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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. )
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Check the appropriate box:
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RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12
Littelfuse, Inc.
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(Name of Registrant as Specified In Its Charter)
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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SEC 1913 (02-02)
LITTELFUSE, INC.
800 East Northwest Highway
Des Plaines, Illinois 60016
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 30, 2004
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 30, 2004, at 9:00
a.m., local time, for the following purposes as described in the attached Proxy
Statement:
1. To elect seven 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
January 1, 2005;
and 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
12, 2004, will be entitled to vote at the meeting.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED
ENVELOPE.
Mary S. Muchoney
Secretary
March 26, 2004
LITTELFUSE, INC.
800 East Northwest Highway
Des Plaines, Illinois 60016
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
APRIL 30, 2004
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 30, 2004.
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, 2004. The Company's 2003 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.
VOTING
Stockholders of record on the books of the Company at the close of
business on March 12, 2004, 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 12, 2004,
22,059,993 shares of its Common Stock, par value $.01 per share (the "Common
Stock"). Each outstanding share of Common Stock entitles the holder to one vote
on each matter submitted to a 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 at 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 seven 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 12, 2004, 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 (the "Commission").
NUMBER OF SHARES OF
COMMON STOCK
BENEFICIALLY OWNED(1)
-----------------------
SHARES PERCENT
------ -------
Ariel Capital Management, Inc................................... 3,248,620 13.9%
307 North Michigan Avenue, Suite 500
Chicago, Illinois 60601
T. Rowe Price Associates, Inc.(2)............................... 2,672,844 11.5%
100 E. Pratt Street
Baltimore, Maryland 21202
American Century Investment Management ......................... 1,840,319 7.9%
Twentieth Century Tower
4500 Main St.
Kansas City, MO 64111
2
NUMBER OF SHARES OF
COMMON STOCK
BENEFICIALLY OWNED(1)
-----------------------
SHARES PERCENT
------ -------
Howard B. Witt.................................................. 584,800 2.5%
John P. Driscoll................................................ 28,512 *
Anthony Grillo(3)............................................... 57,367 *
Bruce A. Karsh(4)............................................... 153,710 *
John E. Major................................................... 48,752 *
Gordon Hunter................................................... 5,296 *
Ronald L. Schubel............................................... 5,423 *
Kenneth R. Audino............................................... 88,000 *
Philip G. Franklin.............................................. 80,000 *
All current directors and executive officers as a group (13
persons)................................................... 1,159,688 5.0%
* Indicates ownership of less than 1% of Common Stock.
-------------
(1) The number of shares listed includes an aggregate of 808,300 shares of
Common Stock, which may be acquired through the exercise of stock options
within 60 days of March 12, 2004.
(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 11,567 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, requires the
Company's executive officers, directors and holders of more than 10% of the
Common Stock to file with the 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 January 3,
2004, its executive officers and directors 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.
3
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Seven 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 12,
2004. 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 63, 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., a
reporting company under the Exchange Act, and is a member of the Electronic
Industries Alliance Board of Governors. He also serves as a director of the
Artisan Mutual Fund, a reporting company under the Exchange Act.
John P. Driscoll, age 68, has been a director of the Company since
February 1998. 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 in 1995.
Mr. Driscoll is a former Vice President of the Components Group of the
Electronic Industry Alliance, and a nineteen-year member of its Board of
Governors. He was also affiliated with the Electronics Component and Technology
Conference and the Japan American Society. Mr. Driscoll has been determined to
be "independent" under NASDAQ listing standards.
Anthony Grillo, age 48, has been a director of the Company since
December 1991. Mr. Grillo is a Senior Managing Director of Evercore Partners,
Inc. where he has founded the restructuring practice for the firm. For two years
prior, Mr. Grillo was a Senior Managing Director of Joseph Littlejohn & Levy,
Inc., a private equity firm. For eight years previous, Mr. Grillo was a Senior
Managing Director of the Blackstone Group L.P., an investment banking firm.
During those years, he was the co-founder of Blackstone's Restructuring and
Reorganization Group, Chief Operating Officer of the firm's M&A practice and a
member of its Investment Committee. Mr. Grillo serves on the Board of Directors
of Iasis Healthcare International, Inc., and Loews Cineplex Entertainment,
reporting companies under the Exchange Act. Mr. Grillo has been determined to be
"independent" under NASDAQ listing standards.
Gordon Hunter, age 52, has been a director of the Company since June
2002, and became the Chief Operating Officer of the Company in November, 2003.
