INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
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[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-12
(Name of Registrant as Specified in Its Charter)
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Payment of filing fee (check the appropriate box):
[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
800 East Northwest Highway
Des Plaines, Illinois 60016
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 2001
The annual meeting of the stockholders of Littelfuse, Inc. (the "Company")
will be held at the offices of the Company located at 800 East Northwest
Highway, Des Plaines, Illinois, on Friday, April 27, 2001, at 9:00 a.m., local
time, for the following purposes as described in the attached Proxy Statement:
1. To elect a six Directors to serve a term of one year or until their
successors are elected;
2. To approve and ratify the appointment by the Board of Directors of the
Company of Ernst & Young LLP as the Company's independent auditors for
the fiscal year of the Company ending December 29, 2001; and
3. To transact such other business as may properly come before the annual
meeting or any adjournment thereof.
Stockholders of record of the Company at the close of business on March 9,
2001, will be entitled to vote at the meeting.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
/s/ MARY S. MUCHONEY
Mary S. Muchoney
March 26, 2001
800 East Northwest Highway
Des Plaines, Illinois 60016
ANNUAL MEETING OF STOCKHOLDERS
To BE HELD ON
APRIL 27, 2001
This proxy Statement is furnished in connection with the solicitation by
the Board of Directors of the Company of proxies for use at the Company's annual
meeting of stockholders to be held on April 27, 2001.
Any stockholder giving a proxy will have the right to revoke it at any time
prior to the time it is voted. A proxy may be revoked by written notice to the
Company, execution of a subsequent proxy or attendance at the annual meeting and
voting in person. Attendance at the annual meeting will not automatically revoke
the proxy, All shares represented by effective proxies will be voted at the
annual meeting or at any adjournment thereof.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, officers and employees of the Company may solicit proxies
by telephone or in person.
This Proxy Statement and form of proxy are first being mailed to
stockholders on or about March 26, 2001. The Company's 2000 annual report,
including audited financial statements, is included in this mailing.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE
NOMINEES FOR DIRECTOR NAMED IN PROPOSAL 1, AND A VOTE FOR THE APPROVAL AND
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS AS
DISCUSSED IN PROPOSAL 2.
Stockholders of record on the books of the Company at the close of business
on March 9, 2001, will be entitled to notice of and to vote at the meeting. A
list of the stockholders entitled to vote at the meeting will be available for
examination by any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least 10 days prior to the meeting
at the Company's headquarters located at 800 East Northwest Highway, Des
Plaines, Illinois 60016 and at LaSalle Bank N.A., 135 South LaSalle Street,
Chicago, Illinois 60603. The Company had outstanding on March 9, 2001,
19,825,901 shares of its common stock, par value $.01 per share (the "Common
Stock"), and warrants to purchase an additional 1,953,389 shares of Common Stock
at a current exercise price of $4.18 per share. Each outstanding share of Common
Stock entities the holder to one vote on each matter
submitted to a vote at the meeting. A warrant to purchase shares of Common Stock
does not entitle the holder to vote at the meeting.
The shares represented by proxies will be voted as directed in the proxies.
In the absence of specific direction, the shares represented by proxies will be
voted FOR the election of all of the nominees as Directors of the Company, and
FOR the approval and ratification of the appointment of Ernst & Young LLP as
independent auditors. In the event any nominee for Director is unable to serve,
which is not now contemplated, the shares represented by proxies may be voted
for a substitute nominee. If any matters are to be presented at the annual
meeting other than the matters referred to in this Proxy Statement, the shares
represented by proxies will be voted in the discretion of management.
The Company's bylaws provide that a majority of all of the shares of Common
Stock entitled to vote, whether present in person or represented by proxy, shall
constitute a quorum for the transaction of business at the meeting. Votes for
and against, abstentions and "broker non-votes" will each be counted as present
for purposes of determining the presence of a quorum. To determine whether a
specific proposal has received sufficient votes to be passed, for shares deemed
present, an abstention will have the same effect as a vote "against" the
proposal, while a broker non-vote will not be included in vote totals and will
have no effect on the outcome of the vote. The affirmative vote by the holders
of a majority of the shares present (whether in person or by proxy) at the
meeting will be required for the approval of the ratification of Ernst & Young
LLP as independent auditors. With respect to the election of Directors, the six
nominees who receive the most votes at the meeting will be elected.
OWNERSHIP OF LITTELFUSE, INC. COMMON STOCK
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of March 9, 2001, by each Director,
by each person known by the Company to be the beneficial owner of more than 5%
of the outstanding Common Stock, by each executive officer named in the Summary
Compensation Table and by all of the Directors and executive officers of the
Company as a group. Information concerning persons known to the Company to be
beneficial owners of more than 5% of its Common Stock is based upon the most
recently available reports furnished by such persons on Schedule 13G as filed
with the Securities and Exchange Commission.
NUMBER OF SHARES OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES PERCENT
- ------------------------------------ ---------- -------
* Indicates ownership of less than 1% of Common Stock.
(1) The number of shares listed includes 568,900 shares of Common Stock,
which may be acquired through the exercise of stock options within 60 days
of March 9,2001.
(2) These securities are owned by various individual and institutional
investors for which T. Rowe Price Associates, Inc. (Price Associates)
serves as investment advisor with power to direct investments and/or sole
power to vote the securities. For purposes of the reporting requirements of
the Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(3) Includes 7,300 shares of Common Stock held in an IRA and in trust for
Mr. Grillo's children.
