<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
HADCO CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
HADCO CORPORATION
12A MANOR PARKWAY
SALEM, NEW HAMPSHIRE 03079
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
To The Stockholders:
The Annual Meeting of Stockholders of Hadco Corporation (the
"Corporation"), a Massachusetts corporation, will be held on Thursday, March 2,
2000 at 10:00 A.M. at 100 Federal Street, Boston, Massachusetts, for the
following purposes:
1. To fix the number of directors at eight (8) and to elect a Board of
Directors for the ensuing year.
2. To consider and act upon a proposal to approve the Hadco Corporation
Outside Directors' Compensation Plan of 2000.
3. To ratify the selection of the firm of Arthur Andersen LLP as auditors
for the fiscal year ending October 28, 2000.
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Stockholders entitled to notice of and to vote at the meeting shall be
determined as of the close of business on Monday, January 3, 2000, the record
date fixed by the Board of Directors for such purpose.
By Order of the Board of Directors,
James C. Hamilton,
Clerk
January 14, 2000
- --------------------------------------------------------------------------------
STOCKHOLDERS ARE REQUESTED TO SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN
THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL
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<PAGE> 3
HADCO CORPORATION
12A MANOR PARKWAY
SALEM, NEW HAMPSHIRE 03079
------------------------
PROXY STATEMENT
JANUARY 14, 2000
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Hadco Corporation (the "Corporation") for use at the
Annual Meeting of Stockholders of the Corporation to be held on Thursday, March
2, 2000, at 10:00 A.M., at 100 Federal Street, Boston, Massachusetts.
Only stockholders of record as of the close of business on January 3, 2000
will be entitled to vote at the meeting and any adjournments thereof. As of that
date, 13,726,100 shares of Common Stock of the Corporation were issued and
outstanding. Each share outstanding as of the record date will be entitled to
one vote, and stockholders may vote in person or by proxy. Execution of a proxy
will not in any way affect a stockholder's right to attend the meeting and vote
in person. Any stockholder delivering a proxy has the right to revoke it by
written notice to the Clerk at any time before it is exercised.
An Annual Report to Stockholders, containing financial statements for the
fiscal year ended October 30, 1999, is being mailed together with this proxy
statement to all stockholders entitled to vote. It is anticipated that this
proxy statement and the accompanying proxy will be first mailed to stockholders
on or about January 28, 2000.
The representation in person or by proxy of at least a majority of all
shares of Common Stock issued, outstanding and entitled to vote at the meeting
is necessary to constitute a quorum for the transaction of business. Votes
withheld from any nominee for election as director, abstentions and broker
"non-votes" are counted as present or represented for purposes of determining
the presence or absence of a quorum for the meeting. A "non-vote" occurs when a
nominee holding shares for a beneficial owner votes on one proposal, but does
not vote on another proposal because, in respect of such other proposal, the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner. The election of directors by the
stockholders shall be determined by a plurality of the votes cast by
stockholders entitled to vote, and votes withheld will not be counted toward the
achievement of a plurality. On all other matters being submitted to
stockholders, an affirmative vote of a majority of the shares present or
represented and voting on each such matter is required for approval. An
automated system administered by the Corporation's transfer agent tabulates the
votes. The vote on each matter submitted to stockholders is tabulated
separately. Abstentions are included in the number of shares present or
represented and voting on each matter. Broker "non-votes" are not considered
voted for the particular matter and have the practical effect of reducing the
number of affirmative votes required to achieve a majority for such matter by
reducing the total number of shares from which the majority is calculated.
Each of the persons named as proxies in the proxy is a director and officer
of the Corporation. All properly executed proxies returned in time to be cast at
the meeting will be voted. With respect to the election of a Board of Directors,
any stockholder submitting a proxy has a right to withhold authority to vote for
any individual nominee or group of nominees to the Board of Directors by writing
the name of such individual or group in the space provided on the proxy. The
proxies will be voted as stated below and under "Election of Directors." In
addition to the election of directors, the stockholders will consider and vote
upon a proposal to approve the Corporation's Outside Directors' Compensation
Plan of 2000. Finally, the stockholders will act upon a proposal to ratify the
selection of auditors. Where a choice has been specified on the proxy with
respect
<PAGE> 4
to these matters, the shares represented by the proxy will be voted in
accordance with the specification and will be voted FOR if no specification is
indicated.
The Board of Directors knows of no other matter to be presented at the
meeting. If any other matter should be presented at the meeting upon which a
vote may be properly taken, shares represented by all proxies received by the
Board of Directors will be voted with respect thereto in accordance with the
judgment of the persons named as proxies in the proxies.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of January 3, 2000, the name of each
person who, to the knowledge of management, beneficially owned more than 5% of
the 13,726,100 shares of Common Stock of the Corporation outstanding at such
date, the number of shares owned by each of such persons, and the percentage of
the outstanding shares represented thereby.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------- ------------ ----------
<S> <C> <C>
J. & W. Seligman & Co. Incorporated......................... 1,932,900(2) 14.1%
100 Park Avenue
New York, NY 10017
Legg Mason Inc.............................................. 1,384,547(3) 10.1%
100 Light Street
Baltimore, MD 21202
Dresdner Bank AG............................................ 807,495(4) 5.9%
Gallusanlage 7-8
6000 Frankfort Main Germany
Horace H. Irvine II......................................... 693,362(5) 5.1%
c/o Hadco Corporation
12A Manor Parkway
Salem, NH 03079
</TABLE>
- ---------------
(1) Unless otherwise indicated, the named person possesses sole voting and
investment power with respect to the shares.
(2) According to information set forth in a Schedule 13G/A filed with the
Securities and Exchange Commission (the "SEC") on December 9, 1999 by J. &
W. Seligman & Co. Incorporated ("JWS"), William C. Morris ("Morris"), a
majority owner of the outstanding voting securities of JWS, and Seligman
Communications and Information Fund, Inc. (the "Fund"), of which JWS is the
investment advisor, JWS beneficially owned 1,932,900 shares of the Common
Stock of the Corporation, Morris beneficially owned 1,932,900 shares and the
Fund beneficially owned 1,300,000 shares. Further, JWS and Morris had shared
voting power over 1,931,000 shares and shared dispositive power over
1,932,900 shares, and the Fund had shared voting power and shared
dispositive power over 1,300,000 shares.
(3) According to information set forth in a Schedule 13G filed with the SEC on
February 16, 1999 by Legg Mason Inc., Legg Mason Inc. beneficially owned
1,384,547 shares of the Corporation's Common Stock with sole voting power
and sole dispositive power over 1,265,000 shares and shared voting power and
shared dispositive power over 119,547 shares. 1,265,000 shares are held by
Legg Mason Special Investment Trust, Inc., with Legg Mason Fund Advisor,
Inc. having the power to dispose of these
2
<PAGE> 5
shares; 119,547 shares are held for various clients of Legg Mason Wood
Walker, Inc. and Legg Mason Capital Management, Inc., with each client
having the power to dispose of its respective shares.
(4) According to information set forth in a Schedule 13G filed with the SEC on
December 10, 1999 by Dresdner RCM Global Investors, LLC ("RCM Global"),
Dresdner RCM US Holdings LLC ("Dresdner Holdings") and the Dresdner Bank AG
("Dresdner"), each of RCM Global, Dresdner Holdings and Dresdner
beneficially owned 807,495 shares of the Corporation's Common Stock with
sole voting power over 634,095 shares, sole dispositive power over 792,495
shares and shared dispositive power over 15,000 shares. According to
information set forth in the Schedule 13G, RCM Global is an investment
advisor and a wholly-owned subsidiary of Dresdner Holdings, which is a
wholly-owned subsidiary of Dresdner.
(5) Includes 19,355 shares held in a voting trust for the benefit of Andrea P.
Irvine. Mr. Irvine, who is the sole trustee of such trust and retains sole
voting power with respect to the shares held in such trust, disclaims
beneficial ownership of such shares. Does not include 42,605 shares held in
irrevocable trusts for the benefit of members of Horace H. Irvine II's
family. Mr. Irvine, who is not a trustee of such trusts, disclaims
beneficial ownership of such 42,605 shares. James C. Hamilton, Clerk of the
Corporation and a partner at the law firm that is general counsel to the
Corporation, Lawrence Coolidge, a former Director of the Corporation, and
Gilbert M. Roddy, Jr., a Director of the Corporation, are co-trustees of
these irrevocable trusts. Horace H. Irvine II retains no voting or
dispositive power with respect to these shares. All voting rights under
these trusts reside in Messrs. Hamilton, Coolidge and Roddy, who have the
right to dispose of such shares. Messrs. Hamilton and Roddy own 8,300 and
6,569 shares, respectively, as individuals, in addition to the shares they
hold as co-trustees. Mr. Roddy's 6,569 shares include 6,000 shares issuable
upon the exercise of stock options that are currently exercisable or will
become exercisable within 60 days of January 3, 2000.
3
<PAGE> 6
ELECTION OF DIRECTORS
The directors of the Corporation are elected annually and hold office until
the next annual meeting of stockholders and until their successors shall have
been elected and shall have qualified, or until their earlier removal or
resignation. Shares represented by all proxies received by the Board of
Directors and not so marked as to withhold authority to vote for any individual
director or for all directors will be voted (unless one or more nominees are
unable or unwilling to serve) FOR fixing the number of directors for the ensuing
year at eight and FOR the election of the nominees named below. The Board of
Directors knows of no reason why any such nominee should be unable or, for good
cause, unwilling to serve, but if such should be the case, proxies will be voted
for the election of some other person or for fixing the number of directors at a
lesser number.
All of the eight nominees for director are currently directors of the
Corporation and were elected at the Annual Meeting of Stockholders held on March
3, 1999. The nominees for directors and further information with respect to each
nominee are set forth below.
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the individuals to be elected as directors
at the meeting, and the executive officers of the Corporation, their ages, and
the positions currently held by each such person with the Corporation.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Horace H. Irvine II(1)..................... 62 Chairman of the Board of Directors
Andrew E. Lietz............................ 61 President, Chief Executive Officer and
Director
F. Gordon Bitter........................... 56 Senior Vice President - Finance and
Administration, Chief Financial
Officer and Treasurer
William M. Beckenbaugh..................... 53 Senior Vice President and Chief Technology
Officer
John D. Caruso, Jr......................... 51 Senior Vice President - Value Added
Manufacturing
Timothy P. Losik........................... 41 Senior Vice President - Tech Center
Operations
Christopher T. Mastrogiacomo............... 41 Senior Vice President - Volume Printed
Wiring Board Operations
Frederick G. McNamee, III.................. 42 Senior Vice President - Corporate
Development and Strategy
Michael K. Sheehy.......................... 52 Senior Vice President - Sales and Marketing
James C. Hamilton.......................... 62 Clerk
Oliver O. Ward(2).......................... 64 Director
John F. Smith(1)(2)(3)..................... 64 Director
John E. Pomeroy(3)......................... 58 Director
James C. Taylor(1)(3)...................... 61 Director
Mauro J. Walker(2)(3)...................... 64 Director
Gilbert M. Roddy, Jr....................... 43 Director
</TABLE>
- ---------------
(1) Member of Nominating Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
4
<PAGE> 7
CURRENT DIRECTORS TO BE ELECTED AT THE MEETING
HORACE H. IRVINE II
Mr. Horace H. Irvine II, founder of the Corporation, has been its Chairman
of the Board since the Corporation was organized in 1966, and its Chief
Executive Officer from that date until 1986. He is Chairman of the Executive and
Long-Term Planning and Strategy Committees of the Board of Directors. He was
President of the Corporation between 1966 and 1980 and Treasurer of the
Corporation between 1966 and 1984.
