-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vo0yr1VfoxvJckyKCxlhkscpsnYsU09fszCUV/Gs/ZNbWEQzwtZ6cME62VD3pxoo 8hXx3rNgW+/F3XyBZ4PYwA== 0000950134-98-002482.txt : 19980330 0000950134-98-002482.hdr.sgml : 19980330 ACCESSION NUMBER: 0000950134-98-002482 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980505 FILED AS OF DATE: 19980327 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENCORE WIRE CORP /DE/ CENTRAL INDEX KEY: 0000850460 STANDARD INDUSTRIAL CLASSIFICATION: ROLLING DRAWING & EXTRUDING OF NONFERROUS METALS [3350] IRS NUMBER: 752274963 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-20278 FILM NUMBER: 98575241 BUSINESS ADDRESS: STREET 1: 1410 MILLWOOD RD STREET 2: P O BOX 1149 CITY: MCKINNEY STATE: TX ZIP: 75069 BUSINESS PHONE: 2145629473 MAIL ADDRESS: STREET 1: 1410 MILLWOOD RD STREET 2: P O BOX 1149 CITY: MCKINNEY STATE: TX ZIP: 75069 DEF 14A 1 DEFINITIVE PROXY STATEMENT 1 SCHEDULE 14A INFORMATION (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [ ] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
ENCORE WIRE CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12. (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.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ 2 ENCORE WIRE CORPORATION 1410 MILLWOOD ROAD MCKINNEY, TEXAS 75069 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 5, 1998 NOTICE is hereby given that the annual meeting of stockholders of Encore Wire Corporation (the "Company") will be held on Tuesday, May 5, 1998, at 8:30 a.m., local time, at the Company's offices, 1410 Millwood Rd., McKinney, Texas, for the following purposes: (1) To elect a Board of Directors for the ensuing year; (2) To ratify the appointment of Ernst & Young LLP as auditors to audit the financial statements of the Company for the fiscal year ending December 31, 1998; and (3) To transact such other business as may properly come before the meeting or any adjournment thereof. Only stockholders of record at the close of business on March 10, 1998, are entitled to notice of and to vote at the meeting or any adjournment thereof. A record of the Company's activities and consolidated financial statements for the year ended December 31, 1997, are contained in the enclosed 1997 Annual Report. Dated: March 30, 1998. By Order of the Board of Directors SCOTT D. WEAVER Secretary -------------------- WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. IF YOU DO ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON. THE PROMPT RETURN OF PROXIES WILL INSURE A QUORUM AND SAVE THE COMPANY THE EXPENSE OF FURTHER SOLICITATION. 3 ENCORE WIRE CORPORATION 1410 MILLWOOD ROAD MCKINNEY, TEXAS 75069 PROXY STATEMENT For Annual Meeting of Stockholders To be Held on May 5, 1998 GENERAL The accompanying proxy is solicited by the Board of Directors of Encore Wire Corporation (the "Company") for use at the annual meeting of stockholders of the Company to be held at the time and place and for the purposes set forth in the foregoing notice. The approximate date on which this proxy statement and the accompanying proxy are first being sent to stockholders is March 30, 1998. The cost of soliciting proxies will be borne by the Company. The Company has retained Corporate Investor Communications, Inc., a proxy solicitation firm located in Carlstadt, New Jersey, to solicit proxies from brokers, banks, nominees, institutional holders and individual holders for use at the meeting at a fee not to exceed $1,500 plus certain expenses. In addition, the Company may use certain of its officers and employees (who will receive no special compensation therefor) to solicit proxies in person or by telephone, facsimile, telegraph or similar means. PROXIES Shares represented by a proxy in the accompanying form, duly signed, dated and returned to the Company and not revoked, will be voted at the meeting in accordance with the directions given. If no direction is given, such shares will be voted for the election of the nominees for directors named in the accompanying form of proxy and for the other proposal set forth in the notice. Any stockholder returning a proxy may revoke it at any time before it has been exercised by giving written notice of such revocation to the Secretary of the Company, by filing with the Company a proxy bearing a subsequent date or by voting in person at the meeting. VOTING PROCEDURES AND TABULATION The Company will appoint one or more inspectors of election to act at the meeting and to make a written report thereof. Prior to the meeting, the inspectors will sign an oath to perform their duties in an impartial manner and to the best of their abilities. The inspectors will ascertain the number of shares outstanding and the voting power of each of such shares, determine the shares represented at the meeting and the validity of proxies and ballots, count all votes and ballots and perform certain other duties as required by law. The inspectors will tabulate (i) the number of votes cast for or withheld as to the vote on each nominee for director and (ii) the number of votes cast for, against or withheld, as well as the number of abstentions and broker non-votes, as to the approval of the appointment of auditors. Under Delaware law and the Company's Certificate of Incorporation and Bylaws, abstentions and broker non-votes will have no effect on the voting on the election of directors, provided a quorum is present, because directors are elected by a plurality of