SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
BENCHMARK ELECTRONICS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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/X/ No fee required.
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and 0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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previously. Identify the previous filing by registration statement number,
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BENCHMARK ELECTRONICS, INC.
3000 TECHNOLOGY DRIVE
ANGLETON, TEXAS 77515
NOTICE OF 2002 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, MAY 14, 2002
Shareholders of Benchmark Electronics, Inc.:
The 2002 Annual Meeting of Shareholders of Benchmark Electronics, Inc.
("Company") will be held at the Hyatt Regency Houston, 1200 Louisiana Street,
Houston, Texas, on Tuesday, May 14, 2002, beginning at 10:00 a.m. (local time),
for the following purposes:
1. to elect six directors to serve on the Board of Directors until
the 2003 annual meeting of shareholders and until their successors are
duly elected and qualified;
2. to approve the Benchmark Electronics, Inc. 2002 Stock Option Plan
for Non-Employee Directors;
3. to approve a proposed amendment to the Company's Amended and
Restated Articles of Incorporation to increase the number of authorized
shares of common stock, par value $.10 per share, of the Company from 30
million shares to 130 million shares;
4. to ratify the appointment of KPMG LLP as the independent auditors
of the Company for the year ending December 31, 2002; 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 April 2, 2002 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 at your earliest convenience.
By order of the Board of Directors,
/s/ Lenora A. Gurton
Lenora A. Gurton
Secretary
Angleton, Texas
April ____, 2002
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 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 __, 2002
------------------------
PROXY STATEMENT
FOR
2002 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, MAY 14, 2002
------------------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Benchmark Electronics, Inc.
("Company") for use at the 2002 Annual Meeting of Shareholders of the Company to
be held on Tuesday, May 14, 2002, beginning at 10:00 a.m. (local time), and any
adjournment thereof ("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 9, 2002.
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 of Directors until the 2003 annual meeting of
shareholders and until their successors are duly elected and qualified, FOR
the proposal to approve the Benchmark Electronics, Inc. 2002 Stock Option
Plan for Non-Employee Directors, FOR the proposal to approve the amendment to
the Company's Amended and Restated Articles of Incorporation to increase the
number of authorized shares of common stock to 130 million, and FOR the
ratification of the appointment of KPMG LLP as the independent auditors of
the Company for the year ending December 31, 2002. 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 Annual Meeting for which advance
notice was not received by the Company prior to March 2, 2002. 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 April 2, 2002 are
entitled to notice of and to vote at the Meeting. As of April 2, 2002, there
were 19,784,412 shares of common stock, $0.10 par value per share ("Common
Stock"), issued, outstanding and entitled to vote at the Meeting. Each share of
Common Stock 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 shares of Common Stock is necessary to constitute a
quorum. Shares of Common Stock 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. Shares of Common Stock 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.
The affirmative vote of a majority of the outstanding shares of Common
Stock is required to authorize the proposed amendment to the Company's
Amended and Restated Articles of Incorporation to increase the number of
authorized shares of Common Stock. All other matters specified in the notice
of the Meeting require the affirmative vote of a majority of the outstanding
shares of Common Stock 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, the approval
of the 2002 Plan or the ratification of the appointment of the Company's
independent auditors 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 of Directors 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.
2
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. The information as to age,
principal occupation, shares of Common Stock beneficially owned, and
directorships has been furnished by each such nominee. Unless otherwise noted,
each nominee possesses sole voting and dispositive power with respect to the
shares of Common Stock listed, subject to community property laws.
SHARES OF PERCENTAGE OF
COMMON STOCK OUTSTANDING
BENEFICIALLY SHARES OF
NAME AGE PRINCIPAL OCCUPATION OWNED COMMON STOCK
------------------ ---------- ----------------------------------- ------------------ ------------------
Donald E. Nigbor 54 Chairman of the Board and Chief
Executive Officer of the Company 527,782(1) 2.7%
Cary T. Fu 53 President and Chief Operating
Officer of the Company 546,010(2) 2.8%
Steven A. Barton 53 Executive Vice President of the
Company 26,370(3) (4)
David H. Arnold 64 Retired - Former President of EMD
Associates, Inc. 379,059(5) 1.9%
John C. Custer 71 Retired - Former Chairman of the
Board of Mason & Hanger-Silas Mason
Co., Inc. 57,450(6) (4)
Peter G. Dorflinger 50 President of GlasTech, Inc. 69,000(7) (4)
------------------------
(1) Includes (i) 1,950 shares of Common Stock held by Mr. Nigbor's children
as to which shares of Common Stock Mr. Nigbor expressly disclaims
beneficial ownership, and (ii) 344,000 shares of Common Stock that may be
acquired upon the exercise of options that are currently exercisable or
will become exercisable within 60 days of April 2, 2002.
(2) Includes (i) 3,465 shares of Common Stock held by Mr. Fu's daughter as
custodian for his children under the Uniform Gifts to Minors Act, as to
which shares of Common Stock Mr. Fu expressly disclaims beneficial
ownership, (ii) 2,970 shares of Common Stock held by Mr. Fu's daughters,
as to which shares of Common Stock Mr. Fu expressly disclaims beneficial
ownership, and (ii) 344,000 shares of Common Stock that may be acquired
upon the exercise of options that are currently exercisable or will
become exercisable within 60 days of April 2, 2002.
(3) Includes 23,600 shares of Common Stock that may be acquired upon the
exercise of options that are currently exercisable or will become
exercisable within 60 days of April 2, 2002.
(4) Less than 1%.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
3
(5) Includes 11,288 shares of Common Stock held of record by Mr. Arnold's
wife, 2,726 shares held for Mr. Arnold's benefit in the Company's 401(k)
Employee Savings Plan and 30,000 shares that may be acquired upon the
exercise of options that are currently exercisable.
(6) Includes 2,400 shares owned by Mr. Custer's wife and 39,850 shares that
may be acquired upon the exercise of options that are currently
exercisable.
(7) Includes 50,000 shares of Common Stock that may be acquired upon the
exercise of options that are currently exercisable.
Mr. Nigbor has been a director of the Company since 1990 and Chief
Executive Officer of the Company since May 2001, President from 1986 to May 2001
and was its General Manager from 1984 to 1990. Before joining the Company, he
was employed by Intermedics, Inc. ("Intermedics"), a medical implant
manufacturer, serving as a Manufacturing Analyst for its Pacemaker Division from
1980 to 1984. Mr. Nigbor holds B.S. and M.S. degrees in engineering from
Rensselaer Polytechnic Institute and received an M.B.A. from the Amos Tuck
School of Business at Dartmouth College.
Mr. Fu has been a director of the Company since 1990 and President and
Chief Operating Officer of the Company since May 2001. He served as Executive
Vice President of the Company from 1990 to May 2001. He served as Executive Vice
President -- Financial Administration of the Company from 1990 to April 1992. He
also has served the Company as Treasurer from 1986 to January 1996, Secretary
from 1990 to January 1996, a director and Secretary from 1986 to 1988 and
Assistant Secretary from 1988 to 1990. From 1983 to 1986, Mr. Fu was employed by
Intermedics as Controller of the Company and another subsidiary. Mr. Fu holds an
M.S. degree in accounting from the University of Houston and is a certified
public accountant.
Mr. Barton has been a director and Executive Vice President of the Company
since 1990. He served as Executive Vice President -- Marketing and Sales of the
Company from 1990 to April 1992. Since June 1, 1993 he has worked part-time for
the Company. He also has served the Company as Executive Vice President from
1988 to 1990, a director and Vice President from 1986 to 1988, and President
from 1979 to 1983. From 1977 to 1986, Mr. Barton was employed by Intermedics in
various management positions. Mr. Barton holds B.S. and M.S. degrees in
electrical engineering from the University of South Florida and received an
M.B.A. from the Harvard Business School.
Mr. Arnold became a director of the Company in 1996 pursuant to the terms
of the agreement relating to the Company's acquisition of EMD Technologies, Inc.
("EMD") in July 1996. Mr. Arnold has been a member of the Audit Committee since
1997 and a member of the Compensation Committee since 2000. Mr. Arnold was a
co-founder of EMD, alternated as President with EMD's other co-founder, and
served as an officer of EMD from 1974 until its acquisition by the Company. Mr.
Arnold was a co-founder, President and Chairman of the Board of DCM Tech, Inc.,
a privately held manufacturer of machine tools, until he retired on December 30,
1999. Mr. Arnold earned a B.S. degree in mechanical engineering from Iowa State
University and an M.S. degree in mechanical engineering from the University of
Michigan. He also serves as a director of Winona National Bank in Winona,
Minnesota.
