<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:
[_] 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
ACT Manufacturing, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ACT Manufacturing, Inc.
- --------------------------------------------------------------------------------
(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:
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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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:
not applicable
-------------
(2) Form, Schedule or Registration Statement No.:
not applicable
-------------
(3) Filing Party:
not applicable
-------------
(4) Date Filed:
not applicable
-------------
<PAGE>
ACT MANUFACTURING, INC.
108 FOREST AVENUE
HUDSON, MASSACHUSETTS 01749
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of ACT MANUFACTURING, INC., a
Massachusetts corporation (the "Corporation"), will be held on TUESDAY, MAY
19, 1998 AT 10:00 A.M., LOCAL TIME, at BankBoston, N.A., Conference and
Training Center, 100 Federal Street, Boston, Massachusetts 02110 for the
following purposes:
1. To elect one member of the Board of Directors to serve for a three-
year term as a Class III Director.
2. To ratify the selection of the firm Deloitte & Touche LLP as
independent auditors for the fiscal year ending December 31, 1998.
3. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Only stockholders of record at the close of business on Friday, March 27,
1998, the record date fixed by the Board of Directors for such purpose, are
entitled to notice of and to vote at the meeting and any adjournments thereof.
By Order of the Board of Directors
/s/ Douglass C. Greenlaw
Douglass C. Greenlaw
Clerk
Hudson, Massachusetts
April 16, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE
IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED
IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
ACT MANUFACTURING, INC.
108 FOREST AVENUE
HUDSON, MASSACHUSETTS 01749
----------------
PROXY STATEMENT
----------------
APRIL 16, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of ACT Manufacturing, Inc. (the
"Corporation") for use at the Annual Meeting of Stockholders to be held on
Tuesday, May 19, 1998 at 10:00 A.M., local time, at BankBoston, N.A.,
Conference and Training Center, 100 Federal Street, Boston, Massachusetts
02110, and at any adjournments thereof.
Only stockholders of record as of the close of business on March 27, 1998
(the "Record Date") will be entitled to vote at the meeting and any
adjournments thereof. As of that date, 9,062,946 shares of common stock, $.01
par value per share (the "Common Stock"), of the Corporation were issued and
outstanding. The holders of Common Stock are entitled to one vote per share on
any proposal presented at the meeting. Stockholders may vote in person or by
proxy. Execution of a proxy will not in any way affect a stockholder's right
to attend the meeting and vote in person. Any stockholder giving a proxy has
the right to revoke it by written notice to the Clerk of the Corporation at
any time before it is exercised.
An Annual Report to Stockholders, containing audited consolidated financial
statements for the fiscal year ended December 31, 1997, is being mailed
together with this Proxy Statement to all stockholders entitled to vote. This
Proxy Statement and the form of proxy were first mailed to stockholders on or
about April 16, 1998.
QUORUM AND VOTES REQUIRED
The representation, in person or by proxy, of at least a majority of the
outstanding shares of Common Stock entitled to vote at the meeting is
necessary to constitute a quorum for the transaction of business. Shares
represented by proxies pursuant to which votes have been withheld from any
nominee for election as director, or which contain one or more abstentions or
broker "non-votes," are counted as present or represented for purposes of
determining the presence or absence of a quorum for the meeting. A "non-vote"
occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because, with respect to such
other proposal, the nominee does not have discretionary voting power and has
not received instructions from the beneficial owner.
In the election of the Class III Director, the nominee receiving the highest
number of affirmative votes of the shares present or represented and entitled
to vote at the meeting shall be elected as the Class III Director. On all
other matters being submitted to stockholders, an affirmative vote of a
majority of the shares present, in person or represented by proxy, and voting
on each such matter is required for approval. An automated system administered
by the Corporation's transfer agent tabulates the votes. The vote on each
matter submitted to stockholders is tabulated separately. Abstentions will
have the practical effect of voting against each such matter, other than the
election of directors, since they are included in the number of shares present
and voting on each such matter. Broker "non-votes" will have no impact on each
such matter since they are not so included.
<PAGE>
Each of the persons named as attorneys in the proxies is an officer of the
Corporation. All properly executed proxies returned in time to be counted at
the meeting will be voted. Any stockholder giving a proxy has the right to
withhold authority to vote for any individual nominee to the Board of
Directors by writing that nominee's name in the space provided on the proxy or
by checking the appropriate box. In addition to the election of the Class III
Director, the stockholders will consider and vote upon a proposal to ratify
the selection of auditors, as further described in this proxy statement. Where
a choice has been specified on the proxy with respect to the foregoing
matters, the shares represented by the proxy will be voted in accordance with
the specifications and will be voted FOR if no specification is indicated.
