MOLX » Topics » Stock Plans

This excerpt taken from the MOLX DEF 14A filed Sep 23, 2005.

Stock Plans

Molex has three stock-based equity plans administered by the Committee in which an Executive Officer may participate: The 2000 Molex Incorporated Incentive Stock Option Plan (the “2000 ISO Plan”), The 2000 Molex Incorporated Executive Stock Bonus Plan (the “Stock Bonus Plan”) and The 2000 Molex Incorporated Long-Term Stock Plan (the “Long-Term Plan”). These three stock plans provide long-term incentives to Executive Officers and encourage long-term growth of the Company. The shares granted or awarded in all three plans are Class A Common Stock.

The number of options granted to an Executive Officer under the 2000 ISO Plan or the Long-Term Plan is at the discretion of the Committee. Using equity plans that inherently depend upon stock performance over the long-term provides a strong link between management interests and those of the Company’s stockholders. The Committee considers both long-term individual and company performance and previous grants when determining stock option grants for a given year.

The 2000 Molex Incorporated Incentive Stock Option Plan. Each Executive Officer may, at the discretion of the Committee, receive an annual grant of options to acquire shares not to exceed 250,000 shares or 10% of the shares reserved for Plan (currently 10% of 500,000 shares), whichever is less. Both F. A. Krehbiel and J. H. Krehbiel, Jr. each received an incentive stock option for 1,526 shares of Class A Common Stock at a price of $27.24 per share and a non-qualified option for 38,474 shares of Class A Common Stock at a price of $24.76 per share under the 2000 ISO Plan. The 2000 ISO Plan expired and the 2005 Molex Incentive Stock Option Plan is proposed to replace the 2000 ISO Plan. (See Proposal 5 on page 26.)

The 2000 Molex Incorporated Executive Stock Bonus Plan. The Stock Bonus Plan provides for the award of a stock bonus at the end of a fiscal year during which Molex’s financial performance has been exemplary. The Committee may, in its sole discretion, award a stock bonus to eligible persons subject to the financial goal limitations set forth below.

No shares can be awarded for a given fiscal year if (a) the increase in Molex’s net sales revenue did not either equal at least 15% or exceed two times the worldwide connector market growth or (b) the effect of an award would be to lower Molex’s net profit (after taxes) as a percent of sales below 10%. In a given year, an eligible person can receive a maximum amount of stock whose fair market value on June 30 is equal to: 25% of the person’s base salary if the increase in Molex’s sales exceeded either 15% or two times the worldwide connector market growth but was less than 20%; or 50% of the person’s base salary if Molex’s sales increased 20% or more.

The Committee may award a cash bonus to offset taxes, thereby encouraging the recipient to hold the stock awarded. The stock and tax offset bonuses are distributed in four equal annual installments commencing on the June 30 ending the fiscal year for which the bonus has been awarded or as soon thereafter as practicable. If an individual who is awarded a bonus has not yet received his completed distribution and voluntarily leaves Molex before retirement, the balance due him is subject to forfeiture.

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For the fiscal year just ended, the financial conditions necessary to award a stock bonus under the Stock Bonus Plan were not met. Accordingly, no awards were granted. The Stock Bonus Plan expired on June 30, 2005.

The 2000 Molex Incorporated Long-Term Stock Plan. Under the Long-Term Plan, the Committee has the complete authority in its sole discretion in awarding benefits in the form of both stock options and stock bonuses (i.e., no consideration given at the time of distribution) including the amounts, the prices and other terms and conditions. All of the awards under the Long-Term Plan, whether in the form of stock options or stock bonuses, that were given during last fiscal year are: (i) nonqualified; (ii) exercisable or distributable one year after grant or award; (iii) subject to expiration ten years after grant; and (iv) subject to vesting (for options) or subject to distribution (for bonus shares) in 25% annual increments on the anniversary of the grant or award. During last fiscal year, J. J. King, the former CEO, received an option for 300,000 shares of Class A Common Stock at a price of $25.99 per share. In addition, he received, in tandem, a bonus share award of 40,000 shares of Class A Common Stock. M. P. Slark, the new CEO effective July 1, 2005 received an option for 175,000 shares of Class A Common Stock at a price of $25.99 per share. In addition, he received, in tandem, a bonus share award of 20,000 shares of Class A Common Stock under the Long-Term Stock Plan.

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