Mr. Custer has been a director of the Company since 1988, a member of the
Compensation Committee of the Board of Directors since 1990 and a member of the
Audit Committee of the Board of Directors since 2000. He served as Chairman of
the Board of Directors of the Company from 1991 to May 2001. Mr. Custer was
employed by Mason & Hanger-Silas Mason Co., Inc. ("Mason & Hanger"), a technical
services contracting and engineering firm, from 1951 until his retirement in
February 1996. Mr. Custer became a member of the board of directors of Mason &
Hanger in 1983, serving as Chairman of the Board of Mason & Hanger from 1994
until his retirement, and served in various other management and operations
positions prior to 1994.
4
Mr. Dorflinger has been a director of the Company and a member of the
Audit Committee and Compensation Committee of the Board of Directors since 1990.
He is currently President of GlasTech, Inc., a dental products manufacturer, a
position he has held since November 1998. 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 served as
Group Vice President and General Counsel of SULZERmedica, a division of Sulzer
Limited of Switzerland, composed of eight operating medical device companies in
Europe and the United States. Mr. Dorflinger received a J.D. degree from the
University of Houston and also is a director of several privately held
companies.
The officers of the Company are elected by, and serve at the discretion
of, the Board of Directors.
ELECTION PROCEDURES; TERM
The directors will be elected by the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock 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 shares
of Common Stock 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 shares of Common Stock 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
of Directors. The Board of Directors, however, has no reason to believe that any
nominee will be unavailable to serve as a director.
Any vacancy on the Board of Directors 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 of Directors, 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
predecessor in office.
All directors will be elected to serve until the 2003 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.
OPERATION OF BOARD OF DIRECTORS
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 of Directors presently consists of six
members.
The Board of Directors held six meetings during 2001. Each of the
directors attended at least 75% of such meetings during the period which he
was a director.
The Board of Directors has an Audit Committee and a Compensation
Committee, but does not have a nominating committee or any committee
performing a similar function.
5
The Audit Committee consisting of Messrs. Arnold, Custer and Dorflinger
met nine times during 2001 and each member attended all of the meetings during
the period which he was a member of such committee. The functions of the Audit
Committee are to recommend to the Board of Directors the retention or discharge
of the Company's independent auditors; review and approve the engagement of the
independent auditors to conduct an audit of the Company and related matters,
including the scope, extent and procedures of the audit and the fees to be paid
therefor; review, in consultation with the independent auditors, the audit
results and their proposed opinion letter or audit report and any related
management letter; review and approve the audited financial statements of the
Company; consult with the independent auditors and management of the Company,
together or separately, on the adequacy of internal accounting controls and
review the results thereof; review the independence of the independent auditors;
review and approve the engagement of the independent auditors for non-audit
services; direct and supervise investigations into matters within the scope of
the Audit Committee's duties; and perform such other functions as may be
necessary or appropriate in the efficient discharge of its duties. 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. Arnold, Custer and
Dorflinger met six times during 2001 and each member attended all of the
meetings during the period which he was a member of such committee. The
functions of the Compensation Committee are to recommend to the Board of
Directors the compensation of the Chief Executive Officer of the Company;
determine the compensation of the other executive officers of the Company;
administer the Company's employee benefit plans ("plans"), including, without
limitation, determining the terms and conditions of the benefits and the
recipients thereof in accordance with the plans, such as the terms of stock
option grants; review the plans and advise the Board of Directors regarding the
results thereof; and perform such other functions as may be necessary or
appropriate in the efficient discharge of its duties.
AUDIT COMMITTEE REPORT
AUDIT COMMITTEE REPORT TO SHAREHOLDERS
The Audit Committee of the Board is responsible for providing independent,
objective oversight of the Company's accounting functions and internal controls.
The Audit Committee currently is composed of three directors, each of whom is
independent as defined by the New York Stock Exchange listing standards. The
Audit Committee operates under a written charter previously approved by the
Board of Directors.
Management is responsible for the Company's internal controls and
financial reporting process. 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 and the independent accountants to review and discuss the December
31, 2001 financial statements. 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 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.
Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management and the independent accountants, the Audit Committee recommended
that the Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001, filed with the Securities and Exchange Commission on March
19, 2002.
6
Audit Fees
The aggregate fees billed for professional services rendered by KPMG LLP
for the audit of our annual financial statements for the year ended December 31,
2001, and the reviews of the condensed financial statements included in our
quarterly reports on Forms 10-Q for the year ended December 31, 2001, were
$272,545.
Financial Information Systems Design and Implementation Fees
There were no fees paid to KPMG LLP in 2001 for professional services with
respect to financial information systems design and implementation.
All Other Fees
The aggregate fees billed for all other services, exclusive of the fees
disclosed above relating to financial statement audit services, rendered by KPMG
LLP during the year ended December 31, 2001 were $594,194. These other services
consisted of Statutory Audits ($141,865), Audits of Employee Benefit Plans
($11,000) and Tax Services ($441,329).
The Audit Committee of the Company's Board of Directors has considered
whether the services provided by KPMG LLP as they related to other non-audit
services are compatible with maintaining the auditor's independence.
SUBMITTED BY THE AUDIT COMMITTEE OF
THE COMPANY'S BOARD OF DIRECTORS
David H. Arnold, Chairman John C. Custer Peter G. Dorflinger
7
PROPOSAL 2
APPROVAL OF THE BENCHMARK ELECTRONICS, INC.
2002 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Company's shareholders are being asked to approve the adoption of the
Benchmark Electronics, Inc. 2002 Stock Option Plan for Non-Employee Directors
(the "2002 Plan") at the Meeting.
On April 4, 2002 the Board of Directors adopted, subject to shareholder
approval, the Plan. A copy of the 2002 Plan is attached to this Proxy Statement
as Appendix A, to which reference is made for a full statement of its terms.
Stockholders are encouraged to read the 2002 Plan in its entirety. The following
sections describe the background of the Board's decision to adopt the 2002 Plan
and its material terms.
EXISTING PLAN FOR NON-EMPLOYEE DIRECTORS
In December 1994, the Board of Directors and shareholders of the Company
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 the Company or its affiliates who are not employees of the Company or its
affiliates. Under the 1994 Plan, each non-employee director received a grant of
an option to purchase 6,000 shares of the Company's common stock upon the date
of his election or re-election to the Board of Directors. Additionally, any
non-employee director who was a director on the date the Board of Directors
adopted the Plan received (a) an option to purchase 6,000 shares of common stock
for the fiscal year in which the Plan was adopted by the Board of Directors and
(b) an option to purchase shares of common stock in amount equal to (i) 6,000,
multiplied by (ii) the number of consecutive fiscal years (immediately preceding
the fiscal year during which the Plan was adopted) that the individual served as
a director of the Company, provided that the number under clause (ii) shall not
exceed three (3). During 2001, 2000 and 1999, pursuant to the Plan, 18,000,
24,000 and 12,000 options, respectively, were granted to Directors to purchase
shares of common stock at an exercise price of $24.98, $36.88 and $32.13 per
share, respectively. The Company currently has outstanding options with respect
to 155,850 shares of Common Stock under the 1994 Plan and only 10,600 shares are
currently available for grant under the 1994 Plan. For more information
regarding the 1994 Plan, see "Compensation of Non-Employee Directors."
REASONS FOR ADOPTING THE 2002 PLAN
The Board of Directors believes that stock options help to align the
interests of the Company's non-employee directors with the interests of the
Company's shareholders, and that adopting a new stock option plan for the
Company's non-employee directors that continues the practice and compensation
philosophy contained in the 1994 Plan would assist in the retention and
attraction of qualified non-employee directors. Only 10,600 shares remain
available for grant under the 1994 Plan, which is insufficient to provide for
grants to the Company's non-employee directors at the 2002 Annual Meeting and
beyond, consistent with the Company's normal compensation practices and common
practice in the industry. For these reasons, the Board of Directors has adopted
the 2002 Plan. If the 2002 Plan is approved by the shareholders, the Company
will have an aggregate of 300,000 shares currently available under the 2002
Plan, which together with the shares currently outstanding and available for
issuance under the 1994 Plan and the Company's other plans would represent 35%
of the Company's outstanding common stock, assuming conversion of the Company's
currently outstanding 6% Convertible Subordinated Debentures due 2006. It is not
expected, however, that options with respect to all available shares will be
granted immediately.
8
The 2002 Plan is intended to encourage ownership of common stock of the
Company by eligible non-employee directors of the Company and to provide
increased incentive for such directors to render services and to exert maximum
effort for the business success of the Company and its affiliates. In addition,
the Company expects that this Plan will further strengthen the identification of
directors with the shareholders. The Plan is intended to be a continuation of
the 1994 Plan. The 2002 Plan will provide for the granting of a stock option to
purchase 7,000 shares of Common Stock upon the occurrence of the non-employee
director's election or re-election to the Board. The maximum number of shares of
Common Stock that may be subject to outstanding awards determined immediately
after the grant of any award, and the maximum number of shares which may be
issued under the 2002 Plan pursuant to all awards, may not exceed 300,000
shares. Shares of Common Stock which are attributable to awards which have
expired, terminated or been canceled or forfeited are available for issuance or
use in connection with future awards.
