SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 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.
(1) Title of each class of securities to which transactions applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
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BEI TECHNOLOGIES, INC.
One Post Street, Suite 2500
San Francisco, CA 94104
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 1, 2001
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
Thursday, March 1, 2001, at 1:30 p.m. local time, at The Argent Hotel, 50 Third
Street, in San Francisco, California, for the following purposes:
1. To elect two directors to hold office until the 2004 Annual Meeting of
Stockholders;
2. To approve an amendment to the Company's Certificate of Incorporation
to increase the authorized number of shares of the Company's Common
Stock from 20,000,000 shares to 35,000,000 shares;
3. To ratify the selection of Ernst & Young LLP as independent public
accountants of the Company for its fiscal year ending September 29,
2001; and
4. 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 21, 2001
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 [29], 2001
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 1, 2001
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 1, 2001, 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 Argent Hotel, 50 Third Street, in San
Francisco, California. The Company intends to mail this proxy statement and
accompanying proxy card on or about January [29], 2001 to all stockholders
entitled to vote at the Annual Meeting.
Background
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., subsequently
renamed BEI Medical Systems Company, Inc. (referred to herein as "Electronics").
The Company began independent 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"), and has operated
independently ever since.
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, facsimile, 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 shares of the Company's Common Stock at the close
of business on January 21, 2001 will be entitled to notice of and to vote at the
Annual Meeting. At the close of business on January 21, 2001, the Company had
outstanding and entitled to vote [__________] shares of Common Stock. Each
holder of record of the Company's 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
1.
<PAGE>
same effect as negative votes. Broker non-votes are counted towards
establishment of the required quorum, but are not counted for any purpose in
determining whether a matter has been approved.
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 at One Post
Street, Suite 2500, San Francisco, California 94104, Attention: Secretary, 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
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2002 Annual
Meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is [October 1], 2001. Stockholders who wish to submit a stockholder's
proposal or a nomination for director that is not to be included in the
Company's proxy statement and proxy for the 2002 Annual Meeting must ensure that
such proposal or nomination is delivered to, or mailed and received at the
Company not later than December 31, 2001, nor earlier than December 1, 2001.
Stockholders are also advised to review the Company's By-Laws, which contain
additional requirements with respect to advance notice of stockholder proposals
and director nominations.
2.
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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 been duly qualified or until his earlier death,
resignation or removal.
The Board of Directors is presently composed of seven members. There are
two in the class whose term of office expires in 2001. The two nominees for
election to this class, George S. Brown and Mr. Charles Crocker, are directors
of the Company who were previously appointed by the stockholders at the
Company's 1998 annual meeting. If elected at the Annual Meeting, each of the
nominees would serve until the 2004 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 2004 Annual Meeting
George S. Brown
Mr. Brown, age 79, began serving as a Director in June 1997 prior to the
Distribution and resulting spin-off of the Company from Electronics in September
1997. He served as a director of Electronics from October 1974 until his
resignation as a result of the Distribution. Mr. Brown served as President and
Chief Executive Officer of Electronics from October 1974 until July 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.
Charles Crocker
Mr. Crocker, age 61, began serving as a Director in June 1997 prior to the
Distribution and resulting spin-off of the Company from Electronics in September
1997. He was a founder of Electronics and has served as Chairman of the Board of
Directors of Electronics since October 1974 and Chairman of the Board of
Directors of Technologies since October 1997. Mr. Crocker assumed the positions
of President (in which position he served until May 2000) and Chief Executive
Officer of Technologies, effective October 1, 1997, after resigning as President
and CEO of Electronics as a result of the Distribution. Mr. Crocker served as
President of Crocker Capital Corporation, a Small Business
3.
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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 and Pope
& Talbot, Inc. Mr. Crocker also serves as director of OpticNet, Inc., a minority
owned subsidiary of the Company. 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 2002 Annual Meeting
C Joseph Giroir, Jr.
Mr. Giroir, age 61, began serving as a Director in June 1997 prior to the
Distribution and resulting spin-off of the Company from Electronics in September
1997. 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. Mr. Giroir is the sole member of Giroir, PLC. He is also
President of Arkansas International Development Corporation II, LLC and Chairman
of the Board of Directors for Clinical Study Centers, LLC. 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 53, was appointed President and Chief Operating Officer of
the Company in May, 2000. He began serving as a Director and as a Vice President
of the Company in June 1997 prior to the Distribution and resulting spin-off of
the Company from Electronics in September 1997. Dr. Madni was appointed
President of BEI Sensors & Systems Company, Inc. in October 1993, which was
formed by the consolidation of BEI Motion Systems Company and the BEI Sensors &
Controls Group, of which Dr. Madni had been President since October 1992. Prior
to joining BEI Electronics in 1992, he served for 17 years in various senior
level technical and executive positions with Systron Donner Corporation, a
manufacturer of avionics and aerospace sensors and subsystems. He was most
recently Chairman, President and CEO of Systron Donner Corporation, a subsidiary
of Thorn/EMI. Dr. Madni's degrees include a Bachelor of Science and Master of
Science in Engineering from the University of California, Los Angeles, and a
Ph.D. in Engineering from California Coast University. He is also a graduate of
the Engineering Management Program from the California Institute of Technology,
the AEA/Stanford Executive Institute from Stanford University, and the Program
for Senior Executives from the Massachusetts Institute of Technology, Sloan
School of Management. He is a Chartered Engineer and Fellow of the Institute of
Electrical and Electronics Engineers, the Institution of Electrical Engineers,
the Institute for the Advancement of Engineering, the New York Academy of
Sciences, and the International Biographical Association.
