<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 to Section 240.14a-11(c) or
Section 240.14a-12
THE DII GROUP, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than 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)(2) and 0-11
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate Number of securities to which transaction applies: N/A
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): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
/ / 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: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
<PAGE> 2
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1998
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of The DII Group, Inc. (the "Company")
will be held at 10:30 A.M. (local time) on Tuesday, May 5, 1998 at the Executive
Offices of the Company, 6273 Monarch Park Place, Suite 200, Niwot, Colorado, for
the following purposes:
1. To elect six directors to hold office until the next Annual
Meeting and until their successors are duly elected and qualified;
2. To consider and act upon a proposal to approve an Amendment
to the Restated Certificate of Incorporation of the Company to increase
the number of shares of common stock that the Company shall have authority
to issue from 45,000,000 shares to 90,000,000 shares;
3. To consider and act upon a proposal to ratify the
appointment of Deloitte & Touche LLP as the Company's independent auditors
for the fiscal year ending December 27, 1998; and
4. To transact such other business as may properly come before
the Annual Meeting or at any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 20, 1998
as the record date for the determination of the stockholders entitled to notice
of and to vote at the Annual Meeting of Stockholders and at any adjournments or
postponements thereof.
By Order of the Board of Directors,
/s/ Carl R. Vertuca, Jr.
Carl R. Vertuca, Jr.
Executive Vice President - Finance,
Administration and Corporate Development
and Secretary
Niwot, Colorado
April 7, 1998
YOUR VOTE IS IMPORTANT
IF YOU DO NOT EXPECT TO ATTEND THE ANNUAL MEETING, OR IF YOU DO PLAN TO ATTEND
BUT WISH TO VOTE BY PROXY, PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE> 3
THE DII GROUP, INC.
-----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1998
GENERAL
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of The DII Group, Inc., a Delaware
corporation (the "Company"), of proxies for use at the Annual Meeting of
Stockholders to be held on May 5, 1998, commencing at 10:30 A.M. (local time),
at the Executive Offices of the Company, 6273 Monarch Park Place, Suite 200,
Niwot, Colorado, and at any adjournments or postponements thereof. The matters
to be considered and acted upon at the meeting are described below in this Proxy
Statement.
The principal executive offices of the Company are located at 6273 Monarch
Park Place, Suite 200, Niwot, Colorado 80503. The approximate mailing date of
this Proxy Statement and the accompanying proxy is April 7, 1998.
VOTING RIGHTS AND VOTES REQUIRED
Only stockholders of record at the close of business on March 20, 1998
will be entitled to notice of and to vote at the Annual Meeting. All information
in this Proxy Statement has been adjusted to reflect the two-for-one stock split
in the form of a stock dividend effected on September 2, 1997. As of the record
date, the Company had outstanding 25,508,446 shares of common stock. Each
stockholder is entitled to one vote for each share of common stock held. The
holders of a majority of the outstanding shares will constitute a quorum for the
transaction of business at the meeting. Shares of common stock present in person
or represented by proxy (including shares which abstain or do not vote with
respect to one or more of the matters presented for stockholder approval) will
be counted for purposes of determining whether a quorum exists at the meeting.
The affirmative vote of the holders of a plurality of the shares of common
stock present or represented at the meeting is required for the election of
directors. The affirmative vote of the holders of a majority of the shares of
common stock entitled to vote at the meeting is required for the approval of the
Amendment to the Company's Restated Certificate of Incorporation, and the
affirmative vote of the holders of a majority of the shares of common stock
present or represented at the meeting and entitled to vote is required for the
ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the current fiscal year. Abstentions will be treated as
shares that are present and entitled to vote for purposes of determining the
number of shares present and entitled to vote with respect to any particular
matter, but will not be counted as a vote in favor of such matter. Accordingly,
an abstention from voting on a matter will have the same legal effect as a vote
against the matter. If a broker or nominee holding stock in "street name"
indicates on the proxy that it does not have discretionary authority to vote as
to a particular matter, those shares will not be considered as present and
entitled to vote with respect to such matter.
The accompanying proxy may be revoked at any time before it is exercised
by giving a later proxy, notifying the Secretary of the Company in writing, or
voting in person at the meeting.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Company's common stock as of February 28, 1998
(except as otherwise noted) by (i) each person known by the Company to be the
beneficial owner of five percent or more of the outstanding shares of common
stock, (ii) each director of the Company, (iii) each executive officer of the
Company named in the Summary Compensation Table under the heading "Executive
Compensation" below, and (iv) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------ ----------------------- --------
<S> <C> <C>
FMR Corp. 2,064,100(2) 8.1
Goldman, Sachs & Co. 2,720,000(3) 10.7
Ingalls & Snyder LLC 1,314,164(4) 5.2
Ronald R. Budacz 526,273(5) 2.0
Robert L. Brueck 5,600 *
Constantine S. Macricostas 185,990(6) *
Carl R. Vertuca, Jr 242,378(7) *
Gerard T. Wrixon, Phd 8,200 *
Alexander W. Young 7,000 *
Dermott O'Flanagan 122,957(8) *
Ronald R. Snyder 152,765(9) *
All directors and executive officers
as a group (13 persons) 1,618,094(6)(10) 10.7
</TABLE>
- ------------
*Less than one percent.
(1) Each individual or entity has sole voting and investment power, except as
otherwise indicated.
(2) Based upon information as of December 31, 1997 set forth in a Schedule 13G
filing dated February 14, 1998. According to its filing, FMR Corp. has sole
voting power with respect to 61,600 shares and sole investment power with
respect to 2,064,100 shares. Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR Corp., beneficially owns
2,002,500 shares (7.9%), which are included in the figure set forth for FMR
Corp. The Schedule 13G was filed jointly by FMR Corp., Edward C. Johnson
3d, Chairman of FMR Corp., and Abigail P. Johnson, Director of FMR Corp.