the shares of Common Stock present in person or by proxy at the meeting and entitled to vote. An abstention with respect to the proposal to approve the appointment of auditors will effectively count as a vote against such proposal. A broker non-vote or other limited proxy as to the proposal to approve auditors will be counted towards a meeting quorum, but can not be voted on such proposal and therefore will not be considered a part of the voting power with respect to that proposal. This has the effect of reducing the number of shares required to be voted in favor of the proposal in order to approve it. VOTING SECURITIES The only voting security of the Company outstanding is its Common Stock, par value $.01 per share. Only the holders of record of Common Stock at the close of business on March 10, 1998, the record date for the meeting, 4 are entitled to notice of and to vote at the meeting. On the record date, there were 10,808,385 shares of Common Stock outstanding and entitled to be voted at the meeting. A majority of such shares, present in person or by proxy, is necessary to constitute a quorum. Each share of Common Stock is entitled to one vote. Unless otherwise indicated, all share and per share date in this Proxy Statement have been adjusted to give effect to a three for two stock split of the Common Stock on August 19, 1997. ELECTION OF DIRECTORS The business and affairs of the Company are managed by the Board of Directors, which exercises all corporate powers of the Company and establishes broad corporate policies. The Bylaws of the Company provide for nine directors. At the meeting eight directors will be elected with one vacancy on the Board to remain after the meeting. The vacancy was created when A. A. Gingell, who was elected to the Board in May 1993, died in October 1997. The Board has not selected a nominee to replace Mr. Gingell but will consider qualified candidates for later appointment to the Board. No stockholder approval or ratification is required for the Board to fill such vacancy. Directors are elected by plurality vote, and cumulative voting is not permitted. All duly submitted and unrevoked proxies will be voted for the nominees for director selected by the Board of Directors, except where authorization so to vote is withheld. If any nominee should become unavailable for election for any presently unforeseen reason, the persons designated as proxies will have full discretion to vote for another person designated by the Board. Proxies cannot be voted for a greater number of persons than the number of nominees for the office of director named herein. Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. The nominees of the Board for directors of the Company are named below. Each of the nominees has consented to serve as a director if elected. The table below sets forth certain information with respect to the nominees. All the nominees are presently directors of the Company and, except John H. Wilson, have served continuously as directors since the date of their first election to the Board. Mr. Wilson served as a director from April 1989 until May 1993 and was re-elected to the Board in May 1994. VINCENT A. REGO, age 74, Mr. Rego has been Chairman of the Board of director since April 1989. Directors of the Company since April 1989. In October 1996, he assumed the duties of President and Chief Executive Officer. Mr. Rego served as President, Chief Executive Officer and Chairman of the Board of Directors of Capital Wire and Cable Corporation, a manufacturer of electrical wire and cable products, from 1978 until the company was sold to The Penn Central Corporation in 1988. Prior thereto, Mr. Rego was associated with predecessors of Capital Wire in various executive capacities. DONALD M. SPURGIN, age 60, Mr. Spurgin has been a director of the Company director since April 1989 since April 1989 and served as President and Chief Executive Officer from April 1989 to October 1996, and as Secretary of the Company from April 1989 to April 1992. In October 1996, Mr. Spurgin resigned for health reasons as President and Chief Executive Officer and was elected Vice Chairman of the Board of Directors. From 1979 to 1988, Mr. Spurgin was Executive Vice President, Chief Operating Officer and a director of Capital Wire and Cable Corporation. Prior thereto, Mr. Spurgin was associated with predecessors of Capital Wire in various executive capacities. DONALD E. COURTNEY, age 67, Since 1994, Mr. Courtney has served as director since April 1989 President and Chairman of the Board of Directors of Investech, Ltd., which is a private importing firm. Mr. Courtney served as President and Chairman of the Board of 2 5 Directors of S.O.I. Industries, Inc. from 1982 until 1994. During that period, he was also Chairman of the Board of Directors of two subsidiaries of S.O.I. Industries, Inc., Magnatech Corporation, which is engaged in videotape duplication, and Tempo Lighting, Inc., which manufactures residential lighting. Mr. Courtney retired and resigned from these positions in June 1994. Mr. Courtney was re-elected to the Board of Directors of Tempo Lighting and is also a director of F.O.M. Corporation, a manufacturer of floor cleaning equipment. DANIEL L. JONES, age 34, Mr. Jones was Vice President -- Sales and director since May 1994 Marketing of Encore from May 1992 to May 1997, and has served as Executive Vice President since May 1997. In October 1997, Mr. Jones was also