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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14A-11(c) or Section 240.14a-12
Plexus Corp.
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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)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS
FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB
CONTROL NUMBER.
SEC 1913 (11-01)
PLEXUS CORP.
55 JEWELERS PARK DRIVE
P.O. BOX 156
NEENAH, WISCONSIN 54957-0156
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
ON FEBRUARY 12, 2003
To the Shareholders of Plexus Corp.:
Plexus Corp. will hold the annual meeting of its shareholders in the KC
Theater at the Fox Cities Performing Arts Center, located at 400 West College
Avenue, Appleton, Wisconsin, on Wednesday, February 12, 2003 at 10:00 a.m., for
the following purposes:
(1) To elect seven directors to serve until the next annual
meeting and until their successors have been duly elected.
(2) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Plexus' shareholders of record on its books at the close of business on
December 9, 2002 will be entitled to vote at the meeting or any adjournment of
the meeting.
We call your attention to the proxy statement accompanying this notice
for a more complete statement about the matters to be acted upon at the meeting.
By order of the board of directors
/s/ Joseph D. Kaufman
Joseph D. Kaufman
Senior Vice President, Secretary and
Chief Legal Officer
Neenah, Wisconsin
December 20, 2002
PLEASE INDICATE YOUR VOTING DIRECTIONS, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU LATER FIND THAT YOU WILL BE
PRESENT AT THE MEETING OR FOR ANY OTHER REASON DESIRE TO REVOKE YOUR PROXY, YOU
MAY DO SO AT ANY TIME BEFORE IT IS VOTED.
Plexus shareholders who own their shares in "street name" through their
brokerage accounts may also communicate their vote to the brokerage firm and its
service provider electronically or by telephone. If you wish to do so, you can
link to instructions at www.proxyvote.com, or you may also follow any
instructions provided by the brokers with their separate voting form.
PROXY STATEMENT
PLEXUS CORP.
55 JEWELERS PARK DRIVE
P.O. BOX 156
NEENAH, WISCONSIN 54957-0156
* * * * * * *
SOLICITATION AND VOTING
The board of directors of Plexus Corp. is soliciting proxies for the
annual meeting of shareholders on Wednesday, February 12, 2003 and is furnishing
this proxy statement in connection with that solicitation. Shares which are
represented by properly executed proxies received by Plexus will be voted at the
meeting and any adjournment thereof in accordance with the terms of such
proxies, unless revoked. Proxies may be revoked at any time prior to the voting
thereof either by written notice filed with the secretary or acting secretary of
the meeting or by oral notice to the presiding officer during the meeting.
Shareholders of record at the close of business on December 9, 2002
will be entitled to one vote on each matter presented for each share so held. At
that date there were 42,127,947 shares of Plexus common stock outstanding. Any
shareholder entitled to vote may vote either in person or by duly authorized
proxy. Representation of a majority of the outstanding shares will constitute a
quorum at the meeting. Abstentions and shares which are the subject of broker
non-votes will be counted for the purpose of determining whether a quorum exists
at the meeting. Shares represented at a meeting for any purpose are counted in
the quorum for all matters to be considered at the meeting. The voted proxies
will be tabulated by the persons appointed as inspectors of election.
Directors are elected by a plurality of the votes cast by the holders
of Plexus common stock entitled to vote at the election at a meeting at which a
quorum is present. "Plurality" means that the individuals who receive the
highest number of votes are elected as directors, up to the number of directors
to be chosen at the meeting. Any votes attempted to be cast "against" a
candidate are not given legal effect and are not counted as votes cast in the
election of directors. Therefore, any shares which are not voted, whether by
withheld authority, broker non-vote or otherwise, have no effect in the election
of directors except to the extent that the failure to vote for any individual
results in another individual receiving a relatively larger number of votes.
Shareholders who own shares as part of Plexus' 401(k) Savings Plan
and/or the Plexus Employee Stock Purchase Plan will receive a separate proxy for
the purpose of voting their shares held in each account. Shares held by the
Savings Plan for which designations are not received will be voted by the
Savings Plan's trustee at its discretion, as provided in the Savings Plan.
Shares held in accounts under the Purchase Plan will only be voted if
designations are received.
Plexus will pay the expenses in connection with the solicitation of
proxies. Upon request, Plexus will reimburse brokers, dealers, banks and voting
trustees, or their nominees, for reasonable expenses incurred in forwarding
copies of the proxy material and annual report to the beneficial owners of
shares which such persons hold of record. Solicitation of proxies will be
principally by mail. Proxies may also be solicited in person, or by telephone,
telegraph or fax, by officers and regular employees of Plexus who will not be
separately compensated for those services.
This proxy material is being mailed to Plexus shareholders commencing
on or about December 27, 2002.
-1-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table presents certain information as of December 9, 2002
regarding the beneficial ownership of the Plexus common stock held by each
director or nominee for director, each executive officer appearing in the
Summary Compensation Table, all directors and executive officers as a group, and
each known 5%-or-greater shareholder of Plexus.
SHARES PERCENTAGE
BENEFICIALLY OF SHARES
NAME OWNED (1) OUTSTANDING
---- --------- -----------
Stephen P. Cortinovis 0 *
David J. Drury 11,000 *
Dean A. Foate 188,239 *
Harold R. Miller 218,201 *
John L. Nussbaum 356,759 *
Thomas J. Prosser 73,287 *
Charles M. Strother 5,000 *
Jan K. VerHagen 13,000 *
Paul L. Ehlers 90,115 *
J. Robert Kronser 93,757 *
Thomas B. Sabol 100,605 *
Michael T. Verstegen 95,674 *
All executive officers and directors 1,491,426 3.5%
as a group (18 persons)
Mellon Financial Corporation (2) 2,188,434 5.2%
---------------------------
* Less than 1%
(1) The specified persons have sole voting and sole dispositive powers as
to all shares, except as otherwise indicated. The amounts include
shares subject to options granted under Plexus' option plans, which are
exercisable within 60 days. The options include those held by Mr. Drury
(9,000), Mr. Foate (148,333), Mr. Nussbaum (93,897), Messrs. Miller and
Prosser (30,000 each), Mr. VerHagen (6,000), Mr. Ehlers (69,229), Mr.
