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
Filed
by
the Registrant [X]
Filed
by
a Party other than the Registrant [
]
Check
the
appropriate box:
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[
]
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Preliminary
Proxy Statement
|
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[
]
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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 § 240.14a-12
|
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of
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of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
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[X]
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NO
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[
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Fee
Computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11
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| (1) |
Title
of each class of securities to which transaction
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| (2) |
Aggregate
number of securities to which transaction
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| (3) |
Per
unit price or other underlying value of transaction computed
pursuant to
Exchange Act Rule 0-11
(set
forth the amount on which the filing fee is calculated and state
how it
was determined):
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| (4) |
Proposed
maximum aggregate value of
transaction:
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| (5) |
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Fee
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Check
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801
17th Avenue South • Myrtle Beach, South Carolina
29577
To
our
Shareholders:
The
Annual Meeting of Shareholders of AVX Corporation (the "Company"),
a
Delaware corporation, will be held at the AVX Seaboard Facility
located at 1900
Highway 501 East, Myrtle Beach, South Carolina 29577, on Wednesday,
July 20,
2005, at 10:00 a.m., for the purpose of acting upon the following
matters:
| 1. |
To
elect four Directors;
|
| 2. |
To
transact any other business that may properly come
before the Annual
Meeting or any adjournment thereof.
|
Only
shareholders of record of the Company on May 27, 2005, will be
entitled to
notice of, and to vote at, the Annual Meeting or any adjournment
thereof.
The
Company is furnishing an Annual Report on Form 10-K to shareholders
in lieu of a
separate annual report.
In
order
that your shares of stock may be represented at the Annual Meeting,
please
complete, date and sign the enclosed proxy card and return it
promptly in the
enclosed envelope, or use telephone or internet voting (as explained
in the
proxy voting instructions attached to the proxy card) before
the Annual Meeting.
If you attend the Annual Meeting, you may vote in person even
though you have
previously voted.
|
/S/
KURT CUMMINGS
|
|
Kurt
Cummings
Corporate
Secretary
|
Myrtle
Beach, South Carolina
June
24,
2005
YOUR
VOTE IS IMPORTANT
PLEASE
COMPLETE, DATE AND SIGN YOUR PROXY CARD AND PROMPTLY RETURN IT
IN THE ENCLOSED
ENVELOPE, OR USE TELEPHONE OR INTERNET VOTING BEFORE THE ANNUAL
MEETING.
-1-
801
17th Avenue South, Myrtle Beach, SC
29577
PROXY
STATEMENT
Annual
Meeting of Shareholders
To
be held Wednesday, July 20, 2005
This
Proxy Statement is furnished to the shareholders
of AVX Corporation ("AVX" or
the "Company") in connection with the solicitation
on behalf of the Board of
Directors (the "Board") of proxies to be used at
the Annual Meeting of
Shareholders (as may be adjourned, the "Annual
Meeting") to be held on
Wednesday, July 20, 2005, at 10:00 a.m., at the
AVX Seaboard Facility located at
1900 Highway 501 East, Myrtle Beach, South Carolina
29577, and any adjournment
thereof. The Company expects that this Proxy Statement,
with the accompanying
proxy and the Annual Report on Form 10-K for the
fiscal year ended March 31,
2005, will be mailed to shareholders on or about
June 24, 2005.
Each
share of AVX common stock, par value $.01 per share
(the "Common Stock"),
outstanding at the close of business on May 27,
2005, will be entitled to one
vote on all matters acted upon at the Annual Meeting.
On May 27, 2005,
172,479,229 shares of Common Stock were outstanding.
Shares
will be voted in accordance with the instructions
indicated in a properly
executed proxy. In the event that voting instructions
are omitted on any such
proxy, the shares represented by such proxy will
be voted as recommended by the
Board. Shareholders have the right to revoke their
proxies at any time prior to
a vote being taken by: (i) delivering written notice
of revocation before the
Annual Meeting to the Corporate Secretary at the
Company's principal offices;
(ii) delivering a proxy bearing a later date or
time than the proxy being
revoked; (iii) resubmitting a vote by telephone
or internet (as explained in the
proxy voting instructions attached to the proxy
card); or (iv) voting in person
at the Annual Meeting.
The
presence at the Annual Meeting, in person or by
proxy, of shareholders holding
in the aggregate a majority of the outstanding
shares of the Company's Common
Stock entitled to vote shall constitute a quorum
for the transaction of
business. The affirmative vote of the holders of
a plurality of the shares of
Common Stock of the Company present in person or
represented by proxy and
entitled to vote at the Annual Meeting is required
for the election of the
directors. Proxies indicating shareholder abstentions
will, in accordance with
Delaware law, be counted as represented at the
Annual Meeting for purposes of
determining whether there is a quorum present,
but will not be voted for or
against any proposal to which the abstention relates.
Abstentions will also be
counted as a vote cast on any proposal (other than
the election of directors)
and, accordingly, will have the effect of a vote
against the proposal. Shares
represented by "broker non-votes" (i.e., shares
held by brokers or nominees that
are represented at a meeting, but with respect
to which the broker or nominee is
not empowered to vote on a particular proposal)
will be counted for purposes of
determining whether there is a quorum, but will
not be voted on such matter and
will not be counted for purposes of determining
the number of votes cast on such
matter. With respect to any matter brought before
the Annual Meeting requiring
the affirmative vote of a majority or other proportion
of the outstanding
shares, an abstention or broker non-vote will have
the same effect as a vote
against the matter being voted upon.
At
the
date of this Proxy Statement, management does
not know of any matter to be
brought before the Annual Meeting for action
other than the matters described in
the Notice of Annual Meeting and matters incident
thereto. If any other matters
should properly come before the Annual Meeting,
the holders of the proxies will
vote and act with respect to such matters in
accordance with their best
judgment. Discretionary authority to do so is
conferred by the enclosed
proxy.
-2-
The
Company has been informed by the Trustee for the
Company's retirement plans that shares of Common
Stock held by the Trustee for
such plans will be voted by the Trustee in accordance
with instructions received
from the participants, and if no instructions are
received with respect to any
shares, such shares will be voted in the same proportion
as shares for which
instructions are received from other participants
in the plan.
Holders
of our common stock are not entitled to dissenters’ rights or appraisal rights
with respect to the proposals to be considered
at the Annual
Meeting.
-3-
ELECTION
OF DIRECTORS
NOMINATIONS
FOR THE BOARD OF DIRECTORS
The
Board
of Directors has fixed the size of the Board at eleven
(11). It is currently
divided into three classes elected for staggered terms.
The Board of Directors
proposes that the nominees identified below be elected
as directors to serve for
the terms indicated.
CLASS
III
Nominations
for terms expiring at the Annual Meeting in 2008
YASUO
NISHIGUCHI Age
61
-Vice-Chairman
of the Board since 2002 and member of the Board since
1999. President of Kyocera
Corporation (“Kyocera”) since 1999 and Representative Director of Kyocera
since
1992. Executive Vice President of Kyocera from 1997
to 1999.
MASAHIRO
UMEMURA Age
61
-Member
of the Board since 1990. Executive Vice President of
Kyocera since 1999.
Representative Director of Kyocera since 1997. General
Manager of the Corporate
Development Division of Kyocera since 1992 and Managing
Director of Kyocera from
1993 to 1997. Executive Vice President and Treasurer
of Kyocera International,
Inc. (“KII”), a United States subsidiary of Kyocera, from 1986
to
1992.
