<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
ENCORE WIRE 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:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
ENCORE WIRE CORPORATION
1410 MILLWOOD ROAD
MCKINNEY, TEXAS 75069
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 2000
NOTICE is hereby given that the annual meeting of stockholders of
Encore Wire Corporation (the "Company") will be held on May 8, 2000, at 9:00
a.m., local time, at the Company's offices, 1411-A Millwood Road., McKinney,
Texas, for the following purposes:
(1) To elect a Board of Directors for the ensuing year;
(2) To consider and vote upon a proposal to approve the
Company's 1999 Stock Option Plan;
(3) To ratify the appointment of Ernst & Young LLP as
auditors to audit the financial statements of the
Company for the fiscal year ending December 31,
2000; and
(4) To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 10,
2000, are entitled to notice of and to vote at the meeting or any adjournment
thereof.
A record of the Company's activities and consolidated financial
statements for the year ended December 31, 1999, are contained in the enclosed
1999 Annual Report.
Dated: March 26, 1999.
By Order of the Board of Directors
SCOTT D. WEAVER
Secretary
---------------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING
ENVELOPE. IF YOU DO ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY
AND VOTE IN PERSON. THE PROMPT RETURN OF PROXIES WILL INSURE A QUORUM AND SAVE
THE COMPANY THE EXPENSE OF FURTHER SOLICITATION.
<PAGE> 3
ENCORE WIRE CORPORATION
1410 MILLWOOD ROAD
MCKINNEY, TEXAS 75069
PROXY STATEMENT
For Annual Meeting of Stockholders
To be Held on May 8, 2000
GENERAL
The accompanying proxy is solicited by the Board of Directors of
Encore Wire Corporation (the "Company") for use at the annual meeting of
stockholders of the Company to be held at the time and place and for the
purposes set forth in the foregoing notice. The approximate date on which this
proxy statement and the accompanying proxy are first being sent to stockholders
is March 30, 2000.
The cost of soliciting proxies will be borne by the Company. The
Company has retained Corporate Investor Communications, Inc., a proxy
solicitation firm located in Carlstadt, New Jersey, to solicit proxies from
brokers, banks, nominees, institutional holders and individual holders for use
at the meeting at a fee not to exceed a total of $1,500, plus certain expenses.
In addition, the Company may use certain of its officers and employees (who
will receive no special compensation therefor) to solicit proxies in person or
by telephone, facsimile, telegraph or similar means.
PROXIES
Shares represented by a proxy in the accompanying form, duly signed,
dated and returned to the Company and not revoked, will be voted at the meeting
in accordance with the directions given. If no direction is given, such shares
will be voted for the election of the nominees for directors named in the
accompanying form of proxy and in favor of the other proposal set forth in the
notice. Any stockholder returning a proxy may revoke it at any time before it
has been exercised by giving written notice of such revocation to the Secretary
of the Company, by filing with the Company a proxy bearing a subsequent date or
by voting in person at the meeting.
VOTING PROCEDURES AND TABULATION
The Company will appoint one or more inspectors of election to act at
the meeting and to make a written report thereof. Prior to the meeting, the
inspectors will sign an oath to perform their duties in an impartial manner and
to the best of their abilities. The inspectors will ascertain the number of
shares outstanding and the voting power of each of such shares, determine the
shares represented at the meeting and the validity of proxies and ballots,
count all votes and ballots and perform certain other duties as required by
law.
The inspectors will tabulate the number of votes cast for or withheld
as to the vote on each nominee for director and the number of votes cast for,
against or withheld, as well as the number of abstentions and broker non-votes,
as to the approval of the 1999 Stock Option Plan and the appointment of
auditors. Under Delaware law and the Company's Certificate of Incorporation and
Bylaws, abstentions and broker non-votes will have no effect on the voting on
the election of directors, provided a quorum is present, because directors are
elected by a plurality of the shares of Common Stock present in person or by
proxy at the meeting and entitled to vote. An abstention with respect to the
proposals to approve the 1999 Stock Option Plan and the appointment of auditors
will effectively count as a vote against such proposals. A broker non-vote or
other limited proxy as to the proposals to approve the 1999 Stock Option Plan
and to approve the auditors will be counted towards a meeting quorum, but can
not be voted on such proposals and therefore will not be considered a part of
the voting power with respect to each such proposal. This has the effect of
reducing the number of shares required to be voted in favor of the proposals to
approve the 1999 Option Plan and the appointment of auditors in order to
approve them.
VOTING SECURITIES
The only voting security of the Company outstanding is its Common
Stock, par value $.01 per share. Only the holders of record of Common Stock at
the close of business on March 10, 2000, the record date for the meeting, are
entitled to notice of and to vote at the meeting. On the record date, there
were 15,227,122 shares of Common Stock outstanding and entitled to be voted at
the meeting. A majority of such shares, present in person or by proxy, is
<PAGE> 4
necessary to constitute a quorum. Each share of Common Stock is entitled to one
vote. Unless otherwise indicated, all share and per share data in this Proxy
Statement have been adjusted to give effect to a three for two stock split of
the Common Stock on August 18, 1997, and to a three for two stock split of the
Common Stock on June 15, 1998.
ELECTION OF DIRECTORS
The business and affairs of the Company are managed by the Board of
Directors, which exercises all corporate powers of the Company and establishes
broad corporate policies. The Bylaws of the Company provide for nine directors.
At the meeting, seven directors will be elected with two vacancies on the Board
to remain after the meeting. No stockholder approval or ratification is
required for the Board to fill either of the two vacancies.
Directors are elected by plurality vote, and cumulative voting is not
permitted. All duly submitted and unrevoked proxies will be voted for the
nominees for director selected by the Board of Directors, except where
authorization so to vote is withheld. If any nominee should become unavailable
for election for any presently unforeseen reason, the persons designated as
proxies will have full discretion to vote for another person designated by the
Board. Proxies cannot be voted for a greater number of persons than the number
of nominees for the office of director named herein. Directors are elected to
serve until the next annual meeting of stockholders and until their successors
have been elected and qualified.
The nominees of the Board for directors of the Company are named
below. Each of the nominees has consented to serve as a director if elected.
The table below sets forth certain information with respect to the nominees.
All the nominees are presently directors of the Company and, except for John H.
Wilson, have served continuously as directors since the date of their first
election to the Board. Mr. Wilson served as a director from April 1989 until
May 1993 and was re-elected to the Board in May 1994.
VINCENT A. REGO, age 76, Mr. Rego has been Chairman of the
director since 1989. Board of Directors of the Company
since 1989. In October 1996, he
assumed the duties of President and
Chief Executive Officer. Mr. Rego
served as President until May 1998
when Daniel L. Jones was elected
President of the Company. Mr. Rego
served as President, Chief
Executive Officer and Chairman of
the Board of Directors of Capital
Wire and Cable Corporation, a
manufacturer of electrical wire and
cable products, from 1978 until the
company was sold to The Penn
Central Corporation in 1988. Prior
thereto, Mr. Rego was associated
with predecessors of Capital Wire
in various executive capacities.