ANDREW E. LIETZ
Mr. Lietz has been President and Chief Executive Officer of the Corporation
since October 1995, Chief Operating Officer and Vice President of the
Corporation from July 1991 to October 1995, and a director of the Corporation
since February 1993. Mr. Lietz serves as a director of EnergyNorth, Inc., a
natural gas and propane distribution company.
OLIVER O. WARD
Mr. Ward has been a director of the Corporation since 1987. He is Chairman
of the Audit and Finance Committees of the Board of Directors. He was a founder
and has served as chairman of the board, chief executive officer and president
of Germanium Power Devices Corp., a manufacturer and marketer of germanium
semiconductors, since 1973.
JOHN F. SMITH
Mr. Smith has been a director of the Corporation since 1995. He is Chairman
of the Nominating Committee of the Board of Directors. He has been the president
of MYCOS International, Inc., a property development corporation, since April
1993 and was president of PerSeptive Biosystems, Inc., a biotechnology company,
from July 1996 to January 1998 and currently serves as a consultant to that
company. In April 1993, Mr. Smith retired as Senior Vice President and Chief
Operating Officer of Digital Equipment Corporation, a computer company, in which
capacities he had served since 1991. He began his career at Digital Equipment
Corporation in 1958 and served in various other senior management positions from
1976 to 1991. Mr. Smith is also a director of Ansys Corporation, a software
company which produces advanced computer-aided engineering software.
JOHN E. POMEROY
Mr. Pomeroy has been a director of the Corporation since September 1996. He
has been president and chief executive officer of Dover Technologies, a group of
manufacturing companies and a subsidiary of Dover Corporation, since 1987 and
was named a director in 1998. Mr. Pomeroy is a director of Adept Technologies,
Inc., a robotics manufacturing company.
JAMES C. TAYLOR
Mr. Taylor has been a director of the Corporation since December 1996. He
is Chairman of the Compensation Committee of the Board of Directors. He has been
an advisory director at Downer and Company, an investment banking firm, since
1995. He was a managing director of Burns Fry Limited, an investment banking
firm, from 1988 to 1994.
5
<PAGE> 8
MAURO J. WALKER
Mr. Walker has been a director of the Corporation since June 1998. Mr.
Walker is the former senior vice president and director of manufacturing for
Motorola Corporation, a manufacturer and service provider in the semiconductor
and telecommunications industries, a position he held from 1989 to 1997. Mr.
Walker served as a past chair of the Motorola Corporate Advanced Manufacturing
Technology Council and served as a member of Motorola's Science Advisory Board.
Mr. Walker is an ex-officio member and past Industry Chairman of the National
Electronics Manufacturing Initiative, an electronics manufacturing industry
organization.
GILBERT M. RODDY, JR.
Mr. Roddy has been a director of the Corporation since March 1999. He has
been a private trustee of Loring, Wolcott & Coolidge, a fiduciary services
provider, since 1985. Prior to that, Mr. Roddy was a senior financial analyst,
treasury, at Standard Oil Company from 1983 to 1985.
EXECUTIVE OFFICERS
Mr. Bitter joined the Corporation in November 1998 and has been a Senior
Vice President in charge of Finance and Administration since December 1999. Mr.
Bitter has been Chief Financial Officer and Treasurer since November 1998 and
was Senior Vice President from November 1998 to December 1999. Prior to joining
the Corporation, he was the Chief Executive Officer and a director from November
1997 to August 1998, and the Chief Financial Officer from September 1997 to
November 1997, of Molten Metal Technology, Inc., an environmental technology
company that filed for Chapter 11 bankruptcy in December 1997. From May 1996 to
February 1997, he served as Vice President Finance and Chief Financial Officer
of Augat, Inc., a company that designs electronic components. From September
1995 to March 1996, Mr. Bitter served as Vice President Finance and
Administration and Chief Financial Officer of Harman International Industries, a
company that designs and manufactures high-fidelity audio products. From October
1994 to April 1995, Mr. Bitter served as Senior Vice President of Finance and
Accounting for Chicago and North Western Transportation Company, a railroad
holding company. From 1988 to 1993, Mr. Bitter served in various capacities at
The Perkin-Elmer Corporation, a manufacturer of analytical instrumentation and
life science systems, including most recently as Senior Vice President and
President of Metco Division.
William M. Beckenbaugh joined the Corporation in May 1999 and was elected
Senior Vice President and Chief Technology Officer in June 1999. Prior to
joining the Corporation, he served as Vice President of Technical Staff for
Motorola Corporation, a manufacturer and service provider in the semiconductor
and telecommunications industries, where he was in charge of Corporate
Manufacturing Research since 1994. From 1987 to 1994 he was in charge of
Motorola's Advanced Interconnect Systems Lab.
Mr. Caruso joined the Corporation in September 1997 as a Senior Vice
President in charge of Eastern Operations. Mr. Caruso has been Senior Vice
President in charge of Value Added Manufacturing (backplane and system assembly)
since June 1999. Mr. Caruso was the Senior Vice President in charge of Corporate
Services and Chief Information Officer of the Corporation from June 1998 to June
1999. Prior to joining Hadco, Mr. Caruso was the Managing Director of Worldwide
Manufacturing at Cabletron Systems, a computer company, from 1990 to September
1997.
Mr. Losik joined the Corporation in 1986 and has been Senior Vice President
in charge of Tech Center Operations and Design since June 1999, and was
previously the Senior Vice President in charge of Eastern Operations from
November 1998 to June 1999 and the Senior Vice President in charge of Finance
from September 1997 to October 1998. He was a Vice President from March 1994 to
September 1997, Chief Financial Officer and Treasurer of the Corporation from
March 1994 to October 1998, Controller of the
6
<PAGE> 9
Corporation from June 1992 to March 1994 and a Corporate Accounting Manager from
March 1988 to June 1992. Mr. Losik is a certified public accountant. From 1979
to 1986, Mr. Losik held various positions, including partner, in public
accounting firms.
Mr. Mastrogiacomo joined the Corporation in March 1988 and has been Senior
Vice President in charge of Volume Printed Wiring Board Operations since June
1999. Prior to that, Mr. Mastrogiacomo was the Senior Vice President in charge
of the Santa Clara volume operations as well as all Value Added Manufacturing
(backplane and system assembly) since September 1997. He was a Vice President
from January 1997 to September 1997, and the Business Unit Manager in charge of
the Derry volume printed circuit business unit from January 1994 to January
1997. From March 1988 to January 1994, Mr. Mastrogiacomo was Manufacturing
Manager at the Corporation's Owego, New York facility.
Mr. McNamee joined the Corporation in March 1998 and has been Senior Vice
President in charge of Corporate Development and Strategy since June 1999. Prior
to that, Mr. McNamee was Senior Vice President in charge of the operations of
Hadco Phoenix, Inc. and assumed responsibility for the operation of Hadco
Corporation (Malaysia) SDN.BHD. in January 1999. Prior to joining the
Corporation, Mr. McNamee was President and Chief Executive Officer of
Continental Circuits Corp. ("Continental") from September 1994 to March 1998 and
Chairman of the Board from November 1994 to March 1998. Prior to joining
Continental, Mr. McNamee worked for 15 years at IBM, a manufacturer of
computers, software, networking systems, storage devices and microelectronics,
in a variety of printed circuits manufacturing positions, including as manager
of a printed circuits facility from November 1992 to September 1994.
Mr. Sheehy joined the Corporation in 1994 and has been the Senior Vice
President in charge of Sales and Marketing since September 1997. He was the Vice
President in charge of Value Added Manufacturing (backplane and system assembly)
from March 1995 to September 1997. Prior to joining the Corporation, Mr. Sheehy
was the Vice President of Logistic Operations and then Operations at Kendall
Square Research Corp. from January 1991 to November 1994. Prior to that, Mr.
Sheehy held various management positions at Wang Computer from 1981 to 1991.
Mr. Hamilton has been the Clerk of the Corporation since 1966. He is a
partner in the law firm of Hamilton & Dahmen, LLP, general counsel to the
Corporation.
Executive officers are elected to serve at the pleasure of the Board of
Directors. There are no family relationships among any of the directors and
executive officers of the Corporation.
7
<PAGE> 10
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information as of January 3, 2000 with respect
to the beneficial ownership of shares of the Corporation's Common Stock by (i)
each director of the Corporation, (ii) each executive officer named in the
Summary Compensation Table set forth below under the heading "Executive
Compensation" and (iii) by all directors and executive officers of the
Corporation as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS
---------------- ------------ -------
<S> <C> <C>
Horace H. Irvine II......................................... 693,362(2) 5.1%
Andrew E. Lietz............................................. 203,601(3) 1.5%
F. Gordon Bitter............................................ 3,573 *
Frederick G. McNamee, III................................... 47,938(4) *
Timothy P. Losik............................................ 58,388(5) *
Michael K. Sheehy........................................... 19,382(6) *
Christopher T. Mastrogiacomo................................ 32,336(7) *
Oliver O. Ward.............................................. 10,211(8) *
John F. Smith............................................... 22,711 *
John E. Pomeroy............................................. 16,211(9) *
James C. Taylor............................................. 18,211(10) *
Mauro J. Walker............................................. 7,153(11) *
Gilbert M. Roddy, Jr........................................ 49,174(2) *
All directors and executive officers as a group (16
persons).................................................. 1,200,256(12) 8.6%
</TABLE>
- ---------------
* Less than one percent.
(1) Unless otherwise indicated, the named person possesses sole voting and
investment power with respect to the shares.
(2) See footnote (5) to the table under "Principal Holders of Voting
Securities."
(3) Includes 120,000 shares issuable upon the exercise of stock options granted
to Mr. Lietz that are currently exercisable or will become exercisable
within 60 days after January 3, 2000. Of the 203,601 shares listed in the
table above, 66,646 shares are held by a trust of which Mr. Lietz is the
sole trustee and sole beneficiary, and 10,000 are held by a trust of which
Mr. Lietz's wife is the sole trustee and beneficiary. Mr. Lietz disclaims
beneficial ownership of such 10,000 shares.
(4) Includes 6,000 shares issuable upon the exercise of stock options granted
to Mr. McNamee that are currently exercisable or will become exercisable
within 60 days after January 3, 2000.
(5) Includes 46,350 shares issuable upon the exercise of stock options granted
to Mr. Losik that are currently exercisable or will become exercisable
within 60 days after January 3, 2000. Of the 58,388 shares listed in the
table above, 8,200 shares are held jointly with Mr. Losik's wife.
(6) Includes 15,000 shares issuable upon the exercise of stock options granted
to Mr. Sheehy that are currently exercisable or will become exercisable
within 60 days after January 3, 2000.
