-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OYgEhjo7RSCRXNncLlzWL47AK9mS60b+Ih9Cqk8+BhCHgfesfwzeUwFdc3kl4Prk pnYqSIWPKJBJ3PvtvRLpJw== 0000912057-96-029822.txt : 19961223 0000912057-96-029822.hdr.sgml : 19961223 ACCESSION NUMBER: 0000912057-96-029822 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970124 FILED AS OF DATE: 19961220 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WOODHEAD INDUSTRIES INC CENTRAL INDEX KEY: 0000108215 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 361982580 STATE OF INCORPORATION: DE FISCAL YEAR END: 1001 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-05971 FILM NUMBER: 96683713 BUSINESS ADDRESS: STREET 1: 2150 E LAKE COOK RD SUITE 400 CITY: BUFFALO GROVE STATE: IL ZIP: 60089 BUSINESS PHONE: 7084658300 MAIL ADDRESS: STREET 1: 2150 E LAKE COOK RD SUITE 400 CITY: BUFFALO GROVE STATE: IL ZIP: 60089 FORMER COMPANY: FORMER CONFORMED NAME: WOODHEAD DANIEL CO DATE OF NAME CHANGE: 19710624 DEF 14A 1 DEF 14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 WOODHEAD INDUSTRIES, 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): /X/ No fee required. / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ 2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ 4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ 5) Total fee paid: ------------------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: ------------------------------------------------------------------------ 2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ 3) Filing Party: ------------------------------------------------------------------------ 4) Date Filed: ------------------------------------------------------------------------ [LOGO] December 20, 1996 Dear Stockholder: You are cordially invited to attend the 1997 Annual Meeting of Stockholders. The meeting will be held at Marriott's Lincolnshire Resort, 10 Marriott Drive, Lincolnshire, Illinois at 10:00 a.m. on Friday, January 24, 1997. After the business session, we will report on current operations and other matters of importance. The formal Notice and Proxy Statement appear on the following pages and contain details of the business to be conducted at the meeting. In addition to the election of four directors and the ratification of the appointment of the independent public accountants, you will be asked to approve the 1996 Stock Awards Plan. Lincolnshire is a northern suburb of Chicago and Marriott's Lincolnshire Resort is located just west of the Illinois Tollway at the intersection of Milwaukee Avenue (Rt. 21) and Half Day Road (Rt. 22). Your vote is very important regardless of the number of shares you own. We hope you can attend the meeting. However, whether or not you plan to attend, please sign, date and return the accompanying proxy card as soon as possible. The enclosed envelope requires no postage if mailed in the United States. If you attend the meeting, you may revoke your proxy if you wish and vote personally. Sincerely, [SIGNATURE] Alan Reed CHAIRMAN [LOGO] NOTICE OF ANNUAL MEETING OF STOCKHOLDERS JANUARY 24, 1997 TO OUR STOCKHOLDERS: The Annual Meeting of the Stockholders of Woodhead Industries, Inc. (the "Company") will be held at Marriott's Lincolnshire Resort, 10 Marriott Drive, Lincolnshire, Illinois on Friday, January 24, 1997 at 10:00 a.m., Chicago time, to consider and take action upon the following matters which are described more fully in the enclosed Proxy Statement: 1. The election of four directors; 2. The approval of the 1996 Stock Awards Plan; and 3. The ratification of the appointment of Arthur Andersen LLP as independent public accountants of the Company; 4. The transaction of such other business as may properly come before the meeting. The Board of Directors has fixed November 29, 1996 as the record date for the determination of the stockholders entitled to notice of and to vote at the meeting and at any adjournment or postponement thereof. A list of such stockholders will be available for examination by any stockholder at the principal office of the Company, 2150 East Lake Cook Road, Suite 400, Buffalo Grove, Illinois, for a period of ten days prior to the meeting and at the meeting. The Board of Directors has authorized the solicitation of proxies. Unless otherwise directed, the proxies will be voted FOR the election of the four persons listed in the attached Proxy Statement; FOR the approval of the 1996 Stock Awards Plan; FOR the ratification of the appointment of independent public accountants; and on any other business that may properly come before the Annual Meeting as the named proxies in their best judgment shall decide. [SIGNATURE] Robert J. Tortorello SECRETARY Buffalo Grove, Illinois December 20, 1996 [LOGO] PROXY STATEMENT Buffalo Grove, Illinois December 20, 1996 TO THE STOCKHOLDERS OF WOODHEAD INDUSTRIES, INC. The accompanying proxy is solicited by and on behalf of the Board of Directors of Woodhead Industries, Inc., 2150 East Lake Cook Road, Suite 400, Buffalo Grove, Illinois 60089, for use at the Annual Meeting of Stockholders of the Company to be held January 24, 1997 and at any adjournments or postponements of such meeting. This proxy statement and accompanying proxy, along with the Company's Annual Report to Stockholders, are first being sent to stockholders on or about December 20, 1996. Any stockholder giving a proxy has the power to revoke it at any time before it is voted. Proxies may be revoked by filing with the Secretary of the Company written notice of revocation bearing a later date than the proxy, by duly executing a subsequently dated proxy relating to the same shares of Common Stock and delivering it to the Secretary of the Company or by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not in and of itself constitute revocation of a proxy. Any subsequently dated proxy or written notice revoking a proxy should be sent to the Secretary of the Company at Woodhead Industries, Inc., 2150 East Lake Cook Road, Suite 400, Buffalo Grove, Illinois 60089. SHARES OUTSTANDING AND VOTING RIGHTS Only stockholders of record at the close of business on November 29, 1996 are entitled to vote at the meeting. On that date the Company had outstanding 10,432,679 shares of Common Stock, each of which is entitled to one vote. Stockholders do not have cumulative voting rights with respect to the election of directors. The matters to be considered and acted upon at such meeting are referred to in the preceding Notice and are more fully discussed below. All shares represented by proxies which are returned properly signed will be voted as specified on the proxy. If choices are not specified on the proxy, the shares will be voted as recommended by the Board. The Company's By-laws require that the holders of a majority of the total number of shares issued and outstanding be represented in person or by proxy in order for the business of the meeting to be transacted. Abstentions and broker non-votes will be counted in the determination of whether a quorum exists. ITEM 1 ELECTION OF DIRECTORS NOMINEES AND CONTINUING DIRECTORS The Company's By-laws provide that the Board of Directors shall consist of no more than nine directors, but no less than five directors divided into three classes, the classes to be as nearly equal in number as possible. The Board of Directors currently consists of nine members. Class I, to be elected at this meeting, consists of two directors to serve until the 2000 Annual Meeting of Stockholders or until their successors have been elected and qualified. The nominees, Charles W. Denny and C. Mark DeWinter, are two of the three current members of Class I and their terms expire at this meeting. Alan Reed, the other current member of Class I, is retiring from the Board following this meeting. The Board of Directors has determined to not fill the vacancy created by Mr. Reed's retirement at this time and has approved a resolution reducing the size of the Board to eight members effective immediately upon Mr. Reed's retirement. Also to be elected at this meeting are Alan L. Shaffer, a current member of Class II and Sarilee K. Norton, a current member of Class III. Mr. Shaffer and Ms. Norton, as members of Class II and Class III, respectively, will serve until the 1998 Annual Meeting and the 1999 Annual Meeting, or until their successors have been elected and qualified. Mr. Shaffer and Ms. Norton were appointed to the Board earlier in the year. Shares represented by proxies which are returned properly signed will be voted for the nominees unless the stockholder indicates on the proxy that authority to vote the shares is withheld. Each of the nominees has consented to serve as a director if elected. Although it is not anticipated, if any of the nominees should be unable or unwilling to serve as a director, it is intended that the proxies will be voted for such other person or persons, if any, as the Board of Directors may determine. The affirmative vote of the majority of shares present in person or represented by proxy at the annual meeting and entitled to vote is required to elect directors. Abstentions and broker non-votes will have the same effect as a no vote. The following sets forth certain information with respect to the nominees as well as to those directors in Classes II and III whose terms continue after the meeting. 2 The management nominees for director are:
Principal Occupation Director Term to Name of Nominee or Employment Age Since Expire - ------------------------------------ -------------------------------------------- --- ------------- --------- Class I Charles W. Denny (C)(N)............. President and Chief Executive Officer, 60 Feb. 1993 2000 Schneider North America and President and Chief Operating Officer, Square D Company C. Mark DeWinter (E)................ President and Chief Executive Officer of the 54 Jan. 1988 2000 Company Class II Alan L. Shaffer (C)(E).............. Group Vice President, Industrial Products, 46 June 1996 1998 Cincinnati Milacron Inc. Class III Sarilee K. Norton (A)(N)............ Vice President, Quality Management and 49 May 1996 1999 Strategy, Tenneco Packaging Those directors whose terms do not expire this year are: Class II Dale A. Miller (A)(E)............... President and Chief Executive Officer, Ciba 49 Apr. 1993 1998 Animal Health, Inc. Richard A. Virzi (A)(E)............. Retired President and Chief Executive 69 July 1988 1998 Officer, A. M. Castle & Co. Class III Daniel T. Carroll (C)(N)............ Chairman and President, The Carroll Group, 70 Jan. 1987 1999 Inc. Robert D. Tuttle (A)(E)............. Retired Chairman and Chief Executive 71 Sept. 1978 1999 Officer, SPX Corporation