No grants may be made under the 2002 Plan until after it has been approved
by the Company's shareholders.
The following summary of the material provisions of the proposed 2002 Plan
does not purport to be complete, and is subject to and qualified in its entirety
by reference to the complete text of the 2002 Plan, which is attached as
Appendix A. Shareholders are encouraged to read the 2002 Plan in its entirety.
ADMINISTRATION
The 2002 Plan will be administered by the Board of Directors of the
Company. The 2002 Plan requires that the Board of Directors shall hold its
meetings at such times and places as it may determine. A majority of its members
shall constitute a quorum, and all determinations of the Board of Directors
shall be made by not less than a majority of its members. Any decision or
determination reduced to writing and signed by a majority of the members shall
be fully effective as if it had been made by a majority vote of its members at a
meeting duly called and held. All expenses and liabilities incurred by the Board
of Directors in the administration of this Plan shall be borne by the Company.
The Board of Directors may employ attorneys, consultants, accountants or other
persons to assist the Board of Directors in the carrying out of its duties
hereunder.
SHARES AVAILABLE
The aggregate number of shares of Common Stock that may be optioned under
the 2002 Plan is 300,000 shares. The number of shares is subject to adjustment
upon the occurrence of certain events, such as stock splits and stock dividends,
as provided in the 1994 Plan. Shares of Common Stock which are attributable to
awards under the 2002 Plan which expire, terminate or are canceled or forfeited
will become available for issuance or use in connection with future awards.
PARTICIPATION AND ELIGIBILITY
Under the 2002 Plan, awards may be made only to persons who are
non-employee directors on the date of the award. There are currently three
non-employee directors of the Company who will be eligible to participate in the
2002 Plan.
TERMS AND CONDITIONS OF AWARDS
The 2002 Plan becomes effective as of the date of its approval by the
shareholders of the Company. No awards may be granted under the 2002 Plan
after the expiration of ten years from the date of its approval by the
shareholders. 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.
9
The 2002 Plan provides for the granting of nonqualified stock option
awards. All awards under the Plan are fully vested upon the date of grant.
A stock option grants the holder the right to purchase Common Stock in the
future at a price fixed at the time the option is granted. The 2002 Plan
provides for nonqualified stock options. The term of any option granted under
the 2002 Plan shall be determined by the Board of Directors; provided, however,
that the term of any nonqualified stock option cannot exceed ten years from the
date of the grant. The exercise price per share of Common Stock in options
granted under the 2002 Plan will be the fair market value of a share of Common
Stock on the date such option is granted. The exercise price of options granted
under the 2002 Plan will be paid in full in a manner prescribed by the Board of
Directors.
FEDERAL INCOME TAX CONSEQUENCES
Under the Internal Revenue Code, a participant receiving a nonqualified
option ordinarily does not realize taxable income upon the grant of the option.
A participant does, however, realize ordinary income upon the exercise of a
nonqualified option to the extent that the fair market value of the Common Stock
on the date of exercise exceeds the option price. The Company is entitled to a
federal income tax deduction for compensation in an amount equal to the ordinary
income so realized by the participant, provided that the Company withholds
federal income tax with respect to the amount of such compensation. Upon the
subsequent sale of the shares acquired pursuant to a nonqualified option, any
gain or loss will be capital gain or loss, assuming the shares represent a
capital asset in the hands of the participant, although there will be no tax
consequences for the Company.
TERMINATION; AMENDMENT
The Board of Directors may terminate or amend the 2002 Plan at any
time, but no such termination or amendment may impair the rights of a holder
of an award under the 2002 Plan without the consent of the holder. Without
stockholder approval, however, the Board of Directors may not amend the 2002
Plan to (a) to increase the maximum number of shares which may be granted
except as provided in Sections 5 and 6 of the 2002 Plan; (b) to change the
class of persons eligible to receive options; (c) to extend the maximum
period during which options may be granted under the 2002 Plan; (d) to extend
the expiration date of the 2002 Plan; or (e) to decrease to any extent the
price at which options may be granted under the 2002 Plan, except as provided
in Section 6 of the 2002 Plan.
REQUIRED VOTE
The affirmative vote of the stockholders holding a majority of the
outstanding shares of Common Stock present, in person or by proxy, and entitled
to vote at the Annual Meeting, is required to approve the adoption of the 2002
Plan.
10
2002 PLAN BENEFITS
Only eligible non-employee directors may receive stock options under the
2002 Plan. Each eligible non-employee director will receive a grant of an option
to purchase 7,000 shares of Common Stock upon the occurrence of the non-employee
director's election or re-election to the Board of Directors. The actual
benefits, if any, to the holders of stock options issued under the 2002 Plan are
not determinable prior to exercise as the value, if any, of such stock options
to their holders is represented by the difference between the market price of a
share of the Company's Common Stock on the date of exercise and the exercise
price of a holder's stock option. The following table presents certain
information with respect to benefits that would have been received under the
2002 Plan for the fiscal year ended December 31, 2001 if the 2002 Plan had been
in effect.
OPTIONS GRANTED IN 2001 EXERCISE PRICE OF
NAME AND POSITION (NUMBER OF SHARES) GRANTED OPTIONS
Donald E. Nigbor, Chairman and Chief Executive Officer ........... N/A N/A
Cary T. Fu, President and Chief Operating Officer ................ N/A N/A
Steven A. Barton, Executive Vice President ....................... N/A N/A
Gayla J. Delly, Vice President Finance, Chief Financial
Officer and Treasurer ......................................... N/A N/A
All current executive officers as a group (4 persons) ............ N/A N/A
All Non-Employee Directors as a Group (3 persons) ................ 21,000 $24.98
All employees, including all current officers who are
not executive officers, as a group ............................ N/A N/A
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
BENCHMARK ELECTRONICS, INC. 2002 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS.
11
PROPOSAL 3
AMENDMENT TO THE COMPANY'S AMENDED AND
RESTATED ARTICLES OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors is seeking shareholder approval to amend Article
Four of the Company's Amended and Restated Articles of Incorporation (the
"Articles of Incorporation") to increase the number of authorized shares of
Common Stock of the Company from 30 million to 130 million shares. This proposal
has been unanimously approved by the Board of Directors, subject to approval by
the shareholders of the Company. If the proposed amendment is authorized, the
text of Section 4.1 of Article Four of the Articles of Incorporation would be
amended to read as follows:
"The aggregate number of shares which the Corporation shall have authority
to issue is 135,000,000 shares, which shall consist of 130,000,000 shares
of Common Stock, par value $0.10 per share, and 5,000,000 shares of
Preferred Stock, par value $0.10 per share."
REASONS FOR THE PROPOSED AMENDMENT
During 1999, the Company issued 1,000,000 shares of Common Stock in
connection with the acquisition of AVEX, issued 3,525,000 shares of Common Stock
in an offering of shares to the public and reserved 1,995,025 shares of Common
Stock issuable upon the conversion of its 6% Convertible Subordinated Notes.
During 2000, the Company issued 3,163,000 shares of Common Stock in an offering
of shares to the public. As of April 2, 2002, there are 19,784,412 shares of
Common Stock issued and outstanding and 3,391,991 shares reserved for issuance
upon exercise of outstanding options, the employee stock option purchase plan,
and the conversion of the 6% Convertible Subordinated Notes, leaving 6,823,597
shares unrestricted and available for issuance by the Company from time to time.
In addition, the Company recently announced filing of a shelf registration
statement whereby the Company may offer up to $250,000,000 of Common Stock,
Preferred Stock or Debt Securities, of which a maximum of 4,312,500 shares of
Common Stock are currently being offered by the Company. Other than as described
above, the Company has no present plans, arrangements or understandings to issue
any additional shares of Common Stock.
The proposed increase in the authorized shares of Common Stock has been
recommended by the Board to ensure that an adequate supply of authorized and
unissued shares is available for general corporate needs, such as employee
benefit plans, the conversion of other securities (such as Preferred Stock) that
may be issued by the Company, future stock splits, stock dividends and other
distributions to shareholders, raising additional capital, financing
arrangements, and acquisitions by the Company if favorable opportunities become
available.
