UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-
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Definitive Proxy Statement
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Soliciting Material Pursuant to §240.14a-12
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MOLEX INCORPORATED
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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MOLEX
INCORPORATED
2222 Wellington
Court
Lisle, Illinois
60532
NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 31, 2008
Dear Stockholder:
We will hold the annual meeting of Molex Incorporated
stockholders on Friday, October 31, 2008 at
10:00 a.m., local time, at our corporate headquarters at
2222 Wellington Court, Lisle, Illinois 60532.
The purpose of the annual meeting is to consider and take action
on the following matters:
1. The election of four Class III directors for
a term of three years;
2. The approval of the Molex Incorporated Annual
Incentive Plan;
3. The approval of the 2008 Molex Stock Incentive
Plan;
4. The ratification of the selection of
Ernst & Young LLP as Molexs independent auditors
for the fiscal year ending June 30, 2009; and
5. Any other business that properly comes before the
meeting or any adjournments or postponements thereof.
The items of business listed above are more fully described in
the Proxy Statement accompanying this Notice. Stockholders of
record as of the close of business on September 2, 2008 are
entitled to vote at the annual meeting or any adjournments or
postponements thereof. This Notice and Proxy Statement and the
2008 Annual Report are being mailed to stockholders on or about
September 12, 2008.
Your vote is important. Whether or not you plan to attend the
annual meeting in person, it is important that your shares be
represented and voted at the annual meeting. You can vote your
shares by completing and returning your proxy card or the form
forwarded to you by your bank, broker or other holder of record.
By Order of the Board of Directors
Ana G. Rodriguez
Secretary
September 12, 2008
Lisle, Illinois
TABLE OF
CONTENTS
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2
MOLEX
INCORPORATED
2222 Wellington
Court
Lisle, Illinois
60532
PROXY
STATEMENT
INFORMATION
CONCERNING VOTING AND SOLICITATION
General
Information
The enclosed proxy is solicited on behalf of the Board of
Directors of Molex Incorporated, a Delaware corporation, for use
at the annual meeting of stockholders to be held on Friday,
October 31, 2008, at 10:00 a.m., local time, or at any
postponements or adjournments thereof, for the purposes
discussed in this Proxy Statement and in the accompanying Notice
of Annual Meeting of Stockholders and for any business properly
brought before the annual meeting. Proxies are solicited to give
all stockholders of record an opportunity to vote on matters
properly presented at the annual meeting. We intend to mail this
Proxy Statement and accompanying proxy card on or about
September 12, 2008 to all stockholders entitled to vote at
the annual meeting. The annual meeting will be held at our
corporate headquarters at 2222 Wellington Court, Lisle, Illinois
60532.
Who Can
Vote
You are entitled to vote at the annual meeting if you were a
stockholder of record of Molex voting stock as of the close of
business on September 2, 2008. Your shares may be voted at
the annual meeting only if you are present in person or
represented by a valid proxy.
Proxy Card and
Revocation of Proxy
You may vote by completing and mailing the enclosed proxy card.
If you sign the proxy card but do not specify how you want your
shares to be voted, your shares will be voted by the named proxy
holders (i) in favor of the election of all of the director
nominees, (ii) in favor of the approval of the Molex
Incorporated Annual Incentive Plan, (iii) in favor of the
approval of the 2008 Molex Stock Incentive Plan, and
(iv) in favor of ratification of the selection of
Ernst & Young LLP as our independent auditors for the
year ending June 30, 2009.
In their discretion, the named proxy holders are authorized to
vote on any other matters that may properly come before the
annual meeting and at any postponements or adjournments thereof.
The Board of Directors knows of no other items of business that
will be presented for consideration at the annual meeting other
than those described in this Proxy Statement. In addition, no
stockholder proposal or nomination was received, so no such
matters may be brought to a vote at the annual meeting.
If you vote by proxy, you may revoke that proxy at any time
before it is voted at the annual meeting. Stockholders of record
may revoke a proxy by sending to our Secretary, at 2222
Wellington Court, Lisle, Illinois 60532, a written notice of
revocation or a duly executed proxy bearing a later date or by
attending the annual meeting in person and voting in person.
If your shares are held in the name of a bank, broker, or other
holder of record, you may change your vote by submitting new
voting instructions to your bank, broker or other holder of
record. Please note that if your shares are held by a bank,
broker or other holder of record, and you decide to attend and
vote at the annual meeting, your vote in person at the annual
meeting will not be effective unless you present a legal proxy,
issued in your name from your bank, broker or other holder of
record.
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Molex
Stock
We have three classes of common stock. They are Common Stock,
par value $.05 per share (Common Stock), Class A Common
Stock, par value $.05 per share (Class A Common Stock), and
Class B Common Stock, par value $.05 per share
(Class B Common Stock).
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Voting Stock: Common Stock and Class B Common Stock
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The holders of Common Stock and Class B Common Stock are
entitled to one vote per share upon each matter submitted to the
vote of the stockholders and, subject to conditions summarized
below, vote separately as a class as to all matters except the
election of directors. With respect to the election of
directors, the holders of Common Stock and Class B Common
Stock vote together as a class.
The right of Class B Common Stock holders to vote
separately as a class is subject to applicable law and exists
for so long as at least 50% of the authorized shares of the
Class B Common Stock are outstanding. As of
September 2, 2008, more than 50% of the authorized shares
of Class B Common Stock were outstanding.
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Non-Voting Stock: Class A Common Stock
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The holders of Class A Common Stock have the same
liquidation rights and the same rights and preferences regarding
dividends as the holders of Common Stock or Class B Common
Stock. However, the holders of Class A Common Stock have no
voting rights except as otherwise required by law or under
certain circumstances. For example, under Delaware law, any
amendments to our Certificate of Incorporation changing the
number of authorized shares of any class, changing the par value
of the shares of any class, or altering or changing the powers,
preferences, or special rights of the shares of any class so as
to adversely affect them, including Class A Common Stock,
would require the separate approval of the class so affected, as
well as the approval of all classes entitled to vote thereon,
voting together.
Class A Common Stock would automatically convert into
Common Stock on a share-for-share basis any time upon the good
faith determination by the Board of Directors that either of the
following events has occurred: (i) the aggregate number of
outstanding shares of Common Stock and Class B Common Stock
together is less than 10% of the aggregate number of outstanding
shares of Common Stock, Class B Common Stock and
Class A Common Stock together; or (ii) any person or
group, other than one or more members of the Krehbiel Family (as
defined in our Certificate of Incorporation), becomes or is the
beneficial owner of a majority of the outstanding shares of
Common Stock.
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Shares Outstanding On The Record Date
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As of the close of business on September 2, 2008 there were
outstanding:
98,451,858 shares of Common Stock
79,094,661 shares of Class A Common Stock
94,255 shares of Class B Common Stock
A majority of the outstanding shares of each of Common Stock and
Class B Common Stock entitled to vote will constitute a
quorum at the meeting.
Counting of
Votes
All votes will be tabulated by the inspector of election
appointed for the annual meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker
non-votes. Shares held by persons attending the annual meeting
but not voting, shares represented by proxies that reflect
abstentions as to a particular proposal and broker non-votes
will be counted as present for purposes of determining a quorum.
A broker non-vote occurs when a nominee holding
shares for a beneficial
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owner does not vote on a proposal because the nominee does not
have discretionary voting power and has not received
instructions from the beneficial owner.
Our directors are elected by a plurality of the votes cast by
the holders of Common Stock and Class B Common Stock voting
together as a class. This means the director nominees who
receive the largest number of properly cast for
votes will be elected as directors. Abstentions, withheld votes
and broker non-votes will have no effect on the result of the
votes on the election of directors.
All other proposals must be approved separately by a majority of
the shares of Common Stock voting as a class and the majority of
the shares of Class B Common Stock voting as a class.
Abstentions will have the same effect as votes against the
proposal, and broker non-votes will have no effect on the result
of the votes on the proposal.
Solicitation of
Proxies
We will bear the entire cost of solicitation of proxies,
including preparation, assembly and mailing of this Proxy
Statement, the proxy card and any additional information
furnished to stockholders. We may reimburse persons representing
beneficial owners for their costs of forwarding the solicitation
materials to the beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, facsimile,
electronic mail or personal solicitation by our directors,
officers or employees. No additional compensation will be paid
to directors, officers or employees for such services.
A list of stockholders entitled to vote at the annual meeting
will be available for examination by any stockholder for any
purpose relevant to the annual meeting during ordinary business
hours at our offices at 2222 Wellington Court, Lisle, Illinois
60532, for ten days prior to the annual meeting, and also at the
annual meeting.
ITEM 1
ELECTION OF
DIRECTORS
Our Board of Directors is divided into three classes, each class
consisting, as nearly as possible, of one-third of the total
number of directors, with members of each class serving for a
three-year term. Vacancies on the Board may be filled only by
persons elected by the Board to fill a vacancy (including a
vacancy created by an increase in the size of the Board). A
director elected by the Board to fill a vacancy (including a
vacancy created by an increase in the size of the Board) will
serve for the remainder of the full term of the class of
directors in which the vacancy occurred and until such
directors successor is elected and qualified, or until
such directors earlier death, resignation or removal.
Each share of Common Stock and Class B Common Stock is
entitled to one vote for each of the four director nominees. It
is the intention of the named proxy holders to vote the proxies
received by them for the election of the four nominees named
below unless authorization to do so is withheld. If any nominee
should become unavailable for election prior to the annual
meeting, an event that currently is not anticipated by the
Board, the proxies will be voted for the election of a
substitute nominee proposed by the Board. Each person nominated
for election has agreed to serve if elected and the Board has no
reason to believe that any nominee will be unable to serve.
Based upon the recommendation of the Nominating and Corporate
Governance Committee, Edgar D. Jannotta, John H.
Krehbiel, Jr., Donald G. Lubin, and Robert J. Potter are
all nominees for
re-election
to the Board. If elected, each nominee would serve until the
2011 annual meeting of stockholders.
Set forth below is biographical information for each nominee and
for all other directors. Frederick A. Krehbiel and John H.
Krehbiel, Jr. are brothers and Fred L. Krehbiel is the son
of
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John H. Krehbiel, Jr. (collectively, the
Krehbiel Family). The Krehbiel Family may be
considered control persons of Molex. Other than the
Krehbiel Family, no director or executive officer has any family
relationship with any other director or executive officer.
Class III
Nominees Subject to Election This Year
EDGAR D.
JANNOTTA
Edgar D. Jannotta, age 77, has served as a director of
Molex since 1986. Mr. Jannotta has been Chairman of William
Blair & Company LLC, an international investment
banking firm, since 2001. He has served in numerous capacities
at William Blair since 1965, including Senior Director, Senior
Partner and Managing Partner. Mr. Jannotta is a director of
Aon Corporation.
JOHN H.
KREHBIEL, JR.
John H. Krehbiel, Jr., age 71, has served as a
director of Molex since 1966. Mr. Krehbiel has been
Co-Chairman of the Board since 1999. From 1999 to 2001, he
served as Co-Chief Executive Officer of Molex. From 1996 to
1999, he served as Chief Operating Officer, and from 1975 to
1999, he served as President of Molex.
DONALD G.
LUBIN
Donald G. Lubin, age 74, has served as a director of Molex
since 1994. Mr. Lubin is a partner of the law firm
Sonnenschein Nath & Rosenthal LLP. He has been a
partner since 1964 and was Chairman from 1990 to 1996.
ROBERT J.
POTTER
Robert J. Potter, age 75, has served as a director of Molex
since 1981. Dr. Potter has been President and Chief
Executive Officer of R.J. Potter Company, a business consulting
firm, since 1990. From 1987 to 1990, Dr. Potter was
President and Chief Executive Officer of Datapoint Corporation,
a leader in network-based data processing. Dr. Potter is a
director of Zebra Technologies Corporation.
YOUR BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR EACH NAMED
NOMINEE
Class I
Directors Continuing in Office until the 2009 Annual Meeting of
Stockholders
MICHELLE L.
COLLINS
Michelle L. Collins, age 48, has served as a director of
Molex since 2003. Ms. Collins has been President of MC
Advisory LLC and Advisory Board Member of Svoboda Capital
Partners LLC since 2007. Ms. Collins was a co-founder of
Svoboda Collins LLC, a private equity firm, where she served as
Managing Director from 1998 to 2007. From 1992 to 1997,
Ms. Collins was a principal at
William Blair & Company, LLC. Ms. Collins is
a director of Columbia Acorn and Wanger Advisors Trusts.
FRED L.
KREHBIEL
Fred L. Krehbiel, age 43, has served as a director of Molex
since 1993. Since 1988, he has served in various engineering,
marketing and managerial positions with Molex. Mr. Krehbiel
has been Vice President, Product Development and
Commercialization for Molexs Global Commercial Products
Division since July 2007. From 2003 to 2007, he was President,
Connector Products Division (Americas), and from 2002 to 2003,
he served as President, Automotive Division (Americas).
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DAVID L.
LANDSITTEL
David L. Landsittel, age 68, has served as a director of
Molex since 2005. Mr. Landsittel is an independent
consultant to accounting firms and others on auditing and
financial reporting matters. He previously served as Chairman of
the Auditing Standards Board of the American Institute of
Certified Public Accountants. From 1963 to 1997,
Mr. Landsittel served as an auditor in various positions
with Arthur Andersen LLP. Mr. Landsittel is a Trustee of
Burnham Investors Trust.
JOE W.
LAYMON
Joe W. Laymon, age 55, has served as a director of Molex
since 2002. He resigned from the Board in 2006 and was
re-elected in January 2008. Mr. Laymon has been Corporate
Vice President of Human Resources at Chevron Corporation since
March 2008. Prior to that, Mr. Laymon was Group Vice
President, Corporate Human Resources and Labor Affairs for Ford
Motor Company from 2004 to 2008. From 2000 to 2004 he was
Executive Director of Human Resources for Ford.
JAMES S.
METCALF
James S. Metcalf, age 50, has served as a director of Molex
since September 2008. Since 2006, he has been the President and
Chief Operating Officer of USG Corporation, a leading
manufacturer and distributor of building materials and products
used in certain industrial processes. Mr. Metcalf joined
USG in 1980 and has held numerous executive positions including,
Executive Vice President, and President, Building Systems from
2002 to 2006; President and Chief Executive Officer, L&W
Supply from 2000 to 2002; and Executive Vice President and Chief
Operating Officer, L&W Supply from 1999 to 2000.
Class II
Directors Continuing in Office until the 2010 Annual Meeting of
Stockholders
MICHAEL J.
BIRCK
Michael J. Birck, age 70, has served as a director of Molex
since 1995. He is the co-founder of Tellabs, Inc., a
telecommunications equipment company. He has been Chairman of
Tellabs since 2000. He was the Chief Executive Officer of
Tellabs from 2002 to 2004, and Chief Executive Officer and
President from 1975 to 2000.
FREDERICK A.
KREHBIEL
Frederick A. Krehbiel, age 67, has served as a director of
Molex since 1972. Mr. Krehbiel has been Co-Chairman of the
Board since 1999. From 1988 to 1999 he served as Vice Chairman
and Chief Executive Officer, and as Chairman from 1993 to 1999.
From 1999 to 2001 he served as Co-Chief Executive Officer and as
Chief Executive Officer from 2004 to 2005. Mr. Krehbiel is
a director of DeVry Inc. and Tellabs, Inc.
KAZUMASA
KUSAKA
Kazumasa Kusaka, age 60, has served as a director of Molex
since 2007. Mr. Kusaka has been an Executive Advisor to
Dentsu Inc., a leading Japanese advertising agency, since
November 2006, and the President of Japan Cooperation Center for
the Middle East since 2007. Prior to this, Mr. Kusaka held
various high-level positions with the government of Japan,
including Vice Minister for International Affairs, Head of the
Agency for Natural Resources and Energy, and Director-General of
the Trade Policy Bureau of the Ministry of Economy, Trade and
Industry.
MARTIN P.
SLARK
Martin P. Slark, age 53, has served as a director of Molex
since 2000. Mr. Slark has been Vice Chairman and Chief
Executive Officer since 2005. From 2001 to 2005, he served as
President and Chief Operating Officer. From 1999 to 2001, he
served as Executive Vice President. Mr. Slark is a director
of Hub Group, Inc. and Liberty Mutual.
7
CORPORATE
GOVERNANCE
Board
Independence
The Board of Directors has assessed the independence of the
directors in light of the listing standards of NASDAQ and the
more stringent independence test established by the Board. The
Board has determined that the following directors are
independent: Michael J. Birck, Michelle L. Collins, Edgar D.
Jannotta, Kazumasa Kusaka, David L. Landsittel, Joe W. Laymon,
James S. Metcalf and Robert J. Potter. Donald G. Lubin has
determined that he is not independent in light of his
long-standing role as a legal advisor to Molex and the Krehbiel
family, and the Board agrees with Mr. Lubins
determination.
Under the Boards independence requirement, a director
cannot be affiliated with a business organization that either
paid or received payments to or from us during any one of the
past three fiscal years that exceed the greater of 2% of the
recipients gross revenues for that year or $200,000. In
assessing independence, the Board reviewed transactions and
relationships of the directors based on information provided by
each director, our records and publicly available information.
The relationships and transactions reviewed by the Board
included the following:
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Mr. Birck is the Chairman of Tellabs which is a Molex
customer. The Board reviewed Molexs sales to Tellabs
during FY08 and determined that this relationship does not
affect Mr. Bircks status as an independent director;
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Mr. Jannotta is the Chairman of William Blair which
provides investment banking services to Molex. The Board
reviewed the amount of fees paid to William Blair for such
services during FY08 and determined that this relationship does
not affect Mr. Jannottas status as an independent
director;
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Mr. Laymon was previously Group Vice President, Corporate
Human Resources, at Ford Motor Company which is a Molex
customer. The Board reviewed Molexs sales to Ford during
FY08 and determined that this relationship does not affect
Mr. Laymons status as an independent director.
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From time to time, we make charitable contributions to
organizations with which a non-employee director has an
affiliation. The Board reviewed all such charitable
contributions and determined that they did not affect the
independent status of any non-employee director.
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Board and
Committee Information
The Board of Directors held nine meetings during FY08 and all of
the directors attended at least 75% of the total number of
meetings of the Board and committees on which they served. The
Board expects all directors to attend the annual meeting of
stockholders barring unforeseen circumstances. All then-members
of the Board were present at the 2007 annual meeting of
stockholders. The non-employee directors meet in regularly
scheduled executive sessions without management present. The
Chairman of the Nominating and Corporate Governance Committee
presides at these executive sessions.
The Board has a standing Audit Committee, Compensation
Committee, Nominating and Corporate Governance Committee and
Executive Committee. The charters of each of these committees
are posted on our Web site,
www.molex.com
, on the
Investor Relations page under Corporate Governance.
The Audit Committee consists of Mr. Landsittel (Chairman),
Ms. Collins and Dr. Potter. The Board has determined
that each of the members of the Audit Committee is independent
under the listing standards of NASDAQ, and that
Mr. Landsittel is an audit committee financial
expert as defined by SEC regulations. All members of the
Audit Committee meet the NASDAQ composition
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requirements, including the requirements regarding financial
literacy and financial sophistication. The functions of the
Audit Committee are described under Audit Committee
Report. During FY08 the Audit Committee met nine times.
The Compensation Committee consists of Dr. Potter
(Chairman) and Messrs. Landsittel and Laymon. The Board has
determined that each of the members of the Compensation
Committee is independent under the listing standards of NASDAQ.
The Compensation Committee is responsible for establishing
executive compensation policies and overseeing executive
compensation practices. The roles and responsibilities of the
Compensation Committee, management and the compensation
consultants are described in greater detail in the
Compensation Discussion and Analysis. The
Compensation Committee is authorized to delegate
responsibilities to subcommittees when appropriate but has not
done so. During FY08 the Compensation Committee met three times.
The Nominating and Corporate Governance Committee consists of
Mr. Jannotta (Chairman), Mr. Birck, Ms. Collins
and Mr. Metcalf. The Board has determined that each of the
members of the Nominating Committee is independent under the
listing standards of NASDAQ. The Nominating Committee oversees
the corporate governance and Board membership matters and
monitors the independence of the Board. The Nominating Committee
also determines Board membership qualifications, selects,
evaluates and recommends to the Board nominees for election to
the Board, and reviews the performance of the Board. During FY08
the Nominating Committee met twice.
The Executive Committee consists of Frederick A. Krehbiel
(Co-Chairman), John H. Krehbiel, Jr. (Co-Chairman), and
Messrs. Birck, Jannotta and Slark. The Executive Committee
has all the powers and authority of the Board in the management
of the business and affairs, except with respect to certain
enumerated matters including Board composition and compensation,
changes to our charter documents, or any other matter expressly
prohibited by law or our charter documents. Pursuant to its
charter, the Executive Committee has appointed a subcommittee
consisting of Frederick A. Krehbiel, John H. Krehbiel, Jr.
and Martin P. Slark to act in certain prescribed and specific
areas. During FY08 the Executive Committee did not meet but it
acted several times by unanimous written consent.
Corporate
Governance Principles
The Board of Directors, at the recommendation of the Nominating
and Corporate Governance Committee, has adopted certain
principles relating to corporate governance matters.
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Process for Identifying Board Candidates
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The Nominating and Corporate Governance Committee maintains,
with the approval of the Board, certain criteria and procedures
relating to the identification, evaluation and selection of
candidates to serve on the Board. The minimum criteria sought by
the Board for candidates as directors are described in the
Boards Criteria for Membership on the Board of
Directors. In addition, the Nominating Committee has
established Procedures for Identifying and Evaluating
Candidates for Director. Each of these documents is posted
on our Web site,
www.molex.com
, on the Investor Relations
page under Corporate Governance. The Nominating and Corporate
Governance Committee will consider candidates recommended by
stockholders provided that appropriate notice is given.
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Stockholder Proposals and Nominations
|
Pursuant to
Rule 14a-8
under the federal securities laws, stockholders may present
proper proposals for inclusion in our proxy statement and for
consideration at our next annual meeting of stockholders. To be
eligible for inclusion in our 2009 proxy statement, your
proposal must be received by us no later than May 14, 2009,
and must otherwise comply with
Rule 14a-8.
While the Board will consider stockholder proposals, it reserves
the right to omit from our proxy statement stockholder proposals
that it is not required to include.
Under our Bylaws, in order to nominate a candidate for election
to the Board or bring any other business before the stockholders
at an annual meeting that will not be included in our proxy
statement
9
you must comply with certain procedures. Consistent with our
Bylaws, the Nominating and Corporate Governance Committee has
adopted Procedures for Stockholders Submitting Nominating
Recommendations, a copy of which is included in this Proxy
Statement as
Appendix I
. Stockholders who desire to
nominate a candidate for election to the Board must follow these
procedures. As to any other business that a stockholder proposes
to bring before an annual meeting, other than nominations, the
Bylaws provide that a stockholders notice must include a
brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of the
stockholder making the proposal.
In order to propose a nomination or some other item of business
for the 2009 annual meeting of stockholders that will not be
included in our proxy statement, you must notify us in writing
and such notice must be delivered to the Secretary no earlier
than August 3, 2009, and no later than September 2,
2009. You may write to our Secretary at 2222 Wellington Court,
Lisle, Illinois 60532 to deliver the notices discussed above and
for a copy of the relevant Bylaw provisions regarding the
requirements for making stockholder proposals.
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Outside Board Memberships
|
In recognition of the increasing demands of board service, the
Board has limited the number of public company boards on which
our directors and executive officers may serve as follows:
(i) non-employee directors are limited to service on three
other public company boards; (ii) the Chief Executive
Officer and Chief Operating Officer are limited to service on
two other public company boards; and (iii) all other
executive officers (other than the Co-Chairmen) are limited to
service on one other public company board.
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|
Change in Director Occupation
|
When a directors principal occupation or business
association changes substantially during his or her tenure as a
director, that director is required to tender his or her
resignation for consideration by the Board. The Board will
determine whether any action should be taken with respect to the
resignation.
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Stockholder Communication with the Board
|
Our annual meetings provide an opportunity each year for
stockholders to ask questions of, or otherwise communicate
directly with, members of the Board on appropriate matters. In
addition, stockholders may communicate in writing with any
particular director, any committee of the Board, or the
directors as a group by following the Procedures for
Stockholder Communications with Directors included in this
Proxy Statement as
Appendix II
.
COMPENSATION OF
DIRECTORS
We use a combination of cash and stock-based incentives to
attract and retain qualified candidates to serve on the Board.
In setting director compensation, we consider the significant
amount of time that directors expend to fulfill their duties,
the skill-level required of the members of the Board, as well as
competitive practices among peer companies. Employee directors
do not receive additional compensation for their service on the
Board.
Director
Fees
Each non-employee director receives: (i) an annual retainer
of $60,000; (ii) $3,000 for each board meeting attended;
and (iii) $2,000 for each committee meeting attended. The
non-employee director chairs of the committees receive higher
meeting fees in view of their increased responsibilities: the
chair of each of the Compensation Committee and the Nominating
and Corporate Governance Committee is paid $3,000 per committee
meeting attended, and the chair of the Audit Committee is paid
$4,000 per committee meeting attended. In addition, non-employee
directors are reimbursed for all reasonable travel and
out-of-pocket expenses associated with attending Board and
committee meetings and continuing education seminars.
10
Stock
Options
Each non-employee director receives an annual automatic
non-discretionary stock option grant under the 2005 Molex
Incentive Stock Option Plan. The options are granted on the date
of the annual meeting of stockholders with an exercise price
equal to the closing price of the Class A Common Stock on
the grant date. Each option vests ratably over four years
commencing on the first anniversary of the grant date and
expires five years from the grant date. The number of shares
underlying the option is 500 multiplied by the number of years
of service or fraction thereof. The number of shares underlying
a stock option grant cannot exceed 5,000 shares or $150,000
in value, whichever is less.