Prior to joining the Company, Mr. Hunter was Vice President, Intel
Communications Group, and General Manager, Optical Products Group. Mr. Hunter
was responsible for managing Intel's access and optical communications business
segments within the Intel Communications Group. Prior to joining Intel in
February 2002, he served as President of Elo TouchSystems, a subsidiary of
Raychem Corporation . He also served in a variety of positions during a
4
20-year career at Raychem Corporation, including Vice President of commercial
electronics and a variety of sales, marketing, engineering and management
positions.
Bruce A. Karsh, age 48, has been a director of the Company since
December 1991. Mr. Karsh is President and co-founder of Oaktree Capital
Management, LLC, an investment advisory firm with over $27 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 has been determined to be
"independent" under NASDAQ listing standards.
John E. Major, age 58, has been a director of the Company since
December 1991. Mr. Major is President of MTSG, a strategic consulting and
investments company. Previously, he was Chairman and CEO of Novatel Wireless
Inc., which provides wireless data access solutions for PDAs and notebook PCs.
Previously he was 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. Mr. Major serves on the Board of Directors of Verilink Corporation,
Broadcom Corporation and Lennox International Inc., all reporting companies
under the Exchange Act. Mr. Major has been determined to be "independent" under
NASDAQ listing standards.
Ronald L. Schubel, age 60, has been a Director of the Company since
June 2002. Mr. Schubel is Corporate Executive Vice President and President of
the Americas Region for Molex Incorporated, a global manufacturer of
interconnect systems. He began his career with Molex in 1981, spending four
years in Singapore as President of the Far East South Region. Prior to joining
Molex, Mr. Schubel worked for General Motors for 15 years. His last position
with General Motors was Director of Operations for the Packard Electronics
Division. Mr. Schubel has been determined to be "independent" under NASDAQ
listing standards.
INFORMATION CONCERNING BOARD OF DIRECTORS AND ITS COMMITTEES
COMPENSATION OF DIRECTORS. Directors who are not employees of the
Company are paid an annual Director's fee of $30,000, $1,500 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. The Chairman of the
Audit Committee is paid an additional $6,000 annually and the Chairman of the
Compensation Committee is paid an additional $3,000 annually. No 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 Littelfuse
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 Littelfuse, Inc.
(the "1993 Stock Plan") provides for a grant at each annual meeting of the Board
of Directors to each non-employee Director of non-qualified stock options to
purchase 5,000 shares of Common Stock at the fair market value on the date of
grant. Accordingly, on May 2, 2003, Messrs. Driscoll, Grillo, Hunter, Karsh,
Major and Schubel
5
were each granted an option to purchase 5,000 shares of Common Stock. Mr. Hunter
was an independent director before becoming Chief Operating Officer of the
Company in November, 2003.
ATTENDANCE AT MEETINGS. The Board of Directors held nine meetings
during 2003. All of the directors attended at least 75% of the meetings of the
Board of Directors and the committees on which they served. It is the policy of
the Company that all of the directors attend the annual meeting of the
stockholders of the Company.
Independent members of the Board of Directors of the Company meet in
executive session without management present at least two times per year.
Stockholders wishing to communicate directly with independent directors should
communicate in writing to the Corporate Secretary of the Company, who will in
turn promptly forward such communication to the directors.
AUDIT COMMITTEE. 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, (iv) pre-approve all audit services; (v) pre-approve all
permissible non-audit services to be performed by the Company's auditors; and
(vi) review transactions posing a potential conflict of interest among the
Company and its Directors, officers and affiliates. A copy of the Audit
Committee Charter, amended as of May 2, 2003, is included as Appendix A to this
Proxy Statement and is also available on the Company's website at
www.littelfuse.com. The Audit Committee met nine times in 2003. Members of the
Audit Committee are John E. Major, Ronald L. Schubel and Anthony Grillo, the
Chairman of the Committee, all of whom have been deemed to be "independent"
under the Sarbanes Oxley Act of 2002. The Board of Directors has determined that
Anthony Grillo is an "audit committee financial expert" based on his experience
as a certified public accountant, investment banker and private equity investor.
Mr. Grillo is independent from management.
NOMINATING COMMITTEE. It is the responsibility of the Nominating
Committee to identify individuals qualified to serve on the Board of Directors
and to recommend those individuals the Board should nominate for election at the
Company's annual meeting of stockholders. The Nominating Committee will consider
nominees for the Board of Directors recommended by stockholders, using the same
evaluation process as for any other candidate. Recommendations should be
submitted to the Secretary of the Company at the Company's principal executive
offices. The Board of Directors has adopted a charter for the Nominating
Committee. A copy of that charter is attached as Appendix B to this Proxy
Statement and is also available on the Company's website at www.littelfuse.com.
