SCHEDULE 14A
(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
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BLACK BOX CORPORATION
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BLACK BOX CORPORATION
1000 PARK DRIVE
LAWRENCE, PENNSYLVANIA 15055
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 10, 2004
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To the Stockholders of
Black Box Corporation:
The Annual Meeting of Stockholders of Black Box Corporation will be held at
the offices of the Company at 1000 Park Drive, Lawrence, Pennsylvania 15055 on
Tuesday, August 10, 2004, at 12:30 p.m., to consider and act upon the following
matters:
1. The election of six (6) members of the Board of Directors;
2. The approval of an amendment to the 1992 Company Stock Option Plan to
increase the number of shares authorized under the Plan and to limit the
number of shares with respect to which options or rights may be awarded
to any one person in any given fiscal year;
3. The approval of an amendment to the 1992 Director Stock Option Plan to
increase the number of shares authorized under the Plan; and
4. Ratification of the appointment of Ernst & Young LLP as the independent
registered public accounting firm of the Company for the fiscal year
ending March 31, 2005.
Stockholders also will be asked to consider such other matters as may
properly come before the meeting. The Board of Directors has established the
close of business on Friday, June 11, 2004, as the record date for the
determination of the stockholders entitled to notice of and to vote at the
Annual Meeting.
IT IS REQUESTED, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, THAT
YOU COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
Michael McAndrew, Secretary
June 30, 2004
BLACK BOX CORPORATION
1000 PARK DRIVE
LAWRENCE, PENNSYLVANIA 15055
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PROXY STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS
AUGUST 10, 2004
This proxy statement is being furnished to the holders of the common stock,
par value $.001 per share (the "Common Stock"), of Black Box Corporation, a
Delaware corporation (the "Company"), in connection with the solicitation by the
Board of Directors of the Company (the "Board of Directors" or the "Board") of
proxies to be voted at the annual meeting of stockholders (the "Annual Meeting")
scheduled to be held on Tuesday, August 10, 2004, at 12:30 p.m., at the offices
of the Company at 1000 Park Drive, Lawrence, Pennsylvania 15055, or at any
adjournment thereof. This proxy statement and form of proxy were first mailed to
stockholders on or about July 2, 2004. A copy of the Company's Annual Report to
Stockholders for the fiscal year ended March 31, 2004 is being furnished with
this proxy statement.
Only holders of the Common Stock of record as of the close of business on
Friday, June 11, 2004 are entitled to notice of and to vote at the Annual
Meeting and any adjournment thereof. On that date, 17,610,233 shares of Common
Stock, each entitled to one vote per share, were outstanding.
All shares of Common Stock represented by valid proxies received by the
Secretary of the Company prior to the Annual Meeting will be voted as specified
in the proxy. If no specification is made, the shares will be voted FOR the
election of each of the Board's nominees to the Board of Directors and each of
the other matters submitted by the Board of Directors for vote by the
stockholders. Unless otherwise indicated by the stockholder, the proxy card also
confers discretionary authority on the Board-appointed proxies to vote the
shares represented by the proxy on any matter that is properly presented for
action at the Annual Meeting. A stockholder giving a proxy has the power to
revoke it any time prior to its exercise by delivering to the Secretary of the
Company a written revocation or a duly executed proxy bearing a later date
(although no revocation shall be effective until actual notice thereof has been
given to the Secretary of the Company), or by attendance at the meeting and
voting his or her shares in person.
Under the Company's Second Restated Certificate of Incorporation, as
amended (the "Certificate of Incorporation"), and Amended and Restated By-laws
(the "By-laws") and applicable state law, abstentions and broker non-votes
(which arise from proxies delivered by brokers and others, where the record
holder has not received direction on voting and does not have discretionary
authority to vote on one or more matters) are each included in the determination
of the number of shares present for purposes of determining a quorum. At the
Annual Meeting, directors will be elected by a plurality vote and all other
matters will be decided by the affirmative vote of a majority of the votes cast.
Abstentions and broker non-votes are not votes cast and will not be included in
calculating the number of votes necessary for approval of the matter.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE
NOMINEES NAMED BELOW FOR ELECTION AS DIRECTOR, FOR APPROVAL OF AN INCREASE IN
THE NUMBER OF SHARES AUTHORIZED UNDER THE 1992 COMPANY STOCK OPTION PLAN, FOR
APPROVAL OF AN INCREASE IN THE NUMBER OF SHARES AUTHORIZED UNDER THE 1992
DIRECTOR STOCK OPTION PLAN AND FOR RATIFICATION OF THE APPOINTMENT OF ERNST &
YOUNG LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE COMPANY
FOR THE FISCAL YEAR ENDING MARCH 31, 2005.
ANNUAL MEETING MATTERS
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's By-laws provide that the number of directors constituting the
entire Board shall be nine (9), or such other number as shall be fixed by the
stockholders or by the Board of Directors. At present, the Board has fixed the
number of directors at six (6) members. All directors are independent under the
listing standards of the Nasdaq National Market ("Nasdaq"), except for Fred C.
Young as a result of his position as the Company's Chief Executive Officer.
All directors of the Company stand for election each year. The Board has
nominated six (6) persons for election to the Board at the Annual Meeting.
Therefore, six (6) directors are to be elected at the Annual Meeting to hold
office for a term of one (1) year and until their respective successors are
elected and qualified, subject to the right of the stockholders to remove any
director as provided in the By-laws. The stockholders may fill any vacancy in
the office of a director. In the absence of a stockholder vote, a vacancy in the
office of a director may be filled by the remaining directors then in office,
even if less than a quorum, or by the sole remaining director. Any director
elected by the Board of Directors to fill a vacancy shall serve until his
successor is elected or until his or her earlier death, resignation or removal.
If the Board of Directors increases the number of directors, the Board of
Directors may fill any vacancy so created.
The holders of Common Stock have one vote for each share owned as of the
record date in the election of directors. The six (6) nominees receiving the
greatest number of affirmative votes will be elected as directors for terms
expiring in 2005.
The persons named as proxies on the enclosed proxy card were selected by
the Board of Directors and have advised the Board of Directors that, unless
authority is withheld, they intend to vote the shares represented by them at the
Annual Meeting for the election of the following nominees to the Board of
Directors: William F. Andrews, Richard L. Crouch, Thomas W. Golonski, Thomas G.
Greig, Edward A. Nicholson, Ph.D. and Fred C. Young. Mr. Andrews, Mr. Golonski,
Mr. Greig and Mr. Fred Young all presently serve as directors of the Company.
William R. Newlin and Brian D. Young, who currently serve as directors, are not
seeking reelection. Messrs. Newlin and Brian Young will serve as directors until
the Annual Meeting on August 10, 2004.
The Board of Directors knows of no reason why any nominee for director
would be unable to serve as director. If at the time of the Annual Meeting any
of the named nominees is unable or unwilling to serve as a director of the
Company, the persons named as proxies intend to vote for such substitute as may
be nominated by the Board of Directors.
The following sets forth certain information concerning the Company's
nominees for election to the Board of Directors at the Annual Meeting.
WILLIAM F. ANDREWS, 72, was elected a director of the Company on May 18,
1992. He currently is Chairman of Corrections Corporation of America (private
prisons) and Chairman of Katy Industries, Inc. He was Chairman of Scovill
Fasteners, Inc. and Northwestern Steel and Wire from 1996 to 2001. Mr. Andrews
has been a principal with Kohlberg & Co., a private investment company, since
1995. He is also a director of Corrections Corporation, Katy Industries and Trex
Company, Inc., all publicly-held companies.
RICHARD L. CROUCH, 57, has been nominated by the independent directors upon
recommendation of Nominating Committee to serve as director. The Chief Executive
Officer initially recommended Mr. Crouch for consideration to the Nominating
Committee. Mr. Crouch has been a General Partner with the firm of
PricewaterhouseCoopers LLP since 1979, serving as an Audit Partner assigned to
principally public companies. He has served in various capacities for the firm,
including service as a regional accounting, auditing and SEC services
consultant. He will retire from the firm on July 2, 2004.
THOMAS W. GOLONSKI, 61, was selected to be a director of the Company on
February 11, 2003 and was elected by the stockholders on August 12, 2003. Mr.
Golonski is Chairman, President and Chief Executive Officer of National City
Bank of Pennsylvania and Executive Vice President of National City Corporation
2
since 1996. Mr. Golonski is also a director of several economic development
organizations and active in other charitable and financial organizations.
THOMAS G. GREIG, 56, was elected a director of the Company on August 10,
1999 and appointed as non-executive Chairman of the Board in May 2004. Mr. Greig
has been a Managing Director of Liberty Capital Partners, a private equity
partnership, since 1998. From 1973 to 1998, Mr. Greig worked in the investment
banking industry, principally in the technology investment banking area. Mr.
Greig is a director of publicly-held Rudolph Technologies, Inc., a number of
privately held companies and a public, not-for-profit foundation.
EDWARD A. NICHOLSON, PH.D., 64, has been nominated by the independent
directors upon recommendation of the Nominating Committee to serve as director.
The Chief Executive Officer initially recommended Dr. Nicholson for
consideration to the Nominating Committee. Dr. Nicholson has been President of
Robert Morris University since 1989 and is also a director of publicly-held
Shopsmith Inc. He has served more than 25 businesses and government agencies as
a consultant in the areas of long-range planning, organization design and labor
relations. He has published numerous articles and co-authored three books. He is
also a director of several regional economic, charitable and cultural
organizations.
FRED C. YOUNG, 48, was elected a director of the Company on December 18,
1995, President on May 9, 1997 and Chairman and Chief Executive Officer on June
24, 1998. Mr. Young served as Chairman until May 2004 when Mr. Greig was
appointed as non-executive Chairman of the Board. He served as Chief Operating
Officer from May 1996 until June 1998 and Chief Financial Officer and Treasurer
from 1991 until May 1997 and was Secretary from 1991 until May 1999. He is also
a director of Citizens Bank of Pennsylvania.
PROPOSAL 2 - APPROVAL OF INCREASE TO 1992 COMPANY STOCK OPTION PLAN SHARES AND
LIMIT ON INDIVIDUAL GRANTS
In November 1992, the Board of Directors and stockholders adopted the 1992
Company Stock Option Plan (the "Employee Plan"). The Employee Plan constitutes a
key element of the Company's total compensation program. This plan is designed
to motivate key employees of the Company to remain focused on long-term
stockholder value performance.
As a result of the prior grants of stock options under the Employee Plan,
the number of shares of Common Stock available for the grant of stock options as
of March 31, 2004 was 21,520. In order to maintain the Company's
pay-for-performance compensation philosophy, the Board has adopted and proposes
that the stockholders approve an amendment to the Employee Plan which will
increase the total number of shares available for the grant of stock options
under the Employee Plan by 850,000 shares. The aggregate number of shares will
increase from 7,450,000 to 8,300,000.
The Board believes that the increase in the number of shares available for
issuance under the Employee Plan will:
- Strengthen the Company's ability to retain key employees and motivate
such employees to remain focused on long-term stockholder value
performance.
- Support the Company's strategy of using stock options as a key component
of an employee's total compensation. The Company's philosophy is to be
conservative with the cash component of total compensation and tie the
at-risk variable portion to overall Company stock performance.
- Support the intention of the Employee Plan to serve as a post-retirement
benefit program. Generally, the Company does not have a Company-funded
post-retirement medical benefits program or a defined contribution
pension program for any of its key employees. Therefore, the Employee
Plan can serve to cover the cost of these types of post-retirement
benefits. This program design is consistent with the Company's overall
philosophy of pay-for-performance.
- The Company has analyzed the impact of outstanding stock options,
including the proposed increase in the number of shares of Common Stock
available for the grant of stock options under the Employee Plan, and has
determined that the dilutive impact of outstanding options, including
such increase, is within certain investor-based guidelines and lower than
the average dilutive impact for companies in its industry group.
3
- As of March 31, 2004, 66% of the total outstanding options granted to
current employees were vested. Consequently, the Board believes that the
key employees continue to retain their options as they are personally
committed to the Company's long-term profit goals and subsequent
opportunity for stock appreciation, thereby aligning their financial
goals with those of the stockholders. Because of the retention of vested
options, the number of shares outstanding attributable to the Employee
Plan is higher than if employees were to have exercised such options and
sold the shares.
For the above stated reasons, the Board believes that the proposed increase
is appropriate.
In addition, the Employee Plan is to be amended to provide that no person
may receive options or rights under the Employee Plan for more than 500,000
shares in any given fiscal year.
The affirmative vote of a majority of the votes cast in person or by proxy
at the Annual Meeting is required to approve these amendments to the Employee
Plan. Unless otherwise directed by the stockholders, proxies will be voted for
this proposal.