Deferred
Compensation Plan
Our non-employee directors are eligible to participate in the
Molex 2005 Outside Directors Deferred Compensation Plan
under which they may elect on a yearly basis to defer all or a
portion of the following years compensation. A
non-employee director may elect to have the deferred
compensation (i) accrue interest during each calendar
quarter at a rate equal to the average six month Treasury Bill
rate in effect at the beginning of each calendar quarter, or
(ii) converted to stock units at the closing price of Molex
Common Stock on the date the compensation would otherwise be
paid. Upon termination of service as a director, the accumulated
amount in the interest account is distributed in cash, and stock
units are distributed in equal shares of Molex Common Stock. We
impute dividends on each stock unit which is credited to a
director and the dividend units are converted into additional
stock units on the basis of the market value of the Common Stock
on the dividend payment date. The number of outstanding stock
units (including dividend units) is included in the
Security Ownership of Directors and Executive
Officers table.
Director
Compensation Table
The following table sets forth summary information concerning
the compensation awarded to, paid to or earned by each of our
non-employee directors for services rendered as directors during
FY08. Information about compensation awarded to, paid to or
earned by employee directors who are not Named Executive
Officers can be found under Certain Relationships and
Related Transactions.
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|
Fees Earned or
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|
Option
|
|
|
All Other
|
|
|
|
|
Name
|
|
Paid in Cash($)(1)
|
|
|
Awards($)(2)
|
|
|
Compensation($)
|
|
|
Total($)
|
|
|
Michael J. Birck
|
|
|
85,000
|
|
|
|
21,202
|
|
|
|
-
|
|
|
|
106,202
|
|
Michelle L. Collins
|
|
|
104,000
|
|
|
|
6,379
|
|
|
|
-
|
|
|
|
110,379
|
|
Edgar D. Jannotta
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|
|
93,000
|
|
|
|
27,037
|
|
|
|
-
|
|
|
|
120,037
|
|
Kazumasa Kusaka
|
|
|
87,000
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|
|
|
604
|
|
|
|
-
|
|
|
|
87,604
|
|
David L. Landsittel
|
|
|
126,000
|
|
|
|
3,124
|
|
|
|
-
|
|
|
|
129,124
|
|
Joe W. Laymon
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|
|
26,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
26,000
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|
Donald G. Lubin
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|
|
81,000
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|
|
|
21,202
|
|
|
|
-
|
|
|
|
102,202
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|
James S. Metcalf
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|
|
60,000
|
|
|
|
604
|
|
|
|
-
|
|
|
|
60,604
|
|
Robert J. Potter
|
|
|
114,000
|
|
|
|
27,037
|
|
|
|
-
|
|
|
|
141,037
|
|
|
|
|
(1)
|
|
Includes amounts deferred at the
election of a director.
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|
(2)
|
|
The amounts shown represent the
compensation costs of option awards for financial reporting
purposes under FAS 123(R), rather than an amount paid to or
realized by the director. The FAS 123(R) value as of the
grant date is spread over the number of months of service
required for the grant to become non-forfeitable. There can be
no assurance that the FAS 123(R) amounts will ever be realized.
Assumptions used in the calculation of these compensation costs
are included in Note 17 to the consolidated financial
statements included in the Annual Report on
Form 10-K
filed with the SEC on August 6, 2008. Option awards to
acquire the following number of shares were outstanding as of
June 30, 2008: Mr. Birck 13,400; Ms. Collins
4,000; Mr. Jannotta 17,000; Mr. Kusaka 500;
Mr. Landsittel 2,100; Mr. Laymon 0; Mr. Lubin
13,400; Mr. Metcalf 500; and Dr. Potter 17,000.
|
11
SECURITY
OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of Molex
stock beneficially owned by each director, the Named Executive
Officers, and by all directors and executive officers as a group
as of September 2, 2008. Molexs Class A Common
Stock is included in the table for informational purposes.
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B
|
|
|
|
|
|
Class A
|
|
|
|
Common Stock
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|
|
Common Stock
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|
|
Total Voting
|
|
|
Common Stock
|
|
Name
|
|
# Shares(1)
|
|
|
%
|
|
|
# Shares
|
|
|
%
|
|
|
Shares
|
|
|
# Shares(1)
|
|
|
# Options(2)
|
|
|
%
|
|
|
Michael J. Birck
|
|
|
36,615
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
36,615
|
|
|
|
3,000
|
|
|
|
7,900
|
|
|
|
*
|
|
Michelle L. Collins
|
|
|
5,097
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,097
|
|
|
|
-
|
|
|
|
1,950
|
|
|
|
*
|
|
Edgar D. Jannotta
|
|
|
147,709
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
147,709
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|
|
|
76,989
|
|
|
|
11,000
|
|
|
|
*
|
|
Frederick A. Krehbiel
|
|
|
25,004,012
|
(3)
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|
|
25.4
|
|
|
|
47,052.5
|
|
|
|
49.9
|
|
|
|
25,051,064.5
|
|
|
|
117,335
|
(4)
|
|
|
150,000
|
|
|
|
*
|
|
Fred L. Krehbiel
|
|
|
959,785
|
|
|
|
1.0
|
|
|
|
1,701
|
|
|
|
1.8
|
|
|
|
961,486
|
|
|
|
408,900
|
|
|
|
204,000
|
|
|
|
*
|
|
John H. Krehbiel, Jr.
|
|
|
31,847,329
|
(5)
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|
|
32.4
|
|
|
|
41,949.5
|
|
|
|
44.5
|
|
|
|
31,889,278.5
|
|
|
|
4,586,730
|
(6)
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|
|
170,000
|
|
|
|
6.0
|
|
Kazumasa Kusaka
|
|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
125
|
|
|
|
*
|
|
David L. Landsittel
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|
|
8,658
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|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,658
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|
|
|
-
|
|
|
|
725
|
|
|
|
*
|
|
Joe W. Laymon
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|
|
4,383
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|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,383
|
|
|
|
-
|
|
|
|
-
|
|
|
|
*
|
|
Donald G. Lubin
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|
|
35,565
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
35,565
|
|
|
|
10,674
|
|
|
|
7,900
|
|
|
|
*
|
|
James S. Metcalf
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|
|
-
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
125
|
|
|
|
*
|
|
Robert J. Potter
|
|
|
49,818
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,818
|
|
|
|
6,009
|
|
|
|
11,000
|
|
|
|
*
|
|
Martin P. Slark (7)
|
|
|
116,402
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
116,402
|
|
|
|
119,460
|
|
|
|
809,375
|
|
|
|
1.2
|
|
Liam G. McCarthy (8)
|
|
|
27,631
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,631
|
|
|
|
71,332
|
|
|
|
248,290
|
|
|
|
*
|
|
James E. Fleischhacker (9)
|
|
|
105,246
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
105,246
|
|
|
|
51,689
|
|
|
|
419,687
|
|
|
|
*
|
|
David D. Johnson
|
|
|
2,548
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,548
|
|
|
|
35,272
|
|
|
|
160,000
|
|
|
|
*
|
|
David B. Root (10)
|
|
|
862
|
|
|
|
*
|
|
|
|
-
|
|
|
|
-
|
|
|
|
862
|
|
|
|
45,759
|
|
|
|
87,187
|
|
|
|
*
|
|
All Directors and Executive Officers as a Group (21 people)
(11)
|
|
|
36,959,163
|
|
|
|
37.5
|
|
|
|
90,703
|
|
|
|
96.2
|
|
|
|
37,049,866
|
|
|
|
5,605,057
|
|
|
|
2,492,451
|
|
|
|
10.2
|
|
|
|
|
*
|
|
Less than 1%
|
|
(1)
|
|
Includes stock units credited to
the accounts of non-employee directors under our deferred
compensation plans. Stock units are distributed in shares of
Common Stock. Messrs. Jannotta and Potter were participants
in the deferred compensation plan at the time that Molex issued
its Class A Common Stock so their stock unit accounts were
credited with one share of Class A Common Stock for each
share of Common Stock credited to their accounts at the time of
the issuance.
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|
(2)
|
|
These are stock options exercisable
within 60 days of September 2, 2008.
|
|
(3)
|
|
Includes 21,407,343 shares
held by the Krehbiel Limited Partnership. Mr. Krehbiel and
his brother John H. Krehbiel, Jr. are each general and limited
partners of the Partnership and share the power to vote and
dispose of the shares held by the Partnership. Also includes
3,578,186 shares owned indirectly as trustee for family
members and 3,745 shares beneficially owned by
Mr. Krehbiels spouse. Mr. Krehbiel disclaims
beneficial ownership and/or personal beneficial interest in the
shares owned as trustee for family members.
|
|
(4)
|
|
Includes 109,593 shares owned
indirectly as trustee for family members, and 3,666 shares
beneficially owned by Mr. Krehbiels spouse.
Mr. Krehbiel disclaims beneficial ownership and/or personal
beneficial interest in the shares owned as trustee for family
members.
|
|
(5)
|
|
Includes 21,407,343 shares
held by the Krehbiel Limited Partnership. See footnote
(3) above. Also includes 9,691,112 shares owned
indirectly by a trust, 221,275 shares owned indirectly as
trustee for family members, and 6,952 shares beneficially
owned by Mr. Krehbiels spouse. Mr. Krehbiel
disclaims beneficial ownership and/or personal beneficial
interest in the shares owned as trustee for family members.
649,752 of these shares are pledged to a financial institution
as collateral for a line of credit.
|
|
(6)
|
|
Includes 3,844,521 shares
owned indirectly by a trust, 35,575 shares owned indirectly
as trustee for family members and 3,602 shares beneficially
owned by Mr. Krehbiels spouse. Mr. Krehbiel
disclaims beneficial ownership and/or personal beneficial
interest in the shares owned as trustee for family members.
|
|
(7)
|
|
Includes 115,759 Common Stock
shares and 85,979 Class A Common Stock shares beneficially
owned by a trust, and 643 Common Stock shares and 9,641
Class A Common Stock shares beneficially owned by family
members.
|
|
(8)
|
|
Includes 4,755 Class A Common
Stock shares owned by Mr. McCarthys spouse.
|
|
(9)
|
|
Includes 27 Common Stock shares and
42 Class A Common Stock shares beneficially owned by
Mr. Fleischhackers spouse.
|
|
(10)
|
|
Includes 3 Class A Common
Stock shares owned by Mr. Roots spouse.
|
|
(11)
|
|
The Krehbiel Partnership shares
beneficially owned by both Frederick A. Krehbiel and
John H. Krehbiel, Jr. are counted once for purposes of
these totals.
|
12
Stock Ownership
Guidelines for Directors and Executive Officers
The stock ownership guidelines for non-employee directors
require them to own 500 shares
(and/or
stock units) of Molex stock within three years of commencement
of service and 1,000 shares (and/or stock units) of Molex
stock within six years of commencement of service. As of
September 2, 2008, each non-employee director, except for
Messrs. Kusaka and Metcalf both of whom have served on the
Board for less than three years, had met the stock ownership
guidelines.
Under the stock ownership guidelines for executive officers, the
Chief Executive Officer is required to own Molex stock equal in
value to at least three times his annual base salary, and each
other executive officer is required to own Molex stock equal in
value to at least two times his or her annual base salary. A new
executive officer is given five years to meet these guidelines.
We make exceptions to these guidelines for an executive officer
expected to retire within three years or for economic hardship.
As of September 2, 2008, each executive officer had met, or
was on track to meet, the stock ownership guidelines.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires Molexs directors and certain of its
officers to file reports of their ownership of Molex stock and
of changes in such ownership with the SEC. SEC regulations also
require us to identify in this Proxy Statement any person
subject to this requirement who failed to file any such report
on a timely basis. Based on our review of the reports we have
received or assisted in preparing, we believe that all of our
directors and officers complied with all the reporting
requirements applicable to them with respect to transactions
during FY08.
SECURITY
OWNERSHIP OF MORE THAN 5% STOCKHOLDERS
The following table sets forth information regarding beneficial
ownership of the stockholders of more than 5% (other than
directors and executive officers) of the outstanding Molex stock
as of September 2, 2008. Molexs Class A Common
Stock is included in the table for informational purposes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
|
Common Stock
|
|
|
Common Stock
|
|
Name
|
|
# Shares
|
|
|
%
|
|
|
# Shares
|
|
|
%
|
|
|
Krehbiel Limited Partnership (1)
2222 Wellington Court
Lisle, IL 60532
|
|
|
21,407,343
|
|
|
|
21.7
|
%
|
|
|
-
|
|
|
|
-
|
|
Dodge & Cox (2)
555 California Street,
40
th
Floor
San Francisco, CA 94104
|
|
|
-
|
|
|
|
-
|
|
|
|
13,994,887
|
|
|
|
17.7
|
|
Invesco Ltd. (3)
1360 Peachtree Street NE
Atlanta, GA 30309
|
|
|
-
|
|
|
|
-
|
|
|
|
11,198,947
|
|
|
|
14.2
|
|
GE Asset Management Inc. (4)
3001 Summer Street
P.O. Box 7900
Stamford, CT 06904
|
|
|
-
|
|
|
|
-
|
|
|
|
10,719,722
|
|
|
|
13.6
|
|
Wells Fargo & Company (5)
420 Montgomery Street
San Francisco, CA 94163
|
|
|
-
|
|
|
|
-
|
|
|
|
5,375,828
|
|
|
|
6.8
|
|
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(1)
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See footnote (3) of the
Security Ownership of Directors and Executive
Officers table.
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(2)
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As reported in a Schedule 13G
dated January 10, 2008. Dodge & Cox exercises
sole voting power over 13,224,682 shares, shared voting
power over 42,501 shares, and sole dispositive power over
13,994,887 shares.
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13
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(3)
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As reported in a Schedule 13G
dated February 9, 2008 by Invesco Ltd., AIM Funds
Management, Inc., PowerShares Capital Management LLC,
PowerShares Capital Management Ireland Ltd., and Stein Roe
Investment Counsel, Inc. AIM Funds exercises sole voting and
dispositive power over 11,171,287 shares; PowerShares
exercises sole voting and dispositive power over
5,430 shares; PowerShares Ireland exercises sole voting and
dispositive power over 22 shares; and Stein Roe exercises
sole dispositive power over 22,208 shares. Invesco
disclaims beneficial ownership of such shares.
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(4)
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As reported in a Schedule 13G
filed on February 13, 2008 by GE Asset Management Inc.
(GEAM) and the Trustees of General Electric Pension Trust
(GEPT). GEAM claims beneficial ownership of
1,640,097 shares with shared voting and dispositive power
over all such shares. GEPT claims beneficial ownership of
9,079,625 shares with sole voting and dispositive power
over 7,439,528 shares, and shared voting and dispositive
power over 1,640,097 shares. General Electric Company
disclaims beneficial ownership of such shares.
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(5)
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As reported in a Schedule 13G
dated February 7, 2008 by Wells Fargo & Company
(Wells Fargo) on behalf of Wells Capital Management
Incorporated, Wells Fargo Funds Management LLC, and Wells Fargo
Bank, NA. Wells Fargo exercises sole voting power over
4,508,633 shares, shared voting power over
7,640 shares, sole dispositive power over
4,449,609 shares, and shared dispositive power over
42,755 shares.
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ITEM 2
APPROVAL OF THE
MOLEX INCORPORATED ANNUAL INCENTIVE PLAN
On August 1, 2008, upon the recommendation of the
Compensation Committee and subject to stockholder approval, the
Board approved the Molex Incorporated Annual Incentive Plan
(AIP). In the past, we have provided annual cash bonus
opportunities to executive officers and other key employees
pursuant to individual bonus arrangements. We have determined
that adoption of a plan to govern annual cash bonuses is
appropriate, will provide us with consistency in the
administration of annual bonuses and will also comply with the
requirements of Section 162(m) of the Internal Revenue Code.
Purpose of the
AIP
The purpose of the AIP is to enhance shareholder value and
promote the attainment of our significant business objectives by
basing a portion of an employees annual cash compensation
on the achievement of specific performance goals.
Material Features
of the AIP
A summary of the material features of the AIP is set forth
below. The plan document is attached to this Proxy Statement as
Appendix III
. Please refer to the AIP document for a
more complete description of its terms and conditions.
Participation
in and Administration of the AIP
All of our executive officers and other key employees will be
eligible to participate in the AIP. The AIP will be administered
by the Compensation Committee with respect to executive officers
and by the Chief Executive Officer (CEO) with respect to other
key employees. The CEO will determine the other key employees
who are eligible to participate in the AIP. Approximately
125 employees would currently be considered eligible to
participate in the AIP. The Compensation Committee will
determine which participants will be treated as covered
employees for purposes of Section 162(m) of the
Internal Revenue Code.
Determination of Awards.
As it relates to awards for
executive officers, each year the Compensation Committee will
(i) establish one or more performance measures,
(ii) set the annual performance goal with respect to such
performance measure for the Company, a business unit or an
individual, (iii) establish the weighting to be given to
the performance measure and performance goal, and
(iv) designate whether an award will be a
Section 162(m) Award. As it relates to awards for other key
employees, each year the CEO will make the same determinations
as described above except he will not be designating
Section 162(m) Awards.
Section 162(m) Awards.
Section 162(m)
precludes us from taking a deduction for compensation in excess
of $1 million paid to certain of our executive officers.
Certain qualified performance-based compensation is excluded
from this limitation. If the AIP is approved and the other
conditions of
14
the AIP and Section 162(m) are met, the payment of annual
incentives will be excluded from the Section 162(m)
limitation because they will qualify as performance-based
compensation.
Performance Measures.
Performance goals will be
based on one or more of the following performance measures: net
earnings or net income (before or after taxes); earnings per
share; net sales or revenue growth; net operating profit; return
measures (including, but not limited to, return on assets,
return on net assets, capital, invested capital, equity, sales,
or revenue); cash flow (including, but not limited to, operating
cash flow, free cash flow, cash flow return on equity, and cash
flow return on investment); EBIT or earnings before or after
taxes, interest, depreciation,
and/or
amortization; gross or operating margins; productivity ratios;
share price (including, but not limited to, growth measures and
total shareholder return); expense targets; margins; operating
efficiency; market share; total shareholder return; customer
satisfaction; working capital targets; and economic value added
or
EVA
®
(net operating profit after tax minus the sum of capital
multiplied by the cost of capital).
In the Compensation Committees
and/or
the
CEOs discretion, performance goals may be expressed in
terms of attaining a specified level of the particular measure,
or the attainment of a percentage increase or decrease in the
particular measure, or any of the performance measures as
compared to the performance of a group of comparator companies,
or published or special indices, or the Compensation Committee
and/or
the
CEO may select a share price as compared to various stock market
indices.
Performance Evaluation.
The Compensation Committee
and/or
the
CEO may provide that any evaluation of performance may include
or exclude any of the following events that occurs during a
performance period: asset write-downs; litigation or claim
judgments or settlements; the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting
reported results; any reorganization and restructuring programs;
extraordinary nonrecurring items; acquisitions or divestitures;
and foreign exchange gains and losses.
Amount
Available for Awards
The Compensation Committee
and/or
the
CEO will determine the amount available for payment of annual
bonuses in any year or any other measurement period. The
aggregate maximum amount that may be paid to any one participant
during any fiscal year with respect to all awards under the AIP
is $10,000,000.
Distribution
of Awards
Awards under the AIP for a particular year or other measurement
period are paid in cash promptly after the end of that year or
other measurement period.
Repayment of
Awards
The Board may require reimbursement of bonuses paid to a named
executive officer where (i) the payment was predicated in
whole or in part upon the achievement of certain financial
results that were subsequently the subject of a material
restatement, (ii) in the Boards view the named
executive officer engaged in fraud or misconduct that caused the
need for the restatement, and (iii) a lower bonus would
have been made to the named executive officer based upon the
restated financial results. The Board may also seek
reimbursement of bonuses paid to any named executive officer in
other circumstances involving fraud or misconduct if such fraud
or misconduct caused substantial harm to the Company even in the
absence of a restatement of the Companys financial
statements.
Termination of
Employment
Generally, a participant must be actively employed on the date
the amount payable with respect to
his/her
bonus is determined in order to be entitled to payment of the
bonus. A participant whose employment is terminated prior to a
determination date for any reason, other than discharge for
cause or voluntary resignation, may receive a full or partial
bonus as determined by the Compensation Committee
and/or
the
CEO, as applicable.
15
Amendment and
Termination
The Board may at any time amend, suspend or discontinue the AIP,
in whole or in part. The Compensation Committee
and/or
the
CEO, as applicable, may at any time alter or amend any or all
award documents under the AIP to the extent permitted by law.
Stockholder approval may be required for actions that affect
Section 162(m) Awards.
New Plan
Benefits
Future benefits that may be awarded under the AIP are subject to
the discretion of the respective administrator and are not
currently determinable.
Vote
Required
Item 2 must be approved separately by a majority of the
shares of Common Stock voting as a class and the majority of the
shares of Class B Common Stock voting as a class.
Abstentions will have the same effect as votes against the
proposal, and broker non-votes will have no effect on the result
of the votes on the proposal.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ITEM 2
ITEM 3
APPROVAL OF THE
2008 MOLEX STOCK INCENTIVE PLAN
We are proposing the adoption of the 2008 Molex Stock Incentive
Plan (SIP) to (i) add to the number of shares currently
available for equity grants to our directors, officers and
employees, (ii) provide greater flexibility in the terms
and conditions of awards, and (iii) conform our stock
incentive plan to current best practices and changes in federal
tax law.
We currently maintain three stockholder-approved stock incentive
plans that allow us to make grants to directors, officers and
employees. As noted in the following table, each plan has
outstanding awards and shares available for grant. The three
plans will be referred to as the Existing Plans in
this summary. On August 1, 2008, the Board of Directors
adopted, subject to stockholder approval, the SIP which will
replace the Existing Plans.
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Number of
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Shares
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Shares
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Outstanding
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Available
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Authorized
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Awards as of
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for Grant as of
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Existing Plan
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for Grant
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June 30, 2008
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June 30, 2008
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The 1998 Molex Stock Option and Restricted Stock Plan
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12,500,000
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3,663,119
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3,218,797
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The 2000 Molex Long-Term Stock Plan
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12,000,000
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5,885,198
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4,155,395
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The 2005 Molex Incentive Stock Option Plan
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500,000
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47,700
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451,750
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If the SIP is approved by our stockholders, no further stock
incentives will be granted under any of the Existing Plans. Any
shares remaining available for grant under the Existing Plans,
however, will become available for use under the SIP. The
Existing Plans will remain in effect until the awards previously
granted under those plans have been exercised, forfeited, are
otherwise terminated, or any and all restrictions lapse, as the
case may be, in accordance with the terms of such awards. In the
event that any shares subject to outstanding awards granted
under the Existing Plans again become available for the issuance
of awards pursuant to the Existing Plans, then such shares will
become available for use under the SIP.
Purpose of the
SIP
The purpose of the SIP is to optimize our profitability and
growth through stock incentives which are consistent with our
goals and which link and align the personal interests of
directors, officers and employees to those of our stockholders.
The SIP will also enable us to attract, motivate, and retain
directors, officers and employees who make significant
contributions to our success and to allow such
16
individuals to share in our success. The plan is intended to
meet the requirements of Section 162(m) of the Internal
Revenue Code by qualifying awards as performance-based
compensation.
Material Features
of the SIP
A summary of the material features of the SIP is set forth
below. The plan document is attached to this Proxy Statement as
Appendix IV
. Please refer to the SIP document for a
more complete description of its terms and conditions.
Shares
Available Under the SIP
Upon approval of the SIP by our stockholders, there will be an
aggregate of 5,000,000 shares of our Class A Common
Stock available for issuance pursuant to awards under the SIP,
plus:
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The number of shares that remains available for grant under the
Existing Plans on the date of the annual meeting, and
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Shares that would have again become available for issuance
pursuant to the terms of awards previously granted under the
Existing Plans and outstanding on the date of the annual meeting
if those awards expire, terminate or are otherwise forfeited
before being exercised or settled in full.
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The additional 5,000,000 shares to be used under the SIP
will be registered with the SEC on a
Form S-8.
Shares under the Existing Plans are already registered with the
SEC. Shares covered by an award will only be counted as used if
they are actually issued. Any shares related to an award that
terminates by expiration, forfeiture, cancellation, or otherwise
without the issuance of such shares, or are settled in cash in
lieu of shares will be available again for grant under the Plan.
No participant may receive awards exceeding 500,000 shares
of Class A Common Stock in a single calendar year.
Administration
of the SIP; Eligibility and Awards
The SIP will be administered by the Compensation Committee and
the Stock Option Plan Committee. The Compensation Committee,
which is comprised of independent directors, will be responsible
for administering awards to executive officers. The Stock Option
Plan Committee, which is comprised of Frederick A. Krehbiel,
John H. Krehbiel, Jr., and Martin P. Slark, will be
responsible for administering awards to employees who are not
executive officers. The respective committee will select the
individuals eligible to participate in the SIP, the types of
awards granted, the times at which awards may be granted and the
number of shares to be covered by each award granted. The
respective committee will also have the authority to interpret
and administer the SIP, to determine the terms and conditions of
awards and to make all other determinations relating to the SIP
that it deems necessary or desirable for the administration of
the plan. The SIP will terminate on October 30, 2018, ten
years after it is approved by our stockholders except with
respect to awards then outstanding. Only the Board may amend,
suspend or terminate the SIP.
All of our directors, officers and employees will be eligible to
participate in the SIP. Approximately 1,082 individuals
currently participate in the Existing Plans and are considered
to be eligible to participate in the SIP. Awards that may be
granted under the SIP include stock options, restricted stock,
and performance shares. All grants will be evidenced by an award
agreement in a form, and containing such terms and conditions,
as the respective committee determines. The Board has adopted
equity grant procedures that govern the timing of annual grants:
annual grants to executive officers are made on August 15 of
each year (or the next trading day if markets are closed on
August 15); annual grants to other employees are made on
February 1 of each year (or the next trading day if markets are
closed on February 1); annual grants to directors occur on the
date of the annual meeting of stockholders. While awards
typically are granted to selected eligible participants once a
year, the respective committee may grant awards to any eligible
participant at any time.
