SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BEI TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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previously. Identify the previous filing by registration statement number,
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<PAGE>
BEI TECHNOLOGIES, INC.
One Post Street, Suite 2500
San Francisco, CA 94104
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 6, 1997
TO THE STOCKHOLDERS OF BEI TECHNOLOGIES, INC.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of BEI
Technologies, Inc., a Delaware corporation (the "Company"), will be held on
Friday, March 6, 1998 at 1:30 p.m. local time, at the Company's Systron Donner
Inertial Division, 2700 Systron Drive, Concord, California, for the following
purposes:
1. To elect two directors to hold office until the 2001 Annual Meeting
of Stockholders.
2. To ratify the selection of Ernst & Young LLP as independent public
accountants of the Company for its fiscal year ending October 3, 1998.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on January 20,
1997 as the record date for the determination of stockholders entitled to notice
of and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
Robert R. Corr
Corporate Secretary
San Francisco, California
January 26, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT ATTENDANCE AT THE MEETING WILL NOT BY ITSELF REVOKE A PROXY.
FURTHERMORE, IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
BEI TECHNOLOGIES, INC.
One Post Street, Suite 2500
San Francisco, CA 94104
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
March 6, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
BEI Technologies, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on March 6, 1998, at 1:30 p.m. local
time (the "Annual Meeting"), or at any adjournment or postponement thereof, for
the purposes set forth herein and in the accompanying Notice of Annual Meeting.
The Annual Meeting will be held at the Company's Systron Donner Inertial
Division, 2700 Systron Drive, Concord, California. The Company intends to mail
this proxy statement and accompanying proxy card on or about February 3, 1998 to
all stockholders entitled to vote at the Annual Meeting.
The Company was organized under the laws of the state of Delaware on
June 30, 1997 as a wholly-owned subsidiary of BEI Electronics, Inc.
("Electronics"). The Company began operations on September 28, 1997 as a result
of the distribution by Electronics of all of the outstanding stock of the
Company to the stockholders of Electronics (the "Distribution"). For further
information about the Distribution, see the Company's Form 10 General Form for
Registration of Securities, as amended (File No. 0-22799) (the "Form 10"), the
Company's Form 10-K Annual Report for the fiscal year ended September 27, 1997
(the "10-K") and Note 1 of "Notes to Consolidated Financial Statements" included
in the 10-K.
Solicitation
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy statement,
the proxy and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other
regular employees for such services.
Voting Rights and Outstanding Shares
Only holders of record of Common Stock at the close of business on
January 20, 1998 will be entitled to notice of and to vote at the Annual
Meeting. At the close of business on January 20, 1998, the Company had
outstanding and entitled to vote 7,198,850 shares of Common Stock. Each holder
of record of Common Stock on such date will be entitled to one vote for each
share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
1.
<PAGE>
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office, One
Post Street, Suite 2500, San Francisco, California 94104, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Please note, however, that
attendance at the meeting will not by itself revoke a proxy. Furthermore, if the
shares are held of record by a broker, bank or other nominee and the stockholder
wishes to vote at the meeting, the stockholder must obtain from the record
holder a proxy issued in the stockholder's name.
Stockholder Proposals
Proposals of stockholders that are intended to be presented at the
Company's 1999 Annual Meeting of Stockholders must be received by the Company
not later than October 6, 1998 in order to be included in the proxy statement
and proxy relating to that annual meeting.
Proposal 1
Election Of Directors
The Company's Certificate of Incorporation and By-Laws provide that the
Board of Directors shall be divided into three classes, each class consisting,
as nearly as possible, of one-third of the total number of directors, with each
class having a three-year term. Vacancies on the Board may be filled by the
affirmative vote of the holders of a majority of the voting power of the then
outstanding shares of Common Stock or by the affirmative vote of a majority of
the remaining directors. A director elected by the Board to fill a vacancy
(including a vacancy created by an increase in the authorized number of
directors on the Board) shall serve for the remainder of the full term of the
class of directors in which the vacancy occurred and until such director's
successor is elected and has qualified or until his earlier death, resignation
or removal.
The Board of Directors is presently composed of eight members. There
are two directors in the class whose term of office expires in 1998. The two
nominees for election to this class, George S. Brown and Charles Crocker, are
directors of the Company who were previously appointed by the sole incorporator.
If elected at the Annual Meeting, each of the nominees would serve until the
2001 annual meeting and until his successor is elected and has qualified, or
until such director's earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the two nominees named below. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as the Board of
Directors may propose. Each person nominated for election has agreed to serve if
elected, and the Board of Directors has no reason to believe that any nominee
will be unable to serve.
Set forth below is biographical information for each person nominated
and each person whose term of office as a director will continue after the
Annual Meeting.
Nominees for Election for a Three-Year Term Expiring at the 2001 Annual Meeting
George S. Brown
Mr. Brown, age 76, began serving as a director in June 1997 prior to
the Distribution. He served as a director of Electronics from 1974 until his
resignation as a result of the Distribution. Mr. Brown served as President and
Chief Executive Officer of Electronics from 1974 until 1990. Mr. Brown served
from 1971 until 1974 as Executive Vice President and General Manager of Baldwin
Electronics, Inc., a subsidiary of D.H. Baldwin Company and the predecessor of
Electronics. Mr. Brown holds a B.S.E.E. from the University of Oklahoma.
