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Section 240.14a-12
GENERAL CABLE CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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GENERAL CABLE CORPORATION
4 TESSENEER DRIVE
HIGHLAND HEIGHTS, KENTUCKY 41076
TELEPHONE (859) 572-8000
Dear Shareholder:
You are cordially invited to attend the 2005 Annual Meeting of
Shareholders which will be held at 10:00 a.m., local time, Tuesday, May 10,
2005, at 4 Tesseneer Drive, Highland Heights, Kentucky.
You will find enclosed a notice of our 2005 Annual Meeting that
identifies the three proposals for shareholder action. We encourage you to
read the Proxy Statement carefully.
As you will note from the enclosed proxy material, the Board of
Directors recommends that you vote FOR each of the proposals set forth in the
Proxy Statement.
Sincerely,
/s/ Gregory B. Kenny
GREGORY B. KENNY
President and Chief Executive Officer
March 28, 2005
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| YOUR VOTE IS IMPORTANT. YOU MAY VOTE BY THE INTERNET OR TELEPHONE OR BY |
| SIGNING AND RETURNING THE PROXY CARD. PLEASE FOLLOW THE INSTRUCTIONS ON THE |
| PROXY CARD FOR THE VOTING METHOD YOU SELECT. |
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General Cable Corporation
4 Tesseneer Drive
Highland Heights, Kentucky 41076
Telephone (859) 572-8000
NOTICE OF THE 2005 ANNUAL MEETING OF SHAREHOLDERS
The 2005 Annual Meeting of Shareholders of General Cable Corporation
("General Cable") will be held on Tuesday, May 10, 2005, at 10:00 a.m., local
time, at 4 Tesseneer Drive, Highland Heights, Kentucky, to consider and act
upon the following proposals:
1. Election of two directors;
2. Ratification of the appointment of Deloitte & Touche LLP,
independent registered public accountants, to audit General
Cable's 2005 consolidated financial statements and internal
control over financial reporting;
3. Approval of General Cable Corporation 2005 Stock Incentive Plan;
and
4. Such other business as may properly come before the meeting.
Only shareholders of record at the close of business on March 11,
2005, are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
Robert J. Siverd
Secretary
March 28, 2005
PROXY STATEMENT
TABLE OF CONTENTS
VOTING PROCEDURES...........................................................1
ELECTION OF DIRECTORS (Proposal 1)..........................................2
Nominees for Director.......................................................2
The Board, its Committees and Meetings......................................5
REPORT OF AUDIT COMMITTEE...................................................7
BENEFICIAL OWNERSHIP OF SHARES BY MANAGEMENT...............................10
TRANSACTIONS WITH THE COMPANY..............................................11
SIGNIFICANT SHAREHOLDERS...................................................12
EXECUTIVE COMPENSATION.....................................................13
OPTION INFORMATION.........................................................15
REPORT OF COMPENSATION COMMITTEE...........................................18
STOCK PRICE PERFORMANCE GRAPH..............................................21
RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP TO AUDIT GENERAL
CABLE'S 2005 CONSOLIDATED FINANCIAL STATEMENTS AND INTERNAL CONTROL
OVER FINANCIAL REPORTING (Proposal 2)....................................22
APPROVAL OF GENERAL CABLE CORPORATION 2005 STOCK INCENTIVE PLAN
(Proposal 3).............................................................23
OTHER INFORMATION..........................................................32
APPENDIX A -- GENERAL CABLE AUDIT COMMITTEE CHARTER.......................A-1
APPENDIX B -- GENERAL CABLE CORPORATION 2005 STOCK INCENTIVE PLAN.........B-1
PROXY STATEMENT
The Board of Directors of General Cable Corporation ("General Cable" or
the "Company") is providing this Proxy Statement for the solicitation of
proxies from holders of outstanding common stock for the 2005 Annual Meeting
of Shareholders ("Annual Meeting") on May 10, 2005, and at any adjournment of
the meeting. The principal executive offices of General Cable are located at
4 Tesseneer Drive, Highland Heights, Kentucky 41076. General Cable is mailing
this Proxy Statement, proxy form, and General Cable's Annual Report to
Shareholders for 2004 to all shareholders entitled to receive notice and to
vote at the Annual Meeting beginning on or about April 15, 2005.
VOTING PROCEDURES
YOUR VOTE IS VERY IMPORTANT
Whether or not you plan to attend our Annual Meeting, please take the
time to vote either by the Internet or telephone using the instructions on the
proxy card or by completing and mailing the enclosed proxy card as soon as
possible. If you decide to vote using the proxy card, you must sign, date and
mail it and indicate how you want to vote. If you do not so indicate, your
proxy will be voted as recommended by the Board of Directors.
RECORD DATE
Holders of record of General Cable common stock, par value $0.01 per
share, at the close of business on March 11, 2005 (the "Record Date" will be
entitled to notice of the Annual Meeting and to vote at the Annual Meeting and
at any adjournments. At the Record Date, 39,408,419 shares of common stock
were issued and outstanding.
HOW TO REVOKE YOUR PROXY
If you later wish to revoke your proxy, you may do so by (1) sending a
written statement to that effect to the Secretary of General Cable at the
above address; (2) submitting a properly signed proxy having a later date; (3)
making an oral revocation by telephone using the telephone voting instructions
on the proxy card; or (4) voting in person at the Annual Meeting.
VOTE REQUIRED AND METHOD OF COUNTING VOTES
* NUMBER OF SHARES OUTSTANDING. At the close of business on
the Record Date, there were 39,408,419 shares of common
stock outstanding and entitled to vote at the Annual
Meeting.
* VOTE PER SHARE. You are entitled to one vote per share on
matters presented at the Annual Meeting. Shareholders do
not have cumulative voting rights in the election of
directors.
* QUORUM. A majority of outstanding shares, present or
represented by proxy, makes a quorum for the transaction of
business at the Annual Meeting. Abstentions and "broker non-
votes" (i.e., when a broker does not have authority to vote
on a specific issue) are counted as present for purposes of
determining a quorum.
-1-
* VOTE REQUIRED. The following is an explanation of the vote
required for each of the three items to be voted on at the
Annual Meeting:
PROPOSAL 1 ELECTION OF DIRECTORS
The nominees receiving the highest number of votes will be elected.
If you do not wish your shares to be voted for a nominee, you may withhold
votes using the telephone voting instructions on the proxy card or you may
withhold votes by indicating in the space provided on the proxy card.
PROPOSAL 2 RATIFICATION OF APPOINTMENT OF AUDITORS
The affirmative vote of a majority of shares present in person or by
proxy is required for approval of Proposal 2.
PROPOSAL 3 APPROVAL OF GENERAL CABLE CORPORATION 2005 STOCK INCENTIVE PLAN
The affirmative vote of a majority of shares present in person or by
proxy is required for approval of Proposal 3.
Abstentions will have the effect of a vote against Proposals 2 and 3.
Member firms of the New York Stock Exchange ("NYSE") have authority to vote on
Proposals 1 and 2 as routine items and need not decline to vote in the absence
of a voting directive from a shareholder. Under NYSE rules, member firms may
not vote on Proposal 3 absent a voting directive from a shareholder. Broker
non-votes will not affect the outcome of the vote on Proposal 3, unless the
votes otherwise cast constitute less than 50% of all shares entitled to vote
on the proposal.
DISCRETIONARY VOTING POWER
The Board knows of no other matters to be presented for shareholder
action at the Annual Meeting. In addition, on matters raised at the Annual
Meeting that are not covered by this Proxy Statement, the persons named in the
proxy card will have full discretionary authority to vote unless a shareholder
has followed the advance notice procedures discussed below under "Nominees for
Director." If any nominee for election as a director becomes unable to accept
nomination or election, which we do not anticipate, the persons named in the
proxy will vote for the election of another person recommended by the Board.
ELECTION OF DIRECTORS
(Proposal 1)
NOMINEES FOR DIRECTOR
Two directors will be elected at the 2005 Annual Meeting.
Under General Cable's Certificate of Incorporation, the Board is
divided into three classes of Directors serving staggered three-year terms.
Each class is to be as nearly equal in number as reasonably possible. Terms of
office for Directors were set up so that the initial term of office of the
Class I directors expired at the 1998 annual meeting; the initial term of
Class II directors expired at the 1999 annual meeting; and the initial term of
Class III directors expired at the 2000 annual meeting. This year, at the
2005 Annual Meeting, the term of the Class II directors expires. There are
currently two Class II directors.
-2-
Directors elected to succeed directors whose terms have expired have a term of
office lasting three years and until their successors are elected.
Set forth below is certain information relating to the persons who were
nominated by the Board of Directors on January 26, 2005, for reelection as
Class II directors at the Annual Meeting. Also set forth below is information
about Class I and Class III continuing directors. The information is based on
data furnished to General Cable by the individual directors. The new term of
office for each nominee runs from the 2005 Annual Meeting until the Annual
Meeting of Shareholders to be held in 2008 and until his successor shall have
been elected and qualified.
CLASS II DIRECTOR NOMINEES FOR ELECTION AT THE ANNUAL MEETING
-------------------------------------------------------------
[PHOTO] Mr. Kenny has served as President and Chief
Executive Officer of General Cable since
Gregory B. Kenny August 2001. He was President and Chief
Age 52 Operating Officer of General Cable from May
Director since 1997 1999 to August 2001. From March 1997 to May
President and Chief Executive 1999, he was Executive Vice President and
Officer of General Cable Chief Operating Officer of General Cable.
June 1994 to March 1997, he was Executive
Vice President of the subsidiary of General
Cable which was General Cable's immediate
predecessor. He is also a Director of Corn
Products International, Inc. (NYSE: CPO) and
IDEX Corporation (NYSE: IEX).
[PHOTO] Mr. Smialek is a private investor and
consultant. He was President and Chief
Robert L. Smialek Executive Officer of Applied Innovation Inc.
Age 61 (NASDAQ: AINN) from July 2000 to August 2002.
Director since 1998 From May 1993 to July 1999 he served as
Chairman of the Compensation President and Chief Executive Officer of the
Committee, Member of the Audit Insilco Corporation. Prior to 1993,
Committee and Corporate Mr. Smialek served as the Group President and
Governance Committee Chief Operating Officer of the Temperature and
Appliance Controls Group of Siebe, plc. He
was Group Vice President for the Tracor
Instruments Group from 1988 to 1990. For the
prior 19 years, Mr. Smialek worked for the
General Electric Company in various operations
management positions.
-3-
CLASS I CONTINUING DIRECTOR
---------------------------
[PHOTO] Mr. Welsh is currently President of Avalon
Capital Partners, LLC, an investment firm
John E. Welsh, III focused on private equity and venture capital
Age 54 investments. From October 2000 to December
Director since 1997 2002, he was a Managing Director of CIP
Nonexecutive Chairman Management LLC, the management company for
of the Board and Member of Continuation Investments Group Inc. From
the Audit Committee, November 1992 to December 1999, he served as
Compensation Committee and Managing Director and Vice-Chairman of the
the Corporate Governance Board of Directors of SkyTel Communications,
Committee Inc. and as a Director of the company from
September 1992 until December 1999. Prior to
1992, Mr. Welsh was a Managing Director in the
Investment Banking Division of Prudential
Securities, Inc.
CLASS III CONTINUING DIRECTORS
------------------------------
[PHOTO] Mr. Lawton has been President and Chief
Executive Officer of JohnsonDiversey, Inc.
Gregory E. Lawton since October 2000. From January 1999 until
Age 53 September 2000, he was President and Chief
Director since 1998 Operating Officer of Johnson Wax
Chairman of the Corporate Professional. Prior to joining Johnson Wax,
Governance Committee and Mr. Lawton was President of NuTone Inc., a
Member of the Audit subsidiary of Williams plc based in
Committee and Compensation Cincinnati, Ohio, from 1994 to 1998. From
Committee 1989 to 1994, Mr. Lawton served with Procter &
Gamble (NYSE: PG) where he was Vice President
and General Manager of several consumer product
groups. Mr. Lawton is a Director of Johnson
Outdoor Inc. (NASDAQ: JOUT).
-4-
[PHOTO] Mr. Omtvedt has been Senior Vice President
and Chief Financial Officer of Fortune
Craig P. Omtvedt Brands, Inc. (NYSE: FO) since 2000.
Age 55 Previously, he held positions with Fortune
Director since 2004 Brands as Senior Vice President and Chief
Chairman of the Audit Accounting Officer from 1998 to 1999; Vice
Committee and Member of President and Chief Accounting Officer from
the Corporate Governance 1997 to 1998; Vice President, Deputy
and Compensation Committees Controller and Chief Internal Auditor from
1996 to 1997; Deputy Controller from 1992 to
1996; and Director of Audit from 1989 to
1992. Before joining Fortune Brands, Mr.
Omtvedt worked for Pillsbury Company in
Minneapolis, Minnesota from 1985 to 1989 in
various audit and controller roles.
THE BOARD, ITS COMMITTEES AND MEETINGS
The General Cable Board of Directors meets regularly during the year.
In 2004, the Board of Directors held six regular meetings and one special
meeting. The Board expects directors to attend the Annual Meeting and in
2004, all directors attended the Annual Meeting. The Board currently has five
members and there is one vacant seat as a result of a resignation. The Board
has determined that Messrs. Lawton, Omtvedt, Smialek and Welsh, who are not
employees of the Company, are independent under the rules issued by the NYSE.
General Cable has three standing Committees, which are the Audit Committee,
the Compensation Committee, and the Corporate Governance Committee which meet
regularly. In 2004, each director attended at least 75% of the total number
of meetings of the Board of Directors and of the committees on which he
served.
The Board generally will have six regularly scheduled meetings a year
for the non-management directors without management present. These sessions
usually take place around regularly scheduled Board meetings. The
Nonexecutive Chairman will preside at such meetings. The non-management
directors also may meet without management present at other times as are
determined by the Nonexecutive Chairman.
Shareholders may communicate with the Board, including the Nonexecutive
Chairman and the independent directors on matters of interest. The Company
has established a special email address and telephone number for these
communications which are posted on the Company's website (www.generalcable.com)
via the Investor Information page. Shareholders may also contact the directors
anonymously. Communications to these directors initially will be reviewed by
the Secretary and routed to the Chairman or a Board Committee as appropriate.
The current fee schedule for General Cable directors, paid only to
directors who are not officers or employees of General Cable, is as follows:
annual retainer fee of $85,000, payable at least one-half in common stock of
General Cable (which must be deferred into the Company's Deferred Compensation
-5-
Plan) and up to one-half in cash (which may be deferred into the Company's
Deferred Compensation Plan). The Chairman of the Audit Committee also will
receive an annual retainer fee of $10,000 in cash. Outside directors are
reimbursed for related out-of-pocket expenses for attendance at board and
committee meetings. In order to be eligible to receive the retainer, a
director must have attended at least 75% of the board meetings in the prior
year, unless attendance was excused by the Chairman.
Each outside director is eligible to receive an annual grant of 2,500
options to acquire General Cable common stock at the stock's fair market value
when granted. These options generally vest over three years. In January
2005, the Compensation Committee awarded each outside director 2,500 options
on common stock as part of their compensation for services.
In addition, John E. Welsh, III, who has served as Nonexecutive Chairman
of the Board since August 2001, is entitled to annual compensation for his
services as Chairman. This additional compensation is equal to the amount
paid to non-employee directors for regular director service. As part of his
compensation, the Compensation Committee in January 2005 also awarded
Mr. Welsh 2,500 options on General Cable common stock.
Shares of common stock issued to pay director retainer fees and awards
are drawn from the 1997 Stock Incentive Plan. If stockholders approve the
General Cable Corporation 2005 Stock Incentive Plan (see Proposal 3), all
future issuances and awards will be drawn from the shareholder-approved 2005
Stock Incentive Plan.
The membership and functions and other relevant information relating to
each committee are described below:
Audit Committee: Consists of Craig P. Omtvedt (Chairman), Gregory E.
Lawton, Robert L. Smialek and John E. Welsh, III, who are independent under
the rules of the NYSE. The Committee assists in Board oversight of the
integrity of the Company's financial statements, the Company's compliance with
legal requirements and performance of the Company's internal audit functions
and independent auditors. This Committee also determines the public accounting
firm that General Cable retains as its independent auditor. None of the
members of the Committee are officers or employees of General Cable. The
Audit Committee met eight times in 2004. The Board of Directors has
determined that each of the members of the Committee named above is an Audit
Committee financial expert under rules of the Securities and Exchange
Commission ("SEC").
The Audit Committee has adopted formal preapproval policies and
procedures relating to the services provided by its independent auditor
consistent with requirements of the SEC Rules. Under the Company's
preapproval policy, all audit and permissible non-audit services provided by
the independent auditors must be preapproved. The Audit Committee will
generally preapprove a list of specific services and categories of services,
including audit, audit-related and other services, for the upcoming or current
fiscal year. Any services that are not included in the approved list of
services must be separately preapproved by the Audit Committee. The Committee
delegates to the Chairman the authority to approve permitted audit and non-
audit services to be provided by the independent auditor between Committee
meetings for the sake of efficiency. The Committee Chairman reports any such
interim preapproval at the next meeting of the Committee.