(7) Includes 27,550 shares issuable upon the exercise of stock options granted
to Mr. Mastrogiacomo that are currently exercisable or will become
exercisable within 60 days after January 3, 2000.
(8) Includes 9,000 shares issuable upon the exercise of stock options granted
to Mr. Ward that are currently exercisable or will become exercisable
within 60 days after January 3, 2000.
8
<PAGE> 11
(9) Includes 12,000 shares issuable upon the exercise of stock options granted
to Mr. Pomeroy that are currently exercisable or will become exercisable
within 60 days after January 3, 2000 and 1,211 shares Mr. Pomeroy is
entitled to receive as deferred compensation upon his termination as a
Director of the Corporation.
(10) Includes 12,000 shares issuable upon the exercise of stock options granted
to Mr. Taylor that are currently exercisable or will become exercisable
within 60 days after January 3, 2000.
(11) Includes 6,000 shares issuable upon the exercise of stock options granted
to Mr. Walker that are currently exercisable or will become exercisable
within 60 days after January 3, 2000 and 569 shares Mr. Walker is entitled
to receive as deferred compensation upon his termination as Director of the
Corporation.
(12) Includes 42,605 shares held by James C. Hamilton and Gilbert M. Roddy, Jr.,
as co-trustees, and 19,355 shares held by Horace H. Irvine II, as trustee,
8,300 shares held by James C. Hamilton, individually, 6,569 shares held by
Mr. Roddy, individually, of which 6,000 shares are issuable upon the
exercise of stock options granted to Mr. Roddy that are currently
exercisable or will become exercisable within 60 days after January 3,
2000. See footnote (5) to the table under "Principal Holders of Voting
Securities." Includes 120,000 shares issuable upon the exercise of stock
options granted to Mr. Lietz, that are currently exercisable or will become
exercisable within 60 days after January 3, 2000, 66,646 shares held by Mr.
Lietz as trustee and 10,000 shares held by Mr. Lietz's wife as trustee. See
footnote (3) above. Includes 6,000 shares issuable upon the exercise of
stock options granted to Mr. McNamee that are currently exercisable or will
become exercisable within 60 days after January 3, 2000. See footnote (4)
above. Includes 46,350 shares issuable upon the exercise of stock options
granted to Mr. Losik that are currently exercisable or will become
exercisable within 60 days after January 3, 2000 and 8,200 shares held
jointly with Mr. Losik's wife. See footnote (5) above. Includes 15,000
shares issuable upon the exercise of stock options granted to Mr. Sheehy
that are currently exercisable or will become exercisable within 60 days
after January 3, 2000. See footnote (6) above. Includes 27,550 shares
issuable upon the exercise of stock options granted to Mr. Mastrogiacomo
that are currently exercisable or will become exercisable within 60 days
after January 3, 2000. See footnote (7) above. Includes 9,000 shares
issuable upon the exercise of stock options granted to Mr. Ward that are
currently exercisable or will become exercisable within 60 days after
January 3, 2000. See footnote (8) above. Includes 12,000 shares issuable
upon the exercise of stock options granted to Mr. Pomeroy that are
currently exercisable or will become exercisable within 60 days after
January 3, 2000 and 1,211 shares Mr. Pomeroy is entitled to receive as
deferred compensation upon his termination as a Director of the
Corporation. See footnote (9) above. Includes 12,000 shares issuable upon
the exercise of stock options granted to Mr. Taylor that are currently
exercisable or will become exercisable within 60 days after January 3,
2000. See footnote (10) above. Includes 6,000 shares issuable upon the
exercise of stock options granted to Mr. Walker that are currently
exercisable or will become exercisable within 60 days after January 3, 2000
and 569 shares Mr. Walker is entitled to receive as deferred compensation
upon his termination as a Director of the Corporation. See footnote (11)
above. Includes 4,500 shares issuable upon the exercise of stock options
granted to Mr. Caruso that are currently exercisable or will become
exercisable within 60 days after January 3, 2000.
9
<PAGE> 12
BOARD COMMITTEES AND MEETINGS
The Board of Directors of the Corporation held four meetings during the
fiscal year ended October 30, 1999. The Compensation Committee (the
"Compensation Committee") of which Messrs. Taylor (Chairman), Smith, Walker and
Pomeroy are members, determines the compensation of the Corporation's senior
management and administers and makes recommendations and awards concerning the
Corporation's stock option plans. Prior to March 3, 1999, the Compensation
Committee consisted of Messrs. Taylor (Chairman), Smith and Pomeroy. The
Compensation Committee held five meetings in fiscal 1999. The Audit Committee,
of which Messrs. Ward (Chairman), Smith and Walker are members, oversees
financial results and internal controls of the Corporation, including matters
relating to the appointment and activities of the Corporation's independent
auditors. Prior to March 3, 1999, the Audit Committee consisted of Messrs. Ward
(Chairman), Taylor and Smith. The Audit Committee held three meetings during
fiscal 1999. The Long-Term Planning and Strategy Committee, of which Messrs.
Irvine (Chairman), Lietz, Pomeroy, Roddy and Walker are members, reviews and
makes recommendations concerning long-term planning and strategy matters
relating to the Corporation. Prior to March 3, 1999, the Long-Term Planning and
Strategy Committee consisted of Messrs. Irvine (Chairman), Ward, Patrick
Sweeney, Lawrence Coolidge, Lietz and Walker. The Long-Term Planning and
Strategy Committee held four meetings during fiscal 1999. The Executive
Committee, of which Messrs. Irvine (Chairman), Ward, Taylor and Lietz are
members, can act in place of the full Board of Directors to the extent permitted
by law. Prior to March 3, 1999, the Executive Committee consisted of Messrs.
Irvine (Chairman), Ward, Coolidge, Sweeney and Lietz. The Executive Committee
did not meet during fiscal 1999. The Finance Committee, of which Messrs. Ward
(Chairman), Lietz, Roddy and Taylor are members, makes recommendations
concerning general financial policy. Prior to March 3, 1999, the Finance
Committee consisted of Messrs. Ward (Chairman), Coolidge, Smith and Taylor. The
Finance Committee held eight meetings during fiscal 1999. The Nominating
Committee, of which Messrs. Smith (Chairman), Irvine and Taylor are members,
recommends to the Board nominations for the Board of Directors. The Nominating
Committee will consider highly qualified candidates proposed in writing by
stockholders. Stockholders who wish to propose a nomination should submit the
person's name and background information to the Clerk of the Corporation. Prior
to March 3, 1999, the Nominating Committee consisted of Messrs. Smith
(Chairman), Coolidge and Irvine. The Nominating Committee held two meetings
during fiscal 1999. The current membership of the Committees was most recently
determined by the Board of Directors on March 3, 1999. During fiscal 1999, no
incumbent director attended fewer than 75% of the aggregate of (i) the total
number of meetings of the Board of Directors (held during the period for which
he has been a director) and (ii) the total number of meetings held by all
Committees of the Board on which he served (during the period that he served).
10
<PAGE> 13
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION
The following table shows compensation information with respect to services
rendered to the Corporation in all capacities during the fiscal years ended
October 30, 1999, October 31, 1998, and October 25, 1997, for (i) the individual
who served as the Chief Executive Officer for the fiscal year ended October 30,
1999, and (ii) each of the five other most highly compensated executive officers
whose aggregate salary and bonus exceeded $100,000 in the fiscal year ended
October 30, 1999 (collectively with the Chief Executive Officer, the "Named
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION(2)
---------------
ANNUAL AWARDS
COMPENSATION(1) SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND SALARY BONUS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(3) (#) ($)(4)
------------------ ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Andrew E. Lietz................. 1999 $447,500 $500,000 45,000 $ 4,752
Chief Executive Officer, 1998 385,494 184,800 50,000 5,243
President and Director 1997 301,647 279,503 40,000 5,581
F. Gordon Bitter (5)............ 1999 $250,000 $251,875 15,000 $ 2,676
Chief Financial Officer,
Senior Vice President and
Treasurer
Frederick G. McNamee, III (6)... 1999 $239,519 $148,614 12,500 $ 4,360
Senior Vice President 1998 223,269(7) 54,144 40,000 3,835
Timothy P. Losik................ 1999 $199,423 $186,000 12,500 $ 5,947
Senior Vice President 1998 185,237 76,960 14,500 3,943
1997 159,673 158,008 4,000 5,133
Michael K. Sheehy............... 1999 $200,346 $163,680 12,500 $ 4,902
Senior Vice President 1998 155,199 59,520 17,000 4,222
1997 141,032 84,375 15,000 5,412
Christopher J. Mastrogiacomo.... 1999 $199,231 $163,680 12,500 $188,457(8)
Senior Vice President 1998 180,231 69,120 14,000 175,733(9)
1997 170,775 153,737 8,000 153,638(10)
</TABLE>
- ---------------
(1) Excludes perquisites and other personal benefits for fiscal 1999, 1998 and
1997, the aggregate annual amount of which for each Named Officer was less
than the lesser of $50,000 or 10% of the total of annual salary and bonus
reported.
(2) The Corporation did not grant any restricted stock awards or stock
appreciation rights ("SARs") or make any long term incentive plan payouts
during fiscal 1999, 1998 or 1997.
(3) Bonuses are reported in the year earned, even if actually paid in a
subsequent year. Deferred cash and stock portions are subject to forfeiture
if a Named Officer's employment is terminated, other than by death or
disability by the Corporation for cause or by the Named Officer without the
Corporation's
11
<PAGE> 14
consent. The following deferred portions of such bonus were earned in
fiscal 1999 in shares of restricted stock: Mr. Lietz, $200,000 in 4,116
shares; Mr. Bitter, $100,750 in 2,073 shares; Mr. McNamee, $59,446 in 1,223
shares; Mr. Losik, $74,400 in 1,531 shares; Mr. Sheehy, $65,472 in 1,347
shares; and Mr. Mastrogiacomo, $65,472 in 1,347 shares.
(4) Includes the following matching 401(k) contributions to the Hadco
Corporation Retirement Plan (the "Retirement Plan") in fiscal 1999, 1998
and 1997, respectively: Mr. Lietz, $4,752, $4,356, and $1,387; Mr. Bitter,
in 1999, $2,676; Mr. McNamee, in 1999 and 1998, respectively, $4,360 and
$3,588; Mr. Losik, $5,947, $3,056, and $939; Mr. Sheehy, $4,902, $3,335 and
$1,218; and Mr. Mastrogiacomo, $4,863, $3,015 and $1,052. For fiscal 1999,
the Corporation accrued, and in December 1999 made, a contribution of
$1,847,000 to the Retirement Plan, which has not yet been allocated among
the participants in the Retirement Plan. Consequently, the total amount of
contributions by the Corporation in fiscal 1999 to the Retirement Plan for
the Named Officers cannot be set forth. Also reflects the following
contributions to the Retirement Plan for fiscal 1998 and 1997, respectively
(with the 1998 contributions not having been previously allocated in time
to be included in the fiscal 1998 proxy statement): Mr. Lietz, $887 and
$4,194; Mr. McNamee, in 1998, $247; Mr. Losik, $887 and $4,194; Mr. Sheehy,
$887 and $4,194; and Mr. Mastrogiacomo, $887 and $4,194.