YUZO
YAMAMURA Age
63
-Member
of the Board since 1995. Senior Managing and Representative
Director of Kyocera
from 1995 to 1999. President of Kyocera Elco Corporation,
a subsidiary of
Kyocera, since 1992. Director of Kyocera since 2003.
DONALD
B.
CHRISTIANSEN Age
66
-Member
of the Board since 2002. Retired from AVX in 2000.
Senior Vice President of
Finance, Chief Financial Officer and Treasurer from
1997 to 2000. Vice President
of Finance, Chief Financial Officer and Treasurer from
1994 to 1997. Chief
Financial Officer from 1992 to 1994. Member of the
Board from 1992 to
2000.
These
four directors have been nominated by the Board. Unless
contrary instructions
are given, it is intended that the votes represented
by the proxies will be cast
FOR the election of the persons listed above as directors.
In the event that any
of the nominees should become unavailable to stand
for election, the Board may
designate a substitute. It is intended that all properly
executed and returned
proxies will be voted FOR such substitute nominee.
THE
BOARD
OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF THE
PERSONS LISTED
ABOVE.
-4-
CLASS
I
Terms
expiring at the Annual Meeting in 2007
KAZUO
INAMORI Age
73 -Chairman
Emeritus of the Board since 1997. Chairman of the Board
from the Company's
acquisition by Kyocera in 1990 to 1997. Chairman Emeritus
of the Board of
Directors of Kyocera since 1997 and served, prior to
that, as Chairman of the
Board of Directors of Kyocera, which he founded in
1959.
KENSUKE
ITOH Age
67 -Member
of the Board since 1990 and Vice-Chairman of the Board
from 1997 to 2002.
Chairman of Kyocera since 1999. President of Kyocera
from 1989 to 1999.
Representative Director of Kyocera since 1985.
BENEDICT
P. ROSEN Age
68 -Chairman
of the Board since 1997. President from 1993 to 1997,
Chief Executive Officer
from 1993 to 2001 and a member of the Board since
1990. Executive Vice President
from 1985 to 1993 and employed by the Company since
1972. Senior Managing and
Representative Director of Kyocera from 1995 to 2002
and previously served as a
Managing Director of Kyocera from 1992 to 1995. Director
of Crescent Bank,
Crescent Mortgage Company, Nordson Corporation, New
South Corporation, Trelys
Fund and Carolina Financial Institution.
RICHARD
TRESSLER Age
63
-Member
of the Board since 1995. Professor Emeritus of Pennsylvania
State University
since 2002. Professor of Materials Science and Engineering
at Pennsylvania State
University from 1981 to 2002. Head of the Department
of Materials Science and
Engineering from 1991 to 2001.
CLASS
II
Terms
expiring at the Annual Meeting in 2006
JOHN
S.
GILBERTSON Age
61 -Chief
Executive Officer since 2001. President since 1997.
Chief Operating Officer from
1994 to 2001 and a member of the Board since 1990.
Executive Vice President from
1992 to 1997, Senior Vice President from 1990 to
1992 and employed by the
Company since 1981. Managing Director of Kyocera
since 1999 and Director of
Kyocera since 1995. Member of the Board of Directors
of KII, since
2001.
RODNEY
N.
LANTHORNE Age
60 -Member
of the Board since 1990. President of KII since 1987.
Senior Managing and
Representative Director of Kyocera from 1999 to 2003.
Director of Kyocera since
1988.
JOSEPH
STACH Age
66
-Member
of the Board since 2004. Retired since October 2003.
Vice President of Advanced
Energy Industries, a manufacturer of products for
hi-tech manufacturing
processes, from October 1998 to 2003. Chairman, CEO
and President of RF Power
Products, Inc., a manufacturer and distributor of
radio frequency power delivery
systems, from August 1991 to October 1998. Executive
Director, Center for
Microelectronics Research, University of South Florida
from January 1988 to
April 1991.
-5-
The
Common Stock is the only class of equity securities
of the Company outstanding.
As of March 31, 2005, the directors, director nominees
and each executive
officer currently named in the Summary Compensation
Table below, individually,
and all directors, director nominees and executive
officers of the Company as a
group, beneficially owned (i) shares of Common
Stock of the Company and (ii)
equity securities of Kyocera, as follows:
|
Name
|
Amount
and Nature of Beneficial Ownership
of Outstanding AVX Shares
1/
|
Number
of AVX Shares Underlying Exercisable
Options 2/
|
Total
AVX Shares
|
Percentage
of AVX Common Stock
|
||||
|
Benedict
P. Rosen
|
121,727
|
107,500
|
229,227
|
*
|
||||
|
Kazuo
Inamori
|
20,000
|
42,334
|
62,334
|
*
|
||||
|
John
S. Gilbertson
|
78,522
|
903,250
|
981,772
|
*
|
||||
|
Donald
B. Christiansen
|
11,980
|
10,000
|
21,980
|
*
|
||||
|
Kensuke
Itoh
|
6,000
|
42,334
|
48,334
|
*
|
||||
|
Rodney
N. Lanthorne
|
3,000
|
49,667
|
52,667
|
*
|
||||
|
Yasuo
Nishiguchi
|
1,000
|
15,667
|
16,667
|
*
|
||||
|
Joseph
Stach
|
-0-
|
-0-
|
-0-
|
*
|
||||
|
Richard
Tressler
|
5,207
|
3/
|
32,667
|
37,874
|
*
|
|||
|
Masahiro
Umemura
|
2,000
|
42,334
|
44,334
|
*
|
||||
|
Yuzo
Yamamura
|
2,000
|
42,334
|
44,334
|
*
|
||||
|
C.
Marshall Jackson
|
17,438
|
251,876
|
269,314
|
*
|
||||
|
Peter
Collis
|
-0-
|
64,450
|
64,450
|
*
|
||||
|
Kurt
Cummings
|
6,588
|
79,744
|
86,332
|
*
|
||||
|
Keith
Thomas
|
6,147
|
45,625
|
51,772
|
*
|
||||
|
All
directors, director nominees and executive
officers as a group
(A
total of 18 individuals including those
named above)
|
296,279
|
2,021,018
|
2,317,297
|
1.34%
|
|
Name
|
Amount
and Nature of Beneficial Ownership
of Outstanding Kyocera Equity
Securities 1/
|
Number
of Kyocera Equity Securities Underlying
Exercisable Options
4/
|
Total
Kyocera Equity Securities
|
Percentage
of Kyocera Equity Securities
|
||||
|
Benedict
P. Rosen
|
1,739
|
0
|
1,739
|
*
|
||||
|
Kazuo
Inamori
|
11,486,165
|
5/
|
8,000
|
11,494,165
|
6.10%
|
|||
|
John
S. Gilbertson
|
16,195
|
8,000
|
24,195
|
*
|
||||
|
Donald
B. Christiansen
|
-0-
|
-0-
|
-0-
|
*
|
||||
|
Kensuke
Itoh
|
557,072
|
8,000
|
565,072
|
*
|
||||
|
Rodney
N. Lanthorne
|
3,398
|
10,000
|
13,398
|
*
|
||||
|
Yasuo
Nishiguchi
|
4,095
|
8,000
|
12,095
|
*
|
||||
|
Joseph
Stach
|
-0-
|
-0-
|
-0-
|
*
|
||||
|
Richard
Tressler
|
-0-
|
-0-
|
-0-
|
*
|
||||
|
Masahiro
Umemura
|
5,000
|
6,000
|
11,000
|
*
|
||||
|
Yuzo
Yamamura
|
82,000
|
6,000
|
88,000
|
*
|
||||
|
C.
