<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the registrant [x]
Filed by a party other than the registrant [_]
Check the appropriate box:
[x] Preliminary proxy statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or
(S) 240.14a-12
Cable Design Technologies Corporation
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Cable Design Technologies Corporation
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
Not applicable
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
Not applicable
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0- 11:/1/
Not applicable
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
Not applicable
- ------------------------------------------------------------------------------
(5) Total fee paid:
Not applicable
- ------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- ------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- ------------------------------------------------------------------------------
(3) Filing party:
- ------------------------------------------------------------------------------
(4) Date filed:
- ------------------------------------------------------------------------------
- ------------------------
/1/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
1
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LOGO
- --------------------------------------------------------------------------------
CABLE DESIGN TECHNOLOGIES
Foster Plaza 7 * 661 Andersen Drive Paul M. Olson
Pittsburgh, PA 15220 * (412) 937-2300 President/Chief Executive Officer
November 12, 1996
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders on Tuesday, December 10, 1996 at 9:00 A.M.
eastern standard time. The meeting will be held at The Somerset Room of the
DoubleTree Hotel, 1000 Penn Avenue, Pittsburgh, Pennsylvania 15222.
The matters scheduled to be considered at the meeting are the election of
directors, the election of an auditor for the Company, and the proposed
amendment of the Company's Certificate of Incorporation to increase the number
of shares of Common Stock authorized for issuance thereunder from 25,000,000 to
100,000,000 shares. These matters are more fully explained in the attached
Proxy Statement, which you are encouraged to read.
The Board of Directors values and encourages stockholder participation. It
is important that your shares be represented, whether or not you plan to attend
the meeting. Please take a moment to sign, date and return your Proxy in the
envelope provided even if you plan to attend the meeting.
We hope you will be able to attend the meeting.
Sincerely,
LOGO
Paul M. Olson
President and Chief Executive Officer
Innovative Interconnect Technology
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LOGO
CABLE DESIGN TECHNOLOGIES CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Cable
Design Technologies Corporation (the "Company") will be held at The Somerset
Room of the DoubleTree Hotel, 1000 Penn Avenue, Pittsburgh, Pennsylvania 15222
on Tuesday, December 10, 1996, at 9:00 o'clock A.M., eastern standard time, for
the following purposes:
1. To elect 7 directors to serve until the next Annual Meeting of
Stockholders;
2. To elect an Auditor for the Company for the ensuing year; the Board of
Directors of the Company has recommended Arthur Andersen LLP, the present
Auditor, for election as Auditor;
3. To consider the amendment of the Company's Certificate of Incorporation
to increase the number of shares of Common Stock authorized for issuance
thereunder from 25,000,000 shares, par value $.01 per share, to 100,000,000
shares, par value $.01 per share;
4. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
In accordance with the provisions of the Bylaws, the Board of Directors has
fixed the close of business on October 28, 1995 as the record date for the
determination of the holders of Common Stock entitled to notice of and to vote
at the Annual Meeting.
By order of the Board of Directors
LOGO
Kenneth O. Hale
Secretary
Pittsburgh, Pennsylvania
November 12, 1996
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November 12, 1996
PRELIMINARY COPIES
PRELIMINARY PROXY MATERIALS
CABLE DESIGN TECHNOLOGIES CORPORATION
Foster Plaza 7
661 Andersen Drive
Pittsburgh, Pennsylvania 15220
PROXY STATEMENT
Annual Meeting of Stockholders to be Held
December 10, 1996
The Proxy is solicited by the Board of Directors of Cable Design
Technologies Corporation (the "Company") for use at the 1996 Annual Meeting of
Stockholders to be held on Tuesday, December 10, 1996 at 9:00 o'clock a.m. at
The Somerset Room of the DoubleTree Hotel, 1000 Penn Avenue, Pittsburgh,
Pennsylvania 15222. Solicitation of the Proxy may be made through officers and
regular employees of the Company by telephone or by oral communications with
some stockholders following the original solicitation period. No additional
compensation will be paid to such officers and regular employees for Proxy
solicitation. Expenses incurred in the solicitation of Proxies will be borne by
the Company
VOTING MATTERS
The representation in person or by proxy of a majority of the outstanding
shares of common stock of the Company, par value $.01 per share (the "Common
Stock"), entitled to a vote at the meeting is necessary to provide a quorum for
the transaction of business at the meeting. Shares can only be voted if the
stockholder is present in person or is represented by a properly signed proxy.
Each stockholder's vote is very important. Whether or not you plan to attend
the meeting in person, please sign and promptly return the enclosed proxy card,
which requires no postage if mailed in the United States. All signed and
returned proxies will be counted towards establishing a quorum for the meeting,
regardless of how the shares are voted.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted for the Board of Director's proposals, and as
the individuals named as proxy holders on the proxy deem advisable on all other
matters as may properly come before the meeting.
