UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(RULE 14a-101)

Information Required in Proxy Statement

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act

 

 

March 28, 2007

Dear Stockholder:

You are cordially invited to the Annual Meeting of Stockholders (the “Annual Meeting”) of CommScope, Inc., a Delaware corporation (the “Company”), to be held on May 4, 2007 at 1:30 p.m., local time, at the JPMorgan Chase Bank, 270 Park Avenue, 11th Floor, New York, New York 10017.

At the Annual Meeting we will review the Company’s activities in 2006, as well as the outlook for 2007. Details of the business to be conducted and the matters to be considered at the Annual Meeting are given in the attached Notice of Annual Meeting and Proxy Statement.

It is important that your shares be represented at the Annual Meeting, whether or not you are able to attend personally. You are therefore urged to complete, sign, date and return the enclosed proxy card promptly in the accompanying envelope, which requires no postage if mailed in the United States. This year, if your shares of stock are held in a participating bank or brokerage account, you may be eligible to vote over the Internet or by telephone, as an alternative to mailing the traditional proxy card. Please see “Voting over the Internet or by Telephone” in the Proxy Statement for further details.

You are, of course, welcome to attend the Annual Meeting and vote in person, even if you have previously returned your proxy card or voted over the Internet or by telephone.

	Sincerely,
	Frank M. Drendel
	Chairman of the Board and
	Chief Executive Officer

 

COMMSCOPE, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The Annual Meeting of Stockholders (the “Annual Meeting”) of CommScope, Inc. (the “Company”) will be held on May 4, 2007, at 1:30 p.m., local time, at the JPMorgan Chase Bank, 270 Park Avenue, 11th Floor, New York, New York 10017.

The Annual Meeting will be conducted:

1.                To consider and act on the following proposals, which are described in the accompanying Proxy Statement:

 

2.                To transact such other business as may properly come before the Annual Meeting.

Stockholders of record at the close of business on March 13, 2007 will be entitled to notice of and to vote at the Annual Meeting.

 

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ELECTED TO RECEIVE THE 2007 PROXY STATEMENT AND 2006 ANNUAL REPORT OVER THE INTERNET YOU WILL NOT RECEIVE A PAPER PROXY AND YOU SHOULD VOTE ONLINE, UNLESS YOU CANCEL YOUR ENROLLMENT. IF YOUR SHARES ARE HELD IN A PARTICIPATING BANK OR BROKERAGE ACCOUNT AND YOU DID NOT ELECT TO RECEIVE MATERIALS OVER THE INTERNET, YOU MAY BE ELIGIBLE TO VOTE YOUR PROXY OVER THE INTERNET OR BY TELEPHONE. PLEASE SEE “VOTING ELECTRONICALLY OVER THE INTERNET OR BY TELEPHONE” IN THE PROXY STATEMENT FOR FURTHER DETAILS. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED BY DELIVERY TO THE COMPANY OF A SUBSEQUENTLY EXECUTED PROXY OR A WRITTEN NOTICE OF REVOCATION OR BY VOTING IN PERSON AT THE ANNUAL MEETING.

COMMSCOPE, INC.

1100 CommScope Place, S.E., P.O. Box 339
Hickory, North Carolina 28602

PROXY STATEMENT

This Proxy Statement (the “Proxy Statement”) is being furnished to the stockholders of CommScope, Inc., a Delaware corporation (the “Company”), in connection with the solicitation of proxies by the Board of Directors of the Company for use at the Annual Meeting of Stockholders (the “Annual Meeting”) of the Company to be held on May 4, 2007 at 1:30 p.m., local time, at the JPMorgan Chase Bank, 270 Park Avenue, 11th Floor, New York, New York 10017, and any adjournment or postponement thereof.

At the Annual Meeting, stockholders will be asked to consider and vote upon the following proposals: Proposal One: To elect three Class I directors for terms ending at the 2010 Annual Meeting of Stockholders; and Proposal Two: To ratify the appointment of Deloitte & Touche LLP as the Company’s independent auditor for the 2007 fiscal year.

The Board of Directors of the Company recommends a vote FOR approval of each of these proposals.

The Board of Directors of the Company has fixed the close of business on March 13, 2007 (the “Annual Meeting Record Date”) as the record date for determining the holders of outstanding shares of common stock, par value $0.01 per share (the “Common Stock”), entitled to receive notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof. On that date, there were 60,706,575 shares of Common Stock issued and outstanding and entitled to vote at the Annual Meeting, each entitled to one vote on all matters to be acted upon. The Notice of Annual Meeting of Stockholders, this Proxy Statement and the form of proxy are first being mailed or sent electronically on or about March 28, 2007 to each stockholder entitled to vote at the Annual Meeting.

VOTING AND REVOCATION OF PROXIES

Voting

Only holders of record of shares of Common Stock as of the close of business on the Annual Meeting Record Date will be entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. The presence, either in person or by properly executed proxy, of the holders of a majority of the outstanding shares of Common Stock is necessary to constitute a quorum at the Annual Meeting and to permit action to be taken by the stockholders at the Annual Meeting.

Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum, as will broker non-votes. A broker non-vote occurs under stock exchange rules when a broker is not permitted to vote on a matter without instructions from the beneficial owner of the shares and no such voting instructions are given. Under the rules of the New York Stock Exchange (the “NYSE”), brokers may vote in their discretion in the absence of instructions from beneficial owners with respect to the election of directors (Proposal One) and the proposal to ratify the appointment of Deloitte & Touche LLP (Proposal Two). For purposes of determining the number of votes cast with respect to any matter, only those cast “for” or “against” are included; abstentions and broker non-votes are excluded. For purposes of determining whether the affirmative vote of the holders of a majority of the shares entitled to vote on a proposal and present at the Annual Meeting has been obtained, abstentions will be included in, and broker non-votes will be excluded from, the number of shares present and entitled to vote.

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Votes Required for the Proposals

Proposal One: Election of Three Class I Directors

The affirmative vote of a plurality of the shares of Common Stock entitled to vote thereon, and present in person or represented by proxy, at the Annual Meeting is required to elect the directors nominated pursuant to Proposal One. For purposes of Proposal One, abstentions and broker non-votes will not affect the plurality vote required.

Proposal Two: Ratification of the Appointment of the Independent Auditor

The affirmative vote of a majority of the shares of Common Stock entitled to vote thereon, and present in person or represented by proxy, is required to approve Proposal Two. For purposes of Proposal Two, abstentions will have the effect of a vote against the proposal and broker non-votes will have the effect of reducing the number of affirmative votes required to achieve the majority vote.

All shares of Common Stock that are represented at the Annual Meeting by properly executed proxies received prior to or at the Annual Meeting and not revoked will be voted at the Annual Meeting in accordance with the instructions indicated in such proxies. If no instructions are indicated for a particular proposal on a proxy, such proxy will be voted in accordance with the Board of Directors’ recommendations as set forth herein with respect to such proposal(s).

In the event that a quorum is not present at the time the Annual Meeting is convened, or if for any other reason the Company believes that additional time should be allowed for the solicitation of proxies, the stockholders entitled to vote at the Annual Meeting, present in person or represented by proxy, will have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting. If the Company proposes to adjourn the Annual Meeting by a vote of the stockholders, the persons named in the enclosed form of proxy will vote all shares of Common Stock for which they have voting authority in favor of such adjournment.

Voting over the Internet or by Telephone

Stockholders whose shares are registered in the name of a bank or brokerage firm and who elected to receive the Company’s 2006 Annual Report and this Proxy Statement over the Internet will be receiving an e-mail on or about March 28, 2007 with information on how to access stockholder information and instructions for voting. If your shares are registered in the name of a participating bank or brokerage firm and you have not elected to receive the Company’s 2006 Annual Report and this Proxy Statement over the Internet, you may be eligible to vote your shares over the Internet or by telephone. A number of banks and brokerage firms are participating in the ADP Shareholder Preference Database program. This program provides eligible stockholders who receive a paper copy of a company’s annual report and proxy statement the opportunity to vote over the Internet or by telephone. If your bank or brokerage firm is participating in ADP’s program, your voting form will provide instructions. If your voting form does not reference Internet or telephone information, please complete and return the paper proxy card in the self-addressed postage-paid envelope provided.

