<PAGE>
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.___________)
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/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 Section 240.14a-11(c) or Section 240.14a-12
THOMAS & BETTS CORPORATION
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------
<PAGE>
/ / 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:
---------------------------------------------------------------
<PAGE>
Thomas & Betts Corporation Letterhead
March 23, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders. The meeting will be held at the Winegardner Auditorium of The
Dixon Gallery and Gardens, 4339 Park Avenue, Memphis, Tennessee, at 10:00 a.m.
on Wednesday, May 6, 1998. After the business session, we will discuss the
financial results of 1997 and report on current operations.
The formal Notice and Proxy Statement appear on the following pages and
contain details of the business to be conducted at the meeting. In addition to
the election of twelve directors, you will be asked to approve an increase in
the authorized shares of Thomas & Betts common and preferred stock and to ratify
the appointment of the independent public accountants.
Your vote is very important regardless of the number of shares you own. We
hope you can attend the meeting. However, whether or not you plan to attend,
please sign, date and return the accompanying proxy card or voting instruction
form. The enclosed envelope requires no postage if mailed in the United States.
If you attend the meeting, you may revoke your proxy if you wish and vote
personally.
Sincerely,
Clyde R. Moore
President and Chief Executive Officer
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 6, 1998
To the Shareholders of THOMAS & BETTS CORPORATION:
The Annual Meeting of Shareholders of Thomas & Betts Corporation (the
"Corporation") will be held at the Winegardner Auditorium, The Dixon Gallery and
Gardens, 4339 Park Avenue, Memphis, Tennessee, on May 6, 1998, at 10:00 a.m. to
take action with respect to:
1. Election of twelve directors;
2. Amendment of the Charter to increase the number of authorized shares
of (i) Common Stock from 80,000,000 shares to 250,000,000 shares and
(ii) Preferred Stock from 500,000 shares to 1,000,000 shares and to
change the par value of the Common and Preferred Stock from "no par
value" to "$.10 par value";
3. Ratification of the appointment of KPMG Peat Marwick LLP as
independent public accountants for fiscal year 1998; and
4. Such other business as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on March 9, 1998, will
be entitled to receive notice of, and to vote at, the Annual Meeting of
Shareholders or any adjournment thereof.
Whether or not you expect to attend the meeting in person, YOU ARE URGED TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY to: Inspectors of Election, First
Chicago Trust Company of New York, P.O. Box 8711, Edison, New Jersey 08818-9180.
JANICE H. WAY, CORPORATE SECRETARY
8155 T&B Boulevard
Memphis, Tennessee 38125
March _____, 1998
YOUR VOTE IS IMPORTANT
PLEASE RETURN YOUR PROXY PROMPTLY
4
<PAGE>
THOMAS & BETTS CORPORATION
PROXY STATEMENT
SOLICITATION OF PROXY
THE ENCLOSED PROXY IS BEING SOLICITED BY AND ON BEHALF OF THE BOARD OF
DIRECTORS (THE "BOARD") OF THOMAS & BETTS CORPORATION (THE "CORPORATION") whose
principal executive offices are at 8155 T&B Boulevard, Memphis, Tennessee 38125,
for use in connection with the Annual Meeting of Shareholders to be held at
10:00 a.m. on May 6, 1998, at the Winegardner Auditorium, The Dixon Gallery and
Gardens, 4339 Park Avenue, Memphis, Tennessee, and at any adjournment thereof
(the "Annual Meeting"). The definitive proxy statement and accompanying form of
proxy will be first sent or given to shareholders on or about March 23, 1998.
The matters to be considered and acted upon at such Annual Meeting are
referred to in the preceding Notice and are more fully discussed below. All
shares represented by proxies that are returned properly signed will be voted as
specified on the proxy card. If choices are not specified on the proxy card, the
shares will be voted as recommended by the Board. The Bylaws of the Corporation
require that the holders of a majority of the total number of shares entitled to
vote be represented in person or by proxy in order for the business of the
meeting to be transacted.
The cost of soliciting proxies for the Annual Meeting will be borne by the
Corporation. The Corporation has retained Hill and Knowlton, Inc., 466 Lexington
Avenue, New York, NY 10017, to distribute material to beneficial owners whose
shares are held by brokers, banks, or other institutions, and to assist in
soliciting proxies, for a fee estimated at $6,000 plus expenses. In addition,
directors, officers and other employees may solicit proxies in person or by mail
or telecommunication. The Corporation will also reimburse brokers, banks and
others who are record holders of the Corporation's shares for reasonable
expenses incurred in obtaining voting instructions from beneficial owners of
such shares.
The Annual Report to Shareholders for the Corporation's fiscal year ended
December 28, 1997, including financial statements, is enclosed. Such Annual
Report is not a part of the proxy solicitation materials and is not incorporated
herein by reference.
REVOCATION OF PROXY
A proxy may be revoked by the shareholder before it is voted by giving
written notice of revocation to the Inspectors of Election, First Chicago Trust
Company of New York, P.O. Box 8711, Edison, New Jersey 08818-9180, or by
executing a later dated proxy.
COMMON STOCK OUTSTANDING
At the close of business on March 9, 1998, there were outstanding and
entitled to vote at the Annual Meeting ____________ shares of the Corporation's
Common Stock, no par value (the "Common Stock"). Holders of record of Common
Stock at the close of business on March 9, 1998, will be entitled to one vote
for each share held on all matters properly coming before the Annual Meeting.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows persons or groups who were beneficial owners of
more than 5% of the outstanding Common Stock as of December 31, 1997. This
information is copied from the latest Schedule 13G filed by the beneficial
owners with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------------- ----------------- --------
<S> <C> <C>
Delaware Management Holdings, Inc.
2005 Market Street
Philadelphia, Pennsylvania 19103 .... 4,162,612 (1) 7.6%
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109.......... 4,044,806 (2) 7.4%
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154 .......... 3,048,557 (3) 5.5%
</TABLE>
- -------------
(1) Shares are held by Delaware Management Company, Inc., a registered
investment adviser and subsidiary of Delaware Management Holdings, Inc., in
the accounts of institutional investors. Of the total number reported
above, Delaware Management Holdings Inc. has sole dispositive power as to
3,966,112 shares, shared dispositive power as to 196,500 shares, sole
voting power as to 2,521,800 shares, and no voting power as to any other
shares.
(2) FMR Corp., a holding company whose subsidiaries include a registered
investment adviser and a bank, has sole dispositive power as to all shares
and sole voting power as to 125,480 shares.
(3) Scudder Kemper Investments, Inc., a registered investment adviser, has sole
dispositive power as to 3,030,757 shares, shared dispositive power as to
17,800 shares, sole voting power as to 772,820 shares, and shared voting
power as to 2,051,400 shares.
6
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table provides data on Common Stock beneficially owned as of
February 13, 1998, by each director, director nominee, and each of the executive
officers named in the Summary Compensation Table (the "Named Executives") and by
the directors and executive officers as a group, as reported by each person.