Kronser (91,335), Mr. Sabol (75,000), Mr. Verstegen (92,500), and all
officers and directors as a group (829,254).
(2) Mellon Financial Corporation and its subsidiary Mellon Bank N.A.
(together, "Mellon") have filed a report on Schedule 13G dated January
17, 2002, reporting that they beneficially owned 2,188,432 shares of
common stock at December 31, 2001. The amount includes: sole voting
power as to 1,749,394 shares; shared voting power as to 412,310 shares;
sole dispositive power as to 1,758,624 shares; and shared dispositive
power as to 416,310 shares. Of the shares reported, 2,141,104 are held
in Mellon Bank's capacity as trustee of the Plexus Savings Plan; Mellon
disclaims beneficial ownership of those shares. Mellon's address is One
Mellon Center, Pittsburgh, Pennsylvania 15258.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Plexus'
officers and directors, and persons who beneficially own more than 10% of
Plexus' common stock, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. These "insiders" are required by SEC
regulation to furnish Plexus with copies of all Section 16(a) forms they file.
All publicly held companies are required to disclose the names of any
insiders who fail to make any such filing on a timely basis within the preceding
fiscal year, and the number of delinquent filings and transactions, based solely
on a review of the copies of the Section 16(a) forms furnished to Plexus, or
written representations that no such forms were required. On the basis of
filings and representations received by Plexus, Plexus believes that, during
fiscal 2002, Plexus' insiders have complied with all Section 16(a) filing
requirements applicable to them.
-2-
ELECTION OF DIRECTORS
In accordance with Plexus' bylaws, the board of directors has
determined that there shall be seven directors elected at the annual meeting of
shareholders to serve until their successors are duly elected and qualified. The
persons who are nominated as directors and for whom proxies will be voted are
named below, unless a shareholder specifies otherwise. If any of the nominees
should decline or be unable to act as a director, which eventuality is not
foreseen, the proxies will be voted with discretionary authority for a
substitute nominee designated by the board of directors. Plexus' bylaws
authorize up to nine directors. The Plexus board may expand the board up to that
number and elect directors to fill empty seats, including those created by an
expansion, between shareholders' meetings.
Harold R. Miller, who has served as a director of Plexus since Plexus'
formation, has decided to retire from the board at the coming annual meeting of
shareholders. We wish Mr. Miller well and thank him for his more than 20 years
of service to Plexus.
PRINCIPAL OCCUPATION DIRECTOR
NAME AND AGE AND BUSINESS EXPERIENCE (1) SINCE
------------ --------------------------- -----
Stephen P. Cortinovis, 52 Partner, Bridley Capital Partners Limited (U.K. private --
equity group) since 2001; previously President-Europe of
Emerson Electric Co. (5)
David J. Drury, 54 (2)(3) President of Poblocki & Sons LLC (exterior and interior sign 1998
systems) since 1999; previously, an independent consultant
and other executive positions (6)
Dean A. Foate, 44 Chief Executive Officer of Plexus since 2002; previously, 2000
Plexus' Chief Operating Officer from 2001 to 2002, and
Executive Vice President from 1999 to 2001, and President of
Plexus Technology Group, Inc.
John L. Nussbaum, 60 (4) Chairman of Plexus; previously, Chief Executive Officer of 1980
Plexus from 2001 to 2002 and its President and Chief
Operating Officer prior thereto
Thomas J. Prosser, 66 Chairman of the Board of Menasha Corporation (manufacturer 1987
(2)(3)(4) of paper and plastic products) since 1998; previously,
Senior Vice President-Investment Banking of Robert W. Baird
& Co., Incorporated (brokerage and financial services)
Charles M. Strother, MD, 62 Physician; Professor at Baylor College of Medicine since 2002
(3)(4) 2002; previously, Professor of Radiology, Neurology and
Neurosurgery, University of Wisconsin-Madison
Jan K. VerHagen, 65 (2)(4) Retired; previously, Senior Vice President of Corporate 1999
Projects of Emerson Electric Co. from 1999 to 2001, and Vice
Chairman of United Dominion Industries (diversified
manufacturing) prior thereto (7)
------------------
(1) Unless otherwise noted, all directors have been employed in their
principal occupation listed above for the past five years or more.
(2) Member, along with Mr. Miller, of the Audit Committee, which met three
times in fiscal 2002. See "Report of the Audit Committee" below. Mr.
Drury, the chair of the Audit Committee, is a certified public
accountant who practiced with the firm Price Waterhouse for 18 years.
(3) Member, along with Mr. Miller, of the Compensation and Leadership
Development Committee which held two meetings during fiscal 2002. The
Compensation and Leadership Development Committee considers and makes
recommendations to the board of directors with respect to executive
officers' salaries and bonuses, reviews, approves and administers
compensation plans, and awards stock options. The Committee is also
responsible for developing Plexus' leadership structure.
-3-
(4) Member (adjunct, non-voting member in the case of Mr. Nussbaum) of the
Nominating and Corporate Governance Committee, which met once in fiscal
2002. The Nominating and Corporate Governance Committee considers
nominees for director positions and also evaluates and oversees
corporate governance and related issues.
(5) Also a director of Instituform Technologies, Inc. (developer of
trenchless technology for underground pipes).
(6) Also a director of St. Francis Capital Corp. (savings bank holding
company).
(7) Also a director of Wolverine Tube, Inc. (manufacturer of tubing and
related products).
The board of directors held six meetings during fiscal 2002. As part of
these meetings, non-management directors periodically meet without management
present. Each director attended at least 75% of the total of the number of
meetings of the board and the number of meetings of all committees of the board
on which such director served during the year.
