Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
(Amendment
No. )
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Filed
by the Registrant
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x
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Filed
by a Party other than the Registrant
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o
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Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential, For Use of the
Commission Only (as Permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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BENCHMARK
ELECTRONICS, INC.
(Name of
Registrant as Specified in Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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o
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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Fee
paid previously with preliminary
materials.
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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BENCHMARK
ELECTRONICS, INC.
3000
Technology Drive
Angleton,
Texas 77515
NOTICE
OF 2010 ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON TUESDAY, MAY 18, 2010
Shareholders
of Benchmark Electronics, Inc.:
The 2010 Annual Meeting of Shareholders
of Benchmark Electronics, Inc. (the Company) will be held at the Four Seasons
Hotel Houston, 1300 Lamar Street, Houston, Texas, on Tuesday, May 18, 2010,
beginning at 10:00 a.m. (local time), for the following purposes:
1. to
elect seven directors to serve on the Board of Directors until the 2011 annual
meeting of shareholders and until their successors are duly elected and
qualified;
2. to
approve adoption of the Benchmark Electronics, Inc. 2010 Omnibus Incentive
Compensation Plan;
3. to
approve and amend the Rights Agreement between Benchmark Electronics,
Inc. and Computershare Trust Company, N.A.;
4. to
ratify the appointment of KPMG LLP as the independent registered public
accounting firm of the Company for the year ending December 31, 2010;
and
5. to
transact such other business as may properly come before the meeting or any
adjournment thereof.
Shareholders of record at the close of
business on March 29, 2010 are entitled to notice of and to vote at the meeting
and any adjournment thereof.
You are cordially invited to attend the
meeting. Regardless of whether you plan to attend the meeting, you are urged to
complete, date, sign and return the enclosed proxy in the accompanying envelope
or to vote by telephone or via the Internet pursuant to the instructions on the
proxy card at your earliest convenience.
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By
order of the Board of Directors,
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/s/ Kenneth S. Barrow
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Kenneth
S. Barrow
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Secretary
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Angleton,
Texas
April 1,
2010
YOUR
VOTE IS IMPORTANT.
To ensure your shares are represented
at the meeting, please complete, date, sign and return the enclosed proxy in the
accompanying envelope or vote by telephone or via the Internet
pursuant to the instructions on the proxy card at your earliest convenience, whether
or not you plan to attend the meeting. No additional postage is necessary if the
proxy is mailed in the United States. The proxy is revocable at any time before
it is voted at the meeting.
BENCHMARK
ELECTRONICS, INC.
3000
Technology Drive
Angleton,
Texas 77515
(979)
849-6550
April
1, 2010
PROXY
STATEMENT
FOR
2010
ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON TUESDAY, MAY 18, 2010
INTRODUCTION
This Proxy Statement is being furnished
in connection with the solicitation of proxies by the Board of Directors (the
Board) of Benchmark Electronics, Inc. (the Company) for use at the 2010 Annual
Meeting of Shareholders of the Company to be held on Tuesday, May 18, 2010,
beginning at10:00 a.m. (local time), and any adjournment thereof (the
Meeting) for the purposes set forth in this Proxy Statement and the accompanying
Notice. It is anticipated that this Proxy Statement, the Notice and the enclosed
form of proxy will be sent to shareholders on or about April 12,
2010.
Proxies
Proxies in the enclosed form that are
properly executed and received by the Company before or at the Meeting and which
are not revoked will be voted in accordance with the directions set forth
therein. If no direction is made, a proxy that is properly signed and received
by the Company and which is not revoked will be voted FOR the election of all
nominees for director named herein to serve on the Board until the 2011 annual
meeting of shareholders and until their successors are duly elected and
qualified, FOR the
approval of the Benchmark Electronics, Inc. 2010 Omnibus Incentive Compensation
Plan, FOR
the approval and amendment to the Rights Agreement between Benchmark
Electronics, Inc. and Computershare Trust Company, N.A. and FOR the ratification of the
appointment of KPMG LLP as the independent registered public accounting
firm of the Company for the year ending December 31, 2010. If any other
matter, not known or determined at the time of the solicitation of proxies,
properly comes before the Meeting, the proxies will be voted in accordance with
the discretion of the person or persons voting the proxies. The proxy also
confers on the persons named therein discretionary authority to vote with
respect to any matters presented at the Meeting for which advance notice was not
received by the Company prior to February 13, 2010. Proxies may be revoked by
written notice received by the Secretary of the Company at any time before they
are voted by delivering to the Secretary of the Company a signed notice of
revocation, or a later dated signed proxy, or by attending the Meeting and
voting in person by ballot.
Voting
Securities
Shareholders of record at the close of
business on March 29, 2010 are entitled to notice of and to vote at the
Meeting. As of March 29, 2010, there were _________ Common Shares, $0.10 par
value per share (Common Shares), issued, outstanding and entitled to vote at the
Meeting. Each Common Share is entitled to one vote on all matters that may
properly come before the Meeting.
Quorum
and Other Matters
The presence at the Meeting, in person
or by proxy, of the holders of a majority of the outstanding Common Shares is
necessary to constitute a quorum. Common Shares represented by a properly
completed, signed and returned proxy will be counted as present at the Meeting
for purposes of determining a quorum, without regard to whether the proxy is
marked as casting a vote or abstaining. Common Shares held by nominees which are
voted on at least one matter coming before the Meeting will also be counted as
present for purposes of determining a quorum, even if the beneficial owner’s
discretion has been withheld (a non-vote) for voting on some or all other
matters.
All matters specified in the notice of
the Meeting require the approval of the affirmative vote of a majority of the
outstanding Common Shares entitled to vote and present, in person or represented
by proxy, at the Meeting. An abstention, a broker non-vote or a withholding of
authority to vote with respect to the election of directors or the ratification
of the appointment of the Company’s independent registered public accountants
will have the effect of a vote against the proposal.
An Inspector of Election appointed by
the Company will tabulate votes at the Meeting.
The Board is not aware of any matters
that are expected to come before the Meeting other than those referred to in
this Proxy Statement. If any other matter properly comes before the Meeting, the
proxies will be voted in accordance with the discretion of the person or persons
voting the proxies.
PROPOSAL
1
ELECTION
OF DIRECTORS
Nominees
for Election
The following table sets forth certain
information with respect to each nominee for election as a director of the
Company. Each nominee was proposed for reelection by the Nominating/Governance
Committee for consideration by the Board and proposal to the Shareholders. The
information as to age, principal occupation, and directorships has been
furnished by each such nominee.
Name
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Age
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Principal Occupation
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Director
Since
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Cary
T. Fu
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61
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Chairman
of the Board and Chief Executive Officer of the Company
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1990(1)
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Michael
R. Dawson
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56
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Senior
Vice President and Chief Financial Officer of Northern Offshore,
Ltd.
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2006
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Peter
G. Dorflinger
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58
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General
Partner of MAD Capital Partners
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1990
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Douglas
G. Duncan
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59
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Retired
President and Chief Executive Officer of FedEx Freight
Corporation
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2006
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Laura
W. Lang
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54
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Chief
Executive Officer of Digitas
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2005
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Bernee
D.L. Strom
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62
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Founding
Partner of Revitalization Partners, LLC
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2004
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Clay
C. Williams
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47
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Executive
Vice President and Chief Financial Officer of National Oilwell Varco,
Inc.
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2008
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(1) Also
served as a director of the Company from 1986 to 1988.
Mr. Fu has been a director of the
Company since 1990, Chairman of the Board since May 2009 and Chief Executive
Officer since September 2004. He served as President and Chief Executive Officer
of the Company from September 2004 to December 2006, President and Chief
Operating Officer of the Company from May 2001 to September 2004, Executive Vice
President from 1990 to May 2001 and Executive Vice President-Financial
Administration from 1990 to April 1992. He also has served the Company as
Treasurer from 1986 to January 1996, Secretary from 1990 to January 1996 and
from 1986 to 1988 and Assistant Secretary from 1988 to 1990. In addition, Mr. Fu
also served as a director of the Company from 1986 to 1988. From 1983 to 1986,
Mr. Fu was employed by Intermedics as Controller of the Company and another
subsidiary of Intermedics. Mr. Fu holds an M.S. degree in accounting from
the University of Houston and is a Certified Public Accountant. Mr. Fu also
serves on the board of directors of Teradata Corporation. As one of the
Company’s founders, Mr. Fu brings to the Board an unparalleled familiarity with
the Company’s business and industry.
Mr. Dawson has been a director of the
Company since 2006 and is a member of the Audit and Compensation Committees. Mr.
Dawson has served as chair of the Audit Committee since May 2007. Mr. Dawson is
Senior Vice President and Chief Financial Officer of Northern Offshore, Ltd., an
offshore oil and gas drilling contractor. Mr. Dawson served as Senior Vice
President and Chief Financial Officer of GlobalSantaFe Corporation from June
2005 to November 2007. Previously, he served GlobalSantaFe as Vice President and
Controller from 2003 to 2005 and as Vice President and Treasurer from 2001 to
2003. Prior to November 2001, Mr. Dawson served as Vice President, Investor
Relations and Corporate Communications for Global Marine Inc. A former Certified
Public Accountant, Mr. Dawson joined Global Marine in 1999 after 16 years with
Union Texas Petroleum Holdings, where he served as Director of Acquisitions and
Portfolio Management, Director of Investor Relations and in numerous financial
management positions in the Controller’s organization. Mr. Dawson began his
career at Shell Oil Company in 1975. Mr. Dawson holds a B.B.A. degree from the
University of Iowa. In recommending Mr. Dawson as a nominee for election as a
director of the Company, the Nominating/Governance Committee considered Mr.
Dawson’s experience as a Chief Financial Officer and related positions with
various companies, all of which will add to his service on the Company’s Audit
Committee. Mr. Dawson qualifies as an “independent director” under the rules of
the NYSE and as defined in Schedule 14A promulgated under Securities Exchange
Act of 1934 and as an “audit committee financial expert” under the rules of the
Securities and Exchange Commission.
Mr.
Dorflinger has been a director of the Company since 1990 and is a member of the
Nominating/Governance Committee. Mr. Dorflinger has served as chair of the
Nominating/Governance Committee since May 2006. He served as chair of the
Compensation Committee from December 2003 to May 2006. Mr. Dorflinger is a
general partner of MAD Capital Partners focusing on private investments in oil
and gas exploration, commercial property development, and early stage medical
product companies. Mr. Dorflinger is the former President of GlasTech, Inc., a
dental products manufacturer, a position he held from November 1998 through May
2002. From January 1998 through October 1998, he served as President and Chief
Operating Officer of Physicians Resource Group, Inc., a physicians’ practice
management company. From January 1997 through January 1998, he served as Vice
President and General Counsel of Advanced Medical Instruments, Inc., a
manufacturer of medical monitoring equipment. From March 1987 through October
1996, he served as Vice President, General Counsel and Secretary of Intermedics.
From June 1990 through October 1996, he also served as Group Vice President and
General Counsel of SULZERmedica, a division of Sulzer Limited of Switzerland,
composed of eight operating medical companies, including Intermedics. Mr.
Dorflinger received a J.D. degree from the University of Houston and is also a
director of several privately held companies. Mr. Dorflinger brings the
experience of many years of service as a director of the Company and his
intimate understanding of the Company and its business. Mr. Dorflinger qualifies
as an “independent director” under the rules of the NYSE.
Mr.
Duncan has been a director of the Company since 2006 and is a member of the
Audit and Compensation Committees. Mr. Duncan is the retired President and Chief
Executive Officer of FedEx Freight Corporation, a provider of regional and
interregional less-than-truckload freight services. He was founding CEO of this
stand-alone corporation for FedEx and served in that capacity from 2001 until
2010. Mr. Duncan graduated from Christopher Newport University. In recommending
Mr. Duncan as a nominee for election as a director of the Company, the
Nominating/Governance Committee considered not only Mr. Duncan’s experience as a
Chief Executive Officer, but also his skills and leadership with logistics. Mr.
Duncan qualifies as an “independent director” under the rules of the NYSE.
Effective March 1, 2010, Mr. Duncan also serves on the board of directors of
J.B. Hunt Transport Services, Inc.
Ms. Lang has been a director of the
Company since 2005 and is a member of the Compensation and Nominating/Governance
Committees. Ms. Lang has served as chair of the Compensation Committee since May
2006. Ms. Lang is Chief Executive Officer of Digitas, a global leader in digital
marketing, integrated strategy and technology. She is a member of the Publicis
Groupe executive committee and the VivaKi board of directors. Prior to joining
Digitas as Executive Vice President in 1999, Ms. Lang was President of Marketing
Corporation of America, providing strategic consulting services to clients in
the pharmaceutical, technology, entertainment, and financial services
industries. Previously she led the consulting practice at Yankelovich Clancy
Shulman providing strategic marketing services to Fortune and Service 100
clients. Before becoming a consultant, Ms. Lang worked in strategic planning for
Pfizer Pharmaceuticals, as well as product management at Bristol Myers and
Quaker Oats Company. Ms. Lang graduated from Tufts University with a Bachelor’s
degree (summa cum laude) in 1977. She earned an M.B.A. in Finance and Marketing
from the University of Pennsylvania Wharton School of Business in 1980. Ms.
Lang’s experience as a Chief Executive Officer, coupled with other senior
management positions with several different businesses speak for her analytical
skills and decision-making abilities that will add to the leadership skills of
the Board. Ms. Lang qualifies as an “independent director” under the rules of
the NYSE.
Ms. Strom has been a director of the
Company since 2004 and is a member of the Compensation and Nominating/Governance
Committees. She served as chair of the Audit Committee from May 2006 to May 2007
and served as chair of the Nominating/Governance Committee from May 2004 to May
2006. Ms. Strom is the Founding Partner of Revitalization Partners LLC, an
international specialty management services firm that provides hands-on interim
executive management and advisory services to client companies. Ms. Strom also
serves as a director of Ensequence, Inc., a software company that has developed
a cross-platform technology for interactive video across cable, satellite,
broadband and mobile devices. She also has served as President and Chief
Executive Officer of The Strom Group, an investment and business advisory firm,
since 1990. From July 2000 to February 2001 she was Chairman and Chief Executive
Officer of iCopyright.com, a provider of Internet content services. From January
to June 2000 she was President of InfoSpace.com Ventures, LLC, the venture
capital arm of InfoSpace.com, Inc., a global provider of information and
commerce infrastructure services for wireless devices and web sites. From 1998
to 1999 she was President and Chief Operating Officer of InfoSpace.com, Inc.
From 1995 to 1997 she was President and Chief Executive Officer of USA Digital
Radio Partners, LP, a communication and technology company. Ms. Strom received
her B.S. in mathematics and history, her M.A. and her Ph.D. (ABD) in mathematics
and mathematics education from New York University and her M.B.A. from the
Anderson School at the University of California, Los Angeles. Ms. Strom brings
the experience gained through her service on boards or as an officer of several
companies. Ms. Strom qualifies as an “independent director” under the rules of
the NYSE.
Mr. Williams was appointed to the Board
in October 2008 and is a member of the Audit and Compensation Committees. Mr.
Williams is Executive Vice President and Chief Financial Officer of National
Oilwell Varco, Inc., a global service provider and manufacturer of equipment for
oil and gas producers. He also served as the Chief Financial Officer of Varco
International, Inc. prior to Varco’s merger with National-Oilwell. Mr. Williams
began his career at Shell Oil Company in 1985, and has held various positions in
the energy industry for more than 20 years. Mr. Williams received a B.S. degree
in Civil/Geological Engineering from Princeton University and an M.B.A. from the
University of Texas at Austin. In recommending Mr. Williams as a nominee for
election as a director of the Company, the Nominating/Governance Committee
considered Mr. Williams’ current and past experience as a Chief Financial
Officer. Mr. Williams qualifies as an “independent director” under the rules of
the NYSE and as defined in Schedule 14A promulgated under Securities Exchange
Act of 1934 and as an “audit committee financial expert” under the rules of the
Securities and Exchange Commission.
The officers of the Company are elected
by, and serve at the discretion of, the Board.
Election
Procedures; Term
The directors will be elected by the
affirmative vote of the holders of a majority of the outstanding Common Shares
present in person or represented by proxy at the Meeting. Unless the authority
to vote for the election of directors is withheld as to any or all of the
nominees, all Common Shares represented by proxy will be voted for the election
of the nominees. If the authority to vote for the election of directors is
withheld as to any but not all of the nominees, all Common Shares represented by
any such proxy will be voted for the election of the nominees as to whom such
authority is not withheld. If a nominee becomes unavailable to serve as a
director for any reason before the election, the shares represented by proxy
will be voted for such other person, if any, as may be designated by the Board.
The Board, however, has no reason to believe that any nominee will be
unavailable to serve as a director.
Any vacancy on the Board occurring
after the election may be filled (1) by election at any annual or special
meeting of the shareholders called for that purpose, or (2) by a majority
of the remaining directors though less than a quorum of the Board, provided that
the remaining directors may not fill more than two such director vacancies
during the period between any two successive annual meetings of shareholders. A
director elected to fill a vacancy will be elected for the unexpired portion of
the term of his or her predecessor in office.
All directors will be elected to serve
until the 2011 annual meeting of shareholders and until their successors are
duly elected and qualified.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES TO THE BOARD OF DIRECTORS.
EXECUTIVE
OFFICERS
The executive officers of the Company
are Cary T. Fu, Donald F. Adam and Gayla J. Delly. See “Election of
Directors — Nominees for Election” for certain information with respect to
the age, positions and length of service with the Company, and business
experience of Mr. Fu.
Ms. Delly, 50, has been with the
Company since 1996 and served as President from December 2006 and Chief
Financial Officer from May 2001 to December 2006. She has also served as
Executive Vice President of the Company from September 2004 to December 2006, as
Vice President Finance of the Company from November 2000 to September 2004, as
Treasurer from January 1996 to December 2006 and as Controller of the Company
from January 1996 to January 2002. Ms. Delly holds a B.S. degree in accounting
from Samford University and is a Certified Public Accountant. Ms. Delly also
serves as a director of Flowserve Corporation.
Mr. Adam, 46, has been Chief Financial
Officer of the Company since December 2006. He has served as Vice President and
Corporate Controller from July 2005 and as Corporate Controller from January
2002 to July 2005. From February 1998 to January 2002, Mr. Adam served as Chief
Financial Officer of Specialty Piping Components, Inc. Mr. Adam holds a B.B.A.
degree in accounting from The University of Texas and is a Certified Public
Accountant.
CORPORATE
GOVERNANCE
The Company has been built on a culture
where integrity is the first and most important value, and this value has long
been a part of the Company’s corporate identity. The Company’s practices reflect
corporate governance initiatives that are compliant with existing standards of
the NYSE and the corporate governance requirements of the Sarbanes-Oxley Act of
2002, including:
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A
majority of our Board members are independent of the Company and its
management as defined by the NYSE;
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The
independent members of the Board meet regularly without the presence of
management;
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The
Audit Committee, the Compensation Committee and the Nominating/Governance
Committee each operate under charters that clearly establish their
respective roles and
responsibilities;
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All
members of the Audit Committee, the Compensation Committee and the
Nominating/Governance Committee meet the tests for independence
established by the NYSE;
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The
Chairman of the Audit Committee is an “audit committee financial expert”,
as defined by the SEC;
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The
Audit Committee meets with management and the auditors to receive
information concerning the design and operation of internal
controls;
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KPMG
LLP, our independent registered public accounting firm, reports directly
to the Audit Committee;
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The
Company’s internal audit group reports periodically throughout the year
directly to the Audit Committee;
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The
Company has, consistent with the requirements of the Sarbanes-Oxley Act of
2002, adopted a policy prohibiting personal loans or extensions of credit
to any executive officer or
director;
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The
Company has a code of conduct that applies to all employees, officers and
directors and a reporting policy to allow for confidential and anonymous
reporting to the Audit Committee;
and
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The
Board operates under a set of corporate governance
guidelines.
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The Board will continue to enhance the
Company’s governance practices as new ideas and best practices emerge. You can
access our current committee charters for our Audit Committee, Compensation
Committee and Nominating/Governance Committee, as well as our Code of Conduct
applicable to all of the Company’s employees, officers and directors, and our
Corporate Governance Guidelines, on our website at www.bench.com under
“Investor—Corporate Governance,” or you may obtain print copies of these
materials by writing to the Corporate Secretary at Benchmark Electronics, Inc.,
3000 Technology Drive, Angleton, Texas 77515, phone 979-849-6550.
Shareholders and other interested
parties may send communications to the Board, the non-employee directors as a
group or individual directors, in each case in care of Benchmark Electronics,
Inc., 3000 Technology Drive, Angleton, Texas 77515.
OPERATION
OF BOARD OF DIRECTORS AND ITS COMMITTEES
The Board has responsibility for
establishing broad corporate policies and reviewing our overall performance
rather than day-to-day operations. The Board’s primary responsibility is to
oversee the management of the Company and, in so doing, serve the best interests
of the Company and its shareholders. The Board selects, evaluates and provides
for the succession of executive officers and, subject to shareholder election,
directors. It reviews and approves corporate objectives and strategies, and
evaluates significant policies and proposed major commitments of corporate
resources. It participates in decisions that have a potential major economic
impact on the Company. Management keeps the directors informed of Company
activity through regular written reports and presentations at Board and
committee meetings.
The directors are elected annually by
the shareholders and hold office until their successors are elected and
qualified. The Amended and Restated Bylaws of the Company provide for a Board of
Directors consisting of not less than five, nor more than nine, members, as set
from time to time by resolution of the Board of Directors. The Board presently
consists of seven members. Currently, Mr. Fu serves as Chief Executive Officer
and Chairman of the Board of Directors. The Board believes that having Mr. Fu
serve both as Chairman of the Board and Chief Executive Officer represents at
this point in time the most appropriate leadership structure for the Company. In
reaching this conclusion the Board has considered, among others, the following
reasons: Mr. Fu’s familiarity with the Company’s business and industry, his
capacity to identify strategic priorities, his vision, and his ability to
facilitate the flow of information between management and the Board. The Board
feels that combining the roles of Chief Executive Officer and Chairman of the
Board affirms the fact that the Company has the ability to develop and implement
strategy effectively without being weakened by multiple leaders. The Board
acknowledges, however, that independent Board leadership is important and
therefore the Board has established the position for a lead independent
director, who carries the title “Presiding Director” and is elected to preside
at the non-management executive sessions. The Presiding Director also serves as
an additional communication link between management and the Board.
The NYSE rules require that the Company
have a majority of independent directors. The rules provide that no director
will qualify as “independent” unless the Board affirmatively determines that the
director has no material relationship with the Company and its subsidiaries,
either directly or as a partner, shareholder or officer of an organization that
has a relationship with the Company. In evaluating each director’s independence,
the Board considers the NYSE rules as well as all facts and circumstances deemed
relevant. Accordingly, as of the date of this Proxy Statement, the Board has
determined that the following nominees are “independent”: Michael R. Dawson,
Peter G. Dorflinger, Douglas G. Duncan, Laura W. Lang, Bernee D.L. Strom and
Clay C. Williams. The Board has determined that each independent director or
nominee had no material relationship with the Company other than as a director,
shareholder or management, and that none of the express disqualifications
contained in the NYSE rules apply to any of them.
In making this determination, the Board
considered any transactions, relationships and arrangements as required by the
NYSE listing requirements. In particular, the Board noted that in the ordinary
course of business, transactions may occur between the Company and companies or
other entities at which some of our directors are executive
officers.
During 2009, Mr. Duncan was employed by
FedEx Freight Corporation with which the Company engages in ordinary course of
business transactions – purchasing of freight services. Under the NYSE rules,
business transactions are not considered to be material transactions that would
impair a director’s independence if the director is an employee or executive
officer of another company that does business with the Company and our annual
payments to or from that company in each of the last three fiscal years are in
an amount less than the greater of $1,000,000 or 2% of the annual consolidated
gross revenues of the company by which the director is employed. The Company’s
transactions with FedEx Freight Corporation and its parent, FedEx Corporation,
were below the threshold set forth in the NYSE rules.
Our Board
oversees an enterprise-wide approach to risk management. The Board not only aims
to understand the risks facing the Company and the steps management is taking to
address them, but also actively decides on the levels of risks appropriate for
the Company, when designing and implementing its business
strategy. In achieving this objective, the full Board participates in
an annual enterprise risk management assessment. In this process, risk is
assessed throughout the business, focusing on six primary areas of risk:
financial risk, legal/compliance risk, operational/transaction risk, customer
services/reputation risk, information technology risk and inherent (other)
risks. In addition to discussion of risk with the full Board at least once a
year, the independent directors discuss risk management during non-management
executive sessions led by the Presiding Director.
While the Board has the ultimate
oversight responsibility for the risk management process, various committees of
the Board have also been entrusted with responsibility for risk management. In
particular, the Audit Committee focuses on assessing and mitigating financial
risk, including internal controls, and receives an annual risk assessment report
from the Company’s internal auditor, and quarterly reports on identified risk
areas. In setting compensation, the Compensation Committee also strives to
create incentives that encourage a level of risk-taking behavior consistent with
the Company’s business strategy.
The Board held five meetings during
2009. Each of the directors attended at least 75% of such meetings during the
period in which he or she was director. Mr. Fu is also an employee of the
Company. He does not participate in any meeting at which his compensation is
evaluated. All members of all committees are non-employee directors. In addition
to committee meetings, the non-employee directors regularly meet outside the
presence of the employee-directors. These executive sessions are currently held
either before, after or otherwise in conjunction with the Board’s regularly
scheduled meetings. Additional executive sessions can be scheduled at the
request of the non-employee directors. The non-employee directors elect a
“Presiding Director” to preside at these non-management executive sessions, on a
rotating basis. Since May 2009, Mr. Duncan has served as Presiding Director over
the executive sessions. Ms. Strom will serve as Presiding Director from May 2010
to May 2011.
