<PAGE>
================================================================================
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 Section 240.14a-11(c) or Section 240.14a-12
WYLE ELECTRONICS
- --------------------------------------------------------------------------------
(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 transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction 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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Notes:
<PAGE>
[LOGO of WYLE]
15370 BARRANCA PARKWAY
P.O. BOX 19675
IRVINE, CALIFORNIA 92623-9675
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1997
---------------
The Annual Meeting of Shareholders of Wyle Electronics (the "Company") will
be held on Tuesday,May 13, 1997, at 10:30 a.m., local time, at the Company's
offices, located at 15370 Barranca Parkway, Irvine, California 92623-9675.
Please refer to the map on the outside back cover of the accompanying Proxy
Statement for directions to the Annual Meeting location.
The Annual Meeting will consider the following business, which is described
in the accompanying Proxy Statement:
1. To elect two directors to the Board of Directors for a term of two
years. The nominees for election to the Board of Directors are named in
the attached Proxy Statement.
2. To approve the Wyle Electronics 1996 Eligible Directors' Stock Option
Plan.
3. To approve amendments to the Company's 1992 Stock Incentive Plan and its
1978 and 1988 Stock Option Plans.
4. To ratify the selection of Arthur Andersen LLP as independent public
accountants to audit the financial statements of the Company for the
year ending December 31, 1997.
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 17, 1997, as
the record date for determining those shareholders who will be entitled to
notice of and to vote at the Annual Meeting or at any adjournment thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. YOUR VOTE IS IMPORTANT. PLEASE EXECUTE THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE
ANNUAL MEETING. YOUR PROMPTNESS IN RETURNING THE PROXY WILL ASSIST IN THE
EXPEDITIOUS AND ORDERLY PROCESSING OF THE PROXIES. IF YOU RETURN YOUR PROXY,
YOU MAY NEVERTHELESS ATTEND THE ANNUAL MEETING AND VOTE YOUR SHARES IN PERSON
IF YOU WISH. YOU MAY ALSO REVOKE YOUR PROXY PRIOR TO THE ANNUAL MEETING BY
DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF THE COMPANY AT
15370 BARRANCA PARKWAY, P.O. BOX 19675, IRVINE, CALIFORNIA 92623-9675 OR BY
EXECUTING A SUBSEQUENT PROXY AND DELIVERING THE SUBSEQUENT PROXY TO THE
SECRETARY OF THE COMPANY AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ STEPHEN D. NATCHER
Stephen D. Natcher
Secretary
Irvine, California
March 28, 1997
<PAGE>
LOGO
15370 BARRANCA PARKWAY
P.O. BOX 19675
IRVINE, CALIFORNIA 92623-9675
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Wyle Electronics (the "Company") of proxies for use at
the Annual Meeting of Shareholders of the Company to be held on Tuesday, May
13, 1997, at 10:30 a.m., local time, at the Company's offices located at 15370
Barranca Parkway, Irvine, California 92623-9675 (the "Annual Meeting").
If the accompanying proxy is signed properly, dated and returned, the shares
represented thereby will be voted in accordance with the specifications
therein. Your proxy may be revoked at any time before its exercise by filing
with the Secretary of the Company, at 15370 Barranca Parkway, P.O. Box 19675,
Irvine, California 92623-9675, a written notice of revocation or an executed
proxy bearing a later date. The execution of the enclosed proxy will not
affect your right to vote in person should you find it convenient to attend
the Annual Meeting and desire to vote in person.
The expense of soliciting proxies will be borne by the Company. It is
contemplated that proxies of registered shareholders will be solicited
principally through the use of the mails, but directors, officers and regular
employees of the Company may solicit proxies personally or by other
appropriate means. The Company has engaged Corporate Investor Communications,
Inc. to deliver the Company's proxy materials to brokers, nominees,
fiduciaries and other custodians for distribution to their beneficial owners,
and to solicit proxies from brokers, nominees, fiduciaries and other
custodians. The cost of this service is approximately $5,500 plus out-of-
pocket expenses. Although there is no formal agreement to do so, the Company
will also reimburse banks, brokerage houses and other custodians, nominees and
fiduciaries for their reasonable expenses in forwarding proxy materials to
their principals.
This Proxy Statement and the accompanying proxy were first mailed to
shareholders on or about March 28, 1997.
VOTING SECURITIES
On March 17, 1997, the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting, 12,555,936 shares of
the Company's Common Stock were outstanding and entitled to vote.
Votes cast by proxy or in person at the Annual Meeting will be counted by an
appointed inspector of election. The inspector of election will treat shares
represented by proxies that reflect abstentions as shares that are present and
entitled to vote, for purposes of determining the presence of a quorum and for
<PAGE>
purposes of determining the outcome of any matter submitted to the
shareholders for a vote. Abstentions, however, do not constitute a vote "for"
or "against" any matter and thus will be disregarded in the calculation of a
plurality or of "votes cast."
The inspector of election will treat shares referred to as "broker non-
votes" (i.e., shares held by brokers or nominees as to which instructions have
not been received from the beneficial owners or persons entitled to vote or
that the broker or nominee does not have discretionary power to vote on a
particular matter) as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. However, for purposes of
determining the outcome of any matter as to which the broker has physically
indicated on the proxy that it does not have discretionary authority to vote,
those shares will be treated as not present and not entitled to vote with
respect to that matter even though those shares are considered entitled to
vote for quorum purposes and may be entitled to vote on other matters.
In the election of directors, shares present but not voting will be
disregarded (except for quorum purposes) and the candidates for election
receiving the highest number of affirmative votes of the shares entitled to be
voted for them up to the number of directors to be elected by those shares
will be elected and votes cast against a candidate or votes withheld will have
no legal effect. Any unmarked proxies, including those submitted by brokers or
nominees, will be voted as indicated in the accompanying proxy card.
Each shareholder of record is entitled to one vote for each share of Common
Stock held on all matters to come before the Annual Meeting.
2
<PAGE>
ELECTION OF DIRECTORS (PROPOSAL 1)
At the 1995 Annual Meeting of Shareholders, shareholders approved a proposal
to create a classified Board of Directors, pursuant to which three directors
were elected for a one-year term (Class I directors), three directors were
elected for a two-year term (Class II directors) and three directors were
elected for a three-year term (Class III directors), in each case until his or
her successor is duly elected and qualified. Thereafter, each class of
directors is subject to election every third year and will serve for a three-
year term for so long as the Board remains classified into three classes, or
would be subject to election every second year and would serve a two-year term
in the event the Board were classified into two classes as a result of a
decrease in the number of directors to less than nine. Edward Sanders, a
current director of the Company, who is not a nominee for election at the
Annual Meeting due to his retirement under the Board of Directors' retirement
policy, will continue as a director until immediately prior to the Annual
Meeting, at which time the bylaws will authorize a Board of eight directors
divided into two classes.
NOMINEES AS CLASS I DIRECTORS
Two persons have been nominated for election at the Annual Meeting to serve
as Class I directors for a two-year term. The nominees named are now serving as
directors and have been previously elected by the shareholders. Unless
otherwise specified on the proxy, each proxy will be voted FOR the Board's
nominees. If any nominee becomes unavailable for election for any reason which
is not now foreseen, the proxies may be voted for the election of some other
qualified person. The following table sets forth certain information with
respect to each Class I director nominee:
MICHAEL R. CORBOY, 66, is President and Chief Executive
Officer of Corboy Investment Company and has served in that
capacity since 1992. He served as Chairman of the Board and
Chief Executive Officer of Amtech Corporation from 1987 to
1992. He is Chairman of the Audit Committee and a member of
the Executive Compensation Committee. Mr. Corboy was first
elected a director in 1995 and is currently a Class II
director. He is also a director of Aquinas Funds; Family
Hospice, Inc.; NetSpeed, Inc.; and Zygo Corporation.
(PHOTO)
STANLEY A. WAINER, 70, has served as Chairman of the Executive
Committee since June 1991 and as a consultant to the Company
from August 1991 to July 1994. From 1988 to 1991, he was
Chairman of the Board and from 1985 to 1988 served as Chairman
of the Board and Chief Executive Officer. He is a member of
the Audit, Executive, and Nominating Committees. Mr. Wainer
was first elected a director in 1966 and is currently a Class
II director. He is also a director of Liberty Mutual Insurance
Company; Liberty Mutual Fire Insurance Company; and Liberty
Financial Companies, Inc.
(PHOTO)
3
<PAGE>
CONTINUING DIRECTORS
The three Class I directors and the three Class III directors were elected
at the 1996 and 1995 Annual Meetings of Shareholders, respectively. The three
directors identified as Class I directors below will continue to serve until
the 1999 Annual Meeting of Shareholders. The three directors identified as
Class III directors below will continue to serve until the 1998 Annual Meeting
of Shareholders. At their respective Annual Meetings of Shareholders, each
director class is eligible to be elected to serve a two-year term if the
number of directors remains less than nine.
Class I Directors
JACK S. KILBY, 73, has been an independent consultant in
electronic engineering for more than 18 years. From 1958 to
1970, Mr. Kilby was employed by Texas Instruments
Incorporated, where he invented the monolithic integrated
circuit, which, along with his other accomplishments, led to
his induction into the National Inventors Hall of Fame. He is
a member of the Audit Committee. Mr. Kilby was first elected a
director in 1988 and is a Class I director. He is also a
director of Benchmarq Microelectronics.
(PHOTO)
KIRK WEST, 59, is President of the California Chamber of
Commerce and has served in that capacity since 1986. Prior to
1986, he served as Secretary of Business, Transportation and
Housing of the State of California. He is Chairman of the
Nominating Committee and a member of the Executive
Compensation Committee. Mr. West was first elected a director
in 1995 and is a Class I director. He is also a director of
Blue Shield of California.
(PHOTO)
FRANK S. WYLE, 77, is Founder Chairman and has been a
consultant to the Company for more than five years. Formerly,
he served as Chairman of the Board. He is a member of the
Executive Committee. Mr. Wyle was first elected a director in
1953 and is a Class I director.
(PHOTO)
4
<PAGE>
Class III Directors
CHARLES M. CLOUGH, 68, is Chairman of the Board of the
Company. He retired as an employee from the Company effective
March 31, 1995, and continues to serve as Chairman of the
Board. Mr. Clough joined the Company in 1982 as Executive Vice
President of the Company and President of its Electronics
Marketing Group, became President and Chief Operating Officer
of the Company in 1985, was elected President and Chief
Executive Officer of the Company in June 1988, became
Chairman, President and Chief Executive Officer of the Company
in June 1991, was elected Chairman and Chief Executive Officer
in June 1992 and assumed his current position effective April
1, 1995. He is a member of the Executive and Nominating
(PHOTO) Committees. Mr. Clough was first elected a director in 1984
and is a Class III director.
THEODORE M. FREEDMAN, 66, served as a consultant to the
Company from his retirement in January 1992 until December
1995, and served for more than one year prior to his
retirement as Executive Vice President-Finance and Treasurer,
Chief Financial Officer of the Company. He is a member of the
Audit Committee. Mr. Freedman was first elected a director in
1982 and is a Class III director.
(PHOTO)
RALPH L. OZORKIEWICZ, 50, is President and Chief Executive
Officer. He joined the Company in March 1985, was named
Executive Vice President of the Electronics Marketing Group in
April 1985, was elected President of the Group and Vice
President of the Company in September 1985, became Executive
Vice President of the Company in June 1988, was elected
President in June 1992 and assumed his present position
effective March 31, 1995. He is a member of the Executive and
Nominating Committees. Mr. Ozorkiewicz was first elected a
director in 1992 and is a Class III director.
(PHOTO)
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has established an Executive Committee and three
functional standing committees with responsibilities in specific areas of
Board activity. The Board met seven times during the year ended December 31,
1996; all directors, including the nominees, attended at least 75% of the
combined meetings of the Board and their assigned Board committees.