Because one of the executive officers, as a member of the Board of
Directors, is eligible to receive awards under the Employee Plan, he may be
deemed to have a personal interest in the adoption of this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 2.
PROPOSAL 3 - APPROVAL OF INCREASE TO 1992 DIRECTOR STOCK OPTION PLAN SHARES
In November 1992, the Board of Directors and stockholders adopted the 1992
Director Stock Option Plan (the "Director Plan"). The Director Plan constitutes
a key element of the Company's incentive program that is utilized to attract and
retain the services of persons capable of filling director positions of the
Company.
As a result of the prior grants of stock options under the Director Plan,
the number of shares of Common Stock available for the grant of stock options as
of March 31, 2004 was 15,883. In order to maintain the Company's incentive plan
to attract and retain directors, the Board has adopted and proposes that the
stockholders approve an amendment to the Director Plan which will increase the
total number of shares available for the grant of stock options under the
Director Plan by 40,000 shares. The aggregate number of shares will increase
from 210,000 to 250,000.
The Board believes the increase in the number of shares available for
issuance under the Director Plan will:
- Maintain the Company's ability to attract and retain directors capable of
filling such positions.
- Support the Company's philosophy of using at-risk, variable compensation
as a key component of a director's total compensation. This enables the
Company to remain conservative relative to the fixed fees paid to
directors.
- The Company has analyzed the impact of outstanding stock options,
including the proposed increase in the number of shares of Common Stock
available for the grant of stock options under the Director Plan, and has
determined that the dilutive impact of outstanding options, including
such increases, is within certain investor-based guidelines and lower
than the average dilutive impact for companies in its industry group.
The affirmative vote of a majority of the votes cast in person or by proxy
at the Annual Meeting is required to approve the amendment to the Director Plan.
Unless otherwise directed by the stockholders, proxies will be voted for this
proposal.
Because non-employee Directors are eligible to receive awards under the
Director Plan, each of them may be deemed to have a personal interest in the
adoption of this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 3.
4
PROPOSAL 4 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
In May 2004, the Board of Directors, upon recommendation of the Audit
Committee, appointed Ernst & Young LLP as the independent registered public
accounting firm of the Company for the fiscal year ending March 31, 2005. As a
sound governance matter, the Board has determined to submit the appointment to
stockholders for ratification at the Annual Meeting. The affirmative vote of a
majority of the votes cast in person or by proxy at the Annual Meeting is
required for the ratification by the Company's stockholders of such appointment.
Unless otherwise directed by the stockholders, proxies will be voted for
the ratification of the appointment of Ernst & Young LLP as independent
registered public accounting firm of the Company for the fiscal year ending
March 31, 2005. In the event that this appointment is not ratified by the
stockholders, the Audit Committee will consider this vote in determining its
future appointment of the Company's independent registered public accounting
firm. Even if the appointment is ratified, the Audit Committee in its discretion
may change the appointment at any time during the year if it determines that
such change would be in the best interests of the Company and its stockholders.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting, will not be making a statement but will be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4.
BOARD OF DIRECTORS AND CERTAIN BOARD COMMITTEES
The Company's Board of Directors held four meetings during the fiscal year
ended March 31, 2004 ("Fiscal 2004"). During Fiscal 2004, each director attended
at least 75% of the meetings of the board and each committee on which such
director served.
During Fiscal 2004, directors who were not employees of the Company
received directors' fees of $7,500 per annum, paid quarterly, and an additional
fee of $375 for each meeting of the Board of Directors attended in person. In
November 2003, the non-employee directors were each granted an option to
purchases 6,000 shares under the Company's Director Stock Option Plan. In
addition, the Company maintains directors' and officers' liability insurance.
Effective March 3, 2004, Audit Committee members receive a fee of $1,500 for
each meeting of the Audit Committee attended in person or by phone. Effective
May 11, 2004, in addition to the per annum director's fee, the non-executive
Chairman of the Board receives an annual fee of $60,000, paid quarterly.
Stockholders can communicate with the Board of Directors or to individual
members of the Board by writing to the Company's Secretary at: Black Box
Corporation, 1000 Park Drive, Lawrence, Pennsylvania 15055.
The Board of Directors has four standing committees: the Audit Committee,
the Compensation Committee, the Nominating Committee and the Governance
Committee.
AUDIT COMMITTEE
The Board has an Audit Committee consisting of Thomas W. Golonski as chair,
Thomas G. Greig and Brian D. Young. Each member of the Audit Committee is
independent under Nasdaq's listing standards for audit committee members.
The Audit Committee's duties include the sole authority and direct
responsibility over the selection (subject to stockholder ratification if the
Committee so elects), evaluation, retention and replacement of the Company's
independent auditors. The Committee also has responsibility for determining the
compensation and other terms of engagement of such independent auditors.
5
The Audit Committee has such other duties and responsibilities as are set
forth in its written charter, a copy of which is attached to this Proxy
Statement as Annex A. Theses duties and responsibilities include pre-approval of
all audit services and permitted non-audit services, oversight of the
independent auditors, review of financial statements and SEC filings, review of
the lead audit partner, review of the auditors' independence, discussions with
the auditors regarding the planning and scope of the audit, discussions
regarding the Company's internal controls over financial reporting and the
establishment of procedures for the receipt, retention and treatment of
complaints regarding accounting, internal controls and auditing and the
confidentiality thereof.
The Audit Committee pre-approved all independent auditors' fees for the
Fiscal 2004 financial audit and future non-audit services, primarily assistance
with tax compliance and planning.
The Board of Directors has determined that all of the members of the Audit
Committee, Mr. Thomas W. Golonski, Mr. Thomas G. Greig and Mr. Brian D. Young,
qualify as audit committee financial experts within the meaning of Securities
and Exchange Commission ("SEC") regulations and that they have the requisite
level of financial sophistication required under Nasdaq's listing standards. The
Board of Directors also has determined that Messrs. Golonski, Greig and Brian
Young are independent within the meaning of Item 7(d)(3)(iv) of Schedule 14A
contained in the SEC's proxy rules.
The Audit Committee met six times in Fiscal 2004.
COMPENSATION COMMITTEE
The Board has a Compensation Committee, consisting of Thomas G. Greig as
chair, Thomas W. Golonski and William R. Newlin. The Compensation Committee is
responsible for reviewing and recommending to the Board of Directors the total
compensation of the executive officers of the Company. The Committee also
administers the Company's stock option plans.
The Compensation Committee operates under a written charter adopted by the
Board of Directors, a copy of which is attached to this Proxy Statement as Annex
B.
The Compensation Committee met three times in Fiscal 2004.
NOMINATING COMMITTEE
The Company has a Nominating Committee consisting of Brian D. Young as
chair, William F. Andrews and William R. Newlin. Each member of the Nominating
Committee is independent under Nasdaq's listing standards.
The duties of the Nominating Committee are to identify and evaluate
potential candidates for any Board vacancies, including any individuals
recommended by committee members, other Board members, the Company's management
or current stockholders of the Company or identified by third-party executive
search firms, recommend to the Board individuals to be nominated for election as
directors by the stockholders at the Company's annual meeting and, from time to
time, recommend to the Board individuals to be elected by the Board to fill
Board vacancies.
The Nominating Committee considers the independence, experience relative to
the business of the Company and the needs of the Board, diversity and the
ability to represent stockholders in evaluating potential nominees. Potential
Board members should show a willingness to fully participate in Board meetings,
a proven track record of career accomplishments, the ability to make sound
judgments and leadership qualities.
It is the Nominating Committee's policy to consider stockholder proposals
for nominees that are nominated in accordance with the Company's Certificate of
Incorporation, By-laws and other applicable laws, including the rules and
regulations of the SEC and any stock market on which the Company's stock is
listed for trading or quotation. Generally, such recommendations made by a
stockholder entitled to notice of, and to vote at, the meeting at which such
proposed nominee is to be considered, are written and are received by the
Secretary of the Company within a prescribed time period prior to the annual or
special meeting. See
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"Stockholder Nominations and Proposals" for a description of the procedures to
be followed in order to submit a recommendation for a nominee.
The Nominating Committee operates under a written charter adopted by the
Board of Directors. A copy of the Board's Nominating Committee Charter is
attached to this Proxy Statement as Annex C.
The Nominating Committee met twice in Fiscal 2004.
GOVERNANCE COMMITTEE
The Company has a Governance Committee, consisting of William R. Newlin as
chair, William F. Andrews and Brian D. Young. The Governance Committee is
responsible for reviewing, on an ongoing basis, the corporate governance
practices and principles established and implemented by the Board and management
for the Company, monitoring trends and regulatory requirements in corporate
governance and recommending to the Board any changes in the Company's corporate
governance practices and functions based upon such trends and regulatory
requirements. The Governance Committee is also responsible for reviewing and
recommending to the Board of Directors compensation to be provided to Board
members.
The Committee monitors the corporate governance scoring for the Company as
developed by Institutional Shareholder Services ("ISS"), an independent service.
The ISS Corporate Governance Quotient score for Black Box as of May 2004
indicated that the Company outperformed 69.3% of the companies in the Standard &
Poors 600 Index and 86.2% of the companies in the technology hardware and
equipment group.
The Governance Committee believes the annual meetings held by the Company
are appropriate for stockholder communications with the Board of Directors. The
Governance Committee strongly encourages board member attendance at all
meetings, including annual meetings with stockholders. All directors, except for
Brian D. Young, attended the annual meeting of stockholders held in August 2003.
The Governance Committee operates under a written charter adopted by the
Board of Directors, a copy of which is attached to this Proxy Statement as Annex
D.
The Governance Committee met twice in Fiscal 2004.
7
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth all cash compensation paid by the Company
and its subsidiaries, as well as other compensation paid or accrued, to the
Company's chief executive officer and to the other executive officers of the
Company at the end of Fiscal 2004 whose annual salary and bonus in Fiscal 2004
exceeded $100,000 (the "Named Executive Officers") for each of Fiscal 2002, 2003
and 2004, respectively. Such compensation was paid for services rendered in all
capacities to the Company and its subsidiaries:
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
-------------------- ------------
AWARDS
------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
--------------------------- ---- ------ ----- ------- ------------
($) ($) (#) ($)
Fred C. Young.......................................... 2004 474,994(1) 100,000 100,000 13,990(2)
Chief Executive Officer 2003 447,591 200,200 145,000 13,212(2)
2002 447,591 -0- 195,000 8,150(2)
Kathleen Bullions...................................... 2004 200,000 100,000 60,000 13,051(2)
Senior Vice President -- 2003 177,692 100,200 60,000 12,694(2)
North America 2002 150,769 -0- 50,000 7,557(2)
Roger E. M. Croft...................................... 2004 228,619(3) 100,000 35,000 92,412(3)(4)
Senior Vice President -- 2003 224,223(3) 75,000 30,000 93,986(3)(4)
Europe and Latin America 2002 219,826(3) -0- 30,000 80,291(3)(4)
Michael McAndrew....................................... 2004 125,000 31,500 20,000 13,449(2)
Vice President, Chief Financial Officer, 2003 102,606 30,200 20,000 11,670(2)
Treasurer and Secretary 2002 83,269 22,561 15,000 11,253(2)
Francis W. Wertheimber................................. 2004 242,575(3) 100,000 35,000 13,875(3)(5)
Senior Vice President -- 2003 242,575(3) 75,000 30,000 15,022(3)(5)
Pacific Rim/Far East 2002 222,361(3) -0- 25,000 15,022(3)(5)
---------------
(1) Annual salary was not increased from prior year. Lower salaries in 2003 and
2002 reflect participation in a salary forfeiture program.
(2) Represents amounts accrued by the employer for the individual under the
401(k) plan of the Company and payments for life insurance premiums.
(3) Represents local currencies converted to U.S. dollars at March 31, 2004
exchange rates.
(4) Represents amounts paid by the employer for the individual under a plan
similar to a 401(k) plan and for automobile expenses.
(5) Represents amounts paid by the employer for the individual for automobile
expenses.
STOCK OPTION PLANS
The Board of Directors and stockholders of the Company have adopted the
Company's 1992 Stock Option Plan, as amended (the "Employee Plan"), and have
authorized the issuance of options and stock appreciation rights covering up to
7,450,000 shares of Common Stock under this plan (subject to appropriate
adjustments in the event of stock splits, stock dividends and similar dilutive
events). Options and stock appreciation rights may be granted under the Employee
Plan to key salaried and hourly employees (including those who may also be
directors but who are not members of the Compensation Committee) of the Company
and its subsidiaries.