named Chief Operating Officer. From 1988 until joining the Company in 1989, he was employed as a sales representative by Lone Star Transportation Inc., a freight brokerage firm. From 1985 to 1988, while pursuing his education, Mr. Jones attended college while working on a part time basis for Capital Wire and Cable Corporation. JOHN P. PRINGLE, age 68, Mr. Pringle has been President of Tekserco director since August 1990 Inc., which owns and operates pay telephones, since 1990. Prior thereto, Mr. Pringle was employed in various capacities by Capital Wire and Cable Corporation, most recently as Vice President -- Engineering. WILLIAM R. THOMAS, age 67, Mr. Thomas has been President Board since 1982 director since April 1989 of Capital Southwest Corporation, a publicly owned venture capital investment firm. Prior thereto, Mr. Thomas was associated with Capital Southwest Corporation in various executive capacities. Mr. Thomas was a director of Capital Wire and Cable Corporation in 1987 and 1988. Mr. Thomas is also a director of Alamo Group, Inc., which provides heavy-duty mowing equipment for agricultural, commercial and governmental users, and Palm Harbor Homes, Inc., a manufactured housing company. JOHN H. WILSON, age 55, Mr. Wilson has been President of Whitehall since 1980 and Chairman of the Corporation since May 1, 1995 and President of until May 1993 and since U.S. Equity Corporation, a venture capital May 1994 firm, since 1983. Mr. Wilson, who was a director of Capital Wire and Cable Corporation from 1985 to 1988, is also a director of Capital Southwest Corporation, Whitehall Corporation, which modifies and rebuilds commercial and military aircraft and designs and manufactures marine sensor systems, Norwood Promotional Products, Inc., which manufactures and supplies custom imprinted promotional materials, and Palm Harbor Homes, Inc., a manufactured housing company. JOSEPH M. BRITO, age 75, Mr. Brito has been president of C. Brito director since October 1997. Construction Company, a utility contracting firm, and of Brito Enterprises, Inc. for more than ten years. Mr. Brito is also a general partner of Metacom Realty, a real estate development company, and an officer of 1776 Liquors, Ltd. of Bristol, a liquor retailer. Mr. Brito also has served on the regional advisory board of Fleet National Bank, as regional vice president of the National Utility Contractors Association and Administrative Vice President of the Rhode Island Contractors Association. There is no family relationship between any of the nominees or between any of the nominees and any executive officer of the Company, except that Daniel L. Jones, a nominee for director, Executive Vice President and Chief Operating Officer of the Company, is the son-in-law of Mr. Spurgin, Vice Chairman of the Board of Directors of the Company. For information regarding certain business relationships between certain of the nominees and the Company, see "Certain Transactions." Mr. Thomas and Mr. Wilson were originally elected to the Board of Directors 3 6 of the Company pursuant to the terms of a Purchase Agreement dated April 25, 1989 between the Company, Capital Southwest Venture Corporation and certain other persons. Certain provisions of that agreement, including the provisions pursuant to which Messrs. Thomas and Wilson were elected to the Board, were terminated in connection with the initial public offering of the Company's Common Stock in 1992. ADDITIONAL INFORMATION REGARDING THE BOARD OF DIRECTORS BOARD MEETINGS AND COMMITTEES As permitted by the bylaws of the Company, the Board has designated from its members a compensation committee and an audit committee. The Company does not have a standing nominating committee of the Board or any other committee that performs a similar function. During 1997, the Board of Directors held four meetings. All directors attended at least 75% of such meetings held during the period in which such director served. The current committees of the Board, the composition and functions thereof and the number of meetings held in 1997 is set forth below. Compensation Committee. In 1997, the members of the compensation committee were Donald E. Courtney, William R. Thomas and John H. Wilson. The committee met two times during 1997. The role of the compensation committee is to review the performance of officers, including those officers who are also members of the Board, and to set their compensation. The committee also supervises and administers the Company's Employee Stock Option Plan and all other compensation and benefit policies, practices and plans of the Company. Audit Committee. In 1997, the members of the audit committee were Donald E. Courtney, William R. Thomas and John H. Wilson. During 1997, the audit committee met one time. The role of the committee is to review with the Company's auditors the scope of the audit procedures to be applied in the conduct of the annual audit as well as the results of the annual audit. 4 7 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth as of March 10, 1998 the beneficial ownership of Common Stock of the Company (the only equity securities of the Company presently outstanding) by (i) each director and nominee for director of the Company, (ii) each person who was known to the Company to be the beneficial owner of more than five percent of the outstanding shares of Common Stock and (iii) all directors and executive officers of the Company as a group.