(5) Mr. Bitter joined the Corporation in November 1998 as a Senior Vice
President, Chief Financial Officer and Treasurer.
(6) Mr. McNamee joined the Corporation in March 1998 as a Senior Vice
President.
(7) Mr. McNamee's salary of $223,269 for fiscal 1998 consists of $78,654 paid
by Continental Circuits Corp. prior to the March 1998 acquisition of
Continental Circuits Corp. by the Corporation and $114,615 paid by the
Corporation from March 1998 through October 31, 1998.
(8) Includes a payment to Mr. Mastrogiacomo in fiscal 1999 of $179,558 in
tax-adjusted relocation expenses and housing allowance. Of the $179,558
paid to Mr. Mastrogiacomo, $114,142 represents payment of expenses incurred
and $65,416 represents payment of taxes accrued.
(9) Includes a payment to Mr. Mastrogiacomo in fiscal 1998 of $169,624 in
tax-adjusted relocation expenses and housing allowance and $2,207 related
to estate planning fees. Of the $169,624 paid to Mr. Mastrogiacomo,
$144,032 represents payment of expenses incurred and $25,592 represents
payment of taxes accrued.
(10) Includes a payment to Mr. Mastrogiacomo in fiscal 1997 of $148,392 in
tax-adjusted relocation expenses, of which $126,611 represents payment of
expenses incurred and $21,781 represents payment of taxes accrued.
12
<PAGE> 15
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows information regarding grants of stock options to
the Named Officers during the fiscal year ended October 30, 1999. The
Corporation did not grant any stock appreciation rights in fiscal 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------ ANNUAL RATES OF
NUMBER OF PERCENT OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#)(1) FISCAL YEAR(%) ($/SH)(1) DATE 5%($) 10%($)
---- ------------- ----------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Andrew E. Lietz................ 45,000 12.88% $30.31 11/12/08 $857,781 $2,173,785
F. Gordon Bitter............... 15,000 4.29 30.31 11/12/08 285,927 724,595
Frederick G. McNamee, III...... 12,500 3.58 30.31 11/12/08 238,272 603,829
Timothy P. Losik............... 12,500 3.58 30.31 11/12/08 238,272 603,829
Michael K. Sheehy.............. 12,500 3.58 30.31 11/12/08 238,272 603,829
Christopher T. Mastrogiacomo... 12,500 3.58 30.31 11/12/08 238,272 603,829
</TABLE>
- ---------------
(1) These options were granted at an exercise price equal to the fair market
value of the Corporation's Common Stock on the date of grant. These options
have a term of ten years from date of grant and become exercisable as to 50%
of the shares on the second anniversary of the date of grant, 25% of the
shares on the third anniversary of the date of grant, and the final 25% of
the shares on the fourth anniversary of the date of grant.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation on the
Corporation's Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission and do not reflect the Corporation's estimates of future stock
price growth. Actual gains, if any, on stock option exercises and Common
Stock holdings are dependent on the timing of such exercise and sale of the
shares and the future performance of the Corporation's Common Stock. There
can be no assurance that the rates of appreciation assumed in this table can
be achieved or that the amounts reflected will be received by the Named
Officers.
13
<PAGE> 16
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to options to purchase the
Corporation's Common Stock granted to the Named Officers under the Corporation's
stock option plans, including: (i) the number of shares of Common Stock
purchased upon exercise of options in the fiscal year ended October 30, 1999;
(ii) the net value realized upon such exercise; (iii) the number of unexercised
options outstanding at October 30, 1999; and (iv) the value of such unexercised
in-the-money options at October 30, 1999:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT FY-END OPTIONS/SARS AT FY-END
ACQUIRED OCTOBER 30, 1999(#) OCTOBER 30, 1999($)(2)
ON VALUE -------------------------- -------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Andrew E. Lietz........................ 2,500 $62,121 96,000/153,000 $2,356,310/$1,141,550
F. Gordon Bitter....................... -- -- 0/ 15,000 0/ 96,600
Frederick G. McNamee, III.............. -- -- 6,000/ 46,500 0/ 80,500
Timothy P. Losik....................... -- -- 37,550/ 47,100 899,590/ 477,360
Michael K. Sheehy...................... 750 $15,563 9,750/ 46,000 34,313/ 160,205
Christopher T. Mastrogiacomo........... 450 $12,336 19,400/ 46,200 310,125/ 324,340
</TABLE>
- ---------------
(1) Amounts disclosed in this column were calculated based on the difference
between the fair market value of the Corporation's Common Stock on the date
of exercise and the exercise price of the options in accordance with
regulations promulgated under the Securities Exchange Act of 1934, as
amended, and do not necessarily reflect amounts received by the Named
Officers.
(2) Value is based on the difference between the option exercise price and the
fair market value of the Corporation's Common Stock on October 30, 1999
($36.75 per share, the last reported sale price of the Corporation's Common
Stock on the New York Stock Exchange on October 29, 1999), multiplied by the
number of shares underlying the options.
EMPLOYMENT ARRANGEMENTS
In July 1998, the Corporation entered into employment agreements with each
of Messrs. Lietz, McNamee, Losik and Sheehy and entered into employment
agreements with Messrs. Bitter and Mastrogiacomo in November 1998 and August
1999, respectively. The employment agreement with Mr. Lietz, which replaced his
prior employment agreement: (i) contains a one year non-competition agreement
with respect to competing persons or entities with annual gross revenues in
excess of $100 million and a one year non-solicitation provision with respect to
customers or suppliers if such solicitation is for, or results in, competition
with the Corporation or its Affiliates (if the Corporation terminates Mr. Lietz
without cause, or if his employment is terminated by him for Good Reason or by
the Corporation within six months prior to or within 24 months after a Change of
Control, the non-competition and non-solicitation periods extend for such longer
period during which Mr. Lietz receives severance compensation); (ii) contains a
one year non-solicitation provision with respect to employees; (iii) provides
for the payment of the following benefits, for a period of one year plus one
month for each year of service to the Corporation for a maximum of 24 months, if
Mr. Lietz's employment is terminated without cause: base salary; health, life
and disability insurance; certain tax and financial planning assistance and
outplacement services; prompt payment after his termination of a pro-rated bonus
based on his target level and all deferred compensation owed to him at the time
of the termination; (iv) provides for the payment of the above identified
benefits, plus incentive compensation at his target level, for a period of three
years (outplacement assistance is for only one year), if
14
<PAGE> 17
Mr. Lietz's employment is terminated by the Corporation within six months prior
to or within 24 months after a Change of Control or if Mr. Lietz terminates his
employment for Good Reason within 24 months after a Change of Control. Upon a
Change of Control, the Corporation has agreed to set up a Rabbi Trust prior to
the consummation of the Change of Control and fund it with an amount equal to
all amounts which may become due as a result of the Change of Control. The
employment agreements with Messrs. Bitter, McNamee, Losik, Sheehy and
Mastrogiacomo are substantially similar to that of Mr. Lietz except that (i) a
termination by the Corporation within six months prior to or within 24 months
after a Change of Control or a termination for Good Reason within 24 months
after a Change of Control is treated as if the employment was terminated by the
Corporation without cause and (ii) none of Messrs. Bitter, McNamee, Losik,
Sheehy or Mastrogiacomo is entitled to receive future incentive compensation
benefits in the event his employment is terminated by the Corporation within six
months prior to or within 24 months after a Change of Control.
Mr. McNamee also entered into a separate two year employment agreement with
the Corporation commencing March 1998 with a base salary at that time of
$235,000 per year. In connection therewith, Mr. McNamee (i) was granted a
non-qualified option to purchase 40,000 shares of the Corporation's Common Stock
at the fair market value on the day of grant and (ii) purchased directly from
the Corporation, pursuant to a Stock Purchase Agreement 40,000 shares of Common
Stock at the then fair market value. Such employment agreement provides that if
Mr. McNamee's employment with the Corporation is either terminated without
"cause" or is terminated by him for Good Reason (each as defined therein) during
the term of the agreement, Mr. McNamee is entitled to receive his full base
salary for the remainder of the term of the agreement. The agreement also
contains a one year non-solicitation clause.
Options held by the Named Officers pursuant to the Corporation's 1998 Stock
Plan, Non-Qualified Stock Option Plan of November 29, 1995 and Non-Qualified
Stock Option Plan of September 7, 1990, each as amended, accelerate in full
immediately prior to the consummation of an Acquisition (as defined therein) of
the Corporation, provided, however, that if such options are not exercised in
full immediately prior to the consummation of any such Acquisition, they
terminate.
Three of Mr. Lietz's options (for 40,000, 50,000 and 45,000 shares,
respectively) pursuant to the Non-Qualified Stock Option Plan of November 29,
1995 provide that if Mr. Lietz's employment terminates by reason of his
retirement after age 61, such options will, rather than terminating after 90
days, continue to vest and become exercisable on the same schedule as, and shall
expire on the same date as, is provided in the Option Agreements had his
employment with the Corporation not so terminated.
15
<PAGE> 18
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Corporation's Common Stock for the five fiscal
years ended October 30, 1999, with the cumulative total return for the New York
Stock Exchange ("NYSE") Market Index, the NASDAQ Market Index and an SIC index
that includes organizations in the Corporation's Standard Industrial
Classification (SIC) Code 3672 -- Printed Circuit Design (the "Peer Group"),
currently consisting of 30 organizations. During October 1999, the Company's
Common Stock commenced trading on the NYSE under the symbol HDC; it had
previously been traded on the NASDAQ National Market under the symbol HDCO.
Although no longer quoted on the NASDAQ National Market, the Company is required
to show the NASDAQ Market Index for one year for comparison purposes. The
comparison assumes $100 was invested on October 28, 1994 in the Corporation's
Common Stock and in the foregoing Peer Group Index, NYSE Market Index and NASDAQ
Market Index and assumes reinvestment of dividends, if any, in assessing total
returns.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG HADCO CORPORATION, PEER GROUP INDEX,
NYSE MARKET INDEX AND NASDAQ MARKET INDEX
HADCO PERFORMANCE GRAPH
<TABLE>
<CAPTION>
NASDAQ MARKET
HADCO CORPORATION PEER GROUP INDEX NYSE MARKET INDEX INDEX
----------------- ---------------- ----------------- -------------
<S> <C> <C> <C> <C>
Oct. 1994 $100.00 $100.00 $100.00 $100.00
Oct. 1995 318.18 164.48 117.39 118.62
Oct. 1996 368.18 194.64 143.35 139.30
Oct. 1997 659.09 321.88 186.51 182.56
Oct. 1998 381.82 344.06 215.13 206.42
Oct. 1999 445.45 776.48 249.59 340.72
</TABLE>
- ---------------
(1) This graph is not "soliciting material," is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Corporation under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended (the
"Exchange Act") whether such filing was made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
(2) The stock price performance shown on the graph is not necessarily indicative
of future price performance. Information used on the graph was obtained from
Media General Financial Services, Richmond, Virginia, a source believed to
be reliable, but the Corporation is not responsible for any errors or
omissions in such information.