(4) Includes 14,000 shares of Common Stock held in an IRA and in trust for
Mr. Karsh's children, and 14,230 shares of Common Stock issuable upon the
exercise of warrants that are immediately exercisable.
(5) Mr. Turner retired from the Company on August 1, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers, Directors and
holders of more than 10% of the Common Stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. The
Company believes that during the fiscal year ended December 30, 2000, its
executive officers, Directors and holders of more than 10% of the Common Stock
complied with all Section 16(a) filing requirements. In making these statements,
the Company has relied upon the written representations of its executive
officers and Directors.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Six Directors are to be elected at the annual meeting to serve terms of one
year or until their respective successors have been elected. The nominees for
Director, all of whom are now serving as Directors of the Company, are listed
below together with certain biographical information as of March 9, 2001.
Except as otherwise indicated, each nominee for Director has been engaged in his
present principal occupation for at least the past five years.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF ALL OF THE NOMINEES LISTED BELOW AS DIRECTORS.
Howard B. Witt, age 60, has been a Director of the Company since November
1991 and President and Chief Executive Officer since 1990. In May 1993, Mr. Witt
was elected as the Chairman of the Board of the Company. Prior to his
appointment as President and Chief Executive Officer, Mr. Witt served in several
other key management positions since joining the Company as Operations Manager
in 1979. Mr. Witt serves as a Director of Franklin Electric Co., Inc. and
Material Sciences Corporation and is a member of the Electronic Industries
Alliance Board of Directors and the Board of Governors of the National
Electrical Manufacturers Association. He also serves as a director of the
Artisan Mutual Fund.
John P. Driscoll, age 65, was elected a Director of the Company by the
Board of Directors on February 6, 1998. He is a member of the Compensation
Committee. Mr. Driscoll is President of Jack Driscoll Enterprises, Inc.,
a management consulting firm. In June of 1998 Mr. Driscoll retired as
Executive Vice President of Murata Electronics North America, Inc. where he
was responsible for corporate policy and strategy and oversaw government
and industry relations. Mr. Driscoll joined Murata Electronics in 1979 as
Vice President of Marketing and Sales, was appointed Senior Vice President
Marketing and Sales in 1985 and assumed the position of Executive Vice President
Mr. Driscoll is a former Vice President of the Components Group Of the
Electronic Industry Alliance, and a fourteen-year member of its Board of
Anthony Grillo, age 45, is a Senior Managing Director of Joseph
Littlejohn & Levy, Inc., a private equity firm. He has been a Director of the
Company since December 1991 and is Chairman of the Audit Committee. Before
joining Joseph Littlejohn & Levy, Inc. in 1999, Mr. Grillo was a Senior Managing
Director of the Blackstone Group L.P., an investment banking firm which he
joined in 1991. Mr. Grillo serves as a Director of Lancer Industries, Inc.,
Hayes Lemmerz International, Inc., Iasis Healthcare, and several privately held
companies and non-profit organizations.
Bruce A. Karsh, age 45, has been a Director of the Company since December
1991. He is Chairman of the Compensation Committee. Mr. Karsh is President and
co-founder of Oaktree Capital Management, LLC, an investment advisory firm with
over $18 billion of assets under management. Prior to that, Mr. Karsh
established the TCW Special Credits group of funds at The TCW Group, Inc. and
had primary portfolio management responsibility for their operation. Mr. Karsh
currently serves as a Director of Furniture Brands International.
John E. Major, age 55, has been a Director of the Company since December
1991. He is a member of the Audit Committee. Mr. Major is Chairman and CEO of
Novatel Wireless Inc., which provides wireless data access solutions for PDAs
and notebook PCs. Previously he held positions as Chief Executive Officer of
Wireless Knowledge, a QUALCOMM and Microsoft joint venture. Before joining
Wireless Knowledge in 1998, Mr. Major served as Corporate Executive Vice
President of QUALCOMM, Inc. and President of its Wireless Infrastructure
Division. Prior to joining QUALCOMM, Mr. Major served as Senior Vice President
and Staff Chief Technical Officer at Motorola, Inc. He currently serves on the
Board of Governors' Executive Committee for the EIA (Electronic Industries
Association) and the TIA (Telecommunications Industry Association). He also
serves on the Board of Directors of Verilink Corporation, Identix Incorporated,
Advanced Remote Communications Solutions, Inc. and Lennox International Inc. Mr.
Major serves on the Visitor's Board for the Software Engineering Institute of
Carnegie Mellon University and is a science advisor to Loral Space Systems and
Wireless Facilities Inc. Additionally, he is on the Trustee's Council for the
University of Rochester.
John J. Nevin, age 74, has been a Director of the Company since December
1991. He is a member of the Audit Committee. Mr. Nevin was Chairman of the Board
of Bridgestone/Firestone, Inc. from May 1, 1988, to December 31, 1989. Mr. Nevin
joined The Firestone Tire & Rubber Company (predecessor of
Bridgestone/Firestone, Inc.) on December 1, 1979, as President and Chief
Operating Officer and was elected to its Board of Directors on February 9, 1980.
He was named Chief Executive Officer on September 1, 1980, and was elected
Chairman of the Board on February 2, 1981. Prior to joining The Firestone Tire
& Rubber Company, Mr. Nevin held senior management positions with several major
industrial corporations, including Chairman of the Board and Chief Executive
Zenith Radio Corporation and Vice President of Marketing for Ford Motor Company.
Mr. Nevin is a life trustee of Northwestern University.