Marshall Jackson
|
3,667
|
-0-
|
3,667
|
*
|
||||
|
Peter
Collis
|
-0-
|
-0-
|
-0-
|
*
|
||||
|
Kurt
Cummings
|
231
|
-0-
|
231
|
*
|
||||
|
Keith
Thomas
|
385
|
-0-
|
385
|
*
|
||||
|
All
directors, director nominees and executive
officers as a group
(A
total of 18 individuals including those
named above)
|
7,480,864
|
54,000
|
7,534,864
|
4.00%
|
*
Less than 1%
| 1/ |
Includes
interests, if any, in shares held in
the Company's Deferred Compensation
and Retirement Plan
Trusts.
|
| 2/ |
Includes
AVX shares under options exercisable as
of March 31, 2005, and options
which become exercisable within 60 days
thereafter under the AVX
Corporation 1995 Stock Option Plan (the
“1995 Stock Option Plan”), the AVX
Corporation 2004 Stock Option Plan (the
“2004 Stock Option Plan” and,
together with the 1995 Stock Option Plan,
the “Stock Option Plans”), the
AVX Corporation Non-Employee Directors’ Stock Option Plan (the
“Non-Employee Directors’ Stock Option Plan”), or the AVX Corporation 2004
Non-Employee Directors' Stock Option Plan
(the “2004 Non-Employee
Directors' Stock Option Plan” and, together with the Non-Employee
Directors' Stock Option Plan, the “Non-Employee Directors' Stock Option
Plans”).
|
| 3/ |
Includes
4,207 Phantom Shares accrued under the
Deferred Compensation Plan for
Eligible Board Members.
|
| 4/ |
Includes
shares under options exercisable as of
March 31, 2005, and options which
become exercisable within 60 days thereafter
under the Kyocera Stock
Option Plan.
|
| 5/ |
Includes
4,680,000 shares held by the Inamori Foundation
as to which Mr. Inamori,
as President of the foundation, may be
deemed to have voting and
investment power. The aforementioned shares
are not included in the total
shares held by all directors, director
nominees and executive officers as
a group.
|
The
information provided in the above chart as to each
director, director nominee
and named executive officer, individually, and all
directors, director nominees
and executive officers as a group, is based, in part,
on information received
from such individuals. The individuals hold sole voting
and investment power
over the shares indicated as owned by them except:
Mr. Rosen, who shares voting
rights and investment power over 34,094 AVX shares
with his wife; Mr.
Gilbertson, who shares voting rights and investment
power over 1,000 AVX shares
with his wife; and Mr. Lanthorne, who shares voting
rights and investment power
over 2,000 AVX shares and 3,398 Kyocera shares with
his wife.
-6-
Set
forth
below is a table indicating those persons whom the
management of the Company
believes to be beneficial owners of more than 5%
of the Company's
Common
Stock as of March 31, 2005.
|
Name
and Address
of
Beneficial Owner
|
Shares
Beneficially
Owned
|
Percent
of
Class 1/
|
||
|
Kyocera
Corporation
6
Takeda Tobadono-cho
Fushimi-ku,
Kyoto 612-8501, Japan
|
121,800,000
|
2/
|
70.4%
|
|
|
Third
Avenue Management LLC
767
Third Avenue
New
York, NY 10017-2023
|
13,060,228
|
3/
|
7.6%
|
| 1/ |
Based
on a total number of 172,954,815 shares
of Common Stock outstanding as of
March 31, 2005.
|
| 2/ |
The
shares held by Kyocera are subject to the
voting and investment control of
Kyocera's Board of Directors.
|
| 3/ |
Shares
shown as beneficially owned by Third Avenue
Management LLC are reported in
a Form 13G/A filed by Third Avenue Management
LLC dated as of February 15,
2005. Based on that filing, Third Avenue
Management LLC has sole voting
power with respect to 11,311,848 shares
and sole dispositive power with
respect to 13,060,228 shares.
|
Section
16(a) of the Securities Exchange Act of 1934 requires
the Company's
directors, officers and persons who own more than
10% of the Company's
Common
Stock, to file reports of ownership and changes in
ownership of any class of the
Company's
equity
securities. To the Company's
knowledge, during the fiscal year ended March 31,
2005, all of its directors,
officers and persons who hold more than 10% of the
Company's
Common
Stock complied with all applicable Section 16(a)
filing requirements.
-7-
The
Board
has adopted Corporate Governance Guidelines to assist
it in the performance of
its duties and the exercise of its responsibilities
and in accordance with the
listing requirements of the New York Stock Exchange
("NYSE"). The guidelines are
available on the Company's
website
at www.avx.com
in the "Corporate Information Corporate Governance"
section. The Board has also
adopted a Code of Business Conduct and Ethics that
applies to all of our
directors and employees. The code is available on
the Company's
website
at www.avx.com in the "Corporate Information Corporate
Governance" section. You
may request a copy of the guidelines or code by sending
a request to the
Secretary at P.O. Box 867, Myrtle Beach, South Carolina
29578.
Mr.
Rosen
has been selected by the Board as the "Presiding
Director" to preside over
periodic executive sessions of the Board in which
members of management do not
participate.
Because
a
majority of the Company's
shares
are owned by Kyocera, the Company is considered a
"controlled company" under the
applicable rules of the NYSE. Accordingly, the Company
need not have a Board of
Directors with a majority of independent directors
or Nominating/Corporate
Governance and Compensation Committees comprised
entirely of independent
directors.
The
Company's
Corporate Governance Guidelines indicate that the
Board as a whole is
responsible for nominating individuals for election
to the Board by the
shareholders based on candidates suggested by members
of the Board, management
and shareholders. The Board does not currently operate
under a formal written
charter when discharging its nominating functions.
The
Board
has not adopted specific objective requirements for
service on the Board.
Instead, the Board will consider various factors
in determining whether to
nominate an individual for election by the shareholders.
Among other things, the
Board expects each Director to:
| · |
understand
AVX's
businesses and the marketplaces in which
it
operates
|
| · |
regularly
attend meetings of the Board and of the
committees on which he or she
serves
|
| · |
review
and understand the materials provided in
advance of meetings and any other
materials provided to the Board from time
to
time
|
| · |
actively,
objectively and constructively participate
in meetings and the strategic
decision-making processes
|
| · |
share
his or her perspective, background, experience,
knowledge and insights as
they relate to the matters before the Board
and its
committees
|
| · |
be
reasonably available when requested to
advise the CEO and management on
specific issues not requiring the attention
of the full Board but where an
individual director's
insights might be helpful to the CEO or
management.
|
The
Board
will consider candidates recommended by shareholders
in the same manner as other
candidates.
Shareholders
and other interested parties who wish to communicate
with the Board (including,
in the case of shareholders, in order to nominate
director candidates to the
Board), individual board members, the Chairman of
the Board (currently the
Presiding Director) or the non-management directors
as a group may do so by
either of the following means:
| · |
send
correspondence by email to compliance@avxus.com;
or
|
| · |
write
to AVX Corporation, Compliance Office,
P.O. Box 3456, Myrtle Beach, SC
29578-3456.
|
All
questions and concerns will be received and processed
by the Corporate
Compliance Office. Questions and concerns relating
to AVX's
accounting, internal accounting controls or auditing
matters will be referred to
the Chairman of the Audit Committee. Questions
and concerns addressed to the
Board will be referred to the Presiding Director.
Other questions and concerns
will be processed by the Corporate Compliance
Office and forwarded to the
addressees or distributed at the next scheduled
Board meeting, as
appropriate.