Plexus regularly review and augments its corporate governance practices
and procedures. In particular, and as part of its corporate governance
practices, Plexus will be responding to and complying with Securities and
Exchange Commission and Nasdaq Stock Market proposals as they are finalized and
adopted. Plexus expects that as further documentation is finalized, it will be
posted on the Plexus website, at www.plexus.com, under the heading "Investors"
then "Corporate Governance."
Directors' Compensation
Each Plexus director who is not a Plexus officer or employee received
an annual director's fee of $20,000 plus meeting fees of $2,000 for each board
meeting attended in person ($1,000 if attended other than in person), and an
additional $1,000 for each committee meeting attended in person ($500 if other
than in person).
In addition, each director who is not a Plexus officer or employee is
entitled in each fiscal year to receive an option for 1,500 shares (determined
before Plexus' 1997 and 2000 2-for-1 stock splits) of common stock, at the
market value on the date of grant, under Plexus' 1995 Directors' Stock Option
Plan (the "Directors' Plan"). The Directors' Plan was approved by Plexus
shareholders in 1995. Options are fully vested upon grant, may be exercised
after a minimum six month holding period, and must be exercised prior to the
earlier of ten years after grant or one year after the person ceases to be a
director. Under certain circumstances, options may be transferred to family
members. In 2002, the Compensation and Leadership Development Committee took two
actions, in accordance with the Directors' Plan, interpreting the Plan or
amending it in minor ways. First, as contemplated by the Plan's adjustment
provisions, the Committee adjusted future annual awards from 1,500 shares to
3,000 shares, to reflect the August 2000 2-for-1 stock split. The Committee had
previously deferred taking this action; however, it has now determined that the
adjustment would be helpful to Plexus in attracting new directors and in fairly
compensating directors relatively recently elected to the board. (The Committee
declined to further adjust the options for the 1997 stock split.) Second, the
Committee moved back the grant date for options from December 1 of each fiscal
year to the date on which employee annual stock options are to be granted, so as
to better coordinate with employee grants.
In accordance with the Directors' Plan, each of the then-serving
non-employee directors received a fiscal 2002 option for 1,500 Plexus shares,
exercisable at $29.84 per share, on December 3, 2001. The fiscal 2003 options,
for 3,000 Plexus shares each, will be granted in early 2003.
See "Executive Compensation - Special Retirement Arrangements" for
certain supplemental retirement arrangements for Messrs. Nussbaum and Foate, and
for Peter Strandwitz, who retired as a director during fiscal 2002 and as an
executive officer in fiscal 2001.
-4-
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the total
compensation of Plexus' current and retired chief executive officers and its
four other highest compensated executive officers, for fiscal 2002 and the
preceding two fiscal years.
Annual Compensation (1) Awards
------------------------------------------ -------------
Securities
Other Underlying All Other
Name and Fiscal Compensation Options/ Compensation
Principal Position Year Salary Bonus ($) ($)(2) SARs #(3) ($)(4)
---------------------- ---------- ------------- ------------ --------------- ------------ ---------------
John L. Nussbaum, 2002 $326,497 -- $ 56,489 100,000 $747,828
Chairman (5) 2001 384,711 -- -- 30,000 300,652
2000 312,887 $270,643 -- 40,000 300,710
Dean A. Foate, 2002 $299,955 -- $ 13,500 100,000 $ 18,781
President and CEO (6) 2001 246,396 -- 13,500 30,000 17,750
2000 184,088 $131,444 13,500 20,000 17,550
Thomas B. Sabol, 2002 $245,244 -- $ 13,500 70,000 $ 17,884
Executive Vice President, 2001 228,850 -- 13,500 20,000 17,616
CFO and Chief Operating 2000 188,815 $131,444 13,500 20,000 17,550
Officer (7)
J. Robert Kronser, 2002 $212,647 -- $ 13,500 9,000 $ 17,810
Executive Vice President 2001 210,977 -- 13,500 19,000 17,138
- Sales and Marketing 2000 172,093 $123,713 13,500 18,000 16,599
Paul L. Ehlers, 2002 $203,729 -- $ 13,500 12,000 $ 17,575
Vice President 2001 210,977 -- 13,500 14,000 17,010
2000 187,557 $127,518 13,500 18,000 17,750
Michael T. Verstegen, 2002 $181,013 -- $ 13,500 9,000 $ 17,725
President, Plexus 2001 181,404 -- 13,500 7,500 17,611
Technology Group, Inc. (8) 2000 151,753 $ 81,186 13,500 15,000 16,751
(1) While the named individuals received perquisites or other personal
benefits in the years shown, in accordance with SEC regulations, the
value of these benefits are not shown since they did not exceed, in the
aggregate, the lesser of $50,000 or 10% of the individual's salary and
bonus in any years.
(2) For Mr. Nussbaum, reflects a lump sum payout upon his retirement of
accrued pay for unused vacation time. In each other case, represents
the total premiums paid or accrued under the split-dollar life
insurance payments discussed under "Special Deferred Compensation
Arrangements." Under those arrangements, Plexus is entitled to a refund
from policy proceeds of the premiums paid upon the employee's death or
earlier termination of the insurance policy.
(3) Represents the number of shares for which options were granted under
Plexus' 1998 Stock Option Plan (the "Option Plan"). No SARs have been
granted. Amounts are adjusted to reflect Plexus' August 2000 2-for-1
stock split.
(4) Includes for fiscal 2002: Plexus' contributions to the accounts of
Messrs. Nussbaum, Foate, Sabol, Kronser, Ehlers and Verstegen in the
Savings Plan of $4,250, $5,281, $4,384, $4,310, $4,075 and $4,225,
respectively; Plexus' contributions of $743,578 to Mr. Nussbaum's
account under the supplemental retirement arrangements described below;
and Plexus' contributions to accounts of Messrs. Foate, Sabol, Kronser,
Ehlers and Verstegen under their Executive Deferred Compensation Plan
of $13,500 each.