Audit Committee
The Audit Committee is composed of five non-employee directors. Its purpose
is to review audit and financial reporting matters with representatives of the
Company's financial management and its independent certified public
accountants. The Committee also selects and recommends to the Board of
Directors the independent certified public accountants to audit the Company's
financial statements. The Audit Committee also reviews and monitors the
Company's financial reports and accounting practices to ensure that they are
within acceptable limits of sound practice. To assure complete independence,
the certified public accountants have full and free access to meet with the
Audit Committee, with or without
5
<PAGE>
management representatives present, to discuss the results of their
examinations, the adequacy of internal accounting controls and the quality of
financial management and reporting. The Audit Committee met twice during the
year ended December 31, 1996.
Executive Committee
The Executive Committee is composed of one employee director and three non-
employee directors. This committee has broad authority to carry out the
functions of the Board in the periods between meetings of the Board of
Directors. The Executive Committee did not meet during the year ended December
31, 1996.
Executive Compensation Committee
The Executive Compensation Committee is composed of three non-employee
directors. The Executive Compensation Committee recommends to the Board the
establishment and modification of executive compensation plans and programs.
It considers and recommends to the Board remuneration arrangements for senior
management earning more than $285,000 a year, as well as the compensation for
the executive officers of the Company. The Executive Compensation Committee
also grants awards and administers the various stock option and stock
incentive plans of the Company, and determines the compensation for non-
employee directors. The Executive Compensation Committee met seven times
during the year ended December 31, 1996.
Nominating Committee
The Nominating Committee is composed of one employee director and three non-
employee directors. Its purpose is to consider and recommend to the Board its
proposed slate of directors for submission to the shareholders at the
Company's Annual Meeting of Shareholders. The Nominating Committee will
consider shareholder nominations for the 1998 Annual Meeting of Shareholders,
which must be submitted in writing to the Company not earlier than February
13, 1998 and not later than March 14, 1998. The Nominating Committee met once
during the year ended December 31, 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE TWO NOMINEES LISTED ABOVE.
PROXIES RECEIVED WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY OTHERWISE IN THE
PROXY.
6
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information with respect to shares of
the Company's outstanding Common Stock which are held by: (i) each director
and executive officer of the Company; (ii) all directors and executive
officers of the Company as a group; and (iii) the only persons known to the
Company to be the beneficial owners of more than five percent of such Common
Stock:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OWNERSHIP(1) OF CLASS
---- ------------ --------
<S> <C> <C>
By Directors:
Charles M. Clough 22,855(2)(5) *
Michael R. Corboy 7,001(5) *
Theodore M. Freedman 7,431(5) *
Jack S. Kilby 12,334(5) *
Ralph L. Ozorkiewicz 64,412(3)(4) *
Stanley A. Wainer 2,334(5) *
Kirk West 6,001(5) *
Frank S. Wyle 192,991(5)(6) 1.5%
By Executive Officers:
Joseph A. Adamczyk 52,080(4) *
R. Van Ness Holland, Jr. 85,631(4) *
James N. Smith 22,478(4) *
By All Directors and Executive Offi-
cers as a Group (11 persons) 475,548(2)(3)(4)(5)(6)(8)(9) 4.0%
By Five Percent Holders:
The Prudential Insurance Company of
America 1,063,270(7) 8.5%
751 Broad Street, Newark, New Jer-
sey 07102-3777
Lazard Freres & Co. LLC 684,200(8) 5.4%
30 Rockefeller Plaza, New York,
N.Y. 10020
</TABLE>
- --------
* Represents holdings of less than one percent.
(1) Unless otherwise indicated, all shares are owned beneficially by the
specified individual with sole voting and investment power. Shareholdings
of directors and executive officers are shown as of March 17, 1997.
(2) Mr. Clough holds nonqualified stock options granted under a Company stock
incentive plan exercisable within 60 days to purchase an aggregate of
10,000 shares of the Company's Common Stock. These shares are shown as
beneficially owned and considered to be outstanding for calculating the
percentage of ownership for Mr. Clough and directors and executive
officers as a group.
(3) Mr. Ozorkiewicz is also an executive officer.
(4) Messrs. Ozorkiewicz, Adamczyk, Holland and Smith as executive officers
hold stock options granted under the Company's stock option and stock
incentive plans exercisable within 60 days of March 17, 1997 to purchase
an aggregate of 28,599; 43,002; 60,702; and 9,883 shares of the Company's
Common Stock, respectively. Such shares are shown as beneficially owned by
each person named above. These shares have also been considered to be
outstanding for purposes of calculating the percentage of ownership of
each such person and directors and executive officers as a group.
(5) Messrs. Clough, Corboy, Freedman, Kilby, Wainer, West and Wyle hold
nonqualified options under the 1993 Eligible Director's Stock Option Plans
exercisable within 60 days of March 17, 1997 to purchase respectively
1,667, 5,001, 3,333, 8,334, 2,334, 4,001 and 8,334 shares of the Company's
Common Stock. Such shares are shown as beneficially owned by each person
named above. These shares have also been considered to be outstanding for
purposes of calculating the percentage of ownership of each such person
and directors and executive officers as a group. Grants awarded under the
1996 Eligible Directors' Stock Option Plan, which are subject to
shareholder approval at the Annual Meeting are not included. Please see
"Approval of the 1996 Eligible Directors' Stock Option Plan" herein.
7
<PAGE>
(6) Mr. Frank S. Wyle owns 259 shares outright with sole voting and investment
power. As to 187,584 shares, Mr. Wyle is the grantor and trustee of the
Frank and Edith Wyle 1980 Revocable Trust which holds such shares. The
trust can be revoked at any time by Mr. Wyle. The amount shown also
includes 5,148 shares owned by his wife, Mrs. Edith R. Wyle.
(7) The Prudential Insurance Company of America, a mutual insurance company
organized under the laws of the State of New Jersey, an insurance company
as defined in Section 3(a)(19) of the Securities Exchange Act of 1934 (the
"Act") and an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940 ("Prudential"), filed a Schedule 13G under
the Act reporting beneficial ownership of these shares at December 31,
1996, with sole voting and dispositive power over 653,900 shares, shared
voting power covering 403,470 shares and shared dispositive power covering
409,370 shares. The total reported reflects the latest information
available to the Company as to share ownership on behalf of this
shareholder.
(8) Lazard Freres & Co. LLC, a New York limited liability company and an
investment adviser registered under Section 203 of the Investment Advisers
Act of 1940, filed a Schedule 13G under the Act reporting beneficial
ownership of these shares as of December 31, 1996, with sole power to vote
covering 569,200 shares and sole power to dispose covering 684,200 shares.
The total reported reflects the latest information available to the
Company as to share ownership on behalf of this shareholder.
(9) Certain officers of the Company are members of the committee which
administers the Company's pension plan (see below for a description of the
plan) and are trustees of a trust which owns for the benefit of the plan
participants 29,611 shares of the Company's Common Stock, and in such
capacity those officers share voting and investment power over such
shares. These shares have not been included in calculating the amount or
percentage of beneficial ownership of each individual director/executive
officer; however, these shares have been included in the amount and
percentage of beneficial ownership of all directors and executive officers
as a group.
DIRECTOR COMPENSATION
The Executive Compensation Committee is charged with the determination of
compensation for non-employee directors. In September 1996, the Executive
Compensation Committee, with the assistance of Towers Perrin, the Committee's
independent compensation consultant, recommended to the Board of Directors
amendments to non-employee director compensation elements, which were approved
unanimously by the Board of Directors effective October 1, 1996. The purposes
of the amendments, as described below, were to set director cash compensation
at existing levels set forth below, to phase out the Outside Directors
Retirement Plan and, consistent with other companies of similar size, to place
appropriate emphasis on performance-based compensation elements by the
adoption, subject to shareholder approval at the Annual Meeting, of the 1996
Eligible Directors Stock Option Plan covering a maximum of 250,000 shares of
the Company's Common Stock. Please see "Approval of the 1996 Eligible
Directors' Stock Option Plan" herein.
Each non-employee director of the Company receives compensation for services
as a director at an annual rate of $27,500. Each non-employee director is also
paid $1,000 for each committee of which he is a member, $2,500 for each
committee of which he is the chairman, and a per meeting fee of $750 for each
special board and committee meeting attended.
The Company provides a Deferred Compensation Plan for its non-employee
directors. The plan provides that the directors may elect, prior to December
31st of each year, to defer all or a part of their compensation for the
following year, which deferral will continue until the election is revoked.
The compensation deferred accrues interest at the Bank of America prime rate.
The compensation deferred and any accrued interest will be paid to each
participant in 120 equal monthly installments commencing on the 15th day of
the month following the month the person ceases to be a director, absent a
prior election to receive benefits in another manner. The plan also provides
for various payment terms to
8
<PAGE>
beneficiaries in the event of death. The Company has entered into agreements
to secure funding of these benefits under certain circumstances.
The Company provides an Outside Directors Retirement Plan for its retired
and non-employee directors who were serving as directors on October 1, 1996,
which includes all current non-employee directors. Participation is automatic,
and benefits become payable upon a director's serving at least five
consecutive years as a non-employee director. The plan provides for benefit
payments after a director's retirement in an amount representing 100% of the
then current annual director retainer for the number of years equal to the
director's service as an outside director, with a maximum benefit of ten
years. Payments are made only during a director's lifetime, with no survivor
benefits being paid after death. The plan provides for the acceleration of
benefits upon the occurrence of certain changes of control of the Company.
The Company with shareholder approval established the 1993 Eligible
Directors' Stock Option Plan covering 125,000 shares of the Company's Common
Stock, pursuant to which eligible non-employee directors received nonqualified
stock options covering a maximum of 10,000 shares of the Company's Common
Stock in 5,000 share increments effective October 1, 1993 and every October
1st thereafter at an exercise price equal to the fair market value on the date
of award. No further awards will be granted under the 1993 Plan if the 1996
Eligible Directors' Stock Option Plan is approved.
The Board of Directors has approved, subject to shareholder approval at the
Annual Meeting, the 1996 Eligible Directors' Stock Option Plan covering
250,000 shares of the Company's Common Stock, pursuant to which eligible non-
employee directors who were serving as such on October 1, 1996 will each
receive on October 1, 1996 and every April 1st thereafter nonqualified stock
options covering 4,000 shares of the Company's Common Stock at an exercise
price equal to the fair market value on the date of award. The Plan further
provides that eligible directors appointed or elected after October 1, 1996
(other than those directors serving as such on October 1, 1996) will each
receive a one-time grant, upon such appointment or election, of nonqualified
stock options covering 10,000 shares of the Company's Common Stock, and every
April 1st thereafter nonqualified stock options covering 6,000 shares of the
Company's Common Stock, all such options having an exercise price equal to the
fair market value on the date of award. Please see "Approval of the 1996
Eligible Directors' Stock Option Plan" herein.
On July 31, 1984, Mr. Frank S. Wyle retired from full-time employment with
the Company and currently serves under contract as a consultant to the
Company. For his consulting services, Mr. Wyle is entitled to compensation of
$250,000 for each twelve-month period, which amount is adjusted upward
annually for any increase in the consumer price index after December 31, 1980
(an adjusted base of $426,750 for the year ended December 31, 1996), less the
sum of any amounts received pursuant to social security and amounts received
under the Company's pension plan. During the year ended December 31, 1996, the
amount paid by the Company under this agreement was $308,162. The agreement
also provides that in the event of certain changes of control of the Company,
Mr. Wyle may be entitled to an acceleration of a portion of the payments due
under his contract. The agreement provides further, among other things, for
medical and life insurance coverages, disability benefits, office space for
his use and secretarial services. Please see also "Certain Transactions"
herein.