COMMON STOCK BENEFICIALLY OWNED (1) ------------------------------------ NUMBER PERCENT OF NAME OF SHARES CLASS - ---- --------------- --------------- Directors and Nominees for Director Donald E. Courtney . . . . . . . . . . . . . . . . . . . . . . 49,537 .5% Daniel L. Jones . . . . . . . . . . . . . . . . . . . . . . . . 53,336 (2) .5% John P. Pringle . . . . . . . . . . . . . . . . . . . . . . . . 42,375 (3) .4% Vincent A. Rego . . . . . . . . . . . . . . . . . . . . . . . . 908,821 (4) 8.4% Donald M. Spurgin . . . . . . . . . . . . . . . . . . . . . . . 466,095 (5) 4.3% Joseph M. Brito . . . . . . . . . . . . . . . . . . . . . . . . 16,700 (6) .2% William R. Thomas . . . . . . . . . . . . . . . . . . . . . . . -- (7) -- John H. Wilson . . . . . . . . . . . . . . . . . . . . . . . . -- (7) -- All directors and executive officers as a group (10 persons) . . . . . . . . . . . . . . 3,349,613 (8) 31.0% Beneficial Owners of 5% or More (excluding persons named above) Capital Southwest Corporation . . . . . . . . . . . . . . . . 1,683,000 (9) 15.6% Nicholas-Applegate Capital Management . . . . . . . . . . . . . 699,190 (10) 6.5%
- ------------------ (1) Except as otherwise indicated, each stockholder named in the table has sole voting and investment power with respect to all shares indicated as being beneficially owned by such stockholder. (2) Includes 41,700 shares of Common Stock subject to stock options that are exercisable within 60 days, 4,500 shares of Common Stock owned by Mr. Jones' spouse and 150 shares owned for the benefit of Mr. Jones' minor son. Mr. Jones disclaims beneficial ownership of the shares owned by his spouse. (3) Includes 32,375 shares of Common Stock subject to stock options that are immediately exercisable. (4) Includes 150,000 shares of Common Stock subject to stock options that are immediately exercisable and 75,000 shares of Common Stock owned by Mr. Rego's spouse. (5) Includes 150,000 shares of Common Stock subject to stock options that are immediately exercisable and 8,220 shares of Common Stock owned by Mr. Spurgin's spouse. Mr. Spurgin disclaims beneficial ownership of the shares owned by his spouse. (6) Includes 5,000 shares held by the Brito Family Limited Partnership. (7) William R. Thomas and John H. Wilson, directors of the Company, are both directors of, and Mr. Thomas is President and Chairman of the Board of, Capital Southwest Corporation. As indicated in the table, Capital Southwest Corporation is a principal stockholder of the Company. Mr. Thomas and Mr. Wilson may be deemed to share voting and investment power with respect to the 1,683,000 shares of Common Stock beneficially owned by Capital Southwest Corporation. Mr. Thomas and Mr. Wilson each disclaim beneficial ownership of such shares. (8) Includes an aggregate of 441,650 shares of Common Stock that directors and executive officers have the right to acquire within 60 days pursuant to the exercise of stock options and 1,683,000 shares beneficially owned by Capital Southwest Corporation. 5 8 (9) Includes 1,233,000 shares held by Capital Southwest Venture Corporation, a wholly-owned subsidiary of Capital Southwest Corporation, as to which Mr. Thomas and Mr. Wilson may be deemed to share voting and investment power as directors and, in the case of Mr. Thomas, as an officer, of Capital Southwest Corporation. (10) Beneficial ownership of such shares was reported in a Schedule 13G dated February 3, 1998 filed with the SEC by Nicholas-Applegate Capital Management ("Nicholas-Applegate") with respect to its beneficial ownership of Common Stock. In its Schedule 13G, Nicholas-Applegate reports that it beneficially owns all of the shares with sole dispositive power, but has sole voting power with respect to 540,300 of the shares. The respective addresses of the holders of five percent or more of the Common Stock of the Company are as follows: Capital Southwest Corporation, 12900 Preston Road, Dallas, Texas 75230; Nicholas-Applegate Capital Management, 600 West Broadway, 29th Floor, San Diego, CA 92101; Vincent A. Rego, 1410 Millwood Road, McKinney, Texas 75069; and Donald M. Spurgin, 1410 Millwood Road, McKinney, Texas 75069. EXECUTIVE COMPENSATION The Compensation Committee Report appearing below and the information presented herein under the caption "Executive Compensation -- Performance Graph" shall not be deemed to be "soliciting material" or to be "filed" with the SEC or subject to the SEC's proxy rules, except for the required