<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WESCO
--------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
--------------------------------------------------------
2) Aggregate number of securities to which transaction
applies:
--------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
--------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
--------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
--------------------------------------------------------
4) Date Filed:
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<PAGE> 2
[LOGO]
2000
-----------------------------
Notice of Annual Meeting
and Proxy Statement
WESCO INTERNATIONAL, INC.
- -------------------------
Commerce Court, Suite 700
Four Station Square
Pittsburgh, PA 15219
<PAGE> 3
WESCO INTERNATIONAL, INC.
COMMERCE COURT, SUITE 700
FOUR STATION SQUARE
PITTSBURGH, PENNSYLVANIA 15219
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
April 20, 2000
The Annual Meeting of the Stockholders of WESCO International, Inc.
will be held on Tuesday, May 23, 2000, at 2:00 p.m., E.D.S.T., at the Sheraton
Inn, 7 Station Square, Pittsburgh, Pennsylvania 15219 to consider and take
action on the following:
1) Election of a class of two directors for a three-year term expiring
in 2003;
2) Transaction of any other business properly brought before the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE PROPOSAL.
Stockholders of record at the close of business on April 10, 2000 will be
entitled to vote at the Annual Meeting or any adjournments thereof. A list of
stockholders entitled to vote will be available at the Annual Meeting and during
ordinary business hours for ten days prior to the meeting at our corporate
offices, Commerce Court, Suite 700, Four Station Square, Pittsburgh,
Pennsylvania, 15219 for examination by any stockholder for any legally valid
purpose.
WESCO International, Inc. stockholders or their authorized
representatives by proxy may attend the meeting. If your shares are held through
an intermediary such as a broker or a bank, you should present proof of your
ownership at the meeting. Proof of ownership could include a proxy from your
bank or broker or a copy of your account statement.
In order to assure a quorum, it is important that stockholders who do
not expect to attend the meeting in person fill in, sign, date and return the
enclosed proxy in the accompanying envelope.
By order of the Board of Directors,
/s/ DANIEL A. BRAILER
Daniel A. Brailer
Secretary
<PAGE> 4
WESCO INTERNATIONAL, INC.
COMMERCE COURT, SUITE 700
FOUR STATION SQUARE
PITTSBURGH, PENNSYLVANIA 15219
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2000
PROXY SOLICITATION AND VOTING INFORMATION
The accompanying proxy is solicited by the Board of Directors of WESCO
International, Inc. (the "Company") for use at the Annual Meeting of the
Stockholders (the "Annual Meeting") to be held on May 23, 2000 at the Sheraton
Inn, 7 Station Square, Pittsburgh, Pennsylvania 15219 at 2:00 p.m., local time,
and at any adjournment or postponement thereof. The proxies will be voted if
properly signed, received by the Secretary of the Company prior to the close of
voting at the Annual Meeting, and not revoked. If no direction is given in the
proxy, it will be voted "FOR" the election of the directors nominated by the
Board of Directors. The Company has not received timely notice of any
stockholder proposals for presentation at the Annual Meeting as required by
Section 14a-4(c) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Action will be taken at the Annual Meeting for the election of
directors and any other business that properly comes before the meeting, and the
proxy holders have the right to and will vote in accordance with their judgment.
A stockholder who has returned a proxy may revoke it at any time before
it is voted at the Annual Meeting by delivering a revised proxy bearing a later
date, by voting by ballot at the Annual Meeting, or by delivering a written
notice withdrawing the proxy to the Secretary of the Company at the address set
forth above.
This Proxy Statement, together with the accompanying proxy, is first
being mailed to stockholders on or about April 20, 2000. The Company's 1999
Annual Report to Stockholders accompanies this Proxy Statement. The cost of this
solicitation of proxies will be borne by the Company. In addition to soliciting
proxies by mail, the Board of Directors of the Company, without receiving
additional compensation for this service, may solicit in person. Arrangements
also will be made with brokerage firms and other custodians, nominees and
fiduciaries to forward proxy soliciting material to the beneficial owners of the
Common Stock, par value $.01 per share, of the Company ("Common Stock") held of
record by such persons, and the Company will reimburse such brokerage firms,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in doing so. The cost of this proxy solicitation will consist
primarily of printing, legal fees, and postage and handling.