DONALD E. COURTNEY, age 69, Since 1994, Mr. Courtney has served
director since 1989 as President and Chairman of the
Board of Directors of Investech,
Ltd., which is a private importing
firm. Mr. Courtney served as
President and Chairman of the Board
of Directors of S.O.I. Industries,
Inc. from 1982 until 1994. During
that period, he was also Chairman
of the Board of Directors of two
subsidiaries of S.O.I. Industries,
Inc., Magnatech Corporation, which
is engaged in videotape
duplication, and Tempo Lighting,
Inc., which manufactures
residential lighting. Mr. Courtney
retired and resigned from these
positions in June 1994. Mr.
Courtney was re-elected to the
Board of Directors of Tempo
Lighting.
DANIEL L. JONES, age 36, Mr. Jones was Vice President --
director since May 1994 Sales and Marketing of Encore from
May 1992 to May 1997, and has
served as Executive Vice President
since May 1997. In October 1997,
Mr. Jones was also named Chief
Operating Officer, and, in May
1998, he was named President. From
1988 until joining the Company in
1989, he was employed as a sales
representative by Lone Star
Transportation Inc., a freight
brokerage firm. From 1985 to 1988,
while pursuing his education, Mr.
Jones attended college while
working on a part time basis for
Capital Wire and Cable Corporation.
JOHN P. PRINGLE, age 70, Mr. Pringle has been President of
director since 1990 Tekserco Inc., which owns and
operates pay telephones, since
1990. Prior thereto, Mr. Pringle
was employed in various capacities
by Capital Wire and Cable
Corporation, most recently as Vice
President- Engineering.
2
<PAGE> 5
WILLIAM R. THOMAS, age 71, Mr. Thomas has been President since
director since 1989 1980 and Chairman of the Board
since 1982 of Capital Southwest
Corporation, a publicly owned
venture capital investment firm.
Mr. Thomas was a director of
Capital Wire and Cable Corporation
in 1987 and 1988. Mr. Thomas is
also a director of Alamo Group,
Inc., which provides mowing
equipment for agricultural,
commercial and governmental users,
Palm Harbor Homes, Inc., a
manufactured housing company, and
Mail-Well, Inc, which is engaged in
printing and stationary
manufacturing.
JOHN H. WILSON, age 57, Mr. Wilson has been President of
director from 1989 U.S. Equity Corporation, a venture
until May 1993 and since capital firm, since 1983 and served
May 1994 as President of Whitehall
Corporation from May 1995 to July
1998. Mr. Wilson, who was a
director of Capital Wire and Cable
Corporation from 1985 to 1988, is
also a director of Capital
Southwest Corporation, Norwood
Promotional Products, Inc., which
manufactures and supplies custom
imprinted promotional materials,
and Palm Harbor Homes, Inc., a
manufactured housing company.
JOSEPH M. BRITO, age 77, Mr. Brito has been president of C.
director since October 1997. Brito Construction Company, a
utility contracting firm, and of
Brito Enterprises, Inc. for more
than ten years. Mr. Brito is also a
general partner of Metacom Realty,
a real estate development company,
and an officer of 1776 Liquors,
Ltd. of Bristol, a liquor retailer.
Mr. Brito also has served on the
regional advisory board of Fleet
National Bank, as regional vice
president of the National Utility
Contractors Association and
Administrative Vice President of
the Rhode Island Contractors
Association.
There are no family relationships between any of the nominees or
between any of the nominees and any executive officer of the Company. Mr.
Thomas and Mr. Wilson were originally elected to the Board of Directors of the
Company pursuant to the terms of a Purchase Agreement dated April 25, 1989
between the Company, Capital Southwest Venture Corporation and certain other
persons. Certain provisions of that agreement, including the provisions
pursuant to which Messrs. Thomas and Wilson were elected to the Board, were
terminated in connection with the initial public offering of the Company's
Common Stock in 1992.
ADDITIONAL INFORMATION REGARDING THE BOARD OF DIRECTORS
BOARD MEETINGS AND COMMITTEES
As permitted by the bylaws of the Company, the Board has designated
from its members a compensation committee and an audit committee. The Company
does not have a standing nominating committee of the Board or any other
committee that performs a similar function. During 1999, the Board of Directors
held five meetings. All directors attended at least 80% of such meetings held
during the period in which such director served. The current committees of the
Board, the composition and functions thereof and the number of meetings held in
1999 are set forth below.
Compensation Committee. In 1999, the members of the
compensation committee were Donald E. Courtney, William R. Thomas and
John H. Wilson. The committee met twice during 1999. The role of the
compensation committee is to review the performance of officers,
including those officers who are also members of the Board, and to set
their compensation. The committee also supervises and administers the
Company's employee stock option plans and all other compensation and
benefit policies, practices and plans of the Company.
Audit Committee. In 1999, the members of the audit committee
were Donald E. Courtney, William R. Thomas and John H. Wilson. During
1999, the audit committee met twice. The role of the committee is to
review, with the Company's auditors, the scope of the audit procedures
to be applied in the conduct of the annual audit as well as the
results of the annual audit.
3
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 10, 2000, the beneficial
ownership of Common Stock of the Company (the only equity securities of the
Company presently outstanding) by (i) each director and nominee for director of
the Company, (ii) each person who was known to the Company to be the beneficial
owner of more than five percent of the outstanding shares of Common Stock,
(iii) the named executive officers listed in the Summary Compensation Table
elsewhere in this proxy statement and (iv) all directors and executive officers
of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED (1)
------------------------------------
NUMBER PERCENT OF
NAME OF SHARES CLASS
- ---- ---------- ----------
<S> <C> <C>
Directors and Nominees for Director
Donald E. Courtney................................................. 132,705 .8%
Daniel L. Jones.................................................... 102,661 (2) .7%
John P. Pringle.................................................... 73,863 .5%
Vincent A. Rego.................................................... 1,463,005 (3) 9.4%
Joseph M. Brito.................................................... 35,050 (4) .2%
William R. Thomas.................................................. -- (5) --
John H. Wilson..................................................... -- (5) --
Named Executive Officers (excluding directors and
nominees named above)
Scott D. Weaver.................................................... 78,060 (6) .5%
David K. Smith..................................................... 78,476 (7) .5%
Jon R. Heiges...................................................... 29,143 (8) .2%
All directors and executive
officers as a group (10 persons) 4,709,063 (9) 30.0%
Beneficial Owners of 5% or More (excluding persons
named above)
Capital Southwest Corporation ..................................... 2,724,500 (10) 17.8%
Brookside Capital Partners Fund, L.P. ............................. 2,000,000 (11) 6.5%
</TABLE>
- ---------------------------
(1) Except as otherwise indicated, each stockholder named in the table has
sole voting and investment power with respect to all shares indicated
as being beneficially owned by such stockholder.