For all matters to be voted upon at the meeting other than the Increased
Shares Proposal (as defined), the affirmative vote of a majority of shares
present in person or represented by proxy, and entitled to vote on the matter,
is necessary for approval. With respect to the Increased Shares Proposal, the
affirmative vote of a majority of the shares entitled to vote on the matter is
necessary for approval. Withholding authority to vote or an instruction to
abstain from voting on a proposal will be treated as shares present and entitled
to vote and, for purposes of determining the outcome of the vote, will have the
same effect as a vote against the proposal. A broker "non-vote" occurs when a
nominee holding shares for a beneficial holder does not have discretionary
voting power and does not receive voting instructions from the beneficial owner.
Broker "non-votes" will not be treated as shares present and entitled to vote on
a voting matter and will have no effect on the outcome of the vote.
Any stockholder giving the enclosed Proxy has the power to revoke such
Proxy prior to its exercise either by voting by ballot at the meeting, by
executing a later-dated proxy or by delivering a signed written notice of the
revocation to the office of the Secretary of the Company before the meeting
begins. The Proxy will be voted at the meeting if the signer of the Proxy was a
stockholder of record on October 28, 1996 (the "Record Date").
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<PAGE>
On the Record Date, there were outstanding and entitled to vote at the
meeting 18,191,710 shares of Common Stock. Each outstanding share of Common
Stock is entitled to one vote. This Proxy Statement is first being sent to the
stockholders on or about November 12, 1996. A list of the stockholders entitled
to vote at the meeting will be available for inspection at the meeting for
purposes relating to the meeting.
MATTERS TO BE ACTED UPON
1. Election of Directors
Pursuant to the Bylaws of the Company, the Board of Directors has
determined that the number of directors constituting the full Board of Directors
shall be seven. The Board of Directors recommends that the stockholders vote FOR
each nominee set forth below. Proxies are solicited in favor of the nominees
named on the following pages and it is intended that the Proxies will be voted
for the seven nominees. In the event that any of the nominees should become
unable or unwilling to serve as a director, it is intended that the Proxies will
be voted for the election of such other person, if any, as shall be designated
by the Board of Directors. It is not anticipated that any of the nominees will
be unable or unwilling to serve as a director. Each director to be elected will
serve until the next Annual Meeting of Stockholders or until a successor is
elected and shall qualify.
Information Regarding Nominees for Election of Directors
A brief statement of the business experience and positions with the Company
for the past five years, a listing of certain other directorships and the ages
(as of October 27, 1996) of each person nominated to become a director of the
Company are set forth on the following pages. There are no family relationships
between any of the directors, nominees and executive officers of the Company nor
any arrangement or understanding between any director or nominee and any other
person pursuant to which he or she was or is to be selected as a director or
nominee.
Bryan C. Cressey, 47, has been Chairman of the Board of the Company since
1988 and a director since 1985. For the past fifteen years he has also been a
General Partner and Principal of Golder, Thoma, Cressey, Rauner, Inc. ("GTCR"),
a private equity investment firm which controls the principal stockholder of the
Company as well as those of several other corporations. See "Security Ownership
of Certain Beneficial Owners." Mr. Cressey received a Juris Doctor degree and an
MBA degree from Harvard University in 1976. He is also a director of Paging
Network, a publicly traded paging company, which is unaffiliated with the
Company.
Paul M. Olson, 62, has been President and a director of the Company since
1985, and Chief Executive Officer of the Company since 1993. From 1972 to 1984
Mr. Olson was the President of Phalo Corporation, a wire and cable manufacturer,
and directed sales and marketing at Phalo Corporation from 1967 to 1972. From
1963 to 1967, Mr. Olson was employed at General Electric and, from 1960 to 1963,
at General Cable, in wire and cable related sales and marketing positions.
Bernard J. Bannan, 76, has been a director of the Company since 1987. For
the past six years he has been President and CEO of Binley Inc., a private real
estate investment company that is unaffiliated with the Company. Mr. Bannan has
also been a director of MacNeal Schwendler Corp., a publicly traded software
company that is unaffiliated with the Company, since 1986.
Myron S. Gelbach, Jr., 75, has been a director of the Company since 1985.
Until his retirement in 1995, he had been a financial consultant with, and until
September 1994 was the President of, Militia Hill Company, a financial
consulting services company that is unaffiliated with the Company. Until his
retirement last year, Mr. Gelbach was also a director of Tasty Baking Company, a
publicly traded snack food company, which is unaffiliated with the Company.
5
<PAGE>
Michael F.O. Harris, 58, has been a director of the Company since 1985. For
the past seven years he has also been a Managing Director of NGI, Inc. and The
Northern Group, Inc. ("Northern"), which act as Managing General Partners of
Northern Investment Limited Partnership ("NILP") and Northern Investment Limited
Partnership II ("NILPII"), respectively. NILP and NILPII are investment
partnerships which own several manufacturing companies unaffiliated with the
Company. NILPII owns approximately 1.4% of the outstanding Common Stock of the
Company. See "Security Ownership of Certain Beneficial Owners."