The business address of each of FMR Corp., Fidelity, Edward C. Johnson 3d
and Abigail P. Johnson is 82 Devonshire Street, Boston, Massachusetts
02109.
(3) Based upon information as of November 10, 1997 set forth in a Schedule 13G
filing dated November 10, 1997. According to its filing, Goldman, Sachs &
Co. has shared voting and investment power with respect to such shares. The
Schedule 13G was filed jointly by Goldman, Sachs & Co. and The Goldman
Sachs Group, L.P. Their business address is 85 Broad Street, New York, New
York 10004.
(4) Based upon information as of December 31, 1997 set forth in a Schedule 13G
filing dated February 9, 1998. According to its filing, Ingalls & Snyder
LLC has sole voting power with respect to 214,084 shares and sole
investment power with respect to 1,314,164 shares. The business address of
Ingalls & Snyder LLC is 61 Broadway, New York, New York 10006.
(5) Includes 357,707 shares which are subject to options presently exercisable
or exercisable within 60 days.
(6) Includes 150,000 shares owned by Photronics, Inc., of which Mr. Macricostas
is Chairman of the Board, as to which shares Mr. Macricostas disclaims
beneficial ownership.
(7) Includes 178,666 shares which are subject to options presently exercisable
or exercisable within 60 days.
(8) Includes 71,610 shares which are subject to options presently exercisable
or exercisable within 60 days.
(9) Includes 91,354 shares which are subject to options presently exercisable
or exercisable within 60 days and 12,500 performance shares which will vest
within 60 days.
(10) Includes 849,994 shares which are subject to options presently exercisable
or exercisable within 60 days and 12,500 performance shares which will vest
within 60 days.
-2-
<PAGE> 5
1. ELECTION OF DIRECTORS
At the Annual Meeting, six directors are to be elected, each to hold
office until the next annual meeting of stockholders and until his respective
successor has been duly elected and qualified. If no direction is given to the
contrary, all proxies received by the Board of Directors will be voted "FOR" the
election as directors of each of the following nominees. In the event that any
nominee declines or is unable to serve, the proxy solicited herewith may be
voted for the election of another person in his stead at the discretion of the
proxies. The Board of Directors has no reason to believe that any of the
nominees will not be available to serve. Set forth below is certain information
concerning each nominee. Each nominee is currently a director of the Company.
Effective February 1, 1998, Mr. Gary P. Kennedy resigned from his position as a
director of the Company.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION OR DIRECTOR
NAME AND AGE EMPLOYMENT DURING PAST 5 YEARS; OTHER DIRECTORSHIPS SINCE
- ------------ --------------------------------------------------- -----
<S> <C> <C>
Ronald R. Budacz................. Chairman and Chief Executive Officer of the Company since 1993
51 March 1993.
Robert L. Brueck (1)............. Venture capital investments; business consultant; Director of 1993
62 HEI, Inc.
Constantine S. Macricostas (2)... Chairman of the Board of Photronics, Inc. since 1969 and Chief 1996
Executive Officer from 1969 until August 1997; Director of
Nutmeg Federal Savings and Loan Association.
Carl R. Vertuca, Jr. ........... Executive Vice President - Finance, Administration and 1993
51 Corporate Development of the Company since August 1997,
and Senior Vice President and Chief Financial Officer of the
Company from March 1993 until August 1997.
Gerard T. Wrixon, Phd.(1)........ Director, National MicroElectronics Research Centre, Ireland; 1993
57 Professor of MicroElectronics, University College, Cork,
Ireland; Chairman, Steering Board of VLSI Design Action of the
European Community; Chairman, Farran Technology.
Alexander W. Young (2)........... President, Services Business Unit (since March 1998), President 1993
54 and Chief Operating Officer (January 1991 - March 1998), and
Director, Thomas Group, Inc. (business consulting).
</TABLE>
- ----------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
BOARD AND COMMITTEE MEETINGS; DIRECTORS' COMPENSATION
The Board of Directors met seven times during 1997. No director attended
fewer than 75 percent of the aggregate number of meetings of the Board and the
Board Committees on which such director served. The Board Committees include an
Audit Committee and a Compensation Committee. The Company does not have a
standing Nominating Committee of the Board of Directors.
The members of the Audit Committee are Mr. Brueck and Dr. Wrixon. The
Audit Committee reviews the services provided by the Company's independent
auditors, consults with the independent auditors on audits and
-3-
<PAGE> 6
proposed audits of the Company, and reviews the need for internal auditing
procedures and the adequacy of the Company's internal control systems. In 1997,
the Audit Committee held three meetings.
The members of the Compensation Committee are Mr. Macricostas and Mr.
Young. The Compensation Committee administers the Company's stock option and
stock incentive plans, and reviews and recommends compensation levels of the
Company's executive officers. In 1997, the Compensation Committee held three
meetings.
Directors who are full-time salaried employees of the Company are not
compensated for their service on the Board or on any Board Committee. The
Company's Non-Employee Directors' Stock Compensation Plan provides for the
payment, as the only form of compensation for regular service as a non-employee
director, of 2,000 shares of Company common stock per year. All directors are
reimbursed for their travel and other expenses incurred in attending Board and
Committee meetings.