ADDITIONAL INFORMATION CONCERNING BOARD OF DIRECTORS
COMPENSATION OF DIRECTORS. Directors who are not employees of the Company
are paid an annual Director's fee of $22,500, $1,000 for each of the four
regularly scheduled Board meetings attended and $500 for attendance at any
special teleconference Board or Committee meetings, plus reimbursement of
reasonable expenses relating to attendance at meetings. No such fees are paid to
Directors who are also full-time employees of the Company.
Under the Littelfuse Deferred Compensation Plan for Non-employee Directors,
a non-employee Director, at his election, may defer receipt of his Director's
fees. Such deferred fees are used to purchase shares of Common Stock, and such
shares and any distributions thereon are deposited with a third party trustee
for the benefit of the Director until the Director ceases to be a Director of
the Company. All non-employee Directors have elected to be compensated in Common
Stock under the deferred compensation plan.
The 1993 Stock Plan for Employees and Directors of Littlefuse, Inc.
provides for an annual grant to each non-employee Director of non-qualified
stock options to purchase 5,000 shares of Common Stock. In 2000, each
non-employee Director was granted an option to purchase 5,000 shares of Common
AUDIT COMMITTEE. The Audit Committee consists of three non-employee
Directors. It is the responsibility of the Audit Committee to, among other
things, (i) recommend each year to the Board of Directors independent auditors
to audit the financial statements of The Company and its consolidated
subsidiaries, (ii) review the scope of the audit plan, (iii) discuss with the
auditors the results of the Company's annual audit and any related matters, and
(iv) review transactions posing a potential conflict of interest among the
Company and its Directors, officers and affiliates. A copy of the Audit
Committee Charter is included as Appendix A to this Proxy Statement. The Audit
Committee met three times in 2000. Members of the Audit Committee are John E.
Major, John J. Nevin and the Chairman of the Committee, Anthony Grillo.
COMPENSATION COMMITTEE. The Compensation Committee consists of two
non-employee Directors. It is the responsibility of the Compensation Committee
to make recommendations to the Board of Directors with respect to compensation
and benefit programs, including the stock-based plans, for Directors,
officers and employees of the Company and its subsidiaries. The Compensation
Committee met two times and acted by written unanimous consent seven times in
2000. Members of the Compensation Committee are John P. Driscoll and the
Chairman of the Committee, Bruce A. Karsh.
ATTENDANCE AT MEETINGS. The Board of Directors held six meetings during
2000. All of the Directors attended at least 75% of the meetings of the Board of
Directors and the committees on which they served.
PROPOSAL NO. 2
APPROVAL AND RATIFICATION OF
APPOINTMENT OF INDEPENDENT AUDITORS
Subject to approval of the stockholders, the Board of Directors has
appointed Ernst & Young LLP, certified public accountants, as independent
auditors to examine the annual consolidated financial statements of the Company
and its subsidiary companies for the fiscal year ending December 29, 2001. The
stockholders will be asked at the meeting to approve and ratify such
appointment. Fees for the last fiscal year were $275,000 and all other fees were
$433,000, including audit related services (principally fees for business
acquisitions, pension and statutory audits, and SEC filings) of $133,000 and
nonaudit services (principally fees related to income tax matters) of $300,000.
A representative of Ernst & Young LLP will be present at the meeting to make a
statement, if such representative so desires, and to respond to stockholders'
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
FOLLOWING RESOLUTION WHICH WILL BE PRESENTED AT THE MEETING;
RESOLVED: That the appointment by the Board of Directors of the Company of
Ernst & Young LLP as the Company's independent auditors for the fiscal year of
the Company ending December 29, 2001, be approved and ratified.
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Chief Executive
Officer and each of the other four most highly compensated executive officers
(the "Named Executive Officers") for the last three (3) fiscal years.
Ariel Capital Management, Inc. ................................................. 3,236,135 14.5%
307 North Michigan Avenue, Suite 500
Chicago, Illinois 60601
T. Rowe Price Associates, Inc.(2) .............................................. 1,886,800 8.4%
100 E. Pratt Street
Baltimore, Maryland 21202
Howard B. Witt ................................................................. 492,800 2.2%
John P. Driscoll ............................................................... 9,023 *
Anthony Grillo(3) .............................................................. 81,384 *
Bruce A. Karsh(4) .............................................................. 304,534 1.4%
John E. Major .................................................................. 30,495 *
John J. Nevin .................................................................. 46,800 *
William S. Barron .............................................................. 102,900 *
Kenneth R. Audino .............................................................. 66,300 *
Philip G. Franklin ............................................................. 22,400 *
Lloyd Turner(5) ................................................................ 65,500 *
All current directors and executive officers as a group (11 persons)............ 1,228,636 5.5%
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
RESTRICTED STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(2) AWARDS($)(3) OPTIONS/SARs(#) COMPENSATION($)(4)
- --------------------------- ---- ------------ ----------- ------------ --------------- ------------------
(1) Mr. Witt's salary increases have historically become effective on January 1
of each year. Commencing in 1999, Mr. Witt's salary increase became
effective on July 1. The salary increases of Messrs. Audino, Barron,
Franklin and Turner have historically become effective on July 1 of each
(2) The amounts disclosed in this column are awards under the Company's Annual
Incentive Compensation Program.