Glenn Kalnasy, 53, has been a director of the Company since 1985. For the
past seven years he has also been a Managing Director of NGI, Inc. and The
Northern Group, Inc., which act as Managing General Partners of NILP and NILPII,
respectively. NILP and NILPII are investment partnerships which own several
manufacturing companies unaffiliated with the Company. NILPII owns approximately
1.4% of the outstanding Common Stock of the Company. See "Security Ownership of
Certain Beneficial Owners."
Richard C. Tuttle, 41, has been a director of the Company since 1989. Since
1992, he has also been an Executive Vice President at Health Care and Retirement
Corp., a publicly traded health care company that is unaffiliated with the
Company. From 1987 to 1992, he was a principal at GTCR, a private equity
investment firm that controls the principal stockholder of the Company.
2. Election of Auditors
The Board of Directors recommends that the stockholders vote FOR the
election of the firm of Arthur Andersen LLP as the auditors to audit the
financial statements of the Company and certain of its subsidiaries for the
fiscal year ending July 31, 1997. It is intended that the Proxies in the form
enclosed with this Proxy Statement will be voted for such firm unless
stockholders specify to the contrary in their Proxies or specifically abstain
from voting on this matter.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting of Stockholders. They will have the opportunity to make
statements if they desire to do so and will be available to respond to
appropriate questions.
3. Increased Shares Proposal
On September 10, 1996, the Board of Directors unanimously adopted
resolutions approving a proposal (the "Increased Shares Proposal") to amend the
Company's Certificate of Incorporation in order to increase the number of shares
of Common Stock that the Company is authorized to issue from 25,000,000 shares,
par value $.01 per share, to 100,000,000 shares, par value $.01 per share. The
additional shares would be part of the existing class of Common Stock and, if
and when issued, would have the same rights and privileges as the shares of
Common Stock presently outstanding. The holders of shares of Common Stock do not
have preemptive rights. The Board of Directors determined that the Increased
Shares Proposal is advisable and directed that the Increased Shares Proposal be
considered at the Annual Meeting.
One of the principal reasons for the Increased Shares Proposal is to
provide a sufficient number of shares of Common Stock to ensure that the Company
will continue to have an adequate number of authorized and unissued shares of
Common Stock for future use. If the Increased Shares Proposal is adopted by the
stockholders, the additional authorized and unissued Common Stock would be
available for issuance from time to time for such corporate purposes as
financings, acquisitions, stock dividends and future stock splits, as the Board
of Directors may deem appropriate, without the necessity of further amendment to
the Company's Certificate of Incorporation.
Stockholders should note that certain disadvantages may result from the
adoption of the Increased Shares Proposal. In the event that the Increased
Shares Proposal is adopted and the proposed amendment to the Certificate of
Incorporation is effected, there will be an additional 75,000,000 shares of
Common Stock available for issuance by the
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Company.
The Increased Shares Proposal would also have the effect enabling the Board
of Directors to issue shares to persons friendly to current management. Such an
issuance could make more difficult or discourage an attempt to obtain control of
the Company by means of a merger, tender offer, proxy contest or otherwise, and
thereby protect the continuity of the Company's management. Such additional
shares also could be used to dilute the stock ownership of persons seeking to
obtain control of the Company. In addition, the mere existence of unissued and
unreserved Common Stock may have a depressive effect on the market price of
Common Stock.
If the Increased Shares Proposal is adopted, the amendment to the Company's
Certificate of Incorporation will become effective on December 11, 1996.
4. Other Business
The Board of Directors does not know of any other business to be presented
at the Annual Meeting of Stockholders. If any other matters properly come before
the meeting, however, it is intended that the persons named in the enclosed form
of Proxy will vote said Proxy in accordance with their best judgment.
DIRECTORS MEETINGS AND COMPENSATION
Directors Meetings
The Board of Directors held four regular meetings and three special
telephonic meetings during the year ended July 31, 1996 ("fiscal 1996"). The
Audit Committee, which currently consists of Bryan C. Cressey and Michael F.O.
Harris, oversees actions taken by the Company's independent auditors, recommends
the engagement of auditors and reviews the Company's internal audits. The
Compensation Committee approves the compensation of executives of the Company,
makes recommendations to the Board of Directors with respect to standards for
setting compensation levels and administers the Company's incentive plans. The
Compensation Committee currently consists of Bernard J. Bannan, Bryan C. Cressey
and Richard C. Tuttle. There is no standing nominating committee. During fiscal
1996, each of the Company's incumbent directors participated in excess of 91% of
the aggregate of the meetings of the Board of Directors and the meetings of
committees of the Board of Directors of which such director was a member. During
fiscal 1996, the Compensation Committee met one time and the Audit Committee met
one time.