16
<PAGE> 19
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is comprised of four outside directors and
determines salary and bonuses of the Corporation's executive officers and
administers and makes recommendations and awards under the Corporation's stock
option plans.
The Corporation's executive compensation policies are designed to provide
levels of compensation that assist the Corporation in attracting, motivating and
retaining qualified executives by providing a competitive compensation package
based on corporate and individual performance. The Corporation's executive
compensation program for fiscal 1999 consisted of the following elements: (1)
base salary; (2) incentive compensation in the form of annual cash and
restricted stock bonuses; and (3) long-term incentive compensation in the form
of non-qualified stock options. Elements (1), (2) and (3) are administered by
the Compensation Committee.
In fiscal 1998, the Compensation Committee had hired an executive
compensation consultant (the "Consultant") to review levels of executive
compensation, including salary, incentive compensation and stock options for the
Chief Executive Officer and the other executive officers and senior management
of the Corporation and to provide recommendations to the Compensation Committee
regarding guidelines for future compensation for such individuals.
The base salaries of the Corporation's executive officers, including the
Chief Executive Officer, are periodically compared by the Compensation Committee
with survey data of the base salaries of executives in comparable industries. In
fiscal 1999, the Compensation Committee reviewed the base salaries of the
Corporation's executive officers in light of the survey data that had been
compiled by the Consultant. The companies (the "Peer Group") used for this
comparison of base salaries were a different and slightly smaller group than the
companies in the peer group used for comparison in the Corporation's Stock
Performance Graph. The Compensation Committee felt that using this different
Peer Group, consisting of electronics and technology companies (not just printed
circuit companies), for this comparison was appropriate because it believed the
responsibilities of the Corporation's executive officers to be more comparable
to those of this Peer Group in the electronics industry than to just those of
printed circuit companies.
In November 1998, the Compensation Committee reviewed the base salaries of
the Corporation's Chief Executive Officer and other executive officers in light
of the analysis of the Peer Group from the Consultant. Given the Corporation's
performance and the overall condition in the industry, the Compensation
Committee did not increase executive salary levels in line with the Peer Group,
but did accept the Chief Executive Officer's recommendation of smaller increases
in salaries. The Compensation Committee decided that over the next several
years, efforts would be made to bring executive salaries into line with those of
the Peer Group based on attainment of certain incentive targets. The
Compensation Committee acknowledged that future increases would be necessary and
appropriate for the Corporation to maintain competitiveness with the
compensation offered by the above Peer Group
The Hadco Corporation Executive Incentive Compensation Deferred Bonus Plan,
as Amended and Restated July 1, 1998 (the "Bonus Plan"), provides incentives to
key executives, including the Chief Executive Officer, of the Corporation.
Fiscal 1999 bonuses under the Bonus Plan for executives, except the Chief
Executive Officer, were determined by the Compensation Committee based on a
targeted percentage of each executive's base cash salary at fiscal 1999 year-end
adjusted by both (i) relative performance against the median average Return on
Invested Capital for the Peer Group and (ii) a percentage factor determined by
the Compensation Committee and based on the Chief Executive Officer's evaluation
of the executive's individual performance. The formula for the fiscal 1999 bonus
calculations was slightly revised from fiscal 1998. The Compensation Committee
updated the specific benchmark relating to measurement of Peer Group performance
to include the three most recent years, 1996, 1997 and 1998. The fiscal 1999
bonus under the Bonus Plan
17
<PAGE> 20
for the Chief Executive Officer was determined based on individual performance
along with a review of the Corporation's overall performance.
Under the Bonus Plan, for fiscal 1999, individuals received 60% of the
bonus in cash and the remaining 40% in shares of restricted stock of the
Corporation under the Corporation's 1998 Stock Plan. Such restricted stock is
subject to forfeiture if an individual's employment is terminated, other than by
death or disability, by the Corporation for cause or by the individual without
the Corporation's consent.
The Compensation Committee determined that the Corporation was to utilize
stock options as both a reward and incentive for executive performance and to
align management interests with shareholder interests. In determining the stock
option portion of the executive officers' (except the Chief Executive Officer's)
compensation (i.e., number of stock options granted to each individual executive
officer), the Compensation Committee determined that long-term incentive targets
would be based on the median percent of salary in the Peer Group for each
executive position and recommendations of the Chief Executive Officer. In
addition, in determining levels of awards of stock options to executive
officers, the Compensation Committee also took into account the number of
options already outstanding or previously granted to each executive officer, the
exercise price of the options in light of current market value per share as a
reflection of current value, and the time outstanding before expiration of the
respective options.
In determining the stock option portion of the Chief Executive Officer's
compensation for fiscal 1999, the Compensation Committee took into account
long-term incentive targets based on the median percent of salary in the Peer
Group for chief executive officers, general corporate performance and the
personal performance of the Chief Executive Officer. In making its determination
as to stock option grant levels for the Chief Executive Officer, the
Compensation Committee also took into consideration the following factors which
are considered in establishing such levels for the other executive officers: the
number of options already outstanding or previously granted to the Chief
Executive Officer, the exercise price of the options in light of current market
value per share as a reflection of current value, and the time outstanding
before expiration of the options.
Pursuant to sec.162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Corporation may deduct in a fiscal year no more than
$1,000,000 of compensation for covered executive officers other than
compensation that is "performance based" within the meaning of sec.162(m) of the
Code. The Compensation Committee has not addressed this issue for cash
compensation because the cash compensation of the Corporation's executive
officers subject to the deduction limitation rules of sec.162(m) of the Code has
not in the past exceeded $1,000,000. Option grants and stock awards pursuant to
the Non-Qualified Stock Option Plan of November 29, 1995 and the 1998 Stock Plan
are intended to qualify as "performance-based" compensation, and such Plans are
the only equity-related plans of the Corporation that the Board of Directors
currently believes appropriate to bring into compliance with sec.162(m) of the
Code.
Respectfully submitted
by the Compensation Committee:
James C. Taylor, Chairman
John E. Pomeroy
John F. Smith
Mauro J. Walker*
- ---------------
* Mr. Walker joined the Compensation Committee on March 3, 1999.
18
<PAGE> 21
COMPENSATION OF DIRECTORS
During fiscal 1999, each Non-Employee Director was entitled to receive an
annual fee of $20,000 payable in shares of Restricted Stock of the Corporation
(the "Annual Fee"). During fiscal 1999, the Corporation paid each Non-Employee
Director additional fees of $750 for each meeting attended, plus $500 for each
additional Committee meeting held on the same day, and each Chairman of a
Committee of the Board of Directors received an additional annual fee of $2,000
(collectively, the "Additional Fees"). Any Board or Committee meeting exceeding
five hours is deemed to be an additional meeting for purposes of payment of the
above additional $500 fee. Under the Outside Directors' Compensation Plan of
1998 (the "Outside Directors' Plan"), a Non-Employee Director can (i) elect to
receive all or a portion of the Additional Fees in shares of Restricted Stock of
the Corporation, and (ii) elect to defer all or part of the payment of the
Annual Fee and the Additional Fees. Pursuant to the Outside Directors' Plan, on
or before the last day of the month preceding each annual meeting of
stockholders, each eligible Non-Employee Director may elect to have a percentage
of the Additional Fees specified by him paid in Restricted Stock instead of in
cash, and may then elect deferral of payment of a specified percentage of the
Annual Fee and Additional Fees. Once made, the deferral remains in effect until
otherwise revoked in accordance with the terms of the Outside Directors' Plan,
and shall defer payment until such director no longer serves on the Board of
Directors. A deferral account shall be set up for each participating
Non-Employee Director and such account shall be credited with a Common Stock
Equivalent for each share of Restricted Stock such Non-Employee Director would
have received had no deferral been elected. Except in the case of emergencies,
distribution shall occur from this account when the director no longer serves on
the Board of Directors, and such director shall then receive one share of
Restricted Stock for each Common Stock Equivalent in his deferral account and
cash, including interest or dividends accrued or earned as appropriate pursuant
to the Outside Directors' Plan. Mr. Pomeroy and Mr. Walker elected to defer the
payment of the shares of Restricted Stock of the Corporation constituting the
Annual Fee. No Non-Employee Director has elected to receive any portion of the
Additional Fees in shares of Restricted Stock. In fiscal 1999, each Non-Employee
Director (who was a director for the entire year) received an aggregate of 569
shares of Restricted Stock of the Corporation; 327 shares each on March 3, 1999
($10,000/$30.56 per share, the fair market value of the Corporation's Common
Stock on March 2, 1999) and 242 shares each on September 2, 1999 ($10,000/$41.31
per share, the fair market value of the Corporation's Common Stock on September
2, 1999). Mr. Pomeroy and Mr. Walker each received Certificates of Entitlement
for 327 shares and 242 shares of Restricted Stock on March 3, 1999 and September
2, 1999, respectively.
In addition, under the Corporation's 1991 Non-Employee Director Stock
Option Plan (the "Director Option Plan"), which was amended with the approval of
the stockholders at the Annual Meeting of Stockholders on February 26, 1997,
each person who becomes a director for the first time and is not an employee of
the Corporation is automatically granted an option to purchase 15,000 shares of
Common Stock at the then current fair market value, with provision in such
Director Option Plan for acceleration of vesting upon a change of control as
defined therein. Each Non-Employee Director who was a member of the Board of
Directors on February 26, 1997 and who then had five years of service in such
capacity was automatically granted on February 26, 1997, and will be granted on
each anniversary of service in such capacity thereafter, without further action
by the Board of Directors, an option to purchase three thousand (3,000) shares
of the Corporation's Common Stock. Each Non-Employee Director who was a member
of the Corporation's Board of Directors on February 26, 1997 and who did not
then have at least five years of service in such capacity but who subsequently
achieves five years of service in such capacity, and each person who in the
future is elected for the first time as a Non-Employee Director and subsequently
achieves five years of service in such capacity, would each be automatically
granted, on the date of his or her fifth anniversary of service in such capacity
and on each anniversary of service in such capacity thereafter, without further
action by the Board of Directors, an option to purchase three thousand (3,000)
shares of the Corporation's Common Stock. The Director Option
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<PAGE> 22
Plan requires that options granted thereunder shall expire on a date which is
seven (7) years from the date of option grant. The above option to purchase
15,000 shares first becomes exercisable to the extent of one-fifth of the shares
covered by the option on the date of grant; thereafter, one-fifth of the shares
covered by such option will become exercisable on each anniversary of the option
grant commencing with the first anniversary of the option grant. The above
options to purchase three thousand (3,000) shares granted or to be granted in
the future, vest in the optionee immediately upon grant.
In June 1999, Mr. Patrick Sweeney resigned as a member of the Corporation's
Board of Directors. In connection with his resignation, he entered into a
consulting agreement with the Corporation providing that he would serve as a
consultant to the Corporation through December 31, 2000. Under the agreement,
Mr. Sweeney is paid at the rate of $36,000 per year for performing such duties
and responsibilities as may be reasonably requested of him by the President of
the Corporation, with such duties contemplated as including domestic and
international marketing and public relations services. The consulting agreement
contains a confidentiality provision as well as non-competition and
non-solicitation provisions during the term of the agreement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1999, Mr. Mastrogiacomo, a Senior Vice President of the
Corporation, had a loan from the Corporation in the aggregate principal amount
of $100,000 (the "Loan"). The Loan was paid in full in October 1999. Interest
accrued on the Loan at the annual rate of 5.68% and was paid monthly by Mr.