-6-
REPORT OF THE AUDIT COMMITTEE
General Cable's Audit Committee is furnishing the following report
under the rules of SEC:
The Audit Committee provides oversight relating to the integrity of the
Company's financial reporting process, its compliance with legal and
regulatory requirements and the quality of its internal and external audit
processes. The role and responsibilities of the Audit Committee are set forth
in a written Charter adopted by the Board, which is attached as Appendix A to
this Proxy Statement. The Audit Committee Charter is also posted on the
Company's website and is accessible via the Investor Information page. The
Audit Committee reviews its Charter annually.
The Audit Committee is responsible for overseeing the Company's overall
financial reporting process. In fulfilling its responsibilities for calendar
2004, the Audit Committee:
* Reviewed and discussed the audited financial statements for the year
ended December 31, 2004, with management and Deloitte & Touche LLP,
the member firms of Deloitte & Touche Tohmatsu, and their respective
affiliates (together, the "Deloitte Entities"), the Company's
independent auditors;
* Discussed with the Deloitte Entities the matters required to be
discussed by Statement on Auditing Standards No. 61, as amended,
relating to the conduct of the audit; and
* Received written disclosures and the letter from the Deloitte
Entities regarding its independence as required by Independence
Standards Board Standard No. 1. The Audit Committee discussed with
the Deloitte Entities their independence; and
* Exercised oversight in other areas relating to the financial
reporting and audit process that the Committee determined
appropriate, including the Company's compliance program relating to
Section 404 of the Sarbanes-Oxley Act and the Company's risk
assessment and risk management programs.
Based on the Audit Committee's review of the audited financial
statements and discussions with management and the Deloitte Entities, the
Audit Committee recommended to the Board that the audited financial statements
be included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2004, for filing with the SEC.
Audit Committee:
Craig P. Omtvedt, Chairman
Gregory E. Lawton
Robert L. Smialek
John E. Welsh, III
COMPENSATION COMMITTEE: Consists of Robert L. Smialek (Chairman),
Gregory E. Lawton, Craig P. Omtvedt, and John E. Welsh, III. The Compensation
Committee reviews and acts on General Cable's executive compensation and
employee benefit plans and programs, including their establishment,
modification and administration. It also determines the compensation of the
Chief Executive Officer and other executive officers. None of the members are
officers or employees of General Cable; all are independent under the rules of
the NYSE. The Compensation Committee's charter is posted on the Company's
website via the Investor Information page. The Compensation Committee met
three times in 2004.
-7-
CORPORATE GOVERNANCE COMMITTEE: Consists of Gregory E. Lawton
(Chairman), Craig P. Omtvedt, Robert L. Smialek and John E. Welsh, III. The
Corporate Governance Committee considers and recommends nominees for election
as directors, appropriate director compensation, and the membership and
responsibilities of Board committees. It also conducts, in conjunction with
the Compensation Committee, an annual performance evaluation of the Chief
Executive Officer and sets performance objectives for the CEO. The Corporate
Governance Committee also reviews management development and succession
policies and practices. A copy of the Corporate Governance Committee's
charter is available on the Company's website via the Investor Information
page. None of the members of the Corporate Governance Committee are officers
or employees of General Cable; all are independent under the rules of the
NYSE. The Corporate Governance Committee met four times in 2004.
The Corporate Governance Committee as noted is responsible for
considering and recommending nominees for election as director. In carrying
out its duties, the Corporate Governance Committee engages third-party search
firms to assist in identifying and assessing qualifications of director
candidates. Director qualifications and related responsibilities are set
forth in the Company's own Corporate Governance Principles and Guidelines.
Under these Guidelines, the Corporate Governance Committee expects that
directors of the Company should possess the highest personal and professional
values, ethics, and integrity and should be committed to represent and advance
the long-term interests of the Company's shareholders. Directors must have an
inquisitive and objective perspective, practical experience and maturity of
judgment. General Cable aims to have a Board representing diverse experience
in business, finance, technology, and other disciplines relevant to the
Company's business activities.
Directors of our Company are also expected to attend all scheduled Board
and committee meetings and to be prepared for the meetings by reviewing the
materials provided to them in advance of the meetings. Directors must be
willing to devote sufficient time to carry out their duties and
responsibilities effectively and should be committed to serve on the Board for
an extended period of time. Directors should offer their resignation in the
event of any significant change in their personal circumstances, including a
change in their principal job responsibilities that would adversely affect
their ability to fulfill their duties and responsibilities as directors.
Further, directors who also serve as CEO or in equivalent positions should not
serve on more than two boards of public companies in addition to the General
Cable Board, and other directors should not serve on more than four other
boards of public companies. Current positions in excess of those limits may
be maintained unless the Board determines that doing so would impair the
director's service on the Company's Board. Lastly, the Board does not believe
that arbitrary term limits on directors' service are appropriate, nor does it
believe that directors should expect to be renominated annually until they
reach retirement age. The Board does believe that 70 is an appropriate
retirement age for outside directors. However, the Board will utilize its own
self-evaluation process as an important determinant of Board tenure.
Each year, the Corporate Governance Committee recommends a slate of
nominees to the Board which proposes nominees to the shareholders for election
to the Board. In connection with its recommendations, the Corporate
Governance Committee considers whether the director candidates have the
requisite qualifications and skills that are identified above and the
commitment and willingness to serve on the Board in accord with the Company's
Corporate Governance Principles and Guidelines.
The Corporate Governance Committee also will consider shareholder
suggestions for nominees when submitted in accord with the provisions of our
Bylaws. Under General Cable's Bylaws, shareholders may present any proposals
for shareholder vote, including the election of directors, by following the
advance notice procedure described below. Under this procedure, the only
candidates eligible for election at a meeting of shareholders are candidates
nominated by or at the direction of the Board of Directors and
-8-
candidates nominated at the meeting by a shareholder. Shareholders will be
given a reasonable opportunity at the Annual Meeting to nominate candidates
for the office of director. The Bylaws require that a shareholder wishing to
nominate a director candidate must first give the Secretary of General Cable a
written nomination notice at least sixty (60) days before the date of the
Annual Meeting.
The nomination notice must set forth the following information as to
each individual nominated:
* The name, date of birth, business address and residence address of the
individual;
* The business experience during the past five years of the nominee,
including his or her principal occupations and employment during such
period, the name and principal business of any corporation or other
organization in which those occupations and employment were carried on,
and additional information about the nature of his or her
responsibilities and level of professional competence which permits an
assessment of the candidate's prior business experience;
* Whether the nominee is or has ever been at any time a director, officer
or owner of 5% or more of any class of capital stock, partnership
interests or other equity interest of any corporation, partnership or
other entity;
* Any directorships held by the nominee in any company with a class of
securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended, or covered by Section 15(d) of that Act or any
company registered as an investment company under the Investment
Company Act of 1940, as amended; and
* Whether, in the last five years, the nominee has been convicted in a
criminal proceeding or has been subject to a judgment, order, finding
or decree of any federal, state or other governmental entity concerning
any violation of federal, state or other law, or any proceeding in
bankruptcy, which conviction, order, finding, decree or proceeding may
be material to an evaluation of the ability or integrity of the
nominee.
The nomination notice must also provide the following information about
the person submitting the nomination notice and any person acting in concert
with that person: (1) the name and business address of that person, (2) the
name and address of that person as they appear in the Corporation's books, and
(3) the class and number of General Cable shares that are beneficially owned
by that person. The nomination notice must include the nominee's signed
written consent to being named in a proxy statement as a nominee and to serve
as a director if elected. If the presiding officer at any shareholder's
meeting determines that a nomination was not made in accord with these
procedures, he or she will so declare to the meeting and the defective
nomination will be disregarded.
The Board of Directors recommends that shareholders vote FOR the
election of the nominees for director.
-9-
BENEFICIAL OWNERSHIP OF SHARES BY MANAGEMENT
The following table sets forth information, as of March 1, 2005,
concerning the beneficial ownership of General Cable's common stock by (i)
each director and director nominee of General Cable; (ii) each executive
officer of General Cable named in the Summary Compensation Table; and (iii)
all directors and executive officers of General Cable as a group. This
information is based on data furnished by the named persons. The beneficial
owners of common stock listed below have sole investment and voting power with
respect to these shares, except as otherwise indicated.
SHARE OWNERSHIP TABLE
Shares Beneficially Owned (1)
-----------------------------
Name of Beneficial Owner Number Percent (2)
- ------------------------------------------ ------------- -----------
Gregory B. Kenny, Nominee for Director and 499,483 (3) 1.26
Officer
Gregory E. Lawton, Director 14,044 (4) *
Craig P. Omtvedt, Director 3,000 (5) *
Robert J. Siverd, Officer 231,428 (6) *
Robert L. Smialek, Nominee for Director 17,044 (7) *
Christopher F. Virgulak, Officer 176,510 (8) *
John E. Welsh, III, Director 94,673 (9) *
All directors and officers as a group 1,036,182 2.57
- --------------------------
* Means less than 1.0%
<FN>
(1) Beneficial ownership is determined under the rules of the SEC and includes
voting or investment power with respect to the shares.
(2) The percentages shown are calculated based on the total number of shares
of common stock which were outstanding at the Record Date (39,408,419
shares of common stock).
(3) Includes 2,100 shares held by Mr. Kenny as custodian for his children and
1,167 shares of restricted stock awarded to Mr. Kenny under the General
Cable 1997 Stock Incentive Plan as to which he has voting power; and
473,000 shares covered by options in common stock which may be exercised
within sixty (60) days of March 1, 2005. Excludes 443,449 shares of
restricted and unrestricted common stock deferred under the General Cable
Deferred Compensation Plan.
(4) Includes 12,167 shares covered by stock options which may be exercised by
Mr. Lawton within sixty (60) days of March 1, 2005. Excludes 22,177
shares of common stock deferred under the General Cable Deferred
Compensation Plan.
(5) Excludes 1,827 shares of common stock granted to Mr. Omtvedt and deferred
under the General Cable Deferred Compensation Plan.
(6) Includes 173,000 shares covered by stock options which may be exercised by
Mr. Siverd within sixty (60) days of March 1, 2005. Excludes 79,096
shares of restricted and unrestricted common stock deferred under the
General Cable Deferred Compensation Plan.
-10-
(7) Includes 12,167 shares covered by stock options which may be exercised by
Mr. Smialek within sixty (60) days of March 1, 2005. Excludes 22,177
shares of common stock deferred under the General Cable Deferred
Compensation Plan.
(8) Includes 175,000 shares covered by stock options which may be exercised by
Mr. Virgulak within sixty (60) days of March 1, 2005. Excludes 128,218
shares of restricted and unrestricted common stock deferred under the
General Cable Deferred Compensation Plan.
(9) Includes 53,500 shares covered by stock options which may be exercised by
Mr. Welsh within sixty days of March 1, 2005. Excludes 76,150 shares of
common stock deferred under the General Cable Deferred Compensation Plan.
</FN>
SHARE OWNERSHIP GUIDELINES FOR DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors, on March 28, 2005, adopted Share Ownership
Guidelines (the "Guidelines") for Directors and the Executive Officers listed
in the Summary Compensation Table. Under the approved Guidelines, Directors
will be required to obtain ownership of shares of common stock equal to three
(3) times the amount of the cash retainer paid to non-employee directors for
their service as directors within five (5) years from adoption or from their
date of appointment. (See the Board, its Committees and Meetings on pages 5-
6.) All non-employee directors with more than five (5) years of service meet
these Guidelines. In addition, Executive Officers are required to obtain
ownership of shares of common stock equal to a multiple of base salary within
five (5) years of the adoption of the Guidelines or from the date of election
in case of a new Executive Officer, as follows: Chief Executive Officer,
multiple of five (5) times base salary; other Executive Officers, multiple of
three (3) times base salary. Each of the listed Executive Officers has
ownership of common stock exceeding these Guidelines, which the Board believes
represent prevailing sound practice based in part on the advice of the
independent consultant to the Compensation Committee. For purposes of the
Guidelines, shares which qualify to be included are common shares acquired
individually with personal funds, grants and awards under incentive plans, and
shares held by the individuals in Company retirement and savings and deferred
compensation plans. Options on common stock are not included for this
purpose. The Compensation Committee of the Board intends to review the
Guidelines annually to determine if the requirements are being met, and to
consider whether action should be taken to address any non-compliance,
including involuntary payment of incentive awards in restricted common stock
at the discretion of the Compensation Committee.
TRANSACTIONS WITH THE COMPANY
In October 1998, the Board of Directors approved the Stock Loan
Incentive Plan ("SLIP"). Under the SLIP, executive officers and General Cable
key employees were provided the opportunity to purchase General Cable common
stock worth an aggregate of $6.12 million in the open market using funds
loaned by the Company. Loans made were full-recourse loans which matured in
five years when they were required to be repaid with accrued interest. The
loans bore interest at 5.12%, the applicable federal rate provided by the
Internal Revenue Service in October 1998. Dividends on common stock purchased
by participants were applied to reduce interest on the loans. In addition,
participants were awarded a long-term incentive of one restricted stock unit
for each share of stock purchased, which award vested in five years.
On June 10, 2003, Messrs. Kenny, Virgulak and Siverd each repaid in full
their outstanding loans from the Company under the SLIP in the respective
amounts of $752,909, $501,914, and $501,914; the Plan is no longer in effect
with respect to these executive officers. The Company accepted as partial
-11-
payment for the loans common stock owned by the executive officers and
restricted stock units previously awarded under the SLIP.
SIGNIFICANT SHAREHOLDERS
The following table sets forth information about each person known to
General Cable to be the beneficial owner of more than 5% of General Cable's
common stock. General Cable obtained this information from its records and
statements filed with the SEC under Sections 13(d) and 13(g) of the Securities
Exchange Act of 1934 and received by General Cable through the Record Date.
Shares Beneficially Owned (1)
-----------------------------
Name and Address of Beneficial Owner Number Percent (2)
- ------------------------------------ ------------- -----------
Fidelity Management & Research Corp. 4,977,300 (3) 12.63
82 Devonshire St.
Boston, MA 02109
Pzena Investment Management, LLC 2,753,400 (4) 6.98
120 West 45th Street
New York, NY 10036
Artisan Partners Limited Partnership 2,605,900 (5) 6.61
875 East Wisconsin Avenue, Suite 800
Milwaukee, WI 53202
- -----------------------
<FN>
(1) Beneficial ownership is determined under the rules of the SEC and
includes voting or investment power with respect to the shares.
(2) The percentages shown are calculated based on the total number of shares
of common stock which were outstanding at the Record Date (39,408,419
shares of common stock).
(3) These shares of General Cable common stock are owned by FMR Corp. as a
parent holding company, Fidelity Management and Research Company
("Fidelity"), Fidelity Low Priced Stock Fund and Edward C. Johnson 3d
and members of his family. Fidelity beneficially owns 5,077,300 shares
or 12.63% of the common stock of General Cable by reason of its acting
as investment advisor to various registered investment companies.
Edward C. Johnson 3d, FMR Corp., through its control of Fidelity, has
sole power to dispose of 5,077,300 shares of General Cable common stock.
Members of the Johnson family are the predominant owners of Class B
shares of FMR Corp. common stock representing about 49% of the voting
power of FMR Corp.
(4) These shares of General Cable common stock are owned by Pzena Investment
Management, LLC ("Pzena"). Pzena has sole voting power with respect to
2,568,350 shares and sole dispositive power with respect to 2,753,400
shares of General Cable common stock.
(5) These shares of General Cable common stock are owned by Artisan Partners
Limited Partnership ("Artisan"). Artisan has sole voting power with
respect to 2,605,900 shares and sole dispositive power with respect to
2,605,900 shares of General Cable common stock.
</FN>
-12-
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation
paid to the Chief Executive Officer and the two other most highly compensated
executive officers of General Cable (including its subsidiaries) for services
rendered in all capacities for fiscal years 2002, 2003 and 2004.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ --------------------
RESTRICTED
STOCK AND
FISCAL OTHER ANNUAL UNIT OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) AWARDS (2) (SHARES) COMPENSATION (3)
- ---------------------------- ------ -------- -------- ---------------- ---------- -------- ----------------
Gregory B. Kenny 2004 $624,135 $370,580 $ 0 $1,027,496 43,331 $42,937
President and 2003 550,000 348,250 745,000 900,790 0 15,518
Chief Executive Officer 2002 550,000 0 0 0 330,000 48,028
Christopher F. Virgulak 2004 $341,843 $117,500 $ 0 $264,196 11,141 $17,491
Executive Vice President, 2003 328,388 152,171 495,000 228,430 0 6,125
Chief Financial Officer and 2002 326,122 0 0 0 85,000 21,267
Treasurer
Robert J. Siverd 2004 $325,353 $112,000 $ 0 $251,444 10,604 $18,350
Executive Vice President, 2003 312,750 148,496 495,000 215,500 0 6,028
General Counsel and Secretary 2002 310,592 0 0 0 60,000 20,588
________________________
<FN>
(1) The amounts listed represent awards under three-year retention
arrangements approved by the Board of Directors in July 2003. Under the
terms of the arrangements, each executive received a cash payment in July
2003, in consideration for services to be rendered through July 2006. See
also Employment Agreements.