Stock
Options
Stock options may be granted alone or in addition to other
awards. Stock options may be nonqualified stock options or
incentive stock options within the meaning of Section 422
of the Internal
17
Revenue Code; provided, that incentive stock options may only be
granted to officers and employees and are subject to the
requirements of Section 422 of the Internal Revenue Code as
explained in the SIP.
The exercise price for stock options granted to directors and
executive officers may not be less than 100% of the fair market
value of the shares on the grant date. The Stock Option Plan
Committee may grant stock options to employees who are not
executive officers at an exercise price that is less than the
fair market value of the shares on the grant date. Employees who
are not executive officers generally receive stock options with
an exercise price equal to 50% of the fair market value.
Non-employee directors will continue to receive non-qualified
stock options pursuant to a non-discretionary formula. They will
be granted stock options to purchase 500 shares multiplied
by the number of years of service, or fraction thereof, on the
date of the annual meeting of stockholders. In no event,
however, will a non-employee director receive an annual grant in
excess of 5,000 shares or with a value in excess of
$150,000, whichever is less.
Stock
o
ptions will vest and be exercised as determined by
the respective committee and may be exercised during a term not
to exceed 10 years from the grant date. Accelerated vesting
of stock options occurs in the event of death, disability,
retirement or involuntary termination, as defined in the SIP.
Stock options may not be transferred, other than by will or by
the laws of descent and distribution.
The respective committee may determine the permitted methods of
payment of the exercise price, which may include cash, the
tender of previously acquired shares of Molex stock,
cashless (broker-assisted) exercise, any combination
of these methods, or any other method approved or accepted by
the respective committee. Discounted stock options granted to
U.S. employees are automatically exercised on the date of
vesting with settlement to the participant through a net share
delivery approach. This means that we withhold a number of
shares underlying the stock option to pay for the exercise price
and applicable taxes, and the remaining net shares
are distributed to the participant.
Restricted
Stock
Restricted stock may be granted alone or in addition to other
awards. The SIP provides that the respective committee may grant
shares of restricted stock and determine the vesting period and
number of shares of restricted stock for each award. Restricted
stock may not be sold, transferred or otherwise disposed of by
participants, and may be forfeited in the event of termination
of employment or service, prior to vesting. Upon vesting, the
restricted stock is distributed to the participant.
Accelerated vesting of restricted stock occurs in the event of
death, disability, retirement or involuntary termination, as
defined in the SIP. Unvested restricted stock will be cancelled
immediately upon a termination of employment or service other
than for death, disability, retirement, or involuntary
termination. Restricted stock becomes freely transferable once
it has vested and has been distributed to a participant.
Performance
Shares
Performance shares may be granted alone or in addition to other
awards. The amount of the award to be distributed, the
performance goal to be achieved during any performance period
and the length of the performance period will be determined by
the respective committee. Performance shares will be distributed
only after the end of the relevant performance period. The
performance goals will be objectively measurable and will be
based upon one or more of the following performance measures:
net earnings or net income (before or after taxes); earnings per
share; net sales or revenue growth; net operating profit; return
measures (including, but not limited to, return on assets,
return on net assets, capital, invested capital, equity, sales,
or revenue); cash flow (including, but not limited to, operating
cash flow, free cash flow, cash flow return on equity, and cash
flow return on investment); EBIT or earnings before or after
taxes, interest, depreciation,
and/or
amortization; gross or operating margins; productivity ratios;
share price (including, but not limited to, growth measures and
total shareholder return); expense targets; margins; operating
efficiency; market share; total shareholder return; customer
satisfaction; working capital targets; and economic value added
or
EVA
®
(net operating profit after tax minus the sum of capital
multiplied by the cost of capital).
18
The vesting of performance shares will be based on the
attainment of performance goals pre-established by the
respective committee from the list of applicable performance
measures. The respective committee also has the authority to
provide for accelerated vesting of any performance shares based
on the achievement of performance goals pursuant to the
specified performance measure in the event of death, disability,
retirement or involuntary termination that occurs during the
last six months of a performance period. Unvested performance
shares will be cancelled immediately upon a termination of
employment or service other than for death, disability or
retirement. Performance shares may not be transferred until all
conditions and restrictions have been satisfied, other than by
will or by the laws of descent and distribution.
Adjustment and
Change in Control Provisions
The number of shares available under the SIP and the terms and
conditions of awards (e.g., the exercise price of stock options,
the number and kind of shares subject to outstanding awards,
restriction period, performance periods, etc.) may be adjusted
in the event of unusual events such as distributions in
connection with a merger or reorganization or stock splits. In
the event of a change in control: (i) all stock options
will become immediately vested and exercisable, (ii) all
restricted stock will become fully vested and be distributed;
and (iii) all performance shares will be deemed to have
been earned as of the effective date of the change in control,
the performance shares will become fully vested, and there will
be paid out a pro rata number of shares.
A change in control is defined to include:
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The purchase or other acquisition by any person, entity or group
of persons, within the meaning of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934, as amended (the
Exchange Act) or any comparable successor
provisions, or beneficial ownership (within the meaning of
Rule 13d-4
promulgated under the Exchange Act) of more than fifty percent
(50%) of either the outstanding shares of common stock of Molex
or the combined voting power of Molexs then outstanding
voting securities entitled to vote generally;
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The approval by Molexs stockholders of a reorganization,
merger or consolidation, in each case, with respect to which
persons who were Molex stockholders immediately prior to such
reorganization, merger or consolidation, immediately thereafter,
own more than fifty percent (50%) of the combined voting power
entitled to vote generally in the election of directors of the
reorganized, merged or consolidated companys then
outstanding securities;
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A liquidation or dissolution of Molex; or
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The sale of all or substantially all of Molexs assets
(i.e., greater than 40% of the total gross fair market value of
all of the assets of Molex immediately prior to such sale or
disposition) within a
12-month
period ending on the date of the most recent sale or disposition.
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Forfeiture
Awards under the SIP may be forfeited if (i) the recipient
engages in competitive activities during employment or within
one year after termination of employment; (ii) the
recipient solicits employees to work for another organization
during employment or within two years after termination of
employment; or (iii) the recipients employment is
terminated for cause, as defined in the SIP. Awards may also be
forfeited in certain circumstances if Molex is required to
restate its financial statements.
Certain Federal
Income Tax Consequences
The following is a general description of the U.S. federal
income tax consequences to participants and Molex relating to
awards. This discussion does not cover all tax consequences
relating to the awards, and assumes, with respect to
deductibility of compensation by Molex, that to the extent
applicable, the requirements of Section 162(m) of the
Internal Revenue Code have been satisfied. Also, our ability to
obtain a deduction for future payments under the SIP could be
limited by the golden parachute rules of
Section 280G of the Internal Revenue Code, which prevent
the deductibility of certain excess parachute
payments made in connection with a change in control. The
19
tax treatment may also vary depending on the participants
particular situation and may, therefore, be subject to special
rules not discussed below.
A participant who receives stock options generally will not
recognize any income, nor will we be entitled to any tax
deduction, in the year of the grant. At the time that a
nonqualified stock option is exercised, the participant will
recognize ordinary income in an amount equal to the excess of
(a) the fair market value of the shares purchased over
(b) the exercise price of the stock option. We generally
will be entitled to a tax deduction in an amount equal to the
amount includible in the income of the participant in the
taxable year in which the participant is required to recognize
the income.
A participant who disposes of shares received upon the exercise
of a nonqualified stock option will recognize capital gain (or
loss) in an amount equal to the difference between (a) the
amount realized on the disposition of the shares, and
(b) the fair market value of the shares on the exercise
date. The capital gain (or loss) will be considered long-term if
the shares received upon exercise are held for more than one
year after exercise. We are not entitled to any deduction for
federal income tax purposes upon a participants
disposition of stock received upon the exercise of a
non-qualified stock option.
A participant will recognize no income for federal income tax
purposes upon the grant or the exercise of an incentive stock
option, provided that the exercise occurs during employment or
within three months after termination, other than in the case of
death or disability. If the shares acquired upon the exercise
are held for a minimum of both (a) two years from the grant
date and (b) one year from the exercise date, then any gain
or loss recognized by the participant on the sale of such shares
will be treated as a long-term capital gain or loss, and we will
not be entitled to any deduction for federal income tax
purposes. If the shares acquired are not held for these minimum
periods, then the participant will be required to recognize
ordinary income in the year of the disposition to the extent
that the fair market value of the shares on the exercise date or
the sale price, whichever is less, exceeds the exercise price
for the shares. We generally will be entitled to a deduction for
federal income tax purposes equal to the amount the participant
is required to recognize as ordinary income.
A participant who receives awards payable in restricted stock or
performance shares will not recognize income for federal income
tax purposes until the awards vest. At that time, the
participant will recognize ordinary income on the excess of
(a) the fair market value of the shares on the vesting date
over (b) the amount, if any, paid for the shares. We will
be entitled to take a tax deduction in an amount equal to the
ordinary income recognized by the participant.
An employee participant will be subject to withholding for
federal and, if applicable, state and local, income taxes at the
time the participant recognizes income under the rules described
above with respect to shares. As such, we will have the right to
make all payments or distributions to a participant net of any
taxes required to be paid at such time. We will have the right
to withhold from wages or other amounts otherwise payable such
withholding taxes as may be required by law, to otherwise
require the participant to pay such withholding taxes or to take
such other action as may be necessary to satisfy such
withholding obligations. Non-employee directors are not subject
to withholding by us and must make their own arrangements for
satisfying any tax obligations they may have in connection with
the grant or exercise of an award under the SIP.
Internal Revenue Code Section 409A imposes an additional
20% tax and interest on an individual receiving nonqualified
deferred compensation, as defined in Section 409A, under a
plan that fails to satisfy certain requirements. Awards made
pursuant to the SIP are designed to comply with the requirements
of Section 409A to the extent such awards are not exempt
from coverage. However, if the SIP fails to comply with
Section 409A in operation, a participant could be subject
to the additional taxes and interest.
New Plan
Benefits
Future benefits that may be awarded under the SIP are subject to
the discretion of the respective committee and, therefore, are
not currently determinable.
20
Vote
Required
Item 3 must be approved separately by a majority of the
shares of Common Stock voting as a class and the majority of the
shares of Class B Common Stock voting as a class.
Abstentions will have the same effect as votes against the
proposal, and broker non-votes will have no effect on the result
of the votes on the proposal.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ITEM 3
ITEM 4
RATIFICATION OF
SELECTION OF INDEPENDENT AUDITORS
The Audit Committee has selected Ernst & Young LLP
(E&Y) as Molexs independent auditors for the fiscal
year ending June 30, 2009, and has further directed that
the Board submit the selection of independent auditors for
ratification by the stockholders at the annual meeting. A
representative of E&Y is expected to be present at the
annual meeting and will have an opportunity to make a statement
if he or she so desires, and will be available to respond to
questions.
Stockholder ratification of the selection of E&Y as
Molexs independent auditors is not required by the Bylaws
or otherwise, but the Board believes that as a matter of
corporate practice the selection of E&Y should be submitted
to Molexs stockholders for ratification. If the
stockholders do not ratify the selection, the Audit Committee
will consider whether or not to retain E&Y. Even if the
selection is ratified, the Audit Committee in its discretion may
direct the appointment of a different independent auditor at any
time during the year if the Audit Committee determines that such
a change would be in the best interests of Molex and its
stockholders.
YOUR BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR
ITEM 4
AUDIT
MATTERS
Audit Committee
Report
The Audit Committee acts on behalf of the Board of Directors by
providing oversight on the following matters: the quality and
integrity of Molexs financial statements, internal
controls and other accounting, auditing and reporting practices;
the audits of Molexs financial statements; compliance with
legal and regulatory requirements; and the activities of the
internal audit function. Molexs management is responsible
for preparing the financial statements, establishing and
maintaining the system of internal controls, and assessing the
effectiveness of Molexs internal control over financial
reporting. E&Y is responsible for auditing the annual
financial statements and expressing opinions on the conformity
of the financial statements with U.S. generally accepted
accounting principles, and on the effectiveness of Molexs
internal control over financial reporting based on its audit.
In fulfilling its oversight responsibilities, the Audit
Committee reviewed and discussed with management and E&Y
the audited financial statements for the fiscal year ended
June 30, 2008 and the reasonableness of significant
estimates and judgments made in preparing the financial
statements, as well as the clarity of the disclosures in the
financial statements. The Audit Committee also discussed
separately with Molexs internal auditor and E&Y, with
and without management present, their evaluations of
Molexs internal control over financial reporting and the
overall quality of Molexs financial reporting.
The Audit Committee discussed with E&Y such matters as are
required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees, as amended. In
addition, E&Y has provided to the Audit Committee the
written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit
Committees), and the Audit Committee and E&Y have discussed
the auditors independence from the Company and its
management, including the matters in those written disclosures.
Additionally, the Audit Committee considered the non-audit
services provided by E&Y and the fees and costs billed and
expected to be billed by
21
E&Y for those services. All of the non-audit services
provided by E&Y have been pre-approved by the Audit
Committee in accordance with its pre-approval policy. When
approving the retention of E&Y for these non-audit
services, the Audit Committee has considered whether the
retention of E&Y for these non-audit services is compatible
with maintaining auditor independence.
In reliance on the reviews and discussions with management and
E&Y referred to above, the Audit Committee recommended to
the Board of Directors, and the Board approved, the inclusion of
the audited financial statements in Molexs Annual Report
on
Form 10-K
for the fiscal year ended June 30, 2008 for filing with the
SEC. The Audit Committee also approved the selection of E&Y
as Molexs independent auditors for the fiscal year ending
June 30, 2009.
The Audit Committee:
David L. Landsittel, Chairman
Michelle L. Collins
Robert J. Potter
Independent
Auditors Fees
The following table presents fees for professional audit
services rendered by Molexs independent auditors for the
audit of Molexs annual financial statements for FY08 and
FY07, and fees billed for other services rendered by the
independent auditors during those periods.
|
|
|
|
|
|
|
|
|
|
|
FY08
|
|
|
FY07
|
|
|
Audit Fees (1)
|
|
|
$3,529,439
|
|
|
|
$3,712,018
|
|
Audit-Related Fees (2)
|
|
|
$444,981
|
|
|
|
$524,469
|
|
Tax Fees (3)
|
|
|
$1,277,292
|
|
|
|
$931,879
|
|
All Other Fees (4)
|
|
|
-
|
|
|
|
$17,405
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$5,251,712
|
|
|
|
$5,185,771
|
|
|
|
|
(1)
|
|
Audit Fees were principally for
audit work performed on the consolidated financial statements
and internal control over financial reporting, as well as work
generally only the independent auditors can reasonably be
expected to provide, such as statutory audit services.
|
|
(2)
|
|
Audit-related fees were principally
for consultations as to the accounting or disclosure treatment
of transactions or events, services related to post-acquisition
reviews, royalty audits and local grant audits, preliminary due
diligence pertaining to potential business
acquisitions/dispositions and financial statement audits of
employee benefit plans. The FY07 fees include services provided
by E&Y relating to the review of our past stock option
granting practices.
|
|
(3)
|
|
Tax fees were principally for
services related to domestic and international tax compliance
and reporting, including services related to expatriate tax
compliance.
|
|
(4)
|
|
During FY07, Molex reimbursed
E&Y for its reasonable costs incurred in responding to
discovery subpoena related to the securities litigation in which
Molex was involved.
|
Policy on Audit
Committee Pre-Approval of Services
Consistent with SEC policies regarding auditor independence, the
Audit Committee has responsibility for appointing, setting
compensation and overseeing the work of the independent
auditors. In recognition of this responsibility, the Audit
Committee has established a policy to pre-approve all audit and
permissible non-audit services provided by the independent
auditors.
Management submits to the Audit Committee a list of services and
related fees expected to be rendered during that year within
each of four categories of services: audit services,
audit-related services, tax services, and all other services.
Prior to engagement, the Audit Committee pre-approves services
within each category and the fees for each category are
budgeted. The Audit Committee requires the independent auditors
and management to report actual fees versus the budget
periodically throughout the year by category of service.
Pursuant to the policy, 100% of all services provided by the
independent auditors were pre-approved by the Audit Committee.
During the year, circumstances may arise when it may become
necessary to engage the independent auditors for additional
services not contemplated in the original pre-approval
categories. In those instances, the Audit Committee requires
specific pre-approval before engaging the independent auditors.
The Audit Committee may delegate pre-approval authority to the
Chairman of the Audit
22
Committee. The Chairman reports any pre-approval decisions to
the Audit Committee at its next scheduled meeting.
COMPENSATION
DISCUSSION AND ANALYSIS
We believe that the performance and contributions of our
executive officers are critical to the overall success of Molex.
To attract, retain and motivate our executives to accomplish our
business strategies, we have implemented executive compensation
programs providing executives with the opportunity to earn
compensation comparable to that paid by companies with which we
compete for top talent and that reward strong performance and
creation of stockholder value. The Compensation Committee of the
Board of Directors is responsible for establishing executive
compensation policies and overseeing our executive compensation
practices. The Committee has engaged The Delves Group to provide
advice and assist it in its decision-making and the firms
sole engagement for Molex is as compensation consultant to the
Committee.
Objectives
The overall objectives of our executive compensation program are
to attract world-class executive talent, retain key leaders,
reward short- and long-term performance, and align
executives long-term interests with those of our
stockholders. We focus on the following core principles in
structuring an effective compensation program that meets our
stated objectives:
|
|
|
|
|
Performance - We endeavor to align executive compensation
with the achievement of operational and financial results and
individual contributions.
|
|
|
|
Balance - We balance rewards for our demanding executive
roles between short-term and long-term financial and strategic
decisions to enhance performance over time.
|
|
|
|
Competitiveness - We believe that in total our executive
compensation should be targeted above the median of our peer
group. This target compensation positioning allows us to retain
highly experienced executives and to effectively recruit highly
qualified candidates when necessary.
|
Procedures Used
to Establish Executive Compensation
Each year the Committee reviews and considers market data (base
salary, target bonus, total cash, long-term stock incentives and
total direct compensation) of Molexs peer group along with
the individual responsibilities of each executive when setting
annual targeted pay opportunities. Annually, the Committee uses
tally sheets to review all elements of total compensation,
including outstanding equity awards and projected payments upon
termination.
In determining the design and the level of each element of
compensation we undertake a thorough review of competitive
market information. Management has retained Watson Wyatt to
develop competitive market information and assist us in making
recommendations to the Committee with respect to the composition
of the peer group companies, total compensation levels for our
executive officers, and the mix and design of incentive
compensation. The companies in the peer group are representative
of the types of companies with which we compete for executive
talent. The 2008 peer group was comprised of the following
companies: Amphenol Corp., Analog Devices, AVX Corp., Benchmark
Electronics, Cooper Industries, Genuine Parts Co., Hubbel Inc.,
ITT Corp., Jabil Circuit, KLA-Tencor Corp., Network Appliance,
Seagate Technology, SPX Corp., Teradyne, Thomas &
Betts Corp., Vishay Intertechnology and Western Digital Corp.
The peer group company compensation data that is presented to
the Committee is supplemented with compensation data from
broader, general industry surveys provided by Watson Wyatt.
Recommendations on the CEOs compensation arrangements are
made by the Co-Chairmen of the Board and the CEOs pay is
set by the Committee during executive session based on the
Committees assessment of the CEOs individual
performance, the financial and operating performance of Molex,
the recommendations of the Co-Chairmen, competitive market data,
and advice of The Delves Group. The CEO presents his assessment
of the performance of other executive officers
23
and makes recommendations to the Committee concerning the
compensation of such officers. The Committee considers the
CEOs recommendations based on each executives
individual responsibility, performance, overall contribution,
competitive market data and advice of The Delves Group, then
determines the compensation arrangements for these individuals.
Elements of
Compensation
Our executive compensation program is comprised primarily of
three elements: base salary, annual cash incentives and
long-term equity incentives. Each of these elements plays an
important role in balancing executive rewards over short- and
long-term periods, based on our program objectives.
Although we have no formal policy for a specific allocation
between current and long-term compensation or between cash and
non-cash compensation, the Committee has established a pay mix
for executive officers that balances performance-based pay with
retention-based equity awards. Executive compensation is divided
between current and long-term compensation, and cash and
non-cash compensation, to generally reflect market practice and
to provide executive officers with attractive levels of pay
while encouraging officers to remain with us for the long-term.
Generally, the amount of equity compensation granted is not
impacted by the realized or potentially realizable gains of past
equity awards.
Base
Salary
The base salary of an executive takes into account the
executives performance, responsibilities, experience and
internal equity. We target base salaries between the
50th and 75th percentiles of our peer group with the
expectation that successful performance over time will position
pay at or above the 75th percentile. In any given year,
actual individual salaries may range above or below the
75th percentile based on a variety of factors, including
position level, executive experience relative to industry peers,
tenure, individual performance, future potential, and leadership
qualities.
Annual
Bonuses
Annual bonuses are provided to reward executives both for Molex
performance toward corporate growth objectives and performance
of their individual objectives. The annual bonus is a short-term
annual incentive paid in cash pursuant to arrangements that
cover all executive officers and provide that a bonus will be
paid upon the achievement of two performance metrics: a
quantitative performance measure that makes up 80% of the bonus,
and performance against previously-defined individual goals,
which makes up the remaining 20%. The Committee selects the
performance measure at the beginning of each fiscal year. The
annual cash incentive is targeted at the median of the peer
group, and depending on Molex and individual performance, actual
bonuses can vary widely.
Individual performance goals are established by the Committee
and the CEO at the beginning of each fiscal year. These
individual performance goals may be based on a variety of
factors, including internal budget goals, investor expectations,
peer company results, prior year Molex performance, upcoming
fiscal year business plans, and strategic initiatives. Each
officers performance against individual goals is assessed
at the end of the fiscal year.
For FY08, the Committee determined that bonuses would be paid
out upon the achievement of any improvement in operating income
as compared to FY07 with target bonuses set at 15% growth in
operating income and maximum bonuses set at 30% growth in
operating income. The target and maximum award opportunities as
a percent of base salary for our NEOs are as follows:
|
|
|
|
|
|
|
|
|
Name
|
|
Target
|
|
|
Maximum
|
|
|
Mr. Slark
|
|
|
75
|
%
|
|
|
150
|
%
|
Mr. McCarthy
|
|
|
60
|
%
|
|
|
120
|
%
|
Mr. Johnson
|
|
|
60
|
%
|
|
|
120
|
%
|
Mr. Fleischhacker
|
|
|
50
|
%
|
|
|
100
|
%
|
Mr. Root
|
|
|
50
|
%
|
|
|
100
|
%
|
24
Long-Term
Incentives
The Committee awards a combination of stock options and
restricted stock to focus executive officers on long-term value
creation and achievement of key performance goals. Equity awards
help to align the interests of our executive officers with those
of our stockholders. Executive officers receive stock options
that provide them with the right to buy a fixed number of shares
of Molex Class A Common Stock at the closing price of the
stock on the grant date. Generally, options vest ratably over
four years beginning on the first anniversary of the grant date.
Restricted stock awards of Molex Class A Common Stock are
granted at no cost to the executive officer. Generally,
restricted stock awards vest ratably over four years beginning
on the first anniversary of the grant date. The vesting of stock
options and restricted stock awards is accelerated upon the
death, total disability or qualified retirement of an executive
officer.
We believe that equity awards, more than any other element of
compensation, provide our executive officers with incentives to
improve the performance of Molex over the long-term. This
performance incentive combined with the fact that equity awards
allow us to retain valuable executives and align the interests
of our executives with those of stockholders, is why the
Committee has historically provided equity awards that are at
the
75
th
percentile
or higher of our peer group.
All long-term incentives grants for executive officers are
approved by the Committee and routine annual grants occur on
August 15 (or the next trading day if markets are closed on
August 15).
FY08 Compensation
Decisions
As previously noted, the Committee selected year-over-year
growth in operating income as the performance measure for the
FY08 annual bonus. The Committee approved individual performance
goals at the beginning of FY08 for the CEO, and the Committee
and the CEO approved performance goals for the other executive
officers. The CEOs individual performance goal areas
included: year-over-year improvement in operating performance
for each of the divisions; strengthening Molexs global
compliance and ethics program; increased stakeholder contact;
talent development and effective succession planning; and
revenue growth through acquisitions and strategic alliances.
In August 2008, the Committee and the Co-Chairman of the Board
conducted an evaluation of the performance of the CEO, and the
Committee and the CEO conducted an evaluation of the performance
of the other executive officers during FY08 against
pre-established goals. Based upon these evaluations, decisions
were made regarding salary increases and annual bonuses. The
Named Executive Officers received salary increases ranging from
3.5% to 4% effective September 1, 2008. We did not have any
improvement in operating income in FY08 and the executive
officers, including the Named Executive Officers, did not
receive an annual bonus.
In keeping with our philosophy of aligning management and
stockholder interests and considering the future contributions
expected of the executive officers, the Committee granted on
August 15, 2007, long-term incentive awards to each
executive officer. See the Grants of Plan-Based Awards
Table for the equity granted to the Named Executive
Officers in FY08.
Retirement,
Savings and Insurance Benefits
In order to provide competitive total compensation, we offer
qualified profit sharing and 401(k) defined contribution plans.
U.S. executive officers participate in these plans on the
same terms as other salaried employees. The ability of executive
officers to participate fully in these plans is limited under
IRS and ERISA requirements. As is commonly the case among our
peer group, we offer to executive officers nonqualified
counterparts to these plans, which are not subject to these
limitations. Additionally, we offer a nonqualified deferred
compensation plan, supplemental life insurance, supplemental
travel/accident insurance and the opportunity to purchase
supplemental life insurance coverage.
We do not offer pension benefits to our executive officers. On a
case-by-case
basis, the Committee has approved individual retirement
packages, in addition to the retirement benefits generally
available under other employee benefit plans, to retiring
executive officers based on years of service and contributions
to Molex.
25
Defined
Contribution Plans
The Molex Incorporated Profit Sharing and Retirement Plan is a
defined contribution plan under which we make discretionary
annual contributions of a fixed percentage of eligible
compensation to a participants account. We make
contributions to the Profit Sharing Plan for executive officers
on the same terms as applicable to all participating employees.