Unless otherwise stated, the beneficial owners exercise sole voting and
investment power over their shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)(2) OF CLASS
------------------------ -------------------------- --------
<S> <C> <C>
T. Roy Burton .................. 44,293 *
Ernest H. Drew ................. 2,000 (3) *
T. Kevin Dunnigan .............. 347,459 *
Jeananne K. Hauswald ........... 1,134 *
Fred R. Jones .................. 27,916 *
Thomas W. Jones ................ 1,407 (3) (4) *
Ronald B. Kalich ............... 0 *
Robert A. Kenkel ............... 1,200 *
John N. Lemasters .............. 14,312 (3) (5) *
Kenneth R. Masterson ........... 1,650 *
Thomas C. McDermott ............ 4,724 *
Clyde R. Moore ................. 224,741 *
W. Neil Parker ................. 36,606 *
Jean-Paul Richard .............. 1,400 *
Ian M. Ross .................... 1,600 (3) *
Jerre L. Stead ................ 0 *
Gary R. Stevenson .............. 61,123 *
William H. Waltrip ............. 1,400 *
Directors and executive officers
as a group (19 including the
above) ....................... 866,654 1.6%
</TABLE>
- -----------
* Less than one percent of the outstanding Common Stock.
(1) Includes shares which may be acquired within 60 days of February 13, 1998,
through the exercise of stock options, as follows: Mr. Burton, 27,672;
Mr. Dunnigan, 190,332; Mr. Lemasters, 3,178; Mr. McDermott, 3,178;
Mr. Moore, 166,101; Mr. Parker, 24,081; Mr. Stevenson, 39,378; and all
directors and executive officers as a group (19), 526,746.
(2) Includes shares of restricted stock with respect to which the holders have
sole voting power but no dispositive power during the restricted period, as
follows: Mr. Burton, 12,601; Dr. Drew, 1,200; Mr. Dunnigan, 37,310;
Ms. Hauswald, 884; Mr. F. R. Jones, 12,915; Mr. T. W. Jones, 1,200;
Mr. Kenkel, 800; Mr. Lemasters, 281; Mr. Masterson, 650; Mr. McDermott,
281; Mr. Moore, 35,582; Mr. Parker, 10,125; Dr. Richard, 400; Dr.
Ross, 1,200; Mr. Stevenson, 12,963;
7
<PAGE>
Mr. Waltrip, 1,200; and all directors and executive officers as a group
(19), 159,639.
(3) Amounts do not include phantom stock shares credited to accounts in
the Deferred Fee Plan for Nonemployee Directors of Thomas & Betts
Corporation, as follows: Dr. Drew, 3,349; Mr. T. W. Jones, 4,959; Mr.
Lemasters, 830; Dr. Ross, 4,700.
(4) Includes 207 shares with respect to which Mr. T. W. Jones shares voting and
investment power with his wife.
(5) Includes 7,675 shares with respect to which Mr. Lemasters shares voting and
investment power with his wife.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
On the basis of reports and representations submitted by the directors and
executive officers of the Corporation, all Forms 3, 4 and 5 showing ownership of
and changes in ownership of Common Stock were timely filed with the Securities
and Exchange Commission as required by Section 16(a) of the Securities Exchange
Act of 1934 except that (i) Mr. Jerry Kronenberg, Vice President-General
Counsel, filed a Form 5 reporting six late Form 4 transactions, and (ii) Mr.
Gary Stevenson filed one late Form 4 reporting one transaction.
1. ELECTION OF DIRECTORS
At the forthcoming Annual Meeting it is intended that 12 directors shall be
elected, each to hold office for the term of one year and until a successor
shall be elected and shall qualify. The nominees identified below will be
proposed by the Board for the 12 directorships. Shares represented by proxies
that are returned properly signed will be voted for the nominees unless the
shareholder indicates on the proxy that authority to vote the shares is withheld
for one or more or for all of the nominees listed. Directors are elected by a
plurality of the votes cast. Any shares not voted, whether by withholding or
broker non-vote, have no effect on the election of directors except to the
extent the failure to vote for an individual results in another individual
receiving a larger number of votes. Should a nominee become unable to serve as a
director, the proxy will be voted for the election of a substitute nominee who
shall be designated by the Board or, if no substitute nominee is named, the
number of directorships will be reduced accordingly.
Following is information on the principal occupation and employment during
the past five years of each director nominee, positions and offices with the
Corporation, and membership on other boards of directors.
ERNEST H. DREW, 60
A DIRECTOR SINCE 1989
Chief Executive Officer of Industries and Technology Group (power
generation, commercial nuclear power, governmental and environmental services,
transport temperature control and process control systems), Westinghouse
Electric Corporation (July to December 1997). Member of the Board of Management
(1995 to 1997) of Hoechst A.G. (chemicals, pharmaceuticals, fibers and
plastics). Chairman (1994 to 1995), Chief Executive Officer (1988 to 1995), and
President (1987 to 1994) of
8
<PAGE>
Hoechst Celanese Corporation. Director of Public Service Enterprise Group
Incorporated.
T. KEVIN DUNNIGAN, 60
A DIRECTOR SINCE 1975
Chairman of the Board (1992 to present), Chief Executive Officer (1985 to
1997), President (1980 to 1994), Chief Operating Officer (1980 to 1985),
Executive Vice President-Electrical (1978 to 1980), Vice President-T&B/Thomas &
Betts (1976 to 1978), President of The Thomas & Betts Co. Division (1974 to
1976) of the Corporation. Director of C. R. Bard, Inc., Elsag Bailey Process
Automation N.V., and Lukens Inc.
JEANANNE K. HAUSWALD, 53
A DIRECTOR SINCE 1993
Business consultant (January 1998 to present). Vice President and
Treasurer (1993 to 1998) of The Seagram Company Ltd. (beverages and
entertainment/communications).
THOMAS W. JONES, 48
A DIRECTOR SINCE 1992
Vice Chairman of Travelers Group, Inc. (financial services) and Chairman
and Chief Executive Officer (August 1997 to present) of Smith Barney Asset
Management Division of Travelers Group, Inc. Vice Chairman (1995 to August
1997), President and Chief Operating Officer (1993 to August 1997), Executive
Vice President and Chief Financial Officer (1989 to 1993) of Teachers Insurance
and Annuity Association--College Retirement Equities Fund (pension system for
employees of colleges, universities, independent schools, and related
organizations). Director and Deputy Chairman of the Federal Reserve Bank of New
York. Director of Travelers Group, Inc. and of the Federal Home Loan Mortgage
Corporation (Freddie Mac).
RONALD B. KALICH SR., 50
NOMINEE
Group President (1993 to present) in The Marmon Group, Inc. (a worldwide
affiliation of independent manufacturing and service companies) and President
and Chief Executive Officer (1994 to present) of Getz Bros. & Co., Inc.
(marketing and distribution of medical devices, pharmaceuticals, industrial
equipment, specialty chemicals and consumer goods). Group Executive,
Environmental and Process Controls (1991 to 1993) of Danaher Corporation (tools,
environmental controls, transportation equipment and electrical products).
Director of The Carbide/Graphite Group, Inc. and National-Standard Company.
ROBERT A. KENKEL, 63
A DIRECTOR SINCE 1994
Private investor (1996 to present). Business consultant (1990 to 1996).
Chairman, Chief Executive Officer and Chief Operating Officer (1988 to 1990) of
The Pullman Co. (automotive, aerospace and industrial components and products).
9
<PAGE>
KENNETH R. MASTERSON, 54
A DIRECTOR SINCE 1995
Executive Vice President, General Counsel and Secretary (January 1998 to
present) of FDX Corporation (transportation services). Executive Vice President
(1996 to 1998), Senior Vice President (1981 to 1996), General Counsel (1981 to
1998) and Secretary (1993 to 1998) of Federal Express Corporation (worldwide
express delivery services). Director of Nova Holdings, Inc.
