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. _____)
Filed by the Registrant |X|
Filed
by a Party other than the Registrant |_|
Check the appropriate box:
|_|
Preliminary Proxy Statement
|_| Confidential, for
Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_|
Definitive Additional Materials
|_| Soliciting Material
Pursuant to Rule 14a-11(c) or Rule 14a-12
MASTEC, INC.
(Name of Registrant
as Specified in Its Charter)
N/A
(Name of Person(s)
Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the
appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
| 1) |
Title of each class of securities to which transaction applies: |
| 2) |
Aggregate number of securities to which transaction applies: |
| 3) |
Per unit price of other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined): |
| 4) |
Proposed maximum aggregate value of transaction: |
|_| Fee paid previously with
preliminary materials.
|_| Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of
its filing:
| 1) |
Amount
Previously Paid: |
| 2) |
Form,
Schedule or Registration Statement No.: |
[GRAPHIC OMITTED]
NOTICE OF 2003 ANNUAL
MEETING OF SHAREHOLDERS
To our shareholders:
The
2003 Annual Meeting of Shareholders of MasTec, Inc. will be held on Friday, May 30, 2003,
at 9:30 a.m., local time, at our corporate headquarters located at 3155 N.W.
77th Avenue, Miami, Florida 33122-1205. At the Annual Meeting, shareholders
will be asked to vote on the following proposals:
1.
The election of three directors as the Class II directors to serve until the
2006 Annual Meeting of Shareholders;
2.
The approval of the MasTec, Inc. 2003 Employee Stock Incentive Plan;
3.
The approval of the MasTec, Inc. 2003 Stock Incentive Plan for Non-Employees;
and
4.
Such other business as may properly be brought before the Annual Meeting, and at
any adjournments or postponements of the Annual Meeting.
The
proposals are discussed more fully in the Proxy Statement accompanying this notice.
Shareholders of record at the close of business on March 21, 2003 are entitled to notice
of and to vote at the Annual Meeting and at any adjournments or postponements of the
Annual Meeting.
All
shareholders are cordially invited to attend the Annual Meeting in person. However, to
ensure that your stock is represented at the meeting in case you are not personally
present, you are requested to mark, sign, date and return the enclosed proxy card as
promptly as possible in the envelope provided. Return of the proxy card will not prevent
you from voting in person at the meeting should you decide to do so. As an alternative,
all shareholders are encouraged to vote by telephone or online and enroll for electronic
delivery of future proxy and other materials. Please go to www.mastec.com under
Investor Relations or follow the instructions accompanying your proxy card for more
information and enrollment.
By Order of the Board of
Directors,
/s/ Austin J. Shanfelter
Austin J. Shanfelter, President and Chief Executive Officer
Miami, Florida April 25, 2003
We urge each shareholder to
promptly sign and return the enclosed proxy card or to use telephone or Internet voting as
described in the proxy statement.
[GRAPHIC OMITTED]
April 25, 2003
PROXY STATEMENT
2003 ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD MAY 30, 2003
The
Board of Directors of MasTec, Inc. is furnishing this Proxy Statement to solicit proxies
on its behalf to be voted at the 2003 Annual Meeting of shareholders of MasTec to be held
at our corporate headquarters located at 3155 N.W. 77th Avenue, Miami, Florida 33122-1205,
on Friday, May 30, 2003, at 9:30 a.m. local time. At the Annual Meeting, our shareholders
will be asked to vote on three proposals, which are described in greater detail in this
Proxy Statement.
This
Proxy Statement and accompanying proxy and the Annual Report on Form 10-K containing the
financial statements for the year ended December 31, 2002 are first being mailed or
transmitted electronically on or about April 25, 2003 to shareholders of record at the
close of business on March 21, 2003. All properly executed written proxies and all
properly completed proxies submitted by telephone or via the internet will be voted at the
Annual Meeting in accordance with the directions given in the proxy, unless the proxy is
revoked before the meeting.
Only
holders of record of shares of common stock at the close of business on March 21, 2003 are
entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement
of the meeting.
VOTING
General
The
securities that can be voted at the Annual Meeting consist of our common stock, with each
share entitling its owner to one vote on all matters brought before the Annual Meeting.
Only shareholders of record at the close of business on March 21, 2003 are entitled to
vote at the Annual Meeting. On the record date, 48,035,674 shares of common stock were
outstanding and eligible to be voted at the Annual Meeting and there were 2,152 record
shareholders.
Proxies
If
you are not present in person at the Annual Meeting, your shares can be voted only if
represented by proxy or if you vote telephonically or online. The shares represented by
your proxy will be voted in accordance with your instructions only if you properly
complete, sign and return the accompanying proxy card to our Secretary prior to the Annual
Meeting or vote your ballot telephonically or online.
Shareholders
may be eligible to vote electronically through the Internet or by telephone. Please go to
www.mastec.com under Investor Relations or follow the instructions accompanying
your proxy card for more information on voting by telephone or online and registering to
receive future proxy and other materials online.
Shareholders
not wishing to vote telephonically or electronically through the Internet or whose proxy
card does not reference telephone or online voting information should complete and return
the enclosed paper proxy card. Signing and returning the proxy card or submitting the
proxy via telephone or online does not affect the right to vote in person at the Annual
Meeting. If no choice is specified on a returned proxy card, the shares represented by the
proxy will be voted for the election of the three nominees for director, in favor of the
approval of the MasTec 2003 Employee Stock Incentive Plan (the “Employee Plan”),
in favor of approval of the MasTec 2003 Stock Incentive Plan for Non-Employees (the
“Non-Employee Plan”), and in the discretion of the holder of the proxy on all
other matters that may properly come before the Annual Meeting.
Quorum and Vote Required
The
presence, in person or by proxy, of a majority of the shares of common stock entitled to
vote is necessary to constitute a quorum at the Annual Meeting.
If
a quorum is present, directors will be elected pursuant to Proposal 1 by the affirmative
vote of a plurality of the shares of common stock voting in person or represented by proxy
at the Annual Meeting, which means that the three nominees must receive the most
affirmative votes to be elected to the Board of Directors. In voting for Proposal 1 to
elect nominees to the Board of Directors, shareholders may vote in favor of all the
nominees or any individual nominee or withhold their votes as to all the nominees or any
individual nominee. In accordance with Florida law, votes that are withheld will be
counted in determining whether a quorum is present but will have no other effect on the
election of directors. If a quorum is present, for Proposals 2 and 3 involving the
approval of the Employee Plan and the Non-Employee Plan, you may vote in favor of each
proposal or against each proposal or may abstain from voting. The vote required to approve
each of Proposals 2 and 3 is governed by Florida law and is the affirmative vote of the
holders of a majority of the shares of common stock represented and entitled to vote at
the Annual Meeting. As a result, abstentions will be considered in determining whether a
quorum is present and the number of votes required to obtain the necessary majority vote
and therefore, will have the same legal effect as voting against each proposal.
As
of March 21, 2003 (the record date for the Annual Meeting), our directors and executive
officers beneficially owned or controlled approximately 24,396,266 shares of our common
stock (2,420,993 of which are shares beneficially owned through options exercisable within
60 days), constituting approximately 51% of the outstanding common stock. We believe that
these holders will vote their shares of common stock in favor of the nominees for
Class II directors, in favor of the Employee Plan and in favor of the Non-Employee
Plan. Therefore, the presence of a quorum and the election of the director nominees and
approval of the Employee and Non-Employee Plans are reasonably assured.
Revoking Your Proxy
A
proxy given pursuant to this solicitation may be revoked at any time prior to its exercise
(1) by written notice delivered to our Secretary at 3155 N.W. 77th Avenue,
Miami, Florida 33122-1205, (2) by executing and delivering to our Secretary a proxy with a
later date, (3) by attending the Annual Meeting and voting in person or (4) by
submitting a telephonic or electronic vote with a later date. With respect to telephonic
or electronic votes, the last vote transmitted will be the vote counted. Attendance at the
Annual Meeting will not, in itself, constitute revocation of a proxy.
If
you hold shares of our common stock in street name and wish to vote in person at the
meeting, you must present a recent proxy validating your ownership of the shares of common
stock intended to be voted from your bank, broker or other nominee that holds of record
your shares of common stock and proof of identity for entrance to the meeting.
Costs of this Proxy
In
addition to soliciting proxies through the mail, we may solicit proxies through our
directors, officers and employees in person and by telephone or facsimile. Brokerage
firms, nominees, custodians and fiduciaries also may be requested to forward proxy
materials to the beneficial owners of shares held of record by them. All expenses incurred
in connection with the solicitation of proxies will be borne by MasTec.
Voting by Participants
in the MasTec 401(k) Retirement Plan
Separate
proxy cards are being transmitted to all persons who have shares of our common stock
allocated to their accounts as participants or beneficiaries under the MasTec, Inc. 401(k)
Retirement Plan (the “401(k) Plan”). These proxy cards appoint Wells Fargo Bank,
who acts as Trustee for the 401(k) Plan, to vote the shares held for the accounts of the
participants or their beneficiaries in the 401(k) Plan in accordance with the instructions
noted thereon. In the event no proxy card is received from a participant or beneficiary
or a proxy card is received without instructions, or in the event shares are not yet
allocated to any participant’s account, the Trustee will vote the shares of stock of
the participant and any unallocated shares “FOR” each of Proposals 1, 2 and 3 in
this proxy statement. The Trustee does not know of any other business to be brought
before the Annual Meeting but it is intended that, if any other matters properly come
before the Annual Meeting, the Trustee as proxy will vote upon such matters according to
its judgment.
Any
401(k) Plan participant or beneficiary who executes and delivers a proxy card to the
Trustee may revoke it at any time prior to its use by executing and delivering to the
Trustee a duly executed proxy card bearing a later date or by giving written notice to the
Trustee at the following address: Wells Fargo Bank West, National Association, Attention:
Leslieann Gallagher and Andrea Stellish — C7301-027, 1740 Broadway, Denver, Colorado
80274. Under the terms of the 401(k) Plan, only the Trustee of the 401(k) Plan can vote
the shares allocated to the accounts of participants, even if such participants or their
beneficiaries attend the Annual Meeting in person.
PROPOSAL 1
ELECTION OF DIRECTORS
The
Nominating and Corporate Governance Committee of the Board of Directors has nominated each
of Austin J. Shanfelter, William N. Shiebler and John Van Heuvelen to stand for
reelection at the Annual Meeting, to hold office until the 2006 Annual Meeting and until
their respective successor is elected and qualified. Their current term as Class II
directors expires at the 2003 Annual Meeting. The Board of Directors currently is composed
of nine directors elected in three classes, with three Class I, three Class II, and three
Class III directors. Directors in each class hold office for three-year terms. The terms
of the classes are staggered so that the term of only one class terminates each year. The
terms of the current Class II directors expire at the Annual Meeting; if elected, the
nominees for Class II directors will serve until the annual shareholders meeting in 2006.
The terms of the Class III directors expire at the annual meeting of shareholders in 2004
and the terms of the Class I directors expire at the annual meeting of shareholders in
2005.
Additional
background information regarding the nominees for election is provided below. MasTec has
no reason to believe that any of these nominees will refuse or be unable to serve as a
director if elected; however, if any of the nominees is unable to serve, each proxy that
does not direct otherwise will be voted for a substitute nominee designated by the Board
of Directors.
The
Board of Directors recommends that you vote FOR each of the nominees named above.
Unless otherwise indicated, the accompanying form of proxy will be voted FOR the
election of each of the nominees for election as a Class II director named above.
Information as to
Nominees and Other Directors
Nominees for Class II
Directors
Austin
J. Shanfelter, 45, has been our Chief Executive Officer and President and a
member of the Board of Directors since August 2001. From February 2000 until August 2001,
Mr. Shanfelter was our Chief Operating Officer. Prior to being named Chief Operating
Officer, he served as President of one of our service operations from January 1997. Mr.
Shanfelter has been in the telecommunications infrastructure industry since 1981. Mr.
Shanfelter has been a member of the Board of Directors of the Power and Communications
Contractors Association (PCCA), an industry trade group, since 1993. He is also the
Chairman of the Cable Television Contractors Council of the PCCA. Mr. Shanfelter has also
been a member of the Society of Cable Television Engineers since 1982 and the National
Cable Television Association since 1991.
William
N. Shiebler, 61, has been a member of the Board of Directors since June 1999. Since
March 2002, Mr. Shiebler has been a Managing Director of Deutsche Bank and Chief Executive
Officer of the Americas for Deutsche Asset Management. Mr. Shiebler was a Senior Managing
Director of Putnam Investments, a Boston based investment management firm, and President
of Putnam Mutual Funds from 1990 until 2000. Before joining Putnam, he was President and
Chief Operating Officer of Dean Witter Reynolds Intercapital, the investment management
division of Dean Witter Reynolds, Inc., and Executive Vice President and director of Dean
Witter Reynolds, Inc. Mr. Shiebler is a member of the Board of Directors of Oxigene, Inc.
and Attensity, Inc. Mr. Shiebler also is a director or trustee of a number of private
companies and not-for-profit charitable institutions.
John
Van Heuvelen, 56, has been a member of the Board of Directors since June 2002. Mr. Van
Heuvelen spent 13 years with Morgan Stanley and Dean Witter Reynolds in various executive
positions in the mutual fund, unit investment trust and municipal bond divisions before
serving as president of Morgan Stanley Dean Witter Trust Company from 1993 until 1999.
Since 1999, Mr. Van Heuvelen has been a private equity investor based in Denver, Colorado.
His investment activities have included private telecom and technology firms, where he
still remains active.
Class III Directors
Joseph
P. Kennedy II, 50, has been a member of the Board of Directors since October 1999. Mr.
Kennedy is Chairman and President of Citizens Energy Corporation, a not-for-profit energy
provider that he founded in 1979, as well as Chairman and/or President of a number of
related companies. Mr. Kennedy served six terms in the U.S. House of Representatives
during which time he was a member of the House Banking and Financial Services Committee, a
senior member of the House Veteran’s Affairs Committee and the co-chair of the Older
American Caucus. He also served as the ranking Democrat on the Housing and Community
Opportunity Subcommittee.
Arthur
B. Laffer, 62, has been a member of the Board of Directors since
March 1994. Dr. Laffer has been Chairman of Laffer Associates, an economic research and
financial consulting firm, since 1979; Chief Executive Officer, Laffer Advisors Inc., a
broker-dealer, since 1981; and Chief Executive Officer, Laffer Investments, an investment
management firm, since 1999. Dr. Laffer is a director of Nicholas Applegate Growth Fund,
Oxigene, Inc., Vivendi Environment and Petco Animal Supplies.
Jose
S. Sorzano, 62, has been a member of the Board of Directors since October 1994. Mr.
Sorzano has been Chairman of The Austin Group, Inc., an international corporate consulting
firm, since 1989, a director of Ultra-Scan Corp., a biometric privately held company, and
a director for CIPE, the Center for International Private Enterprise. Mr. Sorzano was also
Special Assistant to President Reagan for National Security Affairs from 1987 to 1988;
Associate Professor of Government, Georgetown University, from 1969 to 1987; and
Ambassador and U.S. Deputy to the United Nations from 1983 to 1985.
Class I Directors
Jorge
Mas, 40, has been our Chairman of the Board of Directors since January 1998 and a
director since March 1994. From March 1994 to October 1999, Mr. Mas was our Chief
Executive Officer. In addition, Mr. Mas is the Chairman of the Board of Directors of Neff
Corp. and is a member of the Board of Directors of Nova Southeastern University. Mr. Mas
has been Chairman of the Board of the Cuban American National Foundation, Inc., a
not-for-profit corporation, since July 1999. Mr. Mas is the brother of Jose Mas.
Jose
R. Mas, 32, has been a member of the Board of Directors since August 2001. Mr. Mas has
been our Executive Vice President – Business Development since August 2001. Mr. Mas
has served in a number of capacities at the operating level with us since 1991, most
recently as President of one of our service offerings from May 1999 to August 2001. He is
also a member of the Board of Directors of Neff Corp. Mr. Mas is the brother of Jorge Mas,
MasTec’s Chairman of the Board.
Julia
L. Johnson, 40, has been a member of the Board of Directors since February
2002. From January 2001 to the present, Ms. Johnson has been President of
NetCommunications, L.L.C., a strategy consulting firm specializing in the communications,
energy, and information technology public policy arenas. Prior to founding
NetCommunications, Ms. Johnson was Vice President of Marketing for MILCOM Technologies,
Inc., a military technology commercialization company, from March 2000 to August 2001.
From November 2001 to the present, Ms. Johnson has also served as founder and Chairman of
the Emerging Issues Policy Forum, a public policy organization established to promote open
public policy discussions on key market, industrial and regulatory issues. Ms. Johnson
served on the Florida Public Service Commission from January 1992 until November 1999,
serving as chairwoman from January 1997 to January 1999. Ms. Johnson also chaired
Florida’s Information Service Technology Development Task Force, which advised
Florida Governor Jeb Bush on information technology policy and related legislative issues,
from November 1999 to July 2001. In June 2001, Governor Bush appointed Ms. Johnson to the
Florida Board of Education for a four-year term. She also serves on the Board of Advisors
of GridOne, an independent corporation related to the transmission assets of Entergy, and
currently serves on the University of Florida Foundation Board of Trustees.
OTHER INFORMATION
REGARDING THE BOARD OF DIRECTORS
Board and Committee
Meetings
The
Board of Directors conducts its business through meetings of the full Board and through
committees of the Board, consisting of the Executive Committee, the Audit Committee, the
Compensation Committee, and the Nominating and Corporate Governance Committee. The Board
and its committees also act by written consent. During 2002, the Board of Directors met on
three occasions. During 2002, each of the current directors attended 100% of the Board
meetings and the meetings of each committee on which such director serves.
The
Executive Committee is composed of Jorge Mas, who serves as Chairman, Austin J.
Shanfelter, Arthur B. Laffer and William N. Shiebler. The principal function of the
Executive Committee is to act for the Board of Directors when action is required between
full Board meetings. During 2002, the Executive Committee met on one occasion.
The
Audit Committee is composed of Arthur B. Laffer, who serves as Chairman, William N.
Shiebler and John Van Heuvelen, all of whom are independent directors. The Audit Committee
oversees MasTec’s financial reporting and compliance program on behalf of the Board
of Directors. The Audit Committee also is required to approve all audit and nonaudit
services provided by our independent auditor, including the scope of and fees paid to the
independent auditor. MasTec’s board of directors has adopted a charter that sets
forth the responsibilities of the Audit Committee. During 2002, the Audit Committee met on
four occasions. Please refer to the section entitled “Audit Committee and Audit
Related Information” for further information.
The
Compensation Committee is composed of Arthur B. Laffer, who serves as Chairman, William N.
Shiebler and Jose S. Sorzano, all of whom are independent directors. The Compensation
Committee is charged with determining compensation for the Chief Executive Officer and the
other senior management of MasTec, establishing salaries, bonuses and other compensation
for MasTec’s executive and operating officers, administering MasTec’s stock
option, stock purchase and incentive compensation plans and recommending to the Board of
Directors changes to the plans. MasTec’s board of directors has adopted a charter
that sets forth the responsibilities of the Compensation Committee. During 2002, the
Compensation Committee met on two occasions.
The
Nominating and Corporate Governance Committee is composed of Jorge Mas, who serves as
Chairman, Julia Johnson, and Joseph P. Kennedy II. The Nominating and Corporate Governance
Committee is responsible for developing qualifications for members of the Board of
Directors, recommending to the Board of Directors candidates for election to the Board of
Directors and evaluating the effectiveness and performance of the Board of Directors. The
Committee will consider candidates recommended by the shareholders pursuant to written
applications submitted to our Corporate Secretary in accordance with our bylaws and Rule
14a-4 of the Securities Exchange Act of 1934, as amended. Shareholder proposals for
nominees should include biographical and other related information regarding the proposed
nominee sufficient to comply with applicable disclosure rules and a statement from the
shareholder as to the qualifications and willingness of the candidate to serve on our
Board of Directors. The Nominating and Corporate Governance Committee also develops,
implements and monitors MasTec’s corporate governance principles and its code of
business conduct and ethics; monitors and safeguards the board’s independence; and
annually undertakes performance evaluations of the board committees and the full board of
directors. MasTec’s board of directors has adopted a charter that sets forth the
responsibilities of the Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee did not meet during 2002, but did take action through
written consents.
The
Board of Directors has adopted a written Charter for each of its operating committees
except for the Executive Committee. The full text of each Charter, the Corporate
Governance Guidelines and MasTec’s Code of Conduct are available on MasTec’s
website located at www.mastec.com.
Compensation of Directors
During
the last five years, MasTec has not paid its directors an annual cash retainer or other
fees for serving as a director or attending meetings, however, MasTec may consider paying
such retainers and fees in the future. Directors are reimbursed for their reasonable
expenses in attending Board and committee meetings. Under MasTec’s current Stock
Option Plan for Non-Employee Directors, our non-employee directors are eligible to receive
options to purchase shares of common stock. The Compensation Committee sets the amount,
exercise price and term of the options granted under this plan. The following directors
received options to purchase common stock in the amounts indicated when elected to the
Board in 2002: Julia L. Johnson, 45,000 and John Van Heuvelen, 45,000. All options expire
ten years from the date of grant and vest annually over three years. All options were
granted at an exercise price equal to the fair market value of MasTec’s common stock
based on the mean between the high and low sale prices of our common stock on the New York
Stock Exchange on the date of grant. Please see “Proposal 3 – Approval of the
Adoption of the MasTec, Inc. 2003 Stock Incentive Plan for Non-Employees” for
information regarding formula grants of stock options to non-employee directors under the
proposed plan.
SECURITY OWNERSHIP
Directors and Executive
Officers
The following
table sets forth the beneficial ownership as of March 21, 2003 of common stock by (i) each
director of MasTec and each Named Executive Officer (as defined under the caption
Executive Compensation below), and (ii) all executive officers and directors of MasTec as
a group. Unless otherwise indicated, each named shareholder has sole voting and investment
power with respect to the shares beneficially owned by the shareholder.
|
Common Stock Beneficially Owned
|
| Name |
Number
of Shares
|
Percent of
Common Stock
Outstanding
|
| Jorge Mas |
|
21,364,788 |
(1) |
44.5 |
% |
| Chairman of the Board | |
| Jose R. Mas | |
1,439,105 |
(2) |
3.0 | % |
| Vice Chairman of the Board and Executive Vice President | |
| Julia L. Johnson | |
15,000 |
(3) |
* | |
| Director | |
| Joseph P. Kennedy II | |
129,167 |
(3) |
* | |
| Director | |
| Arthur B. Laffer | |
456,820 |
(3) |
1.0 | % |
| Director | |
| William N. Shiebler | |
159,425 |
(3) |
* | |
| Director | |
| Jose S. Sorzano | |
116,170 |
(3) |
* | |
| Director | |
| John Van Heuvelen | |
0 |
|
-- | |
| Director | |
| Austin J. Shanfelter | |
545,072 |
(3) |
1.1 | % |
| Director, President and Chief Executive Officer | |
| Donald P. Weinstein | |
20,000 |
(3) |
* | |
| Executive Vice President and Chief Financial Officer | |
| Eric J. Tveter | |
9,642 |
|
* | |
| Executive Vice President and Chief Operations Officer | |
| Jose M. Sariego | |
141,077 |
(3) |
* | |
| Former Senior Vice President and General Counsel | |
| All executive officers and | |
24,396,266 |
(3) |
50.8 | % |
| directors as a group (12 persons) | |
* Represents less than one half of
one percent of the outstanding shares of MasTec common stock.
| |
(1) |
Includes
11,273,716 shares owned directly by the Jorge L. Mas Canosa Holdings I Limited
Partnership, a Texas limited partnership (the "Family Partnership"), and
indirectly by Jorge Mas, as the president and sole director of Jorge L. Mas
Canosa Holdings Corporation, a Texas corporation, the sole general partner of
the Family Partnership; and 8,380,966 shares owned of record by Jorge Mas
Holdings I Limited Partnership, a Texas limited partnership ("Jorge Mas Holdings").