(2) Includes 73,238 shares of Common Stock subject to stock options that
are exercisable within 60 days, 6,750 shares of Common Stock owned by
Mr. Jones' spouse and 225 shares owned for the benefit of Mr. Jones'
minor son. Mr. Jones disclaims beneficial ownership of the shares
owned by his spouse.
(3) Includes 225,000 shares of Common Stock subject to stock options that
are immediately exercisable and 1,236,985 shares of Common Stock held
by Dorvin Partners, L.P., a family limited partnership. Dorvin
Partners, L.P. consists of a trust as its general partner and eight
separate family trusts for the benefit of Mr. Rego's two sons as its
limited partners. Mr. Rego serves as trustee for the general partner
trust and is a co-trustee of four of the limited partnership trusts.
Mr. Rego has sole power to vote or to direct the vote and the sole
power to dispose of or to direct the disposition of all 1,236,985
shares of common stock held by Dorvin Partners.
(4) Includes 17,500 shares held by the Brito Family Limited Partnership.
(5) William R. Thomas and John H. Wilson, directors of the Company, are
both directors of, and Mr. Thomas is President and Chairman of the
Board of, Capital Southwest Corporation. As indicated in the table,
Capital Southwest Corporation is a principal stockholder of the
Company. Mr. Thomas and Mr. Wilson may be deemed to share voting and
investment power with respect to the 2,724,500 shares of Common Stock
beneficially owned by Capital Southwest Corporation. Mr. Thomas and
Mr. Wilson each disclaim beneficial ownership of such shares.
4
<PAGE> 7
(6) Includes 13,950 shares of Common Stock subject to stock options that
are exercisable within 60 days.
(7) Includes 62,551 shares of Common Stock subject to stock options that
are exercisable within 60 days.
(8) Includes 22,500 shares of Common Stock subject to stock options that
are exercisable within 60 days.
(9) Includes an aggregate of 397,239 shares of Common Stock that directors
and executive officers have the right to acquire within 60 days
pursuant to the exercise of stock options and 2,724,500 shares
beneficially owned by Capital Southwest Corporation.
(10) Includes 1,849,500 shares held by Capital Southwest Venture
Corporation, a wholly-owned subsidiary of Capital Southwest
Corporation, as to which Mr. Thomas and Mr. Wilson may be deemed to
share voting and investment power as directors and, in the case of Mr.
Thomas, as an officer, of Capital Southwest Corporation.
(11) Beneficial ownership of such shares was reported in a Schedule 13G
dated December 24, 1998 filed with the SEC by Brookside Capital
Partners Fund, L.P. ("Brookside Capital") with respect to its
beneficial ownership of Common Stock. In its Schedule 13G, Brookside
Capital reports that it beneficially owns all of the shares with sole
voting and dispositive power.
The respective addresses of the holders of five percent or more of the
Common Stock of the Company are as follows: Capital Southwest Corporation,
12900 Preston Road, Dallas, Texas 75230; Brookside Capital Partners Fund, L.P.,
Two Copley Place, Boston, Massachusetts 02116; and Vincent A. Rego, 1410
Millwood Road, McKinney, Texas 75069.
EXECUTIVE COMPENSATION
The Compensation Committee Report appearing below and the information
presented herein under the caption "Executive Compensation -- Performance Graph"
shall not be deemed to be "soliciting material" or to be "filed" with the SEC or
subject to the SEC's proxy rules, except for the required disclosure herein, or
to the liabilities of Section 18 of the Securities Exchange Act of 1934 (the
"Exchange Act"), and such information shall not be deemed to be incorporated by
reference into any filing made by the Company under the Exchange Act or under
the Securities Act of 1933.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
To the Stockholders of
Encore Wire Corporation:
The Compensation Committee of the Board of Directors (the "Committee")
administers the compensation program for executive officers and other
management level employees of the Company and makes all related decisions. The
Committee also administers the Company's employee stock option plans and makes
all decisions regarding the granting of stock options to employees of the
Company under such plans.
The goals of the Company's compensation program are to attract, retain and
motivate competent executive officers who have the experience and ability to
contribute materially to the long-term success of the Company. The individual
judgments made by the Committee are subjective and are based largely on the
Committee's perception of each executive's contribution to both past
performance and the long-term growth potential of the Company. The principal
elements of compensation for executive officers are base salary, discretionary
bonus payments and stock options.
In view of the major decline in the Company's 1999 earnings and the depressed
state of the wire and cable industry, the committee determined in December 1999
that there would be no changes in the base salaries of executive officers and
certain key management employees during the year 2000 and that the Company
would establish no 1999 bonuses for executive officers and certain key
management employees.
5
<PAGE> 8
From time to time, the Committee granted stock options under the
Company's 1989 Stock Option Plan to executive officers and key employees to
align their long-term interests with those of the Company's stockholders. The
1989 Stock Option Plan expired in 1999, but on June 28, 1999, the Company's
Board of Directors adopted the 1999 Stock Option Plan, subject to stockholder
approval. Unexercised options covering 858,453 shares under the 1989 plan
remain outstanding and available for exercise. The 1999 Stock Option Plan
reserves 300,000 shares of Common Stock for issuance pursuant to non-qualified
and/or incentive stock options granted under the plan. Subject to stockholder
approval of the 1999 Stock Option Plan, the Committee granted to Daniel L.
Jones, the Company's President, an option to purchase 100,000 shares of Common
Stock. In addition, the Committee granted options to purchase 16,500 shares in
1999 to other employees. Stock options are granted at exercise prices not less
than the fair market value on the date of the grant and thus will have no value
unless the value of the Company's Common Stock appreciates. The Committee
believes that stock options provide a significant incentive for the option
holders to enhance the value of the Company's Common Stock by continually
improving the Company's performance.