(2) Award amounts for 2004 represent the value of restricted common stock
granted in January 2005 subject to time-based vesting ratably over a five-
year period. Award amounts for 2003 represent the value of restricted
common stock granted in January 2004 subject to time and performance
vesting conditions over a six-year period.
The number and aggregate value of restricted stock holdings of executive
officers at December 31, 2004, based on the year-end share price of $13.85
were: Mr. Kenny, 100,167 shares, $1,387,313; Mr. Virgulak, 37,246 shares,
$515,857; and Mr. Siverd, 15,000 shares, $207,750. Dividends are payable
on the restricted common stock only if declared by the Board of Directors.
No dividends have been declared and paid on the Company's common stock
since the third quarter of 2002.
(3) Includes (a) imputed income from life insurance in the amount $1,518 in
2004, $1,518 in 2003, and $990 in 2002 for Mr. Kenny; $990 in 2004, $990
in 2003, and $990 in 2002 for Mr. Virgulak; and $2,838 in 2004, $1,518
in 2003, and $1,518 in 2002 for Mr. Siverd; and (b) employer matching
and additional contributions pursuant to General Cable's retirement and
savings and excess benefit plans in the amounts $40,419 in 2004, $14,000
in 2003, and $47,038 in 2002 for Mr. Kenny; $16,501 in 2004, $5,135 in
2003, and $20,277 in 2002 for Mr. Virgulak; and $15,492 in 2004, $4,510
in 2003, and $19,070 in 2002 for Mr. Siverd.
</FN>
-13-
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENTS
Employment Agreements
Below are summary descriptions of the separate employment agreements
between General Cable (and certain subsidiaries) and Messrs. Kenny,
Virgulak and Siverd as amended (each an "Employment Agreement").
Messrs. Kenny, Virgulak and Siverd have Amended and Restated Employment
Agreements with three-year terms beginning October 18, 1999 with automatic
one-year extensions unless General Cable or the executives elect not to
extend. Each executive earns a base salary approved by the Compensation
Committee and has an opportunity to earn a bonus for attainment of specified
performance goals approved by the Compensation Committee under the 1999
Incentive Bonus Program and any performance-based bonus program for senior
executives applicable after 1999. Upon termination of employment, each
executive will be entitled to any bonus deferred for any year prior to the
year in which termination of employment occurs in addition to any accrued and
unpaid base salary and benefits under the existing plans (other than severance
benefits). Furthermore, in case of a termination due to death or Disability,
by General Cable other than for Cause or by the executive for Good Reason (as
defined), the executive receives immediate vesting and lapsing of restrictions
on unvested stock awards under the applicable agreements. In case of a
termination by General Cable other than for Cause or by the executive for Good
Reason, the Employment Agreement also provides for a payment equal to a
multiple (the "Multiplier") of the sum of their base salary and the target
bonus under the Annual Incentive Plan applicable to the year termination
occurs subject to a minimum target. The executives are also entitled to their
continuation as a participant in General Cable's executive health and welfare
benefit plans for the number of years represented by the Multiplier.
The differences among these agreements are as follows: Mr. Kenny serves
as President and Chief Executive Officer, is entitled to an annual salary of
$660,000, and has a Multiplier of 3. Mr. Virgulak serves as Executive Vice
President, Chief Financial Officer and Treasurer, is entitled to an annual
salary of $352,260 and has a Multiplier of 2. Mr. Siverd serves as Executive
Vice President, General Counsel and Secretary, is entitled to an annual salary
of $335,265, and has a Multiplier of 2.
In July 2003, each Executive Officer entered into an amendment to his
Employment Agreement related to the retention awards in the Summary
Compensation Table. The amendment provides that the amount of the retention
award is earned one-third each year for each full year of employment after
July 2003, and that if the executive's employment were terminated at his
option other than for Good Reason (or under the Change-in-Control Agreement
described below), the executive will be required to repay the unearned portion
of the retention award.
Change-in-Control Agreements
Below are summary descriptions of the Amended and Restated
Change-in-Control Agreements between General Cable and each of Messrs. Kenny,
Virgulak and Siverd dated April 28, 2000 (the "Change-in-Control Agreements").
The Change-in-Control Agreements provide benefits if the executive's
employment is terminated by General Cable or General Cable's subsidiaries or
by General Cable's successor without Cause (as defined). Benefits are also
payable if the executive terminates his employment with General Cable or
General Cable's subsidiaries or with General Cable's successor for any one of
certain specified events detrimental to the executive ("Good Reason") and the
termination occurred within six months before, or, in the case of Messrs.
Virgulak or Siverd, within two years after, or, in
-14-
the case of Mr. Kenny, within three years after, any one of certain specified
events producing a change in control of General Cable (a "Change-in-Control").
In that case, the executive would receive a payment equal to a specified
multiple of the sum of (1) the executive's annual base salary at the time of
the termination of the executive's employment (or, in the case of a termination
of employment for Good Reason based on a reduction of his annual base salary,
the annual base salary in effect immediately prior to such reduction) and (2)
the executive's target annual bonus applicable to the year in which employment
is terminated or the year in which the Change-in-Control occurs, whichever is
greater. There is a fixed minimum Annual Incentive Plan percentage target for
each executive. In addition, General Cable or its successor agreed to continue
the executive's participation in General Cable-sponsored executive health and
welfare benefit plans until the earlier of the same specified multiple of 12
months following the date of the executive's termination of employment or the
date the executive receives equivalent coverage and benefits under the plans
of a subsequent employer. The multiples were as follows: Mr. Kenny -- three
times; Mr. Virgulak and Mr. Siverd -- two times. On a Change-in-Control,
restrictions on any unvested awards will become fully vested and immediately
exercisable under the 1997 Stock Incentive Plan.
OPTION INFORMATION
OPTION GRANTS IN LAST FISCAL YEAR(1)
Below is a table with information on option grants for fiscal 2004 made
by General Cable to the executive officers listed in the Summary Compensation
Table.
Potential Realizable
Values at Assumed
Number of Percent of Annual Rates of Stock
Securities Total Options Price Appreciation for
Underlying Granted to Exercise Option Term (2)
Options Employees in or Base Expiration ----------------------
Name Granted Fiscal Year Price Date 5% 10%
- ----------------------- ---------- ------------- -------- ---------- ------- --------
Gregory B. Kenny 43,331 13.71 $11.94 1/26/2015 325,849 706,695
Christopher F. Virgulak 11,141 3.52 $11.94 1/26/2015 83,780 180,930
Robert J. Siverd 10,604 3.35 $11.94 1/26/2015 79,742 172,209
- ------------
<FN>
(1) The grants above were a part of the executive officers' compensation for
performance in 2004 and were made under the Company's 1997 Stock
Incentive Plan.
(2) The Company selected potential realizable values at assumed 5% and 10%
rates as provided in the SEC rules. The values shown, therefore, are
not intended as a forecast of the Company's common stock price in the
future.
</FN>
-15-
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Shown below is a table setting forth information concerning unexercised
options held by the executive officers listed in the Summary Compensation
Table at December 31, 2004. To the Company's knowledge, none of these
officers exercised any General Cable stock options during 2004.
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT FISCAL MONEY OPTIONS AT FISCAL
SHARES YEAR-END YEAR-END (1)
ACQUIRED ON VALUE ------------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ------------ -------- ----------- ------------- ----------- -------------
Gregory B. Kenny 0 0 323,000 330,000 1,329,600 4,570,500
Christopher F. Virgulak 0 0 175,000 85,000 526,300 1,731,250
Robert J. Siverd 0 0 173,000 60,000 498,600 1,385,000
<FN>
(1) The closing price of General Cable's common stock on the NYSE on
December 31, 2004, was $13.85 per share. Values were calculated under
the rules of the SEC.
</FN>
EQUITY COMPENSATION PLANS
The following table sets forth information about General Cable's equity
compensation plans as of December 31, 2004.
NUMBER OF WEIGHTED- NUMBER OF SECURITIES
SECURITIES TO BE AVERAGE REMAINING AVAILABLE FOR
ISSUED UPON EXERCISE FUTURE ISSUANCE UNDER
EXERCISE OF PRICE OF EQUITY COMPENSATION
OUTSTANDING OUTSTANDING PLANS (EXCLUDING SECURITIES
OPTIONS OPTIONS REFLECTED IN FIRST COLUMN)
----------------- ----------- ---------------------------
Shareholder approved plan:
1997 Stock Incentive Plan (1) 2,229,000 $12.07 569,000
Non-shareholder approved plan:
2000 Stock Option Plan 1,057,000 7.80 278,000
--------- ------ -------
Total 3,286,000 $10.70 847,000
--------- ------ -------
--------- ------ -------
<FN>
(1) Excludes matching restricted stock units and unrestricted common stock
of 82,932 and 1,410,686, respectively, awarded through December 31,
2004.
The 1997 Stock Incentive Plan authorizes a maximum of 4,725,000 shares,
options or units of common stock to be granted. Stock options are
granted to employees selected by the Compensation Committee of the Board
or the Chief Executive Officer at prices which are not less than the
closing market price on the date of grant. The Compensation Committee
(or Chief Executive Officer) has authority to set all the terms of each
grant. The majority of the options granted under the plan expire in 10
years and become fully exercisable ratably over three years of continued
employment or become fully exercisable after three years of continued
employment. Restrictions on the majority of shares awarded to employees
under the Plan expire ratably over a three-year period or expire after
six years from the date of grant or expire ratably from the second
anniversary to the sixth anniversary of the grant. Restricted stock
units were awarded to
-16-
employees in November 1998 as part of the Stock Loan Incentive Plan,
which is no longer in effect as to current employees.
The 2000 Stock Option Plan authorizes a maximum of 1,500,000 non-
qualified options to be granted. No other forms of award are authorized
under this plan. Stock options are granted to employees selected by the
Compensation Committee of the Board or the Chief Executive Officer at
prices which are not less than the closing market price on the date of
grant. The Compensation Committee (or the Chief Executive Officer) has
authority to set all the terms of each grant. The majority of the
options granted under the Plan expire in 10 years and become fully
exercisable ratably over three years of continued employment or become
fully exercisable after three years of continued employment. See
Proposal 3.
</FN>
PENSION PLAN BENEFIT TABLE
Set forth below is a pension table showing estimated annual benefits
payable upon retirement under General Cable's retirement plans.
YEARS OF SERVICE
-------------------------
REMUNERATION (AVERAGE OF THREE 20 OR
HIGHEST ANNUAL COMPENSATION LEVELS) 10 15 MORE
- ----------------------------------- ------- ------- -------
450,000 112,500 168,750 225,000
500,000 125,000 187,500 250,000
550,000 137,500 206,250 275,000
600,000 150,000 225,000 300,000
650,000 162,500 243,750 325,000
700,000 175,000 262,500 350,000
750,000 187,500 281,250 375,000
800,000 200,000 300,000 400,000
850,000 212,500 318,750 425,000
900,000 225,000 337,500 450,000
950,000 237,500 356,200 475,000
Effective January 1, 2000 the Company adopted a defined benefit
Supplemental Executive Retirement Plan (the "SERP") to cover key executives of
the Company. The SERP generally provides for a target retirement benefit
equal to 2.5% of final average pay times years of credited service (not
greater than 20) to be paid upon retirement from the Company. The actual SERP
benefit is the excess, if any, of the target benefit over the sum of (i) the
annuity equivalent of the vested portion of employer contributions under
General Cable's Retirement and Savings Plan (the "Retirement Plan") and the
Benefit Equalization Plan (the "Equalization Plan") for the account of such
employee (plus or minus aggregate investment gains or losses thereon)
including employer provided matching contributions, (ii) amounts payable under
the frozen defined benefit Retirement Income Guarantee Plan (the "RIGP"), and
(iii) 50% of the estimated age 65 retirement benefit payable under the Social
Security Act. For purposes of the SERP, final average pay is defined as the
average of the highest three consecutive years of compensation in the last
five years. SERP compensation includes base salary plus cash incentive
compensation, other forms of incentive bonuses and amounts deferred under the
Retirement Plan. Service is credited under the Plan for the number of years
and months of employment with the Company and its subsidiaries. In addition,
service with a prior employer may also be recognized. If prior employer
service is credited the target benefit is also offset for prior employer
benefits attributable to that service.
-17-
Under the SERP, participants have the right to elect a distribution
option. The normal form is a life annuity, but the participant may elect (by
December 31 of the year which is at least two years prior to the year in which
the participant terminates employment) among these options: joint and 100%
survivor annuity, joint and 50% survivor annuity, ten year certain and life
annuity, three annual installments, or single lump sum. The Committee
appointed by the Board of Directors which administers the SERP must approve in
advance of any request for a single lump sum distribution.
General Cable terminated its former defined benefit plan as of December
31, 1985 and adopted the defined benefit RIGP as of January 1, 1986. For
persons hired on or before January 1, 1986, the RIGP generally provides for an
additional retirement benefit equal to the amount, if any, by which the total
of the annuity equivalent of the employees accrued benefit under the former
retirement plan at December 31, 1985, plus the annuity equivalent of the
vested portion of General Cable's contributions under General Cable's
Retirement Plan on the account of such employee (plus or minus aggregate
investment gains or losses thereon) is less than the retirement benefit that
the employee would have received if the former retirement plan had continued.
The years of service, average compensation and social security entitlement
used in calculating the retirement benefit for each participant were frozen as
of December 31, 1993. Any compensation, years of employment or contributions
to a participant's Retirement Plan after that date are not included in the
benefit calculation.
General Cable's Equalization Plan generally makes up certain reductions
caused by Internal Revenue Code of 1986 limitations in the annual retirement
benefit determined pursuant to the RIGP and in General Cable's contributions
on behalf of an employee pursuant to the Retirement Plan. Those amounts not
payable under the RIGP, the former retirement plan, or the Retirement Plan due
to such limitations would be payable under the Equalization Plan.
Estimated annual benefits under the SERP benefit formula are illustrated
in the table above. The amounts were calculated under the single life annuity
option form of pension, payable to participants at the normal retirement age
of 65. The amounts shown in the table would be reduced by the annuity
equivalent of the vested portion of General Cable's contributions under
General Cable's Retirement Plan and the Equalization Plan, including employer
provided matching contributions, and 50% of the estimated age 65 retirement
benefit payable under the Social Security Act.
Messrs. Kenny, Virgulak and Siverd have 22, 17, and 21 full credited
years, respectively, with General Cable and its subsidiaries, under the SERP
(including any prior employer service credited). Mr. Kenny and Mr. Siverd have
12 and 11 full credited years of service, respectively, with General Cable and
its subsidiaries, under the RIGP and the Equalization Plan, which represent a
carryover of their years of service with The Penn Central Corporation. All
listed executive officers are 100% vested under the Retirement Plan and
Equalization Plan. Mr. Kenny and Mr. Siverd are 100% vested under the RIGP.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
General Cable has established a Compensation Committee (the
"Committee"), whose members are four independent directors. This Committee is
responsible for establishing the Company's compensation policy and making
decisions regarding compensation for the Chief Executive Officer and the other
named executive officers, including approving their base salaries and bonus
amounts, target financial performance levels under annual incentive plans, and
granting long-term incentive rewards. The Committee also reviews and acts on
other benefit plans affecting managers and employees of the Company.
-18-
Executive Compensation Philosophy
The Company's fundamental executive compensation objectives are to
ensure that General Cable attracts and retains a talented executive team and
key employees and motivates them to take actions to continually enhance
shareholder value. To implement this philosophy in 2004, the Company targeted
base salaries at the 50th percentile of a broad survey of industrial companies
of similar size, scope and complexity. For 2005 compensation, the Committee
modified the comparative peer group in response to the review it conducted in
2004 of compensation practices with an independent consultant. For 2004, the
Company also provided executives with the opportunity to receive total annual
cash compensation at the 50th percentile if target business objectives were
achieved, and an opportunity to earn rewards above that level if performance
exceeded the specified 50th percentile targets. The Committee believes that
Company incentive programs and awards (described below) are related to
achievement of performance goals, which result in a significant percentage of
total compensation being tied to financial objectives and measures linked
directly to shareholder value.