The sole general partner of Jorge Mas Holdings is Jorge Mas Holdings
Corporation, a Texas corporation that is wholly-owned by Mr. Jorge Mas.
Also includes 282,670 shares owned of record by the Mas Family Foundation, Inc.,
a Florida not-for-profit corporation (the "Family Foundation") of which
Mr. Jorge Mas is the president; 1,084,291 shares covered by options
exercisable within 60 days of March 21, 2003; and 343,145 shares owned of
record individually. Mr. Jorge Mas disclaims beneficial ownership of the
shares held by the Family Partnership except to the extent of his pecuniary interest
therein, and disclaims beneficial ownership of all of the shares owned by the
Family Foundation. The business mailing address for Mr. Jorge Mas is c/o
MasTec, Inc., 3155 N.W. 77th Avenue, Miami, Florida 33122-1205. |
| |
(2) |
Includes
1,114,251 shares owned of record by Jose Ramon Mas Holdings I Limited Partnership, a
Texas limited partnership ("Jose Mas Holdings"). The sole general partner
of Jose Mas Holdings is Jose Ramon Mas Holdings Corporation, a Texas
corporation that is wholly owned by Mr. Jose Mas. Also includes 138,096
shares covered by options exercisable within 60 days of March 21, 2003; and
186,758 shares owned of record individually. |
| |
(3) |
Includes
shares of common stock that may be issued upon the exercise of stock options that are
exercisable within 60 days of March 21, 2003 as follows: Julia L. Johnson,
15,000; Joseph P. Kennedy II, 129,167 shares; Arthur B. Laffer, 266,667 shares;
William N. Shiebler, 139,167 shares; Jose S. Sorzano, 113,917 shares; Austin J.
Shanfelter, 403,379 shares; Donald P. Weinstein 10,000 shares; and Jose M. Sariego,
121,309 shares. |
Section 16(a) Beneficial
Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, and regulations of the
Securities and Exchange Commission thereunder require that MasTec's directors,
executive officers and persons who own more than 10% of MasTec's common stock, as well
as certain affiliates of such persons, to file initial reports of their ownership of
MasTec's common stock and subsequent reports of changes in such ownership with the
Securities and Exchange Commission. Directors, executive officers and persons owning
more than 10% of MasTec's common stock are required by Securities and Exchange
Commission regulations to file with the Securities and Exchange Commission and the New
York Stock Exchange reports of their respective ownership of common stock and to
furnish MasTec with copies of all Section 16(a) reports they file. Based solely on a
review of the copies of such reports received, MasTec believes that during the year
ended December 31, 2002, directors, executive officers and owners of more than 10% of
the common stock timely complied with all applicable filing requirements.
Certain Principal
Shareholders
As
of December 31, 2002, in addition to information provided for directors and executive
officers, MasTec was aware of the following shareholder who owned beneficially more
than 5% of MasTec's common stock:
|
Common Stock Beneficially Owned
|
| Name |
Number
of Shares
|
Percent of
Common Stock
Outstanding
|
| Mellon Financial Corporation (1) |
|
3,958,622 |
|
8 |
.24% |
| |
(1) |
Mellon Financial Corporation and certain of its direct and indirect subsidiaries
(“Mellon”) filed a Schedule 13G/A dated January 15, 2003 with the
Securities and Exchange Commission reporting beneficial ownership of more than
5% of MasTec’s common stock. As reported in the Schedule 13G/A, Mellon
possesses sole voting power with respect to 2,791,632 shares and possesses
shared voting power with respect to 501,400 shares. As reported in the Schedule
13G/A, Mellon possesses sole dispositive power with respect to 3,957,191 and
shared dispositive power with respect to 1,431 shares. Mellon’s address is
One Mellon Center, 500 Grant Street, Pittsburgh, Pennsylvania 15258-0001. |
EXECUTIVE COMPENSATION
Summary Compensation
Table
The
following table summarizes all compensation paid to our Chief Executive Officer and the
four other most highly compensated executive officers of MasTec whose total salary and
bonus exceeded $100,000 (together, the “Named Executive Officers”) for services
rendered in all capacities to MasTec and its subsidiaries for the years ended December 31,
2002, 2001 and 2000.
|
Annual Compensation
|
Long Term Compensation
|
Name and
Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Securities
Underlying Options(4)
|
All Other
Compensation($)
|
| Austin J. Shanfelter |
|
2002 |
|
601,925 |
|
100,000 |
(2) |
150,000 |
(5) |
619,645 |
(9) |
| President and Chief | |
2001 | |
391,996 |
|
-- |
|
450,000 |
(6) |
-- |
|
| Executive Officer(1) | |
2000 | |
213,657 |
|
300,000 |
(3) |
150,000 |
|
-- |
|
| Donald P. Weinstein | |
2002 | |
258,577 |
|
100,000 |
(2) |
30,000 |
(8) |
-- |
|
| Executive Vice President | |
2001 | |
-- |
|
-- |
|
-- |
|
-- |
|
| and Chief Financial | |
2000 | |
-- |
|
-- |
|
-- |
|
-- |
|
| Officer(1) | |
| Jose R. Mas | |
2002 | |
235,062 |
|
-- |
|
-- |
|
1,627 |
(10) |
| Vice Chairman of the | |
2001 | |
157,197 |
|
-- |
|
125,000 |
(7) |
1,627 |
(10) |
| Board and Executive Vice | |
2000 | |
-- |
|
-- |
|
-- |
|
-- |
|
| President(1) | |
| Eric J. Tveter | |
2002 | |
126,923 |
|
68,750 |
(2) |
50,000 |
(8) |
-- |
|
| Executive Vice President | |
2001 | |
-- |
|
-- |
|
-- |
|
-- |
|
| and Chief Operations | |
2000 | |
-- |
|
-- |
|
-- |
|
-- |
|
| Officer(1) | |
| Jose M. Sariego | |
2002 | |
245,611 |
|
-- |
|
-- |
|
1,060 |
(10) |
| Former Senior Vice | |
2001 | |
239,770 |
|
-- |
|
13,940 |
|
993 |
(10) |
| President and General | |
2000 | |
224,038 |
|
200,000 |
(3) |
17,418 |
|
888 |
(10) |
| Counsel (1) | |
| |
(1) |
Mr. Shanfelter became President and Chief Executive Officer in August 2001. Mr.
Mas became Vice Chairman of the Board and Executive Vice President in August
2001. Mr. Weinstein became Executive Vice President and Chief Financial Officer
in January 2002. Mr. Tveter became Executive Vice President and Chief Operations
Officer in July 2002. Mr. Sariego resigned as Senior Vice President and General
Counsel as of December 31, 2002. |
| |
(2) |
The bonus paid to Mr. Shanfelter in 2002 was paid in connection with his amended
employment agreement. The bonuses paid to Messrs. Weinstein and Tveter in 2002
were paid as inducements for employment and pursuant to their respective
employment agreements. |
| |
(3) |
The bonus amounts indicated for 2000 were awarded in the beginning of 2001 for
performance during the year ending December 31, 2000. $30,000 of Jose
Sariego’s 2000 bonus was awarded in stock valued at fair market value on
the date of the grant. |
| |
(4) |
The options were granted in the year indicated based on performance in the
previous year unless otherwise noted. Option amounts granted prior to June 19,
2000 have been adjusted for a three-for-two stock split in the form of a stock
dividend effective June 19, 2000. |
| |
(5) |
Represents options to acquire 150,000 shares of our common stock that was
granted to Mr. Shanfelter in connection with revising his employment agreement. |
| |
(6) |
Represents options to acquire 300,000 shares of our common stock that were
granted to Mr. Shanfelter for his increased responsibilities in connection with
becoming President and Chief Executive Officer in August 2001 and options to
acquire 150,000 shares of our common stock granted for performance during the
year ending December 31, 2000 that were awarded in early 2001. |
| |
(7) |
Represents options to acquire 125,000 shares of our common stock that were
granted to Mr. Mas for his increased responsibilities in connection with
becoming Vice Chairman of the Board and Executive Vice President in August 2001. |
| |
(8) |
Represents options for Mr. Tveter to acquire 50,000 shares of our common stock
and Mr. Weinstein to acquire 30,000 of our common stock in connection with their
respective employment agreements. |
| |
(9) |
Includes premiums paid by MasTec for insurance on the lives of Mr. Shanfelter
and members of his family and interest owed to Mr. Shanfelter. |
| |
(10) |
Represents premiums paid by MasTec for the term portion of life insurance on the
lives of the individuals referenced. |
Option Grants in Last
Fiscal Year
The
following table provides information with respect to options to purchase common stock
granted to the Named Executive Officers for the year ended December 31, 2002:
|
|
Individual Grants
|
|
|
|
|
|
|
|
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Option Term (3)
|
| Name
| Number of Shares Underlying Options Granted |
Percent of Total Options granted to Employees for Fiscal Year(1) |
Exercise Price ($/sh)(2) |
Expiration Date |
5% |
10% |
| Austin J. Shanfelter |
|
|
|
150,000 |
|
|
17.8% |
|
$ |
3.34 |
|
|
8/15/09 |
|
$ |
203,957 |
|
$ |
475,307 |
|
| Donald P. Weinstein | | |
| 30,000 |
|
| 3.6% |
|
$ | 7.07 |
|
| 01/02/09 | |
$ | 86,346 |
|
$ | 201,223 |
|
| Jose R. Mas | | |
| -- |
|
| -- |
|
| -- |
|
| -- | |
| -- |
|
| -- |
|
| Eric J. Tveter | | |
| 50,000 |
|
| 5.9% |
|
$ | 6.14 |
|
| 07/15/09 | |
$ | 124,980 |
|
$ | 291,256 |
|
| Jose M. Sariego | | |
| -- |
|
| -- |
|
| -- |
|
| | |
| -- |
|
| -- |
|
| |
(1) |
Based on options to purchase an aggregate of 843,500 shares of common stock
granted to employees in 2002. |
| |
(2) |
All options were granted at an exercise price equal to fair market value based
on the mean between the high and low sale prices of our common stock on the New
York Stock Exchange on the date of grant. |
| |
(3) |
Amounts represent hypothetical gains assuming exercise at the end of the option
term and assuming rates of stock price appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their expiration
date. The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission. These assumptions are not intended to
forecast future appreciation of our stock price. The potential realizable value
computation does not take into account federal or state income tax consequences
of option exercises or sales of appreciated stock. The actual gains, if any, on
the stock option exercises will depend on the future performance of our common
stock, the optionee’s continued employment through applicable vesting
periods and the date on which the options are exercised and the underlying
shares are sold. The closing price of our common stock on March 21, 2003
was $1.60 per share. |
Aggregate Option
Exercises and Year-End Option Values
The
following table sets forth information with respect to each exercise of stock options
during the year ended December 31, 2002 by the Named Executive Officers and the value at
December 31, 2002 of unexercised stock options held by the Named Executive Officers.
|
Shares
Acquired on Exercise
(#)
|
Value
Realized
($)
|
Number of Shares Underlying
Unexercised Options at
December 31, 2002
Exercisable/Unexercisable
(#)
|
Value of Unexercised in
the Money Options at
December 31, 2002(1)
Exercisable/Unexercisable
($)
|
|
|
|
|
|
| Austin J. Shanfelter |
|
0 |
|
0 |
|
300,829/505,100 |
|
0/0 |
|
| Donald P. Weinstein | |
0 |
|
0 |
|
0/30,000 | |
0/0 | |
| Jose R. Mas | |
0 |
|
0 |
|
138,096/83,333 | |
0/0 | |
| Eric J. Tveter | |
0 |
|
0 |
|
0/50,000 | |
0/0 | |
| Jose M. Sariego | |
0 |
|
0 |
|
121,309/0 | |
0/0 | |
| |
(1) |
Market value of shares underlying in-the-money options at December 31, 2002
based on the product of $2.95 per share, the closing price of MasTec’s
common stock on the New York Stock Exchange on December 31, 2002, less the
exercise price of each option, multiplied by the number of in-the-money options
as of that date. |
Equity Compensation Plan
Information
The
following table sets forth information about MasTec’s common stock that may be issued
under all of MasTec’s existing equity compensation plans as of December 31, 2002,
which include the 1994 Stock Incentive Plan, 1994 Stock Option Plan for Non-Employee
Directors, 1997 Annual Incentive Compensation Plan, 1997 Non-Qualified Employee Stock
Purchase Plan, Non-Employee Directors’ Stock Plan, Inepar Stock Option Agreement,
1999 Non-Qualified Option Plan and individual option agreements. The 1994 Stock Incentive
Plan, 1994 Stock Option Plan for Non-Employee Directors and the 1997 Annual Incentive
Compensation Plan were approved by our shareholders. The information in the
following table does not include securities under our proposed 2003 Employee Stock
Incentive Plan and 2003 Stock Incentive Plan for Non-Employees described in Proposals 2
and 3 below for which shareholder approval is being sought at the Annual Meeting.
| Plan Category |
Number of
Securities to be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights
(a) |
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b) |
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected
in Column (a))
(c) |
|
|
|
|
| Equity Compensation Plans Approved by Shareholders |
|
|
6,099,762 |
|
|
$10.59 |
|
|
2,023,862 |
|
|
| | |
| Equity Compensation Plans Not Approved by Shareholders | | |
2,644,462 | | |
$ 17.33 | | |
591,612 | | |
| | |
| TOTAL | | |
8,744,224 | | |
| | |
2,615,474 | | |
__________________
| |
(1) |
Calculations to compute the weighted average for options, warrants and rights
under the 1997 Annual Incentive Plan and Non-Employee Directors’ Stock Plan
were based upon an assumed purchase price of $1.61 per share, which was the fair
market value based on the mean between the high and low sale price of our common
stock on the New York Stock Exchange on March 21, 2003, and for the 1997
Non-Qualified Employee Stock Purchase Plan were based upon an assumed purchase
price of $1.37 per share, which is 85% of the fair market value on March 21,
2003. See “Summaries of Plans Not Approved by Our Shareholders” below
for a description of the Non-Employee Directors’ Stock Plan and the 1997
Non-Qualified Employee Stock Purchase Plan. |
| |
(2) |
The 1997 Annual Incentive Plan has 1,500,000 shares remaining available for
future issuance, but MasTec has never issued any shares under the plan and has
no current plans to do so. |
Summaries of Plans Not
Approved by Our Shareholders
1997
Non-Qualified Employee Stock Purchase Plan. The MasTec, Inc. 1997 Non-Qualified
Employee Stock Purchase Plan is administered by the Compensation Committee, and permits
employees of MasTec who meet certain criteria set by the Committee to purchase common
stock of MasTec at a 15% discount to the market price at the time of purchase. Such
purchases are made through regular payroll deductions or lump sum investments. Employees
are limited to a maximum investment of $25,000 in the plan each year. The total amount of
common stock reserved under the plan is approximately 365,000 shares, substantially all of
which have been purchased. The Board of Directors is considering amending the plan to
increase the available number of shares under the plan.
Non-Employee
Directors’ Stock Plan. The MasTec, Inc. Non-Employee Directors’ Stock Plan
adopted in 1998 permits non-employee directors to elect to receive all or a specified
percentage of any director fees paid for each year of service on the board in shares of
MasTec common stock. The number of shares issued to each non-employee director is
determined by dividing the director’s fees owed to such director by the fair-market
value of a share of common stock on the date of the issue. The shares issued are delivered
to the non-employee director and the non-employee director has all the rights and
privileges of a stockholder as to the shares. The shares were immediately vested upon
grant and were not forfeitable to MasTec. The maximum number of shares of common stock
that may be issued under the plan is 150,000, substantially all of which have not been
issued.
This
plan is administered by the Compensation Committee. The Committee has authority to adopt
such rules as it may deem appropriate to carry out the purposes of the plan. In the event
MasTec undertakes a transaction resulting in a change in the outstanding common stock, the
Committee in its discretion may make proportionate adjustments as it considers appropriate
to prevent diminution or enlargement of the rights of non-employee directors under the
plan with respect to the aggregate number of shares of common stock authorized to be
issued under the plan. MasTec has not used this plan in the last four years since director
compensation has been paid by grant of options to purchase common stock and has no current
plans to use this plan in the future.
1999
Non-Qualified Employee Stock Option Plan. The 1999 Non-Qualified Employee Stock Option
Plan is administered by the Compensation Committee of the board and permits the Committee
to grant non-qualified options to purchase up to 3,000,000 shares of common stock to any
MasTec employee. The Compensation Committee determines the recipient of options, the
number of shares covered by each option, and the terms and conditions of options within
the parameters of the plan (including the exercise price, vesting schedule, and the
expiration date) and may adopt rules and regulations necessary to carry out the plan.
Options
may be granted pursuant to the plan until January 31, 2009, after which time no further
options will be granted under the plan, but options previously granted may be exercised
pursuant to the respective terms. The Compensation Committee has the authority to change
or discontinue the plan or the options issued pursuant thereto at any time without the
holders consent so long as the holders’ rights would not be impaired. The plan
permits the Compensation Committee to determine and accept different forms of payment
pursuant to the exercise of options.
The
plan provides for the termination of all outstanding options whether or not vested in the
event of a termination of employment, and permits the Committee to take certain actions in
the event of a change of control to ensure fair and equitable treatment of the employees
who hold options granted under the plan, including accelerating the vesting of any
outstanding option, offering to purchase any outstanding option and making other changes
to the terms of the outstanding options.
Inepar
Stock Option Agreement. Effective July 31, 1997, MasTec granted Inepar S.A.
Indústria e Construç&otidle;es, a Brazilian corporation, an option to
purchase 75,000 shares of MasTec common stock at $17.67 per share in connection with an
acquisition by MasTec. All of the Inepar options are currently vested and will expire on
July 31, 2007.
Individual
Option Grants. MasTec has entered into various option agreements (for approximately
211,000 shares of common stock) with non-employee directors, advisors and other parties in
connection with providing certain services, acquisitions and other matters. Such options
have various vesting schedules and exercise prices and have been included in the equity
compensation plan table above.
Employment and Other
Agreements
Effective
January 1, 2002, MasTec entered into employment agreements with Austin J. Shanfelter
relating to his employment as President and Chief Executive Officer. The agreement is for
a term of four years unless earlier terminated, and provides that Mr. Shanfelter will be
paid an annual salary of $600,000, an initial bonus of $100,000 prior to March 31, 2003
and deferred compensation of $2,000,000. The agreement also provides for a bonus to be
paid pursuant to an incentive performance bonus plan to be agreed upon and stock options
pursuant to MasTec’s stock option plans. Following termination of employment, the
agreement provides for a two-year consulting period at $500,000 per year. Additionally, if
there is a change of control of MasTec during the employment term, the executive will be
entitled to all of the unpaid portion of his salary for the remaining term of the
agreement, to the consulting fees, any unpaid portion of the initial bonus and the
deferred compensation amount and to immediate vesting of any previously unvested options.
The agreement also contains gross-up for any excise taxes, confidentiality,
non-competition and non-solicitation provisions.
On
January 1, 2002, MasTec set forth the terms and conditions of employment of Donald P.
Weinstein relating to his employment as Executive Vice President — Chief Financial
Officer. These terms state that they are not to be construed as an employment agreement
and that Mr. Weinstein is an employee at-will and may be terminated at any time upon one
day’s written notice. These terms specify that Mr. Weinstein will be paid an annual
salary of $270,000 and a guaranteed bonus of at least $60,000 for 2002. MasTec granted Mr.
Weinstein options to purchase 30,000 shares of stock pursuant to the terms of
MasTec’s stock option plan.
Effective
January 1, 2002, MasTec and Carmen Sabater, former Chief Financial Officer of MasTec,
amended Ms. Sabater’s employment agreement, terminating such agreement as of January
1, 2002. MasTec agreed to pay Ms. Sabater total severance payments during the year 2002 of
$500,000 and forgave a $125,000 obligation to MasTec under a promissory note dated
November 2000.
In
July 2002, MasTec entered into an employment agreement with Eric J. Tveter as Executive
Vice President and Chief Operations Officer with a two year term at an annual base
salary of $300,000 (with annual cost of living increases) and a grant of 50,000 stock
options, a guaranteed bonus for the year 2002 equal to one half of his base salary paid to
him during the year 2002 and payable prior to March 31, 2003, and the right to participate
in MasTec’s bonus plan for Senior Management Committee January 1, 2003. The agreement
contains noncompete and nonsoliciation provisions for a period of two years following the
term of the agreement.
In
December 2002, MasTec entered into a severance agreement with Jose M. Sariego,
MasTec’s Senior Vice President and General Counsel, effective December 31, 2002.
MasTec will provide Mr. Sariego total severance payments of $120,000 during 2003, payment
of certain insurance benefits and the vesting of his outstanding options.
In
June 2001, MasTec agreed to pay up to $300,000 over a four year period of the premiums on
policies of life insurance on Mr. Shanfelter and members of his family in exchange for a
promissory note from Mr. Shanfelter in the full amount of the premiums to be paid plus
interest together with an assignment of the policies as collateral for the promissory
note. The full amount of the promissory note plus interest is payable solely from the
proceeds of the policies, when paid, which are assigned to MasTec. The balance of proceeds
from the policies, after repayment of the promissory note plus interest, will be remitted
to the applicable insured’s beneficiary. MasTec has not paid premiums under these
policies since April 2002 and will not make any future payments under these policies. On
November 1, 2002, MasTec and Austin Shanfelter entered into a split dollar agreement
wherein MasTec agreed to pay the premiums due on a life insurance policy with an aggregate
face amount of $18,000,000. Mr. Shanfelter and his spouse are the insureds under the
policy. Under the terms of this agreement, MasTec is the sole owner and beneficiary of the
policy and is entitled, upon the death of the insureds, to recover all premiums it pays on
the policy plus interest equal to four percent, compounded annually. The remainder of the
policy’s proceeds will be paid in accordance with Mr. Shanfelter’s designations.
MasTec will make the premium payments for the term of the agreement or until the agreement
is terminated, which occurs upon any of the following events: (i) total cessation of
MasTec’s business, (ii) bankruptcy, receivership or dissolution of MasTec, or (iii)
the six year anniversary of the agreement. In 2002, MasTec paid approximately $500,000 in
premiums in connection with insurance policies for Mr. Shanfelter and his family.