Compensation of Directors
Directors who are also officers of the Company do not currently receive
compensation from the Company for their services as directors. Those directors
who are not officers of the Company (the "Outside Directors") (currently Bernard
J. Bannan, Myron S. Gelbach and Richard C. Tuttle) currently receive $2,500
quarterly for their services as directors. All directors are reimbursed for
expenses incurred in connection with their attendance at meetings. In addition,
in June 1996, the Board of Directors granted each of the Outside Directors a
special $10,000 bonus for extraordinary service over the past fiscal year.
Under the Company's Non-Employee Director Stock Plan (the "Outside Director
Plan") each participating director under such plan (currently Bernard J. Bannan,
Myron S. Gelbach and Richard C. Tuttle) is entitled to receive shares of Common
Stock annually with a fair market value of $15,000.
Each of Messrs. Harris and Kalnasy is a party to a consulting agreement
with the Company (the "Director Consulting Agreements"), dated as of July 14,
1988, pursuant to which each has purchased Common Stock of the Company and has
been granted options to purchase additional Common Stock in exchange for
consulting services. All
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of such options are fully vested. Each Director Consulting Agreement can be
terminated by the director or the Company upon 60 days prior notice.
GTCR, which controls the principal stockholder of the Company, and
Northern, which controls an entity owning approximately 1.4% of the outstanding
Common Stock of the Company, are each party to a consulting agreement pursuant
to which each is paid $50,000 a year in exchange for consulting services
rendered to the Company and its subsidiaries by management personnel of each of
GTCR and Northern. Bryan Cressey, a director of the Company, is a General
Partner of GTCR, and Michael Harris and Glenn Kalnasy, directors of the Company,
are each a Managing Director and significant stockholder of Northern. Although
the consulting agreements with GTCR and Northern terminated by their terms upon
the completion of the Company's initial public offering, the Board of Directors
of the Company voted to amend the consulting agreements to provide for their
continuation.
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MANAGEMENT COMPENSATION AND CERTAIN TRANSACTIONS
Summary Compensation Table
The following Summary Compensation Table discloses, for the fiscal years
indicated, individual compensation information on Mr. Olson and the four other
most highly compensated executive officers who were serving as executive
officers at the end of fiscal 1996 (collectively, the "named executives").
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------ ---------------------------------------------
Awards Payouts
-------------------------- -----------------
Restricted
Stock All Other
Fiscal Salary Bonus Awards Options/SARs Compensation
Name and Principal Position Year ($)(1) ($) ($) (#) ($)(2)
- ------------------------------------------ ------ ------ --- --- --- ------
<S> <C> <C> <C> <C> <C> <C>
Paul M. Olson.............................. 1996 341,539 282,117 -- -- 26,712
President, Chief Executive Officer 1995 320,674 288,750 -- -- 26,793
1994 288,308 147,577 -- -- 34,941
Michael A. Dudley.......................... 1996 176,593 113,990 -- -- 24,133
Executive Vice President 1995 158,743 111,161 -- -- 80,606
1994 144,134 87,605 -- -- 22,492
David R. Harden............................ 1996 232,854 110,222 -- -- 25,200
Senior Vice President 1995 220,420 145,822 -- -- 25,200
1994 201,766 108,476 31,278
Donald M. Hastings......................... 1996 232,854 110,222 -- -- 26,712
Senior Vice President 1995 220,420 145,822 -- -- 26,712
1994 201,766 108,476 32,700
George C. Graeber.......................... 1996 212,865 124,636 -- -- 24,228
Executive Vice President 1995 179,158 125,562 -- -- 24,020
1994 146,960 97,635 -- -- 22,379
</TABLE>
- -------------
(1) Amounts in this column reflect salaries paid in the 1996 fiscal year.
(2) Figures in this column include amounts with respect to Company
contributions to the West Penn Wire Division Incentive Profit Sharing Plan
and Trust (the "Incentive Plan") (which is a defined contribution plan) and
term life insurance premiums paid by the Company (both of which reflect
payments made in the 1996 fiscal year), which for each of the other named
executives are: Mr. Olson, Incentive Plan $22,500, term life insurance
premium $4,212; Mr. Dudley, Incentive Plan $22,500, term life insurance
premium $1,633; Mr. Harden, Incentive Plan $22,500, term life insurance
premium $2,700; Mr. Hastings, Incentive Plan $22,500, term life insurance
premium $4,212; Mr. Graeber, Incentive Plan $22,500, term life insurance
premium $1,728.
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Option/SAR Grants in Fiscal Year 1996
While the Company does have incentive plans authorizing the grant of stock
options, no stock options were granted to any of the named executives during
fiscal 1996.