POSSIBLE EFFECTS OF THE PROPOSED AMENDMENT
If approved by the shareholders, the additional authorized shares of
Common Stock would be available for issuance at the discretion of the Board of
Directors without further shareholder approval (subject to applicable rules of
the New York Stock Exchange), without the delay and expense incident to holding
a special meeting of shareholders to consider any specific issuance. However,
the rules of the New York Stock Exchange generally require shareholder approval
in the following situations: (i) with respect to a stock option or purchase
plan, or any other arrangement, pursuant to which officers or directors may
acquire stock (subject to certain exceptions); (ii) prior to the issuance of
Common Stock, or of securities convertible into or exercisable for Common Stock,
to (a) a director, officer or substantial security holder of the Company (a
"Related Party"), (b) a subsidiary, affiliate or other closely-related person of
a Related Party, or (c) any company or entity in which a Related Party has a
substantial direct or indirect interest; (iii) prior to the issuance of Common
Stock, or of securities convertible into or exercisable for Common Stock (except
12
for a public offering of Common Stock for cash) that would result in an increase
in the number of shares or voting power of the outstanding shares by 20% or
more; or (iv) prior to an issuance that will result in the change of control of
the issuer.
Current holders of Common Stock have no preemptive rights, which means
that current shareholders do not have a prior right to purchase any new issue of
capital stock of the Company in order to maintain their proportionate ownership
thereof. The effects of the authorization of additional shares of Common Stock
may also include dilution of the voting power of currently outstanding shares
and reduction of the portion of dividends and of liquidation proceeds payable to
the holders of currently outstanding Common Stock.
In addition, the Board could use the authorized but unissued shares of
Common Stock to create impediments to a takeover or a change of control of the
Company. Under certain circumstances, such shares could be used to create voting
impediments or to frustrate persons seeking to effect a takeover or otherwise
gain control of the Company. For example, the Company might seek to frustrate a
takeover attempt by making a private sale of a large block of shares to a third
party who was opposed to such an attempt. The increase in authorized stock might
also be considered as having the effect of discouraging an attempt by a third
party to acquire control of the Company, through the acquisition of a
substantial number of shares, since the issuance of any shares could be used to
dilute the stock ownership of shares of the Company's voting stock held by such
third party. Accordingly, an effect of the increase in the number of authorized
shares of Common Stock may be to deter a future takeover attempt. The Board is
not presently aware of any plans to acquire control of the Company and has not
proposed the amendment to the Articles of Incorporation as an anti-takeover
measure.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO 130 MILLION
SHARES.
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP as the independent auditors
of the Company for the year ending December 31, 2002. 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 shares of Common Stock 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 AUDITORS.
13
EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid by the Company for
the three fiscal years ended December 31, 2001 to its Chief Executive Officer
and the other executive officers of the Company whose salary and bonus received
from the Company for services rendered during the fiscal year ended December 31,
2001 exceeded $100,000.
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------- AWARDS
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($) OPTIONS (#) COMPENSATION($)(2)
--------------------- ---- ---------- ------------ --------------- -------------- --------------------
Donald E. Nigbor......... 2001 $ 438,462 $ -0-(3) -0- 50,000 $ 6,006
Chairman and Chief 2000 400,000 120,000 -0- 20,000 6,025
Executive Officer 1999 319,591 -0-(3) -0- 50,000 5,508
Cary T. Fu............... 2001 438,462 -0-(3) -0- 50,000 6,006
President and Chief 2000 400,000 120,000 -0- 20,000 6,025
Operating Officer 1999 319,591 -0-(3) -0- 50,000 5,508
Steven A. Barton......... 2001 101,539 -0-(3) -0- 6,000 3,327
Executive Vice 2000 90,000 27,000 -0- 6,000 2,575
President 1999 90,000 -0-(3) -0- 3,000 2,308
Gayla J. Delly........... 2001 287,308 -0-(3) -0- 10,000 6,006
Vice President
Finance, Chief
Financial Officer 2000 234,000 70,200 -0- 20,000 6,025
and Treasurer 1999 221,250 -0-(3) -0- 25,000 5,508
---------------------------
(1) The amounts shown in this column reflect cash bonuses paid to Messrs.
Nigbor and Fu and Ms. Delly pursuant to the Company's incentive bonus
plans discussed below under the caption "Executive Compensation and Other
Matters -- Board Compensation Committee Report on Executive Compensation
-- Cash Bonus."
(2) For fiscal year ended December 31, 2001, the "All Other Compensation"
column includes (a) $5,250 paid by the Company pursuant to the Company's
Qualified 401(k) Employee Savings Plan ("Savings Plan") to each of Messrs.
Nigbor and Fu, and Ms. Delly, and $2,571 paid to Mr. Barton, and (b)
payments by the Company of premiums of $312 for term life insurance and
$444 for medical insurance on behalf of each of Messrs. Nigbor, Fu and
Barton, and Ms. Delly. Under the Savings Plan, the Company is obligated to
make matching contributions to the Savings Plan in an amount equal to 50%
of each participant's elective contributions, to the extent that such
elective contributions do not exceed 7.5% of such participant's
compensation. The Company also may make discretionary contributions to the
Savings Plan based on each participant's compensation compared to the
total compensation of all participants. Messrs. Nigbor and Fu are each
reimbursed for financial planning services, up to $5,000 annually, and
biannual physical examinations. However, the value of such perquisites
does not exceed the lesser of $50,000 or 10% of such officer's annual cash
compensation and are therefore not included in the table.
(3) Because the Company's sales and net income did not exceed the levels
targeted by the Company in its 2001 and 1999 business plans, the
Compensation Committee elected not to pay or accrue any bonuses during
2001 and 1999.
14
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain information concerning options to
purchase Common Stock granted during the fiscal year ended December 31, 2001 to
the four executive officers named in the Summary Compensation Table.
POTENTIAL REALIZED
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PER PRICE APPRECIATION
UNDERLYING GRANTED TO SHARE FOR OPTION TERM
OPTIONS EMPLOYEES EXERCISE EXPIRATION --------------------------
NAME GRANTED(1) IN 2001 PRICE DATE 5% 10%
---------- --------------- -------------- ------------ ------------ --------- ---------
Donald E. Nigbor............. 20,000 4.07% $20.6875 01/02/11 $260,205 $659,411
30,000 6.10% $20.2700 07/24/11 $382,431 $969,155
Cary T. Fu................... 20,000 4.07% $20.6875 01/02/11 $260,205 $659,411
30,000 6.10% $20.2700 07/24/11 $382,431 $969,155
Steven A. Barton............. 6,000 1.22% $20.2700 07/24/11 $ 76,486 $193,831
Gayla J. Delly............... 10,000 2.03% $20.6875 01/02/11 $130,103 $329,705
----------------------------
(1) All options were granted under the 2000 Plan at an exercise price equal to
the fair market value of the Common Stock on the date of the grant. Each
option granted and reported in this table vests over a four year period,
with 20% of the shares becoming exercisable at the end of the second year
following the date of grant, 30% becoming exercisable at the end of the
third year following the date of grant and the entire option becoming
exercisable at the end of the fourth year. The options expire 3 months
after termination of employment, and are fully vested in the event of a
change of control of the Company.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table provides certain information concerning exercises of
options to purchase Common Stock during the fiscal year ended December 31, 2001
by the four executive officers named in the Summary Compensation Table and the
value of such officers' unexercised options at December 31, 2001.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED ON VALUE ------------------------------ ----------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------- --------- ------------- ------------- --------------- ------------- ----------------
Donald E. Nigbor........ -0-(1) -0- 360,000 150,000 $1,804,050 $22,950
Cary T. Fu.............. 9,300 $114,644 350,700 150,000 1,681,197 22,950
Steven A. Barton........ 1,200 $15,408 42,400 19,400 338,348 -0-
Gayla J. Delly.......... -0-(1) -0- 71,000 75,000 270,235 22,950
------------------------------
(1) These executive officers did not exercise any stock options during 2001.
15
COMPENSATION OF NON-EMPLOYEE DIRECTORS
The Company pays its non-employee directors an annual fee of $5,000 and
a fee of $500 for each meeting of the Board of Directors or any committee
thereof attended in person. On February 26, 2002, the Board of Directors
increased the annual fee paid to non-employee directors to $20,000 and
increased the fee for each meeting to $1,000. The Company also reimburses its
non-employee directors for their reasonable travel expenses in attending such
meetings.
In December 1994, the Board of Directors of the Company 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 the
Company or its Affiliates who are not employees of the Company or its
Affiliates (as defined in the 1994 Plan). After giving effect to the
Company's stock split during 1997, the aggregate number of shares of Common
Stock for which options may be granted under the 1994 Plan was 200,000. The
purpose of the 1994 Plan is to encourage ownership of the Company's Common
Stock 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 terminates 10 years from the date of its adoption and no further options
may be granted pursuant to the 1994 Plan after its termination.
Under the terms of the 1994 Plan, each member of the Board of Directors of
the Company or its Affiliates who was not an employee of the Company or any of
its Affiliates on the date of the grant (a "Non-Employee Director") will receive
a grant of an option to purchase 6,000 shares of the Company's Common Stock upon
the date of his election or re-election to the Board of Directors. Additionally,
any Non-Employee Director who was a director on the date the Board of Directors
adopted the 1994 Plan received, after giving effect to the Company's stock split
during 1997, (a) an option to purchase 6,000 shares of Common Stock for the
fiscal year in which the 1994 Plan was adopted by the Board of Directors and (b)
an option to purchase shares of Common Stock in amount equal to (i) 6,000,
multiplied by (ii) the number of consecutive fiscal years, immediately preceding
the fiscal year during which the 1994 Plan was adopted, that the individual
served as a director of the Company, provided that the number under clause (ii)
shall not exceed three (3).