The Nominating Committee did not meet during fiscal 2003; however, on February
6, 2004, the Nominating Committee met to evaluate and to nominate the persons
who would be standing for election as directors at the Company's 2004 annual
stockholders' meeting. The Nominating Committee reviewed the performance of all
of the current members of the Board of Directors and determined that all of the
current directors should be nominated for re-election. In making this
recommendation, consideration was given to matters such as attendance at
meetings, preparation for meetings, input at meetings, interaction with other
board members, and other tangible or intangible benefits their service as
directors brought to the Company. No other candidates were recommended or
evaluated. Members of the Nominating Committee are John P. Driscoll and Bruce A.
Karsh.
6
Director Qualification Standards
The Nominating Committee will take into consideration such factors as
it deems appropriate, including the following:
- Experience as an executive or director of a publicly traded company;
- Familiarity with the business of the Company and its industry;
- Availability to actively participate in meetings of the Board of
Directors and attend the annual meeting of stockholders;
- Knowledge and experience in the preparation or evaluation of financial
statements;
- Diversity;
- Satisfaction of the criteria for independence established by the
Commission and NASDAQ listing standards, as they may be amended from
time to time; and
- Ability to interact in a productive manner with the other members of
the Board of Directors.
COMPENSATION COMMITTEE. 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 and executive officers of the Company and its subsidiaries. The
Compensation Committee met eight times in 2003. Members of the Compensation
Committee are Bruce A. Karsh and John P. Driscoll, the Chairman of the
Committee. Gordon Hunter resigned from the Compensation Committee when he became
the Chief Operating Officer of the Company.
TECHNOLOGY COMMITTEE. It is the responsibility of the Technology
Committee to review the research and development activities of the Company and
ensure the Company maximizes the use of technology throughout the organization.
The Technology Committee met eight times in 2003. Members of the Technology
Committee are John E. Major, Ronald L. Schubel and Gordon Hunter, the Chairman
of the Committee.
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Chief
Executive Officer and each of the other three most highly compensated executive
officers (the "named executive officers") for the last three fiscal years.
7
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
AWARDS
---------------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
------------------------ STOCK AWARDS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) OPTIONS/SARS(#) COMPENSATION($)(3)
--------------------------- ---- --------- ----------- ------------ --------------- ------------------
Howard B. Witt...................... 2003 530,000 363,120 172,920 65,000 59,681
Chairman of the Board, 2002 500,000 309,301 0 65,000 116,974
President and 2001 475,000 0 0 65,000 164,459
Chief Executive Officer
Philip G. Franklin.................. 2003 275,000 157,769 144,100 22,000 1,551
Vice President, Operations Support 2002 250,000 120,956 0 22,000 1,546
and Chief Financial Officer 2001 225,000 0 0 22,000 1,546
65,000 35,000 0 50,000 31,437
Gordon Hunter (4)................... 2003
Chief Operating Officer
Kenneth R. Audino................... 2003 180,000 88,814 144,100 15,000 3,806
Vice President 2002 167,000 71,311 0 15,000 2,325
2001 160,000 0 0 15,000 2,270
(1) The amounts disclosed in this column are awards under the Company's
Annual Incentive Compensation Program.
(2) In 2003, the Compensation Committee granted restricted shares awards
under the 1993 Stock Plan to Mr. Witt for 6,000 shares of Common Stock
and to each of Messrs. Audino and Franklin for 5,000 shares of Common
Stock. The restricted shares subject to such awards had values listed
in the table based upon a $28.82 share average of the high and low
"sales" price of Common Stock as reported on The NASDAQ Stock Market on
January 2, 2004. 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 31, 2005.
(3) 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, Hunter and Audino. The amounts also include the amount
representing total imputed interest from interest-free loans obtained by
Mr. Witt from the Company pursuant to the Littelfuse Executive Loan
Program in fiscal 2001 and 2002. Total imputed interest for Mr. Witt was
$152,874 in fiscal 2001; $103,737 in fiscal 2002; and $53,526 in fiscal
2003.
(4) Mr. Hunter joined the Company as Chief Operating Officer effective
November 3, 2003. He was not employed by the Company in any capacity
prior to such date. All 2003 compensation data presented is as of
November 3, 2003.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal 2003 to the
named executive officers.