Effective
August 7, 2001, MasTec entered into a severance agreement with Joel-Tomas Citron relating
to his separation from MasTec. Under the agreement, MasTec is obligated to pay Mr. Citron
$10,000,000 in equal installments, without interest, on September 3, 2001, January 2,
2002, April 1, 2002, July 1, 2002 and October 1, 2002. The final installment was reduced
by $750,000 to offset the amount due to MasTec under a non-interest bearing demand
promissory note between MasTec and Mr. Citron. The severance agreement specifies that Mr.
Citron will provide certain consulting services to MasTec upon MasTec’s request until
August 7, 2003. All of Mr. Citron’s stock options to acquire MasTec common stock
became fully vested and immediately exercisable under the severance agreement. Under the
agreement, Mr. Citron agreed to certain restrictions on his ability to provide services to
persons or entities that compete with MasTec or any of its affiliates, to solicit
customers and employees of MasTec and to disclose MasTec’s confidential information.
Mr. Citron also agreed to aid MasTec in any legal proceedings or investigations and agreed
to release MasTec from any claims relating to his employment with MasTec.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The
Compensation Committee of the Board of Directors is responsible for establishing and
administering the policies for MasTec’s compensation programs and for approving the
compensation levels of the executives of MasTec, including its Chief Executive Officer.
The Compensation Committee also reviews with the Chief Executive Officer guidelines for
salaries and bonus awards applicable to MasTec’s employees other than its executives.
The Compensation Committee is composed of Arthur B. Laffer, who serves as Chairman,
William N. Shiebler and Jose S. Sorzano, all of whom are independent directors of MasTec.
Statement of Philosophy
of Executive Compensation
The executive
compensation program of MasTec is designed to (i) provide base compensation reasonably
comparable to that offered by other leading companies to their executives so as to attract
and retain talented personnel, (ii) motivate executives to achieve the strategic
goals set by MasTec by linking an executive’s incentive compensation to the
performance of MasTec and applicable business units, as well as to individual performance,
and (iii) align the interests of MasTec’s executives with the long-term
interests of its shareholders through the award of stock options and other stock-related
programs. To implement this philosophy, MasTec offers its executives compensation packages
that include a mix of salary, incentive bonus awards, and stock options.
In
determining the level and form of executive compensation to be paid or awarded, the
Committee relies primarily on MasTec’s results of operations and, in the case of
senior executives, an assessment of MasTec’s overall performance in light of its
strategic objectives. The primary factor the Compensation Committee considered in
establishing 2002 compensation for senior executives was the net loss incurred by MasTec
in 2001.
Salary
The
base salary of executives is determined initially by analyzing and evaluating the
responsibilities of the position and comparing the proposed base salary with that of
executives in comparable positions in other companies. Adjustments are determined by
objective factors such as MasTec’s performance and the individual’s contribution
to that performance and subjective considerations such as additional responsibilities
taken on by the executive. Austin J. Shanfelter was the only executive officer in 2002 for
whom the Compensation Committee increased the base salary, based on the employment
agreement effective January 1, 2002.
Incentive Awards
In
addition to paying a base salary, MasTec awards incentive bonuses as a component of
overall compensation. MasTec has established incentive compensation plans for our
executives at both the corporate and operational levels that award incentive bonuses based
primarily on MasTec’s or an individual unit’s performance as measured by
earnings before interest and taxes (“EBIT”). Because bonuses are based on
performance during a year and it takes time to gather and evaluate the necessary financial
data to gauge performance, bonuses for performance in a year are not paid until the
beginning of the next year. Awards are based on a multiple of base salary or a percentage
of EBIT. A portion of the bonus may be awarded in stock and stock options. MasTec or the
individual unit must meet certain minimum thresholds before any bonus is earned. For
performance in 2002, the Compensation Committee awarded no cash bonuses to MasTec’s
executives under these plans. None of the Named Executive Officers received an incentive
bonus award for 2002 performance and the only bonuses awarded to the Named Executive
Officers in 2002 were paid pursuant to the Named Executive Officers employment agreements.
Long-Term Incentives
Stock
options are granted as long-term incentive compensation to encourage and enhance positive
performance and to align the interest of our executives with our shareholders. Options are
granted at a price equal to the fair market value of our common stock on the New York
Stock Exchange on the date of grant, and will have value only if MasTec’s stock price
increases. Grants to executives are based on their scope of responsibility, performance,
size of prior grants and strategic practices. Of the named executive officers, Messrs.
Tveter and Weinstein received stock option grants during 2002 as incentives for employment
in connection with their original employment agreements and Mr. Shanfelter received a
stock option grant during 2002 in connection with his revised employment agreement.
Awards
generally are not exercisable immediately upon grant, but instead vest over a specified
period. Accordingly, an employee must remain employed by us for a specified period to
enjoy the full economic benefit of an award.
Chief Executive Officer
Compensation
Effective
January 1, 2002, MasTec entered into an employment agreement with Austin J. Shanfelter
relating to his employment as Chief Executive Officer. The agreement is for a term of four
years unless earlier terminated, and provides that Mr. Shanfelter will be paid an annual
salary of $600,000, an initial bonus of $100,000 prior to March 31, 2003 and deferred
compensation of $2,000,000. The agreement also provides for a bonus to be paid pursuant to
an incentive performance bonus plan to be agreed upon. Finally, following termination of
employment, the agreement provides for a two-year consulting period at $500,000 per year.
Additionally, if there is a change of control of MasTec during the employment term, the
executive will be entitled to all of the unpaid portion of his salary for the remaining
term of the agreement, to the consulting fees, any unpaid portion of the initial bonus and
the deferred compensation amount and to immediate vesting of any previously unvested
options. The agreement also contains non-competition and non-solicitation provisions
during the term of the agreement.
Compensation Committee
Interlocks and Insider Participation
Mr.
Laffer, who is a MasTec director and serves as Chairman of our Compensation
Committee, resigned as a member of the board of directors and compensation
committee of Neff Corp. on November 18, 2002. MasTec purchases, rents and leases
equipment used in its business from a number of different vendors, on a
nonexclusive basis, including Neff. See “Certain Relationships and Related
Transactions” below for more information.
Jorge
Mas and Jose Ramon Mas, Chairman of the Board and Vice Chairman of the Board and Executive
Vice President of MasTec, respectively, are members of the Board of Directors of Neff
Corp., and Juan Carlos Mas, the brother of Jorge and Jose Ramon Mas, is the Chairman, CEO
and a director of Neff Corp. Messrs. Jorge, Jose Ramon and Juan Carlos Mas, and their
respective families, own a controlling interest in both MasTec and Neff Corp.
Compensation Committee
Arthur
B. Laffer
William
N. Shiebler
Jose
S. Sorzano
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
As
of January 1, 2002, Carmen M. Sabater was indebted to MasTec for $125,000 under a
non-interest bearing demand promissory note. Ms. Sabater’s obligation to repay her
loan was forgiven by MasTec as part of her severance arrangement, which was effective
January 1, 2002.
As
of December 31, 2001, Jose Mas, Vice Chairman of the Board and Executive Vice President,
and Juan Carlos Mas, the brother of Jorge and Jose Mas, were indebted to MasTec for an
aggregate of $72,673 and $116,533, respectively, representing advances made to them to pay
their tax obligations resulting from the termination of the subchapter S corporation
election of MasTec’s predecessor company at the time of the merger of the predecessor
company with Burnup & Sims Inc. in 1994. Interest on the advances has accrued at an
annual rate of prime plus two percent. On May 13, 2002, Jose and Juan Carlos Mas paid this
indebtedness in full.
MasTec
purchases, rents and leases equipment used in its business from a number of different
vendors, on a non-exclusive basis, including Neff Corp., in which Jorge Mas and Jose Mas
are directors and owners of a controlling interest. Juan Carlos Mas, the brother of Jorge
and Jose Mas, is Chairman, Chief Executive Officer and a director of Neff Corp.
Additionally, Jorge Mas, Juan Carlos Mas and Jose Mas have a controlling interest in Neff.
During the year ended December 31, 2002, MasTec paid Neff approximately $1.8 million for
equipment purchases, rentals and leases, which constituted approximately 4.1% of
MasTec’s total equipment purchases, rentals and leases during the year. MasTec
believes the amount paid to Neff is equivalent to the payments that would have been made
between unrelated parties for similar transactions acting at arm’s length.
Effective
as of August 27, 2002, MasTec and Jorge Mas entered into a split dollar agreement wherein
MasTec agreed to pay the premiums due on two life insurance policies with an aggregate
face amount of $50,000,000. Mr. Mas and his spouse are the insureds under the policies.
Under the terms of this agreement, MasTec is the sole owner and beneficiary of the
policies and is entitled to recover all premiums it pays on the policies plus interest
equal to four percent, compounded annually, upon the death of the insureds. The remainder
of the policies’ proceeds will be paid in accordance with Mr. Mas’ designations.
MasTec will make the premium payments until the agreement is terminated, which occurs upon
any of the following events: (i) total cessation of MasTec’s business, (ii)
bankruptcy, receivership or dissolution of MasTec, or (iii) a change of control of MasTec.
Additionally,
effective as of September 13, 2002, MasTec and Jorge Mas entered into a second split
dollar agreement (as amended on December 1, 2002) wherein MasTec agreed to pay the
premiums due on a life insurance policy with a face amount of $80,000,000, $60,000,000 of
which is subject to the agreement and the remaining $20,000,000 is deemed to be key-man
insurance payable to MasTec and falls outside of the agreement. Jorge Mas is the insured
under this policy. Under the terms of this agreement, MasTec is the sole owner and
beneficiary of the policy and is entitled to recover all premiums it pays on the portion
of the policy subject to the agreement, plus interest equal to four percent, compounded
annually, upon the death of the insured. MasTec will make the premium payments until the
agreement is terminated, which occurs upon any of the following events: (i) total
cessation of MasTec’s business, (ii) bankruptcy, receivership or dissolution of
MasTec, or (iii) a change of control of MasTec. An amount equal to $60,000,000 of the
policy’s proceeds will be paid in accordance with Jorge Mas’s designations. Any
remainder of the proceeds will be paid to MasTec. In 2002, MasTec paid $1,340,400 in
premiums in connection with the split dollar agreements for Jorge Mas.
Julia
L. Johnson, a director, entered into a one-year consulting agreement with MasTec through
NetCommunications on June 1, 2000. The agreement specified that Ms. Johnson would provide
business development consulting to MasTec on a nonexclusive basis for a flat fee of
$12,500 per month. Pursuant to the agreement, Ms. Johnson would identify new customers,
identify additional business opportunities with existing customers, arrange meetings and
presentations with new and existing customers, assist in the preparation of proposals, and
provide guidance to develop additional business opportunities for MasTec. The agreement
contains customary non-compete, non-solicitation and confidential information provisions.
The agreement expired in May 2001 but was continued on a month-to-month basis until April
2002, at which time the parties mutually agreed to terminate the agreement. Ms. Johnson
was paid $50,000 for her consulting services in 2002 prior to the termination of the
consulting agreement. Ms. Johnson is also the founder and Chairman of the Emerging Issues
Policy Forum, a public policy organization established to promote open public policy
discussions on key market, industrial and regulatory issues. MasTec paid the Emerging
Issues Policy Forum $20,000 in 2002 for membership.
STOCK PERFORMANCE GRAPH
The
following graph compares the cumulative total shareholder return on MasTec’s common
stock from December 31, 1997 through December 31, 2002 with the cumulative total return of
the Standard & Poor’s 500 Stock Index and a company-constructed index of six peer
companies consisting of Black Box Corp., Dycom Industries, Inc., International Fibercom,
Inc., LCC International Inc., Quanta Services, Inc., and Wireless Facilities Inc. The
graph assumes that the value of the investment in the common stock was $100 on December
31, 1997, with the number of shares purchased for the $100 investment determined based on
the fair market value on that date and that all dividends were reinvested. This data is
not necessarily indicative of future results.
[GRAPHIC OMITTED]
* $100 invested on 12/31/97 in stock or index-including reinvestment of dividends. Fiscal year
ending December 31.
|
12/31/97
|
12/31/98
|
12/31/99
|
12/31/00
|
12/31/01
|
12/31/02
|
| MasTec |
|
$100.00 |
|
$ 91.80 |
|
$194.54 |
|
$131.14 |
|
$ 45.57 |
|
$19.34 |
|
| S&P 500 | |
$100.00 |
|
$128.58 |
|
$155.64 |
|
$141.46 |
|
$124.65 |
|
$97.10 |
|
| Peer Group | |
$100.00 |
|
$144.15 |
|
$203.89 |
|
$207.21 |
|
$100.52 |
|
$64.01 |
|
PROPOSAL 2
APPROVAL OF THE
ADOPTION OF THE MASTEC, INC.
2003 EMPLOYEE STOCK
INCENTIVE PLAN
Introduction
MasTec’s
1994 stock option plan for employees has a low number of shares of common stock remaining
and will expire in early 2004. Therefore, in order to further our growth and development,
to encourage employees to obtain a proprietary interest in MasTec by owning MasTec’s
stock, and to attract quality employees and encourage employees to continue in our
service, MasTec proposes to adopt the MasTec, Inc. 2003 Employee Stock Incentive Plan,
which MasTec refers to in this description as the “Employee Plan.” The Employee
Plan would permit us to grant to our employees stock options and other stock-based
compensation. Subject to the approval of our shareholders, the Employee Plan would be
effective June 1, 2003. The following description of the Employee Plan is qualified in its
entirety by reference to the applicable provisions of the Employee Plan and agreements
related to the Employee Plan. A copy of the Employee Plan may be accessed through our web
site at www.mastec.com under Investor Relations. Additionally, MasTec will promptly
deliver a paper copy of the Employee Plan to a shareholder upon receiving an oral or
written request from a shareholder. Any such shareholder who wishes to receive a separate
paper copy of the Employee Plan should contact MasTec Investor Relations by telephone at
1-305-599-1800 or by mail to: MasTec Investor Relations, 3155 N.W. 77th Avenue,
Miami, Florida 33122-1205.
The
board of directors unanimously recommends that the shareholders vote “FOR” the
proposal to approve the adoption of the MasTec, Inc. 2003 Employee Stock Incentive Plan.
Stock Subject to Awards
The
stock underlying awards under the Employee Plan is our common stock, par value $0.10 per
share (or such other securities as may be applicable upon a stock dividend, stock split,
recapitalization, reorganization, exchange of shares or other change in our corporate
structure or shares of stock). On March 21, 2003, the closing price of our common stock
as reported on the New York Stock Exchange was $1.60 per share. The total aggregate
shares authorized during the term of the Employee Plan is limited to 7,000,000 shares,
subject to adjustment as described below. Up to 2,500,000 shares of our common stock
would initially be authorized for grant or purchase under the Employee Plan. Each
December 31, beginning December 31, 2003, the authorized shares would automatically be
increased by the number of shares subject to grants made during the calendar year ending
on such December 31. In the event that any option expires unexercised or is forfeited,
terminated, surrendered or cancelled without being exercised or settled, the common stock
covered by such option, or portion thereof, will again become available for issuance
under the Employee Plan, but would reduce the number of shares of the automatic increase
for the year. The number of awards issued, the number of awards available for issuance
under the plan, and the price of outstanding awards may be adjusted as described below in
the event of a capital reorganization.
Types of Awards
The
Employee Plan would permit grants of incentive stock options under IRC Section 422,
nonqualified stock options, reload options, restricted stock, and performance shares.
Administration
The
Employee Plan is administered by our Compensation Committee, which is appointed by our
board. The members of the committee must be “outside directors” within the
meaning of Section 162(m) of the IRC and must be “non-employee directors” for
purposes of Rule 16b-3 of the Exchange Act. Among other powers and duties, the
Compensation Committee establishes rules and regulations for the Employee Plan; interprets
plan provisions; determines the number of shares, exercise price and restrictions of
awards granted; determines the times when awards will be granted and vested or
exercisable; and prescribes the form of agreements related to the awards.
Eligibility for Awards
In
consideration of their services, common law employees who serve as officers or employees
of MasTec or a member of our controlled group of companies and who are actively employed
at the time an award is made are eligible to receive awards under the Employee Plan.
Incentive stock options may only be granted to employees of MasTec or its parent and
subsidiary companies as defined in Section 424 of the IRC. Reload options may only be
granted to employees who are actively employed in good standing at the time of grant of
the reload option. The maximum number of shares for which options may be granted to any
individual in any calendar year is 750,000. The maximum number of shares for which
restricted stock may be granted to any individual in any calendar year is 750,000. The
maximum number of shares for which performance shares may be granted to any individual in
any calendar year is 750,000.
As
of April 25, 2003, there were approximately 8,450 officers and other employees eligible to
receive grants under the Employee Plan.
Options Granted
As
of April 25, 2003, the Compensation Committee has granted no options under the Employee
Plan.
Terms of Options
Options
granted under the Employee Plan have terms and conditions as determined by the
Compensation Committee, as more fully described below:
Option
Price. The exercise price of each option granted under the Employee Plan will be 100%
of the fair market value of a share of the common stock on the date of grant.
Vesting. Unless
the Compensation Committee specifies otherwise, options granted under the
Employee Plan will vest and become exercisable with respect to 33% of the
options granted on each of the first two anniversaries of the date of grant,
and with respect to the remainder of the options granted on the third
anniversary of the date of grant. The Compensation Committee is permitted to
impose any other conditions, restrictions, forfeitures and contingencies on
awards of stock options, including the satisfaction of performance measures.
The Compensation Committee may accelerate the exercisability of options at any
time. Unless otherwise determined by the Compensation Committee, options
automatically become fully exercisable upon the optionee’s death,
disability, or upon a change of control of us, as defined in the Employee Plan.
Term
of Options. The maximum term of any option is ten years from the date of grant.
Termination
of Employment. Following a termination of employment with MasTec for cause or
voluntary termination by the optionee other than retirement after reaching age 65, all
unexercised options will immediately expire. Following a termination for other reasons,
exercisable options will remain exercisable (but not beyond the options’ expiration
date) for:
o 90 days, if the termination is for any reason other than retirement after reaching age 65, death or disability; and
o one year, or such shorter period as determined by the Compensation Committee and set forth
in the applicable stock option agreement, if the termination is due to retirement after
reaching age 65, death or disability.
The
exercise period following termination of employment may be extended at the discretion of
the Compensation Committee, but not beyond the tenth anniversary of the date of grant.
Exercise
of Options. Payment of the exercise price may be made in cash, by tendering previously
acquired shares of our stock that have been held for six months, by a combination of cash
and surrender of shares, or another method approved by the Compensation Committee.
Reload
Options. The Compensation Committee may grant reload options in conjunction with a
grant of nonqualified stock options or incentive stock options. Multiple, successive
reload options may also be granted. If a stock option has been granted with an
accompanying reload option, the Compensation Committee will grant a reload option for the
same number of shares as are surrendered by the optionee in payment of the exercise price
of the related stock option upon exercise. The reload option will have the same terms and
conditions as the related stock option, except that the reload option’s exercise
price will be the fair market value as of the date of grant of the reload option, and the
reload option will become fully exercisable six months after its date of grant.
Terms of Restricted
Stock Awards
Restricted
stock awards granted under the Employee Plan would have terms and conditions as determined
by the Compensation Committee, as more fully described below:
Grant. The
Employee Plan would permit grants of restricted stock, which is a grant of our
common stock subject to restrictions as described below.
Restrictions
and Vesting. Unless the Compensation Committee specifies otherwise, restricted stock
awards vest and become nonforfeitable with respect to 100% of the shares on the third
anniversary of grant if the recipient is an employee on that date. The Compensation
Committee is also permitted to impose any other conditions, restrictions, forfeitures and
contingencies on awards of restricted stock, which may include satisfaction of performance
measures. Vesting and lapse of restrictions may be accelerated by the Compensation
Committee at any time. Unless otherwise determined by the Compensation Committee, upon the
recipient’s death, disability, or a change of control as defined in the Employee
Plan, outstanding restricted stock awards (i) that are subject only to time-based vesting,
become fully vested and nonforfeitable; or (ii) that are subject to any other type of
vesting schedule or requirement, become vested an nonforfeitable with respect to a
proportion of the award equal to the proportion of the time completed through the date of
the triggering event to the total performance measurement period for the award, with
target performance level (or, if no target was designated, the performance level that
would result in the least number of shares becoming vested) deemed to be achieved as of
the date of the triggering event.
Rights
as a Shareholder. A recipient of a restricted stock award would have the rights of a
shareholder with respect to the shares of restricted stock held in his or her name,
including the right to vote the shares and to receive dividends.
Termination
of Employment. Except as otherwise determined by the Compensation Committee, upon
termination of employment with us, unvested restricted stock would be forfeited.
Terms of Performance
Awards
Performance
awards granted under the Employee Plan would have terms and conditions as determined by
the Compensation Committee, as more fully described below:
Grant. The
Employee Plan would permit grants of performance shares, which is a right to
receive an award of our common stock in the future, subject to conditions,
restrictions and contingencies determined by the Compensation Committee,
including satisfaction of performance goals.
Performance
Goals and Vesting. The Compensation Committee specifies the manner in which
performance shares vest and become nonforfeitable, as well as any conditions,
restrictions, forfeitures and contingencies to which the performance shares are subject,
which may include satisfaction of performance goals and continuous service during a
performance period. Vesting may be accelerated by the Compensation Committee at any time,
and the Compensation Committee may elect, in its sole discretion, to waive any or all
restrictions with respect to an award of performance shares. Unless otherwise determined
by the Compensation Committee, upon the recipient’s death, disability, or a change of
control as defined in the Employee Plan, outstanding performance share awards that are
subject to performance criteria become vested and nonforfeitable with respect to a
proportion of the award equal to the proportion of the time completed through the date of
the triggering event to the total performance measurement period for the award, with
target performance level (or, if no target was designated, the performance level that
would result in the least number of shares becoming vested) deemed to be achieved as of
the date of the triggering event.
Dividends. Holders
of outstanding performance shares receive additional performance share credits
for the value of dividends distributed while the performance shares are
outstanding.
Delivery
of Shares. Upon vesting, the shares of common stock subject to the performance share
award will be distributed to the grantee.
Termination
of Employment. Except as otherwise determined by the Compensation Committee, upon
termination of employment with MasTec, all performance shares still subject to
restrictions would be forfeited.
Fair Market Value
Fair
market value of the common stock under the Employee Plan is generally the last sale price
of a share of MasTec’s common stock quoted at the close of trading for the relevant
date on the New York Stock Exchange.
Reorganization
If
MasTec is part of any reorganization involving merger, consolidation, acquisition of our
stock or acquisition of our assets, the Compensation Committee, in its discretion, may
decide that (i) outstanding awards apply to the securities of the resulting corporation;
(ii) outstanding options become immediately fully exercisable; (iii) outstanding options
become immediately fully exercisable and terminate after 30 days’ notice; and/or (iv)
restricted stock and performance shares become immediately fully vested, nonforfeitable,
and/or payable.