CERTAIN LITIGATION
In 1997, two related complaints, as amended, were filed in the District
Court of Boulder, Colorado and the U.S. District Court for the District of
Colorado against the Company and certain of its officers. The lawsuits purport
to be brought on behalf of a class of persons who purchased the Company's common
stock during the period from April 1, 1996, through September 8, 1996, and claim
violations of Colorado and federal laws based on allegedly false and misleading
statements made in connection with the offer, sale or purchase of the Company's
common stock at allegedly artificially inflated prices, including statements
made prior to the Company's acquisition of Orbit Semiconductor, Inc. ("Orbit").
The complaints seek compensatory and other damages as well as equitable relief.
The Company filed motions to dismiss both amended complaints. The motion to
dismiss the state court complaint has been denied, and the Company has filed its
answer denying that it misled the securities market. The motion to dismiss the
federal court complaint is still pending. Both actions were brought by the same
plaintiffs' law firm as the Orbit action discussed below. The Company believes
that the claims asserted in both actions are without merit and intends to defend
against such claims vigorously. There has been no discovery from the Company in
either action and neither court has yet set a trial date.
A class action complaint (as amended in March 1996) for violations of
federal securities law was filed against Orbit and three of its officers in 1995
in the U.S. District Court for the Northern District of California. The amended
complaint was dismissed on November 12, 1996, with leave to amend only as to
certain specified claims relating to the statements made by securities analysts.
In January 1997, a second amended complaint was filed. The second amended
complaint alleges that Orbit and three of its officers are responsible for
actions of securities analysts that allegedly misled the market for Orbit's then
existing public common stock. The second amended complaint seeks relief under
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and Rule 10b-5 promulgated thereunder. The second amended
complaint seeks compensatory and other damages as well as equitable relief. In
September 1997, Orbit filed its answer to the second amended complaint denying
responsibility for the actions of securities analysts and further denying that
it misled the securities market. The court has set a trial date for January 26,
1999, and discovery is ongoing.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information with respect to the
compensation paid or awarded by the Company to the Chief Executive Officer and
the four other most highly compensated executive officers (collectively, the
"Named Executive Officers") for services rendered in all capacities during 1995,
1996 and 1997.
-4-
<PAGE> 7
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
-----------------------------------------------
OTHER
NAME AND ANNUAL
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1) COMPENSATION($)(2)
------------------ ---- --------- -------- --------------------
<S> <C> <C> <C> <C>
Ronald R. Budacz, 1997 $ 430,000 $ 430,000 $ 123,451
Chairman and Chief 1996 $ 375,000 $ 129,938 -0-
Executive Officer 1995 $ 290,000 $ 235,000 -0-
Carl R. Vertuca, Jr., 1997 $ 275,000 $ 220,000 $ 83,201
Executive Vice President 1996 $ 225,000 $ 51,975 -0-
-Finance, Administration 1995 $ 195,000 $ 105,000 -0-
and Corporate
Development
Dermott O'Flanagan, 1997 $ 230,000 $ 184,000 -0-
Senior Vice President 1996 $ 180,000 $ 40,800 -0-
1995 $ 155,000 $ 125,000 -0-
Ronald R. Snyder, 1997 $ 170,000 $ 136,000 $ 44,640
Senior Vice President of 1996 $ 150,000 $ 28,875 -0-
Sales and Marketing 1995 $ 130,000 $ 57,000 -0-
Gary P. Kennedy,(6) 1997 $ 299,998 -0- -0-
President and Chief 1996 $ 275,000 -0- -0-
Executive Officer of 1995 $ 239,991 -0- -0-
Orbit Semiconductor
</TABLE>
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS/PAYOUTS
--------------------------------------------------
RESTRICTED NUMBER OF SHARES PERFORMANCE
NAME AND STOCK UNDERLYING SHARES ALL OTHER
PRINCIPAL POSITION YEAR AWARDS($)(3) OPTIONS(#) VESTED(#)(1)(4) COMPENSATION($)(5)
------------------ ---- ------------ ---------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Ronald R. Budacz, 1997 $ 2,250,000 134,286 46,668 $ 223,571
Chairman and Chief 1996 -0- -0- 46,666 $ 24,539
Executive Officer 1995 -0- -0- 46,666 $ 168,510
Carl R. Vertuca, Jr., 1997 -0- 32,103 31,332 $ 130,197
Executive Vice President 1996 -0- -0- 31,334 $ 9,441
-Finance, Administration 1995 -0- -0- 31,334 $ 8,865
and Corporate
Development
Dermott O'Flanagan, 1997 -0- 21,261 24,668 $ 19,813
Senior Vice President 1996 -0- -0- 24,666 $ 16,484
1995 -0- -0- 24,666 $ 15,633
Ronald R. Snyder, 1997 $ 593,750 14,873 16,668 $ 67,799
Senior Vice President of 1996 -0- -0- 16,666 $ 4,847
Sales and Marketing 1995 -0- -0- 16,666 $ 4,472
Gary P. Kennedy,(6) 1997 -0- -0- -0- $ 2,521
President and Chief 1996 -0- -0- -0- $ 17,080
Executive Officer of 1995 -0- 117,000 -0- $ 12,558
Orbit Semiconductor
</TABLE>
- --------------
(1) Includes amounts deferred under the Company's Deferred Compensation Plan.
(2) Represents taxes reimbursed in connection with the forgiveness of loans
extended by the Company for the payment of taxes in connection with the
vesting of performance shares.
(3) Value is calculated by multiplying the number of restricted shares
awarded by the last reported sale price for the Company's common stock on
the Nasdaq National Market on the respective grant dates. The aggregate
number and value (based upon the last reported sale price of $24.00 of the
Company's common stock on the Nasdaq National Market on December 26, 1997)
of restricted shares held as of December 28, 1997 were as follows: Ronald
R. Budacz, 200,000 ($4,800,000) and Ronald R. Snyder, 50,000 ($1,200,000).
Dividends are not paid on restricted shares.