Gary D. Wrench
Mr. Wrench, age 67, began serving as a Director in June 1997 prior to the
Distribution and resulting spin-off of the Company from Electronics in September
1997. He was Senior Vice President and Chief Financial Officer of Electronics
from July 1993 until his resignation as a result of the Distribution, and held
these same positions with Technologies until his retirement in May, 2000. He was
named a Director of Electronics in February 1986, and continues to serve as a
director of Electronics. He also serves as a director of OpticNet, Inc., and has
served as Chief Financial Officer of that company since May, 2000. From April
1985 to July 1993, he served as Vice President of Electronics and President and
Chief Executive Officer of BEI Motion Systems Company, Inc., then a wholly owned
subsidiary of
4.
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Electronics that is now a part of Sensors & Systems. Other experience includes
twenty years with Hughes Aircraft Company. Mr. Wrench holds a B.A. from Pomona
College and a M.B.A. from the University of California, Los Angeles.
Directors Continuing in Office Until the 2003 Annual Meeting
Richard M. Brooks
Mr. Brooks, age 72, began serving as a Director in June 1997 prior to the
Distribution and resulting spin-off of the Company from Electronics in September
1997. From 1987 until his resignation as a result of the Distribution, he served
as a director of Electronics. He is currently an independent financial
consultant, and also serves as a director of Longs Drug Store Corporation,
Granite Construction, Inc. and the Western Farm Credit Bank, a private company.
Mr. Brooks holds a B.S. from Yale University and a M.B.A. from the University of
California, Berkeley.
Dr. William G. Howard, Jr
Dr. Howard, age 59, began serving as a Director in June 1997 prior to the
Distribution and resulting spin-off of the Company from Electronics in September
1997. 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 Chairman of
Credence Systems, Inc. and a director of RAMTRON International Corp.,
Thunderbird Technologies, Inc., and Xilinx, Inc. Dr. Howard holds a B.S.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.
Board Committees and Meetings
During the fiscal year ended September 30, 2000, the Board of Directors
held 4 regularly scheduled meetings. From time to time the Board of Directors
also acts by unanimous written consent. The Board has an Audit Committee and a
Compensation Committee, but does not have a Nominating Committee or any other
Board committee performing a similar function.
During fiscal 2000, each Board member attended at least 75% or more of the
meetings of the Board. Mr. Giroir, a member of the Audit Committee, was unable
to attend one Audit Committee meeting during fiscal 2000.
The Compensation Committee:
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 2000, the Compensation
Committee was composed of three non-employee directors: Mr. Brown, Chairman of
the Committee, and Messrs. Brooks, and Giroir. The Compensation Committee met
once during fiscal 2000.
5.
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The Audit Committee:
The Audit Committee's responsibilities include the following: to meet with
the Company's independent accountants at least annually to review the scope and
results of the annual audit; recommend to the Board the independent accountants
to be retained for the Company; and receive and consider the accountants'
comments as to internal controls, accounting staff, management performance, and
procedures performed and results obtained in connection with the audit. During
fiscal 2000, the Audit Committee was initially composed of four directors: Mr.
Brooks, Chairman of the Committee, and Messrs. Giroir, Howard and Dr. Robert
Mehrabian, until Dr. Mehrabian's resignation as a member of the Board in March,
2000. Following Mr. Mehrabian's resignation, the Audit Committee was comprised
solely of Messrs. Brooks, Giroir and Howard. All members of the Audit Committee
are independent directors (as independence is defined in Rule 4200(a)(15) of the
NASD listing standards). The Audit Committee met 3 times during fiscal 2000.
6.
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Proposal 2
Approval Of Increase In Number Of Authorized Shares Of Common Stock
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the Company's Restated Certificate of Incorporation to increase the
Company's authorized number of shares of Common Stock from 20,000,000 shares to
35,000,000 shares.
The additional Common Stock to be authorized by adoption of the amendment
would have rights identical to the currently outstanding Common Stock of the
Company. If the amendment is adopted, it will become effective upon filing of a
Certificate of Amendment of the Company's Restated Certificate of Incorporation
with the Secretary of State of the State of Delaware following stockholder
approval.
At the time of adoption of the Company's 1997 Equity Incentive Plan, the
Board reserved a total of 2,278,890 shares of the Company's Common Stock for
issuance as equity incentives under the Plan. As of September 30, 2000, in
addition to the shares of Common Stock outstanding as of the same date, the
Board had an aggregate of 361,928 shares reserved for issuance upon exercise of
options outstanding under the plan, and 903,714 shares reserved for future grant
as options or rights under the plan.
Although at present the Board of Directors has no plans to issue the
additional shares of Common Stock, it desires to have such shares available to
provide additional flexibility to use its capital stock for business and
financial purposes in the future. The additional shares may be used, without
further stockholder approval, for various purposes including, without
limitation, raising capital, providing equity incentives to employees, officers
or directors, establishing strategic relationships with other companies and
expanding the Company's business or product lines through the acquisition of
other businesses or products using the Company's Common Stock as currency.