During FY08, we made a contribution equal to 9.2% of eligible
compensation to all eligible employees, including the
U.S. executive officers.
U.S. executive officers may also participate in the Molex
Incorporated Employees 401(k) Plan, a defined contribution plan.
Under this plan, each executive officer may contribute a maximum
of 25% of eligible pay on a pre-tax basis up to the IRS limit.
We match the contributions of executive officers on the same
terms as are applicable to all participating employees - up
to 1% of an employees contributions. Additional
information about these plans can be found under Executive
Compensation.
Supplemental
Executive Retirement Plan
The Molex Supplemental Executive Retirement Plan is a
non-qualified defined contribution plan available to all
participants in the Profit Sharing Plan who are affected by the
IRS contribution limit. Additional information about this plan
can be found under Executive Compensation.
Executive
Deferred Compensation Plan
The Molex Executive Deferred Compensation Plan permits
participants to defer all or a portion of their base salary and
bonus during the plan year. Additional information about this
plan can be found under Executive Compensation.
Executive
Perquisites
We provide certain perquisites to our executive officers. We are
selective in our use of perquisites, utilizing perquisites of
which the value is generally modest; these perquisites may
include car allowances or leased cars, financial planning and
counseling, executive physical medical examinations and other
customary executive perquisites. The Committee has adopted a
perquisite pre-approval policy under which certain perquisites
and maximum amounts for such perquisites have been pre-approved
by the Committee. The Committee has delegated authority to the
CEO to approve such perquisites for other executive officers.
The Committee must separately approve perquisites not specified
included in the policy or amounts that exceed the specified
amounts.
Employment
Agreements, Severance Arrangements and Change in Control
Benefits
We do not currently offer employment agreements, severance
agreements, or change in control agreements to any executive
officer. As the Committee annually reassesses the effectiveness
of the executive compensation program, it also assesses the
merits of offering these types of arrangements for executives.
The Committee may decide to offer these types of benefits in the
future.
Tax
Considerations
Under Section 162(m) of the Internal Revenue Code,
executive compensation in excess of $1 million paid to
certain executive officers is generally not deductible for
purposes of corporate federal income taxes unless it qualifies
as performance-based compensation. The Committee intends to rely
on performance-based compensation practices and such practices
will be designed to fulfill, in the best possible manner, future
corporate business objectives. We will take appropriate action
to maintain the tax deductibility of our executive compensation.
However, when warranted due to competitive or other factors, the
Committee may decide in certain circumstances to exceed the
deductibility limit or to otherwise pay non-deductible
compensation.
Section 409A of the Internal Revenue Code requires that
nonqualified deferred compensation be deferred and
paid under plans or arrangements that satisfy the requirements
of the statute with respect to the timing of deferral elections,
timing of payments and certain other matters. Failure to satisfy
these requirements can expose executive officers to accelerated
income tax liabilities and penalty taxes and interest on their
vested compensation under such plans or arrangements.
26
Accordingly, it is our intention to design and administer, and
where applicable to amend, our compensation and benefits plans
and arrangements for all executive officers so that they are
either exempt from, or satisfy the requirements of,
Section 409A.
REPORT OF THE
COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the
foregoing Compensation Discussion & Analysis with
management. Based on this review and discussion, the
Compensation Committee has recommended to the full Board of
Directors that the Compensation Discussion and Analysis be
included in this Proxy Statement for filing with the SEC.
Compensation Committee:
Robert J. Potter, Chairman
David L. Landsittel
Joe W. Laymon
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table sets forth dollar amounts concerning
compensation awarded to, paid to, or earned by each of our of
Named Executive Officers (NEO) for all services rendered in all
capacities during FY08 and FY07.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
Name
|
|
Year
|
|
Salary
|
|
Awards(1)
|
|
Awards(1)
|
|
Compensation(2)
|
|
Compensation(3)
|
|
Total
|
|
Martin P. Slark
|
|
|
2008
|
|
|
|
878,333
|
|
|
|
1,380,194
|
|
|
|
1,627,679
|
|
|
|
-
|
|
|
|
163,212
|
|
|
|
4,049,418
|
|
Vice Chairman &
|
|
|
2007
|
|
|
|
833,333
|
|
|
|
1,120,651
|
|
|
|
1,858,885
|
|
|
|
-
|
|
|
|
199,854
|
|
|
|
4,012,723
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liam G. McCarthy
|
|
|
2008
|
|
|
|
568,332
|
|
|
|
550,926
|
|
|
|
839,148
|
|
|
|
-
|
|
|
|
93,302
|
|
|
|
2,051,708
|
|
President & Chief
|
|
|
2007
|
|
|
|
545,825
|
|
|
|
413,499
|
|
|
|
762,822
|
|
|
|
-
|
|
|
|
155,583
|
|
|
|
1,877,729
|
|
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Fleischhacker
|
|
|
2008
|
|
|
|
480,291
|
|
|
|
539,048
|
|
|
|
778,047
|
|
|
|
-
|
|
|
|
75,048
|
|
|
|
1,872,434
|
|
Executive Vice President
& President, Transportation Products Division
|
|
|
2007
|
|
|
|
461,818
|
|
|
|
567,327
|
|
|
|
1,007,831
|
|
|
|
-
|
|
|
|
82,332
|
|
|
|
2,119,308
|
|
David D. Johnson
|
|
|
2008
|
|
|
|
477,400
|
|
|
|
616,012
|
|
|
|
552,701
|
|
|
|
-
|
|
|
|
64,143
|
|
|
|
1,710,256
|
|
Executive Vice President, Treasurer & Chief Financial
Officer
|
|
|
2007
|
|
|
|
455,000
|
|
|
|
458,833
|
|
|
|
392,484
|
|
|
|
-
|
|
|
|
103,596
|
|
|
|
1,409,913
|
|
David B. Root
|
|
|
2008
|
|
|
|
392,460
|
|
|
|
366,013
|
|
|
|
374,358
|
|
|
|
-
|
|
|
|
306,151
|
|
|
|
1,438,982
|
|
Executive Vice President
& President, Commercial Products Division
|
|
|
2007
|
|
|
|
376,500
|
|
|
|
258,465
|
|
|
|
381,544
|
|
|
|
-
|
|
|
|
92,952
|
|
|
|
1,109,461
|
|
|
|
|
(1)
|
|
The amounts shown represent the
compensation cost of stock awards and option awards for
financial reporting purposes under FAS 123(R), rather than
an amount paid to or realized by the NEOs. The FAS 123(R)
value as of the grant date is spread over the number of months
of service required for the grant to become non-forfeitable.
There can be no assurance that the FAS 123(R) amounts will
ever be realized. For FY08, assumptions used in the calculation
of these compensation costs are included in Note 17 to the
consolidated financial statements included in the Annual Report
on Form
10-K
filed with the SEC on August 6, 2008.
|
|
(2)
|
|
Since our annual incentive
performance measures were not met in FY08 and FY07, the NEOs did
not receive a bonus.
|
|
(3)
|
|
See the All Other
Compensation Table.
|
27
All Other
Compensation Table
The following table sets forth dollar amounts for other
compensation provided to the NEOs included in the All
Other Compensation column of the Summary
Compensation Table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined
|
|
Life
|
|
|
|
|
|
|
|
|
Tax
|
|
Retirement/
|
|
Contribution
|
|
Insurance
|
|
|
Name
|
|
Year
|
|
Perquisite(1)
|
|
Gross-Up(2)
|
|
Severance
|
|
Plans(3)
|
|
Premiums
|
|
Total
|
|
M. Slark
|
|
|
2008
|
|
|
|
67,687
|
|
|
|
737
|
|
|
|
-
|
|
|
|
91,493
|
|
|
|
3,295
|
|
|
|
163,212
|
|
|
|
|
2007
|
|
|
|
57,752
|
|
|
|
1,993
|
|
|
|
-
|
|
|
|
136,086
|
|
|
|
4,023
|
|
|
|
199,854
|
|
L. McCarthy
|
|
|
2008
|
|
|
|
32,307
|
|
|
|
125
|
|
|
|
-
|
|
|
|
59,268
|
|
|
|
1,602
|
|
|
|
93,302
|
|
|
|
|
2007
|
|
|
|
58,876
|
|
|
|
408
|
|
|
|
-
|
|
|
|
94,523
|
|
|
|
1,776
|
|
|
|
155,583
|
|
J. Fleischhacker
|
|
|
2008
|
|
|
|
22,486
|
|
|
|
843
|
|
|
|
-
|
|
|
|
50,117
|
|
|
|
1,602
|
|
|
|
75,048
|
|
|
|
|
2007
|
|
|
|
7,970
|
|
|
|
166
|
|
|
|
-
|
|
|
|
72,420
|
|
|
|
1,776
|
|
|
|
82,332
|
|
D. Johnson
|
|
|
2008
|
|
|
|
11,911
|
|
|
|
814
|
|
|
|
-
|
|
|
|
49,816
|
|
|
|
1,602
|
|
|
|
64,143
|
|
|
|
|
2007
|
|
|
|
25,038
|
|
|
|
-
|
|
|
|
-
|
|
|
|
76,782
|
|
|
|
1,776
|
|
|
|
103,596
|
|
D. Root
|
|
|
2008
|
|
|
|
262,838
|
|
|
|
724
|
|
|
|
-
|
|
|
|
40,987
|
|
|
|
1,602
|
|
|
|
306,151
|
|
|
|
|
2007
|
|
|
|
32,204
|
|
|
|
125
|
|
|
|
-
|
|
|
|
58,847
|
|
|
|
1,776
|
|
|
|
92,952
|
|
|
|
|
(1)
|
|
See the Perquisites
Table.
|
|
(2)
|
|
Tax
gross-ups
relate to service anniversary awards, annual medical
examinations and spousal travel for business purposes.
|
|
(3)
|
|
See the Company Contributions
Table.
|
Perquisites
Table
The following table sets forth dollar amounts for perquisites
provided to the NEOs included in the Perquisites
column of the All Other Compensation Table. The
amounts included in the table reflect the actual cost to Molex
for providing these perquisites.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overseas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leased
|
|
|
Financial
|
|
|
Medical
|
|
|
Assignment
|
|
|
|
|
|
Spousal
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
|
Vehicle
|
|
|
Planning
|
|
|
Exam
|
|
|
Expenses(1)
|
|
|
Clubs(2)
|
|
|
Travel
|
|
|
Gifts(3)
|
|
|
Total
|
|
|
M. Slark
|
|
|
2008
|
|
|
|
30,680
|
|
|
|
26,996
|
|
|
|
1,465
|
|
|
|
-
|
|
|
|
8,546
|
|
|
|
-
|
|
|
|
-
|
|
|
|
67,687
|
|
|
|
|
2007
|
|
|
|
19,264
|
|
|
|
23,354
|
|
|
|
1,685
|
|
|
|
-
|
|
|
|
6,490
|
|
|
|
-
|
|
|
|
6,959
|
|
|
|
57,752
|
|
L. McCarthy
|
|
|
2008
|
|
|
|
27,107
|
|
|
|
5,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,307
|
|
|
|
|
2007
|
|
|
|
45,716
|
|
|
|
8,406
|
|
|
|
-
|
|
|
|
-
|
|
|
|
300
|
|
|
|
-
|
|
|
|
4,454
|
|
|
|
54,422
|
|
J. Fleischhacker
|
|
|
2008
|
|
|
|
7,626
|
|
|
|
12,792
|
|
|
|
-
|
|
|
|
-
|
|
|
|
350
|
|
|
|
1,718
|
|
|
|
-
|
|
|
|
22,486
|
|
|
|
|
2007
|
|
|
|
1,422
|
|
|
|
6,198
|
|
|
|
-
|
|
|
|
-
|
|
|
|
350
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,970
|
|
D. Johnson
|
|
|
2008
|
|
|
|
7,597
|
|
|
|
2,364
|
|
|
|
1,950
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,911
|
|
|
|
|
2007
|
|
|
|
22,239
|
|
|
|
2,799
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,038
|
|
D. Root
|
|
|
2008
|
|
|
|
1,499
|
|
|
|
-
|
|
|
|
-
|
|
|
|
248,766
|
|
|
|
12,573
|
|
|
|
-
|
|
|
|
-
|
|
|
|
262,838
|
|
|
|
|
2007
|
|
|
|
23,196
|
|
|
|
-
|
|
|
|
2,674
|
|
|
|
-
|
|
|
|
750
|
|
|
|
5,584
|
|
|
|
-
|
|
|
|
32,204
|
|
|
|
|
(1)
|
|
Mr. Root served on expatriate
assignment in Singapore during all of FY08. The amount shown
includes rent and house maintenance expenses for
Mr. Roots residence in Singapore, tax equalization,
expatriate travel expenses for him and his family, and payments
to recognize the cost of living differential between the U.S.
and Singapore. These expenses are within our Foreign Service
Employees Policies & Procedures.
|
|
(2)
|
|
The amounts for Mr. Slark
include memberships in the Chicago Club and the
Mid-America
Club. These two memberships are used primarily for business
purposes, but because corporate members are not permitted, the
memberships are held in Mr. Slarks name. The amount
for Mr. Root includes membership in a club in Singapore
that is an enhanced benefit outside of our Foreign Service
Employees Policies & Procedures but within the
Compensation Committees perquisite pre-approval policy.
All other amounts represent memberships in airline club lounges.
|
|
(3)
|
|
The amounts represent the dollar
value of service anniversary awards made by Molex.
|
28
Company
Contributions Table
The following table sets forth dollar amounts included in the
Company Contributions to Defined Contribution Plans
column of the All Other Compensation Table as
follows: (i) Molex matching contributions to the Molex
Incorporated 401(k) Savings Plan, (ii) Molex contributions
to the Molex Incorporated Profit Sharing and Retirement Plan,
and (iii) Molex contributions to the 2005 Molex
Supplemental Executive Retirement Plan. This table does not
include contributions made by each of the NEOs to these plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
|
401(k) Plan
|
|
|
Profit-Sharing
|
|
|
SERP
|
|
|
Total
|
|
|
M. Slark
|
|
|
2008
|
|
|
|
2,300
|
|
|
|
21,741
|
|
|
|
67,452
|
|
|
|
91,493
|
|
|
|
|
2007
|
|
|
|
2,300
|
|
|
|
21,021
|
|
|
|
112,765
|
|
|
|
136,086
|
|
L. McCarthy
|
|
|
2008
|
|
|
|
2,300
|
|
|
|
21,741
|
|
|
|
35,227
|
|
|
|
59,268
|
|
|
|
|
2007
|
|
|
|
2,300
|
|
|
|
21,021
|
|
|
|
71,202
|
|
|
|
94,523
|
|
J. Fleischhacker
|
|
|
2008
|
|
|
|
2,300
|
|
|
|
21,741
|
|
|
|
26,076
|
|
|
|
50,117
|
|
|
|
|
2007
|
|
|
|
2,300
|
|
|
|
21,021
|
|
|
|
49,099
|
|
|
|
72,420
|
|
D. Johnson
|
|
|
2008
|
|
|
|
2,300
|
|
|
|
21,741
|
|
|
|
25,775
|
|
|
|
49,816
|
|
|
|
|
2007
|
|
|
|
2,300
|
|
|
|
21,021
|
|
|
|
53,461
|
|
|
|
76,782
|
|
D. Root
|
|
|
2008
|
|
|
|
2,300
|
|
|
|
21,741
|
|
|
|
16,946
|
|
|
|
40,987
|
|
|
|
|
2007
|
|
|
|
2,300
|
|
|
|
21,021
|
|
|
|
35,526
|
|
|
|
58,847
|
|
Molex Incorporated 401(k) Savings Plan.
We make
matching contributions to the 401(k) Plan for each of the NEOs
on the same terms as applicable to all participating employees.
The 401(k) Plan permits participants to contribute a maximum of
25% of compensation subject to a dollar limit set by the IRS.
For calendar years 2007 and 2008 the IRS limit was $15,500. We
match up to 1% of a participants contributions and amounts
contributed by us and participants may be invested in a variety
of mutual funds, including money market, bond, fixed income,
large-, mid-, and small-cap equity funds, international equity
funds and life-style funds. Earnings on such investments were in
the range of 4.87% to 26.88% during calendar year 2007, and
-14.7% to 11.46% during calendar year 2008. Molex stock is not
an investment option and above market crediting
rates are not offered. A participant may transfer investments
among the various investment alternatives on a daily basis.
Molex Incorporated Profit Sharing and Retirement
Plan.
The Profit Sharing Plan is a defined contribution
plan under which we make discretionary annual contributions for
each of the NEOs on the same terms as applicable to
participating employees. During each of FY07 and FY08, we made a
contribution equal to 9.2% of eligible compensation to
U.S. eligible employees, including the NEOs. Eligible
compensation includes base salary and bonuses subject to a
dollar limit set by the IRS. For calendar years 2007 and 2008,
the IRS limit was $225,000 and $230,000, respectively. Our
contributions in excess of these eligible compensation limits
were contributed under the SERP to restore the intended benefit
of the Profit Sharing Plan.
Amounts that we contribute may be invested in a variety of
mutual funds, including managed income, bond, fixed income,
large-, mid-, and small-cap equity funds, international equity
funds and life-style funds. Earnings on such investments were in
the range of 4.29% to 23.67% during calendar year 2007, and
-19.1% and 5.28% during calendar year 2008. Molex stock is not
an investment option and above market crediting
rates are not offered. A participant may transfer investments
among the various investment alternatives on a daily basis.
Amounts that we contribute commence vesting on a
participants second anniversary of employment. At that
time, amounts vest in 20% annual increments and become fully
vested on the participants sixth anniversary of
employment. Vested amounts are distributed to a participant upon
separation from service.
2005 Molex Supplemental Executive Retirement Plan
(SERP).
The SERP is a non-qualified defined
contribution plan available to participants in the Profit
Sharing Plan who are affected by the IRS contribution limit. As
noted above, we contribute to the SERP the excess of eligible
compensation that we were not able to contribute to the Profit
Sharing Plan due to IRS contribution limits. Amounts that we
contribute may be invested in a variety of mutual funds,
including money market, bond, fixed income, large-,mid-, and
small-cap equity funds, international equity funds and
life-style funds. Earnings on such
29
investments were in the same ranges as for the Profit Sharing
Plan during each of calendar year 2007 and 2008. Molex stock is
not an investment option and above market crediting
rates are not offered. A participant may transfer investments
among the various investment alternatives on a daily basis.
Amounts that we contribute under the SERP vest in the same
manner as contributions to the Profit Sharing Plan. Vested
amounts are distributed to a participant upon separation from
service. Participants may elect to receive their distributions
in either a single lump sum payment or five annual installments.
To the extent permitted under Section 409A of the Internal
Revenue Code, distributions may be accelerated in the event of
an unforeseeable emergency or financial hardship. Distributions
to an NEO cannot begin earlier than six months after separation
from service.
Grants of
Plan-Based Awards
The following table provides information on the estimated
possible payouts under the annual incentive plan for FY08, based
on certain assumptions about the achievement of performance
objectives for Molex and the individual NEO at various levels.
Since Molexs operating performance bonus thresholds were
not met in FY08, the NEOs did not receive a bonus. The table
also provides information on stock awards and stock options to
acquire shares of Molex Class A Common Stock granted in
FY08 to each of the NEOs. There can be no assurance that the
amounts in the Grant Date Fair Value of Stock and Option
Award column will ever be realized. We did not grant any
performance-based equity in FY08.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts Under
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
Stock
|
|
Option
|
|
|
|
Grant Date
|
|
|
|
|
($)(1)
|
|
Awards:
|
|
Awards:
|
|
Exercise or
|
|
Fair Value
|
|
|
|
|
|
|
Number of
|
|
Number of
|
|
Base Price
|
|
of Stock
|
|
|
|
|
|
|
Shares of
|
|
Securities
|
|
of Option
|
|
and Option
|
|
|
Grant
|
|
|
|
|
|
|
|
Stock or
|
|
Underlying
|
|
Awards
|
|
Award
|
Name
|
|
Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units (#)
|
|
Options (#)
|
|
($/Sh)
|
|
($)(2)
|
|
M. Slark
|
|
|
08/15/07
|
|
|
|
0
|
|
|
|
658,749
|
|
|
|
1,317,499
|
|
|
|
75,000
|
|
|
|
200,000
|
|
|
|
22.82
|
|
|
|
2,951,500
|
|
L. McCarthy
|
|
|
08/15/07
|
|
|
|
0
|
|
|
|
340,999
|
|
|
|
681,998
|
|
|
|
30,000
|
|
|
|
125,000
|
|
|
|
22.82
|
|
|
|
1,459,600
|
|
J. Fleischhacker
|
|
|
08/15/07
|
|
|
|
0
|
|
|
|
240,145
|
|
|
|
480,291
|
|
|
|
20,000
|
|
|
|
60,000
|
|
|
|
22.82
|
|
|
|
828,400
|
|
D. Johnson
|
|
|
08/15/07
|
|
|
|
0
|
|
|
|
286,440
|
|
|
|
572,880
|
|
|
|
25,000
|
|
|
|
100,000
|
|
|
|
22.82
|
|
|
|
1,190,500
|
|
D. Root
|
|
|
08/15/07
|
|
|
|
0
|
|
|
|
196,230
|
|
|
|
392,460
|
|
|
|
25,000
|
|
|
|
60,000
|
|
|
|
22.82
|
|
|
|
942,500
|
|
|
|
|
(1)
|
|
As further described in the
Compensation Discussion & Analysis, the
target award opportunity for Mr. Slark is equal to 75% of
salary and the target award opportunities for the other NEOs
range from 50% to 60% of base salary. The maximum award
opportunity for Mr. Slark is equal to 150% of base salary
and the maximum award opportunities for the other NEOs range
from 100% to 120%. We used these percentages to calculate the
target and maximum amounts noted. There
are no thresholds under our annual bonus
arrangements.
|
|
(2)
|
|
Reflects the aggregate grant date
fair value of stock bonus awards and stock options as calculated
in accordance with FAS 123(R). There can be no assurance that
the FAS 123(R) amounts will ever be realized. Assumptions
used in the calculation of these values are included in
Note 17 to the consolidated financial statements included
in the Annual Report on Form
10-K
filed
with the SEC on August 6, 2008.
|
2000 Molex Long-Term Stock Plan.
Stock awards and
stock options are granted to the NEOs under the 2000 Molex
Long-Term Stock Plan. Stock awards vest ratably over four years
beginning on the first anniversary of the grant date. There is
no dividend or other ownership rights in the shares of
Class A Common Stock subject to the award unless and until
the award vests and the shares are issued. Stock options are
granted at 100% of the closing price of the stock on the grant
date and vest ratably over four years beginning on the first
anniversary of the grant date and expire on the fifth
anniversary of the grant date.
The vesting of stock awards and stock options is accelerated
upon the executives death, disability or qualified
retirement. A qualified retirement is one where the executive
has reached
age 59
1
/
2
,
was employed at least 15 consecutive years, and the Compensation
Committee approves the accelerated vesting. Once accelerated,
stock awards are distributed and stock options are immediately
exercisable and expire at the earliest of the date of expiration
set when the option was granted or six years after death,
disability or qualified retirement. Stock awards and stock
options terminate immediately upon the executives
voluntary or involuntary termination of employment (other than
death, disability or qualified retirement). Stock awards and
stock options are not transferable.