Amendment and Termination
MasTec’s
board of directors may amend, modify or terminate the Employee Plan at any time. However,
no amendment, modification or termination shall result in the Employee Plan being subject
to variable or other adverse accounting treatment or adversely affect, in any way, the
rights of holders of outstanding awards without their consent unless the amendment or
termination is necessary to comply with applicable law. Unless terminated sooner, the
Employee Plan automatically terminates on the tenth anniversary of its effective date.
Adjustments
In
the event MasTec is involved in a corporate transaction or any other event which affects
MasTec’s common stock (such as recapitalization, reclassification, stock split, stock
dividend, extraordinary cash dividend, split-up, spin-off, combination or exchange of
shares), the Compensation Committee will adjust the number and kind of shares available
for issuance under the Employee Plan, the number and kind of shares subject to outstanding
awards, the exercise price of outstanding stock options, and any other equitable
adjustment.
Transferability
Options
are not transferable except by will or by the laws of descent and distribution. Unless
otherwise specified by the Compensation Committee, restricted stock would not be
transferable while subject to applicable restrictions. Performance shares are not
transferable.
Federal Income Tax
Consequences
The
following is a brief general description of the consequences under the IRC of the receipt
or exercise of awards under the Employee Plan:
Incentive
Stock Options. An option holder has no tax consequences upon issuance or, generally,
upon exercise of an incentive stock option. An option holder will recognize income when he
or she sells or exchanges the shares acquired upon exercise of an incentive stock option.
This income will be taxed at the applicable capital gains rate if the sale or exchange
occurs after the expiration of the requisite holding periods. Generally, the requisite
holding periods expire two years after the date of grant of the incentive stock option and
one year after the date of acquisition of our common stock pursuant to the exercise of the
incentive stock option.
If
an option holder disposes of the common stock acquired pursuant to exercise of an
incentive stock option before the expiration of the requisite holding periods, the option
holder will recognize compensation income in an amount equal to the difference between the
option price and the lesser of (i) the fair market value of the shares on the date of
exercise and (ii) the price at which the shares are sold. This amount will be taxed at
ordinary income rates. If the sale price of the shares is greater than the fair market
value on the date of exercise, the difference will be taxed at the applicable capital
gains rate. If the sale price of the shares is less than the option price, the option
holder will recognize a capital loss equal to the excess of the option price over the sale
price. The use of shares acquired upon exercise of an incentive stock option to pay the
option price of another option (whether or not it is an incentive stock option) will be
considered a disposition of the shares.
An
option holder may have tax consequences upon exercise of an incentive stock option if the
aggregate fair market value of shares of the common stock subject to incentive stock
options which first become exercisable by an option holder in any one calendar year
exceeds $100,000. If this occurs, the excess shares will be treated as though they are
subject to a nonqualified stock option instead of an incentive stock option. Upon exercise
of an option with respect to these shares, the option holder will have the tax
consequences described below with respect to the exercise of nonqualified stock options.
Finally,
except to the extent that an option holder has recognized income with respect to the
exercise of an incentive stock option, the amount by which the fair market value of a
share of our common stock at the time of exercise of the incentive stock option exceeds
the option price will be included in determining an option holder’s alternative
minimum taxable income, and may cause the option holder to incur an alternative minimum
tax liability in the year of exercise.
There
will be no tax consequences to us upon issuance or, generally, upon exercise of an
incentive stock option. However, to the extent that an option holder recognizes ordinary
income upon exercise, we generally will have a deduction in the same amount.
Nonqualified
Stock Options. Neither MasTec nor the option holder has income tax consequences from
the issuance of nonqualified stock options. Generally, upon the exercise of nonqualified
stock options, the option holder recognizes ordinary income in the amount by which the
fair market value of the shares at the time of exercise exceeds the option price for such
shares. The holder’s tax basis in the shares is the fair market value of the shares
on the date of exercise. We generally will have a deduction in the same amount as the
ordinary income recognized by the option holder in our tax year in which or with which
the option holder’s tax year (of exercise) ends. Upon the sale of shares acquired
upon exercise, the option holder will have a capital gain (or loss) equal to the
difference between the tax basis and the sale price calculated at the applicable capital
gains rates.
Certain
additional rules apply if the exercise price is paid in shares of our common stock held by
the optionee.
Restricted
Stock and Performance Share Awards. A holder of restricted stock or performance shares
will recognize income upon receipt of the award, but generally only to the extent that the
stock is not subject to a substantial risk of forfeiture. If the restricted stock or
performance shares are subject to restrictions that lapse in increments over a period of
time, so that the holder becomes vested in a portion of the shares as the restrictions
lapse, the holder will recognize income in any tax year only with respect to the shares
that become nonforfeitable during that year. The income recognized will be equal to the
fair market value of those shares, determined as of the time that the restrictions on
those shares lapse. That income generally will be taxable at ordinary income tax rates.
Any dividends paid in connection with restricted stock will be taxed at ordinary income
tax rates. MasTec generally will be entitled to a deduction in an amount equal to the
amount of ordinary income recognized by the holder of the restricted stock or performance
shares.
A
holder of restricted stock or performance shares may elect instead to recognize ordinary
income for the taxable year in which he or she receives an award in an amount equal to the
fair market value of all shares of restricted stock or performance shares, as applicable,
awarded to him or her, even if the shares are subject to forfeiture. That income will be
taxable at ordinary income tax rates. At the time of disposition of the shares, a holder
who has made such an election will recognize gain in an amount equal to the difference
between the sales price and the fair market value of the shares at the time of the award.
This gain will be taxable at the applicable capital gains rate. Any such election must be
made within 30 days after the transfer of the restricted stock to the holder or the award
of performance shares to the recipient. MasTec will generally be entitled to a deduction
in an amount equal to the amount of ordinary income recognized by the holder at the time
of his or her election.
Limitation
on Company Deductions. No federal income tax deduction is allowed for compensation
paid to a “covered employee” in any of our taxable years beginning on or after
January 1, 1994, to the extent that such compensation exceeds $1,000,000. For this
purpose, “covered employees” are generally defined as our chief executive
officer and our four highest compensated officers whose annual salary and bonus exceeds
$100,000, and the term “compensation” generally includes amounts includable in
gross income as a result of the exercise of stock options, or the receipt of stock
options, restricted stock, or performance awards. This deduction limitation does not apply
to compensation that is (1) commission-based compensation, (2) performance-based
compensation, (3) compensation which would not be includable in an employee’s gross
income, and (4) compensation payable under a written binding contract in existence on
February 17, 1993, and not materially modified thereafter.
Compensation
attributable to a stock option will generally satisfy the limitation exception for
performance-based compensation if:
o the grant or award is made by a "compensation committee" (a committee composed of "outside" directors);
o the “material terms” (including which employees are eligible to receive
compensation, the maximum number of shares that may be granted to an optionee and the
exercise price of the options) of the plan under which the option or right is granted are
disclosed to shareholders and approved by a majority of the shareholder vote;
o the “compensation committee” certifies that performance goals were in fact satisfied before the
compensation is paid; and
o under the terms of the option or right, the amount of compensation the employee could
receive is based solely on an increase in the value of the stock after the date of the
grant or award.
Stock
options and other awards granted under the Employee Plan may satisfy these requirements,
depending upon the specific terms, provisions, restrictions and limitations of such
options or awards.
The
foregoing discussion is not a complete discussion of all federal income tax aspects of the
Employee Plan. Some of the provisions contained in the IRC have only been summarized, and
additional qualifications and refinements may be contained in regulations which will be
issued in the future by the Internal Revenue Service. Furthermore, subsequent legislative
changes or changes in administrative or judicial interpretation could alter significantly
the tax treatment discussed herein. No discussion of state income tax law has been
included. Each employee should consult his or her own tax advisors with respect to the tax
consequences of participation in the Employee Plan and disposition of shares acquired
under the Employee Plan.
ERISA. The
Employee Plan is not, and is not intended to be, an employee benefit plan or
qualified retirement plan. The Employee Plan is not, therefore, subject to the
Employee Retirement Income Security Act of 1974, as amended, or Section 401(a)
of the IRC.
PROPOSAL 3
APPROVAL OF THE
ADOPTION OF THE MASTEC, INC.
2003 STOCK INCENTIVE
PLAN FOR NON-EMPLOYEES
Introduction
MasTec’s
1994 stock option plan for non-employees has a low number of shares of common stock
remaining and will expire in early 2004. Therefore, in order to further our growth and
development, to encourage non-employee directors, consultants and advisors to obtain a
proprietary interest in MasTec by owning our stock, and to attract quality directors and
encourage directors to continue in our service, MasTec proposes to adopt the MasTec, Inc.
2003 Stock Incentive Plan for Non-Employees, which is referred to in this description as
the “Non-Employee Plan.” The Non-Employee Plan would permit us to grant stock
options to non-employee directors, consultants and advisors. Subject to the approval of
our shareholders, the Non-Employee Plan would be effective June 1, 2003. The following
description of the Non-Employee Plan is qualified in its entirety by reference to the
applicable provisions of the Non-Employee Plan and agreements related to the Non-Employee
Plan. A copy of the Non-Employee Plan may be accessed through our web site at
www.mastec.com under Investor Relations. Additionally, MasTec will promptly deliver
a paper copy of the Non-Employee Plan to a shareholder upon receiving an oral or written
request from a shareholder. Any such shareholder who wishes to receive a separate paper
copy of the Non-Employee Plan should contact MasTec Investor Relations by telephone at
1-305-599-1800 or by mail to: MasTec Investor Relations, 3155 N.W. 77th Avenue,
Miami, Florida 33122-1205.
The
board of directors unanimously recommends that the shareholders vote “FOR” the
proposal to approve the adoption of the MasTec, Inc. 2003 Stock Incentive Plan for
Non-Employees.
Stock Subject to Options
The
stock underlying options under the Non-Employee Plan is MasTec’s common stock, par
value $0.10 per share (or such other securities as may be applicable upon a stock
dividend, stock split, recapitalization, reorganization, exchange of shares or other
change in our corporate structure or shares of stock). On March 21, 2003, the closing
price of MasTec’s common stock as reported on the New York Stock Exchange was $1.60
per share. Up to 1,000,000 shares of MasTec’s common stock would initially be
authorized for purchase under the Non-Employee Plan. Each December 31, beginning December
31, 2003, the authorized shares would automatically be increased by the number of shares
subject to grants made during the calendar year ending on such December 31. In the event
that any option expires unexercised or is forfeited, terminated, surrendered or cancelled
without being exercised or settled, the common stock covered by such option, or portion
thereof, will again become available for issuance under the Non-Employee Plan, but would
reduce the number of shares of the automatic increase for the year. The number of options
issued, the number of shares available for issuance under the plan, and the price of
outstanding options may be adjusted as described below in the event of a capital
reorganization.
Types of Awards
The
Non-Employee Plan would permit grants of nonqualified stock options, which are options
that do not qualify as incentive stock options under IRC Section 422, and therefore are
subject to taxation under IRC Section 83.
Administration
The
Non-Employee Plan is administered by MasTec’s Compensation Committee, which is
appointed by MasTec’s board. The members of the committee must be “non-employee
directors” for purposes of Rule 16b-3 of the Exchange Act. Among other powers and
duties, the Compensation Committee establishes rules and regulations for the Non-Employee
Plan; interprets plan provisions; determines the number of shares and exercise price of
options granted; determines the times when options will be granted and exercisable; and
prescribes the form of agreements related to the options.
Eligibility for Awards
In
consideration of their services, any “advisor” (an individual who serves as an
advisor or consultant to MasTec or a member of our controlled group of companies under a
relationship other than that of common law employee), and any member of MasTec’s
board of directors who is not and never has been either an officer or common law employee
of MasTec or a member of MasTec’s controlled group, is eligible to receive options
under the Non-Employee Plan.
As
of April 25, 2003, there were six non-employee directors eligible to receive grants under
the Non-Employee Plan.
Options Granted
As
of April 25, 2003, the Compensation Committee has granted no options under the
Non-Employee Plan.
Terms of Options
Options
granted under the Non-Employee Plan have terms and conditions as determined by the
Compensation Committee, subject to the provisions described below:
Formula
Grants to Directors. The Non-Employee Plan provides for automatic option grants to
non-employee directors according to a formula under the plan. Under the formula, as of the
first business day of the month following initial election as a non-employee director and
each re-election to serve a three-year term as a non-employee director, such non-employee
director will automatically receive an option to purchase 20,000 shares. As of the first
business day following the annual shareholders meeting in any year in which a non-employee
director does not receive a grant due to election or re-election, such director will
automatically receive an option to purchase 7,500 shares. If the Non-Employee Plan is
approved by shareholders, the formula grants will take effect immediately, such that
non-employee directors that are elected or re-elected at the 2003 Annual Meeting will
receive an option to purchase 20,000 shares and all other non-employee directors will
receive an option to purchase 7,500 shares on the first business day following the 2003
Annual Meeting.
Discretionary
Grants. The Compensation Committee has discretion to grant options to advisors under
the Non-Employee Plan from time to time.
Option
Price. Unless otherwise determined by the Compensation Committee, the exercise price
of each option granted under the Non-Employee Plan will be 100% of the fair market value
of a share of the common stock on the date of grant. In no case will the exercise price of
an option be less than 100% of fair market value on the date of grant.
Vesting. Formula
option grants for non-employee directors will become exercisable with respect
to 33% of the options granted on each of the first two anniversaries of the
date of grant, and with respect to the remainder of the options granted on the
third anniversary of the date of grant. Formula grants become fully exercisable
upon a change of control as defined in the Non-Employee Plan. Unless the
Compensation Committee specifies otherwise, discretionary grants to advisors
will become exercisable with respect to 33% of the options granted on each of
the first two anniversaries of the date of grant, and with respect to the
remainder of the options granted on the third anniversary of the date of grant,
and become fully exercisable upon a change of control as defined in the
Non-Employee Plan.
Term
of Options. Unless otherwise specified by the Compensation Committee, the term of any
option is ten years from the date of grant.
Termination
of Service. Following a termination of service with MasTec for any reason, all
unexercisable options will immediately terminate, and exercisable options will remain
exercisable (but not beyond the options’ expiration date) for one year.
Exercise
of Options. Payment of the exercise price may be made in cash, by tendering previously
acquired shares of MasTec’s stock that have been held for six months, by a
combination of cash and surrender of shares, or another method approved by the
Compensation Committee.
Fair Market Value
Fair
market value of the common stock under the Non-Employee Plan is generally the last sale
price of a share of MasTec’s common stock quoted at the close of trading for the
relevant date on the New York Stock Exchange.
Reorganization
If
MasTec is part of any reorganization involving merger, consolidation, acquisition of our
stock or acquisition of our assets, the Compensation Committee, in its discretion, may
decide that (i) outstanding awards apply to the securities of the resulting corporation;
(ii) outstanding options become immediately fully exercisable; and/or (iii) outstanding
options become immediately fully exercisable and terminate after 30 days’ notice.
Amendment and Termination
MasTec’s
board of directors may amend, modify or terminate the Non-Employee Plan at any time.
However, no amendment, modification or termination shall result in the Non-Employee Plan
being subject to variable or other adverse accounting treatment or adversely affect, in
any way, the rights of holders of outstanding awards without their consent unless the
amendment or termination is necessary to comply with applicable law. Unless terminated
sooner, the Non-Employee Plan automatically terminates on the tenth anniversary of its
effective date.
Adjustments
In
the event MasTec is involved in a corporate transaction or any other event which affects
MasTec’s common stock (such as recapitalization, reclassification, stock split, stock
dividend, extraordinary cash dividend, split-up, spin-off, combination or exchange of
shares), the Compensation Committee will adjust the number and kind of shares available
for issuance under the Non-Employee Plan, the number and kind of shares subject to
outstanding options, the exercise price of outstanding stock options, and any other
equitable adjustment.
Transferability
Unless
the Compensation Committee specifies otherwise, options are not transferable except by the
laws of descent and distribution.
Federal Income Tax
Consequences
The
following is a brief general description of the consequences under the IRC of the receipt
or exercise of options under the Non-Employee Plan:
Incentive
Stock Options. The Non-Employee Plan does not provide for the grant of incentive stock
options.
Nonqualified
Stock Options. Neither MasTec nor the option holder has income tax consequences from
the issuance of nonqualified stock options. Generally, upon the exercise of nonqualified
stock options, the option holder recognizes ordinary income in the amount by which the
fair market value of the shares at the time of exercise exceeds the option price for such
shares. The holder’s tax basis in the shares is the fair market value of the shares
on the date of exercise. MasTec generally will have a deduction in the same amount as the
ordinary income recognized by the option holder in MasTec’s tax year in which or with
which the option holder’s tax year (of exercise) ends. Upon the sale of shares
acquired upon exercise, the option holder will have a capital gain (or loss) equal to the
difference between the tax basis and the sale price calculated at the applicable capital
gains rates.
Certain
additional rules apply if the exercise price is paid in shares of our common stock held by
the optionee.
The
foregoing discussion is not a complete discussion of all federal income tax aspects of the
Non-Employee Plan. Some of the provisions contained in the IRC have only been summarized,
and additional qualifications and refinements may be contained in regulations that will be
issued in the future by the Internal Revenue Service. Furthermore, subsequent legislative
changes or changes in administrative or judicial interpretation could alter significantly
the tax treatment discussed herein. No discussion of state income tax law has been
included. Each individual should consult his or her own tax advisors with respect to the
tax consequences of participation in the Non-Employee Plan and disposition of shares
acquired under the Non-Employee Plan.
ERISA. The
Non-Employee Plan is not, and is not intended to be, an employee benefit plan
or qualified retirement plan. The Non-Employee Plan is not, therefore, subject
to the Employee Retirement Income Security Act of 1974, as amended, or Section
401(a) of the IRC.
AUDIT COMMITTEE AND
AUDIT RELATED INFORMATION
Audit Committee Report
The
Audit Committee of MasTec is composed of three independent nonmanagement directors. The
members of the Audit Committee meet the independence and experience requirement of the New
York Stock Exchange. In 2002, the Audit Committee met four times. The Audit Committee has
adopted, and annually reviews, a charter, which provides the duties and obligations of the
Audit Committee. In April 2003, the Board of Directors approved a new charter for the
Audit Committee, a copy of which is attached to this Proxy Statement as Appendix A.
During
the calendar year 2002, at each of its meetings, the Audit Committee met with senior
members of the financial management team and with independent auditors. The agenda of the
Committee is established by the Chairman. Members of the Committee had private executive
sessions, at each of its meetings, with independent auditors for the purpose of discussing
financial management, accounting and internal control issues.
The
Audit Committee engaged Ernst & Young LLP as the independent auditor for MasTec for
the year ended December 31, 2002 and reviewed with MasTec’s financial management team
and the independent auditors the scope of the annual audit plan, the results of their
examination, the evaluation by the independent auditors of the internal control systems
and MasTec’s financial reporting. The Committee has reviewed with management and the
independent auditors the critical accounting policies of MasTec and the reasonableness of
accounting judgments and estimates.
The
Audit Committee also discussed with the independent auditors the matters required to be
reviewed by Statement on Auditing Standards No. 61 (Communications with Audit Committees),
as amended by Statement on Auditing Standards No. 90 (Audit Committee Communications), and
reviewed the written disclosures and related correspondence from the independent auditors
required by Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees). The Audit Committee reviewed and discussed with the independent
auditors their independence from MasTec. In connection with discussions regarding
independence, the Audit Committee also considered with the independent auditors whether
the provision of nonaudit services by independent auditors to MasTec is compatible with
the auditors’ independence.
The
Audit Committee has reviewed the audited financial statements contained in the Annual
Report on Form 10-K with our management, including a discussion of the accounting
principles, the reasonableness of judgments and estimates, the clarity of disclosure in
the financial statements and the conformity of the consolidated financial statements of
MasTec with generally accepted accounting principles.
In
performing its functions, the Audit Committee acts in an oversight capacity. The Audit
Committee relies on the work and assurances of our management, which has the primary
responsibility for the financial statements and reports, and of the independent auditors,
who, in their report, express an opinion on the conformity of our annual financial
statements to generally accepted accounting principles.
In
reliance on these reviews and discussions, and the report of the independent auditors, the
Audit Committee has recommended to the Board of Directors and the Board of Directors has
approved, that the audited financial statements be included in MasTec’s Annual Report
on Form 10-K for the year ended December 31, 2002.
Arthur B. Laffer, Chairman
William N. Shiebler
John Van Heuvelen
Audit Fees
The
Audit Committee is required to approve all audit and non-audit services provided by our
independent auditor, including the scope of services and fees to be paid.
Fees
for services rendered by Ernst & Young for the audit of our annual financial
statements and review of financial statements included in quarterly reports on Form 10-Q
for calendar 2002 totaled approximately $800,000.
Fees
for services rendered by PricewaterhouseCoopers for the audit of our annual financial
statements and review of financial statements included in quarterly reports on Form 10-Q
for calendar 2001 totaled approximately $427,616.
Audit Related Fees
Fees
for audit related services, which are services that are reasonably related to the
performance of the audit or review of quarterly financial statements, performed by Ernst
& Young for calendar 2002 totaled approximately $58,070.
There
were no fees for audit related services, which are services that are reasonably related to
the performance of the audit or review of quarterly financial statements, performed by
PricewaterhouseCoopers for calendar 2001.
Tax Fees
Fees
for tax services, including compliance, tax advice and tax planning, performed by Ernst
& Young for calendar 2002 totaled approximately $47,000.
Fees
for tax services, including compliance, tax advice and tax planning performed by
PricewaterhouseCoopers for calendar 2001 totaled approximately $262,262.
All Other Fees
There
were no fees for other services not described above in 2002 and 2001.
We
have been advised by Ernst & Young LLP that neither the firm nor any member of the
firm has any financial interest, direct or indirect, in any capacity in MasTec or our
subsidiaries.
Selection of Auditors
On
April 26, 2002, MasTec filed a Current Report on Form 8-K (as amended on June 11, 2002)
reporting that on April 19, 2002, the Audit Committee dismissed PricewaterhouseCoopers LLP
and engaged Ernst & Young LLP as our independent auditors for the 2002 calendar year.
The Form 8-K reported that there were no adverse opinions or disclaimer of opinions and
that there were no disagreements between MasTec and PricewaterhouseCoopers involving any
matter of accounting principles or practices, financial statement disclosure or auditing
scope or procedure. The Form 8-K stated that the Audit Committee adopted a policy to
review the independent auditor selection on a periodic basis. MasTec expects that
representatives of the independent auditors for 2002 will be present at the Annual
Meeting. The independent auditor’s representatives will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate questions from
shareholders.
MISCELLANEOUS
List of MasTec’s
Shareholders
A list
of MasTec’s shareholders as of March 21, 2003, the record date for the Annual
Meeting, will be available for inspection at our corporate headquarters located at 3155
N.W. 77th Avenue, Miami, Florida, during normal business hours during the 10-day period
prior to the Annual Meeting.
