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 (AMENDMENT NO.   )

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BELDEN CDT INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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April 13, 2007

 

Dear Stockholder:

 

You are cordially invited to attend the annual meeting of stockholders of Belden CDT Inc. to be held on Thursday, May 24, 2007, at 11 o’clock in the morning at the Saint Louis Club (16^th Floor), Pierre Laclede Center, 7701 Forsyth Boulevard, St. Louis, Missouri.

 

The accompanying Notice of Annual Meeting of Stockholders and Proxy Statement describe the items to be considered and acted upon by the stockholders.

 

Whether or not you plan to attend, please sign, date and return your proxy card or vote over the phone or Internet, as soon as possible so that your shares can be voted at the meeting in accordance with your instructions.

 

Thank you for your support and continued interest in Belden.

 

Sincerely,

 

John Stroup

President and Chief Executive Officer

BELDEN CDT INC.
7701 Forsyth Boulevard
Suite 800
St. Louis, Missouri 63105
(314) 854-8000
April 13, 2007
Notice of Annual Meeting of Stockholders

 

 

 

By Authorization of the Board of Directors,

 

Kevin Bloomfield

Vice President, Secretary and General Counsel

 

This proxy statement and accompanying proxy card are being distributed on or about April 13, 2007.

 

PROXY STATEMENT FOR THE
2006 ANNUAL MEETING OF STOCKHOLDERS

BELDEN CDT INC.
To be held on Thursday, May 24, 2007

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

 

If your shares are registered directly in your name with Belden’s transfer agent, ComputerShare, you are considered (with respect to those shares) the shareholder of record and these proxy materials are being sent directly to you by Belden. As the shareholder of record, you have the right to grant your voting proxy directly to Belden or to vote in person at the meeting. Belden has enclosed a proxy card for you to use.

 

 

If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in

“street name” (that is, the name of your stock broker, bank or other nominee) and these proxy materials are being forwarded to you by your broker or nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker or nominee how to vote and are also invited to attend the meeting. However, since you are not the shareholder of record, you may not vote these shares in person at the meeting. Your broker or nominee has enclosed a voting instruction card for you to use.

 

 

Even if you plan to attend the annual meeting, we recommend that you also submit your proxy as described below so that your vote will be counted if you decide later not to attend the meeting.

 

 

 

 

Proposal 2 — Approve performance goals for performance-based awards made under the Cable Design Technologies Corporation 2001 Long-Term Performance Incentive Plan to enable the Company to seek a deduction for such awards under Section 162(m) of the IRC. This proposal requires the affirmative vote of a majority of those shares present and represented at the annual meeting and eligible to vote.

 

Proposal 3 — Approve performance goals for awards made under the Company’s annual cash incentive plan to enable the Company to seek a deduction under Section 162(m) of the IRC.  This proposal requires the affirmative vote of a majority of those shares present and represented at the annual meeting and eligible to vote.

 

 

 

 

 

 

 

 

 

 

Stockholder Proposals:  To be included in the Company’s proxy statement and form of proxy for the 2008 annual meeting, a stockholder proposal must, in addition to satisfying the other requirements of the Securities and Exchange Commission’s rules and regulations, be received at the Company’s principal executive offices not later than December 14, 2007.

 

Nomination of Director Candidates:  The Nominating and Corporate Governance Committee will consider nominees recommend-ed by stockholders if such nominations are submitted to the Company prior to the deadline for proposals to be included in future proxy statements as noted above under the caption “May I propose actions for consideration at next year’s annual meeting of stockholders or nominate individuals to serve as directors?”. To have a candidate considered by the Committee, a stockholder must submit the recommendation in writing and must include the following information:

 

 

In considering candidates submitted by stockholders, the Committee will take into consideration the needs of the Board and the qualifications of the candidate. The Committee may also take into consideration the number of shares held by the recommending stockholder and the length of time that such shares have been held. The Committee believes that the minimum

qualifications for serving as a director of the Company are that a nominee demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board’s oversight of the business and affairs of the Company and have an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities. In addition, the Committee examines a candidate’s specific experiences and skills, time availability in light of other commitments, potential conflicts of interest and independence from management and Belden. The Committee also seeks to have the Board represent a diversity of backgrounds and experience.

 

The Committee will identify potential nominees by asking current directors and executive officers to notify the Committee if they become aware of persons, meeting the criteria described above, who have had a change in circumstances that might make them available to serve on the Board. The Committee also, from time to time, may engage firms that specialize in identifying director candidates. As described above, the Committee will also consider candidates recommended by stockholders.

 

Once a person has been identified by the Committee as a potential candidate, the Committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If the Committee determines that the candidate warrants further consideration, the Chairman or another member of the Committee may contact the person. Generally, if the person expresses a willingness to be considered and to serve on the Board, the Committee will request information from the candidate, review the person’s accomplishments and qualifications, and conduct one or more interviews with the candidate. In certain instances, Committee members may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater first-hand knowledge of the candidate’s accomplishments. The Committee’s evaluation process will not vary based on whether or not a candidate is recommended by a stockholder, although, as stated above, the Board may take into consideration the number of shares held by the recommending stockholder and the length of time that such shares have been held.

 

 

The Belden Board has nine members and three standing committees: Audit, Compensation, and Nominating and Corporate Governance. The Board had ten meetings during 2006; six were telephonic. All directors attended 75% or more of the Board meetings and the Board committee meetings on which they served. Mr. Byrnes resigned from the Board on May 24, 2006. To fill this vacancy, Messrs. Monter and Cressey (members of the Nominating and Corporate Governance Committee) and Mr. Stroup, with the assistance of an executive search firm, conducted a search for a new director which resulted in the Board’s appointment of Mr. Aldrich on February 22, 2007. The maximum number of directors authorized under the Company’s bylaws is nine.

 

 

X — Committee member * — Chairman. ** — Mr. Monter became Chairman upon Mr. Byrnes’ retirement in May 2006.

 

At its regular meeting in February 2007, the Board determined that Messrs. Aldrich, Bain, Balk, Cressey, Harris, Kalnasy, Monter, and Rethore each met the independence requirements of the NYSE listing standards. As part of this process, the Board determined that each such member had no material relationship with the Company.

 

The Audit Committee operates under a Board-approved written charter and each member meets the independence requirements of the NYSE’s listing standards. The Committee assists the Board in overseeing the Company’s corporate accounting and reporting practices by:

 

 

A representative of Ernst & Young LLP is expected to be present at the annual meeting and will have the opportunity to make a statement if the representative desires to do so, and is expected to be available to respond to appropriate questions. The Board has determined that Messrs. Rethore, Bain, and Harris each is

an Audit Committee Financial Expert as defined in the rules pursuant to the Sarbanes-Oxley Act of 2002 and each is independent.

 

The Audit Committee assists the Company’s Board of Directors in its general oversight of the Company’s financial reporting process. Management is responsible for the preparation and presentation of the Company’s financial statements. Ernst & Young LLP (“EY”), the Company’s independent registered public accounting firm for 2006, is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of the Company’s audited financial statements with accounting principles generally accepted in the United States.

 

The Committee has reviewed and discussed the Company’s audited financial statements for 2006 with management and has discussed with EY the matters that are required to be discussed by SAS 61, as amended.

 

EY has provided to the Committee the written disclosures and the letter required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, and the Committee has discussed with EY and confirmed that firm’s independence. The Committee has concluded that EY’s provision of non-audit services to the Company and its subsidiaries is compatible with EY’s independence.

 

Based on these reviews and discussions, the Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for 2006.

 

Bernard G. Rethore (Chair)

Lorne D. Bain

Michael F.O. Harris

 

The following table presents fees for professional services rendered by EY for the audit of the Company’s annual financial statements and internal control over financial reporting for 2006 and 2005.

 

 

“Audit fees” primarily represent amounts paid or expected to be paid for audits of the Company’s financial statements and internal control over financial reporting procedures under SOX 404, and reviews of SEC Forms 10-Q, Forms 8-K and Form 10-K and statutory audit requirements at certain non-U.S. locations.