- ------------------------ (A) Member of Audit Committee (C) Member of Compensation and Stock Option Committee (E) Member of Executive Committee (N) Member of Nominating Committee 3 Mr. Charles W. Denny has been President and Chief Operating Officer of Square D Company and President and Chief Executive Officer of Schneider North America since 1992, having served as Executive Vice President and Chief Operating Officer of Square D since 1991. Prior to that he had served as Executive Vice President, Electrical Distribution Sector for Square D Company. He currently serves as a director of Cherry Corporation. Square D Company is one of North America's largest manufacturers of quality electrical power control and distribution products. Mr. C. Mark DeWinter, President and Chief Executive Officer of the Company, was elected to that position in July 1993, having been President and Chief Operating Officer since May 1987. Mr. Alan L. Shaffer has been Group Vice President - Industrial Products at Cincinnati Milacron Inc. for more than five years. Cincinnati Milacron is a premier manufacturing source for metalworking and processing technologies serving industries worldwide. Ms. Sarilee K. Norton, Vice President, Quality Management and Strategy for Tenneco Packaging, has held that position for more than five years. Tenneco Packaging, a division of Tenneco Inc., is one of the world's leading and most diverse packaging manufacturers. Mr. Dale A. Miller was appointed President and Chief Executive Officer of Ciba Animal Health, Inc. in 1996 in anticipation of the merger of Sandoz, Ltd. and Ciba Geigy, Ltd. Prior to the merger, he was President and Chief Executive Officer of Sandoz Agro, Inc. and Sandoz Agro, Ltd. for more than 10 years. Ciba Animal Health, Inc., an international manufacturer of specialty animal health products, will be known as Novartis Animal Health, Inc. upon completion of the above merger. Mr. Richard A. Virzi retired as President and Chief Executive Officer of A. M. Castle & Co. in 1990, positions he had held since 1977. Mr. Virzi also is a director of A. M. Castle & Co., one of the nation's leading suppliers of specialty and high technology metals. Mr. Alan Reed currently serves as the Company's Chairman of the Board, a position he has held since 1987. He is also the President of Firstlight, Inc., a management consulting firm started by Mr. Reed upon his retirement from the Company in 1994. Prior to his retirement, Mr. Reed was the Company's Chief Executive Officer from 1986 to 1993. Mr. Reed also serves as a director of Mutual of America. Mr. Daniel T. Carroll, Chairman and President of The Carroll Group, Inc., has served in that position since 1982. He currently serves as a director of A. M. Castle & Co.; American Woodmark Corp.; Aon Corporation; Comshare, Inc.; DeSoto, Inc.; Diebold, Inc.; Michigan National Corporation; Oshkosh Truck Corporation; UDC Homes, Inc.; and Wolverine World Wide, Inc. The Carroll Group, Inc. is a management consulting firm. Mr. Robert D. Tuttle retired as SPX Corporation's Chairman of the Board in 1991 and Chief Executive Officer in 1990. He had served in these positions since 1985. Mr. Tuttle is a director of Batts Group, Inc., Guardsman Products, Inc., and Walbro Corporation. SPX Corporation is a manufacturer and distributor of components for automotive and heavy-duty transportation equipment in both the United States and international markets. INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES BOARD OF DIRECTORS The Board normally considers dividend action in January, April, July and October. At its October meeting it reviews the results of operations for the fiscal year just ended and the Company's operating plan for the year ahead as well as the capital budget for the ensuing year. 4 In fiscal 1996 there were five meetings of the Board of Directors. All directors were present for 75% or more of the total number of meetings of the Board of Directors and Committees of the Board on which they serve. COMMITTEES OF THE BOARD The committees established by the Board to assist it in the discharge of its responsibilities are the Audit Committee, Compensation and Stock Option Committee, Executive Committee, and Nominating Committee. These committees and the principal responsibilities of each are described below. Respective memberships on the various committees are identified in the list of directors in this Proxy Statement. The Audit Committee currently consists of four directors who are not employees of the Company ("non-employee directors"). This Committee reviews the results and costs of audits by the Company's outside auditors. Each year the Committee recommends the appointment of an independent public accounting firm. Periodically it meets with representatives of that firm and with the Company's management. It also reviews and monitors policies established to prevent unethical, questionable or illegal activities by those associated with the Company. The Audit Committee held four meetings during fiscal 1996. The Compensation and Stock Option Committee consists of four non-employee directors. This Committee makes recommendations to the Board of Directors as to the salaries of the Company's officers as well as incentive plans and other forms of compensation. This Committee also grants stock options to management personnel and key employees of the Company and its subsidiaries, and maintains administrative authority with respect to the Woodhead Industries, Inc. Stock Compensation Plans. The Compensation and Stock Option Committee held one meeting during fiscal 1996. The Executive Committee, comprised of five directors, exercises the authority of the Board of Directors in certain matters subject to the final approval of the entire Board. The Committee meets periodically to discuss and review matters of interest to the Board. The Executive Committee held no meetings during fiscal 1996. The Nominating Committee, comprised of four directors, reviews the qualifications of possible directors and submits its recommendations to the Board of Directors to fill board vacancies. This committee also reviews and recommends board committee assignments. The Nominating Committee held one meeting during fiscal 1996 The Company's By-laws provide that nominations for the election of directors may be made by the Board of Directors or a committee appointed by the Board of Directors. In addition, the By-laws provide a procedure for stockholder nominations. Stockholders intending to nominate director candidates for election must deliver written notice thereof to the Secretary of the Company not later than (i) with respect to an election to be held at an annual meeting of stockholders, 90 days in advance of such meeting, and (ii) with respect to an election to be held at a special meeting of stockholders, the close of business on the seventh day following the date on which notice of such meeting is first given to stockholders. Stockholders wishing to make such nominations may contact the Secretary of the Company to determine the proposed date of such annual meeting. The By-laws further provide that the notice shall set forth certain information concerning such stockholder and his nominee(s), including their names and addresses, a representation that the stockholder is entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, a description of all arrangements or understandings between the stockholder and each nominee, such other information as would be required to be included in a proxy statement soliciting proxies for the 5 election of the nominees of such stockholder and the consent of each nominee to serve as a director of the Company if so elected. The chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure. DIRECTORS' COMPENSATION Directors who are officers of the Company receive no additional compensation for service on the Board of Directors or any committee thereof or on any Company committee. Non-employee directors each receive an annual retainer of $17,000 plus an additional $900 for attendance at each meeting of the Board or a committee of the Board. Under a deferred compensation arrangement, non-employee directors may elect to defer payment of their annual retainers and fees until termination of their services as directors. Deferred amounts accrue interest at the Federal Reserve Discount Rate until paid. A retired non-employee director who has served at least five years and has retired from the Board and his principal occupation at age 62 or older will receive an annual retainer for life based on the annual retainer in effect at the time of retirement. The Company has established a trust to ensure payment to all directors of their deferred compensation and retirement benefits. The 1990 Directors Stock Option Plan provided for three automatic annual grants of stock options to each non-employee director who was serving on the Board of Directors at the time of such grants. No further grants may be made under this plan. Each annual grant (which became exercisable six months following its grant date) entitles the participant to purchase from the Company up to 1,500 shares of Common Stock (subject to adjustment pursuant to the 1990 Directors Plan) at the fair market value of the Common Stock on the grant date. Directors' stock options expire five years after the date they were granted, or at such earlier date as provided in the 1990 Directors Plan. The 1993 Directors Stock Option Plan provided for three automatic annual grants of stock options to each non-employee director who was serving on the Board of Directors at the time of such grants. Each annual grant (which became exercisable six months following its grant date) entitles the participant to purchase from the Company up to 1,500 shares of Common Stock (subject to adjustment pursuant to the 1993 Directors Plan) at the fair market value of the Common Stock on the grant date. Directors' stock options expire five years after the date they were granted, or at such earlier date as provided in the 1993 Directors Plan. Options were granted for 10,500 shares on October 24, 1995 with an exercise price of $14.31. During 1996 Mr. Carroll exercised options for 4,500 shares with an exercise price of $4.25 per share. At the time of this exercise the fair market value of the stock was $14.31. See "Item 2 - 1996 Stock Awards Plan" for a description of a proposed stock awards plan pursuant to which directors will receive awards of stock option grants or restricted stock. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission and NASDAQ. Executive officers and directors are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based on a review of the copies of such forms furnished to the Company and written representations from the Company's executive officers and directors, all reports were filed on a timely basis except that one report of a purchase of shares by Charles W. Denny was inadvertently filed late. 6 STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS MANAGEMENT The following table sets forth the number of shares of the Company's Common Stock beneficially owned as of November 29, 1996, by each director, each executive officer named in the Summary Compensation Table and all directors and executive officers as a group.