-8-
The
Board
held four meetings during the fiscal year ended
March 31, 2005. During that
period, all the directors, except Mr. Itoh, attended
at least 75% of the
meetings of the Board and meetings of the committees
of the Board on which they
served. The directors are encouraged and expected
to attend the Annual Meeting
of Shareholders if reasonably possible. All of
the directors except for Dr.
Inamori attended the Company's
Annual
Meeting of Shareholders held on July 20, 2004.
The Board has the following
standing committees and no nominating committee:
Executive
Committee.
The
Executive Committee has been delegated authority
by the Board to exercise the
powers of the Board in matters pertaining to the
management of the business. The
Executive Committee held no meetings during the
fiscal year ended March 31,
2005. The members of the Executive Committee are
Messrs. Inamori (Chairman),
Gilbertson, Lanthorne, Nishiguchi and Umemura.
Audit
Committee.
The
Audit Committee has been established in accordance
with Section 3(a)(58)(A) of
the Securities Exchange Act and operates under
a written charter adopted by the
Board of Directors. The Audit Committee is appointed
by the Board of Directors
to provide assistance to the Board in fulfilling
its oversight responsibility
relating to the integrity of the Company's consolidated
financial statements and
the financial reporting processes; the systems
of internal accounting and
financial controls; the annual independent audit
of the Company's consolidated
financial statements; the independent registered
public accounting
firm's
qualifications and independence; the performance
of the Company's internal audit
function and independent registered public accounting
firm and any other areas
specified by the Board of Directors of potential
financial risks to the Company.
The Audit Committee is also responsible for hiring,
retaining and terminating
the Company's independent registered public accounting
firm. The Audit Committee
met nine times during fiscal 2005.
The
Audit
Committee is comprised of three members. The members
of the Audit Committee are
Messrs. Christiansen (Chairman), Stach and Tressler.
Each member of the Audit
Committee is financially literate, knowledgeable
and qualified to review
financial statements. The Board of Directors has
determined that the Company has
at least one "audit committee financial expert",
as defined by the Securities
and Exchange Commission ("SEC"), serving on the
Audit Committee. The "audit
committee financial expert" designated by the Board
is Mr. Christiansen. The
Board has determined that an independent director
is one who is free from any
relationship that would interfere with his or her
exercise of independent
business judgment, receives no compensation from
the Company or its subsidiaries
other than director's
fees
and shall not be an affiliate of the Company or
its subsidiaries. The Board of
Directors has determined that the members of the
Audit Committee are
"independent"
under
the currently applicable rules of the NYSE.
The
Board
of Directors has adopted a written charter for
the Audit Committee. The charter
is available on the Company's
website
at www.avx.com in the "Corporate Information Corporate
Governance" section.
You
may request a copy of the charter by sending a
request to the Secretary at P. O.
Box 867, Myrtle Beach, South Carolina 29578.
Compensation
Committee.
The
Compensation Committee has the full power and authority
of the Board with
respect to the determination of compensation for
all executive officers of the
Company. The Compensation Committee also has full
power and authority over any
compensation plan approved by the Board for employees
of the Company and its
subsidiaries, other than the Stock Option Plans,
including the issuance of
shares of Common Stock, as the Compensation Committee
may deem necessary or
desirable in accordance with such compensation
plans. The Compensation Committee
held one meeting during the fiscal year ended March
31, 2005. The members of the
Compensation Committee are Messrs. Inamori (Chairman),
Rosen, Nishiguchi,
Tressler and Umemura.
Equity
Compensation Committee.
The
Equity Compensation Committee is responsible for
any action on all matters
concerning the Stock Option Plans. This committee
consists of Messrs. Tressler
(Chairman), Stach and Umemura. The Equity Compensation
Committee held one
meeting during the fiscal year ended March 31,
2005.
Special
Advisory Committee.
The
Special Advisory Committee is comprised of independent
directors. The committee
is required to review and approve all material
contracts and transactions
between the Company and related parties and to
meet periodically in executive
session. The Special Advisory Committee held three
meetings during the fiscal
year ended March 31, 2005. The members of the Special
Advisory Committee are
Messrs. Stach (Chairman), Tressler and Christiansen.
-9-
Each
director who is not an employee of the Company
or Kyocera is paid an annual
director's
fee of
$30,000, an attendance fee of $2,500 per Board
or committee meeting and
reimbursement of travel expenses. The Chairman
of the Audit Committee also
receives an additional $5,000 per year. Each
director who is an employee of
Kyocera is paid an attendance fee of $2,500 per
Board or committee meeting and
reimbursement of travel expenses. In addition,
each director who is not an
employee of the Company is granted stock options
pursuant to the Non-Employee
Directors'
Stock
Option Plans.
Stock
Options
The
2004
Non-Employee Directors'
Stock
Option Plan authorizes the issuance of 1,000,000
shares of Common Stock, making
available the grant of an option to purchase
15,000 shares of Common Stock to
each Non-Employee Director (a director not employed
by AVX) as of the date on
which a Non-Employee Director is elected for
the first time and every third
anniversary thereafter. In addition, options
to purchase shares of Common Stock
may also be granted from time to time upon prior
approval by the Board. The
option becomes exercisable 33 1/3% one year after
the date of the grant and an
additional 33 1/3% at the end of each of the
following two years, provided that
the Non-Employee Director must continue to be
a director at the date of
exercise. However, if the Non-Employee Director's
service
terminates due to retirement, death or disability,
his options shall thereupon
become fully vested. Options have an exercise
price equal to the fair market
value (as defined in the plan) of the Common
Stock on the date of grant. The
Board administers this plan. The plan requires
that options granted thereunder
will expire on the date which is ten years after
the date of grant, unless
sooner terminated under the terms of the plan.
Unless sooner terminated by
action of the Board, the plan will terminate
on August 1, 2014. Subject to
certain exceptions that require shareholder approval,
the plan may be amended or
discontinued by the Board. Options granted under
the plan are not assignable.
There are no Federal tax consequences either
to the Non-Employee Directors or to
the Company upon the grant of an option. On exercise
of an option, the excess of
the date-of-exercise fair market value of the
shares acquired over the option
price will generally be taxable to the Non-Employee
Director as ordinary income
and deductible by the Company. The disposition
of shares acquired upon exercise
of an option will generally result in a capital
gain or loss for the
Non-Employee Director, but will have no tax consequences
for the Company. The
Non-Employee Director’s Stock Option Plan adopted in 1995 will terminate
on
August 1, 2005. AVX feels that it is important
for members of the Board to be
shareholders of the Company, to have an incentive
to help the Company grow and
prosper, and to share in that prosperity.
Deferred
Compensation Plan for Eligible Board Members
The
Deferred Compensation Plan for Eligible Board
Members allows each "Outside
Director" (a director not employed by AVX or
Kyocera), at his election, to defer
payment of certain portions of his compensation
as a director. Deferrals are
invested in an AVX Phantom Share Unit Fund. Each
deferral is converted into a
hypothetical investment in Common Stock using
the price of the stock at each
deferral period. At the time of pay out of the
deferred accounts, the Company
disburses to the Outside Director an equivalent
number of shares of Common Stock
"purchased" by the Outside Director during the
entire deferral period, increased
for any hypothetical reinvested dividends declared
during the deferral period.
An Outside Director's
deferred account is paid, at the director's
election, either on the 10th anniversary of each
annual deferral or upon his
ceasing to be a member of the Board of Directors.