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Option/SAR Exercises and Year End Values for Fiscal Year 1996
The following table shows information regarding the exercise of stock
options or SARs during fiscal 1996 by the named executives and the number and
value of any unexercised stock options or SARs held by them as of July 31, 1996:
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised in the Money
Shares Value Options/SARs at FY-End Options/SARs at
Acquired on Realized (#) FY-End ($) Exercisable/
Name Exercise (#) ($) Exercisable/Unexercisable Unexercisable(1)
---- ------------ --- ------------------------- -------------------
<S> <C> <C> <C> <C>
Paul M. Olson....... 78,000 (2) 187,874/0 5,495,315/0
Michael A. Dudley... 15,000 -- 148,772/0 4,351,581/0
David R. Harden..... -- -- 265,874/0 5,184,533/0
Donald M. Hastings.. -- -- 265,874/0 5,184,533/0
George C. Graeber... 15,000 88,377/36,395(3) 2,585,027/1,064,554
- ---------
</TABLE>
(1) Based on the closing price of the Common Stock on July 31, 1996 of $29 1/4.
(2) On March 4, 1996, 182,196 SARs, at a value of $37.35 per SAR (net of
exercise price) vested upon the consummation of a primary and secondary
public offering of 5,700,000 shares of the Company's Common Stock (the
"Offering") on February 27, 1996. The Offering included 3,000,000 shares
of Common Stock sold by the Company and 2,204,000 shares of Common Stock
sold by GTC Fund II.
(3) On September 14, 1996 an additional 36,395 of the options held by Mr.
Graeber vested.
Employment Agreements
None of the named executives have employment agreements with the Company
or any of its affiliates, nor are any such named executives party to any
agreements entitling them to termination or severance payments upon a change in
control of the Company. The Company has, however, entered into Senior Management
Agreements with each of Messrs. Olson, Hastings and Harden, pursuant to which
each has purchased shares of Common Stock. The Senior Management Agreements also
impose certain additional restrictions upon the executives, including confiden-
tiality obligations, assignment of the benefit of inventions and patents to the
Company and a requirement that such executives devote all of their business
time to the Company.
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Certain Transactions
The Company purchases converted copper from an entity controlled by family
members of David Harden, an officer of the Company. In fiscal 1996, total
purchases by the Company from such entity were approximately $1,738,000. As of
July 31, 1996, the Company owed approximately $62,000 to such entity, consisting
of accounts payable arising in connection with such purchases. The Company
expects to continue to purchase converted copper from such entity at such level
in the foreseeable future. In addition, during fiscal 1996, the Company
purchased approximately $25,000 of machinery, equipment and services from
entities owned by Mr. Harden. Purchases are made on an "as needed" basis, and
there is no contract relating to such purchases.
The Company leases one of its facilities from an entity controlled by Mr.
Harden. The facility is leased on a month-to-month basis for $5,000 per month.
There is no written lease relating to such arrangement; however, the Company
expects to terminate such lease in the near future.
The Company leases one of its facilities from an entity controlled by
members of Mr. Harden's family for a rental payment of $1,310 and a property tax
payment of $135 per month. The written lease agreement governing this
arrangement expires October 31, 1998.
The Company believes that each of the foregoing transactions was
consummated on terms no less favorable than those that could be obtained by the
Company from an unrelated third party in a transaction negotiated on an arms-
length basis.
Compensation Committee Report
Compensation Policies Applicable to Executive Officers
During fiscal 1996, the Compensation Committee continued to follow
compensation policies established prior to the Company's initial public
offering. The overall compensation program for salaried employees has been
designed and is administered to ensure that employee compensation motivates
superior job performance and the achievement of business objectives. The main
policy objective of executive officer compensation is the maximization of
stockholder value over the long term. The Compensation Committee believes that
this can best be accomplished by an executive compensation program which
reflects the following three principles:
First, base salaries should be sufficient to attract and retain qualified
management talent, without exceeding competitive practice at similar
companies in the specialty cable and related industries.
Second, annual bonus and incentive programs should provide opportunity for
significant increases in compensation, based on meeting or exceeding pre-
determined performance targets.
Third, a substantial portion of total long-term compensation should reflect
performance on behalf of the Company's stockholders, as measured by
increases in the Company's stock price.
In the judgment of the Compensation Committee, the performance of the
Company in fiscal 1996 confirms that the compensation program is achieving its
main objectives. Accordingly, the Compensation Committee made no fundamental
changes in the basic executive compensation program during fiscal 1996.
Base Salary
Annual base salaries of the executive officers were reviewed by the
Compensation Committee at its October 1996
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meeting and adjusted as appropriate effective October 1, 1996. Following
previously stated policies, the Compensation Committee adjusted salaries based
upon competitive salary levels, past individual performance as measured by both
qualitative and quantitative factors and the potential for making significant
contributions to future Company performance. The Compensation Committee believes
that for salary increases to provide a meaningful additional incentive such
increases must exceed the rate of inflation and, in light of relatively low
inflation in the national economy, the Compensation Committee approved salary
increases ranging between 2% and 17% for senior management at its October 1996
meeting. Although strong overall performance by the Company was a factor in
determining the salary adjustments, the individual factors stated above were the
primary considerations.