8
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
------------------------------------------------------------ -------------------------
PERCENTAGE
NUMBER OF OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR(2) ($/SHARE) DATE(3) 5%($) 10%($)
----------------------------------------------------------------------------------------------------------------------------
Howard B. Witt.......... 65,000 17.0% 20.24 5/2/2013 825,256 2,093,356
Philip G. Franklin....... 22,000 5.8% 20.24 5/2/2013 279,317 708,520
Gordon Hunter........... 30,000 7.9% 28.08 11/7/2013 529,781 1,342,569
20,000 5.2% 7.00 11/7/2013 774,787 1,316,646
Kenneth R. Audino...... 15,000 3.9% 20.24 5/2/2013 190,444 483,082
------------
(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 Commission and do
not reflect the Company's estimate of future stock price performance.
(2) The Company granted options representing 381,750 shares to employees in
fiscal 2003.
(3) The options granted to Messrs. Witt, Franklin and Audino become
exercisable in 20% increments on May 2, 2004-2008. The options granted to
Mr. Hunter become exercisable in 20% increments on November 7, 2004-2008.
The options expire 10 years after the grant.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information on option exercises in fiscal 2003 by
the named executive officers and the value of such officers' unexercised options
at January 3, 2004.
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED ON OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS AT
EXERCISE VALUE REALIZED JANUARY 3, 2004(1) JANUARY 3, 2004($)(2)
NAME (#) ($)(3) ----------------------------- ---------------------------------
------------------------------ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Howard B. Witt......... 10,000 83,849 364,000 194,000 2,652,842 895,520
Philip G. Franklin....... 0 0 50,400 67,600 370,900 353,700
Gordon Hunter.......... 0 0 1,000 59,000 5,210 515,190
Kenneth R. Audino...... 6,000 71,069 65,200 44,800 377,777 206,922
(1) 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 on January 2, 2004 ($28.82).
(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.
9
EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL EMPLOYMENT AGREEMENTS ENTERED INTO
WITH EXECUTIVE OFFICERS
The Company entered into an employment agreement dated August 8, 2003,
with Howard B. Witt, the Chairman, President and Chief Executive Officer of the
Company. His employment agreement has a term ending on December 31, 2004, and
provides that Mr. Witt will receive an annual salary of no less than $530,000,
plus bonuses to be determined from time to time by the Board of Directors of the
Company. To the extent he is otherwise eligible during the term of his
Employment Agreement, 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 benefit plans, programs and policies
maintained by the Company.
Mr. Witt's employment agreement provides that during its term, but
subject to election and removal by the Board of Directors of the Company, Mr.
Witt will serve as Chairman, President and Chief Executive Officer of the
Company.
In the event that the Company were to terminate Mr. Witt's employment
without Cause (as defined in his employment agreement), or Mr. Witt were to
terminate his employment for Good Reason (as defined in his employment
agreement), he would continue to be paid the compensation he would otherwise
have earned for the remaining balance of the term of his employment agreement
plus monthly payments equal to one-half of the monthly salary which was payable
to him during the month immediately preceding the date of such termination for a
period of twenty-four months commencing January 1, 2005, in lieu of the
compensation which would have been paid to Mr. Witt by the Company under his
consulting agreement described below.
Mr. Witt has agreed that he will not compete with the Company for a
period of two years after any termination of his employment during the term of
his employment agreement, unless the Company shall terminate his employment
without Cause or Mr. Witt terminates his employment for Good Reason.
In the event Mr. Witt continues as an employee of the Company for the
entire term of his employment agreement, the Company and he have agreed to enter
into a two-year consulting agreement which will pay Mr. Witt monthly, during the
consulting period, an amount equal to one-half of the monthly salary payable to
him during the last month of full-time employment with the Company and which
will require him to provide certain consulting services to the Company. If so
requested by the Board of Directors of the Company and elected by the
stockholders of the Company, Mr. Witt has agreed to serve as a Director of the
Company during the two-year term of his consulting agreement.
The Company entered into change of control employment agreements dated
August 8, 2003, with Mr. Witt, dated September 1, 2001, with Kenneth R. Audino,
Philip G. Franklin and Mary S. Muchoney and dated November 3, 2003, with Gordon
Hunter. 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 in these agreements) with
respect to the Company at any time prior to December 31, 2004, with respect to
Mr. Witt, and prior to September 1, 2006, with respect to the others. If such a
Change of Control were to occur and any of these individual's employment with
the Company was terminated at any time during the two-year period thereafter,
other than for Cause (as defined in these agreements), or if during these time
periods any of these individuals were to terminate his
10
or her employment for Good Reason (as defined in these agreements), then the
Company would be obligated to make the payments described below for the benefit
of these individuals.