Effective January 1, 1995, Mr. Clough and the Company entered into an
agreement (the "Agreement") which superseded his prior employment agreement
dated February 1, 1989, as amended. Pursuant to the Agreement, Mr. Clough
served as Chairman of the Board and Chief Executive Officer until he retired
as an employee effective March 31, 1995, at which time he continued to serve
as Chairman of the Board and will serve as Chairman until the earlier of the
1998 Annual Meeting of Shareholders or June 30, 1998. He receives an annual
fee of $250,000 payable monthly inclusive of all director and committee fees.
The Agreement provides further, among other things, that in the event of
certain changes of control of the Company, Mr. Clough may be entitled to an
acceleration of a portion of the payments due under the Agreement. He is also
entitled to non-employee director benefits as may be in effect from time to
time, office space and secretarial services.
9
<PAGE>
EXECUTIVE OFFICERS' COMPENSATION AND OTHER INFORMATION
COMPENSATION AND RELATED MATTERS
The following table sets forth for the last three fiscal years ended December
31, 1996, a summary of all annual and long term compensation for the Chief
Executive Officer and the three executive officers (other than the Chief
Executive Officer) who were serving as executive officers at December 31, 1996.
SUMMARY COMPENSATION TABLE (A)
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
(A) (B) (C) (D) (F) (G) (I)
RESTRICTED
NAME AND STOCK OPTIONS/ ALL OTHER
PRINCIPAL FISCAL SALARY CASH BONUS(B) AWARDS SARS(D) COMPENSATION(E)
POSITION YEAR ($) ($) ($)(B)(C) (#) ($)
--------- -------- -------- ------------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Ralph L. Ozorkiewicz 12/31/96 $500,000 $ -0- $495,000 50,000 $ 51,177
President and 12/31/95 400,000 280,000 536,355 30,000 43,549
Chief Executive Officer 12/31/94 300,000 210,000 72,226 45,000 43,549
Joseph A. Adamczyk 12/31/96 325,000 224,730 74,910 30,000 26,628
Executive Vice 12/31/95 260,000 169,000 319,116 20,000 23,453
President and Chief 12/31/94 240,000 156,000 53,658 15,000 23,453
Operating Officer
R. Van Ness Holland, Jr. 12/31/96 265,000 -0- 209,880 10,000 16,576
Executive Vice 12/31/95 250,000 150,000 178,571 8,500 12,601
President-Finance and 12/31/94 230,000 149,500 69,164 10,000 139,961
Treasurer, Chief
Financial Officer
James N. Smith 12/31/96 265,000 10,000 217,040 22,000 21,473
Executive Vice 12/31/95 225,000 112,500 235,207 12,000 17,340
President 12/31/94 180,000 102,850 -0- 10,000 14,281
</TABLE>
- --------
(A) Columns (e) "Other Annual Compensation" and (h) "LTIP Payouts" are omitted
from the table as there was no such compensation awarded to, earned by, or
paid to any of the named executive officers in any fiscal year covered by
the table.
(B) The Company has an executive incentive compensation program for executive
officers, which in 1996 was based solely on the Company's financial
performance and in 1995 and 1994 was based on the Company's financial
performance as well as the personal performance of the individual. For
incentive awards earned in 1996, each executive officer was given the
option to defer all or a portion of his cash incentive award in shares of
restricted stock, vesting in equal annual installments over three years
from date of award. As an additional incentive, this award was matched by a
Company restricted stock award not included in the table equal to 25% of
the executive officers's deferred award which will be vested and earned
three years from the date of award. For Messrs. Ozorkiewicz, Adamczyk and
Holland in 1995 and 1994, and for Mr. Smith in 1995, actual incentive
amounts earned in excess of their respective total incentive targets were
paid in shares of restricted stock in lieu of cash. These shares vest in
equal annual installments over three years from date of award. Please see
footnote (C) for restricted stock award detail. Please also see "Report of
the Executive Compensation Committee" herein.
10
<PAGE>
(C) Dollar amounts shown equal the number of shares of restricted stock
multiplied by the stock price on the award date or at year-end as shown
below and do not take into account diminution of value attributable to
restrictions applicable to the shares. Awards for 1995 and 1994 represent
earned incentive compensation, including that for personal performance, in
excess of the individual's total incentive target and was paid in shares
of restricted stock in lieu of cash.
1996 RESTRICTED STOCK AWARDS
<TABLE>
<CAPTION>
CASH INCENTIVE AWARD COMPANY 25% MATCH
DEFERRED 1/31/97 1/31/97
---------------------- -----------------
NAME $ VALUE # SHARES $ VALUE # SHARES
---- ----------- ---------- -------- --------
<S> <C> <C> <C> <C>
R. L. Ozorkiewicz................ $ 495,000 12,531 $123,750 3,133
J. A. Adamczyk................... 74,910 1,896 18,728 474
R. V. Holland, Jr. .............. 209,880 5,313 52,470 1,328
J. N. Smith...................... 217,040 5,494 54,260 1,374
</TABLE>
1995 RESTRICTED STOCK AWARDS
<TABLE>
<CAPTION>
AWARDED ON
AWARDED ON 11/27/95 @
1/17/96 @ $28.75 $37.875
---------------- -----------------
NAME $ VALUE # SHARES $ VALUE # SHARES
---- ------- -------- -------- --------
<S> <C> <C> <C> <C>
R. L. Ozorkiewicz...................... $81,363 2,830 $454,992 12,013
J. A. Adamczyk......................... 49,105 1,708 270,011 7,129
R. V. Holland, Jr. .................... 43,585 1,516 134,986 3,564
J. N. Smith............................ 32,689 1,137 202,518 5,347
1994 RESTRICTED STOCK AWARDS
<CAPTION>
AWARDED ON
1/26/95
@ $22.00
----------------
NAME $ VALUE # SHARES
---- ------- --------
<S> <C> <C>
R. L. Ozorkiewicz...................... $72,226 3,283
J. A. Adamczyk......................... 53,658 2,439
R. V. Holland, Jr. .................... 69,164 2,337
J. N. Smith............................ -0- -0-
</TABLE>
The number and dollar value of shares of restricted stock held on December
31, 1996, based upon the closing price of the Common Stock of $39.50 at
year-end were: Mr. Ozorkiewicz--16,746 shares ($661,467); Mr. Adamczyk--
10,457 shares ($413,052); Mr. Holland--8,417 shares ($332,472); and Mr.
Smith--5,870 shares ($231,865). Year-end data exclude shares awarded on
January 31, 1997 at $39.50 per share, the closing price of the Common Stock
at year-end reflected in the 1996 Restricted Stock Awards table above.
Recipients of restricted stock awards are entitled to dividend and voting
rights.
(D) The amounts reflected in this column represent grants of stock options
only.
(E) The amounts shown in this column for 1996 include for Messrs. Ozorkiewicz,
Adamczyk, Holland and Smith Company paid split-dollar insurance premiums
of $43,249, $23,153, $12,301 and $17,040, respectively, and for 1995 and
1994 represent for Messrs. Ozorkiewicz and Adamczyk Company paid split-
dollar insurance premiums; represent for Mr. Holland in 1995 and for 1994
split-dollar insurance premiums of $12,301 and Company paid relocation
expenses of $127,360 (consisting of $69,630 in reimbursed expenses and
$57,730 in related income taxes payable); and represent for Mr. Smith in
1995 split-dollar insurance premiums and in 1994 Company paid relocation
expenses of $13,981 (consisting of $10,860 in reimbursed expenses and
$3,121 in related income taxes payable). See "Insurance Benefits" herein.
Amounts for 1996 also include Company matching
11
<PAGE>
contributions subject to a combined maximum of $0.50 per dollar of the
first 6% of pay contributed to the Company's 401(k) Plan and the Company's
executive deferred compensation plan: Mr. Ozorkiewicz ($7,928); Mr.
Adamczyk ($3,475); Mr. Holland ($4,275); and Mr. Smith ($4,433). Amounts
for 1995 and 1994 include 401(k) Company matching contributions of $300 for
each person named in the table. See "Pension Plan and Related Retirement
Benefits" herein.
STOCK OPTIONS
The following table reflects information as to stock options granted for
those named individuals above in the Summary Compensation Table, during the
year ended December 31, 1996, and other information relating thereto:
OPTION/SAR GRANTS TABLE
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
- ------------------------------------------------------------------- ----------
(A) (B) (C) (D) (E) (F)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE VALUE ($)
- -------------------- ------------ ------------ -------- ---------- ----------
(A),(B) (C) (D)
<S> <C> <C> <C> <C> <C>
Ralph L. Ozorkiewicz 50,000 29% $38.50 12/16/06 $764,500
Joseph A. Adamczyk 30,000 18% 38.50 12/16/06 458,700
R. Van Ness Holland,
Jr. 10,000 6% 38.50 12/16/06 152,900
James N. Smith 22,000 13% 38.50 12/16/06 336,380
</TABLE>
- --------
(A) Options were granted in the year ended December 31, 1996 under the
Company's 1995 Stock Incentive Plan (the "1995 Plan"), and become
exercisable in increments of 20% per year beginning one year after the
date of grant until fully vested on the fifth anniversary date. No stock
appreciation rights ("SARs") were granted.
(B) The options were granted for a term of 10 years, subject to earlier
termination in certain events related to termination of employment, in the
Committee's discretion, and acceleration upon the occurrence of certain
changes in control of the Company.
(C) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares or by offset of the underlying
shares, subject to certain conditions.
(D) The estimated grant date present value reflected in the above table is
determined using the modified Black-Scholes model. The material
assumptions and adjustments incorporated in the Black-Scholes model in
estimating the value of the options reflected in the above table include
the following: an exercise price on the option of $38.50, equal to the
fair market value of the underlying stock on the date of grant; an option
term of ten years; an interest rate of 6.30% that represents the interest
rate on a U.S. Treasury security with a maturity date corresponding to
that of the option term; volatility of 37.29% calculated using daily stock
prices for the one-year period prior to the grant date; dividends at the
rate of $0.32 per share representing the annualized dividends paid with
respect to a share of Common Stock at the date of grant; and a reduction
of approximately 11.38% to reflect the probability of forfeiture due to
termination prior to vesting and 15.90% to reflect the probability of a
shortened option term due to termination of employment prior to the option
expiration date. The Company does not advocate or agree necessarily that
the Black-Scholes model can determine properly the value of an option. The
ultimate values of the options will depend on the future market price of
the Company's Common Stock, which cannot be forecast with reasonable
accuracy. The actual value, if any, an optionee will realize upon exercise
of an option will depend on the excess of the market value of the
Company's Common Stock over the exercise price on the date the option is
exercised.
12
<PAGE>
The following table reflects stock option information for those individuals
named in the tables above relating to option exercises during the year ended
December 31, 1996, and number and value of exercisable options at year end:
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FY-END (A)
AT FY-END (#) ($)
--------------- --------------------
SHARES ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(A) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------- --------------- --------------------
<S> <C> <C> <C> <C>
Ralph L.
Ozorkiewicz 34,176 $853,728 22,599/120,999 $ 370,450/1,093,228
Joseph A.
Adamczyk 3,750 120,938 39,002/ 68,998 803,544/ 544,705
R. Van Ness Hol-
land, Jr. 4,000 129,500 56,702/ 36,798 1,399,286/ 444,527
James N. Smith 7,000 234,250 28,601/ 46,399 631,373/ 358,378
</TABLE>
- --------
(A) Calculated by subtracting actual option exercise price from market price
at exercise date or at year-end ($39.50 per share), as the case may be,
and multiplying the difference by number of shares in each category.
INSURANCE BENEFITS
The Company provides all executive officers with additional life insurance
benefits funded with "split dollar" insurance contracts pursuant to which the
covered persons contribute a portion of the premium. Each covered person
receives from the Company the amount necessary to fund his portion of the
premium. The policies are collaterally assigned to the Company as security for
the payments made by the Company. The Company will receive its total premium
contributions from the policy's cash value at the time of a participant's
retirement or from the proceeds payable in the event of death. Each
participant designates his own beneficiaries for the balance of the proceeds.