The Board has an Audit Committee, a
Compensation Committee and a Nominating/Governance Committee. Each committee has
a charter that has been approved by the Board. Each committee must review the
appropriateness of its charter at least annually. Each member of each committee
meets the independence requirements of the NYSE.
The Audit Committee, consisting of
Messrs. Dawson, Duncan and Williams, met twelve times during 2009 and each
member attended at least 75% of the meetings during the period in which he or
she was a member of such committee. Mr. Dawson and Mr. Williams qualify as
“audit committee financial experts” under the rules of the SEC. For a
description of Mr. Dawson and Mr. Williams’ qualifications see “Election of
Directors–Nominees for Election”. An “audit committee financial expert” is
defined as a person who has the following attributes: (i) an understanding of
generally accepted accounting principles and financial statements; (ii) the
ability to assess the general application of such principles in connection with
the accounting for estimates, accruals and reserves; (iii) experience preparing,
auditing, analyzing or evaluating financial statements that present a breadth
and level of complexity of accounting issues that are generally comparable to
the breadth and complexity of issues that can reasonably be expected to be
raised by the registrant’s financial statements, or experience actively
supervising one or more persons engaged in such activities; (iv) an
understanding of internal controls and procedures for financial reporting; and
(v) an understanding of audit committee functions. The Board, in its business
judgment, has determined that Audit Committee members are “independent,” as
required by applicable listing standards of the NYSE governing the
qualifications of the members of audit committees, including the requirements of
the Securities Exchange Act of 1934. The function of the Audit Committee is to
assist the Board in fulfilling its responsibility to oversee
(i) management’s conduct of the Company’s financial reporting process
(including management’s development and maintenance of systems of internal
accounting and financial controls), (ii) the integrity of the Company’s
financial statements, (iii) the Company’s compliance with legal and
regulatory requirements and ethical standards, (iv) the qualifications and
independence of the Company’s outside auditors and (v) the performance of
the Company’s internal audit function and the outside auditors; and to prepare
the audit committee report required by the rules of the SEC to be included in
the Company’s annual proxy statement. Additional information regarding the
functions performed by the committee is set forth below in the “Report of the
Audit Committee.”
The Compensation Committee, consisting
of Messrs. Dawson, Duncan, Williams, Ms. Strom and Ms. Lang, met five times
during 2009 and each member attended at least 75% of the meetings during the
period in which he or she was a member of such committee. The functions of the
Compensation Committee are to (i) oversee the administration of the
compensation plans, in particular the incentive compensation and equity-based
plans, of the Company (and, to the extent appropriate, the subsidiaries of the
Company), (ii) discharge the Board’s responsibilities relating to the
compensation of the Company’s executives, (iii) review and make
recommendations on director compensation and (iv) prepare the annual report
on executive compensation required by the rules and regulations of the SEC to be
included in the Company’s annual proxy statement. Additional information
regarding the functions performed by the committee is set forth below in the
“Report of the Compensation Committee.”
The Nominating/Governance Committee,
consisting of Mr. Dorflinger, Ms. Lang and Ms. Strom, met four times during 2009
and each member attended at least 75% of the meetings during the period in which
he or she was a member of such committee. The functions of the
Nominating/Governance Committee are to (i) identify individuals qualified to
become Board members and recommend such individuals to the Board for nomination
for election to the Board, (ii) make recommendations to the Board concerning
committee appointments, (iii) develop, recommend and annually review corporate
governance guidelines for the Company and (iv) oversee corporate governance
matters and coordinate an annual evaluation of the Board.
To be
considered by the Nominating/Governance Committee, a director nominee should
have experience as a board member or senior executive of a public company or
nationally recognized private company. In addition to these minimum
requirements, the Nominating/Governance Committee will also evaluate whether the
nominee’s skills are complementary to the existing Board members’ skills, and
the Board’s needs for operational, management, financial, international,
technological or other expertise. In addition, although there is no specific
policy on considering diversity, the Board and the Nominating/Governance
Committee, believe that the Board membership should reflect diversity in its
broadest sense, including persons diverse in geography, gender, ethnicity,
viewpoint, education, skills and professional experience. The
Nominating/Governance Committee typically utilizes a search firm to identify and
screen the candidates, do reference checks, prepare a biography for each
candidate for the Nominating/Governance Committee to review and coordinate
interviews. The Nominating/Governance Committee, the Chairman of the Board and
executive officers interview candidates that meet the criteria, and the
Nominating/Governance Committee selects nominees who best suit the Board’s
needs. The Nominating/Governance Committee will consider for nomination to the
Board candidates suggested by the shareholders, provided that such
recommendations are submitted and received by us at our principal executive
offices at 3000 Technology Drive, Angleton, Texas 77515, with an appropriate
biographical summary, in accordance with the requirements described below under
“Date of Submission of Shareholder Proposals.”
The Board
does not have a formal written policy requiring members to attend the
Shareholders’ Meeting, although all members have traditionally attended. We
anticipate that all of our directors will attend our 2010 Annual Meeting of
Shareholders.
The Board reviews Related Person
Transactions (as defined below) in which the Company is or will be a participant
to determine if they are in the best interests of our shareholders and the
Company. Financial transactions, arrangements, relationships or any series of
similar transactions, arrangements or relationships in which a Related Person
(as defined below) had or will have a direct or indirect material interest and
that exceed $120,000 (Related Person Transactions) are subject to the Board’s
review. “Related Persons” are directors, director nominees, executive officers,
holders of 5% or more of our voting stock and their immediate family members.
Immediate family members are children, stepchildren, spouses, parents, siblings,
stepparents, mothers-in-law, fathers-in-law, brothers-in-law, sisters-in-law,
daughters-in-law, sons-in-law and any person, other than a tenant or domestic
employee, who shares in the household of a director, director nominee, executive
officer or holder of 5% or more of our voting stock.
The Board does not have a written
policy regarding Related Person Transactions. The Board does not believe a
written policy is necessary because the Board has not, and does not expect to,
approve the Company’s engagement in any Related Person Transactions other than
in rare circumstances. Each Related Person Transaction is considered on a
stand-alone basis based on facts and circumstances at the time.
After its review, the Board decides
whether to approve or ratify a Related Person Transaction that is in, or is not
inconsistent with, the best interests of the Company and its shareholders, as
the Board determines in good faith.
COMPENSATION
DISCUSSION AND ANALYSIS
The goals of our executive compensation
program are to align executive compensation with the Company’s long-term
business objectives and performance and to enable the Company to attract, retain
and reward executive officers who contribute to the long-term success of the
Company. We believe that the best way to achieve these goals is by aligning the
financial interests of the Company’s executive officers closely with the
interests of the Company’s shareholders through a combination of annual cash
incentives and stock-based incentive compensation, while providing the executive
officers with base salary compensation at levels that are competitive with
prevailing standards.
Regarding most compensation matters,
including executive and director compensation, our management provides
recommendations to the Compensation Committee; however, the Compensation
Committee does not delegate any of its responsibilities to others in setting
compensation for the executive officers. The Chief Executive Officer annually
reviews the performance of the other executive officers. The conclusions reached
and recommendations based on these reviews, including with respect to salary
adjustments and annual equity awards, are presented by the Vice President of
Human Resources to the Compensation Committee. The Compensation Committee can
exercise its discretion in modifying any recommended adjustments or awards to
the officers of the Company (which includes the executive officers). The
Compensation Committee directly engaged Mercer Human Resource Consulting, Inc.
in 2008 to serve as the Compensation Committee’s compensation consultant (the
consultant). The consultant did not provide general advice regarding
compensation issues during 2009 but is currently performing an executive
compensation review. The consultant did not provide any services on behalf of
management and did not have any potential business conflicts with its role as an
independent advisor.
Our executive compensation program is
generally comprised of the three following components, each of which is
determined in part by corporate performance:
|
·
|
Base
salary compensation;
|
|
·
|
Annual
incentive compensation; and
|
|
·
|
Long-term
incentive compensation.
|
In setting executive officer
compensation, the Compensation Committee considers all factors deemed relevant,
including their views of appropriate compensation levels. The Compensation
Committee also considers presentations compiled by the Vice President of Human
Resources based on market pay survey data that provides information on the level
of the total target compensation (which is comprised of salary, annual incentive
compensation and long-term incentive awards) paid to similarly positioned
executives at companies in a peer group (the Peer Group). The Company’s targeted
compensation was set at the median of the Peer Group for each component of the
total compensation. Our compensation program is designed to deliver above median
compensation for above median performance and below median compensation for
below median performance. The Compensation Committee has the discretion to
approve an above median total target compensation opportunity when individual
performance or other circumstances warrant. To determine the amount for each of
these executives, the Compensation Committee performed a subjective evaluation
of each executive’s performance and responsibilities, and also considered market
pay survey data, and relativity in pay among the executive officers. In setting
executive compensation, the Compensation Committee has not established a set
formula or other quantitative policy for allocating between cash and non-cash
compensation, establishing the amount of equity awards or allocating equity
awards between stock options and restricted shares.
The Peer Group was selected in 2007
based on a recommendation by the consultant from publicly traded companies that
are major competitors in the marketplace for talent for the applicable
positions. The companies in the Peer Group included entities with revenues of
between $1 billion and $7.5 billion, manufacturers and companies in the
electronics, semiconductor and electronics manufacturing services industries.
The Peer Group consisted of the following 15 companies:
|
·
|
Agilysys,
Inc.
|
|
·
|
Jabil
Circuit, Inc.
|
|
·
|
Anixter
International Inc.
|
|
·
|
Molex
Incorporated
|
|
·
|
Amphenol
Corporation
|
|
·
|
PC
Connection, Inc.
|
|
·
|
Bell
Microproducts Inc.
|
|
·
|
Plexus
Corp
|
|
·
|
Brightpoint,
Inc.
|
|
·
|
ScanSource,
Inc.
|
|
·
|
CDW
Corporation
|
|
·
|
Synnex
Corporation
|
|
·
|
Cooper
Industries, Ltd.
|
|
·
|
Vishay
Intertechnology, Inc.
|
|
·
|
Insight
Enterprises, Inc.
|
|
|
|
Base
Salary Compensation
Our Compensation Committee reviews base
salaries for executive officers annually. In making salary determinations, the
Compensation Committee considers the terms of any employment contract with the
executive, the recommendations of the Chief Executive Officer (as to other
executive officers), salary norms for persons in comparable positions in the
executive’s Peer Group, the executive’s experience and scope of responsibility,
and the Compensation Committee’s assessment of the executive’s individual past
and potential future contribution to the Company’s results. During its review of
base salaries for executives, the Compensation Committee primarily considers
market data provided by the consultant and the Vice President of Human
Resources, the results of a review of the executive’s compensation relative to
the Company’s other executive officers, the executive’s individual performance
and the committee members’ own business experience and views on appropriate
compensation levels.
Annual
Incentive Compensation
The purpose of the annual incentive
compensation plan is to align the interests of executive officers with our
shareholders by motivating executive officers to achieve superior financial and
operational performance that increases shareholder value. Incentive bonuses are
generally granted based on a percentage of each executive officer’s base salary
earned during the fiscal year. The 2009 incentive compensation plan for Messrs.
Fu and Adam and Ms. Delly was adopted by the Compensation Committee in May 2009.
Our practice is to award cash incentive bonuses based upon performance goals.
The following table sets forth the 2009 threshold, target, incremental and
maximum performance goals, and the actual fiscal year financial results of the
Company, for each of the executive officers:
|
|
Corporate Performance Goals
|
|
Objective Level
|
|
Earnings Per
Share(1)
|
|
|
Inventory
Turns(2)
|
|
|
Revenue
|
|
Threshold
|
|
$ |
0.58 |
|
|
|
6.5 |
|
|
$ |
1.87 billion |
|
Target
|
|
$ |
0.68 |
|
|
|
7.0 |
|
|
$ |
1.97 billion |
|
Incremental
|
|
$ |
0.78 |
|
|
|
7.5 |
|
|
$ |
2.07 billion |
|
Maximum
|
|
$ |
0.88 |
|
|
|
8.0 |
|
|
$ |
2.17 billion |
|
Actual
|
|
$ |
0.90 |
|
|
|
6.5 |
|
|
$ |
2.09 billion |
|
(1)
|
Earnings
per share before special items excludes restructuring charges and a
discrete tax benefit related to a previously closed
facility.
|
(2)
|
Inventory
turns is calculated as sales divided by average inventory for each of the
four quarters ended December 31,
2009.
|
The following table sets forth the 2009
threshold, target, incremental and maximum cash incentive amount levels, as a
percentage of salary, for each of the executives based on the Company’s
achievement of each of the three performance goals above:
|
|
2009 Incentive Amount as a Percentage of Salary
Related to Achievement of Each of Three Corporate Performance Goals
|
|
Named Executive
|
|
Threshold
|
|
|
Target
|
|
|
Incremental
|
|
|
Maximum
|
|
Cary
T. Fu
|
|
|
16.7 |
% |
|
|
33.33 |
% |
|
|
50.0 |
% |
|
|
66.70 |
% |
Donald
F. Adam
|
|
|
8.3 |
% |
|
|
16.70 |
% |
|
|
25.0 |
% |
|
|
33.33 |
% |
Gayla
J. Delly
|
|
|
12.5 |
% |
|
|
25.00 |
% |
|
|
37.5 |
% |
|
|
50.00 |
% |
The total incentive bonus award is
determined according to the level of achievement of the corporate performance
goals. The maximum incentive bonus for these executive officers was 200.10% for
Mr. Fu, 99.99% for Mr. Adam and 150.00% for Ms. Delly.
At its March 2010 meeting, the
Compensation Committee determined the extent to which the performance goals were
achieved, and approved the amount of the award to be paid to each executive
officer. The Compensation Committee determined that the executives had achieved
the maximum performance in earnings per share before special items, threshold
performance in inventory turns and incremental performance in revenue. For each
of the executives, we have set forth in the table below the amount of annual
cash compensation earned and the corresponding percentage of their 2009 base
salary that the amount represented.
Named Executive
|
|
Amount of Cash Incentive Earned
|
|
|
% of Salary
|
|
Cary
T. Fu
|
|
$ |
933,800 |
|
|
|
133.40 |
%(1) |
Donald
F. Adam
|
|
$ |
199,800 |
|
|
|
66.63 |
%(2) |
Gayla
J. Delly
|
|
$ |
485,000 |
|
|
|
100.00 |
%(3) |
(1)
|
Mr.
Fu’s total cash incentive compensation of 133.40% consisted of the
following percentages for each performance goal: 66.70% for earnings per
share before special items, 16.70% for inventory turns and 50.00% for
revenue.
|
(2)
|
Mr.
Adam’s total cash incentive compensation of 66.63% consisted of the
following percentages for each performance goal: 33.33% for earnings per
share before special items, 8.30% for inventory turns and 25.00% for
revenue.
|
(3)
|
Ms.
Delly’s total cash incentive compensation of 100.00% consisted of the
following percentages for each performance goal: 50.00% for earnings per
share before special items, 12.50% for inventory turns and 37.50% for
revenue.
|
Long-Term
Incentive Compensation
In 2009, long-term incentive
compensation of the executive officers took the form of stock option and
restricted share awards. The Compensation Committee believes that equity-based
incentive compensation is critical in motivating the long-term creation of
shareholder value because it focuses executive attention on share price as the
primary measure of the Company’s overall performance. Beginning in 2008, our
Compensation Committee awarded Mr. Fu, Mr. Adam and Ms. Delly a combination of
stock options and restricted shares. To determine the amount for each of these
executives, the Compensation Committee performed a subjective evaluation of each
executive’s performance and responsibilities, and also considered market pay
survey data, and relative pay among the Company’s executive officers. The
Compensation Committee considers all the above-referenced factors in exercising
its discretion to make equity awards. The Compensation Committee grants
stock options at not less than 100% of the fair market value of the Common
Shares on the date of grant. Because stock options provide value only in the
event of share price appreciation, the Compensation Committee believes these
awards are, by their nature, performance-based and are an important component of
our executive compensation program. Although management may recommend the number
of shares to be covered by equity awards granted to employees, the Compensation
Committee approves the grant of all equity awards and does not delegate the
timing of such grants. Equity award grants to our Chief Executive Officer and
other executive officers are not made automatically each year. The amount and
terms of equity awards already held by an executive officer generally are not
significant factors in the Compensation Committee’s determination of whether and
how many equity awards should be granted to the executive officer.
Deferred
Compensation Benefits
Effective January 1, 2009, in order to
attract and retain key employees the Company established the Benchmark
Electronics, Inc. Deferred Compensation Plan (the Deferred Compensation Plan)
which allows certain designated employees, including the Named Executive
Officers, the opportunity to defer, on a pre-tax basis, their salary, bonus
awards, and other specified compensation and to receive the deferred amounts,
together with an investment return (positive or negative), either at a
pre-determined time in the future or upon termination of employment with the
Company. The Company intends that the Deferred Compensation Plan will at all
times be maintained on an unfunded basis for federal income tax purposes under
the Internal Revenue Code and be administered as a nonqualified “top-hat” plan
exempt from the substantive requirements of the Employee Retirement Income
Security Act.
Retirement
Benefits
All employees in the United States,
including the executive officers, are eligible to participate in the Company’s
401(k) Employee Savings Plan (the Savings Plan). The Savings Plan is a defined
contribution tax-qualified retirement savings plan pursuant to which employees
are able to contribute a portion of their eligible cash compensation to the
Savings Plan and the Company provides matching cash contributions up to 4% of
the employees’ eligible compensation. All contributions to the Savings Plan as
well as any matching contributions are fully vested upon
contribution.
Perquisites
and Personal Benefits
The Company provides only minimum
perquisites or other personal benefits to executive officers, consisting
primarily of a portion of the cost of financial planning services, health club
memberships and annual physical exams.
Stock
Ownership Guidelines
Beginning in December 2009, our
executive officers are subject to a share ownership requirement. During the term
of his or her employment with the Company, our executive officers are expected
to directly own Common Shares of the Company having a market value of at least
(1) three times their annual base salary if he or she is President or Chief
Executive Officer and (2) two times his or her annual base salary if he or she
is Chief Financial Officer. Mr. Fu is in compliance with this ownership
requirement. For our executive officers who have not achieved this ownership
requirement, they are expected to retain 20% of the underlying shares of (1)
each exercise of stock option grants and (2) each vesting of restricted share
grants until such executive officer has achieved his or her respective ownership
requirement.
Mr. Fu, who serves as Chairman of the
Board of Directors, is also subject to an additional minimum share ownership
requirement in his capacity as a director. Within three years after joining the
Board, each director is required to directly own Common Shares of the Company
with a market value of at least $100,000. Mr. Fu is in compliance with this
ownership requirement.
Role
of Chief Executive Officer in Compensation Decisions
The Compensation Committee makes all
compensation decisions for officers of the Company (which includes the executive
officers) and approves recommendations regarding equity-based compensation to
all employees of the Company. The Chief Executive Officer annually reviews the
performance of the other executive officers. The conclusions reached by the
Chief Executive Officer and his recommendations based on these performance
reviews, including with respect to salary adjustments and annual equity awards,
are presented by the Vice President of Human Resources to the Compensation
Committee. The Compensation Committee can exercise its discretion in modifying
any recommended adjustments or awards to the officers of the Company (which
includes the executive officers). The Vice President of Human Resources
regularly attends the Compensation Committee meetings. The Chief Executive
Officer does not attend the Compensation Committee meetings in which his
compensation is discussed.
Timing
of Compensation Decisions
The Compensation Committee generally
has made executive base salary compensation decisions in August of each year.
The Compensation Committee’s practice has been to review and approve stock
option grants and restricted share awards to all eligible employees, including
executive officers, once a year, on the date of the Compensation Committee’s
regularly scheduled fourth quarter meeting at an exercise price equal to the
closing price of the Company’s Common Shares as reported by the New York Stock
Exchange for that date. The Company believes this practice is reasonable when
followed on a consistent basis each year and does not time the grant of equity
awards with the release of material nonpublic information. In order to make all
performance and compensation reviews at the same time each year, beginning in
2010, all elements of the compensation program will be implemented by April
1.
IRS
Limits on Deductibility of Compensation
An income tax deduction under
Section 162(m) of the Internal Revenue Code will generally be available for
annual compensation in excess of $1 million paid to the executive officers
(other than the Chief Financial Officer) only if that compensation is
“performance-based” and complies with certain other tax law requirements.
Although the Compensation Committee considers deductibility issues when
approving executive compensation elements, we believe that the other
compensation objectives, such as attracting, retaining and providing incentives
to qualified managers, are important and may supersede the goal of maintaining
deductibility. Consequently, the Compensation Committee may make compensation
decisions without regard to deductibility when it believes it is in the best
interests of the Company and its shareholders to do so.
REPORT
OF COMPENSATION COMMITTEE
The Company’s executive compensation
program is administered by the Compensation Committee, a committee of the Board
composed of non-employee directors listed below this report. The Compensation
Committee is responsible for recommending to the full Board the compensation of
the Chief Executive Officer of the Company, determining the compensation of the
other executive officers of the Company and administering the Company’s employee
benefit plans. None of the members of the Compensation Committee has any
interlocking or other relationships with the Company that would call into
question their independence as Compensation Committee members. The Compensation
Committee operates under a written charter previously approved by the
Board.
The Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis (the CD&A) for the
year ended December 31, 2009 with management. In reliance on the reviews
and discussions referred to above, the Compensation Committee recommended to the
Board, and the Board has approved, that the CD&A be included in the proxy
statement for the year ended December 31, 2009 for filing with the
SEC.
SUBMITTED
BY THE COMPENSATION COMMITTEE OF
THE
COMPANY’S BOARD OF DIRECTORS.
Laura W.
Lang, Chair
Michael
R. Dawson
Douglas
G. Duncan
Bernee D.
L. Strom
Clay C.
Williams
Summary
Compensation Table
The following table sets forth
information concerning the compensation of our Chief Executive Officer and our
other two executive officers who served in such capacities during the fiscal
years ended December 31, 2009, 2008 and 2007 (the Named Executive
Officers).
Name and
Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Stock
Awards(1)
($)
|
|
|
Option
Awards(1)
($)
|
|
|
Non-Equity
Incentive Plan
Compensa-
tion(2)
($)
|
|
|
All Other
Compensa-
tion(3)
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cary
T. Fu
|
|
2009
|
|
$ |
700,000 |
|
|
$ |
343,980 |
|
|
$ |
731,700 |
|
|
$ |
933,800 |
|
|
$ |
9,524 |
|
|
$ |
2,719,004 |
|
Chief
Executive
|
|
2008
|
|
|
671,154 |
|
|
|
376,610 |
|
|
|
463,000 |
|
|
|
112,083 |
|
|
|
9,324 |
|
|
|
1,632,171 |
|
Officer
(PEO)
|
|
2007
|
|
|
622,136 |
|
|
|
— |
|
|
|
313,000 |
|
|
|
207,358 |
|
|
|
9,016 |
|
|
|
1,151,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald
F. Adam
|
|
2009
|
|
|
300,000 |
|
|
|
133,770 |
|
|
|
284,550 |
|
|
|
199,890 |
|
|
|
9,524 |
|
|
|
927,734 |
|
Chief
Financial
|
|
2008
|
|
|
282,692 |
|
|
|
161,168 |
|
|
|
185,200 |
|
|
|
23,463 |
|
|
|
9,324 |
|
|
|
661,847 |
|
Officer
(PFO)
|
|
2007
|
|
|
248,077 |
|
|
|
— |
|
|
|
103,800 |
|
|
|
41,429 |
|
|
|
9,016 |
|
|
|
402,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gayla
J. Delly
|
|
2009
|
|
|
485,000 |
|
|
|
210,210 |
|
|
|
447,150 |
|
|
|
485,000 |
|
|
|
9,524 |
|
|
|
1,636,884 |
|
President
|
|
2008
|
|
|
470,096 |
|
|
|
241,752 |
|
|
|
277,800 |
|
|
|
58,762 |
|
|
|
9,324 |
|
|
|
1,057,734 |
|
|
|
2007
|
|
|
440,000 |
|
|
|
— |
|
|
|
253,500 |
|
|
|
110,000 |
|
|
|
9,016 |
|
|
|
812,516 |
|
(1)
|
The
amounts reflect the aggregate grant date fair value of stock option and
restricted share grants during the fiscal years ended December 31, 2009,
2008 and 2007, respectively, computed in accordance with the provisions of
Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) Topic 718, pursuant to the Company’s stock awards plan.
Assumptions used in the calculation of this amount for fiscal years ended
December 31, 2009, 2008 and 2007 are included in footnote 1(m) to the
Company’s audited financial statements for the fiscal year ended
December 31, 2009, included in the Company’s Annual Report on Form
10−K filed with the Securities and Exchange Commission on March 1, 2010.
The actual number of stock option and restricted share grants is shown in
the “2009 Grants of Plan Based Awards” table included in this
filing.
|
(2)
|
The
amounts shown in this column reflect cash incentive bonuses paid to the
Named Executive Officers pursuant to the Company’s annual incentive
compensation plans. The amounts include cash incentive bonuses earned in
year of service regardless of when
paid.
|
(3)
|
For
fiscal year ended December 31, 2009, the “All Other Compensation”
column includes (a) $9,200 paid by the Company pursuant to the
Company’s Savings Plan to each of the Named Executive Officers (under the
Savings Plan, the Company is obligated to make matching contributions to
the Savings Plan in an amount equal to 100% of each participant’s elective
contributions, to the extent that such elective contributions do not
exceed 4% of such participant’s eligible compensation), and
(b) payments by the Company of premiums of $324 for term life
insurance on behalf of each of the Named Executive
Officers.
|
Employment
Agreements
The Company has entered into employment
agreements with Messrs. Fu and Adam and Ms. Delly. The agreements provide for
annual base salaries, subject to increases from time to time as determined by
the Compensation Committee. These agreements are automatically extended by
successive one-year terms, unless terminated by the Company or the executive.