Under Mr. Witt's change of control employment agreement, and in order
to compensate Mr. Witt for the compensation he would have received under his
consulting agreement, Mr. Witt's annual base salary would be increased by
$250,000 and 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 two 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 SERP
if Mr. Witt had continued in the employment of the Company for an additional two
years after the date of termination and 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.
In the event 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 tax.
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
excise tax "gross-up" payment described above. Additionally, if any individual
were to terminate his employment with the Company for Good Reason (as defined in
these agreements) or be terminated by the Company other than for Cause (as
defined in these agreements) 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.
Unless the Company were to terminate Mr. Witt's employment for Cause or
Mr. Witt were to terminate his employment with the Company without Good Reason,
upon any termination of Mr. Witt's employment with Littelfuse (either during the
term of his employment agreement or his change of control employment agreement)
he will receive the following benefits: (1) all of Mr. Witt's outstanding stock
options would vest and he would have three years after any such termination to
exercise these stock options; and (2) Mr. Witt and his spouse would continue to
receive for ten years after any such termination life insurance and medical
insurance benefits comparable to those which were being provided to Mr. Witt and
his spouse immediately prior to such termination.
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 systems 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.
11
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 non-audit 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
nine meetings during fiscal 2003.
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 January 3, 2004 for filing with the Commission. 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 January 1, 2005.
Audit Committee
Anthony Grillo (Chairman)
John E. Major
Ronald L. Schubel
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 to:
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
12
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.
SALARIES
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 minimum, 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 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
13
Compensation Program as it relates to the Chief Executive Officer, makes all of
the determinations described above with respect to the Chief Executive Officer.
STOCK OPTIONS
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 and in 2003 stock
options with an exercise price below fair market value were granted to Mr.
Hunter upon commencement of his employment with the Company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee increased Mr. Witt's 2003 base salary from
his 2002 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
is determined based on Company and individual performance using the mathematical
formula established under the program by the Compensation Committee prior to the
beginning of each fiscal year.
The Compensation Committee in 2003 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.
COMPENSATION COMMITTEE
John P. Driscoll (Chairman)
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.
14
COMPANY PERFORMANCE
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, the Russell 2000 Index and the Dow Jones Electrical
Components and Equipment Industry Group Index. The Company has included the Dow
Jones Electrical Components and Equipment Industry Group Index for the first
time. In future years, the Company does not intend to include the NASDAQ
Non-Financial Index. The Company believes that the Russell 2000 Index and the
Dow Jones Electrical Components and Equipment Industry Group Index, more
appropriately, represent a broad market index and peer industry group for total
return performance comparison.
The Russell 2000(R) Index consists of the 2,000 smallest companies,
including the Company.
The Dow Jones Electrical Components and Equipment Industry Group Index
includes the Common Stock of Actuant Corp. Class A, Acuity Brands, Inc.,
American Power Conversion Corp., American Standard Cos. Inc., Ametek, Inc.,
Artesyn Technologies, Inc., AVX Corp., Ballard Power Systems Inc., Benchmark
Electronics, Inc., C&D Technologies, Inc., Celestica, Inc., Checkpoint Systems,
Inc., Cooper Industries, Inc., CTS Corp., FuelCell Energy, Inc., Gennum Corp.,
GrafTech International Ltd., Hubbell Inc. Class B, Integrated Circuit Systems,
Inc., Jabil Circuit, Inc., Kemet Corp., Littelfuse, Inc., Methode Electronics,
Inc. Class A., Molex, Inc. and Molex, Inc. Class A, Onex Corp., Park
Electrochemical Corp., Plexus Corp., Plug Power, Inc., Power-One, Inc.,
Sanmina-SCI Corp., Solectron Corp., SPX Corp., Technitrol, Inc., Thomas & Betts
Corp., Three-Five Systems, Inc., Vicor Corp., Vishay Intertechnology, Inc. and
York International Corp.