The Board of Directors knows of no other matter to be presented at the
Annual Meeting. If any other matter upon which a vote may properly be taken
should be presented at the Annual Meeting, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
2
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 27, 1998 certain information
regarding beneficial ownership of the Corporation's Common Stock by: (i) each
person who, to the knowledge of the Corporation, owned beneficially more than
5% of the shares of Common Stock of the Corporation outstanding at such date;
(ii) each director or nominee for director of the Corporation; (iii) each
executive officer identified in the Summary Compensation Table set forth below
under the heading "Compensation and Other Information Concerning Directors and
Officers"; and (iv) all directors, nominees for election to the Board of
Directors and executive officers of the Corporation as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENTAGE OF COMMON
OF BENEFICIAL OWNER OF OWNERSHIP(1) STOCK OUTSTANDING(2)
- -------------------- ----------------- --------------------
<S> <C> <C>
Heartland Advisors, Inc.(3)............ 600,000 6.6%
790 North Milwaukee Street
Milwaukee, WI 53202
John A. Pino(4)........................ 5,020,722 55.4
c/o ACT Manufacturing, Inc.
108 Forest Avenue
Hudson, MA 01749
Douglass C. Greenlaw(5)................ 91,111 1.0
Gregory J. Iodice(6)................... 20,000 *
Blaise E. Scioli(7).................... 75,300 *
Robert W. Egan, Jr.(8)................. 33,300 *
Edward T. Cuddy(9)..................... 12,000 *
Bruce R. Gardner(10)................... 12,464 *
Donald G. Polich(10)................... 11,464 *
All directors and executive officers as
a group (8 persons)(11)............... 5,276,361 56.7%
</TABLE>
- --------
* Less than 1% of the outstanding shares of Common Stock.
(1) Except as otherwise noted, each person or entity named in the table has
sole voting and investment power with respect to their shares of Common
Stock, except to the extent authority is shared by spouses under
applicable law.
(2) The number of shares of Common Stock deemed outstanding on March 27, 1998
with respect to a person or group includes: (i) 9,062,946 shares of
Common Stock outstanding on such date and (ii) all options that are
currently exercisable or will become exercisable within 60 days of March
27, 1998 by the person or group in question.
(3) According to a Schedule 13G filed with the Securities and Exchange
Commission on January 27, 1998.
(4) Includes 426,440 shares held by the John A. Pino Grantor Retained Annuity
Trust II Dated August 16, 1996, of which Mr. Pino is a trustee. Excludes
(a) 96,166 shares held by Douglas R. Ederle, Trustee of the Pino Family
Trust, a trust for the benefit of Janet M. Pino, Mr. Pino's wife, his
children and his issue, (b) 175,456 shares held by Douglas R. Ederle,
Trustee of the John M. Pino Trust, a trust for the benefit of John M.
Pino, Mr. Pino's son, and (c) 175,456 shares held by Douglas R. Ederle,
Trustee of the Melissa A. Pino Trust, a trust for the benefit of Melissa
A. Pino, Mr. Pino's daughter.
(5) Includes 79,200 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
3
<PAGE>
(6) Includes 20,000 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(7) Includes 75,200 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(8) Includes 33,200 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(9) Includes 10,000 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(10) Includes 11,464 shares issuable upon the exercise of outstanding stock
options exercisable on the Record Date or within 60 days thereafter.
(11) Includes 240,528 shares issuable upon the exercise of outstanding options
exercisable on the Record Date or within 60 days thereafter.
4
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTOR
In accordance with the Corporation's Amended and Restated By-laws, the
Corporation's Board of Directors is divided into three classes. Each class
serves for three years, with the terms of office of the respective classes
expiring in successive years. Bruce R. Gardner is a Class III Director whose
term expires at the Annual Meeting of Stockholders to be held in 1998. The
Board is also composed of two Class I Directors (Edward T. Cuddy and Donald G.
Polich) and one Class II Director (John A. Pino) whose terms will expire upon
the election and qualification of directors at the Annual Meeting of
Stockholders to be held in 1999 and 2000, respectively.
The nominee for Class III Director is Bruce R. Gardner, who is currently
serving as a Class III Director. Shares represented by all proxies received by
the Board of Directors and not so marked as to withhold authority to vote for
Mr. Gardner will be voted FOR his election. Mr. Gardner will be elected to
hold office until the Annual Meeting of Stockholders to be held in 2001 and
until his successor is duly elected and qualified. Mr. Gardner has indicated
his willingness to serve, if elected; however, if he should be unable or
unwilling to serve, the proxies will be voted for the election of a substitute
nominee designated by the Board of Directors or for fixing the number of
directors at a lesser number.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE NOMINEE LISTED BELOW.
The following table sets forth, for the nominee to be elected at the meeting
and for each director whose term of office will extend beyond the meeting, the
year each such nominee or director was first elected a director, the positions
currently held by each nominee or director with the Corporation, the year each
nominee's or director's term will expire and the class of director of each
nominee or director.