 

“Audit-related fees” are primarily related to due diligence services on potential acquisitions.

 

“Tax fees” for 2006 and 2005 are for domestic and international compliance totaling $176,876 and $393,684, respectively, and tax consulting totaling $27,985 and $105,827, respectively.

 

In approving such services, the Audit Committee did not rely on the pre-approval waiver provisions of the applicable rules of the SEC.

 

Audit Fees:  For 2006, the Committee reviewed and pre-approved the audit services and estimated fees for the year. Throughout the year, the Committee received project updates and considered and, if appropriate, pre-approved or ratified any amounts exceeding the original estimates.

 

Non-Audit Services and Fees:  Annually, and otherwise as necessary, the Committee reviews and pre-approves all non-audit services and the estimated fees for such services. For recurring services, such as employee benefit plans, tax compliance, expatriate tax returns, and statutory filings, the Committee reviews and pre-approves the services and estimated total fees for such matters by category and location of service. The projections are updated quarterly and the Committee considers and, if appropriate, pre-approves any amounts exceeding the original estimates.

 

For non-recurring services, such as special tax projects, due diligence or other tax services, the Committee will review and pre-approve the services and estimated fees by individual project. The projections will be updated quarterly and the Committee will review and, if appropriate, pre-approve any amounts exceeding the original estimates.

 

Should an engagement need pre-approval before the next Committee meeting, the Committee has delegated to the Committee Chair authority to grant such approval (or if he were unavailable, another Committee member). Thereafter, the entire Committee will review such approval at its next quarterly meeting.

 

The Compensation Committee of Belden determines, approves and reports to the Board on all elements of compensation for the Company’s elected officers. The Committee reviews the design, funding and competitiveness of the Company’s retirement programs. The Committee also assists the Company in developing compensation and benefit strategies to attract, develop and retain qualified employees. The Committee operates under a written charter approved by the Board.

 

The Nominating and Corporate Governance Committee identifies, evaluates and recommends nominees for the Board for each annual meeting (and to fill vacancies during interim periods); evaluates the composition, organization, and governance of the Board and its committees; and develops and recommends corporate governance principles and policies applicable to the Company. The Nominating and Corporate Governance Committee will consider nominees recommended by stockholders if such nominations are submitted to the Company prior to the deadline for proposals to be included in future proxy statements as noted above under the caption “Nomination of Director Candidates.”

 

The Committee’s responsibilities with respect to its governance function include considering matters of corporate governance and reviewing and revising the Company’s corporate governance guidelines and its code of ethics (“Conflicts of Interest and Ethical Conduct Policy,” which applies to all Company employees, officers and directors). Mr. Cressey, a Committee member, presides over all non-management executive sessions of the Board. The Committee is governed by a written charter approved by the Board.

 

Current copies of the Audit, Compensation and Nominating and Corporate Governance charters, as well as the Company’s governance principles and code of ethics, are available on the Company’s website at www.belden.com under the heading “Corporate Governance.” Printed copies of these materials are also available to stockholders upon request, addressed to the Corporate Secretary at 7701 Forsyth Boulevard, Suite 800, St. Louis, Missouri 63105.

 

The Company’s Board has established a process to receive communications from stockholders and other interested parties. Stockholders and other interested parties may contact any member (or all members) of the Board (including Bryan Cressey, the presiding director for non-management director meetings), any Board committee or any chair of any such committee by U.S. mail, through calling the Company’s hotline or via e-mail.

 

To communicate with the Board, any individual director or any group or committee of directors, correspondence should be addressed to the Company’s Board or any such individual directors or group or committee of directors by either name or title. All such correspondence should be sent “c/o Corporate Secretary” at 7701 Forsyth Boulevard, Suite 800, St. Louis, MO 63105. To communicate with any of our directors electronically or through the Company’s hotline, stockholders should go to our corporate website at www.belden.com. Under the headings “Corporate Governance,” you will find the Company’s hotline number (with access codes for dialing from outside the U.S.) and an e-mail address that may be used for writing an electronic message to the Board, any individual directors, or any group or committee of directors. Please follow the instructions on our website to send your message.

 

All communications received as set forth in the preceding paragraph will be opened by (or in the case of the hotline, initially reviewed by) our corporate ombudsman for the sole purpose of determining whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions of a product or service, or patently offensive material will be forwarded promptly to the addressee. In the case of communications to the Board or any group or committee of directors, the corporate ombudsman’s office will send copies of the contents to each director who is a member of the group or committee to which the envelope or e-mail is addressed.

 

In addition, it is the Company’s policy that each director attends the annual meeting absent exceptional circumstances. Messrs. Bain, Balk, Cressey, Harris, Kalnasy, Monter, Rethore and Stroup attended the Company’s 2006 annual meeting.

 

 

The following table provides information on non-employee director compensation for 2006.

 

 

 

Stock awards in 2006 for each non-employee director:

 

 

 

 

 

Since 2005, the Board has required that each non-employee director hold Company stock equal to five times his annual cash retainer (currently 5 times $50,000). Upon appointment, a member has five years to meet this requirement, but must meet interim goals during the five-year period of: 20% after one year; 40% after two years; 60% after three years; and 80% after four years. The in-the-money value of vested stock options and the value of unvested restricted stock or RSUs are included in making this determination at the higher of their grant date value or current market value. Messrs. Bain, Balk, Cressey, Harris, Kalnasy, Monter and Rethore each meet 100% of the stock holding requirement. Mr. Aldrich, who upon his appointment to the Board on February 22, 2007 received an RSU award of 2,500 shares, meets the first-year interim requirement.

 

The Company has nine directors — Messrs. Aldrich, Bain, Balk, Cressey, Harris, Kalnasy, Monter, Rethore and Stroup. The term of each director will expire at this annual meeting and the Board proposes that each of them be reelected for a new term of one year and until their successors are duly elected and qualified. Each nominee has consented to serve if elected. If any of them becomes unavailable to serve as a director, the Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by the Board.

 

 

General

 

The shareholders are asked to consider and approve the material terms of the performance goals used in determining payment of performance grant awards to certain executive officers under the Plan. Internal Revenue Code Section 162(m) limits to $1 million annually the Company’s deduction for compensation paid to any “covered employee” (generally, the officers named in the Summary Compensation Table noted below) unless the compensation is “performance-based,” the requirements for which include stockholder approval of the material terms of the performance goals used for determining the compensation. Consequently, the Company seeks stockholder approval of the material terms of the performance goals used for determining payment of performance grant awards to certain executive officers under the Plan.

 

If stockholders approve this proposal, the material terms of the performance goals used for determining payment of performance grant awards to certain executive officers under the Plan will go into effect for 2008 and, unless changed, will meet the requirements of Section 162(m) until 2013.

 

A summary of the Plan amendments required to enable the Company to seek a deduction for performance grant awards made under the Plan is provided below. Approval of this proposal should not be considered as a guarantee that all amounts paid as performance-based awards under the Plan will in practice be deductible by the Company.

 

Plan Amendments

 

Eligible Participants.  Participation in the Plan is limited to key employees of the Company and its subsidiaries as determined by the Compensation Committee.

 

Performance Goals.  For the CEO and the other most highly paid officers of the Company and its subsidiaries who are “covered employees” as defined in Section 162(m) of the Internal Revenue Code (“Highly Compensated Participants”), payment of any amount in respect of performance grant awards made under the Plan shall be based solely on the attainment of performance goals, which performance goals (including their measures and weights) shall be established annually by the Committee.

 

Performance criteria used by the Committee to establish performance goals for performance grant awards granted to Highly Compensated Participants shall include one or any combination of the following, which may be measured on either a relative or absolute basis with respect to the Company or one or more of its subsidiaries or business units:

 

 

The performance goals established by the Committee for each performance award granted to Highly Compensated Participants will specify achievement targets with respect to each applicable performance criterion (including a threshold level of performance below which no amount will become payable with respect to such award).