8
The Board of Directors and stockholders have also adopted the Company's
1992 Director Stock Option Plan, as amended (the "Director Plan"), and have
authorized the issuance of options and stock appreciation rights covering up to
210,000 shares of Common Stock under this plan (subject to appropriate
adjustments in the event of stock splits, stock dividends and similar dilutive
events). Under the Director Plan, the Compensation Committee may grant options
and stock appreciation rights to non-employee Directors of the Company.
The following table sets forth information concerning the stock options
granted to each of the Company's Named Executive Officers in Fiscal 2004:
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM (1)
---------------------------------------------------- -----------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE OR EXPIRATION
NAME GRANTED FISCAL YEAR BASE PRICE DATE 5% 10%
---- ------- ----------- ---------- ---- -- ---
(#) (%) ($/SHARE) ($) ($)
Fred C. Young.................... 100,000 11.4% 40.55 10/01/13 2,550,168(2) 6,462,626(3)
Kathleen Bullions................ 60,000 6.8% 40.55 10/01/13 1,530,101(2) 3,877,575(3)
Roger E. M. Croft................ 35,000 4.0% 40.55 10/01/13 892,559(2) 2,261,919(3)
Michael McAndrew................. 20,000 2.3% 40.55 10/01/13 510,034(2) 1,292,525(3)
Francis W. Wertheimber........... 35,000 4.0% 40.55 10/01/13 892,559(2) 2,261,919(3)
All Stockholders................. 455,442,467(2)(4) 1,154,181,646(3)(4)
---------------
(1) Assumes, from the date of grant of the option through its ten year
expiration date, a hypothetical 5% and 10% per year appreciation (compounded
annually) in the fair market value of the Common Stock. The 5% and 10% rates
of appreciation are set by the SEC and, therefore, are not intended to
forecast possible future appreciation, if any, in the Common Stock. If the
Common Stock does not increase in value from the date of grant of the stock
option, such option would be valueless.
(2) Assuming the exercise price of $40.55 per share appreciates at 5% per annum,
the fair market value of the Common Stock after 10 years is $66.05 per
share.
(3) Assuming the exercise price of $40.55 per share appreciates at 10% per
annum, the fair market value of the Common Stock after 10 years is $105.18
per share.
(4) Represents assumed appreciation in market value of shares of Common Stock
outstanding as of March 31, 2004 over a term of 10 years, measured from such
date.
9
The following table sets forth information with respect to each of the
Company's Named Executive Officers concerning the exercise of options during
Fiscal 2004 and unexercised options held as of March 31, 2004:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED NET VALUE OPTIONS AT OPTIONS AT
NAME ON EXERCISE REALIZED FISCAL YEAR END FISCAL YEAR END (1)
---- ----------- -------- --------------- -------------------
(#) ($) (# EXERCISABLE/ ($ EXERCISABLE/
# UNEXERCISABLE) $ UNEXERCISABLE)
Fred C. Young............... 140,000 5,510,013 1,261,733/261,667 29,109,765/2,945,117
Kathleen Bullions........... 20,000 666,167 280,483/116,667 6,004,881/1,336,033
Roger E. M.................. -0- -0- 145,149/65,000 2,326,838/752,450
Michael McAndrew............ 11,480 297,977 47,717/38,333 792,256/649,750
Francis W. Wertheimber...... 77,335 2,045,828 73,437/63,333 742,677/730,667
---------------
(1) This Value of Unexercised In-the-Money Options represents the difference
between the March 31, 2004 closing stock price of $53.44 and the option cost
for all exercisable and unexercisable options.
REPORT OF THE COMPENSATION COMMITTEE
MEMBERSHIP AND ROLE OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors consisted of Thomas G.
Greig as chair, Thomas W. Golonski and William R. Newlin. The Compensation
Committee is charged with administering the Company's compensation programs for
executive officers, including fixed compensation and incentive compensation
plans, including the Company's stock option plans. The Company believes that its
total executive compensation package should be designed to facilitate the
achievement of short- and long-range Company goals, to recognize individual
executive performance and contribution, and to promote increased value creation
for the Company's stockholders. To this end, the Company and the Compensation
Committee seek to:
- Hire, train, develop, compensate and retain the highest quality
executives possible for the Company's success.
- Reward executives for outstanding contributions to the achievement of the
Company's goals and overall success.
- Provide incentives for executives to align their goals with those of the
stockholders through a pay-for-performance philosophy in the form of
fixed and at risk, variable compensation.
ANNUAL EXECUTIVE COMPENSATION
The annual compensation for executives is paid based upon performance,
experience, the requirements of the position and the executive's relative
ability to impact the Company's overall success. The Company and the
Compensation Committee believe that the annual compensation paid to the
Company's executives has historically been competitive with that paid to
executives in the industry. In making compensation decisions, the Company has
relied upon its Board of Directors and the Compensation Committee's collective
knowledge of the industry and the functions that Company executives perform.
The primary goals for executives, in their own respective positions, are to
help the Company achieve its annual profit and cash flow targets. Fixed salaries
for the executives are reviewed by the Compensation Committee on an annual basis
and may be increased or decreased based upon the Compensation Committee's
10
decision that they are competitive in the industry, and/or that a particular
executive's contributions to the Company have been significant during the year.
In making its decision, the Compensation Committee will also consider the amount
of each executive's overall compensation, which is in the form of base salary
versus compensation that is at-risk.
Included in total compensation is at-risk incentive compensation.
Generally, the incentive compensation payments are made as a percentage of fixed
salaries. Any payments are subject to approval by the Board of Directors on an
annual basis.
EMPLOYMENT AGREEMENT
In May 2004, the Company entered into an agreement with Fred C. Young. The
agreement generally provides for certain benefits to Mr. Young in the event that
his employment is terminated within three years of a change of control either by
(a) the Company for other than cause, death, disability or retirement or (b) Mr.
Young's resignation for good reason. A change of control is deemed to occur if
it is reportable as such by SEC rules or if 20% or more of the Company's stock
is acquired, or 51% or more of its stock is issued in a merger or substantially
all assets are sold.
Mr. Young is also entitled to receive the benefits upon termination by him
of his employment for any reason during a 30-day period commencing six months
after a change in control.
Additionally, Mr. Young will receive the benefits if (a) he is terminated
by the Company for other than cause, death, disability or retirement, or (b)
upon his resignation, if the Board of Directors removes or fails to reelect him
to the chief executive officer position or otherwise reduces the power and
status of such position at any time other than at a time when he could have been
terminated for cause. The agreement defines cause as his deliberate and
intentional failure to devote his best efforts to the performance of duties,
conviction of criminal fraud or a felony involving moral turpitude, gross
misconduct materially and demonstrably damaging to the Company, continuing
failure after notice to adhere to the nondisclosure and noncompete portions of
the agreement and willful failure to follow instructions of the Board. Good
reason is defined as the failure of the Company to have any successor assume the
agreement and the occurrence of any of the following after a change in control:
the assignment of new duties materially and substantially inconsistent with
prior duties and/or a material change in reporting responsibilities, reduction
in base salary, failure to continue comparable incentive compensation, failure
to continue comparable stock option and other fringe benefits, relocation beyond
50 miles and any purported termination other than for disability or retirement
or made without a specified written notice of termination.
The benefits provided by the agreement generally equal three years of
annual base salary, annualized long-term incentive plan payments, other cash
bonuses and medical insurance or similar benefit plans ("Benefits"). In
addition, all of Mr. Young's unvested options shall vest and remain outstanding
for their stated term if (a) Mr. Young is entitled to the Benefits upon his
termination as discussed above, (b) in the event of death or (c) if he
terminates his employment after May 11, 2007 at any time other than at a time
when he could have been terminated for cause.
The original term of the agreement is five years with an evergreen renewal
on a one-year basis thereafter absent notice of nonrenewal six months prior to
the renewal date.
COMPANY STOCK OPTION PLAN
In Fiscal 1993, the Company's Board of Directors and stockholders approved
the Employee Plan, pursuant to which the Compensation Committee may grant stock
options to key employees, including those who may be executive officers of the
Company. This plan was amended in Fiscal 1995 through Fiscal 2004 pursuant to
stockholder votes to increase the number of shares available for the grant of
options thereunder. Information with respect to the options granted to the Named
Executive Officers in Fiscal 2004 is set forth in the table entitled "Option
Grants in Last Fiscal Year" appearing elsewhere in this proxy statement. The
Compensation Committee believes that the options granted are consistent with the
Company's overall compensation policies and the individual compensation packages
of each Named Executive Officer.
11
The Employee Plan requires that all options have an exercise price of not
less than the fair market value of the stock on the date of grant of the option.
CHIEF EXECUTIVE OFFICER'S COMPENSATION ANALYSIS
In determining the total compensation for Fred C. Young, CEO of the
Company, the Compensation Committee used the same criteria described above in
the opening paragraphs of the Annual Executive Compensation section.
The Compensation Committee believes that the total compensation for Mr.
Young was appropriate for Fiscal 2004 because of the overall performance of the
Company, his individual performance and comparable executive compensation in the
industry.
SUMMARY
The Company's total compensation plan is predicated on the Committee's and
the Company's belief that executives contribute to stockholder returns by
maximizing profits and cash flow.
The Committee believes that the total compensation paid to its executives
for Fiscal 2004 was reasonable in view of the Company's performance relative to
the overall industry.
COMPENSATION COMMITTEE:
Thomas W. Golonski
Thomas G. Greig
William R. Newlin
12
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended March 31, 2004,
included in the Company's Annual Report on Form 10-K. The information contained
in this report shall not be deemed to be "soliciting material" or to be "filed"
with the Securities and Exchange Commission, 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 it by reference in such
filing.
MEMBERSHIP AND ROLE OF AUDIT COMMITTEE
During Fiscal 2004, the Audit Committee consisted of the following members
of the Company's Board of Directors: Thomas W. Golonski, as chair, Thomas G.
Greig and Brian D. Young. Each of the members of the Audit Committee is
independent as defined under Nasdaq's listing standards. The Audit Committee
operates under a written charter adopted by the Board of Directors.
REVIEW WITH MANAGEMENT
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT REGISTERED ACCOUNTING FIRM
The Audit Committee has discussed with Ernst & Young LLP, the Company's
independent accountants for Fiscal 2004, the matters required to be discussed by
SAS 61 (Codification of Statements on Accounting Standards) which includes,
among other items, matters related to the conduct of the audit of the Company's
financial statements.
The Audit Committee has also received written disclosures and the letter
from Ernst & Young LLP required by Independence Standards Board Standard No. 1
(which relates to the accountant's independence from the Company and its related
entities) and has discussed with Ernst & Young LLP their independence from the
Company.
CONCLUSION
Based on review and discussions referred to above, the Committee
recommended to the Company's Board that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 2004.
AUDIT COMMITTEE:
Thomas W. Golonski
Thomas G. Greig
William R. Newlin
13
PERFORMANCE GRAPH
The graph below represents and compares the value, through March 31, 2004,
of a hypothetical investment of $100 made on March 31, 1999, in each of (i) the
Company's Common Stock, (ii) the S&P Small Cap 600, (iii) the Russell 2000
Group, and (iv) the Nasdaq Market Index, assuming the reinvestment of dividends
in each case:
BLACK BOX
CORPORATION S&P SMALL CAP 600 NASDAQ MARKET INDEX RUSSELL 2000 GROUP
----------- ----------------- ------------------- ------------------
3/99 100.00 100.00 100.00 100.00
3/00 223.34 130.70 198.50 137.29
3/01 143.75 129.02 76.58 116.25
3/02 156.19 157.37 59.96 132.51
3/03 95.84 118.32 49.22 96.78
3/04 173.66 185.16 76.27 158.55
14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From February 1989 until January 1992, Brian D. Young, a current member of
the Compensation Committee, was a partner in Odyssey Partners, at that time the
Company's controlling stockholder, and served as President of MB Holdings, Inc.
MB Holdings, of which the Company is a successor, was at that time the holding
company for MICOM Communications Corp. and its subsidiaries as well as Black Box
Corporation and its subsidiaries. Each of MICOM and Black Box had separate
management teams responsible for the operating performance of that entity that
reported to the holding company management on behalf of its investors.
Subsequent to January 1992, the Company effected its initial public offering and
spun-off MICOM. While, technically, Brian D. Young was the President of the
predecessor to the Company, he did not have day-to-day management over the
operating companies, including Black Box. In addition, Brian D. Young and Fred
C. Young, Chief Executive Officer, are not related to each other.
EQUITY PLAN COMPENSATION INFORMATION
The following table sets forth information about the Company's equity
compensation plans for employees as of March 31, 2004:
(A) (B) (C)
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER EQUITY
ISSUED UPON EXERCISE OF EXERCISE PRICE OF COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLANS WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
----- -------------------------- -------------------- ----------------------------
Equity compensation plans
approved by security
holders....................... 4,251,509(1) $36.35 21,520
Equity compensation plans not
approved by security
holders....................... -0- -0- -0-
--------- ------ ------
Total........................... 4,251,509 $36.35 21,520
========= ====== ======
---------------
(1) Includes both vested and unvested options.