30
Outstanding
Equity Awards at Fiscal Year-End Table
The following table set forth summary information regarding the
outstanding equity awards at June 30, 2008 granted to each
of our NEOs. We did not grant any performance-based equity
during FY08. Unless otherwise noted, option awards and stock
awards are for the acquisition of shares of Molex Class A
Common Stock and vest ratably over four years commencing on the
first anniversary of the grant date. Awards are listed below
according to grant date with earliest grants listed first.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
Options
|
|
|
Options
|
|
|
Option
|
|
|
Option
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Exercise Price
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($)(3)
|
|
|
M. Slark
|
|
|
59,532
|
(1)
|
|
|
0
|
|
|
|
28.80
|
|
|
|
07/19/2008
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
22.28
|
|
|
|
07/25/2009
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
75,000
|
|
|
|
0
|
|
|
|
23.62
|
|
|
|
06/02/2010
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
175,000
|
|
|
|
0
|
|
|
|
25.99
|
|
|
|
10/24/2013
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
131,250
|
|
|
|
43,750
|
|
|
|
24.76
|
|
|
|
07/29/2009
|
|
|
|
5,000
|
|
|
|
114,550
|
|
|
|
|
93,750
|
|
|
|
93,750
|
|
|
|
23.86
|
|
|
|
10/28/2010
|
|
|
|
31,250
|
|
|
|
715,938
|
|
|
|
|
46,875
|
|
|
|
140,625
|
|
|
|
29.79
|
|
|
|
08/15/2011
|
|
|
|
46,875
|
|
|
|
1,073,907
|
|
|
|
|
0
|
|
|
|
200,000
|
|
|
|
22.82
|
|
|
|
08/15/2002
|
|
|
|
75,000
|
|
|
|
1,718,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L. McCarthy
|
|
|
18,452
|
(1)
|
|
|
0
|
|
|
|
28.80
|
|
|
|
07/19/2008
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
6,250
|
|
|
|
0
|
|
|
|
22.28
|
|
|
|
07/25/2009
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
17,990
|
|
|
|
0
|
|
|
|
25.99
|
|
|
|
10/24/2013
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
13,350
|
|
|
|
4,450
|
|
|
|
25.51
|
|
|
|
08/26/2009
|
|
|
|
925
|
|
|
|
21,192
|
|
|
|
|
75,000
|
|
|
|
75,000
|
|
|
|
23.54
|
|
|
|
07/01/2010
|
|
|
|
12,500
|
|
|
|
286,375
|
|
|
|
|
31,250
|
|
|
|
93,750
|
|
|
|
29.79
|
|
|
|
08/15/2011
|
|
|
|
22,500
|
|
|
|
515,475
|
|
|
|
|
0
|
|
|
|
125,000
|
|
|
|
22.82
|
|
|
|
08/15/2012
|
|
|
|
30,000
|
|
|
|
687,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Fleischhacker
|
|
|
0
|
|
|
|
12,500
|
(2)
|
|
|
21.81
|
|
|
|
07/29/2009
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
93,750
|
(2)
|
|
|
28.32
|
|
|
|
07/22/2010
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
54,362
|
|
|
|
0
|
|
|
|
28.80
|
|
|
|
07/19/2008
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
70,000
|
|
|
|
0
|
|
|
|
22.28
|
|
|
|
07/25/2009
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
23.62
|
|
|
|
06/02/2010
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
25.99
|
|
|
|
10/24/2013
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
75,000
|
|
|
|
25,000
|
|
|
|
24.76
|
|
|
|
07/29/2009
|
|
|
|
6,000
|
|
|
|
137,460
|
|
|
|
|
28,125
|
|
|
|
28,125
|
|
|
|
23.86
|
|
|
|
10/28/2010
|
|
|
|
9,375
|
|
|
|
214,782
|
|
|
|
|
15,000
|
|
|
|
45,000
|
|
|
|
29.79
|
|
|
|
08/15/2011
|
|
|
|
15,000
|
|
|
|
343,650
|
|
|
|
|
0
|
|
|
|
60,000
|
|
|
|
22.82
|
|
|
|
08/15/2012
|
|
|
|
20,000
|
|
|
|
458,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Johnson
|
|
|
75,000
|
|
|
|
25,000
|
|
|
|
22.80
|
|
|
|
05/16/2010
|
|
|
|
6,250
|
|
|
|
143,188
|
|
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
24.33
|
|
|
|
09/12/2010
|
|
|
|
5,000
|
|
|
|
114,550
|
|
|
|
|
18,750
|
|
|
|
56,250
|
|
|
|
29.79
|
|
|
|
08/15/2011
|
|
|
|
11,250
|
|
|
|
257,738
|
|
|
|
|
0
|
|
|
|
100,000
|
|
|
|
22.82
|
|
|
|
08/15/2012
|
|
|
|
18,750
|
|
|
|
429,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
572,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. Root
|
|
|
0
|
|
|
|
8,000
|
|
|
|
9.275
|
|
|
|
10/09/2011
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
28,125
|
|
|
|
28,125
|
|
|
|
26.06
|
|
|
|
07/28/2010
|
|
|
|
9,374
|
|
|
|
214,758
|
|
|
|
|
15,000
|
|
|
|
45,000
|
|
|
|
29.79
|
|
|
|
08/15/2011
|
|
|
|
15,000
|
|
|
|
343,650
|
|
|
|
|
0
|
|
|
|
60,000
|
|
|
|
22.82
|
|
|
|
08/15/2012
|
|
|
|
25,000
|
|
|
|
572,750
|
|
|
|
|
(1)
|
|
These options expired unexercised
on July 19, 2008.
|
|
(2)
|
|
These are long-term options to
acquire shares of Molex Common Stock that vest on the tenth
anniversary of the grant date.
|
|
(3)
|
|
Based on the $22.91 per share
closing price of the Class A Common Stock on June 30,
2008.
|
31
Option Exercises
and Stock Vested Table
This table summarizes the option exercises and vesting of stock
awards for each of the NEOs for FY08.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
of Shares
|
|
|
Value
|
|
|
of Shares
|
|
|
Value
|
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
Acquired on
|
|
|
Realized on
|
|
Name
|
|
Exercise (#)
|
|
|
Exercise($)(1)
|
|
|
Vesting(#)(2)
|
|
|
Vesting($)(3)
|
|
M. Slark
|
|
|
249,767
|
|
|
|
1,408,585
|
|
|
|
41,250
|
|
|
|
1,060,363
|
|
L. McCarthy
|
|
|
6,250
|
|
|
|
91,745
|
|
|
|
15,404
|
|
|
|
381,635
|
|
J. Fleischhacker
|
|
|
58,593
|
|
|
|
552,298
|
|
|
|
19,187
|
|
|
|
215,350
|
|
D. Johnson
|
|
|
-
|
|
|
|
-
|
|
|
|
18,750
|
|
|
|
475,500
|
|
D. Root
|
|
|
8,250
|
|
|
|
119,963
|
|
|
|
9,688
|
|
|
|
240,676
|
|
|
|
|
(1)
|
|
The aggregate dollar value realized
upon exercise of stock options reflects the price at which
shares of Molex Class A stock underlying the stock options
were valued or sold for income tax purposes, net of the exercise
price of the stock option.
|
|
(2)
|
|
Includes the following number of
shares retained by Molex for the payment of applicable taxes:
Mr. Slark 16,276; Mr. McCarthy 4,538;
Mr. Fleischhacker 6,121; Mr. Johnson 5,524; and
Mr. Root 2,854.
|
|
(3)
|
|
The aggregate dollar value realized
on vesting of the stock awards was calculated by multiplying the
closing price of Molex Class A stock on the vesting date by
the number of vested shares.
|
Nonqualified
Deferred Compensation
The Molex Executive Deferred Compensation Plan permits
participants to defer all or a portion of their base salary and
bonus during the plan year. Amounts deferred by participants may
be invested in a variety of mutual funds, including money
market, bond, fixed income, large-, mid-, and small-cap equity
funds, international equity funds and life-style funds. Molex
stock is not an investment option and above market
crediting rates are not offered. Participants may transfer
investments among the various investment alternatives on a daily
basis.
Participants make separate elections each year regarding the
amount to defer, the deferral period, and the timing and method
of distribution at the end of the deferral period. With regard
to the deferral period, participants may elect a fixed deferral
period of five or ten years or to defer payment until separation
from service. Payment of fixed period deferrals begin as of the
date elected provided the participant is still employed at that
time. Participants who leave employment prior to the end of an
elected fixed deferral period must begin receiving payments
after separation from service even if the fixed period has not
expired.
Deferred amounts not distributed as described above, are
distributed upon a participants death, disability or
separation from service paid in a single lump sum. Deferred
amounts can be distributed in annual installments and the
participant is at least
59
1
/
2
.
To the extent permitted under Section 409A of the Internal
Revenue Code, distributions may be accelerated in the event of
an unforeseeable emergency or financial hardship we approve.
Distributions to executive officers cannot begin earlier than
six months after separation from service. None of the NEOs
participate in this plan.
Potential
Payments upon Termination or
Change-in-Control
We do not currently provide executive officers with pension
benefits, employment, severance or change in control agreements
or arrangements. On a
case-by-case
basis, the Compensation Committee has approved individual
retirement packages to retiring executive officers based on
years of service and contribution to Molex.
32
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The Audit Committee adopted a written policy governing the
review and approval of related person transactions. The policy
requires that certain transactions with related
persons must be approved
and/or
ratified by the Audit Committee. The transactions covered by
this policy include any transaction in which we are a
participant, the amount involved exceeds $120,000, and any
related person has a direct or indirect material interest. In
accordance with SEC regulations, the term related
person refers to stockholders of more than 5%, directors
(and nominees for director), executive officers and their family
members.
The policy provides standing pre-approval for certain types of
transactions that the Audit Committee has determined do not pose
a significant risk of a conflict of interest, either because a
related person would not have a material interest in a
transaction of that type or other characteristics of the
transaction eliminate the risk of a conflict of interest.
Standing pre-approval applies to the following:
|
|
|
|
|
Any transaction between us and another company at which a
related persons only relationship is as an employee (other
than an executive officer), director or beneficial owner of less
than 10% of that companys shares, if the aggregate amount
involved does not exceed the greater of 2% of the other
companys gross revenues for that year or $200,000;
|
|
|
|
Any charitable contribution by us to an organization at which a
related persons only relationship is as an employee (other
than an executive officer) or director, if the aggregate amount
involved does not exceed the greater of 2% of the charitable
organizations total annual receipts for that year or
$200,000;
|
|
|
|
Any transaction where the related persons interest arises
solely from the ownership of our stock and all stockholders
received or will receive the same benefit on a pro rata
basis; and
|
|
|
|
Any transaction involving a related person where the rates or
charges involved are determined by competitive bids.
|
Also, our employment of an immediate family member of one of our
directors or executive officers is not subject to the policy
unless the family members total compensation (salary,
bonus, perquisites and value of equity awards) exceeds $120,000
and/or
the
family member is appointed an officer.
Individual
Arrangements Involving Future Compensation
On February 1, 1991, each of Frederick A. Krehbiel and John
H. Krehbiel, Jr. entered into an agreement pursuant to
which we agreed that if he dies while employed, we will pay his
wife, if she survives him, $125,000 per year for the remainder
of her life. Starting with January 1, 1992 the annual
amount is automatically adjusted every January 1 to reflect an
increase (or decrease) in the Consumer Price Index for the
preceding calendar year at the rate of said increase or
decrease. Each agreement terminates in the event that employment
terminates for any reason other than death. As of March 31,
2008, we had accrued $105,000 for Frederick A. Krehbiels
arrangement and $202,000 for John H. Krehbiel, Jr.s
arrangement. These amounts are included in the table below under
All Other Compensation.
Compensation of
Employee Directors
Frederick A. Krehbiel, Fred L. Krehbiel, and John H.
Krehbiel, Jr. are members of the Board and are also
employed by us. During FY08, they were paid
and/or
earned the following amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
Name
|
|
Salary($)
|
|
|
Bonus($)
|
|
|
($)(1)
|
|
|
Total($)
|
|
|
Frederick A. Krehbiel
|
|
|
450,000
|
|
|
|
-
|
|
|
|
180,242
|
|
|
|
630,242
|
|
Fred L. Krehbiel
|
|
|
221,273
|
|
|
|
-
|
|
|
|
38,700
|
|
|
|
259,973
|
|
John H. Krehbiel, Jr.
|
|
|
450,000
|
|
|
|
-
|
|
|
|
264,179
|
|
|
|
714,179
|
|
|
|
|
(1)
|
|
These amounts are comprised of
amounts contributed by us to qualified and non-qualified benefit
plans, perquisites, executive life insurance premiums, tax
gross-ups
and the amounts accrued pursuant to the arrangements involving
future compensation for Frederick A. Krehbiel and John H.
Krehbiel, Jr.
|
33
On August 15, 2007, Fred L. Krehbiel was granted a stock
option to purchase 15,000 shares of Molex Class A
Common Stock. The stock option vests ratably over four years
commencing on the first anniversary of the grant date, and
expires five years following the grant date. Frederick A.
Krehbiel and John H. Krehbiel, Jr. did not receive equity
grants during FY08. Messrs. Krehbiel are eligible to
participate in our compensation, benefit and health and welfare
plans generally to the same extent as all other Molex employees.
EQUITY
COMPENSATION PLAN INFORMATION
We currently maintain equity compensation plans that provide for
the issuance of Molex stock to directors, executive officers and
other employees. The following table sets forth information
regarding outstanding options and shares available for future
issuance under these plans as of June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
|
|
|
|
remaining available
|
|
|
(a)
|
|
(b)
|
|
for future issuance
|
|
|
Number of shares
|
|
Weighted-average
|
|
under equity
|
|
|
to be issued upon
|
|
exercise price
|
|
compensation plans
|
|
|
exercise of outstanding
|
|
of outstanding
|
|
(excluding shares
|
|
|
options
|
|
options
|
|
reflected in column (a))
|
|
|
Common
|
|
Class A
|
|
Common
|
|
Class A
|
|
Common
|
|
Class A
|
Plan Category
|
|
Stock
|
|
Stock
|
|
Stock
|
|
Stock
|
|
Stock
|
|
Stock
|
|
Equity compensation plans approved by stockholders
|
|
|
223,438
|
|
|
|
9,750,217
|
|
|
$
|
27.59
|
|
|
$
|
19.02
|
|
|
|
-
|
|
|
|
7,825,942
|
|
Equity compensation plans not approved by stockholders
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
OTHER
MATTERS
Compliance and
Ethics
We have adopted a Code of Business Conduct and Ethics for
directors, officers and employees, and a Code of Ethics for
Senior Financial Management. The full text of these codes can be
found on our Web site at
www.molex.com
. We intend to post
any amendments to or waivers from these codes on our Web site.
Householding of
Proxy Materials
The SEC allows us to send a single proxy statement and annual
report to two or more stockholders who share the same address,
subject to certain conditions. This practice is known as
householding. If your household receives multiple copies of our
proxy statements and annual reports and you wish to receive only
one copy, please call your bank or broker or contact our
Investor Relations group at
(630) 527-4447.
Conversely, if your household receives only one copy of our
proxy statements and annual reports and you would prefer to
receive separate copies for each account, please call your bank
or broker or Investor Relations and ask to have your accounts
removed from the householding program.
34
Appendix I
MOLEX
INCORPORATED
PROCEDURES FOR STOCKHOLDERS SUBMITTING
NOMINATING RECOMMENDATIONS
The Nominating and Corporate Governance Committee (Committee)
will accept for consideration submissions from stockholders of
recommendations for the nomination of directors subject to the
following terms and conditions:
|
|
1.
|
Manner and Address for Submission
.
All
stockholders nominating recommendations must be in writing,
addressed to the Secretary at 2222 Wellington Court, Lisle, IL
60532. Submissions must be made by mail, courier or personal
delivery.
E-mailed
submissions will not be considered.
|
|
2.
|
Information Concerning the Recommending
Stockholders
.
A nominating recommendation must
be accompanied by the following information concerning each
recommending stockholder:
|
|
|
|
|
|
The name and address, including telephone number, of the
recommending stockholder;
|
|
|
|
The number and class of Molex stock owned by the recommending
stockholder and the time period for which such shares have been
held;
|
|
|
|
If the recommending stockholder is not a stockholder of record,
a statement from the record holder of the shares (usually a
broker or bank) verifying the holdings of the stockholder and a
statement from the recommending stockholder of the length of
time that the shares have been held. (Alternatively, the
stockholder may furnish a current Schedule 13D,
Schedule 13G, Form 3, Form 4 or Form 5 filed
with the Securities and Exchange Commission reflecting the
holdings of the stockholder, together with a statement of the
length of time that the shares have been held); and
|
|
|
|
A statement from the stockholder as to whether the stockholder
has a good faith intention to continue to hold the reported
shares through the date of Molexs next annual meeting of
stockholders.
|
|
|
3.
|
Information Concerning the Proposed Nominee.
A nominating
recommendation must be accompanied by the following information
concerning the proposed nominee:
|
|
|
|
|
|
The information required by Item 401 of SEC
Regulation S-K;
|
|
|
|
The information required by Item 403 of SEC
Regulation S-K; and
|
|
|
|
The information required by Item 404 of SEC
Regulation S-K.
|
|
|
4.
|
Relationships Between the Proposed Nominee and the
Recommending Stockholder.
The nominating recommendation must
describe all relationships between the proposed nominee and the
recommending stockholder and any agreements or understandings
between the recommending stockholder and the nominee regarding
the nomination.
|
|
5.
|
Other Relationships of the Proposed Nominee.
The
nominating recommendation shall describe all relationships
between the proposed nominee and any of Molexs
competitors, customers, suppliers or other persons with special
interests regarding Molex.
|
|
6.
|
Qualifications of the Proposed Nominee.
The recommending
stockholder must furnish a statement supporting its view that
the proposed nominee possesses the minimum qualifications
prescribed by the Committee for nominees, and briefly describing
the contributions that the nominee would be expected to make to
the Board.
|
|
7.
|
Ability to Represent All Stockholders.
The recommending
stockholder must state whether, in the view of the stockholder,
the nominee, if elected, would represent all stockholders and
not serve for the purpose of advancing or favoring any
particular stockholder or other Molex constituency.
|
|
8.
|
Timing for Submissions Regarding Nominees for Election at
Annual Meetings.
A stockholder (or group of stockholders)
wishing to submit a nominating recommendation for an annual
meeting of stockholders must ensure that it is received by
Molex, as provided above, not less than 60 days
|
I-1
|
|
|
nor more than 90 days prior to the first anniversary of the
preceding years annual meeting of stockholders. In the
event that the date of the annual meeting of stockholders for
the current year is more than 30 days following the first
anniversary date of the annual meeting of stockholders for the
prior year, the submission of a recommendation will be
considered timely if it is submitted a reasonable time in
advance of the mailing of Molexs proxy statement for the
annual meeting of stockholders for the current year.
|
|
|
9.
|
Stockholder Groups.
If a recommendation is submitted by a
group of two or more stockholders, the information regarding
recommending stockholders must be submitted with respect to each
stockholder in the group.
|
|
10.
|
No Obligation to Nominate a Candidate.
Acceptance of a
recommendation for consideration does not imply that the
Committee will interview or nominate the recommended candidate.
|
I-2
Appendix II
MOLEX
INCORPORATED
PROCEDURES FOR
STOCKHOLDER COMMUNICATIONS WITH DIRECTORS
It is Molexs policy to facilitate communications of
stockholders with the Board of Directors and its Committees
subject to the following conditions:
|
|
1.
|
Molexs acceptance and forwarding of communications to the
Board or its members does not imply that the directors owe or
assume any fiduciary duty to the person submitting the
communication - applicable law prescribes all such duties.
|
|
2.
|
Communications to the directors must be in writing and sent to
the Secretary at 2222 Wellington Court, Lisle, IL 60532.
|
|
3.
|
The following types of communications are not appropriate for
delivery to directors:
|
|
|
|
|
§
|
Communications regarding individual grievances or other
interests that are personal to the party submitting the
communications and could not be construed to be of concern to
the stockholders or other constituencies of Molex such as
employees, customers, suppliers, etc.;
|
|
|
§
|
Communications that advocate engaging in illegal activities;
|
|
|
§
|
Communications that contain offensive, scurrilous or abusive
content; and
|
|
|
§
|
Communications that have no rational relevance to Molexs
business or operations.
|
|
|
4.
|
All communications must be accompanied by the following
information regarding the person submitting the communication:
|
|
|
|
|
§
|
If the person is a stockholder, a statement of the type and
amount of the Molex stock that the person holds;
|
|
|
§
|
If the person is not a stockholder and is submitting the
communication as an interested party, the nature of the
persons interest in Molex;
|
|
|
§
|
The address, telephone number and
e-mail
address, if any, of the person.
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|
|
5.
|
Upon receipt by the Secretary, the following will occur:
|
|
|
|
|
§
|
The communication will be logged identifying the person
submitting the communication, the nature of its content and the
action taken with respect to the communication.
|
|
|
§
|
A review as to whether the conditions of these procedures have
been complied with.
|
|
|
§
|
An acknowledgement will be sent to the submitter advising
whether the communication will be forwarded and if not, why not.
|
|
|
6.
|
If a communication is not presented to the directors because of
failure to meet the conditions of these procedures, that
communication must nonetheless be made available to any director
to whom it was directed and who wishes to review it.
|
|
7.
|
Communications deemed appropriate for delivery shall be
delivered to the directors on periodic basis, generally in
advance of each regularly scheduled meeting of the Board.
|
|
8.
|
If so instructed by the Chairman of the Board, communications
directed to the Board as a whole, but relating to the competence
of one of the Boards committees, shall be delivered to
that committee, with a copy to the Chairman.
|
II-1
APPENDIX III
MOLEX
INCORPORATED
ANNUAL INCENTIVE
PLAN
The purpose of the Molex Incorporated Annual Incentive Plan is
to provide an incentive to enhance stockholder value and promote
the attainment of significant business objectives of the Company
by basing a portion of a selected Employees cash
compensation on the performance of such Employee, the Company
and/or
a
Business Unit.
(a)
Award
means any annual incentive
award, payable in cash, made under the Plan, which award may be
based on (i) the change (measured as a percentage or an
amount) in or of any Performance Measure from one measurement
period to another, (ii) the difference (measured as a
percentage or an amount) between a specified target or budget
amount of any Performance Measure and the actual amount of that
Performance Measure, during any measurement period,
(iii) the extent to which a specified target or budget
amount for any Performance Measure is met or exceeded during any
measurement period, or (iv) any other award, including a
discretionary award, that may be paid from time to time under
the Plan.
(b)
Award Schedule
means the Award
Schedule established pursuant to Section 5.
(c)
Board
means the Board of Directors
of the Company.
(d)
Business Unit
means any existing or
future facility, region, division, group, subsidiary or other
unit within the Company.
(e)
Code
means the Internal Revenue Code
of 1986, as amended, and any successor statute and the
regulations promulgated thereunder, as it or they may be amended
from time to time.
(f)
Code Section 162(m) Award
means
an Award intended to satisfy the requirements of Code
Section 162(m) and designated as such in an Award Schedule.
(g)
Committee
means the Compensation
Committee of the Board.
(h)
Company
means Molex Incorporated, a
Delaware corporation.
(i)
Covered Employee
means a
covered employee within the meaning of Code
Section 162(m)(3) or a person designated as a Covered
Employee by the Committee.
(j)
Employee
means any employee of the
Company or of any of its Business Units.
(k)
Executive Officer
means an officer
of the Company that has been designated as an executive officer
by the Board.
(l)
Participant
means any Employee
selected to receive an Award pursuant to the Plan for any Year.
(m)
Performance Goals
means the
performance objectives with respect to one or more Performance
Measures established by the Administrator for the Company, a
Business Unit or an individual for the purpose of determining
whether, and the extent to which, payments will be made for that
Year or other measurement period with respect to an Award under
the Plan.
(n)
Performance Measure
means any one or
more of the following measures, taken alone or in conjunction
with each other, each of which may be adjusted by the
Administrator to exclude the before-tax or after-tax effects of
any significant events not included in the calculations made in
connection with setting the Performance Measures for the related
Award:
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|
|
(1)
|
Net earnings or net income (before or after taxes);
|
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|
(2)
|
Earnings per share;
|
|
|
(3)
|
Net sales or revenue growth;
|
|
|
(4)
|
Net operating profit;
|
III-1
|
|
|
|
(5)
|
Return measures (including, but not limited to, return on
assets, return on net assets, capital, invested capital, equity,
sales, or revenue);
|
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|
(6)
|
Cash flow (including, but not limited to, operating cash flow,
free cash flow, cash flow return on equity, and cash flow return
on investment);
|
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|
(7)
|
EBIT or earnings before or after taxes, interest, depreciation,
and/or
amortization;
|
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|
(8)
|
Gross or operating margins;
|
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|
(9)
|
Productivity ratios;
|
|
|
(10)
|
Share price (including, but not limited to, growth measures and
total shareholder return);
|
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|
(11)
|
Expense targets;
|
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|
(12)
|
Margins;
|
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|
(13)
|
Operating efficiency;
|
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|
(14)
|
Market share;
|
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(15)
|
Total shareholder return;
|
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|
(16)
|
Customer satisfaction;
|
|
|
(17)
|
Working capital targets; and
|
|
|
(18)
|
Economic value added or
EVA
®
(net operating profit after tax minus the sum of capital
multiplied by the cost of capital).
|
Any Performance Measure may be used to measure the performance
of the Company or any Business Unit, or any combination thereof,
as the Administrator may deem appropriate, or any of the above
Performance Measure as compared to the performance of a group of
comparator companies, or published or special index that the
Administrator, in its sole discretion, deems appropriate, or the
Administrator may select Performance Measure (10) above as
compared to various stock market indices.
(o)
Plan
means the Molex Incorporated
Annual Incentive Plan as set forth herein, as it has been or may
be amended
and/or
restated from time to time.
(p)
Target Award
means the amount, which
may be expressed as a dollar amount or as a percentage of a
Participants salary, payable to a Participant when actual
performance with respect to any Performance Measure equals the
Performance Goal for that Performance Measure established by the
Administrator.
(q)
Year
means the Companys fiscal
year.
3.
Administration
(a)
Appointment of Administrator.
The Plan
shall be administered by the Committee with respect to Executive
Officers and Covered Employees, and the Committee will consist
of two or more persons (i) who satisfy the requirement of a
nonemployee director for purposes of
Rule 16b-3
under the Securities Exchange Act of 1934, and (ii) who
satisfy the requirements of an outside director for
purposes of Code Section 162(m). The Plan shall be
administered by the Companys Chief Executive Officer
(CEO) with respect to Employees other than Executive
Officers and Covered Employees. The Committee and the CEO shall
be referred to individually and collectively as
Administrator herein, as applicable.
(b)
Administrators Actions.
The
Administrators determinations under the Plan need not be
uniform and may be made selectively among Employees who receive
or are eligible to receive Awards under the Plan, whether or not
any Awards are the same or such Employees are similarly
situated. Without limiting the generality of the foregoing, the
Administrator will be entitled, among other things, to make
non-uniform and selective determinations and to establish
non-uniform and selective
III-2
Performance Measures, Performance Goals, the weightings thereof,
and Target Awards, if applicable. Whenever the Plan refers to a
determination being made by the Administrator, it shall be
deemed to mean a determination by the Administrator in its sole
discretion. Without limiting the generality of the foregoing,
the Administrator may establish a Target Award for any
Participant based on any Performance Measure.
(c)
Code Section 162(m) Compliance.
It is
the intent of the Company that this Plan and Code
Section 162(m) Awards hereunder satisfy, and be interpreted
in a manner that satisfy, in the case of Participants who are or
may be Covered Employees, the applicable requirements of Code
Section 162(m), including the administration requirement of
Code Section 162(m)(4)(C), so that the Companys tax
deduction for remuneration in respect of Code
Section 162(m) Awards for services performed by such
Covered Employees is not disallowed in whole or in part by the
operation of such Code section. If any provision of this Plan
would otherwise frustrate or conflict with the intent expressed
in this Section, that provision, to the extent possible, shall
be interpreted and deemed amended so as to avoid such conflict.
To the extent of any remaining irreconcilable conflict with such
intent, such provision shall be deemed void as applicable to
Covered Employees with respect to whom such conflict exists.
Nothing herein shall be interpreted so as to preclude a
Participant who is or may be a Covered Employee from receiving
an Award that is not a Code Section 162(m) Award.
(d)
Discretion of Administrator.