EMPLOYMENT AGREEMENTS
Messrs. Ozorkiewicz, Adamczyk, Holland and Smith have employment agreements
with the Company which expire on December 31, 1999, and provide that as of
January 1, 1995, their annual compensation will not be less than $550,000,
$335,000, $312,000 and $262,000, respectively (the "1995 Agreements"). In
March 1997, the Board of Directors approved a form of employment agreement to
replace the 1995 Agreements with three-year "evergreen" contracts providing
for minimum annual compensation consisting of base salary then in effect plus
50% of the officer's incentive target or actual incentive if less than 50% in
any year. All agreements provide that the executive will be considered in the
Company's annual compensation review and incentive compensation program. All
agreements provide for termination for cause or in case of death, illness or
extended periods during which the individual cannot perform his duties.
The agreements also provide that each officer may be entitled to
compensation if he is discharged without "Just Cause" or resigns for "Good
Reason" prior to or following a "Change in Control", as those terms are
defined in the agreements. A "Change in Control" in these agreements and
elsewhere is deemed to have occurred if any "person" (as such term is used in
Sections 13(d) and 14(d) of the '34 Act), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the '34 Act), directly or indirectly, of
securities of the Company representing 35% or more of the combined voting
power of the Company's then outstanding securities; or during any period of
two consecutive years, individuals who
13
<PAGE>
at the beginning of such period constitute the Board of Directors of the
Company cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election by the Company's shareholders, of
each new Board member was approved by a vote of at least three-fourths of the
Board members then still in office who were Board members at the beginning of
such period.
In the event of a discharge without "Just Cause" or a resignation for "Good
Reason", the executive officers are entitled to receive: (i) all compensation
benefits and bonuses due prior to the date of discharge or resignation; and
(ii) a lump sum payment equal to the present value of the compensation which
would be received by each through the term of the agreement had the
resignation or discharge not occurred. Payments which constitute "parachute
payments" as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code") shall be limited to one dollar less than the amount which
would cause payments to be subject to the excise tax imposed by Section 4999
of the Code.
PENSION PLAN AND RELATED RETIREMENT BENEFITS
The Company maintains currently a non-contributory defined benefit pension
plan in which each regular employee not covered by a collective bargaining
agreement participates, commencing on the first day of the month next
following the date of hire. Benefits are fully vested at the completion of
five years of service. The normal retirement age is 65 or five years of
service, whichever is later, and the annual retirement benefit is based upon
the participant's average of the 5 highest years of compensation over the last
10 years of employment with the Company. Remuneration used in the computation
of net annual retirement benefits for executive officers is substantially the
same as that reported in the salary and bonus columns in the "Summary
Compensation Table," except that the total amount of compensation which may be
taken into account in computing benefits earned after January 1, 1994 is
limited to $150,000. The plan also provides for early retirement and includes
an automatic 50% joint and survivor benefit for married employees at no cost
to them for the preretirement survivor protection.
The Company also has adopted a Supplemental Executive Retirement Plan
("SERP"). Those employees (or beneficiaries) specified by the Employee
Benefits Committee for inclusion in the SERP are provided with benefits equal
to the retirement benefit which would be provided under the Company's pension
plan if certain limitations imposed under the Code were not applicable.
Messrs. Ozorkiewicz, Adamczyk, Holland and Smith are participants. The SERP
provides for acceleration of benefits upon the occurrence of certain changes
of control of the Company. The Compay has also entered into agreements to
secure funding of these benefits under certain circumstances.
14
<PAGE>
The table below sets forth the estimated annual benefits payable upon normal
retirement, which include benefits payable from the defined benefit plan and
the supplementary executive retirement plan to persons in specified
remuneration and years-of-benefit service classifications. The accumulated
full years of service of Messrs. Ozorkiewicz, Adamczyk, Holland and Smith are
11, 17, 17 and 9 years, respectively. The benefits presented in the table
below are currently subject to a deduction equal to 40% of social security
benefits pro-rated for less than 30 years of service at retirement. Amounts
presented in the table are straight life annuity benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------
FIVE YEAR AVERAGE
REMUNERATION 10 15 20 25 30
- ----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000...................... $ 13,000 $ 20,000 $ 27,000 $ 33,000 $ 40,000
150,000...................... 20,000 30,000 40,000 50,000 60,000
200,000*..................... 27,000 40,000 53,000 67,000 80,000
250,000*..................... 33,000 50,000 67,000 83,000 100,000
300,000*..................... 40,000 60,000 80,000 100,000 120,000
350,000*..................... 47,000 70,000 93,000 117,000 140,000*
400,000*..................... 53,000 80,000 107,000 133,000* 160,000*
450,000*..................... 60,000 90,000 120,000 150,000* 180,000*
500,000*..................... 67,000 100,000 133,000* 167,000* 200,000*
550,000*..................... 73,000 110,000 147,000* 183,000* 220,000*
600,000*..................... 80,000 120,000 160,000* 200,000* 240,000*
650,000*..................... 87,000 130,000* 173,000* 217,000* 260,000*
700,000*..................... 93,000 140,000* 187,000* 233,000* 280,000*
750,000*..................... 100,000 150,000* 200,000* 250,000* 300,000*
800,000*..................... 107,000 160,000* 213,000* 267,000* 320,000*
850,000*..................... 113,000 170,000* 227,000* 283,000* 340,000*
900,000*..................... 120,000 180,000* 240,000* 300,000* 360,000*
</TABLE>
- --------
* Defined benefit plan portion subject to maximums under the Code.
The Company has entered into Supplemental Executive Retirement Agreements,
as amended, for the benefit of Messrs. Clough and Freedman. Mr. Clough is a
participant in two separate agreements, each of which provides for payments of
$50,000 a year for 15 years to him (or his beneficiaries), which payments
commenced December 1994. The agreement with Mr. Freedman provides for payments
of $50,000 a year for 15 years to him (or his beneficiaries), which payments
commenced January 1996. These agreements provide for acceleration of benefits
upon the occurrence of certain changes of control of the Company. The Company
has also entered into agreements to secure funding of these benefits under
certain circumstances.
The Company maintains currently a defined contribution plan (the "Wyle
401(k) Plan") for the benefit of all regular employees who either were
employed by the Company on July 1, 1985, or have completed three months of
service with the Company. The Wyle 401(k) Plan is designed as a tax-qualified
retirement plan under Section 401(k) of the Code. Participants, at their
discretion, may contribute 1% to 15% of their pay, subject to certain
limitations, which contributions are invested in one or more of seven funds as
directed by the participants. The Company provides a matching contribution of
$0.50 per dollar of the first 6% of pay contributed to the Plan, subject to
certain Code limitations.
The Company established effective July 1996 a nonqualified deferred
compensation plan, pursuant to which executive officers and other highly
compensated employees may at their discretion contribute on a pre-tax basis 1%
to 25% of base salary, which contributions are invested in one or more of six
funds as directed by participants. The Company provides a matching
contribution of $0.50 per dollar of the first 6% of pay contributed combined
with contributions to the Wyle 401(k) Plan.
15
<PAGE>
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The following report is designed to assist shareholders in understanding the
Executive Compensation Committee philosophy on executive compensation and how
this philosophy was applied to the compensation for the year ended December
31, 1996, of Mr. Ozorkiewicz, President and Chief Executive Officer, and the
executive officers of the Company, Messrs. Adamczyk, Holland and Smith.
The charter of the Executive Compensation Committee (the "Committee") is to
determine base salary levels, establish and administer the Company's various
incentive plans, including the stock incentive and option plans and approve
other fringe benefits. In this connection, the Committee reviews annually
compensation levels and evaluates the performance of executive officers and
certain members of senior management. The Committee reviews with, and makes
detailed recommendations to, the Board of Directors concerning all aspects of
executive officer compensation, other than stock-based incentives which are
within the sole purview of the Committee.
The Committee has retained as its independent compensation consultant the
nationally recognized actuarial and compensation consulting firm of Towers
Perrin. During the year ended December 31, 1996, Towers Perrin met with the
Committee to review the Company's compensation philosophy, plans and
structure, as well as Towers Perrin compensation surveys based on national and
competitor data.
COMPENSATION PHILOSOPHY
The Company's overall compensation philosophy, which is endorsed by the
Committee, is to provide compensation that will attract and retain superior
executives to maximize shareholder value. Competitive base salaries are one
component consistent with the philosophy. The Committee also believes that a
substantial portion of total annual executive officer compensation should be
"at risk" through short-term incentives relating to measured financial
performance. The Committee believes that disclosure of specific performance
targets or criteria would place the Company at a competitive disadvantage and
may be misleading to shareholders. In addition, the Committee believes that,
by utilizing the vehicle of stock ownership through the Company's various
stock incentive and option plans, alignment of the interests of management
with those of its shareholders will occur.
COMPENSATION PROGRAM ELEMENTS
The Company's executive compensation program consists of three elements:
. Base salary
. Short-term incentive compensation
. Long-term incentive compensation
Base Salary
Each executive officer's base salary is reviewed annually. Salary increases
are determined by a number of factors including promotion, performance,
inflation, internal equity and increases in levels of responsibility. All
salaries are based on sustained individual performance toward the Company's
goals and objectives.
Short-Term Incentive Compensation
The Company's short-term incentive compensation program for the year ended
December 31, 1996 provided annual executive officer compensation opportunities
based on the Company's actual return on net assets ("RONA") and earnings
growth performance measured against RONA and earnings growth targets
established prior to the beginning of the fiscal year by the Committee and
approved by the Board
16
<PAGE>
of Directors. For incentive awards earned in 1996, each executive officer was
given the option to defer all or a portion of his cash incentive award in
shares of restricted stock, vesting in equal annual installments over three
years from date of award. As an additional incentive, this award was matched
by a Company restricted stock award equal to 25% of the executive officer's
deferred award vesting three years from the date of award. Please see "Long-
Term Incentive Compensation" below for a description of the Committee's policy
on restricted stock.
Long-Term Incentive Compensation
The Committee believes that awards of stock options promote the interest of
the Company by providing performance incentives to executive officers and key
employees who are responsible for the management, growth and financial success
of the Company. Options are priced at 100% of the market value on the date of
grant. Since stock options have no economic value to recipients until the
price of the Company's stock exceeds the grant price, and since the option
grants require that the executive serve for a period of time before all or a
portion of the option may be exercised, the Committee believes that executives
are motivated to manage their businesses in ways that over the long term will
benefit shareholders through an increased stock price.
As a general rule, the Committee considers the level of the optionee's job
responsibility and his or her potential impact on the Company's performance in
arriving at the number of shares to be granted under the stock option plans,
as well as the frequency and amount of prior option grants. Neither the
Company nor the Committee has established a target ownership level for equity
holding in the Company by executive officers and key employees.
Since adoption of the 1992 Stock Incentive Plan, the Committee has utilized
restricted stock principally to reward selectively key employees, other than
executive officers and senior management, for exceptional achievement and to
serve as a retention device. For the two years ended December 31, 1995, the
Committee determined that short-term incentive compensation for executive
officers, which exceeded predetermined target levels, would be paid in shares
of restricted stock vesting over a three-year period as replacement for cash
compensation. For incentive awards earned in 1996, each executive officer was
given the option to defer all or a portion of his cash incentive award in
shares of restricted stock, vesting in equal annual installments over three
years from date of award. As an additional incentive, this award was matched
by a Company restricted stock award equal to 25% of the executive officer's
deferred award vesting three years from the date of award. The Committee
believes that the restricted stock awards also promote the interest of the
Company by providing performance incentives and motivating award recipients to
manage their business to benefit shareholders over the long term through an
increased stock price. These awards also serve as a retention device.
FISCAL 1996 CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Ozorkiewicz' base salary of $500,000 in effect for 1996 was 25% greater
than 1995, reflecting an increase recommended by Towers Perrin based upon its
survey data.