Upon their election as directors in May 2001, each of Messrs. Arnold,
Custer and Dorflinger received a grant under the 1994 Plan of an option to
purchase 6,000 shares of Common Stock with an exercise price of $24.98, which
was the market price of the Common Stock on the date of the grant.
There are only 10,600 shares currently available for grant under the
1994 Plan. April 4, 2002, the Board of Directors adopted, subject to
shareholder approval, the Benchmark Electronics, Inc. 2002 Stock Option Plan
for Non-Employee Directors, which if approved, will make available 300,000
shares for granting to non-employee directors. For more information regarding
this plan, see "Approval of the Benchmark Electronics, Inc. 2002 Stock Option
Plan for Non-Employee Directors."
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee, a committee of the Board of Directors composed of
non-employee directors listed below this report. The Compensation Committee is
responsible for recommending to the full Board of Directors 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 have
any interlocking or other relationships with the Company that would call into
question their independence as Compensation Committee members.
16
COMPENSATION POLICIES AND PROGRAMS. The Compensation Committee believes
that the goals of the executive compensation program should be 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. The
Compensation Committee believes that the best way to achieve these goals is by
aligning the financial interests of the Company's executive officers closely to
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, but
which do not exceed, prevailing standards. The compensation of the Company's
executive officers is reviewed and approved annually by the Compensation
Committee. The Company's executive compensation program is based on three
elements, each of which is determined in part by corporate performance:
o Base salary compensation
o Annual incentive compensation
o Stock-based incentive compensation
Corporate performance is evaluated by reviewing the extent to which strategic
and business plan goals are met, including the relationship between the
Company's net income and sales. The Compensation Committee believes that total
executive compensation opportunities are competitive and at the median with
those offered by employers in the peer group of companies with which the Company
compares its performance in the Performance Graph following this report, but
with less emphasis on base salary compensation than such other employers.
CASH BASE SALARY. As of August 1, 2001, the Company has identical
employment agreements with its Chief Executive Officer, its President and its
Executive Vice President. The agreements provide for annual base salaries,
subject to adjustment for subsequent twelve-month periods as determined by the
Compensation Committee, based on its review of base salaries provided to
executive officers of other employers in the Company's industry and certain
corporate performance factors such as the Company's net income and sales and
historical salary progression. The initial term of three years ("Initial Term")
for the employment agreements with Messrs. Nigbor, Fu and Barton expire on
August 1, 2004 unless terminated sooner pursuant to the terms of the agreements.
However, after the Initial Term, the agreements automatically renew thereafter
for successive one-year terms (each such renewal term, a Renewal Term), unless
either party gives to the other written notice of termination no fewer than
ninety days prior to the expiration of any such Renewal term. Messrs. Nigbor's
and Fu's current annual base salary through August 1, 2002 under their
respective employment agreements is $500,000. Mr. Barton's current annual base
salary is $120,000 through August 1, 2002. The employment agreements also
provide for payment of severance. If employment is terminated by the Company
without cause (as that term is defined in the employment agreements) or by the
employee with good reason (as that term is defined in the employment agreements)
on or prior to August 1, 2004, the employment agreements provide for severance
to be paid over a severance period that is the longer of (i) two full years from
the termination date or (ii) the remaining period of the Initial Term. For each
full year of the severance period, the severance payment equals the annual base
salary at the time of termination. For each partial year, the severance payment
will be a pro-rated amount of the annual base salary. If employment is
terminated by the Company without cause after August 1, 2004 and prior to the
end of the then current Renewal Term, severance will be paid for a period of one
year beginning on the date of termination.
17
Effective as of January 24, 2002, the Company entered into a severance
agreement with Ms. Delly that expires on December 31, 2002. The agreement
automatically renews thereafter for successive one-year terms unless terminated
by the Company at least 30 days prior to the expiration date. The severance
agreement provides that the Company will pay severance to Ms. Delly in the event
that her employment is terminated (a) at any time within two years following a
change of control (as such term is defined in the severance agreement) by the
Company or its subsidiaries for reasons other than for "cause" (as such term is
defined in the severance agreement) or other than as a consequence of Ms.
Delly's death, permanent disability or retirement at or after the normal
retirement date; or (b) at any time within two years following a change of
control (as such term is defined in the severance agreement) by Ms. Delly
following the (i) the reduction of Ms. Delly's annual salary (including any
deferred portions thereof), annual or long-term cash or stock bonus
opportunities, or level of benefits or supplemental compensation; or (ii) the
transfer of Ms. Delly to a location requiring a change in her residence or a
material increase in the amount of travel normally required of Ms. Delly in
connection with her employment. The amount of severance to be paid will be equal
to two times the sum of Ms. Delly's annual base pay and recent cash bonus (as
such terms are defined in the severance agreement).
CASH BONUS. The Company has incentive bonus plans for the benefit of its
employees, including executive officers. These incentive bonus plans replaced
the Company's Incentive Bonus Plan, which was adopted in 1992. The total amount
of cash bonus awards to be made under these incentive bonus plans for any period
depends primarily on the Company's earnings before income tax for that period.
For any plan period, the earnings before income tax must meet or exceed,
or in combination with other factors satisfy, levels targeted by the Company in
its business plan, as established at the beginning of each fiscal year, for any
bonus awards to be made. The Compensation Committee has the authority to
determine the total amount of bonus awards, if any, to be made to the Company's
corporate employees for any plan year based on its evaluation of the Company's
financial condition and results of operations, the Company's business and
prospects, and such other criteria as it may determine to be relevant or
appropriate. The Compensation Committee has the authority to determine the
specific amounts of bonus awards to be made to the Company's executive officers
and other key employees based on its evaluation of each such employee's
position, performance, service and such other criteria as it may determine to be
relevant or appropriate.
In 2001, the Company's sales and net income did not meet the levels
targeted by the Company in its 2001 business plan. The Compensation Committee
elected not to award bonuses to Messrs. Nigbor, Fu and Barton and Ms. Delly for
2001.
STOCK PURCHASE PLAN. In April, 1999, the Company adopted the Benchmark
Electronics, Inc. Employee Stock Purchase Plan (the "Purchase Plan"). Under the
Purchase Plan, employees meeting specific employment qualifications are eligible
to participate and can purchase shares semi-annually through payroll deductions
at the lower of 85% of the fair market value of the stock at the commencement or
end of the offering period. The Purchase Plan permits eligible employees to
purchase common stock through payroll deductions for up to the lesser of 17% of
qualified compensation or $25,000. The executive officers, including the Chief
Executive Officer, are eligible to participate in the Purchase Plan on the same
basis as all other employees.
18
STOCK AWARDS PLAN. The Compensation Committee believes that stock options
and other methods of equity-based incentive compensation are of increasing
importance in attracting and retaining employees and executives and are critical
in motivating the long-term creation of shareholder value because methods of
equity-based incentive compensation focus executive attention on stock price as
the primary measure of performance. In 2000, the Company adopted and its
shareholders approved the Benchmark Electronics, Inc. 2000 Stock Awards Plan
(the "2000 Plan") for the benefit of its officers and employees, its affiliates,
and consultants to the Company and its affiliates (the "Eligible Participants").
The 2000 Plan replaces the 1990 Stock Option Plan that expired in May 2000. The
2000 Plan is administered by the Compensation Committee. The purpose of the 2000
Plan is to encourage ownership of Common Stock 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 Compensation Committee subjectively determines
the number of shares to be covered by options granted to its employees and
executive officers, including the Chief Executive Officer. Stock option grants
to the Company's Chief Executive Officer and other executive officers are not
made automatically each year and are not considered to be a part of normal
annual compensation. The amount and terms of options already held by an
executive officer generally are not significant factors in the Compensation
Committee's determination of whether and how many options should be granted to
the executive officer.
Stock option grants provide an incentive that focuses the executives'
attention on managing the Company from the perspective of an owner with an
equity stake in the business. Accordingly, these stock options are tied to the
future performance of the Company's Common Stock and provide value to the
recipient only when the price of the Company's Common Stock increases above the
option grant price.
SUBMITTED BY THE COMPENSATION COMMITTEE OF
THE COMPANY'S BOARD OF DIRECTORS.