Bonus Plan
Each of the named executive officers and certain other key personnel of the
Company participate in an executive/management bonus plan (the "Bonus Plan").
The Bonus Plan has not been formalized in writing, and it provides for annual
bonus awards based upon operating results compared to a projected operating
budget prepared at the beginning of each fiscal year. Employees at each of the
Company's operating divisions receive bonuses based upon a formula determined by
the financial results of their respective division and the overall financial
results of the Company. Other participants, including the Chief Executive
Officer (the "CEO"), receive bonuses based on the overall financial results of
the Company. An individual participant's bonus is determined as a percentage of
the Target Bonus (the individual's "Target Bonus," ranges from 15% to 45% of
base salary) based upon (i) the relevant performance target(s) achieved, (ii)
the employee's place of employment within the Company and (iii) the weight given
to the relevant performance targets. Bonus amounts are prorated for new
participants who are added during the course of a given year. Bonus payments are
subject to modification at the discretion of the Compensation Committee. One
half of the Bonus Plan bonuses are paid quarterly, with the balance paid after
final fiscal year results are available.
NORDX/CDT One-Time Bonus Program
Certain key personnel of NORDX/CDT participate in the NORDX/CDT One-Time
Bonus Program (the "One-Time Program"). The One-Time Program provides for a
potential one-time bonus award to such employees based upon NORDX/CDT and the
Company achieving certain target savings as a result of certain consolidation
and restructuring of NORDX/CDT and Company operations.
NORDX/CDT Plan II Bonus Program
Certain employees of NORDX/CDT participate in the NORDX/CDT Plan II Bonus
Program (the "Plan II Program"). The Plan II Program provides for bonus awards
with respect to the six-month period ending July 31, 1996 and annually
thereafter for four years based upon NORDX/CDT's earnings before interest and
taxes. Bonus payments are subject to modification at the discretion of the Chief
Executive Officer of NORDX/CDT subject to the approval of the Chief Executive
Officer of the Company, currently, Paul M. Olson. One half of the NORDX/CDT plan
bonuses are paid quarterly, with the balance paid after the fiscal year results
are available.
NORDX/CDT Signing Bonus Program
Certain key personnel of NORDX/CDT participate in the NORDX/CDT Signing Bonus
Program (the "Signing Program"). The Signing Program provides for the payment of
a signing bonus to certain key personnel of NORDX/CDT of up to an aggregate of
$750,000 over the first five years of a such person's employment by the Company.
Stock Options
Under the Company's Long Term Performance Incentive Plan (the "Long Term
Plan") and the Company's
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Supplemental Long Term Performance Incentive Plan (the "Supplemental Plan"),
stock options may be granted to the Company's executive officers. The
Compensation Committee determines the number of stock options to be granted
based on an officer's job responsibilities and individual performance
evaluation. Stock options are granted with an exercise price equal to the market
price of the Common Stock on the date of grant and generally vest over five
years. This approach is designed to encourage the creation of long-term
stockholder value since the full benefit of such options cannot be realized
unless the stock price exceeds the exercise price at the end of the five years.
During fiscal 1996, the Compensation Committee granted 219,400 options to
Normand R. Bourque in connection with the Company's acquisition of NORDX/CDT and
the retention by the Company of Mr. Bourque. The Compensation Committee
believes that the significant equity interests in the Company held by the
Company's management helps to align the interests of stockholders and management
and maximize stockholder returns over the long term. An aggregate of 16,122
shares of Common Stock remain reserved for grant under the Long Term Plan. An
Aggregate of 800,600 shares of Common Stock remain reserved for grant under the
Supplemental Plan. Of such 800,600 shares, 350,600 shares remain reserved under
the Supplemental Plan for grants only to new members of the Company's management
who are employed in connection with acquisitions by the Company.
The Outside Directors are not entitled to receive awards under the Long
Term Plan or the Supplemental Plan. In order to create and provide an incentive
structure similar to that which is in place for employees under those plans, the
Company adopted the Outside Director Plan. Under this plan, the Company's
Outside Directors are eligible to receive shares of Common Stock in an amount
and at a price set by a pre-arranged formula. Under the Outside Director Plan
72,750 shares of Common Stock remain reserved for grant to the Company's Outside
Directors.
Compensation of Chief Executive Officer
The compensation policies described above apply as well to the compensation
of the CEO. The Compensation Committee is directly responsible for determining
the CEO's salary level and for all awards and grants to the CEO under the
incentive components of the compensation program. The overall compensation
package of the CEO is designed to recognize that the CEO bears primary
responsibility for increasing the value of stockholders' investments.
Accordingly, a substantial portion of the CEO's compensation is incentive-based,
providing greater compensation as direct and indirect financial measures of
stockholder value increase. The CEO's compensation is thus structured and
administered to motivate and reward the successful exercise of these qualities.