 

For performance grant awards to Highly Compensated Participants, the Committee shall determine whether the performance goals have been met. For any such award, the Committee may provide in the original terms of the award that any determination of performance may include or exclude the impact of the

occurrence of one or more of the following events during the performance period:

 

 

The performance goals established by the Committee may be (but need not be) different for each performance period and different performance goals may be applicable for awards to different Highly Compensated Participants in the same performance period. Payment shall be made with respect to a performance grant award to a Highly Compensated Participant only after the attainment of the applicable performance goals has been certified in writing by the Committee. The Committee may, at its sole discretion, reduce the amount otherwise payable under the original terms of an outstanding award of performance grants to a Highly Compensated Participant, but shall have no discretion to increase the amount otherwise payable.

 

Maximum Value.  As determined by the Committee, the maximum value of each performance grant (the “Maximum Value”) shall be: (i) an amount fixed by the Committee at the time the award is made, (ii) an amount which varies from time to time based in whole or in part on the then current value of the Company stock, or other securities or property, or any combination thereof, or (iii) an amount that is determinable from pre-established business criteria established by the Committee pursuant to Section 8(b) of the Plan. However, in no event shall the Maximum Value for a participant exceed $5 million per year. The Maximum Value is established to comply with Section 162(m) of the IRC.

 

The Belden Board of Directors Unanimously Recommends a Vote “For” the Proposal.

 

Summary of Plan

 

General.  The Plan provides for the granting to key employees, directors and other individuals who perform services for the Company (“Participants”) the following types of incentive awards: stock options, SARs, restricted stock, performance grants and other types of awards that the Board of Directors or the Compensation Committee deems to be consistent with the purposes of the Plan.

 

The Plan prohibits individual annual awards of stock options, SARs, restricted stock or performance grants in excess of 400,000 shares or units. The Plan affords the Company latitude in tailoring incentive compensation to support corporate and business objectives, and to anticipate and respond to a changing business environment and competitive compensation practices.

 

Plan Administration.  The Plan is administered by the Compensation Committee and the Committee has the exclusive authority to select Plan participants and to determine the type, size and terms of each award, to modify the terms of awards, to determine when awards will be granted and paid, and to make all other determinations which it deems necessary or desirable in the interpretation and administration of the Plan.

 

With some exceptions, including termination of employment as a result of death, disability or retirement, or except as otherwise determined by the Committee, rights to these forms of contingent compensation are forfeited if a recipient’s employment or performance of services terminates within a specified period following the award. Generally, a Participant’s rights and interests under the Plan will not be transferable except by will or by the laws of descent and distribution.

 

Awards under the Plan

 

Options:  The Committee may grant non-qualified stock options (“NSO”) and incentive stock options (“ISO”) at a price fixed by the Committee. The option

price may not be less than the fair market value of the Company’s stock on the grant date and, for ISOs issued to an employee owning more than ten percent of the voting power of the Company’s stock, may not be less than 110% of the fair market value of the Company’s stock on the grant date.

 

Options generally will expire not later than ten years after the date on which they are granted. Options will become exercisable at such times and in such installments as the Committee shall determine. Payment of the option price must be made in full at the time of exercise in such form (including cash, common stock of the Company or the surrender of another outstanding award or any combination thereof) as the Committee may determine.

 

SARs:  A SAR (or stock appreciation right) entitles the holder to receive cash or common stock (or a combination thereof) equal to the difference between the exercise price or option price per share and the fair market value per share at the time of such exercise, times the number of shares subject to the SAR or option or other award, or portion thereof, which is exercised. The Plan prohibits SARs issued below the fair market value of the Company stock on the grant date.

 

Restricted Stock Awards.  A restricted stock award, or restricted stock unit (“RSU”), is an award of a given number of shares, or a right to receive a given number of shares, which are subject to a restriction against transfer and to a risk of forfeiture during a period set by the Committee. During the restriction period, a participant may have the right to receive dividends on the shares, payment of which may be deferred until the restricted stock vests.

 

Performance Grants:  Performance grants are awards whose final value, if any, is determined by the degree to which specified performance objectives have been achieved during an award period set by the Committee, subject to such adjustments as the Committee may approve based on relevant factors.

 

Adjustments

 

Upon the liquidation or dissolution of the Company, all outstanding awards under the Plan shall terminate immediately prior to the consummation of such liquidation or dissolution, unless otherwise provided by the Committee. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, all restrictions on any outstanding awards shall lapse and Participants will be entitled to the full benefit of such awards immediately prior to the closing date of such sale or merger, unless otherwise provided by the Committee.

 

Amendments

 

The Board of Directors or the Committee may amend or terminate the Plan, except that no amendment shall become effective without the prior approval of the Company’s stockholders if such approval is necessary for compliance with the performance-based compensation exception of Section 162(m) of the Internal Revenue Code, under the Incentive Stock Options provisions of Section 422 of the Internal Revenue Code or by any NYSE listing requirements. Furthermore, any termination may not materially and adversely affect any outstanding right or obligation under the Plan without the affected Participant’s consent.

 

Termination

 

By its terms, the Plan will expire on December 6, 2010, ten years from the date that the Plan was initially approved by the Company’s shareholders. However, prior to such expiration, the Plan permits the Company’s Board to extend the Plan for up to an additional five years.

 

U.S. Federal Tax Consequences Under the Plan

 

Federal Income Tax Consequences — Incentive Stock Options (ISOs).  The grant of ISOs to an employee does not result in any income tax consequences. The exercise of an ISO does not result in any income tax consequences to the employee if the incentive stock option is exercised by the employee during his employment with the Company or a subsidiary, or within a specified period after termination of employment due to death or retirement for age or disability under then established rules of the Company. However, the excess of the fair market value of the shares of stock as of the date of exercise over the option price is a tax preference item for purposes of determining an employee’s alternative minimum tax. An employee who sells shares acquired pursuant to the exercise of an ISO after the expiration of (i) two years from the date of grant of the incentive stock option, and (ii) one year after the transfer of the shares to him (the “Waiting Period”) will generally recognize long-term capital gain or loss on the sale.

 

An employee who disposes of his ISO shares prior to the expiration of the Waiting Period (a “Disqualifying Disposition”) generally will recognize ordinary income in the year of sale in an amount equal to the

excess, if any, of the lesser of (i) the fair market value of the shares as of the date of exercise or (ii) the amount realized on the sale, over the option price. Any additional amount realized on a Disqualifying Disposition should be treated as capital gain to the employee, short- or long-term, depending on the employee’s holding period for the shares. If the shares are sold for less than the option price, the employee will not recognize any ordinary income but will recognize a capital loss, short- or long-term, depending on the holding period.

 

The Company will not be entitled to a deduction as a result of the grant of an ISO, the exercise of an ISO, or the sale of ISO shares after the Waiting Period. If an employee disposes of his ISO shares in a Disqualifying Disposition, the Company will be entitled to deduct the amount of ordinary income recognized by the employee.

 

Federal Income Tax Consequences — Non-Qualified Stock Options.  The grant of NSOs under the Incentive Plan will not result in the recognition of any taxable income by the participants. A participant will recognize income on the date of exercise of the NSO equal to the difference between (i) the fair market value on the date the shares were acquired, and (ii) the exercise price. The tax basis of these shares for purposes of a subsequent sale includes the option price paid and the ordinary income reported on exercise of the option. The income reportable on exercise of the option by an employee is subject to federal and state income and employment tax withholding.

 

Generally, the Company will be entitled to a deduction in the amount reportable as income by the participant on the exercise of a NSO.

 

Federal Income Tax Consequences — Stock Appreciation Rights and Performance Shares.  Stock Appreciation Rights and Performance Share grants involve the issuance of shares or the payment of cash, without other payment by the recipient, as additional compensation for services to the Company. The recipient will recognize taxable income equal to cash received or the fair market value of the shares on the date of the award, which becomes the tax basis in a subsequent sale. Generally, the Company will be entitled to a corresponding deduction in an amount equal to the income recognized by the recipient.