(5) Mr. Nussbaum remains as Chairman of the Board, but ceased acting as an
executive officer in July 2002. The table includes Mr. Nussbaum's 2002
salary compensation and directors' fees after he ceased being an
-5-
executive officer. However, payments to Mr. Nussbaum under his
supplemental retirement arrangements after that date are discussed
below under "Special Deferred Compensation Arrangements."
(6) Mr. Foate became President and CEO in July 2002, upon Mr. Nussbaum's
retirement from those positions, after having been promoted to Chief
Operating Officer in March 2001.
(7) Mr. Sabol was promoted to Chief Operating Officer in July 2002. His
replacement as Chief Financial Officer was named in October 2002.
(8) Mr. Verstegen's position was deemed an executive officer beginning in
fiscal 2002. Mr. Verstegen also became a Vice President of Plexus in
November 2002.
STOCK OPTIONS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to options
granted to the six executive officers named in the Summary Compensation table
concerning options granted in fiscal 2002.
Individual Grants(1)
------------------------------------------------------------
% of Potential
Number of Total Realized Value at
Securities Options/ Assumed Annual
Underlying SARs Rates of Stock Price
Options/ Granted Appreciation
SARs to Employees Exercise or for Option Term (2)
Granted in Fiscal Base Price Expiration --------------------------
Name (1)(#) Year ($/sh) Date 5% 10%
-------------------- ------------ ---------------- --------------- ------------- ------------ ------------
John Nussbaum 100,000 10.9% $25.285 4/22/12 $1,481,047 $3,753,263
Dean Foate 100,000 10.9% 25.285 4/22/12 1,481,047 3,753,263
Thomas Sabol 70,000 7.6% 25.285 4/22/12 1,036,733 2,627,284
Robert Kronser 9,000 1.0% 25.285 4/22/12 133,294 337,794
Paul Ehlers 12,000 1.3% 25.285 4/22/12 177,726 450,392
Michael Verstegen 9,000 1.0% 25.285 4/22/12 133,294 337,794
(1) No SARs have been granted; all grants reflect stock options under the
Option Plan. Options may, under certain circumstances, be transferred
to family members or related trusts.
(2) Assumes the stated appreciation from the date of grant.
-6-
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES
The following table sets forth information with respect to the six
executive officers named in the Summary Compensation Table concerning the
exercise of options in fiscal 2002 and the number and value of options
outstanding at September 30, 2002.
Number of Value of
Securities Underlying Unexercised In-the-
Unexercised Options/ Money Options/SARs
Shares Acquired Value SARs at FY-End (#)(2) at FY-End ($)(3)
Name on Exercise (#) Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
---- ---------------- ------------------ ----------------------------- ------------------------------
John Nussbaum --- --- 63,896 / 133,334 0 / 0
Dean Foate --- --- 128,333 / 126,667 458,747 / 0
Thomas Sabol --- --- 134,999 / 90,001 327,264 / 0
Robert Kronser --- --- 91,335 / 27,667 178,760 / 0
Paul Ehlers --- --- 69,228 / 27,334 98,447 / 0
Michael Verstegen 5,000 $101,253 92,500 / 19,000 277,107 / 0
(1) Represents the difference between the exercise price and the average of
the high and low sales price on the date of exercise.
(2) Represents options granted under the Option Plan. No SARs have been
granted.
(3) Represents the difference between the exercise price and the $9.25
closing price of Plexus common stock reported on the Nasdaq Stock
Market on September 30, 2002, the last day of the fiscal year.
CHANGE IN CONTROL ARRANGEMENTS
Plexus has entered into Change in Control Agreements with Messrs.
Nussbaum, Foate, Sabol, Kronser, Ehlers, Verstegen and other executive officers.
Under the terms of these agreements, if there is a change in control of Plexus,
as defined in the agreement, the executive officers' authority, duties and
responsibilities shall remain at least commensurate in all material respects
with those prior to the change in control. Their compensation and benefits may
not be reduced, or location of employment changed, as a result of the change in
control.
In the event that any covered officer is terminated other than for
cause, death or disability, or an executive terminates his employment with good
reason, Plexus is obligated to pay the executive officer, in a cash lump sum, an
amount equal to approximately three times the executive's base salary plus
expected bonus payments, and to continue certain benefits. The agreements
further provide for payment of additional amounts which may be necessary to
"gross up" the amounts due such employee in the event of the imposition of an
excise tax upon the payments. The agreements do not preclude termination of the
officer, or require payment of any benefit, if there has not been a change in
control of Plexus, nor does it limit the ability of Plexus to terminate these
persons for cause.
SPECIAL DEFERRED COMPENSATION ARRANGEMENTS
In 1996, the Compensation and Leadership Development Committee
established special retirement arrangements for Mr. Nussbaum, Peter Strandwitz,
who was then CEO and a director, and another executive officer and director who
subsequently retired. The Committee believed that those arrangements would both
reward past service and maintain an additional incentive for those officers'
continued performance for Plexus. As a result, Plexus and those persons have
entered into a supplemental retirement agreement designed to provide specified
retirement and death benefits additional to those provided under the 401(k)
Savings Plan. While the arrangements were designed to provide a 15-year annual
payout on retirement at or after age 65 of 60% of final pay, Plexus' commitment
under the agreements was to annually contribute a fixed dollar amount
(originally $90,921 for Mr. Nussbaum and $193,600 for Mr. Strandwitz) for each
year until age 65 if they remained in Plexus' employ. Effective for fiscal 2000,
the Compensation Committee agreed to an amendment to Mr. Nussbaum's supplemental
retirement agreement. Under the amended arrangement, Plexus' obligation to make
contributions for Mr. Nussbaum was increased to $296,420 per year, but only
until age 60. However, in fiscal 2002, Plexus contributed $743,578
-7-
due to Mr. Nussbaum's retirement. Mr. Nussbaum remains a Plexus employee,
although he ceased being considered a Plexus executive officer after his July
2002 retirement as CEO. As a result of that change, Mr. Nussbaum received his
first payment, of $60,231 for a partial year, during fiscal 2002. (Full year
payments initially will be $240,924, which will be adjusted upward by 4%
annually.) That payment was made after Mr. Nussbaum ceased being considered an
executive officer, and is therefore not included in the cash compensation table.