THOMAS C. McDERMOTT, 61
A DIRECTOR SINCE 1996
Proprietor (January 1998 to present) of Forbes Products, L.L.C. (custom
vinyl business products). Chairman (1995 to 1997), Chief Executive Officer and
President (1994 to 1997) of Goulds Pumps, Incorporated (centrifugal pumps for
industrial, domestic and agricultural markets). President and Chief Operating
Officer (1986 to 1993) of Bausch & Lomb Incorporated (contact lens, lens-care
and eyewear products). Director of A. T. Cross Co. and Canandaigua Brands, Inc.
CLYDE R. MOORE, 44
A DIRECTOR SINCE 1993
Chief Executive Officer (1997 to present), President (1994 to present),
Chief Operating Officer (1994 to 1997), and President-Electrical Division (1992
to 1994) of the Corporation. President and Chief Operating Officer (1990 to
1992) of FL Industries, Inc. (electrical components) and President of its
American Electric Division (1985 to 1992) prior to its acquisition by the
Corporation. Director of The Kroger Company and Essex International Inc.
JEAN-PAUL RICHARD, 55
A DIRECTOR SINCE 1996
Private investor (January 1998 to present). President and Chief Executive
Officer (1996 to September 1997) of AGCO Corporation (agricultural equipment).
President and Chief Executive Officer (1993 to 1996) of Insituform Technologies,
Inc. (trenchless technologies for the rehabilitation and improvement of sewer,
water, gas, and industrial pipes). President (1991 to 1993) of Massey Ferguson
Group Limited (farm equipment and machinery), a subsidiary of Varity
Corporation, and Senior Vice President-Corporate Development (1991 to 1993) of
Varity Corporation (farm equipment and machinery, brake systems, wheels, and
diesel engines).
JERRE L. STEAD, 55
NOMINEE
Chairman and Chief Executive Officer (1996 to present) of Ingram Micro Inc.
(distributor of technology products and services). Chairman and Chief
Executive Officer (January to September 1995) of Legent Corporation (software
products and related services). Executive Vice President (1993 to 1995) of AT&T
Corporation (communication services). Chairman and Chief Executive Officer
(1993 to 1995) of AT&T Global Information Solutions (computing and
communications). President and Chief Executive Officer (1991 to 1993) of AT&T
Corporation's Global Business Communications Systems (PBX's key systems and
voice-processing systems). Director of Armstrong World Industries, Inc.,
10
<PAGE>
American Precision Industries, Inc., TBG Group N.V. and TJ International, Inc.
WILLIAM H. WALTRIP, 60
A DIRECTOR SINCE 1983
Chairman (1996 to present) of Bausch & Lomb Incorporated (contact lens,
lens-care and eyewear products) and Chairman (1993 to present) of Technology
Solutions Company (services and resources to design, develop and implement
large-scale computer systems). Chief Executive Officer of Bausch & Lomb
Incorporated (January to December 1996). Chief Executive Officer (1993 to 1995)
of Technology Solutions Company. Chairman (1992 to 1993), Chief Executive
Officer and President (1991 to 1993) of Biggers Brothers, Inc. (food service
distributors). Director of Bausch & Lomb Incorporated, Teachers Insurance and
Annuity Association, and Technology Solutions Company.
THE BOARD OF DIRECTORS
The Board establishes broad corporate policy and gives guidance to the
Corporation. In 1997, there were six meetings of the Board and 10 meetings of
committees of the Board plus action by unanimous written consent on five
occasions. All director nominees attended at least 75% of the meetings of the
Board and committees of which they were members. The total combined attendance
at these meetings was 89.8%.
Nonemployee directors receive a retainer fee of $26,000 per year plus a fee
of $2,000 for each Board meeting and $1,500 for each regularly scheduled
committee meeting attended. No fees are paid for actions taken by unanimous
written consent in lieu of a meeting. Each committee chairman receives an
additional retainer fee of $3,500 per year. Employee directors do not receive
any fees for serving as a director of the Corporation or as a member or chairman
of any committee of the Board. Under the Thomas & Betts Corporation Restricted
Stock Plan for Nonemployee Directors, each person who is elected a director at
the annual meeting of shareholders receives an award of 200 restricted shares of
Common Stock. A nonemployee director who is elected to fill a vacancy or a newly
created directorship in the interim between annual meetings receives an award of
a prorated number of restricted shares of Common Stock effective as of the date
of election. Shares awarded to a nonemployee director remain restricted until
such director's termination of service as a director.
The Deferred Fee Plan for Nonemployee Directors of Thomas & Betts
Corporation (the "Deferred Fee Plan") provides for a director to defer all or a
portion of compensation earned for services as a director. Any amount so
deferred is valued, in accordance with the director's election, in a
hypothetical investment in Common Stock ("Deferred Stock Units") or in one or
more of seven mutual funds in the Vanguard Group. Deferred Stock Units
fluctuate in value as the value of the Common Stock fluctuates. In addition, to
more closely align directors' interests with those of the Corporation's
shareholders, directors who are elected after December 3, 1997, and current
directors who elect prior to May 6, 1998, to convert the accrued cash value of
their benefit under the Thomas & Betts Retirement Plan for Nonemployee Directors
(the "Retirement Plan") to Deferred Stock Units, will receive an annual grant of
Deferred Stock Units having a value of $7,500 as of the last day of the Board
year. Additional Deferred Stock Units are credited as dividend equivalents on
the payment date and at the same value as dividends declared on the Common
Stock. A deferred fee account is payable only in cash and is distributed, in
accordance with the director's election, in a lump sum or in installments, upon
termination of service as a director.
11
<PAGE>
The Retirement Plan was closed to new participants on December 3, 1997.
Directors (excluding those who are current or former employees of the
Corporation and those who elect to convert their accrued benefit to the Deferred
Fee Plan) who have served on the Board for at least five years will receive upon
retirement an annual benefit payable over a five-year period equal to 50% of the
amount of the annual retainer fee in effect at retirement. Each additional year
of service up to an aggregate of ten years increases the amount of the benefit
payable by ten percentage points and the payment period by one year, to a
maximum of 100% of the retainer payable for a period of ten years. In the event
of a change of control of the Corporation, each nonemployee director would be
fully vested in the maximum retirement benefit.
COMMITTEES OF THE BOARD OF DIRECTORS
There are four standing committees of the Board: Executive Committee,
Audit Committee, Corporate Governance Committee, and Human Resources Committee.
Members of each committee, who are elected by the full Board, are named below.
The Corporation follows the practice of periodically rotating the chairmanship
of the Audit Committee, Corporate Governance Committee, and Human Resources
Committee.
<TABLE>
<CAPTION>
CORPORATE HUMAN
EXECUTIVE AUDIT GOVERNANCE RESOURCES
--------- ----- ---------- ---------
<S> <C> <C> <C>
Ernest H. Drew Thomas W. Jones* Ernest H. Drew Jeananne K. Hauswald
T. Kevin Dunnigan* Thomas C. McDermott T. Kevin Dunnigan Robert A. Kenkel
Robert A. Kenkel Jean-Paul Richard Kenneth R. Masterson* John N. Lemasters
Clyde R. Moore Ian M. Ross Clyde R. Moore William H. Waltrip*
William H. Waltrip
</TABLE>
* Chairman
EXECUTIVE COMMITTEE
The Executive Committee's function is to act for the Board, to the extent
permitted by law, in any situation in which Board action is required and it is
not practicable to have a meeting of the Board. The Executive Committee took
action by written consent in lieu of a meeting of the Committee on three
occasions in 1997.