1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ----
Littelfuse, Inc. $100 $126 $149 $136 $90 $149
NASDAQ Non-Financial $100 $196 $114 $ 88 $57 $ 88
Russell 2000 $100 $120 $115 $116 $91 $132
Dow Jones Electrical Components and
Equipment Industry Group Index $100 $146 $ 89 $ 63 $37 $ 61
In the case of the NASDAQ Non-Financial Index, the Russell 2000 Index
and the Dow Jones Electrical Components and Equipment Industry Group Index, a
$100 investment made on December 31, 1998, and reinvestment of all dividends is
assumed. In the case of the Company, a $100 investment made on December 31, 1998
is assumed (the Company paid no dividends in 1999, 2000, 2001, 2002 or 2003).
Returns are at December 31 of each year, with the exception of 2000, 2001, 2002
and 2003 for the Company, which are at December 30, 2000, December 29, 2001,
December 28, 2002, and January 3, 2004 respectively.
15
PENSION PLAN TABLE
The Company has two non-contributory retirement plans in which the
named executive officers participate. One of these plans is a defined benefit,
qualified under the applicable provisions of the Internal Revenue Code (the
"Qualified Plan"), and the other is a defined contribution, 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
FINAL AVERAGE --------------------------------------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
$ 125,000......... $ 59,350 $ 72,892 $ 72,892 $ 72,892 $ 72,892 $ 72,892
150,000......... 72,892 89,142 89,142 89,142 89,142 89,142
175,000......... 86,433 105,392 105,392 105,392 105,392 105,392
200,000......... 99,975 121,642 121,642 121,642 121,642 121,642
225,000......... 113,517 137,892 137,892 137,892 137,892 137,892
250,000......... 127,058 154,142 154,142 154,142 154,142 154,142
300,000......... 154,141 186,642 186,642 186,642 186,642 186,642
400,000......... 208,308 251,642 251,642 251,642 251,642 251,642
500,000......... 262,474 316,642 316,642 316,642 316,642 316,642
-------------------
(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 2003, the maximum annual social security
payment at age 62 for a single person is $16,716 The formula under the
SERP is offset for one-half of the $16,716.
(2) Maximum normal retirement benefit is earned after 12 years of service.
Under an alternative form, payments from the SERP can be guaranteed over
10 years.
The years of service (to the nearest year) as of January 3, 2004, for
the named executive officers are as follows: Messrs. Witt, 25 years; Franklin, 5
years and Audino, 39 years. Mr. Hunter joined the Company as an executive
officer effective November 3, 2003, and does not participate in the SERP.
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 $3,521,427.
Imputed interest on such loans for fiscal 2003 was $53,526. Funds obtained from
such loans were used by Mr. Witt to
16
exercise Company stock options and to pay income taxes arising from such
exercise. As of July 30, 2002, the Company no longer provides loans to
executives of the Company under this or any other program.
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 January 1, 2005. The
stockholders will be asked at the meeting to approve and ratify such
appointment.
AUDIT AND NON-AUDIT FEES
The following table presents the approximate fees for professional audit
services rendered by Ernst & Young LLP for the audit of the Company's financial
statements for the fiscal year ended January 3, 2004, as well as the approximate
fees billed for other services rendered by Ernst & Young LLP:
2003 2002
Audit fees (1) $585,000 $ 460,000
Audit-related fees (2) $377,000 $ 40,000
Tax advisory services (3) $360,000 $ 430,000
Other (4) $ 10,500 $ 12,000
(1) Includes fees related to statutory audits of foreign
subsidiaries
(2) Includes fees related to audits of employee benefit plans and
acquisition activity during 2003
(3) Includes fees related to tax compliance, tax advice and tax
planning
(4) Includes fees related to secretarial support functions for
foreign subsidiaries
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'
questions.
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 January 1, 2005, be approved and ratified.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the 2005 annual
meeting of the Company's stockholders must be received at the principal
executive offices of the Company by November 22, 2004, 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
17
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 10th
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 2005 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 Exchange Act.
OTHER MATTERS
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 Statement.
By order of the Board of Directors,
Mary S. Muchoney
Secretary
March 26, 2004
18
APPENDIX A
LITTELFUSE, INC.
AUDIT COMMITTEE CHARTER
REVISED MAY 2, 2003
ORGANIZATION
The audit committee is a committee of the board of directors, which shall be
comprised of directors who are independent (as such term is defined under the
applicable federal securities laws and the rules and regulations of any national
securities exchange upon which the Company's common stock is traded) 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 members. The audit committee members shall also meet all
of the other qualifications required for audit committee members from time to
time by applicable federal securities laws and the rules and regulations of any
national securities exchange upon which the Company's common stock is traded.
STATEMENT OF POLICY
The audit committee shall provide assistance to the directors in fulfilling
their responsibility to the shareholders, potential shareholders and the
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 Company.