 

Federal Income Tax Consequences — Restricted Stock Grants.  Restricted stock granted under the Incentive Plan generally will not be taxed to the recipient, nor deductible by the Company, at the time of grant. On the date the restrictions lapse and the shares become transferable or not subject to a substantial risk of forfeiture, the recipient recognizes ordinary income equal to the excess of the fair market value of the shares on that date over the purchase price paid for the stock, if any. The participant’s tax basis for the shares includes the amount paid for the shares and the ordinary income recognized. Generally, the Company will be entitled to a deduction in an amount of income recognized by the recipient.

 

The discussion set forth above is intended only as a summary and does not purport to be a complete enumeration or analysis of all potential tax effects relevant to recipients of awards under the Plan. Accordingly, all award recipients are advised to consult their own tax advisors concerning the federal, state, local and foreign income and other tax considerations relating to such awards and rights thereunder.

 

Incorporation by Reference.  The foregoing is only a summary of the Plan and is qualified in its entirety by reference to the full text of the amended Plan, a copy of which is attached hereto as Appendix I.

 

 

General

 

The stockholders are asked to consider and approve the material terms of the performance goals used in determining payment of awards to certain executive officers under the Cash Plan. Internal Revenue Code Section 162(m) limits to $1 million annually the Company’s deduction for compensation paid to any “covered employee” (generally, the officers named in the Summary Compensation Table) unless the compensation is “performance-based,” the requirements for which include stockholder approval of the material terms of the performance goals used for determining the compensation.

 

Consequently, the Company seeks stockholder approval of the material terms of the performance goals used for determining payment of awards to certain executive officers under the Cash Plan. If stockholders approve

this proposal, the material terms of the performance goals used in determining payment of awards to certain executive officers under the Cash Plan will go into effect for 2008 and, unless changed, will meet the requirements of Section 162(m) until 2013.

 

A summary of the Cash Plan amendments required to enable the Company to seek a deduction for awards made under the Cash Plan is provided below. Approval of this proposal should not be considered as a guarantee that all amounts paid as awards under the Cash Plan will in practice be deductible by the Company.

 

Plan Amendments

 

Eligible Participants.  Participation in the Cash Plan is limited to active, full-time exempt employees of the Company and its subsidiaries that fall within certain salary grades, provided that they are not a covered participant in another annual cash incentive plan and they have been approved for inclusion in the Cash Plan by the Company’s CEO.

 

Performance Goals.  For the CEO and the other most highly paid officers of the Company and its subsidiaries who are “covered employees” as defined in Section 162(m) of the Internal Revenue Code (“Highly Compensated Participants”), payment of awards under the Cash Plan shall be based solely on the attainment of performance goals, which performance goals (including their measures and weights) shall be established annually by the Committee.

 

Performance criteria used by the Committee to establish performance goals for awards to Highly Compensated Participants shall include one or any combination of the following, which may be measured on either a relative or absolute basis with respect to the Company or one or more of its subsidiaries or business units:

 

 

The performance goals established by the Committee for each award granted to Highly Compensated Participants will specify achievement targets with respect to each applicable performance criterion (including a threshold level of performance below which no amount will become payable with respect to such award).

 

For Highly Compensated Participants, the Committee shall determine whether the performance goals have been met. For any award, the Committee may provide in the original terms of the award that any determination of performance may include or exclude the impact of the occurrence of one or more of the following events during the performance period:

 

 

The performance goals established by the Committee may be (but need not be) different for each performance period. Payment shall be made with respect to an award to a Highly Compensated Participant only after the attainment of the applicable performance goals has been certified in writing by the Committee. The Committee may, at its sole discretion, reduce the

amount otherwise payable under the original terms of an outstanding award to a Highly Compensated Participant, but shall have no discretion to increase the amount otherwise payable.

 

Maximum Value.  The amount of any award to any participant under the Cash Plan shall in no event exceed $5 million. The Maximum Value is established to comply with Section 162(m).

 

The Belden Board of Directors Unanimously Recommends a Vote “For” the Proposal.

 

 

 

The following table shows the amount of Belden common stock beneficially owned (unless otherwise indicated) by our directors, the executive officers named in the Summary Compensation Table below and the directors and named executive officers as a group. Except as otherwise noted, all information is as of March 1, 2007.

 

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Based upon a review of filings with the Securities and Exchange Commission and other reports submitted by our directors and officers, we believe that all of our directors and executive officers complied during 2006 with the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934.

 

The following table shows information regarding those shareholders known to the Company to beneficially own more than 5% of the outstanding Belden shares for the period ending on December 31, 2006.

 

 

 

 

In addition, at December 31, 2006, Prudential Bank & Trust, FSB, as Trustee of the Belden CDT Inc. Retirement Savings Plan, held of record 391,148.6194 shares, which represents .8764% of common stock.

 

 

The Compensation Committee provides the following report in accordance with the rules adopted by the Securities and Exchange Commission.

 

The Compensation Committee states that it has reviewed and discussed with management the Compensation Discussion and Analysis contained in the next section of this proxy statement. Based on these reviews and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

 

This report is submitted on behalf of the members of the Compensation Committee.

 

Glenn Kalnasy (Chair)

Lance Balk

John Monter

 

This Compensation Discussion and Analysis (CD&A) provides a summary of the key objectives and material elements of compensation for Belden’s named executive officers listed in the Summary Compensation Table discussed below. This CD&A should be read in conjunction with the following tables, which follow the CD&A in this proxy statement:

 

 

The Compensation Committee of Belden is composed of independent directors appointed by the Board. It determines, approves and reports to the Board on all elements of compensation for Belden’s executive officers. The individuals who served as the Company’s Chief Executive Officer and Chief Financial Officer during 2006, as well as the other individuals included in the Summary Compensation Table, are referred to as the “named executive officers.” (Mr. Matz, a named executive officer, left the Company in February 2006. Information on his compensation is included below under the caption “Mr. Matz.”)

 

The Committee also administers Belden’s incentive plans (including reviewing and approving grants to its executive officers under its equity incentive plans) and generally consults with management regarding Belden’s compensation programs. The Committee’s charter summarizes the Committee’s responsibilities, which the Committee and Board periodically review and revise. The Committee meets throughout the year, including at quarterly meetings held in conjunction with Board meetings. The Committee chair reports on Committee actions and recommendations at Board meetings. The Committee has the authority to engage outside advisors to assist the Committee and, pursuant to such authority, has engaged Deloitte Consulting LLP to conduct an annual review of the Company’s total compensation program for the CEO and other executive officers. Deloitte provides the Committee with relevant market data and alternatives to consider when making compensation decisions for the CEO and other executive officers and advises the Committee periodically on executive compensation philosophy, strategy and implementation.

 

Philosophy

 

Belden’s general goals in designing compensation programs are to attract, motivate and retain key talent; reward associates for individual and company performance; and align management’s interest with those of its stockholders.

 

In 2006, the Committee and management refined these goals to align them with the Company’s new strategic three-year plan. A cornerstone of the strategic plan is for the Company to develop and implement a talent management process to recruit and retain the talent necessary to achieve its strategic goals. To that end, the Company has developed processes to identify and recruit high potential talent and has changed its performance review, career development and compensation programs to attract and retain such talent. Key objectives of this process are to pay for performance and to increase the variable component of total compensation. The Committee and management believe that the proportion of compensation at risk should rise as an associate’s level of responsibility increases. Senior management meets throughout the year to review the status of deploying the strategic plan, including the talent management process.

 

Total compensation for executive officers consists of the following elements:

 

 

Historically, Belden has targeted total direct compensation (the sum of base salary, annual cash incentive payments and long-term equity awards) for executive officers at the 50^th percentile of the relevant peer group and survey data, at expected (target) performance levels.