AUDIT COMMITTEE
This committee is composed solely of nonemployee directors of the
Corporation. The Audit Committee's principal responsibilities are to:
(1) provide an open avenue of communication between and among the independent
accountants, the internal auditors, management and the Board of Directors;
(2) review the engagement of the independent accountants and recommend to the
Board the firm to be appointed each year, subject to ratification by the
Corporation's shareholders; (3) review the plan and scope of the independent
accountants' annual audit of the Corporation's financial statements; (4) review
the internal audit plan, its scope, the factors considered in its development
and the audit results; (5) review the annual financial statements and related
notes, the adequacy of disclosures, the impact of major accounting policy
decisions and the results of the annual financial statement audit; (6) review
the travel and entertainment expenses of employee directors for compliance with
corporate policy; (7) review the adequacy of reserves, accounting estimates and
management's judgments employed in the
12
<PAGE>
preparation of the financial statements; (8) review the adequacy and scope of
the Corporation's internal accounting controls and procedures; (9) review the
fees and expenses for audit and non-audit services provided by the independent
accountants; (10) review the impact of any new accounting or auditing standards
being considered by the accounting profession or the Securities and Exchange
Commission; (11) direct and supervise investigations, if necessary, into any
matter it deems appropriate; and (12) report its findings and actions to the
Board. There were four meetings of the Audit Committee in 1997.
CORPORATE GOVERNANCE COMMITTEE
A majority of the members of this committee must be nonemployee directors
of the Corporation. A former employee serving on this committee is considered a
nonemployee director. The Corporate Governance Committee (1) reviews the
performance, attendance, and maintenance of qualifications of current members of
the Board; (2) receives suggestions and makes recommendations to the Board
concerning candidates for the Board and the slate of director nominees to be
submitted to the annual meeting of shareholders; (3) makes recommendations to
the Board concerning the compensation of nonemployee directors and the
retirement policy of the Board; (4) reviews Board procedures and practices;
(5) recommends membership assignments for committees of the Board; and
(6) reviews and takes action on requests for management personnel to serve on
boards of directors of other companies. The Corporate Governance Committee will
consider shareholder suggestions of persons for consideration as candidates for
nomination as members of the Board. Shareholders should submit the name,
biographical data, and qualifications of any such suggested candidate to the
Corporate Secretary. Any such recommendation should be accompanied by the
written consent of such person to be named as a candidate and, if nominated and
elected, to serve as a director. If a shareholder wishes to nominate at the
annual meeting of shareholders a person for election to the Board, the
Corporation's Bylaws require that the nomination satisfy certain conditions,
including, generally, that written notice be delivered to the Corporate
Secretary at the Corporation's principal executive offices not less than 60 nor
more than 90 days prior to the first anniversary of the preceding year's annual
meeting of shareholders. A copy of the applicable Bylaw is available from the
Corporate Secretary upon the request of any shareholder. There were two meetings
of the Corporate Governance Committee and action taken by unanimous written
consent on one occasion in 1997.
HUMAN RESOURCES COMMITTEE
This committee is composed solely of nonemployee directors of the
Corporation. The Human Resources Committee (1) reviews compensation programs,
employee benefit plans, and personnel policies applicable to officers and other
members of senior management; (2) reviews management development and succession
programs; (3) reviews major organization changes and evaluates their impact on
senior management succession plans and reward systems, and makes recommendations
to the Board when Board action is required; (4) makes recommendations to the
Board on the compensation of the five most highly compensated executive
officers; (5) establishes annually the performance criteria for the Executive
Incentive Plan and certifies at the end of each year the extent to which the
performance targets are met; (6) performs the administrative functions assigned
to the Committee by the provisions of the Executive Incentive and the 1993
Management Stock Ownership Plans; and (7) reports the results of its actions and
findings to the Board, and, with respect to the above, recommends programs and
changes considered desirable. The chairman of this committee is responsible for
chairing the annual review by the nonemployee directors of the performance of
the Chief Executive
13
<PAGE>
Officer. There were four meetings of the Human Resources Committee and action
taken by unanimous written consent on one occasion in 1997.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 28, 1997,
December 29, 1996 and December 31, 1995, the cash compensation paid by the
Corporation and its subsidiaries as well as other compensation paid for those
years to the Chief Executive Officers and to each of the four other most highly
compensated executive officers of the Corporation (the "Named Executives") in
all capacities in which they served.
<TABLE>
<CAPTION>
Summary Compensation Table
ANNUAL COMPENSATION LONG-TERM
------------------- COMPENSATION AWARDS
-------------------------
NAME AND YEAR SALARY ($) BONUS ($) OTHER ANNUAL RESTRICTED NUMBER OF ALL OTHER
---- ---------- --------- ------------ ---------
PRINCIPAL POSITION COMPENSATION STOCK AWARDS SECURITIES COMPENSATION
------------------ ------------ ------------
($)(1) ($)(2) UNDERLYING ($)(3)
------ ------ ------
OPTIONS
GRANTED (#)
-----------
<S> <C> <C> <C> <C> <C> <C> <C>
T. Kevin Dunnigan . . . . . . . . 1997 $275,962 $550,425 $ - $644,663 52,340(5) $11,737,610(5)
Chairman and Chief Executive 1996 585,000 493,448 244,453 345,337 28,380 54,752
Officer(4) 1995 550,000 444,235 175,796 248,316 19,600 58,647
Clyde R. Moore . . . . . . . . . 1997 600,000 537,000 - 644,663 126,170 38,330
President and Chief Executive 1996 460,000 388,010 196,597 308,055 24,284 30,511
Officer(6) 1995 400,000 323,080 101,658 146,011 11,450 24,687
T. Roy Burton . . . . . . . . . . 1997 255,000 151,674 - 200,110 8,124 10,394
President-Electronics/OEM 1996 209,504 109,047 - 139,478 6,712 11,294
Division 1995 197,837 83,317 38,526 55,361 4,350 10,888
Fred R. Jones . . . . . . . . . . 1997 244,000 152,866 - 181,948 7,385 19,378
Vice President-Finance and 1996 205,000 121,042 55,092 183,089 8,810 14,095
Treasurer(7) 1995 83,333 61,116 15,097 - 10,000 1,870
W. Neil Parker. . . . . . . . . . 1997 220,000 95,524 - 152,485 6,189 18,374
President-Electrical 1996 194,558 104,065 100,110 100,267 4,826 6,908
Components Group(8) 1995 173,453 79,684 - 67,988 3,150 -
Gary R. Stevenson . . . . . . . . 1997 257,000 161,011 - 200,110 8,124 15,765
Vice President-Operations 1996 217,300 109,976 - 153,449 7,382 13,729
1995 205,000 99,347 31,533 72,067 4,800 11,614
</TABLE>
___________
14
<PAGE>
(1) Except for Mr. Jones (see footnote 6), the amounts reported represent cash
payments of Federal and state withholding taxes equal to the fair market
value on the date of award of such number of shares of Common Stock that
the recipient of a restricted stock award elected to forgo in favor of tax
payments.
(2) Fair market value of shares awarded on the date of grant in each year.