In addition, in 2004, the Committee carried out a general review of
General Cable's executive compensation programs with the aid of a new
compensation consultant which is independent and reports directly to the
Committee. Based on this review, the Committee is satisfied that current
executive compensation programs reflect competitive market compensation
practices and also take into account both relative pay and relative
performance criteria.
Components of the Executive Compensation Program
The compensation program for the Company's executive officers in 2004
consisted of the following components: (1) base salary; (2) annual incentive
bonus; and (3) long-term incentive compensation consisting of potential awards
of restricted stock, stock options or both. The Company's incentive programs
are the main elements of the total program that is designed to reward
executives for short-term and long-term enhancements of shareholder value.
Base Salaries. The Committee reviews base salaries annually against a
group of benchmark companies at the 50th percentile, and adjusts them as
appropriate in light of Company performance, individual performance and the
executive's position and level of responsibilities. As a result of this
process, base salaries of the executive officers were adjusted. Mr. Kenny's
annual base salary was increased to $660,000 as of January 1, 2005, while
Mr. Virgulak's and Mr. Siverd's salaries were increased to $352,260 and
$335,265, as of March 1, 2005. The Committee believes that these executives'
salaries, which have been benchmarked against comparable public companies, are
appropriate. The Committee also takes into account individual and Company
performance in setting salary levels.
Annual Incentives. For calendar year 2004, executive officers and key
employees had the opportunity to earn cash and common stock rewards based on
attainment of financial, operational and individual performance goals. Under
the General Cable Annual Incentive Plan ("AIP"), the Committee at the
beginning of each year, formally selects one or more performance objectives as
targets for a particular year in light of business conditions and the
Company's annual Business Plan, including factors such as levels of earnings
per share, net income, and return on net operating assets. Incentive awards
for 2004 performance made in early 2005 based on accomplishment of
predetermined performance objectives under the AIP are included in the Summary
Compensation Table.
Long-Term Incentives. The Company has used and continues to use
restricted stock, stock options or a combination as long-term incentives to
tighten the relationship between executive compensation and shareholder return
to General Cable's investors. Grants of restricted stock and stock
-19-
options for 2004 were made to executive officers and are shown in the
Compensation Table. The Committee considers at least annually whether
additional grants of stock awards authorized under Company incentive plans are
appropriate to increase corporate performance, to encourage increased ownership
of the Company's stock by executive officers, and to foster retention of key
executives. In developing the incentive reward program and in approving
awards, the Committee evaluates the mix of awards and the relationship between
short-term and long-term incentives in the total compensation program.
Chief Executive Officer Compensation
Mr. Kenny served as President and Chief Executive Officer during 2004.
Under his Employment Agreement, Mr. Kenny was paid an annual salary of
$625,000 based on Committee review and consideration of relevant competitive
market data for chief executive officers. Mr. Kenny was also provided an
opportunity to receive a bonus under the Annual Incentive Plan equal to 95% of
his base salary in 2004, and he was eligible to receive compensation above
that level if actual performance exceeded the objectives set by the Committee.
For 2004, Mr. Kenny received an incentive award of $370,500 under the AIP
plan, which is included in the Summary Compensation Table.
The Company and its subsidiaries also provide certain benefit programs
in which the named executive officers participate, and the Committee
periodically reviews the terms of these programs which cover executive
officers and other key employees. The compensation for the executive officers
for 2004 is detailed in this proxy statement. Mr. Kenny's participation in
these programs reflects what the Committee believes is the participation that
other executives at his level in benchmark companies would expect.
Policy Under Section 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1 million paid to a
corporation's Chief Executive Officer and the four other most highly
compensated officers. Performance-based compensation that has been approved
by shareholders, however, is excluded from the $1 million limit if, among
other requirements, the compensation is payable only upon attainment of
preestablished, objective performance goals and the Board committee that
establishes such goals consists only of "outside directors" (as defined under
Section 162(m)). All members of General Cable's Compensation Committee
qualify as "outside directors."
The Company's general policy is to optimize the deductibility of
executive compensation so long as deductibility is compatible with the more
important objectives of retaining executives and maintaining competitive and
motivational performance-based compensation.
Robert L. Smialek, Chairman
Gregory E. Lawton
Craig P. Omtvedt
John E. Welsh, III
-20-
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the annual percentage change in cumulative
total shareholder return on General Cable common stock in relation to
cumulative total return of the Standard & Poor's 500 Stock Index, and a peer
group of companies ("2005 Peer Group"). The data shown are for the period
beginning May 16, 1997, the date that General Cable ("BGC") common stock began
trading on the NYSE, through December 31, 2004.
CUMULATIVE RETURN COMPARISON: GENERAL CABLE COMMON STOCK
S&P 500 INDEX AND PEER GROUP*
GRAPH DATA
May Dec. Dec. Dec. Dec. Dec. Dec. Dec. Dec.
1997 1997 1998 1999 2000 2001 2002 2003 2004
---- ---- ---- ---- ---- ---- ---- ---- ----
General Cable 100 167 143 53 32 97 29 62 105
2005 Peer Group 100 125 95 157 134 112 52 93 105
S&P 500 100 117 148 177 159 138 106 134 146
- ----------
<FN>
* Assumes the value of the investment in General Cable common stock and each
index was 100 on May 16, 1997. The 2005 Peer Group consists of Belden CDT
Inc. (NYSE: BDC), CommScope, Inc. (NYSE: CTV), Draka Holding, N.V.
(Euronext Amsterdam Stock Exchange) and Nexans (Paris Stock Exchange). The
2005 Peer Group consists of the same companies as in 2004, except that
Belden, Inc. and Cable Design Technologies Corp. merged in July 2004 to
become Belden CDT Inc. Data in the graph reflects the July 2004 merger.
Returns in the Peer Group are weighted by capitalization.
</FN>
-21-
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2004, all compensation determinations and awards were made by the
independent directors who make up the Compensation Committee. There were no
interlocking relationships between executive officers or directors of the
Company and the Compensation Committee of any other company during 2004.
RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP TO AUDIT
GENERAL CABLE'S 2005 CONSOLIDATED FINANCIAL STATEMENTS AND INTERNAL
CONROL OVER FINANCIAL REPORTING
(Proposal 2)
The Audit Committee of General Cable earlier this year appointed
Deloitte & Touche LLP, along with the member firm of Deloitte & Touche
Tohmatsu and their respective affiliates, independent certified public
accountants, to audit the consolidated financial statements of General Cable
and its subsidiaries for 2005 and its internal control over financial
reporting as of December 31, 2005. The Board of Directors ratified that
appointment and is submitting it to shareholders for a vote at the Annual
Meeting.
Principal Accounting Firm Fees. Aggregate fees billed to the Company
for the fiscal years ended December 31, 2004 and 2003 by Deloitte and its
affiliates were as follows:
Fiscal Year Ended
----------------------
2004 2003
---------- ----------
Audit Fees (1) $2,712,036 $947,000
Audit-related Fees (2) 406,807 256,080
Tax Fees (3) 285,666 321,725
All Other Fees (4) 12,829 166,000
---------- ----------
$3,417,338 $1,690,805
---------- ----------
---------- ----------
- ----------
<FN>
(1) Includes reviews of registration statements, and related consents and
comfort letters.
(2) Includes employee benefit plan audits and assistance in implementation
of Section 404 of Sarbanes-Oxley Act.
(3) Includes fees for tax compliance, consultation and planning.
(4) Includes fees for permitted internal audit outsourcing in 2002 and
permitted actuarial and secretarial services.
</FN>
General Cable expects representatives of Deloitte to attend the Annual
Meeting and be available to respond to appropriate questions from
shareholders. The Deloitte representatives will also have the opportunity to
make a statement if they so desire.
The Board of Directors recommends that shareholders vote FOR the
proposal to ratify the appointment of Deloitte & Touche LLP to audit General
Cable's 2005 consolidated financial statements and internal control over
financial reporting.
-22-
APPROVAL OF GENERAL CABLE CORPORATION
2005 STOCK INCENTIVE PLAN
(Proposal 3)
General Cable's success depends, in large measure, on its ability to
attract and retain talented employees and outside directors with outstanding
abilities and experience. To achieve these objectives, the Board of Directors
approved the 1997 Stock Incentive Plan ("1997 Stock Plan") and amended it in
1998 with shareholder approval and the 2000 Stock Option Plan ("2000 Option
Plan"), each with a ten-year term. These Plans authorize the grant of stock
awards, including restricted common stock and grants of stock options to key
employees and outside directors of the Company. With the passage of time and
grants having been made under these Plans, there are not sufficient shares
available for grant to continue them for a substantial period of time.
Further, the 1997 Stock Plan will expire by its terms in about two years in
May 2007. Consequently, the Board of Directors has considered and adopted a
new plan, the General Cable Corporation 2005 Stock Incentive Plan ("2005 Stock
Incentive Plan") on March 28, 2005, to be effective upon shareholder approval
at the 2005 Annual Meeting. It is intended, under the terms of the
resolutions adopting the 2005 Stock Incentive Plan, that the new Plan will
effectively replace both existing Plans. Those two Plans will continue in
effect until their respective expiration dates for the limited purpose of
giving effect to obligations under existing grants and awards. However, upon
shareholder approval of the 2005 Stock Incentive Plan, no further grants or
awards will be made under the 1997 Stock Plan or the 2000 Option Plan; all
subsequent grants and awards to key employees and non-employee directors will
be made under the shareholder-approved 2005 Stock Incentive Plan.
Set forth below is a summary of (i) the principal features of the 2005
Stock Incentive Plan, which is submitted for stockholder approval at this
Annual Meeting, and (ii) the federal income tax consequences of the 2005 Stock
Incentive Plan. The summary of the 2005 Stock Incentive Plan is not intended
to be complete and is qualified in its entirety by reference to the full text
of the 2005 Stock Incentive Plan attached to this Proxy Statement as Appendix
B.
SUMMARY OF THE 2005 STOCK INCENTIVE PLAN
PURPOSE OF THE 2005 STOCK INCENTIVE PLAN. The purpose of the 2005 Stock
Incentive Plan is to provide incentives to attract, retain, motivate and
reward highly competent persons as outside directors, executive officers and
other key employees of General Cable or any of its subsidiaries by providing
them opportunities to acquire shares of common stock of General Cable or to
receive monetary payments based on the value of such shares. Furthermore, the
2005 Stock Incentive Plan is intended to assist in further aligning the
interests of participants in the 2005 Stock Incentive Plan with those of its
stockholders.
CONSIDERATION TO BE RECEIVED BY GENERAL CABLE FOR THE GRANTING OF
AWARDS. The Board of Directors of General Cable believes that General Cable
and its subsidiaries will significantly benefit from having General Cable's
outside directors, executive officers and other key employees receive options
to purchase common stock and other awards under the 2005 Stock Incentive Plan.
Providing an opportunity to the foregoing participants in the 2005 Stock
Incentive Plan to acquire common stock or benefit from the appreciation of
such common stock is valuable in attracting and retaining highly qualified
outside directors and employees and in providing additional motivation to such
personnel to use their best efforts on behalf of General Cable and its
stockholders.
AWARDS. The following types of awards or any combination of them may be
granted under the 2005 Stock Incentive Plan: (i) "Stock Options" (both
"Incentive Stock Options" and "Non-Qualified Options") to acquire shares of
common stock; (ii) "Stock Appreciation Rights," which entitle the grantee to
receive an amount in cash, shares of common stock, or a combination of cash
and shares of common stock,
-23-
determined by reference to appreciation in common stock value; (iii) "Stock
Awards," which entitle the grantee to acquire shares of common stock which may
be subject to certain restrictions such as restrictions on transferability;
(iv) "Performance Awards," which entitle the grantee to receive, without
payment, an award following the attainment of performance goals; and (v)
"Stock Units," which entitle the grantee to receive an amount in cash or, if
the grantee and the Compensation Committee so agree, in shares of common stock
or a combination of cash and shares of common stock, with or without other
payments by the grantee, as may be determined by the Compensation Committee.
Awards are evidenced by award agreements in such forms as the
Compensation Committee approves from time to time. Each award is subject to
such terms and conditions consistent with the 2005 Stock Incentive Plan, as
determined by the Compensation Committee and as set forth in the award
agreement. The Compensation Committee shall have the authority to retract any
award granted under the 2005 Stock Incentive Plan in case of a material
restatement of the financial statements of General Cable or if it is otherwise
determined by the Compensation Committee that the previously granted award was
not earned by the participant.
ADMINISTRATION OF THE 2005 STOCK INCENTIVE PLAN. The 2005 Stock
Incentive Plan will be administered by the Compensation Committee of the Board
of Directors which is comprised of four directors, none of whom is an officer
or employee of General Cable. The current members of the Compensation
Committee are Robert L. Smialek (Chairman), Gregory E. Lawton, Craig P.
Omtvedt and John E. Welsh, III. It is the Board's policy that the
Compensation Committee be composed of outside directors for the purpose of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the performance-based compensation exception under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Under the 2005 Stock Incentive Plan, the Compensation Committee is
authorized to grant awards to outside directors, executive officers and other
key employees of General Cable or any of its subsidiaries and to determine the
number and types of such awards and the terms, conditions and limitations
applicable to each such award. In addition, the Compensation Committee has
the power to interpret the 2005 Stock Incentive Plan and to adopt such rules
and regulations as it considers necessary or appropriate for purposes of
administering the 2005 Stock Incentive Plan.
The Board of Directors will have the authority to establish stock grant
levels and stock ownership guidelines for outside directors which will be
reviewed annually in relation to director compensation practices of comparable
companies. See Beneficial Ownership-Share Ownership Guidelines at page 11.
ELIGIBILITY AND PARTICIPATION. All outside directors, executive
officers and other key employees of General Cable or any of its subsidiaries
who are significantly responsible for the success and future growth and
profitability of General Cable, as determined by the Compensation Committee,
are eligible to be participants in the 2005 Stock Incentive Plan. As of the
date of this Proxy Statement, four outside directors, three executive officers
and approximately 175 key employees were eligible to be participants. A
participant's right, if any, to continue to serve General Cable as a director,
executive officer, other key employee, or otherwise will not be enlarged or
otherwise affected by his or her designation as a participant under the 2005
Stock Incentive Plan. Participants may receive one or more awards under the
2005 Stock Incentive Plan.
The maximum number of shares of common stock with respect to which
awards may be granted or measured to any individual participant under the 2005
Stock Incentive Plan during each of General Cable's fiscal years will not
exceed 750,000 shares, subject to adjustments for stock splits,
recapitalizations and other specified events. In addition, the maximum number
of shares of common stock which may be
-24-
granted to non-employee directors during each five-year period under the Term
of the 2005 Stock Incentive Plan will not exceed 400,000 shares, subject to
adjustment.
SHARES SUBJECT TO AWARDS. The aggregate number of shares of common
stock that may be subject to awards, including shares of common stock
underlying Stock Options, to be granted under the 2005 Stock Incentive Plan is
1,800,000 shares, subject to adjustments for stock splits, recapitalizations
and other specified events. Such shares may be treasury shares or authorized
but unissued shares. If any outstanding award is canceled, forfeited,
delivered to General Cable as payment for the exercise of a Stock Option or
surrendered to General Cable for tax withholding purposes, shares of common
stock allocable to such award may again be available for awards under the 2005
Stock Incentive Plan. On March 1, 2005, the closing price of common stock on
the New York Stock Exchange was $12.06.
VESTING RESTRICTIONS. Any award to a participant in the 2005 Stock
Incentive Plan is subject to graded vesting with a minimum vesting period of
three years, unless otherwise determined by the Compensation Committee.
STOCK OPTIONS. Stock Options granted under the 2005 Stock Incentive
Plan may be either Incentive Stock Options (within the meaning of Section 422
of the Code) or Non-Qualified Stock Options which do not qualify as Incentive
Stock Options. A description of these two types of Stock Options appears
below under the heading "Federal Income Tax Consequences."
The Compensation Committee determines the exercise price at which shares
underlying a Stock Option may be purchased, whether an Incentive Stock Option
or a Non-Qualified Stock Option. However, the exercise price may not be less
than the fair market value of the shares of common stock on the date the Stock
Option is granted.
Incentive Stock Options may be granted only to executive officers and
other key employees of General Cable or any of its subsidiaries, and Non-
Qualified Stock Options may be granted to any participant in the 2005 Stock
Incentive Plan.
No Stock Option will be exercisable later than ten years after the date
it is granted. Stock Options granted under the 2005 Stock Incentive Plan are
exercisable at such times as specified in the 2005 Stock Incentive Plan and
the award agreement. A participant in the 2005 Stock Incentive Plan may pay
the option exercise price in cash or, in the discretion of the Compensation
Committee, either in shares of common stock then owned by the participant, by
the withholding of shares of common stock for which a Stock Option is
exercisable, by a combination of these methods, or by any other appropriate
method.