2.
<PAGE>
Charles Crocker
Mr. Crocker, age 58, began serving as Chairman of the Board of
Directors, President and Chief Executive Officer of the Company at the time of
the Company's formation in June 1997. He was a founder of Electronics and has
served as Chairman of the Board of Directors of Electronics (now known as BEI
Medical Systems Company, Inc.) since 1974. Mr. Crocker served as President and
Chief Executive Officer of Electronics from October 1995 until the Distribution.
Mr. Crocker served as President of Crocker Capital Corporation, a Small Business
Investment Company, from 1970 to 1985, and as General Partner of Crocker
Associates, a venture capital investment partnership, from 1970 to 1990. He
currently serves as a director of Fiduciary Trust Company International, Pope &
Talbot, Inc. and KeraVision. Mr. Crocker holds a B.S. from Stanford University
and an M.B.A. from the University of California, Berkeley.
The two candidates receiving the highest number of affirmative votes
cast at the meeting will be elected directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF EACH NAMED NOMINEE
Directors Continuing in Office Until the 1999 Annual Meeting
C. Joseph Giroir, Jr.
Mr. Giroir, age 58, began serving as a director in June 1997 prior to
the Distribution. He was a director of Electronics from 1978 until his
resignation as a result of the Distribution. He served as the Secretary of
Electronics from 1974 to early 1995. He is currently a member of the law firm of
Giroir, Gregory, Holmes & Hoover, plc. From 1965 to 1988, Mr. Giroir was a
member of Rose Law Firm, a Professional Association. Mr. Giroir holds a B.A. and
an L.L.B. from the University of Arkansas and an L.L.M. from Georgetown
University.
Asad M. Madni
Dr. Madni, age 50, began serving as a director and as a Vice President
of the Company in June 1997 prior to the Distribution. In October 1993, Dr.
Madni was appointed President of BEI Sensors & Systems Company ("Sensors &
Systems"), then a subsidiary of Electronics and now a subsidiary of the Company.
Sensors & Systems was formed by the consolidation of BEI Motion Systems Company
and the BEI Sensors and Controls Group, of which Dr. Madni was President since
October 1992. Prior to joining Electronics in 1992, he served for 17 years in
various executive and technical management positions with Systron Donner
Corporation, a manufacturer of avionics and aerospace sensors and subsystems. He
was most recently Chairman, President and CEO.
Gary D. Wrench
Mr. Wrench, age 64, began serving as Senior Vice President, Chief
Financial Officer and a director of the Company at the time of the Company's
formation in June 1997. He was Senior Vice President and Chief Financial Officer
of Electronics from July 1993 until the Distribution, and has served as a
director of Electronics (now known as BEI Medical Systems Company, Inc.) since
1986. From April 1985 to July 1993, Mr. Wrench served as Vice President of
Electronics and President and Chief Executive Officer of Motion Systems Company,
Inc., then a wholly owned subsidiary of Electronics and now a part of the
Company. Previous experience includes twenty years with Hughes Aircraft Company
including an assignment as President of Spectrolab, Inc., a Hughes subsidiary.
Mr. Wrench holds a B.A. from Pomona College and an M.B.A. from the University of
California, Los Angeles.
Directors Continuing in Office Until the 2000 Annual Meeting
Richard M. Brooks
Mr. Brooks, age 69, began serving as a director in June 1997 prior to
the Distribution. Mr. Brooks is currently an independent financial consultant.
From 1987 until his resignation as a result of the Distribution, he served as a
3.
<PAGE>
director of Electronics. From 1987 to 1990, he served as President of SFA
Management Corporation, the managing general partner of St. Francis Associates,
an investment partnership. He currently serves as a director of Longs Drug Store
Corporation, Granite Construction Incorporated and the Western Farm Credit Bank,
a private company. Mr. Brooks holds a B.S. from Yale University and an M.B.A.
from the University of California, Berkeley.
William G. Howard, Jr.
Dr. Howard, age 56, began serving as a director in June 1997 prior to
the Distribution. He was a director of Electronics from December 1992 until his
resignation as a result of the Distribution. He is currently an independent
consulting engineer in microelectronics and technology-based business planning.
From 1987 to 1990, Dr. Howard served as Senior Fellow of the National Academy of
Engineering and, prior to that time, held various technical and management
positions with Motorola, Inc., most recently as Senior Vice President and
Director of Research and Development. He currently serves as a director of
Credence Systems, Inc., RAMTRON International Corp., VLSI Technologies, Inc.,
and Xilinx, Inc. Dr. Howard holds a B.E.E. and an M.S. from Cornell University
and a Ph.D. in electrical engineering and computer sciences from the University
of California, Berkeley.