15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information publicly available to the
Company, as of March 31, 2004, regarding the beneficial ownership of the
Company's Common Stock by all those, other than Fred C. Young (whose information
is disclosed in the Security Ownership of Management table set forth below),
known by the Company to be beneficial owners of more than five percent of its
outstanding Common Stock:
NUMBER OF PERCENT OF
SHARES SHARES (7)
--------- ----------
FMR Corp. (1)............................................... 2,336,550 13.1%
82 Devonshire Street, Boston, MA 02109
T. Rowe Price Associates, Inc. (2).......................... 1,730,770 9.8%
100 East Pratt Street, Baltimore, MD 21202
Neuberger Berman, LLC (3)................................... 1,682,638 9.4%
605 Third Avenue, New York, NY 10158
Kayne Anderson Rudnick Investment Management, LLC (4)....... 1,531,361 8.6%
1800 Avenue of the Stars, Los Angeles, CA 90067
Private Capital Management, Inc. (5)........................ 1,000,889 5.6%
8889 Pelican Bay Blvd., Suite 500, Naples, FL 34108
Alex Brown Investment Management (6)........................ 986,230 5.5%
217 E. Redwood St., Suite 1400, Baltimore, MD 21202
---------------
(1) Includes 2,244,585 shares beneficially owned by Fidelity Management &
Research Company ("Fidelity"), a wholly owned subsidiary of FMR Corp. and a
registered investment adviser, of which 2,025,025 shares are owned by one
investment company, Fidelity Low-Priced Stock Fund. Edward C. Johnson 3d,
FMR Corp. and the funds each has sole power to dispose of the 2,244,585
shares owned by the funds. Neither FMR Corp. nor Edward C. Johnson 3d,
Chairman of FMR Corp., has the sole power to vote or direct the voting of
the shares owned directly by the funds, which power resides with the funds'
Boards of Trustees. Fidelity carries out the voting of the shares under
written guidelines established by the funds' Boards of Trustees. Also
includes 91,965 shares beneficially owned by Fidelity Management Trust
Company, a wholly owned bank subsidiary of FMR Corp., serving as investment
manager of certain institutional accounts. Edward C. Johnson 3d and FMR
Corp. each has sole power to dispose of the 91,965 shares owned by the
institutional accounts and sole power to vote or direct the voting of these
shares. This information is derived from FMR Corp.'s Schedule 13G, filed on
February 17, 2004.
(2) These securities are owned by various individuals and institutional
investors for which T. Rowe Price Associates, Inc. ("Price Associates")
serves as investment adviser 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. This
information is derived from a letter received from Price Associates in
February 2004 and Price Associates' Schedule 13G, filed on February 4, 2004.
(3) Neuberger Berman, LLC, an affiliate of Neuberger Berman, Inc., is deemed to
be a beneficial owner since it has shared power to make decisions whether to
retain or dispose, and in some cases, the sole power to vote the securities
of many unrelated clients. Neuberger Berman Genesis Fund Portfolio is the
beneficial owner of 1,155,800 shares. Neuberger Berman, LLC and Neuberger
Berman Management, Inc. are deemed to be beneficial holders of these shares
since they both have shared power to make decisions whether to retain or
dispose of the securities. Neuberger Berman, LLC and Neuberger Berman
Management, Inc. serve as sub-adviser and investment manager, respectively,
of Neuberger Berman Genesis Fund Portfolio, which holds such shares in the
ordinary course of its business. This information is derived from Neuberger
Berman, LLC's Schedule 13G, filed on February 13, 2004.
(4) Kayne Anderson Rudnick Investment Management, LLC is a registered investment
adviser. This information is derived from Kayne Anderson Rudnick Investment
Management, LLC's Schedule 13G, filed on February 5, 2004.
16
(5) Private Capital Management, Inc. is a registered investment adviser. Bruce
S. Sherman, CEO, and Gregg J. Powers, President, of Private Capital
Management exercise shared dispositive and shared voting power with respect
to shares held by Private Capital Management's clients and managed by
Private Capital Management, however, they disclaim beneficial ownership of
such shares and the existence of a control group. This information is
derived from Private Capital Management's Schedule 13G, filed on February
13, 2004.
(6) Alex Brown Investment Management is a registered investment adviser. This
information is derived from Alex Brown Investment Management's Schedule 13G,
filed on February 17, 2004.
(7) Based on 17,859,330 shares outstanding as of March 31, 2004.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information available to the
Company, as of March 31, 2004, regarding the shares of the Company's Common
Stock beneficially owned by (i) each of the Company's directors and nominees for
director; (ii) each of the Company's Named Executive Officers; and (iii) all
directors and executive officers of the Company as a group.
NUMBER OF PERCENT OF
SHARES SHARES (5)
--------- ----------
William F. Andrews (1)...................................... 43,003 *
Kathleen Bullions (2)....................................... 284,484 1.6
Roger E. M. Croft (2)....................................... 145,150 *
Richard L. Crouch........................................... 0 --
Thomas W. Golonski (1)...................................... 2,166 *
Thomas G. Greig (1)......................................... 21,003 *
Michael McAndrew (2)........................................ 47,718 *
William R. Newlin (1)(3).................................... 46,289 *
Edward A. Nicholson, Ph.D. ................................. 0 --
Francis W. Wertheimber (2).................................. 73,438 *
Brian D. Young (1).......................................... 39,336 *
Fred C. Young (2)........................................... 1,272,638 7.1
---------
All directors and executive officers
listed above, as a group of 10 persons (4)................ 1,975,225 11.1
---------------
(1) Includes for Mr. Andrews, Mr. Golonski, Mr. Greig, Mr. Newlin, and Mr. Brian
D. Young: 33,003, 1,666, 15,002, 33,002 and 26,335 shares, respectively,
pursuant to rights to acquire such shares as a result of vested options, as
of May 30, 2004, granted pursuant to the Director Plan.
(2) Includes for Ms. Bullions, Mr. Croft, Mr. McAndrew, Mr. Wertheimber and Mr.
Fred C. Young: 280,483, 145,149, 47,717, 73,437 and 1,261,733 shares,
respectively, pursuant to rights to acquire such shares as a result of
vested options, as of May 30, 2004, granted under the Employee Plan.
(3) Until November 2003, Mr. Newlin served as Chairman and Chief Executive
Officer of Buchanan Ingersoll PC (attorneys at law). The Company engaged
Buchanan Ingersoll PC to perform legal services during Fiscal 2004 and
Fiscal 2005.
(4) Includes for all directors and named executive officers as a group 1,917,526
shares pursuant to rights to acquire such shares as a result of vested
options granted under the Employee Plan and the Director Plan.
(5) Based on 17,859,330 shares outstanding as of March 31, 2004.
The difference between the amounts set forth in the above table and the
amounts indicated in the footnotes are shares owned outright either directly or
indirectly.
* Represents less than 1% of the Common Stock outstanding.
17
SUMMARY OF 1992 COMPANY STOCK OPTION PLAN
The following description is not a complete statement of the Employee Plan
and is qualified in its entirety by reference to the complete text of the
Employee Plan, a copy of which is available from the Company upon request. The
description set forth below does not include any of the proposed amendments to
the plan being voted on at the Annual Meeting.
ADMINISTRATION. The Employee Plan is administered by a committee
consisting of at least two directors of the Company who are appointed by and
serve at the pleasure of the Board of Directors (the "Committee"). The
Committee, from time to time at its discretion, makes determinations with
respect to the persons who shall be granted options ("Options") or stock
appreciation rights ("Rights"), the number of shares of the Common Stock that
may be purchased pursuant to such Options or Rights and the designation of
Options as Incentive Stock Options or Non-Qualified Stock Options, as defined
below. The interpretation and construction by the Committee of any provisions of
the Employee Plan or of an Option or Right granted thereunder is binding and
conclusive on all optionees and on their legal representatives and
beneficiaries.
TYPES OF OPTIONS. The Committee, in its discretion, may grant Options to
purchase shares of Common Stock either in the form of incentive stock options
("Incentive Stock Options") qualified as such under the Internal Revenue Code of
1986, as amended (the "Code"), or other options ("Non-Qualified Stock Options"),
as designated in the optionee's stock option agreement. Historically, the
Company has only granted Non-Qualified Stock Options.
RIGHTS. The Committee, in its discretion, may grant Rights either alone,
simultaneously with the grant of an Incentive Stock Option or Non-Qualified
Stock Option and in conjunction therewith, or subsequent to the grant of a
Non-Qualified Stock Option and in conjunction therewith or in the alternative
thereto.
ELIGIBILITY. Any key salaried or hourly employee who is not a member of
the Committee may be granted Incentive Stock Options, Non-Qualified Stock
Options or Rights under the Employee Plan until November 30, 2012.
EXERCISE PRICE. The Committee shall determine the exercise price for each
Option or Right granted under the Employee Plan, provided however, that the
exercise price: (1) in the case of an Incentive Stock Option granted to an
employee, other than an employee who owns more than 10% of the total combined
voting power of all classes of outstanding stock of the Company (a "Ten-Percent
Stockholder"), or in the case of a Non-Qualified Stock Option, shall not be less
than the fair market value of the shares to which the Option relates on the date
of grant; (2) in the case of an Incentive Stock Option granted to an employee
who is a Ten-Percent Stockholder, shall not be less than 110% of the fair market
value of the shares to which the Option relates on the date of grant; and (3) in
the case of a Right granted alone, shall not be less than 100% of the fair
market value of the shares to which the Right relates.
EXERCISE PERIOD AND EXERCISE OF OPTIONS OR RIGHTS. An Option or Right may
be exercised in whole at any time, or in part from time to time, within such
period or periods as may be determined by the Committee and set forth in the
grantee's agreement, provided that: (1) no Incentive Stock Option shall be
exercisable after the expiration of ten (10) years from the date of grant; and
(2) no Incentive Stock Option granted to an employee who is a Ten-Percent
Stockholder shall be exercisable after the expiration of five years from its
date of grant. Options granted to date have vested in the grantee in equal
annual installments over a period of three years from the date of the grant.
Options are not transferable by the optionee except by will or by the laws of
descent and distribution.
TERMINATION OF EMPLOYMENT; DISABILITY; DEATH. Upon termination of
employment, an Option or Right previously granted to an employee, unless
otherwise specified by the Compensation Committee and to the extent not
previously exercised, shall terminate and become null and void, provided that:
(i) if the employee shall die (a) while in the employ of the Company or (b)
within three (3) months of retirement from such employment or (c) within one (1)
year of retirement from employment by reason of disability, the legal
representative or heirs of such employee shall be entitled to exercise such
Option or Right (to the extent otherwise exercisable) for a one-year period
following the date of death; (ii) if the employment shall have been terminated
by reason of retirement, disability or termination other than for cause (as
defined in the
18
Employee Plan), then such employee shall be entitled to exercise such Option or
Right (to the extent otherwise exercisable) at any time up to (a) three months
after termination by reason of retirement or other than for cause and (b) one
(1) year after termination by reason of disability. If an employee voluntarily
terminates his employment or is terminated for cause, any Option or Right,
unless otherwise specified by the Committee, shall immediately terminate.
PAYMENT. The exercise price of shares purchased pursuant to an Option
shall be paid in full at the time of any exercise either in cash or by certified
check; provided, however, to the extent that the terms of such Option provide,
the purchase price may be paid for, in whole or in part, by delivering
previously-owned shares of Common Stock or, in part, by promissory note (for not
more than 80% of such purchase price subject to applicable margin requirements).
LIMITATION ON ANNUAL AWARDS. The aggregate fair market value of stock for
which Incentive Stock Options are exercisable for the first time by an optionee
during any calendar year under the terms of the Employee Plan shall not exceed
the sum of $100,000.
ADJUSTMENTS, AMENDMENT OR DISCONTINUANCE. In the event of any change in
the outstanding Common Stock through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares, or other like change in capital
structure of the Company, the Committee shall make such adjustment to each
outstanding Option and Right that it, in its sole discretion, deems appropriate.