David H. Arnold John C. Custer Peter G. Dorflinger
19
PERFORMANCE GRAPH
The following Performance Graph compares the Company's cumulative total
shareholder return on its Common Stock for the five-year period commencing
December 31, 1996 and ending December 31, 2001, with the cumulative total return
of the Standard & Poor's Stock Index (which does not include the Company), and
Peer Group, which is composed of Celestica Inc., EFTC Corp, Flextronics
International, Ltd., Jabil Circuit, Inc., Plexus Corp, Sanmina-SCI Corp, and
Solectron Corporation. The Peer Group is the same as in the April 16, 2001 Proxy
Statement except that the DII Group Inc. is now part of Flextronics
International, Ltd. Dividend reinvestment has been assumed.
COMPARISON OF CUMULATIVE TOTAL SHAREHOLDER RETURN
BENCHMARK ELECTRONICS, S&P 500, AND PEER GROUP INDEX
Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01
Benchmark Electronics, Inc. $ 100.00 $ 148.10 $ 243.20 $ 152.30 $ 149.80 $ 125.90
Peer Group $ 100.00 $ 131.00 $ 166.00 $ 198.40 $ 178.20 $ 155.00
S&P 500 $ 100.00 $ 147.70 $ 293.10 $ 610.70 $ 589.00 $ 340.70
NOTES: Assumes $100 invested on December 31, 1996 in Benchmark Electronics,
Inc. Common Stock, in the S&P 500, and in the Peer Group Index. Reflects
month-end dividend reinvestment, and annual reweighting of the Peer
Group Index portfolios.
20
CERTAIN TRANSACTIONS
The Company leases from David H. Arnold, a director of the Company, his
spouse and certain other persons the real estate and buildings in Winona,
Minnesota where operations are conducted. The leases were entered into in 1996
in connection with the Company's acquisition of EMD. The lease covering the EMD
Central building is for a term of 10 years commencing September 1, 1996 at a net
rent of $17,150 per month. The lease covering the EMD East building and the
adjacent parking lot is for a term of 10 years commencing July 30, 1996 at a net
rent of $50,932 per month. Both of such leases may be renewed at the option of
the Company at fair market rental rates. The Company negotiated the terms of the
leases, including purchase options, on an arms-length basis, and obtained
appraisals of the real estate and rental values to help establish such terms.
The Company believes the terms of such leases are no less favorable to the
Company than could have been obtained from unaffiliated third parties.
COMMON STOCK 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
Stock as of April 2, 2002, by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock, 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.
SHARES OF PERCENTAGE OF
COMMON STOCK OUTSTANDING
BENEFICIALLY OWNED SHARES OF
BENEFICIAL OWNERS OWNED(1) COMMON STOCK
----------------- --------------------- ------------------
Donald E. Nigbor................................................... 527,782(2) 2.7%
3000 Technology Drive
Angleton, Texas 77515
Cary T. Fu......................................................... 546,010(3) 2.8%
3000 Technology Drive
Angleton, Texas 77515
Steven A. Barton................................................... 26,370(4) (5)
3000 Technology Drive
Angleton, Texas 77515
Gayla J. Delly..................................................... 85,601(6) (5)
3000 Technology Drive
Angleton, Texas 77515
David H. Arnold.................................................... 379,059(7) 1.9%
1853 Edgewood Road
Winona, Minnesota 55987
John C. Custer..................................................... 57,450(8) (5)
2355 Harrodsburg Road
Lexington, Kentucky 40504
Peter G. Dorflinger................................................ 69,000(9) (5)
9501 Stonebridge
Austin, Texas 78758
Directors and executive officers as a group (7 persons)............ 1,691,272(10) 8.5%
21
(TABLE CONTINUED ON FOLLOWING PAGE)
FMR Corp........................................................... 1,580,384(11) 8.0%
82 Devonshire Street
Boston, MA 02109
D.F. Dent & Company, Inc........................................... 1,147,442(11)(12) 5.8%
2 East Read Street, 6th Floor
Baltimore, Maryland 21202
FleetBoston Financial Corporation.................................. 1,124,453(11) 5.7%
100 Federal Street
Boston, MA 02110
Pioneer Global Asset Management S.p.A.............................. 1,068,855(11) 5.4%
Galleria San Carlo 6
20122 Milan, Italy
---------------------------
(1) Unless otherwise noted, each person identified possesses sole voting and
dispositive power with respect to the shares of Common Stock listed,
subject to community property laws.
(2) Includes (i) 1,950 shares of Common Stock held by Mr. Nigbor's children
as to which shares of Common Stock Mr. Nigbor expressly disclaims
beneficial ownership, and (ii) 344,000 shares of Common Stock that may be
acquired upon the exercise of options that are currently exercisable or
will become exercisable within 60 days of April 2, 2002.
(3) Includes (i) 3,465 shares of Common Stock held by Mr. Fu's daughter as
custodian for his children under the Uniform Gifts to Minors Act, as to
which shares of Common Stock Mr. Fu expressly disclaims beneficial
ownership, (ii) 2,970 shares of Common Stock held by Mr. Fu's daughters,
as to which shares of Common Stock Mr. Fu expressly disclaims beneficial
ownership, and (ii) 344,000 shares of Common Stock that may be acquired
upon the exercise of options that are currently exercisable or will
become exercisable within 60 days of April 2, 2002.
(4) Includes 23,600 shares of Common Stock that may be acquired upon the
exercise of options that are currently exercisable or will become
exercisable within 60 days of April 2, 2002.
(5) Less than 1%.
(6) Includes 82,500 shares of Common Stock that may be acquired upon the
exercise of options that are currently exercisable or will become
exercisable within 60 days of April 2, 2002.
(7) Includes 11,288 shares of Common Stock held of record by Mr. Arnold's
wife, 2,726 shares held for Mr. Arnold's benefit in the Company's 401(k)
Employee Savings Plan and 30,000 shares that may be acquired upon the
exercise of options that are currently exercisable.
(8) Includes 2,400 shares owned by Mr. Custer's wife and 39,850 shares that
may be acquired upon the exercise of options that are currently
exercisable.
(9) Includes 50,000 shares of Common Stock that may be acquired upon the
exercise of options that are currently exercisable.
(10) Includes 944,650 shares of Common Stock that may be acquired upon the
exercise of options that are currently exercisable.
(11) Based solely on information filed with the Securities and Exchange
Commission.
(12) D. F. Dent & Company, Inc. is an Investment Adviser registered under
Section 203 of the Investment Advisers Act of 1940.
22
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 New York
Stock Exchange initial reports of beneficial ownership and reports of changes in
beneficial ownership of Common Stock 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, 2001 and
ending December 31, 2001 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.
EXECUTIVE OFFICERS
The executive officers of the Company are Donald E. Nigbor, Cary T. Fu ,
Steven A. Barton 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 Messrs. Nigbor, Barton
and Fu.
Ms. Delly is 42 years old and has been Chief Financial Officer of the
Company since May 2001. She has served as Vice President Finance of the Company
from November 2000 and as Treasurer and Controller of the Company from January
1996 to January 2002. From 1984 to 1995, Ms. Delly was employed by KPMG LLP and
was a Senior Audit Manager when she left the Firm. Ms. Delly holds a B.S. degree
in accounting from Samford University and is a certified public accountant.
EXPENSES OF SOLICITATION
The cost of soliciting proxies on behalf of the Board of Directors 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.
The Company also will request brokers and nominees to forward soliciting
materials to the beneficial owners of the Common Stock 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 to 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 2003 Annual Meeting of the Shareholders, such proposals must be received
at the Company's principal executive offices no later than December ____, 2002.
A shareholder choosing not to use the procedures established in Rule 14a-8 must
deliver the proposal at the Company's principal executive offices no later than
March ____, 2003.
23
FORM 10-K
A copy of our 2001 Annual Report to Shareholders, which includes our
financial statements for fiscal year 2001, is enclosed with this Proxy
Statement. The Company's Annual Report on Form 10-K, including all exhibits, has
been filed with the Securities and Exchange Commission. 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 the
Corporate Secretary, Benchmark Electronics, Inc., 3000 Technology Drive,
Angleton, Texas 77515.
OTHER MATTERS
The Board of Directors 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/ Lenora A. Gurton
Lenora A. Gurton
Secretary
24
BENCHMARK ELECTRONICS, INC.
PROXY STATEMENT
APPENDIX A
BENCHMARK ELECTRONICS, INC.
2002 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
Section 1. PURPOSE. The purpose of this Benchmark Electronics, Inc. 2002
Stock Option Plan for Non-Employee Directors ("Plan") is to encourage ownership
of common stock, $.10 par value ("Common Stock"), of Benchmark Electronics,
Inc., a Texas corporation (the "Company"), by non-employee directors of the
Company and its Affiliates (as defined below) and to provide increased incentive
for such directors to render services and to exert maximum effort for the
business success of the Company. In addition, the Company expects that this Plan
will further strengthen the identification of directors with the shareholders.