Revocation

Any stockholder who executes and returns a proxy may revoke it at any time prior to the voting of the proxies by giving written notice of revocation to the Secretary of the Company or by executing a later-dated proxy. In addition, voting by telephone, Internet or mail will not prevent you from voting in person at the Annual Meeting should you be present and wish to do so.

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PROPOSAL ONE:  ELECTION OF DIRECTORS

The Company’s Board of Directors currently consists of seven directors divided into three classes, Class I, Class II and Class III, with members of each class holding office for staggered three-year terms and until their successors have been duly elected and qualified. There are currently: three Class I Directors, whose terms expire at the Annual Meeting; two Class II Directors, whose terms expire at the 2008 Annual Meeting of Stockholders; and two Class III Directors, whose terms expire at the 2009 Annual Meeting of Stockholders (in all cases subject to the election and qualification of their successors and to their earlier death, resignation or removal).

If any one or all of the nominees is unable to serve for any reason or withdraws from nomination, proxies will be voted for the substitute nominee or nominees, if any, proposed by the Board of Directors. The Board of Directors has no knowledge that any nominee will or may be unable to serve or will or may withdraw from nomination. All of the nominees are presently serving as directors of the Company. Information concerning the nominees for director is set forth below.

Nominees for Terms Ending at the 2010 Annual Meeting of Stockholders

Boyd L. George, age 65, is Chairman of the Board and Chief Executive Officer of Alex Lee, Inc. (subsidiaries of Alex Lee, Inc. include: Merchants Distributors, Inc., a wholesale food distributor; Institution Food House, Inc., a foodservice distributor; and Lowe’s Food Stores, Inc., a retail operation). Mr. George has been Chairman and Chief Executive Officer of Alex Lee, Inc. since the company was founded in 1992 and served as President from 1992 to 1995. Mr. George joined a subsidiary of Alex Lee, Inc. in 1969 and has served, and continues to serve, in various positions, including Vice Chairman and Chief Executive Officer for such subsidiary as well as for other subsidiaries.

George N. Hutton, Jr., age 77, is and has been a private investor for more than 15 years. The Company’s Corporate Governance Guidelines provide that no director shall stand for re-election after attainment of age 75, unless continued service as a director is approved by the Board of Directors. In December 2006, the Board of Directors approved the continued service of Mr. Hutton as a director of the Company.

Katsuhiko Okubo, age 65, is President of Okubo Technology Management Inc., a private consulting firm he founded in October 2004. He was an advisor to The Furukawa Electric Co., Ltd. (“Furukawa”), a designer, manufacturer, and supplier of optical fiber and cables, from June 2004 until March 2005. Dr. Okubo held various positions with Furukawa since 1965, during which time he worked in the areas of research and development, manufacturing and business development. From June 1999 until June 2004, Dr. Okubo served as a Corporate Director and a Corporate Senior/Executive Vice President of Furukawa, and was involved in the formation of OFS BrightWave, LLC (“OFS BrightWave”), a joint venture between the Company and Furukawa formed to operate certain fiber optic cable and transmission fiber assets acquired from Lucent Technologies Inc. Dr. Okubo is also the author of a highly regarded Japanese textbook on optical fiber technologies.

Each of Messrs. George, Hutton and Okubo is an independent nominee director.

The Board of Directors of the Company recommends a vote “FOR” each of the foregoing nominees as a director of the Company. Proxies will be voted “FOR” each of the foregoing nominees as a director of the Company, unless otherwise specified in the proxy.

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MANAGEMENT OF THE COMPANY

Board of Directors of the Company

The following table sets forth names, in alphabetical order, of and information as to, the persons who currently serve as directors of the Company. Each of Messrs. Drendel, George, Hutton and Whitson has served as a director since July 28, 1997, when the Company was spun-off (the “Spin-Off”) from its former parent company, General Instrument Corporation; Ms. Travis has served since February 21, 2002; and each of Dr. Okubo and Mr. Smith has served since April 1, 2005.

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*                    denotes independent director

Compensation of Directors

DIRECTOR COMPENSATION TABLE

The table below sets forth a summary of the compensation for the year ended December 31, 2006 earned by or paid to the nonemployee directors of the Company during 2006.

(1)          Reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006, in accordance with FAS 123(R). Assumptions used in the calculation of these amounts are included in footnote 13 to the Company’s audited financial statements for the year ended December 31, 2006 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2007.

(2)          The grant date fair value of directors’ option awards granted during 2006, computed in accordance with FAS 123(R), was $97,580 for each of Messrs. George, Hutton and Whitson. Messrs. Okubo and Smith and Ms. Travis did not receive option awards in 2006. Assumptions used in the calculation of these amounts are included in footnote 13 to the Company’s audited financial statements for the year ended December 31, 2006 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2007.

(3)          The aggregate number of shares subject to option awards outstanding on December 31, 2006 were as follows:  65,000 for Mr. Faircloth; 72,000 for Mr. George; 52,000 for Mr. Hutton; 13,334 for Mr. Okubo; 20,000 for Mr. Smith; 45,000 for Ms. Travis; and 52,000 for Mr. Whitson.

(4)          Mr. Faircloth resigned from the Company’s Board of Directors effective as of May 5, 2006.

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Employee directors do not receive additional compensation for serving on the Company’s Board of Directors. During 2006, nonemployee directors received an annual retainer of $45,000, and committee chairpersons received an additional $5,000 retainer. The nonemployee directors’ remuneration is paid quarterly. In addition, the Amended and Restated CommScope, Inc. 1997 Long-Term Incentive Plan (as amended and restated effective May 7, 2004) (the “1997 LTIP”) provided that each nonemployee director, upon initial election to the Board of Directors, would receive an automatic grant of 1,000 shares of Common Stock that vested immediately and an option to purchase 20,000 shares of Common Stock at an exercise price per share equal to the fair market value of the underlying shares of Common Stock on the date of grant, which option became exercisable with respect to one-third of the underlying shares on each of the first three anniversaries of the grant date. During 2006, the CommScope, Inc. 2006 Long Term Incentive Plan (the “2006 LTIP”) provided that each nonemployee director, upon initial election to the Board of Directors, would receive an automatic grant of 1,000 shares of Common Stock that vested immediately and an option to purchase 7,000 shares of Common Stock (which option became exercisable in three equal installments beginning on the first anniversary of the date of grant) on each August 1st following such election as long as he or she was still serving on the Board of Directors, at an exercise price per share equal to the fair market value of the underlying shares of Common Stock on the date of grant. Messrs. George, Hutton and Whitson each received grants of options to purchase 7,000 shares of Common Stock of the Company on August 1, 2006. Messrs. Okubo and Smith and Ms. Travis, however, were not eligible to receive the annual option grant pursuant to the 2006 LTIP until 2008.

On February 28, 2007, the Board of Directors approved certain changes to director compensation. Effective April 1, 2007, nonemployee directors will receive an annual retainer of $60,000, and the Audit Committee chairperson, Compensation Committee chairperson and Nominating and Corporate Governance Committee chairperson will receive additional annual retainers of $15,000, $10,000 and $5,000, respectively (paid in quarterly installments). In addition, under the 2006 LTIP, the automatic grants of 1,000 options upon initial election to the Board of Directors and annual grants of 7,000 options will be discontinued. These are replaced with automatic grants on August 1 of each year of share awards in respect of shares of Common Stock having a fair market value of $60,000 on the date of grant, with issuance of such shares occurring on the next following July 31.