In addition, in the event of any such change, the Committee shall make any
further adjustment as may be appropriate to the maximum number of shares which
may be acquired under the Employee Plan pursuant to the exercise of Options and
Rights, the maximum number of shares which may be so acquired by one employee
and the number of shares and prices per share subject to outstanding Options and
Rights as shall be equitable to prevent dilution or enlargement of rights under
such Options or Rights, and the determination of the Committee as to these
matters shall be conclusive.
In the event of a "change in control" of the Company, as defined in the
Employee Plan, all then outstanding Options and Rights shall immediately become
exercisable. The Committee, in its discretion, may determine that, upon the
occurrence of a change in control transaction, each Option or Right outstanding
under the Employee Plan shall terminate within a specified number of days after
notice to the holder, and such holder shall receive, with respect to each share
subject to such Option or Right, cash in an amount equal to the excess of the
fair market value of such share immediately prior to such transaction over the
exercise price per share of such Option or Right.
The Board of Directors or the Committee, as the case may be, may, from time
to time, amend the Employee Plan, provided that no amendment shall be made,
without the approval of the stockholders of the Company, that will (i) increase
the total number of shares reserved for Options under the Employee Plan (other
than an increase resulting from an adjustment of outstanding Common Stock), (ii)
reduce the exercise price of any Incentive Stock Option granted under the
Employee Plan below the price required by the Employee Plan, (iii) modify the
provisions of the Employee Plan relating to eligibility, or (iv) materially
increase the benefits accruing to participants under the Employee Plan. The
rights and obligations under any Option or Right granted before amendment of the
Employee Plan or any unexercised portion of such Option or Right shall not be
adversely affected by amendment of the Employee Plan, Option or Right without
the consent of the holder of such Option or Right. The Board of Directors may at
any time suspend or terminate the Employee Plan.
TERM OF PLAN. Options and Rights may be granted under the Employee Plan
until November 30, 2012.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal United States federal
income tax consequences of the grant and exercise of Options or Rights under the
Employee Plan, and is based upon an interpretation of present federal tax laws
and regulations and may be inapplicable if such laws and regulations are
changed. This summary is not intended to be exhaustive and, among other items,
does not describe state, local or foreign tax consequences. Each employee
receiving a grant of Options or Rights should consult with his or her
19
personal tax advisor regarding the federal, state, local or foreign tax
consequences of participating in the Employee Plan. The Employee Plan is not
subject to the protective provisions of the Employee Retirement Income Security
Act of 1974 and is not qualified under Section 401(a) of the Code.
NON-QUALIFIED STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. Non-Qualified
Stock Options granted under the Employee Plan are not included in the optionee's
income at the time of grant. Rather, the optionee realizes compensation income
only when the Non-Qualified Stock Option is exercised. The amount of income
realized is equal to the excess of the fair market value of the shares received
as of the date of exercise over the sum of the exercise price plus the amount,
if any, paid by the optionee for the Non-Qualified Stock Option.
If a Non-Qualified Stock Option is exercised solely through payment of the
exercise price by the delivery of Common Stock, to the extent that the number of
shares received by the optionee exceeds the number of shares surrendered,
ordinary income will be realized by the optionee at that time in an amount equal
to the fair market value of such excess shares. The tax basis of any such excess
shares will be equal to the income recognized by the employee.
Generally, the optionee's basis in the shares will be the exercise price
plus the compensation income realized at the time of exercise and the amount, if
any, paid by the optionee for the Non-Qualified Stock Option. Upon the sale of
any such shares, the capital gain or loss will be short-term if the shares are
disposed of within one year after the option is exercised; such short-term gains
are taxable as ordinary income. If the shares were held more than 12 months as
of the sale date, the gain is taxable as a long-term capital gain at a maximum
rate of 15%.
If a Non-Qualified Stock Option expires without being exercised, the
optionee will have no tax consequences unless the optionee paid for the
Non-Qualified Stock Option. In such case, the optionee will recognize a loss in
the amount of the price paid by the optionee for the Non-Qualified Stock Option.
The Company is generally entitled to a tax deduction in an amount equal to
the compensation income recognized by the optionee. This deduction is allowed in
the Company's taxable year in which the income is included as compensation to
the optionee.
If the option exercise price is paid by an optionee in part by promissory
note, the interest paid by the optionee under the promissory note is investment
indebtedness which is generally deductible by the optionee as an itemized
deduction from gross income to the extent the optionee has net investment
income; interest that is disallowed because of this limitation may be carried
over to succeeding tax years and is deductible in the carryover year, subject to
the net investment income limitation.
Rights are treated very similarly to Non-Qualified Options for tax
purposes. The holder of a Right will not normally realize any taxable income
upon the grant of a Right. Upon the exercise of a Right, the person exercising
the Right will realize ordinary income equal to either: (i) the cash received
upon the exercise of the Right; or (ii) if shares are received upon the exercise
of the Right, the fair market value of such shares as of the exercise date. The
basis of any shares acquired upon exercise of a Right will be their fair market
value on the date of exercise, and the holding period will commence at that
time. The Company will be entitled to a tax deduction for compensation paid in
the same amount that the holder of the Right realizes as ordinary income.
INCENTIVE STOCK OPTIONS. Options issued under the Employee Plan and
designated as Incentive Stock Options are intended to qualify under Section 422
of the Code. Under the provisions of Section 422 and the related regulations, an
optionee will not be required to recognize any income for federal income tax
purposes at the time of grant of an Incentive Stock Option, nor is the Company
entitled to any deduction. The exercise of an Incentive Stock Option is also is
not a taxable event, although the difference between the option price and the
fair market value on the date of exercise is an item of tax preference for
purposes of the alternative minimum tax. The taxation of gain or loss upon the
sale of stock acquired upon exercise of an Incentive Stock Option depends, in
part, on whether the stock is held for at least two years from the date the
option was granted and at least one year from after the date the stock was
transferred to the optionee (the "ISO Holding Period").
20
If the ISO Holding Period is not met, then, upon disposition of such shares
(a "disqualifying disposition"), the optionee will realize compensation, taxable
as ordinary income, in an amount equal to the excess of the fair market value of
the shares at the time of exercise over the option price, limited, however to
the gain on sale. Any additional gain would be taxable as capital gain (see
below). If the optionee disposes of the shares in a disqualifying disposition at
a price that is below the fair market value of the shares at the time the
Incentive Stock Option was exercised and such disposition is a sale or exchange
to an unrelated party, the amount includable as compensation income to the
optionee will be limited to the excess of the amount received on the sale or
exchange over the exercise price.
If the optionee recognizes ordinary income upon a disqualifying
disposition, the Company generally will be entitled to a tax deduction in the
same amount.
If the ISO Holding Period is met, any gain recognized upon a sale is
taxable as a long-term capital gain at a maximum rate of 15%.
If the Incentive Stock Option is exercised by delivery of previously owned
shares of Common Stock in partial or full payment of the option price, no gain
or loss will ordinarily be recognized by the optionee on the transfer of such
previously owned shares. However, if the previously owned transferred shares
were acquired through the exercise of an Incentive Stock Option, the optionee
may realize ordinary income with respect to the shares used to exercise an
Incentive Stock Option if such transferred shares have not been held for the ISO
Holding Period. If the optionee recognizes ordinary income upon a disqualifying
disposition, the Company generally will be entitled to a tax deduction in the
same amount. If an Incentive Stock Option is exercised through the payment of
the exercise price by the delivery of Common Stock, to the extent that the
number of shares received exceeds the number of shares surrendered, such excess
shares will be considered Incentive Stock Option stock with a zero basis.
SUMMARY OF 1992 DIRECTOR STOCK OPTION PLAN
The following is a summary description of the Director Plan, is not a
complete statement of the Director Plan and is qualified in its entirety by
reference to the complete text of the Director Plan, a copy of which is
available form the Company upon request. The description set forth below does
not include the proposed amendment to the plan being voted on at the Annual
Meeting.
ADMINISTRATION. The Director Plan is administered by the Board or a
committee consisting of at least two directors of the Company who are appointed
by and serve at the pleasure of the Board of Directors (the "Plan
Administrator"). The Plan Administrator, from time to time at its discretion,
makes determinations with respect to the persons who shall be granted Options or
Rights, and the number of shares of the Common Stock that may be purchased
pursuant to such Options or Rights. The interpretation and construction by the
Plan Administrator of any provisions of the Director Plan or of an Option or
Right granted thereunder is binding and conclusive on all optionees and on their
legal representatives and beneficiaries.
TYPES OF OPTIONS. The Options granted under the Director Plan will be
Non-Qualified Stock Options under the Code.
RIGHTS. The Plan Administrator, in its discretion, may grant Rights either
alone, simultaneously with the grant of an Option and in conjunction with the
grant of an Option and in conjunction therewith, or subsequent to the grant of
an Option and in conjunction therewith or in the alternative thereto.
ELIGIBILITY. Any non-employee director may be granted Options or Rights
under the Director Plan until November 30, 2012.
EXERCISE PRICE. The Plan Administrator shall determine the exercise price
for each Option or Right granted under the Director Plan; provided however, that
the exercise price shall not be less than 100% of the fair market value on the
date of grant of the shares to which the Option or Right relates.
EXERCISE PERIOD AND EXERCISE OF OPTIONS OR RIGHTS. An Option or Right may
be exercised in whole at any time, or in part from time to time, within such
period or periods as may be determined by the Plan
21
Administrator and set forth in the grantee's agreement. Options are not
transferable by the optionee except by will or by the laws of descent and
distribution.
TERMINATION; DISABILITY; DEATH. Upon cessation of such person's status as
a director, an Option or Right previously granted to the director, unless
otherwise specified by the Plan Administrator and to the extent not previously
exercised, shall terminate and become null and void, provided that: (i) if the
director shall die while in the employ of the Company or within three (3) months
of retirement or within one (1) year of retirement by reason of disability, the
legal representative or heirs of such director shall be entitled to exercise
such Option or Right (to the extent otherwise exercisable) for a one-year period
following the date of death; (ii) if the employment shall have been terminated
by reason of retirement, disability or removal other than for cause (as defined
in the Director Plan), then such director shall be entitled to exercise such
Option or Right (to the extent otherwise exercisable) at any time up to (a)
three months after termination by reason of retirement or removal other than for
cause and (b) one (1) year after termination by reason of disability. If a
director voluntarily terminates his service or is terminated for cause, any
Option or Right, unless otherwise specified by the Plan Administrator, shall
immediately terminate.
PAYMENT. The exercise price of shares purchased pursuant to an Option
shall be paid in full at the time of any exercise either in cash or by certified
check; provided, however, to the extent that the terms of such Option provide,
the purchase price may be paid for, in while or in part, by delivering
previously-owned shares of Common Stock or, in part, by promissory note (for not
more than 80% of such purchase price subject to applicable margin requirements).
ADJUSTMENTS, AMENDMENT OR DISCONTINUANCE. In the event of any change in
the outstanding Common Stock through merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares, or other like change in capital
structure of the Company, the Plan Administrator shall make such adjustment to
each outstanding Option and Right that it, in its sole discretion, deems
appropriate. In addition, in the event of any such change, the Plan
Administrator shall make any further adjustment as may be appropriate to the
maximum number of shares which may be acquired under the Director Plan pursuant
to the exercise of Options and Rights, the maximum number of shares which may be
so acquired by one director and the number of shares and prices per share
subject to outstanding Options and Rights as shall be equitable to prevent
dilution or enlargement of rights under such Options or Rights, and the
determination of the Plan Administrator as to these matters shall be conclusive.
In the event of a "change in control" of the Company, as defined in the
Director Plan, all then outstanding Options and Rights shall immediately become
exercisable. The Plan Administrator, in its discretion, may determine that, upon
the occurrence of a change in control transaction, each Option or Right
outstanding under the Director Plan shall terminate within a specified number of
days after notice to the holder, and such holder shall receive, with respect to
each share subject to such Option or Right, cash in an amount equal to the
excess of the fair market value of such share immediately prior to such
transaction over the exercise price per share of such Option or Right.
The Board of Directors of the Plan Administrator, as the case may be, may,
from time to time, amend the Director Plan, provided that no amendment shall be
made, without the approval of the stockholders of the Company, that will (i)
increase the total number of shares reserved for Options under the Director Plan
(other than an increase resulting from an adjustment of outstanding Common
Stock), (ii) reduce the exercise price of any Option granted under the Director
Plan below the price required by the Director Plan, (iii) modify the provisions
of the Director Plan relating to eligibility, or (iv) materially increase the
benefits accruing to participants under the Director Plan. The rights and
obligations under any Option or Right granted before amendment of the Director
Plan or any unexercised portion of such Option or Right shall not be adversely
affected by amendment of the Director Plan, Option or Right without the consent
of the holder of such Option or Right. The Board of Directors may at any time
suspend or terminate the Director Plan.