 

For 2006 compensation, survey sources included the 2006 Economic Research Institute Executive Compensation Assessor; 2006/2007 Watson Wyatt Top Management and Middle Management Compensation Calculator; and the 2006 William H. Mercer Executive Compensation Survey. The survey data is regressed to reflect Belden’s revenue size. The companies that comprise the peer group are: Harman International Industries Inc., Energizer Holdings, Inc., Molex, Inc., Exide Technologies, Spectrum Brands, Inc., Amkor Technology, Inc., Juniper Networks, Inc., American Power Conversion Corporation, Amphenol Corporation, Thomas & Betts Corporation, Atmel Corporation, Fairchild Semiconductor International, CommScope, Inc., AVX Corporation, On Semiconductor Corp., Plexus Corp., JDS Uniphase Corporation, Hexcel Corporation, and Altera Corp. The peer group consists of manufacturing companies that are comparable to Belden based on revenue size and market capitalization and that met the following three requirements: (i) annual revenues in excess of $1 billion; (ii) greater than 30% of revenues from global sales; and (iii) three or more business segments.

 

The Committee’s compensation consultant (Deloitte) collected competitive data on the three elements of total direct compensation (base salary, annual cash incentive payments, and long-term equity awards) of the companies in the peer group and survey data for three of the positions listed on the Summary Compensation Table — those being, the Chief Executive Officer (John Stroup), Chief Financial Officer (Gray Benoist) and Division Presidents (Peter Sheehan and Larrie Rose). However, there was insufficient data available for comparison as to the other position listed in the table, the General Counsel position. For that position, Deloitte relied on survey data. Deloitte used the Black-Scholes option pricing model to value long-term stock options or stock appreciation awards; the fair market value of shares on the grant date to value restricted stock grants; and the target grant date value to value performance shares or units.

 

To compete for the talent necessary to achieve the Company’s strategic objectives, Belden has begun to generally target total direct compensation at the 75^th percentile. However, as the Company moves to the 75^th percentile, it will emphasize pay-for-performance and increase the proportion of compensation at risk — the variable component of total direct compensation — and the degree of difficulty of the performance targets.

 

Total direct compensation of the named executive officers — other than Mr. Stroup (75^th) and Mr. Benoist (90^th) — currently is approximately at the 50^th percentile. As it sought candidates for the positions of CEO and CFO, the Committee determined that these levels of compensation were needed to recruit high potential outside candidates with the appropriate skills and experience to fill these critical positions.

 

Base Salary

 

Base salaries of executive officers are generally reviewed annually and are determined and adjusted based on the executive’s performance, the competitive market, the executive’s experience and internal equity. In 2006, the Company adopted a new performance review process for senior management that emphasizes individual accountability based on the attainment of objective goals. Pursuant to this process, Mr. Cressey, on behalf of the Board, conducted a performance review with Mr. Stroup.

 

To assess the competitiveness of compensation for executive officers, the Company compared each officer’s compensation to the peer group and survey data noted above. The comparison focused on each component of total direct compensation — base salary, an annual cash incentive award, and long-term equity awards — as well as total compensation.

 

Salaries paid to the named executive officers for 2006 are shown in the Summary Compensation Table.  With respect to Mr. Benoist, effective with his appointment as Vice President, Finance and Chief Financial Officer on August 24, 2006, he began receiving a base salary of $360,000 per year.

 

Annual Cash Incentive Program

 

Belden’s annual cash incentive program permits eligible management to receive a cash bonus based on the achievement of Company financial goals (Financial Factor) and the attainment of individual personal objectives as determined by his or her annual cash incentive performance review (Personal Performance Factor). Generally, at its regularly scheduled meeting in February, the Committee determines the amount of the cash incentive compensation pool and participants for the ensuing year, and sets minimum and target levels for the Financial Factor.

 

For 2006, for corporate participants (including Messrs. Stroup, Benoist, Johnson, and Bloomfield), 100% of their Financial Factor was based upon consolidated EPS (80%) and operating working capital turns (20%). For division presidents (including Messrs. Sheehan and Rose), the Financial Factor was divided equally between the criteria for corporate participants (consolidated EPS and working capital turns) and division results — operating income (70%) and operating working capital turns (30%).

 

The Committee established thresholds and targets for consolidated EPS and operating working capital turns. “Consolidated EPS” is diluted EPS from continuing operations. “Operating working capital turns” is calculated using a twelve point average of working capital turns at the end of each month during the calendar year computed by taking the ratio at the end of each month of (i) the annualized actual cost of goods sold for the prior month and the current month plus the forecasted cost of goods sold for the next month to (ii) operating working capital at the end of the month. The Committee retains the discretion to approve adjustments to the calculation of consolidated EPS and operating working capital turns for unusual or one time items.

 

The Financial Factor as applied to executive officers is summarized below.

 

Financial Factor

 

 

Once estimated payouts based on the Financial Factor were determined, these were adjusted by the Personal Performance Factor — a factor of .5 to 1.5 — based on the individual’s attainment of his or her 2006 personal objectives.

 

Using this process, at its February 2007 meeting, the Committee reviewed and approved cash incentive payouts for 2006. For the year, the Company exceeded its EPS target by 32%, which yielded a cash incentive equal to 180% of target for 80% of the corporate incentive, and achieved the threshold level of performance of the target for operating working capital turns, which yielded a cash incentive equal to 50% of target for 20% of the corporate cash incentive. The EPS, operating income and operating working capital results were adjusted to reflect certain unusual or unexpected events that occurred during the year such as excess and obsolete inventory adjustments and restructurings in Europe and North America. The Committee believed it was appropriate to adjust the financial results for those legacy issues, which were implemented to facilitate the restructuring of the Company.

 

The Financial Factor for corporate participants (including Messrs. Stroup, Benoist, Johnson and Bloomfield) was 1.54. The Financial Factor for Mr. Sheehan was 1.51 and for Mr. Rose, 1.07. Had the financial adjustments noted above not been made, the Financial Factor for corporate participants, Mr. Sheehan and Mr. Rose would have been 0.78, 0.95 and 0.39, respectively. Base salaries used in calculating payouts were as of the beginning of the year.

 

After computing estimated payouts using the Financial Factor, these amounts were adjusted by the participant’s Personal Performance Factor, a factor of 0.5-1.5 based on the participant’s attainment of his or her 2006 personal objectives. Target cash incentives as a percent of base salary for the named executive officers were 100% for Mr. Stroup, 85% for Mr. Benoist, and 50% for Messrs. Sheehan, Rose, Bloomfield and Johnson (35% for that part of 2006 in which Mr. Johnson was not Interim CFO). Pursuant to his employment agreement (discussed below), Mr. Benoist received a pro-rata share of his annual cash incentive based on his employment period with the Company from August 24 through December 31, 2006. The Personal Performance Factor for the named executive officers ranged from 1.05 to 1.40.

 

The 2006 cash incentives for the named executive officers are set out in the Summary Compensation Table under the column, Non-Equity Incentive Plan Compensation.

 

Long-Term Incentive Awards

 

2006 Awards

 

Belden’s long-term incentive plan (Plan) authorizes the Committee to grant various equity awards, including stock options, stock appreciation rights (“SARs”), performance stock, performance stock units (“PSUs”), restricted shares, and restricted share units (“RSUs”). Annual equity awards (other than those for new hires) are made at the Committee’s regularly scheduled meeting in February. For 2006 awards, eligibility was based on a threshold salary, individual performance and the competitive market. However, the Committee granted 27,400 awards to 29 associates who did not meet the salary grade threshold because of their outstanding individual performance. Also, Mr. Stroup’s awards were based on his employment agreement. His employment agreement provides that for the three-year period of 2006 through 2008, he will receive equity awards having a grant date value of not less than $2.5 million per year. In addition, Mr. Benoist’s 2006 awards were based on his employment agreement, which provided for RSUs of $300,000, SARs of $500,000, and PSUs of $500,000, to be granted effective on the date of his employment. Pursuant to his agreement, on such date (August 24, 2006), as an inducement to accept employment with the Company, Mr. Benoist received 9,090 RSUs, 29,446 SARs and 15,151 PSUs. The PSUs were based on achieving target performance for the performance goals discussed below.