The
Administrator shall have the discretion, subject to the
limitations described herein, including in Section 4 below
relating to Code 162(m) Awards, to, among other actions,
(i) determine the Plan Participants; (ii) determine
who will be treated as an Executive Officer
and/or
Covered Employee and designate whether an Award will be a Code
Section 162(m) Award; (iii) determine the measurement
period; (iv) determine Performance Measures and Performance
Goals for each Year or other measurement period;
(v) determine Target Awards and whether Target Awards will
be applied to any particular Participant; (vi) determine
how Performance Measures will be calculated
and/or
adjusted; (vii) establish an Award Schedule, if any;
(viii) establish performance thresholds for the payment of
any Awards; (ix) determine whether and to what extent the
Performance Goals have been met or exceeded; (x) pay
discretionary Awards, including awards from an exceptional
performance fund, as may be appropriate in order to assure the
proper motivation and retention of personnel and attainment of
business goals; (xi) make adjustments to Performance Goals
and thresholds; provided however, that Performance Goals
applicable to an Award which is designed to be a Code
Section 162(m) Award and which is held by Covered
Employees, may not be adjusted so as to increase the payment
under the Award; and (xii) determine the total amount of
funds available for payment of Awards with respect to each Year
or other measurement period.
(e)
Authority of Administrator.
Subject to the
provisions of the Plan, the Administrator shall be authorized to
interpret the Plan, make, amend and rescind such rules as it
deems necessary for the proper administration of the Plan, make
all other determinations necessary or advisable for the
administration of the Plan and correct any defect or supply any
omission or reconcile any inconsistency in the Plan in the
manner and to the extent the Administrator deems desirable to
carry the Plan into effect. Any action taken or determination
made by the Administrator shall be conclusive and binding on all
parties. In the event of any conflict between an Award Schedule
and the Plan, the terms of the Plan shall govern.
4.
Code Section 162(m) Awards
A Participant who is or may be an Executive Officer
and/or
Covered Employee may receive a Code Section 162(m) Award
and/or
an
Award that is not a Code Section 162(m) Award.
Notwithstanding anything elsewhere in the Plan to the contrary,
as and to the extent required by Code Section 162(m), the
grant of a Code Section 162(m) Award to a Participant must
state, in terms of an objective formula or standard, the method
of computing the amount of compensation payable to each Covered
Employee and must preclude discretion to increase the amount of
compensation payable that would otherwise be due upon attainment
of such goals. All determinations made by the Committee pursuant
to Section 3 above related to a Code Section 162(m)
Award will be made in a timely manner, as required by Code
Section 162(m). Notwithstanding the foregoing, for each
Award designed to qualify
III-3
as a Code Section 162(m) Award, the Committee shall
establish and set forth in the Award the applicable Performance
Goals for that Award no later than the latest date that the
Committee may establish such goals without jeopardizing the
ability of the Award to qualify as a Code Section 162(m)
Award. An Award Schedule for a Covered Employee shall set forth
for each Code Section 162(m) Award, the terms and
conditions applicable to the Award, as determined by the
Committee, not inconsistent with the terms of the Plan, and
shall specify that such Award is a Code Section 162(m)
Award. Before any Code Section 162(m) Award is paid, the
Committee shall certify that the Performance Goals and any other
material terms of such Award has been satisfied.
5.
Awards Schedule
The Company shall establish an Award Schedule for each Executive
Officer
and/or
Covered Employee for each Year, which Award Schedule shall set
forth the Target Award for such Executive Officer
and/or
Covered Employee payable at specified levels of performance,
based on the Performance Goal for each Performance Measure and
the weighting, if any, established for such measure. The Company
may establish an Award Schedule for all other Participants which
sets forth the Target Award, if applicable, the Performance Goal
and the Performance Measure. Participants who are not Executive
Officers
and/or
Covered Employees may receive discretionary Awards under this
Plan without a related Awards Schedule.
6.
Eligible Persons
Executive Officers and any other Employee who is a key Employee
in the judgment of the Company shall be eligible to be selected
for participation in the Plan. Board members who are not
Employees are not eligible to participate in the Plan. No
Employee shall have a right to be selected to participate in the
Plan or, having once been selected, to be selected again or to
continue as an Employee.
7.
Amount Available for Awards
The Administrator shall determine the amount available for
payment of Awards in any Year or any other measurement period.
Notwithstanding anything else in this Plan to the contrary, the
aggregate maximum amount that may be paid to a Participant
during any Year with respect to all Awards under the Plan shall
be $10,000,000.
8.
Determination of Awards
(a)
Eligible Employees and
Awards.
Except in the case of Code Section 162(m)
Awards, the Administrator shall determine the actual Award to
each Participant for each Year or other measurement period,
taking into consideration, as deemed appropriate, the
performance of the Company
and/or
a
Business Unit, as the case may be, for the Year or other
measurement period in relation to the Performance Goals
theretofore established by the Administrator, and the
performance of the respective Participants during the Year or
other measurement period. The fact that an Employee is selected
as a Participant for any Year or other measurement period shall
not mean that such Employee necessarily will receive an Award
for that Year or other measurement period. Notwithstanding any
other provisions of the Plan to the contrary, the Administrator
may make discretionary Awards as deemed appropriate under the
Plan, except in the case of Code Section 162(m) Awards,
which may be adjusted only downward.
(b)
Determination of Code
Section 162(m) Awards.
Code Section 162(m)
Awards shall be determined according to a Covered
Employees Award Schedule based on the level of performance
achieved and such Covered Employees Target Award. All such
determinations regarding the achievement of Performance Goals
and the determination of actual Code Section 162(m) Awards
will be made by the Committee; provided, however, that the
Committee may decrease, but not increase, the amount of the Code
Section 162(m) Award that otherwise would be payable.
(c)
Evaluation of
Performance.
The Administrator may provide in any Award
that any evaluation of performance may include or exclude any of
the following events that occurs during a Year or other
measurement period: (i) asset write-downs;
(ii) litigation or claim judgments or settlements;
(iii) the effect of changes in tax laws, accounting
principles, or other laws or provisions affecting reported
results; (iv) any reorganization and restructuring
programs; (v) extraordinary
III-4
nonrecurring items as described in Accounting Principles Board
Opinion No. 30
and/or
in
managements discussion and analysis of financial condition
and results of operations appearing in the Companys annual
report to shareholders for the applicable year;
(vi) acquisitions or divestitures; and (vii) foreign
exchange gains and losses.
(d)
Adjustments for Material
Changes.
As and to the extent permitted by
Section 162(m) with respect to Code Section 162(m)
Awards, in the event of (i) a change in corporate
capitalization, a corporate transaction or a complete or partial
corporate liquidation, or (ii) a natural disaster or other
significant unforeseen event that materially impacts the
operation of the Company, or (iii) any extraordinary gain
or loss or other event that is treated for accounting purposes
as an extraordinary item under generally accepted accounting
principles, or (iv) any material change in accounting
policies or practices affecting the Company
and/or
the
Performance Goal, then, to the extent any of the foregoing
events was not anticipated at the time the Performance Goal was
established, the Administrator may make adjustments to the
Performance Goal, based solely on objective criteria, so as to
neutralize the effect of the event on the applicable Award. To
the extent such adjustment affect Code Section 162(m)
Awards to Covered Employees, they shall be prescribed in a form
that meets the requirements of Code Section 162(m) for
deductibility.
9.
Distribution of Awards
Unless otherwise determined by the Administrator, Awards under
the Plan for a particular Year or other measurement period shall
be paid no later than December 31 of the Year following the Year
in which the measurement period ends, unless the time of payment
is otherwise expressly specified in an Award Schedule.
To the extent permitted by governing law, the Board may require
reimbursement to the Company of Awards paid to any Participant
who is a named executive officer, within the meaning of
Item 402(a)(3) of
Regulation S-K
under the Securities Exchange Act of 1934, where (i) the
payment was predicated in whole or in part upon the achievement
of certain financial results that were subsequently the subject
of a material restatement, (ii) in the Boards view
the officer engaged in fraud or misconduct that caused or
partially caused the need for the restatement, and (iii) a
lower Award payment would have been made to the officer based
upon the restated financial results. In each such instance, the
Company will, as directed by the Board and to the extent
practicable, seek to recover the amount by which the individual
officers Award for the relevant period exceeded the lower
Award payment that would have been made based on the restated
financial results, plus a reasonable rate of interest. The Board
may seek reimbursement of Awards paid to any named executive
officer, as defined herein, in other circumstances involving
fraud or misconduct by the named executive officer where the
Board determines that such fraud or misconduct caused
substantial harm to the Company even in the absence of a
subsequent restatement of the Companys financial
statements.
|
|
11.
|
Termination of Employment
|
Except as provided herein, a Participant must be actively
employed by the Company on the date the amount payable with
respect to his/her Award is determined by the Administrator (the
Determination Date) in order to be entitled to
payment of any Award for that Year or other measurement period.
In the event active employment of a Participant shall be
terminated before the Determination Date for any reason other
than discharge for cause or voluntary resignation, such
Participant may receive such portion of his/her Award for the
Year or other measurement period as may be determined by the
Administrator in its complete and sole discretion. A Participant
discharged for cause before or after the Determination Date
shall not be entitled to receive any Award for the Year or other
measurement period.
(a)
Nonassignability.
No Award will be
assignable or transferable without the written consent of the
Administrator in its sole discretion, except by will or by the
laws of descent and distribution.
III-5
(b)
Withholding Taxes.
Whenever payments under
the Plan are to be made, the Company will withhold therefrom an
amount sufficient to satisfy any applicable governmental
withholding tax requirements related thereto.
(c)
Amendment or Termination of the Plan
. The
Board may at any time amend, suspend or discontinue the Plan, in
whole or in part. The Administrator may at any time alter or
amend any or all Award Schedules under the Plan to the extent
permitted by law. No such action may be effective with respect
to any Code Section 162(m) Award to any Covered Employee
without approval of the Companys shareholders if such
approval is required by Code Section 162(m)(4)(C). In the
event that applicable tax and/or securities laws change to
permit Administrator discretion to alter the governing
Performance Measures without obtaining shareholder approval of
such changes, the Administrator shall have sole discretion to
make such changes without obtaining shareholder approval.
(d)
Other Payments or Awards
. Nothing
contained in the Plan will be deemed in any way to limit or
restrict the Board, the Committee, the CEO or the Company from
making any Award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter
in effect.
(e)
Payments to Other Persons
. If payments are
legally required to be made to any person other than the person
to whom any amount is available under the Plan, payments will be
made accordingly. Any such payment will be a complete discharge
of the liability of the Company.
(f)
Limits of Liability.
Any liability of the
Company to any Participant with respect to an Award shall be
based solely upon the obligations, if any, created by the Plan
and the Award Schedule. Neither the Company, nor any member of
the Board or of the Committee, nor the CEO nor any other person
participating in any determination of any question under the
Plan, or in the interpretation, administration or application of
the Plan, shall have any liability to any party for any action
taken or not taken in good faith under the Plan.
(g)
Rights of Employees.
Status as an Employee
eligible to receive an Award under the Plan shall not be
construed as a commitment that any Award will be made under this
Plan to such Employee or to other such Employees generally.
Nothing contained in this Plan or in any Award Schedule (or in
any other documents related to this Plan or to any Award or
Award Schedule) shall confer upon any Employee or Participant
any right to continue in the employ or other service of the
Company or constitute a contract or limit in any way the right
of the Company to change such persons compensation or
other benefits or to terminate the employment or other service
of such person with or without cause.
(h)
Section Headings.
The section
headings contained herein are for the purposes of convenience
only, and in the event of any conflict, the text of the Plan,
rather than the section headings, will control.
(i)
Invalidity
. If any term or provision
contained herein will to any extent be invalid or unenforceable,
such term or provision will be reformed so that it is valid, and
such invalidity or unenforceability will not affect any other
provision or part hereof.
(j)
Applicable Law
. The Plan, Awards and Award
Schedules and all actions taken hereunder or thereunder shall be
governed by, and construed in accordance with, the laws of the
State of Illinois without regard to the conflict of law
principles thereof.
(k)
Effective Date.
The Plan will become
effective upon adoption by the Board, subject to approval by the
affirmative vote of a majority of the shares represented in
person or by proxy and entitled to vote on the matter at the
Companys Annual Meeting of Stockholders to be held on
October 31, 2008 (or such other date as shall be determined
by the Board).
III-6
APPENDIX IV
2008 MOLEX STOCK
INCENTIVE PLAN
Article 1.
Establishment, Purpose, and Duration
1.1
Establishment
. Molex Incorporated, a
Delaware corporation, hereby establishes a stock incentive
compensation plan known as the 2008 Molex Stock Incentive Plan,
as set forth in this document.
(a)
Combination of Three Prior Plans
. This Plan is
intended to supercede and replace:
(i) The 1998 Molex Stock Option and Restricted Stock Plan,
as amended (the 1998 Plan);
(ii) The 2000 Molex Long-Term Stock Plan, as amended (the
2000 Plan); and
(iii) The 2005 Molex Incentive Stock Option Plan, as
amended (the 2005 Plan)
(collectively referred to as the Prior Plans) by
merging and combining the 1998 Plan, the 2000 Plan and the 2005
Plan into this single plan for ease in the Companys
administration. Notwithstanding the foregoing, the Prior Plans
shall remain in effect until the awards previously granted under
such Prior Plans have been exercised, forfeited, are otherwise
terminated, or any and all restrictions lapse, as the case may
be, in accordance with the terms of such awards.
(b)
Types of Awards
. This Plan permits the grant of
Nonqualified Stock Options, Incentive Stock Options, Restricted
Stock and Performance Shares.
(c)
Effective Date
. This Plan shall become effective
upon stockholder approval (the Effective Date) and
shall remain in effect as provided in Section 1.3 hereof.
1.2
Purpose of this Plan
. The purpose of this
Plan is to induce designated Employees and Directors to remain
in the employ or service of the Company or any of its
Subsidiaries, and to encourage such Employees and Directors to
secure or increase on reasonable terms their stock ownership in
the Company. The Company believes the Plan will promote
continuity of management and increase incentive and personal
interest in the welfare of the Company by those who are
primarily responsible for shaping, carrying out the long-range
plans of the Company and securing its continued growth and
financial success.
1.3
Duration of this Plan
. Unless sooner
terminated as provided herein, this Plan shall terminate ten
(10) years from the Effective Date (i.e., on the day before
the tenth
(10
th
)
anniversary of the Effective Date). After this Plan is
terminated, no Awards may be granted but Awards previously
granted shall remain outstanding in accordance with their
applicable terms and conditions and this Plans terms and
conditions. Notwithstanding the foregoing, no Incentive Stock
Options may be granted more than 10 years after the earlier
of: (a) adoption of this Plan by the Board, or (b) the
Effective Date.
Article 2.
Definitions
Whenever used in this Plan, the following terms shall have the
meanings set forth below:
(a) Annual Award Limit has the meaning set
forth in Section 4.4.
(b) Applicable Laws means the legal
requirements relating to the administration of equity plans or
the issuance of share capital by a company, including under the
applicable U.S. state corporate laws, U.S. federal and
applicable state securities laws, other U.S. federal and state
laws, the Code, any stock exchange rules and regulations that
may from time to time be applicable to the Company, and the
applicable laws, rules and regulations of any other country or
jurisdiction where Awards are granted under the Plan, as such
laws, rules, regulations, interpretations and requirements may
be in place from time to time.
IV-1
(c) Award means, individually or collectively,
a grant under this Plan of Nonqualified Stock Options, Incentive
Stock Options, Restricted Stock or Performance Shares, in each
case subject to the terms of this Plan.
(d) Award Agreement means either:
(i) A written agreement entered into by the Company and a
Participant setting forth the terms and provisions applicable to
an Award granted under this Plan; or
(ii) A written or electronic statement issued by the
Company to a Participant describing the terms and provisions of
such Award, including in each case any amendment or modification
thereof.
The respective Committee may provide for the use of electronic,
Internet, or other non-paper Award Agreements, and the use of
electronic, Internet, or other non-paper means for the
acceptance and actions by a Participant.
(e) Beneficial Owner or Beneficial
Ownership shall have the meaning ascribed to such term in
Rule 13d-3
of the General Rules and Regulations under the Exchange Act.
(f) Board or Board of Directors
means the Board of Directors of the Company.
(g) Cause means, unless otherwise specified in
an applicable employment agreement between the Company and a
Participant, with respect to any Participant:
(i) Conviction of a felony;
(ii) Actual or attempted theft or embezzlement of the
Companys or any Subsidiarys assets;
(iii) Use of illegal drugs;
(iv) Material breach of an employment agreement between the
Company or a Subsidiary and the Participant;
(v) Commission of an act of moral turpitude that in the
judgment of the respective Committee can reasonably be expected
to have an adverse effect on the business, reputation, or
financial situation of the Company or any Subsidiary and/or the
ability of the Participant to perform his or her duties;
(vi) Gross negligence or willful misconduct in performance
of the Participants duties;
(vii) Breach of fiduciary duty to the Company or any
Subsidiary;
(viii) Willful refusal to perform the duties of the
Participants titled position; or
(ix) Breach of the Companys Code of Business Conduct
and Ethics.
(h) Change in Control means, unless otherwise
specified in an applicable employment agreement between the
Company or a Subsidiary and a Participant:
(i) The purchase or other acquisition by any person, entity
or group of persons, within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the
Exchange Act) or any comparable successor
provisions, or beneficial ownership (within the meaning of
Rule 13d-4
promulgated under the Exchange Act) of more than fifty percent
(50%) of either the outstanding shares of common stock of the
Company or the combined voting power of the Companys then
outstanding voting securities entitled to vote generally;
(ii) The approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with
respect to which persons who were stockholders of the Company
immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than
fifty percent (50%) of the combined voting power entitled to
vote generally in the election of directors of the reorganized,
merged or consolidated companys then outstanding
securities;
IV-2
(iii) A liquidation or dissolution of the Company; or
(iv) The sale of all or substantially all of the
Companys assets (i.e., greater than 40% of the total gross
fair market value of all of the assets of the Company
immediately prior to such sale or disposition) within a
12-month
period ending on the date of the most recent sale or disposition.
(i) Code means the U.S. Internal Revenue Code
of 1986, as amended from time to time. For purposes of this
Plan, references to sections of the Code shall be deemed to
include references to any applicable regulations thereunder and
any successor or similar provision, as well as any applicable
interpretative guidance issued related thereto.
(j) Committee means:
(i) With respect to Awards to Executive Officers, the
Compensation Committee of the Board or a subcommittee thereof,
or any other successor committee designated by the Board; and
(ii) With respect to Awards to Non-Executive Officers, the
Stock Option Plan Committee, or any other successor committee
designated by the Board or Compensation Committee.
(k) Company means Molex Incorporated, a
Delaware corporation, and any successor thereto as provided in
Article 17 herein.
(l) Compensation Committee means that committee
of the Board of Directors (or any other successor committee
designated by the Board) that is designated by the Board to
administer this Plan specifically with respect to Awards to
Executive Officers. The members of the Compensation Committee
shall be appointed from time to time by, and shall serve at the
discretion of, the Board. If the Compensation Committee does not
exist or cannot function for any reason, the Board may take any
action under the Plan that would otherwise be the responsibility
of the Compensation Committee.
(m) Covered Employee means any key Employee who:
(i) Is or may become a Covered Employee, as
defined in Code Section 162(m); and
(ii) Is designated as a Covered Employee,
either as an individual Employee or class of Employees, with
respect to an applicable Performance Period by the Compensation
Committee by the earlier of:
(A) Ninety (90) days after the beginning of the
Performance Period; or
(B) The date on which twenty-five percent (25%) of the
applicable Performance Period has elapsed.
(n) Director means any individual who is a
member of the Board of Directors and who is not an Employee.
(o) Disability means, unless otherwise
specified in an applicable employment agreement between the
Company or a Subsidiary and a Participant:
(i) In the case of an Employee, the Employee qualifying for
long-term disability benefits under any long-term disability
program sponsored by the Company or Subsidiary in which the
Employee participates; and
(ii) In the case of a Director, the inability of the
Director to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment that
can be expected to result in death, or which has lasted or can
be expected to last for a continuous period of not less than
12 months, as determined by the Board, based upon medical
evidence and in accordance with Code Section 22(e)(3).
IV-3
(p) Discounted Option means an Option whose
Option Price is set at less than Fair Market Value on the Grant
Date.
(q) Effective Date has the meaning set forth in
Section 1.1(c).
(r) Employee means any individual who:
(i) Performs services for and is designated as an employee
of the Company or a Subsidiary on payroll records; or
(ii) For all purposes under the Plan except related to the
issuance of Incentive Stock Options, is an employee in
Retirement from the Company or a Subsidiary and is providing
consulting services to the Company or a Subsidiary pursuant to a
retirement agreement or arrangement.
Except as otherwise provided above, an Employee shall not
include any individual during any period he or she is classified
or treated by the Company or a Subsidiary as an independent
contractor, a consultant, or any employee of an employment,
consulting, or temporary agency or any other entity other than
the Company or a Subsidiary, without regard to whether such
individual is subsequently determined to have been, or is
subsequently retroactively reclassified as a common-law employee
of the Company or a Subsidiary during such period.
(s) Exchange Act means the Securities Exchange
Act of 1934, as amended from time to time, or any successor act
thereto.
(t) Executive Officer means those Employees who
are specifically designated as Executive Officers by
the Board.
(u) Fair Market Value or FMV means
the closing price of a Share as of any date as reported by the
Wall Street Journal
. In the event Shares are not publicly
traded at the time a determination of their value is required to
be made hereunder, the determination of their Fair Market Value
shall be made by the respective Committee in accordance with the
regulations set forth under Code Section 409A.
(v) Grant Date means the date on which the
respective Committee approves the grant of an Award by
respective Committee action or such later date as specified in
advance by the respective Committee.
(w) Incentive Stock Option or ISO
means an Option to purchase Shares granted under Article 6
to an Employee and that is designated as an Incentive Stock
Option and that is intended to meet the requirements of Code
Section 422, or any successor provision.
(x) Insider means an individual who is an
officer or Director of the Company, or a more than ten percent
(10%) Beneficial Owner of any class of the Companys equity
securities that is registered pursuant to Section 12 of the
Exchange Act, as determined by the Board or Compensation
Committee in accordance with Section 16 of the Exchange Act.
(y) Involuntary Termination means the
Companys or a Subsidiarys termination of a
Participants employment pursuant to a planned employee
reduction plan if:
(i) The Participant has reached age 55 and was
employed at least twenty (20) years with the Company or a
Subsidiary; or
(ii) The Participant was employed at least twenty
(25) years with the Company or a Subsidiary.
(z) Non-Executive Officer means Employees who
are not designated as Executive Officers by the Board.
(aa) Nonqualified Stock Option or
NQSO means an Option that is not intended to meet
the requirements of Code Section 422, or that otherwise
does not meet such requirements.
IV-4
(bb) Option means an Incentive Stock Option or
a Nonqualified Stock Option, as described in Article 6.
(cc) Option Price means the price at which a
Share may be purchased by a Participant pursuant to an Option.
(dd) Participant means any eligible individual
as set forth in Article 5 to whom an Award is granted.
(ee) Performance-Based Compensation means
compensation under an Award that is intended to satisfy the
requirements of Code Section 162(m) for certain
performance-based compensation paid to Covered Employees.
Notwithstanding the foregoing, nothing in this Plan shall be
construed to mean that an Award which does not satisfy the
requirements for performance-based compensation under Code
Section 162(m) does not constitute performance-based
compensation for other purposes, including Code
Section 409A.
(ff) Performance-Based Exception means the
exception for Performance-Based Compensation from the tax
deductibility limitations of Code Section 162(m).
(gg) Performance Measures means measures as
described in Article 8 on which the performance goals are
based and which are approved by the Companys stockholders
pursuant to this Plan in order to qualify Awards as
Performance-Based Compensation, if applicable.
(hh) Performance Period means the period of
time during which the performance goals must be met in order to
determine the degree of payout and/or vesting with respect to an
Award. Unless otherwise provided in the Award Agreement, the
Performance Period shall be a twelve (12) month period
beginning on each July 1 and ending the immediately following
June 30.
(ii) Performance Share means an Award under
Article 8 and subject to the terms of this Plan, of which
the number of Shares which vest is determined as a function of
the extent to which corresponding Performance Measures have been
achieved.
(jj) Period of Restriction means the period
when a Restricted Stock Award is subject to a substantial risk
of forfeiture, as provided in Article 7.
(kk) Person shall have the meaning ascribed to
such term in Section 3(a)(9) of the Exchange Act and used
in Sections 13(d) and 14(d) thereof, including a
group as defined in Section 13(d) thereof.
(ll) Plan means this 2008 Molex Stock Incentive
Plan, as amended from time to time.
(mm) Prior Plans mean, collectively the 1998
Molex Stock Option and Restricted Stock Plan, as amended, the
2000 Molex Long-Term Stock Plan, as amended, the 2005 Molex
Incentive Stock Option Plan, as amended.
(nn) Restricted Stock means an Award granted to
a Participant pursuant to Article 7.
(oo) Retirement means if all of the following
conditions are met at the time of termination of employment:
(i) The Participant has attained
age 59
1
/
2
;
and
(ii) The Participant was employed at least fifteen
(15) consecutive years with the Company or a Subsidiary.
(pp) Share means a share of the Companys
Class A Common Stock, par value $.05 per share.
(qq) Stock Option Plan Committee means that
committee of the Board of Directors (or any other successor
committee designated by the Board) that is designated by the
Board to
IV-5
administer this Plan specifically with respect to Awards to
Non-Executive Officers. The members of the Stock Option Plan
Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board. If the Stock Option Plan
Committee does not exist or cannot function for any reason, the
Board or Compensation Committee may take any action under the
Plan that would otherwise be the responsibility of the Stock
Option Plan Committee.
(rr) Subsidiary means any corporation or other
entity, whether domestic or foreign, in which the Company has or
obtains, directly or indirectly, a proprietary interest of more
than fifty percent (50%) by reason of stock ownership or
otherwise.
Article 3.
Administration
3.1 General.
(a)
Responsibility
. Each respective Committee shall
be responsible for administering the Awards granted by it under
this Plan, subject to this Article 3 and the other
provisions of this Plan.
(b)
Composition
.