Independence of Board Members

The Board of Directors has adopted Corporate Governance Guidelines which meet the listing standards adopted by the NYSE. The Corporate Governance Guidelines are available on our website (www.commscope.com). Pursuant to the Corporate Governance Guidelines, for a director to be deemed “independent,” the Board must affirmatively determine that the director does not have any material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). The Board has developed the following categorical standards to assist in determining independence:

·       A director will not be independent if, within the preceding three years:

·        the director was an employee, or an immediate family member of the director was an executive officer, of the Company;

·        the director or an immediate family member of the director received, during any twelve-month period, more than $100,000 in direct compensation from the Company (other than director and committee fees and pensions or other forms of deferred compensation in no way contingent on continued service);

·        the director or an immediate family member of the director was (but is no longer) a partner or employee of the firm that is the Company’s internal or external auditor and personally worked on the Company’s audit within such three-year period; or

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·        the director or an immediate family member of the director is, or has been, employed as an executive officer of another company where any of the Company’s present executive officers at the same time serves or served on that other company’s compensation committee.

·       A director will not be independent if:

·        the director or an immediate family member of the director is a current partner of a firm that is the Company’s internal or external auditor;

·        the director is a current employee of a firm that is the Company’s internal or external auditor; or

·        an immediate family member of the director is a current employee of a firm that is the Company’s internal or external auditor and participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice.

·       A director will not be independent if the director is a current employee, or an immediate family member of the director is a current executive officer, of another company that made payments to, or received payments from, the Company which, in any of the last three fiscal years, exceeded the greater of $1 million or 2% of such other company’s consolidated gross revenues.

·       A director will not be independent if, during the Company’s last fiscal year:

·        the director or an immediate family member of the director served as a director or an executive officer of another company which was indebted to the Company, or to which the Company was indebted, and the total amount of either company’s indebtedness to the other exceeded 1% of the total consolidated assets of the other company he or she served as a director or executive officer;

·        the director or an immediate family member of the director served as a director or an executive officer of a charitable or other tax-exempt organization and within the preceding three years the Company’s discretionary contributions to the organization in any single fiscal year exceeded the greater of $1 million or 2% of that organization’s consolidated gross revenues, or

·        the director or an immediate family member of the director served as a director, executive officer, general partner or significant equity holder (10% or greater) of an entity that was a paid provider of professional services (i.e., legal, accounting, or financial) to the Company if the payments for such services exceeded $100,000 for such year.

For purposes of these standards, “immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law and anyone (other than domestic employees) who shares such person’s home and “executive officer” has the same meaning specified for the term “officer” in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board of Directors annually reviews the independence of its non-employee directors. Directors have an affirmative obligation to inform the Board of any material changes in their circumstances or relationships that may impact their designation as “independent.”

The Board of Directors, in compliance with the Corporate Governance Guidelines, undertook a review of director independence and considered the transactions and relationships between its current directors, their immediate family members and their affiliates, on the one hand, and the Company, its subsidiaries and its senior management, on the other hand. As a result of this review, the Board has affirmatively determined that Messrs. George, Hutton, Okubo, Smith and Whitson and Ms. Travis are independent directors under the standards set forth in the Corporate Governance Guidelines, and are also “independent directors” as defined in the Corporate Governance Rules of the NYSE.

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Committees of the Board of Directors—Board Meetings

The Board of Directors of the Company held five meetings in 2006. Each director attended at least 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings of the Board Committees on which he or she served.

The Company has Audit, Compensation, Nominating and Corporate Governance, and Executive Committees of the Board of Directors.

Audit Committee.   The Audit Committee’s principal functions are (i) to oversee the Company’s accounting and financial reporting processes and audits of the Company’s financial statements; (ii) to prepare a report for inclusion in the Company’s Annual Proxy Statement in compliance with applicable federal securities laws; and (iii) to assist the Board of Directors to oversee: the integrity of the Company’s financial statements; the appropriateness of the Company’s accounting policies and procedures; the Company’s compliance with legal and regulatory requirements; the independent auditor’s qualifications, performance and independence; the performance of the Company’s internal audit function; the sufficiency of the independent auditor’s review of the Company’s financial statements; and management’s report on internal controls. In addition, the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of the Company’s independent auditor. The members of the Audit Committee are Messrs. George, Hutton, Okubo, Smith (Chairman) and Whitson and Ms. Travis. The Company’s Board of Directors has determined that each member of the Audit Committee is an “audit committee financial expert” as defined in Item 401(h) of Regulation S-K under the Securities Act of 1933, as amended, and that each member of the Audit Committee is an “independent director” both as defined in the Corporate Governance Rules of the NYSE and under the standards set forth in the Company’s Corporate Governance Guidelines. The Audit Committee operates under a written Audit Committee Charter adopted by the Board of Directors, a copy of which is attached hereto as Exhibit A. The Audit Committee held thirteen meetings in 2006.

James N. Whitson currently serves on the audit committees of the boards of directors of three related Seligman closed end mutual funds (all of which have identical Seligman board compositions), which funds are publicly traded. The Board of Directors, having reviewed, considered and discussed Mr. Whitson’s simultaneous service on the audit committees of the Seligman funds, has affirmatively determined that Mr. Whitson’s simultaneous service on the audit committees of the Seligman funds does not impair his ability to effectively serve on the Company’s Audit Committee.

Compensation Committee.   The Compensation Committee establishes and annually reviews the Company’s overall compensation philosophy and policy. The Compensation Committee administers the stock option and incentive plans of the Company, and in this capacity, it makes and reviews and has the authority to approve recommendations for option grants or awards under these plans. In addition, the Compensation Committee determines and approves the compensation of the Chief Executive Officer and reviews and has the authority to approve recommendations from the Chief Executive Officer and the Compensation Committee’s compensation consultant for the compensation of other senior executives, reviews and discusses the Company’s Compensation Discussion and Analysis with management, and produces a report on executive compensation for inclusion in the Company’s Annual Proxy Statement in compliance with applicable federal securities laws. The Compensation Committee also establishes policies dealing with various compensation and employee benefit plans for the Company. In conducting its role of establishing and managing the Company’s compensation program, the Compensation Committee engaged the services of Towers Perrin, an independent, third party compensation consultant, to gather data and provide advice consistent with the Company’s pay philosophy and business strategy. The Compensation Committee engaged the consultant to provide general executive compensation consulting services and to respond to any Committee member’s questions and to management’s need for advice and counsel. In addition, the consultant performs special executive compensation projects and consulting services from time to time as directed by the Committee. The consultant reports to the Compensation Committee’s

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Chairperson. Pursuant to the Committee’s charter, the Committee has the power to retain and terminate such consultant and engage other advisors. The Compensation Committee at least annually conducts a review of compensation for members of the Board of Directors, including compensation for members of the Board of Directors for their services on committees of the Board of Directors.

The members of the Compensation Committee are Messrs. George, Hutton, Okubo, Smith and Whitson and Ms. Travis (Chairperson), each of whom is an “independent director” both as defined in the Corporate Governance Rules of the NYSE and under the standards set forth in the Company’s Corporate Governance Guidelines. The Compensation Committee operates under a written charter adopted by the Board of Directors, a copy of which is available on our website (www.commscope.com). The Compensation Committee held three meetings in 2006.

Nominating and Corporate Governance Committee.   The Nominating and Corporate Governance Committee’s principal functions are to identify and screen individuals qualified for nomination to the Board of Directors, consistent with criteria approved by the Board of Directors; recommend director nominees for election at stockholders’ meetings, as well as individuals to fill any vacancies on the Board of Directors that arise between such meetings; recommend directors for appointment to committees of the Board of Directors; recommend Corporate Governance Guidelines applicable to the Company and any amendments thereto; and evaluate the performance of the Board of Directors and, in conjunction with the Compensation Committee, oversee the performance of management. The members of the Nominating and Corporate Governance Committee are Messrs. George (Chairman), Hutton, Okubo, Smith and Whitson and Ms. Travis, each of whom is an “independent director” both as defined in the Corporate Governance Rules of the NYSE and under the standards set forth in the Company’s Corporate Governance Guidelines. The Nominating and Corporate Governance Committee operates under a written Nominating and Corporate Governance Committee Charter adopted by the Board of Directors, a copy of which is available on our website (www.commscope.com). The Nominating and Corporate Governance Committee held three meetings in 2006.