The CEO's compensation for fiscal 1996 was directly related to the overall
performance of the Company as measured by financial criteria, as demonstrated by
the significant growth in sales, operating income and cash flow. In addition,
the CEO's compensation reflected (i) the continued strong performance of the
senior management team; (ii) the successful negotiation and consummation of the
acquisition of NORDX/CDT, Inc. and several smaller acquisitions; (iii) the
successful completion of a primary and secondary public offering of 5,700,000
shares of Common Stock on February 27, 1996; and (iv) other related qualitative
factors.
Based on the foregoing, the CEO's base compensation was raised from
$345,000 as of October 1, 1995 to $362,250 effective October 1, 1996. In
addition, the CEO received a bonus of $282,117 for fiscal 1996 under the Bonus
Plan, reflecting achievement of 183% of the target performance level and
received a payment of $6,805,021 due to the vesting of 100% of his SARs. Mr.
Olson's SARs were granted on March 17, 1992 in lieu of stock options as a result
of restrictions placed on the issuance of additional stock options by certain of
the Company's creditors.
Conclusion
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to corporate performance and
stock price appreciation. In fiscal 1996, a majority of the Company's executive
compensation (including unrealized appreciation in stock option) consisted of
these performance-based
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<PAGE>
variable elements.
The Compensation Committee has determined that it is unlikely that the
Company would pay any amounts in fiscal 1997 that would result in the loss of a
Federal income tax deduction under Section 162(m) of the Internal Revenue Code
of 1986, as amended, and accordingly, has not recommended that any special
actions be taken or that any plans or programs be revised at this time in light
of such tax law provision.
Compensation Committee Members as of July 31, 1996
Bernard J. Bannan, Bryan C. Cressey and Richard C. Tuttle
Performance Graph
The following graph compares the cumulative total return on $100 invested
on November 24, 1993 (the first day of public trading of the Common Stock)
through July 31, 1996 (the last day of public trading of the Common Stock in
fiscal 1996) in the Common Stock of the Company, the S&P 500 Index and the S&P
Electrical Equipment Index. The return of the indices is calculated assuming
reinvestment of dividends during the period presented. The Company has not paid
any dividends since its initial public offering. The stock price performance
shown on the graph below is not necessarily indicative of future price
performance.
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<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG CABLE DESIGN TECHNOLOGIES
CORPORATION, S&P 500 INDEX AND
S&P ELECTRICAL EQUIPMENT INDEX
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Cable Design
Technologies S&P Electrical
Date Corporation S&P 500 Index Equipment Index
- --------------------------------------------------------------------
<S> <C> <C> <C>
11/24/93 $100.00 $100.00 $100.00
- --------------------------------------------------------------------
7/29/94 $134.18 $100.99 $105.74
- --------------------------------------------------------------------
7/31/95 $227.85 $127.36 $126.30
- --------------------------------------------------------------------
7/31/96 $444.08 $148.47 $170.61
- --------------------------------------------------------------------
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth certain information regarding beneficial
ownership of Common Stock as of October 20, 1996, by each person or entity known
to the Company who owns of record or beneficially five percent or more of the
Common Stock, by each named executive officer and director nominee and all
executive officers and director nominees as a group.
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<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percentage of
of Outstanding Common
Name Common Stock(1) Stock(1)
- ---- --------------- --------
<S> <C> <C>
GTC Fund II(2)....................... 2,853,922 15.7
NILPII(3)............................ 247,014 1.4
Bryan C. Cressey(2)(4)(5)(6)......... 2,931,836 16.1
Paul M. Olson(4)(7).................. 495,797 2.7
George C. Graeber(8)................. 124,772 *
Michael A. Dudley(9)................. 148,772 *
Kenneth O. Hale(10).................. 61,427 *
Donald M. Hastings(11)............... 387,797 2.1
David R. Harden(11).................. 455,797 2.1
Bernard J. Bannan(4)(12)............. 25,449 *
Myron S. Gelbach, Jr.(4)............. 26,549 *
Michael F.O. Harris(3)(4)(5)(13)..... 337,038 1.8
Glenn Kalnasy(3)(4)(14).............. 338,838 1.8
Richard C. Tuttle(4)(15)............. 15,739 *
All executive officers and
director nominees as a group
(13 Persons)(16) 2,011,861 10.6
</TABLE>
- ------------
* Represents less than 1%.
(1) Figures are based upon 18,188,210 shares of Common Stock outstanding as of
September 30, 1996. The figures assume exercise by only the stockholder or
group named in each row of all options and warrants for the purchase of
Common Stock held by such stockholder or group which are exercisable within
60 days of October 20, 1996.
(2) The general partner of GTC Fund II is GTCR, an Illinois limited
partnership. Bryan Cressey is a General Partner of GTCR, and may be deemed
to be a beneficial owner of the Common Stock of the Company owned by GTC
Fund II, but Mr. Cressey disclaims any such beneficial ownership. The
business address of GTC Fund II and Mr. Cressey is c/o Golder, Thoma,
Cressey, Rauner, Inc., 6100 Sears Tower, Chicago, Illinois 60606.