(3) In 2000, the Compensation Committee granted restricted shares awards under
the 1993 Stock Plan to Mr. Witt for 7,000 shares of Common Stock and to each
of Messrs. Audino, Barron and Franklin for 3,000 shares of Common Stock. The
restricted shares subject to such awards had values listed in the table
based upon a $27.69 share average of the high and low "sales" price of
Common Stock as reported on the Nasdaq Stock Market on December 29, 2000.
These restricted shares awards are subject to the Company attaining certain
financial performance goals relating to return on net tangible assets and
earnings before interest, taxes, depreciation and amortization during the
three-year period ending December 28, 2002. In 1999, the Compensation
Committee granted restricted shares awards under the 1993 Stock Plan to Mr.
Witt for 7,500 shares of Common Stock and to each of Messrs. Audino, Barron,
Franklin and Turner for 2,500 shares of Common Stock. The restricted shares
subject to such awards had values listed in the table based upon a $24.56
share average of the high and low "sales" price of Common Stock as reported
on The Nasdaq Stock Market on December 31, 1999. These restricted shares
awards are subject to the Company attaining certain financial performance
goals relating to return on net
tangible assets and earnings before interest, taxes, depreciation and
amortization during the three-year period ending December 29, 2001.
(4) The amounts disclosed in this column represent the compensation value to
the named executive officers of life insurance premiums paid by the Company
for life insurance policies on the lives of Messrs. Witt, Franklin,
Barron, Audino and Turner. The amounts also include the amount representing
total imputed interest from interest-free loans obtained by the individuals
from the Company pursuant to the Littelfuse Executive Loan Program in
fiscal 1998, 1999 and 2000. Total imputed interest for each of Messrs. Witt,
Barron and Turner was $117,505, $15,201, and $3,058, respectively, in
fiscal 1998; $145,766 $15,570, and $3,905, respectively, in fiscal 1999;
and $176,091, $11,734, and $4,206, respectively, in fiscal 2000.
(5) Mr. Franklin joined the Company on December 30, 1998.
(6) Mr. Turner retired from the Company on August 1, 2000. The compensation
shown was paid to him between January 1, 2000 and July 31, 2000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 2000 to the
named executive officers.
Howard B. Witt................ 2000 475,000 356,468 193,830 65,000 186,028
Chairman of the Board, 1999 410,417 307,505 184,200 60,000 158,046
President and 1998 400,000 50,000 0 60,000 131,035
Chief Executive Officer
Philip G. Franklin(5)......... 2000 225,000 125,632 83,070 22,000 1,008
Vice President, Treasurer and 1999 201,538 105,977 61,400 30,000 1,478
Chief Financial Officer 1998 0 0 0 0 0
William S. Barron............. 2000 225,000 147,028 83,070 22,000 14,801
Vice President 1999 192,500 87,884 61,400 20,000 19,903
1998 175,000 9,700 0 20,000 19,566
Kenneth R. Audino............. 2000 160,000 88,193 83,070 15,000 2,187
Vice President 1999 147,083 67,839 61,400 14,000 2,829
1998 133,000 11,300 0 12,000 3,218
Lloyd J. Turner(6)............ 2000 117,018 37,334 0 0 19,917
Vice President 1999 160,000 74,145 61,400 14,000 10,895
1998 155,000 29,700 0 12,000 7,872
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(l)
NUMBER OF OF TOTAL
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR(2) ($/SHARE) DATE(3) 5%($) 10%($)
(1) Potential realizable value is based on an assumption that the price of
the Common Stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the option term. These numbers are
calculated based on the requirements of the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
(2) The Company granted options representing 358,250 shares to employees in
(3) The options become exercisable in 20% increments on April 28, 2001-2005.
The options expire 10 years after the date they become exercisable.
The expiration date shown is the expiration date of the options which will
become exercisable an April 28, 2005.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL-YEAR-END
The following table provides information on option exercises in fiscal 2000
by the named executive officers and the value of such officers' unexercised
options at December 30, 2000.
Howard B. Witt 65,000 18.1% 35.50 4/28/2015 2,489,627 7,331,500
William S. Barron 22,000 6.1% 35.50 4/28/2015 842,643 2,481,431
Kenneth R. Audino 15,000 4.2% 35.50 4/28/2015 574,529 1,691,885
Philip G. Franklin 22,000 6.1% 35.50 4/28/2015 842,643 2,481,431
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARs
ACQUIRED OPTIONS/SARs AT AT
ON VALUE DECEMBER 30, 2000(l) DECEMBER 30, 2000($)(2)
EXERCISE REALIZED -------------------------- --------------------------
NAME (#) ($)(3) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------------- -------------------------- --------------------------
(1) Future exercisability is subject to vesting and the optionee remaining
employed by the Company.
(2) Value is calculated by subtracting the exercise price from the assumed fair
market value of the securities underlying the option at fiscal year-end and
multiplying the result by the number of in-the-money options held. There is
no guarantee that if and when these options are exercised they will have
this value. Fair market value was calculated based on the average high and
low "sales" price of shares of the Common Stock as reported on The Nasdaq
Stock Market an December 29, 2000 ($27.69).
(3) Market value of underlying securities at exercise date (closing price as
reported on The Nasdaq Stock Market on exercise date), minus the exercise
price of in-the-money options.
(4) Mr. Turner retired from the Company on August 1, 2000.