Robert Mehrabian
Dr. Mehrabian, age 56, began serving as a director in June 1997 prior
to the Distribution. He was a director of Electronics from June 1997 until his
resignation as a result of the Distribution. He is Senior Vice President and
Executive in charge of the Aerospace and Electronic segment of Allegheny
Teledyne, Inc. From 1990 through June 1997, he was president of Carnegie Mellon
University. He is an internationally recognized materials scientist, with
numerous awards including membership in the National Academy of Engineering. He
serves on the boards of directors of Allegheny Teledyne, Inc., Mellon Bank
Corporation, Mellon Bank, N.A., and PPG Industries. Dr. Mehrabian holds B.S. and
Sc.D. degrees from Massachusetts Institute of Technology (MIT).
Board Committees and Meetings
During the fiscal year ended September 27, 1997 the Board of Directors
held two meetings. The Board has an Audit Committee and a Compensation
Committee, but does not have a Nominating Committee or any committee performing
a similar function.
The Audit Committee meets with the Company's independent accountants at
least annually to review the scope and results of the annual audit; recommends
to the Board the independent accountants to be retained; and receives and
considers the accountants' comments as to internal controls, accounting staff
and management performance and procedures in connection with audit and financial
controls. During fiscal 1997, the Audit Committee was composed of four
directors: Mr. Brooks, Chairman of the Committee, and Messrs. Giroir, Howard and
Mehrabian. Due to the operations of the Company effectively beginning
immediately prior to the first day of fiscal 1998, the Audit Committee did not
meet during fiscal 1997.
The Compensation Committee makes recommendations concerning salaries
and incentive compensation for the Company's executive officers, awards stock
options and stock bonuses to eligible executives, employees and consultants
under the Company's 1997 Equity Incentive Plan (the "1997 Plan"), and otherwise
determines compensation levels and performs such other functions regarding
compensation as the Board may delegate. During fiscal 1997, the Compensation
Committee was composed of three non-employee directors: Mr. Brown, Chairman of
the Committee, and Messrs. Brooks and Giroir. As the operations of the Company
effectively began immediately prior to the first day of fiscal 1998, the
Compensation Committee did not meet during fiscal 1997.
During fiscal 1997 each Board member attended 75% or more of the
aggregate of the meetings of the Board and of the committees on which he served,
held during the period for which he was a director or committee member,
respectively.
4.
<PAGE>
Proposal 2
Ratification Of Selection Of Independent Public Accountants
The Board of Directors has selected Ernst & Young LLP as the Company's
independent public accountants for the fiscal year ending October 3, 1998. Ernst
& Young LLP (including its predecessor, Ernst & Whinney) has audited
Electronics' financial statements since 1975, and audited the Company's
financial statements for fiscal 1997. A representative of Ernst & Young LLP is
expected to be present at the Annual Meeting, will have an opportunity to make a
statement if he or she so desires and will be available to respond to
appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent public accountants is not required by the Company's
By-Laws or otherwise. However, the Board is submitting the selection of Ernst &
Young LLP to the stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the Audit Committee
and the Board will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Board at its discretion may direct the appointment of
a different independent accounting firm at any time during the year if it
determines that such a change would be in the best interests of the Company and
its stockholders.
The affirmative vote of the holders of a majority of the shares
represented and entitled to vote at the meeting will be required to ratify the
selection of Ernst & Young LLP as the Company's independent public accountants
for the fiscal year ending October 3, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF PROPOSAL 2
5.
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth certain information regarding the
ownership of the Company's Common Stock as of December 22, 1997 by: (i) each
director; (ii) each of the executive officers named in the Summary Compensation
Table and employed by the Company in that capacity on December 22, 1997; (iii)
all executive officers and directors of the Company as a group; and (iv) all
those known by the Company to be beneficial owners of more than five percent of
its Common Stock.
<CAPTION>
Beneficial Ownership(l)
Number of Percent of
Beneficial Owner Shares Total(2)
<S> <C> <C>
Mr. Charles Crocker(3) ........................................................... 1,557,904 21.7%
One Post Street
Suite 2500
San Francisco, CA
Brinson Partners, Inc.(4) ........................................................ 611,400 8.5%
209 S. LaSalle Street
Chicago, IL
Dimensional Fund Advisors, Inc.(5) ............................................... 489,400 6.8%
1299 Ocean Avenue
11th Floor
Santa Monica, CA
SoGen International Fund, Inc.(6) ................................................ 427,000 5.9%
1221 Avenue of the Americas
8th Floor
New York, NY
Kennedy Capital Management, Inc. ................................................. 412,093 5.7%
10829 Olive Boulevard
St. Louis, MO
Hollybank Investments, LP (7) .................................................... 372,000 5.2%
One Financial Center, Suite 1600
Boston, MA
Mr. Richard M. Brooks(8) ......................................................... 10,735 *
Mr. George S. Brown(8)(9) ........................................................ 63,667 *
Mr. Robert R. Corr(8) ............................................................ 34,141 *
Mr. C. Joseph Giroir, Jr.(8) ..................................................... 10,735 *
Dr. William G. Howard, Jr ........................................................ -- --
Dr. Asad M. Madni(8) ............................................................. 91,739 1.3%
Dr. Robert Mehrabian ............................................................. 1,500 *
Dr. Lawrence A. Wan(8) ........................................................... 26,250 *
Mr. Gary D. Wrench(8)(10) ........................................................ 124,715 1.7%
All executive officers and directors
as a group (10 persons)(11) ............................................. 1,921,386 26.2%
<FN>
* Less than one percent.