Mr. Ozorkiewicz' incentive compensation for 1996 totalled $495,000, based
solely upon actual company financial performance against pre-established
targets and was paid in shares of restricted stock in lieu of cash in
accordance with the Company's executive officer incentive compensation
program. Mr. Ozorkiewicz' total incentive compensation for 1996 represents a
57% decline over the amount paid in fiscal 1995 and 99% of his base salary in
effect for 1996. Financial performance generated an above target incentive for
Mr. Ozorkiewicz based upon exceeding by a significant margin the financial
goals set prior to the beginning of the year. Mr. Ozorkiewicz was granted a
stock option covering 50,000 shares of Common Stock in 1996 in recognition of
Mr. Ozorkiewicz' effective leadership of the Company and for his role in
achieving record earnings, conceiving and implementing a strategy to increase
significantly the Company's value-added services business segment and
continuing to execute the successful national and international expansion
strategies.
17
<PAGE>
RECENT INTERNAL REVENUE CODE AMENDMENTS
The Committee has considered the anticipated tax treatment to the Company
regarding the compensation and benefits paid to the Chief Executive Officer
and the three other most highly compensated executive officers of the Company
in light of the enactment of Section 162(m) of the Internal Revenue Code of
1986, as amended ("Section 162(m)"). Given that the proposed Treasury
Regulations interpreting Section 162(m) have been adopted in final form, the
Company at this time will adopt appropriate changes to the Company's
compensation structure or compensation or existing stock incentive option and
plans, including the 1992 Stock Incentive Plan and the 1978 and 1988 Stock
Option Plans, to meet the Section 162(m) requirements to generally preserve
the deductibility of all compensation paid by the Company which is subject to
Section 162(m). Please see "APPROVAL OF PROPOSED AMENDMENTS TO THE 1992 STOCK
INCENTIVE PLAN AND THE 1978 AND 1988 STOCK OPTION PLANS."
Respectfully submitted,
Executive Compensation Committee of
the Board of Directors
Edward Sanders, Chairman
Michael R. Corboy
Kirk West
18
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF 59-MONTH CUMULATIVE TOTAL RETURN*
AMONG WYLE ELECTRONICS, THE S&P 500 INDEX
AND THE S&P HIGH TECH COMPOSITE INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period WYLE S&P S&P HIGH
(Fiscal Year Covered) ELECTRONICS 500 INDEX TECH COMPOSITE
- ------------------- ---------- --------- -------------
<S> <C> <C> <C>
Measurement Pt- / /
FYE 1/92 $100 $100 $100
FYE 1/93 $137 $111 $105
FYE 12/93 $142 $121 $123
FYE 12/94 $145 $122 $143
FYE 1/95 $264 $168 $206
FYE 12/96 $299 $207 $292
</TABLE>
IT SHOULD BE NOTED THAT THIS GRAPH REPRESENTS HISTORICAL STOCK PRICE
PERFORMANCE AND IS NOT NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE
PERFORMANCE.
THE FOREGOING REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS REGARDING COMPENSATION AND THE PERFORMANCE GRAPH THAT APPEARS
IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE SOLICITING MATERIAL OR
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY
REFERENCE IN ANY DOCUMENTS SO FILED.
19
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During the year ended December 31, 1996, Messrs. Sanders, Corboy, Wainer and
Wyle served as members of the Executive Compensation Committee from January
1st to May 14th and Messrs. Sanders, Corboy and West served as members from
May 14th to December 31, 1996. Messrs. Wainer and Wyle were formerly officers
of the Company. Mr. Wyle serves currently as a consultant to the Company.
CERTAIN TRANSACTIONS
On December 23, 1994, the Company completed the sale of its Scientific
Services & Systems ("SS&S") business to WESS Investment Corp., a buy-out group
led by William E. Simon & Sons and certain members of the SS&S management
("WESS"). In 1995, WESS changed its name to Wyle Laboratories, Inc. The
Company has been advised that Frank S. Wyle, a director of the Company, serves
also as a director of Wyle Laboratories, Inc.
Wyle Laboratories, Inc. acquired certain assets and liabilities of SS&S,
including receivables, inventory, property, plant and equipment, accounts
payable and accrued expenses for a negotiated purchase price of $30 million in
cash, subject to adjustment, plus additional amounts that may be paid to the
Company under an earnout provision. The Company is performing certain
administrative services for Wyle Laboratories, Inc. pursuant to an
administrative services agreement effective for a five-year period.
APPROVAL OF THE 1996 ELIGIBLE DIRECTORS' STOCK OPTION PLAN
(PROPOSAL 2)
PROPOSED ACTION REGARDING 1996 ELIGIBLE DIRECTORS' STOCK OPTION PLAN
In September 1996, the Executive Compensation Committee with the assistance
of Towers Perrin, the Committee's independent compensation consultant,
recommended to the Board of Directors amendments to non-employee director
compensation elements, which were approved by the Board of Directors effective
October 1, 1996. The purposes of the amendments were to set director cash
compensation at existing levels, to phase out the Outside Directors Retirement
Plan, and consistent with other companies of similar size, to place
appropriate emphasis on performance-based compensation elements by the
adoption, subject to shareholder approval at the Annual Meeting, of the 1996
Eligible Directors Stock Option Plan covering a maximum of 250,000 shares of
the Company's Common Stock.
The Board of Directors believes that the 1993 Eligible Directors' Stock
Option Plan (the "1993 Plan") has been worthwhile in attracting, motivating
and retaining experienced and knowledgeable members of the Board of Directors
who are not officers or employees of the Company or any of its subsidiaries
("Non-Employee Directors"). Accordingly, the Board of Directors has
unanimously adopted the Company's 1996 Eligible Directors' Stock Option Plan
(the "Plan"). At the Annual Meeting, shareholders will be asked to approve the
Plan. No further option grants will be awarded under the 1993 Plan if the Plan
is approved.
The Plan provides for the automatic grant of nonqualified stock options to
Non-Employee Directors. The Plan covers a maximum of 250,000 shares of the
Company's Common Stock, subject to adjustment. The following discussion
summarizes the material features of the Plan; however, it is qualified in its
entirety by reference to the text of the Plan, which is attached to the Proxy
Statement as Annex A. Capitalized terms not otherwise defined herein shall
have the meanings set forth in the Plan.
SUMMARY DESCRIPTION OF 1996 ELIGIBLE DIRECTORS' STOCK OPTION PLAN
Eligibility and Administration. The Plan provides for automatic grants to
Non-Employee Directors of nonqualified options to acquire shares of the
Company's Common Stock. Currently, there are 8 Non-
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Employee Directors on the Board who are eligible to participate in the Plan.
Future participation will be based on a person's status as a Non-Employee
Director.
The Plan is designed to be self-effectuating to the maximum extent possible.
Subject to the express provisions of the Plan, the Board of Directors has the
authority to construe and interpret the terms of the Plan and individual
option agreements.
Amount of Common Stock Subject to Options Under the Plan. A maximum of
250,000 shares of Common Stock may be issued in total under the Plan. The
number and type of shares of Common Stock which may be subject to options
under the Plan are subject to adjustment in the event of a stock dividend,
stock split, recapitalization, reclassification, merger, reorganization,
consolidation and other similar events affecting the Company. Except for the
formula award provisions of the Plan, there is no limit on the number of
shares of Common Stock or options that may be granted to an individual Non-
Employee Director during the term of the Plan.
Grants of Options. All Non-Employee Directors will receive annual
nondiscretionary grants of nonqualified options to purchase shares of the
Company's Common Stock over the term of the Plan. The grant date for such
options will be April 1 of each year, commencing in 1997. The specific number
of shares subject to the annual options granted to each Non-Employee Director
will vary depending on whether the Non-Employee Director was a member of the
Board of Directors as of October 1, 1996. Each Non-Employee Director in office
on October 1, 1996 will be granted an option on an annual basis to purchase
4,000 shares of the Company's Common Stock; provided, however, that the Non-
Employee Director is in office on the date of grant. Each Non-Employee
Director who takes office as such after October 1, 1996 will be granted an
option on an annual basis to purchase 6,000 shares of the Company's Common
Stock; provided, however, that the Non-Employee Director is in office on the
date of grant. The exercise price of options granted under the Plan will be
equal to the fair market value of the shares of Common Stock on the grant
date. The price of a share of the Company's Common Stock on the New York Stock
Exchange on March 17, 1997 was $33.625.
In addition to the automatic annual grants described above, the Plan
provides for a one-time initial grant to each Non-Employee Director. Each Non-
Employee Director who was in office on October 1, 1996 was granted, subject to
shareholder approval of the Plan, an option to purchase 4,000 shares of Common
Stock at an exercise price of $31.50 per share. Each Non-Employee Director who
first takes office after October 1, 1996 will receive a one time initial
option grant of 10,000 shares of Common Stock.
The number and value of the options granted on October 1, 1996, subject to
the assumptions noted, are shown below:
1996 ELIGIBLE DIRECTORS' STOCK OPTION PLAN
PLAN BENEFITS (OCTOBER 1996 GRANTS)
<TABLE>
<CAPTION>
DOLLAR NUMBER
VALUE OF
($)(1) SHARES
-------- ------
<S> <C> <C>
Non-Employee Director Group (8 persons)................... $414,080 32,000(2)
</TABLE>
- --------
(1) The estimated grant date present value reflected in the above table is
determined using the modified Black-Scholes model. The material
assumptions and adjustments incorporated in the Black-Scholes model in
estimating the value of the options reflected in the above table include
the following: an exercise price on the option of $31.50, equal to the
fair market value of the underlying stock on the date of grant; an option
term of ten years; an interest rate of 6.53% that represents the interest
rate on a U.S. Treasury security with a maturity date corresponding to
that of the option term; volatility of 37.81% calculated using daily stock
prices for the one-year period prior to the grant date;
21
<PAGE>
dividends at the rate of $0.32 per share representing the annualized
dividends paid with respect to a share of Common Stock at the date of grant;
and a reduction of approximately 7.79% to reflect the probability of
forfeiture due to termination prior to vesting and approximately 16.21% to
reflect the probability of a shortened option term due to termination of
service prior to the option expiration date. The Company does not advocate
or agree necessarily that the Black-Scholes model can determine properly the
value of an option. The ultimate values of the options will depend on the
future market price of the Company stock, which cannot be forecast with
reasonable accuracy. The actual value, if any, an optionee will realize upon
exercise of an option will depend on the excess of the market value of the
Company's Common Stock over the exercise price on the date the option is
exercised. The value of automatic grants in future years to Non-Employee
Directors is not determinable until the market value on the award date and
other variable at the time are known.
(2) Represents the annual amount to be awarded each year, assuming 8 eligible
persons, up to an aggregate amount of 250,000 shares to all Non-Employee
Directors, subject to anti-dilution adjustments.
Consideration Received for Options. Typically, the only consideration
received by the Company for the grant of an option under the Plan will be
service on the Board of Directors by the optionee.
Type and Term of Options. Only nonqualified stock options will be awarded
under the Plan. A nonqualified stock option is the right to purchase shares of
the Company's Common Stock at a future date at the exercise price on the date
the option is granted. Options granted under the Plan will expire ten years
after the date of grant, subject to earlier termination in the event an
optionee's service as a Non-Employee Director terminates. See "Termination of
Directorship."
Exercise of Options. Subject to early termination or acceleration provisions
(which are summarized below), options awarded under the Plan will generally
become fully exercisable as of the date which is six months after the grant
date.
The exercise price of any option grant under the Plan may be paid (i) in
cash or by check, (ii) in shares of the Company's Common Stock previously
owned by the optionee for at least six months prior to exercise, (iii) partly
in such shares and partly in cash, or (iv) by delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to deliver
to the Company the amount of the sale proceeds necessary to pay the exercise
price.