Holders of Common Stock at the close of business on April 10, 2000 (the
"Record Date") are entitled to vote at the Annual Meeting or any adjournment or
adjournments thereof. On that date, 45,519,061 shares of Common Stock were
issued and outstanding (including 4,653,131 shares of Class B Common Stock). The
presence, in person or by proxy, of stockholders holding
2
<PAGE> 5
at least a majority of the shares of Common Stock will constitute a quorum for
the transaction of business at the Annual Meeting. Stockholders are entitled to
cast one vote per share on each matter presented for consideration and action at
the Annual Meeting. Proxies that are transmitted by nominee holders on behalf of
beneficial owners will count toward a quorum and will be voted as instructed by
the nominee holder. The Board of Directors will be elected by a plurality of the
votes cast at such election.
BOARD OF DIRECTORS AND ELECTION OF DIRECTORS
The Board of Directors of the Company (the "Board") consists of seven
members, divided into three classes. The terms of office of the three classes of
directors (Class I, Class II and Class III) end in successive years. The term of
the Class I directors expires this year, and their successors are to be elected
at the Annual Meeting for a three-year term expiring in 2003. The terms of the
Class II and Class III directors do not expire until 2001 and 2002,
respectively.
The Board has nominated Michael J. Cheshire and James A. Stern for
election as Class I directors. The accompanying proxy will be voted for the
election of these nominees, unless authority to vote for one or more nominees is
withheld. In the event that any of the nominees is unable or unwilling to serve
as a director for any reason (which is not anticipated), the proxy will be voted
for the election of any substitute nominee designated by the Board. The nominees
for directors have previously served as members of the Board of the Company.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF
THE CLASS I DIRECTOR NOMINEES.
CLASS I DIRECTORS--NOMINEES FOR TERMS TO EXPIRE IN 2003
MICHAEL J. CHESHIRE Mr. Cheshire is Chairman and Chief Executive
Age: 51 Officer of Gerber Scientific, Inc. Prior to
Director since 1998 joining Gerber Scientific in 1997, Mr.
Cheshire spent 21 years with the General
Signal Corporation and was most recently
president of their electrical group.
JAMES A. STERN Mr. Stern has been Chairman of The Cypress
Age: 49 Group L.L.C. ("Cypress") since its formation
Director since 1998 in April 1994. Prior to joining Cypress, Mr.
Stern was a managing director with Lehman
Brothers, Inc. ("Lehman Brothers") and
served as head of the Merchant Banking
Group. During his career at Lehman Brothers,
he also served as head of that firm's
Investment Banking, High Yield and Primary
Capital Markets Groups. Mr. Stern is also a
director of AMTROL Inc., Cinemark USA, Inc.,
Frank's Nursery & Crafts, Inc. and Lear
Corporation, and a trustee of Tufts
University.
3
<PAGE> 6
CONTINUING CLASS II DIRECTORS--PRESENT TERM EXPIRES IN 2001
ROBERT J. TARR, JR. Mr. Tarr has been the Chairman, Chief
Age: 56 Executive Officer and President of
Director since 1998 HomeRuns.com, Inc. since February 2000.
Prior to joining HomeRuns.com, he worked for
more than 20 years in senior executive roles
for Harcourt General, Inc., including six
years as President, Chief Executive Officer
and Chief Operating Officer of Harcourt
General, Inc. (formerly General Cinema
Corporation) and the Neiman Marcus Group,
Inc. Mr. Tarr is also a director of Barneys
Inc., Hannaford Bros., Houghton Mifflin &
Co., Inc. and the John Hancock Financial
Services, Inc.
ANTHONY D. TUTRONE Mr. Tutrone has been a Managing Director of
Age: 35 Cypress since 1998 and has been a member of
Director since 1998 Cypress since its formation in April 1994.
Prior to joining Cypress, he was a member of
the Merchant Banking Group of Lehman
Bothers. Mr. Tutrone is also a director of
AMTROL, Inc. and Danka Business Systems PLC.