The Nominating and Corporate Governance Committee will consider nominees for election as director that are recommended by stockholders. The Nominating and Corporate Governance Committee will select nominees for the Board of Directors who possess at a minimum the following characteristics: knowledge about issues affecting the Company; personal integrity; loyalty to the Company and concern for its success and welfare; time available for meetings and consultation on Company matters; and a willingness to apply sound and independent business judgment. The Nominating and Corporate Governance Committee may conduct any inquiries into the backgrounds and qualifications of candidates it deems appropriate. The Nominating and Corporate Governance Committee does not evaluate candidates differently based on whether candidates were recommended by stockholders or not.

Stockholders may propose director candidates for consideration by the Board’s Nominating and Corporate Governance Committee. Any such recommendation should include the nominee’s name and qualifications for Board membership and should be directed to CommScope, Inc., Attn: Corporate Secretary, 1100 CommScope Place, S.E., P.O. Box 339, Hickory, North Carolina 28602.

In addition, the Company’s By-laws permit stockholders to nominate directors for election at an annual stockholders’ meeting. Each nomination must state: the nominee’s name, age, business address, residence address and principal occupation or employment; the number of shares of the Company’s stock owned beneficially or of record by the nominee; and any other information about the nominee that would be required to be disclosed in a proxy statement or other filings required to be made in connection with proxy solicitations for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder. In addition, the nomination must include: the stockholder’s name and record address; the number of shares of the Company’s stock owned beneficially or of record by the stockholder; a description of any arrangements between the stockholder, each proposed nominee and any other persons under which the nominations are to be made by such stockholder; a representation that the

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stockholder intends to appear (in person or by proxy) at the meeting to nominate the persons named in the notice; and any other information about the stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with proxy solicitations for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder. Nominations must also contain the written consent of each proposed nominee to be named as nominee and to serve as director if elected. Stockholder nominations must be received by the Company generally not less than 60 days nor more than 90 days in advance of an annual stockholders’ meeting.

Executive Committee.   The Executive Committee has the authority to exercise all powers and authority of the Company’s Board of Directors that may be lawfully delegated to it under Delaware law. It meets between regularly scheduled meetings of the Company’s Board of Directors to take such action as is necessary for the efficient operation of the Company. The members of the Executive Committee are: Messrs. Drendel (Chairman), Whitson and George. The Executive Committee held no meetings in 2006.

Executive Sessions.   Non-management directors met in executive session without management during each meeting of the Board of Directors in 2006. The presiding director at executive sessions of the Board of Directors is rotated annually among the chairs of the committees of the Board of Directors (other than the Executive Committee) in alphabetical order by committee name. Ms. Travis, the current Chairperson of the Compensation Committee, is the presiding director at executive sessions of the Board of Directors in 2007.

Interested Party Communications

Interested parties may communicate directly either with the presiding director at executive sessions of the Board of Directors or with the non-management directors as a group by sending a communication c/o the Corporate Secretary of the Company to CommScope, Inc., 1100 CommScope Place, S.E., P.O. Box 339, Hickory, North Carolina 28602. Any such communications should be specifically directed to the attention of the presiding director or the non-management directors as a group, as applicable. All communications will be compiled by the Corporate Secretary of the Company and submitted to the appropriate directors on a periodic basis.

Available Information

Our website (www.commscope.com) contains copies of our Code of Ethics and Business Conduct, Code of Ethics for Principal Executive and Senior Financial and Accounting Officers (including any subsequent amendments thereto or waivers therefrom), Corporate Governance Guidelines and the Charters of our Nominating and Corporate Governance, Audit and Compensation Committees, each of which can be downloaded free of charge.

Printed copies of our Code of Ethics and Business Conduct, Code of Ethics for Principal Executive and Senior Financial and Accounting Officers, Corporate Governance Guidelines, Charters of our Nominating and Corporate Governance, Audit and Compensation Committees and any of our reports on Form 10-K, Form 10-Q and Form 8-K and all amendments to those reports, can also be obtained free of charge (other than a reasonable duplicating charge for exhibits to our reports on Form 10-K, Form 10-Q and Form 8-K) by any stockholder who requests them from our Investor Relations Department:

Investor Relations
CommScope, Inc.
1100 CommScope Place, SE
P.O. Box 339
Hickory, North Carolina 28602
U.S.A.
Phone: (828) 324 2200
Fax: (828) 982 1708
E-mail: investor.relations@commscope.com

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Stockholder Communications with Board Members

The Board of Directors provides a process for stockholders to send communications to the Board of Directors or any of the directors. Stockholders may send written communications to the Board of Directors, or any of the individual directors, c/o the Corporate Secretary of the Company to CommScope, Inc., 1100 CommScope Place, S.E., P.O. Box 339, Hickory, North Carolina 28602. All communications will be compiled by the Corporate Secretary of the Company and submitted to the Board of Directors or the individual directors, as applicable, on a periodic basis. In addition, all directors are invited, but not required, to attend our annual meetings. None of the directors, other than Mr. Drendel and Mr. Smith, attended our 2006 annual meeting.

Certain Relationships and Related Transactions

Frank M. Drendel, Chairman and Chief Executive Officer of the Company, was a director of Sprint Nextel Corporation, a provider of a comprehensive range of wireless and wireline communications services, during 2006. In 2006, Sprint Nextel Corporation and its affiliates purchased products from the Company for an aggregate amount representing less than 1% of the Company’s 2006 net sales.

The Company believes that the terms of the transactions described above were no less favorable to the Company than the terms which could be obtained from unrelated third parties.

The Company’s Board of Directors has adopted a written policy with respect to related party transactions that is designed to monitor and ensure the proper review, approval, ratification and disclosure of related party transactions involving the Company. The Board of Directors determined that the Audit Committee is the appropriate Committee to review, approve and ratify “Related Party Transactions” (as defined in the policy), except that Related Party Transactions involving compensation are approved by the Compensation Committee.

Under the policy, management brings to the Audit Committee for review the proposed Related Party Transaction. After appropriate review (which includes consideration of the financial terms of such transaction), the Audit Committee will approve such Related Party Transaction if it is consistent with the policy and is on terms, taken as a whole, which the Audit Committee believes are no less favorable to the Company than could be obtained in an arms-length transaction with an unrelated third party. Management also brings to the Audit Committee for its review and approval any proposed material modification to any previously approved Related Party Transaction.  If it is not practical for the Audit Committee to review in advance a particular Related Party Transaction or material modification thereto, management brings to the Audit Committee for its ratification such Related Party Transaction or modification and makes such changes, if any, as the Audit Committee so directs.  Any Related Party Transaction or modification which has been approved or ratified by the Board of Directors, by the affirmative vote of a majority of directors who do not have a direct or indirect material interest in such Related Party Transaction, need not be approved or ratified by the Audit Committee.

For purposes of this policy, a “Related Party” is (i) any director, nominee for director or executive officer of the Company, (ii) any beneficial holder of more than 5% of the outstanding common stock of the Company; or (iii) any immediate family member of a director, director nominee or executive officer of the Company or of a beneficial holder of more than 5% of the outstanding common stock of the Company; an “immediate family member” means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law and sister-in-law and any other person (other than a tenant or employee) sharing the same household.

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For purposes of this policy, a “Related Party Transaction” is a transaction (including, but not limited to, any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships) in which the Company is a participant and the amount involved exceeds $100,000, and in which any Related Party had or will have a direct or indirect material interest; a person’s interest is not be deemed to be “an indirect material interest” if it arises only (i) from such person’s position as a director of another entity, (ii) from the direct or indirect ownership by such person and all other Related Parties, in the aggregate, of a less than 10% equity interest in another entity, (iii) from both (i) and (ii), or (iv) from such person’s position as a limited partner in a partnership in which such person and all other Related Parties have an interest of less than 10% and such person is not a general partner of and does not hold another position in the partnership.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and holders of more than 10% of the Common Stock to file with the Securities and Exchange Commission (the “Commission”) and the NYSE reports of ownership and changes in ownership of Common Stock and other equity securities of the Company on Forms 3, 4 and 5 and to provide the Company with copies of such reports. The Company undertakes to make such filings on Forms 3, 4 and 5 on behalf of its directors and officers. Based solely on a review of the reports filed by the Company on behalf of its directors and officers, the reports provided to the Company and on written representations of certain reporting persons that no Form 5 report was required to be filed by them, the Company believes that, during the year ended December 31, 2006, its officers and directors and holders of more than 10% of the Common Stock complied with all applicable Section 16(a) filing requirements with the exception of the following filing. Due to an administrative error, the Company filed the second of two simultaneous Forms 4 for Mr. Drendel twice on March 22, 2006 (which two simultaneous Forms 4 together were to be deemed a single report filed on that date). An amended Form 4 was filed on April 5, 2006 to provide the information that was intended to be filed in the first of the two simultaneous Forms 4.