Number of Shares Percent of Beneficially Owned(1)(2) Class ------------------------- ---------- Daniel T. Carroll.................................... 22,500 * Charles W. Denny..................................... 7,350 * C. Mark DeWinter..................................... 358,130(3) 3.4% Robert G. Jennings................................... 148,167(4) 1.4% Dale A. Miller....................................... 6,750(5) * Robert A. Moulton.................................... 87,800 * Joseph P. Nogal...................................... 39,800(5) * Sarilee K. Norton.................................... 350 * Alan Reed............................................ 230,685 2.2% Alan L. Shaffer...................................... 500(5) * Robert J. Tortorello................................. 109,700(5) 1.1% Robert D. Tuttle..................................... 36,000(5) * Richard A. Virzi..................................... 25,500 * All directors and executive officers as a group (13 1,073,232 10.3% persons) including above-named......................
- ------------------------ * Less than 1%. (1) Except as otherwise indicated, each director and executive officer has sole voting and investment power over the shares he beneficially owns. (2) Includes shares which may be acquired within 60 days pursuant to option grants as follows: Mr. Carroll -- 10,500 shares, Mr. Denny -- 6,000 shares, Mr. DeWinter -- 306,000 shares, Mr. Jennings -- 122,250 shares, Mr. Miller -- 6,000 shares, Mr. Moulton -- 81,300 shares, Mr. Nogal -- 34,800 shares, Mr. Reed -- 205,500 shares, Mr. Tortorello -- 102,700 shares, Mr. Tuttle -- 1,500 shares, Mr. Virzi -- 10,500 shares, and all directors and officers as a group -- 887,050 shares. Stock options carry no voting or investment rights. (3) Includes 30,000 shares granted as a restricted stock award under the 1990 Stock Awards Plan. These shares vest on July 28, 2000. Mr. DeWinter has the right to vote such shares. (4) Excludes, 1,400 shares owned by Mr. Jennings' family members sharing the same household for which he disclaims any beneficial ownership. (5) Shared voting and investment power as follows: Mr. Miller -- 750 shares, Mr. Nogal -- 4,000 shares, Mr. Shaffer -- 500 shares, Mr. Tortorello -- 7,000 shares, and Mr. Tuttle -- 34,500 shares. 7 OTHER BENEFICIAL OWNERS The following table shows persons or groups who are known to the Company to be beneficial owners of more than 5% of the outstanding Common Stock of the Company as of November 29, 1996:
Name and Address Amount and Nature of Percent of Beneficial Owner Beneficial Ownership of Class - ----------------------------------------------------------------------- --------------------- ----------- Neuberger & Berman .................................................... 1,113,050(1) 10.7 605 Third Avenue New York, New York 10158 Mary Woodhead Eklund .................................................. 782,701(2)(3) 7.5 666 Hilary Drive Tiburon, California 94920 Harris Bankcorp, Inc. ................................................ 600,000(4) 5.8 111 West Monroe Street Chicago, Illinois 60690
- ------------------------ (1) Information provided by Neuberger & Berman indicates that Neuberger & Berman has sole voting power as to 957,300 shares and shared dispositive power as to 1,109,050 shares. (2) Information provided by Mary Woodhead Ecklund and stockholder records indicate that Mary Woodhead Ecklund has shared voting and dispositive power as to 715,201 shares including the shares referred to in footnote 3 below, and sole voting and dispositive power as to 67,500 shares. (3) Information provided by the Harris Trust & Savings Bank indicates that such bank has shared voting and dispositive power as co-trustee as to 600,000 shares. 8 EXECUTIVE COMPENSATION The following table sets forth the compensation received by the Chief Executive Officer and the four other most highly compensated executive officers of the Company (the "Named Executives") for services to the Company and its subsidiaries during the last three fiscal years. SUMMARY COMPENSATION TABLE
Annual Compensation ------------------------- Long Term Compensation Other ---------------------- Annual Restricted All Other Compen- Stock Compensa- Name and Principal Salary Bonus sation Awards Options(2) tion(3) Position Year ($) ($) ($) ($) (#) ($) - -------------------------- ---- ------- ------- ------- --------- ---------- --------- C. Mark DeWinter 1996 300,000 180,000 (1) 0 45,000 12,924 President & C.E.O. 1995 280,000 210,000 (1) 0 37,500 12,446 1994 250,000 187,500 (1) 0 34,500 17,741 R. G. Jennings 1996 155,000 93,000 (1) 0 9,000 12,924 Vice President Finance & 1995 149,000 111,750 (1) 0 12,750 12,689 C.F.O. 1994 143,420 110,760 (1) 0 12,750 12,037 R. J. Tortorello 1996 137,000 65,760 (1) 0 6,200 12,057 Vice President, Corporate 1995 131,000 75,980 (1) 0 8,250 11,677 Development, General 1994 127,648 76,003 (1) 0 8,250 11,226 Counsel and Secretary R. A. Moulton 1996 111,500 53,520 (1) 0 3,800 10,371 Vice President, 1995 107,000 62,060 (1) 0 5,250 9,710 Human Resources 1994 103,000 62,130 (1) 0 5,250 9,377 J. P. Nogal 1996 108,500 52,080 (1) 0 3,800 10,173 Treasurer/Controller 1995 104,000 60,320 (1) 0 5,250 9,601 1994 100,000 58,000 (1) 0 5,250 8,930
- ------------------------ (1) No disclosure is required in this column pursuant to applicable Securities and Exchange Commission Regulations, as the aggregate value of perquisites and other personal benefits covered by this column does not exceed the lesser of $50,000, or 10% of the annual salary and bonus shown for each respective Named Executive. (2) The number of shares granted in fiscal years 1995 and 1994 was adjusted to reflect the 50% stock dividend in May 1995. (3) Reflects the amount of the Company's contribution to the Profit Sharing and 401(k) Plan. 9 OPTION GRANTS IN LAST FISCAL YEAR The following table sets forth information on option grants in fiscal 1996 to the Named Executives.
Potential Realizable Value Individual Grants At Assumed Annual - -------------------------------------------------------------------------------------------- Rates Of Percent Of Stock Price Total Appreciation For Options Option Term(2) Options Granted To Exercise Or ---------------------- Granted(1) Employees In Base Price(1) Expiration 5% 10% Name (#) Fiscal 1996 ($/Share) Date ($) ($) - ------------------------------- ----------- ----------------- --------------- ---------- --------- ----------- C.M. DeWinter.................. 45,000 35.8% 14.31 10/24/05 405,000 1,026,450 R.G. Jennings.................. 9,000 7.2% 14.31 10/24/05 81,000 205,290 R.J. Tortorello................ 6,200 4.9% 14.31 10/24/05 55,800 141,422 R.A. Moulton................... 3,800 3.0% 14.31 10/24/05 34,200 86,678 J.P. Nogal..................... 3,800 3.0% 14.31 10/24/05 34,200 86,678
- ------------------------ (1) All such options were granted on October 24, 1995 at fair market value on such date and were not exercisable until October 24, 1996. (2) Amounts shown assume a 5% and 10% annual rate of appreciation on the price of the Company's Common Stock throughout the option term. There can be no assurance that the rate of appreciation assumed for purposes of this table will be achieved. However, an increase of approximately $94 million and $238 million, respectively, in the "Potential Realizable Value" would be realized by all shareholders under the prescribed 5% and 10% stock price appreciation rates. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES The following table sets forth information regarding stock option exercises during fiscal 1996 and the unexercised options held as of the end of fiscal 1996.