The additional shares of Common Stock that would become available for
issuance if the proposal were adopted could also be used by the Company to
oppose a hostile takeover attempt or delay or prevent changes in control or
management of the Company. For example, without further stockholder approval,
the Board could choose to strategically sell shares of Common Stock in a private
transaction to purchasers who would oppose a takeover or favor the current
Board. Although this proposal to increase the authorized Common Stock has been
prompted by business and financial considerations and not by the threat of any
hostile takeover attempt (nor is the Board currently aware of any such attempts
directed at the Company), nevertheless, stockholders should be aware that
approval of proposal could facilitate future efforts by the Company to deter or
prevent changes in control of the Company, including transactions in which the
stockholders might otherwise receive a premium for their shares over then
current market prices.
The affirmative vote of the holders of a majority of the shares of the
Common Stock will be required to approve this amendment to the Company's
Restated Certificate of Incorporation. As a result, abstentions and broker
non-votes will have the same effect as negative votes.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
7.
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Proposal 3
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 September 29, 2001.
Ernst & Young LLP (including its predecessor, Ernst & Whinney) has audited the
Company's financial statements since inception in 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.
Fees billed to Company by Ernst & Young LLP during Fiscal 2000
Audit Fees:
Audit fees billed to the Company by Ernst & Young LLP during the Company's
2000 fiscal year for review of the Company's annual financial statements and
those financial statements included in the Company's quarterly reports on Form
10-Q totaled $248,674.
Financial Information Systems Design and Implementation Fees:
The Company did not engage Ernst & Young LLP to provide advice to the
Company regarding financial information systems design and implementation during
the fiscal year ended September 30, 2000.
All Other Fees:
Fees billed to the Company by Ernst & Young LLP during the Company's 2000
fiscal year for all other non-audit services rendered to the Company, including
tax related services totaled $285,876.
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 other applicable legal requirement. 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 September 29, 2001. Abstentions will be counted toward 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 this matter
has been approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF PROPOSAL 3
8.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of December 31, 2000 by: (i) each of the
executive officers named in the Summary Compensation Table; (ii) each director;
(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.
Beneficial Ownership (1)
------------------------
Number of Percent of
Beneficial Owner Shares Total(2)
---------------- ------ --------
Mr. Charles Crocker(3) ............................. 3,081,808 21.4
One Post Street
Suite 2500
San Francisco, CA
State Street Research & Management Co.(9) .......... 939,400 6.5
One Financial Center
Suite 3800
Boston, MA
Dimensional Fund Advisors, Inc.(10) ................ 888,800 6.2
1299 Ocean Avenue
11th Floor
Santa Monica, CA
Nicholas-Applegate Capital Management .............. 818,000 5.7
600 West Broadway
San Diego, CA
Kelso Management Company, Inc. ..................... 754,800 5.2
One International Place
Boston, MA
Lord, Abbett & Co.(11) ............................. 737,922 5.1
90 Hudson Street
Jersey City, NJ
Dr. Asad M. Madni(4) ............................... 204,688 1.4
Mr. Gerald D. Brasuell(4) .......................... 50,985 *
Mr. John LaBoskey(4) ............................... 43,862 *
Dr. Lawrence A. Wan(4)(5) .......................... 72,544 *
Mr. Richard M. Brooks(4) ........................... 16,000 *
Mr. George S. Brown(4)(6) .......................... 16,002 *
Mr. C. Joseph Giroir, Jr.(4) ....................... --
Dr. William G. Howard, Jr.(4) ...................... 8,000 *
Mr. Gary D. Wrench(4)(7) ........................... 91,961 *
All executive officers and directors as a group
(10 persons)(8) ................................. 3,669,348 25.5
----------------
* 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.
(2) Applicable percentages are based on 14,408,192 shares outstanding on
December 31, 2000, adjusted as required by rules promulgated by the
Commission.
(3) Includes 776,000 shares held by Mr. Crocker as trustee for his adult
children, as to which Mr. Crocker disclaims beneficial ownership. Also
includes 109,872 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) 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: Dr. Madni, 13,332 shares; Mr. Brasuell, 7,999 shares;
Mr. LaBoskey, 6,000 shares; Dr. Wan, 7,332 shares; and all executive
officers and directors as a group, 40,663 shares. Also includes shares
which certain officers and directors have the right to vote pursuant to
unvested portions of restricted stock awards as follows: Dr. Madni, 135,105
shares; Dr. Wan, 27,400 shares; Mr. Brooks, 13,600 shares; Mr. Brown,
29,580
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shares; Dr. Howard, 5,600 shares; Mr. Wrench, 20,950 shares; and all
executive officers and directors as a group, 257,835 shares.
(5) On December 29, 2000, Dr. Wan was granted a leave of absence from his
position as Vice President, Corporate Technology and Chief Technology
Officer of the Company during which leave of absence he will serve as an
executive officer of OpticNet, Inc., a minority owned subsidiary of the
Company.
(6) Includes 16,002 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 have the power to vote and dispose of such
shares.
(7) Includes 24,518 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 have the power to vote and dispose of such
shares.
(8) Includes the shares described in the Notes above, as applicable.
(9) Represents shares held by State Street Research & Management Co. ("State")
which has the sole power to vote and dispose of the shares held by it.