 

Based on the above eligibility criteria and Mr. Stroup’s employment agreement, on February 22, 2006, the Committee granted to all participants (including Mr. Stroup) 445,700 awards under the Plan — 315,600 SARs, 63,700 RSUs and 66,400 PSUs. All PSUs were awarded to executive officers or direct reports of Mr. Stroup, and were based on target performance. These awards represented 1% of outstanding shares on the record date (April 3, 2006).

 

Out of the February 2006 grants, the current named executive officers received the following awards: Mr. Stroup, 113,600 SARs and 50,000 PSUs; Mr. Johnson, 4,600 SARs, 2,000 PSUs and 2,400 RSUs; Mr. Sheehan, 6,400 SARs, 2,800 PSUs, and 3,400 RSUs; Mr. Rose, 6,400 SARs, 2,800 PSUs, and 3,400 RSUs; and Mr. Bloomfield, 5,600 SARs, 2,400 PSUs, and 3,000 RSUs. (See the Grants of Plan-Based Awards Table for the grant date value of the RSUs and SARs awarded to the named executive officers. The value of these awards was computed in accordance with FAS 123R. The table also includes additional information on these awards, including the estimated payouts of the awarded PSUs at threshold, target and maximum levels.)

 

For the named executive officers (other than Mr. Benoist), the SARs were issued at the average of the high and low price of Belden stock on February 22, 2006 ($25.805), the date the Committee made the awards. Mr. Benoist’s SARs were issued at the average of the high and low price of Belden stock on August 24, 2006 ($33.00), the date of his appointment and the date the Board made the award. All SARs will vest in equal amounts over three years and will expire ten years after the grant date. Upon exercise, the participant will receive in Belden stock the excess of fair market value per share at the time of exercise over the exercise price, times the number of shares subject to the SAR. The RSUs vest after three years, are subject to forfeiture if the participant were to voluntarily leave the Company before the prescribed period and, upon vesting, are payable in Company stock.

 

At its February 21, 2007 meeting, the Committee granted the number of shares actually awarded to executive officers for attainment of performance goals covered under the PSUs issued in 2006. The shares awarded were in the form of RSUs. The number of RSUs awarded to participants was based on the 2006 Financial Factor used in determining a participant’s 2006 annual cash incentive award. The Financial Factor was capped at 1.5 for the 2006 performance period. The RSUs will vest in equal amounts over a two-year period and are subject to forfeiture should the participant voluntarily leave the Company.

 

The current named executive officers received the following RSUs in exchange for receiving PSUs in 2006: Mr. Stroup, 75,000; Mr. Benoist, 22,727; Mr. Johnson, 3,000; Mr. Sheehan, 4,200; Mr. Rose, 4,200; and Mr. Bloomfield, 3,600.

 

For a summary of outstanding stock options, SARs, restricted stock and RSUs each named executive officer had at December 31, 2006, see the Outstanding Equity Awards at Fiscal Year-End Table, included below. For a summary of option exercises and vesting of restricted stock and RSUs of each named executive officer that occurred during 2006, see the Option Exercises and Stock Vested Table, noted below.

 

2007 Awards

 

On February 21, 2007, the Committee granted to all participants (including Mr. Stroup) 454,050 awards under the Plan — 372,800 SARs, 18,350 RSUs and

62,900 PSUs. These awards represented approximately 1% of outstanding shares on the record date of April 2, 2007. Awards to Messrs. Stroup and Benoist were pursuant to their employment agreements. Awards to the other executive officers were based on individual performance, peer group data and survey data of the competitive market. Consistent with the emphasis on paying for performance and increasing the variable component of compensation, all equity awards to the named executive officers were in the form of SARs or PSUs (or both). The named executive officers received the following awards of February 2007 grants: Mr. Stroup, 107,400 SARs; Mr. Benoist, 15,000 SARs and 7,500 PSUs; Mr. Johnson, 6,400 SARs and 3,100 PSUs; Mr. Sheehan, 8,100 SARs and 3,900 PSUs; Mr. Rose, 6,400 SARs and 3,100 PSUs; and Mr. Bloomfield, 8,600 SARs and 4,200 PSUs.

 

Mr. Stroup’s awards were entirely in the form of SARs to permit the Company to take a tax deduction for the awards in accordance with Section 162(m) of the IRC. The Company expects that if stockholders approve Proposal II (Approve performance goals for performance-based awards made under the Cable Design Technologies Corporation 2001 Long-Term Performance Incentive Plan to enable the Company to seek a deduction under Section 162(m) of the IRC), it would permit the Committee to issue PSUs to Mr. Stroup and to other covered executive officers in 2008 that qualify as “performance-based” compensation under Section 162(m) of the IRC, and consequently should permit the Company to deduct the income that the recipient of the award recognizes as an ordinary business expense and not be subject to the limit of Section 162(m).

 

Retirement Benefits

 

Each named executive officer participates in the following retirement plans:

 

 

The Retirement Savings Plan is a funded, qualified, defined contribution plan under the IRC. It is generally available to all active U.S. employees of Belden or its subsidiaries. Participants may contribute from 1% to 50% of pay on a before-tax basis, subject to the limits imposed by the IRC. Belden matches a participant’s contributions at 100% for the first 3% of participant’s contributions and, thereafter, at 50% up to a maximum of 6% of pay. The Company’s matching contributions are in cash. All contributions are invested in employee-directed investment funds. The Excess Contribution Plan is an unfunded, nonqualified plan that provides the benefits of the Retirement Savings Plan to certain employees (including the named executive officers) whose participation in the Retirement Savings Plan is capped beyond certain compensation levels established by the IRC. The Company pays account balances under the Retirement Savings Plan and the Excess Contribution Plan to participants upon their retirement; termination of employment; permanent disability; or death.

 

The Pension Plan is a qualified, funded, defined benefit plan under the IRC. With certain exceptions, it is generally available to all active U.S. employees of Belden or its subsidiaries. Pursuant to the plan, the Company credits to each participant’s account under the plan 4% of the participant’s annual total compensation up to the Social Security wage base for the year, plus 8% of total compensation that exceeds the Social Security wage base. Generally, for the named executive officers, “total compensation” is the sum of salary and any annual cash incentive compensation. Participants do not make contributions to the Pension Plan. The Company contributes funds to a trust that are sufficient to meet the minimum requirements under the IRC to maintain the status of the Pension Plan as a qualified plan. The Excess Pension Plan is an unfunded, nonqualified plan that provides the benefits of the Pension Plan to certain employees (including the named executive officers) whose participation is capped beyond a certain salary level established by the IRC. The Company pays account balances under the Pension Plan and the Excess Pension Plan to participants upon their retirement; termination of employment; permanent disability; or death.

 

The Company maintains a “grantor trust” under Section 671 of the IRC for each of the Excess Contribution Plan and the Excess Pension Plan. The trusts are intended to provide participants of these plans some assurance that the benefits and payments to which participants are entitled will be paid. Prior to a change of control of Belden (as defined in the trust agreements), the Company has the discretion to make contributions to the trusts. After a change in control of the Company, the Company must transfer to the trusts the amount participants have earned through the date of

the change in control and thereafter continue to fund the trusts as benefits accrue. The amount held in the two trusts at December 31, 2006 was $1,052. The assets of the trusts are subject to claims of creditors of Belden in the event the Company becomes “insolvent” as defined in the trust agreements.

 

The actuarial present value of the accumulated benefit under the Belden Pension Plan and the Excess Pension Plan for each named executive officer is included in the Pension Benefits Table, included below. The Nonqualified Deferred Compensation Table, included below, provides the following information for each named executive officer with respect to the Belden Excess Contribution Plan: the officer’s 2006 contributions; the Company’s 2006 contributions; the earnings accrued during 2006 under the Excess Contribution Plan; any withdrawals or distributions; and the year-end balance under the plan. See the Change in Pension Value & Nonqualified Deferred Compensation Earnings column and the All Other Compensation column of the Summary Compensation Table for the Company’s contributions to the Belden Retirement Savings Plan for each named executive officer.