During the year ended December 31, 2009, Mr. Fu’s annual base salary was
$700,000, Ms. Delly’s annual base salary was $485,000 and Mr. Adam’s annual
based salary was $300,000. Effective March 3, 2010, the Compensation Committee
increased Mr. Fu’s annual base salary to $750,000, increased Ms. Delly’s annual
base salary to $510,000 and increased Mr. Adam’s annual base salary to
$350,000.
In addition to annual base salaries,
the aforementioned employment agreements provide for payment of bonuses if the
Company attains or exceeds its corporate performance goals which are specified
each year by the Compensation Committee. A more detailed discussion of the
corporate performance goals and these bonuses, including the percentage of base
salary and the mechanism by which the bonuses are paid and determined by the
Compensation Committee is summarized in the section titled “Annual Incentive
Compensation” above in “Compensation Discussion and Analysis”.
Grants
of Plan-Based Awards
In 2000, we adopted, and our
shareholders approved, the Benchmark Electronics, Inc. 2000 Stock Awards Plan
(the 2000 Plan) for the benefit of the Company’s officers and employees,
directors, and consultants to the Company and its affiliates (the Eligible
Participants). The 2000 Plan is administered by our Compensation Committee. The
purpose of the 2000 Plan is to encourage ownership of Common Shares by the
Eligible Participants to provide increased incentive for such Eligible
Participants to render services and to exert maximum effort for the business
success of the Company and to strengthen identification of such Eligible
Participants with the shareholders for the purpose of maximizing shareholder
value. The 2000 Plan utilizes vesting periods to encourage its executive
officers and eligible employees to continue in the employ of the Company. The
2000 Plan authorizes the Company, upon recommendation of the Compensation
Committee of the Board, to grant a variety of types of awards, including stock
options, restricted share awards, stock appreciation rights, performance awards,
and phantom stock awards, or any combination thereof, to key employees of the
Company. As of December 31, 2009,
the Company had equity awards outstanding with respect to 5.5 million Common
Shares under the 2000 Plan. The 2000 Plan expired on February 16, 2010 and no
additional grants may be made under that plan.
Equity awards granted under the 2000
Plan vest over four
years and require that the recipient of a grant be continuously employed
or otherwise provide services to us or our subsidiaries. Failure to be
continuously employed or in another service relationship, generally results in
the forfeiture of equity awards not vested at the time the employment or other
service relationship ends. Termination of a recipient’s employment or other
service relationship for cause generally results in the forfeiture of all of the
recipient’s equity awards at the time of termination.
The
following table sets forth information concerning grants of nonqualified stock
option and restricted share awards to the Named Executive Officers during the
fiscal year ended December 31, 2009 under the 2000 Plan, as well as estimated
possible payouts under cash incentive plans. During 2009, the Company did not
grant any equity awards that are subject to performance-based vesting.
Accordingly, these columns have been omitted.
2009
Grants of Plan-Based Awards
|
|
|
|
Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards(3)
|
|
|
All Other
Stock
Awards:
Number of Shares of
|
|
|
All Other
Option
Awards:
Number of Securities
|
|
|
Exercise
or Base
Price of Option
|
|
|
Grant Date
Fair Value
|
|
Name
|
|
Grant Date
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Stock or
Units (#)
|
|
|
Underlying
Options (#)
|
|
|
Awards
($/Sh)(1)
|
|
|
Awards
($)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cary
T. Fu
|
|
05/19/09
|
|
$ |
350,700 |
|
|
$ |
699,930 |
|
|
$ |
1,400,700 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12/09/09
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
343,980 |
|
|
|
12/09/09
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
90,000 |
|
|
$ |
19.11 |
|
|
$ |
731,700 |
|
Donald
F. Adam
|
|
05/19/09
|
|
|
74,700 |
|
|
|
150,300 |
|
|
|
299,970 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12/09/09
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
133,770 |
|
|
|
12/09/09
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
35,000 |
|
|
$ |
19.11 |
|
|
$ |
284,550 |
|
Gayla
J. Delly
|
|
05/19/09
|
|
|
181,675 |
|
|
|
363,750 |
|
|
|
727,500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12/09/09
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
210,210 |
|
|
|
12/09/09
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
55,000 |
|
|
$ |
19.11 |
|
|
$ |
447,150 |
|
(1)
|
Represents
closing market price of a share of the Company’s stock on option’s grant
date.
|
(2)
|
The
amounts shown in this column reflect the grant date fair value of the
restricted share and stock option awards granted in 2009, as computed in
accordance with FASB ASC Topic
718. The restricted share awards were valued using the closing
market price of the Company’s Common Shares on the restricted share grant
date. The stock option awards were valued using the Black-Scholes
option-pricing model. Assumptions used in the Black-Scholes model are
included in footnote 1(m) to the Company’s audited financial statements
for the year ended December 31, 2009, included in the Company’s Annual
Report on Form 10-K filed with the Securities and
Exchange Commission on March 1,
2010.
|
(3)
|
The
information included in the “Threshold”, “Target” and “Maximum” columns
represent the range of potential payout under the 2009 incentive
compensation plan for Messrs. Fu and Adam and Ms. Delly adopted by the
Compensation Committee in May 2009.
|
2009
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth
information concerning stock options and stock awards held by the Named
Executive Officers at December 31, 2009.
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares
or
Units
of
Stock
That Have
Not
Vested
(#)
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
That Have
Not
Vested
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cary
T. Fu
|
|
|
45,000 |
|
|
|
— |
|
|
$ |
9.19 |
|
|
01/02/11
|
|
|
|
|
|
|
|
|
|
|
67,500 |
|
|
|
— |
|
|
$ |
9.01 |
|
|
07/24/11
|
|
|
|
|
|
|
|
|
|
|
112,499 |
|
|
|
— |
|
|
$ |
11.44 |
|
|
08/01/12
|
|
|
|
|
|
|
|
|
|
|
75,000 |
|
|
|
— |
|
|
$ |
24.13 |
|
|
12/11/13
|
|
|
|
|
|
|
|
|
|
|
75,000 |
|
|
|
— |
|
|
$ |
23.37 |
|
|
11/30/14
|
|
|
|
|
|
|
|
|
|
|
37,500 |
|
|
|
37,500 |
(1) |
|
$ |
23.22 |
|
|
01/10/16
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
25,000 |
(2) |
|
$ |
26.84 |
|
|
11/15/16
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
40,000 |
(3) |
|
$ |
17.22 |
|
|
12/05/17
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
100,000 |
(4) |
|
$ |
12.64 |
|
|
12/10/18
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
90,000 |
(5) |
|
$ |
19.11 |
|
|
12/09/19
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
—
|
|
|
|
44,500 |
(6) |
|
$ |
841,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald
F. Adam
|
|
|
16,874 |
|
|
|
— |
|
|
$ |
15.77 |
|
|
02/18/13
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
— |
|
|
$ |
24.13 |
|
|
12/11/13
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
— |
|
|
$ |
23.37 |
|
|
11/30/14
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500 |
|
|
|
7,500 |
(1) |
|
$ |
23.22 |
|
|
01/10/16
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
10,000 |
(2) |
|
$ |
26.84 |
|
|
11/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
20,000 |
(3) |
|
$ |
17.22 |
|
|
12/05/17
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
40,000 |
(4) |
|
$ |
12.64 |
|
|
12/10/18
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
35,000 |
(5) |
|
$ |
19.11 |
|
|
12/09/19
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
—
|
|
|
|
18,200 |
(6) |
|
$ |
344,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gayla
J. Delly
|
|
|
22,500 |
|
|
|
— |
|
|
$ |
9.19 |
|
|
01/02/11
|
|
|
|
|
|
|
|
|
|
|
|
|
33,750 |
|
|
|
— |
|
|
$ |
8.46 |
|
|
01/02/12
|
|
|
|
|
|
|
|
|
|
|
|
|
44,999 |
|
|
|
— |
|
|
$ |
15.77 |
|
|
02/18/13
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
— |
|
|
$ |
24.13 |
|
|
12/11/13
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500 |
|
|
|
— |
|
|
$ |
23.37 |
|
|
11/30/14
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500 |
|
|
|
22,500 |
(1) |
|
$ |
23.22 |
|
|
01/10/16
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
15,000 |
(2) |
|
$ |
26.84 |
|
|
11/15/16
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
24,000 |
(3) |
|
$ |
17.22 |
|
|
12/05/17
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
60,000 |
(4) |
|
$ |
12.64 |
|
|
12/10/18
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
55,000 |
(5) |
|
$ |
19.11 |
|
|
12/09/19
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
—
|
|
|
|
27,800 |
(6) |
|
$ |
525,698 |
|
|
(1)
|
Options
granted January 10, 2006 with an exercise price of $23.22 will vest as
follows.
|
|
Vesting Date
|
|
Cary T. Fu
|
|
Gayla J. Delly
|
|
Donald F. Adam
|
|
January
10, 2010
|
|
37,500
|
|
22,500
|
|
7,500
|
|
(2)
|
Options
granted November 15, 2006 with an exercise price of $26.84 will vest as
follows.
|
|
Vesting Date
|
|
Cary T. Fu
|
|
Gayla J. Delly
|
|
Donald F. Adam
|
|
November
15, 2010
|
|
25,000
|
|
15,000
|
|
10,000
|
|
(3)
|
Options
granted December 5, 2007 with an exercise price of $17.22 will vest as
follows.
|
|
Vesting Date
|
|
Cary T. Fu
|
|
Gayla J. Delly
|
|
Donald F. Adam
|
|
December
5, 2010
|
|
15,000
|
|
9,000
|
|
6,000
|
|
December
5, 2011
|
|
25,000
|
|
15,000
|
|
10,000
|
|
(4)
|
Options
granted December 10, 2008 with an exercise price of $12.64 will vest as
follows.
|
|
Vesting Date
|
|
Cary T. Fu
|
|
Gayla J. Delly
|
|
Donald F. Adam
|
|
December
10, 2010
|
|
20,000
|
|
12,000
|
|
8,000
|
|
December
10, 2011
|
|
30,000
|
|
18,000
|
|
12,000
|
|
December
10, 2012
|
|
50,000
|
|
30,000
|
|
20,000
|
|
(5)
|
Options
granted December 9, 2009 with an exercise price of $19.11 will vest as
follows.
|
|
Vesting Date
|
|
Cary T. Fu
|
|
Gayla J. Delly
|
|
Donald F. Adam
|
|
December
9, 2010
|
|
22,500
|
|
8,750
|
|
13,750
|
|
December
9, 2011
|
|
22,500
|
|
8,750
|
|
13,750
|
|
December
9, 2012
|
|
22,500
|
|
8,750
|
|
13,750
|
|
December
9, 2013
|
|
22,500
|
|
8,750
|
|
13,750
|
|
(6)
|
The
following table provides the number of unvested restricted share awards by
vesting date held by the Named Executive Officers at December 31,
2009.
|
|
Vesting Date
|
|
Cary T. Fu
|
|
Gayla J. Delly
|
|
Donald F. Adam
|
|
March
17, 2010
|
|
4,250
|
|
3,000
|
|
2,000
|
|
December
10, 2010
|
|
9,000
|
|
5,400
|
|
3,600
|
|
March
17, 2011
|
|
2,125
|
|
1,500
|
|
1,000
|
|
December
9, 2011
|
|
4,500
|
|
2,750
|
|
1,750
|
|
December
10, 2011
|
|
4,500
|
|
2,700
|
|
1,800
|
|
March
17, 2012
|
|
2,125
|
|
1,500
|
|
1,000
|
|
December
9, 2012
|
|
4,500
|
|
2,750
|
|
1,750
|
|
December
10, 2012
|
|
4,500
|
|
2,700
|
|
1,800
|
|
December
9, 2013
|
|
4,500
|
|
2,750
|
|
1,750
|
|
December
9, 2014
|
|
4,500
|
|
2,750
|
|
1,750
|
|
|
|
44,500
|
|
27,800
|
|
18,200
|
2009
Option Exercises and Stock Vested Table
The following table sets forth
information concerning exercises of stock options by the Named Executive
Officers during the fiscal year ended December 31, 2009.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
|
Value Realized
on Exercise
($)
|
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
|
|
Value Realized
on Vesting
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cary
T. Fu
|
|
|
44,999 |
|
|
$ |
437,102 |
|
|
|
— |
|
|
|
— |
|
Gayla
J. Delly
|
|
|
44,999 |
|
|
$ |
434,196 |
|
|
|
— |
|
|
|
— |
|
Pension
Benefits
None of our Named Executive Officers is
covered by a pension plan or other similar benefit plan that provides for
payments or other benefits.
Non-Qualified
Deferred Compensation
The Deferred Compensation Plan allows
certain designated employees, including the Named Executive Officers, to defer
up to 75% of their base salary and up to 100% of their incentive bonus and other
types of “compensation” (commission and such other cash compensation or equity
compensation approved by the Compensation Committee) on a tax-deferred basis.
Participants may receive matching contributions from the Company on certain of
their deferrals. Some participants may also receive discretionary contributions
made by the Company. The Company intends that the Deferred Compensation Plan
will at all times be maintained on an unfunded basis for federal income tax
purposes under the Internal Revenue Code and be administered as a nonqualified
“top-hat” plan exempt from the substantive requirements of the Employee
Retirement Income Security Act.
Name
|
|
Executive
Contributions
in Last Fiscal
Year
($)
|
|
|
Registrant
Contributions in
Last Fiscal
Year
($)
|
|
|
Aggregate
Earnings in
Last Fiscal
Year (1)
($)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
|
Aggregate
Balance at Last
FYE
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cary
T. Fu
|
|
$ |
294,062 |
|
|
|
— |
|
|
$ |
12 |
|
|
|
— |
|
|
$ |
294,074 |
|
Donald
F. Adam
|
|
|
12,000 |
|
|
|
— |
|
|
|
1,498 |
|
|
|
— |
|
|
|
13,498 |
|
Gayla
J. Delly
|
|
|
27,188 |
|
|
|
— |
|
|
|
4,070 |
|
|
|
— |
|
|
|
31,258 |
|
|
(1)
|
These
amounts are not considered above-market or preferential under SEC rules
and therefore are not reported in the summary compensation table in this
proxy statement.
|
Potential
Payments Upon Termination or Change in Control
The Company has entered into employment
agreements with the Named Executive Officers that will require the payment of
severance by the Company if the executive’s employment is terminated (i) by the
Company without cause or (ii) by the executive for “good reason”. The severance
to be paid is equal to the sum of (a) 100% of the executive’s annual base salary
and (b) a prorated bonus, payable in lump sum six months after termination. In
addition, the Company will pay an amount sufficient to pay any excise taxes
levied under Section 280G of the Internal Revenue Code in conjunction with the
severance payment. Generally, under these agreements, good reason is defined to
include (i) a material diminution of the executive’s duties or responsibilities,
(ii) a reduction in the executive’s base salary greater than ten percent (10%),
or annual bonus or long-term incentive compensation opportunity, (iii) a change
of control, but only if the executive terminates his employment, for any reason,
within 90 days after the date of such change of control, or (iv) a material
breach by the Company of any other provision of the employment agreements that
is not cured after written notice by the executive. In addition, the Company
will provide continuation of medical, dental, health and other welfare benefits
for one year after the termination of employment. Additionally, the agreements
provide payment of severance upon the executive’s death or disability, in an
amount equal to 100% of the executive’s annual base salary plus a prorated
bonus, in a lump sum payment six months after the date of termination. Upon a
termination of employment for cause or retirement, the Named Executive Officers
will only receive salary earned to the date of termination.
The table below reflects the amount of
compensation payable to each Named Executive Officer upon involuntary
not-for-cause termination, termination by the executives for good reason and
termination following a change of control in accordance with the employment
agreements. The amounts shown assume that such termination was effective as of
December 31, 2009, and thus includes amounts earned through such time and
are estimates of the amounts that would be paid to the executives upon their
termination. The actual amounts to be paid can only be determined at the time of
such executive’s separation from the Company.
Name
|
|
Lump Sum
Severance
Payment(1)
|
|
|
Continuation
of Insurance
Benefits(2)
|
|
|
Accelerated
Vesting of
Stock
Options(3)
|
|
|
Accelerated
Vesting of
Stock
Awards(4)
|
|
|
Excise Tax
Reimburse-
ment(5)
|
|
Cary
T.
Fu
|
|
$ |
1,633,800 |
|
|
$ |
9,000 |
|
|
$ |
694,600 |
|
|
$ |
841,495 |
|
|
$ |
— |
|
Donald
F.
Adam
|
|
|
499,890 |
|
|
|
9,000 |
|
|
|
277,840 |
|
|
|
344,162 |
|
|
|
323,379 |
|
Gayla
J.
Delly
|
|
|
970,000 |
|
|
|
9,000 |
|
|
|
416,760 |
|
|
|
525,698 |
|
|
|
— |
|
|
(1)
|
Payment
based on executive’s annual base salary and bonus as of December 31, 2009.
The amounts do not include payments to the extent they are provided on a
non-discriminatory basis to salaried employees generally upon termination
of employment, including accrued salary and vacation
pay.
|
|
(2)
|
Estimated
cost to the Company of providing medical, dental, health and other welfare
benefits for one year after the termination of employment based on average
annual cost per employee.
|
|
(3)
|
The
value of the accelerated vesting benefit equals the number of shares as to
which the in-the-money stock options would vest on an accelerated basis
upon the occurrence of the specified termination or change of control
event, multiplied by the difference between the closing price per share of
the Company’s Common Shares on December 31, 2009 and the exercise
price per share for the affected
options.
|
|
(4)
|
The
value of the accelerated vesting benefit equals the number of restricted
share awards that would vest on an accelerated basis upon the occurrence
of the specified termination or change of control event, multiplied by the
closing price per share of the Company’s Common Shares on December 31,
2009.
|
|
(5)
|
Estimated
cost to the Company to reimburse the executive for any excise tax to which
he or she may be subject to in connection with these benefits (Section
280G tax gross-up).
|
Potential
Payments Upon Death or Disability
The amount of compensation payable to
each Named Executive Officer’s estate upon the death or disability of the
executive is shown below. The amounts shown assume that such termination was
effective as of December 31, 2009, and thus includes amounts earned through
such time and are estimates of the amounts that would be paid to the executives’
estates upon their termination. The actual amounts to be paid can only be
determined at the time of the executive’s separation from the
Company.
Name
|
|
Lump Sum
Payment
Attributable to
Salary(1)
|
|
|
Lump Sum
Payment
Attributable to
Cash Incentive
Bonus(1)
|
|
Cary
T. Fu
|
|
$ |
700,000 |
|
|
$ |
933,800 |
|
Donald
F. Adam
|
|
|
300,000 |
|
|
|
199,890 |
|
Gayla
J. Delly
|
|
|
485,000 |
|
|
|
485,000 |
|
|
(1)
|
Payment
based on executive’s annual base salary and cash incentive bonus as of
December 31, 2009. The amounts do not include payments to the extent they
are provided on a non-discriminatory basis to salaried employees generally
upon termination of employment, including accrued salary and vacation
pay.
|
Compensation
of Directors
Employee directors have never received
any additional compensation for serving on the Board above the compensation they
received for serving as officers of the Company, as described under “Executive
Compensation and Other Matters.”
The Company uses a combination of cash
and stock-based incentive compensation to attract and retain qualified
candidates to serve on the Board. In setting non-employee director compensation,
the Company considers the significant amount of time that directors expend in
fulfilling their duties to the Company as well as the skill-level required by
the Company of members of the Board. Directors are subject to a minimum share
ownership requirement. Within three years after joining the Board, each director
is required to directly own Common Shares of the Company with a market value of
at least $100,000. All of the Company’s directors are in compliance with this
ownership requirement.
Cash
Compensation Paid to Non-Employee Directors
The following table shows non-employee
director compensation as determined by the Board upon the recommendation of the
Compensation Committee.
Annual
Board Retainer (1)
|
|
$ |
60,000 |
|
Annual
Committee Chair Retainer (1)
|
|
$ |
5,000 |
|
Annual
Presiding Director Retainer (1)
|
|
$ |
5,000 |
|
Payment
per Board meeting attended
|
|
$ |
1,000 |
|
Payment
per Committee meetings attended
|
|
$ |
1,000 |
|
Payment
per Committee meeting attended as Chair of Committee
|
|
$ |
1,000 |
|
Payment
per executive session attended as Presiding Director
|
|
$ |
1,000 |
|
The Company also reimburses its
non-employee directors for their reasonable travel expenses in attending such
meetings.
Stock
Option Program
In December 1994, the Board adopted the
1994 Plan for the benefit of members of the Board who are not employees of the
Company or its Affiliates (as defined in the 1994 Plan). The purpose of the 1994
Plan was to encourage ownership of the Company’s Common Shares by eligible
non-employee directors of the Company, to provide increased incentive for such
directors to render services and to exert maximum effort for the business
success of the Company and to further strengthen the identification of directors
with the shareholders of the Company. The 1994 Plan terminated in December 2004.
The 1994 Plan was replaced by the 2002 Plan, and no additional grants may be
made under the 1994 Plan. The Company has outstanding options with respect to
27,000 Common Shares under the 1994 Plan, as of December 31, 2009.
After giving effect to the Company’s
stock splits in 2003 and 2006, the 2002 Plan, as amended, provides for the
granting of a stock option to purchase up to 15,750 Common Shares upon the
occurrence of the non-employee director’s election or reelection to the Board.
The maximum number of Common Shares for which options may be granted under the
2002 Plan is 675,000, after giving effect to the Company’s stock splits in 2003
and 2006. No awards may be granted under the 2002 Plan after the expiration of
ten years from February 26, 2002, the date of its adoption by the Board. The
2002 Plan remains in effect as to awards made prior to the expiration of ten
years until such awards have been satisfied or have expired. All awards under
the 2002 Plan are fully vested upon the date of grant. The exercise price per
common share of options granted under the 2002 Plan will be the fair market
value of a Common Share on the date such option is granted.
During 2009, 60,500 options were
granted to non-employee directors under the 2002 Plan to purchase Common Shares
at a weighted-average exercise price of $12.18 per share. The Company has
outstanding options with respect to 324,750 Common Shares under the 2002
Plan.
2009
Director Summary Compensation Table
The following table summarizes the cash
and equity compensation for non-employee directors during the fiscal year ended
December 31, 2009. The Company did not grant any stock awards to any of our
non-employee directors during 2009 and none of our directors is covered by a
non-equity incentive plan, a pension plan or a nonqualified deferred
compensation plan; accordingly these columns have been omitted.
Name
|
|
Fees Earned
or Paid in
Cash
($)
|
|
|
Option
Awards(1)
($)
|
|
|
Total
($)
|
|
Michael
R. Dawson
|
|
$ |
77,000 |
|
|
$ |
60,800 |
|
|
$ |
137,800 |
|
Peter
G. Dorflinger
|
|
|
77,000 |
|
|
|
60,800 |
|
|
|
137,800 |
|
Douglas
G. Duncan
|
|
|
74,750 |
|
|
|
60,800 |
|
|
|
135,550 |
|
Laura
W. Lang
|
|
|
77,000 |
|
|
|
63,840 |
|
|
|
140,840 |
|
Bernee
D.L. Strom
|
|
|
68,000 |
|
|
|
60,800 |
|
|
|
128,800 |
|
Clay
C. Williams
|
|
|
68,000 |
|
|
|
60,800 |
|
|
|
128,800 |
|
|
(1)
|
Reflects
the dollar amount recognized for financial statement reporting purposes
for the fiscal year ended December 31, 2009 in accordance with FASB ASC
Topic 718. As of December 31, 2009, each of the non-employee directors had
the following number of options outstanding: Mr. Dawson: 40,000; Mr.
Dorflinger: 124,000; Mr. Duncan: 40,000; Ms. Lang: 57,750; Ms. Strom:
70,000: and Mr. Williams: 20,000.
|
COMMON
SHARE OWNERSHIP OF
CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain
information with respect to the beneficial ownership, as defined in Rule 13d-3
under the Exchange Act, of Common Shares as of March 29, 2010, by each person
known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Shares, each director and nominee for director of the
Company, each executive officer of the Company and all directors and executive
officers of the Company as a group.
Beneficial Owners
|
|
Common Shares
Beneficially
Owned(1)
|
|
|
Percentage of
Outstanding
Common Shares
|
|
|
|
|
|
|
|
|
Cary
T. Fu
3000
Technology Drive
Angleton,
Texas 77515
|
|
|
1,047,291 |
(2) |
|
__
|
% |
|
|
|
|
|
|
|
|
Donald
F. Adam
3000
Technology Drive
Angleton,
Texas 77515
|
|
|
94,074 |
(3) |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
Gayla
J. Delly
3000
Technology Drive
Angleton,
Texas 77515
|
|
|
271,198 |
(5) |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
Michael
R. Dawson
575
N. Dairy Ashford, Suite 200
Houston,
Texas 77079
|
|
|
50,000 |
(6) |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
Peter
G. Dorflinger
One
Carolane Trail
Houston,
Texas 77024
|
|
|
172,750 |
(7) |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
Douglas
G. Duncan
3589
Classic Drive S
Memphis,
Tennessee 38125
|
|
|
48,850 |
(8) |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
Laura
W. Lang
800
Boylston Street
Boston,
Massachusetts 02199
|
|
|
63,750 |
(9) |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
Bernee
D.L. Strom
5505
Lake Washington Blvd., N.E. #3B
Kirkland,
Washington 98033
|
|
|
74,750 |
(10) |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
Clay
C. Williams
7909
Parkwood Circle Drive
Houston,
Texas 77036
|
|
|
30,000 |
(11) |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
Directors
and executive officers as a group (9 persons)
|
|
|
1,852,663 |
(12) |
|
__
|
% |
(table
continued on following page)
Beneficial Owners
|
|
Common Shares
Beneficially
Owned(1)
|
|
|
Percentage of
Outstanding
Common Shares
|
|
|
|
|
|
|
|
|
Dimensional
Fund Advisors LP
1299
Ocean Avenue
Santa
Monica, California 90401
|
|
|
5,515,936 |
(13)
(14) |
|
|
__ |
% |
|
|
|
|
|
|
|
|
|
BlackRock,
Inc..