COMPENSATION COMMITTEE
William R. Thomas, Chairman
Donald E. Courtney
John H. Wilson
6
<PAGE> 9
SUMMARY COMPENSATION
The following table sets forth summary information regarding the
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and the four other highest paid executive officers in 1999 for the
years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS
----------------------------------------------------------------------------
OTHER SECURITIES UNDERLYING
NAME AND ANNUAL OPTIONS/
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION SARS(#)
------------------ ---- -------- -------- ------------ ----------------------
<S> <C> <C> <C> <C> <C>
Vincent A. Rego 1999 $250,000 $ -- $13,939 --
Chairman and Chief 1998 250,000 350,000 13,057 --
Executive Officer 1997 250,000 500,000 14,310 --
Daniel L. Jones 1999 $200,000 $ -- 23,710 100,000
President and Chief 1998 156,250 75,000 21,116 --
Operating Officer 1997 99,000 100,000 18,711 18,000
David K. Smith 1999 $118,000 $ -- 4,506 --
Vice President - 1998 105,000 45,000 1,688 --
Operations 1997 99,000 80,000 1,522 6,750
Scott D. Weaver 1999 $118,000 $ -- 6,551 --
Vice President - 1998 105,000 50,000 6,088 --
Finance, 1997 99,000 80,000 5,392 24,750
Treasurer and Secretary
Jon R. Heiges 1999 $118,000 $ -- $19,908 --
National Sales 1998 115,000 30,000 19,908 --
Manager 1997 90,000 60,000 16,591 --
</TABLE>
- ---------------------
DEFINED BENEFIT PLANS AND OTHER ARRANGEMENTS
The Company has no defined benefit plans and has not entered into any
agreements or arrangements with respect to any of its executive officers.
7
<PAGE> 10
OPTION GRANTS
The following table sets forth summary information with respect to
options to purchase Common Stock granted during the year ended December 31,
1999 to each of the named executive officers.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
- ----------------------------------------------------------------------------------------------------------------
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term(1)
- ----------------------------------------------------------------------------------- -----------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees or Base
Granted in Fiscal Price Expiration
Name (#) (2) Year ($/Sh) Date 5%($)(3) 10% ($)(4)
- ------------------ ------------ ----------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Vincent A. Rego -- -- -- -- -- --
Daniel L. Jones 100,000 85.8% $6.50 12/16/09 $409,000 $1,036,000
David K. Smith -- -- -- -- -- --
Scott D. Weaver -- -- -- -- -- --
Jon R. Heiges -- -- -- -- -- --
</TABLE>
- ---------------------
(1) The values shown are based on the indicated assumed annual rates of
appreciation compounded annually. Actual gains realized, if any, on
stock option exercises and Common Stock holdings are dependent on the
future performance of the Common Stock and overall stock market
conditions. There can be no assurance that the values shown in this
table will be achieved.
(2) Shares become eligible for purchase at a rate of 20% per year starting
on the first anniversary of the grant.
(3) Represents an assumed market price per share of Common Stock of
$10.59.
(4) Represents an assumed market price per share of Common Stock of
$16.86.
8
<PAGE> 11
The following table summarizes the number and value of options
exercised during 1999, as well as the number and value of unexercised options,
as of December 31, 1999, held by each of the named executive officers.
AGGREGATED OPTION EXERCISES IN 1999 AND DECEMBER 31, 1999 OPTION VALUE
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($) (1)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- --------------- --------------- ------------------ --------------- --------------
<S> <C> <C> <C> <C>
Vincent A. Rego - - 225,000 shares/ $403,125/
0 shares 0
Daniel L. Jones - - 73,238 shares/ $353,225/
107,200 shares 112,500
David K. Smith - - 62,551 shares/ $324,466/
2,700 shares 0
Scott D. Weaver - - 13,950 shares/ $ 5,690/
9,900 shares 0
Jon R. Heiges - - 22,500 shares/ $ 77,738/
22,500 shares 77,738
</TABLE>
(1) The closing sales price per share on December 31, 1999 was $7.63 as
reported by the NASDAQ National Market System.
COMPENSATION OF DIRECTORS
Directors do not receive fees for attending meetings of the Board of
Directors. The Company does, however, reimburse directors for reasonable
travel, lodging and related expenses incurred in attending Board and committee
meetings.
9
<PAGE> 12
PERFORMANCE GRAPH
The following graph sets forth the cumulative total stockholder
return, which assumes reinvestment of dividends, of a $100 investment in the
Company's Common Stock, the Peer Group(1) and CRSP Total Return Index for The
Nasdaq Stock Market (U.S. companies).
The Company believes that the Peer Group accurately reflects the
Company's peers in the building wire and cable industry. Although the companies
included in the Peer Group were selected because of similar industry
characteristics, they are not entirely representative of the Company's
business.
COMPARISON OF QUARTERLY CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, PEER GROUP AND CRSP TOTAL RETURN INDEX
FOR THE NASDAQ STOCK MARKET (U.S.)
[GRAPH]
<TABLE>
<CAPTION>
Symbol CRSP Total Returns Index for: 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ------ ---------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Encore Wire Corporation 100.0 55.7 98.6 263.0 118.9 98.0
Nasdaq Stock Market (US Companies) 100.0 141.3 173.9 213.1 300.3 542.4
Self-Determined Peer Group(1) 100.0 150.0 194.1 240.5 209.6 145.5
</TABLE>
- -----------------------------
(1) Consists of the following companies, with each company being added to
the index on its first date of public trading, as indicated: Cable
Design Technologies Corporation (11/24/93), General Cable Corporation
(5/16/97), Belden Inc. (9/30/93) and Superior Telecom, Inc.
(10/11/96).
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<PAGE> 13
APPROVAL OF THE COMPANY'S
1999 STOCK OPTION PLAN
INTRODUCTION
On June 28, 1999, the Board of Directors adopted, subject to the
approval of the stockholders of the Company, the Encore Wire Corporation 1999
Stock Option Plan (the "Plan"). The Board believes that stock option plans
provide an important means of attracting, retaining and motivating key
personnel and recommends that stockholders approve the Plan. Because employee
directors of the Company are eligible to receive options under the Plan, each
employee director has a personal interest in the approval of the Plan.
SUMMARY OF THE PLAN
A copy of the Plan is attached to this Proxy Statement as Exhibit A.
The following summary of the Plan is qualified in its entirety by reference
thereto.
Purpose. The purpose of the Plan is to promote the interests of the
Company and its stockholders by attracting, retaining and stimulating the
performance of selected employees of the Company and its affiliates and giving
such employees the opportunity to acquire a proprietary interest in the Company
and an increased personal interest in its continued success and progress.
Administration. The Plan provides for administration by the
Compensation Committee or another committee of the Board (the "Committee"),
provided that each member of the Committee must be both a "non-employee
director" within the meaning of Rule 16b-3 under the Exchange Act and an
"outside director" within the meaning of Treasury Regulation Section
1.162-27(e)(3) interpreting Section 162(m) of the Internal Revenue Code of 1986
(the "Code"). Among the powers granted to the Committee are the authority to
interpret the Plan, establish rules and regulations for its operation, select
eligible persons to receive options under the Plan and determine the form and
amount and other terms and conditions of such options. Notwithstanding the
authority delegated to the Committee to grant options to employees under the
Plan, the Board also has full authority, subject to the express provisions of
the Plan, to grant options to employees, to interpret the Plan, to provide,
modify and rescind rules and regulations relating to it, to determine the terms
and provisions of options granted to employees under the Plan and the form of
option agreements evidencing options granted under the Plan and to make all
other determinations and perform such actions as the Board deems necessary or
advisable to administer the Plan; provided, however, that the Board may not
grant any Option to any officer (as defined in Rule 16B-3) of the Company or to
any employee who is also a member of the Board or to any "covered employee"
within the meaning of Section 162(m) of the Code, except upon, and strictly in
accordance with, a recommendation of the Committee regarding the number of
shares covered by, and the recipient, timing, exercise price and other terms
of, such Option.