If any option granted under the Plan is not exercised prior to its
expiration or other termination, the underlying shares will thereafter be
available for further option grants under the Plan.
Non-Transferability. The Plan provides that all options are non-transferable
and will not become subject in any manner to sale, transfer, anticipation,
alienation, assignment, pledge, encumbrance or charge. The Plan provides
further that the Committee may permit options to be exercised by certain
persons or entities related to a participant for estate or tax planning
purposes. Subject to the above exceptions, only the participant may exercise
an award during the participant's lifetime.
Termination of Directorship. If a Non-Employee Director's services as a
member of the Board of Directors terminate by reason of (i) death, (ii)
disability, (iii) retirement (in accordance with the Company's mandatory
retirement policy for Non-Employee Directors) or (iv) resignation (or failure
to be renominated) because of a potential conflict of interest due to the Non-
Employee Director's position of outside employment, the Non-Employee
Director's options shall become fully exercisable and shall remain exercisable
for 36 months after the date of such termination or until the expiration of
their stated term, whichever occurs first. Any option which is not then
exercised shall terminate. If a Non-Employee Director's services terminate for
any other reason, the Non-Employee Director's options, to the extent they are
exercisable on such date, shall remain exercisable for 36 months after the
date of such termination or until the expiration of their stated term,
whichever occurs first, and shall then terminate.
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<PAGE>
Other Acceleration of Awards. Upon the occurrence of certain Events
described in Section 4.1k of the Plan (such as a dissolution, liquidation,
merger, asset sale or similar transaction affecting the Company which has been
approved by shareholders, or a "change in control" of the Company as defined
in such section), each option awarded under the Plan will become immediately
exercisable.
Termination of or Changes to the Plan. The Board of Directors may terminate
the Plan or may amend the Plan, but no amendment may be made without
shareholder approval if such approval is required by law. No amendment,
suspension or termination of the Plan may, without the written consent of the
optionee, affect in any manner materially adverse to the optionee any rights
or benefits of the optionee or obligations of the Company under any option
granted under the Plan prior to the effective date of such change. Unless
earlier terminated by the Board, the Plan will terminate on September 30,
2006.
Non-Exclusivity. The Plan does not limit the authority of the Board of
Directors to grant awards or authorize any other compensation under any other
plan or authority.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences of the Plan under current federal law,
which is subject to change, are summarized in the following discussion which
deals with the general tax principles applicable to the Plan. State and local
tax consequences are beyond the scope of this summary.
Nonqualified Stock Options. An optionee receiving a nonqualified stock
option under the Plan does not recognize taxable income on the date of grant
of the option, assuming (as is usually the case with plans of this type) that
the option does not have a readily ascertainable fair market value at the time
it is granted. However, the optionee must generally recognize ordinary income
at the time of exercise of the nonqualified stock option in the amount of the
difference between the option exercise price and the fair market value of the
Common Stock on the date of exercise. The amount of ordinary income recognized
by an optionee is deductible by the Company in the year that the income is
recognized. Upon subsequent disposition, any further gain or loss is taxable
either as a short-term or long-term capital gain or loss, depending on how
long the shares of Common Stock are held.
Accelerated Payments. If, as a result of certain changes in control in the
Company, a participant's options become immediately exercisable, the
additional economic value, if any, attributable to the acceleration may be
deemed a "parachute payment." The additional value will be deemed a parachute
payment if such value, when combined with the value of other payments which
are deemed to result from the change in control, equals or exceeds a threshold
amount equal to 300 percent of the participant's average annual taxable
compensation over the five calendar years preceding the year in which the
change in control occurs. In such case, the excess of the total parachute
payments over such participant's average annual taxable compensation will be
subject to a 20 percent non-deductible excise tax in addition to any income
tax payable. The Company will not be entitled to a deduction for that portion
of any parachute payment which is subject to the excise tax.
VOTE REQUIRED FOR APPROVAL OF THE PLAN
Approval of the Plan requires the affirmative vote of the holders of a
majority of the Common Stock present, or represented, and entitled to vote at
the Annual Meeting assuming the presence of a quorum. Each share of Common
Stock is entitled to one vote.
Shareholders should note that because Non-Employee Directors (subject to re-
election and shareholder approval) will receive stock options under this
proposal, all current Non-Employee Directors of the Company have a personal
interest in the proposal and its approval by shareholders. However, the
members of the Board of Directors believe that the Plan is in the best
interests of the Company and its shareholders.
23
<PAGE>
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
THE PLAN. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY OTHERWISE IN THE PROXY.
APPROVAL OF PROPOSED AMENDMENTS TO THE 1992 STOCK INCENTIVE PLAN AND THE 1978
AND 1988 STOCK OPTION PLANS
(PROPOSAL 3)
The Board of Directors believes that the various stock option and stock
incentive plans adopted by the Company have been worthwhile in attracting and
retaining desirable key employees and executives. At the Annual Meeting,
shareholders will be asked to approve the amendments described below to the
1992 Stock Incentive Plan, the 1978 Nonqualified Stock Option Plan (the "1978
Plan") and the 1988 Stock Option Plan (the "1988 Plan"), collectively adopted
by the Board of Directors on October 31, 1996. For information regarding
options and restricted stock awards granted to directors and executive
officers of the Company, see the material under the headings "Compensation of
Directors" and "Executive Compensation."
PROPOSED AMENDMENTS TO THE PLANS
The proposed amendments to the Plans which require shareholder approval may
be summarized as follows:
Individual Share Limit. Under Section 162(m) of the Internal Revenue Code of
1986, as amended, ("Code"), the Company may not deduct certain compensation of
over $1,000,000 in any year to the Chief Executive Officer or one of the four
other most highly compensated executive officers of the Company unless, among
other things, this compensation qualifies as "performance-based compensation"
under Code Section 162(m). For purposes of satisfying the performance-based
compensation exception under Code Section 162(m) with respect to options and
stock appreciation rights that are granted under the Plans, the Plans have
been amended, subject to shareholder approval, to provide that the maximum
number of shares which may be covered by options and stock appreciation rights
that are granted to an individual during any calendar year under the 1992
Plan, 1978 Plan or the 1988 Plan cannot exceed 75,000 shares, subject to
certain adjustments.
Transferability Restrictions. The Plans currently provide that awards are
generally nontransferable. The Plans have been amended, subject to shareholder
approval, to clarify the existing transfer restrictions and provide for
limited exceptions. The amended provisions are more fully described under
"Summary Description of the Plans--Transferability," below.
Amendment Authority. The Plans have also been amended, subject to
shareholder approval, to provide that any amendment that would materially (i)
increase the benefits accruing to participants, (ii) increase the aggregate
number of shares of the Company's Common Stock that may be delivered under the
Plans, or (iii) modify eligibility requirements under the Plans, shall be
subject to shareholder approval only to the extent required by applicable law
or deemed necessary or advisable by the Board of Directors.
SUMMARY DESCRIPTION OF THE PLANS
Administration. The Plans are administered by either (i) the Board or (ii)
The Executive Compensation Committee of the Board (either the Board or the
Compensation Committee is referred to (herein as the "Committee") consisting
of two or more directors, each of whom in respect of any decision at a time
when the participant affected by the decision may be subject to Section 162(m)
of the Code and/or Section 16 of the Securities Exchange Act of 1934, will be
an "outside director" within the meaning of Code Section 162(m) and/or a "Non-
Employee Director" within the meaning of Rule 16b- 3(b)(3), as applicable.
24
<PAGE>
Eligibility. Under the Plans, awards may be granted to any officer or other
key employee of the Company or of any subsidiary. Directors who are not
regular employees of the Company are not eligible to participate in the Plans.
The 1992 Plan covers a maximum of 500,000 shares of the Company's Common
Stock, subject to adjustment under certain circumstances described more fully
in the 1992 Plan. As of March 17, 1997 there remains 1,900 shares of Common
Stock available to be granted under the 1992 Plan. The closing price of the
Company's Common Stock on the New York Stock Exchange on March 17, 1997 was
$33.625 per share. The Company estimates that all officers and key employees
of the Company will remain eligible to receive awards under the Plans, subject
to the discretion of the Committee to determine the particular individuals
who, from time to time, will be selected to receive awards.
Shares Available for Awards. The 1978 Plan covers a maximum of 625,000
shares of the Company's Common Stock, subject to adjustment under certain
circumstances described more fully in the 1978 Plan. As of March 17, 1997,
there remains 7,101 shares of Common Stock available to be granted under the
1978 Plan.
The 1988 Plan covers a maximum of 400,000 shares of the Company's Common
Stock, subject to adjustment under certain circumstances described more fully
in the 1988 Plan. As of March 17, 1997 there remains 1,969 shares of Common
Stock available to be granted under the 1988 Plan.
Vesting and Award Periods. Subject to early termination or acceleration
provisions (which are summarized below), an award is exercisable, in whole or
in part, from the date specified in the related award agreement until the
expiration date specified by the Committee; provided, however, all options
expire not later than ten years after the date of grant.
Types of Awards.
The 1992 Plan permits the grant of options (both incentive and
nonqualified), stock appreciation rights, restricted stock awards, performance
share awards and stock bonuses.
The 1978 Plan permits the grant of nonqualified stock options.
The 1988 Plan permits the grant of options (both incentive and nonqualified)
and stock appreciation rights.
Transferability. The Plans generally provide that all awards are non-
transferable and will not become subject in any manner to sale, transfer,
anticipation, alienation, assignment, pledge, encumbrance or charge. As
amended, the Plans provide that the Committee may permit awards to be
exercised by certain persons or entities related to a participant for estate
and/or tax planning purposes. Incentive stock options, and with respect to the
1992 Plan, restricted stock awards will be further subject to all applicable
transfer restrictions under the Code. Subject to the above exceptions, only
the participant may exercise an award during the participant's lifetime.
Purchase Price. The purchase price payable upon the exercise of an incentive
stock option must be at least equal to the fair market value of the Common
Stock on the date of grant. Nonqualified options may be granted at an exercise
price which is less than the fair market value of the Common Stock on the date
of grant. Nonqualified options have been granted under the Plans only at
exercise prices equal to fair market value on the date of grant. Payment for
the exercise may be made (i) in cash or equivalent; (ii) with shares of Common
Stock already owned by the option holder, with certain restrictions if the
shares were originally acquired upon exercise of a stock option; (iii) with
respect to the 1992 Plan and the 1988 Plan, if authorized by the Committee, or
if specified in the option agreement, by a promissory note; or (iv) by means
of a properly executed exercise notice together with irrevocable instructions
to a broker to promptly deliver loan or sale proceeds to the Company necessary
to pay the exercise price; or any combination thereof.
25
<PAGE>
Termination of Employment. Absent provisions to the contrary in the award
agreement or Committee action, no stock option or, with respect to the 1992
Plan and the 1988 Plan, stock appreciation right will be exercisable, and with
respect to the 1992 Plan, no restricted stock award will vest and no
performance share award will be paid after an employee's termination of
employment. Nevertheless, in the case of stock options and stock appreciation
rights, if such termination is due to the option holder's normal retirement,
the exercise period will be extended for three months after termination. In
addition, if such termination is due to death or permanent disability, the
exercise period will be extended for one year after such event. Under the 1992
plan, in the event of any termination of employment for any reason, the
Committee or the terms of the award agreement may extend the exercise period
up to any later date. In no case, however, will the exercise period extend
beyond the original expiration date of the award. Under the 1992 Plan, the
Committee or the terms of an award agreement may also provide for additional
vesting upon termination in the case of restricted and performance share
awards.
Acceleration of Awards. Upon the approval by the shareholders of a
dissolution or liquidation, certain agreements to merge or consolidate, sale
of substantially all of the Company's assets or certain other "changes in
control" as defined in the Plans, each option and, with respect to the 1992
Plan and the 1988 Plan, related stock appreciation right will become
immediately exercisable, and with respect to the 1992 Plan, each restricted
stock award shall immediately vest and each performance share award shall
immediately become payable provided that awards shall in no event be
accelerated to a date less than six months after the award date. Such
acceleration will automatically occur unless the Committee, prior to any such
event, determines otherwise.