KENNETH L. WAY Mr. Way has been Chairman and Chief
Age: 60 Executive Officer of Lear Corporation since
Director since 1998 1988 and has been affiliated with Lear
Corporation and its predecessor companies
for 34 years in engineering, manufacturing
and general management capacities. Mr. Way
is also a director of CMS Energy Corporation
and Comerica, Inc.
CONTINUING CLASS III DIRECTORS--PRESENT TERM EXPIRES IN 2002
ROY W. HALEY Mr. Haley has been Chief Executive Officer
Age 53 of the Company since February 1994. From
Chairman of the Board and 1988 to 1993, Mr. Haley was an executive at
Chief Executive Officer; American General Corporation, a diversified
Director since 1994 financial services company, where he served
as Chief Operating Officer and as President
and a director. Mr. Haley is also a director
of Cambrex Corporation and United
Stationers, Inc.
JAMES L. SINGLETON Mr. Singleton has been a Vice Chairman of
Age: 44 Cypress since its formation in April 1994.
Director since 1998 Prior to joining Cypress, he was a Managing
Director in the Merchant Banking Group at
Lehman Brothers. Mr. Singleton is also a
director of Cinemark USA, Inc., Club Corp,
Inc., Danka Business Systems PLC, Genesis
Health Ventures, Inc., L.P., HomeRuns.com,
Inc., Thebault Company, and Williams
Scotsman, Inc.
4
<PAGE> 7
MEETINGS AND COMMITTEES OF THE BOARD
The Board has three standing committees: an Executive Committee, an
Audit Committee and a Compensation Committee. The Board does not have a
nominating committee. The full Board held seven meetings in 1999.
The Executive Committee consists of Messrs. Cheshire, Haley, Singleton
and Stern, with Mr. Singleton serving as Chairman. It is responsible for
overseeing the management of the affairs and business of the Company and has
been delegated authority to exercise the powers of the Board during intervals
between Board meetings. The Executive Committee held two meetings in 1999. Each
director attended 75% or more of the aggregate number of the total number of
meetings of the Board and the committees of the Board on which he served, other
than Mr. Tarr.
The Audit Committee consists of Messrs. Cheshire and Tarr, with Mr.
Tarr serving as Chairman. It is responsible for recommending the firm to be
appointed as independent accountants to audit the Company's financial statements
and to perform services related to the audit; reviewing the scope and results of
the audit with the independent accountants; reviewing with the management and
the independent accountants the Company's year end operating results;
considering the adequacy of the internal accounting, audit and control
procedures of the Company, reviewing the non-audit services to be performed by
the independent accountants, if any, and considering the effect of such
performance on the accountants' independence. The Audit Committee held four
meetings in 1999.
The Compensation Committee consists of Messrs. Stern, Singleton,
Tarr, Tutrone and Way, with Mr. Stern serving as Chairman. It is responsible for
the review, recommendation and approval of compensation arrangements for
directors and executive officers, for the approval of such arrangements for
other senior level employees, and for the administration of certain benefit and
compensation plans and arrangements of the Company. The Compensation Committee
held two meetings in 1999.
COMPENSATION OF DIRECTORS
Members of the Board who are also employees of the Company do not
receive cash compensation for their services as directors. Each director of the
Company who is not an employee of the Company or any of its subsidiaries or
Cypress is entitled to receive an annual director's fee of $25,000. Each
director of the Company meeting the criteria during 1999 did receive $25,000.
The Company established the Deferred Compensation Plan for Non-Employee
Directors in 1999 under which non-employee directors can elect to defer 25% or
more of the annual director's fee. Amounts deferred under this arrangement will,
on the deferral date, be converted into stock units (common stock equivalents)
which will be credited to a bookkeeping account in the director's name. For
purposes of determining the number of stock units to be credited to a director
for a particular year, the average of the high and low trading prices of the
Common Stock on the first trading day in January of that year will be used.
Distribution of deferred stock units will be made in a lump sum or installments,
in the form of shares of Common Stock, in accordance with the distribution
schedule selected by the director at the time the deferral election is made.