Incentive Stock Options are subject to certain limitations, including
the following. The aggregate market value (determined as of the date of
grant) of common stock with respect to which Incentive Stock Options are
exercisable for the first time by a participant during any calendar year may
not exceed $100,000. Furthermore, Incentive Stock Options may not be granted
to any participant who, at the time of grant, owns stock possessing more than
10% of the total combined voting power of all outstanding classes of stock of
General Cable or any of its subsidiaries, unless the exercise price is fixed
at not less than 110% of the fair market value of the common stock on the date
of grant and the option cannot be exercised more than five years after the
date of grant.
STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is a right to
receive a payment in cash, shares of common stock or a combination of cash and
shares of common stock, in an amount equal to the increase in the fair market
value, or other specified valuation, of a specified number of shares from the
-25-
date the right is granted to the date the right is exercised. Stock
Appreciation Rights may be granted to executive officers and other key
employees.
STOCK AWARDS. Stock Awards may be granted to any participant in the
2005 Stock Incentive Plan. A Stock Award may include restrictions on the sale
or other disposition of the shares covered by the award, or General Cable may
have the right to reacquire such shares for no consideration upon termination
of the participant's employment within specified periods. The award agreement
will specify whether the participant will have, with respect to the shares of
common stock subject to a Stock Award, all of the rights of a holder of shares
of common stock, including the right to receive dividends and to vote the
shares.
PERFORMANCE AWARDS. Performance Awards may be granted to executive
officers and other key employees of General Cable or any of its subsidiaries.
The Compensation Committee will set performance targets at its discretion
which, depending on the extent to which they are met, will determine the
number and/or value of Performance Awards that will be paid out to the
participants and may attach to such Performance Awards one or more
restrictions. Performance targets may be based upon company-wide, business
unit and/or individual performance.
Payment of earned Performance Awards may be made in shares of common
stock or in cash and will be made in accordance with the terms and conditions
prescribed or authorized by the Compensation Committee. The participant may
elect to defer, or the Compensation Committee may require or permit the
deferral of, the receipt of Performance Awards upon such terms as the
Compensation Committee deems appropriate.
STOCK UNITS. Stock Units may be granted to executive officers and other
key employees of General Cable or any of its subsidiaries. A Stock Unit is a
notional account representing one share of common stock. The Compensation
Committee determines the vesting criteria for Stock Units. Upon vesting,
shares of common stock are distributed, subject to certain exceptions, to the
participant unless the participant and the Compensation Committee agree to
make payment in cash or partly in cash and partly in shares of common stock.
The Compensation Committee may grant a participant the right to receive the
amount of any dividend paid on the share of common stock underlying a Stock
Unit (payable in cash or in additional Stock Units).
PERFORMANCE-BASED AWARDS. Certain awards made under the 2005 Stock
Incentive Plan may be granted so that they qualify as "performance-based
compensation" (as this term is used in Section 162(m) of the Code and the
regulations thereunder) and are exempt from the deduction limitation imposed
by Section 162(m) of the Code ("Performance-Based Awards"). All Stock Options
and Stock Appreciation Rights granted under the 2005 Stock Incentive Plan and
certain Stock Awards, Performance Awards, and Stock Units granted under the
2005 Stock Incentive Plan, and the compensation attributable to such awards,
are intended to (i) qualify as Performance-Based Awards or (ii) be otherwise
exempt from the deduction limitation imposed by Section 162(m) of the Code.
Among other criteria, awards only qualify as Performance-Based Awards if at
the time of grant the Compensation Committee is comprised solely of two or
more "outside directors" (as this term is used in Section 162(m) of the Code
and the regulations thereunder). In making these awards, the Compensation
Committee must establish and apply objective performance goals and may use one
or more or a combination of goals including increases or improvements in
earnings per share, net income, return on assets, stock market index
comparisons and other similar objective factors.
EFFECT OF CHANGE IN CONTROL. The 2005 Stock Incentive Plan provides for
the acceleration of certain benefits in the event of a "Change in Control" of
General Cable. The meaning of a "Change in Control" is either defined in the
participant's employment agreement or change-in-control agreement, if one
-26-
exists, or by the 2005 Stock Incentive Plan. The 2005 Stock Incentive Plan
definition includes, among other things, such events as the sale of all assets
of General Cable, any person becoming the beneficial owner of more than 35% of
General Cable's voting stock, and a merger of General Cable where General
Cable's stockholders own less than 51% of the voting stock of the surviving
entity.
All unvested awards granted under the 2005 Stock Incentive Plan will
become fully vested immediately upon the occurrence of the Change of Control
and such vested awards will be paid out or settled, as applicable, within 60
days upon the occurrence of the Change of Control, subject to requirements of
applicable laws and regulations. The Compensation Committee may determine
that upon the occurrence of a Change in Control, each Stock Option and Stock
Appreciation Right outstanding will terminate and the holder will receive,
within 60 days upon the occurrence of the Change in Control, an amount equal
to the excess of the fair market value of the shares underlying the award
immediately prior to the occurrence of such Change in Control over the
exercise price per share of such award. This cashout amount is payable in
cash, in one or more kinds of property (including the property, if any,
payable in the transaction) or in a combination thereof.
ADJUSTMENTS TO AWARDS DUE TO CHANGES IN GENERAL CABLE'S CAPITAL
STRUCTURE. In the event of any change in the shares of common stock by reason
of a merger, consolidation, reorganization, recapitalization, stock split,
stock dividend, exchange of shares, or other similar change in the corporate
structure or distribution to stockholders, each outstanding Stock Option and
Stock Appreciation Right will be adjusted. The adjustments will make each
award exercisable thereafter for the securities, cash and/or other property as
would have been received in respect of the common stock subject to such award
had the Stock Option or Stock Appreciation Right been exercised in full
immediately prior to the change or distribution. Furthermore, in the event of
any such change or distribution, in order to prevent dilution or enlargement
of participants' rights under the 2005 Stock Incentive Plan, the Compensation
Committee has the authority to make equitable adjustments to, among other
things, the number and kind of shares and exercise price of outstanding
awards.
TERMINATION OF EMPLOYMENT. If a participant's employment is terminated
due to death or disability, then the participant's unvested Stock Awards or
Stock Units and unexercisable Stock Options or Stock Appreciation Rights
become vested or exercisable, as applicable, immediately as of the date of the
termination of the participant's employment. All Stock Options and Stock
Appreciation Rights that were or became exercisable as of the date of the
participant's death or termination of employment, will remain exercisable
until the earlier of (i) the end of the one-year period following the date of
the participant's death or the date of the termination of his or her
employment, as the case may be, or (ii) the date the Stock Option or Stock
Appreciation Right would otherwise expire.
All unearned or unvested Performance Awards held by the participant on
the date of the participant's death or the date of the termination of his or
her employment, as the case may be, will immediately become earned or vested
as of such date and will be paid out or settled based on the participant's
performance immediately prior to the date of the participant's death or the
date of the termination of his or her employment on a pro-rated basis with a
minimum of at least one year into a performance period. A participant whose
employment is terminated for cause, as defined in the 2005 Stock Incentive
Plan, forfeits all awards, whether or not vested, exercisable or earned,
granted to the participant. A participant whose employment is terminated for
any reason, including, without limitation, retirement, other than for cause,
death or disability forfeits all unvested, unexercisable and unearned awards
granted to the participant. All exercisable Stock Options and all exercisable
Stock Appreciation Rights held by the participant on the date of the
termination of his or her employment for any reason other than for cause,
death or disability will remain exercisable until the earlier of (i) the end
of the 90-day period following the date of the termination of the
participant's employment, or (ii) the date the Stock Option or Stock
-27-
Appreciation Right would otherwise expire. The 2005 Stock Incentive Plan's
provisions relating to termination of employment may be modified in the
discretion of the Compensation Committee.
TRANSFERABILITY. Each award granted under the 2005 Stock Incentive Plan
which is subject to restrictions on transferability and/or exercisability is
not transferable otherwise than by will or the laws of descent and
distribution, and/or is exercisable, during the participant's lifetime, only
by the participant. The Compensation Committee may allow a Stock Option or
Stock Appreciation Right to be exercisable during a period after the death of
the participant by the executor or administrator of the estate of the deceased
participant or the person or persons to whom the deceased participant's rights
under the Stock Option or Stock Appreciation Right will pass by will or the
laws of descent and distribution. The Compensation Committee also may permit
an award (other than an Incentive Stock Option) to be transferred by a
participant solely to members of the participant's immediate family or trusts
or family partnerships for the benefit of such persons, subject to any
restriction included in the award agreement.
AMENDMENT OF AWARDS. The terms and conditions applicable to any award
may be amended or modified by mutual agreement between General Cable and the
participant or any other persons as may then have an interest in the award.
Also, by mutual agreement between General Cable and a participant under this
2005 Stock Incentive Plan or under any other present or future plan of General
Cable, awards may be granted to a participant in substitution and exchange
for, and in cancellation of, any awards previously granted to a participant
under the 2005 Stock Incentive Plan or any other present or future plan of
General Cable.
TERM AND AMENDMENT OF THE 2005 STOCK INCENTIVE PLAN. The Board of
Directors approved the 2005 Stock Incentive Plan on March 28, 2005 and
recommended the 2005 Stock Incentive Plan for stockholder approval. The 2005
Stock Incentive Plan will become effective upon stockholder approval. If the
stockholders approve the 2005 Stock Incentive Plan at this Annual Meeting, the
2005 Stock Incentive Plan will become effective as of May 10, 2005, and will
terminate on the 10th anniversary of May 10, 2005, unless terminated sooner by
the Board of Directors. The Board of Directors may amend, suspend or
terminate the 2005 Stock Incentive Plan at any time and from time to time.
Without stockholder approval, no amendment will (i) increase the total number
of shares which may be issued under the 2005 Stock Incentive Plan or the
maximum number of shares with respect to which Stock Options, Stock
Appreciation Rights and other awards that may be granted to any individual
under the 2005 Stock Incentive Plan; (ii) modify the requirements as to
eligibility for awards under the 2005 Stock Incentive Plan; (iii) disqualify
any Incentive Stock Options granted under the 2005 Stock Incentive Plan; or
(iv) effect the repricing of Stock Options.
EFFECT ON 1997 STOCK INCENTIVE PLAN AND 2000 STOCK OPTION PLAN. If
stockholders approve the 2005 Stock Incentive Plan at this Annual Meeting, the
2005 Stock Incentive Plan will replace the 1997 Stock Incentive Plan and the
2000 Stock Option Plan (collectively, the "Plans") in effect as of the date of
this Proxy Statement, and no grants will be made under the Plans. Shares of
common stock available under the Plans will no longer be available for
issuance under the Plans, and no shares of common stock forfeited or cancelled
under the Plans will be available for grants under the 2005 Stock Incentive
Plan.
-28-
FEDERAL INCOME TAX CONSEQUENCES
The following information is not intended to be a complete discussion of
the federal income tax consequences of participation in the 2005 Stock
Incentive Plan and is qualified in its entirety by references to the Code and
the regulations adopted under the Code. The provisions of the Code described
in this section include current tax law only and do not reflect any proposals
to revise current tax law. The federal income tax consequences applicable to
officers, directors, and other persons who are subject to potential liability
under Section 16(b) of the Exchange Act may be different than the federal
income tax consequences applicable to persons who are not subject to
Section 16(b). The federal income tax consequences applicable to all persons,
whether or not subject to Section 16(b), are described below.
INCENTIVE STOCK OPTIONS. Generally, under the Code, an optionee will
not realize taxable income by reason of the grant or exercise of an Incentive
Stock Option granted pursuant to the 2005 Stock Incentive Plan (see, however,
discussion of alternative minimum tax below). If an optionee exercises an
Incentive Stock Option and does not dispose of the shares until the later of
(i) two years from the date the option was granted and (ii) one year from the
date of exercise, the entire gain, if any, realized upon disposition of such
shares will be taxable to the optionee as long-term capital gain, and General
Cable will not be entitled to any deduction. If an optionee disposes of the
shares within the period of two years from the date of grant or one year from
the date of exercise (a "disqualifying disposition"), the optionee generally
will realize ordinary income in the year of disposition and General Cable will
receive a corresponding deduction in an amount equal to the excess of (i) the
lesser of (a) the amount, if any, realized on the disposition and (b) the fair
market value of the shares on the date the option was exercised over (ii) the
option price. Any additional gain realized on the disposition will be short-
term or long-term capital gain and any loss will be long-term or short-term
capital loss. The optionee will be considered to have disposed of a share if
he or she sells, exchanges, makes a gift of or transfers legal title to the
share (except transfers, among others, by pledge, on death or to a spouse).
If the disposition is by sale or exchange, the optionee's tax basis will equal
the amount paid for the shares plus any ordinary income realized as a result
of the disqualifying disposition.
The exercise of an Incentive Stock Option may subject the optionee to
the so-called "alternative minimum tax" ("AMT"). The amount by which the fair
market value of the shares purchased at the time of the exercise exceeds the
option exercise price is an adjustment for purposes of computing the AMT. In
the event of a disqualifying disposition of the shares in the same taxable
year as exercise of the Incentive Stock Option, no adjustment is then required
for purposes of the AMT, but regular income tax, as described above, may
result from such disqualifying disposition.
An optionee who surrenders shares as payment of the exercise price of
his or her Incentive Stock Option generally will not recognize gain or loss on
his or her surrender of such shares. The surrender of shares previously
acquired upon exercise of an Incentive Stock Option in payment of the exercise
price of another Incentive Stock Option, is, however, a "disposition" of such
stock. If the Incentive Stock Option holding period requirements described
above have not been satisfied with respect to such stock, such disposition
will be a disqualifying disposition that may cause the optionee to recognize
ordinary income as discussed above.
Under the Code, all of the shares received by an optionee upon exercise
of an Incentive Stock Option by surrendering shares will be subject to the
Incentive Stock Option holding period requirements. Of those shares, a number
of shares (the "Exchange Shares") equal to the number of shares surrendered by
the optionee will have the same tax basis for capital gains purposes
(increased by any ordinary income recognized as a result of a disqualifying
disposition of the surrendered shares if they were Incentive Stock Option
shares) and the same capital gains holding period as the shares surrendered.
-29-
For purposes of determining ordinary income upon a subsequent disqualifying
disposition of the Exchange Shares, the amount paid for such shares will be
deemed to be the fair market value of the shares surrendered. The balance of
the shares received by the optionee will have a tax basis (and a deemed
purchase price) of zero and a capital gains holding period beginning on the
date of exercise. The Incentive Stock Option holding period for all shares
will be the same as if the option had been exercised for cash.
NON-QUALIFIED STOCK OPTIONS. Generally, there will be no federal income
tax consequences to either the optionee or General Cable on the grant of Non-
Qualified Stock Options pursuant to the 2005 Stock Incentive Plan. On the
exercise of a Non-Qualified Stock Option, the optionee has taxable ordinary
income equal to the excess of the fair market value of the shares acquired on
the exercise date over the option price of the shares. General Cable will be
entitled to a federal income tax deduction (subject to the limitations
contained in Section 162(m)) in an amount equal to such excess, provided that
General Cable complies with applicable reporting rules.
Upon the sale of stock acquired by exercise of a Non-Qualified Stock
Option, optionees will realize long-term or short-term capital gain or loss
depending upon their holding period for such stock. For individuals, capital
losses are deductible only to the extent of capital gains for the year plus
$3,000. An optionee who surrenders shares in payment of the exercise price of
a Non-Qualified Stock Option will not recognize gain or loss with respect to
the shares so delivered unless such shares were acquired pursuant to the
exercise of an Incentive Stock Option and the delivery of such shares is a
disqualifying disposition. See "Incentive Stock Options." The optionee will
recognize ordinary income on the exercise of the Non-Qualified Stock Option as
described above. Of the shares received in such an exchange, that number of
shares equal to the number of shares surrendered have the same tax basis and
capital gains holding period as the shares surrendered. The balance of shares
received will have a tax basis equal to their fair market value on the date of
exercise and the capital gains holding period will begin on the date of
exercise.
STOCK APPRECIATION RIGHTS. A participant who is awarded a Stock
Appreciation Right will not have taxable income upon the grant of such Stock
Appreciation Right and General Cable will not be entitled to a tax deduction
by reason of such grant. Upon the exercise of a Stock Appreciation Right, a
participant will recognize taxable ordinary income equal to the amount of cash
and the fair market value of any shares of common stock received. General
Cable may generally claim a deduction at that time equal to the amount
recognized as ordinary income by the participant.