Shareholders’
Proposals for 2003 Annual Meeting
Under
our bylaws, MasTec must receive any proposal of an eligible shareholder intended to be
presented at the Annual Meeting of Shareholders of MasTec in 2004 on or before December
31, 2003, for the proposal to be eligible for inclusion in our Proxy Statement and Proxy
related to that meeting. Any notice regarding a shareholder proposal must include the
information specified in Article I, Section 9 of our bylaws. If a shareholder fails to
comply with Article I, Section 9 of our bylaws or notifies MasTec after December 31, 2003
of an intent to present a proposal at MasTec’s Annual Meeting of Shareholders in the
year 2004, the proposal will not be considered. A copy of our bylaw requirements will be
provided upon written request to: MasTec Legal Department, 3155 N.W. 77th
Avenue, Miami, Florida 33122-1205.
Householding
Unless
contrary instructions are received, MasTec may send a single copy of the Annual Report,
Proxy Statement and Notice of Annual Meeting to any household at which two or more
shareholders reside if MasTec believes the shareholders are members of the same family.
Each shareholder in the household will continue to receive a separate proxy card. This
process is known as “householding” and helps reduce the volume of duplicate
information received at a single household, which reduces costs and expenses borne by
MasTec.
If
you would like to receive a separate set of MasTec’s annual disclosure documents this
year or in future years, follow the instructions described below. Similarly, if you share
an address with another shareholder and the two of you would like to receive only a single
set of our annual disclosure documents, follow the instructions below:
1.
If your shares are registered in your own name, please contact our transfer
agent Wachovia Securities, and inform them of your request by calling them at
1-800-829-8432 or by writing to them at Corporate Trust Client Services NC-1153,
1525 West W.T. Harris Boulevard 3C3, Charlotte, North Carolina 28262-1153.
2.
If a bank, broker or other nominee holds your shares, please contact your bank,
broker or other nominee directly.
Other Matters that May
Come Before the Annual Meeting
The
Board of Directors does not intend to present and knows of no others who intend to present
at the Annual Meeting any matter or business other than that set forth in the accompanying
Notice of Annual Meeting of Shareholders. If other matters are properly brought before the
Annual Meeting, it is the intention of the persons named in the accompanying form of proxy
to vote any proxies on such matters in accordance with their judgment.
MasTec’s
Annual Report on Form 10-K for the year ended December 31, 2002 is being mailed or
transmitted with this Proxy Statement to shareholders of record as of March 21, 2003. The
Form 10-K does not form any part of the material for the solicitation of proxies.
/s/ Cristina Canales
Cristina Canales, Secretary
Miami, Florida
April 21, 2003
APPENDIX A
AUDIT COMMITTEE CHARTER
CHARTER OF THE AUDIT
COMMITTEE
OF THE BOARD OF
DIRECTORS OF
MASTEC, INC.
1. PURPOSE
The
Audit Committee (the “Committee”) of the Board of Directors of MasTec, Inc. (the
“Company”) shall assist the Board of Directors (the “Board”) in
fulfilling its oversight responsibilities with respect to: (i) the financial reports and
other financial information provided by the Company to the public or any governmental
body; (ii) the Company’s compliance with legal and regulatory requirements; (iii) the
Company’s systems of internal controls regarding finance, accounting and legal
compliance; (iv) the qualifications and independence of the Company’s independent
auditors; (v) the performance of the Company’s internal audit function and
independent auditors; (vi) the Company’s auditing, accounting, and financial
reporting processes generally; and (vii) the performance of such other functions as the
Board may assign from time to time. To this end, the Committee will maintain free and open
communication with the Board, the independent auditors, the Company’s internal
auditor and any other person responsible for the financial management of the Company. The
Committee will also prepare the report of the Committee required by the rules of the
Securities and Exchange Commission to be filed in the Company’s annual proxy
statement. Consistent with its functions, the Committee will encourage continuous
improvement of, and will foster adherence to, the Company’s policies, procedures and
practices at all levels.
The
Committee will primarily fulfill its responsibilities by carrying out the activities
enumerated in Section 5 of this Charter.
As
an oversight body, the Committee does not have responsibility for day-to-day operations
and financial reporting. It is not the responsibility of the Committee to plan or conduct
audits or to determine that the Corporation’s financial statements are complete and
accurate and are in accordance with generally accepted accounting principles; rather, this
is the responsibility of management and the independent auditors.
2.
COMPOSITION AND ORGANIZATION
The
Committee will consist of three or more directors, each of whom must be an
“Independent Director” (as defined below). Members of the Committee shall be
appointed by the Board and, unless otherwise directed by the Board, shall serve one-year
terms. Members may be removed by the Board at any time with or without cause. Upon the
removal or resignation of a member, the Board may appoint a successor to serve the
remainder of the unexpired term. The Board will appoint one member of the Committee as
chairperson. If the Board fails to appoint a chairperson, the Committee will appoint one
member of the Committee as chairperson. The Company shall have the power to create
subcommittees with such powers as the Committee shall from time to time confer.
For
purposes of this Charter, the term “Independent Director” means: a person other
than an officer or employee of the Company or its subsidiaries or any other individual
having a relationship which, in the opinion of the Board, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a member of the
Committee or a director. The following persons shall not be considered independent:
o a director who is or has been employed by the Company or any of the Company's affiliates within the past five years;
o a director who is currently, or within the past five years was, affiliated with or employed by a (present or former) auditor
of the company (or of an affiliate);
o a director who is or was employed as an executive officer of another entity where any of
the Company’s executives concurrently serve or served on such entity’s
compensation committee in the current year or any of the past five years; or
o a director who is a Family Member of an individual who is, or within the past five years was, in any of the foregoing
categories.
Additionally,
the following enhanced “Independent Director” requirement applies to members of
the Audit Committee. The following persons will not be considered independent:
o a director who accepts any consulting, advisory or other compensatory fees from the
Company other than for service on the Board or a committee of the Board.
For
purposes of this Charter, “Family Member” means any person who is related to the
director by blood, marriage or adoption or has the same residence.
3. QUALIFICATIONS
Each
member of the Committee must be able to read and understand fundamental financial
statements, including the Company’s balance sheet, income statement and cash flow
statement. As such requirements are phased in under the applicable rules and regulations,
the chairperson of the Committee must have past employment experience in finance or
accounting, requisite professional certification in accounting or any other comparable
experience or background which results in the individual’s financial sophistication,
including being or having been a chief executive officer, chief financial officer or other
senior officer with financial oversight responsibilities or other experience as required
by applicable law and must meet the definition of “financial expert” as that
term is defined by the Securities and Exchange Commission and as required by the
Sarbanes-Oxley Act of 2002.
No
director may serve as a member of the Committee if such director serves on the audit
committees of more than two other public companies unless the Nominating and Governance
Committee and the Board determine that such simultaneous service would not impair the
ability of such director to effectively serve on the Committee and such determination is
disclosed in the Company’s annual proxy statement.
4. MEETINGS
The
Committee will meet at least four times annually and more frequently as circumstances
dictate. The Committee chairperson will establish the agenda for each Committee meeting.
As part of its job to foster open communication, the Committee will meet at least
quarterly with management, the internal auditor and the independent auditors in separate
executive sessions to discuss any matters that the Committee or any of these groups
believe should be discussed privately. In addition, the Committee will meet with the
independent auditors and management quarterly to review the Company’s financials,
consistent with Section 5 below.
5.
RESPONSIBILITIES AND DUTIES
To
fulfill its responsibilities and duties the Committee will:
1.
Document
/ Report Review
| |
(a) |
Review this
Charter at least annually, update this Charter as necessary and ensure that this Charter is posted on the Company’s website. |
| |
(b) |
Review any reports or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion, or review rendered by the independent auditors. |
| |
(c) |
Review the regular internal reports to management prepared by the internal auditing
department and management’s response. |
| |
(d) |
Review with financial management and the independent auditors each Form 10-Q and Form 10-K
prior to its filing. |
| |
(e) |
Review, at least annually, a report by the independent auditors describing: (i) the
independent auditors’ internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or
peer review, of the independent auditors, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the independent auditors, and any steps taken to deal with any such issues. |
| |
(f) |
Review a formal written statement submitted by the independent auditors to the Company at least annually which delineates all relationships between the independent
auditors and the Company, consistent with Independence Standards Board Standard No. 1. |
| |
(g) |
Review a report of the independent auditors prior to the filing of the Form 10-K or the release of any audited financial statements of the Company with respect to: |
| |
(i) |
all critical accounting policies and practices used; |
| |
(ii) |
all alternative treatments of financial information within generally accepted accounting principles (GAAP) that have been discussed with management,
ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and |
| |
(iii) |
other material written communications between the independent auditors and management, such as any management letter or schedule of unadjusted
differences. |
| |
(h) |
Review with
management, including both the Chief Executive Officer and Chief Financial Officer: (i) on a quarterly basis, the report of the Disclosure Controls
Committee and the internal control system, and (ii) on an annual basis, the internal control report to be filed with the Company’s annual report on
Form 10-K. |
| |
(i) |
Prepare (or cause to be prepared) the report of the Committee to be included in the Company’s
annual proxy statement. |
2.
Independent Auditors and Other Advisors
| |
(a) |
Have sole authority, without Board action, to select and hire the independent auditors, considering independence and effectiveness. On an annual basis, the Committee
should review and discuss with the independent auditors all disclosed relationships the independent auditors have with the Company to determine the
independent auditors’ objectivity and independence, consistent with Independence Standards Board Standard No. 1. |
| |
(b) |
Have sole authority, without Board action, to approve the independent auditors’fees.
|
| |
(c) |
Have sole authority, without Board action, to approve all audit and non-audit services provided by the independent auditors, prior to the Company’s receipt of
such services. All approved non-audit services shall be disclosed in the Company’s periodic reports required by Section 13(a) of the Securities Exchange Act of
1934. |
| |
(d) |
Review and evaluate the qualifications, performance and independence of the independent auditors; when circumstances warrant, discharge the independent auditors; and
nominate independent auditors for stockholder approval in the Company’s annual proxy statement. The independent auditors will be accountable to the
Board and the Committee, as representatives of the stockholders of the Company. |
| |
(e) |
Periodically consult
with the independent auditors out of the presence of management about internal controls and the fullness and accuracy of the Company’s financial statements. |
| |
(f) |
Have sole
authority, without Board action, to set clear hiring policies for employees or former employees of the independent auditors, including the requirement that no
person be hired as Chief Executive Officer, Chief Financial Officer, Controller, Chief Accounting Officer or any other financial reporting oversight role if such person
was employed by the independent auditors and participated in any capacity in the audit of the Company during the one year period preceding the date of initiation of such audit. |
| |
(g) |
Have
sole authority, without Board action, to hire and determine the fees and other retention terms for legal, accounting and other advisors to the Committee as it
sees fit. |
3.
Financial Reporting Processes
| |
(a) |
Discuss
the annual audited financial statements and quarterly financial statements with
management, the internal auditor and the independent auditors, including the Company’s
disclosures under “Management’s Discussion and Analysis of Financial Condition
and Results of Operation.” |
| |
(b) |
Discuss
earnings press releases, as well as financial information and earnings guidance provided
to analysts and rating agencies. |
| |
(c) |
In consultation
with the independent auditors and the internal auditor, review the integrity of the Company’s internal and external financial reporting processes. |
| |
(d) |
Consider the independent auditors’ judgments about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting. |
| |
(e) |
Consider and approve, if appropriate, major changes to the Company’s accounting principles and practices as suggested by the independent auditors, management
or the internal auditing department. |
4.
Process Improvement
| |
(a) |
Establish regular and separate systems of reporting to the Committee by each of management, the independent auditors and the internal auditor regarding any significant judgments made in management’s preparation of the financial statements and
the view of each as to appropriateness of such judgments. |
| |
(b) |
Following completion
of the annual audit, review separately with each of management, the independent auditors and the internal auditing department any problems or difficulties
encountered during the course of the audit, including any restrictions on the scope of work or access to required information, and management’s response
to the problems or difficulties. |
| |
(c) |
Review any significant disagreement between management and the independent auditors or the
internal auditing department in connection with the preparation of the financial statements. |
| |
(d) |
Review with the independent auditors, the internal auditing department and management the
extent to which changes or improvements in financial or accounting practices,as approved by the Committee, have been implemented. |
| |
(e) |
Report to the Board on a regular basis and forward copies of the minutes of all meetings to the Board. |
| |
(f) |
Establish procedures for: (i) the receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or audit matters;and (ii) the confidential anonymous submission by
employees of concerns regarding accounting or auditing matters.
|
| |
(g) |
Annually review and evaluate the performance of the Committee. |
5.
Legal Compliance
| |
(a) |
Review activities,
organizational structure, and qualifications of the internal audit department. |
| |
(b) |
Review,with
the Company’s counsel, any legal matter that could have a significant impact on the Company’s financial statements and compliance programs and
policies. |
| |
(c) |
Review and discuss the Company’s risk assessment and risk management policies.
|
| |
(d) |
Review
and approve all related party transactions. |
| |
(e) |
Perform any other activities consistent with this Charter, the Company’s Bylaws and governing law, as the Committee or the Board deems necessary or appropriate. |
APPENDIX B
MASTEC, INC.
2003 EMPLOYEE STOCK
INCENTIVE PLAN
Section 1
PLAN INFORMATION
| |
1.1
Purpose. MasTec, Inc. (the “Company”)
has established the MasTec, Inc. 2003 Employee Stock Incentive Plan (the “SIP”)
to further the growth and development of the Company. The SIP encourages the employees of
the Company and its Related Companies to obtain a proprietary interest in the Company by
owning its stock. The SIP shall also provide employees with an added incentive to
stimulate their efforts in promoting the growth, efficiency and profitability of the
Company and its Related Companies and may also help to attract potential employees to the
service of the Company and its Related Companies. Further, the SIP may encourage
employees to continue in the employ or service of the Company or a Related Company.
|
| |
1.2 Awards
Available Under the SIP. The SIP permits Awards of Stock Options, Restricted Stock
and Performance Shares. The types of Stock Options permitted under the SIP are incentive
stock options (“ISOs”), nonqualified stock options (“NQSOs”) and
Reload Options. The Company intends that ISOs granted under the SIP qualify as incentive
stock options under Code §422. NQSOs are options that do not qualify as ISOs and are
subject to taxation under Code §83. Awards of Restricted Stock and/or Performance
Shares are subject to taxation under Code §83. It is intended that some Awards under
the SIP will qualify as performance-based compensation under Code §162(m).
|
| |
1.3 Effective
Date and Term of the SIP. The Board of Directors of the Company adopted the SIP on
April 21, 2003, to become effective as of May 30, 2003 (the “Effective Date”),
contingent upon the approval of the shareholders of the Company at the May 30, 2003
annual shareholders meeting. Unless earlier terminated by the Company, the SIP shall
remain in effect until the tenth anniversary of the Effective Date or May 30, 2013.
Notwithstanding its termination, the SIP shall remain in effect with respect to
outstanding Awards as long as any Awards are outstanding.
|
| |
1.4 Operation,
Administration and Definitions. The operation and administration of the SIP are
subject to the provisions of this plan document. Capitalized terms used in the SIP are
defined in Section 2 below or may be defined within the SIP.
|
| |
1.5 Legal
Compliance. The SIP is intended to comply with the requirements for exemption of
stock options under the provisions of Rule 16b-3 under the 1934 Act. In addition, the SIP
is intended to comply with the requirements for performance-based compensation under Code
§162(m).
|
Section 2
PLAN DEFINITIONS
For
purposes of the SIP, the terms listed below are defined as follows:
| |
2.1
1933 Act means the Securities Act of 1933, as
amended.
|
| |
2.2
1934 Act means the Securities Exchange Act of
1934, as amended.
|
| |
2.3 Agreement means
a Stock Option Agreement, a Restricted Stock Agreement, or a Performance Share Agreement,
as applicable, the terms and conditions of which have been established by the Committee,
and which has been entered into between the Company and an individual Key Employee of the
Company.
|
| |
2.4 Award means
any award or benefit granted to any Participant under the SIP, including, without
limitation, the grant of Stock Options and the award of Restricted Stock, and/or
Performance Shares.
|
| |
2.5
Beneficiary shall mean, with respect to an Optionee:
|
| |
(a) |
Designation of Beneficiary. An Optionee’s Beneficiary shall be the
individual who is last designated in writing by the Optionee as such
Optionee’s Beneficiary under an Option. An Optionee shall designate his or
her Beneficiary in writing on his or her Option Agreement. Any subsequent
modification of the Optionee’s Beneficiary for an Option shall be in a
written executed letter addressed to the Company and shall be effective when it
is received and accepted by the Committee, determined in the Committee’s
sole discretion. |
| |
(b) |
Designation of Multiple Beneficiaries. An Optionee may not
designate more than one individual as a Beneficiary. To the extent that a
designation purports to designate more than one individual as a Beneficiary, the
designation shall be null and void. |
| |
(c) |
No Designated Beneficiary. If, at any time, no Beneficiary has been
validly designated by an Optionee, or the Beneficiary designated by the Optionee
is no longer living at the time of the Optionee’s death, then the
Optionee’s Beneficiary shall be deemed to be the Optionee’s estate,
and only the executor or administrator of the estate shall be permitted to
exercise the Option. |
| |
2.6
Board means the Board of Directors of the Company.
|
| |
2.7 Cause shall
have the same meaning prescribed in an Optionee’s employment agreement if one exists
for the Optionee and the employment agreement defines “cause,” if no such
agreement exist or the agreement does not contain a definition for “cause,” the
term “cause” means the Optionee is terminated for one of the following reasons:
|
| |
(a) |
willful and continued failure to substantially perform assigned duties with the
Company within seven (7) days after a written demand for substantial performance
is delivered to the Key Employee which identifies the manner in which the
Company believes that the Key Employee has not substantially performed his
duties; |
| |
(b) |
unlawful or willful misconduct which is economically injurious to the Company or
to any entity in control of, controlled by or under common control with the
Company (and its successors); |
| |
(c) |
indictment for, conviction of, or plea of guilty or nolo contendere to a
felony charge; |
| |
(d) |
drug or alcohol abuse that impairs the Key Employee’s ability to perform
the essential duties of his position; and |
| |
(e) |
engaging in activities that are deemed to be competing with the business of the
Company or not in the best interest of the Company. |
| |
2.8
Change in Control means the date of:
|
| |
(a) |
Acquisition By Person of Substantial Percentage. The acquisition by a
Person (including “affiliates” and “associates” of such
Person, but excluding the Company, any “parent” or
“subsidiary” of the Company, or any employee benefit plan of the
Company or of any “parent” or “subsidiary” of the Company)
of a sufficient number of shares of the Common Stock, or securities convertible
into the Common Stock, and whether through direct acquisition of shares or by
merger, consolidation, share exchange, reclassification of securities or
recapitalization of or involving the Company or any “parent” or
“subsidiary” of the Company, to constitute the Person the actual or
beneficial owner of 51% or more of the Common Stock, but only if such
acquisition occurs without approval or ratification by a majority of the members
of the Board; |
| |
(b) |
Disposition of Assets. Any sale, lease, transfer, exchange, mortgage,
pledge or other disposition, in one transaction or a series of transactions, of
all or substantially all of the assets of the Company or of any
“subsidiary” of the Company to a Person described in subsection (a)
above, but only if such transaction occurs without approval or ratification by a
majority of the members of the Board; or |
| |
(c) |
Substantial Change of Board Members. During any fiscal year of the
Company, individuals who at the beginning of such year constitute the Board
cease for any reason to constitute at least a majority thereof, unless the
election of each director who was not a director at the beginning of such period
has been approved in advance by a majority of the directors in office at the
beginning of the fiscal year. |
| |
For
purposes of this Section, the terms “affiliate,” “associate,”“parent” and
“subsidiary” shall have the respective meanings ascribed to such terms in Rule
12b-2 under Section 12 of the 1934 Act. |
| |
2.9 Code means
the Internal Revenue Code of 1986, as amended. A reference to any provision of the Code
includes reference to any successor provision of the Code.
|
| |
2.10 Committee
shall mean the Compensation Committee as appointed by the Board from time to time.