 

Cash Long-Term Performance Plan

 

In 2003, Belden Inc. adopted a cash long-term performance plan having performance cycles of four years (with new cycles beginning each year). Following the merger of Belden Inc. and the Company in July 2004 (the Merger), the Committee decided to discontinue the plan prospectively. Two performance cycles were granted in 2003 (2003-2006 cycle) and 2004 (2004-2007 cycle) prior to the plan’s discontinuance. Of the named officers, only Messrs. Johnson, Rose and Bloomfield currently participate. With respect to the two cycles, performance measures are based on the Company’s average annual growth rate of EBITDA compared to the average annual growth rate of a peer group index of approximately fifty electrical and electronic equipment companies over the four-year performance cycle. Cash payments may be made in 2007 for the 2003 cycle and in 2008 for the 2004 cycle if the performance criteria are met. See the Non-Equity Incentive Plan column of the Summary Compensation Table for the estimated amount payable under the 2003 cycle of the plan to Messrs. Johnson, Rose and Bloomfield. Once the 2004 cycle is determined in 2008, the plan will terminate.

 

Retention and Integration Awards Program

 

In connection with the Merger (which constituted a change of control for purposes of stock options under the Belden Inc. and CDT plans), all restricted stock grants under the Belden Inc. and CDT plans became fully vested except that the named executive officers who had restricted stock outstanding at the time of the Merger waived the lapse of restrictions on their restricted stock in connection with the Merger in exchange for participating in a retention and integration awards program. Each of the Belden-named executive officers at the time of the Merger also agreed to amend his change of control agreement (discussed below) to remove the provision regarding the unilateral thirty-day right of termination with respect to the Merger.

 

The value of each payment with respect to the retention and integration award equaled 110% of the executive’s salary. Fifty percent of this value was paid in the form of cash and the remaining fifty percent, in shares of restricted stock of the Company, with the number of shares of Company stock being determined on the Merger date. The awards were paid in three installments: one-third upon each of the consummation of the Merger (July 15, 2004), the first (July 15, 2005) and second (July 15, 2006) anniversaries of the consummation of the Merger, in each case if the executive were still employed by the Company on those dates. Of the named executive officers, Messrs. Johnson, Sheehan, Rose and Bloomfield participated in the retention and integration awards program and each of them received all payments under the program. (Mr. Matz also participated in the program until he left the Company; he did not receive his third payment.) See the All Other Compensation Column of the Summary Compensation Table for the amounts paid to Messrs. Johnson, Sheehan, Rose and Bloomfield in 2006 under the program.

 

Stock Ownership Guidelines

 

In 2005, to further align senior management’s interest with stockholders’ interest, the Compensation Committee established stock ownership guidelines for Section 16(a) officers — Company officers (including the named executive officers) who are required to disclose their holdings of Company stock to the SEC. The CEO is required to hold three times his annual base salary in Belden stock and all other Section 16(a) officers must hold two times their annual base salary. An officer has five years from May 2005 (the date the guidelines were implemented) or, if later, five years from becoming an

officer to acquire the appropriate shareholdings, and he or she must make interim progress toward the requirement during the five-year period — 20% after one year, 40% after two years, 60% after three years and 80% after four years. For purposes of determining ownership, unvested RSUs and the value of vested in-the-money options and SARs are included. For calculation purposes, the Committee will use the higher of the current trading price or the acquisition price. As of the record date, each of the named executive officers either met his interim or five-year stock ownership guideline.

 

Health, Welfare Benefits and Perquisites

 

The Company’s healthcare, insurance and other welfare and employee-benefit programs are the same for all eligible employees, including executive officers. The Company shares the cost of health and welfare benefits with its associates, a cost that is dependent on the level of benefit coverage that each associate elects.

 

The Company reimburses the following named executive officers for luncheon club memberships: Messrs. Stroup, Benoist, Bloomfield, and Sheehan. The Company also pays the cost of annual physical examinations and tax preparation services for the named executive officers. The aggregate amount of these for each named executive officer does not exceed $10,000 and has not been included in the Summary Compensation Table.

 

Chief Executive Officer Compensation

 

All elements of compensation for Mr. Stroup, including base salary, annual cash incentive and long-term incentives, are reviewed and approved solely by the Board or the Committee. As of the date of his appointment (October 31, 2005), Mr. Stroup was awarded a combination of stock options and RSUs to compensate him for the “in the money” value of his unvested options and unvested restricted stock that he forfeited upon leaving his former employer and as a further inducement to accept employment with the Company. He received 451,580 stock options with an exercise price equal to the fair market value of the Company’s stock on the grant date ($19.93). The options vest in equal installments over three years and expire in ten years. The RSUs (150,526) vest in five years and will be paid in Company stock upon vesting.

 

In connection with his appointment, Mr. Stroup entered into an executive employment agreement with the Company, effective October 31, 2005. The agreement’s initial term is for three years. Mr. Stroup’s base salary of $600,000 per year is subject to annual review; he is entitled to participate in the Company’s annual cash incentive plan; and his annual target bonus is 100% of his base salary. See above under the captions “Annual Cash Incentive Program” and “Long-Term Incentive Awards” for a discussion of Mr. Stroup’s 2006 annual cash incentive award and equity grants in 2006 and 2007.

 

Should Mr. Stroup terminate his employment (for any reason before a change of control of the Company or, after a change of control, without good reason), he will be entitled to receive any accrued base salary. He will forfeit all unvested equity awards. If the Company terminates his employment for cause, Mr. Stroup will be entitled to any accrued salary and benefits, and all vested and unvested equity awards will be forfeited and cancelled. If the Company terminates Mr. Stroup’s employment without cause (before a change of control of the Company), he will be entitled to (i) severance equal to the product of the sum of his base salary and annual cash incentive target, times 1.5, (ii) a pro-rated annual cash incentive payment for the current year, and (iii) accelerated vesting of his equity awards granted on the date of his appointment (October 31, 2005) with the right to exercise such options for one year.

 

Under Mr. Stroup’s agreement, a change of control generally will occur when a person acquires more than 50% of the outstanding shares of the Company’s stock or a majority of the board consists of individuals who were not approved by the board. In such event, all unvested options and RSUs granted on the date of his appointment will become vested, exercisable and payable. Following a change of control and during the two-year period thereafter, if Mr. Stroup’s employment is involuntarily terminated without cause or he elects to terminate it for good reason, he will receive all amounts provided for in the event of a termination without cause before a change of control of the Company, except severance would be based on a multiple of 2.0 and he would have full vesting of all equity awards. Good reason includes an event where his duties are “negatively and materially changed.”

 

If the payments would constitute an “excess parachute payment” pursuant to IRC Section 280G and the present value of such payments is more than 110% of the threshold at which such amounts become an excess parachute payment, Mr. Stroup will be entitled to a gross-up payment to cover his excise tax liability. Should Mr. Stroup leave the Company for any reason, his employment agreement precludes him from

competing with the Company or soliciting any Company employees for 18 months (24 months during any two-year period following a change of control). His agreement also provides that he will be entitled to participate in all employee benefit plans of the Company available to senior executives. Mr. Stroup’s agreement is included as Exhibit 10.1 in the Company’s Form 8-K, filed on September 27, 2005, and should be read in its entirety for a complete description of his employment terms.

 

Other Employment Agreements

 

Mr. Benoist

 

In connection with his appointment, effective August 24, 2006, Mr. Benoist entered into an executive employment agreement with the Company. The agreement’s initial term is for five years from the effective date, subject to earlier termination based on disability, death, termination by the Company with or without cause, and voluntary termination by Mr. Benoist with or without good reason. Mr. Benoist’s annual base salary is $360,000 and is subject to annual review and increase; he is entitled to participate in the Company’s annual cash incentive plan and his annual target cash incentive is 85% of his base salary. For 2006, he received a pro-rata share (based on his employment period from the effective date through December 31) of the cash incentive he earned in 2006. The amount earned was based on actual Company and individual performance for 2006.