STOCK AWARDS. The taxability of a Stock Award to a participant is
dependent upon the extent to which the award is restricted on the date of
grant. If a Stock Award is either transferable or not subject to a
substantial risk of forfeiture, a participant will recognize taxable ordinary
income on the date of grant. If a Stock Award is both non-transferable and
subject to a substantial risk of forfeiture on the date of grant, then unless
an election is made as described below, a participant will not recognize
taxable ordinary income on the date of grant, but will at such time or times
as the Stock Award becomes either transferable or not subject to a substantial
risk of forfeiture in an amount equal to the fair market value of such shares
at that time. Within thirty days of receipt of a Stock Award that is not
transferable and subject to a substantial risk of forfeiture, a participant
may file an election with the Internal Revenue Service to include as taxable
ordinary income in the year of receipt an amount equal to the fair market
value of the shares subject to the award at the time of receipt. In such
event, any subsequent appreciation in the value of such shares will not be
taxable as compensation to a participant upon the vesting of shares subject to
the award. However, if shares subject to the award are forfeited subsequent to
such election, a participant will not be entitled to a tax deduction. For
purposes of determining the amount of taxable gain or loss upon a subsequent
disposition of shares issued pursuant to such an award, the amount recognized
as ordinary income to a participant will be treated as the cost basis for such
shares. Shares which are held for more than one year after vesting (or in the
event of an election as described above, the date of receipt) generally will
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qualify for long-term capital gain treatment. General Cable will be entitled
to a deduction in such amount and at such time as ordinary income becomes
taxable to the participant.
PERFORMANCE AWARDS. The tax consequences of a performance award depend
upon the nature of the underlying award and if and when the performance goals
are achieved. If a performance award consists of a promise to deliver common
stock at a future date based upon the satisfaction of certain targets, such
awards will be subject to federal income taxation as ordinary income based
upon the fair market value of the common stock on the date such performance
awards are earned by a participant by satisfying the performance targets,
provided such awards are not then subject to a substantial risk of forfeiture.
STOCK UNITS. A participant will not be subject to federal income
taxation upon the grant of a Stock Unit. A participant will be subject to tax
as ordinary taxable income upon payout of a stock unit in an amount equal to
the sum of the cash and the fair market value of common stock received.
APPLICATION OF SECTION 409A TO DEFERRED COMPENSATION ARRANGEMENTS. The
2005 Stock Incentive Plan provides that, under certain circumstances, the
receipt of a benefit resulting from an award under the 2005 Stock Incentive
Plan may be electively deferred by the participant (or the Compensation
Committee, as applicable) to a time that is later than the year in which such
benefit becomes vested. To the extent that a participant makes such a
deferral election, Section 409A of the Code, which was recently enacted as
part of the American Jobs Creation Act of 2004 (the "Jobs Act"), subjects the
deferral arrangement to certain substantive requirements including (among
other items) deferral election and payment timing requirements. In the event
that a deferral arrangement fails to comply with Code Section 409A in form or
operation, a participant may become subject to: (i) the imposition of Federal
income tax on all amounts deferred in the tax year in which the amounts are
deferred (or, if later, in the tax year when the receipt of the benefits are
no longer subject to a substantial risk of forfeiture); (ii) a penalty tax of
20 percent of the includable amount (in addition to the regular income tax at
ordinary income rates); and (iii) interest at the underpayment rate plus 1
percent from the time the amount was first deferred (or, if later, the tax
year when the benefits are no longer subject to a substantial risk of
forfeiture) until the time the amount is included in income.
Code Section 409A may require significant changes to existing
nonqualified deferred compensation plans no later than December 31, 2005;
however, such amendments are subject to the issuance of complete guidance from
the Treasury and the Internal Revenue Service. The first installment of such
guidance was issued in the form of Internal Revenue Service Notice 2005-1 (the
"Notice"), which contained 38 questions and answers. The Notice acknowledges
that it does not provide comprehensive guidance and indicates that the
Treasury and the Internal Revenue Service anticipate issuing additional
guidance. Accordingly, the Notice contains certain transitional relief
through the period ending December 31, 2005, provided that a plan is operated
in good faith. Although General Cable will institute a review of the 2005
Stock Incentive Plan with respect to the requirements of Code Section 409A,
because the tax consequences to any participant in the 2005 Stock Incentive
Plan may depend upon such person's situation, as well as the uncertain
application of Code Section 409A, each participant in the 2005 Stock Incentive
Plan should consult his or her tax advisor as to the federal, state and local
and other tax consequences with respect to the grant or exercise of an option
or any other award granted under the 2005 Stock Incentive Plan.
WITHHOLDING OF TAX; COMPANY DEDUCTION. Generally, whenever a
participant realizes ordinary income under the 2005 Stock Incentive Plan, a
corresponding deduction is available to General Cable provided General Cable
complies with certain reporting requirements. Under Section 162(m), however,
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General Cable will be denied a deduction for certain compensation exceeding
$1,000,000 paid to its Chief Executive Officer and the two other highest paid
executive officers, excluding (among other things) certain performance-based
compensation.
General Cable is entitled to withhold, or secure payment from a
participant in lieu of withholding, the amount of any tax required by law to
be withheld or paid by General Cable with respect to any amount payable or
shares issuable under a participant's award.
CONCLUSION. The foregoing summarizes the federal income tax
consequences, and does not include a discussion of state and local income tax
consequences of participation in the 2005 Stock Incentive Plan. Participants
are encouraged to consult their own tax advisors regarding the federal, state
and local tax consequences in their particular circumstances and with respect
to their particular awards.
The Board of Directors recommends a vote FOR the proposal to approve the
General Cable Corporation 2005 Stock Incentive Plan.
OTHER INFORMATION
SOLICITATION OF PROXIES
Solicitation of proxies is being made by management at the direction of
General Cable's Board of Directors, without additional compensation, through
the mail, in person or by telephone. The cost will be borne by General Cable.
In addition, General Cable will request brokers and other custodians,
nominees and fiduciaries to forward proxy soliciting material to the
beneficial owners of shares held of record and General Cable will reimburse
them for their expenses in so doing. General Cable has retained Mellon
Investor Services LLC to aid in the solicitation of proxies for a fee of
$9,000 plus out-of-pocket expenses.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires General
Cable's directors and executive officers, and persons who own more than ten
percent of a registered class of equity securities, to file initial reports of
ownership and reports of changes in ownership of General Cable common stock
with the SEC. These persons are required by SEC regulations to furnish
General Cable with copies of all Section 16(a) forms which they file. Based
solely on review of the copies of forms furnished to General Cable, or written
representations that SEC Forms 5 were not required, General Cable believes
that all such SEC filings during 2004 complied with the reporting
requirements.
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SHAREHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
Shareholder proposals under Rule 14a-8 of the Securities Exchange Act
of 1934 for the 2006 Annual Meeting of Shareholders must be received by General
Cable no later than November 15, 2005, in order to be considered for inclusion
in General Cable's proxy statement for that meeting. Shareholder proposals
not made under Rule 14a-8 must be made in accordance with the 60 (sixty) day
advance notice procedure described on pages 8-9. All proposals must be
communicated in writing to the Secretary of General Cable at its headquarters
address.
By Order of the Board of Directors,
ROBERT J. SIVERD
Secretary
Highland Heights, Kentucky
March 28, 2005
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APPENDIX A
GENERAL CABLE AUDIT COMMITTEE CHARTER
PURPOSE
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The Audit Committee's purpose is (A) to assist in Board oversight of (i)
the integrity of the Company's financial statements, (ii) the Company's
compliance with legal and regulatory requirements, (iii) the independent
auditor's qualifications and independence, and (iv) the performance of the
Company's internal audit function and independent auditor; and (B) to prepare
an audit committee report as required by the SEC's rules for inclusion in the
Company's annual proxy statements. If the Company does not file a proxy
statement, the report will be included in the Company's annual report on SEC
Form 10-K.
The Audit Committee is responsible for the duties and responsibilities
set forth in this charter, but its role is one of oversight, and therefore, it
is not responsible either for the preparation of the Company's financial
statements or the auditing of the Company's financial statements. Management
has the responsibility for preparing the financial statements and implementing
internal controls and the independent auditors have the responsibility for
auditing the financial statements and monitoring the effectiveness of the
internal controls, subject, in each case, to the oversight of the audit
committee described in this charter.
COMPOSITION
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There will be a committee of the board of directors (the "Board") to be
known as the Audit Committee which will be composed of at least three (3)
directors, each of whom will satisfy the independence and financial literacy
requirements of the New York Stock Exchange and all other applicable
regulatory requirements, subject to the effective dates and relevant
transition periods. In addition, at least one member of the Audit Committee
will have the required accounting or related financial management expertise as
the Board interprets such qualification in its business judgment. No member
of the Audit Committee will simultaneously serve on the audit committee of
more than three public companies unless the Board determines that the
simultaneous service would not impair the ability of the Audit Committee
member to effectively serve on this Audit Committee and discloses the
determination in the Company's annual proxy statement or, if the Company does
not file an annual proxy statement, in the Company's annual report on Form 10-
K filed with the SEC.
The Non-Executive Chairman upon consultation with other members of the
Board will elect or appoint a chairperson of the Audit Committee (or, if he
does not do so, the Audit Committee members will elect a chairperson by vote
of a majority of the full committee). The Audit Committee chairperson will
have authority to act on behalf of the Audit Committee between meetings.
DUTIES AND RESPONSIBILITIES
- ---------------------------
The duties and responsibilities of the Audit Committee are set forth below.
The Audit Committee will:
(A) be directly responsible for the appointment, compensation,
retention and oversight of the work of any registered public
accounting firm engaged (including resolution of disagreements
between management and the auditor regarding financial reporting)
for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Company;
each such registered public accounting firm must report directly
to the Audit Committee.
A-1
(B) establish procedures for (i) the receipt, retention and treatment
of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and (ii) the
confidential, anonymous submissions by Company employees of
concerns regarding questionable accounting or auditing matters;
(C) have the authority to engage independent counsel and other
advisers as it determines necessary to carry out its duties;
(D) receive appropriate funding from the Company, as determined by the
Audit Committee in its capacity as a committee of the Board, for
payment of: (i) compensation to any registered public accounting
firm engaged for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services for
the Company; (ii) compensation to any advisers employed by the
Audit Committee; and (iii) ordinary administrative expenses of the
Audit Committee that are necessary or appropriate in carrying out
its duties;
(E) at least annually, obtain and review a report by the independent
auditor describing (i) the firm's internal quality-control
procedures; (ii) any material issues raised by the most recent
internal quality-control review or peer review of the firm, or by
any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or
more independent audits carried out by the firm, and any steps
taken to deal with any such issues; and (iii) (to assess the
auditor's independence) all relationships between the independent
auditor and the Company;
(F) review and discuss the Company's annual audited financial
statements and quarterly financial statements with management and
the independent auditor, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations";
(G) discuss the Company's earnings press releases, as well as
financial information and earnings guidance provided to analysts
and rating agencies;
(H) discuss policies with respect to risk assessment and risk
management;
(I) meet separately, from time to time, with management, internal
auditors (or other personnel or independent contractors
responsible for the internal audit function) and the independent
auditors;
(J) review with the independent auditor any audit problems or
difficulties and management's response, including discussion of
the responsibilities, budget and staffing of the Company's
internal control function;
(K) set clear hiring policies for employees or former employees of the
independent auditors;
(L) report regularly to the Board;
(M) make an annual performance evaluation of the Audit Committee;
(N) review and assess the adequacy of the Audit Committee's charter
annually;
A-2
(O) comply with the preapproval requirements of Section 10A(i) of the
Securities Exchange Act of 1934; and
(P) make such other recommendations to the Board on such matters,
within the scope of its function, as may come to its attention and
which in its discretion warrant consideration by the Board.
MEETINGS
- --------
The Audit Committee will meet on a quarterly basis each year and more
frequently as circumstances require. One or more meetings may be conducted in
whole or in part by telephone conference call or similar means if it is
impracticable to obtain the personal presence of each Audit Committee member.
The Company will make available to the Audit Committee, at its meetings and
otherwise, individuals and firms as may be designated from time to time by the
Audit Committee, such as members of management including (but not limited to)
the internal audit and accounting staff, the independent auditors, inside and
outside counsel, and other individuals or firms (whether or not employed by
the Company and including any corporate governance employees and individuals
or entities performing internal audit services as independent contractors).
DELEGATION
- ----------
Any duties and responsibilities of the Audit Committee, including but
not limited to the authority to preapprove all audit and permitted non-audit
services, may be delegated to one or more members of the Audit Committee or a
subcommittee of the Audit Committee.
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APPENDIX B
GENERAL CABLE CORPORATION
2005 STOCK INCENTIVE PLAN
1. Purpose
The General Cable Corporation 2005 Stock Incentive Plan (the "Plan") is
intended to provide incentives which will attract, retain, motivate and reward
highly competent persons as non-employee directors, executive officers and
other key employees of General Cable Corporation (the "Company") or any of its
subsidiary corporations, limited liability companies or other forms of
business entities now existing or hereafter formed or acquired
("Subsidiaries"), by providing them opportunities to acquire shares of the
common stock, par value $.01 per share, of the Company ("Common Stock") or to
receive monetary payments based on the value of such shares pursuant to Awards
(as defined in Section 4 below) described herein. Furthermore, the Plan is
intended to assist in further aligning the interests of the Company's non-
employee directors, executive officers and other key employees with those of
its stockholders.
2. Administration
a. The Plan generally shall be administered by a committee (the
"Committee") which shall be the Compensation Committee of the Board of
Directors of the Company (the "Board") or another committee appointed by the
Board from among its members. Unless the Board determines otherwise, the
Committee shall be comprised solely of not less than two members who each
shall qualify as a (i) "Non-Employee Director" within the meaning of Rule 16b-
3(b)(3) (or any successor rule) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and (ii) an "outside director" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations thereunder. The Committee is authorized,
subject to the provisions of the Plan, to establish such rules and regulations
as it deems necessary for the proper administration of the Plan and to make
such determinations and interpretations and to take such action in connection
with the Plan and any Awards granted hereunder as it deems necessary or
advisable. All determinations and interpretations made by the Committee shall
be binding and conclusive on all participants and their legal representatives.
However, the Board shall have the authority to establish stock grant levels
and stock ownership guidelines for the non-employee directors which shall be
reviewed annually in relation to director compensation practices of comparable
companies.
b. No member of the Board, no member of the Committee and no agent of
the Committee who is an employee of the Company shall be liable for any act
or failure to act hereunder, except in circumstances involving his or her bad
faith, gross negligence or willful misconduct, or for any act or failure to
act hereunder by any other member or employee or by any agent to whom duties
in connection with the administration of this Plan have been delegated. The
Company shall indemnify members of the Board, members of the Committee and
any agent of the Committee who is an employee of the Company against any and
all liabilities or expenses to which they may be subjected by reason of any
act or failure to act with respect to their duties on behalf of the Plan,
except in circumstances involving such person's bad faith, gross negligence
or willful misconduct.
c. The Committee shall have the authority to grant Awards to non-
employee directors, executive officers and other key employees of the Company
or any of its Subsidiaries. The Committee may delegate to one or more of its
members, or to one or more agents, such administrative duties as it may deem
B-1
advisable, and the Committee, or any person to whom it has delegated duties
as aforesaid, may employ one or more persons to render advice with respect to
any responsibility the Committee or such person may have under the Plan. The
Committee may employ such legal or other counsel, consultants and agents as
it may deem desirable for the administration of the Plan and may rely upon
any opinion or computation received from any such counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company or any of its Subsidiaries
whose employees have benefited from the Plan, as determined by the Committee.
3. Participants
Participants shall consist of such non-employee directors, executive
officers and other key employees of the Company or any of its Subsidiaries as
the Committee in its sole discretion determines to be significantly
responsible for the success and future growth and profitability of the Company
and whom the Committee may designate from time to time to receive Awards under
the Plan. Designation of a participant in any year shall not require the
Committee to designate such person to receive an Award in any other year or,
once designated, to receive the same type or amount of Award as granted to the
participant in any other year. The Committee shall consider such factors as
it deems pertinent in selecting participants and in determining the type and
amount of Awards.
4. Types of Awards and Vesting Restrictions
Awards under the Plan may be granted in any one or a combination of (1)
Stock Options, (2) Stock Appreciation Rights, (3) Stock Awards, (4)
Performance Awards and (5) Stock Units (each as described above an "Award,"
and collectively, "Awards"). Stock Awards, Performance Awards and Stock Units
may, as determined by the Committee, in its discretion, constitute
Performance-Based Awards, as described in Section 11 below. Any Award to a
participant in the Plan shall be subject to graded vesting with a minimum
vesting period of three years, unless otherwise determined by the Committee.
Awards shall be evidenced by Award agreements (which need not be identical)
in such forms as the Committee may from time to time approve; provided,
however, that in the event of any conflict between the provisions of the Plan
and any such agreements, the provisions of the Plan shall prevail.