Number Of Unexercised Value of Unexercised Shares Options At Fiscal In-The-Money Options Acquired On Value Year End At Fiscal Year End(1) Exercise Realized (#) ($) Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable - ------------------------------- ------------- --------- -------------------------- -------------------------- C.M. DeWinter.................. 24,000 196,080 261,000/45,000 1,593,897/0 R.G. Jennings.................. 3,700 34,188 113,250/ 9,000 756,238/0 R.J. Tortorello................ 0 0 98,000/ 6,200 684,672/0 R.A. Moulton................... 0 0 79,500/ 3,800 594,018/0 J.P. Nogal..................... 1,000 10,130 32,000/ 3,800 176,293/0
- ------------------------ (1) Value represents the fair market value as of the end of fiscal 1996 of the shares subject to such options less the exercise price of such options. 10 COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Company's primary financial objective is to increase shareholder value. To achieve this objective, the Company has created a comprehensive business strategy. The purpose of the Compensation and Stock Option Committee of the Board of Directors (the "Committee") is to establish and administer total executive compensation policies which are aligned with the Company's strategic business objectives. The Committee, which is composed entirely of non-employee directors, recommends compensation actions for all corporate officers to the Board of Directors for approval. COMPENSATION PHILOSOPHY There are certain guiding principles to which the Committee adheres in structuring the compensation packages of key executives including the Named Executives. These are: PAY FOR PERFORMANCE -- A high percentage of executives' total compensation is composed of short-term and long-term variable pay directly linked to the performance of the Company. The Committee believes that this structure aligns the executives' interests with the interest of the stockholders. COMPETITIVENESS -- Total compensation programs are designed to provide executives with an opportunity to earn at a level above the median industry practices and market competitors, when Company performance exceeds industry norms and that of its competitors. This enables the Company to significantly challenge its management team. EXECUTIVE OWNERSHIP -- A major component of variable pay is equity based compensation. This links management's interests with stockholders' interests and properly balances rewards for long-term vs. short-term results. MANAGEMENT DEVELOPMENT -- Total compensation programs are designed to attract and retain individuals with the leadership skills and other key competencies required to shape the Company's future. This is based on the belief that the Company's human resources can provide a competitive advantage in the marketplace. COMPONENTS OF EXECUTIVE PAY The components of total pay for all executives are base salary, annual incentives, long-term incentives, and benefits. The Committee annually reviews total compensation for the Company's executives, as well as each component of compensation. This involves a market comparison of compensation and changes in compensation for equivalent positions in related industrial groups, including companies of comparable size. Competitive data are provided by independent compensation consultants at the request of the Committee. BASE SALARY -- Base salary is generally set at a range of ten percent plus or minus the median salary offered by companies of comparable size. An individual executive's base salary, as well as increases, are based on the executive's performance, experience, and reference to competitive rates for jobs with comparable content. Actual salary adjustments for executives are determined on a case by case basis and vary based on factors including performance, job content, and pay position within a range, with no one factor given any particular weighting. ANNUAL INCENTIVES -- Under the Company's annual Management Incentive Plan, a target annual incentive is established for all participants in the form of a percentage of base salary. Target awards 11 under the annual incentive plan vary from 20% to 50% of base salary, with the maximum awards varying from 30% to 80% of base salary. The minimum award is 0% of base salary. These targets provide executives with the opportunity to exceed competitive annual incentive levels if the Company's performance significantly exceeds standard industry benchmarks. Performance is measured against predetermined financial goals as reviewed and approved by the Committee. For the Chief Executive Officer and the Named Executives, incentive awards are based on two equally weighted components. One is year-over-year growth in net income and the other is return on stockholders' equity. Company performance is measured against a predetermined scale with minimum thresholds applicable to each performance component under which no portion of an incentive award is earned. An absolute threshold, related to year-over-year growth in net income, must be achieved before any incentive award may be earned by the Named Executives. LONG-TERM INCENTIVES -- Long-term incentives are provided in the form of stock options and restricted stock under the 1993 Stock Awards Plan and predecessor plans. STOCK OPTIONS -- Incentive stock options or non-qualified stock options may be granted to provide executives with the opportunity to acquire an equity interest in the Company and to share in the appreciation of the stock. Market surveys of long-term incentives are reviewed to establish competitive practices. Management makes recommendations to the Committee on the size of a grant, if any, for each executive based on the individual's ability to affect financial performance, the executive's past performance, and expectations of the executive's future contributions. All individual stock option grants are reviewed and approved by the Committee. Normally stock options are granted annually to executive officers and key management personnel. The exercise price of such stock options has always been set at the fair market value on the date of the grant. The Company has never re-priced any stock option grant. RESTRICTED STOCK -- Restricted stock awards are intended to be a mechanism for aligning management and stockholders' interests and to insure retention of key selected executives. The Company's long-term performance ultimately determines the compensation value derived from restricted stock, since the value is dependent on the long-term growth of the Company's stock price. Only one restricted stock award has ever been granted by the Company. BENEFITS -- Certain employee benefits are provided to executives as part of the total compensation program. Generally the benefits offered to executives are largely those offered to the general employee population, except for incremental amounts of life insurance. Additionally, executive officers are provided non-cash personal benefits such as tax and financial planning, health exams, club memberships, and company cars. Two of the Named Executives are also covered by a Supplemental Executive Retirement Plan. SECTION 162(M) COMPLIANCE -- Section 162(m) of the Internal Revenue Code of 1986 places a $1,000,000 cap on the amount of compensation which may be deducted for each of the Named Executives. The Company has studied this cap and intends to take the necessary steps to conform its compensation to comply with such Section 162(m). CHIEF EXECUTIVE OFFICER COMPENSATION Mr. DeWinter's base salary was increased during fiscal 1996 to an annual rate of $300,000, competitive with the median base salary paid to chief executive officers of comparably sized corporations. 12 Mr. DeWinter has a target annual incentive level of 50% of base salary. In accordance with the annual Management Incentive Plan and based on the Company's growth in net income of 15.6% and return on shareholders' equity of 19.7% for fiscal 1996, Mr. DeWinter was awarded an annual incentive of $180,000, or 60% of his base salary. During fiscal 1996, the Committee approved a stock option grant to Mr. DeWinter of 45,000 shares. This grant is consistent with competitive practices of companies in related industries, and of comparable size. The grant also reflects the Committee's recognition of Mr. DeWinter's leadership in achieving the Company's past performance, as well as its expectation for his future contributions. The Committee believes that the policies and programs described above have supported the strategic business objectives leading to the increased shareholder value of Woodhead Industries, Inc. over the last five-year period. COMPENSATION AND STOCK OPTION COMMITTEE Charles W. Denny, Chairman Daniel T. Carroll Alan L. Shaffer Alan Reed 13 PERFORMANCE GRAPH The following graph compares the cumulative total shareholder return on the Company's Common Stock for the last five fiscal years with the cumulative total return on the Russell 2000 Index and the Dow Jones Electrical Components Group over the same period (assuming the investment of $100 in the Company's Common Stock, the Russell 2000 Index and the Dow Jones Electrical Components Group on September 28, 1991 with all dividends reinvested).
