This excerpt taken from the MOLX DEF 14A filed Sep 23, 2005.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The information contained in this report shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission (“SEC”), nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates such information by reference in such filing.
The compensation committee of the Company’s Board of Directors (the “Committee”) consists of three non-employee directors, Messrs. Robert J. Potter (Chairman), Masahisa Naitoh and Joe W. Laymon, all of whom, in the opinion of the Board of Directors, meet the independence requirements of Nasdaq, are “non-employee directors” pursuant to SEC Rule 16b-3, and are “outside directors” for purposes of §162(m) of the Internal Revenue Code. During the fiscal year ended June 30, 2005, the Committee conducted three meetings and agreed to three unanimous written consents.
The Committee is a standing committee of the Board of Directors and operates under a written charter adopted by the Board of Directors. The Committee charter is available on our Web site, www.molex.com, by first clicking on “Investors”, then “Corporate Governance” and “Compensation Committee Charter.” In fiscal year 2005, the Board did not modify or reject in any material way any recommendation or action of the Committee.
In accordance with its written charter, the Committee approves compensation for the executive officers (the “Executive Officers”) of Molex, including the Co-Chairmen of the Board, F. A. Krehbiel and J. H. Krehbiel, Jr., and the Chief Executive Officer (“CEO”) in accordance with the Committee charter. F. A. Krehbiel and M. P. Slark, Molex’s former and current CEO, respectively, and J. H. Krehbiel, Jr. are evaluated and their compensation administered in the same general fashion as the other Executive Officers.
The compensation program for Executive Officers is designed to attract, motivate and retain talented executives who will strive to attain the Company’s strategic and financial objectives and thereby increase stockholder value. The guiding principles governing the philosophies behind the compensation of Executive Officers are:
There are three general components of executive compensation that are used to achieve the principles set forth above. They are base salary, merit bonus and stock plans.
When comparing Molex executive compensation with other companies, the Committee uses survey data of comparably sized manufacturing/electronics companies (the “Comparator Group”) provided by an outside consultant. The survey data for the Comparator Group was divided into each of the three different types of compensation and distributed over four quartiles for positions similar to those held by the Executive Officers. The companies comprising the Comparator Group are not necessarily the same as those in the Peer Group in the section entitled “Stockholder Return Performance Presentation” included in this proxy statement. Molex’s most direct competitors for executive talent are more frequently manufacturing companies of the same size as Molex while many of the Peer Group companies are much smaller than Molex and some are also involved in different types of businesses.
Molex seeks to have the overall executive compensation be somewhat above that of the Comparator Group average. When compared to the Comparator Group, Executive Officers’ base salaries are somewhat above average while their merit bonuses are below average. Grants under the stock plans described herein have been historically below the Comparator Group average, however, during the last three years the grants were somewhat above average.