Term and Termination of the Plans. The authority to grant new nonqualified
stock options under the 1978 is not subject to a definite term. Accordingly,
the authority to grant options under the 1978 Plan will continue until the
shares reserved for issuance under the 1978 Plan have been exhausted.
The authority to grant new awards under the 1992 Plan and the 1988 Plan will
terminate on March 26, 2002 and March 24, 1998, respectively. Such termination
typically will not affect rights of participants which accrued prior to such
termination.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences of the Plans under current federal law,
which is subject to change, are summarized in the following discussion which
deals with general tax principles applicable to the Plans. State and local tax
consequences are beyond the scope of this summary.
With respect to nonqualified stock options, the Company is generally
entitled to deduct an amount equal to the difference between the option
exercise price and the fair market value of the shares at the time of
exercise. With respect to incentive stock options, the Company is generally
not entitled to a similar deduction either upon grant of the option or at the
time the option is exercised. The current federal income tax consequences of
other awards authorized under the 1992 Plan and/or the 1988 Plan generally
follow certain basic patterns: stock appreciation rights are taxed and
deductible in substantially the same manner as nonqualified stock options:
nontransferable restricted stock subject to a substantial risk of forfeiture
results in income when the restrictions lapse (unless the recipient elects to
accelerate recognition as of the date of grant); performance share awards
generally are subject to tax at the time of payment; and unconditional stock
bonuses are generally subject to tax measured by the value of the payment
received; in each of the foregoing cases, the Company will generally have a
corresponding deduction at the time the participant recognizes income. If an
award is accelerated under the Plans, the Company may not be permitted to
deduct the portion of the compensation attributable to the acceleration.
Furthermore, if the compensation attributable to awards is not "performance-
based" within the meaning of Section 162(m) of the Code, the Company may not
be permitted to deduct such compensation in certain circumstances.
26
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VOTE REQUIRED FOR APPROVAL OF PROPOSED AMENDMENTS TO THE PLANS
Approval of the proposed amendments to the Plans requires the affirmative
vote of the holders of a majority of the Common Stock present, or represented,
and entitled to vote at the Annual Meeting assuming the presence of a quorum.
Each share of Common Stock is entitled to one vote.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS A VOTE FOR
THE APPROVAL OF THE PROPOSED AMENDMENTS TO THE PLANS AS DESCRIBED ABOVE.
PROXIES RECEIVED WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY OTHERWISE IN THE
PROXY.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 4)
The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has unanimously appointed the firm of Arthur Andersen LLP as
independent public accountants to examine the consolidated financial
statements of the Company for the year ending December 31, 1997, and a
resolution will be presented at the Annual Meeting to ratify such appointment.
Arthur Andersen LLP has acted as independent public accountants of the Company
since 1961. The Company has been advised by Arthur Andersen LLP that no member
of that firm or any of its associates has any financial interest in the
Company or any of its subsidiaries or affiliates. A representative of Arthur
Andersen LLP will be present at the Annual Meeting with the opportunity to
make a statement and is expected to be available to respond to appropriate
questions from the shareholders.
Although this appointment is not required to be submitted to a vote of the
shareholders, the Board believes it is appropriate as a matter of policy to
request that shareholders ratify the appointment. If the shareholders, by the
affirmative vote of the holders of shares representing a majority of votes
cast (in person or by proxy) on the resolution at the Annual Meeting, do not
ratify the selection of Arthur Andersen LLP, then the selection of independent
public accountants will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF THE FIRM OF ARTHUR ANDERSEN LLP AS DESCRIBED ABOVE. PROXIES RECEIVED WILL
BE SO VOTED UNLESS SHAREHOLDERS SPECIFY OTHERWISE IN THE PROXY.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 34 Act requires the Company's directors and executive
officers, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file with the Securities and Exchange
Commission (the "SEC") and the New York Stock Exchange initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Executive officers, directors and greater than ten-
percent shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on 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 December 31, 1996, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten-percent beneficial owners were complied with.
27
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OTHER MATTERS
The Board is not aware of any other matters to be presented for action at
the Annual Meeting. However, if any other matter is properly presented, it is
the intention of the persons named in the enclosed form of Proxy to vote in
accordance with their best judgment on such matter.
SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals intended for inclusion in the Company's Proxy Statement for the
1998 Annual Meeting of Shareholders should be sent to the attention of the
Secretary of the Company at 15370 Barranca Parkway, P.O. Box 19765, Irvine,
California 92623-9675 and must be received by November 29, 1997.
By Order of the Board of Directors
/s/ STEPHEN D. NATCHER
----------------------
Stephen D. Natcher
Secretary
Irvine, California
March 28, 1997
28
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WYLE ELECTRONICS
1996 ELIGIBLE DIRECTORS' STOCK OPTION PLAN
ANNEX A
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
1. THE PLAN............................................................ 1
1.1 Purpose............................................................. 1
1.2 Administration...................................................... 1
1.3 Shares Available for Options........................................ 1
2. THE OPTIONS......................................................... 1
2.1 Automatic Option Grants............................................. 1
2.2 Payment of Exercise Price........................................... 2
2.3 Option Period....................................................... 3
2.4 Limitations on Exercise and Vesting of Options...................... 3
3. OTHER PROVISIONS.................................................... 3
3.1 Rights of Participants and Beneficiaries............................ 3
3.2 No Transferability; Limited Exception to Transfer Restrictions...... 3
3.3 Adjustments......................................................... 4
3.4 Acceleration of Options............................................. 4
3.5 Compliance with Laws................................................ 4
3.6 Plan Amendment, Shareholder Approval and Suspension................. 5
3.7 Privileges of Stock Ownership....................................... 5
3.8 Effective Date of Plan.............................................. 5
3.9 Term of Plan........................................................ 5
3.10 Legal Issues........................................................ 5
4. DEFINITIONS......................................................... 6
4.1 Definitions......................................................... 6
</TABLE>
<PAGE>
WYLE ELECTRONICS
1996 ELIGIBLE DIRECTORS' STOCK OPTION PLAN
1. THE PLAN
1.1 Purpose.
The purpose of this Plan is to promote the success of the Company by
providing an additional means through the grant of Options to attract,
motivate and retain experienced and knowledgeable Eligible Directors.
Capitalized terms are defined in Article 4.
1.2 Administration.
(a) Board Authority and Powers; Interpretation. This Plan shall be, to the
maximum extent possible, self-effectuating. This Plan shall be interpreted
and, to the extent any determinations are required hereunder, shall be
administered by the Board. Subject to the express provisions of this Plan, the
Board shall have the authority to construe and interpret this Plan and any
agreements defining the rights and obligations of the Corporation and
Participants under this Plan.
(b) Binding Determinations. Any action taken by, or inaction of, the
Corporation or the Board relating or pursuant to this Plan shall be within the
absolute discretion of that entity or body and shall be conclusive and binding
upon all persons. No member of the Board or officer of the Corporation shall
be liable for any such action or inaction, except in circumstances involving
such person's bad faith.
(c) Reliance on Experts. In making any determination or in taking or not
taking any action under this Plan, the Board may obtain and may rely upon the
advice of experts, including professional advisors to the Corporation. No
director, officer or agent of the Corporation shall be liable for any such
action or determination taken or made or omitted in good faith.
(d) Delegation. The Board may delegate ministerial, non-discretionary
functions to individuals who are officers or employees of the Corporation.
1.3 Shares Available for Options.
Subject to the provisions of Section 3.3, the capital stock that may be
delivered under this Plan shall be shares of the Corporation's authorized but
unissued Common Stock and any shares of its Common Stock held as treasury
shares.
(a) Number of Shares. The maximum number of shares of Common Stock that may
be delivered pursuant to Options granted to Eligible Directors under this Plan
shall not exceed [250,000] shares, subject to adjustments contemplated by
Section 3.3.
(b) Reserves for Options. Shares subject to outstanding Options shall be
reserved for issuance. If any Option to acquire shares of Common Stock under
an Option shall expire or be cancelled or terminated without having been
exercised in full, the undelivered shares subject thereto shall again be
available for purposes of this Plan.
2. THE OPTIONS
2.1 Automatic Option Grants. Subject to adjustments contemplated by Section
3.3,
(a) Initial Grant to Eligible Directors in office as of October 1, 1996. On
October 1, 1996, there shall be granted automatically (without any action by
the Board) to each person who is then an Eligible Director an Option (the
Option Date of which shall be October 1, 1996) to purchase 4,000 shares of
Common Stock.
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(b) Subsequent Annual Grants to Eligible Directors in office as of October
1, 1996. On April 1 in each calendar year during the term of this Plan,
commencing April 1, 1997, there shall be granted automatically (without any
action by the Board) to each person who is then an Eligible Director and who
was an Eligible Director on October 1, 1996 an Option (the Option Date of
which shall be such April 1) to purchase 4,000 shares of Common Stock.
(c) Initial Grants to Eligible Directors taking office after October 1,
1996. If an individual first becomes an Eligible Director after October 1,
1996, there shall be granted automatically (without any action by the Board)
to such Eligible Director an Option (the Option Date of which shall be such
date that the individual first becomes an Eligible Director) to purchase
10,000 shares of Common Stock. Notwithstanding anything else contained herein
to the contrary, an individual who was an officer of the Company and member of
the Board prior to becoming an Eligible Director shall not be granted an
option pursuant to this Subsection 2.1(c).
(d) Subsequent Annual Grants to Eligible Directors taking office after
October 1, 1996. On April 1 in each calendar year during the term of this
Plan, commencing April 1, 1997, there shall be granted automatically (without
any action by the Board) to each person who becomes an Eligible Director after
October 1, 1996 an Option (the Option Date of which shall be such April 1) to
purchase 6,000 shares of Common Stock.
(e) Maximum Number of Shares. Any grant under Sections 2.1(b)-(d) that would
otherwise exceed the maximum number of shares under Section 1.3(a) shall be
prorated within such limitation among the number of Eligible Directors
entitled thereto.
(f) Option Price. The purchase price per share of the Common Stock covered
by each Option granted pursuant to this Section 2.1 shall be 100 percent of
the Fair Market Value of the Common Stock on the Option Date.
(g) Option Period and Exercisability. Each Option granted under this Plan
shall be fully vested and immediately exercisable as of the date which is six
months after the Option Date.
(h) Effect of Termination of Service. If a Participant (i) dies or suffers a
Disability while serving as a director, (ii) retires from service as a
director in accordance with the Company's mandatory retirement policy then in
effect for outside directors, or (iii) resigns from service as a director or
fails to be renominated for service by the Board because the director's
position of outside employment may result in a conflict of interest with the
Company, any Option granted pursuant to this Plan then held by such
Participant shall immediately become and shall remain fully exercisable for 36
months after the date of such termination or until the expiration of the
stated term of such Option, whichever first occurs, and shall then terminate.
If a Participant's services as a member of the Board terminate for any other
reason, then any portion of an Option granted pursuant to this Plan which is
not then exercisable shall terminate and any portion of such Option which is
then exercisable may be exercised for 36 months after the date of such
termination or until the expiration of the stated term, whichever first
occurs, and shall then terminate.
(i) Nonqualified Options. Each Option granted under this Plan is intended to
be a nonqualified stock option (i.e., not an "incentive stock option") under
the Code and shall be so designated.
(j) Director Share Limit. There shall be no limit on the number of shares or
Options granted to an Eligible Director during the term of this Plan, subject,
however, to Sections 2.1(a)-(d); and provided that the number of shares may be
subject to adjustments in accordance with Section 3.3.