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<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for the
Company's Chief Executive Officer and for the Company's four other most highly
compensated executive officers with compensation in excess of $100,000 for 1997,
1998 and 1999 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
FISCAL ------------------------- OPTIONS (#S) ALL OTHER
NAME AND PRINCIPAL POSITION(S) YEAR SALARY ($) BONUS ($) (1) COMPENSATION ($)(2)(3)(4)
- ------------------------------ ---- ---------- --------- ------------ -------------------------
<S> <C> <C> <C> <C> <C>
Roy W. Haley, 1999 500,000 200,000 -- 23,925
Chairman of the Board 1998 500,000 425,000 867,000 1,074,000
and Chief Executive Officer 1997 466,667 425,000 -- 52,300
James H. Mehta 1999 275,000 40,000 -- 2,938
Vice President, Business 1998 275,000 115,000 190,740 564,638
Development 1997 258,339 115,000 -- 13,325
Patrick M. Swed, 1999 216,667 70,000 -- 10,300
Vice President, Operations 1998 200,000 130,000 190,740 472,900
1997 200,000 130,000 -- 33,000
Steven A. Burleson 1999 184,171 65,000 -- 4,675
Vice President, Chief 1998 153,337 130,000 127,160 322,419
Financial Officer 1997 135,006 115,000 -- 9,438
Donald H. Thimjon 1999 180,841 60,000 -- 8,500
Vice President, Operations 1998 158,340 110,000 127,160 375,892
1997 146,667 100,000 -- 23,637
</TABLE>
- -----------------------------
(1) All options were granted under the Company's 1998 Stock Option Plan. All
options granted in 1998 have an exercise price of $10.75 per share.
(2) Includes contributions under the WESCO Distribution, Inc. retirement
savings plan in the amounts of (a) $4,800, $2,938, $4,800, $4,675 and
$4,800 for Messrs. Haley, Mehta, Swed, Burleson and Thimjon, respectively,
in 1999, (b) $12,800, $7,738, $16,000, $9,169 and $16,000 for Messrs.
Haley, Mehta, Swed, Burleson and Thimjon, respectively, in 1998 and (c)
$9,550, $7,675, $15,950, $8,388 and $15,950 for Messrs. Haley, Mehta, Swed,
Burleson and Thimjon, respectively, in 1997.
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<PAGE> 9
(3) Includes contributions by the Company under the WESCO Distribution, Inc.
deferred compensation plan in the amounts of (a) $19,125, $-0-, $5,500,
$-0- and $3,700 for Messrs. Haley, Mehta, Swed, Burleson and Thimjon,
respectively, in 1999, (b) $61,200, $6,900, $16,900, $3,250 and $9,884 for
Messrs. Haley, Mehta, Swed, Burleson and Thimjon, respectively, in 1998 and
(c) $42,750, $5,650, $17,050, $1,050 and $7,687 for Messrs. Haley, Mehta,
Swed, Burleson and Thimjon, respectively, for 1997.
(4) Includes special retention bonus payments in 1998 in the amounts of
$1,000,000, $550,000, $440,000, $310,000 and $350,008 for Messrs. Haley,
Mehta, Swed, Burleson and Thimjon, respectively.
OPTION GRANTS IN LAST FISCAL YEAR
No stock options were granted to the Named Executive Officers in 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The table below sets forth information for each Named Executive Officer
with regard to the aggregate stock options held at December 31, 1999. No stock
options were exercised by any of the Named Executive Officers during 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END (#) AT FY-END (1)(2)
NAME (EXERCISABLE) (UNEXERCISABLE) (EXERCISABLE) (UNEXERCISABLE)
------------------------------------------ ----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Roy W. Haley 1,504,534 650,250 $9,201,217 -0-
James H. Mehta 543,031 143,055 3,415,411 -0-
Patrick M. Swed 377,723 143,055 2,358,122 -0-
Steven A. Burleson 97,682 95,370 470,798 -0-
Donald H. Thimjon 197,098 95,370 1,181,126 -0-
</TABLE>
- ----------------------
(1) Based on the closing market price per share of $8.875 as reported on the
NYSE on December 31, 1999.
(2) Certain of the options have an exercise price in excess of $8.875 per
share; accordingly, no value is reflected in the table for those options
which are not in-the-money.