State is a wholly owned subsidiary of Metropolitan Life Insurance Company
("Metropolitan"). Metropolitan may be deemed to share the power to vote and
dispose of all shares held by State, and State may be deemed to share the
power to vote and dispose of all shares held by itself. Therefore, both
Metropolitan and State each may be deemed a beneficial owner of the shares
held.
(10) Dimensional Fund Advisors, Inc., ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as investment manager to
certain other investment vehicles, including commingled group trusts.
(These investment companies and investment vehicles are the "Portfolios").
In its role as investment advisor and investment manager, Dimensional
possesses both voting and investment power over 888,800 shares of the
Company's stock as of September 30, 2000. The portfolios own all securities
reported in this statement, and Dimensional disclaims beneficial ownership
of such securities.
(11) Represents shares held by Lord Abbett & Co. ("Abbett") which has the sole
power to vote and dispose of the shares held by it. Abbett is owned by
eight individuals who participate in the management of the firm's
investment activities. Therefore, Abbett and the eight individuals may be
deemed beneficial owners of all shares held by Abbett.
Section 16(a) Beneficial Ownership Reporting Compliance
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 30, 2000, the
Company's officers, directors and greater than ten percent beneficial owners
complied with all applicable Section 16(a) filing requirements.
10.
<PAGE>
EXECUTIVE COMPENSATION
Compensation of Directors
During fiscal 2000, each non-employee director of the Company received a
monthly fee of $1,000. Each non-employee director of the Company also received a
fee of $500 for each Board meeting attended and for each committee meeting
attended by that committee member and a fee of $250 for each telephone
conference Board meeting in which such director participated. In the fiscal year
ended September 30, 2000, the total compensation paid by the Company to
non-employee directors for services rendered as directors was $70,250. 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. Wrench, a member of the Board of Directors, provided consulting
services to the Company following his retirement in May 2000 in consideration of
which services the Company made payments to Mr. Wrench totaling $30,500 during
fiscal 2000. Such consulting services were pursuant to a written agreement
entered into between Mr. Wrench and the Company that provided in material part
for services to be provided by Mr. Wrench to the Company on up to 5 days per
month for a total of $6000 per month, plus $1200 per day for any excess days.
11.
<PAGE>
Compensation of Executive Officers
Summary of Compensation
<TABLE>
As noted above, the Company became an independent public company on
September 27, 1997 as a result of the Distribution. The following table shows,
for the fiscal years ended September 30, 2000, October 2, 1999 and October 3,
1998, compensation awarded or paid to or earned by the Company's Chief Executive
Officer and its four other most highly compensated executive officers (the
"Named Executive Officers") for services rendered by them as executive officers
of Technologies in the fiscal years ended September 30, 2000, October 2, 1999
and October 3, 1998, as well as compensation information for one former
executive officer who retired from service to the Company during fiscal year
2000.
Summary Compensation Table
<CAPTION>
Long Term
Annual Compensation Compensation Awards
---------------------------------------- -------------------------
Other
Annual Securities All Other
Compensation Restricted Underlying Compensation
Name and Salary (1) Bonus (2) Awards(3) Options (4)
Principal Position Year ($) ($) ($) ($) (#) ($)
------------------ ---- ---------- ----- --- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Mr. Charles Crocker .................. 2000 395,681 200,000 27,290 -0- -0- 6,088
Chairman of the Board and 1999 334,125 100,000 -0- -0- 5,928
Chief Executive Officer 1998 341,725 40,000 -0- -0- 6,158
Dr. Asad M. Madni .................... 2000 356,940 200,000 337,500 20,000 8,135
President and Chief 1999 269,355 90,000 64,813 10,000 6,117
Operating Officer 1998 334,956 40,000 120,000 -0- 6,240
Gerald D. Brasuell ................... 2000 183,906 125,000 25,000 10,000 6,754
Vice President, General 1999 164,991 35,000 54,500 7,000 5,322
Manager of Systron Donner 1998 140,605 24,500 60,000 -0- 3,956
John LaBoskey ........................ 2000 137,846 110,000 37,500 6,000 5,764
Senior Vice President and 1999 115,510 37,500 21,000 6,000 4,267
Chief Financial Officer 1998 102,941 15,000 60,000 -0- 2,996
Dr. Lawrence A. Wan(5) ............... 2000 278,968 75,000 54,570 12,500 8,000 12,084
Vice President, Corporate 1999 245,423 40,000 54,313 7,000 10,362
Technology and Chief Technical Officer 1998 244,922 13,500 84,000 -0- 8,840
12.
<PAGE>
Mr. Gary D. Wrench(6) ................ 2000 188,000 0 50,000 8,000 4,939
Former Senior Vice 1999 298,020 75,000 346,000 8,000 5,928
President and Chief 1998 298,000 40,000 -0- 125,39 6,158
Financial Officer 2
<FN>
(1) Includes (i) annual cash payments designated as automobile allowances,
which did not exceed $16,000 for any individual in any year, (ii) includes
compensation earned but deferred at the election of the Named Executive
Officer pursuant to the Company's Deferred Compensation Plan, and (iii)
$40,384 in fiscal year 2000 and $31,550 in fiscal year 1998 of accrued
vacation pay deferred by Dr. Madni.
(2) Represents amounts paid to Messrs. Crocker and Wan in the form of the
receipt of shares in the Company's minority owned subsidiary OpticNet, Inc.
as compensation for activities related to the founding of OpticNet, Inc.
