENERAL DIRECTIONS
LOCATED JUST NORTH OF THE "HIGH TECH" EAST/WEST I-88 TOLLWAY CORRIDOR AT
NAPERVILLE AND WARRENVILLE ROADS.
FROM THE NORTH:
M Take I-355 or I-294 to I-88 West
M Take I-88 West to Naperville Road exit
FROM THE SOUTH:
M Take I-55 North to I-355 or I-57 to I-294 to I-88 West
M Take I-88 West to Naperville Road exit
FROM THE WEST:
M Take I-88 to the Naperville Road exit
FROM THE EAST:
M Take I-290 from Chicago or I-294 from Indiana to I-88 West
M Take I-88 West to Naperville Road exit
ONCE AT NAPERVILLE ROAD EXIT:
M Exit Naperville Road to the left
M Proceed 1 block to Warrenville Road
M Turn right
M Hotel 1/2 block on the left hand side of Warrenville Road
<PAGE> 32
MOLEX PROXY
INCORPORATED 2222 WELLINGTON CT. LISLE, ILLINOIS 60532
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
The undersigned hereby appoints John H. Krehbiel, Jr. and Frederick A.
Krehbiel as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote as designated below all the shares of
voting stock of Molex Incorporated held of record by the undersigned on August
28, 1998 at the annual meeting of stockholders to be held on October 23, 1998
or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder(s). If no direction is made, this proxy
will be voted FOR the individuals listed as nominees in Proposal 1 and in favor
of Proposal 2.
(PLEASE MARK THIS PROXY AND SIGN AND DATE IT ON THE REVERSE SIDE HEREOF AND
RETURN IT IN THE ENCLOSED ENVELOPE.)
(Continued on the reverse side)
<PAGE> 33
<TABLE>
<S><C>
MOLEX INCORPORATED
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED DIRECTORS
AND THE OTHER LISTED PROPOSAL.
[ ]
1. Election of Directors For All
Frederick A. Krehbiel, John H. Krehbiel, Jr., Fred L. Krehbiel, For Withheld Except nominees written below
Robert J. Potter, Edgar D. Jannotta, Donald G. Lubin,
Masahisa Naltoh, Michael J. Birck, Douglas K. Carnahan. / / / / / /
-------------------------
2. Proposal to approve an Amendment and Restatement of For Against Abstain
The 1991 Molex Incorporated Incentive Stock Option Plan
/ / / / / /
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
Dated ,1998
-------------------------
------------------------------------
------------------------------------
Signature of Stockholder(s)
Please sign name exactly as
imprinted (do not print). Please
indicate any change in address.
When shares are held by joint
tenants, both should sign. When
signing as an attorney, as
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.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY
</TABLE>