Dividends are paid to the recipients of restricted stock awards at the same
time and at the same rate as paid to all shareholders. The number and value
of the aggregate restricted stock holdings as of December 28, 1997, based
on the closing market price of the Common Stock on December 26, 1997 of
$45.9375 are as follows:
Mr. Dunnigan . . . . . . . . . . . . . . . . . . . 44,800 $2,058,000
Mr. Moore . . . . . . . . . . . . . . . . . . . . 26,583 1,221,157
Mr. Burton . . . . . . . . . . . . . . . . . . . . 9,698 445,502
Mr. Jones . . . . . . . . . . . . . . . . . . . . 8,721 400,621
Mr. Parker . . . . . . . . . . . . . . . . . . . . 8,031 368,924
Mr. Stevenson. . . . . . . . . . . . . . . . . . . 10,576 485,835
(3) The amounts reported in 1997 for Messrs. Dunnigan, Moore, Burton, Jones,
Parker and Stevenson include contributions to a 401(k) plan in the amounts
of $6,113, $5,836, $5,530, $6,400, $6,304, and $6,325, respectively;
contributions to a nonqualifed savings plan in the amounts of $16,785,
$25,461,$0, $5,904, $3,730, and $6,000, respectively; and premiums paid by
the Corporation in the amounts of $35,794, $7,033, $4,864, $7,086, $8,340,
and $3,440, respectively, for group term life insurance and whole life
insurance having an aggregate face value equal to 1 1/2 times each person's
annual base salary and average bonus ("Life Insurance"). The amounts
reported in 1996 for Messrs. Dunnigan, Moore, Burton, Jones, Parker and
Stevenson include contributions to a 401(k) plan in the amounts of $6,102,
$6,347, $6,303, $5,155, $6,223 and $6,462, respectively; contributions to a
nonqualifed savings plan in the amounts of $14,560, $17,466, $358, $3,175,
$685 and $3,990, respectively; and premiums paid by the Corporation in the
amounts of $34,090, $6,698, $4,633, $5,765, $0 and $3,277, respectively,
for Life Insurance. The amounts reported in 1995 for Messrs. Dunnigan,
Moore, Burton, Jones and Stevenson include contributions to a 401(k) plan
in the amounts of $5,936, $5,803, $6,476 $1,328, and $6,575, respectively;
contributions to a nonqualifed savings plan in the amounts of $20,245,
$12,505, $0, $542, and $1,920, respectively; and premiums paid by the
Corporation in the amounts of $32,466, $6,379, $4,412, $0, and $3,120,
respectively, for Life Insurance.
(4) The amounts reported in 1997 are for Mr. Dunnigan's service as Chief
Executive Officer until his retirement on May 7, 1997.
(5) The amounts reported in 1997 for Mr. Dunnigan include a stock option grant
for 26,170 shares of Common Stock, a restricted stock award of $644,663 and
a special stock award of $1,500,024 pursuant to the terms of an agreement
concerning Mr. Dunnigan's retirement as the Corporation's Chief Executive
Officer effective May 7, 1997, as described on page [12], and a lump-sum
distribution under the Corporation's Executive Retirement Plan of
$9,534,231.
(6) The amounts reported for 1997 are for Mr. Moore's service as President and
Chief Operating
15
<PAGE>
Officer through May 6, 1997, and as President and Chief Executive Officer
beginning May 7, 1997.
(7) The amounts reported for 1995 are for the period beginning August 1, the
date that Mr. Jones joined the Corporation. The bonus amount for 1995 is
comprised of an annual incentive payment of $47,116 and a signing bonus of
$14,000. Other Annual Compensation reported for 1996 and 1995 consists of
relocation expenses paid to or on behalf of Mr. Jones.
(8) Other Annual Compensation reported for 1996 consists of relocation expenses
paid to or on behalf of Mr. Parker.
STOCK OPTION GRANTS
The following table contains information concerning the grant of stock
options under the Corporation's 1993 Management Stock Ownership Plan to the
Named Executives as of the end of the last fiscal year.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK
PRICE APPRECIATION
FOR OPTION TERM (3)
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE
GRANTED IN PRICE EXPIRATION
NAME (#)(1) FISCAL YEAR ($/SH)(2) DATE 5% 10%
---- ------ ----------- --------- ---- -- ---
INDIVIDUAL GRANTS
-----------------
<S> <C> <C> <C> <C> <C> <C>
T. Kevin Dunnigan. . . . . . . . . 52,340 9.60% $45.75 02-05-07 $1,505,923 $3,816,304
Clyde R. Moore . . . . . . . . . . 126,170 23.14% 45.75 02-05-07 3,630,154 9,199,524
T. Roy Burton. . . . . . . . . . . 8,124 1.49% 45.75 02-05-07 233,743 592,351
Fred R. Jones. . . . . . . . . . . 7,385 1.35% 45.75 02-05-07 212,481 538,468
W. Neil Parker . . . . . . . . . . 6,189 1.14% 45.75 02-05-07 178,069 451,263
Gary R. Stevenson. . . . . . . . . 8,124 1.49% 45.75 02-05-07 233,743 592,351
</TABLE>
___________
(1) Options become exercisable in three equal annual installments beginning
February 5, 1998.
(2) Based on the average of the high and low sales prices of the Common Stock
reported on the New York Stock Exchange Composite Tape ("NYSE Tape") on the
date of grant. The exercise price may be paid in cash or by tendering
shares of Common Stock valued at the closing price reported on the NYSE
Tape for the day immediately preceding the date of exercise.
(3) The dollar amounts under these columns are the result of calculations at
the arbitrary rates of 5% and 10% set by the Securities and Exchange
Commission and are not a forecast of the value of the Common Stock.
16
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executives concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the last fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES
ACQUIRED VALUE
ON EXERCISE REALIZED
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --- ------ ----------- ------------- ----------- -------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT 12-28-97 (#) 12-28-97 ($)(2)
----------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
T. Kevin Dunnigan . . . . . . 36,206 $905,690 156,890 77,796 $2,089,193 $ 237,402
Clyde R. Moore. . . . . . . . 28,000 667,131 112,136 146,178 1,531,691 194,334
T. Roy Burton . . . . . . . . - - 21,278 14,048 268,173 54,045
Fred R. Jones . . . . . . . . - - 9,603 16,592 102,815 85,143
W. Neil Parker . . . . . . . - - 19,359 10,456 247,382 39,026
Gary R. Stevenson . . . . . . 2,000 47,688 32,610 14,646 422,372 59,369
</TABLE>
___________
(1) Market value on the date of exercise of shares covered by options
exercised, less option exercise price.
(2) Market value of in-the-money option shares on December 28, 1997 ($45.9375),
less option exercise price. These values have not been realized and no
assurance can be given that these values will be realized.
PENSION PLAN
Based on compensation that is covered under the Executive Retirement Plan
("ERP") and years of service with the Corporation and its subsidiaries, the
following table gives the aggregate annual retirement income covered
participants will receive upon retirement at age 60 or later with the required
minimum of 20 years of credited service or more under the ERP. The ERP is an
unfunded, nonqualifed retirement plan for designated corporate officers and key
executives that provides supplemental benefits, including amounts that would
otherwise be denied participants by reason of certain limitations imposed on
qualified plan benefits by the Internal Revenue Code of 1986, as amended, and
elective deferrals to a nonqualified savings plan. The benefit payable under the
ERP incorporates amounts payable to a participant from (1) a qualified pension
plan; (2) the employer-paid portion of a participant's Social Security benefit;
and (3) the employer-paid portion of a participant's 401(k) and nonqualified
savings plan accounts.
17
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
HIGHEST
5-YEAR
AVERAGE
COMPENSATION
LEVELS 20 25 30 35 OR MORE
YEARS OF SERVICE
<S> <C> <C> <C> <C>
$200,000 $100,000 $115,000 $130,000 $145,000
300,000 150,000 172,500 195,000 217,500
400,000 200,000 230,000 260,000 290,000
500,000 250,000 287,500 325,000 362,500
600,000 300,000 345,000 390,000 435,000
700,000 350,000 402,500 455,000 507,500
800,000 400,000 460,000 520,000 580,000
900,000 450,000 517,500 585,000 652,500
1,000,000 500,000 575,000 650,000 725,000
1,100,000 550,000 632,500 715,000 797,500
</TABLE>
Covered compensation is comprised of annual base salary and incentive
compensation paid under the Thomas & Betts Corporation Executive Incentive Plan.