Mr. Strandwitz received payments of $210,000 in fiscal 2002; he ceased service
as a director of, and employment with, Plexus during fiscal year 2002.
The contributions for Messrs. Strandwitz and Nussbaum are invested in a
life insurance policy acquired by Plexus on each participant's life. On
retirement, the agreement provides for a 15-year annual installment payment
stream. (Plexus' contributions were also to continue to be made should their
employment terminate after a change in control, attainment of age 55 and
completion of 10 years of service or disability, should the participants
terminate for "good reason" as defined in the agreement, or should Plexus
terminate the executive, but not for "cause" as defined in the agreement.
Provided the participants are able to and do perform such duties as may be
provided under a separate consulting agreement, the 15-year installment payments
were to commence at retirement. Lump sum payments based on policy cash values
become due if at any time after a change in control Plexus' consolidated
tangible net worth drops below $35 million, or if the ratio of Plexus'
consolidated total debt to consolidated tangible net worth becomes greater than
2.5 to 1.) To the extent that any of the payments constitute excess parachute
payments subjecting the participant to an excise tax, the agreement provides for
an additional payment (the "gross-up payment") to be made by Plexus to the
participant so that after the payment of all taxes imposed on the gross-up
payment, the participant retains an amount of the gross-up payment equal to the
excise tax imposed. If a participant dies prior to receiving all of the 15-year
annual installment payments, certain death benefit payments become due.
During fiscal 2000, the Compensation and Leadership Development
Committee also established additional deferred compensation mechanisms for
several executive officers and other key employees, including Messrs. Foate,
Sabol, Kronser, Ehlers and Verstegen. As part of those arrangements, the
Committee established the Plexus Corp. Executive Deferred Compensation Plan.
Under this plan, a covered executive may elect to defer some or all of his or
her compensation through the plan, and Plexus may credit the participant's
account with a discretionary employer contribution. Participants are entitled to
payment of deferred amounts and any earnings which may be credited thereon upon
termination or retirement from Plexus.
Plexus has also entered into split-dollar life insurance agreements
with various executive officers and key employees, including Messrs. Foate,
Sabol, Kronser, Ehlers and Verstegen. Under these agreements, Plexus has paid a
minimum premium of $13,500 per policy, and such additional premiums as it may
determine. Upon the death of the covered employee, Plexus has an interest in the
proceeds of the policy equal to the premiums paid. The balance, if any, of the
policy proceeds are paid to the employee's beneficiary. Plexus' rights are
secured by a related assignment of employee's life insurance policy as
collateral. Upon an earlier termination of employment, or Plexus' determination
to terminate the agreement, the agreement provides that the employee may obtain
unencumbered ownership of the policy by paying Plexus the lesser of premiums
paid or the cash surrender value, or Plexus can withdraw from the policy an
amount equal to the premiums it has paid and then release its interest in the
policy permitting unencumbered ownership of the policy by the employee. Plexus
is exploring alternatives to these arrangements as a result of changes in law
which were effective in July 2002.
COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation and Leadership Development Committee of the Plexus
board of directors sets general compensation policies for Plexus. The Committee
makes the primary decisions with respect to compensation of the Chairman, the
Chief Executive Officer and the Chief Operating Officer of Plexus. Prior to July
2002, the Chairman (Mr. Nussbaum) was the Chief Executive Officer of Plexus;
from and after July 2002, the President (Mr. Foate) has served as CEO. Decisions
on compensation for other Plexus officers are recommended by the CEO and the
COO. Plexus' other compensation programs, such as the Savings Plan and the
Option Plans, are either originated or approved by the Committee; the Committee
grants stock options under the Option Plans.
Plexus' policy, to which the Committee adheres, is to fairly compensate
individuals for their contributions to Plexus, but also to provide value to
Plexus' shareholders and to consider the ability of Plexus to fund any
compensation decisions, plans or programs. The Committee believes that fair
compensation packages are necessary
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to attract and retain qualified executive officers. To be effective in
attracting and retaining competent individuals, compensation packages must
balance short-term and long-term considerations, as well as provide incentives
to individuals based upon the performance of Plexus. For the past several fiscal
years, the Committee has evaluated the compensation of Plexus executive officers
in the context of continuing growth and the occasional effect on earnings of
that growth. In the most recent determinations, the Committee considered the
weaknesses in Plexus' markets and the negative effect on sales and
profitability. The Committee has not recently retained outside consultants, or
relied in a significant fashion upon outside market surveys specifically
commissioned by Plexus. However, the Committee reviews published survey
information. In late 2002, the Committee engaged outside consultants to assist
it in evaluating executive officer compensation for 2003 salary determinations.
In determining CEO compensation, the Committee reviews numerous
factors, although most of these factors are not subject to quantification or
specific weight. The primary factors reviewed, in no particular order, are: the
importance of the individual's contribution to Plexus' strategic planning and
long-term success; special projects and tasks undertaken by the individual
during the preceding year; acquisition-related activities and efforts; and
performance of Plexus' sales and earnings. In addition, the Committee also
reviewed a sampling, which it believed to be representative, of compensation
paid by other companies in Plexus' geographic area, comparable companies in the
electronics manufacturing services industry and numerous published surveys. This
group of companies did not coincide with the more extensive list of companies in
the Nasdaq electronics components sector used in the following performance
graph. Plexus generally has used a March/April annual review cycle in recent
years for its employees, including key executives. New salaries become effective
around the time of the review and thus affect two fiscal years. Stock options
generally have been awarded shortly after the salary reviews.