Executive Officer Compensation

Compensation Discussion and Analysis

Overview

The Compensation Committee, which is comprised entirely of nonemployee directors,  oversees the compensation program of named executive officers. The principal objectives of the Company’s compensation program with respect to executives are as follows:

·       Provide compensation opportunities that enable the Company to attract superior talent in a highly competitive industry;

·       Retain key employees and reward outstanding achievement;

·       Foster management’s performance in order to produce financial results that the Compensation Committee believes will enhance the long-term interests of the stockholders; and

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·       Align management’s interests with those of the stockholders and encourage executives to have equity stakes in the Company.

To meet these objectives, the compensation program provides for fair and competitive fixed compensation while creating significant upside potential for exceptional performance. Moreover, a significant portion of named executive officers’ compensation is equity-driven because the Compensation Committee believes that equity incentives are an effective tool to further the Company’s goal of aligning the executives’ interests with stockholders. The compensation program for the Company’s named executive officers is composed of the following primary elements:  base pay, annual incentive, equity compensation and the CommScope, Inc. Supplemental Executive Retirement Plan  (“SERP”).

2006 Compensation Elements

Base Pay

The key consideration used in setting named executive officers’ base pay levels is the practices of the Company’s peer group of industry competitors, supplemented by the pay practices of companies of similar size in the industry. Since mid-year 2005, the Compensation Committee has worked to bring the Company’s compensation levels closer to the median reflected in peer group analyses and general industry survey data. The level of compensation as compared to the Company’s peer group may change in the future. While the Compensation Committee believes that a reasonable and competitive rate of base pay is necessary, it believes that linking a greater portion of executives’ pay with performance through other elements of compensation both fosters superior performance of existing management and attracts high achievers. The Compensation Committee and the Board of Directors review the named executive officers’ performance each year and may adjust salary accordingly. In 2006, the Compensation Committee approved salary increases for our named executive officers ranging from approximately 4% to 15%. The increases were based on each named executive officer’s individual services rendered, level and scope of responsibility and experience, as well as comparisons to market pay practices, including those of the peer group.

Annual Incentive

The Company’s incentive program is designed to provide incentive-based targeted payouts within a competitive range of the median level of our peer group, with significant upside potential for extraordinary performance.

The CommScope, Inc. Annual Incentive Plan (“AIP”) is an incentive program that covers approximately 800 employees, including the named executive officers, and takes into account Company and individual performance when determining plan payouts. In 2006, the measure of corporate and operating unit performance used to determine the incentive payments to the named executive officers under the AIP was operating income (adjusted as described below) (“AIP Adjusted Operating Income”), which the Company believes is one of the key drivers leading to the creation of stockholder value. This performance measure was defined as the “Operating Income (Loss)” as reflected on the Company’s Consolidated Statement of Operations for 2006, increased or decreased by the following items:  (1) impairment charges for goodwill or other long lived assets including fixed assets and investments; (2) any acquisition or divestiture related expenses, gains or losses, including one-time start up and transition costs, amortization of any inventory related fair value adjustments, in process research and development write-offs, and other business acquisition purchase accounting adjustments; (3) any gains or losses on disposal of long lived assets including property, plant and equipment; (4) any restructuring costs; and (5) gains or losses resulting from reporting the recovery of the OFS impaired investment. In addition, adjustments shall be made with respect to this determination to reflect any unanticipated change in

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accounting standards that affect the calculation of operating income (loss) as reflected on the Company’s Consolidated Statement of Operations for 2006.

An employee’s award (other than that of the Chief Executive Officer) may be adjusted up or down based on his or her individual performance results. These individual performance percentages by which the award is multiplied vary by employee and range from a zero to a 120% factor based on results, provided that the award of any participant (other than the Chief Executive Officer), when combined with the measure of corporate or operating unit performance, cannot exceed 150% of his or her target award. The Chief Executive Officer is not eligible for an adjustment based on personal performance, and his award cannot exceed $1,500,000. Each personal performance percentage generally consists of two to five objective elements determined on an individualized basis with input from the relevant manager or managers. These elements are generally set during the first quarter of the performance year. The Compensation Committee retains the subjective ability to, at any time prior to the final determination of awards, change the target award percentage of any participant (other than the Chief Executive Officer) or assign a different target award percentage to a participant (other than the Chief Executive Officer). These positive or negative subjective changes to AIP awards have not historically been made. They may be made, however, where the Compensation Committee believes it is appropriate to do so as a result of extraordinary business reasons that are out of the business unit’s control. If a change in control of the Company occurs, the Company will pay each participant a cash award equal to the participant’s target incentive for the AIP plan cycle then underway (with the payout prorated to the date of the change in control). The Company believes this is appropriate since the impact of a change in control on operating income or other financial targets is unpredictable and could potentially affect participant awards under the AIP. For 2006, the target award percentages for our named executive officers (other than the Chief Executive Officer) ranged from 50% to 60% of their base salary for the year, and the target award percentage for the Chief Executive Officer was 75%. The 2006 AIP Adjusted Operating Income results equaled approximately 141% to 150% of the named executive officers’ targets for 2006. The resulting AIP award, as determined in accordance with the terms of the AIP, for the Chief Executive Officer was $762,115, and AIP awards for the other named executive officers ranged from $218,842 to $417,948. Expansion of operating income has been a priority for the Company, and the performance metrics of the AIP reflect that. The Company believes that its strong focus on fundamental operating principles, along with pricing initiatives, cost reductions and choosing the right businesses to be in, have improved the Company’s overall business performance. More information about the AIP can be found below under the caption “Non-Equity Incentive Plan Compensation.”

In 2006 the Company adopted its Policy on Discretionary Performance Compensation (the “Policy”), which is a more broad-based annual incentive program, and which includes the Company’s named executive officers. The Policy was adopted as a replacement for the Company’s historical practice of making discretionary profit sharing payments. Under the Policy, participants will receive a percentage of their annualized pay rate as of the end of the performance year as a cash incentive. The percentage will be established each calendar year by the Board of Directors or a committee thereof, generally during the first quarter of the performance year. The percentage will be the same for each eligible employee, and will range from zero to two percent. The Policy is designed to reward employees for performance in the prior fiscal year with a view to encouraging improved performance in future years. The Board of Directors set the percentage at 2% for the 2006 fiscal year if the Company’s AIP Adjusted Operating Income equals or exceeds 100% of the target set forth in the AIP. That percentage decreases as the percent of target reached decreases, down to 0% if less than 50% of the AIP Adjusted Operating Income target is reached. Because 2006 AIP Adjusted Operating Income exceeded its target, the percentage payout for the 2006 performance year equaled 2%. More information about the Policy’s 2006 performance targets and percentage can be found below under the caption “Non-Equity Incentive Plan Compensation.”

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Equity Compensation

The Compensation Committee believes that key employees, who are in a position to make a substantial contribution to the long-term success of the Company and to build stockholder value, should have a significant stake in the Company’s on-going success. Granting equity of the Company to the named executive officers is accordingly a principal focus of the compensation program. The Company grants equity awards to named executive officers pursuant to the 2006 LTIP. The 2006 LTIP is the Company’s principal long-term compensation vehicle, and designed to link in a meaningful way a substantial portion of executives’ compensation to long term enhancement of stockholder value as reflected in share price appreciation. As a general matter, the largest component of each named executive officer’s targeted compensation is intended to be 2006 LTIP awards. In addition to providing a significant linkage between each executives’ compensation and the Company’s stock price, the 2006 LTIP provides the company with a strong long-term retention tool. Current compensation decisions do not take into account the executives’ wealth in shares of the Company as the Compensation Committee believes that doing so would produce a disincentive to the executives.