(1) This table is based upon information supplied by officers, directors
and principal stockholders of the Company and upon any Schedules 13D or
13G filed with the Securities and Exchange Commission (the
"Commission"). Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable, the
Company believes that each of the stockholders named in this table has
sole voting and investment power with respect to the shares indicated
as beneficially owned.
6.
<PAGE>
(2) Applicable percentages are based on 7,189,979 shares outstanding on
December 22, 1997, adjusted as required by rules promulgated by the
Commission.
(3) Includes 400,000 shares held by Mr. Crocker as trustee for his adult
children, as to which Mr. Crocker disclaims beneficial ownership. Also
includes 54,936 shares held in a trust of which, Mr. Crocker is
beneficiary and sole trustee. Mr. Crocker, acting alone, has the power
to vote and dispose of the shares in each of these trusts.
(4) Represents shares held by Brinson Partners, Inc. ("Partners") which has
the sole power to vote and dispose of the shares held by it and shares
held by Brinson Trust Company ("Trust") which has the sole power to
vote and dispose of the shares held by it. Trust is a wholly-owned
subsidiary of Partners which is a wholly-owned subsidiary of Brinson
Holdings, Inc. ("Holdings"). Holdings may be deemed to share the power
to vote and dispose of all shares held by Partners and Trust, and
Partners may be deemed to share the power to vote and dispose of all
shares held by itself or Trust. Therefore, both Holdings and Partners
each may be deemed a beneficial owner of all the shares held by
Partners and Trust.
(5) Represents shares held by Dimensional Fund Advisors, Inc., DFA
Investment Dimensions Group Inc. and The DFA Investment Trust Company.
Officers of Dimensional Fund Advisors, Inc. have sole power to vote and
dispose of shares beneficially owned by it, including shares held by
DFA Investment Dimensions Group Inc. and The DFA Investment Trust
Company.
(6) So Gen International Fund, Inc. shares with SoGen International SICAV
and Ohio National Fund and Global Contrarian the power to vote and
dispose of all shares held by it.
(7) Represents shares held by Hollybank Investments, LP ("Hollybank") which
has the sole power to vote and dispose of the shares held by it, and
includes 30,000 shares held by Dorsey R. Gardner, general partner of
Hollybank, who has the sole power to vote and dispose of his shares.
Mr. Gardner, as general partner of Hollybank, may be deemed to
beneficially own shares held by Hollybank. Except to the extent of his
interest as a limited partner in Hollybank, Mr. Gardner disclaims such
beneficial ownership.
(8) Includes shares which certain officers and directors have the right to
acquire within 60 days after the date of this table pursuant to
outstanding options as follows: Mr. Brooks, 10,735 shares; Mr. Brown,
42,539 shares; Mr. Corr, 6,441 shares; Mr. Giroir, 10,735 shares; Dr.
Madni, 21,472 shares; Mr. Wrench, 62,696 shares; and all executive
officers and directors as a group, 154,618 shares. Also includes shares
which certain officers and directors have the right to vote pursuant to
unvested portions of restricted stock awards as follows: Mr. Corr,
12,388 shares; Dr. Madni, 54,447 shares; Dr. Wan, 18,014 shares; Mr.
Wrench, 13,080 shares; and all executive officers and directors as a
group, 97,929 shares.
(9) Includes 21,128 shares held in a revocable trust of which Mr. Brown and
his wife, Mildred S. Brown, are beneficiaries and sole trustees. Mr.
and Mrs. Brown, acting alone, each has the power to vote and dispose of
such shares.
(10) Includes 45,276 shares held in a revocable trust of which Mr. Wrench
and his wife, Jacqueline Wrench, are beneficiaries and sole trustees.
Mr. and Mrs. Wrench, acting alone, each has the power to vote and
dispose of such shares. Also includes 16,743 shares which Mr. Wrench,
acting alone, has power to vote and dispose of.
(11) Includes the shares described in the Notes above.
</FN>
</TABLE>
7.
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's Common Stock, to file
with the Commission initial reports of ownership and reports of changes in
ownership of Common Stock of the Company. Officers, directors and greater than
ten percent stockholders are required by the Commission's regulations to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 27, 1997, the
Company's officers, directors and greater than ten percent beneficial owners
complied with all applicable Section 16(a) filing requirements with the
exception of Dr. Mehrabian, who failed to timely file his Form 3, and former
director Peter G. Paraskos, who failed to timely file a Form 4 disclosing one
transaction.