-10-
Cash
Compensation
The
following table shows cash compensation paid
and certain other compensation paid
or accrued by the Company for the fiscal years
ended March 31, 2005, 2004 and
2003 to each of the Company's
Chief
Executive Officer and the next four most highly
compensated executive officers
("Named
Executive Officers")
in all
capacities in which they served.
|
|
Annual
Compensation
|
|
Long
Term Compensation
|
|||||||||
|
Other
Annual
|
Securities
Underlying
|
All
Other
|
||||||||||
|
Fiscal
|
Salary
|
Bonus
|
Compensation
|
Options
|
Compensation
|
|||||||
|
Name
& Position
|
Year
|
($)
1/
|
($)
2/
|
($)
3/
|
(#)
4/
|
($)
5/
|
||||||
|
John
S. Gilbertson
|
2005
|
$576,000
|
$454,900
|
$35,800
|
100,000
|
$74,300
|
||||||
|
Chief
Executive Officer
|
2004
|
558,000
|
-0-
|
31,600
|
100,000
|
72,500
|
||||||
|
and
President
|
2003
|
558,000
|
-0-
|
12,000
|
226,500
|
75,000
|
||||||
|
C.
Marshall Jackson
|
2005
|
299,400
|
119,700
|
19,400
|
25,000
|
38,800
|
||||||
|
Executive
Vice President
|
2004
|
295,000
|
-0-
|
18,400
|
25,000
|
38,400
|
||||||
|
of
Sales and Marketing
|
2003
|
295,000
|
-0-
|
11,200
|
56,250
|
39,400
|
||||||
|
Peter
Collis
|
2005
|
211,400
|
148,700
|
18,100
|
20,000
|
21,100
|
||||||
|
Vice
President
|
2004
|
159,000
|
-0-
|
17,100
|
20,000
|
11,300
|
||||||
|
of
Tantalum
|
2003
|
110,400
|
-0-
|
17,000
|
18,400
|
7,800
|
||||||
|
Kurt
Cummings
|
2005
|
191,100
|
150,900
|
14,800
|
10,000
|
24,600
|
||||||
|
Vice
President, Chief Financial
|
2004
|
184,000
|
-0-
|
14,700
|
10,000
|
24,300
|
||||||
|
Officer,
Treasurer and Secretary
|
2003
|
184,000
|
-0-
|
10,700
|
18,500
|
24,400
|
||||||
|
Keith
Thomas
|
2005
|
203,200
|
137,300
|
13,300
|
13,000
|
25,500
|
||||||
|
President
of
|
2004
|
169,300
|
-0-
|
12,900
|
10,000
|
22,100
|
||||||
|
Kyocera
Electronic Devices
|
2003
|
169,300
|
-0-
|
9,500
|
12,750
|
22,700
|
||||||
| 1/ |
Includes
amounts earned but deferred by the
executive officer at his election,
pursuant to the Company's savings
or deferred compensation
plans.
|
| 2/ |
Includes
$432,000, $107,800, $148,700, $143,300
and $129,500 with respect to
Messrs. Gilbertson, Jackson, Collis,
Cummings and Thomas, respectively,
representing 75% of a performance-based
cash award to such officer in
accordance with the Management Incentive
Plan. The remaining 25% of such
cash award will be paid in June of
2006, provided such officer is employed
by the Company at that time. Also
includes $22,900, $11,900, $7,600
and
$7,800 with respect to Messrs. Gilbertson,
Jackson, Cummings and Thomas,
respectively, representing 50% of
a bonus for such officers in accordance
with a determination by the Company’s Board of Directors to pay a
discretionary cash bonus to each
U.S. salaried employee of the Company
in
an amount equal to 8% of such employee’s calendar year 2004 eligible
earnings. The remaining 50% of such
bonus will be paid in June of 2006,
provided the officer is employed
by the Company at that
time.
|
| 3/ |
Includes
automobile cost allowances and contributions
to group life, medical, or
excessive liability insurance programs,
respectively, as follows for the
fiscal year ended March 31, 2005:
John S. Gilbertson - $24,000 and
$11,800; C. Marshall Jackson - $14,400
and $5,000; Peter Collis $15,800
and $2,300; Kurt Cummings - $12,000
and $2,800; Keith Thomas - $10,200
and
$3,100. The Company provides the
named executive officers with certain
group life and medical benefits generally
available to all salaried
employees and personal liability
insurance coverage that supplements
the
executive officer’s United States personal homeowner’s and automobile
liability insurance coverage.
|
| 4/ |
All
stock options were granted pursuant
to the 1995 Stock Option
Plan.
|
| 5/ |
All
other compensation includes the Company's
contribution on behalf of the
respective Named Executive Officers
pursuant to the terms of the AVX
Corporation Deferred Compensation
Plans (the "DCPs"), the AVX Corporation
Retirement Plan (the "Retirement
Plan") and the AVX Ltd. Pension Plan
(the
“Pension Plan”). For the fiscal year ended March
31, 2005, components of
all other compensation described
above for the respective Named Executive
Officers was as follows for the DCP
and Retirement Plan, respectively:
John S. Gilbertson - $47,600 and
$26,700; C. Marshall Jackson - $12,200
and $26,600; Kurt Cummings - $1,200
and $23,400; Keith Thomas - $1,600
and
$23,900. The amount indicated for
Peter Collis for the fiscal year
ended
March 31, 2005 reflects the Company's
contribution on his behalf under
the
Pension Plan, a defined benefit pension
plan administered by AVX Limited,
a wholly-owned subsidiary of AVX
Corporation. The Pension Plan provides
for a retirement benefit equal to
1/60ths of the final pensionable
salary
for each year of service, as defined,
at age 65. Mr. Collis has been
employed by the Company since 1967.
In the event of early retirement,
the
retirement benefit is proportionally
reduced based on years of service.
The estimated annual benefit payable
to Mr. Collis upon retirement, based
on his estimated final pensionable
salary, as defined, of $200,000 and
32
years of credited service is $100,000.
Compensation covered by the Pension
Plan generally corresponds with the
annual compensation reported for
Mr.
Collis in the summary compensation
table above.
|
The
amounts shown for each Named Executive Officer may
exclude certain perquisites
and other personal benefits that did not exceed, in
the aggregate, the lesser of
either $50,000 or 10% of the total of annual salary
and bonus reported for the
Named Executive Officer for any year included in this
table.
-11-
Fiscal
Year-End Option Values
The
following table sets forth information with respect
to options exercised during
fiscal 2005 by the Named Executive Officers and fiscal
year-end values of
unexercised options held by the Named Executive Officers
at year-end (all of
which were granted by the Company pursuant to the 1995
Stock Option Plan).
And
Fiscal Year-End Option Values
|
Number
of Shares Underlying Unexercised Options
at Fiscal Year End
|
Value
of Unexercised In-the-Money Options at
Fiscal
Year End 1/
|
||||||
|
Name
|
Shares
Acquired on Exercise
(#)
|
Value
Realized ($)
|
Exercisable
(#)
|
Unexercisable
(#)
|
Exercisable
($)
|
Unexercisable
($)
|
|
|
John
S. Gilbertson
|
-0-
|
$
|
-0-
|
853,250
|
288,250
|
$
1,199,505
|
$
77,880
|
|
C.