DOW JONES ELECTRICAL WOODHEAD INDUSTRIES COMPONENTS GROUP RUSSELL 2000 ----------------------- ----------------------- --------------- 9/91 $ 100 $ 100 $ 100 9/92 $ 144 $ 107 $ 109 9/93 $ 207 $ 115 $ 145 9/94 $ 208 $ 124 $ 149 9/95 $ 303 $ 142 $ 184 9/96 $ 281 $ 179 $ 208
14 SEVERANCE AGREEMENTS The Company has entered into severance agreements with certain key employees, including all present executive officers, which provide for the payment of compensation and benefits in the event of termination of employment following a change in control of the Company. The agreements generally define "change in control of the Company" as (i) the acquisition of 25% or more of the combined voting power of the Company's then outstanding securities; (ii) a change in the majority of the Company's Board of Directors over a two-year period; or (iii) shareholder approval of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets or the merger or consolidation of the Company with any other corporation, unless the Company's shareholders continue to hold at least 80% of the combined voting power of the voting securities of the Company or the surviving entity. The original term of the severance agreements is three years provided, however, that each October 1 the agreements will be extended for an additional year unless the Company provides proper notice of its intention not to extend the agreements. If a change in control of the Company occurs during the original or extended term, the agreements will continue in effect for the later of (i) the original or extended term or (ii) twenty-four months beyond the month in which the change in control occurs. In no event will the term of an agreement extend beyond the date the executive attains age sixty-five. An executive whose employment is terminated following a change in control of the Company generally will receive compensation pursuant to the severance agreement only if the termination was by the Company without "cause" or by the executive for "good reason" as those terms are defined in the agreements. In addition to the ordinary compensation and benefits (excluding severance) to which any terminating employee would be entitled, the severance agreements provide the following additional benefits payable after a change in control of the Company to executives who are terminated without cause or who resign for good reason: (i) three times the sum of the executive's base salary and target bonus, provided, however, that if executive is within three years of normal retirement age, then this amount is reduced pro rata; (ii) continued health care coverage and life insurance coverage for up to 36 months; (iii) a cash payment equal to the difference between the fair market value of the Company's stock and the exercise price of unexercised options for the Company's stock times the number of shares represented by the unexercised options; (iv) a cash payment equal to the present value of the accrued benefit under the Retirement Plan and the account balance in the Profit Sharing Plan to the extent that either is not fully vested; (v) the payment of any federal excise taxes; and (vi) the reimbursement of all legal and accounting fees and expenses incurred as a result of such termination. The Company has established a trust which, in the event of a change in control of the Company, will be funded to ensure payment to all key employees of the compensation and benefits described herein. RETIREMENT PLANS The Company provides Retirement Plans which cover the employees of the Company and its subsidiaries, excluding, however, those employees who are members of groups which have not adopted the Plans, groups covered by collective bargaining agreements that do not provide for participation and employees of certain foreign subsidiaries. The Plans are funded entirely by the Company and provide pension benefits upon retirement at age 65. The Plan for the Company and its U.S. subsidiaries provides pension benefits upon retirement at age 65 equal to 1.2% of the participant's average annual compensation multiplied by years of credited service up to 30 years, reduced by .6% of final average compensation (which reflects reductions for social security benefits) up to covered compensation multiplied by years of credited service up to 30 years. Participants are fully vested in their accrued pension benefits after five 15 years of service. The Plans provide for early retirement at age 55 with 10 years' continuous employment. In the event of the death of an active participant who has completed 5 years of service, provision is made to pay a benefit of monthly income for life to the participant's surviving spouse equal to 50% of the benefit which would have been payable to the participant. Annual amounts of normal retirement pension payable under the Plans are illustrated in the following table. The illustration assumes retirement as of October 1, 1996 at the normal retirement age of 65. Benefits were computed on a straight life annuity basis.
Estimated Annual Normal Retirement Pension Five-Year Based Upon the Indicated Benefit Service Average ----------------------------------------------------- Compensation 10 Years 15 Years 20 Years 25 Years 30 Years ---------------- --------- --------- --------- --------- --------- $100,000...................... $ 10,345 $ 15,518 $ 20,691 $ 25,864 $ 31,036 125,000...................... 13,345 20,018 26,691 33,364 40,036 150,000 and above............ 16,345 24,518 32,691 40,864 49,036
The number of years of service, as of October 1, 1996 for each of the executive officers listed in the summary compensation table was as follows: Mr. DeWinter - --10 years, Mr. Jennings --9 years, Mr. Tortorello --9 years, Mr. Moulton --10 years, and Mr. Nogal --18 years. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN The Woodhead Industries, Inc. Supplemental Executive Retirement Plan ( the "SERP") is a non-qualified and unfunded plan designed to provide supplemental retirement benefits to selected key employees of the Company who have forfeited potential retirement benefits from former employers and/or who are subject to statutory or regulatory restrictions on qualified plan benefits. The supplemental benefit payable to each participant who retires on or after his normal retirement age is equal to sixty percent (60%) of his average monthly compensation, less the sum of (i) his "Primary Social Security Benefit" and (ii) the actuarial equivalent of any retirement benefits to which such participant is then entitled under any other retirement plan or arrangement maintained by the Company. A participant's average monthly compensation is one-sixtieth (1/60) of the aggregate of such participant's base salary and bonus award for the five highest consecutive Plan Years (as defined in the Retirement Plan). The SERP provides for early retirement (before age 65) under certain conditions with reduced benefits. The supplemental benefit to which a participant may be entitled under the SERP will be paid as a lump sum benefit at retirement. Messrs. DeWinter and Jennings are the only Named Executives currently covered by the SERP who would be entitled to benefits thereunder. The estimated lump sum benefits under the SERP that would be received by these Named Executives, if each retired at age 65, are as follows: Mr. DeWinter, $1,115,575; Mr. Jennings, $350,766. The amounts assume that these Named Executives will continue to work for the Company until their normal retirement dates and that their earnings will remain the same as in fiscal year 1996. The Company has established a trust which, in the event of a change in control of the Company, will be funded to ensure payment to all participants of the benefits described herein. PROFIT SHARING PLANS The Company provides Profit Sharing Plans which cover the employees of the Company and its subsidiaries excluding those employees who are members of groups which have not adopted the Plans, groups covered by collective bargaining agreements that do not provide for participation and employees of certain other subsidiaries. The plans are funded by the Company and annual profit sharing contributions are, under most plans, 5% of annual pretax profits, as defined, but not exceeding 15% of 16 the aggregate compensation paid to participants during the year. The contributions, together with non-vested amounts forfeited by reason of terminations of employment during the year, are allocated among the accounts of participants in accordance with a formula based on participants' covered compensation. The amounts so allocated are invested by the plan trustee, at the direction of each participant, in various investment alternatives. A participant's account is vested in annual increments of 20% for each of five years in which the participant completes 1,000 hours of service, and is fully vested after five years of service. The accounts, however, are automatically vested upon death, permanent disability or reaching age 65. Distribution of a participant's vested account balances is normally made upon termination of employment in the form of a single payment or installment payments. The Plan for the Company and its U.S. subsidiaries also provides employees the opportunity for tax-deferred savings pursuant to Section 401(k) of the Internal Revenue Code of 1986. The Plan allows participants to make elective deferrals of up to 15% of their eligible compensation, not to exceed the maximum amount allowable by law. The Company will make matching contributions of 50% of the amount (up to 4% of the participant's eligible compensation) a participant defers to the Plan. Employee contributions and income derived therefrom are 100% vested and nonforfeitable. Amounts credited to participant accounts which are attributable to the Company's matching contributions (and any income derived therefrom) are vested in annual increments of 20% for each of five years in which the participant completes 1,000 hours of service, and are fully vested after five years of service. MANAGEMENT INCENTIVE PLAN The Management Incentive Plan is administered by a Corporate Management Committee under the direction of the Compensation and Stock Option Committee of the Board of Directors. Participants include officers and other key employees who can make significant contributions to the profitable growth of the Company. In general, a minimum increase in the Company's net income over the prior year must be achieved before any payments can be made under the Plan. Each eligible participant shall have defined in advance of the fiscal year a range of incentive opportunity, including a maximum bonus amount, which is expressed as a percent of the participant's base salary. Corresponding with the incentive opportunity are pre-established performance targets that must be achieved before the incentive award is earned. These performance targets are related to the specific strategic objectives of each of the business units. These targets may include, but are not limited to, return on stockholders' equity, return on funds employed, sales growth and income from operations. Maximum payments