<TABLE>
<CAPTION>
NOMINEE'S OR DIRECTOR'S
NAME AND YEAR
NOMINEE OR DIRECTOR YEAR TERM CLASS OF
FIRST BECAME DIRECTOR POSITION(S) HELD WILL EXPIRE DIRECTOR
----------------------- ---------------- ----------- --------
<S> <C> <C> <C>
NOMINEE:
Bruce R. Gardner (1994)............... Director 1998 III
CONTINUING DIRECTORS:
Edward T. Cuddy (1995)................ Director 1999 I
Donald G. Polich (1982)............... Director 1999 I
John A. Pino (1988)................... President, Chief Executive 2000 II
Officer and Chairman of the
Board
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met eleven (11) times, and took action by unanimous
written consent two (2) times during the fiscal year ended December 31, 1997.
The Audit Committee of the Board of Directors, presently comprised of
Messrs. Gardner and Polich, both outside directors of the Corporation, was
established on March 29, 1995. The Audit Committee is responsible
5
<PAGE>
for reviewing the result and scope of audits and other services provided by
the Corporation's independent auditors and reviewing the Corporation's
internal accounting control policies and procedures. The Audit Committee met
once during the fiscal year ended December 31, 1997.
The Compensation Committee of the Board of Directors, presently comprised of
Mr. Pino and Messrs. Polich and Cuddy, both outside directors of the
Corporation, was established on March 29, 1995. The Compensation Committee
reviews and makes recommendations concerning the salaries and incentive
compensation of senior executives and employees of and consultants to the
Corporation, and oversees the administration of the Corporation's 401(k) plan.
The Compensation Committee met once during the fiscal year ended December 31,
1997.
The Stock Option Committee of the Board of Directors, presently comprised of
Messrs. Gardner and Cuddy, both outside directors of the Corporation, was
established on March 29, 1995. The Stock Option Committee oversees and
administers the Corporation's 1993 Stock Option Plans, 1995 Stock Plan and
1995 Non-Employee Director Stock Option Plan. During the fiscal year ended
December 31, 1997, the Stock Option Committee took action by written consent
seven (7) times.
The Board of Directors does not currently have a nominating committee. Each
of the directors attended at least 75% of the total number of meetings of the
Board of Directors and all committees of the Board of Directors on which he
served during the fiscal year ended December 31, 1997.
6
<PAGE>
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the Class III nominee to be elected at the
meeting, the current directors who will continue to serve as directors beyond
the meeting, and the executive officers of the Corporation, their ages, and
the positions currently held by each such person with the Corporation.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
John A. Pino(1)......... 50 President, Chief Executive Officer and Chairman of the Board
Douglass C. Greenlaw.... 47 Vice President of Finance and Administration,
Chief Financial Officer, Treasurer and Clerk
Gregory J. Iodice....... 48 Vice President of Operations
Blaise E. Scioli........ 40 Vice President of Sales and Marketing
Robert W. Egan, Jr. .... 41 Vice President of Business Development
Edward T. Cuddy(1)(3)... 62 Director
Bruce R. Gardner(2)(3).. 55 Director
Donald G. Polich(1)(2).. 63 Director
</TABLE>
- --------
(1) Member of Compensation Committee
(2) Member of Audit Committee
(3) Member of Stock Option Committee
DIRECTOR TO BE ELECTED AT THE MEETING
BRUCE R. GARDNER has been a director of the Corporation since December 1994.
Mr. Gardner has been the President since November 1997, and prior to that, the
Chief Financial Officer and Treasurer and a director of Datawatch Corporation,
a provider of personal computer software, since co-founding that corporation
in 1985. Mr. Gardner was a Senior Vice President of Datawatch until June 1993
when he became Executive Vice President of that company.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE MEETING
EDWARD T. CUDDY joined the Corporation as a Director in April 1995. In
August 1995, Mr. Cuddy retired from his position as Vice President of
Manufacturing and Member of the Senior Staff at GTECH Corporation, a firm
which designs, manufactures, installs and services customized computer
equipment for state and local governments. In addition to serving on the
Corporation's Board, Mr. Cuddy currently serves as a director of Terascape
Software, Inc., a privately-held software company which optimizes database
storage and management, a director of Worldwide Interchange Network, Inc., a
privately-held consultancy assisting companies wishing to manufacture in or
export to Southeast Asia, and as a member of the Executive Advisory Board of
The Register Company, a privately-held worldwide provider of training and
consulting in the quality field.
JOHN A. PINO joined the Corporation as President and a Director in February
1988. He also became Executive Vice President of Automated Component
Technologies, Inc. ("ACT II"), the Corporation's printed circuit board
assembly predecessor, in March 1991, and President of that company in March
1992. Mr. Pino became Chairman of the Board and Chief Executive Officer of the
Corporation in January 1993 and served as
7
<PAGE>
Treasurer of the Corporation from January 1993 to February 1995. Prior to
joining the Corporation, he had served as Vice President of Finance for New
Balance Athletic Shoe, Inc. and Visual Technology, Inc. and as Corporate
Controller for Datacon, Inc.