(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. At September 30, 2000, 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 September 30, 2000) was as follows: Dr. Madni, 125,400
shares, valued at $2,562,863; Mr. Brasuell, 27,766 shares, valued at
$567,468; Mr. LaBoskey, 29,300 shares, valued at $598,818; Mr. Pike, 16,906
shares, valued at $345,516; Dr. Wan, 33,050 shares, valued at $675,459; and
Mr. Wrench, 75,400 shares, valued at $1,540,988. Generally, 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.
(4) Includes $5,100, $5,100, $6,150, $5,260, $5,100 and $7,231 paid in fiscal
2000 to each of Messrs. Crocker, Madni, Brasuell, LaBoskey, Wan and Wrench,
respectively, and $4,800, $3,549, $4,775, $3,915, $4,316 and $4,800 paid in
fiscal 1999 to each of Messrs. Crocker, Madni, Brasuell, LaBoskey, Wan and
Wrench respectively, and $4,800, $3,559, $3,492, $2,684, $4,222 and $4,800
paid in fiscal 1998 to Crocker, Madni, Brasuell, LaBoskey, Wan, and Wrench,
respectively, as a normal contribution pursuant to the Company's Retirement
Savings Plan. The remaining sums listed for each of fiscal 2000, 1999 and
1998 for Messrs. Crocker, Madni, Brasuell, LaBoskey, Wan and Wrench are
attributable to premiums paid by the Company for group term life insurance,
supplemental life insurance and, solely with respect to Messrs. Crocker and
Wan, payments made by the Company pursuant to split dollar life insurance
policies entered into by the Company in fiscal 2000.
(5) On December 29, 2000, Dr. Wan was granted a leave of absence from his
position as Vice President, Corporate Technology and Chief Technology
Officer of the Company during which leave of absence he will serve as an
executive officer of OpticNet, Inc., a minority owned subsidiary of the
Company.
(6) Mr. Wrench retired from his position as Senior Vice President and Chief
Financial Officer of the Company in May 2000.
</FN>
</TABLE>
13.
<PAGE>
Stock Option Grants and Exercises
<TABLE>
During the Company's fiscal year ended September 30, 2000, the Company
granted options to its executive officers and key employees under its 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 Equity Incentive 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 each option to purchase Electronics' Common Stock immediately prior to
the Distribution and the intent to issue options to purchase 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 Registration Statement filed on Form 10 (File No. 0-22799). The
Company has not issued any stock appreciation rights, either apart from or under
the Company's 1997 Equity Incentive Plan. As of December 31, 2000, options to
purchase a total of 445,423 shares had been granted and were outstanding under
the 1997 Equity Incentive Plan and options to purchase 1,315,318 shares remained
available for grant thereunder. The following table shows, for fiscal 2000,
certain information regarding options for the Company's Common Stock exercised,
and options held at year-end, by the Named Executive Officers.
Option Grants in Fiscal Year 2000
<CAPTION>
Potential Realizable Value at
Number of % of Total Assumed Annual
Securities Options Market Rates of Stock
Underlying Granted to Price at Price Appreciation for
Options Employees Exercise Date of Option Term(3)
Granted in Fiscal Price Grant Expiration -------------------------------
Name (#)(1) Year(2) ($/Sh) ($/Sh) Date 0% 5% 10%
----------------------- ------- -------- ------ ------ --------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mr. Crocker............ - 0 - -------- ------ ------ --------- ------- ------- -------
Dr. Madni.............. 20,000 9.1% 6.250 6.250 12/08/09 ------- 78,612 199,218
Mr. Braswell.......... 10,000 4.6% 6.250 6.250 12/08/09 ------- 39,306 99,609
Mr. LaBoskey........... 6,000 2.7% 6.250 6.250 12/08/09 ------- 23,584 59,765
Dr. Wan................ 8,000 3.7% 6.250 6.250 12/08/09 ------- 31,445 79,687
Mr. Wrench............. 8,000 3.7% 6.250 6.250 12/08/09 ------- 31,445 79,687
<FN>
(1) Options generally vest annually over a 3-year period. The options will
fully vest upon a change in control, as defined in the Company's 1997 Plan.
(2) Based upon options to purchase 215,000 shares issued to employees in fiscal
year 2000.
(3) The potential realizable value is based on the term of the option at its
time of grant. It is calculated by assuming that the stock price on the
date of grant appreciates at the indicated rate, compounded annually for
the entire term of the option and the option is exercised solely on the
last day of its term for the appreciated price. These amounts represent
certain assumed rates of appreciation less the exercise price, in
accordance with the rules of the Commission, and do not reflect the
Company's estimate or projection of future stock price performance. Actual
gains, if any, are dependent on the actual future performance of the
Company's Common Stock and no gain to the optionee is possible unless the
stock price increases over the option term, which will benefit all
stockholders.
</FN>
</TABLE>
14.