Mastrogiacomo through payroll deductions.
Mr. Hamilton, Clerk of the Corporation, is a partner in the law firm of
Hamilton & Dahmen, LLP, which serves as general counsel to the Corporation. The
Corporation paid Hamilton & Dahmen, LLP fees of $361,111 for professional
services rendered in fiscal 1999.
PROPOSAL TO APPROVE
HADCO CORPORATION OUTSIDE DIRECTORS'
COMPENSATION PLAN OF 2000
Shareholders are being asked to approve the Corporation's Outside
Directors' Compensation Plan of 2000 (the "2000 Plan"). The 2000 Plan provides
(i) that all annual fees (the "Annual Fees") of the directors of the Corporation
who are neither officers nor employees of the Corporation (individually, an
"Outside Director" and collectively, the "Outside Directors") will be paid in
stock subject to various restrictions (the "Restricted Stock"), (ii) that an
Outside Director may elect that all or a portion of any other fees earned in any
year of service for attendance at meetings of the Board of Directors, committee
meetings or serving as a Chairman of a committee (the "Additional Fees"), may be
paid in cash or Restricted Stock; and (iii) that an Outside Director may elect
to defer the payment of all or a portion of the Restricted Stock payment
constituting either Annual Fees or Additional Fees or the cash payment, if any,
constituting Additional Fees. The Board of Directors believes that the approval
of the 2000 Plan is in the best interests of the Corporation because the 2000
Plan aligns the interests of the Outside Directors more closely with the
interests of other shareholders of the Corporation, encourages the highest level
of Outside Director performance by providing the Outside Directors with a direct
interest in the Corporation's attainment of its financial goals, and helps
attract and retain qualified Outside Directors. The Corporation can not at the
present time determine how many shares of Restricted Stock each Outside Director
may receive in connection with any specific payment of Annual Fees or Additional
Fees if the 2000 Plan is approved by shareholders.
The Board of Directors adopted the 2000 Plan in December 1999 subject to
shareholder approval. Below is a summary description of the principal provisions
of the 2000 Plan, assuming shareholder approval. The summary is not necessarily
complete and is qualified in its entirety by reference to the full text of the
2000 Plan, which is attached to this Proxy Statement as Appendix A.
20
<PAGE> 23
SUMMARY OF THE 2000 PLAN
Purposes. The purposes of the 2000 Plan are to align the interests of
Outside Directors more closely with the interests of other shareholders of the
Corporation, to encourage the highest level of Outside Director performance by
providing Outside Directors with a direct interest in the Corporation's
attainment of its financial goals, and to help attract and retain qualified
Outside Directors.
Shares Subject to the 2000 Plan. A maximum of 50,000 shares of Common Stock
have been authorized for issuance under the 2000 Plan, and any increase in the
number of authorized shares subject to the 2000 Plan requires stockholder
approval.
Restricted Stock. Restricted Stock shall be Common Stock of the Corporation
subject to various terms and conditions as imposed from time to time by the
Board of Directors or the Compensation Committee of the Board of Directors (the
"Compensation Committee") which shall include restrictions on the sale,
exchange, transfer or any other disposition of such shares. Such restrictions
shall lapse at the earlier of (i) the time at which the Outside Director no
longer serves on the Board of Directors or (ii) the time at which the Board of
Directors or the Compensation Committee has determined that such stock
restrictions should lapse.
Eligibility. Only Outside Directors are eligible to participate in the 2000
Plan.
Administration. The Board of Directors has full power and authority to
administer, interpret and construe the 2000 Plan. The 2000 Plan is administered
by the Compensation Committee, which currently consists of Messrs. Taylor
(Chairman), Pomeroy, Smith and Walker, four non-employee directors of the
Corporation. Subject to the provisions of the 2000 Plan, the Compensation
Committee has the authority to, among other things, make all determinations and
take all actions necessary or advisable for the implementation and
administration of the 2000 Plan, to adopt, amend and rescind regulations
relating to the 2000 Plan and impose any appropriate limitations and
restrictions in connection with the 2000 Plan.
Payment of Fees. An Outside Director's entire Annual Fee shall be
distributed to the Outside Director in the form of Restricted Stock. Any
Additional Fees, in amounts to be set by the Board of Directors from time to
time, may be paid at the election of the Outside Director in either cash or
Restricted Stock. If the Outside Director fails to elect a form of payment, the
total amount of Additional Fees shall be paid in cash. All payments,
distributions or credits of amounts in connection with an Outside Director's
Annual Fee or Additional Fees shall be made not less often than semi-annually.
If payments are made semi-annually, the first payment, distribution or credit is
to occur each year on the date of the annual meeting of the stockholders of the
Corporation and the second payment, distribution or credit is to occur on the
date which is six months after the date of the annual meeting of the
stockholders of the Corporation.
Deferral Elections. On or before the last day of the month preceding each
annual meeting of stockholders, each eligible Outside Director may elect to have
all or a portion of the Additional Fees specified by him or her paid in
Restricted Stock instead of cash, and may also elect to defer the payment of all
or a portion of his or her Restricted Stock payment constituting either Annual
Fees and Additional Fees or the cash payment, if any, constituting Additional
Fees (the "Deferral Election"). Any amount deferred by an Outside Director shall
be credited to an account established by the Corporation for the Outside
Director electing such deferral (the "Deferral Account"). Any amounts deferred
by the Outside Director as Restricted Stock shall be credited to the Outside
Director's Deferral Account in the form of hypothetical shares of Common Stock
of the Corporation which shall have a value equal to the fair market value of
the Corporation's Common Stock on the date of payment to the Outside Director
(the "Common Stock Equivalents"). Once an Outside Director makes a Deferral
Election, the Deferral Election remains in effect until otherwise revoked in
accordance with the 2000 Plan, and shall defer payment until such Outside
Director no longer serves on the Board of Directors. Except in the case of
emergencies, distribution of his or her Deferral Account shall occur
21
<PAGE> 24
promptly following the time when the Outside Director no longer serves on the
Board of Directors, and such Outside Director shall then receive one share of
Common Stock of the Corporation for each Common Stock Equivalent in his or her
Deferral Account and cash, including interest or dividends accrued or earned as
appropriate pursuant to the 2000 Plan.
Federal Income Tax Consequences. Any fees received under the 2000 Plan by
an Outside Director currently, in cash or Restricted Stock, will constitute
taxable income equal to the amount of such cash or the fair market value of such
Restricted Stock. If an Outside Director makes a Deferral Election with respect
to Restricted Stock or cash, such Outside Director will have taxable income in
the year in which such Restricted Stock or cash is paid and in an amount equal
to the fair market value of any such Restricted Stock received plus the amount
of any cash received, including any interest or dividends credited to such
Restricted Stock or cash. Whether or not an Outside Director makes a Deferral
Election with respect to payments of Restricted Stock or Additional Fees, the
Corporation will not be allowed a tax deduction for such payments until they are
actually paid to such Outside Director.
Amendment and Termination. The Corporation may amend, alter, modify or
revoke in whole or in part the 2000 Plan at any time subject, in certain cases
as set forth in the 2000 Plan, to the consent of the Outside Directors that may
be affected by such amendment, alteration, modification or revocation, and
subject to stockholder approval for any increase in the authorized shares
subject to the 2000 Plan.
The affirmative vote of stockholders holding at least a majority of the
voting stock of the Corporation voting in person or by proxy at the Annual
Meeting of Stockholders and entitled to vote is required for the approval of the
2000 Plan.
The Board recommends a vote FOR the approval of the 2000 Plan.
22
<PAGE> 25
OPTION INFORMATION
The Corporation's Restated Articles of Organization, as amended, currently
authorizes the issuance of up to 50,000,000 shares of Common Stock. As of
December 10, 1999, authorized shares of the Corporation were issued and
outstanding or subject to outstanding options or reserved for future grants as
follows:
<TABLE>
<S> <C>
ISSUED AND OUTSTANDING SHARES OF COMMON STOCK............... 13,662,015
</TABLE>
<TABLE>
<CAPTION>
SHARES SUBJECT SHARES RESERVED
TO FOR
OUTSTANDING OPTIONS FUTURE GRANTS
------------------- ---------------
<S> <C> <C>
STOCK-BASED COMPENSATION PLANS:
1998 Stock Plan................................... 386,800 584,310
+1998 Outside Directors' Compensation Plan........ 0 3,823
1997 Employee Stock Purchase Plan................ 0 307,144
November 29, 1995 Stock Option Plan.............. 972,755 24,620
1991 Directors' Stock Option Plan................ 69,000 141,000
*September 1990 Stock Option Plan................. 396,945 0
*December 1986 Stock Option Plan.................. 24,540 0
--------- ---------
Totals....................................... 1,850,040 1,060,897
--------- ---------
</TABLE>
- ---------------
+ Subject to approval by the shareholders of the Hadco Corporation Outside
Directors' Compensation Plan of 2000, the Board of Directors does not intend
to issue any further shares under this Plan.
* The Board of Directors of the Corporation has voted not to issue any more
options under these Plans and will not grant any more options under them in
the future.
All of the currently outstanding options granted pursuant to the above
December 1986 Stock Option Plan will expire no later than March 2000. The
outstanding options under all of the above stock-based compensation plans, as of
December 10, 1999 were held as follows:
<TABLE>
<CAPTION>
SHARES SUBJECT
TO OPTIONS
--------------
<S> <C>
All executive officers as a group........................... 695,800
All current directors (who are not executive officers) as a
group..................................................... 69,000
All employees (who are not executive officers) as a group... 1,085,240
</TABLE>
23
<PAGE> 26
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Arthur Andersen LLP,
independent certified public accountants, to serve as auditors for the fiscal
year ending October 28, 2000. Arthur Andersen LLP has served as the
Corporation's auditors and outside accountants since 1966. It is expected that a
member of the firm will be present at the Annual Meeting of Stockholders with
the opportunity to make a statement if so desired and will be available to
respond to appropriate questions. The directors recommend a vote FOR
ratification of this selection. The ratification of this selection is not
required under the laws of the Commonwealth of Massachusetts, where the
Corporation is incorporated, but the results of this vote will be considered by
the Board of Directors in selecting auditors for future fiscal years.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be furnished to all stockholders entitled to vote at the next annual meeting of
stockholders of the Corporation must be received at the Corporation's principal
executive offices not later than October 2, 2000. The deadline for providing
timely notice to the Corporation of matters that stockholders otherwise desire
to introduce at the next annual meeting of stockholders of the Corporation is
December 14, 2000. In order to curtail controversy as to the date on which a
proposal was received by the Corporation, it is suggested that all notices of
proposals by stockholders should be sent Certified Mail -- Return Receipt
Requested to the attention of: F. Gordon Bitter, Hadco Corporation, 12A Manor
Parkway, Salem, New Hampshire 03079.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation, and
in addition to soliciting stockholders by mail through its regular employees,
the Corporation may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Corporation
registered in the names of a nominee and, if so, will reimburse such banks,
brokers and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket costs. Solicitation by officers and employees of the Corporation
may also be made of some stockholders in person or by mail, telephone or
telegraph following the original solicitation.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Corporation's directors, executive officers and holders of more
than 10% of the Corporation's Common Stock (collectively, "Reporting Persons")
to file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of Common Stock of the Corporation. Such
persons are required by regulations of the Commission to furnish the Corporation
with copies of all such filings. Based on its review of the copies of such
filings received by it with respect to the fiscal year ended October 30, 1999
and written representations from certain Reporting Persons, the Corporation
believes that all Reporting Persons complied with all Section 16(a) filing
requirements in the fiscal year ended October 30, 1999.