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL EMPLOYMENT AGREEMENTS ENTERED INTO
WITH EXECUTIVE OFFICERS
The Company entered into an Employment Agreement dated September 1, 1996,
with Howard B. Witt the Chairman, President and Chief Executive Officer of the
Company. This Employment Agreement has a five-year term and provides that
Mr. Witt will receive an annual salary of no less than $310,000 plus bonuses
to be determined from time to time by the Board of Directors of the Company. To
the extent he is otherwise eligible, Mr Witt will participate in and receive
the benefits of any and all stock options, pension, retirement, vacation, profit
sharing, health, disability insurance and other benefits, plans, programs and
policies maintained by the Company from time to time. The Employment
Agreement provides that during the term of the Employment Agreement, but subject
to election and removal by the Board of Directors of the Company in its sole
discretion, Mr. Witt will serve as Chairman, President and Chief Executive
Officer of the Company.
The Employment Agreement allows for termination of Mr. Witt for Cause (as
defined therein). In the event that the Company were to terminate Mr. Witt's
employment without Cause, he would continue to be paid the compensation he would
otherwise have earned for the remaining balance of the term of the Employment
Agreement. Additionally, any of his unvested stock options would immediately
vest upon such a termination of his employment. Mr. Witt has agreed that, in the
event he were to terminate his employment with the Company in violation of the
terms of the Employment Agreement or the Company terminates his employment
for Cause, he will not compete with the Company for a period of two years
thereafter. If the Employment Agreement expires and is not renewed after its
initial five-year term, Mr. Witt has agreed that he will not compete with the
Company for a period of one year thereafter.
The Company entered into Change of Control Employment Agreements dated
September 1, 1996, with Howard B. Witt, Kenneth R. Audino and William S. Barron
and dated January 4, 1999, with Philip G. Franklin. These Change of Control
Employment Agreements are designed to provide these individuals with certain
employment and compensation protection in the event that there was a Change of
Control (as defined therein) respecting the Company at any time prior to
September 2, 2001. If such a Change of Control were to occur and Mr. Witt's
employment with the Company was terminated at any time during the three-year
period thereafter, or any of the other individual's employment with the Company
was terminated at any time during the two-year period thereafter, other than for
Cause (as defined therein), or if during these time periods any of these
individuals were to terminate their employment for Good Reason (as defined
therein), then the Company would be obligated to make certain payments to or for
the benefit of these individuals.
In the case of Mr. Witt, the Company would pay him his compensation which
had accrued prior to the date of termination, including an annualized bonus,
plus an amount equal to the product of three times the sum of Mr. Witt's annual
base salary plus bonus. Additionally, the Company would contribute on behalf of
Mr. Witt to the Company's Supplemental Executive Retirement Plan (the "SERP")
an amount equal to the amount which would have been credited to Mr. Witt's
account under the SERF if Mr. Witt had continued in the employment of the
Company for an additional three years after the date of termination.
Additionally, Mr. Witt's SERP account balance would no longer be subject to
forfeiture in the event he were to be employed by a competitor of the Company.
Mr. Witt and his family would also be provided with medical insurance benefits
until he reaches the age of 62.
In the event that any payments received by Mr. Witt upon a Change of
Control would require him to pay the 20% excise tax imposed by Section 4999 of
the Internal Revenue Code, the Company would make an additional payment to Mr.
Witt in an amount such that, after payment by Mr. Witt of
such excise tax, Mr. Witt would retain the same amount of the payments made by
the Company to him which he would have retained if he had not paid the excise
with respect to the other individuals, under their Change of Control
Employment Agreements they will be paid their accrued compensation and
annualized bonus, and will receive an amount equal to two times the sum of their
annual salary plus bonus, two additional years of crediting under the SERP and
two years of continuing medical insurance benefits. They will also receive the
tax "gross-up" payment described above. Additionally, if any individual were to
terminate his employment with the Company for Good Reason (as defined in the
Change of Control Employment Agreement) or be terminated by the Company other
than for Cause (as defined in the Change of Control Employment Agreement)
during the two-year period following a Change of Control, the individual's
account balance under the SERP would not be subject to forfeiture in the event
he were to work for a competitor of the Company within two years after his date
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the system of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgements, and the
clarity of disclosures in the financial statements.
The Audit Committee also reviewed and discussed the audited financial
statements with the independent auditors and discussed the matters requiring
discussion pursuant to SAS 61, including the accounting methods used in the
audit. In addition, the Committee has discussed with the independent auditors
the auditors' independence from management and the Company including the matters
in the written disclosures and letter required by the Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees, and
considered the compatibility of nonaudit services with auditor's independence.
The Audit Committee discussed with the independent auditors the overall
scope and plans for their audits. The Audit Committee meets with the independent
auditors, with and without management present, to discuss the results of their
examinations, their evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting. The Audit Committee held
three meetings during fiscal 2000.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 30, 2000 for filing with the SEC. The
Committee and the Board have also recommended, subject to stockholder approval,
the selection Of Ernst & Young LLP as the Company's independent auditors for the
fiscal year ended December 29, 2001.
John J. Nevin
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee administers the Company's executive cash and
benefits compensation program.
The goals of the Company's integrated executive compensation program are
1. Pay competitively to attract, retain and motivate a high-quality
senior management team;
2. Link annual salary increases to the attainment by each executive
officer of individual performance objectives;
3. Tie individual incentive cash compensation to Company and individual
performance goals; and
4. Align executive officers' financial interests with stockholder value.
As one of the factors in its consideration of compensation matters, the
Compensation Committee also considers the anticipated tax treatment to the
Company and to the executive officers of various payments and benefits.