TERM OF PLAN. Options and Rights may be granted under the Director Plan
until November 30, 2012.
22
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal United States federal
income tax consequences of the grant and exercise of Options or Rights under the
Director Plan, and is based upon an interpretation of present federal tax laws
and regulations and may be inapplicable if such laws and regulations are
changed. This summary is not intended to be exhaustive and, among other items,
does not describe state, local or foreign tax consequences. Each Director
receiving a grant of Options or Rights should consult with his or her personal
tax advisor regarding the federal, state, local or foreign tax consequences of
participating in the Employee Plan. The Director Plan is not subject to the
protective provisions of the Employee Retirement Security Act of 1974 and is not
qualified under Section 401(a) of the Code.
An option to be issued under the Director Plan will be designated as a
Non-Qualified Stock Option. A Non-Qualified Stock Option is not included as
compensation income at the time of grant. Rather, the optionee realizes
compensation income only when the Non-Qualified Stock Option is exercised. The
amount of income realized is equal to the excess of the fair market value of the
shares received as of the date of exercise over the sum of the exercise price
plus the amount, if any, paid by the optionee for the Non-Qualified Stock
Option.
If a Non-Qualified Stock Option is exercised solely through payment of the
exercise price by the delivery of Common Stock, to the extent that the number of
shares received by the optionee exceeds the number of shares surrendered,
ordinary income will be realized by the optionee at that time in an amount equal
to the fair market value of such excess shares. The tax basis of such excess
shares will be equal to the income recognized by the Director.
Generally, the optionee's basis in the shares will be the exercise price
plus the compensation income realized at the time of exercise and the amount, if
any, paid by the optionee for the Non-Qualified Stock Option. Upon the sale of
any such shares, the capital gain or loss will be short-term if the shares are
disposed of within one year after the option is exercised; such short-term gains
are taxable as ordinary income. If the shares were held more than 12 months as
of the sale date, the gain is taxable as a long-term capital gain at a maximum
rate of 15%.
If a Non-Qualified Stock Option expires without being exercised, the
optionee will have no tax consequences unless the optionee paid for the
Non-Qualified Stock Option. In such case, the optionee will recognize a loss in
the amount of the price paid by the optionee for the Non-Qualified Stock Option.
The Company is generally entitled to a tax deduction in an amount equal to
the compensation income recognized by the optionee. This deduction is allowed in
the Company's taxable year in which the income is included as compensation to
the optionee.
If the option exercise price is paid by an optionee in part by promissory
note, the interest paid by the optionee under the promissory note is investment
indebtedness which is generally deductible by the optionee as an itemized
deduction from gross income to the extent the optionee has net investment
income; interest that is disallowed because of this limitation may carried over
to succeeding tax years and is deductible in the carryover year, subject to the
net investment income limitation.
Rights are treated very similarly to Non-Qualified Options for tax
purposes. The holder of a Right will not normally realize any taxable income
upon the grant of a Right. Upon the exercise of a Right, the person exercising
the Right will realize ordinary income equal to either: (i) the cash received
upon the exercise of the Right; or (ii) if shares are received upon the exercise
of the Right, the fair market value of such shares as of the exercise date. The
basis of any shares acquired upon exercise of a Right will be their fair market
value on the date of exercise, and the holding period will commence at that
time. The Company will be entitled to a tax deduction for compensation paid in
the same amount that the holder of the Right realizes as ordinary income.
DISMISSAL OF ARTHUR ANDERSEN
As previously discussed on a Form 8-K filed with the SEC on June 24, 2002
(the "Company's Form 8-K"), the Company dismissed Arthur Andersen LLP ("Arthur
Andersen") as the Company's
23
independent public accountants and engaged Ernst & Young LLP ("E&Y") to serve as
the Company's independent public accountants for the fiscal year ending March
31, 2003. This determination was approved by the Company's Board of Directors
upon the recommendation of its Audit Committee.
Arthur Andersen's reports on the Company's consolidated financial
statements for each of the fiscal years ended March 31, 2002 and 2001 did not
contain an adverse opinion or disclaimer of opinion. The March 31, 2002 report
contained an explanatory fourth paragraph disclosing the Company's change in its
method of accounting for goodwill and other intangible assets. The March 31,
2001 report was not qualified or modified as to uncertainty, audit scope or
accounting principles.
During the fiscal year ended March 31, 2002 and through June 24, 2002,
there were no disagreements with Arthur Andersen on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to Arthur Andersen's satisfaction, would have
caused them to make reference to the subject matter in connection with their
report on the Company's consolidated financial statements for such years; and
there were no reportable events as defined in Item 304(a)(1)(v) of Regulation
S-K.
The Company has provided Arthur Andersen with a copy of the above
statements. Attached as Exhibit 16 to the Company's Form 8-K is a copy of a
letter from Arthur Andersen stating it found no basis for disagreement with such
statements.
During the fiscal year ended March 31, 2002 and through the date of the
Board's decision, the Company did not consult with E&Y with respect to the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's consolidated financial statements, or any other matters or
reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
ERNST & YOUNG AS INDEPENDENT ACCOUNTANTS
FEES BILLED TO THE COMPANY BY ERNST & YOUNG LLP DURING FISCAL 2004
AUDIT FEES: An aggregate of $1,244,100 was billed for professional
services and expenses rendered for the audit of the Company's annual financial
statements for Fiscal 2004 and for the reviews of financial statements included
in the Company's quarterly reports on Form 10-Q for Fiscal 2004. An aggregate of
$548,700 was billed for similar professional services and expenses in Fiscal
2003.
AUDIT-RELATED FEES: $172,300 in fees were billed for audits of employee
benefit plans during Fiscal 2004. An aggregate of $12,800 was billed for similar
professional services and expenses in Fiscal 2003.
TAX FEES: $202,300 in fees were billed for tax compliance, planning and
advice during Fiscal 2004. An aggregate of $86,200 was billed for similar
professional services and expenses in Fiscal 2003.
ALL OTHER FEES: Ernst & Young LLP did not render any other professional
services to the Company during Fiscal 2004 or 2003.
The Audit Committee considered whether the provision of non-audit services
rendered by Ernst & Young LLP to the Company was compatible with maintaining
Ernst & Young LLP's independence and determined that they would be compatible.
All audit and non-audit services performed by Ernst & Young LLP were pre-
approved by the Audit Committee.
FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
A copy of the Annual Report on Form 10-K of the Company for the fiscal year
ended March 31, 2004, as filed with the Securities and Exchange Commission, is
available to stockholders. A stockholder may obtain a copy of the Form 10-K free
of charge on the Company's website or otherwise without charge and a copy of any
exhibits thereto upon payment of a reasonable charge limited to the Company's
costs of providing such
24
exhibits by writing to Investor Relations Department, Anna M. Baird, Director of
Compliance, Black Box Corporation, 1000 Park Drive, Lawrence, Pennsylvania
15055.
SOLICITATION OF PROXIES
The Company will pay the expenses in connection with the printing,
assembling and mailing to the holders of Common Stock of the Company the notice
of meeting, this proxy statement and the accompanying form of proxy. In addition
to the use of the mails, directors, officers or regular employees of the Company
may solicit proxies personally or by telephone or telegraph. The Company may
request the persons holding stock in their names, or in the names of their
nominees, to send proxy material to, and obtain proxies from, their principals,
and will reimburse such persons for their expense in so doing.
STOCKHOLDER NOMINATIONS AND PROPOSALS
Stockholders who believe they are eligible to have their proposals included
in the Company's proxy statement for the annual meeting expected to be held in
August 2005, in addition to other applicable requirements established by the
SEC, must ensure that their proposals are received by the Secretary of the
Company not later than March 2, 2005.
The By-laws of the Company establish an advance notice procedure for
stockholders to make nominations for the position of director and to propose
business to be transacted at an annual meeting. The Company's By-laws provide
that notice of nominations for director and proposals for business must be given
to the Secretary of the Company not later than 150 days prior to the anniversary
date of the prior year's annual meeting. For the Annual Meeting expected to be
held in August 2005, notice of nominations and proposals under this provision
must be received by March 13, 2005.
Such notice must set forth in reasonable detail information concerning the
nominee (in the case of a nomination for election to the Board of Directors) or
the substance of the proposal (in the case of any other stockholder proposal),
and shall include: (a) the name and residence address and business address of
the stockholder who intends to present the nomination or other proposal or of
any person who participates or is expected to participate in making such
nomination and of the person or persons, if any, to be nominated and the
principal occupation or employment and the name, type of business and address of
the business and address of the corporation or other organization in which such
employment is carried on of each such stockholder, participant and nominee; (b)
a representation that the proponent of the proposal is a holder of record of
stock of the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to present the nomination or other proposal
specified in the notice; (c) a description of all arrangements or understandings
between the proponent and any other person or persons (naming such person or
persons) pursuant to which the nomination or other proposal is to be made by the
proponent; (d) such other information regarding each proposal and each nominee
as would have been required to be included in a proxy statement filed pursuant
to the proxy rules of the SEC had the nomination or other proposal been made by
the Board of Directors; and (e) the consent of each nominee, if any, to serve as
a director of the Company if elected. Within fifteen (15) days following the
receipt by the Secretary of a notice of nomination or proposal pursuant hereto,
the Secretary shall advise the proponent in writing of any deficiencies in the
notice and of any additional information the Company is requiring to determine
the eligibility of the proposed nominee or the substance of the proposal. A
proponent who has been notified of deficiencies in the notice of nomination or
proposal and/or of the need for additional information shall cure such
deficiencies and/or provide such additional information within fifteen (15) days
after receipt of the notice of such deficiencies and/or the need for additional
information. The presiding officer of a meeting of stockholders may, in his or
her sole discretion, refuse to acknowledge a nomination or other proposal
presented by any person that does not comply with the foregoing procedure and,
upon his or her instructions, all votes cast for such nominee or with respect to
such proposal may be disregarded.
25
The Company's By-laws do not limit or restrict the ability of a stockholder
to present any proposal made by such stockholder in accordance with SEC
requirements. A copy of the Company's By-laws is available from the Company upon
request.
OTHER MATTERS
Management does not intend to present, nor, in accordance with the
Company's By-laws, has it received proper notice from any person who intends to
present, any matter for action by stockholders at the Annual Meeting to be held
on August 10, 2004, other than as stated in the Notice of Annual Meeting of
Stockholders accompanying this Proxy Statement. The enclosed proxy, however,
confers discretionary authority with respect to the transaction of any other
business that properly may come before the meeting, and it is the intention of
the persons named in the enclosed proxy to vote on any such matters in
accordance with their best judgment.
26
ANNEX A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS OF
BLACK BOX CORPORATION
ADOPTED AS OF JUNE 25, 2004
I. PURPOSE AND AUTHORITY OF THE COMMITTEE
The Audit Committee (the "Committee") of the Board of Directors (the
"Board") of Black Box Corporation ("Black Box" or the "Company") shall oversee
the Company's discharge of its financial reporting obligations and its
relationship with the Company's independent auditors, and it shall assist the
Board in fulfilling its fiduciary obligations with respect to the financial
reporting, accounting, internal control and auditing functions of the Company
and its subsidiaries. The Committee shall also have responsibility for reviewing
compliance with the Company's Code of Ethics.
The Committee shall provide an avenue for open communications between and
among the Board, the independent auditors, management and counsel to the Company
as their duties relate to financial reporting, accounting and internal controls.
II. COMPOSITION OF THE COMMITTEE
The Committee shall consist of not less than three directors appointed by
the Board, each of whom qualifies as an independent director under the
independence standards set forth in Securities and Exchange Commission ("SEC")
Rule 10A-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act") and satisfies all other requirements applicable to audit committee members
under applicable Nasdaq National Market ("NASDAQ") rules, as then in effect, and
SEC rules and regulations. Each Committee member shall be able to read and
understand fundamental financial statements, including a company's balance
sheet, income statement and cash flow statement. At least one member shall have
"financial sophistication" within the meaning of NASDAQ requirements. It is the
intention of the Board that at least one member of the Committee satisfy the
definition of an "audit committee financial expert" under SEC rules and
regulations. No member of the Committee shall have participated in the
preparation of the financial statements of the Company or any current subsidiary
of the Company at any time during the prior three years.
The members of the Committee shall be appointed annually to one-year terms
by majority vote of the Board at the first meeting of the Board following the
annual meeting of the Company's stockholders. The Committee shall, by majority
vote of the appointed Committee members, appoint one of the appointed members as
Committee Chair. Vacancies on the Committee shall be filled by majority vote of
the Board at the next Board meeting following the occurrence of the vacancy or
as soon as practicable thereafter. A vacancy in the position of Committee Chair
shall be filled by majority vote of the Committee at the next Committee meeting
following the occurrence of the vacancy or as soon as practicable thereafter. No
member of the Committee shall be removed except by majority vote of the
independent directors then in office.