In order to maintain flexibility, the 2006 LTIP permits the grant of options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance awards and share awards. Named executive officers generally receive grants each year with time and performance components. In terms of targeted awards, approximately half of the 2006 LTIP award (by value) consists of time-vesting options granted with an exercise price equal to the closing price of the Company’s stock on the date of grant, and the other half consists of performance share units for Messrs. Drendel, Leonhardt and Garrett. For Messrs. Crenshaw and Hally, 2006 LTIP awards generally are divided approximately three-quarters/one-quarter between performance share units and stock options. Options only have value if the Company’s stock price increases from the date of grant. The performance share unit awards are intended to provide further long-term incentives that are generally comparable to median market practices for the peer group and general industry practices but with significant upside potential if operating income (i.e., ratio of operating income, adjusted as described below, to revenue) performance targets are met. The adjusted operating income performance measure  (“LTIP Adjusted Operating Income”) was defined in the 2006 award agreements as the “Operating Income (Loss)” as reflected on the Company’s Consolidated Statement of Operations for 2006, increased or decreased by the following items:  (1) impairment charges for goodwill or other long lived assets including fixed assets and investments; (2) any acquisition or divestiture related expenses, gains or losses, including one-time start up and transition costs, amortization of any inventory-related fair value adjustments, in process research and development write-offs, and other business acquisition purchase accounting adjustments; (3) any gains or losses resulting from the extinguishment of long-term debt determined by subtracting the realized value of retiring the long-term debt early from its booked value; (4) any gains or losses on disposal of long lived assets including property, plant and equipment; and (5) any restructuring costs. In addition, adjustments shall be made with respect to this determination to reflect any unanticipated change in accounting standards that affect the calculation of operating income (loss) as reflected on the Company’s Consolidated Statement of Operations for 2006. Performance share unit grantees generally receive a payment of shares of Company stock on the third anniversary of the date of grant, but only if performance in the year following the grant reaches a threshold percentage of target. The performance share unit awards are intended to combine short-term performance measures with longer-term value based on share price appreciation. For awards granted in December 2006, (1) there is no payment unless performance reaches a threshold of approximately 87% of the target during fiscal year 2007, (2) if the threshold is reached, the grantee has the potential to vest in 50% of his or her performance share unit awards, (3) if the target is hit, the grantee has the potential to vest in 100% of  his or her performance share unit awards, and (4) if the target is exceeded by 13%, the grantee has the potential to vest in up to 150% of his or her performance share unit awards. There is straight line interpolation for performance results between these amounts.

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Before December 2005, the long-term incentive equity awards to executives were entirely option-based. The changes made in December 2005 were made in conjunction with a significant review of all the Company’s long-term incentive programs. The Compensation Committee decided to grant restricted stock (as opposed to options) to lower level employees in order to better encourage employee retention at key management and entry-level management positions. At higher levels, including for the named executive officers, the Company grants a mix of performance share units and options. The purpose of this change was to lessen the use of stock options and thereby create a stronger retention tool for senior executives than options, to provide for rewards based on internal performance improvements, to better align accounting costs with incentive payments, and to minimize the stockholder dilution that occurs through the use of options.

Although the Compensation Committee has no formal, written policy with respect to timing of option and other equity grants, it makes annual grants under the 2006 LTIP to named executive officers in conjunction with the December meeting of the Board of Directors and, with the exception of one year, has done so at this time every year since the Company became a public company. The meeting dates are generally set during the last quarter of the prior year; therefore, the date of the December Board of Directors meeting is generally set twelve to fourteen months ahead of time. The Compensation Committee may, in a particular instance, consider changing the timing of option grants in order to avoid making such grants shortly in advance of the public release of material information. The Company also occasionally grants options and other equity awards as a recruiting, incentive or retention tool, and therefore on limited occasions there have been grants to new hires and existing key employees made outside of the December meeting. During the last fiscal year, no named executive officers received grants made outside of the December meeting.

SERP

The Compensation Committee considers the SERP to be an important long-term retention program as, except for payment upon certain changes in control of the Company, named executive officers must stay with the Company until retirement in order to receive any payments. There are generally no payments of supplemental retirement benefits to named executive officers until they retire at age 55 or older with 10 years of service, or at age 65 without regard to any service requirement. The SERP is a defined contribution type retirement plan which provides for an allocation each year to a participant’s “account.”  The account accrues interest each year (currently at a rate of 6%). The amount of the allocation each year is based on a participant’s base salary and annual incentive paid in respect of the year. Long-term compensation is not taken into account for purposes of the SERP. In general, benefits may be paid in a lump sum upon retirement. If, however, the participant’s employment terminates for any reason other than by the Company for cause within two years after a change in control, SERP participants’ SERP payments are made in a lump sum. The Compensation Committee believes that such a feature is appropriate to address concerns of executives regarding the potential for nonpayment of benefits following a change in control. More information about the SERP can be found below under the caption “Nonqualified Deferred Compensation.”

Severance Protection

The Company, since it became a public company, has had severance protection agreements with its named executive officers (more fully described below under the caption “Potential Payments Upon Termination or Change in Control”). These agreements extend for one year each year unless terminated by either the Company or the covered executive. They are intended to protect our senior executives from the loss of reasonably expected compensation as a result of a premature termination of employment following a change in control. The severance is payable only if the executive is terminated by the Company without cause or the executive is constructively terminated as a result of adverse actions taken by the

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Company. The agreements also, by providing a gross-up for certain excise taxes that may be payable by the executive, seek to mitigate unintended tax consequences to the executive. The Compensation Committee considers the agreements and the benefits payable pursuant to them to be comparable to those of other companies of the Company’s size.

Other Elements of Compensation

Although not part of a formal plan or program, in the past the Company has occasionally granted special cash bonus awards outside of its annual incentive programs. These are targeted awards that are intended to reward specific individuals for performance not addressed by the Company’s other programs. Because these types of bonuses are not paid out in the ordinary course, the Compensation Committee considers any such payment a true discretionary bonus rather than an incentive, and more designed to reward employees for exceptional past performance than to provide performance incentives to them. No named executive officers received these discretionary bonuses in 2006.

As a general matter, the Company does not provide a significant number of perquisites to the named executive officers. However, the Chief Executive Officer is permitted to use the Company’s plane approximately 50 hours per year for personal transportation for efficiency and security reasons. In 2006, the majority of the Chief Executive Officer’s use of the plane related to attendance at Sprint Nextel Corporation board of director and other meetings. Mr. Drendel fully reimbursed the Company for the incremental costs of these trips and other perquisites.

Compensation Generally

Peer Group.   The Compensation Committee uses peer group data in setting payment levels of many of our elements of compensation. Generally speaking, the peer group consists of publicly traded electronic cable and communications network equipment suppliers, some of which are of similar size as the Company as determined by revenues, geographic scope and other relevant factors. The peer group that we used in considering 2006 compensation was composed of the following companies:  ADC Telecommunications, Inc., Amphenol Corporation, Andrew Corporation, Arris Group, Inc., Broadwing Corp., Belden CDT Inc., C-COR Incorporated, Corning Inc., Finisar Corp., General Cable Corp., Harmonic Inc., JDS Uniphase Corp., Scientific Atlanta, Inc. and Symmetricom Inc. The Compensation Committee plans to adjust the composition of the peer group during 2007 to more closely reflect the Company’s current mix of businesses. We believe that once this peer group composition is adjusted, it will likely consist of the following companies:  ADC Telecommunications, Inc., Amphenol Corporation, Andrew Corporation, Anixter International Inc., Arris Group, Inc., Belden CDT Inc., Corning Inc., General Cable Corp., Hubbell Incorporated, Lamson & Sessions Co., Powerwave Technologies Inc., Superior Essex Inc. and Tellabs Inc.