DONALD G. POLICH has been an independent consultant since January 1993,
following the sale by him of all of the outstanding stock of the Corporation
and ACT II to Mr. Pino. Mr. Polich has served as a Director of the Corporation
since he founded it in 1982. Mr. Polich also served as the President and Chief
Executive Officer of the Corporation from inception until February 1988, and
was President and Chief Executive Officer and a director of ACT II from its
inception in December 1986 until March 1992.
EXECUTIVE OFFICERS
DOUGLASS C. GREENLAW joined the Corporation as Vice President of Finance and
Administration and Chief Financial Officer in January 1995 and became
Treasurer and Clerk in February 1995. Prior to joining the Corporation, Mr.
Greenlaw was Vice President of Finance and Administration and Chief Financial
Officer at BioSepra, Inc., a developer of chemical media and process systems,
from April 1994 to January 1995. He served Corporate Software Incorporated, a
reseller of computer software and related services, as Vice President of
Operations from July 1993 until April 1994 and as Vice President of Finance
and Chief Financial Officer from April 1991 until July 1993. Prior to April
1991, Mr. Greenlaw had been with Millipore Corporation, a separations company,
and since December 1984 had been the Vice President of Finance and
Administration of the Waters Chromatography division.
GREGORY E. IODICE has been the Vice President of Operations since April
1997. Prior to joining the Corporation, from May 1994 to April 1997, Mr.
Iodice held various positions at Digital Equipment Corporation, Personal
Computer Division, including Vice President--External Manufacturing and Vice
President--Europe Manufacturing and Logistics. Prior to that, Mr. Iodice was
Vice President, Manufacturing Operations Division of Data General Corp. from
November 1991 to May 1994. From March 1990 to November 1991, Mr. Iodice held
several positions at Racal Datacom, first as Vice President, Manufacturing
Operations and then as Vice President, Desktop Business Division.
BLAISE E. SCIOLI has been the Vice President of Sales and Marketing since
1991. He has held several management positions in the Corporation since
joining in June 1986. Prior to joining the Corporation, Mr. Scioli held
various sales and marketing positions for AMP, Inc., a manufacturer of
electronic interconnection products, from August 1981 to June 1986.
ROBERT W. EGAN, JR. has been the Vice President of Business Development
since March 1994. Mr. Egan was the Director of Business Development for
Lockheed Commercial Electronics Company, a contract manufacturer, from March
1992 to February 1994. Prior to that, he served as the Vice President of Sales
and Marketing for Heliotron Corporation, a contract manufacturer, from April
1990 to March 1992. From April 1988 to March 1990, Mr. Egan was a marketing
manager for SCI Systems, Inc., a contract manufacturer.
Executive officers of the Corporation are elected by the Board of Directors
on an annual basis and serve until their successors have been duly elected and
qualified. There are no family relations among any of the executive officers
or directors of the Corporation.
8
<PAGE>
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION SUMMARY
The following table shows certain information with respect to the annual and
long-term compensation of the Corporation's Chief Executive Officer and each
of the Corporation's four other most highly compensated executive officers
(collectively, the "Named Executive Officers") for the fiscal years ended
December 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION(2)
-------------------------- ---------------
COMMISSION
NAME AND PRINCIPAL AND OPTION ALL OTHER
POSITION YEAR SALARY($) BONUS($)(3) AWARDS(#) COMPENSATION(4)
- ------------------ ---- --------- ----------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
John A. Pino............ 1997 $ 200,000 $ -- -- $ 196,685(5)
President, Chief 1996 180,000 100,000 -- 196,174(5)
Executive Officer
and Chairman of the 1995 150,000 50,000 -- 424
Board
Douglass C. Greenlaw.... 1997 165,000 -- 66,000 723
Vice President of 1996 150,000 60,000 12,000 174
Finance and
Administration, Chief
Financial
Officer, Treasurer and 1995 125,000 25,000 112,000 102
Clerk
Gregory J. Iodice(6).... 1997 131,540 65,000 100,000 426
Vice President of
Operations
Blaise E. Scioli........ 1997 100,000 -- 12,000 484
Vice President of Sales
and 1996 100,000 50,528 12,000 66
Marketing 1995 80,000 63,000 -- 316
Robert W. Egan, Jr...... 1997 100,000 -- 12,000 503
Vice President of
Business 1996 100,000 68,178 12,000 51
Development 1995 80,000 42,000 -- --
</TABLE>
- --------
(1) Excludes perquisites and other personal benefits, if any, the aggregate
annual amount of which for each officer was less than the lesser of
$50,000 or 10% of the total of annual salary and commission and bonus
reported.
(2) The Corporation did not grant any restricted stock awards or stock
appreciation rights ("SARs") or make any long-term incentive plan payouts
during the fiscal years 1997, 1996 or 1995.
(3) Bonuses are reported in the year earned, even if actually paid in a
subsequent year.
(4) Consists of premiums for term life insurance paid by the Corporation on
behalf of the Named Executive Officer and the Corporation's matching
contributions related to the Corporation's 401(k) Plan.
(5) Includes life insurance premiums paid by the Corporation on behalf of Mr.