No member of the Committee may receive, directly or indirectly, any
compensation or consulting or advisory fee from the Company, other than
director's fees (including any additional amounts paid to the chair of
committees and to members of committees of the Board), except as may otherwise
be permitted under the Sarbanes-Oxley Act, the rules of NASDAQ, as then in
effect, and applicable SEC rules and regulations, nor may any member of the
Committee be an "affiliated person" of the Company or any subsidiary thereof,
within the meaning of SEC Rule 10A-3 under the Exchange Act.
III. MEETINGS AND PROCEDURES OF THE COMMITTEE
The Committee shall fix its own rules of procedure, which shall be
consistent with the By-laws of the Company and this charter. The Committee is to
meet at least once each fiscal quarter or more frequently as the Committee deems
necessary. Members of the Committee shall strive to be present at all meetings.
27
A majority of the members of the Committee present in person or by means of
a conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other shall constitute a
quorum.
The Committee may form subcommittees for any purpose that the Committee
deems appropriate and may delegate to such subcommittees such power and
authority within the scope of the Committee's authority as the Committee deems
appropriate; provided, however, that no subcommittee shall consist of fewer than
two members; and provided further that the Committee shall not delegate to a
subcommittee any power or authority required by any law, regulation or listing
standard to be exercised by the Committee as a whole.
The Committee may request that any directors, officers or Team Members of
the Company, or other persons whose advise and counsel are sought by the
Committee, attend any meetings of the Committee to provide such pertinent
information as the Committee requests.
Following each of its meetings, the Committee shall report its
deliberations at the next meeting of the Board, including a description of all
actions taken by the Committee at the meeting and an identification of any
matters that require action by the Board. The Committee shall keep written
minutes of its meetings, which minutes shall be maintained with the books and
records of the Company.
IV. DUTIES OF THE COMMITTEE
The Committee shall have the following duties and responsibilities:
1. The Committee shall have sole authority and direct responsibility over
the selection of the Company's independent auditors, subject to stockholder
ratification if the Committee so elects. The Committee shall also have sole
authority and direct responsibility over the evaluation, retention and
replacement (as the Committee may deem appropriate) of the independent auditors
and for determining the compensation and other terms of engagement of such
independent auditors. The Committee shall review the selection, performance and
compensation of the Company's independent auditors on an annual basis and
consider periodic rotation of the independent audit firm.
2. The Committee shall receive a written statement from the auditors
delineating all relationships between the auditors and the Company as
contemplated by Independence Standards Board Standard 1. It shall discuss with
the auditors any disclosed relationship as well as the auditors' independence
from management and the Company, and it shall take, or recommend that the Board
take, any appropriate action to ensure the auditors' independence.
3. The Committee shall discuss with the independent auditors the overall
scope and plans for their audit, including the adequacy of staffing and
compensation.
4. The Committee shall review and evaluate the performance of the lead
audit partner and ensure the periodic rotation of the lead audit partner having
primary responsibility for the audit and the audit partner responsible for
reviewing the audit.
5. The Committee shall pre-approve all audit services and permitted
non-audit services (including the fees and terms thereof) to be performed for
the Company by its independent auditors, subject to any de minimis exceptions
for non-audit services that are authorized by law and approved by the Committee
prior to the completion of the audit. The Committee shall consider whether the
Company's independent auditors' provision of any permitted non-audit services is
compatible with their independence.
6. The Committee shall oversee the work of the independent auditors and
shall resolve any disputes between management and the independent auditors
concerning financial reporting or accounting matters.
7. The Committee shall review, with management and the independent
auditors, the following:
- prior to their public release, the Company's annual and quarterly
financial results;
- prior to the filing of each of the Company's Quarterly Reports on Form
10-Q, the Company's quarterly financial statements together with the
results of the quarterly review and any other matters required to
28
be communicated to the Committee by the independent auditors under
generally accepted auditing standards; the Committee Chair may represent
the entire Committee for the purposes of this review;
- the financial statements to be included in the Company's Annual Report on
Form 10-K (or the annual report to stockholders if distributed prior to
the filing of Form 10-K), including disclosures made in management's
discussion and analysis, and it shall recommend to the Board whether the
audited financial statements should be included in the Company's Form
10-K; and
- the results of the annual audit, including material written
communications between the independent auditors and management, such as
any management letter or schedule of unadjusted differences, the adequacy
and effectiveness of the Company's accounting and financial controls,
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements and any other
matters required to be communicated to the Committee by the independent
auditors under generally accepted auditing standards.
8. The Committee shall review disclosures made to the Committee by the
Company's Chief Executive Officer and Chief Financial Officer during their
certification process for the Form 10-K and the Form 10-Q about any significant
deficiencies in the design or operation of internal controls or material
weaknesses therein and any fraud involving management or other Team Members who
have a significant role in the Company's internal controls.
9. The Committee shall establish, review and oversee the implementation of
the Committee's procedures for the receipt, retention and treatment of reported
complaints and concerns regarding accounting, internal accounting controls or
auditing matters, and the confidential, anonymous submission by Team Members of
concerns regarding questionable accounting or auditing matters.
10. Obtain periodic reports from the Company's General Counsel regarding
the Company's Code of Ethics and the implementation of its procedures and any
reported violations thereof.
11. Conduct a review of any proposed related party transactions, all of
which shall be reported to the Committee by the Chief Financial Officer, for
potential conflict of interest situations on an ongoing basis. All such related
party transactions shall be subject to approval by the Committee.
The Company shall provide the necessary funding for the compensation of the
Company's independent auditors engaged for the purpose of rendering an audit
report on the Company's annual financial statements and for any related work or
other audit, review or attest services for the Company that the Committee has
authorized.
The Committee may conduct or authorize investigations into or studies of
any matter or activity involving the financial reporting, accounting practices
or internal controls of the Company, the audit of the Company's financial
statements, any violations of the Company's Code of Ethics or any other matter
within the scope of the Committee's responsibility. All Team Members shall
cooperate with respect thereto as requested by the Committee or its authorized
representatives.
The Committee may retain, at the Company's expense, or terminate such
independent counsel, accountants, consultants or other advisors as it deems
necessary to assist the Committee in the discharge of its responsibilities
hereunder or in the conduct of any investigation it has authorized, and the
Committee shall have sole authority to approve the fees, expenses and other
retention terms for any and all such advisors.
V. EVALUATION OF THE CHARTER
The Committee shall periodically, and at least annually, evaluate this
charter. The Committee shall report to the Board the results of its evaluation,
including any recommended amendments to this charter and any recommended changes
to the Company's or the Board's policies or procedures.
29
ANNEX B
CHARTER OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF
BLACK BOX CORPORATION
ADOPTED AS OF JUNE 25, 2004
I. PURPOSE AND AUTHORITY OF THE COMMITTEE
The Compensation Committee (the "Committee") of the Board of Directors (the
"Board") of Black Box Corporation ("Black Box" or the "Company") shall evaluate
and recommend to the Board, as appropriate, the compensation philosophy and
practices of the Company with respect to its Executive Officers (as such term is
defined in the rules and regulations of the Securities and Exchange Commission
("SEC") to be the Company's chief executive officer, any vice president in
charge of a principal business unit, division or function (such as sales,
administration or finance), any other officer who performs a policy making
function or any other person who performs similar policy making functions for
the Company) and administer the Company's stock option plans, and it shall
perform any other responsibilities vested in it pursuant to this charter.
II. COMPOSITION OF THE COMMITTEE
The Committee shall consist of not less than three directors, appointed by
the Board, each of whom qualifies as (a) an independent director under
applicable Nasdaq National Market ("NASDAQ") rules, as then in effect, and any
applicable SEC rules or regulations, exclusive in each instance of any
independence rules applicable solely to audit committee members, (b) an outside
director for the purposes of Section 162(m) of the Internal Revenue Code and (c)
a non-employee director within the meaning of SEC Rule 16b-3 promulgated under
the Securities Exchange Act of 1934.
The members of the Committee shall be appointed annually to one-year terms
by majority vote of the Board at the first meeting of the Board following the
annual meeting of the Company's stockholders. The Committee, by majority vote of
the appointed Committee members, shall appoint one of the appointed members as
Committee Chair. Vacancies on the Committee shall be filled by majority vote of
the Board at the next Board meeting following the occurrence of the vacancy or
as soon as practicable thereafter. A vacancy in the position of Committee Chair
shall be filled by majority vote of the Committee at the next Committee meeting
following the occurrence of the vacancy or as soon as practicable thereafter. No
member of the Committee shall be removed except by majority vote of the
independent directors then in office.
III. MEETINGS AND PROCEDURES OF THE COMMITTEE
The Committee shall fix its own rules of procedure, which shall be
consistent with the By-laws of the Company and this charter. The Committee shall
meet at least two times each year and as many other times as the Committee deems
necessary. Members of the Committee shall strive to be present at all meetings.
A majority of the members of the Committee present in person or by means of
a conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other shall constitute a
quorum.
The Committee may form subcommittees for any purpose that the Committee
deems appropriate and may delegate to such subcommittees such power and
authority within the scope of the Committee's authority as the Committee deems
appropriate; provided, however, that no subcommittee shall consist of fewer than
two members; and provided further that the Committee shall not delegate to a
subcommittee any power or authority required by any applicable law, regulation
or listing standard to be exercised by the Committee as a whole.
30
The Committee may request that any directors, officers or Team Members of
the Company, or other persons whose advice and counsel are sought by the
Committee, attend any meeting of the Committee to provide such pertinent
information as the Committee requests.
Following each of its meetings, the Committee shall report its
deliberations at the next meeting of the Board, including a description of all
actions taken by the Committee at the meeting and an identification of any
matters that require action by the Board. The Committee shall keep written
minutes of its meetings which shall be maintained with the books and records of
the Company.
IV. DUTIES OF THE COMMITTEE
The Committee shall have the following duties and responsibilities:
1. Provide to the Board of Directors, on an annual basis, its
recommendation as to the total compensation of the Chief Executive Officer
based upon (1) an evaluation of the objectives and performance of the Chief
Executive Officer, taking into account the Company's short term and long
term goals and performance, (2) competitive market data and (3) the
Company's overall compensation philosophy. The Chief Executive Officer
shall not be present during any part of the Committee's, or the Board's,
deliberations concerning or vote on his or her compensation.
2. Provide to the Board of Directors, on an annual basis, its
recommendation as to the total compensation of the Executive Officers,
other than the Chief Executive Officer, based upon (1) an evaluation of the
objectives and performance of the Executive Officer, taking into account
the Company's short term and long term goals and performance, (2)
competitive market data and (3) the Company's overall compensation
philosophy.
3. Administer the Company's 1992 Stock Option Plan, as amended, and
1992 Director Stock Option Plan, as amended (the "Stock Option Plans").
Review and approve any awards under any deferred compensation, stock option
or other long-term incentive plan the Company may establish from time to
time and approve any proposed amendments to any such plan (including the
Stock Option Plans). The Committee shall have the sole authority to grant
equity awards and to determine the timing, size and other terms of any such
awards and to confer such authority on the Chief Executive Officer with
respect to grants to Team Members other than the Executive Officers of the
Company.
4. Prepare a report for inclusion in the Company's annual proxy
statement and/or Annual Report on Form 10-K summarizing the Executive
Officers' compensation levels and explaining the relationship between
executive compensation and the Company's performance, as required by any
applicable SEC rules or regulations.
The Committee may retain or terminate any executive compensation or benefit
consultants or advisors to assist it in the discharge of its responsibilities
and shall have sole authority to approve the fees, expenses and other retention
terms for any such consultants and advisors.
V. EVALUATION OF THE CHARTER
The Committee shall periodically, and at least annually, evaluate this
charter. The Committee shall report to the Board the results of its evaluation,
including any recommended amendments to this charter and any recommended changes
to the Company's or the Board's policies or procedures.
31
ANNEX C
CHARTER OF THE NOMINATING COMMITTEE
OF THE BOARD OF DIRECTORS OF
BLACK BOX CORPORATION
ADOPTED AS OF JUNE 25, 2004
I. PURPOSE AND AUTHORITY OF THE COMMITTEE
The Nominating Committee (the "Committee") of the Board of Directors (the
"Board") of Black Box Corporation ("Black Box" or the "Company") shall consider
potential candidates for election as directors of the Company, including
individuals proposed by the Company's stockholders in accordance with the
Company's Certificate of Incorporation, By-laws, Nasdaq National Market
("NASDAQ") rules, as then in effect, and applicable Securities and Exchange
Commission ("SEC") rules and regulations and perform any other responsibilities
vested in it pursuant to this charter.