Options to be granted under this Plan will be nonqualified options which are not
intended to qualify as Incentive Stock Options pursuant to Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"), as provided in the
agreements evidencing the options as provided in Section 6 hereof. As used in
this Plan, the term "Affiliates" means any "parent corporation" of the Company
and any "subsidiary corporation" of the Company within the meaning of Sections
424(e) and (f), respectively, of the Code.
Section 2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Board of Directors of the Company ("Board"). Subject to the terms of the
Plan, the Board shall have the power to interpret the provisions and supervise
the administration of the Plan. All decisions made by the Board pursuant to the
provisions of the Plan shall be made by a majority of its members at a duly held
regular or special meeting or by written consent in lieu of any such meeting. A
majority of the directors in office shall constitute a quorum and all decisions
made by the Board pursuant to the provisions of the Plan shall be made by a
majority of the directors present at any duly held regular or special meeting at
which a quorum is present (unless the concurrence of a greater proportion is
required by law or by the certificate of incorporation or bylaws of the Company)
or by the written consent of a majority of the directors in lieu of any such
meeting. All expenses and liabilities incurred by the Board in the
administration of this Plan shall be borne by the Company. The Board may employ
attorneys, consultants, accountants or other persons to assist the Board in the
carrying out of its duties hereunder.
Section 3. STOCK RESERVED. Subject to adjustment as provided in Section 6
hereof, the aggregate number of shares of Common Stock that may be optioned
under this Plan is 300,000. The shares subject to this Plan shall consist of
authorized but unissued shares of Common Stock and such number of shares shall
be and is hereby reserved for sale for such purpose. Any of such shares which
may remain unsold and which are not subject to outstanding options at the
termination of this Plan shall cease to be reserved for the purpose of this
Plan, but until termination of this Plan or the termination of the last of the
options granted under this Plan, whichever last occurs, the Company shall at all
times reserve a sufficient number of shares to meet the requirements of this
Plan. To the extent that an option under this Plan expires, lapses, or is
cancelled, including but not limited to a relinquishment or cashing-out of an
outstanding option for cash, any shares of Common Stock subject to such option
may again be made subject to an option under this Plan.
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Section 4. ELIGIBILITY. The persons eligible to participate in this Plan
as a recipient of options ("Optionee") shall include only non-employee directors
of the Company or its Affiliates at the time the option is granted.
Section 5. GRANT OF OPTIONS. Commencing with the Annual Meeting of the
Shareholders approving this Plan, each non-employee director of the Company
shall receive a grant of an option to purchase 7,000 shares of Common Stock upon
the occurrence of the non-employee director's election or re-election to the
Board. The term "Date of Grant" means commencing with the Annual Meeting of the
Shareholders approving this Plan, the date of each Annual Meeting of the
Shareholders. The annual options granted in accordance with this Section shall
be subject to adjustment as provided in Section 6(j).
Section 6. TERMS AND CONDITIONS. Each option granted under this Plan shall
be evidenced by an agreement, in a form approved by the Board, which shall be
subject to the following express terms and conditions and to such other terms
and conditions as the Board may deem appropriate.
(a) OPTION PERIOD. The Board shall promptly notify the Optionee of the
option grant and a written agreement shall promptly be executed and delivered by
and on behalf of the Company and the Optionee. Each option agreement shall
specify the period for which the option thereunder is granted (which in no event
shall exceed ten years from the Date of Grant) and shall provide that the option
shall expire at the end of such period. If the original term of an option is
less than ten years from the Date of Grant, the option may be amended prior to
its expiration, with the approval of the Board and the Optionee, to extend the
term so that the term as amended is not more than ten years from the Date of
Grant.
(b) EXERCISE PRICE. The exercise price of each share of Common Stock
subject to each option granted pursuant to this Plan shall be the fair market
value of a share of Common Stock on the Date of Grant.
For all purposes under this Plan, the fair market value of a share of
Common Stock on a particular date shall be equal to the closing sales price of
the Common Stock on the New York Stock Exchange on that date, or if no prices
are reported on that date, on the last preceding date on which such prices of
the Common Stock are so reported. If the Common Stock is not traded on the New
York Stock Exchange at the time a determination of its fair market value is
required to be made hereunder, its fair market value shall be deemed to be equal
to the average between the closing bid and ask prices of the Common Stock on the
most recent date the Common Stock was publicly traded. In the event the Common
Stock is not publicly traded at the time a determination of its value is
required to be made hereunder, the determination of its fair market value shall
be made by the Board in such manner as it deems appropriate.
(c) EXERCISE PERIOD. The option agreement shall provide that all options
shall be fully vested and may be exercised immediately, in whole or in
increments.
(d) PROCEDURE FOR EXERCISE. Options shall be exercised by the delivery by
the Optionee of written notice to the Secretary of the Company setting forth the
number of shares of Common Stock with respect to which the option is being
exercised. The notice shall be accompanied by, at the election of the Optionee,
(i) cash, cashier's check, bank draft, or postal or express money order payable
to the order of the Company, (ii) certificates representing shares of Common
Stock theretofore owned by the Optionee duly endorsed for transfer to the
Company, (iii) an election by the Optionee to have the Company withhold the
number of shares of Common Stock the fair market value of which is equal to the
aggregate exercise price of the shares of Common Stock issuable upon exercise of
the option, or (iv) any combination of the preceding, equal in value to the full
amount of the exercise price. Moreover, an option agreement may provide for a
"CASHLESS EXERCISE" of the option by establishing procedures whereby the
Optionee, by a properly-executed written notice, directs (i) an immediate market
sale or margin loan respecting all or a part of the shares of
A-2
Common Stock to which he is entitled upon exercise pursuant to an extension of
credit by the brokerage firm or other financial institution to the Optionee of
the option price, (ii) the delivery of the shares of Common Stock from the
Company directly to a brokerage firm or other financial institution and (iii)
the delivery of the option price from the sale or margin loan proceeds from the
brokerage firm or other financial institution directly to the Company. Notice
may also be delivered by telecopy provided that the exercise price of such
shares is received by the Company via wire transfer on the same day the telecopy
transmission is received by the Company. The notice shall specify the address to
which the certificates for such shares are to be mailed. An option to purchase
shares of Common Stock in accordance with this Plan shall be deemed to have been
exercised immediately prior to the close of business on the date (i) written
notice of such exercise and (ii) payment in full of the exercise price for the
number of share for which options are being exercised, are both received by the
Company and the Optionee shall be treated for all purposes as the record holder
of such shares of Common Stock as of such date.
As promptly as practicable after receipt of such written notice and
payment, the Company shall deliver to the Optionee certificates for the number
of shares with respect to which such option has been so exercised, issued in the
Optionee's name or such other name as Optionee directs; provided, however, that
such delivery shall be deemed effected for all purposes when a stock transfer
agent of the Company shall have deposited such certificates in the United States
mail, addressed to the Optionee at the address specified pursuant to this
Section 6(d).
(e) TERMINATION OF SERVICE FROM THE BOARD. If an Optionee ceases to serve
on the Board for any reason other than death or disability, the rights under
such option shall terminate upon the expiration date of the option or two years
after such date of cessation of service on the Board, whichever first occurs.
(f) DISABILITY OR DEATH. In the event the Optionee dies or is determined
under this Plan to be disabled while the Optionee serves on the Board, the
options previously granted to the Optionee may be exercised at any time and from
time to time, within a two year period after such death or determination of
disability, by the Optionee, the Optionee's authorized legal representative, the
guardian of the Optionee's estate, the executor or administrator of the
Optionee's estate or by the person or persons to whom the Optionee's rights
under the option shall pass by will or the laws of descent and distribution, but
in no event may the option be exercised after its expiration under the terms of
the option agreement. An Optionee shall be deemed to be disabled if, in the
opinion of a physician selected by the Board, the Optionee is incapable of
performing services for the Company of the kind the Optionee was performing at
the time the disability occurred by reason of any medically determinable
physical or mental impairment which can be expected to result in death or to be
of long, continued and indefinite duration. The date of determination of
disability for purposes hereof shall be the date of such determination by such
physician.
(g) TRANSFERABILITY. An option granted pursuant to this Plan shall not be
assignable or otherwise transferable by the Optionee otherwise than by
Optionee's will or by the laws of descent and distribution. During the lifetime
of an Optionee, an option shall be exercisable only by such Optionee or the
Optionee's legal representative. Any heir or legatee of the Optionee shall take
rights granted herein and in the option agreement subject to the terms and
conditions hereof and thereof. No such transfer of any option to heirs or
legatees of the Optionee shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and a copy of such
evidence as the Board may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the terms and
conditions hereof.
(h) NO RIGHTS AS SHAREHOLDER. No Optionee shall have any rights as a
shareholder with respect to shares covered by an option until the option is
exercised by written notice and accompanied by payment as provided in Section
6(d) above.