Eligibility for Participation. All employees of the Company and its
subsidiaries, including employees who are also directors of the Company, are
eligible to be selected to participate in the Plan. The selection of employees
is within the discretion of the Committee. In making this selection, the
Committee and the Board may give consideration to the functions and
responsibilities of the participant, his or her past, present and potential
contributions to the growth and success of the Company and such other factors
deemed relevant by the Committee or the Board. No employee is entitled to
receive an option unless selected by the Committee. As of December 31, 1999,
the Company and its subsidiaries had a total of 424 employees.
Stock Options. The board may, in its discretion, designate any option
granted as an incentive stock option intended to qualify under Section 422 of
the Code. All options shall be subject to the terms, conditions, restrictions
and limitations of the Plan, except that the Committee or the Board may, in its
sole judgment, subject any option to such other terms, conditions, restrictions
and limitations as it deems appropriate, provided they are not inconsistent
with the terms of the Plan.
The Committee or the Board will, with regard to each stock option,
determine the number of shares subject to the option, the manner and time of
the option's exercise and the exercise price per share of Common Stock subject
to the option. In no event, however, may the exercise price of a stock option
be less than 100% of the fair market value of the Common Stock on the effective
date of the option's grant; provided, however, that the purchase price per
share of Common Stock under any incentive stock option granted to an optionee
who, at the time such incentive stock option is granted, owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or any Affiliate shall be at least 110% of the fair market value per
share of Common Stock at the date of grant. The term
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<PAGE> 14
of each option shall be as specified by the Committee or the Board, provided
that, unless otherwise designated by the Committee or the Board, no option
shall be exercisable later than ten years from the effective date of the
option's grant. Upon exercise of an option, the exercise price may be paid by a
participant in cash or, in the discretion of the Committee, by delivery to the
Company or its designated agent of an executed irrevocable option exercise form
together with irrevocable instructions to a broker-dealer to sell or margin a
sufficient portion of the shares with respect to which the option is exercised
and deliver the sale or margin loan proceeds directly to the Company to pay for
the exercise price and any required withholding taxes.
Available Shares. The maximum number of shares of Common Stock that
shall be available for grant of options under the Plan shall not exceed
300,000, subject to adjustment in accordance with the provisions of the Plan.
If any option expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject to such expired or terminated
option shall be available for purposes of the Plan. The maximum number of
shares of Common Stock for which options may be granted under the Plan to any
one employee during a calendar year is 100,000.
In the event the Company shall effect a split of the Common Stock or
dividend payable in Common Stock, or in the event the outstanding Common Stock
shall be combined into a smaller number of shares, the maximum number of shares
as to which options may be granted under the Plan and the maximum number of
shares as to which an option or options may be granted to any one optionee
during a calendar year shall be decreased or increased proportionately. In the
event that before delivery by the Company of all of the shares of Common Stock
in respect of which any option has been granted under the Plan, the Company
shall have effected such a split, dividend or combination, the shares still
subject to such option shall be increased or decreased proportionately and the
purchase price per shall be decreased or increased proportionately so that the
aggregate purchase price for all of the then optioned shares shall remain the
same as immediately prior to such split, dividend or combination.
In the event of a reclassification of Common Stock not covered by the
foregoing, or in the event of a liquidation or reorganization (including a
merger, consolidation, spinoff or sale of assets) of the Company or an
Affiliate, the Committee shall make such adjustments, if any, as it may deem
appropriate in the number, purchase price and kind of shares covered by the
unexercised portions of options theretofore granted under the Plan. These
adjustments shall only be applicable if, and only to the extent that, the
application thereof does not conflict with any valid governmental statute,
regulation or rule.
As of December 31, 1999, the closing sales price of the Common Stock
as reported on the Nasdaq National Market was $7.625 per share.
Amendment. The Board may alter or amend the Plan but may not, without
the approval of the stockholders of the Company, make any alteration or
amendment thereof which operates (i) to abolish the Committee, change the
qualifications of its members or withdraw the administration of the Plan from
its supervision, (ii) to increase the total number of shares of Common Stock
that may be granted under the Plan, (iii) to extend the term of the Plan or the
maximum exercise period, (iv) to decrease the minimum purchase price, or (v) to
materially modify the requirements as to eligibility for participation in the
Plan.
Effectiveness. The Plan will become effective, as of June 28, 1999,
the date of its adoption by the Board, when it has been duly approved by the
holders of the shares of Common Stock within twelve months after the date of
adoption of the Plan by the Board. Subject to the right of the Board to
terminate the Plan prior thereto, the Plan shall terminate at the expiration of
ten years from June 28, 1999.
United States Federal Income Tax Consequences. The following summary
is based upon an analysis of the Code, existing laws, judicial decisions,
administrative rulings, regulations and proposed regulations, all of which are
subject to change. Moreover, the following is only a summary of United States
federal income tax consequences and such consequences may be either more or
less favorable than those described below depending on an employee's particular
circumstances.
Incentive Options. No income will be recognized by an optionee for
federal income tax purposes upon the grant or exercise of an incentive option;
provided, however, that to the extent that an incentive option is exercised
more than three months (twelve months in the event of disability) from the date
of termination of employment for any reason other than death, such incentive
option will be taxed in the same manner described below for nonqualified
options (rather than in the manner described herein for an incentive option).
The basis of shares transferred to an optionee pursuant to the exercise of an
incentive option is the price paid for the shares. If the optionee holds the
shares for at least one year after transfer of the shares to the optionee and
two years after the grant of the incentive option, the optionee will recognize
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<PAGE> 15
capital gain or loss upon sale of the shares received upon the exercise equal
to the difference between the amount realized on the sale and the basis of the
stock. Generally, if the shares are not held for that period, the optionee will
recognize ordinary income upon disposition in an amount equal to the excess of
the fair market value of the shares on the date of exercise over the amount
paid for such shares, or if less (and if the disposition is a transaction in
which loss, if sustained, would be recognized), the gain on disposition. Any
additional gain or loss realized by the optionee upon such disposition will be
a capital gain or loss.
The excess of the fair market value of shares received upon the
exercise of an incentive option over the option price for the shares is an item
of adjustment for the optionee for purposes of the alternative minimum tax.