However, since some types of compensation payments and their deductibility
depend upon the timing of an executive officer's exercise of stock options
(e.g., the spread on exercise of non-qualified options), and because
interpretations and changes in the tax laws and other factors beyond the control
of the Compensation Committee may also affect the deductibility of compensation,
the Compensation Committee will not necessarily limit executive compensation to
that which is deductible under applicable provisions of the Internal Revenue
Code. The Compensation Committee will consider various alternatives to
preserving the deductibility of compensation payments and benefits to the
extent reasonably practicable and to the extent consistent with the Company's
other compensation goals.
The Compensation Committee's determination of each executive officer's base
salary is designed to accomplish two goals. The first goal is to pay executive
officers competitively to attract,
retain and motivate a high-quality senior management team. The second goal is
to link annual salary increases to the attainment by each executive officer of
individual performance objectives. The base salary of each executive officer
is targeted to be within a range of 80% to 120% of the average base salary
received by executive officers in similar positions with manufacturing
companies having comparable annual sales.
In determining the base salary to be paid to each executive officer other
than the Chief Executive Officer (the "Other Executive Officers"), the
Compensation Committee reviews recommendations prepared by the Chief Executive
Officer. These recommendations are based, in part, on executive compensation
surveys. These recommendations are also based on the executive officer's
attainment of individual performance objectives. After consultation with the
Chief Executive Officer, the Compensation Committee reviews the recommendations
and the supporting executive compensation review. The Compensation Committee
then determines the annual base salary of each of the Other Executive Officers.
The determination of the Chief Executive Officer's annual base salary is
specifically discussed below.
ANNUAL INCENTIVE COMPENSATION PROGRAM
The Annual Incentive Compensation Program is designed to accomplish the
goal of tying incentive cash compensation to Company and individual performance
goals. The Compensation Committee annually approves the Annual Incentive
Compensation Program and, after consultation with the Chief Executive Officer,
delegates the administration of the program as it relates to the Other Executive
Officers to the Chief Executive Officer. The Compensation Committee administers
the program as it relates to the Chief Executive Officer.
The Chief Executive Officer establishes a target and a maximum amount that
may be awarded to each of the Other Executive Officers as an annual incentive
compensation award. The target and maximum amounts established for each of the
Other Executive Officers are percentages of such executive officer's base
salary. These amounts are established by the Chief Executive Officer with input
from compensation survey data. In determining each of the Other Executive
Officers' total award, Company performance is determined based on the
achievement by the Company of specified financial objectives, which may include
sales, earnings before interest and taxes ("EBIT") and cash flow, while
individual performance is determined based on each of the Other Executive
Officers' achievement of specified performance objectives. At the end of each
fiscal year, the amount of the total award paid to each of the Other Executive
Officers is determined based on Company and individual performance using the
mathematical formula previously established by the Chief Executive Officer and
the Chief Financial Officer under the program. The determination of whether each
of the Other Executive Officers achieved his or her specified performance
objectives is made by the Chief Executive Officer after consulting with the
Compensation Committee. The Compensation Committee, in administering the Annual
Incentive Compensation Program as it relates to the Chief Executive Officer,
makes all of the determinations described above with respect to the Chief
The stock-based compensation programs of the Company are administered by
the Compensation Committee. The granting of stock options by the Compensation
Committee is designed to accomplish the goal of aligning the financial interests
of executive officers with stockholder value. The number of stock options
granted to executive officers is determined by the executive officer's position
and responsibilities. Grants of stock options are intended to recognize
different levels of contribution to the achievement by the Company of its
performance goals as well as different levels of responsibility and experience
as indicated by each executive officer's position. Generally, all stock options
granted to executive officers have been granted with an exercise price equal to
the fair market value of the Common Stock on the date of grant. In 1999, stock
options with an exercise price below fair market value were granted to Mr.
Franklin upon commencement of his employment with the Company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee increased Mr. Witt's 2000 base salary from his
1999 base salary due to his performance as Chief Executive Officer and the
relationship of his compensation to the compensation of chief executive officers
of peer group companies. This increase was based, in part, on Mr. Witt's
attainment of individual performance objectives.
Mr. Witt's total award under the Annual Incentive Compensation Program was
determined based on Company and individual performance using the mathematical
formula established under the program by the Compensation Committee prior to the
beginning of the 2000 fiscal year.
The Compensation Committee in 2000 granted Mr. Witt options to purchase
65,000 shares of Common Stock. The number of stock options granted to Mr. Witt
reflects the Compensation Committee's recognition of the performance of his
duties as the Chief Executive Officer.
John P. Driscoll
Bruce A. Karsh
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933 or the Exchange Act
that might incorporate by reference filings, including this Proxy Statement, in
whole or in part, the preceding Report of the Compensation Committee on
Executive Compensation and the Performance Graph included in "Company
Performance" shall not be incorporated by reference into any such filings.
The following graph compares the five-year cumulative total return on the
Common Stock to the five-year cumulative total returns on the Nasdaq
Non-Financial Index, and the Russell 2000 Index. The Company does not include a
comparator group because companies that it competes with are typically either
privately-held or comprise divisions of much larger public entities. As a
result, the Company has determined that a group of companies with similar
market capitalization is an appropriate comparator group and has selected the
Russell 2000 Index for such purpose.
1995 1996 1997 1998 1999 2000
Littelfuse, Inc. 100 132 139 105 132 156
NASDAQ Non-Financial 100 121 142 209 409 238
Russell 2000 100 115 138 134 160 153
In the case of the Nasdaq Non-Financial Index and the Russell 2000 Index, a
$100 investment made on December 31, 1995, and reinvestment of all dividends,
are assumed. In the case of the Company, a $100 investment made on December 31,
1995 is assumed (the Company paid no dividends in 1996, 1997, 1998, 1999 or
2000). Returns are at December 31 of each year, with the exception of 1998, 1999
and 2000 for the Company, which are at January 2, 1999, January 1, 2000 and
December 30, 2000, respectively.