<PAGE>
<TABLE>
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options in-the-Money Options
Shares Acquired Value at FY-End (#) at FY-End ($)
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable(1) Unexercisable(2)
---- --- --- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Mr. Crocker................... - 0 - - 0 - / - 0 - - 0 - / - 0 -
Dr. Madni..................... - 0 - - 0 - 3,333 / 26,667 56,453 / 396,672
Mr. Brasuell.................. - 0 - - 0 - 2,333 / 14,667 39,515 / 220,922
Mr. LaBoskey.................. - 0 - - 0 - 2,000 / 10,000 33,875 / 152,875
Dr. Wan....................... - 0 - - 0 - 2,333 / 12,667 39,515 / 192,547
Mr. Wrench.................... - 0 - - 0 - - 0 - / - 0 - - 0 - / - 0 -
<FN>
------------------
(1) Includes both "in-the-money" and "out-of-the-money" options.
(2) The fair market value of the underlying shares of the Company's Common
Stock on September 30, 2000, less the exercise price.
</FN>
</TABLE>
Management Incentive Bonus Plan For Fiscal 2000
In 1999, the Company's Board of Directors adopted a Management Incentive
Bonus Plan for fiscal 2000 ("2000 MIB Plan") covering employees of the Company.
Following the end of the Company's 2000 fiscal year, the Company's Compensation
Committee determined how to allocate monies under the Bonus Plan on the basis of
goals relating to return on equity, and subject to predetermined limits under
the 2000 MIB Plan, and created a bonus fund for each company. Based upon
recommendations from management of each company, the Compensation Committee was
permitted, in its discretion, to approve individual awards to employees of the
respective companies, for performance during fiscal 2000 subject to final
approval by the Company's Board of Directors.
Incentive awards totaling approximately $1,753,000 were made with respect
to the Company's fiscal year 2000. The amounts of such incentive payments to the
Named Executive Officers are included in the "Bonus" column of "Summary
Compensation Table" under "Executive Compensation."
Employment Agreements
The employment agreement between the Company and Dr. Madni, President and
Chief Operating Officer of the Company, renews annually on the anniversary date
of the agreement. Such agreementfurther provides 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 of his employment, his annual bonus prorated
to the date of termination of his employment and an amount equal to the average
of the bonuses paid Dr. Madni over the prior 3 completed fiscal years. The
employment agreement includes a noncompetition clause that provides that Dr.
Madni will refrain from activities of a competitive nature for a period of 2
years after termination of his employment with the Company.
15.
<PAGE>
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, Madni, Wan
and LaBoskey. 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 by the employee 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 Electronics 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. Mr. Crocker,
Chairman of the Board and Chief Executive Officer of the Company, serves as a
director and has been selected to serve as a member of the Compensation
Committee of OpticNet, and Mr. Wrench, a director of the Company serves as Chief
Financial Officer for OpticNet and also as a director.
16.
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF BEI TECHNOLOGIES, INC.(1)
DECEMBER 6, 2000
The Compensation Committee is composed of three non-employee directors,
consisting of Messrs. Brown, Brooks and Giroir. The Compensation 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 Equity Incentive Plan. The Compensation Committee annually
evaluates the performance, and determines the compensation, of the Chief
Executive Officer and the other executive officer of the Company based upon a
mix of the achievement of corporate goals, individual performance of the
executive officers and comparisons with other companies operating in the same
industry. The Chief Executive Officer provides recommendations to the
Compensation Committee, but is not present during the discussion of his own
compensation.
Executive Compensation Principles
The Compensation Committee seeks to compensate executive officers in a
manner designed to achieve the primary interest of the Company's stockholders,
namely that of increased stockholder value. In furtherance of this goal, the
Compensation Committee determined a compensation package for fiscal 2000 that
considered both competitive and performance factors. Annual compensation of
executives of the Company is composed of salary, bonus and stock incentives, an
approach consistent with the compensation programs of most electronics and/or
industrial focused companies. A substantial portion of the cash compensation of
each executive officer is contingent upon the achievement of certain performance
milestones by the Company. Bonuses, therefore, could be substantial, could vary
significantly from year to year, and could vary significantly among executive
officers. The Company's Compensation Committee intends to continue to follow
this approach in the future and be guided by the same principles. Stock-based
awards also continue to be a part of the overall compensation for Technologies'
executive officers, and are intended to further incentivize, as well as reward,
the executive officers.
Base Salary
The Compensation Committee determined salaries for fiscal 2000 for all
executive officers at its meeting of December 10, 1999. In adjusting the base
salary of the executive officers, the Compensation Committee examined both
competitive and qualitative factors relating to corporate and individual
performance. In connection with its examination of competitive factors, the
Compensation 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
2000, the Compensation Committee relied primarily on the evaluation and
recommendations by Mr. Crocker of each officer's responsibilities for fiscal
2000 and performance during fiscal 1999.
Management Incentive Bonus Plan Adopted for Fiscal 2001
The Company's Board of Directors has adopted a Management Incentive Bonus
Plan (the "2001 MIB Plan") for fiscal 2001 covering employees of the Company and
its operating divisions (which include the Company's majority owned
subsidiaries). On the basis of goals relating to return on equity,
--------------------------
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 Securities
Exchange Act of 1934, as amended, whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
17.
<PAGE>
and subject to predetermined limits under the 2001 MIB Plan, the Company's
Compensation Committee, will in its discretion, determine a bonus fund for the
Company and each of its operating divisions each company following the end of
the Company's 2001 fiscal year. Based upon recommendations from the management
of the Company, the Compensation Committee may, in its discretion, approve
awards to employees of the Company and each of its operating divisions, subject
to final approval of the Company's Board of Directors.