EXECUTIVE COMPENSATION
Compensation of Directors
During fiscal 1997, each non-employee director of Electronics (all of
whom except Mr. Paraskos are directors of the Company) received a monthly fee of
$1,000, with the exception of George Brown, who served as a consultant to
Electronics until June 30, 1997, after which he also received a monthly fee of
$1,000. Each non-employee director of Electronics received a fee of $500 for
each Board meeting attended and for each committee meeting attended by committee
members and a fee of $250 for each telephone conference Board meeting in which
such director participated. In the fiscal year ended September 27, 1997, the
total compensation paid by Electronics to non-employee directors for services as
directors was $55,000. The members of the Board of Directors are eligible for
reimbursement for their expenses incurred in connection with attendance at Board
meetings in accordance with Company policy.
Mr. Brown provided consulting services to Electronics pursuant to an
agreement under which he was paid a retainer of $3,000 per month and a fee of
$750 per day of service. His consulting agreement expired June 30, 1997. In the
fiscal year ended September 27, 1997, Electronics paid Mr. Brown $33,750 under
the agreement. Pursuant to his agreement, Electronics paid $6,606 in life and
health insurance premiums in fiscal year 1997 on behalf of Mr. Brown.
Compensation Of Executive Officers
Summary Of Compensation
As noted above, the Company became an independent public company on
September 27, 1997 as a result of the Distribution. Prior to that date, the
businesses of the Company were controlled by Electronics and all compensation
decisions for persons who are now executive officers of the Company were
determined by Electronics.
The following table shows, for the fiscal years ended September 27,
1997, September 28, 1996 and September 30, 1995, compensation awarded or paid to
or earned by the Company's Chief Executive Officer and its four other most
highly compensated executive officers (the "Named Executive Officers") for
services rendered by them as executive officers of Electronics in those years.
The Named Executive Officers did not earn compensation from the Company in
fiscal 1997 and the Company did not exist in fiscal 1995 or 1996. The positions
of the Named Executive Officers set forth below are those currently held in the
Company, which are comparable in scope and responsibility to those held by them
previously with Electronics.
8.
<PAGE>
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term
Annual Compensation
Compensation(l) Awards
----------------------- -------
Restricted
Stock All Other
Name and Salary(2) Bonus Awards(3)(4) Compensation(5)
Principal Position Year ($) ($) ($) ($)
------------------ ---- ------- ------ ------- -----
<S> <C> <C> <C> <C> <C>
Mr. Charles Crocker ................................... 1997 341,400 50,000 0 4,707
Chairman of the Board, 1996 260,775 35,000 0 3,252
President and Chief 1995 195,150 0 0 3,240
Executive Officer
Mr. Gary D. Wrench .................................... 1997 282,000 80,000 63,750 5,102
Senior Vice President and 1996 264,000 35,000 48,750 4,370
Chief Financial Officer 1995 264,000 0 0 4,223
Dr. Asad M. Madni ..................................... 1997 290,239 65,000 315,000 5,823
President, BEI Sensors & Systems Company, Inc. 1996 239,312 95,000 65,000 5,488
Dr. Lawrence A. Wan ................................... 1997 217,043 33,000 53,125 8,463
Vice President, 1996 190,922 45,000 26,000 7,792
Corporate Technology 1995 182,100 45,000 15,000 6,920
Mr. Robert R. Corr .................................... 1997 159,600 45,000 31,875 4,400
Secretary, Treasurer 1996 149,600 16,000 13,000 3,681
and Controller 1995 139,600 12,000 7,875 3,635
<FN>
(1) As permitted by rules promulgated by the Commission, no amounts are
shown for "Other Annual Compensation" because no Named Executive
Officer received "perquisites" in an amount exceeding the lesser of 10%
of bonus plus salary or $50,000.
(2) Includes annual cash payments designated as automobile allowances,
which did not exceed $11,400 for any individual in any year; also
includes amounts earned but deferred at the election of the Named
Executive Officer pursuant to the Company's Retirement Savings Plan,
and includes $36,027 of accrued vacation pay deferred by Dr. Madni.
(3) Represents the dollar value of shares awarded, calculated by
multiplying the market value based on the closing sales price on the
date of grant by the number of shares awarded. As a result of the
Distribution each holder of restricted stock granted under Electronics'
1992 Restricted Stock Plan ("Electronics Restricted Stock") received
vested and unvested shares of the Company's Common Stock in amounts
equal to the number of vested and unvested shares of Electronics
Restricted Stock held by such holder on the record date for the
Distribution. At September 27, 1997, the aggregate holdings and value
of restricted stock held by the Named Executive Officers (based on the
number of shares held at fiscal year-end multiplied by the closing
sales price of the Company's Common Stock as reported on the Nasdaq
National Market on October 8, 1997, the date on which regular way
trading of the Company's Common Stock began) was as follows: Mr.
Wrench, 24,419 shares, valued at $320,499; Dr. Madni, 60,267 shares,
valued at $791,004; Dr. Wan, 19,250 shares, valued at $252,656; Mr.
Corr, 12,700 shares, valued at $166,688. The restrictions on awards of
restricted stock lapse with respect to 15% of the total number of
shares per year on the first, second, third, fourth and fifth
anniversaries of the date of grant and with respect to the remaining
shares subject to such award on the sixth anniversary of the date of
grant. Dividends are paid on shares of restricted stock when, as and if
the Board declares dividends on the Common Stock of the Company.