may range from 30% to 80% of a participant's base salary. STOCK COMPENSATION PLANS The Company has adopted stock compensation plans, from time to time, for the benefit of certain key employees of the Company and its subsidiaries. There are currently four plans, the 1981 and 1987 Stock Compensation Plans (the "1981 Plan" and "1987 Plan"), and the 1990 and 1993 Stock Awards Plans (the "1990 Plan" and "1993 Plan") under which options have been granted and remain unexercised. No shares are available for the granting of options under the 1981 Plan, 1987 Plan, or 1990 Plan. See, however, "Item 2 - 1996 Stock Awards Plan" for a description of the proposed new plan. Presently there are approximately 200 employees eligible to participate. These plans are administered by the Compensation and Stock Option Committee of the Board of Directors, none of the members of which may receive options under these plans. Under these plans, options are granted to eligible employees to purchase Company stock. The employees who are granted options, the number of shares covered by an option, and the option price are determined by the Compensation and Stock Option Committee. The 17 option price, however, may not be less than the fair market value of the stock at the time of the grant. Options under all plans expire not later than ten years after grant. The optionee generally must exercise his option within 30 days of termination of employment with the Company or one of its subsidiaries. Termination of employment for death or disability may extend the post-employment period in which options may be exercised to up to two years, while retirement at age 55 or older may extend that period to up to five years. Options are not transferable except in the case of the optionee's death. The plans permit an optionee to acquire stock pursuant to an option either by paying cash or by exchanging Company stock at its then fair market value, or by a combination of cash and stock. The plans also provide for the granting of non-qualified options in addition to or instead of incentive stock options. Also, the 1990 Plan and 1993 Plan authorize the Compensation and Stock Option Committee to grant restricted stock with such restriction periods as it may designate. During the restriction period, the restricted stock may not be sold, assigned, pledged or otherwise transferred. Except for the restrictions on transfer and such other restrictions as the Compensation and Stock Option Committee may impose, a participant has all the rights of a holder of the Company's Common Stock including, but not limited to, voting and receiving dividends. To date, only one award of restricted shares has been granted. ITEM 2 1996 STOCK AWARDS PLAN On October 23, 1996, the Board of Directors of the Company adopted, subject to approval by the stockholders, the 1996 Stock Awards Plan (the "1996 Plan") for directors, executives and key employees of the Company and its subsidiaries. The affirmative vote of the holders of a majority of the shares of Common Stock present in person or by proxy at the annual meeting and entitled to vote is required to adopt the 1996 Plan. Abstentions and broker non-votes will have the same effect as a no vote. If approved, the 1996 Plan will be effective as of October 23, 1996, and 500,000 shares of the authorized but unissued shares of Common Stock of the Company will be reserved for future grant. There presently are no shares available for granting under any of the Company's other existing stock option plans except under the 1993 Plan which has 23,900 shares available for grant to employees. There are no plans under which shares are available for grants to non-employee directors. On October 23, 1996, the Company granted, subject to stockholder approval of the 1996 Plan, options on 12,000 shares, in aggregate, to the Company's eight non-employee directors. The following general description of certain features of the 1996 Plan is qualified in its entirety by reference to the 1996 Plan which is included as Exhibit A to this proxy statement. The purpose of the 1996 Plan, as with prior stock option plans, is to encourage ownership of the Company's shares by directors, officers and key employees of the Company and its subsidiaries, thereby creating an additional incentive on their part to promote the success of the Company and to continue their service to the Company and its subsidiaries, and to enhance the Company's ability to obtain other key personnel. The 1996 Plan provides that a committee, consisting of a minimum of two members of the Board of Directors who are "outside directors" within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, and "non-employee directors" within the meaning of Rule 16b-3(b)(3) of the Securities Exchange Act of 1934, as amended, appointed by the Board of Directors shall administer the 1996 Plan. The committee may, at its discretion, prior to October 23, 2006, grant in the aggregate, incentive stock options, non-qualified stock options, or restricted stock awards on up to 500,000 shares of the common stock of the Company to directors, officers and key employees of the Company and its subsidiaries, provided, however, that no more than 50,000 shares may be granted in the form of restricted stock. 18 No incentive stock option may be granted to any employee who, at the time of such grant, owns stock possessing more than ten percent of the voting power of the Company or any of its subsidiaries. Options for no more than $100,000 of fair market value (determined at the time the incentive stock option is granted) of the stock with respect to which the incentive stock options are granted (under all stock option plans maintained by the Company) can become exercisable for the first time by an individual during any calendar year. The price at which shares may be purchased pursuant to the options will be determined by the committee but shall in no event be less than the fair market value as of the date of grant. Stock options will be for terms determined by the committee but not more than ten years from the date of grant. The average of the high and low quotations for the Company's Common Stock on November 29, 1996, as reported by NASDAQ on the National Market System, was $12.69. There are currently 8 non-employee directors, 5 executive officers and approximately 185 other employees of the Company and its subsidiaries who are eligible to receive options. At the discretion of the committee, an eligible person may be granted stock options under the 1996 Plan at 100 percent of the fair market value of the Company's Common Stock on the date of the grant. The stock options may be exercised at such time or times, within ten years, as determined by the committee at the time of grant, but not sooner than six months after the date of grant. The period during which a stock option may be exercised following termination of employment or service on the Board of the participant cannot exceed thirty days except in the cases of retirement (five years) and death or disability (two years). The 1996 Plan also authorizes the committee to grant restricted stock with such restriction periods as the committee may designate. During the restriction period, certificates evidencing the restricted shares will be held by the Company. These shares may not be sold, assigned, pledged or otherwise transferred. Except for the restrictions on transfer and such other restrictions as the committee may impose, the participant shall have all the rights of a holder of the Company's Common Stock (including, but not limited to, voting and receiving dividends). Stock options awarded under the 1996 Plan are not transferable by a participant other than by will or by the laws of descent and distribution. During the participant's lifetime, stock options can be exercised only by him. Under current federal income tax law a participant granted an incentive stock option will not recognize any income upon the grant of such option. Upon exercise of such option, no income is recognized by the participant (except that the alternative minimum tax may apply). Any gain realized upon a sale or exchange of the shares acquired upon such exercise will be taxed as long-term capital gain if such shares are held as a capital asset and not disposed of within the period ending on the later of two years after the date such option is granted and one year after such option is exercised. If the shares acquired by the participant upon such exercise are disposed of in a taxable sale or exchange before the end of such period, the participant will generally recognize ordinary income in an amount equal to the lesser of (i) the excess of the fair market value of such shares on the date of exercise over the option price and (ii) the amount of gain realized. A participant granted a non-qualified option will not recognize any income upon the grant of such option. Upon the exercise of a non-qualified stock option, the participant will generally recognize ordinary income in an amount equal to the excess of the fair market value of the shares acquired on the date of exercise over the option price. Upon the sale of such shares, any gain or loss resulting from such sale will 19 be taxed as long-term or short-term capital gain or loss depending on how long such shares were held. The Company will be entitled to a federal income tax deduction in an amount equal to the ordinary income required to be recognized by a participant as described above. A participant who is granted restricted stock may elect to have the grant taxed as compensation income on the date of receipt. If the participant does not elect to do so, the grant will generally be taxed to him as compensation income at the full fair market value on the date that the restrictions imposed on the shares expire. Unless a participant makes such an election, any dividends paid on Common Stock subject to the restrictions will be compensation income to the participant and deductible compensation expense to the Company. The Company will be entitled to a deduction for any compensation income taxed to the participant. If the participant elects to be taxed on the shares on the date of grant and the participant subsequently forfeits the shares, the participant is not entitled to a deduction as a consequence of such forfeiture and the Company must include as ordinary income the amount it previously deducted in the year of grant with respect to such shares. Upon a participant's sale of shares received pursuant to a grant of restricted stock, the difference between the selling price and the tax basis of the shares (generally, if the above election is made, the fair market value of the shares on the date of grant or, if no such election is made, the date on which the restrictions on the shares expire) will be a capital gain or loss. A participant's holding period will begin on the date of grant if the above election is made or on the date on which the restrictions on the shares expire if no such election is made. The Board of Directors of the Company shall have the power to amend or revise the 1996 Plan, but no such action shall impair the rights of a participant under any prior award without the participant's consent. Notwithstanding the foregoing, stockholder approval of any such amendment or revision shall not be required under this Section except to the extent such approval shall be required to fulfill the conditions of Rule 16b-3 of the Securities Exchange Act of 1934, as amended, Sections 162(m) or 422 of the Internal Revenue Code of 1986, as amended, or such other applicable statutory rules and regulations and only if the Company intends to fulfill such conditions. The Board of Directors may terminate the 1996 Plan at any time with respect to any shares not subject to outstanding options. NEW PLAN BENEFITS 1996 STOCK AWARDS PLAN