During fiscal 2002, two persons served as chief executive officer of
Plexus. Mr. Nussbaum, who became Chief Executive Officer in March 2001 upon the
retirement of the prior CEO, retired as CEO as of June 30, 2002. The board of
directors selected Mr. Foate, who began fiscal 2002 as chief operating officer,
as the new chief executive officer effective July 1, 2002.
When the Committee established Mr. Nussbaum's salary in April 2001, Mr.
Nussbaum had at that time just assumed the position of chief executive officer.
Given his acceptance of these new duties, the Committee wanted to recognize the
new position and salary level. In addition, the Committee had available full
fiscal 2000 financial information, which indicated increases in sales and net
income of 53% and 98%, respectively, in fiscal 1999. During the first quarter of
fiscal 2001 (ended December 31, 2000), sales and net income increased 85% and
60%, respectively, over the prior year's quarter. In making determinations as to
Mr. Nussbaum, the Committee also considered the payments made on his behalf
pursuant to the special retirement benefits discussed above. Based upon both
quantitative and non-quantitative factors, the assumption of the new duties, and
Mr. Nussbaum's prior performance as chief operating officer, the Committee
approved a $425,000 annual salary for Mr. Nussbaum effective May 2001, which
represented a 21% salary increase.
As fiscal 2001 progressed, the electronics and telecommunications
industries, which Plexus serves, experienced significant economic challenges.
Management initiated a number of measures intended to reduce costs and make
Plexus competitive in these challenging times. One initiative was a 10% salary
decrease for all executive officers. Mr. Nussbaum and the other executive
officers accepted this decrease effective October 1, 2001. The 10% salary
reduction was eliminated for all executive officers, including the CEO, in
December 2002.
When the Committee met in April 2002, it had available full fiscal 2001
results, which indicated increases in sales of 41% but an increase in net income
(before restructuring costs and acquisition and merger costs) of 3%. However,
for the first quarter of fiscal 2002 (ended December 31, 2001), sales were
reduced 26% and Plexus had a net loss before special charges for the quarter. In
addition to the statistical information, the Committee considered the increasing
challenges being addressed by the CEO, and other members of the management team,
due to the difficulties in the industries served by Plexus and the strong
efforts which Mr. Nussbaum and other members of the management team were making
to address these issues. As a result of both the quantitative and
non-quantitative factors, particularly including the need for continued
management attention and dedication to meet the challenges, the Committee did
not change the chief executive officer's salary in April 2002.
Mr. Nussbaum retired as chief executive officer effective June 30,
2002. At that time, to reflect the reduction in his duties, his salary was
decreased to $72,000, which continued to reflect the 10% general reduction.
-9-
Compensation determinations for Mr. Foate in both April 2001 and April
2002 were made before his assumption of the chief executive officer position.
However, salary determinations in April 2001 were made at the time he assumed
the position of chief operating officer. In considering the substantial increase
in responsibilities which Mr. Foate was then assuming, and also reviewing the
then-available economic information discussed above, the Committee concurred in
the recommendation by the then-CEO to increase Mr. Foate's salary by 50%, to
$300,000, effective in May 2001.
Mr. Foate subsequently accepted the same 10% salary reduction effective
October 1, 2001 as the other executive officers. The April 2002 salary
determination was made before Mr. Foate's assumption of CEO duties. The
Committee again reviewed the then-available economic information referred to
above and considered other non-quantifiable factors as to Mr. Foate's
performance. The Committee determined to not change his salary.
In connection with Mr. Foate's assumption of chief executive officer
duties and responsibilities effective July 1, 2002, the Committee determined
that it would be appropriate to adjust his compensation substantially to reflect
those added duties and responsibilities. The Committee therefore increased his
base salary by 50% to $405,000, which reflected a continuing 10% reduction from
the $450,000 target salary.
The Committee determined it would be in Plexus' best interest to
provide its executive officers with a performance-based incentive beyond that
contained in the Option Plan. Such a bonus arrangement would further motivate
officers to improve performance, and provide specific non-market criteria to
evaluate performance. Beginning in fiscal 2000, bonuses were determined by
reference to earnings per share, sales growth, and individual performance; the
three factors were weighted equally. The possible ranges of bonus, if targets
are met, are from 10% to 100% of base salary for executive officers, which
amounts are chosen in advance by the Committee and may vary from person to
person, and year to year.
For fiscal 2002, for the target bonus to be earned, Plexus was required
to achieve pre-bonus, pre-special charges earnings per share of $0.98 per share
(approximately an 8% increase over fiscal 2001) and corporate sales growth over
fiscal 2001 equal to at least 25%. If these targets were met, Mr. Nussbaum and
Mr. Foate would each earn a bonus of 50% of his salary; for results above or
below target, the bonus (if any) would vary between 0% and 100%. The Committee
believed that both targets were very aggressive. In fiscal 2002, Plexus had
pre-bonus fully-diluted earnings per share (before special charges) of $0.10 and
a sales decline of approximately 17%. Because the target numerical goals were
not met in fiscal 2002, no bonuses were paid.
The Committee believes that the Option Plan provides participants with
a long-term incentive to increase the overall value of Plexus by providing them
with a stake in the increasing value of its common stock on a long-term basis.
The Committee also wished to recognize Mr. Nussbaum's past service, and Mr.
Foate's significantly increasing responsibilities and the Committee's
expectation that Mr. Foate would be considered for the chief executive officer
position if Mr. Nussbaum chose to retire. Consistent with this approach, the
Committee granted to Messrs. Nussbaum and Foate each options for 100,000 shares,
in April 2002. The Committee had granted Mr. Nussbaum and Mr. Foate each options
for 30,000 shares in each of fiscal 2001; Messrs. Nussbaum and Foate received
options for 40,000 shares and 20,000 shares, respectively, in fiscal 2000. The
award levels reflect the Committee's determination to increase the reliance upon
stock options as a component of compensation, to reflect cash compensation
levels (including pay reductions and freezes), and also to reflect the changing
relative duties of these officers. Going forward, the Committee intends to make
its general grant of stock options in January, earlier in the fiscal year.