(4) The aggregate number and value (based upon the last reported sale price of
$24.00 of the Company's common stock on the Nasdaq National Market on
December 26, 1997) of unvested performance shares (after giving effect to
performance shares vested with respect to 1997 performance) held by the
Named Executive Officers as of December 28, 1997 were as follows: Ronald
R. Budacz, 89,000 ($2,136,000); Carl R. Vertuca, Jr., 50,000 ($1,200,000);
Dermott O'Flanagan, 50,000 ($1,200,000); and Ronald R. Snyder, 40,000
($960,000). Dividends are not paid on unvested performance shares.
(5) All Other Compensation is comprised of the Company's matching
contributions under the Company's Retirement Savings and Investment Plan
and Deferred Compensation Plan and Company paid life insurance premiums.
Also includes, for 1997, loans extended by the Company for the payment of
taxes in connection with the vesting of performance shares, together with
interest thereon, to the extent forgiven, in the amounts of $144,629 for
Mr. Budacz, $97,474 for Mr. Vertuca and $52,298 for Mr. Snyder. In the
case of Mr. O'Flanagan, the amounts shown reflect the contributions by
DOVatron (Ireland) B.V. under its defined contribution plan.
(6) Includes compensation earned prior to August 22, 1996 (the date of the
acquisition by the Company of Orbit Semiconductor, Inc.). Effective
February 1, 1998, Mr. Kennedy's employment with the Company terminated.
-5-
<PAGE> 8
Option Grants Table
The following table sets forth information regarding options granted
during the fiscal year ended December 28, 1997 by the Company to each of the
Named Executive Officers:
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE EXPIRATION OPTION TERM(1)
NAME GRANTED IN FISCAL PRICE DATE --------------------------------
(#) YEAR ($/SHARE) 5%($) 10%($)
----------------------- -------------- ------------ ------------ -------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald R. Budacz 100,000(2) 11.7% $10.4375 01/29/2007 $ 656,409 $ 1,663,469
34,286(3) 4.0% $20.0625 12/03/2007 $ 432,593 $ 1,096,276
Carl R. Vertuca, Jr. 20,000(2) 2.3% $10.4375 01/29/2007 $ 131,282 $ 332,694
12,103(3) 1.4% $20.0625 12/03/2007 $ 152,706 $ 386,987
Dermott O'Flanagan 6,000(2) .7% $10.4375 01/29/2007 $ 39,385 $ 99,808
15,261(3) 1.8% $20.0625 12/03/2007 $ 192,551 $ 487,762
Ronald R. Snyder 6,000(2) .7% $10.4375 01/29/2007 $ 39,385 $ 99,808
8,873(3) 1.0% $20.0625 12/03/2007 $ 111,952 $ 283,709
</TABLE>
- --------------
(1) The potential realizable value of the options reported was calculated by
assuming 5% and 10% compounded annual rates of appreciation of the common
stock from the date of grant of the options until the expiration of the
options, based on the market price on the date of grant. These assumed
annual rates of appreciation were used in compliance with the rules of the
Securities and Exchange Commission and are not intended to forecast future
price appreciation of the common stock.
(2) These options vest in three equal installments on the first, second and
third anniversary dates.
(3) These options vest in installments of 20%, 30% and 50% on the first, second
and third anniversary dates.
Fiscal Year End Option Value Table
The following table sets forth information regarding the aggregate number
and value of options held by the Named Executive Officers as at December 28,
1997. No options were exercised by any of the Named Executive Officers during
1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 28, 1997(#) AT DECEMBER 28, 1997($)(1)
----------------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Ronald R. Budacz........................ 316,234 134,286 $ 5,077,314 $ 1,491,251
Carl R. Vertuca, Jr. ................... 172,000 31,549 2,733,200 316,725
Dermott O'Flanagan ..................... 69,610 21,261 1,078,142 141,465
Ronald R. Snyder........................ 89,354 14,873 1,445,942 116,312
Gary P. Kennedy ........................ 58,500 58,498 888,364 888,333
</TABLE>
- -------------
(1) The last reported sale price for the Company's common stock on the Nasdaq
National Market on December 26, 1997 was $24.00 per share. Value is
calculated on the basis of the difference between the respective option
exercise prices and $24.00, multiplied by the number of shares of common
stock underlying the respective options.
-6-
<PAGE> 9
Long-Term Incentive Plan Awards Table
The following table sets forth information regarding performance shares
awarded to the Named Executive Officers in 1997:
<TABLE>
<CAPTION>
NUMBER OF
PERFORMANCE PERFORMANCE
NAME SHARES (#)(1) PERIOD (1)
- ---- ------------- ----------
<S> <C> <C>
Ronald R. Budacz.......................
89,000 12-03-05
Carl R. Vertuca, Jr.................... 50,000 12-03-05
Dermott O'Flanagan..................... 50,000 12-03-05
Ronald R. Snyder.......................
50,000 12-03-05
</TABLE>
- -------------
(1) Performance share awards represent shares of Company common stock which,
upon vesting, are issued to the award recipient. One-eighth of the
performance shares vest annually upon the achievement of certain annual
earnings per share targets established by the Compensation Committee. In
cases where the target is exceeded, the performance shares vest at
accelerated rates up to a maximum of three-eighths per year. If the target
is not met in any year, one-eighth of the performance shares will be
escrowed (subject, however, to vesting in the next succeeding year upon the
achievement of that year's performance target) and issued to the award
recipient if the award recipient is employed by the Company at the end of
the performance period. Performance shares escrowed for award recipients
who are no longer employed by the Company at the end of the performance
period are forfeited. Vesting of performance shares accelerates in cases of
death or disability and in the event of a change in control of the Company.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with each of Messrs. Ronald
R. Budacz, Carl R. Vertuca, Jr. and Ronald R. Snyder, effective January 1, 1997,
and Mr. Dermott O'Flanagan, effective January 1, 1998, providing for terms of
employment of four (4) years (three (3) years in the case of Mr. O'Flanagan).