Relation Among the Various Elements of Compensation.   When reviewing both peer and general industry survey data, the Compensation Committee reviews total direct compensation data in assessing the Company’s overall competitive position relative to this measure of compensation. Total direct compensation is composed of base pay, targeted equity compensation and annual incentive. However, the Company and the Compensation Committee view the elements of compensation as distinct, and no element is necessarily increased due to another’s decreasing since each element is designed to reward or encourage a discrete aspect of Company or individual performance. The structure and, if applicable, the target amounts of each element are set based primarily on market practices of similar companies. How each of these elements of compensation is quantified (except for base salary) is dependent on the applicable objectives of the Company. The annual incentive program is designed to reward relatively short-term internal performance such as earnings growth and revenue growth. The performance share unit awards under the 2006 LTIP are designed to link executive pay with the Company’s stock price and focus executives on achieving margin improvement goals; since granting these awards, the Company has seen

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significant improvement in operating margins. Option awards, for which value is linked to stock price, are designed to encourage long-term growth in stock price. The Compensation Committee also believes that the SERP encourages long-term retention of the executive team.

Role of Executives in Setting Compensation.   The Compensation Committee approves pay changes for the named and other Section 16 executive officers based on recommendations from the Compensation Committee’s compensation consultant, and also from the Chief Executive Officer (who does not make recommendations with respect to his own pay changes). The Chief Financial Officer, Chief Operating Officer, General Counsel and Senior Vice President of Human Resources also provide assistance to the Compensation Committee through, among other things, preparing analyses of peer group benchmarking, helping to select the companies that constitute the peer group, providing information to the Compensation Committee’s compensation consultant, analyzing accounting and tax aspects of compensation matters, analyzing various performance metrics and providing legal analysis of plan documents. Although the Compensation Committee approves the annual December grants of equity to named executive officers as well as non-December grants to Section 16 officers, the Chief Executive Officer may approve any grants to non-Section 16 new hires and special awards to non-Section 16 key employees (which may be at other times during the year).

Policies Regarding Tax and Accounting Impacts on Compensation.   Tax and accounting impacts influence compensation in that the Company and the Compensation Committee generally strive to comply with the maximum tax deductibility of each arrangement, and accounting treatment is analyzed before starting a new program or making grants under existing programs. The Company and the Compensation Committee generally attempt to structure the compensation program so that no payments will be non-deductible by reason of the application of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). In 2006, no named executive officer’s compensation was non-deductible by reason of application of Section 162(m).

Policies Regarding Hedging Risk of Company Stock Ownership.   The Company’s Insider Information and Insider Trading Policy prohibits named executive officers from trading in exchange traded options on the Company’s stock and from selling the Company’s stock short. The reason is that people who trade in speculative exchange traded options and sell stock short are generally betting that a stock price will move rapidly; therefore, the Company believes that it is inappropriate to do so with an employer’s stock because it arouses suspicion that the employee is trading on inside information. The Company does sometimes permit managing the risk of owning Company securities by entering into certain hedging or monetization transactions; however, the Company requires those who wish to enter into such arrangements to obtain approval for the proposed transaction in writing from the Company’s compliance officers at least two weeks prior to executing the transaction, and the Company’s compliance officers may reject any such request at their sole discretion. The compliance officers have not approved any such hedging transactions for named executive officers.

Policies Regarding Stock Ownership.   While the Company encourages its directors and officers to be significant stockholders, it does not have any formal stock ownership guidelines. The Company and the Compensation Committee believe that under the equity incentive programs, named executive officers will over time achieve levels of stock ownership that will substantially align their interests with those of stockholders.

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SUMMARY COMPENSATION TABLE

The table below sets forth a summary of the compensation for the year ended December 31, 2006 earned by or paid to the Chief Executive Officer of the Company, the Chief Financial Officer of the Company and the three additional most highly compensated executive officers of the Company, referred to herein as the Company’s  “named executive officers.”

Name and Principal Position		Year		Salary			Bonus(1)					Stock Awards (2)			Option Awards (2)			Non-Equity Incentive Plan Compensation (3)					Nonqualified Deferred Compensation Earnings					All Other Compensation (4)					Total
Frank M. Drendel, Chairman and Chief Executive Officer		2006		$	721,700			$	4,400			$	471,042		$	236,391			$	776,549				$	5,515				$	205,903	(5)		$	2,421,500
Jearld L. Leonhardt, Executive Vice President and Chief Financial Officer		2006		$	351,918			$	4,400			$	102,385		$	51,409			$	316,213				$	2,075				$	91,630			$	920,030
Brian D. Garrett, President and Chief Operating Officer		2006		$	475,730			$	4,400			$	148,067		$	74,542			$	427,463				$	2,648				$	123,346			$	1,256,196
Randall W. Crenshaw, Executive Vice President and General Manager, Enterprise		2006		$	327,250			$	4,400			$	89,908		$	22,298			$	249,631				$	929				$	139,927	(6)		$	834,343
Edward A. Hally, Executive Vice President and General Manager, Carrier/Wireless		2006		$	294,612			$	4,400			$	71,187		$	17,661			$	224,734				$	284				$	91,131			$	704,009

(1)    Reflects a transitional bonus paid when the Company changed from its practice of making discretionary profit sharing payments to the Policy on Discretionary Performance Compensation.

(2)    Reflects the dollar amount recognized for financial statement reporting purposes for the year ended December 31, 2006, in accordance with FAS 123(R), for performance share awards granted during 2005 (pursuant to the 1997 LTIP) and performance share unit awards granted in 2006 (pursuant to the 2006 LTIP). Assumptions used in the calculation of this amount are included in footnote 13 to the Company’s audited financial statements for the year ended December 31, 2006 included in the Company’s Annual Report on Form 10-K filed with the Commission on March 1, 2007.

(3)    Reflects payments in 2007 with respect to the 2006 performance year pursuant to (i) the Company’s AIP (described below under the caption “Non-Equity Incentive Plan Information”) of $762,115, $309,174, $417,948, $243,086 and $218,842 to Messrs. Drendel, Leonhardt, Garrett, Crenshaw and Hally, respectively and (ii) the Company’s Policy on Discretionary Performance Compensation (described below under the caption “Non-Equity Incentive Plan Information”) of $14,434, $7,038, $9,515, $6,545 and $5,892 to Messrs. Drendel, Leonhardt, Garrett, Crenshaw and Hally, respectively.

(4)    Reflects (i) the employer base and matching contribution under the CommScope, Inc. Employees Retirement Savings Plan (the “Employees Retirement Savings Plan”) in the amount of $13,200 on behalf of each of Messrs. Drendel, Leonhardt, Garrett, Crenshaw and Hally, (ii) a Company profit sharing contribution of $9,159 to the 401(k) plan account of each of Messrs. Drendel, Leonhardt, Garrett, Crenshaw and Hally, (iii) payment by the Company in 2006 of premiums of $1,299, $633, $856, $672 and $530 for term life insurance on behalf of Messrs. Drendel, Leonhardt, Garrett, Crenshaw and Hally, respectively, and (iv) the annual regular and special credits under the SERP in the amount of $182,245, $68,638, $100,131, $56,100 and $68,242 for 2006 to the accounts thereunder of Messrs. Drendel, Leonhardt, Garrett, Crenshaw and Hally, respectively. More information about the SERP can be found below under the caption “Nonqualified Deferred Compensation.”

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(5)    In 2006, Mr. Drendel was provided with the following items for which he fully reimbursed the Company for the incremental cost to the Company:  personal use of the Company’s aircraft, certain club dues, tickets to sporting events and assistance from administrative staff unrelated to the Company’s business. No amounts are included for these items.

(6)    Reflects (i) $58,899 representing a tax gross-up payment from the Company to Mr. Crenshaw in 2006 relating to relocation benefits that the Company paid to Mr. Crenshaw in 2005 when he relocated at the Company’s request and (ii) $1,897 representing the cost to the Company of tickets to sporting events and a concert that were provided to Mr. Crenshaw.