RESPONSIBILITIES
The audit committee of the Company, in its capacity as a committee of the board
of directors, shall be directly responsible for the appointment, compensation,
retention and oversight of the work of any accounting firm engaged (including
resolution of disagreements between management and the auditor regarding
financial reporting) for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Company, and each such
accounting firm must report directly to the audit committee. 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 shall:
- Retain the independent auditors to audit the Company's financial
statements. Have a clear understanding with the independent auditors that
they are to report directly to the audit committee, who have ultimate
authority to engage, evaluate and, if appropriate, terminate their
services.
- 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, pre-approve all audit, review or attest
engagements and permissible non-audit services to be provided to the
Company by the independent auditors, and to approve the fees of the
independent auditors for such services; provided, however, that in no event
shall the audit committee have the authority to preapprove any non-audit
services which may not be performed by the independent auditors for the
Company or its subsidiaries under applicable law. At the conclusion of the
audit, review the findings, comments and recommendations of the independent
auditors.
- Have the authority to delegate to one or more members of the audit
committee the authority to grant pre-approvals of any audit, review or
attest engagements and permissible non-audit services to be performed by
the independent auditors. Any member to whom such pre-approval authority is
delegated shall advise the audit committee at each of its scheduled
meetings of any such pre-approvals by such member since the last meeting of
the audit committee.
- Have the authority to establish pre-approval policies and procedures with
respect to audit, review and attest engagements and permissible non-audit
services provided the policies and procedures are detailed as to the
particular service and the audit committee is informed of each service and
such policies and procedures do not include delegation of the audit
committees responsibilities under the Securities Exchange Act of 1934 to
management.
- 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 procedures are desirable. Review management's internal control report
prior to its inclusion in the Company's annual report, which addresses the
effectiveness of the Company's internal controls and procedures for
purposes of financial reporting.
- Review any legal or regulatory matters that may have a material effect on
the financial statements of the Company or related Company compliance
policies.
- 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 Company's quarterly financial statements prior to the release of
quarterly earnings and subsequent filing of such release with the
Securities and Exchange Commission.
- 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 any and all reports issued by the independent auditors with respect
to the Company's financial statements and accounting policies.
- 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.
- 2 -
- 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 audit.
- Review accounting and financial personnel and succession planning within
the Company.
- Report the results of the annual audit to the board of directors.
- Review the nature and scope of non-audit services provided to the Company
by the independent auditors and consider the potential effects of these
other relationships on the auditors' independence.
- Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the board of
directors.
- Investigate any matter brought to its attention within the scope of its
duties.
- Establish procedures for the receipt, retention, and treatment of
complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters and the confidential, anonymous
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters.
- Have the authority to engage independent counsel and other advisers as it
determines necessary to carry out its duties.
- Determine
(i) the compensation payable to any registered public
accounting firm engaged for the purpose of preparing or issuing an
audit report or performing other audit, review or attest services for
the Company;
(ii) compensation payable to any advisers employed by the
audit committee; and
(iii) the ordinary administrative expenses of the audit
committee that are necessary or appropriate in carrying out its duties.
The audit committee is responsible for the duties set forth in this charter but
is not responsible for either preparation of the financial statements or
auditing of the financial statements. Management has the responsibility for
preparing the financial statements and implementing internal controls, and the
independent auditors have the responsibility for auditing the financial
statements and monitoring the effectiveness of the internal controls. The review
of the financial statements by the audit committee is not of the same quality as
the audit performed by the independent auditors.
- 3 -
APPENDIX B
LITTELFUSE, INC.
NOMINATING COMMITTEE CHARTER
PURPOSE
The purpose of the Nominating Committee is to seek, evaluate and
recommend to the Board of Directors qualified candidates for election to the
Board of Directors.
MEMBERSHIP
The Nominating Committee will consist of at least two members of the
Board of Directors elected from time to time by the Board of Directors. The
Board of Directors may designate one of such members as the Chairman of the
Nominating Committee. All members of the Nominating Committee shall be
"independent" as such term is used or defined in all laws, rules or regulations
applicable from time to time to the Nominating Committee, including, without
limitation, those of or pertaining to the Securities and Exchange Commission and
The Nasdaq Stock Market.
RESPONSIBILITIES
The Nominating Committee will seek and evaluate candidates for election
to the Board of Directors and will recommend to the Board of Directors persons
to be elected as directors of the Company at each annual meeting of the
stockholders of the Company or at any special meeting of the stockholders of the
Company at which directors are to be elected. The Nominating Committee may also
evaluate and recommend to the Board of Directors candidates to fill any vacancy
from time to time on the Board of Directors.