9.
<PAGE>
(4) During the past three fiscal years, Electronics did not grant any stock
options or issue any stock appreciation rights to any Named Executive
Officer.
(5) Includes $3,253, $3,648, $3,675, $3,884 and $3,549 paid in fiscal 1997
and $2,078, $3,000, $2,999, $3,164 and $2,988 paid in fiscal 1996 to
Messrs. Crocker, Wrench, Madni, Wan and Corr, respectively, and $2,150,
$2,655, $2,796 and $2,854 paid in fiscal 1995 to Messrs. Crocker,
Wrench, Wan and Corr, respectively, as a normal contribution pursuant
to the Company's Retirement Savings Plan. The remaining sum for each
Named Executive Officer is attributable to premiums paid by the Company
for group term life insurance.
</FN>
</TABLE>
Stock Option Grants and Exercises
The Company granted options to its executive officers and key employees
under the 1997 Equity Incentive Plan. In connection with the Distribution,
holders of options to purchase Common Stock of Electronics that were not
exercised prior to the Distribution had such options converted to vested and
unvested incentive stock options and nonstatutory stock options, as appropriate,
to purchase the Company's Common Stock issued under the 1997 Plan. The number of
shares of the Company's Common Stock subject to options issued in the conversion
was determined by criteria which included the aggregate fair market value of the
option on Electronics' Common Stock immediately prior to the Distribution and
the intent to issue options on the Company's Common Stock that were not more
favorable to the holder than those options held on Electronics' Common Stock
that converted as a result of the Distribution. For further information, see
"The Distribution -- Other Consequences of the Distribution -- Stock Options" in
the Information Statement included as an exhibit to the Company's Form 10. As of
December 22, 1997, options to purchase a total of 335,059 shares had been
granted and were outstanding under the 1997 Plan and options to purchase 800,000
shares remained available for grant thereunder. During the fiscal year ended
September 27, 1997, there were no stock options granted to the Named Executive
Officers by Electronics or the Company. Neither Electronics nor the Company has
issued any stock appreciation rights. The following table shows, for fiscal
1997, certain information regarding options for Electronics Common Stock
exercised, and options held at year-end, immediately prior to the Distribution,
by the Named Executive Officers.
<TABLE>
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
<CAPTION>
Number of Securities Value of Unexercised In-
Shares Underlying Unexercised the-Money Options at
Acquired on Valued Options at FY-End (#) FY-End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#)(1) ($) Unexercisable(2) Unexercisable (3)
<S> <C> <C> <C> <C>
Mr. Crocker ............................. 0 0 0/0 0/0
Mr. Wrench .............................. 33,600 253,900 62,696/0 509,405/0
Dr. Madni ............................... 0 0 21,472/0 112,728/0
Dr. Wan ................................. 20,000 212,400 0/0 0/0
Mr. Corr ................................ 10,000 71,250 6,441/0 25,764/0
<FN>
(1) The number of shares of Electronics Common Stock received upon exercise
of underlying options. No options to purchase the Company's Common
Stock were issued prior to the end of the 1997 fiscal year other than
those issued as a result of the conversion from options to purchase
Electronics Common Stock. See discussion, above. No options to purchase
the Company's Common Stock were exercised prior to the end of fiscal
1997.
(2) Includes both "in-the-money" and "out-of-the-money" options.
(3) The fair market value of the underlying shares of the Company's Common
Stock on the first day of when issued trading, September 29, 1997, less
the exercise price.
</FN>
</TABLE>
10.
<PAGE>
Management Incentive Bonus Plan
The Company's Board of Directors adopted a Management Incentive Bonus
Plan for fiscal 1998 ("MIB Plan") covering employees of the Company and Sensors
& Systems. On the basis of goals relating to return on equity, and subject to
predetermined limits under the MIB Plan, the Company's Compensation Committee
will in its discretion determine a bonus fund for each company following the end
of the year. Based upon recommendations from management of each company, the
Compensation Committee may, in its discretion, approve individual awards to
employees of the respective companies, subject to final approval of the
Company's Board of Directors.
The Compensation Committee and the Board of Directors approved a
separate Incentive Bonus Plan for the President and Chief Executive Officer for
fiscal year 1997 at its December 1996 meeting. Achievement of all goals
enumerated gave the President and Chief Executive Officer the opportunity to
earn an incentive bonus equal to his fiscal 1997 base pay.
Electronics had management incentive bonus plans in place for more than
8 years. Incentive awards totaling approximately $621,800 were made with respect
to Electronics' fiscal year 1997. The amounts of such incentive payments to
Messrs. Crocker, Wrench and Corr and to Drs. Madni and Wan are included in the
"Summary Compensation Table" under "Executive Compensation."
Employment Agreements
The employment arrangements between the Company and Mr. Wrench, Senior
Vice President, Chief Financial Officer and a director of the Company, provide
that if Mr. Wrench is terminated by the Company, he will receive from the
Company his then full-time current salary for 12 months after such termination.