Employment Agreements

In November 1988, Mr. Drendel entered into an employment agreement (the “Agreement”) with GI Delaware and CommScope NC providing for his employment as President and Chief Executive Officer of CommScope NC for an initial term ending on November 28, 1991. The Agreement provides for a minimum salary, which is less than Mr. Drendel’s current salary, and provides that Mr. Drendel will participate in any management incentive compensation plan for executive officers that CommScope NC maintains. Commencing on November 29, 1989, subject to early termination by reason of death or disability or for cause (as defined in the Agreement), the Agreement extends automatically so that the remaining term is always two years, unless either party gives notice of termination, in which case the Agreement will terminate two years from the date of such notice. As of the date of this Proxy Statement, neither party has given notice of termination. Pursuant to the Agreement, Mr. Drendel is eligible to participate in all benefit plans available to other CommScope NC senior executives. The Agreement prohibits Mr. Drendel, for a period of five years following the term of the Agreement, from engaging in any business in competition with the business of CommScope NC in any country where CommScope NC then conducts business. Effective as of the Spin-off, GI Delaware ceased to be a party to the Agreement.

GRANT OF PLAN-BASED AWARDS DURING 2006

(1)        Reflects the threshold, target and maximum number of shares of Common Stock that will become payable to the executive on December 13, 2009 pursuant to performance share unit awards if specified performance goals in respect of the 2007 fiscal year are met, provided the executive is an employee at such time.

(2)        Options become exercisable with respect to one-third of the shares covered thereby on December 13, 2007, December 13, 2008 and December 13, 2009.

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(3)        Reflects the grant date fair value of each equity award in accordance with FAS 123(R), using the target level (where applicable). Assumptions used in the calculation of this amount are included in footnote 13 to the Company’s audited financial statements for the year ended December 31, 2006 included in the Company’s Annual Report on Form 10-K filed with the Commission on March 1, 2007.

(4)        Reflects the threshold, target and maximum incentives payable under the AIP for the 2006 performance year if pre-established financial targets are met. The summary compensation table includes the incentive that was actually paid under this plan.

(5)        Reflects the threshold and maximum incentives payable under the Company’s Discretionary Performance Policy for the 2006 performance year if pre-established financial targets are met.

Non-Equity Incentive Plan Compensation

The AIP is the Company’s annual cash incentive plan for the Chief Executive Officer and certain other employees, including the named executive officers. Under the AIP in 2006, the Compensation Committee established a target award amount for each named executive officer. The percentage of such amount to be received is primarily based on whether and to what extent the AIP Adjusted Operating Income performance target was met or exceeded. The percentage of such amount to be received is also based on individual performance (for all participants other than the Chief Executive Officer) and, if necessary, a reduction so that the aggregate dollar amount of awards as adjusted for individual performance would not increase the aggregate dollar amount of all awards earned by all participants during a performance period. The 2006 AIP Adjusted Operating Income targets for the named executive officers were as follows:  a minimum of $87.3 million, a target of $124.71 million, and a maximum of $186.06 million ($336.72 million for the Chief Executive Officer). The executives will begin to earn a bonus award if the AIP Adjusted Operating Income result equals 70% of the targeted amount (i.e., a minimum of $87.3 million). The Compensation Committee set the named executive officers’ 2006 percentages of base salary that would be paid if the performance target were met as follows:  Mr. Drendel—75%, Mr. Leonhardt—60%, Mr. Garrett—60%, Mr. Crenshaw—50% and Mr. Hally—50%. At the end of the 2006 performance year, the Compensation Committee determined that the AIP Adjusted Operating Income target exceeded the threshold necessary for the named executive officers to receive a payment under the AIP (the AIP Adjusted Operating Income result for 2006 was approximately $175.55 million). Accordingly, in February 2007, the Compensation Committee approved award percentages of base salary in accordance with the terms of the AIP for the 2006 performance year as follows:  Mr. Drendel—105.6%, Mr. Leonhardt—87.9%,  Mr. Garrett—87.9%, Mr. Crenshaw—74.3% and Mr. Hally—74.3%, which amounts are reflected in the Summary Compensation Table.

Under the Company’s Policy on Discretionary Performance Compensation, the named executive officers have the opportunity to receive a payment in the amount of up to 2% of their annualized pay rate as of the end of the performance year, as annually determined by the Board of Directors (or a committee thereof) in its discretion. In March 2006, the Compensation Committee set the percentage as follows:

·  If the Company’s 2006 AIP Adjusted Operating Income equals or exceeds 100% of the target established under the AIP (i.e., $124.71 million), the percentage will be 2%.

·  If the AIP Adjusted Operating Income is less than 100% of the target but is equal to or greater than 87.5% of the target, the percentage will be 1.75%.

·  If the AIP Adjusted Operating Income is less than 87.5% of the target but is equal to or greater than 75% of the target, the percentage will be 1.5%.

·  If the AIP Adjusted Operating Income is less than 75% of the target but is equal to or greater than 62.5% of the target, the percentage will be 1.25%.

·  If the AIP Adjusted Operating Income is less than 62.5% of the target but is equal to or greater than 50% of the target, the percentage will be 1%.

·  If the AIP Adjusted Operating Income is less than 50% of the target, the percentage will be 0%.

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Because the target was met, the named executive officers received a payout of 2% of their base salary in respect of 2006 performance under the Policy on Discretionary Performance Compensation, which amounts are reflected in the Summary Compensation Table.

Equity Incentive Plan Awards

On December 13, 2006, the Compensation Committee approved and made grants to the named executive officers pursuant to the Company’s form of Employee Performance Share Unit Award Agreement. The form provides for grants of awards pursuant to the 2006 LTIP. The Employee Performance Share Unit Award Agreement generally provides that a grantee will be eligible to receive shares of Common Stock upon the third anniversary of the date of grant in respect of performance units which have vested as a result of the Company’s performance during the applicable performance period. The relevant performance measure under the Employee Performance Share Unit Award Agreement is the ratio of LTIP Adjusted Operating Income to revenue during the performance period of 2007. If the ratio is less than 10%, then no performance share units will be eligible to vest. If the ratio is at least 10% (the minimum), then 50% of the performance share units will be eligible to vest. If the ratio is 11.5% (the target), then 100% of the performance share units will be eligible to vest. If the ratio is 13% or greater (the maximum), then 150% of the performance share units will be eligible to vest. Between the minimum and the target, and between the target and the maximum, the percentage of performance share units with respect to which performance goals have been satisfied is determined by using a straight line interpolation rounded to the nearest whole number.

On December 13, 2006, the Compensation Committee approved and made grants to the named executive officers pursuant to the Company’s form of Nonqualified Stock Option Agreement (Annual). The form provides for grants of awards pursuant to the 2006 LTIP. The Nonqualified Stock Option Agreement (Annual) provides that a grantee has the option to purchase shares of Common Stock, which option generally vests in 1¤3 increments on each of the first, second and third anniversaries of the date of grant. The exercise price of the options is equal to the closing price of the Company’s stock on the date of grant.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

(1)                During their ten-year terms, options generally become exercisable in three equal installments each year beginning on the first anniversary of the date of grant. On August 10, 2005, however, the Compensation Committee accelerated the vesting dates of unvested options held by the named executive officers that were granted in 2003, 2004 and January 1 through August 10, 2005, ahead of the effective date of FAS 123(R).

(2)                Options expire on the tenth anniversary of the date of grant.

(3)                Reflects the number and aggregate market value of performance share awards that were granted on December 14, 2005. Because specified performance goals were met in respect of the 2006 fiscal year, the awards will become payable to the executive on December 14, 2008, provided the executive is an employee at such time.

(4)                Reflects the number and aggregate market value of performance share unit awards that were granted on December 13, 2006 and will become payable to the executive on December 13, 2009 if the performance goals in respect of the 2007 fiscal year are met at the maximum level, provided the executive is an employee at such time.

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