disclosure herein, or to the liabilities of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), and such information shall not be deemed to be incorporated by reference into any filing made by the Company under the Exchange Act or under the Securities Act of 1933. REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION To the Stockholders of Encore Wire Corporation: The Compensation Committee of the Board of Directors (the "Committee") administers the compensation program for executive officers and other management level employees of the Company and makes all related decisions. The Committee also administers the Company's Employee Stock Option Plan and makes all decisions regarding the granting of stock options to employees of the Company under such plan. The goals of the Company's compensation program are to attract, retain and motivate competent executive officers who have the experience and ability to contribute materially to the long-term success of the Company. The individual judgments made by the Committee are subjective and are based largely on the Committee's perception of each executive's contribution to both past performance and the long-term growth potential of the Company. The principal elements of compensation for executive officers are base salary, discretionary bonus payments and stock options. Base salaries for 1998 were reviewed by the Committee in December 1997 for each of the executive officers on an individual basis, taking into consideration contributions to the Company's performance, length of tenure with the Company, compensation levels of comparable positions and internal equities among positions. Among other things, the Committee considered each officer's contribution to the success of the Company's business and to its foundation for future earnings growth, as well as such officer's role in achieving a higher level of customer satisfaction, increased market penetration and the efficient utilization of assets and employees in his area of responsibility. In addition to base salaries, discretionary cash bonuses may be paid to certain executive officers. In determining whether to grant bonuses and the amount of any such grants, the Committee considers both individual performance and the Company's overall performance, with particular emphasis on each executive's specific contributions to the Company's ability to achieve its long-term objectives. In 1997, the Committee approved cash bonuses to certain executive officers and key managers, including bonuses of $500,000 to Vincent A. Rego, $100,000 to Daniel L. Jones, $80,000 to David K. Smith and $80,000 to Scott D. Weaver. 6 9 The 1998 compensation levels of Vincent A. Rego, Daniel L. Jones, David K. Smith and Scott D. Weaver were determined subjectively by the Committee based on their responsibilities and the factors described in the preceding two paragraphs. From time to time, the Committee has granted stock options under the Company's Employee Stock Option Plan (the "Plan") to executive officers and key employees to align their long-term interests with those of the stockholders. The Plan, which was adopted in 1990, initially reserved 561,000 shares of Common Stock for issuance pursuant to non-qualified and/or incentive stock options granted under the Plan. In February 1994, the Plan was amended to increase the number of shares issuable under the Plan to a total 1,011,000 shares. In January 1997, the Plan was amended to increase the number of shares issuable under the Plan to a total of 1,161,000 shares. Stock options are granted at exercise prices not less than the fair market value on the date of the grant and thus will have no value unless the value of the Company's Common Stock appreciates. The Committee believes that stock options provided a significant incentive for the option holders to enhance the value of the Company's Common Stock by continually improving the Company's performance. In 1997 the Committee granted options covering 119,000 shares, including 12,000 shares to Daniel L. Jones, 4,500 shares to David K. Smith and 16,500 shares to Scott D. Weaver. During the three years ended December 31, 1997, options to purchase 214,550 shares were granted and options to purchase 90,955 shares were available under the Plan for grant at December 31, 1997. COMPENSATION COMMITTEE William R. Thomas, Chairman Donald E. Courtney John H. Wilson 9 10 SUMMARY COMPENSATION The following table sets forth summary information regarding the compensation awarded to, earned by or paid to the Company's Chief Executive Officer and the four other highest paid executive officers in 1997 for the years indicated. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ANNUAL COMPENSATION AWARDS ------------------------------------------------------------------------- OTHER ANNUAL COMPENSATION (1) SECURITIES UNDERLYING NAME AND ---------------- OPTIONS/ PRINCIPAL POSITION YEAR SALARY BONUS (1) SARS(#) ------------------ ---- ------ ----- --- ------- Vincent A. Rego 1997 $250,000 $500,000 $14,310 Chairman, President 1996 150,000 250,000 16,556 and Chief Executive 1995 150,000 -- 16,829 Officer Daniel L. Jones 1997 $99,000 $100,000 $18,711 12,000 Executive Vice 1996 91,750 60,000 17,344 President and Chief 1995 85,000 -- 14,262 Operating Officer David K. Smith 1997 $99,000 $80,000 $ 1,522 4,500 Vice President - 1996 99,667 60,000 1,432 Operations 1995 85,000 -- 1,418 Scott D. Weaver 1997 $99,000 $80,000 $ 5,392 16,500 Vice President - 1996 94,061 60,000 4,254 Finance, 1995 85,000 -- 3,106 Treasurer and Secretary Donald M. Spurgin 1997 $ 99,000 -- $ 4,612 Vice Chairman 1996 139,555 -- 15,503 1995 150,000 -- 17,640
- -------------- (1) Includes (a) average monthly lease payments by the Company of $700 in 1995, $640 in 1996 and $820 in 1997 for automobiles used by Mr. Rego, $680 in 1995, $730 in 1996 and $730 in 1997 for automobiles used by Mr. Jones, and $700 in 1995, $655 in 1996 and $137 in 1997 for automobiles used by Mr. Spurgin and (b) Company contributions to defined contribution plans of $3,416 on behalf of each of Mr. Rego and Mr. Spurgin, $1,275 on behalf of Mr. Jones and $1,688 on behalf of Mr. Weaver in 1995, $4,535 for Mr. Rego, $2,793 for Mr. Jones, $2,822 for Mr. Weaver and $4,217 for Mr. Spurgin in 1996 and $3,912 for Mr. Jones, $3,870 for Mr. Weaver and $2,970 for Mr. Spurgin in 1997. DEFINED BENEFIT PLANS AND OTHER ARRANGEMENTS The Company has no defined benefit plans and has not entered into any agreements or arrangements with respect to any of its executive officers, other than Mr. Spurgin's employment agreement as discussed below. 10 11 OPTION GRANTS The following table sets forth summary information with respect to options to purchase Common Stock granted during the year ended December 31, 1997 to each of the named executive officers.
Option/SAR Grants in Last Fiscal Year - --------------------------------------------------------------------------------------------------------------- Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation Individual Grants for Option Term (1) - ---------------------------------------------------------------------------------- -------------------------- Number of % of Total Securities Options/SARs Underlying Granted to Exercise Options/SARs Employees or Base Granted in Fiscal Price Expiration Name (#) (2) Year ($/Sh) Date 5% ($)(3) 10% ($)(4) - --------------- ------------ ------------ -------- ---------- --------- ---------- Vincent A. Rego -- -- -- -- -- -- Daniel L. Jones 12,000 10.1% $12.50 1/31/07 $ 94,320 $239,040 David K. Smith 4,500 3.8% $12.50 1/31/07 $ 35,370 $ 89,640 Scott D. Weaver 16,500 13.9% $12.50 1/31/07 $ 129,690 $328,680 Donald M. Spurgin -- -- -- -- -- --
- -------------- (1) The values shown are based on the indicated assumed annual rates of appreciation compounded annually. Actual gains realized, if any, on stock option exercises and Common Stock holdings are dependent on the future performance of the Common Stock and overall stock market conditions. There can be no assurance that the values shown in this table will be achieved. (2) Shares become eligible for purchase at a rate of 20% per year starting on the first anniversary of the grant. (3) Represents an assumed market price per share of Common Stock of $20.36. (4) Represents an assumed market price per share of Common Stock of $32.42. 11 12 The following table summarizes the number and value of options exercised during 1997, as well as the number and value of unexercised options, as of December 31, 1997, held by each of the named officers. AGGREGATED OPTION EXERCISES IN 1997 AND DECEMBER 31, 1997 OPTION VALUE
Value of Number of Unexercised Unexercised In-the-Money Options at Options at FY-End (#) FY-End ($) (1) Shares Acquired Exercisable/ Exercisable/ Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable ------------------ ----------------- ------------------- --------------- --------------- Vincent A. Rego -- -- 150,000 shares/ $3,375,000/ 0 shares 0 Daniel L. Jones 0 0 36,975 shares/ $1,075,770/ 16,650 shares 326,913 David K. Smith 0 0 34,350 shares/ $995,016/ 9,150 shares 186,288 Scott D. Weaver 24,000 714,920 8,100 shares/ $177,525/ 27,900 shares 587,685 Donald M. Spurgin -- -- 150,000 shares/ $3,375,000/ 0 shares 0