The agreements provide for base salaries for Messrs. Budacz, Vertuca, O'Flanagan
and Snyder, of $430,000, $250,000, $295,000 and $170,000, respectively, subject
to increases established from time to time by the Board of Directors. In the
event of termination of employment "without cause," the terminated executive
will be entitled to receive termination payments equal to 100% of his base
salary and bonus (based on the highest annual bonus payment within the prior
three (3) years) for the remainder of the term of the agreement (with a minimum
of one year's salary plus bonus). Any termination payments under the employment
agreements may not be duplicated under the severance compensation agreements
described below. The agreements also provide for annual performance bonuses in
accordance with the Company's Senior Executive Performance Bonus Plan and
eligibility for stock option grants and performance share awards under the
Company's 1994 Stock Incentive Plan. The agreements also provide for the
forgiveness, over the term of employment and provided the executives continue to
remain employees of the Company, of loans extended to the executives for the
payment of taxes in connection with the vesting of performance shares and the
payment of additional amounts to the executives equal to the executives' tax
liability resulting
-7-
<PAGE> 10
from such forgiveness of indebtedness. The full amount of the loans will be
forgiven and the additional payments for taxes will be made in the event of
death, disability, termination "without cause" or a change of control of the
Company. See "Certain Transactions and Relationships."
DEFERRED COMPENSATION PLAN
In 1997, the Company adopted a Deferred Compensation Plan (the "Plan")
pursuant to which executive officers of the Company may defer up to 100% of
their cash salary and bonus, their performance shares and profits resulting from
the exercise of non-qualified stock options. The Plan provides for Company
matching contributions of 100% of the first 5% of salary and bonus deferred and
25% of the next 5% of salary and bonus deferred, and permits the Company to make
additional matching contributions on a discretionary basis. Company matching
contributions vest in 20% increments, based on years of service, with full
vesting occurring after five years of service (with vesting credit for prior
years service). The Plan provides for accelerated vesting of Company matching
contributions upon a change in control.
SEVERANCE COMPENSATION ARRANGEMENTS
The Company has entered into severance compensation agreements with each
of Messrs. Budacz, Vertuca, O'Flanagan and Snyder. The agreements provide that
if within 18 months following a change of control of the Company, the officer's
employment is terminated either by the Company for other than cause or
disability or by such officer for good reason, then such officer will receive a
lump sum payment equal to (a) in the cases of Messrs. Budacz and Vertuca, twice
the aggregate of the highest base salary and highest bonus received by such
officer in any of the most recent five years or, (b) in the cases of Messrs.
O'Flanagan and Snyder, the aggregate of the highest base salary and highest
bonus received by such officer in any of the most recent five years. Also, in
the event of a change of control, the exercisability of stock options and the
vesting of performance shares held by such officers will be accelerated.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes
certain excise taxes on, and limits the deductibility of, certain compensatory
payments made by a corporation to or for the benefit of certain individuals if
such payments are contingent upon certain changes in the ownership or effective
control of the corporation or the ownership of a substantial portion of the
assets of the corporation provided that such payments to the individual have an
aggregate present value in excess of three times the individual's annualized
includible compensation for the base period, as defined in the Code. The
agreements limit the cash compensation payments that may be paid thereunder to
the extent that such cash payments would exceed (calculated without regard to
any other compensation or payments) the largest amount that can be paid by the
Company without the Company losing the deduction for such payments. The
agreements further provide for additional payments to the officers in order to
fully offset any excise taxes payable by an officer as a result of the
acceleration of the exercisability of stock options and the vesting of
performance shares held by the officer caused by a change of control.
-8-
<PAGE> 11
CERTAIN TRANSACTIONS AND RELATIONSHIPS
The Company made loans to certain of its executives in order to enable the
executives to satisfy their tax obligations in connection with the vesting of
their performance shares in 1996 and 1997. The loans were advanced in January
1996 and April 1997. Interest on the loans accrues at a rate of 5.7% per annum
and 6.5% per annum, respectively. As of December 28, 1997, the aggregate amount
of principal and interest outstanding with respect to each of the executives,
excluding amounts forgiven as of January 1, 1998, was as follows: Ronald R.
Budacz, $445,333; Carl R. Vertuca, Jr., $300,134; Ronald R. Snyder, $161,029;
Carl A. Plichta, $224,323; Thomas J. Smach, $154,820; Steven C. Schlepp,
$123,552; Mark D. Herbst, $69,657; and C.Y. Cheong, $58,069. The loans are being
forgiven in proportionate installments on January 1 of 1998, 1999, 2000 and
2001.
Messrs. Ronald R. Budacz and Carl R. Vertuca, Jr., Chairman and Chief
Executive Officer and Executive Vice President of the Company, respectively,
have leased to the Company usage of a resort property located in Arrowhead,
Colorado for purposes of holding corporate meetings and other corporate
purposes. The terms of the lease provide for usage for a period of 80 days per
year at a rental rate of $0.2 million. The lease is for a period of five years
commencing September 1, 1997. Messrs. Budacz and Vertuca, together with Mr.