PENSION PLAN TABLE
The Company has two non-contributory defined benefit retirement plans in
which the named executive officers participate. One of these plans is qualified
under the applicable provisions of the Internal Revenue Code (the "Qualified
Plan"), and the other is a non-qualified Supplemental Executive Retirement Plan
("SERP"). The total annual combined pension benefits payable under the Qualified
Plan and SERP to the named executive officers are determined on the basis of a
final five-year average annual compensation formula.
The compensation covered by the retirement plans for each of the named
executive officers is the sum of the amounts reported in the salary and bonus
columns of the Summary Compensation Table. The table shows the total combined
annual pension benefits payable under the current provisions of both retirement
plans assuming retirement of an employee who has continued employment to age 62.
YEARS OF SERVICE
COMPENSATION 10 15 20 25 30 35
$125,000....$ 60,262 $ 73,804 $ 73,804 $ 73,804 $ 73,804 $ 73,804
150,000..... 73,804 90,054 90,054 90,054 90,054 90,054
175,000..... 87,345 106,304 106,304 106,304 106,304 106,304
200,000.... 100,887 122,554 122,554 122,554 122,554 122,554
225,000.... 114,429 138,804 138,904 138,804 138,804 138,804
250,000.... 127,970 155,054 155,054 155,054 155,054 155,054
300,000.... 155,053 187,554 187,554 187,554 187,554 187,554
400,000.... 209,220 252,554 252,554 252,554 252,554 252,554
500,000.... 263,386 317,554 317,554 317,554 317,554 317,554
(1) Payable in the normal form of payment which is a single life annuity for a
single person (if a person is married, the form of payment is joint and
50% to surviving spouse). For 2000, the maximum annual social security
payment at age 62 for a single person is $14,892. The formula under the
SERP is offset for one-half of the $14,892.
(5) Maximum normal retirement benefit is earned after 12 years of service.
Under an alternative form, payments from the SERP can be guaranteed over
The years of service (to the nearest year) as of December 30, 2000, for the
named executive officers are as follows: Messrs. Witt, 22 years; Franklin, 2
years; Barron, 10 years; Audino, 36 years and Turner, 12 years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Driscoll and Karsh,
neither of whom are employees of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1995, the Board of Directors of the Company adopted the Littelfuse
Executive Loan Program to provide interest-free loans to management for the
purpose of enabling them to exercise their Company stock options and pay the
resulting income taxes. Pursuant to this Program, Mr. Witt has obtained
interest-free loans from the Company in the aggregate amount of $3,069,746. The
amount of the loan obtained by Mr. Witt in 2000 was $545,237. Imputed interest
on such loans for fiscal 2000 was $176,091. Funds obtained from such loans were
used by Mr. Witt to exercise Company stock options and to pay income taxes
arising from such exercise. No other executive officer of the Company has
obtained loans in excess of $60,000 pursuant to the Littelfuse Executive Loan
Except as described above, the Company is not a party to any other material
transactions of the type required to be described herein.
Any stockholder proposal intended to be presented at the 2002 annual
meeting of the Company's stockholders must be received at the principal
executive offices of the Company by November 21, 2001, in order to be considered
for inclusion in the Company's proxy materials relating to that meeting.
The Company's bylaws require that in order to nominate persons to the
Company's Board of Directors or to present a proposal for action by stockholders
at an annual meeting of stockholders, a stockholder must provide advance written
notice to the secretary of the Company, which notice must be delivered to or
mailed and received at the Company's principal executive offices not later than
the close of business on the 60th day nor earlier than the close of business on
the 90th day prior to the first anniversary of the preceding year's annual
meeting of stockholders; provided that in the event that the date of the annual
meeting to which such stockholder's notice relates is more than 30 days before
or more than 60 days after such anniversary date, for notice by the stockholder
to be timely it must be so delivered not earlier than the close of business on
the 90th day prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual meeting or the l0th
day following the day on which public announcement of the date of such annual
meeting is first made by the Company. In the event that the number of Directors
to be elected to the Board of Directors is increased and there is no public
announcement by the Company naming all of the nominees for Director or
specifying the size of the increased Board of Directors at least 70 days prior
to the first anniversary of the preceding year's annual meeting, a stockholder's
notice will be considered timely, but only with respect to nominees for any
new positions created by such increase, if it is delivered to or mailed and
received at the Company's principal executive offices not later than the close
of business on the 10th day following the day on which such public announcement
is first made by the Company. The stockholder's notice must contain detailed
information specified in the Company's bylaws. As to any proposal that a
stockholder intends to present to stockholders without inclusion in the
Company's proxy statement for
the Company's 2002 annual meeting of the Company's stockholders, the proxies
named in management's proxy for that meeting will be entitled to exercise their
discretionary authority on that proposal by advising stockholders of such
proposal and how they intend to exercise their discretion to vote on such
matter, unless the stockholder making the proposal solicits proxies with respect
to the proposal to the extent required by Rule 14a-4(c)(2) under the Securities
Exchange Act of 1934.