The Plexus 2000 Stock Purchase Plan also permits executive officers,
like other employees, to purchase shares of Plexus common stock at a price equal
to 85% of the lower of the market value at the beginning or the end of six month
periods. Compensation information does not include the value of any purchases by
the individuals who chose to participate, since the broad-based plan is open to
most employees. The Committee also believes that the Savings Plan provides an
additional possibility for stock-based incentive. Although employees, including
the CEO, may choose from a variety of investment funds for their contributions
under the Savings Plan, the Plexus Stock Fund is one alternative.
The Committee further believed that a supplemental retirement
arrangement with Mr. Nussbaum was appropriate, and therefore entered into the
Supplemental Retirement Agreement with each of those described above under
"Executive Compensation - Special Retirement Arrangements."
-10-
The factors used to determine other executive officers' compensation
are essentially the same as those used for the CEOs. As with the CEOs, Messrs.
Sabol, Ehlers, Kronser and Verstegen, and other executive officers, were
considered for salary increases effective in April 2001 and April 2002.
Increases in executive officers' salaries (other than the CEO's) in April 2001
varied from 6% to 50%. Effective October 1, 2001, the base salaries of each
executive officer was reduced 10%. In April 2002, executive officers' salaries
remained frozen, although Mr. Sabol's was increased in July 2002 by 40% to
reflect the substantial increase in his duties and another officer's was
increased 16% in September 2002, also as a result of changes in duties. The
Committee's determinations on option grants varied by individual, depending upon
the Committee's view of the adequacy of the particular officer's compensation
compared to that officer's performance and duties, especially when those duties
significantly changed or increased since the last salary increase, and expected
changes in circumstances in the coming year. In particular, Mr. Sabol was given
a relatively large option grant in view of his increasing responsibilities.
For fiscal 2002, executive officers did not receive any bonus under the
Bonus Plan as a result of corporate performance. The bonus criteria were the
same for the other executive officers as they were for the CEOs; however, the
target bonuses for 2002 ranged from 25% to 50% of salary, and the maximum of
bonuses ranged from 50% to 100%.
The Committee also approved stock option awards during fiscal 2002 for
the executive officers of Plexus, which awards varied from 2,000 to 70,000
shares. The number of shares subject to options granted to executive officers
was generally the same or greater than the number granted upon ordinary grants
in the preceding fiscal year, with appropriate changes to reflect the
Committee's perception of individual circumstances. The largest of these awards
reflected Mr. Sabol's anticipated significant increase in duties. Plexus has
also entered into supplemental retirement arrangements with the executive
officers, as described above. The Committee bore in mind the costs of these
arrangements and the expected benefits under them in making its compensation
decisions relating to the affected executive officers.
The Committee believes that it is highly unlikely that the compensation
of any executive officer, including the CEO, will exceed $1 million in any
fiscal year. Therefore, except with respect to the Option Plan and the 2000
Purchase Plan, it has not taken any action with respect to the provisions of
Section 162 of the Internal Revenue Code which limits the deductibility of
compensation to certain executive officers of over $1 million in any fiscal
year. Because of the shareholders' approval of the Option Plan and the 2000
Purchase Plan, the Committee believes that any compensation income under them
would not be subject to the Internal Revenue Code's deduction limitation.
Members of the Compensation Committee: Thomas J. Prosser, Chair David J. Drury
Harold R. Miller Charles M. Strother
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No Plexus insiders are members of the Compensation and Leadership
Development Committee. None of the directors who are Committee members are
employees of Plexus, have ever been employed by Plexus or any of its
subsidiaries, and have other reportable relationships with Plexus.
-11-
PERFORMANCE GRAPH
The following graph compares the cumulative total return on Plexus
common stock with the NASDAQ Stock Market Index for U.S. Companies and the
NASDAQ Stock Market Index for Electronics Components Companies, both of which
include Plexus. The values on the graph show the relative performance of an
investment of $100 made on September 30, 1997, in Plexus common stock and in
each of the indices.
COMPARISON OF CUMULATIVE TOTAL RETURN
[graph]
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Plexus 100 55 87 401 134 53
NASDAQ-US 100 102 166 220 90 71
NASDAQ-Electronics 100 80 162 285 80 54
CERTAIN TRANSACTIONS
Plexus has provided certain engineering design and development services
for Memorylink Corp., a developer of electronic products. Mr. Strandwitz, who
retired as a director during fiscal 2002, is a director and a shareholder of
Memorylink. Plexus did not perform any services for Memorylink in fiscal 2002,
but billed Memorylink $0.9 million in fiscal 2001 for services; the amounts
billed were determined in accordance with Plexus' standard charges for those
types of services. Memorylink had an outstanding balance due to Plexus of $1.5
million at September 30, 2001, all of which was past due, and fully reserved for
by Plexus, on that date.
Primarily as a result of the downturn in the electronics and
communications industries, MemoryLink was unable to successfully commercialize
its products or obtain, in a sufficient amount, needed additional financing.
MemoryLink informed Plexus in early fiscal 2002 that it was therefore unable to
pay in full the amounts due to Plexus. In January 2002, Plexus received a
payment of $100,000, and converted the balance into a $650,000 promissory note
from, and a minority equity interest in, MemoryLink. In August 2002, in
recognition of MemoryLink's continuing difficulties in obtaining financing,
Plexus agreed to accept an additional cash payment of $100,000 on the promissory
note, and convert the balance into an increased equity interest in Memorylink.
From time to time, Plexus executive officers and directors are
prohibited from selling Plexus stock because of the existence or potential
existence of material non-public information. Mr. Sabol intended to sell Plexus'
shares during one of these time periods to finance a real estate purchase.
Because Plexus' activities prohibited him from making a sale, Plexus loaned Mr.