24
<PAGE> 27
APPENDIX A
HADCO CORPORATION
OUTSIDE DIRECTORS' COMPENSATION PLAN OF 2000
1. PURPOSE AND ESTABLISHMENT. Hadco Corporation (the "Company"), hereby
establishes the Hadco Corporation Outside Directors' Compensation Plan of 2000
(the "Plan") for those directors of the Company who are neither officers nor
employees of the Company. All an eligible director's annual fee will be paid in
Restricted Stock of the Company and all or a portion of the Additional Director
Fees (hereinafter defined) may be paid in Restricted Stock of the Company at the
option of the director. The Plan also provides the opportunity for eligible
directors to request that the Company defer payment of that portion of the
annual fee or Additional Director Fees taken as shares of Restricted Stock of
the Company, and further allows such directors to defer Additional Director Fees
taken as cash payments, as described more fully below. The purposes of this Plan
are to align the interests of such directors more closely with the interests of
other shareholders of the Company, to encourage the highest level of director
performance by providing such directors with a direct interest in the Company's
attainment of its financial goals, and to help attract and retain qualified
directors.
2. DEFINITIONS.
a. "Additional Director Fees" means all those fees, in addition to the
annual fee, that an Outside Director (hereinafter defined) may be entitled to in
any year of service for attendance at Board or committee meetings and/or serving
as a chairman of a committee.
b. "Board" means the Board of Directors of the Company.
c. "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
d. "Committee" means the Compensation Committee of the Board.
e. "Common Stock Equivalent" means a hypothetical share of Stock which
shall have a value on any date equal to the Fair Market Value of one share of
Stock on that date. The amount distributed to an Outside Director pursuant to
Section 7 hereof shall be that number of shares of Stock equal to the number of
Common Stock Equivalents then in the participating Outside Director's Deferral
Account.
f. "Deferral Account" means the bookkeeping account established by the
Company in respect of each Outside Director pursuant to Section 6.3 hereof and
to which shall be credited the Common Stock Equivalents into which deferred
portions of the annual fee and/or Additional Director Fees are converted, and to
which dividends are credited, and to which deferred cash payments, plus accrued
interest, of the Additional Director Fees are credited pursuant to the Plan.
g. "Effective Date" means the date on which this Plan is approved by the
stockholders of the Company.
h. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
i. "Fair Market Value" means as of any applicable date: (i) if the
Company's Stock is actively traded in the established over-the-counter market,
the mean between the bid and asked prices quoted in such over-the-counter market
at the close on the date nearest preceding the applicable date; (ii) if such
Stock is listed on any national exchange, or traded in the NASDAQ National
Market, the mean between the high and low sale prices quoted on such exchange or
market on the trading day nearest preceding the applicable date; or (iii) if the
Stock is not publicly traded, the value as determined from time to time by the
Board.
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<PAGE> 28
j. "Outside Director" means a member of the Board who is neither an
officer nor an employee of the Company, who was elected or appointed to the
Board in a manner prescribed in the Bylaws of the Company.
k. "Restricted Stock" means shares of Stock of the Company subject to
terms and conditions as imposed from time to time by the Committee or Board,
which shall include the following:
(i) Restricted Stock awards may not be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of except in accordance with
the terms of the Plan and each transfer agent for the Stock shall be
instructed to such effect.
(ii) At such time as the Outside Director ceases to serve on the
Board, or upon such earlier date as the Committee or Board shall determine,
the restrictions imposed by the Plan shall lapse.
l. "Stock" means the $0.05 par value common stock of the Company.
m. "Payment Date" means each of the dates each year on which the Company
pays the annual fee and Additional Director Fees to Outside Directors pursuant
to Section 5.
3. PLAN ADMINISTRATION.
3.1 The Board shall have full power and authority to administer,
interpret and construe the Plan, any forms and constructions thereof and any
action thereunder.
3.2 The Committee shall have the power and authority to administer the
Plan, including the power and authority to:
a. Impose such limitations, restrictions, and conditions as shall be
deemed appropriate;
b. Adopt, amend and rescind administrative guidelines and other rules
and regulations relating to the Plan, including the power to change the
dates by which deferral requests must be submitted to the Clerk and the
sole discretion as to whether deferral and distribution requests made under
the Plan are approved; and
c. Make all other determinations and take all other actions necessary
or advisable for the implementation and administration of the Plan.
3.3 Notwithstanding the foregoing, the Committee shall have no
authority, discretion or power to alter any terms or conditions specified in the
Plan, except in the sense of administering the Plan subject to the provisions of
the Plan.
4. STOCK SUBJECT TO THE PLAN.
4.1 Number of Shares. There shall be authorized for issuance under the
Plan, in accordance with the provisions of the Plan, 50,000 shares of Stock,
subject to the approval of the stockholders of the Company. This authorization
may be increased from time to time by approval of the Board, subject to the
approval of the stockholders of the Company. The Company shall at all times
during the term of the Plan retain as authorized and unissued Stock at least the
number of shares from time to time required under the provisions of the Plan.
The shares of Stock issuable hereunder shall be authorized and unissued shares
or previously issued and outstanding shares of Stock reacquired by the Company.
4.2 Other Shares of Stock. Any shares of Stock subject to a Common
Stock Equivalent which for any reason are not issued to an Outside Director
shall automatically become available again for use under the Plan.
4.3 Adjustments Upon Changes in Stock. If there shall be any change in
the Stock of the Company, through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, spin-off, split up, dividend in
kind or other change in the corporate structure, appropriate adjustments shall
be made by the Committee (or if the Company is not the surviving corporation in
any such transaction, the board of
A-2
<PAGE> 29
directors of the surviving corporation) in the aggregate number and kind of
shares subject to the Plan, and the number and kind of shares which may be
issued under the Plan. Appropriate adjustments may also be made by the Committee
in the terms of Common Stock Equivalents under the Plan to reflect such changes
and to modify any other terms on an equitable basis as the Committee in its
discretion determines.
5. PAYMENT OF FEES.
5.1 Payment of Annual Fees. Each Outside Director who serves as a
director shall be entitled to payment of an annual fee in such an amount as
determined by the Board from time to time. The entire annual fee shall be
distributed to the Outside Director as Restricted Stock or, if the Outside
Director elects to defer payment as set forth below, shall be credited to the
Outside Director's Deferral Account as Common Stock Equivalents.
5.2 Payment of Additional Director Fees. In addition to the annual
fee, Outside Directors may be entitled to additional fees for attendance at
Board or committee meetings and/or serving as chairman of a committee. Such
Additional Director Fees are in amounts to be set from time to time by the
Board. An Outside Director may choose to accept payment of these Additional
Director Fees in cash or Restricted Stock, and the Outside Director may also
elect to have such cash or Restricted Stock payments deferred as set forth in
Section 6.1 below. If the Outside Director fails to make an election regarding
the form of payment, the total amount of the Additional Director Fees shall be
paid in cash.
5.3 Payment Dates. All payments, distributions or credits of amounts
in connection with the Outside Director annual fee or Additional Director Fees
shall be made not less than semi-annually. If payments are made semi-annually,
the first payment, distribution or credit is to occur each year on the date of
the annual meeting of the stockholders of the Company and the second payment,
distribution or credit is to occur on the date which is six months after the
date of the annual meeting of the stockholders of the Company.
6. DEFERRAL ELECTIONS.
6.1 Deferral Elections for Outside Directors. An Outside Director may
elect, in writing, on or before the last day of the month preceding each annual
meeting of stockholders, on a form to be prescribed by the Clerk of the Company,
the following:
a. To defer the payment of all or any part of the Restricted Stock
payment constituting the Outside Director annual fee to be earned during
the period immediately following the annual meeting of stockholders and
ending on the date of the next succeeding annual meeting of stockholders.
The Outside Director shall specify on the election form the percentage
amount of the Restricted Stock payment constituting the annual fee to be
deferred. Amounts deferred by an Outside Director pursuant to this Section
6.1(a) shall be converted into Common Stock Equivalents in accordance with
Section 6.3.
b. To receive payment of all or a specified percentage of the
Additional Director Fees to be earned during the period immediately
following the annual meeting of stockholders and ending on the date of the
next succeeding annual meeting of stockholders, in Restricted Stock rather
than cash. The Outside Director shall specify on the election form the
percentage amount to be paid in cash and the percentage amount to be paid
in Restricted Stock.
c. To defer the payment of all or any portion of the Additional
Director Fees taken as a cash payment. The Outside Director shall specify
on the election form the percentage amount of the cash payment constituting
the Additional Director Fees to be deferred.
d. To defer the payment of all or any portion of the Additional
Director Fees taken as Restricted Stock payments pursuant to subsection (b)
of this Section. The Outside Director shall specify on the
A-3
<PAGE> 30
election form the percentage amount of the Restricted Stock payment
constituting the Additional Director Fees to be deferred. Amounts deferred
by an Outside Director pursuant to this Section 6.1(d) shall be converted
into Common Stock Equivalents in accordance with Section 6.3.
Once made, the election shall remain in effect until revoked by the
participating Outside Director. Such revocation shall become effective for
Outside Directors' fees earned for the period beginning immediately following
the annual meeting of stockholders next occurring after such revocation notice.
6.2 Deferral Elections for Outside Director Candidates. Any individual
who is a candidate for election to the Board as an Outside Director may make
elections, as listed in Section 6.1 above, regarding the payment of the annual
fee and Additional Director Fees to be earned during the period beginning with
the date of his or her election and ending on the date of the next succeeding
annual meeting of stockholders. The election shall be made in writing, on or
before the last day of the month preceding the annual meeting of stockholders
prior to his or her election, on a form to be prescribed by the Clerk of the
Company.
6.3 Establishment of Deferral Accounts. There shall be established for
each participating Outside Director an account which shall reflect the cash or
Restricted Stock amounts deferred by the participating Outside Director which
would otherwise have been paid to such Outside Director had no election to defer
been made. Fees deferred by an Outside Director shall be credited to such
Deferral Account as of each Payment Date or such other date that such amounts
would otherwise have been paid or distributed to the Outside Director.
Restricted Stock amounts that the Outside Director elects to defer shall be
converted to Common Stock Equivalents based on the Fair Market Value as of the
Payment Date. A statement will be sent to each participating Outside Director as
to the balance of his or her Deferral Account at least once each calendar year.