Benefit amounts shown in the above table assume that payments are made on a
10-year certain and life annuity.
The Named Executives, except Mr. Dunnigan, had the following years of
credited service under the terms of the ERP as of February 13, 1998: Mr. Moore,
12; Mr. Burton, 4; Mr. Jones, 3; Mr. Parker, 6; and Mr. Stevenson, 12.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-OF-CONTROL
ARRANGEMENTS
The Corporation entered into an agreement with T. Kevin Dunnigan effective
February 5, 1997 (the "Agreement") in connection with Mr. Dunnigan's desire to
relinquish the title of Chief Executive Officer and to retire as an employee of
the Corporation as of the organizational meeting of the Board on May 7, 1997. In
recognition of Mr. Dunnigan's long and valued service to the Corporation,
including 12 years as Chief Executive Officer, the Agreement provides for the
grant to Mr. Dunnigan on February 5, 1997 of a stock option for 26,170 shares, a
restricted stock award of 14,091 shares that will vest on February 4, 2000, and
a special stock award of 32,302 shares that will be distributed in three
substantially equal installments on May 7, 1998, May 7, 1999 and May 7, 2000,
respectively, subject to his compliance with covenants as to confidential
information and competitive conduct; an incentive cash bonus in March 1998 under
the Executive Incentive Plan as if he had served as Chief Executive Officer of
the Corporation for the entire fiscal year 1997; and retirement benefits under
the ERP attributable to a retirement age of 60.
The Agreement further provides for Mr. Dunnigan's post-retirement service
as Chairman of the Board for a term ending May 6, 2000 at an annual rate of no
less than $500,000 per year and perquisites consisting of membership fees in a
golf club in Memphis, Tennessee, that is used in part for Corporation business,
and an automobile allowance. Mr. Dunnigan has undertaken to devote his
knowledge, skill, attention and energies to the performance of the duties of
Chairman of the Board, to perform projects that are assigned by the Board or
requested by the Chief Executive Officer, and to refrain from engaging
18
<PAGE>
in any business, service or employment without the prior consent of the Board.
No other fees, stock awards, retirement benefits or other compensation shall be
paid to Mr. Dunnigan for serving as a member of the Board or any committee of
the Board during the term of the Agreement. The change-of-control provisions
described below also apply to this Agreement.
The Corporation has an agreement with each of the Named Executives
providing for continuation of employment for a term of three years following any
change of control of the Corporation. Each agreement provides for compensation
to be continued during the three-year term at least at the same level that
existed prior to the time of a change of control, provided the person continues
employment, leaves employment for good reason, or is terminated without cause.
Events that constitute leaving employment for good reason are: the assignment of
duties inconsistent with the person's position; the diminution of the person's
position, authority, duties or responsibilities; failure to provide compensation
or benefits specified in the agreement; relocation to an office that is 35 miles
or more from the location where the person was employed immediately prior to the
change of control; or failure to require any successor to the Corporation to
assume and agree to perform the agreement. A person's employment may be
terminated for cause, which is an act or acts of dishonesty intended to result
in substantial personal enrichment, willful violations of the person's duty to
perform responsibilities under the agreement, or conviction of a felony. Each
agreement also provides for immediate vesting of stock options and lapse of
restrictions on restricted stock awards if the person's employment is terminated
following a change of control. Any amount payable under the agreement will be
reduced by the amount of any compensation earned by the person from other
employment during the term of the agreement.
Generally, a "change of control" shall be deemed to have occurred if (i)
any person, including a "group" within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, becomes the beneficial owner of 25% or more of
the outstanding voting securities of the Corporation or (ii) a majority of the
Board shall cease for any reason to be members of the "Incumbent Board." The
Incumbent Board shall mean a director who was a director of the Corporation as
of the date of each employment agreement as well as any person whose election or
nomination after such date was approved by at least 75% of the vote of the then
Incumbent Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Lemasters, who was Chairman of the Board and Chief Executive Officer of
Augat Inc. prior its acquisition by the Corporation in December 1996, has been a
member of the Human Resources Committee of the Board since May 1997.
THE HUMAN RESOURCES COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
1. EXECUTIVE COMPENSATION PHILOSOPHY
The executive compensation program is designed to align shareholder and
management interests, to balance the focus on annual performance targets with
actions needed for the long-term success of the Corporation, and to attract,
motivate, and retrain key executives.
19
<PAGE>
(a) PAY POSITIONING: The Corporation positions total direct compensation
(i.e., base salary, annual incentive, and long-term incentive gain
opportunity) at the median of general industry companies, a high
percentage of which are represented in the S&P 400. This is a much
broader group than the electrical/electronics companies that make up
the Thomas & Betts Peer Group Index shown in the performance graph
that follows this report. Since electrical/electronics compensation
levels are generally consistent with general industry levels (where
pay and performance data is more easily accessible), the Committee
believes that general industry companies represent an appropriate
comparative framework. The annual and long-term incentive components
of compensation are sufficiently variable so that there should be a
strong relationship between total return to shareholder performance
and actual total direct compensation levels over time.
(b) PAY MIX: Like total direct compensation, each component is positioned
at the median of general industry companies.
(i) BASE SALARY: Base salaries are set by periodic comparison to
external rates of pay for comparable positions within general
industry and are targeted at the 50th percentile for such
positions. Individual salaries are considered for adjustment
annually; adjustments are based upon general movement in salary
levels in general industry, individual performance and
potential, and changes in duties and responsibilities. Actual
salaries may range from 20% below to 20% above targeted salary
levels. As a group, the average of the Named Executive's base
salaries in 1997 was slightly below the targeted level.
(ii) ANNUAL INCENTIVE: Annual incentives are based upon actual
performance compared to established corporate and operating
group performance goals. Annual incentives range between 20%
and 40% of base salary for median performance and provide a
maximum payout of between 60% and 100% of base salary for
superior performance. Annual bonus opportunities are targeted
to be at the 50th percentile for general industry when
performance is at the 50th percentile and at the 75th
percentile for general industry when performance is at that
level. For the Chief Executive Officer and other corporate
staff executive officers, the annual incentive for 1997 is
based 50% on return on equity (ROE) relative to the S&P 400 and
50% on earnings per share (EPS) growth. ROE attainment was
above mid-point, while EPS was near the maximum of the
performance range, resulting in a combined payout above
mid-point to these executives. For the group executive
officers named in the Summary Compensation Table, the annual
incentive payment for 1997 was based on corporate ROE (12 1/2%
weighting), EPS (12 1/2%), and the performance of that
officer's group on income (50%) and cash flow (25%). As a
group, the average of the executives officers' incentive
payments for fiscal year 1997 was _______ of base salary.
(iii) LONG-TERM INCENTIVES: Long-term incentive awards are made in
the form of stock options and restricted stock awards, which
are typically granted annually.
20
<PAGE>
Combined stock option and restricted stock awards are targeted
to provide an expected value at grant date approximately at the
50th percentile for general industry, according to a mix
predetermined by the Committee. For executive officers, the
expected value of grants ranges from approximately 52% to 150%
of base salary. Individual grants may vary based on the
Committee's assessment of individual performance and potential.