The Committee shall be responsible for administering and interpreting the SIP in
accordance with Section 3 below.
|
| |
2.11
Common Stock means the common stock, $0.10 par value per share, of the Company.
|
| |
2.12
Company means MasTec, Inc. and its subsidiaries or Related Companies.
|
| |
2.13 Disability means
a Participant’s eligibility to receive long-term disability benefits under a plan
sponsored by the Company or a Related Company, or if no such plan is applicable, a
Participant’s inability to engage in the essential functions of his or her duties
due to a medically-determinable physical or mental impairment, illness or injury, which
can be expected to result in death or to be of long-continued and indefinite duration as
determined in the sole discretion of the Committee.
|
| |
2.14
Effective Date means May 30, 2003, subject to shareholder approval.
|
| |
2.15
Exercise Price means the purchase price of the shares of Common Stock underlying a
Stock Option.
|
| |
2.16
Fair Market Value of the Common Stock as of a date of determination shall mean the
following:
|
| |
(a) |
Stock Listed and Shares Traded. If the Common Stock is listed and traded
on a national securities exchange (as such term is defined by the 1934 Act) or
on the NASDAQ National Market System on the date of determination, the Fair
Market Value per share shall be the last sale price of a share of the Common
Stock on the applicable national securities exchange or National Market System
on the date of determination at the close of trading on such date. If the Common
Stock is traded in the over-the-counter market, the Fair Market Value per share
shall be the average of the closing bid and asked prices on the date of
determination. |
| |
(b) |
Stock Listed But No Shares Traded. If the Common Stock is listed on a
national securities exchange or on the National Market System but no shares of
the Common Stock are traded on the date of determination but there were shares
traded on dates within a reasonable period before the date of determination, the
Fair Market Value shall be the last sale price of the Common Stock on the most
recent trade date before the date of determination at the close of trading on
such date. If the Common Stock is regularly traded in the over-the-counter
market but no shares of the Common Stock are traded on the date of determination
(or if records of such trades are unavailable or burdensome to obtain) but there
were shares traded on dates within a reasonable period before the date of
determination, the Fair Market Value shall be the average of the closing bid and
asked prices of the Common Stock on the most recent date before the date of
determination. |
| |
(c) |
Stock Not Listed. If the Common Stock is not listed on a national
securities exchange or on the National Market System and is not regularly traded
in the over-the-counter market, then the Committee shall determine the Fair
Market Value of the Common Stock from all relevant available facts, which may
include the average of the closing bid and ask prices reflected in the
over-the-counter market on a date within a reasonable period either before or
after the date of determination or opinions of independent experts as to value
and may take into account any recent sales and purchases of such Common Stock to
the extent they are representative. |
The
Committee’s determination of Fair Market Value, which shall be made pursuant to the
foregoing provisions, shall be final and binding for all purposes of this SIP.
| |
2.17
Incentive Stock Option or ISO means an incentive stock option within the
meaning of Code §422(b).
|
| |
2.18 Key
Employee means any common law employee who serves as an officer or employee of the
Company or a Related Company and who is actively employed at the time Awards are made. As
required by law, only employees of the Company and any “parent” or “subsidiary” of
the Company (as those terms are defined in Code §424) are eligible to receive ISOs.
|
| |
2.19 Nonqualified
Stock Option or NQSO means an option that is not qualified as an incentive
stock option within the meaning of Code §422(b).
|
| |
2.20
Optionee means a Key Employee who is granted a Stock Option.
|
| |
2.21
Participant means an Optionee or a Recipient.
|
| |
2.22 Performance
Measures means any one or more of the criteria or measurements by which specific
performance goals may be established and performance may be measured, as determined by
the Committee in its discretion, pursuant to the provisions of Section 5.2.
|
| |
2.23 Performance
Share means an award of the right, subject to such conditions, restrictions and
contingencies as the Committee determines, including specifically the satisfaction of
specified Performance Measures, to receive one share of Common Stock in the future.
|
| |
2.24 Performance
Share Agreement means a written agreement signed and dated by the Committee (or its
designee) and a Recipient that specifies the terms and conditions of an Award of
Performance Shares.
|
| |
2.25
Person means any individual, organization, corporation, partnership or other entity.
|
| |
2.26
Recipient means a Key Employee who is awarded Restricted Stock or Performance Shares.
|
| |
2.27 Related
Company means any member within the Company’s controlled group of corporations,
as that term is defined in Code §1563(a), in addition to any partnerships, joint
ventures, limited liability companies, limited liability partnerships or other entities
in which the Company owns more than a 50 percent equity interest.
|
| |
2.28 Reload
Option means a Stock Option granted to a Key Employee who is an Optionee who
exercises a previously held Stock Option by surrendering Common Stock for part or all of
the Exercise Price, pursuant to the provisions of the SIP.
|
| |
2.29 Restricted
Stock means an Award of Common Stock subject to such conditions, restrictions and
contingencies as the Committee determines, including the satisfaction of specified
Performance Measures and/or forfeiture provisions.
|
| |
2.30 Restricted
Stock Agreement means a written agreement signed and dated by the Committee (or its
designee) and a Recipient that specifies the terms and conditions of an Award of
Restricted Stock.
|
| |
2.31
SIP means this MasTec, Inc. 2003 Employee Stock Incentive Plan.
|
| |
2.32
Stock Option means an ISO, NQSO or Reload Option, as applicable, granted to a Key
Employee under the SIP.
|
| |
2.33 Stock
Option Agreement means a written agreement signed and dated by the Committee (or its
designee) and an Optionee that specifies the terms and conditions of a Stock Option or
Reload Option.
|
Section 3
SIP ADMINISTRATION
| |
3.1 General
Administration. The SIP shall be administered and interpreted by the Committee (as
designated pursuant to Section 3.2). Subject to the express provisions of the SIP, the
Committee shall have authority to interpret the SIP, to prescribe, amend and rescind
rules and regulations relating to the SIP, to determine the terms and provisions of the
Agreements by which Awards shall be evidenced (which shall not be inconsistent with the
terms of the SIP), and to make all other determinations necessary or advisable for the
administration of the SIP, all of which determinations shall be final, binding and
conclusive.
|
| |
3.2 Appointment
of Committee. The Board shall appoint the Committee from among its members to serve
at the pleasure of the Board. The Board from time to time may remove members from, or add
members to, the Committee and shall fill all vacancies thereon. The Committee at all
times shall be composed of two or more non-employee directors who are deemed independent
directors by the Board and who shall meet the following requirements:
|
| |
(a) |
Disinterested Administration for Rule 16b-3 Exemption. During the period
any director is serving on the Committee, he shall not be (i) an officer of the
Company or a parent or subsidiary of the Company, or otherwise currently
employed by the Company or a parent or subsidiary of the Company; (ii) does not
receive compensation, either directly or indirectly, from the Company or a
parent or subsidiary of the Company for services rendered as a consultant or in
any capacity other than as a director, except for an amount that does not exceed
the dollar amount for which disclosure would be required pursuant to Rule 404(a)
of the 1934 Act; (iii) does not possess an interest in any other transaction for
which disclosure would be required pursuant to Rule 404(a); and (iv) is not
engaged in a business relationship for which disclosure would be required
pursuant to Rule 404(b). The requirements of this subsection are intended to
comply with Rule 16b-3 under Section 16 of the 1934 Act or any successor rule or
regulation, and shall be interpreted and construed in a manner which assures
compliance with said Rule. To the extent said Rule 16b-3 is modified to reduce
or increase the restrictions on who may serve on the Committee, the SIP shall be
deemed modified in a similar manner. |
| |
(b) |
Outside Director Rule for Compliance with Code Section 162(m). No
director serving on the Committee may be a current employee of the Company or a
former employee of the Company (or any corporation affiliated with the Company
under Code §1504) receiving compensation for prior services (other than
benefits under a tax-qualified retirement plan) during each taxable year during
which the director serves on the Committee. Furthermore, no director serving on
the Committee shall be or have ever been an officer of the Company (or any Code
§1504 affiliated corporation), or shall receive remuneration (directly or
indirectly) from such a corporation in any capacity other than as a director.
The requirements of this subsection are intended to comply with the
“outside director” requirements of Treas. Reg. §1.162-27(e)(3) or
any successor regulation, and shall be interpreted and construed in a manner
which assures compliance with the “outside” director requirement of
Code §162(m)(4)(C)(i). |
| |
3.3 Organization.
The Committee shall hold its meetings at such times and at such places as it shall deem
advisable. A majority of the Committee shall constitute a quorum, and such majority shall
determine its actions. The Committee shall keep minutes of its proceedings and shall
report the same to the Board at the meeting next succeeding.
|
| |
3.4 Powers
of Committee. The Committee may make one or more Awards under the SIP to a Key
Employee who shall become a Participant in the SIP. The Committee shall decide to whom
and when to grant an Award, the type of Award that it shall grant and the number of
shares of Common Stock covered by the Award. The Committee shall also decide the terms,
conditions, performance criteria, restrictions and other provisions of the Award. The
Committee may grant a single Award or an Award in combination with another Award(s) to a
Participant. In making Award decisions, the Committee may take into account the nature of
services rendered by the individual, the individual’s present and potential
contribution to the Company’s success and such other factors as the Committee, in
its sole discretion, deems relevant.
|
| |
(a) |
In accordance with Section 5 of the SIP, the Committee shall decide whether and
to what extent Awards under the SIP shall be structured to conform with Code
§162(m) requirements for the exemption applicable to performance-based
compensation. The Committee may take any action, establish any procedures and
impose any restrictions that it finds necessary or appropriate to conform to
Code §162(m). If every member of the Committee does not meet the definition
of “outside director” as defined in Code §162(m), the Committee
shall form a subcommittee of those members who do meet that definition, and that
subcommittee shall have all authority and discretion to act as the Committee to
make Awards that conform with Code §162(m). |
| |
(b) |
The Committee shall interpret the SIP, establish and rescind any rules and
regulations relating to the SIP, decide the terms and provisions of any
Agreements made under the SIP, and determine how to administer the SIP. The
Committee also shall decide administrative methods for the exercise of Stock
Options. Each Committee decision shall be final, conclusive and binding on all
parties. |
| |
(c) |
The Committee shall act by a majority of its then members, at a meeting of the
Committee or by unanimous written consent. The Committee shall keep adequate
records concerning the SIP and the Committee’s proceedings and acts in such
form and detail as the Committee may decide. |
| |
3.5 Delegation
by Committee. Unless prohibited by applicable law or the applicable rules of a stock
exchange, the Committee may allocate or delegate all or some of its responsibilities. The
Committee also may delegate all or some of its administrative responsibilities and powers
to any person or persons it selects. The Committee delegates to the Company’s
counsel the authority to document any and all Awards made by the Committee under the SIP
by execution of the appropriate agreements. The Committee may revoke any such allocation
or delegation at any time.
|
| |
3.6 Information
to be Furnished to Committee. In order for the Committee to discharge its duties, it
may require the Company, its Related Companies, Participants and other persons entitled
to benefits under the SIP to provide it with certain data and information.
|
| |
3.7 Indemnification.
In addition to such other rights of indemnification that they have as members of the
Board or the Committee, the Company shall indemnify the members of the Committee (and any
designees of the Committee as permitted under this Section 3), to the extent permitted by
applicable law, against reasonable expenses (including, without limitation, attorney’s
fees) actually and necessarily incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal, to which they or any of them may be
a party by reason of any action taken or failure to act under or in connection with the
SIP or any Award awarded hereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved to the extent required by and in the manner
provided by the articles of incorporation or the bylaws of the Company relating to
indemnification of the members of the Board) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to such matters as to
which it is adjudged in such action, suit or proceeding that such Committee member or
members (or their designees) did not act in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the Company.
|
Section 4
STOCK SUBJECT TO THE
SIP
| |
4.1
Stock Subject to Awards.
|
Stock
subject to Awards and other provisions of the SIP shall consist of the following:
| |
(a) |
authorized but unissued shares of Common Stock; |
| |
(b) |
shares of Common Stock held by the Company in its treasury which have been
reacquired; |
| |
(c) |
shares of Common Stock purchased by the Company in the open market; or |
| |
(d) |
shares of Common Stock allocable to the unexercised portion of any expired or
terminated Option granted under the SIP again may become available for grants of
Options under the SIP. |
| |
4.2 Shares
of Common Stock Subject to Awards. Subject to adjustment in accordance with the
provisions of Section 9, the maximum number of shares of Common Stock that may be issued
under the SIP shall equal 2,500,000 shares of Common Stock, plus an increase as of each
December 31 (commencing on December 31, 2003) equal to a number of shares equal to the
difference between the number of shares subject to grants made under the SIP during the
12-month period ending on such December 31, less any shares subject to grants that again
became available for issuance under the SIP due to forfeiture, termination, surrender or
other cancellation of the underlying grant without such shares being issued, provided
that, notwithstanding the foregoing, in no event shall more than an aggregate of
7,000,000 shares of common stock be authorized for issuance during the term of the SIP
(unless the SIP is amended in accordance with its terms and in compliance with all
applicable statutes, rules and regulations).
|
Section 5
PERFORMANCE-BASED
COMPENSATION
| |
5.1 Awards
of Performance-Based Compensation. At its discretion, the Committee may make Awards
to Participants intended to comply with the “performance-based”compensation
provisions of Code Section 162(m). Therefore, the number of shares becoming exercisable
or transferable or amounts payable with respect to grants of Stock Options, awards of
Restricted Stock and/or Performance Shares may be determined based on the attainment of
written performance goals approved by the Committee for a performance period. The
performance goal shall state, in terms of an objective formula or standard, the method of
computing the amount of compensation payable to the Participant if the goal is attained.
The performance goals must be established by the Committee in writing at the time of
award. The outcome of the performance goal must be substantially uncertain at the time
the Committee establishes the performance goal. Performance goals will be based on the
attainment of one or more Performance Measures. To the degree consistent with Code §162(m),
the performance goals may be calculated without regard to extraordinary or nonrecurring
items.
|
| |
5.2 Performance
Measures. Performance measures may be based on non-GAAP criteria or terms, including,
but not limited to, the following: (i) earnings before interest expense, taxes,
depreciation and amortization (“EBITDA”); (ii) earnings before interest expense
and taxes (“EBIT”); (iii) net earnings; (iv) net income; (v) operating income;
(vi) earnings per share; (vii) growth; (viii) return on shareholders’ equity; (ix)
capital expenditures; (x) expenses and expense ratio management; (xi) return on
investment; (xii) improvements in capital structure; (xiii) profitability of an
identifiable business unit or product; (xiv) profit margins; (xv) stock price; (xvi)
market share; (xvii) revenues or sales; (xviii) costs; (xix) cash flow; (xx) working
capital; (xxi) return on assets; (xxii) economic value added; (xxiii) industry indices;
(xxiv) peer group performance; (xxv) asset quality; (xxvi) gross margin; (xxvii)
operating profit; and (xxviii) gross or net profit. Performance measures may relate to
the Company and/or one or more of its Related Companies, one or more of its divisions or
units or any combination of the foregoing, on a consolidated or nonconsolidated basis,
and may be applied on an absolute basis or be relative to one or more peer group
companies or indices, or any combination thereof, all as the Committee determines. In
addition, to the extent consistent with the requirements of Code §162, the
performance measures may be calculated without regard to extraordinary or nonrecurring
items.
|
| |
5.3 Shareholder
Approval. For Awards to constitute performance-based compensation under Code §162(m),
the material terms of Performance Measures on which the performance goals are to be based
must be disclosed to and subsequently approved by the Company’s shareholders prior
to payment of the compensation. Shareholder approval of the SIP is necessary for the
Awards to meet the Code §162(m) exemption.
|
| |
5.4 Code
§162(m) Committee and Committee Certification. Awards intended to qualify for
exemption as performance-based compensation shall be granted by a committee of “outside
directors” as defined in Code §162(m). Pursuant to the provisions of Section
3.1(b) hereof, the Committee may establish a Code §162(m) subcommittee, if
necessary, to make such grants. Any payment of compensation with respect to an Award that
is intended to be performance-based compensation will be subject to the written
certification of the Code §162(m) Committee that the Performance Measures were
satisfied prior to the payment of the performance-based compensation. This written
certification may include the approved minutes of the Committee meeting in which the
certification is made.
|
Section 6
STOCK OPTIONS
| |
6.1 Stock
Option Agreement. When the Committee grants a Stock Option hereunder, it shall
prepare (or cause to be prepared) a Stock Option Agreement that specifies the following
terms and any additional terms and conditions determined by the Committee and not
inconsistent with the SIP:
|
| |
(a) |
the name of the Optionee; |
| |
(b) |
the total number of shares of Common Stock to which the Stock Option pertains; |
| |
(c) |
the Exercise Price of the Stock Option; |
| |
(d) |
the date as of which the Committee granted the Stock Option; |
| |
(e) |
the type of Stock Option granted; |
| |
(f) |
the requirements for the Stock Option to become exercisable, such as continuous
service, time-based schedule, period and goals for Performance Measures to be
satisfied, additional consideration, and forfeiture or cancellation provisions; |
| |
(g) |
whether Reload Options are available with respect to the Stock Option and if so,
any limitations on the granting of or number of successive Reload Options that
may be granted with regard to the Stock Option and any Reload Options under the
Stock Option; and |
| |
(h) |
the expiration date of the Option. |
| |
6.2 Maximum
Number of Shares for Option Awards. Subject to readjustment pursuant to Section 9 of
the SIP, the maximum number of shares that may be awarded under Stock Options to any
individual during any one calendar year is 750,000 shares. Notwithstanding any other
provision of the SIP, subject to readjustment pursuant to Section 9 of the SIP the
maximum number of shares that may be awarded as ISOs under the SIP shall be 7,000,000
shares.
|
| |
(a) |
The per share Exercise Price of each ISO shall be 100% of the Fair Market Value
of a share of Common Stock as of the date of grant (110% of the Fair Market
Value of a share of Common Stock as of the date of grant for an ISO Optionee who
owns more than ten percent of the voting power of all classes of stock of either
the Company or any “parent” or “subsidiary” of the Company
as defined in Code §424). |
| |
(b) |
The per share Exercise Price of each NQSO shall be 100% of the Fair Market Value
of a share of Common Stock as of the date of grant. |
| |
(a) |
General Schedule. Unless the Committee specifies otherwise in the Stock
Option Agreement, each Stock Option shall become exercisable according to the
following schedule: |
As of the following anniversary of the
Stock Option's date of grant: |
The Stock Option shall become
exercisable in the following percentages: |
| One-year anniversary |
33% |
| Two-year anniversary |
33% |
| Three-year anniversary |
34%(entire remaining) |
| |
Before
the one-year anniversary of the date of grant, no part of the Stock Option is exercisable.
Once a portion of a Stock Option is exercisable, that portion continues to be exercisable
until the Stock Option expires (as described in Section 6.5 hereof). Fractional shares
shall be carried forward to the third-year anniversary grant. |
| |
(b) |
Other Vesting Requirements. The Committee may impose any other
conditions, restrictions, forfeitures and contingencies on awards of Stock
Options. Such conditions, restrictions, forfeitures and contingencies may
consist of a requirement of continuous service and/or the satisfaction of
specified Performance Measures. The Committee may designate a single goal
criterion or multiple goal criteria for performance measurement purposes. |
| |
(c) |
Accelerated Exercisability. The Committee shall always have the power to
accelerate the exercisability of any Stock Option granted under the SIP. In the
event of one of the following events, any outstanding Stock Options shall
immediately become fully exercisable, unless otherwise determined by the
Committee and set forth in the applicable Stock Option Agreement: |
| |
(i) |
the
Optionee’s death; |
| |
(ii) |
the
Optionee’s Disability; or |
| |
(iii) |
a
Change of Control of the Company. |
| |
6.5
Expiration Date. The Expiration Date of any Stock Option shall be the earliest to
occur of the following:
|
| |
(a) |
Maximum Term. The date ten (10) years from the date of grant of the Stock
Option (or five (5) years from the date of grant for an ISO for an Optionee who
owns more than ten percent of the voting power of all classes of stock of either
the Company or any “parent” or “subsidiary” of the Company
as defined in Code §424); |
| |
(b) |
Termination for Cause and Voluntary Termination. The date of the
Optionee’s termination of employment with the Company and all Related
Companies due to discharge for Cause or voluntary termination (other than
retirement after the attainment of age 65 as specified below) by the Optionee; |
| |
(c) |
Death. The one-year anniversary of the Optionee’s termination of
employment with the Company and all Related Companies due to death, or such
shorter period as determined by the Committee and set forth in the Stock Option
Agreement; |
| |
(d) |
Disability. The one-year anniversary of the Optionee’s termination
of employment with the Company and all Related Companies due to Disability, or
such shorter period as determined by the Committee and set forth in the Stock
Option Agreement; |
| |
(e) |
Retirement. The one-year anniversary, or such shorter period as
determined by the Committee and set forth in the Stock Option Agreement, of the
Optionee’s termination of employment with the Company and all Related
Companies due to the retirement after attainment of age 65 or |
| |
(f) |
Termination of Employment. The ninety (90) day anniversary of the date of
the Optionee’s termination of employment with the Company and all Related
Companies for any reason other than those specified elsewhere in this Section
6.5, or such shorter period as determined by the Committee and set forth in the
Stock Option Agreement; |
| |
(g) |
Extension of Expiration Date. The Committee shall always have the
authority and discretion to extend the Expiration Date of any Stock Option as
long as the extended Expiration Date is not later than the tenth anniversary of
the date of grant (or five years from the date of grant for an ISO for an
Optionee who owns more than ten percent of the voting power of all classes of
stock of either the Company or any “parent” or “subsidiary”
of the Company as defined in Code §424). To the extent the Committee
extends the Expiration Date of an ISO beyond any legal period for ISO tax
treatment, the ISO shall automatically convert to a NQSO for the remainder of
the extended exercise period. |
| |
6.6 Minimum
Exercise Amount. Unless the Committee specifies otherwise in the Stock Option
Agreement, an Optionee may exercise a Stock Option for less than the full number of
shares of Common Stock subject to the Stock Option. However, such exercise may not be
made for less than 100 shares or the total remaining shares subject to the Stock Option.
The Committee may in its discretion specify other Stock Option terms, including
restrictions on frequency of exercise and periods during which Stock Options may not be
exercised.
|
| |
6.7 Payment
of Exercise Price. The Optionee must pay the full Exercise Price for shares of Common
Stock purchased upon the exercise of any Stock Option at the time of such exercise by one
of the following forms of payment:
|
| |
(b) |
by surrendering unrestricted previously held shares of Common Stock that have a
value equal to the Exercise Price at the time of exercise. The Optionee must
have held the surrendered shares of Common Stock for at least six months before
their surrender. The Optionee may surrender shares of Common Stock either by
attestation or by the delivery of a certificate or certificates for shares duly
endorsed for transfer to the Company, and if required by the Committee, with
medallion level signature guarantee by a member firm of a national stock
exchange, by a national or state bank (or guaranteed or notarized in such other
manner as the Committee may require); or |
| |
(c) |
any combination of the above forms or any other form of payment permitted by the
Committee. |
| |
6.8 Reload
Options. When the Committee grants a Stock Option, it shall designate in the Stock
Option Agreement whether a Reload Option accompanies the Stock Option and any limitations
that will apply to the granting of a Reload Option. Unless otherwise designated by the
Committee in the applicable Stock Option Agreement, a Stock Option shall not be subject
to any Reload Options. If it so desires, the Committee may permit multiple, successive
Reload Options for a Stock Option, and may designate such in the Stock Option Agreement;
but if no number of Reload Options is specified in the Stock Option Agreement that
provides for Reload Options, then the Option shall be subject to only one Reload Option.