Pino in fiscal 1996 or 1997, as applicable, on a split-dollar life
insurance policy as described below under "Split-Dollar Life Insurance
Agreement".
(6) Mr. Iodice's employment with the Corporation began in April 1997. Mr.
Iodice's fiscal 1997 base salary was $180,000.
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows information regarding grants of stock options to
the Named Executive Officers pursuant to the Corporation's stock plans during
the year ended December 31, 1997.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTIONS TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION -------------------------
NAME GRANTED(#) YEAR ($/SHARE)(1) DATE 5%($) 10%($)
- ---- ---------- ---------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John A. Pino............ -- -- -- -- -- --
President, CEO and
Chairman of the Board
Douglass C. Greenlaw.... 12,000(3) 2.0% $19.38 3/6/07 $ 146,256 $ 370,641
Vice President of
Finance 54,000(4) 9.2% $19.38 3/6/07 $ 658,151 $ 1,667,883
and Administration,
CFO, Treasurer and
Clerk
Blaise E. Scioli........ 12,000(3) 2.0% $19.38 3/6/07 $ 146,256 $ 370,641
Vice President of Sales
and Marketing
Robert W. Egan, Jr...... 12,000(3) 2.0% $19.38 3/6/07 $ 146,256 $ 370,641
Vice President of
Business Development
Gregory J. Iodice....... 100,000(5) 17.1% $19.50 4/3/07 $ 1,226,345 $ 3,107,798
Vice President of
Operations
</TABLE>
- --------
(1) All options were granted at fair market value as determined by the Board
of Directors of the Corporation.
(2) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compounded rates of appreciation (5% and 10%)
on the market value of the Corporation's Common Stock on the date of
option grant over the term of the options. These numbers are calculated
based on rules promulgated by the Securities and Exchange Commission and
do not reflect the Corporation's estimate of future stock price growth.
Actual gains, if any, on stock option exercises and Common Stock holdings
are dependent on the timing of such exercise and the future performance of
the Corporation's Common Stock. There can be no assurance that the rates
of appreciation assumed in this table can be achieved or that the amounts
reflected will be received by the individuals.
(3) The options were granted in 1997 and become exercisable at the rate of 33
1/3% per annum.
(4) The options were granted in 1997 and vest as follows: 4,000 shares 3/6/00;
25,000 shares on 3/6/01; and 25,000 shares on 3/6/02.
(5) The options were granted in 1997 and become exercisable at the rate of 20%
per annum.
10
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to options to
purchase the Corporation's Common Stock granted to the Named Executive
Officers under the Corporation's stock plans, including (i) the number of
shares of Common Stock purchased upon exercise of options during the fiscal
year ended December 31, 1997; (ii) the net value realized upon such exercise;
(iii) the number of unexercised options outstanding at December 31, 1997; and
(iv) the value of such unexercised options at December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES VALUE OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON REALIZED DECEMBER 31,1997(#) DECEMBER 31, 1997($)(2)
NAME EXERCISE(#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
John A. Pino............ -- -- -- --
Douglass C. Greenlaw.... -- -- 48,800/141,200 $334,700/$509,800
Blaise E. Scioli........ 4,000 $ 75,000 33,600/ 53,600 $399,907/$430,907
Robert W. Egan, Jr...... 12,400 $280,104 8,400/ 53,600 $ 80,254/$352,014
Gregory J. Iodice....... -- -- 0/100,000 $0/$0
</TABLE>
- --------
(1) Amounts disclosed in this column were calculated based on the difference
between the fair market value of the Corporation's Common Stock on the
date of exercise and the exercise price of the options in accordance with
regulations promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and do not reflect amounts received by the
Named Executive Officers.
(2) Value is based on the difference between the option exercise price and the
fair market value at December 31, 1997, the last day during fiscal year
1997 for which market prices are available ($14.125 per share as quoted on
the Nasdaq National Market), multiplied by the number of shares underlying
the option.
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Corporation's executive compensation program is administered by the
compensation committee (the "Compensation Committee") and the Stock Option
Committee (the "Stock Option Committee"). Pursuant to authority delegated by
the Board of Directors, the Compensation Committee is responsible for
establishing and administering the Corporation's executive compensation plans
and policies (other than with respect to the Corporation's stock plans). The
Compensation Committee is comprised of three directors, two of whom are
independent outside directors. The Stock Option Committee, which is comprised
of two independent outside directors, makes recommendations and awards under
the Corporation's stock plans.
COMPENSATION PHILOSOPHY
The Corporation's compensation policy for executive officers is reviewed and
approved by the Compensation Committee and the Stock Option Committee. The
Corporation's executive compensation program is designed to promote the
following objectives:
.To enhance profitability of the Corporation and increase stockholder
value.
.To provide competitive compensation that will attract, retain and reward
highly qualified executives.
11
<PAGE>
. To recognize individual initiative and achievement.
. To align the interests of management with those of stockholders by
including long-term equity incentives.