EMPLOYMENT AGREEMENTS
Employment Agreement with the Chief Executive Officer. The Company is a
party to an employment agreement with Mr. Haley providing for a rolling
employment term of three years. Pursuant to this agreement, Mr. Haley is
entitled to an annual base salary of $500,000 and an annual incentive bonus
equal to a percentage of his annual base salary ranging from 0% to 200%. The
actual amount of Mr. Haley's annual incentive bonus will be determined based
upon the Company's financial performance as compared to the annual performance
objectives established for the relevant fiscal year. If Mr. Haley's employment
is terminated by the Company without "cause," by Mr. Haley for "good reason" or
as a result of Mr. Haley's death or disability,
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<PAGE> 10
Mr. Haley is entitled to continued payments of his average annual base salary
and his average annual incentive bonus, reduced by any disability payments for
the three-year period, or in the case of a termination due to Mr. Haley's death
or disability, the two-year period, following such termination, and continued
welfare benefit coverage for the two-year period following such termination. In
addition, in the event of any such qualifying termination, all outstanding
options held by Mr. Haley will become fully vested.
The agreement further provides that, in the event of the termination of
Mr. Haley's employment by the Company without cause or by Mr. Haley for good
reason, in either such case, within the two-year period following a "change in
control" of the Company, in addition to the termination benefits described
above, Mr. Haley is entitled to receive continued welfare benefit coverage and
payments in lieu of additional contributions to the Company's Retirement Savings
Plan and Deferred Compensation Plan for the three year period following such
change in control. The Company has agreed to provide Mr. Haley with an excise
tax gross up with respect to any excise taxes Mr. Haley may be obligated to pay
pursuant to Section 4999 of the United States Internal Revenue Code of 1986 on
any excess parachute payments. In addition, following a change in control, Mr.
Haley is entitled to a minimum annual bonus equal to 50% of his base salary, and
the definition of "good reason" is modified to include certain additional
events. The agreement also contains customary covenants regarding nondisclosure
of confidential information and non-competition and non-solicitation
restrictions.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Responsibilities and Goals:
The Compensation Committee, composed of non-employee directors, has the
responsibility of administering executive compensation and benefit programs,
policies and practices. The Committee consists of Messrs. Stern, Singleton,
Tarr, Tutrone and Way, with Mr. Stern serving as Chairman. The Committee engages
the assistance of outside consultants and third-party surveys in its
consideration of compensation levels and incentive plan designs.
On an annual basis, the Committee reviews and approves the compensation
and benefit programs for the executive officers, including the Chairman and
Chief Executive Officer.
Executive Officer Compensation:
The objective of the Company's compensation program for executive
officers (including Mr. Haley, Chief Executive Officer) is to motivate and
reward executive management for achieving high levels of business performance
and outstanding financial results. This reflects the Company's commitment to
attract, develop, retain and motivate the high caliber of executive required to
perform in the competitive distribution industry, and to ensure positive
business performance and continued growth in shareholder value.
8
<PAGE> 11
The Company's compensation program for executive officers consists of a
base salary, annual incentive bonuses and long-term incentives. Executives have
significant amounts of compensation at risk, based on performance. Executives
are also encouraged to maintain a significant equity stake in the Company since
this most closely aligns the interests of management with those of the
shareholders. Each of the Company's executive officers maintains an equity
investment in the Company, exclusive of stock options, of at least two times
their base salary. Mr. Haley's equity ownership is greater than 18 times his
base salary.
o Base salaries for the Company's executives are targeted at the
median of similarly sized industrial services companies. Salaries
for each executive are reviewed annually, taking into account
factors such as changes in duties and responsibilities, individual
performance and changes in the competitive marketplace.
o Annual incentives are awarded for successfully achieving financial
and operational goals of the Company which are established at the
beginning of the year.
o Long-term incentives are generally granted in the form of stock
options. The Committee believes that stock options are the most
effective long-term link between executive performance and
shareholder value.
CEO Compensation
In determining the 1999 compensation of Mr. Haley, the Company's Chief
Executive Officer, the Committee assessed his individual performance and
leadership, as reflected in the Company's financial and operating performance
(including such factors as sales, operating income, earnings per share, cash
flow and capitalization), new business development initiatives and acquisition
programs.