Marshall Jackson
|
-0-
|
-0-
|
239,376
|
71,874
|
452,313
|
19,312
|
|
|
Peter
Collis
|
-0-
|
-0-
|
55,950
|
44,200
|
46,479
|
6,798
|
|
|
Kurt
Cummings
|
-0-
|
-0-
|
74,744
|
26,756
|
120,760
|
6,050
|
|
|
Keith
Thomas
|
-0-
|
-0-
|
39,875
|
26,875
|
13,350
|
3,630
|
|
| 1/ |
In
accordance with the rules of the SEC, values
are calculated by subtracting
the exercise price from the fair market value
of the underlying Common
Stock. For purposes of calculating the value
of unexercised options
exercisable and unexercisable, fair market value
is deemed to be $12.25
per share, the closing price of the Common Stock
reported for the NYSE
Composite Transactions on March 31, 2005, the
last trading day of the
Company's fiscal year.
|
-12-
Option
Grants in Fiscal 2005
The
following table sets forth information regarding all options
to acquire shares
of Common Stock granted to the Named Executive Officers
during the fiscal year
ended March 31, 2005.
|
Name
|
Number
of Securities Underlying Stock
Options
Granted 1/ 2/
|
Percent
of Total Stock Options Granted to Employees in
Fiscal
2005
|
Exercise
Prices Per
Share 3/
|
Expiration
Date
|
Grant
Date
Present
Value 4/
|
|
John
S. Gilbertson
|
100,000
|
20.0%
|
$
14.46
|
5/14/2014
|
$
625,050
|
|
C.
Marshall Jackson
|
25,000
|
5.0%
|
14.46
|
5/14/2014
|
156,263
|
|
Peter
Collis
|
20,000
|
4.0%
|
14.46
|
5/14/2014
|
125,010
|
|
Kurt
Cummings
|
10,000
|
2.0%
|
14.46
|
5/14/2014
|
62,505
|
|
Keith
Thomas
|
13,000
|
2.6%
|
14.46
|
5/14/2014
|
81,257
|
| 1/ |
Options
were granted on May 14, 2004 to purchase shares
of Common Stock.
Twenty-five percent of the shares subject to
options become exercisable
one-year from the date of grant and 25% become
exercisable on each of the
three succeeding anniversary dates, provided
the officer continues to be
employed by the Company or any of its
subsidiaries.
|
| 2/ |
The
options were granted pursuant to the 1995 Stock
Option Plan and do not
provide tandem or stand-alone stock appreciation
rights.
|
| 3/ |
Payment
for shares of Common Stock upon exercise of a
stock option may be made in
cash, or with the Company's consent, shares of
Common Stock or a
combination of cash and shares of Common
Stock.
|
| 4/ |
These
amounts represent the estimated value of stock
options at the respective
dates of grant, calculated using the Black-Scholes
option pricing model,
based on the following assumptions used in developing
the valuations for
the grants issued on May 14, 2004: an expected
volatility of 55.74%, for
the grant date, based on the historical volatility
of AVX Common Stock; an
expected term of exercise of 4 years; a risk
free rate of return of
3.498%; and a dividend yield of 1.037%. The actual
value of the options,
if any, realized by the officers will depend
on the extent to which the
market value of the Common Stock exceeds the
exercise price of the option
on the date the option is exercised. Consequently,
there is no assurance
that the value realized by the officer will be
at or near the value
estimated above. The amounts should not be used
to predict stock
performance. No gain to the officer is possible
without an appreciation in
stock value which will benefit all shareholders
commensurately.
|
-13-
Employment
Agreement
Mr.
Gilbertson has an employment agreement that provides for
a two-year advisory
period upon retirement from the Company. During this advisory
period, he will
receive an annual payment equivalent to his most recent
base salary as a
full-time employee. If Mr. Gilbertson dies prior to or
during the advisory
period, his heirs will be entitled to the payments he would
have
received.
The
Company has four stock option plans, all of which are shareholder-approved
plans. As of March 31, 2005, the number of options outstanding
and remaining
available under the approved plans were as follows:
|
Plan
Category
|
Number
of securities to be issued upon exercise of
outstanding options
|
Weighted
average exercise price of outstanding
options
|
Number
of securities remaining available for future
issuance
|
|
Equity
Compensation plans approved by security holders
|
4,907,876
|
$15.01
|
12,062,027
|
|
Equity
compensation plans not approved by security holders
|
--
|
--
|
1/
|
| 1/ |
Members
of the Board of Directors who are not employees
of AVX or Kyocera are
eligible to defer their annual director's fee
and attendance fees in an
AVX Phantom Share Unit Fund under the Deferred
Compensation Plan for
Eligible Board Members (not approved by shareholders)
based on the Fair
Market Value of the Common Stock at each Credit
Date (all as defined in
the plan). Payment of account balances to an
eligible director (as
prescribed in "Compensation of Directors" above)
is payable in the form of
a number of shares of Common Stock equal to the
whole number of Phantom
Shares Units (as defined) credited to such director
under the plan. See
"Compensation of Directors" above for more
information.
|
-14-
During
the fiscal year ended March 31, 2005, the Compensation
Committee was comprised
of Messrs. Inamori, Nishiguchi, Rosen, Tressler and Umemura
and the Equity
Compensation Committee was comprised of Messrs. Tressler,
Stach and Umemura.
Until his retirement from the Board in May 2004, Carroll
A. Campbell, Jr. also
served as a member of the Equity Compensation Committee.
Mr. Rosen formerly held
the offices of Chief Executive Officer, President and Executive
Vice President
of AVX and Senior Managing and Representative Director
and Managing Director of
Kyocera. Dr. Inamori is Chairman Emeritus of the Board,
Mr. Nishiguchi is
President, and Mr. Umemura is Executive Vice President,
of Kyocera. Kyocera owns
121,800,000 shares, or approximately 70.4%, of the Company's
outstanding Common Stock as of March 31, 2005, and has
engaged in a significant
number and variety of related company transactions with
the Company. The more
significant arrangements and agreements between the Company
and Kyocera are
described under the caption "Relationship
with Kyocera and Related Transactions"
below.
For additional information concerning positions with Kyocera
held by executive
officers and directors of the Company, see "Proposal
I, Election of Directors, Nominations for the Board of
Directors"
above.
This
report provides an overview of the Company's
executive compensation philosophy and describes the roles
of the Compensation
Committee and the Equity Compensation Committee.
The
Compensation Committee, subject to review by the Board,
makes determinations
regarding salary levels and annual incentive bonus opportunities
for executive
officers, and performs other compensation related functions
delegated to the
Compensation Committee by the Board. The Equity Compensation
Committee makes
determinations regarding all option awards under Stock
Option Plans, including
awards to executive officers.
The
Company's
compensation policy reflects a commitment to an executive
compensation plan
which enables the Company to attract, retain and motivate
highly qualified
management professionals. The Company's
compensation philosophy is to directly align executive
compensation with the
financial performance of the organization. The Company
believes that the
relationship between executive compensation and Company
performance will create
a benefit for all shareholders.
The
executive compensation program has been developed by the
Compensation Committee
using various factors which include historical earnings,
review of industry
competition executive compensation plans, and consultation
with compensation
experts. The key elements of the executive compensation
program are base salary,
annual incentive bonus and stock options, in addition to
those benefits provided
under the Company's
retirement plans.
The
Compensation Committee or the Equity Compensation Committee,
as applicable,
reviews and approves each element of the Company's
executive compensation program and periodically assesses
the effectiveness of
the program as a whole. This program covers the Chief Executive
Officer, other
named executive officers and all other executive officers
of the Company.
Specifically, the committees approve the salaries of all
executive officers,
cash awards under the Company's
Management Incentive Plan ("MIP"),
the
grant of stock options under Stock Option Plans, and the
provision of any
special benefits or perquisites to executive officers.
-15-
Base
Salary Program
The
base
salary program is intended to provide base salary levels
that are externally
competitive and internally equitable, and to reflect each
individual's
sustained performance and cumulative contribution to the
Company. Each executive
officer's
individual performance is reviewed to arrive at merit increase
determinations.
These merit increases are then reviewed within the context
of the total merit
increase budget to determine reasonableness.