DOLLAR VALUE NUMBER OF UNITS(1) NAME AND POSITION $ # - ------------------------------------------------------------------------------- ----------------- ------------------- Executive Group -- 0 Non-Executive Director Group -- 12,000 Non-Executive Officer Employee Group -- 0
- ------------------------ (1) Represents a non-qualified stock option grant on October 23, 1996 at an exercise price of $13.19 per share, the fair market value on the date of grant. This grant becomes exercisable six months after the grant date. This option grant is subject to the shareholders' approval of the 1996 Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE 1996 STOCK AWARDS PLAN. 20 ITEM 3 RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS Upon recommendation of the Audit Committee, the Board of Directors has reappointed Arthur Andersen LLP as independent public accountants for the fiscal year ending September 27, 1997, subject to ratification by the stockholders. Arthur Andersen LLP has examined the financial statements of the Company each fiscal year since 1961. A representative of Arthur Andersen LLP will be present at the Annual Meeting to respond to appropriate questions from stockholders and to make a statement if such person desires. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS. PROPOSALS OF STOCKHOLDERS Proposals of stockholders intended to be presented at the next Annual Meeting must be received by the Secretary, Woodhead Industries, Inc., 2150 East Lake Cook Road, Suite 400, Buffalo Grove, Illinois 60089, no later than August 23, 1997. GENERAL The Company has mailed to all stockholders, concurrently with this Proxy Statement, its annual report for the year ended September 28, 1996. Proxies will be solicited by mail. Proxies may be solicited by directors, officers and a small number of regular employees of the Company personally or by mail, telephone or telegraph, but such persons will not be specially compensated for such service. It is contemplated that brokerage houses, custodians, nominees and fiduciaries will be requested to forward the soliciting material to the beneficial owners of stock held of record by such persons. The expense of such solicitation will be paid by the Company. In addition, the Company has retained D. F. King & Co., Inc. to assist them in the solicitation of proxies from stockholders. For such services, the Company will pay D. F. King & Co., Inc. a fee not to exceed $5,000 plus out-of-pocket expenses. If any matters other than those referred to in the Notice of Annual Meeting should properly come before the meeting, it is the intention of the persons named in the accompanying form of proxy to vote the proxies held by them in accordance with their best judgment. Management does not know of any business other than that referred to in the Notice which may properly be considered at the meeting. By order of the Board of Directors [SIGNATURE] Robert J. Tortorello SECRETARY 21 EXHIBIT A WOODHEAD INDUSTRIES, INC. 1996 STOCK AWARDS PLAN SECTION 1: PURPOSE The purpose of the Woodhead Industries, Inc. 1996 Stock Awards Plan (the "1996 Plan") is to advance the long-term financial interests of Woodhead by (a) encouraging qualified individuals to join Woodhead and its Subsidiaries, (b) providing an incentive for directors, officers and key employees to remain with Woodhead and its Subsidiaries, and (c) furthering the identity of interests of participants with those of Woodhead's shareholders. SECTION 2. DEFINITIONS The following definitions are applicable to the 1996 Plan: (a) "Board of Directors" means the Board of Directors of Woodhead. (b) "Change in Control" means a situation where (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of Woodhead or a corporation owned, directly or indirectly, by the stockholders of Woodhead in substantially the same proportions as their ownership of Woodhead stock, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of Woodhead securities representing 25% or more of the combined voting power of Woodhead's then outstanding securities; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors and any new director (other than a director designated by a person who has entered into an agreement with Woodhead to effect a transaction described in clauses (i) or (iii) of this Subsection) whose election by the Board of Directors or nomination for election by Woodhead's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (iii) Woodhead's shareholders approve a merger or consolidation of Woodhead with any other corporation, other than a merger or consolidation which would result in the voting securities of Woodhead outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 80% of the combined voting power of the voting securities of Woodhead or such surviving entity outstanding immediately after such merger or consolidation, or the shareholders of Woodhead approve a plan of complete liquidation of Woodhead or an agreement for the sale or disposition by Woodhead of all or substantially all its assets. (c) "Code" means the Internal Revenue Code of 1986, as amended, and any successor statute. (d) "Common Stock" means the $1.00 par value common stock of Woodhead, except as this definition may be modified as provided in Section 8. (e) "Disability" means total and permanent disability within the meaning of Section 22(e)(3) of the Code. (f) "Exchange Act" means the Securities Exchange Act of 1934, as amended. A-1 (g) "Fair Market Value" of Woodhead's Common Stock on any given date shall mean the average of the highest and lowest sales prices of the Common Stock on such date (or, if the Common Stock was not traded on such date, on the next preceding day on which such stock was traded) as reported in The Wall Street Journal under the heading "NASDAQ National Market Issues" or any similar or successor heading. (h) "ISO or ISOs" mean incentive stock option(s) as provided for in section 422 of the Code. (i) "non-ISO or non-ISOs" mean stock option(s) that do not satisfy the requirements of section 422 of the Code. (j) "Participant" means a director, officer or employee who has been granted an award pursuant to the 1996 Plan. (k) "Retirement" as it relates to an employee means termination of employment with Woodhead or a Subsidiary after the Participant has reached age 55 and has completed five years of service with Woodhead or a Subsidiary. "Retirement" as it relates to a director means termination of service at a time when the Participant would be entitled to a retirement benefit under Woodhead's retirement plan for non-employee directors adopted by resolution of the Board of Directors on October 26, 1984, as may be amended from time to time. (l) "Subsidiary" means any corporation in which Woodhead owns at least 50% of the voting stock, or any corporation in a chain of corporations connected with Woodhead through ownership of at least 50% of its voting stock by any corporation in the chain. (m) "Woodhead" means Woodhead Industries, Inc., and its successors. All references to gender herein shall include both the masculine and feminine. SECTION 3: SHARES SUBJECT TO THE 1996 PLAN Subject to the adjustments authorized by Section 8 of the 1996 Plan, a maximum of 500,000 shares of Woodhead's Common Stock may be issued pursuant to this 1996 Plan; provided, however, that no more than 50,000 shares may be granted in the form of restricted stock awards. The number of such available shares shall be reduced by the number of shares subject to awards which are granted under the 1996 Plan and increased by the number of shares subject to awards granted under such plan which have expired unexercised or unpaid, been canceled, forfeited or otherwise terminated. No more than 35% of the aggregate shares subject to the 1996 Plan may be awarded to a single individual. Shares allotted to Participants may be made available from authorized but unissued Common Stock or from Common Stock held in the treasury or from both unissued and treasury Common Stock. SECTION 4: ADMINISTRATION Unless otherwise determined by the Board of Directors, the 1996 Plan shall be administered by a committee, which shall consist of two or more members of the Board of Directors who are "outside directors" within the meaning of Section 162(m) of the Code, and "non-employee directors" within the meaning of Rule 16b-3(b)(3) of the Exchange Act. Such committee, may, in its discretion, delegate to a subcommittee its duties hereunder, including the grant of options. For all purposes under the 1996 Plan, any entity which performs the duties described herein, shall be referred to as the "Committee". The Committee shall have full authority to: A-2 (a) Determine (i) the individuals to whom awards under the 1996 Plan will be granted; and (ii) the number and type of awards to be granted to each Participant and the number of shares subject to each such award; (b) Interpret, construe, and implement the provisions of the 1996 Plan; (c) Adopt, amend, and rescind appropriate rules and regulations relating to the 1996 Plan. All determinations of the Committee shall be by a majority of its members. The Committee's interpretation and construction of any provision of the 1996 Plan or any award shall be binding and conclusive for all purposes and on all persons. SECTION 5: ELIGIBILITY Any director, officer or employee shall be eligible to receive awards hereunder; provided he or she is currently (a) a director or officer of Woodhead; (b) an officer of any Subsidiary; (c) a key employee of Woodhead or any Subsidiary who is deemed eligible by the Committee (collectively "Eligible Persons"). Participation under the 1996 Plan shall not affect eligibility for participation in any pension, profit sharing, stock option, or other welfare or compensation plan of Woodhead or any of its Subsidiaries now existing or hereafter adopted. SECTION 6: AWARDS The Committee may grant to Eligible Persons, in accordance with this Section 6 and the other provisions of this 1996 Plan, stock option grants and/or restricted stock grants. (a) Stock Options Stock options granted under the 1996 Plan may be in the form of ISOs or non-ISOs and shall be evidenced by written stock option agreements between Woodhead and the Participant in such form as the Committee shall from time to time approve and shall be subject to the following terms and conditions: (i) Exercisability. A stock option shall become