(i)
Compensation Committee
. The Compensation
Committee shall consist of not less than two Directors who are
both non-employee directors, within the meaning of
Rule 16b-3
of the Exchange Act, and outside directors, as
defined in Treasury
Regulation Section 1.162-27;
provided, however,
that if at any time any member of the
Compensation Committee is not an outside director, as so
defined, the Compensation Committee may establish a
subcommittee, consisting of all members who are outside
directors, for all purposes of any Award to a Covered Employee,
unless the Compensation Committee determines that such an Award
is not intended to qualify for the Performance-Based Exception.
(ii)
Stock Option Plan Committee
. The Stock Option
Plan Committee shall consist of not less than two members of the
Board (or any other successor committee designated by the Board).
(c)
Actions
. A majority of the members of the
respective Committee shall constitute a quorum. All
determinations of the respective Committee shall be made by a
majority of its members. Any decision or determination reduced
to writing and signed by a majority of the members of such
respective Committee shall be fully as effective as if it had
been made by a majority vote at a meeting duly called and held.
All actions taken and all interpretations and determinations
made by the respective Committee shall be final and binding upon
the Participants, the Company, and all other interested
individuals. Notwithstanding the foregoing, members of the Board
or the respective Committee who are either eligible for Awards
or have been granted Awards may vote on any and all matters,
including matters affecting the administration of the Plan or
the grant of Awards pursuant to the Plan. However, no such
member shall act upon the granting of a specific Award to
himself or herself, but any such member may be counted in
determining the existence of a quorum at any meeting of the
Board or the respective Committee during which action is taken
with respect to the granting of an Award to him or her.
3.2
Authority of the Respective Committees
.
Each respective Committee shall have full and exclusive
discretionary power:
(a) To determine the Executive Officers or Non-Executive
Officers, as the case may be for the respective Committee, who
will receive Awards and become Participants in the Plan;
(b) To determine the time at which Awards shall be granted
and the terms and conditions of each Award, including, but not
limited to:
(i) Option periods, Period of Restriction or Performance
Period;
(ii) Vesting schedule, if any;
IV-6
(iii) Number of Shares subject to the Award; and
(iv) Any such other terms and provisions of the Award
Agreement, which are not required to be identical among
Participants;
provided, however, in making any such determinations, the
respective Committee may take into account the nature of the
services rendered by the respective Executive Officer or
Non-Executive Officer his or her present and potential
contribution to the Companys success, and such other
factors as the respective Committee in its discretion shall deem
relevant; provided, further, with the exception of
Section 5.2(b), neither the Compensation Committee nor the
Stock Option Plan Committee shall have any power to grant Awards
to Directors or to set the terms and conditions thereof;
(c) To interpret the terms and the intent of this Plan and
any Award Agreement or other agreement or document ancillary to
or in connection with this Plan;
(d) To correct any defect or supply any omission or
reconcile any inconsistency;
(e) To adopt such rules, regulations, forms, instruments,
and guidelines for administering this Plan as the respective
Committee may deem necessary or proper and if applicable, to
comply with Applicable Law and regulations; and
(f) Subject to Article 15, to adopt modifications and
amendments to any Award or Award Agreement, including without
limitation:
(i) Accelerating the vesting of any Award;
(ii) Extending the post-termination exercise period of an
Award (subject to the limitations of Code Section 409A); and
(iii) Any other modifications or amendments that are
necessary to comply with the laws of the countries and other
jurisdictions in which the Company and its Subsidiaries operate.
Article 4.
Number of Shares Available for
Awards
4.1
Plan Total
. Subject to adjustment as
provided in Section 4.5 herein, the maximum number of
Shares available for grant to Participants under this Plan (the
Share Authorization) shall be:
|
|
|
|
(a)
|
Five million (5,000,000) Shares; and
|
(b) The number of Shares which remained available for grant
under the Companys Prior Plans as of the Effective Date;
and
(c) The number of Shares subject to outstanding Awards as
of the Effective Date under the Prior Plans that on or after the
Effective Date cease for any reason to be subject to such Awards
(other than by reason of exercise or settlement of the Awards to
the extent they are exercised for or settled in vested and
nonforfeitable Shares).
4.2
Maximum Number of Shares Reserved for
ISOs
. The maximum number of Shares of the Share
Authorization that may be issued pursuant to ISOs under this
Plan shall be two hundred and fifty thousand (250,000) Shares.
4.3
Share Usage
. Shares covered by an
Award shall only be counted as used to the extent they are
actually issued. Any Shares related to Awards which terminate by
expiration, forfeiture, cancellation, or otherwise without the
issuance of such Shares, are settled in cash in lieu of Shares,
shall be available again for grant under this Plan. Moreover, if
the Option Price of any Option granted under this Plan is
satisfied by tendering Shares to the Company, only the number of
Shares issued, net of the Shares tendered, if any, will be
delivered for purposes of determining the maximum number of
Shares available for delivery under this Plan. The Shares
available for issuance under this Plan may be authorized and
unissued Shares, Shares available on the open market or treasury
shares purchased on the open market or otherwise reacquired.
IV-7
4.4
Annual Award Limit
. Unless and until
the Compensation Committee determines that an Award to a Covered
Employee shall not be designed to qualify as Performance-Based
Compensation, the maximum aggregate number of Shares subject to
Awards granted in any one calendar year to any one Participant
shall be five hundred thousand (500,000), as adjusted pursuant
to this Plan.
4.5
Adjustments in Authorized Shares
.
(a)
Company Transactions
.
(i)
General Rule
. In the event of any corporate
event or transaction such as an amalgamation, a merger,
consolidation, reorganization, recapitalization, separation,
partial or complete liquidation, stock dividend, stock split,
reverse stock split, split up, spin-off, division, consolidation
or other distribution of stock or property of the Company,
combination of Shares, exchange of Shares, dividend in kind, or
other like change in capital structure, number of issued Shares
or distribution (other than normal cash dividends) to
stockholders of the Company, or any similar corporate event or
transaction (a Corporate Transaction), the
respective Committee, in order to prevent dilution or
enlargement of Participants rights under this Plan, shall
substitute or adjust, as applicable, the number and kind of
Shares that may be issued under this Plan or under particular
forms of Awards, the number and kind of Shares subject to
outstanding Awards, the Option Price applicable to outstanding
Awards, the annual award limits, and other value determinations
applicable to outstanding Awards. Notwithstanding the foregoing,
with respect to Corporate Transactions, the Board may also:
(A) Substitute options or shares of another corporation
(after equitable adjustment to the number of shares and exercise
price) and in conjunction cancel outstanding Awards; or
(B) Cancel outstanding Awards and provide payment to the
Participants equal to the value of the cancelled Awards.
The Board shall make all determinations under this subparagraph
(i), and all such determinations shall be conclusive and
binding;
provided, however,
any adjustment by the Board,
as of the date such adjustment is made, may not materially or
adversely affect the rights of the holder of an Award without
such holders consent. Any such adjustments to Shares in
accordance with this subparagraph (i) shall be cumulative
and the applicable provisions of the Plan affected by such
adjustment shall be deemed to be automatically amended
accordingly;
provided, however,
the Board shall take all
necessary action so as to actually make all necessary
adjustments in the number and kind of securities subject to any
outstanding Options, Restricted Stock and/or Performance Shares
and the exercise price thereof.
(ii)
Special Circumstances Requiring
Adjustment
. The respective Committee, in its sole
discretion, may also make appropriate adjustments in the terms
of any Awards under this Plan to reflect, or related to, such
changes or distributions and to modify any other terms of
outstanding Awards, including modifications of performance goals
and changes in the length of Performance Periods. The
determination of the respective Committee as to the foregoing
adjustments, if any, shall be conclusive and binding on
Participants under this Plan.
(iii)
Issuance or Assumption of
Benefits
. Subject to the provisions of Article 15
and notwithstanding anything else herein to the contrary,
without affecting the number of Shares reserved or available
hereunder, the respective Committee may authorize the issuance
or assumption of benefits under this Plan in connection with any
amalgamation, merger, consolidation, acquisition of property or
stock, or reorganization upon such terms and conditions as it
may deem appropriate (including, but not limited to, a
conversion of equity awards into Awards under this Plan in a
manner consistent with paragraph 53 of FASB Interpretation
No. 44 or subsequent accounting guidance),
IV-8
subject to compliance with the rules under Code
Sections 422 and 424, as and where applicable. The
respective Committee shall provide to Participants reasonable
written notice (which may include, without limit, notice by
electronic means) within a reasonable time of any such
determinations it makes.
(iv)
Fractional Shares
. No adjustment or
substitutions provided for in this Article shall require the
Company to sell a fractional share, and the total substitution
or adjustment with respect to each Award shall be limited
accordingly.
Article 5.
Eligibility and Participation
5.1
Eligibility
. Individuals eligible to
participate in this Plan include any Employee and all Directors.
5.2
Actual Participation
.
(a)
Executive Officers
. Subject to the
provisions of this Plan, the Compensation Committee may, from
time to time, select from all Executive Officers for a given
calendar year, those Executive Officers to whom Awards shall be
granted and shall determine, in its sole discretion, the nature
of, any and all terms permissible by law, and the amount of each
Award.
(a)
Non-Executive Officers
. Subject to the
provisions of this Plan, the Stock Option Plan Committee may,
from time to time, select from all Non-Executive Officers, those
Non-Executive Officers to whom Awards shall be granted and shall
determine, in its sole discretion, the nature of any and all
terms permissible by law, and the amount of each Award.
(c)
Automatic Grant of Options to Outside
Directors
. Notwithstanding any other provision of the
Plan to the contrary, each Director shall receive only an
automatic nondiscretionary Option grant on the date of the
annual stockholders meeting during the term of the Plan. Any
Option granted to a Director shall be a Nonqualified Stock
Option. The amount of Shares subject to the NQSO that will be
automatically granted to each Director for each year shall be
the amount of Shares equal to 500 multiplied by the number of
years of service to the Board or fraction thereof.
Notwithstanding the foregoing, no Option grant to a Director
shall exceed the lesser of:
(i) 5,000 Shares; or
(ii) The number of Shares whose Fair Market Value on the
Grant Date does not exceed $150,000.
5.3
Leaves of Absence
. Notwithstanding
any other provision of the Plan to the contrary, for purposes of
determining Awards granted hereunder, a Participant shall not be
deemed to have incurred a termination of employment if such
Participant is placed on military or sick leave or such other
leave of absence which is considered as continuing intact the
employment relationship with the Company or any Subsidiary. In
such a case, the employment relationship shall be deemed to
continue until the date when a Participants right to
reemployment shall no longer be guaranteed either by law or
contract.
5.4
Transfer of Service
. Notwithstanding
any other provision of the Plan to the contrary, for purposes of
determining Awards granted hereunder, a Participant shall not be
deemed to have incurred a termination of employment if the
Participants status as an Employee or Director terminates
and the Participant is then, or immediately thereafter becomes,
an eligible individual due to another status or relationship
with the Company or any Subsidiary.
Article 6.
Options
6.1
Grant of Options
. Subject to the
terms and provisions of this Plan, Options may be granted to
Participants in such number, and upon such terms, and at any
time and from time to time as shall be determined by the
respective Committee, in its sole discretion; provided that ISOs
may be granted only to eligible Employees of the Company or any
Subsidiary (as permitted under Code Sections 422 and 424).
IV-9
6.2
Award Agreement
. Each Option grant
shall be evidenced by an Award Agreement that shall specify the
Option Price, the maximum duration of the Option, the number of
Shares to which the Option pertains, the conditions upon which
an Option shall become vested and exercisable, and such other
provisions as the respective Committee shall determine which are
not inconsistent with the terms of this Plan. Unless otherwise
provided, all Options granted shall be NQSOs.
6.3
Option Price
.
(a)
General Rule for Awards to Executive Officers,
Non-Executive Officers and Directors
. Subject to
paragraph (b) immediately below, the Option Price for each
grant of an Option under this Plan shall be determined by the
respective Committee in its sole discretion and shall be
specified in the Award Agreement;
provided, however,
the
Option Price must be at least equal to one hundred percent
(100%) of the FMV of the Shares as determined on the Grant Date.
With respect to a Participant who owns, directly or indirectly,
more than ten percent (10%) of the total combined voting power
of all classes of the stock of the Company or any Subsidiary,
the Option Price of Shares subject to an ISO shall be at least
equal to one hundred and ten percent (110%) of the Fair Market
Value of such Shares on the ISOs Grant Date.
(b)
Discounted Options for Non-Executive
Officers
. Notwithstanding anything to the contrary in
this Plan, the Stock Option Plan Committee, in its sole
discretion, may set an Option Price for any grant of an Option
under this Plan to a Non-Executive Officer at less than a
Shares FMV on the Grant Date.
6.4
Term of Options
.
(a)
Vesting
.
(i)
General Rule
. Options granted under this
Section 6 shall vest at such times and be subject to such
restrictions and conditions as the respective Committee shall in
each instance approve, which need not be the same for each grant
or for each Participant. Notwithstanding the preceding sentence,
the Fair Market Value of Shares to which ISOs are exercisable
for the first time by any Participant during any calendar year
may not exceed $100,000. Any ISOs that become exercisable in
excess of such amount shall be deemed NQSOs to the extent of
such excess. Notwithstanding anything to the contrary, all
Options must vest 100% within 10 years from the Grant Date.
(ii)
Default Vesting
. If the Award does not
specify the time or times at which an Option shall vest, the
Option shall vest ratably over four years commencing on the
first anniversary of the Grant Date. The percentages vested and
exercisable are cumulative with respect to any Option.
(iii)
Acceleration of Vesting
.
(A)
Automatic Vesting
. Notwithstanding
subparagraphs (i) and (ii) immediately above, all
Options shall immediately vest and become immediately
exercisable upon a Participants death, Disability,
Retirement, or Involuntary Termination.
(B)
Discretionary Vesting
. The respective
Committee shall specifically have the power to change the
vesting schedule of any previously granted Options to a schedule
which is more favorable to the Participant; provided, however,
no such Options shall vest in amounts greater than, or at times
prior to, the amounts and times such Options would have vested
if such Options were within the scope of Section 6.4(a)(ii).
(b)
Expiration
.
(i)
General Rule
. Options granted under this
Section 6 shall expire and terminate at such time as the
respective Committee shall determine when the
IV-10
respective Committee approves the grant, which need not be the
same for each grant or for each Participant, and shall be set
forth in the applicable Award Agreement.
(ii)
Default Expiration
. If the Award Agreement
does not specify the time at which an Option shall expire, then
every Option granted to each Participant under this Plan shall
terminate and expire at the earliest of:
(A) One (1) year after one of the events set forth in
Section 6.4(a)(iii)(A); or
(B) Immediately upon termination of employment or service
of the Participant for any reason except if his/her employment
is terminated by reason of one of the events set forth in
Section 6.4(a)(iii)(A).
Notwithstanding the foregoing, no Option shall be exercisable
later than the day before the
10
th
anniversary of the Grant Date. Any Option which has not been
exercised by these times shall immediately expire and become
null and void.
(c)
Exercise
.
(i)
General Rule for All Options Other Than Discounted
Options
. Options, other than Discounted Options granted
to U.S. Employees, granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions
and conditions as the respective Committee shall in each
instance approve, which terms and restrictions need not be the
same for each grant or for each Participant.
(ii)
Payment for All Options Other Than Discounted
Options
. Options, other than Discounted Options granted
to U.S. Employees, granted under this Article 6 shall be
exercised by the delivery of a notice of exercise to the Company
or an agent designated by the Company in a form specified or
accepted by the respective Committee, or by complying with any
alternative procedures which may be authorized by the respective
Committee, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment
for the Shares. A condition of the issuance of the Shares as to
which an Option shall be exercised shall be the payment of the
Option Price. The Option Price of any Option shall be payable,
in full, to the Company, under any of the following methods as
determined by the respective Committee, in its discretion:
(A) In cash or its equivalent;
(B) By tendering (either by actual delivery or attestation)
to the Company previously acquired Shares having an aggregate
Fair Market Value at the time of exercise equal to the Option
Price;
(C) By a cashless (broker-assisted) exercise (which can be
settled in Shares or cash);
(D) By a combination of (A), (B) and/or (C); or
(E) Any other method approved or accepted by the respective
Committee in its sole discretion.
Subject to any governing rules or regulations, as soon as
practicable after receipt of written notification of exercise
and full payment (including satisfaction of any applicable tax
withholding), the Company shall deliver to the Participant
evidence of book entry Shares, or upon the Participants
request, Share certificates in an appropriate amount based upon
the number of Shares purchased under the Option. Unless
otherwise determined by the respective Committee, all payments
under all of the methods indicated above shall be paid in United
States dollars.
(iii)
Special Rule for Discounted
Options
. Notwithstanding any other provision of this
Plan, Discounted Options granted to U.S. Employees under this
Article 6 shall
IV-11
be automatically exercised by the Company on behalf of the
Participant on the date when all or a portion of such Discounted
Option vests, by using Shares underlying the Discounted Option
to pay for the Option Price and applicable withholding taxes,
and the Participant, following such vesting event, shall receive
the net shares with respect to such Discounted Option.
(d)
Option Transferability
.
(i)
General Rule
. Any Option granted under the
Plan is not transferable and can be exercised only by the
Participant during his/her life subject to subparagraph
(ii) immediately below.
(ii)
Death or Disability
. In the event of a
Participants death or Disability while employed by the
Company or a Subsidiary, his/her Option, to the extent he/she
could have exercised it on the date of his/her death, may be
exercised by the personal representative of the estate of the
Participant within one year after the date of his/her death in
accordance with the terms established by the respective
Committee at the time the Option was granted, but not later than
the expiration date set forth in Section 6.4(b).
6.5
Restrictions on Share
Transferability
. The respective Committee may impose
such restrictions on any Shares acquired pursuant to the
exercise of an Option granted under this Article 6 as it
may deem advisable, including, without limitation, minimum
holding period requirements, restrictions under applicable
federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or
traded, or under any blue sky or state securities laws
applicable to such Shares.
Article 7.
Restricted Stock
7.1
Grant of Restricted Stock
. Subject to
the terms and provisions of this Plan, the respective Committee,
at any time and from time to time, may grant Restricted Stock to
Participants in such amounts as the respective Committee shall
determine.
7.2
Restricted Stock Award
Agreement
. Each Restricted Stock Award shall be
evidenced by an Award Agreement that shall specify the Period of
Restriction, the number of Shares of Restricted Stock granted,
and such other provisions as the respective Committee shall
determine.
7.3
Other Restrictions
.
(a)
General Rules
. The respective Committee
shall impose such other conditions and/or restrictions on any
Shares of Restricted Stock granted pursuant to this Plan as it
may deem advisable including, without limitation:
(i) A requirement that Participants pay a stipulated
purchase price for each Share of Restricted Stock (which price
shall not be less than par value of such Share);
(ii) Restrictions based upon the achievement of specific
performance goals;
(iii) Time-based restrictions on vesting following the
attainment of the performance goals;
(iv) Time-based restrictions;
(v) Restrictions under Applicable Laws or under the
requirements of any stock exchange or market upon which such
Shares are listed or traded; and/or
(vi) Holding requirements or sale restrictions placed on
the Shares upon vesting of such Restricted Stock.
To the extent deemed appropriate by the respective Committee,
the Company may retain the certificates representing Shares of
Restricted Stock in the Companys possession until such
time as all conditions and/or restrictions applicable to such
Shares have been satisfied or lapse.
IV-12
(b)
Default Vesting
. If the Award does not
specify the time or times at which an Award of Restricted Stock
shall vest, the Restricted Stock shall vest on ratably over four
years commencing on the first anniversary of the Grant Date.
(c)
Acceleration of Vesting
.
(i)
Automatic Vesting
. Notwithstanding
paragraphs (a) and (b) immediately above, all
Restricted Stock Awards shall immediately vest upon the
Participants death, Disability, Retirement, or Involuntary
Termination.
(ii)
Discretionary Vesting
. The respective
Committee shall specifically have the power to change the
vesting schedule of any previously granted Restricted Stock to a
schedule which is more favorable to the Participant;
provided, however,
no such Restricted Stock shall vest in
amounts greater than, or at times prior to, the amounts and
times such Restricted Stock would have vested if such Restricted
Stock were within the scope of Section 7.3(b).
(d)
Expiration
. Restricted Stock granted under
this Section 7 shall expire and terminate immediately upon
termination of employment of the Participant with the Company or
any Subsidiary for any reason except if his/her employment is
terminated by reason of one of the events set forth in
Section 7.3(c)(i).
7.4
Share Transferability
. Except as
otherwise provided in this Article 7, Shares of Restricted
Stock covered by each Restricted Stock Award shall become freely
transferable by the Participant after all conditions and
restrictions applicable to such Shares have been satisfied or
lapse (including satisfaction of any applicable tax withholding
obligations).
7.5
Voting Rights
. Unless otherwise
determined by the respective Committee and set forth in a
Participants Award Agreement, to the extent permitted or
required by law, Participants holding Shares of Restricted Stock
granted hereunder may be granted the right to exercise full
voting rights with respect to those Shares during the Period of
Restriction.
Article 8.
Performance Shares
8.1
Grant of Performance Shares
. Subject
to the terms and provisions of this Plan, the respective
Committee, at any time and from time to time, may grant
Performance Shares to Participants in such amounts and upon such
terms as the respective Committee shall determine.
8.2
Performance Shares Award
Agreement
. Each Performance Share grant shall be
evidenced by an Award Agreement that shall specify the number of
Shares subject to the Award, the applicable Performance Period,
the Performance Measure, and such other terms and provisions as
the respective Committee shall determine.
8.3
Earning of Performance
Shares
. Subject to the terms of this Plan, after the
applicable Performance Period has ended, the holder of
Performance Shares shall be entitled to receive the number of
Performance Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent
to which the corresponding performance goals have been achieved.
8.4
Other Restrictions
. The respective
Committee shall impose such other conditions and/or restrictions
on any Performance Shares granted pursuant to this Plan as it
may deem advisable including, without limitation: a requirement
that time-based restrictions on vesting follow the attainment of
the performance goals; restrictions under Applicable Laws or
under the requirements of any stock exchange or market upon
which such shares are listed or traded; or holding requirements
or sale restrictions placed on the Shares by the Company upon
vesting of such Performance Shares. There are no default vesting
provisions; a Participant must meet the performance goals in
order to earn the Performance Shares under Section 8.3.
IV-13
8.5
Vesting Overrides
.
(a)
General Rule
. Except as set forth in
paragraph (b) immediately below, unvested Performance
Shares shall be cancelled immediately upon the
Participants termination of employment with the Company or
a Subsidiary.
(b)
Accelerated Vesting
. Notwithstanding any
provision in this Plan to the contrary, the respective
Committee, in its sole discretion, may fully or partially vest a
Participant in his/her Performance Shares if such Participant
terminates employment during the last six (6) months of a
Performance Period by reason of death, Disability, Retirement,
or Involuntary Termination; provided, however, if the respective
Committee does fully or partially vest such Participant in
his/her
Performance Shares in such situation, such determination to
fully or partially vest shall not be made until the end of the
Performance Period and the lapse of any such restrictions on
such Performance Shares shall occur at the same time such
restrictions lapse for all other Participants holding
Performance Shares relating to the same Performance Period.
8.6
Performance Measures
.
(a)
General Rule
. The performance goals, upon
which the payment or vesting of a Performance Share to a Covered
Employee that is intended to qualify as Performance-Based
Compensation, shall be selected by the respective Committee in
its complete and sole discretion but shall be limited to one or
more of the following Performance Measures:
(i) Net earnings or net income (before or after taxes);
(ii) Earnings per share;
(iii) Net sales or revenue growth;
(iv) Net operating profit;
(v) Return measures (including, but not limited to, return
on assets, return on net assets, capital, invested capital,
equity, sales, or revenue);
(vi) Cash flow (including, but not limited to, operating
cash flow, free cash flow, cash flow return on equity, and cash
flow return on investment);
(vii) EBIT or earnings before or after taxes, interest,
depreciation, and/or amortization;
(viii) Gross or operating margins;
(ix) Productivity ratios;
(x) Share price (including, but not limited to, growth
measures and total stockholder return);
(xi) Expense targets;
(xii) Margins;
(xiii) Operating efficiency;
(xiv) Market share;
(xv) Total stockholder return;
(xvi) Customer satisfaction;
(xvii) Working capital targets; and
(xviii) Economic value added or
EVA
®
(net operating profit after tax minus the sum of capital
multiplied by the cost of capital).
Any Performance Measure may be used to measure the performance
of the Company, a Subsidiary or a business unit, in whole or in
part, as the respective Committee may deem appropriate, or any
of the above Performance Measures may be compared to the
performance of a group of comparator companies, or published or
special index that the respective
IV-14
Committee deems appropriate, or the respective Committee may
select Performance Measure (x) above as compared to various
stock market indices. The respective Committee also has the
authority to provide for accelerated vesting of any Performance
Share award based on the accelerated achievement of performance
goals pursuant to the Performance Measures specified in this
Section 8.6.
(b) Evaluation of Performance. The respective Committee may
provide that any evaluation of performance may include or
exclude any of the following events that occurs during a
Performance Period:
(i) Asset write-downs;
(ii) Litigation or claim judgments or settlements;
(iii) The effect of changes in tax laws, accounting
principles, or other laws or provisions affecting reported
results;
(iv) Any reorganization and restructuring programs;
(v) Extraordinary nonrecurring items as described in
Accounting Principles Board Opinion No. 30 and/or in
managements discussion and analysis of financial condition
and results of operations appearing in the Companys annual
report to stockholders for the applicable year;
(vi) Acquisitions or divestitures; and
(vii) Foreign exchange gains and losses.
To the extent such inclusions or exclusions affect Awards to
Covered Employees, they shall be prescribed in a form that meets
the requirements of Code Section 162(m) for deductibility.