The Committee recognized and acknowledged the Company's record levels
of sales and operating earnings, and the significant effort required to
accomplish the Company's initial public offering and improved financial
structure. The Company, however, maintains demanding performance based
standards, and since performance targets were not fully achieved, the annual
cash bonus payments for Mr. Haley and other Named Executive Officers were
significantly reduced in relation to prior years.
In 1999, Mr. Haley received a base salary of $500,000 and a cash bonus
in the amount of $200,000. No stock option awards were granted to Mr. Haley
under the LTIP (Long Term Incentive Plan) in 1999. This information is also
shown in the Summary Compensation Table in this Proxy Statement.
9
<PAGE> 12
Conclusions
The Committee's goal is to maintain compensation and benefit programs
that are competitive within the distribution industry and clearly linked to
shareholder value. The Committee believes that the 1999 compensation levels
disclosed in this Proxy Statement are reasonable and appropriate.
The Committee intends to ensure that compensation paid to its executive
officers is within the limits of, or exempt from, the deductibility limits of
162(m) of the Internal Revenue Code and expects that all compensation will be
deductible. However, it reserves the right to pay compensation that is not
deductible if it determines that to be in the best interests of the Company and
the shareholders.
RESPECTFULLY SUBMITTED:
COMPENSATION COMMITTEE
James A. Stern, Chairman
James L. Singleton
Robert J. Tarr, Jr.
Anthony D. Tutrone
Kenneth L. Way
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is an officer or employee of
the Company. No member of the Committee has a current or prior relationship, and
no officer who is a statutory insider of the Company has a relationship to any
other company, required to be described under the Securities and Exchange
Commission rules relating to disclosure of executive compensation.
10
<PAGE> 13
COMPARATIVE STOCK PERFORMANCE
The following performance graph compares the total stockholder return
of an investment in the Company's Common Stock to that of a peer group of 28
other industrial and construction products distributors(1) and the Russell 2000
index of small cap stocks for the period commencing May 11, 1999, the date on
which the Common Stock was first publicly traded, and ending on December 31,
1999. The graph assumes that the value of the investment in the Company's Common
Stock was $100 on May 11, 1999. The historical information set forth below is
not necessarily indicative of future performance. The Company does not make or
endorse any predictions as to future stock performance.
STOCKHOLDER RETURN PERFORMANCE GRAPH
<TABLE>
<CAPTION>
11 May 1999 31 Dec 1999
----------- -----------
<S> <C> <C>
WESCO................ 100 49.310
Peer Group........... 100 88.426
Russell 2000......... 100 112.970
</TABLE>
(1) The peer group includes the following companies: Airgas, Inc., Applied
Industrial Technologies, Barnes Group, Inc., Barnett, Inc., Building
Materials Holding Corporation, Cameron Ashley Building Products, Inc.,
Fastenal Company, Grainger (W.W.), Inc., Hughes Supply, Inc., Industrial
Distribution Group, Inc., Innovative Valve Technology, Inc., JLK Direct
Distributors, Inc., Kaman Corp., KEVCO, Inc., Lawson Products, Inc., Maxco,
Inc., MSC Industrial Direct Co., Inc., NCH Corporation, Noland Company,
Pameco Corp., Park-Ohio Holdings Corp., Pentacon, Inc., Premier Farnell
PLC, SCP Pool Corporation, Strategic Distribution Inc., SunSource, Inc.,
Watsco, Inc. and Wilmar Industries, Inc.
11
<PAGE> 14
CERTAIN TRANSACTIONS AND RELATIONSHIPS WITH THE COMPANY
AMENDED AND RESTATED REGISTRATION AND PARTICIPATION AGREEMENT. In
connection with the Company's recapitalization in 1998, an investor group led by
The Cypress Group L.L.C. ("Cypress"), which included, among others, Chase
Capital Partners and Co-Investment Partners, L.P. and Clayton, Dubilier & Rice
("CD&R"), Westinghouse and the Company entered into a registration and
participation agreement (the "Registration and Participation Agreement"), which
amended and restated the previous agreement among CD&R, Westinghouse and the
Company, to reflect, among other things, the succession of the investor group to
CD&R's and Westinghouse's rights and obligations thereunder. Pursuant to the
Registration and Participation Agreement, the investor group and the management
stockholders have the right, under certain circumstances and subject to certain
conditions, to request that the Company register under the Securities Act shares
of common stock held by them. Subject to certain conditions and exceptions, the
investor group and the management stockholders also have the right to require
that shares of common stock held by them be included in any registration under
the Securities Act commenced by the Company. The Registration and Participation
Agreement provides that the Company will pay all expenses in connection with the
first three registrations requested by the investor group and the management
stockholders. The Registration and Participation Agreement also provides that
the Company will indemnify the investors and the management stockholders and
their affiliates for certain liabilities they may incur under the securities
laws.