The employment arrangements between the Company and Dr. Madni, Vice
President of the Company and President of Sensors & Systems, renew annually on
the anniversary date. They further provide that if the Company terminates him
without cause or a change in control of the Company occurs and he executes a
general release of liability, Dr. Madni will receive from the Company his then
current full-time salary and medical, dental and life insurance benefits for the
12 months following the termination or change of control, his annual bonus
prorated to the date of termination or change in control and an amount equal to
the average of the bonuses paid Dr. Madni over the prior 3 completed fiscal
years. The employment arrangements include an agreement that Dr. Madni will
refrain from activities of a competitive nature for a period of 2 years after
termination of employment or a change in control of the Company.
Executive Change of Control Benefits Agreements
The Company has entered into Executive Change of Control Benefits
Agreements (the "Change of Control Agreements") with Messrs. Crocker, Corr,
Madni, Wan and Wrench. Pursuant to the terms of the Change of Control
Agreements, each executive officer would receive a single payment equal to the
sum of his annual salary and the average of his annual bonuses for the prior
three years upon the occurrence of a voluntary termination of employment or an
involuntary termination of employment without cause within 12 months after a
change in control of the Company, as defined in the Change of Control
Agreements. In addition, the Company would pay medical benefits on behalf of the
executive officer and his dependents until the executive officer is again
employed, but not longer than 18 months.
Compensation Committee Interlocks and Insider Participation
As noted above, the Compensation Committee consists of Messrs. Brown,
Brooks and Giroir. Mr. Brown retired in July 1990 as President of Electronics
and served as a consultant to the Company until June 30, 1997. Mr. Giroir served
as Corporate Secretary of Electronics until February 1995 for which he received
no compensation in addition to that received as director's fees.
11.
<PAGE>
Report of the Compensation Committee of the Electronics Board of Directors
on Executive Compensation(1)
Electronics' Compensation Committee was composed of Messrs. Brown,
Brooks and Giroir, the same three non-employee directors who currently serve on
the Compensation Committee of the Company's Board of Directors. The Company's
Committee is responsible for, among other things, setting the compensation of
executive officers, including any stock-based awards to such individuals under
the Company's 1997 Plan.
Executive Compensation Principles
Electronics' Committee sought to compensate executive officers in a
manner designed to achieve the primary goal of the Electronics stockholders:
increased stockholder value. In furtherance of this goal, the Committee
determined a compensation package that took into account both competitive and
performance factors. Annual compensation of Electronics' executives was
comprised of salary and bonus, an approach consistent with the compensation
programs of most electronics companies. A substantial portion of the cash
compensation of each executive officer was contingent upon Electronics'
performance. Bonuses, therefore, could be substantial, could vary significantly
for an individual from year to year, and could vary significantly among the
executive officers. The Company's Compensation Committee intends to follow the
same approach and to be guided by the same principles. Another significant
component of compensation of Electronics' executive officers was restricted
stock grants which vest at approximately 15% per annum over a six year period.
In the past, incentive stock options also were a significant part of the
compensation of some of the Electronics executive officers.
Base Salary
Electronics' Compensation Committee determined salaries for fiscal 1997
in December 1996 for all executive officers. In adjusting the base salary of the
executive officers, Electronics' Committee examined both competitive and
qualitative factors relating to corporate and individual performance. In
connection with its examination of competitive factors, the Committee reviewed
an independent survey of base salaries paid by other electronics companies of
comparable size. In many instances, assessment of qualitative factors
necessarily involved a subjective assessment by the Committee. In determining
salary adjustments for executive officers for fiscal 1997, the Committee relied
primarily on the evaluation and recommendation of Mr. Crocker of each officer's
responsibilities for fiscal 1997 and performance during fiscal 1996.
At its meeting in December 1996, the Committee approved increases in
base salaries effective at the beginning of October 1996 for fiscal year 1997
for the Named Executive Officers other than Mr. Crocker as follows: Mr. Corr by
6.9%, Dr. Madni by 8.7%, Dr. Wan by 4.0% and Mr. Wrench by 7.1%. At an
additional meeting of the Compensation Committee in March 1997, Dr. Wan's base
salary was further increased by 18.0% effective April 1, 1997.
Management Incentive Bonus Plan
Electronics had a Management Incentive Bonus Plan under which members
of management were eligible to receive cash bonuses based on the achievement of
specific operating results established at the beginning of the fiscal year. (The
Company's Board of Directors has adopted a similar plan for fiscal 1998 covering
the Company's employees.) In November 1997, the Committee evaluated operating
results for fiscal 1997 against the established targets. Determining that such
targets were generally achieved, the Committee recommended awards to Named
Executive Officers as set forth in the "Summary Compensation Table" under
"Executive Compensation".
- -------------------
(1) This Section is not "soliciting material," is not deemed "filed" with
the Commission and is not to be incorporated by reference in any filing
of the Company under the Securities Act of 1933, as amended, or the
Exchange Act, whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
12.