45
Freemont Street, 17th
Floor
San
Francisco, California 94105
|
|
|
5,193,568 |
(13)
(16) |
|
|
__ |
% |
|
|
|
|
|
|
|
|
|
Franklin
Resources, Inc.
One
Franklin Parkway
San
Mateo, California 94403
|
|
|
4,883,300 |
(13)
(15) |
|
__
|
% |
|
|
|
|
|
|
|
|
|
Royce
& Associates, LLC
1414
Avenue of the Americas
New
York, New York 10019
|
|
|
4,077,850 |
(13)
(17) |
|
__
|
% |
|
|
|
|
|
|
|
|
|
Bank
of America Corporation
100
North Tryon Street, Floor 25
Bank
of America Corporate Center
Charlotte,
North Carolina 28255
|
|
|
3,260,022 |
(13)
(18) |
|
__
|
% |
(1)
|
Unless
otherwise noted, each person identified possesses sole voting and
dispositive power with respect to the Common Shares listed, subject to
community property laws.
|
(2)
|
Includes (i)
484,999 Common Shares that may be acquired upon the exercise of options
that are currently exercisable or will become exercisable within 60 days
of March 29, 2010 and (ii) 40,250 restricted shares, of which Mr. Fu has
voting power but not dispositive
power.
|
(3)
|
Represents
(i) 75,874 Common Shares that may be acquired upon the exercise of options
that are currently exercisable or will become exercisable within 60 days
of March 29, 2010 and (ii) 16,200 restricted shares, of which Mr. Adam has
voting power but not dispositive
power.
|
(5)
|
Includes
(i) 234,749 Common Shares that may be acquired upon the exercise of
options that are currently exercisable or will become exercisable within
60 days of March 29, 2010 and (ii) 24,800 restricted shares, of which Ms.
Delly has voting power but not dispositive
power.
|
(6)
|
Includes
40,000 Common Shares that may be acquired upon the exercise of options
that are currently exercisable or will become exercisable within 60 days
of March 29, 2010.
|
(7)
|
Includes
124,000 Common Shares that may be acquired upon the exercise of options
that are currently exercisable or will become exercisable within 60 days
of March 29, 2010.
|
(footnotes
continued on following page)
(8)
|
Represents
40,000 Common Shares that may be acquired upon the exercise of options
that are currently exercisable or will become exercisable within 60 days
of March 29, 2010.
|
(9)
|
Represents
57,750 Common Shares that may be acquired upon the exercise of options
that are currently exercisable or will become exercisable within 60 days
of March 29, 2010.
|
(10)
|
Represents
70,000 Common Shares that may be acquired upon the exercise of options
that are currently exercisable or will become exercisable within 60 days
of March 29, 2010.
|
(11)
|
Includes
20,000 Common Shares that may be acquired upon the exercise of options
that are currently exercisable or will become exercisable within 60 days
of March 29, 2010.
|
(12)
|
Includes
1,147,372 Common Shares that may be acquired upon the exercise of options
that are currently exercisable or will become exercisable within 60 days
of March 29, 2010.
|
(13)
|
Based
solely on information filed with the
SEC.
|
(14)
|
The
Company has been advised in a Schedule 13G filing dated as of February 10,
2010 as follows with respect to these shares: (i) Dimensional Fund
Advisors LP has sole power to vote or to direct the vote of 5,429,018
shares and sole power to dispose or to direct the disposition of 5,515,936
shares and (ii) Dimensional Fund Advisors LP holds such shares in its
capacity as investor advisor.
|
(15)
|
The
Company has been advised in a Schedule 13G filing dated as of January 20,
2010 as follows with respect to these shares: (i) Franklin Advisory
Services, LLC has sole power to vote or to direct the vote of 4,773,300
shares and sole power to dispose or to direct the disposition of 4,883,300
shares and (ii) Franklin Advisory Services, LLC holds such shares in its
capacity as investor advisor and other. According to the filed Schedule
13G, Charles B. Johnson and Rupert H. Johnson Jr. each own in excess of
10% of the outstanding common stock of Franklin Resources Inc. and could
therefore be deemed as beneficial owners of the reported
shares.
|
(16)
|
The
Company has been advised in a Schedule 13G filing dated as of January 20,
2010 as follows with respect to these shares: (i) BlackRock, Inc. has sole
power to vote or to direct the vote and sole power to dispose or to direct
the disposition of 5,193,568 shares and (ii) BlackRock, Inc. holds such
shares in its capacity as investor
advisor.
|
(17)
|
The
Company has been advised in a Schedule 13G filing dated as of January 22,
2010 as follows with respect to these shares: (i) Royce & Associates,
LLC has sole power to vote or to direct the vote and sole power to dispose
or to direct the disposition of 4,077,850 shares and (ii) Royce &
Associates, LLC holds such shares in its capacity as investor
advisor.
|
(18)
|
The
Company has been advised in a Schedule 13G filing dated as of February 1,
2010 as follows with respect to these shares: (i) Bank of
America Corporation has shared power to vote or direct the vote with
respect to 2,541,363 shares and shared power to dispose or direct the
disposition of 3,260,022 shares, and (ii) Bank of America Corporation
holds such shares in its capacity as a parent holding company or control
person.
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act
requires the Company’s directors and executive officers, and persons who own
more than ten percent of a registered class of the Company’s equity securities,
to file with the SEC and the NYSE initial reports of beneficial ownership and
reports of changes in beneficial ownership of Common Shares and other equity
securities of the Company. Officers, directors and greater than ten-percent
shareholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms they file.
To the Company’s knowledge, based
solely on review of the copies of such reports furnished to the Company and
certain written representations provided to the Company by such persons, for the
fiscal year beginning January 1, 2009 and ending December 31, 2009 all
Section 16(a) filing requirements applicable to the Company’s officers,
directors and greater than ten-percent beneficial owners were satisfied in a
timely manner.
APPROVE
ADOPTION OF THE BENCHMARK ELECTRONICS, INC.
2010
OMNIBUS INCENTIVE COMPENSATION PLAN
General
On March
22, 2010, the Board of Directors approved, subject to the approval of our
shareholders, the Benchmark Electronics, Inc. 2010 Omnibus Incentive
Compensation Plan (which we refer to as the 2010 Plan). Our Board of
Directors has approved the 2010 Plan as a flexible omnibus incentive
compensation plan that would allow us to use different forms of compensation
awards to attract, retain and reward eligible participants under the 2010 Plan
and strengthen the mutuality of interests between management and our
shareholders. The purpose of the 2010 Plan would be to promote the interests of
the Company and our shareholders by (i) attracting and retaining exceptional
directors, officers, employees and consultants (including prospective directors,
officers, employees and consultants) and (ii) enabling such individuals to
participate in our long-term growth and financial success. The 2010 Plan is
intended to replace the Benchmark Electronics, Inc. 2000 Stock Awards Plan
(which we refer to as the 2000 Plan), which expired on February 16,
2010.
Set forth
below is a summary of the 2010 Plan, which is qualified in its entirety by the
specific language of the 2010 Plan, a copy of which is attached to this proxy
statement as Annex A.
Summary
of the Plan
Types of
Awards. The 2010 Plan would provide for the grant of options
intended to qualify as incentive stock options (ISOs) under Section 422 of
the Internal Revenue Code of 1986, as amended (the Code), nonqualified stock
options (NSOs), stock appreciation rights (SARs), restricted share awards,
restricted stock units (RSUs), performance compensation awards, performance
units, cash incentive awards, deferred share units and other equity-based and
equity-related awards.
Plan
Administration. The 2010 Plan would be administered by the
Compensation Committee of our Board of Directors or such other committee our
Board designates to administer the 2010 Plan (the Committee). Subject to the
terms of the 2010 Plan and applicable law, the Committee would have sole
authority to administer the 2010 Plan, including, but not limited to, the
authority to (1) designate participants, (2) determine the type or
types of awards to be granted to a participant, (3) determine the number of
Common Shares to be covered by, or with respect to which payments, rights or
other matters are to be calculated in connection with, awards,
(4) determine the terms and conditions of any awards, (5) determine
the vesting schedules of awards and, if certain performance criteria must be
attained in order for an award to vest or be settled or paid, establish such
performance criteria and certify whether, and to what extent, such performance
criteria have been attained, (6) determine whether, to what extent and under
what circumstances awards may be settled or exercised in cash, Common Shares,
other securities, other awards or other property, or canceled, forfeited or
suspended and the method or methods by which awards may be settled, exercised,
canceled, forfeited or suspended, (7) determine whether, to what extent and
under what circumstances cash, Common Shares, other securities, other awards,
other property and other amounts payable with respect to an award shall be
deferred either automatically or at the election of the holder thereof or of the
Committee, (8) interpret, administer, reconcile any inconsistency in,
correct any default in and/or supply any omission in, the 2010 Plan and any
instrument or agreement relating to, or award made under, the 2010 Plan,
(9) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the 2010 Plan, (10) accelerate the vesting or exercisability of, payment
for or lapse of restrictions on, awards, (11) amend an outstanding award or
grant a replacement award for an award previously granted under the 2010 Plan
if, in its sole discretion, the Committee determines that (A) the tax
consequences of such award to us or the participant differ from those
consequences that were expected to occur on the date the award was granted or
(B) clarifications or interpretations of, or changes to, tax law or regulations
permit awards to be granted that have more favorable tax consequences than
initially anticipated and (12) make any other determination and take any
other action that the Committee deems necessary or desirable for the
administration of the 2010 Plan.
Shares Available For
Awards. On March 19, 2010, as reported by the New York Stock
Exchange the last reported sales price of our Common Shares was $21.22 per
share. Subject to adjustment for changes in capitalization, the maximum
aggregate number of Common Shares that may be delivered pursuant to awards
granted under the Plan would be equal to (i)
5,000,000 plus (ii) any shares with respect to awards granted under the
2000 Plan that are forfeited following the date that the 2010 Plan is approved
by our shareholders (such sum, the Plan Share Limit), of which 2,500,000 Common
Shares may be delivered pursuant to ISOs granted under the 2010 Plan. Subject to
adjustment for changes in capitalization, (x) each common share with respect to
which an option or stock-settled SAR is granted under the 2010 Plan would reduce
the Plan Share Limit by one common share and (y) each common share with respect
to which any other award denominated in Common Shares is granted under the 2010
Plan would reduce the Plan Share Limit by 1.53 Common Shares. Upon grant of a
stock-settled SAR, each share with respect to which such stock-settled SAR is
exercisable would be counted as one share against the Plan Share Limit,
regardless of the number of Common Shares actually delivered upon settlement of
such stock-settled SAR. Awards that are required to be settled in cash would not
reduce the Plan Share Limit. If any award granted under the 2010 Plan is (A)
forfeited, or otherwise expires, terminates or is canceled without the delivery
of all Common Shares subject thereto, or (B) is settled other than by the
delivery of Common Shares (including, without limitation, cash settlement),
then, in the case of clauses (A) and (B), the number of Common Shares subject to
such award that were not issued with respect to such award would not be treated
as issued hereunder and the Plan Share Limit would be increased by the number of
Common Shares by which the Plan Share Limit was reduced upon issuance of such
award. Notwithstanding the foregoing, the Plan Share Limit would not be
increased as a result of the surrender or tender of Common Shares in payment of
the exercise price of an award or any taxes required to be withheld in respect
of an award. Subject to adjustment as described below, (1) in the case of awards
that are settled in Common Shares, the maximum aggregate number of Common Shares
with respect to which awards may be granted to any participant in any fiscal
year under the 2010 Plan would be 200,000 (each such share counting as one share
for purposes of this clause (1)), and (2) in the case of awards that are settled
in cash based on the fair market value of a share, the maximum aggregate amount
of cash that may be paid pursuant to awards granted to any participant in any
fiscal year under the 2010 Plan would be equal to the per-share fair market
value as of the relevant vesting, payment or settlement date multiplied by the
number of Common Shares described in the preceding clause (1). In the case of
all awards other than those described in the preceding sentence, the maximum
aggregate amount of cash and other property (valued at its fair market value)
other than Common Shares that may be paid or delivered pursuant to awards under
the 2010 Plan to any participant in any fiscal year would be equal to
$4,000,000.
Changes in
Capitalization. In the event of any extraordinary dividend or
other extraordinary distribution, recapitalization, rights offering, stock
split, reverse stock split, split-up or spin-off affecting the Common Shares,
the Committee would make adjustments and other substitutions to awards under the
2010 Plan in the manner it determined to be appropriate or desirable. In the
event of any reorganization, merger, consolidation, combination, repurchase or
exchange of our Common Shares or other similar corporate transactions, the
Committee in its discretion would be permitted to make such adjustments and
other substitutions to the 2010 Plan and awards under the 2010 Plan as it deemed
appropriate or desirable.
Substitute
Awards. The Committee would be permitted to grant awards in
assumption of, or in substitution for, outstanding awards previously granted by
us or any of our affiliates or a company that we acquired or with which we
combined. Any Common Shares issued by us through the assumption of or
substitution for outstanding awards granted by a company that we acquired would
not reduce the aggregate number of Common Shares available for awards under the
2010 Plan, except that awards issued in substitution for ISOs would reduce the
number of Common Shares available for ISOs under the 2010 Plan.
Source of
Shares. Any shares issued under the 2010 Plan would consist,
in whole or in part, of authorized and unissued Common Shares or of treasury
shares.
Eligible
Participants. Any director, officer, employee or consultant
(including any prospective director, officer, employee or consultant) of us or
our affiliates would be eligible to participate in the 2010 Plan. The Company
currently expects that awards will be generally limited to approximately 300
employees.
Stock Options. The
Committee would be permitted to grant both ISOs and NSOs under the 2010 Plan.
The exercise price for options would not be less than the fair market value (as
defined in the 2010 Plan) of Common Shares on the grant date. The Committee
would not reprice any option granted under the 2010 Plan without the approval of
our shareholders. All options granted under the 2010 Plan would be NSOs unless
the applicable award agreement expressly stated that the option was intended to
be an ISO. Under the 2010 Plan, all ISOs and NSOs would be intended to qualify
as “performance-based compensation” under Section 162(m) of the
Code.
Subject
to the applicable award agreement, options would vest and become exercisable
with respect to 25% of the Common Shares subject to such options on each of the
first four anniversaries of the grant date. Unless otherwise set forth in the
applicable award agreement, each option would expire upon the earlier of
(a) the tenth anniversary of the date the option was granted and
(b) (i) in the case of participants who are not directors, three months
after the participant who was holding the option ceased to be an officer,
employee or consultant for us or one of our affiliates or (ii) in the case of
participants who are directors, two years after the participant who was holding
the option ceased to be a director. The exercise price would be permitted to be
paid (1) with cash (or its equivalent) or (2) in the sole discretion of the
Committee, with previously acquired Common Shares or through delivery of
irrevocable instructions to a broker to sell our Common Shares otherwise
deliverable upon the exercise of the option (provided that there was a public
market for our Common Shares at such time) or (3) any other method or
combination of methods approved by the Committee, provided that the combined
value of all cash and cash equivalents and the fair market value of any such
shares so tendered to us as of the date of such tender, together with any shares
withheld by us in respect of taxes relating to an option, was at least equal to
such aggregate exercise price plus taxes.
Stock Appreciation
Rights. The Committee would be permitted to grant SARs under
the 2010 Plan. The exercise price for SARs would not be less than the fair
market value (as defined in the 2010 Plan) of our Common Shares on the grant
date. The Committee would not reprice any SAR granted under the 2010 Plan
without the approval of our shareholders. Upon exercise of a SAR, the holder
would receive cash, Common Shares, other securities, other awards, other
property or a combination of any of the foregoing, as determined by the
Committee, equal in value to the excess, if any, of the fair market value of a
common share on the date of exercise of the SAR over the exercise price of the
SAR. Under the 2010 Plan, all SARs would be intended to qualify as
“performance-based compensation” under Section 162(m) of the Code. Subject
to the applicable award agreement, SARs would vest and become exercisable with
respect to 25% of the Common Shares subject to such SARs on each of the first
four anniversaries of the grant date. Subject to the provisions of the 2010 Plan
and the applicable award agreement, the Committee would determine, at or after
the grant of a SAR, the vesting criteria, term, methods of exercise, methods and
form of settlement and any other terms and conditions of any SAR. No SAR granted
under the 2010 Plan could be exercised more than 10 years after the date of
grant.
Restricted Shares and Restricted
Stock Units. Subject to the provisions of the 2010 Plan, the
Committee would be permitted to grant restricted shares and RSUs. Restricted
shares and RSUs would not be permitted to be sold, assigned, transferred,
pledged or otherwise encumbered except as provided in the 2010 Plan or the
applicable award agreement, except that the Committee could determine that
restricted shares and RSUs would be permitted to be transferred by the
participant for no consideration. Restricted shares could be evidenced in such
manner as the Committee would determine.
An RSU
would be granted with respect to one common share or have a value equal to the
fair market value of one such share. Subject to the applicable award agreement,
restricted shares and RSUs would vest and become exercisable with respect to 25%
of the Common Shares subject to such restricted shares and RSUs on each of the
first four anniversaries of the grant date. Upon the lapse of restrictions
applicable to an RSU, the RSU could be paid in cash, Common Shares, other
securities, other awards or other property, as determined by the Committee, or
in accordance with the applicable award agreement. In connection with each grant
of restricted shares, except as provided in the applicable award agreement, the
holder would be entitled to the rights of a shareholder in respect of such
restricted shares, including the right to vote and receive dividends. The
Committee would be permitted to, on such terms and conditions as it might
determine, provide a participant who holds RSUs with dividend equivalents,
payable in cash, Common Shares, other securities, other awards or other
property. However, holders of performance-based restricted shares and RSUs would
be entitled to dividends and dividend equivalents, respectively, provided that
(1) the performance goal(s) for the applicable performance period are achieved
and (2) the performance formula as applied against such performance goal(s)
determines that all or some portion of such award has been earned. If a
restricted share or RSU were intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the requirements described
below in “Performance Compensation Awards” would be required to be satisfied in
order for such restricted share or RSU to be granted or vest.
Performance
Units. Subject to the provisions of the 2010 Plan, the
Committee would be permitted to grant performance units to participants.
Performance units would be awards with an initial value established by the
Committee (or that was determined by reference to a valuation formula specified
by the Committee) at the time of the grant. In its discretion, the Committee
would set performance goals that, depending on the extent to which they were met
during a specified performance period, would determine the number and/or value
of performance units that would be paid out to the participant. The Committee,
in its sole discretion, would be permitted to pay earned performance units in
the form of cash, Common Shares or any combination thereof that would have an
aggregate fair market value equal to the value of the earned performance units
at the close of the applicable performance period. The determination of the
Committee with respect to the form and timing of payout of performance units
would be set forth in the applicable award agreement. The Committee would be
permitted to, on such terms and conditions as it might determine, provide a
participant who holds performance units with dividends or dividend equivalents,
payable in cash, Common Shares, other securities, other awards or other
property, provided that (i) the performance goal(s) for the applicable
performance period are achieved and (ii) the performance formula as applied
against such performance goal(s) determines that all of some portion of such
award has been earned. If a performance unit were intended to qualify as
“performance-based compensation” under Section 162(m) of the Code, the
requirements below described in “Performance Compensation Awards” would be
required to be satisfied.
Cash Incentive
Awards. Subject to the provisions of the 2010 Plan, the
Committee would be permitted to grant cash incentive awards payable upon the
attainment of performance goals. If a cash incentive award were intended to
qualify as “performance-based compensation” under Section 162(m) of the
Code, the requirements described below in “Performance Compensation Awards”
would be required to be satisfied.
Other Stock-Based
Awards. Subject to the provisions of the 2010 Plan, the
Committee would be permitted to grant to participants other equity-based or
equity-related compensation awards, including vested stock. The Committee would
be permitted to determine the amounts and terms and conditions of any such
awards. If such an award were intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the requirements described
below in “Performance Compensation Awards” would be required to be
satisfied.
Performance Compensation
Awards. The Committee would be permitted to designate any
award granted under the 2010 Plan (other than ISOs, NSOs and SARs) as a
performance compensation award in order to qualify such award as
“performance-based compensation” under Section 162(m) of the Code. Awards
designated as performance compensation awards would be subject to the following
additional requirements:
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Recipients
of Performance Compensation Awards. The
Committee would, in its sole discretion, designate within the first
90 days of a performance period (or, if shorter, within the maximum
period allowed under Section 162(m) of the Code) the participants who
would be eligible to receive performance compensation awards in respect of
such performance period. The Committee would also determine the length of
performance periods, the types of awards to be issued, the performance
criteria that would be used to establish the performance goals, the kinds
and levels of performance goals and any performance formula used to
determine whether a performance compensation award had been earned for the
performance period.
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Performance
Criteria Applicable to Performance Compensation Awards. The
performance criteria would be limited to the following: (1) share price,
(2) net income or earnings before or after taxes (including earnings
before interest, taxes, depreciation and/or amortization), (3) operating
income, (4) earnings per share (including specified types or categories
thereof), (5) cash flow (including specified types or categories thereof),
(6) cash flow return on capital, (7) revenues (including specified types
or categories thereof), (8) return measures (including specified types or
categories thereof), (9) sales or product volume, (10) working capital,
(11) gross or net profitability/profit margins, (12) objective measures of
productivity or operating efficiency, (13) costs (including specified
types or categories thereof), (14) budgeted expenses (operating and
capital), (15) market share (in the aggregate or by segment), (16) level
or amount of acquisitions, (17) economic value-added, (18) enterprise
value, (19) book value and (20) customer satisfaction survey results.
These performance criteria would be permitted to be applied on an absolute
basis or be relative to one or more peer companies or indices or any
combination thereof or, if applicable, be computed on an accrual or cash
accounting basis. The performance goals and periods could vary from
participant to participant and from time to time. To the extent required
under Section 162(m) of the Code, the Committee would, within the
first 90 days of the applicable performance period (or, if shorter,
within the maximum period allowed under Section 162(m) of the Code),
define in an objective manner the method of calculating the performance
criteria it selected to use for the performance
period.
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Modification
of Performance Goals. The
Committee would be permitted to adjust or modify the calculation of
performance goals for a performance period in the event of, in
anticipation of, or in recognition of, any unusual or extraordinary
corporate item, transaction, event or development or any other unusual or
nonrecurring events affecting the Company, any of its affiliates,
subsidiaries, divisions or operating units (to the extent applicable to
such performance goal) or its financial statements or the financial
statements of any of its affiliates, or changes in applicable rules,
rulings, regulations or other requirements of any governmental body or
securities exchange, accounting principles, law or business conditions, so
long as that adjustment or modification did not cause the performance
compensation award to fail to qualify as “performance-based compensation”
under Section 162(m) of the
Code.
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Requirements
to Receive Payment for 162(m) Awards. Except
as otherwise permitted by Section 162(m) of the Code, in order to be
eligible for payment in respect of a performance compensation award for a
particular performance period, participants would be required to be
employed by us on the last day of the performance period, the performance
goals for such period would be required to be satisfied and certified by
the Committee and the performance formula would be required to determine
that all or some portion of the performance compensation award had been
earned for such period.
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Negative
Discretion. The
Committee would be permitted to, in its sole discretion, reduce or
eliminate the amount of a performance compensation award earned in a
particular performance period, even if applicable performance goals had
been attained and without regard to any employment agreement between us
and a participant.
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Limitations
on Committee Discretion. Except
as otherwise permitted by Section 162(m) of the Code, in no event
could any discretionary authority granted to the Committee under the 2010
Plan be used to grant or provide payment in respect of performance
compensation awards for which performance goals had not been attained,
increase a performance compensation award for any participant at any time
after the first 90 days of the performance period (or, if shorter,
within the maximum period allowed under Section 162(m) of the Code)
or increase a performance compensation award above the maximum amount
payable under the underlying award.
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Form
of Payment. Performance
compensation awards (other than restricted shares, RSUs and other
stock-based awards) would be payable in cash or in restricted shares, RSUs
or fully vested shares of equivalent value and would be paid on the terms
determined by the Committee in its discretion. Any restricted shares or
RSUs would be subject to the terms of the 2010 Plan or any successor
equity compensation plan and any applicable award agreement. The number of
restricted shares, RSUs or fully vested shares that is equivalent in value
to a particular dollar amount would be determined in accordance with a
methodology specified by the Committee within the first 90 days of a
plan year (or, if shorter, the maximum period allowed under
Section 162(m) of the Code).
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Amendment and Termination of the
2010 Plan. Subject to any applicable law or government
regulation, to any requirement that must be satisfied if the 2010 Plan were
intended to be a shareholder approved plan for purposes of Section 162(m)
of the Code and to the rules of the New York Stock Exchange, the 2010 Plan would
be permitted to be amended, modified or terminated by our Board of Directors
without the approval of our shareholders, except that shareholder approval would
be required for any amendment that would (a) increase the maximum number of
Common Shares available for awards under the 2010 Plan or increase the maximum
number of Common Shares that could be delivered pursuant to ISOs granted under
the 2010 Plan or (b) change the class of employees or other individuals
eligible to participate in the 2010 Plan. No modification, amendment or
termination of the 2010 Plan that was adverse to a participant would be
effective without the consent of the affected participant, unless otherwise
provided by the Committee in the applicable award agreement.
The
Committee would be permitted to waive any conditions or rights under, amend any
terms of, or alter, suspend, discontinue, cancel or terminate any award
previously granted, prospectively or retroactively. However, unless otherwise
provided by the Committee in the applicable award agreement or in the 2010 Plan,
any such waiver, amendment, alteration, suspension, discontinuance, cancellation
or termination that would materially and adversely impair the rights of any
participant to any award previously granted would not to that extent be
effective without the consent of the affected participant.