Ronald R. Snyder, Senior Vice President of the Company, are members of a limited
liability company which has agreed to lease to one of the Company's subsidiaries
office and manufacturing space in a building located in Boulder, Colorado. The
terms of the agreement provide for a five year lease term, commencing February
28, 1998, at annual rental rates ranging from $109,680 for the first year to
$123,444 for the fifth year, together with additional payments in respect of the
tenant's proportionate share of the maintenance and insurance costs and property
tax assessments for the leased premises. The Company believes that the terms of
both leases are comparable to those that would be entered into between unrelated
parties on an arms' length basis.
REPORT OF THE COMPENSATION COMMITTEE
General
The Compensation Committee of the Board of Directors (the "Committee") is
comprised of non-employee directors. The current members of the Committee are
Mr. Constantine S. Macricostas and Mr. Alexander W. Young. The Committee reviews
and recommends to the Board of Directors compensation levels for the Company's
executive officers, and administers the Company's stock option and stock
incentive plans, including the awarding of grants thereunder. Section 162(m) of
the Code places a limit of $1,000,000 on the amount of compensation that may be
deducted by the Company in any one year with respect to each of the Company's
five most highly paid executive officers. Certain performance-based compensation
that has been approved by the Company's stockholders is not subject to the
deduction limit. The Company continues to administer its stock incentive and
annual cash bonus plans in a manner designed to qualify under Section 162(m) a
substantial portion of the compensation payable under such plans. Although
performance share awards under the Company's stock incentive plan may not
qualify under Section 162(m), the Company does not expect that the amount of any
non-deductible compensation under Section 162(m) in any year will be material.
Compensation Philosophy
The Company's compensation programs are tied to the corporate performance
of the Company, as well as business unit and individual performance.
Compensation is heavily weighted to annual incentive awards and long-term
performance awards in the form of stock options and performance shares in order
to provide "pay-for-performance" and to align management's and stockholders'
interests in the enhancement of stockholder value. The Company's compensation
programs are designed to attract, motivate and retain individuals of outstanding
ability who will contribute to the long-term success of the Company. The three
principal components of the Company's "pay-for-performance" executive
compensation program are: base salary, annual incentive cash bonuses, and
long-term incentive compensation.
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<PAGE> 12
Base Salary
The Committee annually reviews the salaries of the Company's executives.
Base salary levels are set at levels comparable to the average salary levels of
executives of technology companies with similar annual revenues to those of the
Company. Actual salary levels for each executive vary based on the Committee's
subjective assessment of individual performance, experience, level of
responsibility, and potential contribution to the Company's future growth. With
respect to salary levels for 1997, the Committee considered the recommendation
of an outside compensation consultant. The Committee has not found it
practicable to assign relative weights to specific factors in determining base
salary levels, and the specific factors used may vary among individual
executives.
Annual Incentive Awards
The Company has maintained an annual incentive award program designed to
reward management and other key employees for Company, business unit and
individual performance. Under the program, executive officers (including the
Chief Executive Officer) receive a percentage of their base salary based upon
the achievement of pre-determined levels of performance. For the Chief Executive
Officer, the base percentage for 1997 was 50% of base salary, and the base
percentage ranged from 30% to 40% for the other executive officers (including
the other Named Executive Officers, with the exception of Mr. Gary P. Kennedy,
former President of Orbit Semiconductor, Inc.). Base awards were subject to a
multiplier, based on the level of corporate earnings per share in the cases of
the Chief Executive Officer and the other executive officers with Company-wide
responsibility, and based on the levels of corporate earnings per share and
business unit earnings in the cases of executive officers with business unit
responsibility. In the cases of all executives other than the Chief Executive
Officer, awards were subject to adjustment based upon the recommendation of the
Chief Executive Officer. For 1997, actual awards were significantly greater than
the base percentages based upon the Company achieving targeted earnings per
share and targeted business unit earnings.
Long-Term Incentive Compensation
The Committee believes that option grants and performance share awards
align executive interests with stockholder interests by creating a direct link
between compensation and stockholder return. Option grants and performance share
awards are made from time to time to executives whose contributions have or will
have a significant impact on the Company's long-term performance. The
Committee's determination of whether option grants and performance share awards
are appropriate each year is made with regard to competitive considerations, and
each executive's actual grant is based upon the criteria described in the
preceding paragraphs. The size of previous grants and the number of options and
performance shares held are not determinative of future grants. For information
concerning options and performance shares awarded in 1997, see "Option Grants
Table" and "Long-Term Incentive Plan Awards Table." Based upon 1997 performance,
determined by earnings per share, the Named Executive Officers' performance
shares vested in the following amounts: Ronald R. Budacz, 46,668 shares; Carl R.
Vertuca, Jr., 31,332 shares; Dermott O'Flanagan, 24,668 shares; and Ronald R.
Snyder, 16,668 shares; and Mr. Snyder was awarded an additional 25,000
performance shares (on a pre-stock split basis). In addition, in order to
provide additional incentive and in recognition of the importance of Mr. Budacz
to the future growth of the Company, the Company awarded Mr. Budacz 100,000
performance shares (on a pre-stock split basis), of which 50,000 (on a
post-stock split basis) vested in 1998, and the remaining portion of which will
vest in equal portions in 1999, 2000 and 2001.
Compensation of the Chief Executive Officer
Compensation for the Chief Executive Officer was determined in accordance
with the criteria set forth above. The Committee believes that CEO Compensation
was appropriately based upon the Company's financial performance.
Constantine S. Macricostas Alexander W. Young
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<PAGE> 13
PERFORMANCE GRAPH
The following line graph compares the Company's cumulative total return to
stockholders with the cumulative total return of the Nasdaq Composite Index and
the Nasdaq Stock Market Index for Electronic Component Companies from May 28,
1993 through December 28, 1997. These comparisons assume the investment of $100
on May 28, 1993 and the reinvestment of dividends.