In addition, the Registration and Participation Agreement provides that
so long as Cypress owns any of our securities, Cypress shall have the right to
designate one director to our Board of Directors and the Board of Directors of
WESCO Canada. At the time we entered the Registration and Participation
Agreement, Cypress was not affiliated with WESCO, and we believe the transaction
was made on terms no less favorable to us than we could have obtained from an
unaffiliated party.
MANAGEMENT STOCKHOLDERS. Each member of management who holds common
stock is a party to a stock subscription agreement with the Company which
provides that each management stockholder is entitled to certain benefits of,
and bound by certain obligations in, the Registration and Participation
Agreement, including certain registration rights thereunder.
A portion of the purchase price paid for common stock purchased by
certain management stockholders has been financed by full-recourse bank loans
guaranteed by WESCO. As of December 31, 1999, Messrs. Haley, Mehta, Swed,
Goodwin, Kramp, Piraino, Van and Vanderhoff had outstanding loans guaranteed by
the Company in the amount of $3,054,872, $0, $0, $0, $0, $0, $49,686 and $0
respectively, and since January 1, 1999, the largest amounts outstanding under
such loans were $3,054,872, $899,944, $343,200, $260,572, $68,700, $266,634,
$49,686 and $282,832 respectively. Messrs. Kramp and Piraino are no longer with
the Company.
12
<PAGE> 15
SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of the
Company's Common Stock as of April 10, 2000 by each person or group known by the
Company to beneficially own more than five percent of the outstanding Common
Stock, each director, and the executive officers named in the Summary
Compensation Table, and by all directors and executive officers as a group.
Unless otherwise indicated, the holders of all shares shown in the table have
sole voting and investment power with respect to such shares. In determining the
number and percentage of shares beneficially owned by each person, shares that
may be acquired by such person pursuant to options or convertible stock
exercisable or convertible within 60 days of the date hereof are deemed
outstanding for purposes of determining the total number of outstanding shares
for such person and are not deemed outstanding for such purpose for all other
stockholders.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OWNED
NAME OWNED BENEFICIALLY
- ---------------------------------------------------- ---------------- ------------------------
<S> <C> <C>
Cypress Merchant Banking Partners L.P.(1) 18,580,966 40.8%
c/o The Cypress Group L.L.C.
65 East 55th Street
New York, New York 10222
Cypress Offshore Partners L.P. (1) 962,370 2.1%
Bank of Bermuda (Cayman) Limited
P.O. Box 513 G.T. Third Floor
British America Tower
George Town, Grand Cayman
Cayman Islands, B.W.I.
Chase Equity Associates, L.P.(2) 4,653,131 10.2%
c/o Chase Capital Partners, L.P.
380 Madison Avenue, 12th Floor
New York, New York 10017
Co-Investment Partners, L.P. 4,653,189 10.2%
c/o CIP Partners, LLC
660 Madison Avenue
New York, New York 10021
Roy W. Haley 2,762,825 5.9%
Steven A. Burleson 163,285 *
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OWNED
NAME OWNED BENEFICIALLY
- ---------------------------------------------------- ---------------- ------------------------
<S> <C> <C>
James H. Mehta 1,031,586 2.2%
Donald H. Thimjon 336,685 *
Patrick M. Swed 649,528 1.4%
James L. Singleton (1) 19,543,336 42.9%
James A. Stern (1) 19,543,336 42.9%
Anthony D. Tutrone -0- *
Michael J. Cheshire 23,120 *
Robert J. Tarr, Jr. 51,120 *
Kenneth L. Way 50,120 *
All executive officers and directors as a group 25,263,806 51.8%
(16) persons
</TABLE>
* Indicates ownership of less than 1% of the Common Stock.