exercisable by the Participant six months after the date of grant, unless a later date is specified by the Committee, in its sole discretion. All rights to exercise a stock option shall expire not later than 10 years after the date such option is granted. (ii) Purchase Price. The purchase price per share of Common Stock deliverable upon the exercise of a stock option shall be determined by the Committee at the time of grant, but shall in no event be less than 100 percent of the Fair Market Value of the Common Stock on the date the option is granted. (iii) ISO's Exercisable. The aggregate Fair Market Value (determined at the time an ISO is granted) of the Common Stock with respect to which an ISO is exercisable for the first time (under all stock option plans maintained by Woodhead or any of its Subsidiaries) by a Participant during any calendar year shall not exceed $100,000. No ISO may be granted to any employee who, at the time such option is granted, owns stock of Woodhead or a Subsidiary possessing more than ten percent (10%) of the total combined voting power of all classes of stock of Woodhead or a Subsidiary. (iv) Method of Exercise. In order to exercise a stock option in whole or in part, the Participant shall give written notice to Woodhead's Secretary at 2150 East Lake Cook A-3 Road, Suite 400, Buffalo Grove, Illinois, of his intention to exercise such option, stating the number of shares with respect to which he intends to exercise his option. Option shares may be purchased by payment in cash, or in Common Stock, or partly in each. The Participant's notice of exercise of any option shall be accompanied by full payment in cash for the number of shares with respect to which the option is to be exercised if payment for such shares is to be made entirely in cash, or by payment of cash and/or the tender of Common Stock sufficient to pay the purchase price of such shares if payment is to be made partly or wholly in Common Stock. The Fair Market Value of any Common Stock tendered shall be determined as of the date of receipt of such Common Stock by Woodhead's Secretary. Any cash or Common Stock submitted by the Participant in excess of the amount needed to purchase such shares shall be refunded to the Participant. Fractional shares of Common Stock shall not be accepted in payment for option stock. Shares of Common Stock transferred to Woodhead in payment for option shares may be reissued to the Participant by Woodhead as shares issued under the option. (v) Effect of Termination. (A) In the event of termination of employment or service on the Board of Directors by a Participant other than by reason of Retirement, Disability or death, any unexercised option granted to him under the 1996 Plan, which is then exercisable, may be exercised for thirty (30) days following said termination, unless it expires sooner. (B) In the event of termination of employment or service on the Board of Directors by a Participant by reason of Retirement, each of the then outstanding stock options of such Participant will continue to mature and become exercisable in accordance with Section 6(a)(i) above and may be exercised prior to its expiration and within five years after such Retirement. An unexercised ISO will cease to be treated as such and become a non-ISO three months after Retirement. (C) In the event of the Disability or death of a Participant while employed by Woodhead or any Subsidiary or while serving on the Board of Directors, all unexercised stock options of such Participant shall immediately become exercisable by the Participant, the Participant's legal representative, or the estate of the Participant, as the case may be, at any time within two years after such Disability or death, but in no event after the expiration date of the stock option. An unexercised ISO will cease to be treated as such and become a non-ISO twelve months after the Participant's Disability or death. (vi) Change in Control. In the event of a Change in Control, all stock options shall immediately become exercisable without regard to the exercise period set forth in 6(a)(i) above. (b) Restricted Stock. (i) The Committee may award to any Participant shares of Common Stock, subject to this Section 6(b) and such other terms and conditions as the Committee may prescribe (such shares being called "restricted stock"). Each certificate for restricted stock shall be registered in the name of the Participant and deposited, together with a stock power endorsed in blank, with Woodhead. A-4 (ii) There shall be established for each restricted stock award a restriction period of such length as shall be determined by the Committee (the "restriction period"), but in no event less than one year. Shares of restricted stock may not be sold, assigned, transferred, pledged or otherwise encumbered, except as hereinafter provided, during the restriction period. Except for such restrictions on transfer and such other restrictions as the Committee may impose, the Participant shall have all the rights of a holder of Common Stock as to such restricted stock (including, but not limited to, voting and receiving dividends). At the expiration of the restriction period, Woodhead shall deliver to the Participant (or the Participant's legal representative) the certificates deposited pursuant to this section. (iii) Except as otherwise determined by the Committee in its sole discretion, upon a termination of employment or service on the Board of Directors for any reason during the restriction period, all shares still subject to restriction shall be forfeited by the Participant. (iv) In the event of a Change in Control, restrictions shall lapse on all restricted stock as of the date of such Change in Control. SECTION 7: NON-TRANSFERABILITY OF AWARDS. Awards granted under the 1996 Plan are not transferable by a Participant other than by will or by the laws of descent and distribution. During the Participant's lifetime, awards shall be exercisable or received only by him or by his guardian or legal representative. Any purported transfer contrary to this provision will nullify the award. SECTION 8: ADJUSTMENTS IN THE EVENT OF CHANGES IN CAPITAL STRUCTURE, REORGANIZATION, STOCK DIVIDENDS If there shall be any change in the Common Stock subject to the 1996 Plan or to any award granted thereunder through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, exchange of stock or other change in the corporate structure, appropriate adjustments shall be made in the aggregate number and kind of shares or other securities or property subject to the 1996 Plan, and the number and kind of shares or other securities or property subject to outstanding and to subsequent option grants and in the purchase price of outstanding options to reflect such changes. SECTION 9: RIGHTS AS STOCKHOLDERS. A Participant shall have no rights whatsoever as a stockholder of Woodhead with respect to any shares covered by a stock option until the date of the issuance of a stock certificate to him pursuant to such option. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. SECTION 10: AMENDMENT. The Board of Directors may amend, alter or discontinue the 1996 Plan, but no amendment, alteration or discontinuation shall be made that would impair the rights of a Participant under any award theretofore granted without such Participant's consent. Notwithstanding the foregoing, stockholder approval of any such amendment or alteration shall not be required under this Section except to the extent such approval shall be required to fulfill the conditions of Rule 16b-3 of the Exchange Act, Sections 162(m) or 422 of the Code or such other applicable statutory rules and regulations and only if Woodhead intends to fulfill such conditions. A-5 SECTION 11: MISCELLANEOUS (a) Additional Terms and Conditions. Each Participant shall agree to such other terms, provisions and conditions consistent with the 1996 Plan as may be determined by the Committee or the Board of Directors. (b) Tax Withholding. The Committee shall have the power to withhold, or require a Participant to remit to Woodhead, an amount sufficient to satisfy any withholding or other tax due with respect to any shares issuable under the 1996 Plan, and the Committee may defer such issuance unless indemnified to its satisfaction. (c) Rights of Participants. Nothing in the 1996 Plan shall interfere with or limit in any way the right of Woodhead or any Subsidiary to terminate any Participant's employment or service on the Board of Directors at any time, nor confer upon any Participant any right to continue in the employ or service of Woodhead or any Subsidiary for any period of time or to continue his present or any other rate of compensation. No director or employee shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. SECTION 12: EFFECTIVE DATE AND TERMINATION OF PLAN (a) Effective date. The effective date of the 1996 Plan shall be October 23, 1996; provided, however, that the 1996 Plan is approved and ratified by holders of a majority of the shares of Common Stock present, in person or by proxy, and entitled to vote at the 1997 Annual Meeting of Stockholders. (b) Termination. The Board of Directors may terminate the 1996 Plan at any time with respect to any shares that are not subject to awards. Unless terminated earlier by the Board of Directors, the 1996 Plan shall terminate 10 years after the effective date and no awards shall be granted under this 1996 Plan after such date. Termination of this 1996 Plan will not affect the rights and obligations of any Participant with respect to awards granted prior to termination. A-6 WOODHEAD INDUSTRIES, INC. PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF WOODHEAD INDUSTRIES, INC. FOR ANNUAL MEETING ON JANUARY 24, 1997 The undersigned holder of Common Stock of Woodhead Industries, Inc. hereby appoints Alan Reed, Dale A. Miller and Richard A. Virzi or any of them, with full power of substitution, to act as proxy for and to vote the stock of the undersigned at the Annual Meeting of Stockholders of Woodhead Industries, Inc. to be held at Marriott's Lincolnshire Resort, 10 Marriott Drive, Lincolnshire, Illinois on January 24, 1997, or any adjournment or postponement thereof: Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. SIGNATURE SIGNATURE DATED , 19 Please mark, sign, date and return this proxy card (CONTINUED ON THE OTHER SIDE) promptly using the enclosed envelope.
1. ELECTION OF DIRECTORS / / FOR ALL NOMINEES listed below (except / / WITHHOLD AUTHORITY to vote for all as marked to the contrary below). nominees listed below. (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.) CHARLES W. DENNY C. MARK DEWINTER SARILEE K. NORTON ALAN L. SHAFFER
2. Approval of 1996 Stock Awards Plan / / FOR / / AGAINST / / ABSTAIN 3. Ratification of the appointment of Arthur Andersen LLP as independent public accountants. / / FOR / / AGAINST / / ABSTAIN 4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted FOR Proposals 1, 2, 3 and 4. (Please sign and date this proxy on the reverse side hereof and return it in the enclosed envelope.) -----END PRIVACY-ENHANCED MESSAGE-----