The Company is not entitled to a deduction upon the exercise of an
incentive option by an optionee. If the optionee disposes of the shares
received pursuant to such exercise prior to the expiration of one year
following transfer of the shares to the optionee or two years after grant of
the option, however, the Company may, subject to the deduction limitations
described below, deduct an amount equal to the ordinary income recognized by
the optionee upon disposition of the shares at the time such income is
recognized by the optionee.
If an optionee uses already owned shares of Common Stock to pay the
exercise price for shares under an incentive option, the resulting tax
consequences will depend upon whether the already owned shares of Common Stock
are "statutory option stock", and, if so, whether such statutory option stock
has been held by the optionee for the applicable holding period referred to in
Section 424(c)(3)(A) of the Code. In general, "statutory option stock" (as
defined in Section 424(c)(3)(B) of the Code) is any stock acquired through the
exercise of an incentive option, a qualified stock option, an option granted
pursuant to an employee stock purchase plan or restricted stock option, but not
stock acquired through the exercise of a nonstatutory option. If the stock is
statutory option stock with respect to which the applicable holding period has
been satisfied, no income will be recognized by the optionee upon the transfer
of such stock in payment of the exercise price of an incentive option. If the
stock is not statutory option stock, no income will be recognized by the
optionee upon the transfer of the stock unless the stock is not substantially
vested within the meaning of the regulations under Section 83 of the Code (in
which event it appears that the optionee will recognize ordinary income upon
the transfer equal to the amount by which the fair market value of the
transferred shares exceeds their basis). If the stock used to pay the exercise
price of an incentive option is statutory option stock with respect to which
the applicable holding period has not been satisfied, the transfer of such
stock will be a disqualifying disposition described in Section 421(b) of the
Code which will result in the recognition of ordinary income by the optionee in
an amount equal to the excess of the fair market value of the statutory option
stock at the time the incentive option covering such stock was exercised over
the amount paid for such stock. Under the present provisions of the Code, it is
not clear whether all shares received upon the exercise of an incentive option
with already-owned shares will be statutory option stock or how the optionee's
basis will be allocated among such shares.
Nonqualified Options. No income will be recognized by an optionee for
federal income tax purposes upon the grant of a nonqualified option. Upon
exercise of a nonqualified option, the optionee will recognize ordinary income
in an amount equal to the excess of the fair market value of the shares on the
date of exercise over the amount paid for such shares. Income recognized upon
the exercise of nonqualified options will be considered compensation subject to
withholding at the time the income is recognized, and, therefore, the Company
must make the necessary arrangements with the optionee to ensure that the
amount of the tax required to be withheld is available for payment.
nonqualified options are designed to provide the Company with a deduction equal
to the amount of ordinary income recognized by the optionee at the time of such
recognition by the optionee, subject to the deduction limitations described
below.
The basis of shares transferred to an optionee pursuant to exercise of
a nonqualified option is the price paid for such shares plus an amount equal to
any income recognized by the optionee as a result of the exercise of the
option. If an optionee thereafter sells shares acquired upon exercise of a
nonqualified option, any amount realized over the basis of the shares will
constitute capital gain to the optionee for federal income tax purposes.
If an optionee uses already owned shares of Common Stock to pay the
exercise price for shares under a nonqualified option, the number of shares
received pursuant to the nonqualified option which is equal to the number of
shares delivered in payment of the exercise price will be considered received
in a nontaxable exchange, and the fair market value of the remaining shares
received by the optionee upon the exercise will be taxable to the optionee as
ordinary income. If the already owned shares of Common Stock are not "statutory
option stock" or are statutory option stock with respect to which the
applicable holding period referred to in Section 424(c)(3)(A) of the Code has
been satisfied, the shares received pursuant to the exercise of the
nonqualified option will not be statutory option stock and the optionee's basis
in the number of shares received in exchange for the stock delivered in payment
of the exercise price will be equal to the basis of the shares delivered in
payment. The basis of the remaining shares received upon the exercise will be
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<PAGE> 16
equal to the fair market value of the shares. However, if the already owned
shares of Common Stock are statutory option stock with respect to which the
applicable holding period has not been satisfied, it is not presently clear
whether the exercise will be considered a disqualifying disposition of the
statutory option stock, whether the shares received upon such exercise will be
statutory option stock, or how the optionee's basis will be allocated among the
shares received.
The Plan is not subject to the Employee Retirement Income Security Act
of 1974, as amended.
REQUIRED AFFIRMATIVE VOTE
Provided a quorum is present, the affirmative vote of the holders of
at least a majority of the shares of Common Stock of the Company present or
represented and voting at the meeting shall be required to approve the Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE
THE PLAN. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF
THE PROPOSAL UNLESS SHAREHOLDERS SPECIFY OTHERWISE.
AUDITORS
Based on the recommendation of the Audit Committee of the Board of
Directors of the Company, Ernst & Young LLP, which has served as the Company's
independent public accountants since the Company's inception, has been
appointed by the Board of Directors to audit the financial statements of the
Company for the year ending December 31, 2000, subject to the ratification of
such appointment by the stockholders of the Company. Although it is not
required to do so, the Board of Directors is submitting the selection of
auditors for ratification in order to obtain the stockholders' approval of this
appointment. If the selection is not ratified, the Board of Directors will
reconsider the appointment. Representatives of Ernst & Young LLP are expected
to be present at the meeting to respond to appropriate questions from the
stockholders and will be given the opportunity to make a statement should they
desire to do so.
STOCKHOLDER PROPOSALS AND OTHER MATTERS
It is contemplated that the 2001 Annual Meeting of Stockholders of the
Company will take place during the first week of May 2001. Stockholder
proposals for inclusion in the Company's proxy materials for the 2001 Annual
Meeting of Stockholders must be received by the Company at its offices in
McKinney, Texas, addressed to the Secretary of the Company, not less than 120
days in advance of the date (month and day only) this Proxy Statement is first
distributed to stockholders; provided, that if the 2001 Annual Meeting of
Stockholders is changed by more than 30 days from the presently contemplated
date, proposals must be so received a reasonable time in advance of the
meeting.
The Board of Directors does not intend to present any other matters at
the meeting and knows of no other matters that will be presented; however, if
any other matter properly comes before the meeting, the persons named in the
enclosed proxy intend to vote thereon according to their best judgment.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires directors and officers of
the Company, and persons who own more than 10 percent of the Common Stock, to
file with the SEC initial reports of ownership and reports of changes in
ownership of the Common Stock. Directors, officers and more than 10 percent
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1999, all of its
directors, officers and more than 10 percent beneficial owners complied with
all applicable Section 16(a) filing requirements.