Management
Incentive Plan
The
MIP
provides for annual cash incentive compensation based on
various performance
measures for executive officer positions. Bonus awards
are generally paid under
the MIP if the Company's
financial performance exceeds a pre-determined performance
target. The bonus
awards for the Chief Executive Officer are based on a percentage
of target
profits. The rest of the executive officers'
bonuses
are derived from a pool based on a percentage of target
profits.
Stock
Option Plans
The
Stock
Option Plans are designed to reward executive officers
and other key employees
directly for appreciation in the long-term price of the
Company's
stock.
Each of the Stock Option Plans directly links the compensation
of executive
officers to gains by the shareholders and encourages executive
officers to adopt
a strong stakeholder orientation in their work. Each of
the Stock Option Plans
also places what can be a significant element of compensation
at risk because
the options have no value unless there is appreciation
over time in the value of
Company stock.
With
the
understanding that the value (if any) of stock options
is based on future
performance, the Company bases stock option grants on levels
of expected value
for long-term incentive grants among other companies and
other comparable
corporate employers. The Equity Compensation Committee
periodically reviews the
practices, grant levels and grant values of other companies
to ensure the plan
continues to meet the Company's
objectives.
Family
Income Assurance Plan
The
Company has in effect a Family Income Assurance Plan for
executive officers.
Coverage under this self-insured plan provides that, in
the event of the death
of an executive officer while employed by the Company,
the officer’s surviving
spouse, or estate, is entitled to receive the equivalent
of two years base
salary during the following 24 months.
Other
Benefits
Retirement
and medical benefits offered to executive officers are
largely the same as those
offered to the general salaried employee population, with
some variation,
primarily to promote tax efficiency and replacement of
benefit opportunities
lost due to regulatory limits. Miscellaneous benefits offered
to executive
officers are designed to provide a safety net of protection
against the
financial catastrophes that can result from liability suits,
illness, disability
or death.
Chief
Executive Officer Compensation
As
Chief
Executive Officer of the Company, Mr. Gilbertson's
base
salary reflects his substantial responsibilities in addition
to the factors
discussed under the Base Salary Program above. Based on
these responsibilities,
the Board awarded Mr. Gilbertson a base salary of $576,000
for fiscal 2005. Mr.
Gilbertson received a bonus award of $432,000 under the
MIP for fiscal 2005. Not
included in this number is a deferred bonus of $144,000
which will be paid in
June 2006 provided he is still employed by the Company
at that
time.
-16-
Deductibility
of Executive Compensation
With
respect to Section 162(m) of the Code and the underlying
Internal Revenue
Service (the "IRS")
regulations pertaining to the deductibility of compensation
to certain executive
officers in excess of $1 million, the Compensation Committee
has adopted a
policy that it will attempt to comply with such limitations,
to the extent
practicable, including through its presentation of incentive
compensation plans
to the shareholders, for approval, where appropriate. However,
the Compensation
Committee has also determined that some flexibility is
required, notwithstanding
these IRS regulations, in negotiating and implementing
the Company's
incentive compensation program. It has, therefore, retained
the option to award
some bonus payments based on non-quantitative performance
objectives and other
criteria, which it may determine, at its discretion, from
time to
time.
Summary
The
Compensation Committee and the Equity Compensation Committee
believe the
executive compensation program is adequate to accomplish
the program's
goals
of attracting, retaining and motivating highly qualified
management
professionals. The Committees believe the executive compensation
program is fair
to both the executive officers and the Company.
SUBMITTED
BY THE COMPENSATION AND THE EQUITY COMPENSATION COMMITTEES
OF THE
BOARD:
Kazuo
Inamori, Chairman of Compensation Committee
Benedict
Rosen
Yasuo
Nishiguchi
Richard
Tressler
Masahiro
Umemura
Richard
Tressler, Chairman of Equity Compensation Committee
Joseph
Stach
Masahiro
Umemura
-17-
In
accordance with its written charter, as adopted by the
Board of Directors, the
Audit Committee assists the Board in fulfilling its responsibility
for oversight
of the quality and integrity of the accounting, auditing
and financial reporting
practices of the Company. During the fiscal year ended
March 31, 2005, the Audit
Committee met nine times, and the Audit Committee discussed
the interim
financial information contained in each quarterly earnings
announcement with the
Chief Financial Officer and independent registered public
accounting firm prior
to the public release.
In
discharging its oversight responsibility as to the audit
process, the Audit
Committee obtained from the independent registered public
accounting firm a
formal written statement describing all relationships
between the accountants
and the Company that might bear on the accountants'
independence consistent with Independence Standards Board
Standard No. 1,
"Independence
Discussions with Audit Committees",
discussed with the accountants any relationships that
may impact their
objectivity and independence and satisfied itself as
to the
accountants'
independence. The
Audit
Committee also discussed with management and the independent
registered public
accounting firm the quality and adequacy of the Company's
internal controls. The Audit Committee reviewed with
the independent registered
public accounting firm its audit plans, audit scope,
and identification of audit
risks.
The
Audit
Committee reviewed and discussed with the independent
registered public
accounting firm all communications required by generally
accepted auditing
standards, including those described in Statement on
Auditing Standards No. 61,
as amended, "Communication
with Audit Committees",
and,
with and without management present, discussed and reviewed
the results of the
independent registered public accounting firm's
examination of the financial statements.
The
Audit
Committee reviewed and discussed the audited financial
statements of the Company
as of and for the fiscal year ended March 31, 2005, with
management and the
independent registered public accounting firm. Management
has the responsibility
for the preparation of the Company's
financial statements, and the independent registered
public accounting firm has
the responsibility for the examination of those statements.
Based
on
the above-mentioned review and discussions with management
and the independent
registered public accounting firm, the Audit Committee
recommended that the
Company's
audited
financial statements be included in its Annual Report
on Form 10-K for the
fiscal year ended March 31, 2005, for filing with the
Securities and Exchange
Commission. The Audit Committee also reappointed the
independent registered
public accounting firm, PricewaterhouseCoopers, for the
fiscal year ending March
31, 2006.
SUBMITTED
BY THE AUDIT COMMITTEE OF THE BOARD:
Donald
B.
Christiansen, Chairman
Joseph
Stach
Richard
Tressler
-18-
Representatives
of PricewaterhouseCoopers will attend the Annual Meeting.
They will have an
opportunity to make a statement if they so desire, and
to respond to appropriate
questions.
Principal
Independent Registered Public Accounting Firm Fees
As
reflected in the table below, the Company incurred
fees of $2,872,000 and
$8,126,000 in fiscal 2004 and 2005, respectively, for
services performed by
PricewaterhouseCoopers. Of these sums, $2,287,000 in
fiscal 2004 and $7,801,000
in fiscal 2005 were for audit and audit related services.
PricewaterhouseCoopers
did not perform any financial system consulting services
in fiscal 2004 or
2005.
|
2004
|
2005
|
|
|
Audit
Fees 1/
|
$
1,972,000
|
$7,618,000
|
|
Audit
Related Fees 2/
|
315,000
|
183,000
|
|
Tax
Fees 3/
|
585,000
|
325,000
|
|
Other
Fees
|
---
|
---
|
|
Total
Fees
|
$2,872,000
|
$8,126,000
|
| 1/ |
Amounts
represent fees for the annual audit of the
Company for the fiscal years
ended March 31, 2004 and March 31, 2005,
reviews of the Company's
financial statements for interim periods
and other regulatory filings in
fiscal 2004 and fiscal 2005 and services
related to the company’s internal
control over financial reporting.
|
| 2/ |
Amounts
primarily represent fees for the audits of
employee benefit plans,
statutory audits of certain foreign locations
and other procedures related
to documents filed with the SEC and consultations
concerning financial
accounting and reporting standards.
|
| 3/ |
Amounts
represent fees for consultation on tax matters
and tax compliance
services.
|
The
Audit
Committee of the Company's Board of Directors determined
that the provision of
non-audit services by PricewaterhouseCoopers to the
Company during fiscal 2004
and fiscal 2005 was compatible with maintaining the
independent registered
public accounting firm's independence.