Incentive awards totaling $1,753,000 were made with respect to the
Company's fiscal 2000 year. Of that amount, $745,000 was awarded to the Named
Executive Officers.
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.
Long Term Incentives
The Company uses the 1997 Equity Incentive Plan to further align the
interests of stockholders and management by creating common incentives based on
the possession by management of a substantial economic interest in the long-term
appreciation of the Company's stock. In determining the number of restricted
stock awards or stock options to be granted to an executive officer, the
Committee takes 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 for the Company, the competitiveness of the
officer's overall compensation package and the performance of the officer. Based
on a review of this mix of factors for fiscal 2000, the Committee granted
incentive stock options to executive officers of the Company including; Mr.
Crocker (10,000 shares), Dr. Madni (14,590 shares), Mr. Brasuell (5,000 shares),
Mr. LaBoskey (2,500 shares) and Dr. Wan (4,000 shares).
Section 162(m) of the Internal Revenue Code (the "Code") limits the
Company to a deduction for federal 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."
Richard M. Brooks C. Joseph Giroir, Jr.
George S. Brown (Chairman)
18.
<PAGE>
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS (DECEMBER 6, 2000)2
The Audit Committee of the Board of Directors of BEI Technologies, Inc.
is composed of three independent directors appointed by the Board of Directors
(each of which is independent under applicable NASD rules) and operates under a
written charter adopted by the Board of Directors in fiscal 2000, and as amended
in fiscal 2001 (see Exhibit A to this Proxy Statement). The members of the Audit
Committee are Mr. Brooks (Chairman of the Committee), Dr. William Howard and C.
Joseph Giroir, Jr. The Audit Committee recommends to the Board of Directors,
subject to stockholder ratification, the selection of the Corporation's
independent accountants.
Management is responsible for the Company's internal accounting and
financial controls, the financial reporting process, the internal audit function
and compliance with the Company's legal and ethics programs. The Company's
independent accountants are responsible for performing an independent audit of
the Company's consolidated financial statements in accordance with generally
accepted auditing standards and for issuance of a report thereon. The Audit
Committee's responsibility is to monitor and oversee these processes and report
its findings to the full Board.
In this context, the Audit Committee has met and held discussions
separately, and jointly with each of management, the Company's internal auditors
and the independent accountants. Management represented to the Audit Committee
that the Company's consolidated financial statements were prepared in accordance
with generally accepted accounting principles, and the Audit Committee has
reviewed and discussed the consolidated financial statements with management and
the independent accountants. The Audit Committee discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
In connection with new standards for independence of the Company's
external auditors promulgated by the Securities and Exchange Commission, during
the Company's 2001 fiscal year the Audit Committee will undertake to consider in
advance of the provision of any non-audit services by the Company's independent
accountants whether the provision of such services is compatible with
maintaining the independence of the Company's external auditors.
The Company's independent accountants also provided to the Audit
Committee the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the Audit
Committee discussed with the independent accountants that firm's independence.
Based on the Audit Committee's discussion with management and the
independent accountants and the Audit Committee's review of the representation
of management and the report of the independent accountants to the Audit
Committee recommended that the Board of Directors include the audited
consolidated financial statements in the Company's Annual Report on Form 10-K
for the year ended September 30, 2000 filed with the Securities and Exchange
Commission.
Richard Brooks (Chairman) Dr. William Howard
C. Joseph Giroir, Jr.
----------------------
2 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 Securities
Exchange Act of 1934, as amended, whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
19.
<PAGE>
Performance Measurement Comparison(1)
The following graph shows the value as of the Company's most recent
fiscal year end of an investment of $100 in cash on October 8, 1997, the first
day of regular way trading on Nasdaq of (i) the Company's Common Stock, (ii) the
Nasdaq Stock Market Index (U.S. Companies) and (iii) the Dow Jones Advanced
Industrial Equipment Index. All values assume reinvestment of the full amount of
all dividends paid by the Company since October 8, 1997 through the Company's
2000 fiscal year end and are calculated as of the last trading day of the
applicable calendar quarter(2):
Comparison of 12 Quarter Cumulative Total Return on Investment
BEI Technologies, Inc.
Proxy Performance Graph
For the Fiscal Year ended 9/30/00
<TABLE>
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
<CAPTION>
BEI TECHNOLOGIES INC
Cumulative Total Return
-----------------------------------------------------------------------------------------
10/8/97 12/97 3/98 6/98 9/98 12/98 3/99
<S> <C> <C> <C> <C> <C> <C> <C>
BEI TECHNOLOGIES, INC. 100.00 93.49 128.95 146.30 56.98 71.94 82.63
NASDAQ STOCK MARKET (U.S.) 100.00 90.43 105.83 108.74 98.12 127.50 142.99
DOW JONES ADVANCED INDUSTRIAL EQUIPMENT 100.00 82.64 90.55 81.25 65.98 81.75 84.44
Cumulative Total Return
--------------------------------------------------------------------------
6/99 9/99 12/99 3/00 6/00 9/00
BEI TECHNOLOGIES, INC. 77.02 93.55 117.84 136.82 197.97 323.34
NASDAQ STOCK MARKET (U.S.) 156.42 160.30 236.91 265.90 231.18 212.78
DOW JONES ADVANCED INDUSTRIAL EQUIPMENT 104.11 99.54 139.93 170.64 188.77 176.66
<FN>
* $100 invested on 10/28/97 in stock or index - including reinvestment of
dividends. Fiscal year ending September 30, 2000.