<PAGE>
Chief Executive Officer Compensation
In general, the factors utilized in determining Mr. Crocker's
compensation were similar to those applied to the other executive officers in
the manner described in the preceding paragraphs; however, a significant
percentage of his potential earnings was and continues to be subject to
consistent, positive, long-term performance of the Company.
In December 1996, Mr. Crocker's base compensation for fiscal 1997 was
increased by 4.7%. At the same time, Electronics' Board of Directors approved a
separate incentive bonus plan for Mr. Crocker for fiscal 1997. Achievement of
all goals enumerated under the Plan gave Mr. Crocker the opportunity to earn an
incentive bonus equal to his fiscal 1997 base pay. In November 1997, the
Company's Compensation Committee evaluated Mr. Crocker's performance and judged
that a large percentage of the goals had been achieved. Despite attaining most
of the agreed annual goals, the Committee agreed with Mr. Crocker's
recommendation of a bonus of $50,000.
Long-Term Incentives
The Company intends to use the 1997 Equity Incentive Plan to further
align the interests of stockholders and management by creating common incentives
related to the possession by management of a substantial economic interest in
the long-term appreciation of the Company's stock. In determining the size of a
restricted stock award or stock option to be granted to an executive officer,
the Committee will take into account the officer's position and level of
responsibility within the Company, the officer's existing equity holdings, the
potential reward to the officer if the stock appreciates in the public market,
the incentives to retain the officer's services to the Company, the
competitiveness of the officer's overall compensation arrangements and the
performance of the officer. Based on a review of this mix of factors for fiscal
1997, the Committee made no grants of incentive stock options to any executive
officers, but in November 1997, awarded restricted stock grants to Mr. Corr
(5,000 shares), Dr. Madni (10,000 shares), and Dr. Wan (7,000 shares).
Section 162(m) of the Internal Revenue Code (the "Code") limits the
Company to a deduction for federal income tax purposes of no more than $1
million of compensation paid to certain Named Executive Officers in a taxable
year. Compensation above $1 million may be deducted if it is "performance-based
compensation" within the meaning of the Code. The Committee has determined that
stock options granted under the Company's 1997 Plan with an exercise price at
least equal to the fair market value of the Company's Common Stock on the date
of grant shall be rated as "performance-based compensation."
George S. Brown Richard M. Brooks C. Joseph Giroir, Jr.
Performance Measurement Comparison
Because the Distribution was not effective until September 27, 1997,
the last day of the Company's fiscal year, and regular way trading in the
Company's Common Stock on the Nasdaq National Market System did not begin until
October 8, 1997, regular way trading data during fiscal 1997 does not exist and
thus the performance measurement comparison is omitted from this proxy
statement.
CERTAIN TRANSACTIONS
The Company's By-Laws provide that the Company will indemnify its
directors and executive officers and may indemnify its other officers, employees
and other agents to the extent not prohibited by Delaware law. Under the
Company's By-Laws, indemnified parties are entitled to indemnification for
negligence, gross negligence and otherwise to the fullest extent permitted by
law. The By-Laws also require the Company to advance litigation expenses in the
case of stockholder derivative actions or other actions, against an undertaking
by the indemnified party to repay such advances if it is ultimately determined
that the indemnified party is not entitled to indemnification.
13.
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
Robert R. Corr
Corporate Secretary
January 26, 1998
A copy of the Company's Annual Report to the Securities and Exchange Commission
on Form 10-K for the fiscal year ended September 27, 1997 is available without
charge upon written request to: Investor Relations, BEI Technologies, Inc., One
Post Street, Suite 2500, San Francisco, CA 94104.
14.
<PAGE>
Appendix A
BEI TECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 6, 1998
The undersigned hereby appoints Charles Crocker and Gary D. Wrench, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of BEI Technologies, Inc. which
the undersigned may be entitled to vote at the Annual Meeting of Stockholders of
BEI Technologies, Inc. to be held at the Company's Systron Donner Inertial
Division, 2700 Systron Drive, Concord, California, on Friday, March 6, 1998 at
1:30 p.m. (local time), and at any and all postponements, continuations and
adjournments thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following materials and in
accordance with the following instructions, with discretionary authority as to
any and all other matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED
BELOW.
Proposal 1: To elect two directors to hold office until the 2001 Annual Meeting
of Stockholders.
[ ] FOR all nominees listed below (except [ ] WITHHOLD AUTHORITY to vote
as marked to the contrary below). for all nominees listed
below
Nominees: Charles Crocker and George S. Brown
To withhold authority to vote for any nominee(s), write such nominee(s)' name(s)
below:
________________________________________________________________________________
________________________________________________________________________________
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
Proposal 2: To ratify the selection of Ernst & Young LLP as independent public
accountants of the Company for its fiscal year ending October 3, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign exactly as your name appears
hereon. If the stock is registered in the names
of two or more persons, each should sign.
Executors, administrators, trustees, guardians
and attorneys-in-fact should add their titles.
If signer is a corporation, please give full
corporate name and have a duly authorized
officer sign, stating title. If signer is a
partnership, please sign in partnership name by
authorized person.
Dated: _____________, 1998
_______________________________________________
_______________________________________________
Signature(s)
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