The
Committee would be authorized to make adjustments in the terms and conditions of
awards in the event of any unusual or nonrecurring corporate event (including
the occurrence of a change of control of us) affecting us, any of our affiliates
or our financial statements or the financial statements of any of our
affiliates, or of changes in applicable rules, rulings, regulations or other
requirements of any governmental body or securities exchange, accounting
principles or law whenever the Committee, in its discretion, determined that
those adjustments were appropriate or desirable, including providing for the
substitution or assumption of awards, accelerating the exercisability of, lapse
of restrictions on, or termination of, awards or providing for a period of time
for exercise prior to the occurrence of such event and, in its discretion, the
Committee would be permitted to provide for a cash payment to the holder of an
award in consideration for the cancellation of such award.
Change of
Control. The 2010 Plan would provide that, unless otherwise
provided in an award agreement, in the event of a change of control of the
Company, unless provision was made in connection with the change of control for
assumption of, or substitution for, awards previously granted:
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any
options and SARs outstanding as of the date the change of control was
determined to have occurred would become fully exercisable and vested, as
of immediately prior to the change of
control;
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all
performance units, cash incentive awards and other awards designated as
performance compensation awards would be paid out as if the date of the
change of control were the last day of the applicable performance period
and “target” performance levels had been attained;
and
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all
other outstanding awards would automatically be deemed exercisable or
vested and all restrictions and forfeiture provisions related thereto
would lapse as of immediately prior to such change of
control.
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Unless
otherwise provided pursuant to an award agreement, a change of control would be
defined to mean any of the following events, generally:
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during
any period of 24 consecutive calendar months, a change in the composition
of a majority of the board of directors, as constituted on the first day
of such period, that was not supported by a majority of the incumbent
board of directors;
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consummation
of certain mergers or consolidations of the Company with any other
corporation following which the Company’s shareholders hold 50% or less of
the combined voting power of the surviving
entity;
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the
shareholders approve a plan of complete liquidation or dissolution of the
Company unless such liquidation or dissolution is part of a transaction or
series of transactions described in the preceding bullet;
or
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certain
acquisitions by any individual, entity or group of beneficial ownership of
a percentage of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors that
was equal to or greater than 50%.
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Term of the 2010
Plan. No award would be permitted to be granted under the 2010
Plan after the tenth anniversary of the date the 2010 Plan was approved by the
shareholders.
Certain
Federal Tax Aspects of the 2010 Plan
The
following summary describes the federal income tax treatment associated with
options awarded under the 2010 Plan. The summary is based on the law as in
effect on March [●], 2010. The summary does not discuss state or local tax
consequences or non-U.S. tax consequences.
Incentive Stock
Options. Neither the grant nor the exercise of an ISO results
in taxable income to the optionee for regular federal income tax purposes.
However, an amount equal to (i) the per-share fair market value on the
exercise date minus the exercise price at the time of grant multiplied by
(ii) the number of shares with respect to which the ISO is being exercised
will count as “alternative minimum taxable income” which, depending on the
particular facts, could result in liability for the “alternative minimum tax” or
AMT. If the optionee does not dispose of the shares issued pursuant to the
exercise of an ISO until the later of the two-year anniversary of the date of
grant of the ISO and the one-year anniversary of the date of the acquisition of
those shares, then (a) upon a later sale or taxable exchange of the shares,
any recognized gain or loss would be treated for tax purposes as a long-term
capital gain or loss and (b) the Company would not be permitted to take a
deduction with respect to that ISO for federal income tax
purposes.
If shares
acquired upon the exercise of an ISO were disposed of prior to the expiration of
the two-year and one-year holding periods described above (a disqualifying
disposition), generally the optionee would realize ordinary income in the year
of disposition in an amount equal to the lesser of (i) any excess of the
fair market value of the shares at the time of exercise of the ISO over the
amount paid for the shares or (ii) the excess of the amount realized on the
disposition of the shares over the participant’s aggregate tax basis in the
shares (generally, the exercise price). A deduction would be available to the
Company equal to the amount of ordinary income recognized by the optionee. Any
further gain realized by the optionee will be taxed as short-term or long-term
capital gain and would not result in any deduction by the Company. A
disqualifying disposition occurring in the same calendar year as the year of
exercise would eliminate the alternative minimum tax effect of the ISO
exercise.
Special
rules may apply where all or a portion of the exercise price of an ISO is paid
by tendering shares, or if the shares acquired upon exercise of an ISO are
subject to substantial forfeiture restrictions. The foregoing summary of tax
consequences associated with the exercise of an ISO and the disposition of
shares acquired upon exercise of an ISO assumes that the ISO is exercised during
employment or within three months following termination of employment. The
exercise of an ISO more than three months following termination of employment
will result in the tax consequences described below for NSOs, except that
special rules apply in the case of disability or death. An individual’s stock
options otherwise qualifying as ISOs will be treated for tax purposes as NSOs
(not as ISOs) to the extent that, in the aggregate, they first become
exercisable in any calendar year for stock having a fair market value
(determined as of the date of grant) in excess of $100,000.
Nonqualified Stock
Options. An NSO (that is, a stock option that does not qualify
as an ISO) would result in no taxable income to the optionee or deduction to the
Company at the time it is granted. An optionee exercising an NSO would, at that
time, realize taxable compensation equal to (i) the per-share fair market
value on the exercise date minus the exercise price multiplied by (ii) the
number of shares with respect to which the option is being exercised. If the NSO
was granted in connection with employment, this taxable income would also
constitute “wages” subject to withholding and employment taxes. A corresponding
deduction would be available to the Company. The foregoing summary assumes that
the shares acquired upon exercise of an NSO option are not subject to a
substantial risk of forfeiture.
Section 162(m). Section 162(m)
of the Code currently provides that if, in any year, the compensation that is
paid to our Chief Executive Officer or to any of our three other most highly
compensated executive officers (excluding our Chief Financial Officer) exceeds
$1,000,000 per person, any amounts that exceed the $1,000,000 threshold will not
be deductible by us for federal income tax purposes, unless the compensation
qualifies for an exception to Section 162(m) of the Code. Certain
performance-based awards under plans approved by shareholders are not subject to
the deduction limit. Stock options that would be awarded under the 2010 Plan are
intended to be eligible for this performance-based exception.
Section 409A. Section 409A
of the Code imposes restrictions on nonqualified deferred compensation. Failure
to satisfy these rules results in accelerated taxation, an additional tax to the
holder of the amount equal to 20% of the deferred amount, and a possible
interest charge. Stock options granted with an exercise price that is not less
than the fair market value of the underlying shares on the date of grant will
not give rise to “deferred compensation” for this purpose unless they involve
additional deferral features. Stock options that would be awarded under the 2010
Plan are intended to be eligible for this exception.
Securities
Authorized for Issuance Under Equity Compensation Plans
The
following table provides information about equity-based awards outstanding and
Common Shares available for future awards under all of our equity compensation
plans as of December 31, 2009.
Equity
Compensation Plan Information
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights (a)
|
|
|
Weighted-average exercise
price of
outstanding
options,
warrants and
rights (b)
|
|
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a)) (c)
|
|
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a))
updated as of
March 29, 2010
|
|
Equity
compensation plans approved by security holders
|
|
|
5,584,328 |
(1)
|
|
$ |
19.23 |
(1)
|
|
|
3,879,770 |
(2)
|
|
|
220,500 |
(3)
|
Equity
compensation plans not approved by security holders
|
|
|
27,000 |
(4)
|
|
$ |
13.75 |
|
|
|
— |
|
|
|
— |
|
Total
|
|
|
5,611,328 |
|
|
|
|
|
|
|
3,879,770 |
|
|
|
220,500 |
|
|
(1)
|
Includes
80,481 phantom stock awards. The weighted-average exercise price does not
take these awards into account.
|
|
(2)
|
Includes 3,659,270 previously
available for equity awards under the 2000 Plan. The 2000 Plan expired
February 16, 2010, and as of February 16, 2010 no addition grants under
such plan can be made.
|
|
(3)
|
As of March 29, 2010, an
aggregate of 220,500 shares remain available for future issuance under the
Benchmark Electronics, Inc. 2002 Stock Option Plan for Non-Employee
Directors (the 2002 Plan).
|
|
(4)
|
In
December of 1994, the Board of Directors adopted the Benchmark
Electronics, Inc. 1994 Stock Option Plan for Non-Employee Directors (the
1994 Plan) for the benefit of members of the Board of Directors of
Benchmark or its affiliates who are not employees of Benchmark or its
affiliates (as defined in the 1994 Plan). The 1994 Plan was not required
to be approved by our shareholders. All awards under the 1994 Plan were
fully vested upon the date of grant. The exercise price per common share
of options granted under the 1994 Plan was the fair market value of a
Common Share on the date such option was granted. As of December 31, 2009,
the Company had outstanding options with respect to 27,000 Common Shares
under the 1994 Plan. The 1994 Plan was replaced in 2002 by the Benchmark
Electronics, Inc. 2002 Stock Option Plan for Non-Employee Directors (the
2002 Plan).
|
The
following table sets forth information regarding the outstanding stock options
as of December 31, 2009 under the 2000 Plan, the 1994 Plan and the 2002 Plan. In
addition, as of such date there were outstanding a total of 370,091 unvested
RSUs and restricted shares under the 2000 Plan.
OUTSTANDING
AWARDS
(Shares
in thousands)
|
|
|
|
|
Weighted
Average
Remaining
Contractual Life
in Years
|
|
|
Weighted
Average Exercise
Price
|
|
$ 6.50
– $10.00
|
|
|
388 |
|
|
|
1.63 |
|
|
$ |
8.83 |
|
$10.01
– $15.00
|
|
|
1,060 |
|
|
|
7.44 |
|
|
$ |
12.25 |
|
$15.01
– $20.00
|
|
|
1,578 |
|
|
|
7.57 |
|
|
$ |
17.64 |
|
$20.01
– $25.00
|
|
|
1,857 |
|
|
|
5.12 |
|
|
$ |
23.46 |
|
$25.01
– $30.00
|
|
|
614 |
|
|
|
6.83 |
|
|
$ |
26.89 |
|
$30.01
– $35.00
|
|
|
12 |
|
|
|
0.18 |
|
|
$ |
31.25 |
|
$35.01
– $103.75
|
|
|
22 |
|
|
|
0.75 |
|
|
$ |
70.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,531 |
|
|
|
6.18 |
|
|
$ |
19.20 |
|
The
following table sets forth information regarding equity awards granted and
earned, the run rate for each of the last three years and the average run rate
over the last three years. The run rate has been calculated as the quotient of
(i) all time-vested awards granted in a year divided by (ii) the weighted
average number of basic Common Shares outstanding at the end of such year. The
Company has not previously granted SARs or performance vested stock options or
RSUs.
RUN
RATE
(Shares
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time-vested
stock options granted
|
|
|
1,215 |
|
|
|
817 |
|
|
|
584 |
|
|
|
972 |
|
Time-vested
restricted shares\ RSUs granted
|
|
|
— |
|
|
|
174 |
|
|
|
200 |
|
|
|
125 |
|
Weighted
average Common Shares outstanding (basic)
|
|
|
72,061 |
|
|
|
67,060 |
|
|
|
64,758 |
|
|
|
67,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Run
rate
|
|
|
1.69 |
% |
|
|
1.48 |
% |
|
|
1.30 |
% |
|
|
1.47 |
% |
Required
Vote
The
affirmative vote of the majority of the votes cast at the Annual Meeting by
holders of Common Shares entitled to vote is required for the adoption of the
2010 Plan.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE 2010
OMNIBUS INCENTIVE COMPENSATION PLAN.
PROPOSAL
3
APPROVAL
OF RIGHTS AGREEMENT AND PROPOSED AMENDMENT
The
Company’s shareholders are being asked to approve the Company’s Rights Agreement
dated December 11, 1998 (the Rights Agreement), as previously amended and as
proposed to be amended by an amendment substantially in the form of Annex B
hereto (the Proposed Amendment). Although shareholder approval of a
rights agreement or similar arrangement is not required by the Restated Articles
of Incorporation or the Amended and Restated Bylaws of the Company or by
applicable law, the Board has determined to request shareholder approval of the
Rights Agreement as a matter of good corporate governance.
The
Rights Agreement discourages certain unsolicited attempts to acquire control of
the Company by making an acquisition of the Company that is not approved by the
Board prohibitively expensive for the acquiror. Accordingly, the Rights
Agreement, as amended by the Proposed Amendment, will provide that, if any one
person or group of affiliated or associated persons acquires 20% or more of the
Company’s Common Shares, all of our shareholders (other than such person or
group) will have the right to acquire Common Shares at a favorable price,
thereby diluting the holdings of the person or group that acquires the 20%
interest and increasing the number of Common Shares that would have to be
acquired.
Background
On
December 11, 1998, the Board declared a dividend distribution of one right to
purchase preferred stock (a Right) for each outstanding common share to holders
of record on December 21, 1998, with such Rights to expire on December 11, 2008,
and the Company entered into the Rights Agreement.
On
December 10, 2008, the Board authorized and approved an amendment to the Rights
Agreement in order to, among other things, (i) extend the term of the
Rights Agreement until December 11, 2018, and (ii) amend the definition of
“Beneficial Owner” and “beneficial ownership” to clarify that a person will be
deemed to beneficially own any securities, including the Company’s Common
Shares, that are the subject of specified derivative transactions entered into
by such person or such person’s affiliates or associates. The amendments to the
definition of “Beneficial Owner” and “beneficial ownership” were designed to
reduce the risk that potential acquirors may use derivative transactions to gain
effective control over the Company while evading the provisions of the Rights
Agreement and thereby depriving the Company’s shareholders of the protections
and other benefits described below under “Reasons for the Rights
Agreement.”
The
Proposed Amendment is designed to meet the published requirements of the
Corporate Governance Policies and Guidelines issued by RiskMetrics Group, a
proxy advisory firm for many institutional investors, and will (i) reduce
the term of the Rights Agreement to three years from the date of the Proposed
Amendment, (ii) amend the definition of “Acquiring Person” to increase the
threshold at which a person’s acquisition of beneficial ownership of Common
Shares will trigger the distribution of Rights in accordance with the Rights
Agreement from 15% to 20% of the outstanding Common Shares and (iii) add a
“qualified offer” provision allowing holders of the Common Shares, under certain
circumstances, to call a special meeting of the Company’s shareholders to
consider a required redemption of the Rights (which would have the effect of
removing the obstacles to completing an acquisition by an Acquiring
Person).
Reasons
for the Rights Agreement
The
Board’s decisions to adopt the Rights Agreement and to propose that the
shareholders approve the Rights Agreement and the Proposed Amendment were not
made in response to any efforts by any party to acquire or gain control of the
Company, and the Board is not currently aware of any such
efforts. The Rights Agreement is designed to enable holders of Common
Shares to realize the full value of their investment in the Company, and to
provide for fair and equal treatment of all shareholders, in the event that an
unsolicited attempt is made to acquire control of the Company.
We expect
that the Rights Agreement will be used to protect our shareholders in the event
of certain unsolicited attempts to acquire control of the Company, including a
partial or two-tier tender offer that fails to treat all shareholders equally or
a “creeping acquisition” by the purchase of Common Shares on the open market,
and other acquisition tactics that the Board determines are abusive or unfair to
shareholders or otherwise not in the best interests of the Company and its
shareholders.
The
Rights Agreement is an effective means of preventing an acquiror from taking
advantage of the onset of adverse market conditions, short-term declines in the
price of our Common Shares, or anticipated improvements in operating results
before such improvements are fully reflected in the price of our Common Shares,
any of which could allow a hostile acquiror to acquire control of the Company at
a price that does not reflect our intrinsic value or long-term
prospects.
A major
function of the Rights Agreement is to give the Board a greater period of time
to evaluate the adequacy of an acquisition proposal, investigate alternatives,
solicit competitive proposals and take other steps necessary to maximize
shareholder value. The Rights Agreement also induces potential
bidders to negotiate with the Board and thereby strengthens the Board’s
bargaining position for the benefit of our shareholders. The Board
would be in a position to evaluate any proposed combination in light of the
Company’s business plan and other strategic alternatives.
The
Rights Agreement will not prevent all attempts to acquire control of the
Company. In responding to an acquisition proposal, the Board has a
fiduciary obligation to act in the best interests of the Company and its
shareholders.
Summary
of the Rights Agreement
The
following is a summary of the material terms of the Rights Agreement, reflecting
the Proposed Amendment. The statements below are only a summary and
are qualified in their entirety by reference to the full text of the unamended
Rights Agreement, which was filed as Exhibit 1 to the Form 8-A filed by the
Company with the Securities and Exchange Commission on December 11, 1998, the
full text of Amendment No. 1 to the Rights Agreement, which was filed as Exhibit
4.1 to the Form 8-K filed by the Company with the Securities and Exchange
Commission on December 10, 2008, and the full text of the Proposed Amendment,
which is filed as Annex B hereto.
The
Rights
The
Rights are presently attached to all certificates for Common Shares, and no
separate Rights certificates have been distributed. The Rights will continue to
be evidenced by common share certificates until the earlier of (i) ten days
following a public announcement that a person or group of affiliated or
associated persons (an Acquiring Person) has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of the outstanding Common Shares
(the date of the announcement being the Stock Acquisition Date) and (ii) ten
business days following the commencement of a tender offer or exchange offer
that would result in a person’s becoming an Acquiring Person (any such earlier
date being a Distribution Date).
Until the
Distribution Date, the Rights will trade only with Common Shares and the
transfer of any certificates for Common Shares will also constitute the transfer
of the associated Rights. As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights will be mailed to holders of
Common Shares, and such certificates alone will evidence the
Rights.
The
Rights are not exercisable until the Distribution Date and will
expire three years after the date of the Proposed Amendment, unless earlier
redeemed or exchanged by the Company as described below.
“Flip-In
Events”—Exercise of Rights for Shares of the Company
In the
event that a person becomes an Acquiring Person, except pursuant to a “permitted
offer” (meaning a tender or exchange offer for all outstanding Common Shares
that at least a majority of the independent directors of the Company determines
to be (i) at a price and on terms that are fair to the Company’s shareholders
and (ii) otherwise in the best interests of the Company and its shareholders),
each holder of a Right (other than the Acquiring Person) will thereafter have
the right to receive, upon exercise of such Right, a number of Common Shares
having a Current Market price (as defined in the Rights Agreement) equal to two
times the exercise price of the Right. However, Rights are not
exercisable following the occurrence of such event until such time as the Rights
are no longer redeemable by the Company as described below.
If a
person becomes an Acquiring Person, the Board may, under certain circumstances,
exchange one common share for each Right (other than Rights held by the
Acquiring Person).
“Flip-Over
Events”—Exercise of Rights for Shares of an Acquiring Company
In the
event that, at any time on or after the Stock Acquisition Date, (i) the Company
is acquired in a merger or other business combination transaction, or (ii) 50%
or more of the Company’s assets or earning power is sold or transferred, each
holder of a Right (other than the Acquiring Person) shall thereafter have the
right to receive, upon exercise, a number of shares of common stock of the
acquiring company having a Current Market Price equal to two times the exercise
price of the Right.
Adjustment
to Purchase Price
Each of
the purchase price payable, and the number of Common Shares or other securities
or property issuable, upon exercise of the Rights is subject to adjustment from
time to time to prevent dilution (such as for dividends, distributions, stock
splits and reclassifications).
Redemption
of Rights
At any
time until ten days following the Stock Acquisition Date, the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right.
In
addition, if the Company receives a “qualified offer” (meaning a tender offer
which, among other things, in the determination of the Board (a) is a fully
financed all-cash offer for all Common Shares at a price per share greater than
the higher of (i) the highest reported per share market price in the
immediately preceding 24 months and (ii) the amount that is 25% higher than
the average closing price for Common Shares over the prior 30 trading days,
(b) commits the offeror to buy all other Common Shares for the same
consideration paid pursuant to the offer and (c) is otherwise in the best
interests of the Company and its shareholders) and the Company does not
thereafter redeem the Rights within 90 business days, the holders of at least
10% of the outstanding Common Shares may request a special meeting of the
Company’s shareholders to consider a required redemption of the Rights. If
either (i) the special meeting is not held within 90 business days
following the request, or (ii) at the special meeting, the holders of a
majority of the outstanding Common Shares vote in favor of the redemption
resolution, then all of the Rights will be deemed redeemed at the redemption
price.
Amendment
The
Rights Agreement may (other than the provision establishing the Redemption
Price) be amended prior to the Distribution Date in any manner. The Rights
Agreement may also be amended after the Distribution Date, but only to cure any
ambiguity, defect or inconsistency, to make changes that do not materially
adversely affect the interests of holders of Rights, or to shorten or lengthen
any time period.
Effect
of Approval and Non-Approval
The
affirmative vote of the majority of the votes cast at the Annual Meeting by
holders of Common Shares entitled to vote is required to approve and amend the
Rights Agreement. If the Rights Agreement as it is proposed to be amended is
approved, the Company will enter into the Proposed Amendment promptly after the
Meeting. Should the shareholders not approve the Rights Agreement as it is
proposed to be amended, the Board intends to reevaluate the Rights Agreement and
determine whether it believes the Rights Agreement continues to be in the
shareholders’ best interests. The Board may, as a result of such reevaluation
and determination, terminate the Rights Agreement, modify the terms of the
Rights Agreement or allow the Rights Agreement to remain in place without
change, among other actions.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE
THE RIGHTS AGREEMENT AND THE PROPOSED AMENDMENT.
PROPOSAL
4
RATIFICATION
OF APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The Board has appointed KPMG LLP as the
independent public accounting firm of the Company for the year ending December
31, 2010. The shareholders will be asked to ratify the appointment of KPMG LLP
at the Meeting. The ratification of such appointment will require the
affirmative vote of the holders of a majority of the outstanding Common Shares
entitled to vote and present, in person or represented by proxy, at the Meeting.
Representatives of KPMG LLP will be present at the Meeting, will be given an
opportunity to make a statement (if they desire to do so) and will be available
to respond to appropriate questions.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY
THE APPOINTMENT OF THE INDEPENDENT PUBLIC ACCOUNTING FIRM.
AUDIT
COMMITTEE REPORT TO SHAREHOLDERS
The Audit Committee of the Board is
responsible for providing independent, objective oversight of management’s
conduct of the Company’s financial reporting process (including management’s
development and maintenance of systems of internal accounting and financial
controls). The Audit Committee operates under a written charter, previously
approved by the Board. The Audit Committee met twelve times during 2009 and each
member attended at least 75% of the meetings during the period in which he or
she was a member of such committee. The meetings were designed to facilitate and
encourage communication between members of the Audit Committee and management as
well as private communication between the members of the Audit Committee and our
internal auditors, and our independent registered public accounting firm, KPMG
LLP.
Management is responsible for the
Company’s internal controls and financial reporting process. In carrying out its
oversight responsibilities, the Audit Committee has sole authority for selection
and retention of the Company’s independent accountants, subject to annual
shareholder ratification. The independent accountants are responsible for
performing an independent audit of the Company’s consolidated financial
statements in accordance with generally accepted auditing standards and issuing
a report thereon. The Audit Committee’s responsibility is to monitor and oversee
these processes.
In connection with these
responsibilities, the Audit Committee met with management, our internal auditor
and KPMG LLP to review and discuss the December 31, 2009 audited financial
statements and matters related to Section 404 of the Sarbanes-Oxley Act of 2002.
The Audit Committee also discussed with the independent accountants the matters
required by Statement on Auditing Standards No. 61, Communication with Audit
Committee. The Audit Committee also received written disclosures and the
letter from the independent accountants required by Independence Standards Board
Standard No. 1, Independence
Discussions with Audit Committees, and the Audit Committee discussed with
the independent accountants that firm’s independence.
The Audit Committee currently is
composed of three non-employee directors, each of whom is an “independent
director” under the rules of the NYSE governing the qualifications of the
members of audit committees. Mr. Dawson and Mr. Williams qualify as “audit
committee financial experts” under the rules of the SEC. Please see the
information under the caption “Nominees for Election” for Mr. Dawson and Mr.
Williams’ financial experience.
Based upon the Audit Committee’s review
of the audited consolidated financial statements, discussions with management,
our internal auditor and the independent accountants, and the Audit Committee’s
review of the representations of management and discussions with the independent
accountants as set forth above, the Audit Committee recommended that the Board
include the audited consolidated financial statements in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2009, filed with the SEC on
March 1, 2010.
The following table presents fees for
professional services provided by KPMG LLP for 2009 and 2008, all of which were
pre-approved by the Audit Committee.
|
|
2009
|
|
|
2008
|
|
Audit
Fees
(1)
|
|
$ |
2,065,887 |
|
|
$ |
2,400,392 |
|
Audit-Related
Fees (2)
|
|
|
25,169 |
|
|
|
— |
|
Tax
Fees
(3)
|
|
|
299,154 |
|
|
|
328,758 |
|
All
other fees
(4)
|
|
|
— |
|
|
|
7,500 |
|
Total
fees
|
|
$ |
2,390,210 |
|
|
$ |
2,736,650 |
|
(1)
Includes fees billed for professional services rendered by KPMG LLP for the
audit of our annual financial statements for the years ended December 31, 2009
and 2008, the reviews of the condensed financial statements included in our
quarterly reports on Forms 10-Q for the years ended December 31, 2009 and 2008,
the audit of the Company’s internal control over financial reporting and the
effectiveness of internal control over financial reporting, statutory audits
required internationally and services rendered by KPMG
LLP related to regulatory filings with the Securities and Exchange
Commission.
(2)
Includes fees billed for professional services rendered by KPMG LLP for agreed
upon procedures in 2009. There were no other audit-related fees billed by KPMG
LLP in 2008.
(3)
Includes fees billed for professional services rendered by KPMG LLP for domestic
and international income tax planning, compliance, expatriate and executive tax
work, and tax work related to foreign entity statutory audits.
(4)
Includes fees billed for professional services rendered by KPMG LLP for
compilation of statutory financial statements in 2008. There were no other fees
billed by KPMG LLP in 2009 for other professional services.