(c)
Adjustment of Performance-Based
Compensation
. Awards that are intended to qualify as
Performance-Based Compensation may not be adjusted upward. The
respective Committee shall retain the discretion to adjust such
Awards downward, either on a formula or discretionary basis or
any combination as necessary to reach an equitable result. For
Awards that are not intended to qualify as Performance-Based
Compensation, the respective Committee shall retain the
discretion to adjust such Awards upward or downward, either on a
formula or discretionary basis or any combination.
(d)
Committee Discretion
. In the event that
applicable tax and/or securities laws change to permit the
respective Committees discretion to alter the governing
Performance Measures without obtaining stockholder approval of
such changes, the respective Committee shall have sole
discretion to make such changes without obtaining stockholder
approval. In addition, in the event that the respective
Committee determines that it is advisable to grant Performance
Shares that shall not qualify as Performance-Based Compensation,
the respective Committee may make such grants without satisfying
the requirements of Code Section 162(m) and base vesting on
Performance Measures other than those set forth in
paragraph 8.6 (a).
8.7
Compliance with Code
Section 162(m)
. The Company intends that
Performance Shares granted to Covered Employees shall satisfy
the requirements of the Performance-Based Exception under Code
Section 162(m), unless otherwise determined by the
respective Committee when the Performance Shares are granted.
Accordingly, the terms of this Plan, including the definition of
Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code
Section 162(m). Notwithstanding the foregoing, because the
respective Committee cannot determine with certainty whether a
given employee will be a Covered Employee with respect to a
fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by
the Compensation Committee as likely to be a Covered Employee
with respect to a fiscal year. If any provision of the Plan or
any Award Agreement designated as intended to satisfy the
Performance-Based Exception under Code Section 162(m) does
not comply or is inconsistent with the requirements of Code
Section 162(m), such provision shall be construed or deemed
amended to the extent necessary to conform to such requirements,
and no provision shall be
IV-15
deemed to confer upon the respective Committee or any other
person sole discretion to increase the amount of compensation
otherwise payable in connection with such Performance Shares
upon attainment of the applicable performance objectives.
8.8
Transferability
. Performance Shares
are not transferable until all conditions and restrictions
applicable to such Performance Shares have been satisfied or
lapse (including satisfaction of any applicable tax withholding
obligations). In the event of a Participants death or
Disability while employed with the Company or a Subsidiary, the
personal representative of the estate of the Participant may
receive the distribution of vested Performance Shares in
accordance with Section 8.5(b).
Article 9.
Forfeiture of Awards
9.1
General
. Notwithstanding anything
else to the contrary contained herein, the respective Committee
in granting any Award shall have the full power and authority to
determine whether, to what extent and under what circumstances
such Award shall be forfeited, cancelled or suspended. Unless an
Award Agreement includes provisions expressly superseding the
provisions of this Article 9, the provisions of this
Article 9 shall apply to all Awards. Any such forfeiture
shall be effected by the Company in such manner and to such
degree as the respective Committee, in its sole discretion,
determines, and will in all events (including as to the
provisions of this Article 9) be subject to the
Applicable Laws. In order to effect a forfeiture under this
Article 9, the respective Committee may require that the
Participant sell Shares received upon exercise or settlement of
an Award to the Company or to such other person as the Company
may designate at such price and on such other terms and
conditions as the respective Committee in its sole discretion
may require.
9.2
Forfeiture Events
. Unless otherwise
specified by the respective Committee, in addition to any
vesting or other forfeiture conditions that may apply to an
Award and Shares issued pursuant to an Award, each Award granted
under the Plan will be subject to the following forfeiture
conditions:
(a)
Restrictive Covenants
.
In consideration
of Company granting Awards under this Plan, Participants must
agree in their Award Agreements that:
(i)
Non-compete
. During employment with Company
and for one year after separation from service thereof,
Participant will not, directly or indirectly, as a principal,
officer, director, employee or in any other capacity whatsoever,
without prior written consent of the Company, engage in any
activity with, or provide services to, any person or entity
engaged in, or about to engage in, any business activity that is
competitive with the business then engaged in by the Company, in
any geographic area in which the Companys business is then
conducted. Participant may make or hold any investment in
securities of a competitive business traded on a national
securities exchange or traded in the over-the-counter market,
provided the investment does not exceed 5% of the issued and
outstanding stock of the competitive business. The term
competitor business means a person or entity who or
which is engaged in a material line of business conducted by the
Company in any geographic area in which the Companys
business is conducted (for purposes of this Plan, a
material line of business conducted by the Company means
an activity generating gross revenues to the Company of more
than US$15 million in the immediately preceding fiscal year
of the Company);
(ii)
Non-Solicitation
. During employment with
the Company and for two years after separation from service,
Participant will not, directly or indirectly:
(A) Hire, solicit or make an offer to any Employee of the
Company to be employed or perform services outside of the
Company;
(B) Solicit for competitive business purposes (as defined
in subparagraph (i) immediately above) any customer of the
Company; or
(C) Solicit, induce or attempt to induce any customer of
the Company to cease doing business in whole or in part with or
through the Company.
IV-16
(iii)
Forfeiture Upon Violation of Restrictive
Covenants
. If Participant breaches any provision of
subparagraphs (i) or (ii) immediately above as
determined by the Company, Participant shall forfeit, upon
written notice to such effect from the Company:
(A) All right, title and interest to any Award (whether
vested or unvested);
(B) Any Share issued upon vesting and/or exercise of any
Award then owned by Participant; and
(C) Any and all profits realized by Participant pursuant to
any sales or transfer of any Shares underlying the Awards within
the 24 month period prior to the date of such breach.
The term profit is defined as either:
(I) The difference between the Option Price and the Fair
Market Value of the Share on the exercise date, with respect to
Options; or
(II) The Fair Market Value of the Share on the vesting
date, with respect to Restricted Stock or Performance Shares.
Additionally, the Company shall have the right to issue a stock
transfer order and other appropriate instructions to its
transfer agent with respect to the Shares underlying the Award,
and the Company further shall be entitled to reimbursement from
the Participant of any fees and expenses (including
attorneys fees) incurred by or on behalf of the Company in
enforcing its rights hereunder.
(b)
Termination for Cause
.
All outstanding
Awards and Shares issued pursuant to an Award held by a
Participant will be forfeited in their entirety (including as to
any portion of an Award or Shares subject thereto that are
vested or as to which any forfeiture restrictions in favor of
the Company or its designee have previously lapsed) if the
Participants employment or service is terminated by the
Company for Cause;
provided, however,
that if a
Participant has sold Shares issued upon exercise or settlement
of an Award within 24 months prior to the date on which the
Participant would otherwise have been required to forfeit such
Shares under this paragraph (b) as a result of termination
of the Participants employment or service for Cause, then
the Company will be entitled to recover any and all profits (as
defined above in paragraph (a)) realized by the Participant in
connection with such sale; and
provided further,
that in
the event the respective Committee determines that it is
necessary to establish whether grounds exist for termination for
Cause, the Award will be suspended during any period required to
conduct such determination, meaning that the vesting,
exercisability and/or lapse of restrictions otherwise applicable
to the Award will be tolled and if grounds for such termination
are determined to exist, the forfeiture specified by this
paragraph (b) will apply as of the date of suspension, and
if no such grounds are determined to exist, the Award will be
reinstated on its original terms.
(c)
Accounting Restatement
. If the Company is
required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of
misconduct, with any financial reporting requirement under the
securities laws, and if the Participant knowingly or grossly
negligently engaged in the misconduct, or knowingly or grossly
negligently failed to prevent the misconduct, or if the
Participant is one of the individuals subject to automatic
forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002, the Participant shall reimburse the Company the amount of
any payment in settlement of an Award earned or accrued during
the 24 month period following the first public issuance or
filing with the United States Securities and Exchange Commission
(whichever just occurred) of the financial document embodying
such financial reporting requirement.
Article 10.
Director Awards
The Board shall determine all Awards to Directors in accordance
with Section 5.2(c). The terms and conditions of any grant
to any such Director shall be set forth in an Award Agreement
and shall be otherwise subject to the Plan.
IV-17
Article 11.
Dividend Equivalents
Any Participant may be granted dividend equivalents based on the
dividends declared on Shares that are subject to any Award, to
be credited as of dividend payment dates, during the period
between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the respective
Committee. Such dividend equivalents shall be converted to cash
or additional Shares by such formula and at such time and
subject to such limitations as may be determined by the
respective Committee.
Notwithstanding the foregoing, if the grant of an Award to a
Covered Employee is designed to comply with the requirements of
the Performance-Based Exception, the Compensation Committee may
apply any restrictions it deems appropriate to the payment of
dividends declared with respect to such Award, such that the
dividends and/or the Award maintain eligibility for the
Performance-Based Exception. With respect to Restricted Stock,
in the event that any dividend constitutes a derivative security
or an equity security pursuant to the rules under
Section 16 of the Exchange Act, such dividend shall be
subject to a vesting period equal to the remaining vesting
period of the Shares of Restricted Stock with respect to which
the dividend is paid.
Article 12.
Beneficiary Designation
Each Participant under this Plan may, from time to time, name
any beneficiary or beneficiaries (who may be named contingently
or successively) to whom any benefit under this Plan is to be
paid in case of his/her death or Disability before he/she
receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be
in a form prescribed by the Company, and will be effective only
when filed by the Participant in writing with the Company during
the Participants employment. In the absence of any such
beneficiary designation, benefits remaining unpaid or rights
remaining unexercised at the Participants death or
Disability shall be paid to or exercised by the
Participants spouse, executor, administrator, or legal
representative, as determined by the respective Committee, in
its sole discretion.
Article 13.
Rights of Participants
13.1
Employment
. Nothing in this Plan or an
Award Agreement shall interfere with or limit in any way the
right of the Company or a Subsidiary, to terminate any
Participants employment at any time or for any reason not
prohibited by law, nor confer upon any Participant any right to
continue his/her employment for any specified period of time.
Neither an Award nor any benefits arising under this Plan shall
constitute an employment contract with the Company or a
Subsidiary and, accordingly, subject to Articles 3 and 15,
this Plan and the benefits hereunder may be terminated at any
time in the sole and exclusive discretion of the Board or the
respective Committee without giving rise to any liability on the
part of the Company and its Subsidiaries.
13.2
Participation
. No individual shall have
the right to be selected to receive an Award under this Plan. In
addition, the receipt of any Award shall not create a right to
receive a future Award.
13.3
Rights as a Stockholder
. Except as
otherwise provided herein, a Participant shall have none of the
rights of a stockholder with respect to Shares covered by any
Award until the Participant becomes the registered holder of
such Shares.
Article 14.
Change in Control
14.1
Change in Control of the Company
. Upon the
occurrence of a Change in Control while the Participant is
employed or in service with the Company and/or any Subsidiary,
unless otherwise specifically prohibited under Applicable Laws,
or by the rules and regulations of any governing governmental
agencies or national securities exchanges, or unless the
respective Committee shall determine otherwise in the Award
Agreement:
(a)
Options
. Any and all Options shall become
immediately vested and exercisable.
(b)
Restricted Stock
. Any Period of Restriction
for Restricted Stock shall end, and such Restricted Stock shall
become fully vested.
IV-18
(c)
Performance Shares
. The target payout
opportunities attainable under all outstanding Awards which are
subject to achievement of any of the Performance Measures
specified in Article 8 or any other performance conditions
or restrictions that the respective Committee has made the Award
contingent upon, shall be deemed to have been earned as of the
effective date of the Change in Control, and the vesting of all
such Performance Shares shall be accelerated as of the effective
date of the Change in Control, and there shall be paid out to
Participants a pro rata number of fully paid Shares based upon
an assumed achievement of all relevant targeted performance
goals and upon the length of time within the Performance Period,
if any, that has elapsed prior to the Change in Control. The
respective Committee has the authority to pay all or any portion
of the value of the Shares in cash.
(d)
Adjustments
. Subject to Article 15,
the respective Committee shall have the authority to make any
modifications to the Awards deemed appropriate before the
effective date of the Change in Control.
14.2
Treatment of Awards
. In the event of a
Change in Control where the Company ceases to have publicly
traded equity securities, after the consummation of the Change
in Control, if no replacement awards are issued in lieu of
outstanding Awards under the Plan, then the Plan and all
outstanding Awards granted hereunder shall terminate, and the
Company (or successor) shall pay Participants an amount for
their outstanding Awards determined using the
Change-in-Control
price. Participants with outstanding Options shall be given an
opportunity to exercise all their Options in connection with the
consummation of the Change in Control and receive payment for
any acquired Shares using the
Change-in-Control
price.
Article 15.
Amendment, Modification, Suspension,
and Termination
15.1
Amendment, Modification, Suspension, and
Termination
. Subject to Section 15.3:
(a) The Board may, at any time and from time to time,
alter, amend, modify, suspend, or terminate this Plan; and
(b) The Board, Compensation Committee or Stock Option Plan
Committee may, at any time and from time to time, alter, amend,
modify, suspend, or terminate any Award Agreement in whole or in
part;
provided, however,
that, without the prior approval of
the Companys stockholders and except as provided in
Section 4.5, Options issued under this Plan will not be
repriced, replaced, or regranted through cancellation, or by
lowering the Option Price of a previously granted Option, and no
material amendment of this Plan shall be made without
stockholder approval if stockholder approval is required by
Applicable Laws.
15.2
Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events
. The respective
Committee may make adjustments in the terms and conditions of,
and the criteria included in, Awards in recognition of unusual
or nonrecurring events (including, without limitation, the
events described in Section 4.5 hereof) affecting the
Company or the financial statements of the Company or of changes
in Applicable Laws, regulations, or accounting principles,
whenever the respective Committee determines that such
adjustments are appropriate in order to prevent unintended
dilution or enlargement of the benefits or potential benefits
intended to be made available under this Plan. The determination
of the respective Committee as to the foregoing adjustments, if
any, shall be conclusive and binding on Participants under this
Plan.
15.3
Awards Previously Granted
. Notwithstanding
any other provision of this Plan to the contrary (other than
Section 15.4), no termination, amendment, suspension, or
modification of this Plan or an Award shall adversely affect in
any material way any Award previously granted under this Plan,
without the written consent of the Participant holding such
Award.
15.4
Amendment to Conform to
Law
. Notwithstanding any other provision of this Plan
to the contrary, the Board or Compensation Committee may amend
the Plan or an Award, to take effect retroactively or otherwise,
as deemed necessary or advisable for the purpose of conforming
the Plan or an Award to any present or future law relating to
plans of this or similar nature (including, but not limited
IV-19
to, Code Section 409A), and to the administrative
regulations and rulings promulgated thereunder. By accepting an
Award under this Plan, each Participant agrees to any amendment
made pursuant to this Section 15.4 to any Award granted
under the Plan without further consideration or action.
Article 16.
Withholding
16.1
General
. The Company shall have the power
and the right to deduct or withhold, or require a Participant to
remit to the Company, the amount necessary to satisfy federal,
state, and local taxes, domestic or foreign, required by law or
regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
16.2
Stock Settled Awards
. Each Participant
shall make such arrangements as the respective Committee may
require, within a reasonable time prior to the date on which any
portion of an Award settled in Shares is scheduled to vest, for
the payment of all withholding tax obligations through either:
(a) Giving instructions to a broker for the sale on the
open market of a sufficient number of Shares to pay the
withholding tax in a manner that satisfies all Applicable Laws;
(b) Depositing with the Company an amount of funds equal to
the estimated withholding tax liability; or
(c) Such other method as the respective Committee in its
discretion may approve, including a combination of paragraphs
(a) and (b) immediately above.
If a Participant fails to make such arrangements, or if by
reason of any action or inaction of the Participant the Company
fails to receive a sufficient amount to satisfy the withholding
tax obligation, then, anything else contained in this Plan or
any Award to the contrary notwithstanding, the Shares that would
otherwise have vested on such date shall be subject to
forfeiture, as determined by the respective Committee,
regardless of the Participants status as an Employee or
Director; provided, that the respective Committee, in its sole
discretion, may permit a Participant to cure any failure to
provide funds to meeting the withholding tax obligation
(including any penalties or interest thereon), if the respective
Committee determines that the failure was due to factors beyond
the Participants control.
Article 17.
Successors
All obligations of the Company under this Plan with respect to
Awards granted hereunder shall be binding on any successor to
the Company, whether the existence of such successor is the
result of a direct or indirect purchase, amalgamation, merger,
consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.
Article 18.
General Provisions
18.1
Right of Offset
. The Company or a
Subsidiary, to the extent permitted by Applicable Law, may
deduct from and set off against any amounts the Company or a
Subsidiary may owe to the Participant from time to time,
including amounts payable in connection with any Award, owed as
wages, fringe benefits, or other compensation owed to the
Participant, such amounts as may be owed by the Participant to
the Company or a Subsidiary although the Participant shall
remain liable for any part of the Participants payment
obligation not satisfied through such deduction and setoff. By
accepting any Award granted hereunder, the Participant agrees to
any deduction or setoff under this Section 18.1.
18.2
Legend
. Share certificates may include any
legend which the respective Committee deems appropriate to
reflect any restrictions on transfer of such Shares.
18.3
Gender and Number
. Except where otherwise
indicated by the context, any masculine term used herein also
shall include the feminine, the plural shall include the
singular, and the singular shall include the plural.
18.4
Severability
. In the event any provision
of this Plan shall be held illegal or invalid for any reason,
the illegality or invalidity shall not affect the remaining
parts of this Plan, and this Plan shall be construed and
enforced as if the illegal or invalid provision had not been
included.
IV-20
18.5
Requirements of Law
. The granting of
Awards and the issuance of Shares under this Plan shall be
subject to all Applicable Laws, and to such approvals by any
governmental agencies or stock exchange as may be required.
18.6
Securities Law Compliance
. With respect to
Insiders, transactions under the Plan are intended to comply
with all applicable conditions of
Rule 16b-3
or its successor under the Exchange Act. To the extent any
provision of the Plan or action by the respective Committee
fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the respective
Committee.
18.7
Delivery of Title
. The Company shall have
no obligation to deliver evidence of title for Shares issued
under this Plan prior to:
(a) Obtaining any approvals from governmental agencies that
the Company determines are necessary or advisable; and
(b) Completion of any registration or other qualification
of the Shares under any applicable national or foreign law or
ruling of any governmental body that the Company determines to
be necessary or advisable.
18.8
Inability to Obtain Authority
. The
inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the
Companys counsel to be necessary to the lawful issuance
and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been
obtained.
18.9
Investment Representations
. The respective
Committee may require any individual receiving Shares pursuant
to an Award under this Plan to represent and warrant in writing
that the individual is acquiring the Shares for investment and
without any present intention to sell or distribute such Shares.
18.10
Employees Based Outside of the United
States
. Notwithstanding any provision of this Plan to
the contrary, in order to comply with the laws in other
countries in which the Company and/or its Subsidiaries operate
or have Employees or Directors, the respective Committee, in its
sole discretion, shall have the power and authority to:
(a) Determine which Subsidiaries shall be covered by this
Plan;
(b) Determine which Employees or Directors outside the
United States are eligible to participate in this Plan;
(c) Modify the terms and conditions of any Award granted to
Employees outside the United States to comply with applicable
foreign laws;
(d) Establish
sub-plans
and modify exercise procedures and other terms and procedures,
to the extent such actions may be necessary or advisable. Any
sub-plans
and modifications to Plan terms and procedures established under
this Section 18.10 by the respective Committee shall be
attached to this Plan document as appendices; and
(e) Take any action, before or after an Award is made, that
it deems advisable to obtain approval or comply with any
necessary local government regulatory exemptions or approvals.
Notwithstanding the above, the respective Committee may not take
any actions hereunder, and no Awards shall be granted, that
would violate Applicable Law.
18.11
Uncertificated Shares
. To the extent that
this Plan provides for issuance of certificates to reflect the
transfer of Shares, the transfer of such Shares may be effected
on a noncertificated basis, to the extent not prohibited by
Applicable Laws.
18.12
Unfunded Plan
. Participants shall have no
right, title, or interest whatsoever in or to any investments
that the Company and/or its Subsidiaries may make to aid it in
meeting its obligations under this Plan. Nothing contained in
this Plan, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Participant,
beneficiary, legal representative, or any other individual. To
the extent that any individual acquires a right to receive
payments from the Company and/or its Subsidiaries under this
IV-21
Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company or any Subsidiary, as
the case may be. All payments to be made hereunder shall be paid
from the general funds of the Company or any Subsidiary, as the
case may be, and no special or separate fund shall be
established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in this
Plan.
18.13
No Fractional Shares
. No fractional
Shares shall be issued or delivered pursuant to this Plan or any
Award. The respective Committee shall determine whether cash,
Awards, or other property shall be issued or paid in lieu of
fractional Shares or whether such fractional Shares or any
rights thereto shall be forfeited or otherwise eliminated.
18.14
Retirement and Welfare Plans
. Neither
Awards made under this Plan nor Shares or cash paid pursuant to
such Awards may be included as compensation for
purposes of computing the benefits payable to any Participant
under the Companys or any Subsidiarys retirement
plans (both qualified and non-qualified) or welfare benefit
plans unless such other plan expressly provides that such
compensation shall be taken into account in computing a
Participants benefit.
18.15
Code Section 409A Application
. The
Company shall have no liability for any tax imposed on a
Participant by Code Section 409A, and if any tax is imposed
on the Participant, the Participant shall have no recourse
against the Company for payment of any such tax.
18.16
Non-exclusivity of this Plan
. The
adoption of this Plan shall not be construed as creating any
limitations on the power of the Board or respective Committee to
adopt such other compensation arrangements as it may deem
desirable for any Participant.
18.17
No Constraint on Corporate
Action
. Nothing in this Plan shall be construed to:
(a) Limit, impair, or otherwise affect the Companys
or any Subsidiarys right or power to make adjustments,
reclassifications, reorganizations, or changes of its capital or
business structure, or to amalgamate, merge or consolidate, or
dissolve, liquidate, sell, or transfer all or any part of its
business or assets; or
(b) Limit the right or power of the Company or any
Subsidiary to take any action which such entity deems to be
necessary or appropriate.
18.18
Governing Law
. The Plan and each Award
Agreement shall be governed by the laws of the State of
Illinois, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or
interpretation of this Plan to the substantive law of another
jurisdiction. Unless otherwise provided in the Award Agreement,
recipients of an Award under this Plan are deemed to submit to
the exclusive jurisdiction and venue of the federal or state
courts of Illinois, to resolve any and all issues that may arise
out of or relate to this Plan or any related Award Agreement.
18.19
Indemnification
. Subject to requirements
of Illinois law, each individual who is or shall have been a
member of the Board, or a respective Committee appointed by the
Board, or an officer of the Company shall be indemnified and
held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a
party or in which he or she may be involved by reason of any
action taken or failure to act under this Plan and against and
from any and all amounts paid by him or her in settlement
thereof, with the Companys approval, or paid by him or her
in satisfaction of any judgment in any such action, suit, or
proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend
the same before he or she undertakes to handle and defend it on
his/her own behalf, unless such loss, cost, liability, or
expense is a result of his/her own willful misconduct or except
as expressly provided by statute. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such individuals may be entitled under
the Companys charter documents, as a matter of law, or
otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
IV-22
2222 WELLINGTON COURT
LISLE, IL 60532-1682
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date
or meeting date. Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by Molex Incorporated in mailing proxy materials,
you can consent to receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the
instructions above to vote using the Internet and, when prompted, indicate that you agree to receive
or access stockholder communications electronically in future years.
VOTE BY PHONE- 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up
until 11:59 P.M. Eastern
Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call
and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or
return it to Molex Incorporated, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS:
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MLXIN1
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH
AND RETURN THIS PORTION
ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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MOLEX INCORPORATED
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For
All
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Withhold
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For All
Except
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To withhold authority to vote for any individual
nominee(s), mark For All Except
and write the
number(s) of the nominee(s) on the line below.
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THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE LISTED
NOMINEES AND FOR EACH OF THE OTHER ITEMS
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Item 1 - Election of Directors.
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Class III Nominees to Serve a Three-Year Term
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01)
02)
03)
04)
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Edgar D.
Jannotta
John H. Krehbiel, Jr.
Donald G. Lubin
Robert J. Potter
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For
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Against
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Abstain
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Item 2 - Approval of the Molex Incorporated Annual Incentive Plan
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Item 3 - Approval of the 2008 Molex Stock Incentive Plan
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Item 4 - Ratification of Selection of Independent Auditors
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Ratification of the appointment of
Ernst & Young LLP as the independent auditors of Molex for the fiscal year ending June 30, 2009.
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(NOTE:
Please sign exactly as your name(s) appear(s) hereon.
All holders must sign. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such.
Joint owners should each sign personally. If a corporation,
please sign in full corporate name, by authorized officer. If a
partnership, please sign in partnership name by
authorized person.)
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Signature [PLEASE SIGN WITHIN BOX]
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Signature (Joint Owners)
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Important Notice Regarding Internet
Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
MOLEX INCORPORTED
2222 Wellington Court, Lisle, Illinois 60532
Annual
Meeting of Stockholders October 31, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Molex Incorporated, a Delaware corporation, hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement and hereby appoints
Frederick A. Krehbiel, John H. Krehbiel, Jr., and Martin P. Slark and each or any of them (the
Proxies), as proxies and attorneys-in-fact, each with full power of substitution, on behalf of
and in the name of the undersigned, to represent the undersigned at the Annual Meeting to be held
October 31, 2008 at 10:00 a.m., local time, at Molexs corporate headquarters, and at any
adjournments or postponements thereof, and to vote all of the shares of Common Stock (or Class B
Common Stock) of Molex held of record by the undersigned as of the close of business on September
2, 2008, which the undersigned would be entitled to vote if personally present at the Annual
Meeting with all the powers the undersigned would possess, on all matters set forth on the reverse
side.
The Proxies, in their discretion, are further authorized to vote (i) for the election of a
person to the Board of Directors if any nominee herein becomes unavailable to serve or for good
cause will not serve, and (ii) in their best judgment on any other matters that may properly come
before the Annual Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
ALL NOMINEES FOR DIRECTORS AND FOR ALL OTHER ITEMS.
PLEASE VOTE, DATE AND SIGN THIS PROXY AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
(Please complete and sign reverse side)
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