 

On the date of his appointment (August 24, 2006), in accordance with his employment agreement, Mr. Benoist was awarded a combination of RSUs, SARs and PSUs, valued at $300,000, $500,000 and $500,000, respectively, to induce him to accept employment with the Company. (See Long-Term Incentive Awards; 2006 Awards above for a summary of these awards.) Upon a change in control of the Company, all such inducement awards will immediately vest, any RSUs awarded with respect to inducement PSUs will immediately vest, and any RSUs to be awarded with respect to inducement PSUs will be fully vested immediately upon award. Pursuant to his agreement, Mr. Benoist was granted an equity award in February 2007 valued at 200% of his base salary, half of which was in SARs and the other half in PSUs. (See Long-Term Incentive Awards; 2007 Awards for a summary of these awards.) Pursuant to his agreement, any future awards will be determined in the discretion of the Compensation Committee. His agreement also entitles him to participate in all employee benefit plans of the Company available to senior executives and requires that he relocate to St. Louis within two years.

 

Following a change in control of the Company, if Mr. Benoist’s employment is terminated by the Company without cause or is voluntarily terminated by Mr. Benoist for good reason, in either case only in connection with such change in control or during the period commencing on the occurrence of the change in control and ending on the second anniversary thereof (the “Protection Period”), then the Company will pay and provide Mr. Benoist with certain payments and benefits, including a lump sum severance payment equal to the sum of his highest base salary during the Protection Period and his annual target cash incentive, multiplied by two; a pro-rated annual cash incentive through the date of termination based on target performance; and Company medical benefits for two years.

 

Outside the context of a change in control of the Company, if Mr. Benoist’s employment is terminated by the Company without cause, then the Company will pay and provide Mr. Benoist with certain payments and benefits, including severance payments in installments that equal in the aggregate the sum of his base salary and his annual target cash incentive; a pro-rated annual cash incentive through the date of termination based on actual performance; and Company medical benefits for 12 months.

 

Following a change in control of the Company, if Mr. Benoist’s employment is terminated by the Company without cause or is voluntarily terminated by Mr. Benoist for good reason, in either case only in connection with such change in control or during the Protection Period, all of Mr. Benoist’s equity awards (other than the inducement awards which would have already vested in accordance with the change in control trigger noted above) will immediately vest, and all unexercised stock appreciation rights will be exercisable for the lesser of one year after the date of termination or the exercise period stated in the award agreement.

 

Outside the context of a change in control of the Company, if Mr. Benoist’s employment is terminated by the Company without cause, or if Mr. Benoist’s employment terminates due to death or disability, then all of Mr. Benoist’s inducement awards will immediately vest, any RSUs awarded with respect to inducement PSUs will immediately vest, any RSUs to be awarded with respect to inducement PSUs will be fully vested immediately upon award following the

performance period, and Mr. Benoist’s inducement SSARs will be exercisable for the lesser of one year after the date of termination or the exercise period stated in the award agreement. All of Mr. Benoist’s other equity (non-inducement) awards will in such circumstances (outside the context of a change in control) be governed by the terms and conditions of the award agreements.

 

Mr. Benoist also agrees to certain confidentiality, nonsolicitation and noncompetition covenants that began on his appointment and extend for various periods beyond termination of his employment. Mr. Benoist’s agreement is included as Exhibit 10.3 in the Company’s 2006 third quarter Form 10-Q, filed on November 3, 2006, and should be read in its entirety for a complete description of his employment terms.

 

Messrs. Johnson, Rose and Bloomfield

 

Before the Merger, Belden Inc. entered into change of control agreements with Messrs. Johnson, Rose and Bloomfield. These agreements provide for, among other things, certain payments and benefits in the event of a “qualifying termination” of employment (i.e., a termination of employment by the executive officer for “good reason” or a termination of employment by Belden without “cause,” each as defined in the change of control agreements) within three years following a change of control. In the event of a qualifying termination, the executive will become entitled to outplacement services and health benefit continuation and a lump sum severance payment generally equal to the sum of: (i) 2 times the sum of the executive’s base salary and the highest annual cash incentive earned by the executive with respect to the two completed fiscal years preceding the date of termination and (ii) the amount necessary to make the executive whole with respect to any excise taxes imposed under the IRC with respect to excess parachute payments.

 

The Merger constituted a change in control and the Company, in connection with the Merger, assumed all of the obligations of Belden Inc. under each of these agreements. The agreements will expire on July 15, 2007. The form of Messrs. Rose, Johnson, and Bloomfield’s agreements are included as Exhibits 10.38 in the Company’s 2006 annual report on Form 10-K, and this should be read in its entirety for a complete description of their employment terms.

 

Mr. Sheehan

 

Effective July 16, 2006, Mr. Sheehan entered into an Executive Employment Agreement with the Company. The agreement reflects his continuing employment as Vice President, Operations of the Company and President of its Belden Americas division at an annual base salary of $368,000. His base salary will be subject to annual review by Mr. Stroup. Mr. Sheehan will be entitled to participate in the Company’s annual cash incentive plan, as well as all other employee benefit plans of the Company available to senior executives. His agreement’s initial term is for three years from its effective date, subject to earlier termination based on disability, death, termination by the Company with or without cause, and voluntary termination by Mr. Sheehan with or without good reason.

 

Following a change in control of the Company, if Mr. Sheehan’s employment is terminated by the Company without cause or is voluntarily terminated by him for good reason, in either case during the period commencing on the occurrence of the change in control and ending on the second anniversary thereof (the “Protection Period”), then the Company will pay and provide him with certain payments and benefits, including a lump sum severance payment equal to the sum of his highest base salary during the Protection Period and his annual target cash incentive, multiplied by two; a pro-rated annual cash incentive through the date of termination based on target performance; and Company medical benefits for two years.

 

Outside the context of a change in control of the Company, if his employment is terminated by the Company without cause, then the Company will pay and provide him with certain payments and benefits, including severance payments in installments that equal in the aggregate the sum of his base salary and his annual target cash incentive; a pro-rated annual cash incentive through the date of termination based on actual performance; and Company medical benefits for 12 months.

 

All of his stock options, stock appreciation rights, restricted stock units, performance share units and any other long-term incentive awards will remain in effect in accordance with their terms and conditions (including with respect to the consequences of a termination of employment or a change in control) and are not amended or affected by his employment agreement. He also agrees to certain confidentiality, nonsolicitation and noncompetition covenants that begin on the effective date and extend for various periods beyond termination of his employment.

 

Mr. Sheehan’s agreement is included as Exhibit 10.1 in the Company’s 2006 third quarter Form 10-Q, filed on November 3, 2006, and it should be read in its entirety for a complete description of the employment terms.

 

Mr. Matz

 

In connection with leaving the Company, effective February 6, 2006, Mr. Matz, Vice President of Operations, entered into a separation agreement with the Company. The agreement confirmed his entitlements arising out of his employment and separation from the Company. Pursuant to the separation agreement, among other things, Mr. Matz received severance of $1,041,800 (an amount equal to two times the sum of his base salary and 2004 cash incentive) and a 2005 cash incentive of $108,500. He also became vested in 12,000 restricted shares of Company stock and had the right to exercise his stock options until the earlier of February 7, 2007 and the expiration date of the applicable stock option award. The vesting of his March 30, 2005 stock option grant was accelerated. Mr. Matz’s separation agreement, non-compete covenant and general release of claims are included as Exhibits in the Company’s Form 8-K, filed on February 10, 2006, and should be read in their entirety for a complete description of his separation arrangements.

 

Quantitative Disclosure of Employment Agreements

 

Information regarding applicable payments under the agreements the Company has with each of the named executive officers is provided below under the heading Payments upon Termination or Change of Control.

 

Indemnification Agreements

 

Each of the named executive officers has entered into an indemnification agreement with the Company. The agreement provides, in essence, for indemnification against expenses, judgments, fines and settlements in connection with covered threatened or pending litigation, inquiries or investigations that arise out of his acts or omissions in his capacity as an officer of the Company.