As a group, the average of the Named Executive's annual
long-term incentive awards in 1997 was ______% of base salary.
In determining stock option and restricted stock awards, the
Committee does not consider the amount of options and
restricted stock granted in prior years. Options are granted
at fair market value on the date of grant, have a term of ten
years, and vest over a three-year period at the rate of
one-third per year. Restricted stock vests at the end of three
years.
2. COMPENSATION OF THE CHIEF EXECUTIVE OFFICERS
Mr. Dunnigan's Compensation
Mr. Dunnigan's base salary through May 7, 1997, the date of his
retirement as Chief Executive Officer, was at an annual rate of $615,000,
which was 5.1% over the prior year. This placed his base salary slightly
below the median of salaries paid to chief executive officers in general
industry companies of comparable size. The Committee based this increase
on the continued good performance of the Corporation, comparability with
other positions within general industry at the 50th percentile and the
length of time that Mr. Dunnigan had served as the Chief Executive Officer.
Mr. Dunnigan's target annual incentive was 40% of base salary in 1997,
and the maximum incentive was 100% of base salary. The Corporation's 1997
return on equity was 16.78%, which was above the mid-point of the
performance range, and earnings per share was near the maximum of the
performance range, which together resulted in Mr. Dunnigan receiving an
annual incentive of $550,425. Mr. Dunnigan was granted a stock option for
26,170 shares and a restricted stock award for 14,091 shares. As in
previous years, the Committee targeted the expected value of the stock
option and restricted stock awards to Mr. Dunnigan to be at the 50th
percentile of general industry according to a mix predetermined by the
Committee.
Mr. Moore's Compensation
Mr. Moore's salary for 1997 was set at $600,000. This placed his base
salary below the median paid to chief executive officers in general
industry companies of comparable size. The Committee based his salary on
the contributions to the Corporation's performance that Mr. Moore had made
as President and Chief Operating Officer, his expected performance as Chief
Executive Officer and comparability with other positions within general
industry at the 50th percentile.
Mr. Moore's target annual incentive was 40% of base salary in 1997,
and the maximum incentive was 100% of base salary. The Corporation's 1997
return on equity was 16.78%, which was above the mid-point of the
performance range, and earnings per share was near the
21
<PAGE>
maximum of the performance range, which together resulted in Mr. Moore's
receiving an annual incentive of $537,000. Mr. Moore was granted a stock
option for 26,170 shares and a restricted stock award for 14,091 shares.
The Committee targeted the expected value of the stock option and
restricted stock awards to Mr. Moore to be at the 50th percentile of
general industry according to a mix predetermined by the Committee. Mr.
Moore also received a special one-time stock option grant of 100,000 shares
in recognition of his promotion to Chief Executive Officer. The stock
option was granted at the fair market value of the Corporation's stock on
the date of grant. The option vests, one third a year, over three years,
and is exercisable up to ten years from date of grant.
3. POLICY REGARDING EXECUTIVE COMPENSATION DEDUCTIBILITY
The Corporation's policy is to design and administer compensation
plans that support the achievement of long-term strategic objectives and
enhance shareholder value. Performance-based compensation is a significant
part of executive compensation, and it is the Corporation's policy to take
all reasonable action to maximize the deductibility of such compensation.
The Executive Incentive Plan ("EIP") and the 1993 Management Stock
Ownership Plan ("MSOP") were approved by the shareholders, and incentive
payments under the EIP and stock options granted under the MSOP qualify as
performance-based compensation that is not subject to a limit on
deductibility. Mr. Lemasters abstained from voting on awards under the EIP
and the MSOP to the executive officers.
Base salary and the value of restricted stock awards do not qualify as
performance-based compensation under the provisions of Section 162(m) of
the Internal Revenue Code (the "Code"), but it is unlikely in the
foreseeable future that such amounts, as calculated under the Code, that
are paid to any executive other than the Chief Executive Officer will
exceed the deductibility limit.
William H. Waltrip, Chairman
Jeananne K. Hauswald
Robert A. Kenkel
John N. Lemasters
March 5, 1998
PERFORMANCE GRAPH
The graph set forth below provides comparisons of the yearly percentage
change in the cumulative total shareholder return on the Common Stock with the
cumulative total return for the five years ended December 31, 1997 of Standard &
Poor's ("S&P") 500 Stock Index, and a Thomas & Betts self-constructed peer
group index ("T&B Peer Group Index"). The shareholder returns in each case have
been calculated using the calendar year rather than the Corporation's fiscal
year, which was changed in 1993 to end on the Sunday closest to December 31.
22
<PAGE>
The companies in the T&B Peer Group Index are: AMP Incorporated, Emerson
Electric Co., W.W. Grainger, Inc., and General Signal Corporation, which are in
the S&P Electrical Equipment Index, and Berg Electronics Corp. (effective as of
its initial public offering in March 1996), Cooper Industries, Inc., Hubbell
Incorporated--Class B, Molex Incorporated and Robinson Nugent, Inc.
The T&B Peer Group Index has been weighted in accordance with each
company's market capitalization (closing stock price multiplied by the number of
shares outstanding) as of the beginning of each of the five years covered by the
performance graph. The weighted return for each year was calculated by summing
the products obtained by multiplying (i) the percentage that each company's
market capitalization represents of the total market capitalization for all
companies in the index for each such year by (ii) the total shareholder return
for that company for such year.
Comparison of Five-Year Cumulative Total Return
Thomas & Betts Corporation, T&B Peer Group Index
and S&P 500 Stock Index
(Assumes $100 invested on December 31, 1992
and reinvestment of dividends)
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Thomas & Betts $100.00 $ 92.52 $109.89 $124.76 $154.39 $168.19
% change -7.48% 18.78% 13.53% 23.75% 8.94%
year to year
T&B Peer 100.00 110.35 113.48 137.76 163.72 193.85
Group
% change 10.35% 2.83% 21.40% 18.84% 18.40%
year to year
S&P 500 100.00 110.08 111.53 153.45 188.68 251.63
% change 10.08% 1.32% 37.58% 22.96% 33.36%
year to year
</TABLE>
The performance graph above shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1993 or under the Securities Exchange Act
of 1934, except to the extent the Corporation specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
2. AMENDMENT TO THE CORPORATION'S CHARTER TO INCREASE THE
AUTHORIZED COMMON AND PREFERRED STOCK AND CHANGE THE PAR VALUE
The Board has authorized the submission to the shareholders for their
approval of an amendment to Article VI of the Corporation's Charter to increase
the number of authorized shares of (i) Common Stock from 80,000,000 to
250,000,000 and (ii) Preferred Stock from 500,000 to 1,000,000, and to change
the par value of the Common and Preferred Stock from "no par value" to "$.10 par
value." The change from "no par value" to "$.10 par value" will have no impact
on the market value of the Corporation's stock or the rights of its
shareholders. If the proposed amendment is approved by the
23
<PAGE>
shareholders, the change in par value will, however, enable the Corporation to
realize reductions in the amounts of annual franchise taxes and one-time filing
fees charged by various states for filing an amended certificate of authority
reflecting the increase in authorized shares of Common and Preferred Stock.
If approved, the first sentence of paragraph 1 of Article VI, as amended,
would read in its entirety as follows:
"The corporation is authorized to issue 251,000,000 shares, consisting
of 250,000,000 shares of Common Stock, $.10 par value, and 1,000,000
shares of Preferred Stock, $.10 par value."