Notwithstanding the terms of any Stock Option Agreement, the Committee shall grant Reload
Options only to Participants who are actively employed in good standing by the Company or
a Related Company at the time the grant of the Reload Option is to be made. If the
Committee has designated a Stock Option as having an accompanying Reload Option, the
Committee shall grant a Reload Option for the same number of shares as is surrendered by
the Optionee in payment of the Exercise Price (but not for shares surrendered for tax or
other withholding obligations) upon exercise of the Stock Option. The Reload Option shall
have the same terms and conditions as the related original Stock Option, including the
expiration date of the original Stock Option, except that (i) the Exercise Price for a
Reload Option shall be the Fair Market Value of the Common Stock as of the date of grant
of such Reload Option, and (ii) the Reload Option shall become fully exercisable six
months after its date of grant (except as may be limited by ISO requirements).
|
| |
6.9 Transferability.
An Optionee may transfer Stock Options under the SIP only by the laws of descent and
distribution and shall be exercisable during the Optionee’s lifetime only by the
Optionee (or a legal representative if the Optionee becomes disabled). After the death of
an Optionee, only the executor or administrator of the Optionee’s estate may
exercise an outstanding Stock Option.
|
| |
6.10 Rights
as a Shareholder. An Optionee shall first have rights as a shareholder of the Company
with respect to shares of Common Stock covered by a Stock Option only when the Optionee
has paid the Exercise Price in full and the shares actually have been issued to the
Optionee.
|
Section 7
RESTRICTED STOCK
| |
7.1 Restricted
Stock Agreement. When the Committee awards Restricted Stock under the SIP, it shall
prepare (or cause to be prepared) a Restricted Stock Agreement that specifies the
following terms:
|
| |
(a) |
the name of the Recipient; |
| |
(b) |
the total number of shares of Common Stock subject to the Award of Restricted
Stock; |
| |
(c) |
the manner in which the Restricted Stock will become nonforfeitable and
transferable and a description of any restrictions applicable to the Restricted
Stock; and |
| |
(d) |
the date as of which the Committee awarded the Restricted Stock. |
| |
7.2 Maximum
Award Per Year. Subject to readjustment pursuant to Section 9 of the SIP, the maximum
number of shares that may be awarded as Restricted Stock to any individual during any one
calendar year is 750,000 shares.
|
| |
7.3 Vesting.
Unless the Committee specifies in the Restricted Stock Agreement that an alternative
vesting schedule shall apply, that other vesting requirements shall apply or that no
vesting requirements shall apply, an Award of Restricted Stock shall become vested and
nonforfeitable on the third anniversary of the date of grant if the Recipient is an
employee of the Company on that date, and before the third anniversary of the date
of the Award, no portion of the Restricted Stock shall be vested.
|
| |
7.4 Other
Vesting Requirements. The Committee may impose any other conditions, restrictions,
forfeitures and contingencies on awards of Restricted Stock. Such conditions,
restrictions, forfeitures and contingencies may consist of a requirement of continuous
service and/or the satisfaction of specified Performance Measures. The Committee may
designate a single goal criterion or multiple goal criteria for performance measurement
purposes. The Committee may determine, in accordance with Section 5 of the SIP, whether
such vesting requirements will conform with the requirements applicable to
performance-based compensation under Code §162(m).
|
| |
7.5 Accelerated
Vesting. The Committee shall always have the right to accelerate vesting of any
Restricted Stock awarded under this SIP.
|
| |
(a) |
In the event of one of the following events, any outstanding Awards of
Restricted Stock that remain subject to vesting requirements shall immediately
become vested pursuant to the provisions of subsection (b) hereof, unless
otherwise determined by the Committee and set forth in the applicable Restricted
Stock Agreement: |
| |
(i) |
the
Recipient’s death; |
| |
(ii) |
the
Recipient’s Disability; or |
| |
(iii) |
a
Change in Control of the Company. |
| |
(b) |
If an outstanding Award of Restricted Stock remains subject only to a time-based
vesting schedule (i.e., one that requires only that the Recipient remain
employed for the passage of a specified time period), then such Award shall
immediately become fully vested and nonforfeitable upon one of the events in
subsection (a) above. If an outstanding Award of Restricted Stock remains
subject to any other type of vesting schedule or requirement (e.g., a
performance-based schedule), then upon one of the events in subsection (a)
above, a proportion of the shares subject to such Award shall become vested and
nonforfeitable, equal to the proportion of the time completed through the date
of the applicable event to the performance measurement period for the Award,
with target performance level deemed to be achieved as of the date of the
applicable event. In the event an Award was originally scheduled without a
designated target performance level (e.g., a single performance level or
minimum and maximum performance levels), then the performance level that, if
met, would have resulted in the least number of shares becoming vested shall be
treated as the target level. |
| |
7.6 Termination
of Employment. Unless the Committee decides otherwise, all shares of Restricted Stock
that remain subject to restriction upon the Recipient’s termination of employment,
other than shares of Restricted Stock accelerated under Section 7.5(b), shall be
forfeited by the Recipient.
|
| |
7.7
Delivery of Restricted Stock.
|
| |
(a) |
Issuance. The Company shall issue a certificate representing the shares
of Restricted Stock within a reasonable period of time after execution of the
Restricted Stock Agreement; provided, if any law or regulation requires the
Company to take any action (including, but not limited to, the filing of a
registration statement under the 1933 Act and causing such registration
statement to become effective) with respect to such shares before the issuance
thereof, then the date of delivery of the shares shall be extended for the
period necessary to take such action. As long as any restrictions apply to the
Restricted Stock, the shares of Restricted Stock may be held by the Committee in
uncertificated form in a restricted account. |
| |
(b) |
Legend. Unless the certificate representing shares of the Restricted
Stock are deposited with a custodian (as described in subparagraph (c) hereof),
each certificate shall bear the following legend (in addition to any other
legend required by law): |
| |
“The
transferability of this certificate and the shares represented hereby are subject to the
restrictions, terms and conditions (including forfeiture and restrictions against
transfer) contained in the MasTec, Inc. 2003 Stock Incentive Plan and a Restricted Stock
Agreement dated __________, ____, between ________________ and MasTec, Inc. The Plan and
the Restriction Agreement are on file in the office of the Chief Financial Officer of
MasTec, Inc.” |
| |
Such
legend shall be removed or canceled from any certificate evidencing shares of Restricted
Stock as of the date that such shares become nonforfeitable. |
| |
(c) |
Deposit with Custodian. As an alternative to delivering a stock
certificate to the Recipient, the Committee may deposit or transfer such shares
electronically to a custodian designated by the Committee. The Committee shall
cause the custodian to issue a receipt for the shares to the Recipient for any
Restricted Stock so deposited. The custodian shall hold the shares and deliver
the same to the Recipient in whose name the Restricted Stock evidenced thereby
are registered only after such shares become nonforfeitable. |
| |
7.8 Transferability.
Unless the Committee specifies otherwise in the Restricted Stock Agreement, a Recipient
may not sell, exchange, transfer, pledge, hypothecate or otherwise dispose of shares of
Restricted Stock awarded under this SIP while such shares are still subject to
restriction.
|
| |
7.9 Effect
of Restricted Stock Award. Upon issuance of the shares of the Restricted Stock, the
Recipient shall have immediate rights of ownership in the shares of Restricted Stock,
including the right to vote the shares and the right to receive dividends with respect to
the shares, notwithstanding any outstanding restrictions on the Restricted Stock.
|
Section 8
PERFORMANCE SHARES
| |
8.1 Performance
Share Agreement. When the Committee awards Performance Shares under the SIP, the
Committee shall prepare (or cause to be prepared) a Performance Share Agreement that
specifies the following terms:
|
| |
(a) |
the
name of the Recipient; |
| |
(b) |
the total number of Performance Shares awarded;
|
| |
(c) |
the
period over which performance is to be measured, which may be of a short-term
or long-term duration; |
| |
(d) |
the
specific Performance Measures upon satisfaction of which the Performance Shares
are to become vested and nonforfeitable; |
| |
(e) |
the
specific dates as of which Performance Measures are to be measured; |
| |
(f) |
whether
the awarded Performance Shares are eligible for dividend credit (as provided in
Section 8.4 below); and |
| |
(g) |
the
date as of which the Committee awarded the Performance Shares. |
| |
8.2 Maximum
Award Per Year. Subject to readjustment pursuant to Section 9 of the SIP, the maximum
number of shares that may be awarded as Performance Shares to any individual during any
one calendar year is 750,000 shares.
|
| |
8.3 Performance
Share Account. When the Committee awards Performance Shares hereunder, the Company
shall establish a bookkeeping account for the Recipient that shall accurately reflect the
number of Performance Shares awarded to the Recipient.
|
| |
8.4 Dividend
Credits. Unless otherwise determined by the Committee, on each date on which a
dividend is distributed by the Company on shares of Common Stock (whether paid in cash,
Common Stock or other property), the Recipient’s Performance Share account shall be
credited with an additional whole or fractional number of Performance Shares as a
dividend credit. The number of additional Performance Shares to be credited shall be
determined by dividing the product of the dividend value times the number of Performance
Shares standing in the Recipient’s account on the dividend record date by the Fair
Market Value of the Common Stock on the date of the distribution of the dividend (i.e.,
dividend amount x number of whole and fractional Performance Shares as of the dividend
record date / Fair Market Value of Common Stock as of dividend distribution date).
Accounts shall be maintained and determinations shall be calculated to three decimal
places.
|
| |
8.5 Vesting.
The Committee shall specify in the Performance Share Agreement the manner in which
Performance Shares shall vest and become nonforfeitable, as well as any conditions,
restrictions, forfeitures and contingencies to which the Performance Shares are subject.
Such conditions, restrictions, forfeitures and contingencies may consist of a requirement
of continuous service and the satisfaction of specified Performance Measures. The
Committee may designate a single goal criterion or multiple goal criteria for performance
measurement purposes. The Committee may determine, in accordance with Section 5 of the
SIP, whether such vesting requirements will conform with the requirements applicable to
performance-based compensation under Code §162(m).
|
| |
8.6 Accelerated
Vesting. The Committee shall always have the right to accelerate vesting of any
Performance Shares awarded under this SIP.
|
| |
(a) |
In the event of one of the following events, any outstanding Awards of
Performance Shares that remain subject to vesting requirements shall immediately
become vested pursuant to the provisions of subsection (b) hereof, unless
otherwise determined by the Committee and set forth in the applicable
Performance Share Agreement: |
| |
(i) |
the
Recipient’s death; |
| |
(ii) |
the
Recipient’s Disability; or |
| |
(iii) |
a
Change in Control of the Company. |
| |
(b) |
If an outstanding Award of Performance Shares remains subject to performance
criteria, then upon one of the events in subsection (a) above, a proportion of
the shares subject to such Award shall become vested and nonforfeitable, equal
to the proportion of the time completed through the date of the applicable event
to the performance measurement period for the Award, with target performance
level deemed to be achieved as of the date of the applicable event. In the event
an Award was originally scheduled without a designated target performance level
(e.g., a single performance level or minimum and maximum performance
levels), then the performance level that, if met, would have resulted in the
least number of shares becoming vested shall be treated as the target level. |
| |
8.7 Termination
of Employment. Unless the Committee decides otherwise, all shares of Performance
Shares that remain subject to restriction upon the Recipient’s termination of
employment, other than Performance Shares accelerated under Section 8.6(b), shall be
forfeitedby the Recipient.
|
| |
8.8 Delivery
of Common Stock. Upon vesting, Performance Shares shall be converted into Common
Stock and the Common Stock shall be issued to the Recipient. Any fractional Performance
Share that becomes vested shall be paid to the Recipient in cash based upon the Fair
Market Value of an equivalent fraction of a share of the Common Stock on such date. Upon
actual issuance of the shares of the Performance Shares, the Recipient shall have
immediate rights of ownership in the shares of Performance Shares, including the right to
vote the shares and the right to receive dividends with respect to the shares,
notwithstanding any outstanding restrictions on the Performance Shares.
|
| |
8.9 Transferability.
A Recipient may not sell, exchange, transfer, pledge, hypothecate or otherwise dispose of
Performance Shares awarded under this SIP.
|
| |
8.10
Waiver of Restrictions. The Committee may elect, in its sole discretion, to waive
any or all restrictions with respect to an award of Performance Shares.
|
Section 9
ADJUSTMENTS UPON
CHANGES IN CAPITALIZATION
| |
9.1
Certain Corporate Transactions.
|
| |
(a) |
Recapitalization. If the Company is involved in a corporate transaction
or any other event which affects the Common Stock (including, without
limitation, any recapitalization, reclassification, reverse or forward stock
split, stock dividend, extraordinary cash dividend, split-up, spin-off,
combination or exchange of shares), then the Committee shall adjust Awards to
preserve the benefits or potential benefits of the Awards as follows: |
| |
(i) |
The
Committee shall take action to adjust the number and kind of shares
of Common Stock that are issuable under the SIP; |
| |
(ii) |
The
Committee shall take action to adjust the number and kind of shares of
Common Stock subject to outstanding Awards; |
| |
(iii) |
The
Committee shall take action to adjust the Exercise Price of outstanding
Stock Options; and |
| |
(iv) |
The
Committee shall make any other equitable adjustments. |
| |
Only whole shares of Common Stock shall be issued in making the above adjustments. Further, the number of shares available under the SIP or
the number of shares of Common Stock subject to any outstanding Awards shall be the next
lower number of shares, so that fractions are rounded downward. Any adjustment to or
assumption of ISOs under this Section shall be made in accordance with Code §424. If
the Company issues any rights or warrants to subscribe for additional shares pro rata to
holders of outstanding shares of the class or classes of stock then set aside for the
SIP, then each Optionee shall be entitled to the same rights or warrants on the same
basis as holders of outstanding shares with respect to such portion of the Optionee’s
Stock Option as is exercised on or prior to the record date for determining shareholders
entitled to receive or exercise such rights or warrants. |
| |
(b) |
Reorganization.
If the Company is part of any reorganization involving merger,
consolidation, acquisition of the Common Stock or acquisition of the
assets of the Company, the Committee, in its discretion, may decide that:
|
| |
(i) |
any
or all outstanding Awards granted under the SIP shall pertain to and apply,
with appropriate adjustment as determined by the Committee, to the
securities of the resulting corporation to which a holder of the number of
shares of the Common Stock subject to each such Award would have been
entitled; |
| |
(ii) |
any
or all outstanding Stock Options granted hereunder shall become immediately
fully exercisable (to the extent permitted under federal or state
securities laws); |
| |
(iii) |
any
or all Stock Options granted hereunder shall become immediately fully
exercisable (to the extent permitted under federal or state securities
laws) and shall be terminated after giving at least 30 days’ notice
to the Participants to whom such Stock Options have been granted; and/or
|
| |
(iv) |
any
or all awards of Restricted Stock and Performance Shares hereunder shall
become immediately fully vested, nonforfeitable and/or payable. |
| |
(c) |
Limits on Adjustments. Any issuance by the Company of stock of any class
other than the Common Stock, or securities convertible into shares of stock of
any class, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of the Common Stock subject to
any Stock Option, except as specifically provided otherwise in this SIP. The
grant of Awards under the SIP shall not affect in any way the right or authority
of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge, consolidate or
dissolve, or to liquidate, sell or transfer all or any part of its business or
assets. All adjustments the Committee makes under this SIP shall be conclusive. |
Section 10
SIP OPERATION
| |
10.1
Compliance with Other Laws and Regulations. Distribution of shares of Common Stock
under the SIP shall be subject to the following:
|
| |
(a) |
Notwithstanding any other provision of the SIP, the Company shall not be
required to issue any shares of Common Stock under the SIP unless such issuance
complies with all applicable laws (including, without limitation, the
requirements of the 1933 Act and Section 16 of the 1934 Act) and the applicable
requirements of any securities exchange or similar entity. |
| |
(b) |
When the SIP provides for issuance of Common Stock, the Company may issue shares
of Common Stock on a noncertificated basis as long as it is not prohibited by
applicable law or the applicable rules of any stock exchange. |
| |
(c) |
The Company may require a Participant to submit evidence that the Participant is
acquiring shares of Common Stock for investment purposes. |
| |
10.2 Tax
Withholding. The Participant must pay to the Company an amount necessary to cover the
minimum required income tax and other withholdings before the Company shall issue Common
Stock under the SIP. The Participant may satisfy the withholding requirements by any one
or combination of the following methods:
|
| |
(b) |
payment by surrendering unrestricted previously held shares of Common Stock
which have a value equal to the required withholding amount. The Optionee must
have held the surrendered shares of Common Stock for at least six months before
their surrender. The Optionee may surrender shares of Common Stock either by
attestation or by the delivery of a certificate or certificates for shares duly
endorsed for transfer to the Company, and if required, with medallion level
signature guarantee by a member firm of a national stock exchange, by a national
or state bank (or guaranteed or notarized in such other manner as the Committee
may require). |
| |
10.3 Limitation
of Implied Rights. The SIP is not a contract of employment. A Key Employee selected
as a Participant shall not have the right to be retained as an employee of the Company or
any Related Company and shall not have any right or claim under the SIP, unless such
right or claim has specifically accrued under the terms of the SIP.
|
| |
10.4 Conditions
of Participation in the SIP. When the Committee makes an Award, it shall require a
Participant to enter into an Agreement in a form specified by the Committee, agreeing to
the terms and conditions of the Award and to such additional terms and conditions, not
inconsistent with the terms and conditions of the SIP, as the Committee may, in its sole
discretion, prescribe. If there is a conflict between any provision of an Agreement and
the SIP, the SIP shall control.
|
| |
10.5 Evidence.
Anyone required to give evidence under the SIP may give such evidence by certificate,
affidavit, document or other information which the person acting on the evidence
considers pertinent, reliable and signed, made or presented by the proper party or
parties.
|
| |
10.6 Amendment
and Termination of the SIP and Agreements. The Board may amend, modify or terminate
the SIP at any time. No such amendment, modification or termination shall result in the
SIP as a whole being subject to variable, or other adverse, accounting treatment or
adversely affect, in any way, the rights of individuals who have outstanding Awards
unless such individuals consent to such amendment or termination or such amendment or
termination is necessary to comply with applicable law. The Committee may amend any
Agreement that it previously has authorized under the SIP if the amended Agreement is
signed by the Company and the applicable Participant.
|
| |
10.7 Gender
and Number; Headings. Words in any gender shall include any other gender, words in
the singular shall include the plural and the plural shall include the singular. The
headings in this SIP are for convenience of reference. Headings are not a part of the SIP
and shall not be considered in the construction hereof.
|
| |
10.8 Legal
References. Any reference in this SIP to a provision of law which is later revised,
modified, finalized or redesignated, shall automatically be considered a reference to
such revised, modified, finalized or redesignated provision of law.
|
| |
10.9 Notices.
In order for a Participant or other individual to give notice or other communication to
the Committee, the notice or other communication shall be in the form specified by the
Committee and delivered to the location designated by the Committee in its sole
discretion.
|
| |
10.10
Governing Law. The SIP is governed by and shall be construed in accordance with the
laws of the State of Florida.
|
APPENDIX C
MASTEC, INC.
2003 STOCK INCENTIVE
PLAN FOR NON-EMPLOYEES
Section 1
PURPOSE
| |
1.1 Purpose.
The purpose of this Plan is to further the growth and development of the Company by
encouraging Directors who are not employees and nonemployee advisors and consultants to
the Company to obtain a proprietary interest in the Company by owning its stock. The
Company intends that the Plan will provide such persons with an added incentive to
continue to serve as Directors and will stimulate their efforts in promoting the growth,
efficiency and profitability of the Company. The Company also intends that the Plan will
afford the Company a means of attracting persons of outstanding quality to service on the
Board and on the boards of directors of Related Companies. The Company also intends to
permit grants or awards to nonemployee advisors to provide incentive to continue to serve
the Company.
|
| |
1.2 Awards
Available Under the Plan. The Plan permits grants of nonqualified stock options (“NQSOs”).
NQSOs are options that do not qualify as “incentive stock options” under Code
Section 422 and are subject to taxation under Code §83.
|
| |
1.3 Effective
Date and Term of the Plan. The Board of Directors of the Company adopted the Plan on
April 21, 2003, to become effective as of May 30, 2003 (the “Effective Date”),
contingent upon the approval of the shareholders of the Company at the May 30, 2003
annual shareholders meeting. Unless earlier terminated by the Company, the Plan shall
remain in effect until the tenth anniversary of the Effective Date or May 30, 2013.
Notwithstanding its termination, the Plan shall remain in effect with respect to Options
as long as any Options are outstanding.
|
| |
1.4 Operation,
Administration and Definitions. The operation and administration of the Plan are
subject to the provisions of this plan document. Capitalized terms used in the Plan are
defined in Section 2 below or may be defined within the Plan.
|
| |
1.5 Legal
Compliance. The Plan is intended to comply with the requirements for exemption of
stock options under the provisions of Rule 16b-3 under the 1934 Act.
|
Section 2
DEFINITIONS
The
following words and phrases as used in this Plan shall have the meanings set forth in this
Section unless a different meaning is clearly required by the context:
| |
2.1
1933 Act shall mean the Securities Act of 1933, as amended.
|
| |
2.2
1934 Act shall mean the Securities Exchange Act of 1934, as amended.
|
| |
2.3 Advisor shall
mean any individual who serves as an advisor or consultant to the Company or a Related
Company under a relationship other than that of a common law employee of the Company or a
Related Company (including but not limited to independent contractors.)
|
| |
2.4 Agreement means
an Option Agreement, the terms and conditions of which have been established by the
Committee, and which has been entered into between the Company and an individual Director
or Advisor.
|
| |
2.5
Beneficiary shall mean, with respect to an Optionee:
|
| |
(a) |
Designation of Beneficiary. An Optionee’s Beneficiary shall be the
individual who is last designated in writing by the Optionee as such
Optionee’s Beneficiary under an Option. An Optionee shall designate his or
her Beneficiary in writing on his or her Option Agreement. Any subsequent
modification of the Optionee’s Beneficiary for an Option shall be in a
written executed letter addressed to the Company and shall be effective when it
is received and accepted by the Committee, determined in the Committee’s
sole discretion. |
| |
(b) |
Designation of Multiple Beneficiaries. An Optionee may not
designate more than one individual as a Beneficiary. To the extent that a
designation purports to designate more than one individual as a Beneficiary, the
designation shall be null and void. |
| |
(c) |
No Designated Beneficiary. If, at any time, no Beneficiary has been
validly designated by an Optionee, or the Beneficiary designated by the Optionee
is no longer living at the time of the Optionee’s death, then the
Optionee’s Beneficiary shall be deemed to be the Optionee’s estate,
and only the executor or administrator (or a trustee designated by the executor)
of the estate shall be permitted to exercise the Option. |
| |
2.6
Board shall mean the Board of Directors of MasTec, Inc.
|
| |
2.7
Change of Control shall mean the date of:
|
| |
(a) |
Acquisition By Person of Substantial Percentage. The acquisition by a
Person (including “affiliates” and “associates” of such
Person, but excluding the Company, any “parent” or
“subsidiary” of the Company, or any employee benefit plan of the
Company or of any “parent” or “subsidiary” of the Company)
of a sufficient number of shares of the Common Stock, or securities convertible
into the Common Stock, and whether through direct acquisition of shares or by
merger, consolidation, share exchange, reclassification of securities or
recapitalization of or involving the Company or any “parent” or
“subsidiary” of the Company, to constitute the Person the actual or
beneficial owner of 51% or more of the Common Stock, but only if such
acquisition occurs without approval or ratification by a majority of the members
of the Board; |
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(b) |
Disposition of Assets. Any sale, lease, transfer, exchange, mortgage,
pledge or other disposition, in one transaction or a series of transactions, of
all or substantially all of the assets of the Company or of any
“subsidiary” of the Company to a Person described in subsection (a)
above, but only if such transaction occurs without approval or ratification by a
majority of the members of the Board; or |
| |
(c) |
Substantial Change of Board Members. During any fiscal year of the
Company, individuals who at the beginning of such year constitute the Board
cease for any reason to constitute at least a majority thereof, unless the
election of each director who was not a director at the beginning of such period
has been approved in advance by a majority of the directors in office at the
beginning of the fiscal year. |
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For
purposes of this Section, the terms “affiliate,” “associate,”“parent” and
“subsidiary” shall have the respective meanings ascribed to such terms in Rule
12b-2 under Section 12 of the 1934 Act. |
| |
2.8 Code shall
mean the Internal Revenue Code of 1986, as amended. A reference to a section of the Code
shall include all regulations, rulings and other authority issued thereunder.
|
| |
2.9 Committee shall
mean the Compensation Committee as appointed by the Board from time to time. The
Committee shall be responsible for administering and interpreting the Plan in accordance
with Section 3 below.
|
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2.10
Common Stock shall mean the par value $0.10 common stock of the Company.
|
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2.11
Company shall mean MasTec, Inc. and its subsidiaries or any Related Company.
|
| |
2.12 Director shall
mean an individual who (i) is serving as a member of the Board and (ii) is not and never
has been either an officer or common law employee of the Company or a Related Company.