POLICIES
- The Nominating Committee believes that it is in the best
interest of the Company and its stockholders to have highly
qualified persons serve as members of the Board of Directors.
- The Nominating Committee will seek candidates with integrity,
good judgment and appropriate business experience.
- The Nominating Committee recognizes the benefit of a Board of
Directors that reflects the diversity of the Company's
stockholders, employees and customers
and the communities in which it operates and shall actively
seek qualified candidates for nomination and election to the
Board of Directors in order to reflect such diversity.
- The Nominating Committee will consider candidates recommended
by all persons and entities, including candidates recommended
by security holders of the Company.
- All candidates will be evaluated by the Nominating Committee
in such a manner as the Nominating Committee deems appropriate
under the circumstances; provided, however, that the
Nominating Committee will not use an evaluation process for
candidates recommended by security holders of the Company
which is materially different from the evaluation process used
for any other candidates.
- In evaluating and recommending candidates, the Nominating
Committee will take into consideration such factors as it
deems appropriate. These factors may include experience as an
executive or director of a publicly traded company, the
familiarity of a candidate with the business of the Company
and its industry, the availability of a candidate to actively
participate in meetings of the Board of Directors and its
committees, the experience of a candidate in the preparation
or evaluation of financial statements, diversity, and the
ability of a candidate to interact in a productive manner with
the other members of the Board of Directors.
PROCEDURES TO RECOMMEND CANDIDATES TO NOMINATING COMMITTEE
Any person or entity desiring to recommend a person to the Nominating
Committee as a candidate for election to the Board of Directors may deliver such
recommendation in writing either to the Secretary of the Company or directly to
any member of the Nominating Committee, which recommendation should be
accompanied by appropriate written information describing such person, his or
her education, his or her business experience and employment history, and such
other information which would be helpful to the Nominating Committee in
evaluating such person.
PROCESS FOR IDENTIFYING AND EVALUATING CANDIDATES
The Nominating Committee will consider as a candidate any director of
the Company who has indicated to the Nominating Committee that he or she is
willing to stand for re-election as well as any other person who is recommended
by any person or entity. The Nominating Committee may also undertake its own
search process for candidates and may retain the services of third parties to
assist in any such search. The Nominating Committee may use any process it deems
appropriate for the purpose of evaluating candidates which is consistent with
the policies set forth in this Charter, which process may include, without
limitation, personal interviews, background checks, written submissions by the
candidates and third party references.
- 2 -
MINIMUM QUALIFICATIONS AND SPECIFIC QUALITIES OF CANDIDATES
The Nominating Committee may, but shall not be required to, establish
minimum qualifications that the Nominating Committee believes must be met by a
candidate and/or specific qualities or skills that the Nominating Committee
believes are necessary for one or more of the Company's directors to possess.
MEETINGS
The Nominating Committee shall meet at least once each calendar year to
evaluate candidates.
RESOURCES AND AUTHORITY OF THE NOMINATING COMMITTEE
The Nominating Committee shall have the resources and authority
appropriate to discharge its duties and responsibilities, including, without
limitation, the authority to select, retain, terminate and approve the fees and
other retention terms of counsel and other experts or consultants as it deems
appropriate without seeking approval of the Board of Directors or management of
the Company.
- 3 -
LITTELFUSE, INC.
PROXY CARD FOR ANNUAL MEETING ON APRIL 30, 2004
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 30, 2004, at 9:00
a.m. local time, and at any adjournment thereof, with all powers the undersigned
would possess if personally present, as follows:
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.
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Account No. of Shares Proxy No.
LITTELFUSE, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
For Withhold For All For Against Abstain
1. Election of seven nominees to the All All Except 2. Approval and ratification of the
Board of Directors to serve terms of Directors' appointment of
one year or until their successors Ernst & Young LLP as the Company's
are elected. [ ] [ ] [ ] independent auditors for the fiscal [ ] [ ] [ ]
year ending January 1, 2005.
Howard B. Witt, John P. Driscoll,
Anthony Grillo, Gordon Hunter,
Bruce A. Karsh, John E. Major and
Ronald L. Schubel
(INSTRUCTION: To withhold authority to vote
for any individual nominee, strike a line
though that nominee's name)
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THESE PROPOSALS.
Dated: , 2004
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Signature
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Signature
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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.
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