EXECUTIVE COMPENSATION PROGRAM
The Corporation's executive compensation program consists of three elements:
(i) base salary, (ii) annual incentive compensation and (iii) long-term equity
incentives in the form of stock options. Elements (i) and (ii) are
administered by the Compensation Committee, and element (iii) is administered
by the Stock Option Committee. Executive officers are also eligible to
participate in certain benefit programs which are generally available to all
employees of the Corporation, including life insurance and other employee
benefits.
Base Salary
Base salary compensation levels for each of the Corporation's executive
officers are generally determined by evaluating the experience of and the
responsibilities to be held by the individual. The Compensation Committee also
considers generally available information regarding salaries paid to executive
officers with comparable qualifications, experience and responsibilities at
companies in the same or similar business. The Compensation Committee has
generally set base salary in the mid-range level of executive compensation.
Annual Incentive Compensation
Annual incentive compensation, in the form of bonuses and commissions, is
based on the achievement by the Corporation of predetermined revenue and
earnings objectives, as well as individual and business unit performance.
Long-Term Incentive Compensation
Long-term incentive compensation, in the form of stock options, allows the
executive officers to share in any appreciation in the value of the
Corporation's Common Stock. The Compensation and the Stock Option Committees
believe that stock option participation aligns the interests of executive
officers with those of the Corporation's stockholders. When establishing stock
option grant levels for executive officers, the Stock Option Committee
considers existing levels of stock ownership, previous grants of stock
options, vesting schedules of previously granted options and the current price
of the Corporation's Common Stock. Stock options granted under the
Corporation's 1995 Stock Plan and 1993 Stock Option Plans have an exercise
price equal to the fair market value of the stock on the date of grant.
In the fiscal year ended December 31, 1997, each of Blaise E. Scioli, the
Corporation's Vice President of Sales and Marketing and Robert W. Egan, Jr.,
Vice President of Business Development, was granted an option to purchase
12,000 shares of Common Stock at an exercise price of $19.38 per share.
Douglass C. Greenlaw, Vice President of Finance and Administration and Chief
Financial Officer was granted two options to purchase an aggregate of 66,000
shares of Common Stock, each at an exercise price of $19.38. Gregory J.
Iodice, Vice President of Operations, was granted an option to purchase
100,000 shares of Common Stock at an exercise price of $19.50. No stock
options were granted during the fiscal year ended December 31, 1997 to the
Chief Executive Officer.
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<PAGE>
Compensation of the Chief Executive Officer
Consistent with the executive compensation policies described above, Mr.
Pino received salary compensation of $200,000 and no incentive compensation
for the fiscal year ended December 31, 1997. In 1997, as in prior years, Mr.
Pino did not receive any long-term equity incentives in the form of stock
options pursuant to the Corporation's stock plans.
Deductibility of Executive Compensation Expenses
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a tax deduction for compensation in excess of $1
million paid to any of the executive officers named in the Summary
Compensation Table above. The Compensation Committee has considered the
requirements of Section 162(m) of the Code and the related regulations. It is
the Compensation Committees' present belief that, so long as it is consistent
with its overall compensation objectives, substantially all executive
compensation will be deductible for all income tax purposes.
Respectfully submitted by the Respectfully submitted by the
Compensation Committee,
Stock Option Committee,
Edward T. Cuddy Edward T. Cuddy
John A. Pino Bruce R. Gardner
Donald G. Polich
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Corporation's Board of Directors established a Compensation Committee in
March 1995. The Compensation Committee currently consists of Messrs. Cuddy,
Pino and Polich. During the fiscal year ended December 31, 1997, Mr. Pino, the
Corporation's President and Chief Executive Officer and a Director,
participated in the deliberations of the Board of Directors concerning the
compensation of executive officers but did not participate in the Board's
deliberations concerning his own compensation.
Mr. Polich was formerly an officer of the Corporation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Agreements with Donald G. Polich
The Corporation is a party to two separate Consulting Agreements dated as of
August 4, 1993, as amended, with Re-Act Consulting, a consulting company of
which Mr. Polich and Nelva Polich, Mr. Polich's wife, are the owners and
employees (the "Consulting Agreements"). Each of the Consulting Agreements
terminate on August 4, 2003. The Consulting Agreements provide for initial
monthly consulting fees of approximately $16,500 which increase by eight
percent (8%) per annum. The Corporation paid consulting fees of approximately
$260,000 during 1997.
The Corporation is a party to two separate Noncompetition Agreements dated
as of January 1, 1993, as amended, with Mr. Polich (the "Noncompetition
Agreements"). Each of the Noncompetition Agreements terminate on January 1,
2003. Under these agreements, Mr. Polich agreed not to engage in any business
activity in the United States which is directly or indirectly in competition
with the Corporation, including businesses relating to cable and harness
assembly, printed circuit board assembly, subassembly and assembly of final
products. Mr. Polich is prohibited from soliciting any employee of the
Corporation to become an employee of any competing organization during the
term of such agreements. Pursuant to the Noncompetition Agreements, the
Corporation paid to Mr. Polich approximately $68,000 during 1997.