- ---------------------------
(1) Cypress Merchant Banking Partners L.P. and Cypress Offshore Partners L.P.
are affiliates of Cypress. The general partner of Cypress Merchant Banking
Partners L.P. and Cypress Offshore Partners L.P. is Cypress Associates
L.P., and The Cypress Group L.L.C. is the general partner of Cypress
Associates L.P. Messrs. Singleton and Stern are members of Cypress and may
be deemed to share beneficial ownership of the shares of common stock shown
as beneficially owned by such Cypress funds. Such individuals disclaim
beneficial ownership of such shares. The information presented with respect
to Cypress is based on a Schedule 13G filed by Cypress with the Securities
and Exchange Commission (the "Commission") on February 11, 2000.
(2) These shares constitute shares of non-voting Class B common stock which are
convertible at any time into common stock at the option of the holder.
(3) Included in this figure are 3,211,359 shares that may be acquired by the
executive officers and directors pursuant to options or convertible stock
exercisable or convertible within 60 days of the date hereof.
14
<PAGE> 17
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's
directors, its executive officers and any persons beneficially holding more than
ten percent of the Company's Common Stock are required to report their ownership
of the Company's Common Stock and any changes in that ownership to the
Commission and the New York Stock Exchange. Specific due dates for these reports
have been established and the Company is required to report in this proxy
statement any failure to file by these dates. To the Company's knowledge, all of
these filing requirements were satisfied for 1999.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP has served as the independent accountants
for Fiscal 1999. Representatives of PricewaterhouseCoopers LLP will be present
at the Annual Meeting, and will have an opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Rule 14a-8 of the Exchange Act contains the procedures for including
certain stockholder proposals in the Company's proxy statement and related
materials. The deadline for submitting a stockholder proposal pursuant to Rule
14a-8 for the 2001 Annual Meeting of Stockholders (the "2001 Annual Meeting") of
the Company is December 24, 2000. With respect to any stockholder proposal
outside the procedures provided in Rule 14a-8 and received by the Company no
later than December 24, 2000, the Company may be required to include certain
limited information concerning such proposal in the Company's proxy statement so
that proxies solicited for the 2001 Annual Meeting may confer discretionary
authority to vote on any such matter. Any stockholder proposals should be
addressed to the Secretary of the Company, Commerce Court, Suite 700, Four
Station Square, Pittsburgh, Pennsylvania 15219.
15
<PAGE> 18
PROXY
WESCO INTERNATIONAL, INC.
COMMERCE COURT, SUITE 700
FOUR STATION SQUARE
PITTSBURGH, PENNSYLVANIA 15219
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL DIRECTOR NOMINEES.
The undersigned hereby appoints Steven A. Burleson and Daniel A. Brailer
as Proxies, and each of them with full power of substitution, to represent the
undersigned and to vote all shares of common stock of WESCO International,
Inc., which the undersigned would be entitled to vote if personally present and
voting at the Annual Meeting of Shareholders to be held May 23, 2000 or any
adjournment thereof, upon all matters coming before the meeting.
(Continued on reverse side)
* FOLD AND DETACH HERE *
<PAGE> 19
Please mark
your votes as [X]
indicated in
this example
1. ELECTION OF DIRECTORS: THE ELECTION OF TWO DIRECTORS, MICHAEL J. CHESHIRE
AND JAMES A. STERN, FOR A THREE YEAR TERM TO EXPIRE IN 2003.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. This Proxy, when properly
executed will be voted in the manner directed herein by the undersigned
stockholder. If no direction is made, the Proxy will be voted for
Proposal 1.
INSTRUCTIONS: To withhold authority to vote
for any individual nominee, write the
nominee's name on the line below:
____________________________________________
FOR ALL nominees WITHHOLD AUTHORITY
listed above. to vote For All
nominees listed above
[ ] [ ]
Please sign exactly as name appears. When
shares are held by joint tenants, both
should sign. When signing as attorney, as
executor, administrator, trustee or
guardian, please give full title as such. If
a corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
DATED: _______________________________, 2000
____________________________________________
Signature
____________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
* FOLD AND DETACH HERE *