5. Common Stock Available Under the Plan
a. Shares Available. The aggregate number of shares of Common Stock
that may be subject to Awards, including shares of Common Stock underlying
Stock Options, granted under this Plan shall be 1,800,000 shares of Common
Stock, which may be authorized and unissued or treasury shares, subject to any
adjustments made in accordance with Section 12 below.
b. Maximum Limits. The maximum number of shares of Common Stock with
respect to which Awards may be granted or measured to any individual
participant under the Term of the Plan during the Company's fiscal year shall
not exceed 750,000 shares, subject to adjustments made in accordance with
Section 12 below. In addition, the maximum number of shares of common stock
which may be granted to non-employee directors during each five-year period
under the Term of the Plan shall not exceed 400,000 shares, subject to
adjustment.
c. Shares Underlying Awards That Again Become Available. Any shares of
Common Stock subject to a Stock Option, Stock Appreciation Right, Stock Award,
Performance Award, or Stock Unit which for any reason are cancelled,
forfeited, delivered to the Company as part or full payment for the exercise
of a Stock Option or surrendered to the Company for tax withholding purposes
shall again be available for Awards under the Plan. The preceding sentence
shall apply only for purposes of determining the aggregate number of shares of
B-2
Common Stock subject to Awards pursuant to Section 5.a above but shall not
apply for purposes of determining the maximum number of shares of Common Stock
subject to Awards that any individual participant may receive pursuant to
Section 5.b above.
6. Stock Options
a. In General. The Committee is authorized to grant Stock Options to
non-employee directors, executive officers and other key employees of the
Company or any of its Subsidiaries and shall, in its sole discretion,
determine such participants in the Plan who will receive Stock Options and the
number of shares of Common Stock underlying each Stock Option. Stock Options
may be (i) incentive stock options ("Incentive Stock Options") within the
meaning of Section 422 of the Code, or (ii) Stock Options which do not qualify
as Incentive Stock Options ("Non-Qualified Stock Options"). The Committee may
grant to any participant one or more Incentive Stock Options, Non-Qualified
Stock Options, or both types of Stock Options. Each Stock Option shall be
subject to such terms and conditions consistent with the Plan as shall be
determined by the Committee and as set forth in the Award agreement. In
addition, each Stock Option shall be subject to the following limitations set
forth in this Section 6.
b. Exercise Price. Each Stock Option granted hereunder shall have such
per-share exercise price as the Committee may determine on the date of grant;
provided, however, subject to Section 6(e) below, that the per-share exercise
price shall not be less than 100 percent of the Fair Market Value (as defined
in Section 17 below) of Common Stock on the date the Stock Option is granted.
c. Payment of Exercise Price. The Stock Option exercise price may be
paid in cash or, in the discretion of the Committee, by the delivery of shares
of Common Stock then owned by the participant for at least six months, by the
withholding of shares of Common Stock for which a Stock Option is exercisable,
or by a combination of these methods. In the discretion of the Committee, a
payment may also be made by delivering a properly executed exercise notice to
the Company together with a copy of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds to pay the
exercise price with the requirement of the broker same day reconciliation or
as otherwise determined by the Company. To facilitate the foregoing, the
Company may enter into agreements for coordinated procedures with one or more
brokerage firms. The Committee may prescribe any other method of paying the
exercise price that it determines to be consistent with applicable law and the
purpose of the Plan, including, without limitation, in lieu of the exercise of
a Stock Option by delivery of shares of Common Stock then owned by a
participant for at least six months, providing the Company with a notarized
statement attesting to the number of shares owned, where upon verification by
the Company, the Company would issue to the participant only the number of
incremental shares to which the participant is entitled upon exercise of the
Stock Option. In determining which methods a participant may utilize to pay
the exercise price, the Committee may consider such factors as it determines
are appropriate; provided, however, that with respect to Incentive Stock
Options, all such discretionary determinations shall be made at the time of
grant and specified in the Award agreement.
d. Exercise Period. Stock Options granted under the Plan shall be
exercisable at such time or times as specified in the Plan and the Award
agreement; provided, however, that no Stock Option shall be exercisable later
than ten years after the date it is granted.
e. Limitations on Incentive Stock Options. Incentive Stock Options may
be granted only to participants who are executive officers or other key
employees of the Company or any of its Subsidiaries on the date of grant. The
aggregate market value (determined as of the time the Stock Option is granted)
of Common Stock with respect to which Incentive Stock Options (under all
option plans of the Company) are exercisable for the first time by a
participant during any calendar year shall not exceed $100,000. For purposes
B-3
of the preceding sentence, (i) Incentive Stock Options shall be taken into
account in the order in which they are granted and (ii) Incentive Stock
Options granted before 1995 shall not be taken into account. Incentive Stock
Options may not be granted to any participant who, at the time of grant, owns
stock possessing (after the application of the attribution rules of Section
424(d) of the Code) more than 10 percent of the total combined voting power of
all outstanding classes of stock of the Company or any of its Subsidiaries,
unless the exercise price is fixed at not less than 110 percent of the Fair
Market Value of Common Stock on the date of grant and the exercise of such
option is prohibited by its terms after the expiration of five years from the
date of grant of such option. In addition, no Incentive Stock Option shall be
issued to a participant in tandem with a Non-Qualified Stock Option.
7. Stock Appreciation Rights
The Committee is authorized to grant Stock Appreciation Rights to
executive officers and other key employees of the Company or any of its
Subsidiaries and shall, in its sole discretion, determine such executive
officers and other key employees who will receive Stock Appreciation Rights
and the number of shares of Common Stock with respect to each Stock
Appreciation Right. A "Stock Appreciation Right" shall mean a right to
receive a payment in cash, Common Stock or a combination thereof, in an amount
equal to the excess of (x) the Fair Market Value, or other specified
valuation, of a specified number of shares of Common Stock on the date the
Stock Appreciation Right is exercised over (y) the Fair Market Value, or other
specified valuation (which shall be no less than the Fair Market Value), of
such shares of Common Stock on the date the Stock Appreciation Right is
granted, all as determined by the Committee, provided, however, that if a
Stock Appreciation Right is granted retroactively in tandem with or in
substitution for a Stock Option, the designated Fair Market Value in the Award
agreement may be the Fair Market Value on the date such Stock Option was
granted. Each Stock Appreciation Right shall be subject to such terms and
conditions consistent with the Plan as shall be determined by the Committee
and as set forth in the Award agreement.
8. Stock Awards
The Committee is authorized to grant Stock Awards to non-employee
directors, executive officers and other key employees of the Company or any of
its Subsidiaries and shall, in its sole discretion, determine such
participants in the Plan who will receive Stock Awards and the number of
shares of Common Stock underlying each Stock Award. Each Stock Award shall be
subject to such terms and conditions consistent with the Plan as shall be
determined by the Committee and as set forth in the Award agreement,
including, without limitation, restrictions on the sale or other disposition
of such shares, and the right of the Company to reacquire such shares for no
consideration upon termination of the participant's employment within
specified periods. The Committee may require the participant to deliver a
duly signed stock power, endorsed in blank, relating to Common Stock covered
by such Stock Award and/or that the stock certificates evidencing such shares
be held in custody or bear restrictive legends until the restrictions thereon
shall have lapsed. The Award agreement shall specify whether the participant
shall have, with respect to the shares of Common Stock subject to a Stock
Award, all of the rights of a holder of shares of Common Stock, including the
right to receive dividends and to vote the shares.
9. Performance Awards
a. In General. The Committee is authorized to grant Performance Awards
to executive officers and other key employees of the Company or any of its
Subsidiaries and shall, in its sole discretion, determine such executive
officers and other key employees who will receive Performance Awards and the
number of shares of Common Stock or Stock Units (as described in Section 10
below) that may be subject to each Performance Award. Each Performance Award
shall be subject to such terms and conditions consistent with the Plan as
B-4
shall be determined by the Committee and as set forth in the Award agreement.
The Committee shall set performance targets at its discretion which, depending
on the extent to which they are met, will determine the number and/or value of
Performance Awards that will be paid out to the participants, and may attach
to such Performance Awards one or more restrictions. Performance targets may
be based upon, without limitation, Company-wide, divisional and/or individual
performance.
b. Adjustment of Performance Targets. With respect to those
Performance Awards that are not intended to qualify as Performance-Based
Awards (as described in Section 11 below), the Committee shall have the
authority at any time to make adjustments to performance targets for any
outstanding Performance Awards which the Committee deems necessary or
desirable unless at the time of establishment of goals the Committee shall
have precluded its authority to make such adjustments.
c. Payout. Payment of earned Performance Awards may be made in shares
of Common Stock or in cash and shall be made in accordance with the terms and
conditions prescribed or authorized by the Committee. The participant may
elect to defer, or the Committee may require or permit the deferral of, the
receipt of Performance Awards upon such terms as the Committee deems
appropriate.
10. Stock Units
a. In General. The Committee is authorized to grant Stock Units to
executive officers and other key employees of the Company or any of its
Subsidiaries and shall, in its sole discretion, determine such executive
officers and other key employees who will receive Stock Units and the number
of shares of Common Stock with respect to each Stock Unit. The Committee
shall determine the criteria for the vesting of Stock Units. A Stock Unit
granted by the Committee shall provide payment in shares of Common Stock at
such time as the Award agreement shall specify. Shares of Common Stock issued
pursuant to this Section 10 may be issued with or without other payments
therefor as may be required by applicable law or such other consideration as
may be determined by the Committee. The Committee shall determine whether a
participant granted a Stock Unit shall be entitled to a Dividend Equivalent
Right (as defined below). Each Stock Unit shall be subject to such terms and
conditions consistent with the Plan as shall be determined by the Committee
and as set forth in the Award agreement.
b. Payout. Upon vesting of a Stock Unit, unless the Committee has
determined to defer payment with respect to such unit or a participant has
elected to defer payment under Section 10(c) below, shares of Common Stock
representing the Stock Units shall be distributed to the participant unless
the Committee, with the consent of the participant, provides for the payment
of the Stock Units in cash or partly in cash and partly in shares of Common
Stock equal to the value of the shares of Common Stock which would otherwise
be distributed to the participant.
c. Deferral. Prior to the year with respect to which a Stock Unit may
vest, the participant may elect, upon such terms as the Committee deems
appropriate, not to receive Common Stock upon the vesting of such Stock Unit
and for the Company to continue to maintain the Stock Unit on its books of
account. In such event, the value of a Stock Unit shall be payable in shares
of Common Stock pursuant to the agreement of deferral.
d. Definitions. A "Stock Unit" shall mean a notional account
representing one share of Common Stock. A "Dividend Equivalent Right" shall
mean the right to receive the amount of any dividend paid on the share of
Common Stock underlying a Stock Unit, which shall be payable in cash or in the
form of additional Stock Units.
B-5
11. Performance-Based Awards
a. In General. All Stock Options and Stock Appreciation Rights granted
under the Plan, and certain Stock Awards, Performance Awards, and Stock Units
granted under the Plan, and the compensation attributable to such Awards, are
intended to (i) qualify as Performance-Based Awards (as defined in the next
sentence) or (ii) be otherwise exempt from the deduction limitation imposed by
Section 162(m) of the Code. Certain Awards granted under the Plan may be
granted in a manner such that Awards qualify as "performance-based
compensation" (as such term is used in Section 162(m) of the Code and the
regulations thereunder) and thus be exempt from the deduction limitation
imposed by Section 162(m) of the Code ("Performance-Based Awards"). Awards
shall only qualify as Performance-Based Awards if at the time of grant the
Committee is comprised solely of two or more "outside directors" (as such term
is used in Section 162(m) of the Code and the regulations thereunder).
b. Stock Options and Stock Appreciation Rights. Stock Options and
Stock Appreciation Rights granted under the Plan with an exercise price at or
above the Fair Market Value of Common Stock on the date of grant should
qualify as Performance-Based Awards.
c. Other Awards. Stock Awards, Performance Awards, and Stock Units
granted under the Plan should qualify as Performance-Based Awards if, as
determined by the Committee, in its discretion, either the granting or vesting
of such Award is subject to the achievement of a performance target or targets
based on one or more of the performance measures specified in Section 11(d)
below. With respect to such Awards intended to qualify as Performance-Based
Awards:
(1) the Committee shall establish in writing (x) the objective
performance-based goals applicable to a given period and (y) the individual
employees or class of employees to which such performance-based goals apply no
later than 90 days after the commencement of such period (but in no event
after 25 percent of such period has elapsed);
(2) no Performance-Based Awards shall be payable to or vest with
respect to, as the case may be, any participant for a given period until the
Committee certifies in writing that the objective performance goals (and any
other material terms) applicable to such period have been satisfied; and
(3) after the establishment of a performance goal, the Committee shall
not revise such performance goal or increase the amount of compensation
payable thereunder (as determined in accordance with Section 162(m) of the
Code) upon the attainment of such performance goal.
d. Performance Measures. The Committee may use the following
performance measures (either individually or in any combination) to set
performance targets with respect to Awards intended to qualify as Performance-
Based Awards: net sales; pretax income before allocation of corporate
overhead and bonus; budget; earnings per share; net income; division, group or
corporate financial goals; return on stockholders' equity; return on assets;
attainment of strategic and operational initiatives; appreciation in and/or
maintenance of the price of Common Stock or any other publicly-traded
securities of the Company; market share; gross profits; earnings before
interest and taxes; earnings before interest, taxes, depreciation and
amortization; economic value-added models; comparisons with various stock
market indices; and/or reductions in costs.
12. Adjustment Provisions
If there shall be any change in Common Stock of the Company, through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, reverse stock split, split up, spinoff, combination of shares, exchange
B-6
of shares, dividend in kind or other like change in capital structure or
distribution (other than normal cash dividends) to stockholders of the
Company, an adjustment shall be made to each outstanding Stock Option and
Stock Appreciation Right such that each such Stock Option and Stock
Appreciation Right shall thereafter be exercisable for such securities, cash
and/or other property as would have been received in respect of Common Stock
subject to such Stock Option or Stock Appreciation Right had such Stock Option
or Stock Appreciation Right been exercised in full immediately prior to such
change or distribution, and such an adjustment shall be made successively each
time any such change shall occur. In addition, in the event of any such
change or distribution, in order to prevent dilution or enlargement of
participants' rights under the Plan, the Committee shall have the authority to
adjust, in an equitable manner, the number and kind of shares that may be
issued under the Plan, the number and kind of shares subject to outstanding
Awards, the exercise price applicable to outstanding Awards, and the Fair
Market Value of Common Stock and other value determinations applicable to
outstanding Awards. Appropriate adjustments may also be made by the Committee
in the terms of any Awards under the Plan to reflect such changes or
distributions and to modify any other terms of outstanding Awards on an
equitable basis, including modifications of performance targets and changes in
the length of performance periods. In addition, other than with respect to
Stock Options, Stock Appreciation Rights and other Awards intended to
constitute Performance-Based Awards, the Committee is authorized to make
adjustments to the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events affecting the Company
or any of its Subsidiaries or the financial statements of the Company, or in
response to changes in applicable laws, regulations, or accounting principles.
Notwithstanding the foregoing, (i) any adjustment with respect to an
Incentive Stock Option shall comply with the rules of Section 424(a) of the
Code, and (ii) in no event shall any adjustment be made which would render any
Incentive Stock Option granted hereunder other than an incentive stock option
for purposes of Section 422 of the Code.
13. Change In Control
a. Accelerated Vesting. Notwithstanding any other provision of this
Plan, if there is a Change in Control of the Company (as defined in Section
13(b) below), all unvested Awards granted under the Plan shall become fully
vested immediately upon the occurrence of the Change of Control and such
vested Awards shall be paid out or settled, as applicable, within 60 days upon
the occurrence of the Change of Control, subject to requirements of applicable
laws and regulations.
b. Definition. For purposes of this Section 13, (i) if there is an
employment agreement or a change-in-control agreement between the participant
and the Company or any of its Subsidiaries in effect, "Change in Control"
shall have the same definition as the definition of "change in control"
contained in such employment agreement or change-in-control agreement, or (ii)
if "Change in Control" is not defined in such employment agreement or change-
in-control agreement, or if there is no employment agreement or change-in-
control agreement between the participant and the Company or any of its
Subsidiaries in effect, a "Change in Control" of the Company shall be deemed
to have occurred upon any of the following events:
(1) any person or other entity (other than any of the Company's
Subsidiaries or any employee benefit plan sponsored by the Company or any of
its Subsidiaries) including any person as defined in Section 13(d)(3) of the
Exchange Act, becomes the beneficial owner, as defined in Rule 13d-3 under the
Exchange Act, directly or indirectly, of more than 35 percent of the total
combined voting power of all classes of capital stock of the Company normally
entitled to vote for the election of directors of the Company (the "Voting
Stock");
(2) the stockholders of the Company approve the sale of all or
substantially all of the property or assets of the Company and such sale
occurs;
B-7
(3) the Company's Common Stock shall cease to be publicly traded;
(4) the stockholders of the Company approve a consolidation or merger
of the Company with another corporation (other than with any of the Company's
Subsidiaries), the consummation of which would result in the stockholders of
the Company immediately before the occurrence of the consolidation or merger
owning, in the aggregate, less than 51 percent of the Voting Stock of the
surviving entity, and such consolidation or merger occurs; or
(5) a change in the Company's Board occurs with the result that the
members of the Board on the Effective Date (as defined in Section 25(a) below)
of the Plan (the "Incumbent Directors") no longer constitute a majority of
such Board, provided that any person becoming a director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest or the settlement thereof, including but not
limited to a consent solicitation, relating to the election of directors of
the Company) whose election or nomination for election was supported by two-
thirds (2/3) of the then Incumbent Directors shall be considered an Incumbent
Director for purposes hereof.
c. Cashout. The Committee, in its discretion, may determine that, upon
the occurrence of a Change in Control of the Company, each Stock Option and
Stock Appreciation Right outstanding hereunder shall terminate and such holder
shall receive, within 60 days upon the occurrence of the Change of Control,
with respect to each share of Common Stock subject to such Stock Option or
Stock Appreciation Right, an amount equal to the excess of the Fair Market
Value of such shares of Common Stock immediately prior to the occurrence of
such Change in Control over the exercise price per share of such Stock Option
or Stock Appreciation Right; such amount to be payable in cash, in one or more
kinds of property (including the property, if any, payable in the transaction)
or in a combination thereof, as the Committee, in its discretion, shall
determine.