Pursuant to a Stock Purchase Agreement dated as of January 1, 1993, as
amended, among the Corporation, Mr. Pino and Mr. Polich, Mr. Pino agreed to
vote his shares in the Corporation in favor of electing Mr. Polich as a
director of the Corporation until the earlier of: (i) January 1, 2003 or (ii)
the date on which all payments required by the Corporation under the
Consulting Agreements and Noncompetition Agreements have been paid in full. In
addition, the Corporation agreed that during such time that Mr. Polich is
entitled to be elected a director (i) Mr. Polich will receive annual director
fees from the Corporation in the amount of $7,500 (provided, that such fees
shall be applied to Mr. Polich's $70,686 loan, as of such date, from the
Corporation to him), (ii) the Corporation will maintain a $1,000,000 term life
insurance policy on his life payable to his spouse, and (iii) the Corporation
will provide Mr. and Mrs. Polich with health insurance pursuant to the
standard health insurance benefits provided to employees of the Corporation.
During 1997, the Corporation applied the $7,500 director fees against Mr.
Polich's loan from the Corporation described below, paid $5,790 in premiums
for the insurance policy on Mr. Polich's life and paid approximately $6,450 in
health insurance premiums for Mr. and Mrs. Polich.
Mr. Polich is the obligor on a promissory note in the original principal
amount of $70,686 payable to the Corporation. The obligation is evidenced by a
note dated December 31, 1992 which bears interest at six percent per annum,
and the $7,500 in annual director's fees which are paid to Mr. Polich are
applied to the principal and interest due on such note. All unpaid principal
and accrued interest is due December 31, 2002. As of December 31, 1997, the
principle and accrued interest outstanding on the promissory note was $41,834.
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Re-Act Realty Trust
The Corporation leases two facilities in Hudson, Massachusetts and certain
equipment from Re-Act Realty Trust, a Massachusetts nominee trust ("Re-Act
Realty Trust"), which is controlled by Mr. Pino and the beneficial interest of
which is principally owned by Mr. Pino. The two facility leases provide for
terms expiring in 1998, and provided for total base monthly rent during 1997
of approximately $30,300. The Corporation assumes the cost of all taxes,
betterment assessments, insurance costs, utility costs and all other operating
and maintenance expenses for the facilities. The equipment lease is scheduled
to expire on December 31, 1998. Under the leases, the Corporation paid Re-Act
Realty Trust a total of approximately $388,000 during 1997.
Split-Dollar Life Insurance Agreement
In September 1996, the Corporation entered into a "split-dollar" life
insurance agreement with a trust established by John A. Pino and his wife,
Janet M. Pino. Under the terms of the agreement, the Corporation and the trust
will share in the premium costs of a whole life insurance policy on the joint
lives of Mr. and Mrs. Pino. The Corporation is entitled to reimbursement of
the amounts advanced, without interest, upon the first to occur of (a) the
death of the later of Mr. or Mrs. Pino or (b) the surrender of the policy.
These advances are secured by a collateral assignment of the policy to the
Corporation. In 1997, the Corporation advanced $196,000 toward the payment of
the premiums.
Other Transactions
The Corporation has entered into a Registration Rights Agreement dated
February 8, 1995 with Mr. Pino and certain trusts previously established by
Mr. Pino pursuant to which the Corporation, under certain circumstances, will
be required to register their shares of Common Stock under the Securities Act
of 1933, as amended.
The Corporation has adopted a policy whereby all material future
transactions between the Corporation and its officers, directors and
affiliates will be on terms no less favorable to the Corporation than could be
obtained from unrelated third parties and will be approved by a majority of
the disinterested members of the Corporation's Board of Directors.
COMPENSATION OF DIRECTORS
As compensation for serving on the Board of Directors, the Corporation pays
each non-employee director $5,000 annually and an additional $1,000 for each
meeting of the Board of Directors that they attend. Non-employee directors
also receive $500 for their attendance at each meeting of any Board committees
on which they serve unless such committee meeting is held on the same date as
a meeting of the Board, and will be reimbursed for their reasonable out-of-
pocket expenses incurred in attending Board and committee meetings. Non-
employee directors are also automatically granted options to purchase shares
of the Corporation's Common Stock pursuant to the 1995 Non-Employee Director
Stock Option Plan. Mr. Polich receives minimum annual director's fees, payable
quarterly, of $7,500 for his service on the Board of Directors. Directors who
are officers or employees of the Corporation do not receive any additional
compensation for their services as directors.
15
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
stockholder return on the Corporation's Common Stock during the period from
the Corporation's initial public offering on March 30, 1995 through December
31, 1997, with the cumulative total return for the Nasdaq Market Index and an
SIC Index that includes all organizations in the Corporation's Standard
Industrial Classification (SIC) Code 367--Electronic Components & Accessories.