For purposes of the Plan, a “common law employee” is an individual whose wages
are subject to withholding of federal income taxes under Code Section 3401, and an “officer” is
an individual elected or appointed by the Board or chosen in such other manner as may be
prescribed in the bylaws of the Company to serve as such.
|
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2.13
Effective Date shall mean May 30, 2003, subject to shareholder approval.
|
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2.14
Exercise Price shall mean the purchase price of the shares of Common Stock underlying
an Option.
|
| |
2.15
Fair Market Value of the Common Stock as of a date of determination shall mean the
following:
|
| |
(a) |
Stock Listed and Shares Traded. If the Common Stock is listed and traded
on a national securities exchange (as such term is defined by the 1934 Act) or
on the NASDAQ National Market System on the date of determination, the Fair
Market Value per share shall be the last sale price of a share of the Common
Stock on the applicable national securities exchange or National Market System
on the date of determination at the close of trading on such date. If the Common
Stock is traded in the over-the-counter market, the Fair Market Value per share
shall be the average of the closing bid and asked prices on the date of
determination. |
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(b) |
Stock Listed But No Shares Traded. If the Common Stock is listed on a
national securities exchange or on the National Market System but no shares of
the Common Stock are traded on the date of determination but there were shares
traded on dates within a reasonable period before the date of determination, the
Fair Market Value shall be the last sale price of the Common Stock on the most
recent trade date before the date of determination at the close of trading on
such date. If the Common Stock is regularly traded in the over-the-counter
market but no shares of the Common Stock are traded on the date of determination
(or if records of such trades are unavailable or burdensome to obtain) but there
were shares traded on dates within a reasonable period before the date of
determination, the Fair Market Value shall be the average of the closing bid and
asked prices of the Common Stock on the most recent date before the date of
determination. |
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(c) |
Stock Not Listed. If the Common Stock is not listed on a national
securities exchange or on the National Market System and is not regularly traded
in the over-the-counter market, then the Committee shall determine the Fair
Market Value of the Common Stock from all relevant available facts, which may
include the average of the closing bid and ask prices reflected in the
over-the-counter market on a date within a reasonable period either before or
after the date of determination or opinions of independent experts as to value
and may take into account any recent sales and purchases of such Common Stock to
the extent they are representative. |
The
Committee’s determination of Fair Market Value, which shall be made pursuant to the
foregoing provisions, shall be final and binding for all purposes of this Plan.
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2.16 NQSO shall
mean a nonqualified stock option to purchase shares of the Common Stock, which is an
option to which Code §422 (relating to certain incentive stock options) does not apply.
|
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2.17
Option shall mean a NQSO granted to an individual pursuant to the terms and
provisions of this Plan.
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2.18 Option
Agreement shall mean a written agreement, executed and dated by the Company and an
Optionee, evidencing an Option granted under the terms and provisions of this Plan,
setting forth the terms and conditions of such Option, and specifying the name of the
Optionee, the number of shares of stock subject to such Option and other terms and
conditions of the Option.
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2.19 Optionee shall
mean any nonemployee Director or Advisor who is granted an Option pursuant to the terms
and provisions of this Plan.
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2.20
Person shall mean any individual, organization, corporation, partnership or other
entity.
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2.21
Plan shall mean this MasTec, Inc. 2003 Stock Incentive Plan For Non-Employees.
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2.22 Related
Company means any member within the Company’s controlled group of corporations,
as that term is defined in Code §1563(a), in addition to any partnerships, joint
ventures, limited liability companies, limited liability partnerships or other entities
in which the Company owns more than a 50 percent interest.
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Section 3
ADMINISTRATION
| |
3.1 General
Administration. The Plan shall be administered and interpreted by the Committee (as
designated pursuant to Section 3.2). Subject to the express provisions of the Plan, the
Committee shall have authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and provisions of the
Option Agreements by which Options shall be evidenced (which shall not be inconsistent
with the terms of the Plan), and to make all other determinations necessary or advisable
for the administration of the Plan, all of which determinations shall be final, binding
and conclusive.
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3.2 Appointment.
The Board shall appoint the Committee from among its members to serve at the pleasure of
the Board. The Board from time to time may remove members from, or add members to, the
Committee and shall fill all vacancies thereon. The Committee at all times shall be
composed of two or more non-employee directors who shall meet the following requirements. During
the period any director is serving on the Committee, he shall not (i) be an officer of
the Company or a parent or subsidiary of the Company, or otherwise currently employed by
the Company or a parent or subsidiary of the Company; (ii) receive compensation, either
directly or indirectly, from the Company or a parent or subsidiary of the Company for
services rendered as a consultant or in any capacity other than as a director, except for
an amount that does not exceed the dollar amount for which disclosure would be required
pursuant to Rule 404(a) of the 1934 Act; (iii) possess an interest in any other
transaction for which disclosure would be required pursuant to Rule 404(a); and (iv) be
engaged in a business relationship for which disclosure would be required pursuant to
Rule 404(b). The requirements of this subsection are intended to comply with Rule 16b-3
under Section 16 of the 1934 Act or any successor rule or regulation, and shall be
interpreted and construed in a manner which assures compliance with said Rule. To the
extent said Rule 16b-3 is modified to reduce or increase the restrictions on who may
serve on the Committee, the Plan shall be deemed modified in a similar manner.
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3.3 Organization.
The Committee shall hold its meetings at such times and at such places as it shall deem
advisable. A majority of the Committee shall constitute a quorum, and such majority shall
determine its actions. The Committee shall keep minutes of its proceedings and shall
report the same to the Board at the meeting next succeeding.
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3.4 Powers
of Committee. The Committee may grant one or more Options under the terms of the Plan
to Advisors. Except for the formula grant provisions of Section 6.4 of the Plan, the
Committee shall decide to whom and when to grant an Option and the number of shares of
Common Stock covered by the Option. In making decisions, the Committee may take into
account the nature of services rendered by the individual, the individual’s present
and potential contribution to the Company’s success and such other factors as the
Committee, in its sole discretion, deems relevant.
|
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(a) |
The Committee shall interpret the Plan, establish and rescind any rules and
regulations relating to the Plan, decide the terms and provisions of any Option
Agreements made under the Plan, and determine how to administer the Plan. The
Committee also shall decide administrative methods for the exercise of Options.
Each Committee decision shall be final, conclusive and binding on all parties. |
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(b) |
The Committee shall act by a majority of its then members, at a meeting of the
Committee or by unanimous written consent. The Committee shall keep adequate
records concerning the Plan and the Committee’s proceedings and acts in
such form and detail as the Committee may decide. |
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3.5 Indemnification.
In addition to such other rights of indemnification as they have as directors or as
members of the Committee, the members of the Committee (and any designees of the
Committee as permitted under this Section 3), to the extent permitted by applicable law,
shall be indemnified by the Company against reasonable expenses (including, without
limitation, attorneys’ fees) actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal, to which
they or any of them may be a party by reason of any action taken or failure to act under
or in connection with the Plan or any Options granted hereunder, and against all amounts
paid by them in settlement thereof (provided such settlement is approved to the extent
required by and in the manner provided by the articles or certificate of incorporation or
the bylaws of the Company relating to indemnification of directors) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding that such
Committee member or members did not act in good faith and in a manner he or they
reasonably believed to be in or not opposed to the best interest of the Company.
|
Section 4
STOCK
| |
4.1
Stock Subject to Options. The Common Stock subject to Options and other provisions
of the Plan shall consist of the following:
|
| |
(a) |
authorized but unissued shares of Common Stock; |
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(b) |
shares of Common Stock held by the Company in its treasury which have been
reacquired; |
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(c) |
shares of Common Stock purchased by the Company in the open market; or |
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(d) |
shares of Common Stock allocable to the unexercised portion of any expired or
terminated Option granted under the Plan again may become available for grants
of Options under the Plan. |
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4.2 Number
of Shares Available for Options. Subject to readjustment in accordance with the
provisions of Section 7, the total number of shares of Common Stock for which Options may
be granted under the Plan shall be 1,000,000 shares of Common Stock, plus an increase as
of each December 31 (commencing on December 31, 2003) equal to a number of shares equal
to the difference between the number of shares subject to grants made under the Plan
during the 12-month period ending on such December 31, less any shares subject to grants
that again became available for issuance under the Plan due to forfeiture, termination,
surrender or other cancellation of the underlying grant without such shares being issued.
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Section 5
ELIGIBILITY TO RECEIVE
AND GRANT OF OPTIONS
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5.1 Individuals
Eligible for Grants of Options. The individuals eligible to receive Options hereunder
shall be solely those individuals who are Directors (as defined in Section 2.12 of the
Plan) or Advisors (as defined in Section 2.3 of the Plan). Such Directors and Advisors
shall receive Options hereunder in accordance with the provisions of Sections 5.2 and 5.3
below.
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5.2 Formula
Grants of Options. Effective upon the Effective Date, Options shall be granted to
Directors (as defined in Section 2.12 of the Plan) in accordance with the following
formulas:
|
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(a) |
Option Upon Initially Becoming a Director. Upon initially becoming a
Director and each reelection to serve a three-year term as a Director, the
Director shall be granted an Option to purchase 20,000 shares of Common Stock as
of the first business day of the month following appointment or election, with
such Option subject to the provisions of Section 6 below. Options granted under
this subsection shall be evidenced by an Option Agreement. |
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(b) |
Service Option Grants. As each Director begins a service year in which
the Director does not receive an Option grant pursuant to Section 5.2(a) above,
the Director shall be granted an Option to purchase 7,500 shares of Common Stock
as of the first business day of the month following the date of the annual
shareholders meeting, with such Option subject to the provisions of Section 6
below. Options granted under this subsection shall be evidenced by an Option
Agreement. |
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(c) |
Insufficient Shares. In the event that the number of shares available for
grants under the Plan is insufficient to make all grants provided herein on the
applicable date, then all those who become entitled to a grant on such date
shall share ratably in the number of shares then available for grant under the
Plan. |
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5.3 Discretionary
Grants of Options. Subject to the provisions of the Plan, the Committee shall have
the authority and sole discretion to determine and designate, from time to time, Advisors
(as defined in Section 2.3 of the Plan) to whom Options will be granted, the Exercise
Price of the shares covered by any Options granted, and the manner in and conditions
under which Options are exercisable (including, without limitation, any limitations or
restrictions thereon). In making such determinations, the Committee may take into account
the nature of the services rendered by the respective individuals to whom Options may be
granted, their present and potential contributions to the Company’s success and such
other factors as the Committee, in its sole discretion, shall deem relevant. In its
authorization of the granting of an Option hereunder, the Committee shall specify the
name of the Optionee, the number of shares of common stock subject to such Option, the
exercise price of the Option, the term of the Option and any restrictions, conditions,
forfeitures or cancellation provisions. The Committee may grant, at any time, new Options
to an Optionee who previously has received Options, whether such Options include prior
Options that still are outstanding, previously have been exercised in whole or in part,
or have expired. No individual shall have any claim or right to be granted Options under
the Plan.
|
Section 6
TERMS AND CONDITIONS
OF OPTIONS
Unless otherwise
provided by the Committee, Options granted hereunder and Option Agreements shall comply
with and be subject to the following terms and conditions:
| |
6.1 Requirement
of Option Agreement. Upon the grant of an Option hereunder, the Committee shall
prepare (or cause to be prepared) an Option Agreement. The Committee shall present such
Option Agreement to the Optionee. Upon execution of such Option Agreement by the
Optionee, such Option shall be deemed to have been granted effective as of the date of
grant. The failure of the Optionee to execute the Option Agreement within 30 days after
the date of the receipt of same shall render the Option Agreement and the underlying
Option null and void ab initio.
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6.2 Optionee
and Number of Shares. Each Option Agreement shall state the name of the Optionee and
the total number of shares of the Common Stock to which it pertains, the Exercise Price,
the Beneficiary of the Optionee, and the date as of which the Option was granted under
this Plan.
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6.3 Exercise
Price. Except as determined by the Committee with respect to Options granted under
Section 5 above, the Exercise Price of the shares of Common Stock underlying each Option
shall be the Fair Market Value of the Common Stock on the date the Option is granted;
provided, in no case shall the Exercise Price be less than 100% of the Fair Market Value
of the Common Stock on the date the Option is granted. Upon execution of an Option
Agreement by both the Company and Optionee, the date as of which the Option was granted
under this Plan as noted in the Option Agreement shall be considered the date on which
such Option is granted.
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6.4
Exercisability of Options.
|
| |
(a) |
Formula Grants. Each Option granted under Section 5.2 shall first become
exercisable with respect to such portions of the shares subject to such Option
as are specified in the schedule set forth hereinbelow: |
| |
(i) |
Commencing
as of the first anniversary of the date the Option is granted, the
Optionee shall have the right to exercise the Option with respect to, and
to thereby purchase, 33 percent (rounded down to the nearest whole number)
of the shares subject to such Option. Prior to said date, the Option shall
be unexercisable in its entirety. |
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(ii) |
Commencing
as of the second anniversary of the date the Option is granted, the
Optionee shall have the right to exercise the Option with respect to, and
to thereby purchase, an additional 33 percent (rounded down to the nearest
whole number) of the shares subject to the Option. |
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(iii) |
Commencing
as of the third anniversary of the date the Option is granted, the
Optionee shall have the right to exercise the Option with respect to, and
to thereby purchase, the remainder of the shares subject to the Option.
|
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(iv) |
Notwithstanding
the above, any Options previously granted to an Optionee shall become immediately exercisable for 100% of the number of shares subject to the
Options upon a Change of Control. |
| |
(b) |
Discretionary Grants. Unless the Committee specifies otherwise in the
Option Agreement, each Option granted under Section 5.3 shall first become
exercisable with respect to such portions of the shares subject to such Option
as are specified in the schedule set forth herein below: |
| |
(i) |
Commencing
as of the first anniversary of the date the Option is granted, the
Optionee shall have the right to exercise the Option with respect to, and
to thereby purchase, 33 percent (rounded down to the nearest whole number)
of the shares subject to such Option. Prior to said date, the Option shall
be unexercisable in its entirety. |
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(ii) |
Commencing
as of the second anniversary of the date the Option is granted, the
Optionee shall have the right to exercise the Option with respect to, and
to thereby purchase, an additional 33 percent (rounded down to the nearest
whole number) of the shares subject to the Option. |
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(iii) |
Commencing
as of the third anniversary of the date the Option is granted, the
Optionee shall have the right to exercise the Option with respect to, and
to thereby purchase, the remainder of the shares subject to the Option.
|
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(iv) |
Notwithstanding
the above, any Options previously granted to an Optionee shall become immediately exercisable for 100% of the number of shares subject to the
Options upon a Change of Control. |
Other
than as provided above, if an Optionee ceases to be a Director or Advisor of the Company,
his rights with regard to all then unexercised Options shall cease immediately.
| |
6.5
Expiration Date. The Expiration Date of any Option shall be the earliest to occur
of the following:
|
| |
(a) |
Maximum Term. The date ten (10) years from the date of grant of the
Option; |
| |
(b) |
Death. Unless the Committee specifies otherwise in the Option Agreement,
the one-year anniversary of the Optionee’s termination of service with the
Company and all Related Companies due to death; or |
| |
(c) |
Termination of Service as Director or Advisor. Unless the Committee
specifies otherwise in the Option Agreement, the one-year anniversary of the
Optionee’s termination of service as a Director or Advisor of the Company
other than as provided under Section 6.5(b) above. |
| |
6.6 Minimum
Exercise Amount. The exercise of an Option may be for less than the full number of
shares of Common Stock subject to such Option, but such exercise shall not be made for
less than (i) 100 shares or (ii) the total remaining shares subject to the Option, if
such total is less than 100 shares. Subject to the other restrictions on exercise set
forth herein, the unexercised portion of an Option may be exercised at a later date by
the Optionee.
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6.7 Payment
of Exercise Price. The Optionee must pay the full Exercise Price for shares of Common
Stock purchased upon the exercise of any Option at the time of such exercise by one of
the following forms of payment:
|
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(b) |
by surrendering unrestricted previously held shares of Common Stock that have a
fair market value equal to the Exercise Price at the time of exercise. The
Optionee must have held the surrendered shares of Common Stock for at least six
(6) months before their surrender. The Optionee may surrender shares of Common
Stock either by attestation or by the delivery of a certificate or certificates
for shares duly endorsed for transfer to the Company, and if required by the
Committee, with medallion level signature guarantee by a member firm of a
national stock exchange, by a national or state bank (or guaranteed or notarized
in such other manner as the Committee may require); or |
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(c) |
any combination of the above forms or any other form of payment permitted by the
Committee. |
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6.8 Transferability.
Unless the Committee specifies otherwise in the Option Agreement, an Optionee may
transfer Options only by the laws of descent and distribution. After the death of an
Optionee, only a named Beneficiary or the executor or administrator of the Optionee’s
estate may exercise an outstanding Option.
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6.9 Rights
as a Shareholder. An Optionee shall first have rights as a shareholder of the Company
with respect to shares of Common Stock covered by an Option only when the Optionee has
paid the Exercise Price in full and the shares actually have been issued to the Optionee.
|
Section 7
ADJUSTMENTS UPON
CHANGES IN CAPITALIZATION
| |
7.1
Certain Corporate Transactions.
|
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(a) |
Recapitalization. If the Company is involved in a corporate transaction
or any other event which effects the Common Stock (including, without
limitation, any recapitalization, reclassification, reverse or forward stock
split, stock dividend, extraordinary cash dividend, split-up, spin-off,
combination or exchange of shares), then the Committee shall adjust outstanding
Options to preserve the benefits or potential benefits of the Options as
follows: |
| |
(i) |
The
Committee shalltake action to adjust the number and kind of shares
of Common Stock that are issuable under the Plan; |
| |
(ii) |
The
Committee shall take action to adjust the number and kind of shares of
Common Stock subject to outstanding Options; |
| |
(iii) |
The
Committee shall take action to adjust the Exercise Price of outstanding
Options; and |
| |
(iv) |
The
Committee shall make any other equitable adjustments. |
| |
Only
whole shares of Common Stock shall be issued in making the above adjustments. Further,
the number of shares available under the Plan or the number of shares of Common Stock
subject to any outstanding Options shall be the next lower number of shares, so that
fractions are rounded downward. If the Company issues any rights or warrants to subscribe
for additional shares pro rata to holders of outstanding shares of the class or classes
of stock then set aside for the Plan, then each Optionee shall be entitled to the same
rights or warrants on the same basis as holders of outstanding shares with respect to
such portion of the Optionee’s Option as is exercised on or prior to the record date
for determining shareholders entitled to receive or exercise such rights or warrants. |
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(b) |
Reorganization. If the Company is part of any reorganization involving
merger, consolidation, acquisition of the Common Stock or acquisition of the
assets of the Company, the Committee, in its discretion, may decide that: |
| |
(i) |
any
or all outstanding Options granted under the Plan shall pertain to and
apply, with appropriate adjustment as determined by the Committee, to the
securities of the resulting corporation to which a holder of the number of
shares of the Common Stock subject to each such Option would have been
entitled; |
| |
(ii) |
any
or all outstanding Options granted hereunder shall become immediately fully
exercisable (to the extent permitted under federal or state securities
laws); and/or |
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(iii) |
any
or all Options granted hereunder shall become immediately fully exercisable
(to the extent permitted under federal or state securities laws) and shall
be terminated after giving at least 30 days’ notice to the Directors
and Advisors to whom such Options have been granted. |
| |
(c) |
Limits on Adjustments. Any issuance by the Company of stock of any class
other than the Common Stock, or securities convertible into shares of stock of
any class, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of the Common Stock subject to
any Option, except as specifically provided otherwise in this Plan. Option
grants under the Plan shall not affect in any way the right or authority of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge, consolidate or dissolve, or to
liquidate, sell or transfer all or any part of its business or assets. All
adjustments the Committee makes under this Plan shall be conclusive. |
Section 8
PLAN OPERATION
| |
8.1
Compliance with Other Laws and Regulations.
|
| |
Distribution
of shares of Common Stock under the Plan shall be subject to the following: |
| |
(a) |
Notwithstanding any other provision of the Plan, the Company shall not be
required to issue any shares of Common Stock under the Plan unless such issuance
complies with all applicable laws (including, without limitation, the
requirements of the 1933 Act and Section 16 of the 1934 Act) and the applicable
requirements of any securities exchange or similar entity. |
| |
(b) |
When the Plan provides for issuance of Common Stock, the Company may issue
shares of Common Stock on a noncertificated basis as long as it is not
prohibited by applicable law or the applicable rules of any stock exchange. |
| |
(c) |
The Company may require an Optionee to submit evidence that the Optionee is
acquiring shares of Common Stock for investment purposes. |
| |
8.2 Limitation
of Implied Rights. The Plan is not a contract of employment or a contract for
continued service as a Director or an Advisor. Neither a Director nor an Advisor selected
as an Optionee shall have the right to be retained as a director or an advisor of the
Company or any Related Company and shall not have any right or claim under the Plan,
unless such right or claim has specifically accrued under the terms of the Plan.
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8.3 Evidence.
Anyone required to give evidence under the Plan may give such evidence by certificate,
affidavit, document or other information which the person acting on the evidence
considers pertinent, reliable and signed, made or presented by the proper party or
parties.
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8.4 Amendment
and Termination of the Plan and Agreements. The Board may amend, modify or terminate
the Plan at any time. No such amendment, modification or termination shall result in the
Plan as a whole being subject to variable, or other adverse, accounting treatment or
adversely affect, in any way, the rights of individuals who have outstanding Options
unless such individuals consent to such amendment or termination or such amendment or
termination is necessary to comply with applicable law. The Committee may amend any
Agreement that it previously has authorized under the Plan if the amended Agreement is
signed by the Company and the applicable Optionee.
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| |
8.5 Gender
and Number; Headings. Words in any gender shall include any other gender, words in
the singular shall include the plural and the plural shall include the singular. The
headings in this Plan are for convenience of reference. Headings are not a part of the
Plan and shall not be considered in the construction hereof.
|
| |
8.6 Legal
References. Any reference in this Plan to a provision of law which is later revised,
modified, finalized or redesignated, shall automatically be considered a reference to
such revised, modified, finalized or redesignated provision of law.
|
| |
8.7 Notices.
In order for a Director or Advisor or other individual to give notice or other
communication to the Committee, the notice or other communication shall be in the form
specified by the Committee and delivered to the location designated by the Committee in
its sole discretion.
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8.8
Governing Law. The Plan is governed by and shall be construed in accordance with
the laws of the State of Florida.
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ADOPTED BY BOARD OF
DIRECTORS ON April 21, 2003
TO BE APPROVED BY
SHAREHOLDERS ON MAY 30, 2003
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MasTec
3155 NW 77th AVENUE
MIAMI, FL 33122
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VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit
your voting instructions and for electronic delivery of information up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you
access the web site. You will be
prompted to enter your 12-digit Control Number which is located below to
obtain your records and to create an electronic voting instruction form.
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VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to
transmit your voting instructions up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date.
Have your proxy card in hand when you call. You will be prompted to enter your 12-digit Control Number
which is located below and then follow the simple instructions the Vote Voice
provides you.
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VOTE BY MAIL -
Mark, sign, and date your proxy
card and return it in the postage-paid envelope we have provided or return it
to MasTec, Inc., c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
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