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ANNUAL REPORT
The Company has provided without charge to each person whose proxy is
solicited hereby a copy of the 1999 Annual Report of the Company, which
includes the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (including the consolidated financial statements) filed with
the SEC. Additional copies of the Annual Report may be obtained without charge
upon written request to the Company, Encore Wire Corporation, 1410 Millwood
Road, McKinney, Texas, 75069, Attention: Corporate Secretary.
By Order of the Board of Directors
Scott D. Weaver,
Vice President - Finance, Treasurer and Secretary
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EXHIBIT A
ENCORE WIRE CORPORATION
1999 STOCK OPTION PLAN
Section 1. Purpose. It is the purpose of the Plan to promote the
interests of the Company and its stockholders by attracting, retaining and
stimulating the performance of selected Employees of the Company and its
Affiliates and giving such Employees the opportunity to acquire a proprietary
interest in the Company and an increased personal interest in its continued
success and progress.
Section 2. Definitions. As used herein the following terms have the
following meanings:
(a) "Affiliate" means any parent or subsidiary corporation of
the Company within the meaning of Section 424(e) and (f) of the Code.
(A corporation includes any business entity that elects to be
classified as an association for federal tax purposes or that otherwise
is a corporation for federal tax purposes.)
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Compensation Committee of the Board,
each member of which shall be a disinterested person within the meaning
of Rule 16B-3 under the Securities Exchange Act of 1934, as amended,
and an "outside director' within the meaning of Treasury Regulation
Section 1.162-27(e)(3) interpreting Section 162(m) of the Code.
(e) "Common Stock" means the $.01 par value Common Stock of
the Company.
(f) "Company" means Encore Wire Corporation, a Delaware
corporation.
(g) "Employee" means any regular salaried officer or employee
of the Company or an Affiliate, including such officers or employees
who are also members of the Board.
(h) "Fair Market Value" means the closing sales price of the
Common Stock on the date in question (or if there is no reported sale
on such date, then on the last preceding date on which a report of sale
occurred) as reported on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or on any national securities
exchange on which the Common Stock is then traded; or if the Common
Stock is not listed or admitted to trading on any such exchange and is
not listed as a national market security on NASDAQ, but is quoted on
NASDAQ (or any similar system), "Fair Market Value" shall mean the
average of the closing high bid and low ask prices of the Common Stock
on such system on the date in question.
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(i) "Options" means any option to purchase shares of Common
Stock granted pursuant to the provisions of the Plan.
(j) "Optionee" means an Employee who has been granted an
Option under the Plan.
(k) "Plan" means this Encore Wire Corporation 1999 Stock
Option Plan.
Section 3. Number of Shares. Options may be granted by the Company from
time to time under the Plan to purchase an aggregate of 300,000 shares of the
authorized Common Stock. If any Option expires or terminates for any reason
without having been exercised in full, the unpurchased shares subject to such
expired or terminated Option shall be available for purposes of the Plan. The
maximum number of shares of Common Stock for which options may be granted under
the Plan to any one Employee during a calendar year is 100,000.
Section 4. Administration of the Plan.
(a) The Plan shall be administered by the Committee. Each
member of the Committee shall be appointed by the Board. The Board
shall have the sole continuing authority to appoint members of the
Committee, both in substitution for members previously appointed and to
fill vacancies.
(b) The Committee shall have full authority subject to the
express provisions of the Plan to interpret the Plan, to provide,
modify and rescind rules and regulations relating to it, to determine
the terms and provisions of each Option and the form of each option
agreement evidencing an Option granted under the Plan, including the
authority to place restrictions on the shares of Common Stock to be
purchased pursuant to an Option, and to make all other determinations
and perform such actions as the Committee deems necessary or advisable
to administer the Plan. In addition, the Committee shall have full
authority, subject to the express provisions of the Plan, to determine
the Employees to whom Options shall be granted, the time or date of
grant of each such Option, the number of shares subject thereto, and
the price at which such shares may be purchased. In making such
determinations, the Committee may take into account the nature of the
services rendered by the Employee, his present and potential
contributions to the success of the Company's business and such other
facts as the Committee in its discretion shall deem appropriate to
carry out the purposes of the Plan.
(c) Notwithstanding the authority hereby delegated to the
Committee to grant Options to Employees under the Plan, the Board also
shall have full authority, subject to the express provisions of the
Plan, to grant options to Employees under the Plan, to interpret the
Plan, to provide, modify and rescind rules and regulations relating to
it, to determine the terms and provisions of Options granted to
Employees under the Plan and the form of option agreements evidencing
Options granted under the Plan and to make all other determinations
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<PAGE> 20
and perform such actions as the Board deems necessary or advisable to
administer the Plan; provided, however, that the Board shall not grant
any Option to any officer (as defined in Rule 16B-3) of the Company or
to any Employee who is also a member of the Board or to any "covered
employee" within the meaning of Section 162(m) of the Code, except
upon, and strictly in accordance with, a recommendation of the
Committee regarding the number of shares covered by, and the recipient,
timing, exercise price and other terms of, such Option.
(d) No member of the Committee shall be eligible to receive an
Option.
Section 5. Grant of Options. At any time and from time to time during
the duration of the Plan and subject to the express provisions thereof, Options
may be granted by the Committee to any Employee for such number of shares of
Common Stock as the Committee in its discretion shall deem to be in the best
interest of the Company and which will serve to further the purposes of the
Plan. The Committee, in its discretion, may designate any Option so granted as
an incentive stock option intended to qualify under Section 422 of the Code. To
the extent that the aggregate Fair Market Value (determined at the time the
respective Incentive Stock Option is granted) of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by an
individual during any calendar year under all incentive stock option plans of
the Company and its Affiliates exceeds $100,000, such excess Incentive Stock
Options shall be treated as options which do not constitute Incentive Stock
Options. The Committee shall determine, in accordance with applicable provisions
of the Code, which of an optionee's Incentive Stock Options will not constitute
Incentive Stock Options because of such limitation and shall notify the optionee
of such determination as soon as practicable after such determination.
Section 6. Option Price. The purchase price per share of Common Stock
under each Option shall be determined by the Committee but in no event shall be
less than 100% of the Fair Market Value per share of Common Stock at the time
the Option is granted; provided, however, that the purchase price per share of
Common Stock under any incentive stock option granted to an Optionee who, at the
time such incentive stock option is granted, owns stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company or any
Affiliate shall be at least 110% of the Fair Market Value per share of Common
Stock at the date of grant. Upon exercise of an Option, the purchase price shall
be paid in full in cash, or if to the extent provided for under the option
agreement for such Option, in cash and or by delivery of shares of Common Stock
already owned by the Optionee having an aggregate Fair Market Value equal to the
purchase price. The proceeds of such sale shall constitute general funds of the
Company. Upon exercise of an Option, the Optionee will be required to pay to the
Company the amount of any federal, state or local taxes required by law to be
withheld in connection with such exercise.