The comparison assumes $100 was invested on March 30, 1995, the date the
Corporation's Common Stock began publicly trading, in the Corporation's Common
Stock and in each of the foregoing indices and assumes reinvestment of
dividends, if any.
COMPARISON OF CUMULATIVE TOTAL RETURN(1)(2)
<TABLE>
<CAPTION>
- ----------------------------------------------------FISCAL YEAR ENDING---------
COMPANY 1995 1995 1996 1997
<S> <C> <C> <C> <C>
ACT MANUFACTURING INC 100.00 92.71 219.79 117.75
INDUSTRY INDEX 100.00 125.76 190.66 202.87
BROAD MARKET 100.00 120.91 150.25 183.79
</TABLE>
(1) Prior to March 30, 1995, the Corporation's Common Stock was not publicly
traded. Comparative data is provided only for the period since that date.
This graph is not "soliciting material," is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Corporation under the Securities Act of
1933 or the Exchange Act whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
(2) The stock price performance shown on the graph is not necessarily
indicative of future price performance. Information used on the graph was
obtained from Media General Financial Services, Richmond, Virginia, a
source believed to be reliable, but the Corporation is not responsible for
any errors or omissions in such information.
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<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche LLP
("Deloitte & Touche"), independent certified public accountants, to serve as
auditors for the fiscal year ending December 31, 1998. Deloitte & Touche has
served as the Corporation's auditors since 1985. It is expected that a member
of the firm will be present at the meeting with the opportunity to make a
statement if so desired and will be available to respond to appropriate
questions from the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THIS SELECTION.
SECTION 16 REPORTING
Section 16(a) of the Exchange Act, requires the Corporation's directors,
executive officers and holders of more than 10% of the Corporation's Common
Stock (collectively, the "Reporting Persons") to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock of the Corporation. Such persons are required by
regulations of the Commission to furnish the Corporation with copies of all
such filings. Based on its review of the copies of such filings received by it
with respect to the fiscal year ended December 31, 1997, the Corporation
believes that all Reporting Persons complied with all Section 16(a) filing
requirements in the fiscal year ended December 31, 1997.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be furnished to all stockholders entitled to vote at the next Annual Meeting
of Stockholders of the Corporation must be received at the Corporation's
principal executive offices not later than December 17, 1998. Any such
proposal must comply with the rules and regulations of the Securities and
Exchange Commission. In order to curtail controversy as to the date on which a
proposal was received by the Corporation, it is suggested that proponents
submit their proposals by Certified Mail, Return Receipt Requested to ACT
Manufacturing, Inc., 108 Forest Avenue, Hudson, MA 01749, Attention: Douglass
C. Greenlaw, Clerk.
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<PAGE>
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation. In
addition to soliciting stockholders by mail and through its regular employees,
the Corporation may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Corporation
registered in the names of a nominee and, if so, will reimburse such banks,
brokers and other custodians, nominees and fiduciaries for their reasonable
out-of-pocket costs. Solicitation by officers and employees of the Corporation
may also be made of some stockholders in person or by mail, telephone or
telegraph following the original solicitation.
By Order of the Board of Directors
/s/ Douglass C. Greenlaw
Douglass C. Greenlaw
Clerk
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<PAGE>
1382-PS-98
<PAGE>
DETACH HERE
PROXY
ACT MANUFACTURING, INC.
PROXY FOR 1998 ANNUAL MEETING OF STOCKHOLDERS--MAY 19, 1998
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of ACT Manufacturing, Inc., a Massachusetts
corporation (the "Corporation"), hereby acknowledges receipt of the Notice of
Annual Meeting of Stockholders and Proxy Statement, each dated April 16, 1998
and hereby appoints John A. Pino and Douglass C. Greenlaw, and each of them,
proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
Annual Meeting of Stockholders of the Corporation to be held at BankBoston,
N.A., Conference and Training Center, 100 Federal Street, Boston, MA 02110 on
May 19, 1998 at 10:00 a.m., local time, and at any adjournment or adjournments
thereof, and to vote all shares of Common Stock which the undersigned would be
entitled to vote if then there personally present, on the matters set forth on
the reverse side.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE>
DETACH HERE
- --- Please mark
X votes as in
- --- this example.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR AND FOR THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
<TABLE>
<S> <C>
1. To elect one (1) Director to serve for FOR AGAINST ABSTAIN
a three-year term as a Class III Director. 2. To ratify the selection of Deloitte & [_] [_] [_]
Touche LLP as independent
NOMINEE: Bruce R. Gardner auditors for the fiscal year ending
December 31, 1998.
FOR WITHHELD
[_] [_]
and, in their discretion, upon such other matter or matters
which may properly come before the meeting or any
adjournment or adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
(This Proxy should be marked, dated and signed by the shareholder(s)
exactly as his or her name appears hereon, and returned promptly in the
enclosed envelope. Persons signing in a fiduciary capacity should so
indicate. If shares are held by joint tenants or as community
property, both should sign.)
Signature: ____________________ Date: ______________ Signature: ____________________ Date: ______________
</TABLE>