THE DII GROUP, INC.
Comparison of Cumulative Total Return to Stockholders
May 28, 1993 through December 28, 1997
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
5/28/93 12/31/93 12/31/94 12/31/95 12/29/96 12/28/97
<S> <C> <C> <C> <C> <C> <C>
NASDAQ Composite Index 100.00 110.41 107.96 153.57 188.86 231.86
NASDAQ Electronic Component Index 100.00 115.85 128.22 212.06 366.67 384.51
The DII Group, Inc. 100.00 183.33 171.67 225.00 155.00 320.00
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons owning more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission reports of ownership and changes in ownership of equity
securities of the Company. Such persons are also required to furnish the Company
with copies of all such forms.
Based solely upon a review of the copies of such forms furnished to the
Company and, in certain cases, upon written representations that no Form 5
filings were required, the Company believes that, with respect to the 1997
fiscal year, all required Section 16(a) filings were timely made, except that
Mr. Robert L. Brueck filed late a Form 4 reporting the sale of 2,000 shares.
2. PROPOSAL TO APPROVE AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Company's Restated Certificate of Incorporation currently authorizes
an aggregate of 50,000,000 shares of capital stock, consisting of 5,000,000
shares of preferred stock, $.01 par value, and 45,000,000 shares of common
stock, $.01 par value. As of February 27, 1998, the Board of Directors of the
Company approved an amendment to the Restated Certificate of Incorporation to
increase the number of authorized shares of common
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<PAGE> 14
stock from 45,000,000 to 90,000,000 shares and directed that the proposed
amendment be submitted to the stockholders of the Company for their
consideration and approval at the Annual Meeting.
The proposed amendment to the Restated Certificate of Incorporation would
increase the number of authorized shares of common stock to 90,000,000 shares
thus bringing the total number of authorized shares of capital stock for all
classes to 95,000,000 shares. As of March 20, 1998, 25,700,946 shares of common
stock were issued and outstanding (including 192,500 treasury shares), 1,278,492
shares of common stock were reserved for issuance under the Company's stock
incentive and employee stock purchase plans, and 4,600,000 shares were reserved
for issuance upon conversion of $86,250,000 aggregate principal amount of
Convertible Notes. The additional shares of common stock for which authorization
is sought would be a part of the existing class of common stock and, if and when
issued, would have the same rights and privileges as the currently outstanding
shares of common stock. This increase would be accomplished by amending the
lead-in paragraph of Article Fourth of the Restated Certificate of Incorporation
to read as follows:
"FOURTH: The total number of shares of all classes of
stock which the Corporation is authorized to issue is
95,000,000 shares, of which 90,000,000 shares, having a par
value of $.01 each, shall be Common Stock; and 5,000,000
shares shall be Preferred Stock, having a par value of $.01
each."
The Board believes that the proposed increase is desirable so that, as the
need may arise, the Company will have more flexibility to issue shares of common
stock without the expense and delay of a special stockholders' meeting, in
connection with possible future stock dividends or stock splits, equity
financing, future opportunities for expanding business through investments or
acquisitions, management incentive and employee benefit plans and for other
general corporate purposes. The Company currently does not have any plans,
commitments or understandings with respect to the issuance of any of the
additional shares of common stock to be authorized.
Authorized but unissued shares of the Company's common stock may be issued
at such times, for such purposes and for such consideration as the Board of
Directors may determine to be appropriate without further authorization by the
Company's stockholders, except as otherwise required by applicable law or the
rules of the Nasdaq National Market.
The increase in the authorized number of shares of common stock will not
have any immediate effect on the rights of existing stockholders. However, the
Board will have the authority to issue authorized shares of common stock without
requiring future stockholder approval of such issuances, except as otherwise
required by applicable law or the rules of the Nasdaq National Market. To the
extent that additional shares of common stock are issued in the future, they
will decrease the existing stockholders' percentage equity ownership and,
depending upon the price at which they are issued, could be dilutive to the
existing stockholders. The holders of common stock have no preemptive rights.
The increase in the authorized number of shares of common stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change in control of the Company.
RECOMMENDATION AND VOTE
An affirmative vote of the holders of a majority of the shares of common
stock entitled to vote at the Annual Meeting is required to approve the
Amendment to the Company's Restated Certificate of Incorporation to increase the
number of authorized shares of common stock from 45,000,000 to 90,000,000
shares. If no direction is given to the contrary, all proxies received by the
Board of Directors will be voted "FOR" approval of the Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION.
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<PAGE> 15
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP to act as the
Company's independent auditors for the current fiscal year, subject to the
ratification of such appointment by the stockholders at the Annual Meeting. If
no direction is given to the contrary, all proxies received by the Board of
Directors will be voted "FOR" ratification of the appointment of Deloitte &
Touche LLP as the Company's independent auditors for the current fiscal year.
KPMG Peat Marwick LLP was previously the principal accountants for the
Company. On September 4, 1997, that firm's appointment as principal accountants
was terminated and Deloitte & Touche LLP was engaged as principal accountants.
The decision to change accountants was approved by the Audit Committee of the
Board of Directors.
During the Company's two most recent fiscal years and the subsequent
interim periods preceding such dismissal, there were no disagreements with KPMG
Peat Marwick LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures which disagreements if not
resolved to their satisfaction would have caused them to make Company's thereof
in connection with their reports. None of the "reportable events" described
under Item 304(a)(l)(v) of Regulation S-K occurred within the Company's two most
recent fiscal years and the subsequent interim periods preceding September 4,
1997. The audit reports of KPMG Peat Marwick LLP on the consolidated financial
statements of the Company and subsidiaries as of and for the 52 weeks ended
December 29, 1996 and the year ended December 31, 1995 did not contain any
adverse opinion, or disclaimer of opinion nor were they qualified or modified as
to uncertainty, audit scope, or accounting principles.