14. Termination of Employment
a. Subject to any written agreement between the participant and the
Company or any of its Subsidiaries, if a participant's employment is
terminated due to death or disability:
(1) all unvested Stock Awards and all unvested Stock Units held by the
participant on the date of the participant's death or the date of the
termination of his or her employment as the case may be, shall immediately
become vested as of such date;
(2) all unexercisable Stock Options and all unexercisable Stock
Appreciation Rights held by the participant on the date of the participant's
death or the date of the termination of his or her employment, as the case may
be, shall immediately become exercisable as of such date and shall remain
exercisable until the earlier of (i) the end of the one-year period following
the date of the participant's death or the date of the termination of his or
her employment, as the case may be, or (ii) the date the Stock Option or Stock
Appreciation Right would otherwise expire;
(3) all exercisable Stock Options and all exercisable Stock
Appreciation Rights held by the participant on the date of the participant's
death or the date of the termination of his or her employment, as the case may
be, shall remain exercisable until the earlier of (i) the end of the one-year
period following the date of the participant's death or the date of the
termination of his or her employment, as the case may be, or (ii) the date the
Stock Option or Stock Appreciation Right would otherwise expire; and
(4) all unearned and/or unvested Performance Awards held by the
participant on the date of the participant's death or the date of the
termination of his or her employment, as the case may be, shall immediately
B-8
become earned or vested as of such date and shall be paid out and/or settled
based on the participant's performance immediately prior to the date of the
participant's death or the date of the termination of his or her employment on
a pro-rated basis with a minimum of at least one year into a performance
period.
b. Subject to any written agreement between the participant and the
Company or any of its Subsidiaries, if a participant's employment is
terminated by the Company for Cause (as defined in Section 14(f) below), all
Awards, whether or not vested, earned or exercisable, held by the participant
on the date of the termination of his or her employment for Cause shall
immediately be forfeited by such participant as of such date.
c. Subject to any written agreement between the participant and the
Company or any of its Subsidiaries, if a participant's employment is
terminated for any reason, including, without limitation, retirement, other
than for Cause or other than due to death or disability:
(1) all unvested, unearned or unexercisable Awards held by the
participant on the date of the termination of his or her employment shall
immediately be forfeited by such participant as of such date; and
(2) all exercisable Stock Options and all exercisable Stock
Appreciation Rights held by the participant on the date of the termination of
his or her employment shall remain exercisable until the earlier of (i) the
end of the 90-day period following the date of the termination of the
participant's employment, or (ii) the date the Stock Option or Stock
Appreciation Right would otherwise expire.
d. Notwithstanding anything contained in the Plan to the contrary, the
Committee may, in its discretion, provide that:
(1) any or all unvested Stock Awards and/or any or all unvested Stock
Units held by the participant on the date of the participant's death and/or
the date of the termination of the participant's employment shall immediately
become vested as of such date;
(2) any or all unexercisable Stock Options and/or any or all
unexercisable Stock Appreciation Rights held by the participant on the date of
the participant's death and/or the date of the termination of his or her
employment shall immediately become exercisable as of such date and shall
remain exercisable until a date that occurs on or prior to the date the Stock
Option or Stock Appreciation Right is scheduled to expire, provided, however,
that Incentive Stock Options shall remain exercisable not longer than the end
of the 90-day period following the date of the termination of the
participant's employment;
(3) any or all exercisable Stock Options and/or any or all exercisable
Stock Appreciation Rights held by the participant on the date of the
participant's death and/or the date of the termination of his or her
employment shall remain exercisable until a date that occurs on or prior to
the date the Stock Option or Stock Appreciation Right is scheduled to expire,
provided, however, that Incentive Stock Options shall remain exercisable not
longer than the end of the 90-day period following the date of the termination
of the participant's employment; and/or
(4) a participant shall immediately become vested in all or a portion
of any earned Performance Awards held by such participant on the date of the
termination of the participant's employment, and such vested Performance
Awards (or portion thereof) and/or any unearned Performance Awards (or portion
thereof) held by such participant on the date of the termination of his or her
employment shall immediately become payable to such participant as if all
B-9
performance goals had been met as of the date of the termination of his or her
employment.
e. Notwithstanding anything contained in the Plan to the contrary, (i)
the provisions contained in this Section 14 shall be applied to an Incentive
Stock Option only if the application of such provision maintains the treatment
of such Incentive Stock Option as an Incentive Stock Option and (ii) the
exercise period of an Incentive Stock Option in the event of a termination due
to disability provided in Section 14(a)(3) above shall only apply if the
participant's disability satisfies the requirement of "permanent and total
disability" as defined in Section 22(e)(3) of the Code.
f. For purposes of this Section 14, (i) if there is an employment
agreement between the participant and the Company or any of its Subsidiaries
in effect, "Cause" shall have the same definition as the definition of "cause"
contained in such employment agreement; or (ii) if "Cause" is not defined in
such employment agreement or if there is no employment agreement between the
participant and the Company or any of its Subsidiaries in effect, "Cause"
shall include, but is not limited to:
(1) any willful and continuous neglect of or refusal to perform the
employee's duties or responsibilities with respect to the Company or any of
its Subsidiaries, insubordination, dishonesty, gross neglect or willful
malfeasance by the participant in the performance of such duties and
responsibilities, or the willful taking of actions which materially impair the
participant's ability to perform such duties and responsibilities, or any
serious violation of the rules or regulations of the Company;
(2) the violation of any local, state or federal criminal statute,
including, without limitation, an act of dishonesty such as embezzlement,
theft or larceny;
(3) intentional provision of services in competition with the Company
or any of its Subsidiaries, or intentional disclosure to a competitor of the
Company or any of its Subsidiaries of any confidential or proprietary
information of the Company or any of its Subsidiaries; or
(4) any similar conduct, including, without limitation, disparagement
of the Company or any of its Subsidiaries, by the participant with respect to
which the Company determines in its discretion that the participant has
terminated employment under circumstances such that the payment of any
compensation attributable to any Award granted under the Plan would not be in
the best interest of the Company or any of its Subsidiaries.
For purposes of this Section 14, the Committee shall have the authority
to determine whether the "Cause" exists and whether subsequent actions on the
part of the participant have cured the "Cause."
15. Transferability
Each Award granted under the Plan to a participant which is subject to
restrictions on transferability and/or exercisability shall not be
transferable otherwise than by will or the laws of descent and distribution
and/or shall be exercisable, during the participant's lifetime, only by the
participant. In the event of the death of a participant, each Stock Option or
Stock Appreciation Right theretofore granted to him or her shall be
exercisable in accordance with Section 14 above and then only by the executor
or administrator of the estate of the deceased participant or the person or
persons to whom the deceased participant's rights under the Stock Option or
Stock Appreciation Right shall pass by will or the laws of descent and
distribution. Notwithstanding the foregoing, at the discretion of the
Committee, an Award (other than an Incentive Stock Option) may permit the
transferability of such Award by a participant solely to members of the
B-10
participant's immediate family or trusts or family partnerships for the
benefit of such persons, subject to any restriction included in the Award
agreement.
16. Other Provisions
Awards granted under the Plan may also be subject to such other
provisions (whether or not applicable to the Award granted to any other
participant) as the Committee determines on the date of grant to be
appropriate, including, without limitation, for the installment purchase of
Common Stock under Stock Options, for the installment exercise of Stock
Appreciation Rights, to assist the participant, excluding an executive officer
or a non-employee director, in financing the acquisition of Common Stock, for
the forfeiture of, or restrictions on resale or other disposition of, Common
Stock acquired under any form of the Award, for the acceleration of
exercisability or vesting of Awards in the event of a change in control of the
Company, or to comply with federal and state securities laws, or
understandings or conditions as to the participant's employment, in addition
to those specifically provided for under the Plan. In addition, except as
otherwise provided herein, a participant may defer receipt or payment of any
Award granted under this Plan, in accord with the terms of any deferred
compensation plan or arrangement of the Company. The Committee shall have the
authority to retract any Award granted under the Plan in case of a material
restatement of the financial statements of the Company or if it is otherwise
determined by the Committee that the previously granted Award was not earned
by the participant.
17. Fair Market Value
For purposes of this Plan and any Awards granted hereunder, Fair Market
Value shall be (i) the closing price of Common Stock on the date of
calculation (or on the last preceding trading date if Common Stock was not
traded on such date) if Common Stock is readily tradeable on a national
securities exchange or other market system or (ii) if Common Stock is not
readily tradeable, the amount determined in good faith by the Committee as the
fair market value of Common Stock.
18. Withholding
All payments or distributions of Awards made pursuant to the Plan shall
be net of any amounts required to be withheld pursuant to applicable federal,
state and local tax withholding requirements. If the Company proposes or is
required to distribute Common Stock pursuant to the Plan, it may require the
participant receiving such Common Stock to remit to it or to the Subsidiary
that employs such participant an amount sufficient to satisfy such tax
withholding requirements prior to the delivery of any certificates for such
Common Stock. In lieu thereof, the Company or the Subsidiary employing the
participant shall have the right to withhold the amount of such taxes from any
other sums due or to become due from the Company or the Subsidiary, as the
case may be, to the participant receiving Common Stock, as the Committee shall
prescribe. The Committee may, in its discretion, and subject to such rules as
the Committee may adopt (including any as may be required to satisfy
applicable tax and/or non-tax regulatory requirements), permit a participant
to pay all or a portion of the federal, state and local withholding taxes
arising in connection with any Award consisting of shares of Common Stock by
electing to have the Company withhold shares of Common Stock having a Fair
Market Value equal to the amount of tax to be withheld, such tax calculated at
rates required by statute or regulation.
19. Tenure
A participant's right, if any, to continue to serve the Company as a
non-employee director, executive officer, other key employee, or otherwise
shall not be enlarged or otherwise affected by his or her designation as a
participant under the Plan.
B-11
20. Unfunded Plan
Participants shall have no right, title, or interest whatsoever in or to
any investments which the Company may make to aid it in meeting its
obligations under the Plan. Nothing contained in the 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 person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall be
paid from the general funds of the Company 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 the Plan. The Plan
is not intended to be subject to the Employee Retirement Income Security Act
of 1974, as amended.
21. No Fractional Shares
No fractional shares of Common Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether
cash, or 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.
22. Duration, Amendment and Termination
No Award shall be granted more than ten years after the Effective Date;
provided, however, that the terms and conditions applicable to any Award
granted prior to such date may thereafter be amended or modified by mutual
agreement between the Company and the participant or such other persons as may
then have an interest therein. Also, by mutual agreement between the Company
and a participant under this Plan or under any other present or future plan of
the Company, Awards may be granted to such participant in substitution and
exchange for, and in cancellation of, any Awards previously granted to such
participant under this Plan, or any other present or future plan of the
Company. The Board or the Committee may amend the Plan from time to time or
suspend or terminate the Plan at any time. However, no action authorized by
this Section 22 shall reduce the amount of any existing Award or change the
terms and conditions thereof without the participant's consent. No amendment
of the Plan shall, without approval of the stockholders of the Company (i)
increase the total number of shares which may be issued under the Plan or the
maximum number of shares with respect to Stock Options, Stock Appreciation
Rights and other Awards that may be granted to any individual under the Plan;
(ii) modify the requirements as to eligibility for Awards under the Plan; or
(iii) effect the repricing of Stock Options, as defined in Section 303A.08 or
other applicable section of the New York Stock Exchange Listed Company Manual;
provided, however, that no amendment may be made without approval of the
stockholders of the Company if the amendment will disqualify any Incentive
Stock Options granted hereunder.
23. Governing Law
This Plan, Awards granted hereunder and actions taken in connection
herewith shall be governed and construed in accordance with the laws of the
Commonwealth of Kentucky (regardless of the law that might otherwise govern
under applicable Kentucky principles of conflict of laws).
24. Severability
In case any provision of this Plan shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
B-12
25. Effective Date
a. The Plan shall be effective as of the date on which the Plan is
approved by the stockholders of the Company at an annual meeting or any
special meeting of stockholders of the Company (the "Effective Date") and such
approval of stockholders shall be a condition to the right of each participant
to receive Awards hereunder.
b. This Plan shall terminate on the 10th anniversary of the Effective
Date (unless sooner terminated by the Board).
B-13
NOTICE OF
2005
ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
GENERAL CABLE
GENERAL CABLE
HIGHLAND HEIGHTS, KENTUCKY
PROXY FOR 2005 ANNUAL MEETING OF SHAREHOLDERS, MAY 10, 2005
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gregory B. Kenny, Christopher F. Virgulak
and Robert J. Siverd, and each of them, as attorneys and proxies of the
undersigned, with full power of substitution, for and in the name, place and
stead of the undersigned, to appear at the Annual Meeting of Shareholders of
General Cable to be held at 10:00 a.m. on May 10, 2005, at 4 Tesseneer Drive,
Highland Heights, Kentucky, and at any postponement or adjournment thereof, and
to vote all of the shares of General Cable which the undersigned is entitled to
vote, with all the powers and authority the undersigned would possess if
personally present. The undersigned directs that this proxy be voted as marked
on the reverse side.
This Proxy will, when properly executed, be voted as directed. If no
directions to the contrary are indicated in the boxes provided, the persons
named above intend to vote FOR each proposal listed on the reverse side. A
majority of the attorneys and proxies present and acting at the meeting in
person or by their substitutes (or if only one is present and acting, then
that one) may exercise all the powers granted. Discretionary authority is
conferred as to certain matters which may properly come before the meeting. As
of the date of the Proxy Statement, management is not aware of any other
matter to be presented at the meeting that is not described in the Proxy
Statement. Please refer to the Proxy Statement for more information on
discretionary voting authority.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
YOUR VOTE IS IMPORTANT
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Vote by Internet at http://www.eproxy.com/bgc
or
2. Call toll free 1-800-435-6710 on a touch-tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this
call
or
3. Mark, sign and date your proxy card and return it promptly in the
enclosed envelope.
PLEASE VOTE
TO VIEW OUR ANNUAL REPORT ONLINE
GO TO: http//www.generalcable.com
1. Election of Directors: Gregory B. Kenny and Robert L. Smialek
FOR all nominees listed above (except as marked to the contrary) [ ]
WITHHOLD AUTHORITY to vote for all nominees listed above [ ]
To withhold authority to vote for any individual nominee, write that
nominee's name on the space provided below.
2. Ratify the appointment of Deloitte & Touche LLP to audit the 2005
consolidated financial statements of General Cable.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of General Cable Corporation 2005 Stock Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Check box if you plan to attend the Annual Meeting [ ]
Signature________________________________________
Signature________________________________________ Date_________
Please sign exactly as your name or names appear here. When shares are held by
joint tenants, all should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign name by authorized person.
----------------------------------------------------------------------------
| CONSENTING TO RECEIVE ALL FUTURE ANNUAL MEETING MATERIALS AND SHAREHOLDER |
| COMMUNICATIONS ELECTRONICALLY IS SIMPLE AND FAST! Enroll today at |
| www.melloninvestor.com/ISD for secure online access to your proxy |
| materials, statements, tax documents and other important shareholder |
| correspondence. |
----------------------------------------------------------------------------
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
Internet and telephone voting is available through 11:59 PM Eastern Time the
day prior to the annual meeting day.
YOUR INTERNET OR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR
SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY
CARD.
INTERNET
http://www.eproxy.com/bgc
-------------------------
Use the Internet to vote your proxy.
Have your proxy card in hand when you access the web site.
OR
TELEPHONE
1-800-435-6710
Use any touch-tone telephone to vote your proxy.
Have your proxy card in hand when you call.
OR
MAIL
Mail, sign and date your proxy card and
return it in the enclosed postage-paid envelope.
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.