As of March 9, 1998, the Corporation had _________ shares of Common Stock
issued and outstanding, and there were ___________ shares of Common Stock
reserved for issuance under the Corporation's 1993 Management Stock Ownership
Plan. No shares of Preferred Stock have been issued to date, but a reserve of
300,000 shares has been established for the Corporation's Shareholder Rights
Plan.
The Corporation's Charter authorizes the Board to determine, in whole or in
part, the preferences, limitations and relative rights of the Preferred Stock as
a class, to issue shares of Preferred Stock in series, and to fix from time to
time before issuance the number of shares to be included in each series and the
designations, relative rights, preferences and limitations of all shares of each
series. To the extent that the Board exercises the authority granted to it in
the Charter, the fixing of the relative rights, preferences and limitations of
shares of Preferred Stock could have the effect of modifying the rights of
holders of Common Stock. The issuance of Preferred Stock may have the effect of
delaying, deferring or preventing a change in control of the Corporation without
further action by shareholders and may adversely affect the voting and other
rights of the holders of Common Stock.
Although at present the Board has no plans to issue additional shares of
the Corporation's capital stock (except as noted above with respect to the 1993
Management Stock Ownership Plan), the Board believes that it is prudent to have
the additional shares of capital stock available in the future for general
corporate purposes, including acquisitions, stock splits or dividends, stock
options, financings or public offerings.
The Board has submitted this proposal to facilitate the Corporation's
normal conduct of its business and not to prevent a change of control of the
Corporation. If the amendment is approved, the Board will not be required to
obtain further shareholder approval prior to the issuance of any such additional
shares except in transactions requiring shareholder approval under Tennessee law
or the rules of the New York Stock Exchange, such as certain mergers to which
the Corporation might be a party. Shareholders do not have preemptive rights to
subscribe for or purchase additional shares of Common Stock, and any issuance of
Common Stock on other than a pro-rata basis may dilute the ownership interest of
present shareholders.
Approval of the amendment will require that the number of votes cast in
favor of this proposal exceeds the number of votes cast against this proposal.
Abstentions and broker non-votes will not be counted as votes cast and will have
no impact on the vote.
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THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accounting firm for the Corporation in fiscal year
1997 was KPMG Peat Marwick LLP ("KPMG"). The Board, upon the recommendation of
the Audit Committee, has appointed this firm, subject to ratification by the
shareholders, to audit the financial statements of the Corporation for the
fiscal year 1998 and until the 1999 Annual Meeting of Shareholders. KPMG has
audited the Corporation's financial statements annually since 1969, is
considered to be well qualified, and has no financial interest, direct or
indirect, in the Corporation or any subsidiary of the Corporation. If the
shareholders do not ratify this appointment, the Audit Committee and the Board
will consider the appointment of another independent public accounting firm.
Representatives of KPMG will be present at the Annual Meeting to make a
statement, if they desire to do so, and to respond to appropriate questions.
On July 25, 1997, the Corporation dismissed Deloitte & Touche LLP ("D&T"),
the independent public accounting firm previously engaged by Augat Inc.
("Augat"), an indirect subsidiary of the Corporation acquired in December 1996.
The decision to dismiss D&T was made by management as part of the integration of
Augat and was not explicitly approved by the Board or any committee thereof;
however, in February 1997, the Audit Committee did recommend to the Board and
the Board appointed KPMG as the independent public accountants of the
Corporation's worldwide operations, including Augat, and the appointment was
ratified by shareholders at the 1997 Annual Meeting of Shareholders.
In KPMG's audit report on the consolidated financial statements of the
Corporation for the year ended December 28, 1997, KPMG, as the principal
independent public accountants, expressed its reliance on the reports issued by
D&T with respect to audits of the consolidated financial statements of Augat as
of December 29, 1996 and for the two-year period ended December 29, 1996.
The reports of D&T on the consolidated financial statements of Augat for
the fiscal years ended December 29, 1996 and December 31, 1995 did not contain
an adverse opinion or a disclaimer of opinion; nor were the reports qualified or
modified as to uncertainty, audit scope or accounting principles. There were no
disagreements between D&T and the Corporation or Augat on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures.
Ratification of the appointment of KPMG will require that the number of
votes cast in favor of this proposal exceeds the number of votes cast against
this proposal. Abstentions and broker non-votes will not be counted as votes
cast and will have no impact on the vote.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
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SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1999 Annual Meeting
of Shareholders, in addition to meeting certain eligibility requirements
established by the Securities and Exchange Commission, must be in writing and
received by the Corporate Secretary at the Corporation's principal executive
offices on or prior to November 23, 1998, to be considered for inclusion in the
Corporation's proxy statement and form of proxy for the 1999 Annual Meeting of
Shareholders.
OTHER BUSINESS
The Annual Meeting is called for the purposes set forth in the Notice. The
Board does not know of any matter for action by shareholders at such meeting
other than the matters described in the Notice. For any matter to be properly
brought before the Annual Meeting, it must be an appropriate subject for
shareholder consideration, timely notice thereof must be given in writing to the
Corporate Secretary, and other applicable requirements must be met. In general,
such notice is timely if it is delivered to the Corporate Secretary at the
principal executive offices of the Corporation not less than 60 nor more than 90
days prior to the first anniversary of the preceding year's annual meeting.
Alternative notice deadlines apply if the date of the annual meeting differs by
more than 30 days from the date of the previous year's annual meeting. The
Bylaws specify the information to be included in the shareholder's notice. An
interested shareholder can obtain a complete copy of the Bylaw provisions by
making a written request therefor to the Corporate Secretary. The enclosed proxy
will confer discretionary authority with respect to matters which are not known
at the date of printing hereof but which may properly come before the Annual
Meeting. The persons named as Proxies on the proxy card are authorized to vote
in accordance with their best judgment on any such matter.
By Order of the Board of Directors,
JANICE H. WAY, CORPORATE SECRETARY
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<PAGE>
THOMAS & BETTS CORPORATION
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
ANNUAL MEETING OF SHAREHOLDERS--MAY 6, 1998
The undersigned hereby appoints CLYDE R. MOORE, FRED R. JONES and JERRY
KRONENBERG as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side
hereof, all the shares of Common Stock of Thomas & Betts Corporation held by the
undersigned on March 9, 1998, at the Annual Meeting of Shareholders to be held
on May 6, 1998, or any adjournment thereof.
Nominees for election as directors: CHANGE OF ADDRESS ONLY:
E. H. Drew, T. K. Dunnigan, J. K. Hauswald, -------------------------------
T. W. Jones, R. B. Kalich Sr., R. A. Kenkel, -------------------------------
K. R. Masterson, T. C. McDermott, -------------------------------
C. R. Moore, J.-P. Richard, J. L. Stead, and -------------------------------
W. H. Waltrip (If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
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<PAGE>
/x/ Please mark your
votes as in this
example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED HEREIN, BUT IF
NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
1. Election of Directors (see reverse) FOR / / WITHHELD / /
For, except vote withheld from the following nominee(s)
---------------------------------------------------------------------
2. Amendment of the Charter to increase the authorized shares of Common and
Preferred Stock and change the par value.
FOR / / AGAINST / / ABSTAIN / /
3. Ratification of appointment of KPMG Peat Marwick LLP as independent public
accountants.
FOR / / AGAINST / / ABSTAIN / /
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Check this box
to note change / /
of address
Note: Please sign exactly as your name appears
on this Proxy. Joint owners should each sign
personally. When signing as attorney, executor,
administrator, guardian, custodian, or
corporate official, sign name and title.
-----------------------------------------------
-----------------------------------------------
SIGNATURE(S) DATE
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