A-3
(i) EXTRAORDINARY CORPORATE TRANSACTIONS. The existence of outstanding
options shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations, exchanges, or other changes in the Company's capital structure
or its business, or any merger or consolidation of the Company, or any issuance
of Common Stock or other securities or subscription rights thereto, or any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise. If the Company recapitalizes or otherwise
changes its capital structure, or merges, consolidates, sells all or
substantially all of its assets or dissolves (each of the foregoing a
"Fundamental Change"), then thereafter upon any exercise of an option
theretofore granted the Optionee shall be entitled to purchase under such
option, in lieu of the number of shares of Common Stock as to which option shall
then be exercisable, the number and class of shares of stock and securities to
which the Optionee would have been entitled pursuant to the terms of the
Fundamental Change if, immediately prior to such Fundamental Change, the
Optionee had been the holder of record of the number of shares of Common Stock
as to which such option is then exercisable.
(j) CHANGES IN CAPITAL STRUCTURE. If the outstanding shares of Common
Stock or other securities of the Company, or both, for which the option is then
exercisable shall at any time be changed or exchanged by declaration of a stock
dividend, stock split, combination of shares or recapitalization, the number and
kind of shares of Common Stock or other securities which are subject to this
Plan or subject to any options theretofore granted, and the exercise prices,
shall be appropriately and equitably adjusted so as to maintain the
proportionate number of shares or other securities without changing the
aggregate exercise price.
(k) COMPANY ACTION. Except as hereinbefore expressly provided, (i) the
issuance by the Company of shares of stock of any class or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, (ii) the payment of a dividend in property
other than Common Stock, or (iii) the occurrence of any similar transaction, and
in any case whether or not for fair value, shall not affect, and no adjustment
by reason thereof shall be made with respect to, the number of shares of Common
Stock subject to options theretofore granted or the purchase price per share,
unless the Board shall determine in its sole discretion that an adjustment is
necessary to provide equitable treatment to Optionee.
Section 7. CASHING OUT OPTIONS. On receipt of written notice of exercise,
the Board may elect to cash out all or part of the portion of the shares of
Common Stock for which an option is being exercised by paying the Optionee an
amount, in cash or shares of Common Stock, equal to the excess of the fair
market value of the shares of Common Stock over the option price times the
number of shares of Common Stock for which the option is being exercised on the
effective date of such cash-out.
Section 8. AMENDMENTS OR TERMINATION. Except as set forth herein, the
Board in its discretion may terminate the Plan at any time with respect to any
shares for which options have not theretofore been granted. Except as set forth
herein, the Board shall have the right to alter or amend the Plan or any part
thereof from time to time. Neither a termination of the Plan, nor an amendment
to the Plan, nor a change in any options theretofore granted may be made which
would impair the rights of an Optionee holding such option without the consent
of the Optionee. The Board may not, without approval of the shareholders, amend
the Plan:
A-4
(a) except as provided in Sections 5 and 6, to increase the maximum number
of shares (i) which may be issued under the Plan as set forth in Section 3 or
(ii) which may be subject to an option as set forth in Section 5;
(b) to change the class of persons eligible to receive options;
(c) to extend the maximum period during which options may be granted under
the Plan;
(d) to extend the expiration date of the Plan; or (e) to decrease to any
extent the price at which options may be granted under the Plan, except as
provided in Section 6.
Section 9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. This Plan, the
grant and exercise of options thereunder, and the obligation of the Company to
sell and deliver shares under such options, shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
governmental or regulatory agency as may be required. The Company shall not be
required to issue or deliver any certificates for shares of Common Stock prior
to the completion of any registration or qualification of such shares under any
federal or state law or issuance of any ruling or regulation of any government
body which the Company shall, in its sole discretion, determine to be necessary
or advisable. Any adjustments provided for in Section 6 of this Plan shall be
subject to any shareholder action required by corporate law of the State of
incorporation.
Section 10. PURCHASE FOR INVESTMENT. Unless the options and shares of
Common Stock covered by this Plan have been registered under the Securities Act
of 1933, as amended, or the Company has determined that such registration is
unnecessary, each person exercising an option under this Plan may be required by
the Company to give a representation in writing that such person is acquiring
such shares for his or her own account for investment and not with a view to, or
for sale in connection with, the distribution of any part thereof.
Section 11. TAXES.
(a) The Company may make such provisions as it may deem appropriate for
the withholding of any taxes which it determines is required in connection with
any options granted under this Plan.
(b) Any Optionee may pay all or any portion of the taxes required to be
withheld by the Company or paid by the Optionee in connection with the exercise
of an option by electing to have the Company withhold shares of Common Stock, or
by delivering previously owned shares of Common Stock, having a fair market
value, determined in accordance with Section 6(b), equal to the amount required
to be withheld or paid. An Optionee must make the foregoing election on or
before the date that the amount of tax to be withheld is determined. All such
elections are irrevocable and subject to disapproval by the Board.
Section 12. LIABILITY OF COMPANY FOR NON-ISSUANCE OF SHARES AND TAX
CONSEQUENCES. The Company and any Affiliate which is in existence or hereafter
comes into existence shall not be liable to an Optionee or other persons as to:
(a) The non-issuance or sale of shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction the authority
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any shares hereunder; and
A-5
(b) Any tax consequence expected, but not realized, by any Optionee or
other person due to the exercise of any option granted hereunder.
Section 13. EFFECTIVENESS AND EXPIRATION OF PLAN. The Plan shall be
effective on the date of its approval by the shareholders of the Company. The
Plan shall expire ten years after such approval and thereafter no option shall
be granted pursuant to the Plan; provided, however, that the Plan provisions
shall remain in effect with respect to all options granted under the Plan until
such options are satisfied or expire.
Section 14. NON-EXCLUSIVITY OF THIS PLAN. Neither the adoption by the
Board nor the submission for approval of this Plan to the shareholders of the
Company shall be construed as creating any limitations on the power of the Board
to adopt such other incentive arrangements as it may deem desirable, including
without limitation, the granting of restricted stock or stock options otherwise
than under this Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.
Section 15. GOVERNING LAW. This Plan and any agreements hereunder shall be
interpreted and construed in accordance with the laws of the State of Texas and
applicable federal law.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing by directors of the Company, Benchmark Electronics, Inc. has caused
these presents to be duly executed in its name and behalf by its proper officers
thereunto duly authorized as of this 4th day of April, 2002.
BENCHMARK ELECTRONICS, INC.
By: /s/ DONALD E. NIGBOR
-----------------------------------
Name: DONALD E. NIGBOR
-----------------------------------
Title: CHIEF EXECUTIVE OFFICER
-----------------------------------
A-6
PROXY BENCHMARK ELECTRONICS, INC. PROXY
2002 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON TUESDAY, MAY 14, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The 2002 Annual Meeting of Shareholders of Benchmark Electronics, Inc.
("Company") will be held at the Hyatt Regency Houston, 1200 Louisiana Street,
Houston, Texas on Tuesday, May 14, 2002, beginning at 10:00 a.m. (local time).
The undersigned hereby acknowledges receipt of the related Notice and Proxy
Statement dated April , 2002, accompanying this proxy.
The undersigned hereby appoints Donald E. Nigbor, Steven A. Barton, and
Cary T. Fu, and each of them, attorneys and agents, with full power of
substitution, to vote as proxy all shares of Common Stock, 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 2002 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 2003 ANNUAL MEETING OF
SHAREHOLDERS AND UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED, FOR
APPROVAL OF THE BENCHMARK ELECTRONICS, INC. 2002 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS, FOR THE PROPOSAL TO AMEND THE COMPANY'S AMENDED AND
RESTATED ARTICLES OF INCORPORATION AND FOR THE RATIFICATION OF THE APPOINTMENT
OF KPMG LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE YEAR ENDING
DECEMBER 31, 2002.
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.
1. to elect six directors to serve on the Board of Directors until the 2003
annual meeting of shareholders and until their successors are duly elected and
qualified;
INSTRUCTIONS: To withhold authority to vote for any of the nominees listed
below, draw a line through such nominee's name.
Nominees: Donald E. Nigbor, Cary T. Fu, Steven A. Barton, David H. Arnold, John
C. Custer, and Peter G. Dorflinger.
/ / For All / / Withheld Authority / / For All Except Nominee(s) written
below __________
2. to approve the Benchmark Electronics, Inc. 2002 Stock Option Plan for
Non-Employee Directors;
/ / FOR / / AGAINST / / ABSTAIN
3. to approve a proposed amendment to the Company's Amended and Restated
Articles of Incorporation to increase the number of authorized shares of Common
Stock of the Company from 30 million shares to 130 million shares;
/ / FOR / / AGAINST / / ABSTAIN
4. to ratify the appointment of KPMG LLP as the independent auditors of the
Company for the year ending December 31, 2002
/ / FOR / / AGAINST / / ABSTAIN
(Please sign your name exactly as
it appears below. 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 _______________________, 2002
___________________________________
___________________________________
Signature of Shareholder