(1) The high sales price per share on December 31, 1997 was $31 1/4 as reported by the NASDAQ National Market System. COMPENSATION OF DIRECTORS Directors do not receive fees for attending meetings of the Board of Directors. The Company does, however, reimburse directors for reasonable travel, lodging and related expenses incurred in attending Board and committee meetings. EMPLOYMENT AGREEMENT The Company employs Donald M. Spurgin under an Employment Agreement (the "Employment Agreement") as an Executive of the Company for the period October 1, 1996 through September 6, 2002. The agreement provides for an annual salary of $99,000 per year, which the Board of Directors may increase from time to time. Under the Employment Agreement, Mr. Spurgin is entitled to such bonuses or other discretionary compensation payments as the President may award him from time to time, and is also entitled to participate in any employee benefit plans, programs and arrangements provided by the Company from time to time to its employees. 12 13 PERFORMANCE GRAPH The following graph sets forth the cumulative total stockholder return, which assumes reinvestment of dividends, of a $100 investment in the Company's Common Stock, the New Peer Group1, the Old Peer Group2 and CRSP Total Return Index for The Nasdaq Stock Market (U.S. companies). The Company believes that the New Peer Group more accurately reflects the Company's peers in the building wire and cable industry and provides a better basis for comparison than the Old Peer Group. Although the companies included in the New Peer Group were selected because of similar industry characteristics, they are not entirely representative of the Company's business. Performance data for the Old Peer Group has been provided for comparative purposes but is not expected to be included in subsequent years' proxy statements. COMPARISON OF QUARTERLY CUMULATIVE TOTAL RETURN AMONG THE COMPANY, PEER GROUPS AND CRSP TOTAL RETURN INDEX FOR THE NASDAQ STOCK MARKET (U.S.) [GRAPH]
12/31/92 12/31/93 12/31/94 12/30/95 12/29/96 12/31/97 -------- -------- -------- -------- -------- -------- Company 100 109.8 170.7 95.1 168.3 449.1 CRSP Total Return Index for 100 114.8 112.2 158.7 195.2 239.5 NASDAQ Stock Market New Peer Group(1) 100 125.4 161.4 230.4 305.3 406.4 Old Peer Group(2) 100 126.1 82.3 110.8 130.3 181.8
- -------------- (1) Consists of the following companies, with each company being added to the index on its first date of public trading, as indicated: AFC Cable Systems Inc. (12/16/93), Cable Design Technologies Corporation (11/24/93), General Cable Corporation (5/16/97), Belden Inc. (9/30/93), Essex International Inc. (4/18/97) and Superior Telecom Inc (10/11/96). (2) Consists of the following companies: Bird Corporation, Elcor Corporation, Justin Industries, Masco Industries, Inc., Morgan Products, Ltd., Republic Gypsum Company and TJ International Inc. 13 14 AUDITORS Based on the recommendation of the Audit Committee of the Board of Directors of the Company, Ernst & Young LLP, which has served as the Company's independent public accountants since the Company's inception, has been appointed by the Board of Directors to audit the financial statements of the Company for the year ending December 31, 1998, subject to the ratification of such appointment by the stockholders of the Company. Although it is not required to do so, the Board of Directors is submitting the selection of auditors for ratification in order to obtain the stockholders' approval of this appointment. If the selection is not ratified, the Board of Directors will reconsider the appointment. Representatives of Ernst & Young LLP are expected to be present at the meeting to respond to appropriate questions from the stockholders and will be given the opportunity to make a statement should they desire to do so. STOCKHOLDER PROPOSALS AND OTHER MATTERS It is contemplated that the 1999 Annual Meeting of Stockholders of the Company will take place during the first week of May 1999. Stockholder proposals for inclusion in the Company's proxy materials for the 1999 Annual Meeting of Stockholders must be received by the Company at its offices in McKinney, Texas, addressed to the Secretary of