In August 1996 a subsidiary of the Company merged with and into Orbit
Semiconductor, Inc. Deloitte & Touche LLP reported on the consolidated financial
statements of Orbit Semiconductor, Inc. for the year ended December 31, 1995
(the "Orbit Statements"). Except for the Orbit Statements, during the Company's
two most recent fiscal years and the subsequent interim periods preceding
September 4, 1997, Deloitte & Touche LLP had not been engaged as an independent
accountant to audit either the Company's financial statements or the financial
statements of any of its subsidiaries, nor had it been consulted regarding the
application of accounting principles to a specific transaction, either completed
or proposed, or the type of audit opinion that might be rendered on the
Company's financial statements.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting and will be available to respond to appropriate questions from
stockholders and to make a statement if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any other matters which may come before the Annual Meeting. If any other
matters properly come before the meeting, the accompanying proxy confers
discretionary authority with respect to any such matters, and the persons named
in the accompanying proxy intend to vote in accordance with their best judgment
on such matters.
All expenses in connection with the solicitation of proxies will be borne
by the Company. In addition to this solicitation, officers, directors and
regular employees of the Company, without any additional compensation, may
solicit proxies by mail, telephone or personal contact. Morrow & Co., Inc. has
been retained to assist in the solicitation of proxies for a fee of $5,000, plus
reasonable out-of-pocket expenses. The Company will, upon request, reimburse
brokerage houses and other nominees for their reasonable expenses in sending
proxy materials to their principals.
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<PAGE> 16
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials for the 1999
Annual Meeting should be addressed to the Company's Secretary, 6273 Monarch Park
Place, Suite 200, Niwot, Colorado 80503, and must be received no later than
December 15, 1998. In addition, the Company's By-laws currently require that for
business to be properly brought before an annual meeting by a stockholder,
regardless of whether included in the Company's proxy statement, the stockholder
must give written notice of his or her intention to propose such business to the
Secretary of the Company, which notice must be delivered to, or mailed and
received at, the Company's principal executive offices not less than sixty (60)
days and not more than ninety (90) days prior to the scheduled annual meeting
(except that if less than seventy (70) days' notice of the date of the scheduled
annual meeting is given, notice by the stockholder may be delivered or received
not later than the tenth (10th) day following the day on which such notice of
the date of the scheduled annual meeting is mailed). Such notice must set forth
as to each matter the stockholder proposes to bring before the annual meeting:
(i) a brief description of the business desired to be brought before the meeting
and the reasons for conducting such business at the meeting, (ii) the name and
address of the stockholder proposing such business, (iii) the class and number
of shares which are beneficially owned by the stockholder, and (iv) any material
interest of the stockholder in such proposal. The By-laws further provide that
the chairman of the annual meeting may refuse to permit any business to be
brought before an annual meeting without compliance with the foregoing
procedures.
By Order of the Board of Directors,
/s/ Carl R. Vertuca, Jr.
Carl R. Vertuca, Jr.
Executive Vice President - Finance,
Administration and Corporate Development
and Secretary
Niwot, Colorado
April 7, 1998
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED HEREBY,
UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 28, 1997, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION (WITHOUT EXHIBITS). REQUESTS SHOULD BE
MADE TO MR. CARL R. VERTUCA, JR., EXECUTIVE VICE PRESIDENT - FINANCE,
ADMINISTRATION AND CORPORATE DEVELOPMENT AND SECRETARY, 6273 MONARCH PARK PLACE,
SUITE 200, NIWOT, COLORADO 80503.
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<PAGE> 17
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(Continued from other side)
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 PROPOSALS 1 THROUGH 3.
1. Election of Directors. The nominees are:
Ronald R. Budacz Robert L. Brueck Constantine S. Macricostas
Carl R. Vertuca, Jr. Gerard T. Wrixon Alexander W. Young
(Mark only one)
[ ] VOTE FOR all nominees listed above, except vote withheld
from following nominees (if any):
-----------------------------------------------------------------
-----------------------------------------------------------------
[ ] VOTE WITHHELD from all nominees.
FOR AGAINST ABSTAIN
2. Proposal to approve the amendment of
the Restated Certificate of Incorporation
of the Company to increase the number of
authorized shares of Common Stock from
45,000,000 to 90,000,000 shares. [ ] [ ] [ ]
3. Proposal to ratify the appointment of
Deloitte & Touche LLP as independent
auditors. [ ] [ ] [ ]
4. In their discretion, upon such other
matters as may properly come before the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE
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<PAGE> 18
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THE DII GROUP, INC.
P PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING, MAY 5, 1998
The undersigned hereby appoints Ronald R. Budacz and Carl R.
Vertuca, Jr. the proxies (each with power to act alone and with power
R of substitution) of the undersigned to vote at the Annual Meeting of
Stockholders of The DII Group, Inc. to be held on May 5, 1998, and at
any adjournment, all shares of stock which the undersigned is entitled
to vote thereat upon all matters properly brought before the meeting.
O
Dated: , 1998
-------------
X
-------------------------
-------------------------
Y Signature of Stockholder
THIS PROXY MUST BE SIGNED
EXACTLY AS NAME APPEARS
HEREON.
Executors, administrators,
trustees, etc., should give
full title as such. For joint
accounts, each owner should
sign. If the signer is a
corporation, please sign full
corporate name by duly
authorized officer.
(over)
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