(3) The general partners of NILPII are Glenn Kalnasy, Michael F.O. Harris, GT
Northern 1988 Investment Fund ("GT Northern"), a Washington limited
partnership, and Northern. The general partners of GT Northern are Mr.
Kalnasy, Mr. Harris and Northern. Mr. Kalnasy and Mr. Harris together are
the sole stockholders of the outstanding capital stock of Northern. Mr.
Kalnasy, Mr. Harris, Northern and GT Northern may be deemed to be
beneficial owners of the Common Stock of the Company owned by NILPII, but
each disclaims any such beneficial ownership. The business address of
NILPII, Mr. Kalnasy, Mr. Harris, Northern and GT Northern is c/o The
Northern Group, 3140 Bank of California Center, 900-4th Avenue, Seattle,
Washington 98164.
(4) Messrs. Cressey, Olson, Bannan, Gelbach, Jr., Harris, Kalnasy, and Tuttle
are directors of the Company.
(5) Members of the Audit Committee.
(6) Includes 2,853,922 shares held by GTC Fund II. Mr. Cressey is a general
partner of GTCR, and may be deemed to be a beneficial owner of the Common
Stock of the Company owned by GTC Fund II, but Mr. Cressey disclaims any
such beneficial ownership. See footnote 2.
(7) Includes 187,874 shares covered by options.
(8) Includes 124,772 shares covered by options.
(9) Includes 148,772 shares covered by options.
(10) Includes 51,902 shares covered by options.
(11) Includes 265,874 shares covered by options.
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<PAGE>
(12) The Bernard J. Bannan Trust owns these 25,449 shares, and Mr. Bannan
is the beneficiary of the Trust.
(13) Includes 247,014 shares held by Northern Fund II and 90,024 shares covered
by options. Mr. Harris may be deemed to be beneficial owner of the Common
Stock of the Company owned by Northern Fund II, but disclaims any such
beneficial ownership. See footnote 3.
(14) Includes 247,014 shares held by Northern Fund II and 91,824 shares covered
by options. Mr. Kalnasy may be deemed to be the beneficial owner of the
Common Stock of the Company owned by Northern Fund II, but disclaims any
such beneficial ownership. See footnote 3.
(15) Includes 8,735 shares covered by options.
(16) Excludes 2,853,922 shares held by GTC Fund II which may be deemed to be
beneficially owned by Mr. Cressey, and 247,014 shares held by Northern Fund
II which may be deemed to be beneficially owned by Messrs. Kalnasy and
Harris. See footnotes 1 and 3. Each of Messrs. Cressey, Kalnasy and Harris
disclaim any such beneficial ownership.
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<PAGE>
DIRECTOR AND OFFICER AND TEN PERCENT STOCKHOLDER SECURITIES REPORTS
The federal securities laws require the Company's directors and officers,
and persons who own more than ten percent of the Company's Common Stock, to file
with the Securities and Exchange Commission, the Nasdaq National Market and the
Secretary of the Company initial reports of ownership and reports of changes in
ownership of the Common Stock of the Company.
Normand R. Bourque was required to file a report on Form 3 in connection
with his receipt of options to purchase 219,400 shares of Common Stock from the
Company. Mr. Bourque's report was not timely filed, but was filed on February
28, 1996. To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended July 31, 1996, all other of
the Company's officers, directors and greater-than-ten-percent beneficial owners
made all required filings.
STOCKHOLDER PROPOSALS
Proposals of stockholders to be presented at the 1997 Annual Meeting of
Stockholders must be received by the Secretary of the Company by July 13, 1997
to be considered for inclusion in the Company's Proxy Statement and form of
proxy relating to that meeting. It is anticipated that the 1997 Annual Meeting
will be scheduled for December 9, 1997.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any business to come before the Annual Meeting other than the matter
described in the notice. If other business is properly presented for
consideration at the Annual Meeting, the enclosed Proxy authorizes the persons
named therein to vote the shares in their discretion.
SOLICITATION OF PROXIES
Solicitation of the Proxies may be made through officers and regular
employees of the Company by telephone or by oral communications with some
stockholders following the original solicitation period. No additional
compensation will be paid to such officers and regular employees for proxy
solicitation. Expenses incurred in the solicitation of Proxies will be borne by
the Company, including the charges and expenses of brokerage firms and others of
forwarding solicitation material to beneficial owners of Common Stock. In
addition to use of the mails, Proxies may be solicited by officers and employees
of the Company in person or by telephone.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
are incorporated in this Proxy Statement by reference: (i) the Company's Annual
Report for fiscal year ended July 31, 1996 including the financial information
included therein and (ii) the Company's Quarterly Report on Form 10-Q for each
of the fiscal quarters ended October 31, 1995, January 31, 1996, and April 30,
1996.
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