the Company, not less than 120 days in advance of the date (month and day only) this Proxy Statement is first distributed to stockholders; provided, that if the 1999 Annual Meeting of Stockholders is changed by more than 30 days from the presently contemplated date, proposals must be so received a reasonable time in advance of the meeting. The Board of Directors does not intend to present any other matters at the meeting and knows of no other matters that will be presented; however, if any other matter properly comes before the meeting, the persons named in the enclosed proxy intend to vote thereon according to their best judgment. CERTAIN TRANSACTIONS Since its inception the Company has used Manufacturer's Transportation, Inc., a Plano, Texas based common carrier, to deliver materials to the Company and to deliver the Company's products to manufacturers' representatives' warehouses and customers. Manufacturer's Transportation, Inc. was wholly owned by the adult children of Donald M. Spurgin (one of whom is the spouse of Daniel L. Jones, a nominee for director and the Company's Executive Vice President and Chief Operating Officer) until October 1997, when Manufacturer's Transportation, Inc. was sold to a non-affiliated party. During the fiscal year ended December 31, 1997, the Company paid Manufacturer's Transportation, Inc. approximately $1.7 million for these services on the basis of rates the Company believes compare favorably with rates charged by other common carriers. The rates charged by Manufacturer's Transportation, Inc. are filed with the Interstate Commerce Commission. BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires directors and officers of the Company, and persons who own more than 10 percent of the Common Stock, to file with the SEC initial reports of ownership and reports of changes in ownership of the Common Stock. Directors, officers and more than 10 percent stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended December 31, 1997, all of its directors, officers and more than 10 percent beneficial owners complied with all applicable Section 16(a) filing requirements. 14 15 ANNUAL REPORT The Company has provided without charge to each person whose proxy is solicited hereby a copy of the 1997 Annual Report of the Company, which includes the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (including the consolidated financial statements) filed with the SEC. Additional copies of the Annual Report may be obtained without charge upon written request to the Company, Encore Wire Corporation, 1410 Millwood Road, McKinney, Texas, 75069, Attention: Corporate Secretary. By Order of the Board of Directors Scott D. Weaver, Vice President - Finance, Treasurer and Secretary 15 16 PROXY ENCORE WIRE CORPORATION ANNUAL MEETING Continued from other side MAY 5, 1998 The undersigned hereby appoints VINCENT A. REGO and DANIEL L. JONES, and each of them, as the undersigned's attorneys and proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as directed below, all the shares of common stock of ENCORE WIRE CORPORATION (the "Company") held of record by the undersigned on March 10, 1998, at the annual meeting of stockholders to be held on May 5, 1998 or any adjournment thereof. Please mark boxes [ ] in blue or black ink. 1. ELECTION OF DIRECTORS: [ ] FOR all nominees listed below (except as marked tot he contrary below) [ ] WITHHOLD AUTHORITY to vote for all nominees listed below (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME BELOW.) Joseph M. Brito Daniel L. Jones Vincent A. Rego William R. Thomas Donald E. Courtney John P. Pringle Donald M. Spurgin John H. Wilson 2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998: FOR [ ] AGAINST [ ] ABSTAIN [ ] 3. The above-named attorney and proxy (or his substitute) is authorized to vote in his discretion upon such other business as may properly come before the meeting or any adjournment thereof. THIS PROXY SOLICITED BY THE BOARD OF DIRECTORS PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE 17 ENCORE WIRE CORPORATION ANNUAL MEETING MAY 5, 1998 This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted FOR management's nominees for election as directors and FOR each of the other proposals set forth above. Date: , 1998 ------------------------ ------------------------------------- Signature ------------------------------------- Signature if held jointly Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. -----END PRIVACY-ENHANCED MESSAGE-----