As of the date of this Proxy Statement, management knows of no matters to
be brought before the meeting other than the matters referred to in this Proxy
By order of the Board of Directors,
Mary S. Muchoney
March 26, 2001
AUDIT COMMITTEE CHARTER
The audit committee is a committee of the board of directors, which shall be
comprised of directors who are independent of the management of the Company and
are free of any relationship that, in the opinion of the board of directors,
would interfere with their exercise of independent judgment as committee
STATEMENT OF POLICY
The audit committee shall provide assistance to the directors in fulfilling
their responsibility to the shareholders, potential shareholders and investment
community relating to accounting and reporting practices of the company and the
quality and integrity of financial reports. In so doing, it is the
responsibility of the audit committee to maintain free and open communication
between the directors, the independent auditors and the financial management of
The audit committee believes its policies and procedures should remain flexible,
in order to best react to changing conditions and to ensure to the directors and
shareholders that the accounting and reporting practices of the company are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
- - Review and recommend to the directors the independent auditors to be
nominated to audit the company's financial statements. Have a clear
understanding with the independent auditors that they are ultimately
accountable to the board of directors and the audit committee, who have
ultimate authority to engage, evaluate and, if appropriate, terminate
- - Meet with the independent auditors and financial management of the Company
to review the scope of the proposed audit for the current year and the
audit procedures to be utilized and to approve the fee of the independent
auditors. At the conclusion of the audit, review the findings, comments
and recommendations of the independent auditors.
- - Review with the independent auditors and the company's financial
management, the adequacy and effectiveness of the accounting and financial
controls of the company, and elicit any recommendations for the improvement
of such internal controls or particular areas where new or more detailed
controls or particular arms where new or more detailed controls or
procedures are desirable.
- - Review any legal or regulatory matters that may have a material effect on
the financial statements of the company or related company compliance
- - Inquire of management and the independent auditors about significant risks
or exposures and assess the steps management has taken to minimize such
risks to the Company.
- - Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the shareholders.
Any changes in accounting principles should be reviewed.
- - Review with financial management and the independent auditors the results
of their timely analysis of significant financial reporting issues and
practices, including changes in, or adoptions of,
accounting principles and disclosure practices. Also review with financial
management and the independent auditors their qualitative judgments about
the appropriateness, not just acceptability, of accounting principles and
financial disclosure practices used or proposed to be used, and
particularly, the degree of aggressiveness or conservatism of the
organization's accounting principles and underlying estimates.
- - Provide sufficient opportunity for the independent auditors to meet with
the members of the audit committee without members of management present.
Among the items to be discussed in these meetings are the independent
auditors' evaluation of the company's financial and accounting personnel,
and the cooperation that the independent auditors received during the
course of the audit.
- - Provide sufficient opportunity for financial management to meet with the
members of the audit committee without independent auditors present. Among
the items to be discussed are financial management's evaluation of the
performance, service levels and fees of the independent auditors.
- - Review accounting and financial personnel and succession planning within
- - Report the results of the annual audit to the board of directors. Review
the nature and scope of other professional services provided to the
company by the independent auditors and consider the relationship to the
- - Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the board of
- - Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
PROXY LITTELFUSE, INC.
PROXY CARD FOR ANNUAL MEETING ON APRIL 27, 2001
The undersigned hereby appoints Philip G. Franklin and Mary S. Muchoney,
jointly and severally, with full power of substitution, to vote all shares of
Common Stock which the undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held at the offices of the Company located at 800 East
Northwest Highway, Des Plaines, Illinois, on Friday April 27, 2001, at 9:00 a.m.
local time, and at any adjournment thereof with all powers the undersigned would
possess if personally present, as follows:
(1) Election of six nominees to the Board of Directors to serve terms of
one year or until their successors are elected.
FOR all nominees listed below WITHHOLD AUTHORITY
(Except as marked to the contrary below) to vote for all nominees
Howard B. Witt, John P. Driscoll, Anthony Grillo, Bruce A. Karsh,
John E. Major and John J. Nevin
(INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through that nominee's name)
(2) Approval and ratification of the Directors' appointment of Ernst &
Young LLP as the Company's independent auditors for the fiscal year
ending December 29, 2001.
FOR AGAINST ABSTAIN
The Board of Directors unanimously recommends a vote "FOR" these proposals.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY.
(continued, and to be signed on the other side)
Account No. of Shares Proxy No.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO INSTRUCTIONS ARE GIVEN, IT
WILL BE VOTED "FOR" ELECTION OF ALL NOMINEES AS DIRECTORS OF THE COMPANY, "FOR"
APPROVAL AND RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS, AND IN THE
DISCRETION OF THE NAMED PROXIES UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING OR AN ADJOURNMENT THEREOF.
Dated: , 2001
Please sign exactly as name appears on stock certificate(s). Executors,
administrators, trustees, guardians, attorneys-in-fact, etc., should give their
full titles. If signer is a corporation, please give full corporate name and
have a duly authorized officer sign, stating title. If a partnership, please
sign in partnership name by authorized person. If a limited liability company,
please sign in limited liability company name by authorized person. If stock is
registered in two names, both should sign.
Please vote, sign, date and return this proxy promptly.
Howard B. Witt...... 25,300 980,385 225,200 177,800 2,692,838 726,700
Philip G. Franklin.. 0 0 6,000 46,000 84,998 339,992
William S. Barron... 0 0 66,200 56,800 906,319 222,750
Kenneth R. Audino... 10,000 240,108 38,800 38,200 445,918 152,900
Lloyd J. Turner(4).. 48,900 1,305,436 31,600 24,400 271,999 161,250