6.4 Term of Deferrals. A deferral request made pursuant to Section 6.1
and approved by the Company shall defer the payment with respect to which the
request was made until the participating Outside Director leaves the Board.
6.5 Deferral Elections -- First Year of the Plan. Elections to defer
payment of all or a portion of the Restricted Stock constituting the annual fee,
to have payment of all or any portion of the Additional Director Fees made in
the form of Restricted Stock, or to defer the cash or Restricted Stock payments
constituting Additional Director Fees shall be made by the Outside Director, in
writing, on a form to be prescribed by the Clerk of the Company, on or before
the 30th day following the Effective Date of this Plan.
7. DISTRIBUTION OF DEFERRED AMOUNTS.
7.1 Distribution of Accounts. As soon as practicable following
termination of service as an Outside Director, an Outside Director shall receive
a distribution of his or her Deferral Account. Distribution of all deferred
amounts shall be made in one lump sum. Distribution of deferred cash amounts
shall be made in cash and shall include interest earned pursuant to Section 7.4.
Distribution of the Restricted Stock amounts shall consist of one share of Stock
for each Common Stock Equivalent credited to such Outside Director's Deferral
Account as of the Payment Date immediately preceding the date of distribution,
plus any dividends credited to such account pursuant to Section 7.3.
7.2 Distribution to a Deceased Outside Director's Estate. In the event
of an Outside Director's death before the distribution of his or her Deferral
Account, payment of the Outside Director's Deferral Account shall then be made
to the beneficiary designated by the Outside Director pursuant to Section 8.1
or, in the absence of a designation of beneficiary pursuant to Section 8.1, to
his or her estate, in the time and manner selected by the Committee. If no
beneficiary is designated, then the Committee may take into account the
application of any duly appointed administrator or executor of an Outside
Director's estate and direct that the balance of the Outside Director's Deferral
Account be paid to his or her estate in the manner requested by such
application.
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7.3 Hypothetical Dividends on Common Stock Equivalents. Dividends and
other distributions on Common Stock Equivalents shall be deemed to have been
paid as if such Common Stock Equivalents were actual shares of Stock issued and
outstanding on the respective record or distribution dates. Common Stock
Equivalents shall be credited to the Outside Director's Deferral Account on the
basis of the value of the dividend or other distribution and the Fair Market
Value of the Common Stock Equivalents on the date of the announcement of the
dividend or distribution. Credits to an Outside Director's Deferral Account for
dividends or distributions shall be made on the same day as dividends or other
distributions are otherwise paid. Fractional shares shall be credited to an
Outside Director's Deferral Account cumulatively, but the balance of shares of
Common Stock Equivalents in an Outside Director's Deferral Account shall be
rounded to the next lower whole share for any distributions to such Outside
Director pursuant to this Section 7. The value of any fractional share shall be
paid to the Outside Director in cash.
7.4 Interest on Deferred Cash Payments. Interest shall be accrued and
credited on deferred cash amounts, to be compounded annually, until distribution
is made to the participating Outside Director under the Plan. The interest rate
shall be a flat rate of six percent (6%) per annum, or such other rate as
determined from time to time by the Board.
7.5 Emergency Payments. In the event of an "unforeseeable emergency"
as defined herein, the Committee may determine the amounts payable under Section
7 hereof and pay all or a part of such amounts in shares of Stock to the extent
the Committee determines that such action is necessary in light of immediate and
substantial needs of the Outside Director occasioned by severe financial
hardship. For the purposes of this Section, an "unforeseeable emergency" is a
severe financial hardship to the Outside Director resulting from a sudden and
unexpected illness or accident of the Outside Director or of a dependent (as
defined in Section 152(a) of the Code) of the Outside Director, loss of the
Outside Director's property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Outside Director. Payments shall not be made pursuant to this Section to the
extent that such hardship is or may be relieved: (i) through reimbursement or
compensation by insurance or otherwise, (ii) by liquidation of the Outside
Director's assets, to the extent the liquidation of such assets would not itself
cause severe financial hardship, or (iii) by cessation of the Outside Director's
deferrals under the Plan. Such action shall be taken only if an Outside Director
(or an Outside Director's legal representatives) signs an application describing
fully the circumstances which are deemed to justify the payment, together with
an estimate of the amounts necessary to prevent such hardship, which application
shall be approved by the Committee after making such inquiries as the Committee
deems necessary and appropriate.
8. DESIGNATION OF BENEFICIARY.
8.1 Designation. In the event of the death of a participating Outside
Director at a time when deferred amounts remain credited to the Outside
Director's Deferral Account, such amounts will be paid to the beneficiary
designated to receive such deferred amounts on a form to be supplied by and
filed with the Clerk of the Company, if such named beneficiary survives the
participating Outside Director. If no beneficiary designation has been filed
with the Clerk, or if the designated beneficiary does not survive the
participating Outside Director, such deferred amounts shall be distributed
pursuant to the terms of Section 7.2.
8.2 Incapacity of the Participating Outside Director or
Beneficiary. If the Company shall find that any person to whom any amount is
payable under this Plan has been judicially declared incompetent to carry on his
or her own affairs or is a minor, distribution or payment of amounts due
hereunder may be made to a duly appointed guardian or other legal representative
in accordance with the applicable provisions of this Plan. Any such distribution
or payment shall completely discharge any obligations or liabilities of the
Company under this Plan with respect to such distributions or payments.
9. RIGHT TO AMEND, ALTER OR REVOKE. The Company reserves the right to
amend, alter, modify or revoke in whole or in part this Plan at any time;
provided, however, that with respect to amounts as to which the
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<PAGE> 32
period of deferral has commenced at the time of the Company's exercise of its
rights under this Section 9, no exercise of such rights shall result in a
forfeiture of such deferred amounts, a change in the time of payment of amounts,
a change in terms and conditions under which forfeiture of such deferred amounts
may occur, or a change in the provisions of this agreement governing the
crediting of dividends on such deferred amounts, without the consent of the
participating Outside Director(s) affected by such exercise of rights, except as
otherwise provided in this Plan. However, the Company's right to increase the
authorized shares of Stock under the Plan, except as provided in Section 4.3, is
subject to the approval of the stockholders of the Company. Further, without the
prior approval of the Company's stockholders, Restricted Stock issued under the
Plan will not be repriced, replaced or regranted through cancellation or
otherwise.
10. GENERAL CREDITOR STATUS. Each Outside Director, and each other
recipient of an Outside Director's Deferral Account pursuant to Section 7, shall
be and remain an unsecured general creditor of the Company with respect to any
payments due and owing to such Outside Director hereunder. All payments to
persons entitled to benefits hereunder shall be made out of the general assets,
and shall be the sole obligations, of the Company. The Plan is a promise to pay
benefits in the future and it is the intention of the parties that it be
"unfunded" for tax purposes (and for purposes of Title I of the Employment
Retirement Income Security Act ("ERISA")).
11. GOVERNING LAW. This Plan shall be construed in accordance with and
governed by the laws of the Commonwealth of Massachusetts.
12. NO TRUST, LEGAL OR BENEFICIAL OWNERSHIP INTENDED. No trust agreement
is to be deemed created for the benefit of any participating Outside Director,
or the Outside Director's beneficiary, executors, administrators, heirs, assigns
or legal representatives, as a result of this Plan. Similarly, no legal or
beneficial interest in any of the Company's assets is intended to be conferred
by the terms of the Plan.
13. PROHIBITION OF ALIENATION. The right of the participating Outside
Director or the Outside Director's designated beneficiary or any other person to
the payment of amounts due under the Plan may not be assigned, transferred,
pledged or encumbered except as otherwise provided in this Plan.
14. BINDING EFFECT. The Plan, except as otherwise provided herein, shall
be binding upon and inure to the benefit of the Company, the Board, the
Committee, its successors and assigns and participating Outside Directors, their
designated beneficiary, heirs, executors, administrators and legal
representatives.
15. DISTRIBUTION UPON FINDING OF INCLUSION OF DEFERRED AMOUNTS IN GROSS
INCOME. If this Plan shall ever be determined to require the inclusion of all
or part of any participating Outside Director's deferred amounts in the Outside
Director's gross income for federal, state, or local income tax purposes prior
to the time such amount would be required to be distributed or paid under the
terms of this Plan, whether by taxing authorities of the United States or other
sovereign nations or political subdivisions thereof, then only those amounts
which would be treated as includable in gross income at such time will be paid
over to the participating Outside Director. All other deferred amounts will
continue to be subject to the terms of this Plan.
16. AGREEMENT. By requesting the Company to defer payment hereunder, an
Outside Director consents to the provisions of this Plan as they exist at the
time of such request and as they may be amended thereafter by the Board, subject
to the consent of the Outside Director when required pursuant to Section 9.
17. APPROVAL OF STOCKHOLDERS. The Plan shall be subject to approval by
the affirmative vote of stockholders holding at least a majority of the voting
stock of the Company voting in person or by proxy at or by June 30, 2000, and
the Plan shall take effect as of the date of adoption immediately upon such
approval.
A-6
<PAGE> 33
DETACH HERE
PROXY
HADCO CORPORATION
Proxy for Annual Meeting of Stockholders, March 2, 2000
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Horace H. Irvine II and Andrew E. Lietz, and each of
them, proxies, with full power of substitution to vote all shares of the stock
of the Corporation which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of Hadco Corporation to be held on Thursday, March 2,
2000 at 10:00 a.m. at 100 Federal Street, Boston, Massachusetts, and at any
adjournments thereof, upon matters set forth in the Notice of Annual Meeting of
Stockholders and Proxy Statement dated January 14, 2000, a copy of which has
been received by the undersigned. The proxies are further authorized to vote, in
their discretion, upon such other business as may properly come before the
meeting or any adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR FIXING THE NUMBER OF DIRECTORS AND THE
ELECTION OF DIRECTORS AND FOR THE PROPOSALS IN ITEMS 2 AND 3.
<TABLE>
<S> <C> <C>
- ---------------- ----------------
SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
- ---------------- ----------------
DETACH HERE
[x] Please mark votes as in this example.
(continued from other side) FOR AGAINST ABSTAIN
1. To fix the number of Directors 2. To approve the Hadco Corporation [ ] [ ] [ ]
at eight and to elect a Board of Outside Directors' Compensation
Directors for the ensuing year. Plan of 2000.
Nominees: (01) Horace H. Irvine 3. To ratify the election of Arthur [ ] [ ] [ ]
II, (02) Andrew E. Lietz, (03) Andersen LLP as auditors for the
Oliver O. Ward, (04) John F. fiscal year ending October 28, 2000.
Smith, (05) John E. Pomeroy,
(06) James C. Taylor, (07) Mauro
J. Walker and (08) Gilbert M.
Roddy, Jr.
FOR ALL NOMINEES [ ] [ ] WITHHELD FROM
ALL NOMINEES
[ ]_______________________________________________
For, except vote withheld from the above nominee(s)
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
If signing as attorney, executor, trustee or guardian, please
give your full title as such.
Signature: _______________________ Date: __________ Signature: ________________________ Date: ___________
</TABLE>