--------------------------
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 Securities
Exchange Act of 1934, as amended, whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
2 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 Securities
Exchange Act of 1934, as amended, whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
</FN>
</TABLE>
20.
<PAGE>
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.
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 __, 2001
A copy of the Company's Annual Report to the Securities and Exchange Commission
on Form 10-K for the fiscal year ended September 30, 2000 is available without
charge upon written request to: Investor Relations, BEI Technologies, Inc., One
Post Street, Suite 2500, San Francisco, CA 94104.
21.
<PAGE>
EXHIBIT A
CHARTER OF THE AUDIT COMMITTEE
22.
<PAGE>
Exhibit A
BEI Technologies, Inc.
Audit Committee Charter
Organization: The Audit Committee shall be appointed by the Board of Directors.
Each of the members of the Audit Committee shall be free of relationships with
management or the Company that in the opinion of the Board of Directors and the
requirements of the National Association of Security Dealers (NASD) would
interfere with the exercise of their independent judgement. All members of the
Audit Committee should possess credentials indicative of financial literacy, and
at least one member shall have accounting or related financial management
expertise. In addition to the duties and responsibilities of the Audit Committee
as set forth in the Company's by-laws, the operation of the Audit Committee
shall be governed by this charter. The committee shall review and reassess the
charter at least annually and obtain the approval of the board of directors.
Statement of Policy: The Audit Committee shall advise the Board of Directors as
to the Company's consolidated financial statements and the financial reporting
process, the systems of internal accounting and financial controls, the internal
audit function, the annual independent audit of the Company's financial
statements, and the legal compliance and ethics programs as established by
management and the board. In so doing, it is the responsibility of the Committee
to maintain free and open communication between the Committee, independent
accountants, the internal auditors and management of the Company. In discharging
its oversight role, the Committee is empowered to investigate any matter brought
to its attention and shall have full access to all books, records, facilities,
and personnel of the Company and the power to retain outside counsel or other
experts for this purpose.
Responsibilities and Processes: Management is responsible for preparing the
Company's financial statements, and the independent accountants are responsible
for auditing those financial statements. The primary responsibility of the Audit
Committee is to oversee the Company's financial reporting and independent audit
processes on behalf of the board and report its conclusions to the board. The
policies and procedures of the Audit Committee should remain flexible, in order
to best react to changing conditions and circumstances. The Committee should
take the appropriate actions to set the overall corporate "tone" for quality
financial reporting, sound business risk practices, and ethical behavior.
The following shall be the principal recurring processes of the Audit Committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate.
o The Audit Committee is authorized to communicate to management and the
independent accountants that the independent accountants are ultimately
accountable to the Board and the Audit Committee, as representatives of
the Company's shareholders. The Committee shall have the authority and
responsibility to evaluate and, where appropriate, to recommend
replacement of the independent accountants. The Committee shall discuss
with the independent accountants their independence from management and
the Company, their performance of the audit, and the matters included in
the written disclosures required by the Independence Standards Board.
Annually, the committee shall review and recommend to the Board of
Directors, subject to shareholder's approval, the selection of a firm to
be the Company's independent accountants.
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o The Audit Committee shall discuss with the internal auditors and the
independent accountants the overall scope and plans for their respective
audits including the adequacy of staffing and compensation. Also, the
Committee shall review with management, the internal auditors and the
independent accountants the adequacy and effectiveness of the accounting
and financial controls, including the Company's system to monitor and
manage business risks and rewards, and legal and ethical compliance
programs. Further, the Committee shall meet separately with the internal
auditors and independent accountants, with and without management
present, to discuss the results of their examinations. Management shall
also be afforded the opportunity to meet separately with the Committee
without internal auditors or independent accountants present.
o The Audit Committee shall review the reports or recommendations from
both the independent accountants and the internal auditors regarding the
system of internal controls, the company's code of conduct, and ethics
programs.
o The Audit Committee shall review the interim financial statements with
management and the independent accountants prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the Committee shall
discuss the results of the quarterly review and any other matters
required to be communicated to the committee by the independent
accountants under generally accepted auditing standards. The chair of
the Audit Committee may represent the entire Committee for the purposes
of this review, and report to the Committee at their next meeting.
o The Audit Committee shall review with management and the independent
accountants the financial statements and related opinions to be included
in the Company's Annual Report on Form 10-K (or the annual report to
shareholders if distributed prior to the filing of Form 10-K), including
their judgement about the quality and acceptability of relevant
accounting principles, the reasonableness of significant management
judgements, and the clarity of the disclosures in the financial
statements. They shall also review with management and the independent
accountants significant risks and exposures reflected in the report.
Also, the Committee shall discuss the results of the annual audit and
any other matters required to be communicated to the Committee by the
independent accountants under generally accepted auditing standards.
o The Audit Committee shall review and report to the Board of Directors
the cost of audit and non-audit services performed by the Company's
independent accountants during each fiscal year for the Company.
o The Audit Committee shall undertake to consider in advance of the
provision of any non-audit services to the Company by the Company's
independent accountants whether the provision of such services is
compatible with maintaining the independence of the Company's external
auditors.