Audit
Committee Pre-Approval Policy
The Audit Committee has adopted a
specific policy for pre-approval of services to be provided by the Company’s
independent registered public accounting firm. Under the policy, in addition to
the annual audit engagement terms and fees, the Audit Committee pre-approves
specific types of audit, audit-related, tax and non-audit services to be
performed by the independent registered public accounting firm throughout the
year, as well as fee ranges for each specific service, based on the Audit
Committee’s determination that the provision of the services would not be likely
to impair the accounting firm’s independence. Unless a type of service to be
provided by the independent registered public accountant has received general
pre-approval, it will require specific pre-approval by the Audit Committee. Any
proposed services exceeding pre-approved cost levels will require specific
pre-approval by the Audit Committee. The pre-approval is effective for 12 months
from the date of pre-approval, unless the Audit Committee specifically approves
the provision of such services for a different period. The policy permits the
Audit Committee to delegate pre-approval authority to one or more of its members
to ensure prompt handling of unexpected matters, with such delegated
pre-approvals to be reported to the Audit Committee at its next meeting. The
policy also contains a list of prohibited non-audit services and requires that
the independent registered public accounting firm ensure that all audit and
non-audit services provided to the Company have been pre-approved by the Audit
Committee or its designee.
The Audit Committee of the Company’s
Board has considered whether the services provided by KPMG LLP as they related
to other non-audit services are compatible with maintaining the accounting
firm’s independence. The Audit Committee has determined that provision of those
services is compatible with maintaining the independence of KPMG LLP as the
Company’s registered public accounting firm.
SUBMITTED
BY THE AUDIT COMMITTEE OF
THE
COMPANY’S BOARD OF DIRECTORS
Michael
R. Dawson, Chair
Douglas
G. Duncan
Clay C. Williams
EXPENSES
OF SOLICITATION
The cost of soliciting proxies on
behalf of the Board will be borne by the Company. Solicitations of proxies are
being made by the Company through the mail and may also be made in person or by
telephone. Directors and employees of the Company may be utilized in connection
with such solicitations and no additional compensation will be paid to such
individuals. In
addition, management has retained _____________ to assist in soliciting proxies
for a fee of approximately $______, plus reasonable out-of-pocket expenses.
The Company also will request brokers and nominees to forward soliciting
materials to the beneficial owners of the Common Shares held of record by such
persons and will reimburse them for their reasonable forwarding
expenses.
DATE
OF SUBMISSION OF SHAREHOLDER PROPOSALS
In order for proposals submitted by the
shareholders of the Company pursuant to Rule 14a-8 of the General Rules and
Regulations under the Exchange Act to be included in the Company’s proxy
statement and form of proxy relating to the 2011 Annual Meeting of the
Shareholders, such proposals must be received at the Company’s principal
executive offices no later than December 2, 2010. A shareholder choosing not to
use the procedures established in Rule 14a-8 but wishing to submit a proposal at
the Company’s 2010 Annual Meeting of the Shareholders must deliver the proposal
at the Company’s principal executive offices no later than January 31,
2011.
INTERNET
AVAILABILITY OF PROXY MATERIALS AND ANNUAL REPORT
This Proxy Statement and the Company’s
2009 Annual Report are available at
http://www.bench.com/viewer/investor_annual_reports.asp.
FORM
10-K
A copy of our 2009 Annual Report to
Shareholders, which excludes exhibits, but includes our financial statements for
fiscal year 2009, is enclosed with this Proxy Statement. The Company’s Annual
Report on Form 10-K, including all exhibits, has been filed with the SEC. Upon
payment of the Company’s reasonable expenses, the Company will furnish a copy of
any exhibit to the Form 10-K to any shareholder who makes a written request
therefore to Investor Relations, Benchmark Electronics, Inc., 3000 Technology
Drive, Angleton, Texas 77515.
OTHER
MATTERS
The Board does not intend to bring any
other matter before the Meeting and has not been informed that any other matter
is to be presented by others. If any other matter properly comes before the
Meeting, the proxies will be voted in accordance with the discretion of the
person or persons voting the proxies.
You are cordially invited to attend the
Meeting. Regardless of whether you plan to attend the Meeting, you are urged to
complete, date, sign and return the enclosed proxy in the accompanying envelope
at your earliest convenience.
|
By
order of the Board of Directors,
|
|
|
|
/s/ Kenneth S. Barrow
|
|
Kenneth
S. Barrow
|
|
Secretary
|
BENCHMARK
ELECTRONICS, INC.
PROXY
STATEMENT
ANNEX
A
BENCHMARK
ELECTRONICS, INC.
2010
OMNIBUS INCENTIVE COMPENSATION PLAN
Purpose. The
purpose of this Benchmark Electronics, Inc. 2010 Omnibus Incentive Compensation
Plan (the “Plan”) is to promote the interests of Benchmark Electronics, Inc. and
its shareholders by (a) attracting and retaining exceptional directors,
officers, employees and consultants (including prospective directors, officers,
employees and consultants) of the Company (as defined below) and its Affiliates
(as defined below) and (b) enabling such individuals to participate in the
growth and financial success of the Company. This Plan is
intended to replace the Benchmark Electronics, Inc. 2000 Stock Awards Plan (the
“Prior Plan”), which Prior Plan shall be automatically terminated and replaced
and superseded by this Plan on the date on which this Plan is approved by the
Company’s shareholders, except that any awards granted under the Prior Plan
shall remain in effect pursuant to their terms.
Definitions. As
used herein, the following terms shall have the meanings set forth
below:
“Affiliate”
means (a) any entity that, directly or indirectly, is controlled by, controls or
is under common control with, the Company and/or (b) any entity in which the
Company has a significant equity interest, in either case, as determined by the
Committee.
“Award”
means any award that is permitted under Section 6 and granted under the
Plan.
“Award
Agreement” means any written agreement, contract or other instrument or document
evidencing any Award, which may (but need not) require execution or
acknowledgment by a Participant.
“Board”
means the Board of Directors of the Company.
“Cash
Incentive Award” means an Award granted pursuant to Section 6(g).
“Change
of Control” shall (a) have the meaning set forth in an Award Agreement or (b) if
there is no definition set forth in an Award Agreement, mean the occurrence of
any of the following events:
(i) during
any period of 24 consecutive calendar months, individuals who were directors of
the Company on the first day of such period (the “Incumbent Directors”) cease
for any reason to constitute a majority of the Board; provided, however, that any
individual becoming a director subsequent to the first day of such period whose
election, or nomination for election, by the Company’s shareholders was approved
by a vote of at least a majority of the Incumbent Directors shall be considered
as though such individual were an Incumbent Director, but excluding, for
purposes of this proviso, any such individual whose initial assumption of office
occurs as a result of an actual or threatened proxy contest with respect to
election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a “person” (as such term is used in
Section 13(d) of the Exchange Act) (a “Person”), in each case, other than the
management of the Company or the Board;
(ii) the
consummation of a merger, consolidation, statutory share exchange or similar
form of corporate transaction involving (x) the Company or (y) any of its
Subsidiaries, but in the case of this clause (y) only if Company Voting
Securities (as defined below) are issued or issuable, or the sale or other
disposition of all or substantially all the assets of the Company to an entity
that is not an Affiliate (each of the foregoing events being hereinafter
referred to as a “Reorganization”), in each case, unless, immediately following
such Reorganization, (1) all or substantially all the individuals and entities
who were the “beneficial owners” (as such term is defined in Rule 13d-3 under
the Exchange Act (or a successor rule thereto)) of the securities eligible to
vote for the election of the Board (“Company Voting Securities”) outstanding
immediately prior to the consummation of such Reorganization continue to
beneficially own, directly or indirectly, more than 50% of the combined voting
power of the then outstanding voting securities of the corporation or other
entity resulting from such Reorganization (including, without limitation, a
corporation that, as a result of such transaction, owns the Company or all or
substantially all the Company’s assets either directly or through one or more
subsidiaries) (the “Continuing Company”) in substantially the same proportions
as their ownership, immediately prior to the consummation of such
Reorganization, of the outstanding Company Voting Securities (excluding, for
purposes of determining such proportions, any outstanding voting securities of
the Continuing Company that such beneficial owners hold immediately following
the consummation of the Reorganization as a result of their ownership prior to
such consummation of voting securities of any corporation or other entity
involved in or forming part of such Reorganization other than the Company), (2)
no Person (excluding any employee benefit plan (or related trust) sponsored or
maintained by the Continuing Company or any corporation controlled by the
Continuing Company) beneficially owns, directly or indirectly, 50% or more of
the combined voting power of the then outstanding voting securities of the
Continuing Company and (3) at least a majority of the members of the board of
directors of the Continuing Company (or equivalent body) were Incumbent
Directors at the time of the execution of the definitive agreement providing for
such Reorganization or, in the absence of such an agreement, at the time at
which approval of the Board was obtained for such Reorganization;
(iii) the
shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company unless such liquidation or dissolution is part of a
transaction or series of transactions described in paragraph (ii) above that
does not otherwise constitute a Change of Control; or
(iv) any
Person, corporation or other entity or “group” (as used in Section 14(d)(2) of
the Exchange Act) (other than (A) the Company, (B) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or an
Affiliate or (C) any company owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their ownership of the
voting power of the Company Voting Securities) becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company Voting Securities; provided, however, that for
purposes of this subparagraph (iv), the following acquisitions shall not
constitute a Change of Control: (x) any acquisition directly from the
Company, (y) any acquisition by an underwriter temporarily holding such Company
Voting Securities pursuant to an offering of such securities or (z) any
acquisition pursuant to a Reorganization that does not constitute a Change of
Control for purposes of subparagraph (ii) above.
“Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor statute thereto, and the regulations promulgated
thereunder.
“Committee”
means the compensation committee of the Board, or such other committee of the
Board as may be designated by the Board to administer the Plan.
“Company”
means Benchmark Electronics, Inc., a corporation organized under the laws of
Texas, together with any successor thereto.
“Deferred
Share Unit” means a deferred share unit Award that represents an unfunded and
unsecured promise to deliver Shares in accordance with the terms of the
applicable Award Agreement.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time, or
any successor statute thereto, and the regulations promulgated
thereunder.
“Exercise
Price” means (a) in the case of Options, the price specified in the applicable
Award Agreement as the price-per-Share at which Shares may be purchased pursuant
to such Option or (b) in the case of SARs, the price specified in the applicable
Award Agreement as the reference price-per-Share used to calculate the amount
payable to the applicable Participant.
“Fair
Market Value” means, except as otherwise provided in the applicable Award
Agreement, (a) with respect to any property other than Shares, the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee and (b) with respect to Shares as
of any date, (i) the closing per-share sales price of the Shares (A) as reported
by the NYSE for such date or (B) if the Shares are listed on any other national
stock exchange, as reported on the stock exchange composite tape for securities
traded on such stock exchange for such date or, with respect to each of clauses
(A) and (B), if there were no sales on such date, on the closest preceding date
on which there were sales of Shares or (ii) in the event there shall be no
public market for the Shares on such date, the fair market value of the Shares
as determined in good faith by the Committee.
“Incentive
Stock Option” means an option to purchase Shares from the Company that (a) is
granted under Section 6(b) of the Plan and (b) is intended to qualify for
special Federal income tax treatment pursuant to Sections 421 and 422 of the
Code, as now constituted or subsequently amended, or pursuant to a successor
provision of the Code, and which is so designated in the applicable Award
Agreement.
“Independent
Director” means a member of the Board (a) who is neither an employee of the
Company nor an employee of any Affiliate, and (b) who, at the time of acting, is
a “Non-Employee Director” under Rule 16b-3.
“IRS”
means the Internal Revenue Service or any successor thereto and includes the
staff thereof.
“Nonqualified
Stock Option” means an option to purchase Shares from the Company that (a) is
granted under Section 6(b) of the Plan and (b) is not an Incentive Stock
Option.
“NYSE”
means the New York Stock Exchange.
“Option”
means an Incentive Stock Option or a Nonqualified Stock Option or both, as the
context requires.
“Participant”
means any director, officer, employee or consultant (including any prospective
director, officer, employee or consultant) of the Company or its Affiliates who
is eligible for an Award under Section 5 and who is selected by the Committee to
receive an Award under the Plan or who receives a Substitute Award pursuant to
Section 4(c).
“Performance
Compensation Award” means any Award designated by the Committee as a Performance
Compensation Award pursuant to Section 6(e) of the Plan.
“Performance
Criteria” means the criterion or criteria that the Committee shall select for
purposes of establishing the Performance Goal(s) for a Performance Period with
respect to any Performance Compensation Award, Performance Unit or Cash
Incentive Award under the Plan.
“Performance
Formula” means, for a Performance Period, the one or more objective formulas
applied against the relevant Performance Goal to determine, with regard to the
Performance Compensation Award, Performance Unit or Cash Incentive Award of a
particular Participant, whether all, some portion but less than all, or none of
such Award has been earned for the Performance Period.
“Performance
Goal” means, for a Performance Period, the one or more goals established by the
Committee for the Performance Period based upon the Performance
Criteria.
“Performance
Period” means the one or more periods of time as the Committee may select over
which the attainment of one or more Performance Goals shall be
measured for the purpose of determining a Participant’s right to and the payment
of a Performance Compensation Award, Performance Unit or Cash Incentive
Award.
“Performance
Unit” means an Award under Section 6(f) of the Plan that has a value set by the
Committee (or that is determined by reference to a valuation formula specified
by the Committee or the Fair Market Value of Shares), which value may be paid to
the Participant by delivery of such property as the Committee shall determine,
including without limitation, cash or Shares, or any combination thereof, upon
achievement of such Performance Goals during the relevant Performance Period as
the Committee shall establish at the time of such Award or
thereafter.
“Plan”
shall have the meaning specified in Section 1.
“Prior
Plan” shall have the meaning specified in Section 1.
“Restricted
Share” means a Share that is granted under Section 6(d) of the Plan that is
subject to certain transfer restrictions, forfeiture provisions and/or other
terms and conditions specified herein and in the applicable Award
Agreement.
“RSU”
means a restricted stock unit Award that is granted under Section 6(d) of the
Plan and is designated as such in the applicable Award Agreement and that
represents an unfunded and unsecured promise to deliver Shares, cash, other
securities, other Awards or other property in accordance with the terms of the
applicable Award Agreement.
“Rule
16b-3” means Rule 16b-3 as promulgated and interpreted by the SEC under the
Exchange Act or any successor rule or regulation thereto as in effect from time
to time.
“SAR”
means a stock appreciation right Award that is granted under Section 6(c) of the
Plan and that represents an unfunded and unsecured promise to deliver Shares,
cash, other securities, other Awards or other property equal in value to the
excess, if any, of the Fair Market Value per Share over the Exercise Price per
Share of the SAR, subject to the terms of the applicable Award
Agreement.
“SEC”
means the Securities and Exchange Commission or any successor thereto and shall
include the staff thereof.
“Shares”
means shares of common stock of the Company, $0.10 par value, or such other
securities of the Company (a) into which such shares shall be changed by reason
of a recapitalization, merger, consolidation, split-up, combination, exchange of
shares or other similar transaction or (b) as may be determined by the Committee
pursuant to Section 4(b).
“Subsidiary”
means any entity in which the Company, directly or indirectly, possesses 50% or
more of the total combined voting power of all classes of its
stock.
“Substitute
Awards” shall have the meaning specified in Section 4(c).
“Substituted
Options” shall have the meaning specified in Section 6(c)(v).
“Treasury
Regulations” means all proposed, temporary and final regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
Administration. a)Composition of
Committee. The Plan shall be administered by the Committee,
which shall be composed of one or more directors, as determined by the Board;
provided that,
to the extent necessary to comply with the rules of the NYSE and Rule 16b-3 and
to satisfy any applicable requirements of Section 162(m) of the Code and any
other applicable laws or rules, the Committee shall be composed of two or more
directors, all of whom shall be Independent Directors and all of whom shall (i)
qualify as “outside directors” under Section 162(m) of the Code and (ii) meet
the independence requirements of the NYSE.
Authority of
Committee. Subject to the terms of the Plan and applicable
law, and in addition to the other express powers and authorizations conferred on
the Committee by the Plan, the Committee shall have sole and plenary authority
to administer the Plan, including the authority to (i) designate Participants,
(ii) determine the type or types of Awards to be granted to a Participant, (iii)
determine the number of Shares to be covered by, or with respect to which
payments, rights or other matters are to be calculated in connection with,
Awards, (iv) determine the terms and conditions of any Awards, (v) determine the
vesting schedules of Awards and, if certain performance criteria must be
attained in order for an Award to vest or be settled or paid, establish such
performance criteria and certify whether, and to what extent, such performance
criteria have been attained, (vi) determine whether, to what extent and under
what circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or suspended
and the method or methods by which Awards may be settled, exercised, canceled,
forfeited or suspended, (vii) determine whether, to what extent and under what
circumstances cash, Shares, other securities, other Awards, other property and
other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the holder thereof or of the Committee,
(viii) interpret, administer, reconcile any inconsistency in, correct any
default in and/or supply any omission in, the Plan and any instrument or
agreement relating to, or Award made under, the Plan, (ix) establish, amend,
suspend or waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan, (x) accelerate the
vesting or exercisability of, payment for or lapse of restrictions on, Awards,
(xi) amend an outstanding Award or grant a replacement Award for an Award
previously granted under the Plan if, in its sole discretion, the Committee
determines that (A) the tax consequences of such Award to the Company or the
Participant differ from those consequences that were expected to occur on the
date the Award was granted or (B) clarifications or interpretations of, or
changes to, tax law or regulations permit Awards to be granted that have more
favorable tax consequences than initially anticipated and (xii) make any other
determination and take any other action that the Committee deems necessary or
desirable for the administration of the Plan.
Committee
Decisions. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations and other decisions under or
with respect to the Plan or any Award shall be within the sole and plenary
discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all Persons, including the Company, any Affiliate,
any Participant, any holder or beneficiary of any Award and any
shareholder.
Indemnification. No
member of the Board, the Committee or any employee of the Company (each such
person, a “Covered Person”) shall be liable for any action taken or omitted to
be taken or any determination made in good faith with respect to the Plan or any
Award hereunder. Each Covered Person shall be indemnified and held
harmless by the Company from and against (i) any loss, cost, liability or
expense (including attorneys’ fees) that may be imposed upon or incurred by such
Covered Person in connection with or resulting from any action, suit or
proceeding to which such Covered Person may be a party or in which such Covered
Person may be involved by reason of any action taken or omitted to be taken
under the Plan or any Award Agreement and (ii) any and all amounts paid by such
Covered Person, with the Company’s approval, in settlement thereof, or paid by
such Covered Person in satisfaction of any judgment in any such action, suit or
proceeding against such Covered Person; provided that the
Company shall have the right, at its own expense, to assume and defend any such
action, suit or proceeding, and, once the Company gives notice of its intent to
assume the defense, the Company shall have sole control over such defense with
counsel of the Company’s choice. The foregoing right of
indemnification shall not be available to a Covered Person to the extent that a
court of competent jurisdiction in a final judgment or other final adjudication,
in either case not subject to further appeal, determines that the acts or
omissions of such Covered Person giving rise to the indemnification claim
resulted from such Covered Person’s bad faith, fraud or willful criminal act or
omission or that such right of indemnification is otherwise prohibited by law or
by the Company’s Amended and Restated Articles of Incorporation or Amended and
Restated Bylaws. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which Covered Persons may be
entitled under the Company’s Restated Certificate of Incorporation or Restated
Bylaws, as a matter of law, or otherwise, or any other power that the Company
may have to indemnify such persons or hold them harmless.
Delegation of Authority to
Officers. The Committee may delegate, on such terms and
conditions as it determines in its sole and plenary discretion, to one or more
officers of the Company the authority to make grants of Awards to officers
(other than any officer subject to Section 16 of the Exchange Act), employees
and consultants of the Company and its Affiliates (including any prospective
officer (other than any such officer who is expected to be subject to Section 16
of the Exchange Act), employee or consultant) and all necessary and appropriate
decisions and determinations with respect thereto.
Awards to
directors. Notwithstanding anything to the contrary contained
herein, the Board may, in its sole and plenary discretion, at any time and from
time to time, grant Awards to directors or administer the Plan with respect to
such Awards. In any such case, the Board shall have all the authority
and responsibility granted to the Committee herein.
Shares Available for Awards;
Cash Payable Pursuant to Awards. b)Shares and Cash
Available. Subject to adjustment as provided in Section 4(b),
the maximum aggregate number of Shares that may be delivered pursuant to Awards
granted under the Plan shall be equal to (i) 5,000,000 plus (ii) any Shares with
respect to awards granted under the Prior Plan that are forfeited following the
date that the Plan is approved by the Company’s shareholders (such sum, the
“Plan Share Limit”), of which 2,500,000 Shares may be delivered pursuant to
Incentive Stock Options granted under the Plan. Subject to adjustment
as provided in Section 4(b), (x) each Share with respect to which an Option or
stock-settled SAR is granted under the Plan shall reduce the Plan Share Limit by
one Share and (y) each Share with respect to which any other Award denominated
in Shares is granted under the Plan shall reduce the Plan Share Limit by 1.53
Shares. Upon grant of a stock-settled SAR, each Share with respect to
which such stock-settled SAR is exercisable shall be counted as one Share
against the Plan Share Limit, regardless of the number of Shares
actually delivered upon settlement of such stock-settled SAR. Awards
that are required to be settled in cash shall not reduce the Plan
Share Limit. If any Award granted under the Plan is (A) forfeited, or
otherwise expires, terminates or is canceled without the delivery of all Shares
subject thereto, or (B) is settled other than by the delivery of Shares
(including, without limitation, cash settlement), then, in the case of clauses
(A) and (B), the number of Shares subject to such Award that were not issued
with respect to such Award shall not be treated as issued hereunder and the Plan
Share Limit shall be increased by the number of Shares by which the Plan Share
Limit was reduced upon issuance of such Award. Notwithstanding the
foregoing, the Plan Share Limit shall not be increased as a result of the
surrender or tender of Shares to the Company in payment of the Exercise Price of
an Award or any taxes required to be withheld in respect of an
Award. Subject to adjustment as provided in Section 4(b), (1) in the
case of Awards that are settled in Shares, the maximum aggregate number of
Shares with respect to which Awards may be granted to any Participant in any
fiscal year of the Company under the Plan shall be 200,000 (each such Share
counting as one Share for purposes of this clause (1)), and (2) in the case of
Awards that are settled in cash based on the Fair Market Value of a Share, the
maximum aggregate amount of cash that may be paid pursuant to Awards granted to
any Participant in any fiscal year of the Company under the Plan shall be equal
to the per-Share Fair Market Value as of the relevant vesting, payment or
settlement date multiplied by the number of Shares described in the preceding
clause (1). In the case of all Awards other than those described in
the preceding sentence, the maximum aggregate amount of cash and other property
(valued at its Fair Market Value) other than Shares that may be paid or
delivered pursuant to Awards under the Plan to any Participant in any fiscal
year of the Company shall be equal to $4,000,000.
Adjustments for Changes in
Capitalization and Similar Events. c) In the event of any extraordinary
dividend or other extraordinary distribution (whether in the form of cash,
Shares, other securities or other property), recapitalization, rights offering,
stock split, reverse stock split, split-up or spin-off, the Committee shall, in
the manner determined by the Committee to be appropriate or desirable, adjust
any or all of (A) the number of Shares or other securities of the Company (or
number and kind of other securities or property) with respect to which Awards
may be granted, including (1) the maximum aggregate number of Shares that may be
delivered pursuant to Awards granted under the Plan (including pursuant to
Incentive Stock Options) and (2) the maximum number of Shares or other
securities of the Company (or number and kind of other securities or property)
with respect to which Awards may be granted to any Participant in any fiscal
year of the Company, in each case, as provided in Section 4(a), and (B) the
terms of any outstanding Award, including (1) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
subject to outstanding Awards or to which outstanding Awards relate and (2) the
Exercise Price, if applicable, with respect to any Award.
In the
event that the Committee determines that any reorganization, merger,
consolidation, combination, repurchase or exchange of Shares or other securities
of the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee in its
discretion to be appropriate or desirable, then the Committee may (A) in such
manner as it may deem appropriate or desirable, adjust any or all of (1) the
number of Shares or other securities of the Company (or number and kind of other
securities or property) with respect to which Awards may be granted, including
(X) the Plan Share Limit and (Y) the maximum number of Shares or other
securities of the Company (or number and kind of other securities or property)
with respect to which Awards may be granted to any Participant in any fiscal
year of the Company, in each case, as provided in Section 4(a), and (2) the
terms of any outstanding Award, including (X) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
subject to outstanding Awards or to which outstanding Awards relate and (Y) the
Exercise Price, if applicable, with respect to any Award, (B) if deemed
appropriate or desirable by the Committee, make provision for a cash payment to
the holder of an outstanding Award in consideration for the cancelation of such
Award, including, in the case of an outstanding Option or SAR, a cash payment to
the holder of such Option or SAR in consideration for the cancelation of such
Option or SAR in an amount equal to the excess, if any, of the Fair Market Value
(as of a date specified by the Committee) of the Shares subject to such Option
or SAR over the aggregate Exercise Price of such Option or SAR and (C) if deemed
appropriate or desirable by the Committee, cancel and terminate any Option or
SAR having a per-Share Exercise Price equal to, or in excess of, the Fair Market
Value of a Share subject to such Option or SAR without any payment or
consideration therefor.