Section 7. Option Period and Terms of Exercise of Options. Except as
otherwise provided for herein, each Option granted under the Plan shall be
exercisable during such period commencing on or after the expiration of one year
from the date of the grant of such Option as the Committee shall determine;
provided that the otherwise unexpired portion of any Option shall expire and
become null and void no later than upon the first to occur of (i) the expiration
of ten years from
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<PAGE> 21
the date such Option was granted, (ii) the expiration of three months from the
date of the termination of the Optionee's employment with the Company or an
Affiliate for any reason other than death or disability, or (ii) the expiration
of one year from the date of the termination of the Optionee's employment with
the Company or an Affiliate by reason of death or disability. Anything herein to
the contrary notwithstanding the otherwise unexpired portion of any Option
granted hereunder shall expire and become null and void immediately upon
Optionee's termination of employment with the Company or an Affiliate by reason
of such Optionee's fraud, dishonesty or performance of other acts detrimental to
the Company or an Affiliate. Any incentive stock option granted to an Optionee
who, at the time such incentive stock option is granted, owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company or any Affiliate shall not be exercisable after the expiration of five
years from the date of its grant. Under the provisions of any option agreement
evidencing an Option, the Committee may limit the number of shares purchasable
thereunder in any period or periods of time during which the Option is
exercisable and may impose such other terms and conditions upon the exercise of
an Option as are not inconsistent with the terms of this Plan; provided,
however, that the Committee, in its discretion, may accelerate the exercise date
of any Option to any date following the date of grant.
Section 8. Nontransferability of Options. An Option granted under the
Plan shall be transferable by the Optionee only by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the
Optionee only by the Optionee.
Section 9. Termination of Employment. Transfers of employment between
the Company and any of its Affiliates shall not be considered to be a
termination of employment for the purposes of this Plan. Nothing in the Plan or
in any option agreement evidencing an Option granted under the Plan shall confer
upon any Optionee any right to continue in the employ of the Company or any
Affiliate or in any way interfere with the right of the Company or any Affiliate
to terminate the employment of the Optionee at any time, with or without cause.
Section 10. Adjustments Upon Changes in Common Stock. In the event the
Company shall effect a split of the Common Stock or dividend payable in Common
Stock, or in the event the outstanding Common Stock shall be combined into a
smaller number of shares, the maximum number of shares as to which Options may
be granted under the Plan and the maximum number of shares as to which an Option
or Options may be granted to any one Optionee during a calendar year shall be
decreased or increased proportionately. In the event that before delivery by the
Company of all of the shares of Common Stock in respect of which any Option has
been granted under the Plan, the Company shall have effected such a split,
dividend or combination, the shares still subject to such Option shall be
increased or decreased proportionately and the purchase price per shall be
decreased or increased proportionately so that the aggregate purchase price for
all of the then optioned shares shall remain the same as immediately prior to
such split, dividend or combination.
In the event of a reclassification of Common Stock not covered by the
foregoing, or in the event of a liquidation or reorganization (including a
merger, consolidation, spinoff or sale of assets) of the Company or an
Affiliate, the Committee shall make such adjustments, if any, as it may deem
appropriate in the number, purchase price and kind of shares covered by the
unexercised portions of
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Options theretofore granted under the Plan. The provisions of this Section shall
only be applicable if, and only to the extent that, the application thereof does
not conflict with any valid governmental statute, regulation or rule.
Section 11. Amendment and Termination of the Plan. Subject to the right
of the Board to terminate the plan prior thereto, the Plan shall terminate at
the expiration of ten years from June 28, 1999, the date of adoption of the Plan
by the Board. No Options may be granted after termination of the Plan. The Board
may alter or amend the plan but may not without the approval of the stockholders
of the Company make any alteration or amendment thereof which operates (i) to
abolish the Committee, change the qualifications of its members or withdraw the
administration of the Plan from its supervision, (ii) to increase the total
number of shares of Common Stock which may be granted under the Plan (other than
as provided in Section 10 hereof), (iii) to extend the term of the Plan or the
maximum exercise period provided in Section 7 hereof, (iv) to decrease the
minimum purchase price provided in Section 6 hereof (other than as provided in
Section 10 hereof), or (v) to materially modify the requirements as to
eligibility for participation in the Plan.
No termination or amendment of the Plan shall adversely affect the
rights of an Optionee under an Option, except with the consent of such Optionee.
Section 12. Requirements of Law. The granting of Options and the
issuance of Common Stock upon the exercise of an Option shall be subject to all
applicable laws, rules and regulations and to such approval by governmental
agencies as may be required.
Section 13. Effective Date of the Plan. The Plan shall become
effective, as of the date of its adoption by the Board, when it has been duly
approved by the unanimous written consent of the holders of the shares of Common
Stock in accordance with applicable law within twelve months after the date of
adoption of the Plan by the Board. If the Plan is not so approved, the Plan
shall terminate and any Option granted hereunder shall be null and void.
Section 14. Gender. Words of any gender used in the Plan shall be
construed to include any other gender, unless the context requires otherwise.
5
<PAGE> 23
<TABLE>
<S> <C> <C> <C>
ENCORE WIRE CORPORATION ANNUAL MEETING Continued from other side
MAY 8, 2000
The undersigned hereby appoints VINCENT A. REGO and DANIEL L. JONES, and each of them, as the undersigned's
P attorneys and proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to
vote, as directed below, all the shares of common stock of ENCORE WIRE CORPORATION (the "Company") held of record by
R the undersigned on March 10, 2000, at the annual meeting of stockholders to be held on May 8, 2000 or any adjournment
thereof.
O
X Please mark boxes [X] in blue or black ink.
Y 1. ELECTION OF DIRECTORS: [ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME
BELOW.)
Joseph M. Brito Daniel L. Jones Vincent A. Rego John H. Wilson
Donald E. Courtney John P. Pringle William R. Thomas
2. PROPOSAL TO APPROVE THE COMPANY'S 1999 STOCK OPTION PLAN:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. The above-named attorney and proxy (or his substitute) is authorized to vote in his discretion upon such
other business as may properly come before the meeting or any adjournment thereof.
THIS PROXY SOLICITED BY THE BOARD OF DIRECTORS
-----------------------------------------------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 24
<TABLE>
<S> <C> <C>
ENCORE WIRE CORPORATION ANNUAL MEETING
MAY 8, 2000
This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction
is made, this proxy will be voted FOR management's nominees for election as directors and FOR each of the other proposals
set forth above.
Date: , 2000
-----------------------------------------
------------------------------------------------------
Signature
------------------------------------------------------
Signature if held jointly
Please sign exactly as name appears hereon. When shares are
held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign
in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.
</TABLE>