II. COMPOSITION OF THE COMMITTEE
The Committee shall consist of not less than three directors, appointed by
the Board, each of whom qualifies as an independent director under applicable
NASDAQ rules, as then in effect, and any applicable SEC rules or regulations,
exclusive in each instance of any independence rules applicable solely to audit
committee members.
The members of the Committee shall be appointed annually to one-year terms
by majority vote of the Board at the first meeting of the Board following the
annual meeting of the Company's stockholders. The Committee, by majority vote of
the appointed Committee members, shall appoint one of the appointed members as
Committee Chair. Vacancies on the Committee shall be filled by majority vote of
the Board at the next Board meeting following the occurrence of the vacancy or
as soon as practicable thereafter. A vacancy in the position of Committee Chair
shall be filled by majority vote of the Committee at the next Committee meeting
following the occurrence of the vacancy or as soon as practicable thereafter. No
member of the Committee shall be removed except by majority vote of the
independent directors then in office.
III. MEETINGS AND PROCEDURES OF THE COMMITTEE
The Committee shall fix its own rules of procedure, which shall be
consistent with the By-laws of the Company and this charter. The Committee shall
meet at least two times each year and as many other times as the Committee deems
necessary. Members of the Committee shall strive to be present at all meetings.
A majority of the members of the Committee present in person or by means of
a conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other shall constitute a
quorum.
The Committee may form subcommittees for any purpose that the Committee
deems appropriate and may delegate to such subcommittees such power and
authority within the scope of the Committee's authority as the Committee deems
appropriate; provided, however, that no subcommittee shall consist of fewer than
two members; and provided further that the Committee shall not delegate to a
subcommittee any power or authority required by any applicable law, regulation
or listing standard to be exercised by the Committee as a whole.
The Committee may request that any directors, officers or other Team
Members of the Company, or other persons whose advice and counsel are sought by
the Committee, attend any meeting of the Committee to provide such pertinent
information as the Committee requests.
Following each of its meetings, the Committee shall report its
deliberations at the next meeting of the Board, including a description of all
actions taken by the Committee at the meeting and an identification of any
matters that require action by the Board. The Committee shall keep written
minutes of its meetings which shall be maintained with the books and records of
the Company.
32
IV. DUTIES OF THE COMMITTEE
The Committee shall have the following duties and responsibilities:
1. Recommend to the Board individuals to be nominated for election as
directors by the stockholders at the Company's annual meeting and, from
time to time, recommend to the Board individuals to be elected by the Board
to fill Board vacancies, as appropriate.
2. The established criteria for the assessment of potential nominees
for election to the Board shall include independence, experience relevant
to the business of the Company and the needs of the Board, leadership
qualities, a proven track record of career accomplishments, the ability to
make sound judgments, diversity, a willingness to participate in Board
meetings and ability to represent the stockholders.
3. In assessing potential nominees for election to the Board, the
Committee may consider any individuals recommended by Committee members,
other Board members, the Company's management, current stockholders of the
Company or identified by third-party executive search firms. The Committee
may retain or terminate any executive search firm to assist it in the
discharge of its responsibilities and shall have sole authority to approve
the fees, expenses and other retention terms for any such search firms.
V. EVALUATION OF THE CHARTER
The Committee shall periodically, and at least annually, evaluate this
charter. The Committee shall report to the Board the results of its evaluation,
including any recommended amendments to this charter and any recommended changes
to the Company's or the Board's policies or procedures.
33
ANNEX D
CHARTER OF THE GOVERNANCE COMMITTEE
OF THE BOARD OF DIRECTORS OF
BLACK BOX CORPORATION
ADOPTED AS OF JUNE 25, 2004
I. PURPOSE AND AUTHORITY OF THE COMMITTEE
The Governance Committee (the "Committee") of the Board of Directors (the
"Board") of Black Box Corporation ("Black Box" or the "Company") shall provide
independent oversight of the corporate governance functions of Black Box and its
subsidiaries, ensure governance practices are sound and perform any other
responsibilities vested in it pursuant to this charter.
II. COMPOSITION OF THE COMMITTEE
The Committee shall consist of not less than three directors, appointed by
the Board, each of whom qualifies as an independent director under applicable
Nasdaq National Market ("NASDAQ") rules, as then in effect, and any applicable
Securities and Exchange Commission ("SEC") rules or regulations, exclusive in
each instance of any independence rules applicable solely to audit committee
members.
The members of the Committee shall be appointed annually to one-year terms
by majority vote of the Board at the first meeting of the Board following the
annual meeting of the Company's stockholders. The Committee, by majority vote of
the appointed Committee members, shall appoint one of the appointed members as
Committee Chair. Vacancies on the Committee shall be filled by majority vote of
the Board at the next Board meeting following the occurrence of the vacancy or
as soon as practicable thereafter. A vacancy in the position of Committee Chair
shall be filled by majority vote of the Committee at the next Committee meeting
following the occurrence of the vacancy or as soon as practicable thereafter. No
member of the Committee shall be removed except by majority vote of the
independent directors then in office.
III. MEETINGS AND PROCEDURES OF THE COMMITTEE
The Committee shall fix its own rules of procedure, which shall be
consistent with the By-laws of the Company and this charter. The Committee is to
meet at least two times each year and as many other times as the Committee deems
necessary. Members of the Committee shall strive to be present at all meetings.
A majority of the members of the Committee present in person or by means of
a conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other shall constitute a
quorum.
The Committee may form subcommittees for any purpose that the Committee
deems appropriate and may delegate to such subcommittees such power and
authority within the scope of the Committee's authority as the Committee deems
appropriate; provided, however, that no subcommittee shall consist of fewer than
two members; and provided further that the Committee shall not delegate to a
subcommittee any power or authority required by any applicable law, regulation
or listing standard to be exercised by the Committee as a whole.
The Committee may request that any directors, officers or Team Members of
the Company, or other persons whose advice and counsel are sought by the
Committee, attend any meeting of the Committee to provide such pertinent
information as the Committee requests.
Following each of its meetings, the Committee shall report its
deliberations at the next meeting of the Board, including a description of all
actions taken by the Committee at the meeting and an identification of any
matters that require action by the Board. The Committee shall keep written
minutes of its meetings which shall be maintained with the books and records of
the Company.
34
IV. DUTIES OF THE COMMITTEE
The Committee shall have the following duties and responsibilities:
1. Review, on an ongoing basis, the corporate governance practices and
principles established and implemented by the Board and management for the
Company.
2. Monitor trends and regulatory requirements in corporate governance.
3. Recommend to the Board any changes in the Company's corporate
governance practices and functions based upon the trends and regulatory
requirements referenced in the preceding paragraph.
4. Provide to the Board of Directors, on an annual basis, its
recommendation as to the compensation to be provided to members of the
Company's Board of Directors, including any compensation provided for
service on Board committees, based upon (1) an evaluation of the objectives
and performance of the members of the Board, taking into account the
Company's short term and long term goals and performance and (2)
competitive market data.
The Committee will have access to management and professional advisors for
consultation as necessary and will review with Black Box management any
suggestions for changes or improvements to ensure that governance practices are
adequate and appropriate for the Company.
V. EVALUATION OF THE CHARTER
The Committee shall periodically, and at least annually, evaluate this
charter. The Committee shall report to the Board the results of its evaluation,
including any recommended amendments to this charter and any recommended changes
to the Company's or the Board's policies or procedures.
35
ANNUAL MEETING OF STOCKHOLDERS OF
BLACK BOX CORPORATION
AUGUST 10, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
- Please detach along perforated line and mail in the envelope provided. -
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES LISTED
AND "FOR" PROPOSALS NUMBERS 2, 3 AND 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. Election of six (6) Members of the Board of Directors:
NOMINEES:
[ ] FOR ALL NOMINEES O William F. Andrews
O Richard L. Crouch
[ ] WITHHOLD AUTHORITY O Thomas W. Golonski
FOR ALL NOMINEES O Thomas G. Greig
O Edward A. Nicholson, Ph.D.
[ ] FOR ALL EXCEPT O Fred C. Young
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: [O]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
To change the address on your account, please check the box at
right and indicate your new address in the address space above.
Please note that changes to the registered name(s) on the account
may not be submitted via this method. [ ]
--------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. The approval of an amendment to the 1992 [ ] [ ] [ ]
Company Stock Option Plan to increase the
number of shares authorized under the Plan
and to limit the number of shares with
respect to options or rights that may be
awarded to any one person in any given year;
3. The approval of an amendment to the 1992 [ ] [ ] [ ]
Director Stock Option Plan to increase the
number of shares authorized under the Plan;
and
4. Ratification of the appointment of Ernst & [ ] [ ] [ ]
Young LLP as the independent registered
public accounting firm of the Company for
the fiscal year ending March 31, 2005.
The Board of Directors has established the close of business on Friday, June 11,
2004 as the record date for the determination of the stockholders entitled to
notice of and to vote at the Annual Meeting.
Signature of Stockholder Date:
---------------------------------- -------------
Signature of Stockholder Date:
---------------------------------- -------------
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign by duly
authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
PROXY
BLACK BOX CORPORATION
1000 PARK DRIVE
LAWRENCE, PENNSYLVANIA 15055
----------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY
----------------------------------------
The undersigned stockholder hereby appoints Fred C. Young and William R.
Newlin, and each of them, as proxies for the undersigned, each with full power
of substitution for and in the name of the undersigned to act for the
undersigned and to consider and vote, as designated on the reverse, all of the
shares of stock of Black Box Corporation (the "Company") that the undersigned is
entitled to vote at the 2004 Annual Meeting of Stockholders of the Company to be
held on Tuesday, August 10, 2004 at 12:30 p.m. Eastern Daylight Time at the
offices of the Company at 1000 Park Drive, Lawrence, Pennsylvania 15055 on the
following matters:
UNLESS OTHERWISE SPECIFIED IN THE SQUARES PROVIDED, THE PROXIES SHALL VOTE IN
THE ELECTION OF DIRECTORS FOR THE NOMINEES LISTED AND FOR EACH OF THE OTHER
PROPOSALS, AND SHALL HAVE DISCRETIONARY POWER TO VOTE UPON SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
ANNUAL MEETING OF STOCKHOLDERS OF
BLACK BOX CORPORATION
AUGUST 10, 2004
PROXY VOTING INSTRUCTIONS
MAIL - Date, sign and mail your proxy card in the envelope provided as soon as
possible.
- OR -
TELEPHONE - Call toll-free 1-800-PROXIES from any touch-tone telephone and
follow the instructions. Have your control number and proxy card available
when you call.
- OR -
INTERNET - Access "WWW.VOTEPROXY.COM" and follow the on-screen instructions.
Have your control number available when you access the web page.
COMPANY NUMBER
------------------------
ACCOUNT NUMBER
------------------------
You may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com up
until 11:59 PM Eastern Daylight Time the day before the cut-off or meeting date.
- Please detach along perforated line and mail in the envelope provided
IF you are not voting via telephone or the Internet. -
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES LISTED AND
"FOR" PROPOSALS NUMBERS 2, 3 AND 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. Election of six (6) Members of the Board of Directors:
NOMINEES:
[ ] FOR ALL NOMINEES O William F. Andrews
O Richard L. Crouch
[ ] WITHHOLD AUTHORITY O Thomas W. Golonski
FOR ALL NOMINEES O Thomas G. Greig
O Edward A. Nicholson, Ph.D.
[ ] FOR ALL EXCEPT O Fred C. Young
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: [O]
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
To change the address on your account, please check the box at
right and indicate your new address in the address space above. [ ]
Please note that changes to the registered name(s) on the account
may not be submitted via this method.
--------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. The approval of an amendment to the 1992 [ ] [ ] [ ]
Company Stock Option Plan to increase the
number of shares authorized under the Plan
and to limit the number of shares with
respect to options or rights that may be
awarded to any one person in any given year;
3. The approval of an amendment to the 1992 [ ] [ ] [ ]
Director Stock Option Plan to increase the
number of shares authorized under the Plan;
and
4. Ratification of the appointment of Ernst & [ ] [ ] [ ]
Young LLP as the independent registered
public accounting firm of the Company for
the fiscal year ending March 31, 2005.
The Board of Directors has established the close of business on Friday, June 11,
2004 as the record date for the determination of the stockholders entitled to
notice of and to vote at the Annual Meeting.
Signature of Stockholder Date:
---------------------------------- -------------
Signature of Stockholder Date:
---------------------------------- -------------
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign by duly
authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.