Substitute
Awards. Subject to the restrictions on “repricing” of Options
and SARs as set forth in Section 7(b), Awards may, in the discretion of the
Committee, be granted under the Plan in assumption of, or in substitution for,
outstanding awards previously granted by the Company or any of its Affiliates or
a company acquired by the Company or any of its Affiliates or with which the
Company or any of its Affiliates combines (“Substitute Awards”); provided,
however, that in no event may any Substitute Award be granted in a manner that
would violate the prohibitions on repricing of Options and SARSs, as set forth
in clauses (i), (ii), and (iii) of Section 7(b). The number of Shares
underlying any Substitute Awards shall be counted against the Plan Share Limit;
provided, however, that
Substitute Awards issued in connection with the assumption of, or in
substitution for, outstanding awards previously granted by an entity that is
acquired by the Company or any of its Affiliates or with which the Company or
any of its Affiliates combines shall not be counted against the Plan Share
Limit; provided
further, however, that
Substitute Awards issued in connection with the assumption of, or in
substitution for, outstanding stock options intended to qualify for special tax
treatment under Sections 421 and 422 of the Code that were previously granted by
an entity that is acquired by the Company or any of its Affiliates or with which
the Company or any of its Affiliates combines shall be counted against the
maximum aggregate number of Shares available for Incentive Stock Options under
the Plan.
Sources of Shares
Deliverable Under Awards. Any Shares delivered pursuant to an
Award may consist, in whole or in part, of authorized and unissued Shares or of
treasury Shares.
Eligibility. Any
director, officer, employee or consultant (including any prospective director,
officer, employee or consultant) of the Company or any of its Affiliates shall
be eligible to be designated a Participant.
Awards. d)Types of
Awards. Awards may be made under the Plan in the form of (i)
Options, (ii) SARs, (iii) Restricted Shares, (iv) RSUs, (v) Performance
Compensation Awards, (vi) Performance Units, (vii) Cash Incentive Awards, (viii)
Deferred Share Units and (ix) other equity-based or equity-related Awards that
the Committee determines are consistent with the purpose of the Plan and the
interests of the Company. Awards may be granted in tandem with other
Awards. No Incentive Stock Option (other than an Incentive Stock
Option that may be assumed or issued by the Company in connection with a
transaction to which Section 424(a) of the Code applies) may be granted to a
person who is ineligible to receive an Incentive Stock Option under the
Code.
Options. e)Grant. Subject
to the provisions of the Plan, the Committee shall have sole and plenary
authority to determine (A) the Participants to whom Options shall be granted,
(B) subject to Section 4(a), the number of Shares subject to Options to be
granted to each Participant, (C) whether each Option shall be an Incentive Stock
Option or a Nonqualified Stock Option and (D) the conditions and limitations
applicable to the vesting and exercise of each Option. In the case of
Incentive Stock Options, the terms and conditions of such grants shall be
subject to and comply with such rules as may be prescribed by Section 422 of the
Code and any regulations related thereto, as may be amended from time to
time. All Options granted under the Plan shall be Nonqualified Stock
Options unless the applicable Award Agreement expressly states that the Option
is intended to be an Incentive Stock Option. If an Option is intended
to be an Incentive Stock Option, and if, for any reason, such Option (or any
portion thereof) shall not qualify as an Incentive Stock Option, then, to the
extent of such nonqualification, such Option (or portion thereof) shall be
regarded as a Nonqualified Stock Option appropriately granted under the Plan;
provided that
such Option (or portion thereof) otherwise complies with the Plan’s requirements
relating to Nonqualified Stock Options.
Exercise
Price. The Exercise Price of each Share covered by an Option
shall be not less than 100% of the Fair Market Value of such Share (determined
as of the date the Option is granted); provided, however, in the case
of an Incentive Stock Option granted to an employee who, at the time of the
grant of such Option, owns stock representing more than 10% of the voting power
of all classes of stock of the Company or any Affiliate, the per-Share Exercise
Price shall be no less than 110% of the Fair Market Value per Share on the date
of the grant. Options are intended to qualify as “qualified
performance-based compensation” under Section 162(m) of the Code.
Vesting and
Exercise. Each Option shall be vested and exercisable at such
times, in such manner and subject to such terms and conditions as the Committee
may, in its sole and plenary discretion, specify in the applicable Award
Agreement or thereafter. Except as otherwise specified by the
Committee in the applicable Award Agreement, an Option may only be exercised to
the extent that it has already vested at the time of exercise. Except
as otherwise specified by the Committee in the Award Agreement, Options shall
become vested and exercisable with respect to 25% of the Shares subject to such
Options on each of the first four anniversaries of the date of
grant. An Option shall be deemed to be exercised when written or
electronic notice of such exercise has been given to the Company in accordance
with the terms of the Award by the person entitled to exercise the Award and
full payment pursuant to Section 6(b)(iv) for the Shares with respect to which
the Award is exercised has been received by the Company. Exercise of
an Option in any manner shall result in a decrease in the number of Shares that
thereafter may be available for sale under the Option. The Committee
may impose such conditions with respect to the exercise of Options, including,
without limitation, any conditions relating to the application of Federal or
state securities laws, as it may deem necessary or advisable.
Payment. i)No
Shares shall be delivered pursuant to any exercise of an Option until payment in
full of the aggregate Exercise Price therefor is received by the Company, and
the Participant has paid to the Company (or the Company has withheld in
accordance with Section 9(d)) an amount equal to any Federal, state, local and
foreign income and employment taxes required to be withheld. Such
payments may be made in cash (or its equivalent) or, in the Committee’s sole and
plenary discretion, (1) by exchanging Shares owned by the Participant (which are
not the subject of any pledge or other security interest), (2) if there shall be
a public market for the Shares at such time, subject to such rules as may be
established by the Committee, through delivery of irrevocable instructions to a
broker to sell the Shares otherwise deliverable upon the exercise of the Option
and to deliver promptly to the Company an amount equal to the aggregate Exercise
Price or (3) through any other method (or combination of methods) as approved by
the Committee; provided that the
combined value of all cash and cash equivalents and the Fair Market Value of any
such Shares so tendered to the Company, together with any Shares withheld by the
Company in accordance with Section 9(d), as of the date of such tender, is at
least equal to such aggregate Exercise Price and the amount of any Federal,
state, local or foreign income or employment taxes required to be withheld, if
applicable.
Wherever
in the Plan or any Award Agreement a Participant is permitted to pay the
Exercise Price of an Option or taxes relating to the exercise of an Option by
delivering Shares, the Participant may, subject to procedures satisfactory to
the Committee, satisfy such delivery requirement by presenting proof of
beneficial ownership of such Shares, in which case the Company shall treat the
Option as exercised without further payment and shall withhold such number of
Shares from the Shares acquired by the exercise of the Option.
Expiration. Except
as otherwise set forth in the applicable Award Agreement, each Option shall
expire immediately, without any payment, upon the earlier of (A) the tenth
anniversary of the date the Option is granted and (B) (i) in the case of
Participants who are not directors, three months after the date the Participant
who is holding the Option ceases to be an officer, employee or consultant of the
Company or one of its Affiliates or (ii) in the case of Participants who are
directors, two years after the date the Participant who is holding the Option
ceases to be a director of the Company or one of its Affiliates. In
no event may an Option be exercisable after the tenth anniversary of the date
the Option is granted.
SARs. f)Grant. Subject
to the provisions of the Plan, the Committee shall have sole and plenary
authority to determine (A) the Participants to whom SARs shall be granted, (B)
subject to Section 4(a), the number of SARs to be granted to each Participant,
(C) the Exercise Price thereof and (D) the conditions and limitations applicable
to the exercise thereof.
Exercise
Price. The Exercise Price of each Share covered by a SAR shall
be not less than 100% of the Fair Market Value of such Share (determined as of
the date the SAR is granted). SARs are intended to qualify as
“qualified performance-based compensation” under Section 162(m) of the
Code.
Exercise. A
SAR shall entitle the Participant to receive an amount upon exercise equal to
the excess, if any, of the Fair Market Value of a Share on the date of exercise
of the SAR over the Exercise Price thereof. The Committee shall
determine, in its sole and plenary discretion, whether a SAR shall be settled in
cash, Shares, other securities, other Awards, other property or a combination of
any of the foregoing.
Other Terms and
Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine, at or after the grant
of a SAR, the vesting criteria, term, methods of exercise, methods and form of
settlement and any other terms and conditions of any SAR; provided, however, that in no
event may any SAR be exercisable after the tenth anniversary of the date the SAR
is granted. Except as otherwise specified by the Committee in the
Award Agreement, SARs shall become vested with respect to 25% of the Shares
subject to such SARs on each of the first four anniversaries of the date of
grant. Any determination by the Committee that is made pursuant to
this Section 6(c)(iv) may be changed by the Committee from time to time and may
govern the exercise of SARs granted or exercised thereafter.
Restricted Shares and
RSUs. g)Grant. Subject
to the provisions of the Plan, the Committee shall have sole and plenary
authority to determine (A) the Participants to whom Restricted Shares and RSUs
shall be granted, (B) subject to Section 4(a), the number of Restricted Shares
and RSUs to be granted to each Participant, (C) the duration of the period
during which, and the conditions, if any, under which, the Restricted Shares and
RSUs may vest or may be forfeited to the Company and (D) the other terms and
conditions of such Awards.
Transfer
Restrictions. Restricted Shares and RSUs may not be sold,
assigned, transferred, pledged or otherwise encumbered except as provided in the
Plan or as may be provided in the applicable Award Agreement; provided, however, that the
Committee may, in its discretion, determine that Restricted Shares and RSUs may
be transferred by the Participant for no consideration. Restricted
Shares may be evidenced in such manner as the Committee shall
determine. If certificates representing Restricted Shares are
registered in the name of the applicable Participant, such certificates must
bear an appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Shares, and the Company may, at its discretion,
retain physical possession of such certificates until such time as all
applicable restrictions lapse.
Payment/Lapse of
Restrictions. Each RSU shall be granted with respect to one
Share or shall have a value equal to the Fair Market Value of one
Share. RSUs shall be paid in cash, Shares, other securities, other
Awards or other property, as determined in the sole and plenary discretion of
the Committee, upon the lapse of restrictions applicable thereto, or otherwise
in accordance with the applicable Award Agreement. Except as
otherwise specified by the Committee in the Award Agreement, Restricted Shares
and RSUs shall become vested with respect to 25% of the Shares subject to such
Awards on each of the first four anniversaries of the date of
grant. If a Restricted Share or an RSU is intended to qualify as
“qualified performance-based compensation” under Section 162(m) of the Code,
unless the grant of such Restricted Share or RSU is contingent on satisfaction
of the requirements for the payment of “qualified performance-based
compensation” under Section 162(m) of the Code (whether pursuant to Section 6(e)
of this Plan or any other plan), all requirements set forth in Section 6(e) must
be satisfied in order for the restrictions applicable thereto to
lapse.
Performance Compensation
Awards. i)General. The
Committee shall have the authority, at the time of grant of any Award, to
designate such Award (other than an Option or SAR) as a Performance Compensation
Award in order for such Award to qualify as “qualified performance-based
compensation” under Section 162(m) of the Code. Options and SARs
granted under the Plan shall not be included among Awards that are designated as
Performance Compensation Awards under this Section 6(e).
Eligibility. The
Committee shall, in its sole discretion, designate within the first 90 days of a
Performance Period (or, if shorter, within the maximum period allowed under
Section 162(m) of the Code) which Participants shall be eligible to receive
Performance Compensation Awards in respect of such Performance
Period. However, designation of a Participant as eligible to receive
an Award hereunder for a Performance Period shall not in any manner entitle such
Participant to receive payment in respect of any Performance Compensation Award
for such Performance Period. The determination as to whether or not
such Participant becomes entitled to payment in respect of any Performance
Compensation Award shall be decided solely in accordance with the provisions of
this Section 6(e). Moreover, designation of a Participant as eligible
to receive an Award hereunder for a particular Performance Period shall not
require designation of such Participant as eligible to receive an Award
hereunder in any subsequent Performance Period and designation of one person as
a Participant eligible to receive an Award hereunder shall not require
designation of any other person as a Participant eligible to receive an Award
hereunder in such period or in any other period.
Discretion of Committee with
Respect to Performance Compensation Awards. With regard to a
particular Performance Period, the Committee shall have full discretion to
select (A) the length of such Performance Period, (B) the type(s) of Performance
Compensation Awards to be issued, (C) the Performance Criteria that shall be
used to establish the Performance Goal(s), (D) the kind(s) and/or level(s) of
the Performance Goals(s) that is (are) to apply to the Company or any of its
Subsidiaries, Affiliates, divisions or operational units, or any combination of
the foregoing, and (E) the Performance Formula. Within the first 90
days of a Performance Period (or, if shorter, within the maximum period allowed
under Section 162(m) of the Code), the Committee shall, with regard to the
Performance Compensation Awards to be issued for such Performance Period,
exercise its discretion with respect to each of the matters enumerated in the
immediately preceding sentence and record the same in writing.
Performance
Criteria. Notwithstanding the foregoing, the Performance
Criteria that shall be used to establish the Performance Goal(s) with respect to
Performance Compensation Awards shall be based on the attainment of specific
levels of performance of the Company or any of its Subsidiaries, Affiliates,
divisions or operational units, or any combination of the foregoing, and shall
be limited to the following: (A) share price, (B) net income or earnings before or after taxes (including
earnings before interest, taxes, depreciation and/or amortization), (C)
operating income, (D) earnings per share (including specified types or
categories thereof), (E) cash flow (including specified types or categories
thereof), (F) cash flow return on capital, (G) revenues (including
specified types or categories thereof), (H) return
measures (including specified types or categories thereof), (I) sales or product
volume, (J) working capital, (K) gross or net profitability/profit margins, (L)
objective measures of productivity or operating efficiency, (M) costs (including
specified types or categories thereof), (N) budgeted expenses (operating and
capital), (O) market share (in the aggregate or by segment), (P) level or amount
of acquisitions, (Q) economic value-added, (R) enterprise value, (S) book value
and (T) customer satisfaction survey results. Such Performance
Criteria may be applied on an absolute basis, be relative to one or more peer
companies of the Company or indices or any combination thereof or, if
applicable, be computed on an accrual or cash accounting basis. To
the extent required under Section 162(m) of the Code, the Committee shall,
within the first 90 days of the applicable Performance Period (or, if shorter,
within the maximum period allowed under Section 162(m) of the Code), define in
an objective manner the method of calculating the Performance Criteria it
selects to use for such Performance Period.
Modification of Performance
Goals. The Committee is authorized at any time during the
first 90 days of a Performance Period (or, if shorter, within the maximum period
allowed under Section 162(m) of the Code), or any time thereafter (but only to
the extent the exercise of such authority after such 90-day period (or such
shorter period, if applicable) would not cause the Performance Compensation
Awards granted to any Participant for the Performance Period to fail to qualify
as “qualified performance-based compensation” under Section 162(m) of the Code),
in its sole and plenary discretion, to adjust or modify the calculation of a
Performance Goal for such Performance Period to the extent permitted under
Section 162(m) of the Code (A) in the event of, or in anticipation of, any
unusual or extraordinary corporate item, transaction, event or development
affecting the Company, or any of its Affiliates, Subsidiaries, divisions or
operating units (to the extent applicable to such Performance Goal) or (B) in
recognition of, or in anticipation of, any other unusual or nonrecurring events
affecting the Company or any of its Affiliates, Subsidiaries, divisions or
operating units (to the extent applicable to such Performance Goal), or the
financial statements of the Company or any of its Affiliates, Subsidiaries,
divisions or operating units (to the extent applicable to such Performance
Goal), or of changes in applicable rules, rulings, regulations or other
requirements of any governmental body or securities exchange, accounting
principles, law or business conditions.
Payment of Performance
Compensation Awards. (1)Condition to Receipt of
Payment. A Participant must be employed by the
Company or one of its Subsidiaries on the last day of a Performance Period to be
eligible for payment in respect of a Performance Compensation Award for such
Performance Period. Notwithstanding the foregoing and to the extent
permitted by Section 162(m) of the Code, in the discretion of the Committee,
Performance Compensation Awards may be paid to Participants who have retired or
whose employment has terminated prior to the last day of the Performance Period
for which a Performance Compensation Award is made, or to the designee or estate
of a Participant who died prior to the last day of a Performance
Period.
Limitation. Except
as otherwise permitted by Section 162(m) of the Code, a Participant shall be
eligible to receive payments in respect of a Performance Compensation Award only
to the extent that (1) the Performance Goal(s) for the relevant Performance
Period are achieved and certified by the Committee in accordance with Section
6(e)(vi)(C) and (2) the Performance Formula as applied against such Performance
Goal(s) determines that all or some portion of such Participant’s Performance
Compensation Award has been earned for such Performance Period.
Certification. Following
the completion of a Performance Period, the Committee shall meet to review and
certify in writing whether, and to what extent, the Performance Goals for the
Performance Period have been achieved and, if so, to calculate and certify in
writing that amount of the Performance Compensation Awards earned for the period
based upon the Performance Formula. The Committee shall then
determine the actual size of each Participant’s Performance Compensation Award
for the Performance Period and, in so doing, may apply negative discretion as
authorized by Section 6(e)(vi)(D).
Negative
Discretion. In determining the actual size of an individual
Performance Compensation Award for a Performance Period, the Committee may, in
its sole and plenary discretion, reduce or eliminate the amount of the Award
earned in the Performance Period, even if applicable Performance Goals have been
attained and without regard to any employment agreement between the Company and
a Participant.
Discretion. Except as otherwise
permitted by Section 162(m) of the Code, in no event shall any discretionary
authority granted to the Committee by the Plan be used to (1) grant or provide
payment in respect of Performance Compensation Awards for a Performance Period
if the Performance Goals for such Performance Period have not been attained, (2)
increase a Performance Compensation Award for any Participant at any time after
the first 90 days of the Performance Period (or, if shorter, the maximum period
allowed under Section 162(m) of the Code) or (3) increase a Performance
Compensation Award above the maximum amount payable under Section 4(a) of the
Plan.
Form of
Payment. In the case of any Performance Compensation Award
other than a Restricted Share, RSU or other equity-based Award that is subject
to performance-based vesting conditions, such Performance Compensation Award
shall be payable, in the discretion of the Committee, in cash or in Restricted
Shares, RSUs or fully vested Shares of equivalent value and shall be paid on
such terms as determined by the Committee in its discretion. Any
Restricted Shares and RSUs shall be subject to the terms of this Plan (or any
successor equity-compensation plan) and any applicable Award
Agreement. The number of Restricted Shares, RSUs or Shares that is
equivalent in value to a dollar amount shall be determined in accordance with a
methodology specified by the Committee within the first 90 days of the relevant
Performance Period (or, if shorter, within the maximum period allowed under
Section 162(m) of the Code).
Performance
Units. ii)Grant. Subject
to the provisions of the Plan, the Committee shall have sole and plenary
authority to determine the Participants to whom Performance Units shall be
granted.
Value of Performance
Units. Each Performance Unit shall have an initial value that
is established by the Committee at the time of grant. The Committee
shall set Performance Goals in its discretion which, depending on the extent to
which they are met during a Performance Period, shall determine in accordance
with Section 4(a) the number and/or value of Performance Units that shall be
paid out to the Participant.
Earning of Performance
Units. Subject to the provisions of the Plan, after the
applicable Performance Period has ended, the holder of Performance Units shall
be entitled to receive a payout of the number and value of Performance Units
earned by the Participant over the Performance Period, to be determined by the
Committee, in its sole and plenary discretion, as a function of the extent to
which the corresponding Performance Goals have been achieved.
Form and Timing of Payment
of Performance Units. Subject to the provisions of the Plan,
the Committee, in its sole and plenary discretion, may pay earned Performance
Units in the form of cash or in Shares (or in a combination thereof) that have
an aggregate Fair Market Value equal to the value of the earned Performance
Units at the close of the applicable Performance Period. Such Shares
may be granted subject to any restrictions in the applicable Award Agreement
deemed appropriate by the Committee. The determination of the
Committee with respect to the form and timing of payout of such Awards shall be
set forth in the applicable Award Agreement. If a Performance Unit is
intended to qualify as “qualified performance-based compensation” under Section
162(m) of the Code, all requirements set forth in Section 6(e) must be satisfied
in order for a Participant to be entitled to payment.
Cash Incentive
Awards. Subject to the provisions of the Plan, the Committee,
in its sole and plenary discretion, shall have the authority to grant Cash
Incentive Awards. Subject to Section 4(a), the Committee shall
establish Cash Incentive Award levels to determine the amount of a Cash
Incentive Award payable upon the attainment of Performance Goals. If
a Cash Incentive Award is intended to qualify as “qualified performance-based
compensation” under Section 162(m) of the Code, all requirements set forth in
Section 6(e) must be satisfied in order for a Participant to be entitled to
payment.
Other Stock-Based
Awards. Subject to the provisions of the Plan, the Committee
shall have the sole and plenary authority to grant to Participants other
equity-based or equity-related Awards (including Deferred Share Units and fully
vested Shares) (whether payable in cash, equity or otherwise) in such amounts
and subject to such terms and conditions as the Committee shall determine,
provided that any such Awards must comply, to the extent deemed desirable by the
Committee, with Rule 16b-3 and applicable law.
Dividends and Dividend
Equivalents. In the sole and plenary discretion of the
Committee, an Award, other than an Option or SAR or a Cash Incentive Award, may
provide the Participant with dividends or dividend equivalents, payable in cash,
Shares, other securities, other Awards or other property, on a current or
deferred basis, on such terms and conditions as may be determined by the
Committee in its sole and plenary discretion, including, without limitation, (A)
payment directly to the Participant, (B) withholding of such amounts by the
Company subject to vesting of the Award or (C) reinvestment in additional
Shares, Restricted Shares or other Awards;
provided, however, that a Participant shall be eligible to receive dividends or
dividend equivalents in respect of any Award that is payable upon the
achievement of Performance Goal(s) only to the extent that (1) the Performance
Goal(s) for the relevant Performance Period are achieved and (2) the Performance
Formula as applied against such Performance Goal(s) determines that all or some
portion of such Award has been earned for such Performance
Period.
Amendment and
Termination. h)Amendments to the
Plan. Subject to any applicable law or government regulation,
to any requirement that must be satisfied if the Plan is intended to be a
shareholder-approved plan for purposes of Section 162(m) of the Code and to the
rules of the NYSE or any successor exchange or quotation system on which the
Shares may be listed or quoted, the Plan may be amended, modified or terminated
by the Board without the approval of the shareholders of the Company, except
that shareholder approval shall be required for any amendment that would (i)
increase the Plan Share Limit or increase the maximum number of Shares that may
be delivered pursuant to Incentive Stock Options granted under the Plan; provided, however, that any
adjustment under Section 4(b) shall not constitute an increase for purposes of
this Section 7(a), or (ii) change the class of employees or other individuals
eligible to participate in the Plan. No amendment, modification or
termination of the Plan may, without the consent of the Participant to whom any
Award shall theretofor have been granted, materially and adversely affect the
rights of such Participant (or his or her transferee) under such Award, unless
otherwise provided by the Committee in the applicable Award
Agreement.
Amendments to
Awards. The Committee may waive any conditions or rights
under, amend any terms of, or alter, suspend, discontinue, cancel or terminate
any Award theretofor granted, prospectively or retroactively; provided, however, that, except
as set forth in the Plan, unless otherwise provided by the Committee in the
applicable Award Agreement, any such waiver, amendment, alteration, suspension,
discontinuance, cancelation or termination that would materially and adversely
impair the rights of any Participant or any holder or beneficiary of any Award
theretofor granted shall not to that extent be effective without the consent of
the applicable Participant, holder or beneficiary. Notwithstanding
the preceding sentence, in no event may any Option or SAR (i) be amended to
decrease the Exercise Price thereof, (ii) be cancelled at a time when its
Exercise Price exceeds the Fair Market Value of the underlying Shares in
exchange for another Option or SAR or any Restricted Share, RSU, other
equity-based Award, award under any other equity-compensation plan or any cash
payment or (iii) be subject to any action that would be treated, for accounting
purposes, as a “repricing” of such Option or SAR, unless such amendment,
cancellation or action is approved by the Company’s
shareholders. For the avoidance of doubt, an adjustment to the
Exercise Price of an Option or SAR that is made in accordance with Section 4(b)
or Section 8 shall not be considered a reduction in Exercise Price or
“repricing” of such Option or SAR.
Adjustment of Awards Upon
the Occurrence of Certain Unusual or Nonrecurring
Events. Subject to Section 6(e)(v) and the penultimate
sentence of Section 7(b), the Committee is hereby authorized to make adjustments
in the terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(b) or the occurrence of a Change of Control)
affecting the Company, any Affiliate, or the financial statements of the Company
or any Affiliate, or of changes in applicable rules, rulings, regulations or
other requirements of any governmental body or securities exchange, accounting
principles or law (i) whenever the Committee, in its sole and plenary
discretion, determines that such adjustments are appropriate or desirable,
including, without limitation, providing for a substitution or assumption of
Awards, accelerating the exercisability of, lapse of restrictions on, or
termination of, Awards or providing for a period of time for exercise prior to
the occurrence of such event, (ii) if deemed appropriate or desirable by the
Committee, in its sole and plenary discretion, by providing for a cash payment
to the holder of an Award in consideration for the cancelation of such Award,
including, in the case of an outstanding Option or SAR, a cash payment to the
holder of such Option or SAR in consideration for the cancelation of such Option
or SAR in an amount equal to the excess, if any, of the Fair Market Value (as of
a date specified by the Committee) of the Shares subject to such Option or SAR
over the aggregate Exercise Price of such Option or SAR and (iii) if deemed
appropriate or desirable by the Committee, in its sole and plenary discretion,
by canceling and terminating any Option or SAR having a per-Share Exercise Price
equal to, or in excess of, the Fair Market Value of a Share subject to such
Option or SAR without any payment or consideration therefor.