Sabol $260,000 on March 13, 2000. The loan was repayable upon demand, bore
-12-
interest at $250 per month, and was secured by Plexus shares. The loan was
originally for a maximum period of eight months, but was extended to become a
demand note by mutual agreement in fiscal 2001. Interest accrued monthly. The
maximum amount due in fiscal 2002 was $263,000, which was the amount due at
fiscal year end. Mr. Sabol subsequently repaid the loan in full. Because of
subsequent changes in law, Plexus will no longer make similar loans to its
executive officers.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the board of directors oversees and monitors the
participation of Plexus' management and independent auditors throughout the
financial reporting process. No member of the Audit Committee is employed or has
any other material relationship with Plexus. The members are "independent" as
defined in Rule 4200(a)(15) of the NASD listing standards for the Nasdaq Stock
Market. The Plexus board of directors has adopted a written charter for the
Audit Committee, which was attached to the proxy statement for the 2001 annual
meeting of shareholders.
In connection with its function to oversee and monitor the financial
reporting process of Plexus, the Committee has done the following:
- reviewed and discussed the audited financial statements for
the fiscal year ended September 30, 2001 with Plexus
management;
- discussed with PricewaterhouseCoopers LLP, Plexus' independent
auditors, those matters which are required to be discussed by
SAS 61 (Codification of Statements on Auditing Standards, AU
ss.380); and
- received the written disclosure and the letter from
PricewaterhouseCoopers LLP required by Independence Standards
board Standard No. 1 (Independence Discussion with Audit
Committees) and has discussed with PricewaterhouseCoopers LLP
its independence.
Based on the foregoing, the Committee recommended to the board of
directors that the audited financial statements be included in Plexus' annual
report on Form 10-K for the fiscal year ended September 30, 2002.
Members of the Audit Committee: David J. Drury, Chairman Harold R. Miller
Thomas J. Prosser Jan K. VerHagen
AUDITORS
The board of directors intends to reappoint the firm of
PricewaterhouseCoopers LLP as independent auditors to audit the financial
statements of Plexus for fiscal 2003. Representatives of PricewaterhouseCoopers
LLP are expected to be present at the annual meeting of shareholders to respond
to appropriate questions and make a statement if they desire to do so.
Fees (including reimbursements for out-of-pocket expenses) paid to
PricewaterhouseCoopers LLP for services in fiscal 2002 were as follows:
Audit Fees $496,737
Financial Information Systems Design --
and Implementation Fees
All Other Fees $734,262
The non-audit services related principally to income tax matters, both U.S. and
foreign, but also included merger and acquisition counseling and ERISA audits.
The Audit Committee considered the compatibility of non-audit services by
PricewaterhouseCoopers LLP with the maintenance of that firm's independence.
-13-
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by Plexus no later than August
31, 2003 in order to be considered for inclusion in next year's annual meeting
proxy statement. In addition, the Plexus bylaws provide that any proposal for
action, or nomination to the board of directors, proposed other than by the
board of directors must be received by Plexus in writing, together with
specified accompanying information, at least 70 days prior to an annual meeting
in order for such action to be considered at the meeting. The 2004 annual
meeting of shareholders is tentatively scheduled for February 11, 2004, and any
notice of intent to consider other questions and/or nominees, and related
information, must therefore be received by December 3, 2003. The purpose of the
bylaw is to assure adequate notice of, and information regarding, any such
matter as to which shareholder action may be sought.
By order of the board of directors
/s/ Joseph D. Kaufman
Joseph D. Kaufman
Senior Vice President, Secretary and
Chief Legal Officer
Neenah, Wisconsin
December 20, 2002
A COPY (WITHOUT EXHIBITS) OF PLEXUS' ANNUAL REPORT TO THE SECURITIES
AND EXCHANGE COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
2002, WAS INCLUDED IN PLEXUS' 2002 ANNUAL REPORT TO SHAREHOLDERS, WHICH
ACCOMPANIES THIS PROXY STATEMENT. AN ADDITIONAL COPY WILL BE PROVIDED WITHOUT
CHARGE TO EACH RECORD OR BENEFICIAL OWNER OF SHARES OF PLEXUS' COMMON STOCK AS
OF DECEMBER 9, 2002, ON THE WRITTEN REQUEST OF SUCH PERSON DIRECTED TO: KRISTIAN
TALVATIE, INVESTOR RELATIONS DEPARTMENT, PLEXUS CORP., 55 JEWELERS PARK DRIVE,
P.O. BOX 156, NEENAH, WISCONSIN 54957-0156.
-14-
PLEXUS CORP.
PROXY FOR 2003 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John L. Nussbaum, Dean A. Foate and Joseph D.
Kaufman, and any of them, proxies, with full power of substitution, to vote all
shares of stock which the undersigned is entitled to vote at the annual meeting
of shareholders of Plexus Corp. to be held in the KC Theater at the Fox Cities
Performing Arts Center, located at 400 West College Avenue, Appleton, Wisconsin,
on Wednesday, February 12, 2003 at 10:00 a.m. Central Time, or at any
adjournment thereof, as follows, hereby revoking any proxy previously given:
(Continued and to be signed on reverse side)
|X| Please mark your votes as in this sample
(1) ELECTION OF DIRECTORS:
FOR ALL NOMINEES LISTED RIGHT |_| WITHHOLD AUTHORITY |_|
(except as specified to the to vote for all nominees
contrary below) listed below
Nominees: Stephen P. Cortinovis, David J. Drury, Dean A. Foate,
John L. Nussbaum, Thomas J. Prosser, Charles M. Strother, Jan K. VerHagen
(INSTRUCTION: To withhold authority to vote for any individual nominee, please
print that nominee's name on the following line.)
---------------------------------
(2) In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof;
all as set out in the Notice and Proxy Statement relating to the annual meeting,
receipt of which is hereby acknowledged.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder(s). If you do not provide a direction, this proxy
will be voted "FOR" each of the nominees for director who are listed in Proposal
(1).
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY
PROMPTLY IN THE ENVELOPE PROVIDED.
--------------------------------------------------------------------------------
Signature_______________________ Signature____________________ Date ___________
(Please sign exactly as name appears above.)