Audit
Committee's Pre-approval Policies and Procedures
It
is the
policy of the Audit Committee to pre-approve all
audit and permitted non-audit
services (and the related fees and terms) to be provided
to the Company by the
independent registered public accounting firm. The
authority to pre-approve
non-audit services may be delegated by the Audit
Committee to one or more
members of the Committee, who shall present any decision
to pre-approve an
activity to the full Committee at the first meeting
following such decision.
None of the services described above were approved
by the Audit Committee
pursuant to the exception provided by Rule 2-01(c)(7)(i)(C)
under Regulation
S-X.
-19-
Since
January 1990, Kyocera and AVX have engaged in a significant
number and variety
of related party transactions, including, without
limitation, the transactions
referred to in notes 15 and 16 to the consolidated
financial statements in
AVX's
Annual
Report on Form 10-K for the fiscal year ended March
31, 2005. One principal
strategic advantage for the Company is its ability
to produce a broad product
offering to its customers. The inclusion of products
manufactured by Kyocera in
that product offering is a significant component
of this advantage. In addition,
the exchange of information with Kyocera relating
to the development and
manufacture of multi-layer capacitors and various
other ceramic products
benefits the Company. An adverse change in the Company's
relationship with Kyocera could have a negative impact
on the
Company's
results
of operations. AVX also has established several ongoing
arrangements with
Kyocera and has executed several agreements, the
more significant of which are
described below. In the fiscal year ended March 31,
2005, AVX had purchases of
$395.0 million from Kyocera and received sales and
other revenue of $27.4
million from Kyocera under these agreements. Except
for the Buzzer Assembly
Agreement, each of the agreements and any other transactions
described below
contains provisions requiring that the terms of any
transaction under such
agreement be equivalent to that to which an independent
unrelated party would
agree at arm's-length
and is subject to the approval of the Special Advisory
Committee of the AVX
Board of Directors. The Special Advisory Committee
is comprised of the
independent directors of AVX and is required to review
and approve such
agreements and any other significant transactions
between AVX and Kyocera not
covered by such agreements. Periodically, the Special
Advisory Committee reviews
a summary of the Company's
transactions with Kyocera to identify any significant
transactions not covered
by such agreements and investigates the nature and
the terms of such
transactions.
Products
Supply and Distribution Agreement.
Pursuant to the Products Supply and Distribution
Agreement (the "Distribution
Agreement")
(i) AVX
will act as the non-exclusive distributor of certain
Kyocera-manufactured
products to certain customers in certain territories
outside of Japan, and (ii)
Kyocera will act as the non-exclusive distributor
of certain AVX-manufactured
products within Japan. The Distribution Agreement
has a term of one year, with
automatic one-year renewals, subject to the right
of termination by either party
at the end of the then current term upon at least
three months prior written
notice.
Disclosure
and Option to License Agreement.
Pursuant to the Disclosure and Option to License
Agreement (the "License
Agreement"),
AVX
and Kyocera exchange confidential information relating
to the development and
manufacture of multi-layered ceramic capacitors and
various other ceramic
products, as well as the license of technologies
in certain circumstances. The
License Agreement was extended effective March 31,
2005 with a new expiration
date of April 1, 2006.
Materials
Supply Agreement.
Pursuant to the Materials Supply Agreement (the "Supply
Agreement"),
AVX
and Kyocera will from time to time supply the other
party with certain raw and
semi-processed materials used in the manufacture
of capacitors and other
electrical products. The Supply Agreement has a term
of one year, with automatic
one-year renewals, subject to the right of termination
by either party at the
end of the then current term upon at least six months
prior written
notice.
Buzzer
Assembly Agreement.
Pursuant to the Buzzer Assembly Agreement (the "Buzzer
Agreement"),
AVX
assembles certain electronic components for Kyocera
in AVX's
Juarez,
Mexico facility. Kyocera pays AVX a fixed cost mutually
agreed upon by the
parties for each component assembled, plus a profit
margin. The Buzzer Agreement
has automatic one-year renewals, subject to the right
of termination by either
party at the end of the then current term upon at
least six months prior written
notice.
Machinery
and Equipment Purchase Agreement.
Pursuant to the Machinery and Equipment Purchase
Agreement (the "Machinery
Purchase Agreement"),
AVX
and Kyocera will from time to time design and manufacture
for the other party
certain equipment and machinery of a proprietary
and confidential nature used in
the manufacture of capacitors and other electronic
components. The Machinery
Purchase Agreement has a term of one year, with automatic
one-year renewals,
subject to the right of termination by either party
at the end of the then
current term upon at least six months prior written
notice.
-20-
The
following chart compares the percentage change
in the cumulative total
shareholder return on the Company's Common Stock
from March 31, 2000 through
March 31, 2005, with the cumulative total return
of the S&P 500 Stock Index
and a Peer Group index for such period.
The
"Peer
Group"
is
comprised of the following companies: Amphenol,
Kemet, Methode, Molex and
Vishay. The Stock Price Performance Graph above
and the foregoing Reports of the
Compensation Committee, Equity Compensation Committee
and Audit Committee shall
not be deemed incorporated by reference by any
general statement incorporating
by reference this Proxy Statement into any filing
with the Securities and
Exchange Commission under the Securities Act of
1933 or under the Securities
Exchange Act of 1934, except to the extent the
Company specifically incorporates
this information by reference, and shall not otherwise
be deemed filed under
such Acts.
If
any
shareholder intends to present a proposal to the
Company for inclusion in its
proxy statement relating to the annual meeting
of shareholders expected to be
held in July 2006 or wishes to recommend nominees
to the Board, such proposal,
in writing and addressed to the Corporate Secretary,
must be received by the
Company no later than February 24, 2006.
In
general, shareholder proposals intended to be presented
at an annual meeting,
including proposals for the nomination of directors,
must be received by the
Company no less than 60 days, but no more than
90 days, in advance of the
meeting in order to be considered timely under
the By-laws of the Company;
provided, however, if less than 70 days prior notice
is given for an annual
meeting, proposals must be received within ten
days of the mailing or public
disclosure of such notice.
-21-
The
entire cost of this solicitation will be borne
by the Company, including
reimbursement of banks, brokerage firms, custodians,
nominees and fiduciaries
for their reasonable expenses in sending proxy
materials to the beneficial
owners of stock. Solicitation will primarily
be made by mail, but proxies may be
solicited personally by the Company's
officers, directors or employees, by telephone
or by facsimile. In addition, the
Company has retained American Stock Transfer
& Trust Company to assist in
the solicitation of proxies at a fee estimated
to be $23,000, plus reimbursement
of out-of-pocket expenses.
The
Company's
annual
report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K
and any amendments filed with or furnished to
the SEC pursuant to Sections 13(a)
or 15 (d) of the Securities Exchange Act are
available free of charge on the
Company's
website
at www.avx.com as soon as reasonably practicable
after being filed with the
SEC.
By
order
of the Board,
| /s/ Kurt P. Cummings |
|
Kurt
P. Cummings
Corporate
Secretary
|
June
24,
2005
-22-
TABLE
OF CONTENTS