Change of
Control. Unless otherwise provided in the applicable Award
Agreement, in the event of a Change of Control after the date of the adoption of
the Plan, unless provision is made in connection with the Change of Control for
(a) assumption of Awards previously granted or (b) substitution for such Awards
of new awards covering stock of a successor corporation or its “parent
corporation” (as defined in Section 424(e) of the Code) or “subsidiary
corporation” (as defined in Section 424(f) of the Code) with appropriate
adjustments as to the number and kinds of shares and the Exercise Prices, if
applicable, (i) any outstanding Options or SARs then held by Participants that
are unexercisable or otherwise unvested shall automatically be deemed
exercisable or otherwise vested, as the case may be, as of immediately prior to
such Change of Control, (ii) all Performance Units, Cash Incentive Awards and
Awards designated as Performance Compensation Awards shall be paid out as if the
date of the Change of Control were the last day of the applicable Performance
Period and “target” performance levels had been attained and (iii) all other
outstanding Awards (i.e., other than
Options, SARs, Performance Units, Cash Incentive Awards and Awards designated as
Performance Compensation Awards) then held by Participants that are
unexercisable, unvested or still subject to restrictions or forfeiture, shall
automatically be deemed exercisable and vested and all restrictions and
forfeiture provisions related thereto shall lapse as of immediately prior to
such Change of Control.
General
Provisions. 2)Nontransferability. Except
as otherwise specified in the applicable Award Agreement, during the
Participant’s lifetime each Award (and any rights and obligations thereunder)
shall be exercisable only by the Participant, or, if permissible under
applicable law, by the Participant’s legal guardian or representative, and no
Award (or any rights and obligations thereunder) may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a Participant
otherwise than by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate; provided that (i) the
designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance and (ii) the Board or the
Committee may permit further transferability, on a general or specific basis,
and may impose conditions and limitations on any permitted transferability;
provided, however, that
Incentive Stock Options granted under the Plan shall not be transferable in any
way that would violate Section 1.422-2(a)(2) of the Treasury Regulations and in
no event may any Award (or any rights and obligations thereunder) be transferred
in any way in exchange for value. All terms and conditions of the
Plan and all Award Agreements shall be binding upon any permitted successors and
assigns.
No Rights to
Awards. No Participant or other Person shall have any claim to
be granted any Award, and there is no obligation for uniformity of treatment of
Participants or holders or beneficiaries of Awards. The terms and
conditions of Awards and the Committee’s determinations and interpretations with
respect thereto need not be the same with respect to each Participant and may be
made selectively among Participants, whether or not such Participants are
similarly situated.
Share
Certificates. All certificates for Shares or other securities
of the Company or any Affiliate delivered under the Plan pursuant to any Award
or the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan, the applicable
Award Agreement or the rules, regulations and other requirements of the SEC, the
NYSE or any other stock exchange or quotation system upon which such Shares or
other securities are then listed or reported and any applicable Federal or state
laws, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
Withholding. (i) Authority to
Withhold. A Participant may be required to pay to the Company
or any Affiliate, and the Company or any Affiliate shall have the right and is
hereby authorized to withhold from any Award, from any payment due or transfer
made under any Award or under the Plan or from any compensation or other amount
owing to a Participant, the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding taxes in respect of an
Award, its exercise or any payment or transfer under an Award or under the Plan
and to take such other action as may be necessary in the opinion of the
Committee or the Company to satisfy all obligations for the payment of such
taxes.
(ii) Alternative Ways to Satisfy
Withholding Liability. Without limiting the generality of
clause (i) above, a Participant may satisfy, in whole or in part, the foregoing
withholding liability by delivery of Shares owned by the Participant (which are
not subject to any pledge or other security interest) having a Fair Market Value
equal to such withholding liability or, at the discretion of the Participant, by
having the Company withhold from the number of Shares otherwise issuable
pursuant to the exercise of the Option or SAR, or the lapse of the restrictions
on any other Award (in the case of SARs and other Awards, if such SARs and other
Awards are settled in Shares), a number of Shares having a Fair Market Value
equal to such withholding liability.
Section 409A.
(iii) It is intended that the provisions of the Plan comply with
Section 409A of the Code, and all provisions of the Plan shall be construed and
interpreted in a manner consistent with the requirements for avoiding taxes or
penalties under Section 409A of the Code.
No
Participant or the creditors or beneficiaries of a Participant shall have the
right to subject any deferred compensation (within the meaning of Section 409A
of the Code) payable under the Plan to any anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or
garnishment. Except as permitted under Section 409A of the Code, any
deferred compensation (within the meaning of Section 409A of the Code) payable
to any Participant or for the benefit of any Participant under the Plan may not
be reduced by, or offset against, any amount owing by any such Participant to
the Company or any of its Affiliates.
If, at
the time of a Participant’s separation from service (within the meaning of
Section 409A of the Code), (A) such Participant shall be a specified employee
(within the meaning of Section 409A of the Code and using the identification
methodology selected by the Company from time to time) and (B) the Company shall
make a good faith determination that an amount payable pursuant to an Award
constitutes deferred compensation (within the meaning of Section 409A of the
Code) the payment of which is required to be delayed pursuant to the six-month
delay rule set forth in Section 409A of the Code in order to avoid taxes or
penalties under Section 409A of the Code, then the Company shall not pay such
amount on the otherwise scheduled payment date but shall instead pay it on the
first business day after such six-month period. Such amount shall be
paid without interest, unless otherwise determined by the Committee, in its sole
discretion, or as otherwise provided in any applicable employment agreement
between the Company and the relevant Participant.
Notwithstanding
any provision of the Plan to the contrary, in light of the uncertainty with
respect to the proper application of Section 409A of the Code, the Company
reserves the right to make amendments to any Award as the Company deems
necessary or desirable to avoid the imposition of taxes or penalties under
Section 409A of the Code. In any case, a Participant shall be solely
responsible and liable for the satisfaction of all taxes and penalties that may
be imposed on such Participant or for such Participant’s account in connection
with an Award (including any taxes and penalties under Section 409A of the
Code), and neither the Company nor any of its Affiliates shall have any
obligation to indemnify or otherwise hold such Participant harmless from any or
all of such taxes or penalties.
Award
Agreements. Each Award hereunder shall be evidenced by an
Award Agreement, which shall be delivered to the Participant and shall specify
the terms and conditions of the Award and any rules applicable thereto,
including the effect on such Award of the death, disability or termination of
employment or service of a Participant and the effect, if any, of such other
events as may be determined by the Committee.
No Limit on Other
Compensation Arrangements. Nothing contained in the Plan shall
prevent the Company or any Affiliate from adopting or continuing in effect other
compensation arrangements, which may, but need not, provide for the grant of
options, restricted stock, shares, other types of equity-based awards (subject
to shareholder approval if such approval is required) and cash incentive awards,
and such arrangements may be either generally applicable or applicable only in
specific cases.
No Right to
Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained as a director, officer, employee
or consultant of or to the Company or any Affiliate, nor shall it be construed
as giving a Participant any rights to continued service on the
Board. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment or discontinue any directorship or consulting
relationship, free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award
Agreement.
No Rights as
Shareholder. No Participant or holder or beneficiary of any
Award shall have any rights as a shareholder with respect to any Shares to be
distributed under the Plan until he or she has become the holder of such
Shares. In connection with each grant of Restricted Shares, except as
provided in the applicable Award Agreement, the Participant shall be entitled to
the rights of a shareholder (including the right to vote) in respect of such
Restricted Shares. Except as otherwise provided in Section 4(b),
Section 7(c) or the applicable Award Agreement, no adjustments shall be made for
dividends or distributions on (whether ordinary or extraordinary, and whether in
cash, Shares, other securities or other property), or other events relating to,
Shares subject to an Award for which the record date is prior to the date such
Shares are delivered.
Governing
Law. The validity, construction and effect of the Plan and any
rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Texas, without giving
effect to the conflict of laws provisions thereof.
Severability. If
any provision of the Plan or any Award is or becomes or is deemed to be invalid,
illegal or unenforceable in any jurisdiction or as to any Person or Award, or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to the
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be construed or deemed stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
Other Laws; Restrictions on
Transfer of Shares. The Committee may refuse to issue or
transfer any Shares or other consideration under an Award if, acting in its sole
and plenary discretion, it determines that the issuance or transfer of such
Shares or such other consideration might violate any applicable law or
regulation or entitle the Company to recover the same under Section 16(b) of the
Exchange Act, and any payment tendered to the Company by a Participant, other
holder or beneficiary in connection with the exercise of such Award shall be
promptly refunded to the relevant Participant, holder or
beneficiary. Without limiting the generality of the foregoing, no
Award granted hereunder shall be construed as an offer to sell securities of the
Company, and no such offer shall be outstanding, unless and until the Committee
in its sole and plenary discretion has determined that any such offer, if made,
would be in compliance with all applicable requirements of the U.S. Federal and
any other applicable securities laws.
No Trust or Fund
Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate, on one hand, and a
Participant or any other Person, on the other. To the extent that any
Person acquires a right to receive payments from the Company or any Affiliate
pursuant to an Award, such right shall be no greater than the right of any
unsecured general creditor of the Company or such Affiliate.
No Fractional
Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities or other property shall be paid or transferred in lieu of
any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated or otherwise eliminated.
Requirement of Consent and
Notification of Election Under Section 83(b) of the Code or Similar
Provision. No election under Section 83(b) of the Code (to
include in gross income in the year of transfer the amounts specified in Section
83(b) of the Code) or under a similar provision of law may be made unless
expressly permitted by the terms of the applicable Award Agreement or by action
of the Committee in writing prior to the making of such election. If
an Award recipient, in connection with the acquisition of Shares under the Plan
or otherwise, is expressly permitted under the terms of the applicable Award
Agreement or by such Committee action to make such an election and the
Participant makes the election, the Participant shall notify the Committee of
such election within ten days of filing notice of the election with the IRS or
other governmental authority, in addition to any filing and notification
required pursuant to regulations issued under Section 83(b) of the Code or any
other applicable provision.
Requirement of Notification
Upon Disqualifying Disposition Under Section 421(b) of the
Code. If any Participant shall make any disposition of Shares
delivered pursuant to the exercise of an Incentive Stock Option under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions) or any successor provision of the Code, such
Participant shall notify the Company of such disposition within ten days of such
disposition.
Headings and
Construction. Headings are given to the Sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof. Whenever the
words “include”, “includes” or “including” are used in this Plan, they shall be
deemed to be followed by the words “but not limited to”.
Term of the
Plan. (e) Effective
Date. The Plan shall be effective as of the date of its
adoption by the Board and approval by the Company’s shareholders.
Expiration
Date. No Award shall be granted under the Plan after the tenth
anniversary of the date the Plan is approved by the Company’s shareholders under
Section 10(a). Unless otherwise expressly provided in the Plan or in
an applicable Award Agreement, any Award granted hereunder, and the authority of
the Board or the Committee to amend, alter, adjust, suspend, discontinue or
terminate any such Award or to waive any conditions or rights under any such
Award, shall nevertheless continue thereafter.
BENCHMARK
ELECTRONICS, INC.
AMENDMENT
NO. 2 TO RIGHTS AGREEMENT
AMENDMENT
NO. 2 (this “Amendment”) dated as
of [ ],
2010, to the Rights Agreement dated as of December 11, 1998, as amended by
Amendment No. 1 dated as of December 10, 2008 (as amended, the “Rights Agreement”),
between BENCHMARK ELECTRONICS, INC., a Texas corporation (the “Company”), and
COMPUTERSHARE TRUST COMPANY, N.A., a national banking association, as rights
agent (as successor rights agent to Harris Trust and Savings Bank) (the “Rights
Agent”).
WHEREAS,
the Board of Directors of the Company has determined to amend the Rights
Agreement in order to change the Final Expiration Date (as defined in the Rights
Agreement) and to make certain other changes, all as set forth below;
and
WHEREAS,
the Company has directed the Rights Agent to enter into this Amendment pursuant
to Section 27 of the Rights Agreement;
NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein set
forth, the parties hereby agree as follows:
Section
1. Amendments to Section
1.
(a) The
definition of “Acquiring Person” set forth in Section 1 of the Rights
Agreement is hereby amended by deleting each reference to “15%” set forth
therein and substituting therefor “20%”.
(b) The
definition of “Distribution Date” set forth in Section 1 of the Rights
Agreement is hereby amended by inserting the parenthetical “(other than a
Qualified Offer)” immediately after the words “a tender or exchange
offer”.
(c) The
definition of “Final Expiration Date” set forth in Section 1 of the Rights
Agreement is hereby amended by deleting the date “December 11, 2018” set forth
therein and substituting therefor the date “[ ],
2013”.1
(d) Section
1 of the Rights Agreement is hereby amended by inserting the following
definition in appropriate alphabetical order:
“‘Qualified Offer’
shall mean an offer determined by the Board of Directors of the Company to have
each of the following characteristics:
(i) a
fully financed all-cash tender offer for any and all of the outstanding shares
of Common Stock (whether such shares are outstanding at the commencement of the
offer or become outstanding thereafter upon the exercise or conversion of
options or other securities that are outstanding at the commencement of the
offer);
1 To be
the date that is three years after the date of this
Amendment.
(ii) an
offer that has been commenced and is made by an offeror (including Affiliates or
Associates of such offeror) that beneficially owns no more than 10% of the
outstanding Common Stock as of the date of such commencement;
(iii) an
offer whose per share offer price is greater than the higher of (a) the highest
reported per share market price for Common Stock in the immediately preceding 24
months and (b) the amount that is 25% higher than the Current Market Price per
share of Common Stock;
(iv) an
offer that, within 20 Business Days after the commencement date of the offer (or
within 10 Business Days after any increase in the offer consideration), does not
result in a nationally recognized investment banking firm retained by the Board
of Directors of the Company rendering an opinion to the Board of Directors of
the Company that the consideration being offered to the holders of the Common
Stock is either inadequate or unfair;
(v) an
offer that is subject only to the minimum tender condition described below in
item (vii) of this definition and other customary terms and conditions, which
conditions shall not include any financing, funding or similar condition or any
requirements with respect to the offeror or its agents or any other Person being
permitted any due diligence with respect to the books, records, management,
accountants and other outside advisors of the Company;
(vi) an
offer pursuant to which the Company has received an irrevocable written
commitment of the offeror that the offer will remain open for at least
120 Business Days and, if a Special Meeting is duly requested in accordance
with Section 23(c), for at least 10 Business Days after the date of the Special
Meeting or, if no Special Meeting is held within 90 Business Days following
receipt of the Special Meeting Notice in accordance with Section 23(c), for at
least 10 Business Days following such 90 Business Day period;
(vii) an
offer that is conditioned on a minimum of at least two-thirds of the outstanding
shares of Common Stock being tendered and not withdrawn as of the offer’s
expiration date, which condition shall not be waivable;
(viii) an
offer pursuant to which the Company has received an irrevocable written
commitment by the offeror to consummate as promptly as practicable upon
successful completion of the offer a second-step transaction whereby all shares
of the Common Stock not tendered into the offer will be acquired at the same
consideration per share actually paid pursuant to the offer, subject to
statutory appraisal rights, if any; and
(ix) an
offer that is otherwise in the best interests of the Company and its
shareholders.
For
purposes of this definition and related provisions of this Agreement,
(a) ‘commencement’ and ‘commenced’ shall have the meanings given to such
terms pursuant to Rule 14d-2(a) under the Exchange Act and (b) ‘fully
financed’ shall mean that the offeror has sufficient funds for the offer and
related expenses which shall be evidenced by (x) firm, unqualified, written
commitments from responsible financial institutions having the necessary
financial capacity, accepted by the offeror, to provide funds for such offer
subject only to customary terms and conditions, which conditions shall not
include any requirements with respect to such financial institutions or any
other Person being permitted any due diligence with respect to the books,
records, management, accountants and other outside advisors of the Company,
(y) cash or cash equivalents then available to the offeror, set apart and
maintained solely for the purpose of funding the offer with an irrevocable
written commitment being provided by the offeror to the Board of Directors of
the Company to maintain such availability until the offer is consummated or
withdrawn, or (z) a combination of the foregoing, which evidence in each
case has been provided to the Company prior to, or upon, commencement of the
offer. In considering whether the condition set forth in item (ix)
above is satisfied, the Board of Directors of the Company may take into account
the factors set forth in Article 13.06 of the Texas Business Corporation Act as
in effect on the date of this Agreement and any other factors it deems
relevant.
If an
offer becomes a Qualified Offer in accordance with this definition, but
subsequently ceases to be a Qualified Offer as a result of the failure at a
later date to continue to satisfy any of the requirements of this definition,
such offer shall cease to be a Qualified Offer and the provisions of Section
23(c) shall no longer be applicable to such offer, provided the actual
redemption of the Rights pursuant to Section 23(c) shall not already have
occurred.”
Section
2. Amendments to Section
23.
(a) Section 23(b)
of the Rights Agreement is hereby amended by inserting the words “or the
effectiveness of the redemption of the Rights pursuant to Section 23(c)”
immediately after the parenthetical therein.
(b) Section
23 of the Rights Agreement is hereby amended by inserting the following new
Section 23(c):
“(c) In
the event that the Company, not earlier than 90 Business Days nor later than 120
Business Days following the commencement of a Qualified Offer, which has not
been terminated prior thereto and which continues to be a Qualified Offer,
receives a written notice complying with the terms of this Section 23(c)
(the ‘Special Meeting
Notice’) that is properly executed by the holders of record (or their
duly authorized proxy) of at least 10% of the shares of Common Stock then
outstanding directing the Board of Directors of the Company to submit to a vote
of shareholders at a special meeting of the shareholders of the Company (a
‘Special
Meeting’) a resolution authorizing the redemption of all but not less
than all of the then outstanding Rights at the Redemption Price (the ‘Redemption
Resolution’), then the Board of Directors of the Company shall take such
actions as are necessary or desirable to cause the Redemption Resolution to be
submitted to a vote of the shareholders of the Company, by including a proposal
relating to adoption of the Redemption Resolution in the proxy materials of the
Company for the Special Meeting. For purposes of a Special Meeting
Notice, the record date for determining eligible holders of record shall be the
90th Business Day following the commencement of a Qualified
Offer. Any Special Meeting Notice must be delivered to the Secretary
of the Company at the principal executive offices of the Company and must set
forth as to the shareholders of record executing the request (i) the name
and address of such shareholders, as they appear on the Company’s books and
records, (ii) the class and number of shares of Common Stock which are
owned of record by each of such shareholders and (iii) in the case of
Common Stock that is owned beneficially by another Person, an executed
certification by the holder of record that such holder has executed such Special
Meeting Notice only after obtaining instructions to do so from such beneficial
owner. Subject to the requirements of applicable law, the Board of
Directors of the Company may take a position in favor of or opposed to the
adoption of the Redemption Resolution, or no position with respect to the
Redemption Resolution, as it determines to be appropriate in the exercise of its
duties. In the event that no Person has become an Acquiring Person
prior to the redemption date referred to in this Section 23(c), and the
Qualified Offer continues to be a Qualified Offer and either (i) the
Special Meeting is not held on or prior to the 90th Business Day following
receipt of the Special Meeting Notice, or (ii) at the Special Meeting, the
holders of a majority of the shares of Common Stock outstanding as of the record
date for the Special Meeting shall vote in favor of the Redemption Resolution,
then all of the Rights shall be deemed redeemed by such failure to hold the
Special Meeting or as a result of such shareholder action, as the case may be,
at the Redemption Price, and the Board of Directors of the Company shall take
such other action as would prevent the existence of the Rights from interfering
with the consummation of the Qualified Offer, effective either (i) as of
the Close of Business on the 90th Business Day following receipt of the Special
Meeting Notice if a Special Meeting is not held on or prior to such date or
(ii) as of the date on which the results of the vote on the Redemption
Resolution at the Special Meeting are certified as official by the appointed
inspectors of election for the Special Meeting, as the case may
be.”
Section
3. Amendments to Exhibit
B. Exhibit B to the Rights Agreement is hereby amended by
deleting each reference to the date “December 11, 2018” set forth therein and
substituting therefor the date “[ ],
2013”.
Section
4. Amendments to Exhibit
C. Exhibit C to the Rights Agreement is hereby amended by (a)
deleting the reference to “15%” set forth therein and substituting therefor
“20%”, (b) deleting the date “December 11, 2018” set forth in the third
paragraph thereof and substituting therefor the date “[
], 2013”, (c) inserting the parenthetical “(other than a Qualified
Offer (as defined in the Rights Agreement))” immediately after the words “a
tender or exchange offer” and (d) amending and restating the tenth
paragraph thereof in its entirety as follows:
“At any time until 10 days following
the Stock Acquisition Date, the Company may redeem the Rights in whole, but not
in part, at a price of $.01 per Right (the “Redemption Price”), payable, at the
option of the Company, in cash, shares of Common Stock or such other
consideration as the Board of Directors may determine. In addition,
not earlier than 90 business days nor later than 120 business days after
the Company receives a Qualified Offer, the holders of record of 10% of the
shares of Common Stock shall be entitled to deliver a written notice to the
Company requesting a special meeting of the shareholders of the Company to vote
upon a resolution authorizing the redemption of all but not less than all of the
then outstanding Rights at the Redemption Price. If either
(i) the special meeting is not held on or prior to the 90th business day
following receipt of the notice, or (ii) at the special meeting, the
holders of a majority of the shares of Common Stock outstanding shall vote in
favor of the redemption resolution, then all of the Rights shall be deemed
redeemed at the Redemption Price. Immediately upon the effectiveness
of the action of the Board of Directors ordering redemption of the Rights or the
effectiveness of the redemption of the Rights pursuant to the Qualified Offer
redemption provisions, the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.”
Section
5. Certification. The
officer of the Company executing this Amendment on behalf of the Company hereby
certifies on behalf of the Company that this Amendment complies with the terms
of Section 27 of the Rights Agreement.
Section
6. Governing
Law. This Amendment shall be deemed to be a contract made
under the laws of the State of Texas and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
Section
7. Execution in
Counterparts. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section
8. Rights Agreement as
Amended. Upon the effectiveness of this Amendment, the term
“Agreement” as used in the Rights Agreement shall refer to the Rights Agreement
as amended hereby.
Section
9. Ratification of Rights
Agreement. Except as otherwise expressly set forth herein, the
Rights Agreement is hereby ratified and confirmed and remains in full force and
effect as originally entered into as of December 11, 1998, and as amended as of
December 10, 2008.
[Remainder
of this page intentionally left blank]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BENCHMARK
ELECTRONICS, INC.
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by
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Name: Cary
T. Fu
Title: Chief
Executive Officer
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Attest:
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by
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Name: Kenneth
S. Barrow
Title: Secretary
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COMPUTERSHARE
TRUST COMPANY,
N.A.,
as Rights
Agent
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by
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Name:
Title:
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PROXY
|
BENCHMARK
ELECTRONICS, INC.
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PROXY
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2010
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON TUESDAY, MAY 18, 2010
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The 2010
Annual Meeting of Shareholders of Benchmark Electronics, Inc. (the “Company”)
will be held at the Four Seasons Hotel, 1300 Lamar Street, Houston, Texas on
Tuesday, May 18, 2010, beginning at 10:00 a.m. (local time). The undersigned
hereby acknowledges receipt of the related Notice and Proxy Statement dated
April 1, 2010, accompanying this proxy.
The
undersigned hereby appoints Cary T. Fu, Gayla J. Delly, and Donald F. Adam, and
each of them, attorneys and agents, with full power of substitution, to vote as
proxy all common shares, par value $0.10 per share, of the Company owned of
record by the undersigned and otherwise to act on behalf of the undersigned at
the 2010 Annual Meeting of Shareholders and any adjournment thereof in
accordance with the directions set forth herein and with discretionary authority
with respect to such other matters, not known or determined at the time of the
solicitation of this proxy, as may properly come before such meeting or any
adjournment thereof.
This
proxy is solicited by the Board of Directors and will be voted in accordance
with the undersigned's directions set forth herein. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR
NAMED HEREIN TO SERVE ON THE BOARD OF DIRECTORS UNTIL THE 2011 ANNUAL MEETING OF
SHAREHOLDERS AND UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED, FOR THE
APPROVAL OF THE BENCHMARK ELECTRONICS, INC. 2010 OMNIBUS INCENTIVE COMPENSATION
PLAN, FOR THE APPROVAL AND AMENDMENT TO THE RIGHTS AGREEMENT BETWEEN BENCHMARK
ELECTRONICS, INC. AND COMPUTERSHARE TRUST COMPANY, N.A. AND FOR THE RATIFICATION
OF THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 2010.
PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE PROXY CARD USING THE
ENCLOSED
ENVELOPE.
NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
IMPORTANT
— This Proxy must be signed and dated on the reverse side.
THE
FOLLOWING PROPOSALS ARE BEING ACTED UPON:
PROPOSAL
1. to elect
seven directors to serve on the Board of Directors until the 2011 annual meeting
of shareholders and until their successors are duly elected and
qualified
Cary
T. Fu
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¨
For
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¨
Withhold
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Michael
R. Dawson
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¨
For
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¨
Withhold
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Peter
G. Dorflinger
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¨
For
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¨
Withhold
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Douglas
G. Duncan
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¨
For
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¨
Withhold
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Laura
W. Lang
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¨
For
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¨
Withhold
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Bernee
D. L. Strom
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¨
For
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¨
Withhold
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Clay
C. Williams
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¨
For
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¨
Withhold
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PROPOSAL
2. To
approve adoption of the Benchmark Electronics, Inc. 2010 Omnibus Incentive
Compensation Plan
¨
FOR
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¨
AGAINST
|
¨
ABSTAIN
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PROPOSAL
3. To
approve and amend the Rights Agreement between Benchmark Electronics, Inc. and
Computershare Trust Company, N.A.\
¨
FOR
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¨
AGAINST
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¨
ABSTAIN
|
PROPOSAL
4. To ratify
the appointment of KPMG LLP as the independent registered public accounting firm
of the Company for the year ending December 31, 2010
¨
FOR
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¨
AGAINST
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¨
ABSTAIN
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Please
sign your name exactly as it appears above. If shares are held jointly, all
joint owners should sign. If shares are held by a corporation, please sign the
full corporate name by the president or any other authorized corporate officer.
If shares are held by a partnership, please sign the full partnership name by an
authorized person. If you are signing as attorney, executor, administrator,
trustee or guardian, please set forth your full title as such.
Dated
_______________________, 2010
___________________________________
___________________________________
Signature
of Shareholder