2.2 Payment of Exercise Price.
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The exercise price of any Option granted under this Plan shall be paid in
full at the time of each exercise (i) in cash or by check, (ii) in shares of
Common Stock valued at their Fair Market Value on the date of exercise of the
Option, (iii) partly in such shares and partly in cash, or (iv) by delivery of
a properly executed exercise notice together with irrevocable instructions to
a broker to promptly deliver to the Corporation the amount of the sale
proceeds necessary to pay the exercise price; provided that the Corporation
shall not be obligated to deliver certificates for the shares unless and until
it receives full payment of the exercise price therefor. Any shares used in
payment of the exercise price must have been owned by the Participant at least
six months prior to the date of exercise.
2.3 Option Period.
Each Option granted under this Plan and all rights or obligations thereunder
shall expire ten (10) years after the Option Date and shall be subject to
earlier termination as provided herein.
2.4 Limitations on Exercise and Vesting of Options.
(a) Procedure. Any exercisable Option shall be deemed to be exercised when
the Secretary of the Corporation receives written notice of such exercise from
the Participant, together with the required payment of the exercise price.
(b) Fractional Shares/Minimum Issue. Fractional share interests shall be
disregarded, but may be accumulated. No fewer than 100 shares may be purchased
on exercise of any Option at one time unless the number purchased is the total
number at the time available for purchase under the Option.
3. OTHER PROVISIONS.
3.1 Rights of Participants and Beneficiaries.
(a) No Service Commitment. Nothing contained in this Plan (or in any other
documents related to this Plan or to any Option) shall confer upon any
Participant any right to continue to serve as a director of the Corporation
nor shall interfere in any way with the right of the Corporation to change a
director's compensation or other benefits or to terminate the director's
service as a director, with or without cause. Nothing contained in this Plan
or any document related hereto shall influence the construction or
interpretation of the Corporation's Articles of Incorporation or Bylaws
regarding service on the Board or adversely affect any independent contractual
right of any Eligible Director without his or her consent thereto.
(b) Plan Not Funded. Options payable under this Plan shall be payable in
shares and no special or separate reserve, fund or deposit shall be made to
assure payment of such Options. No Participant, Beneficiary or other person
shall have any right, title or interest in any fund or in any specific asset
(including shares of Common Stock) of the Corporation by reason of any Option
hereunder. Neither the provisions of this Plan (or of any related documents),
nor the creation or adoption of this Plan, nor any action taken pursuant to
the provisions of this Plan shall create, or be construed to create, a trust
of any kind or a fiduciary relationship between the Corporation and any
Participant, Beneficiary or other person.
3.2 No Transferability; Limited Exception to Transfer Restrictions.
(a) Limit on Exercise and Transfer. Unless otherwise expressly provided in
(or pursuant to) this Section 3.2, by applicable law and by the Option
Agreement, as the same may be amended, (i) all Options are non-transferable
and shall not be subject in any manner to sale, transfer, anticipation,
alienation, assignment, pledge, encumbrance or charge; Options shall be
exercised only by the Participant; and (ii) shares issuable pursuant to an
Option shall be delivered only to (or for the account of) the Participant.
(b) Exceptions. The Committee may permit Options to be exercised by and paid
to certain persons or entities related to the Participant, including but not
limited to members of the Participant's family, charitable institutions, or
trusts or other entities whose beneficiaries or beneficial owners are members
of
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the Participant's family and/or charitable institutions, or to such other
persons or entities as may be approved by the Committee pursuant to such
conditions and procedures as the Committee may establish. Any permitted
transfer shall be subject to the condition that the Committee receive evidence
satisfactory to it that the transfer is being made for estate and/or tax
planning purposes on a gratuitous or donative basis and without consideration
(other than nominal consideration).
(c) Further Exceptions to Limits on Transfer. The exercise and transfer
restrictions in Section 3.2(a) shall not apply to: (i) transfers to the
Corporation, (ii) the designation of a beneficiary to receive benefits in the
event of the Participant's death or, if the Participant has died, transfers to
or exercise by the Participant's beneficiary, or, in the absence of a validly
designated beneficiary, transfers by will or the laws of descent and
distribution, (iii) if the Participant has suffered a disability, permitted
transfers or exercises on behalf of the Participant by his or her legal
representative, or (iv) the authorization by the Committee of "cashless
exercise" procedures with third parties who provide financing for the purpose
of (or who otherwise facilitate) the exercise of Options consistent with
applicable laws and the express authorization of the Committee.
3.3 Adjustments.
If there shall occur any extraordinary distribution in respect of the Common
Stock (whether in the form of Common Stock, other securities, or other
property), or any recapitalization, stock split (including a stock split in
the form of a stock dividend), reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, or exchange of Common Stock or
other securities of the Corporation, or there shall occur any other like
corporate transaction or event in respect of the Common Stock, or a sale of
substantially all of the assets of the Corporation as an entirety, then the
Board shall, in such manner and to such extent (if any) as may be appropriate
and equitable (1) proportionately adjust any or all of (a) the number and type
of shares of Common Stock (or other securities) which thereafter may be made
the subject of Options (including the specific numbers of shares set forth
elsewhere in this Plan), (b) the number, amount and type of shares of Common
Stock (or other securities or property) subject to any or all outstanding
Options and the vesting provisions of the Options, (c) the grant, purchase, or
exercise price of any or all outstanding Options, (d) the securities, cash or
other property deliverable upon exercise of any outstanding Options, or (2) in
the case of an extraordinary distribution, recapitalization, reclassification,
merger, reorganization, consolidation, combination, sale of assets, split-up,
exchange, or spin-off, make provision for a substitution or exchange of any or
all outstanding Options or for a change in the securities, cash or property
deliverable upon exercise of outstanding Options based upon the distribution
or consideration payable to holders of the Common Stock of the Corporation
upon or in respect of such event; provided, however, that (i) such adjustment
and the Board's actions in respect thereof are based on objective criteria and
(ii) such adjustment (to the extent consistent with Section 3.10(c)) is
consistent with adjustments to comparable Options (if any) held by persons
other than directors of the Corporation.
3.4 Acceleration of Options.
Unless prior to an Event the Committee determines that, upon its occurrence,
there shall be no acceleration of Options or determines those Options which
shall be accelerated, then upon the occurrence of an Event, each Option
granted under Section 2.1 shall become immediately exercisable in full. To the
extent that any Option granted under this Plan is not exercised prior to (i) a
dissolution of the Corporation or (ii) a merger or other corporate event that
the Corporation does not survive, and no provision is (or consistent with the
provisions of Section 3.3 can be) made for the assumption, conversion,
substitution or exchange of the Option, the Option shall terminate upon the
occurrence of such event.
3.5 Compliance with Laws.
This Plan, the granting and vesting of Options under this Plan and the
issuance and delivery of shares of Common Stock, and/or of other securities or
property pursuant to Section 3.3, under this Plan or under
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<PAGE>
Options granted hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal tax and securities laws) and to such approvals by any
listing, regulatory or governmental authority as may, in the opinion of
counsel for the Corporation, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Corporation, provide such assurances and representations to the
Corporation as the Corporation may deem necessary or desirable to assure such
compliance.
3.6 Plan Amendment, Shareholder Approval and Suspension.
(a) Board Authorization. The Board may, at any time, terminate or, from time
to time, amend, modify or suspend this Plan, in whole or in part. No Options
may be granted during any suspension of this Plan or after termination of this
Plan, but the Board shall retain jurisdiction as to Options then outstanding
in accordance with the terms of this Plan.
(b) Shareholder Approval. To the extent required by law, any amendment to
this Plan or any then outstanding Option shall be subject to shareholder
approval.
(c) Limitations on Amendments to Plan and Options. No amendment, suspension
or termination of this Plan or change of or affecting any outstanding Option
shall, without written consent of the Participant, affect in any manner
materially adverse to the Participant any rights or benefits of the
Participant or obligations of the Corporation under any Option granted under
this Plan prior to the effective date of such change. Changes contemplated by
Section 3.3 shall not be deemed to constitute changes or amendments for
purposes of this Section 3.6. Notwithstanding anything else contained herein
to the contrary, the Committee shall not, without prior shareholder approval
(i) authorize the amendment of outstanding Options to reduce the exercise
price, except as contemplated by Section 3.3, or (ii) cancel and replace
outstanding Options with similar awards having an exercise price which is
lower, except as contemplated by Section 3.3.
3.7 Privileges of Stock Ownership.
Except as otherwise expressly authorized by this Plan, a Participant shall
not be entitled to any privilege of stock ownership as to any shares of Common
Stock subject to an Option granted under this Plan prior to the satisfaction
of all conditions to the valid exercise of the Option. No adjustment will be
made for dividends or other rights as a shareholder for which a record date is
prior to such date of delivery.
3.8 Effective Date of Plan.
This Plan shall be effective as of October 1, 1996, subject to shareholder
approval within twelve (12) months thereafter.
3.9 Term of Plan.
This Plan shall terminate at the close of business on September 30, 2006,
and no Option shall be granted under it thereafter, but such termination shall
not affect any Option theretofore granted.
3.10 Legal Issues.
(a) Choice of Law. This Plan, the Options, all documents evidencing Options
and all other related documents shall be governed by, and construed in
accordance with the laws of the State of California.
(b) Severability. If any provision shall be held by a court of competent
jurisdiction to be invalid and unenforceable, the remaining provisions of this
Plan shall continue in effect.
5
<PAGE>
(c) Plan Construction. It is the intent of the Corporation that this Plan
and Options hereunder satisfy and be interpreted in a manner that in the case
of persons who are or may be subject to Section 16 of the Exchange Act
satisfies the applicable requirements of Rule 16b-3 so that such persons will
be entitled to the benefits of Rule 16b-3 or other exemptive rules under
Section 16 of the Exchange Act and will not be subjected to avoidable
liability thereunder. If any provision of this Plan or of any Option would
otherwise frustrate or conflict with the intent expressed above, that
provision to the extent possible shall be interpreted and deemed amended so as
to avoid such conflict, but to the extent of any remaining irreconcilable
conflict with such intent as to such persons in the circumstances, such
provision shall be deemed void.
(d) Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed
to limit the authority of the Board to grant awards or authorize any other
compensation under any other plan or authority.
4. DEFINITIONS
4.1 Definitions.
(a) "Beneficiary" shall mean the person, persons, trust or trusts entitled
by will or the laws of descent and distribution to receive the benefits
specified in the Option Agreement and under this Plan in the event of a
Participant's death, and shall mean the Participant's executor or
administrator if no other Beneficiary is identified and able to act under the
circumstances.
(b) "Board" shall mean the Board of Directors of the Corporation or, with
respect to administrative matters (as distinguished from Plan amendments,
suspension, or termination), the Committee.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Commission" shall mean the Securities and Exchange Commission.
(e) "Committee" shall mean committee of members of the Board who may be
designated to administer this Plan.
(f) "Common Stock" shall mean the Common Stock of the Corporation and such
other securities or property as may become the subject of Options, or become
subject to Options, pursuant to an adjustment made under Section 3.3 of this
Plan.
(g) "Company" shall mean, collectively, the Corporation and its
Subsidiaries.
(h) "Corporation" shall mean Wyle Electronics, a California corporation, and
its successors.
(i) "Disability" shall mean a "permanent and total disability" within the
meaning of Section 22(e)(3) of the Code.
(j) "Eligible Director" shall mean a member of the Board of Directors of the
Corporation who is not an officer or employee of the Corporation or any
Subsidiary at the time of the grant of the Option.
(k) "Event" shall mean any of the following:
(1) Approval by the shareholders of the Corporation of the dissolution or
liquidation of the Corporation; or
(2) Approval by the shareholders of the Corporation of an agreement to
merge or consolidate, or otherwise reorganize, with or into one or more
entities which are not Subsidiaries, as a result of which less than 50% of
the outstanding voting securities of the surviving or resulting entity are,
or will be, owned by shareholders of the Corporation immediately before
such reorganization (assuming
6
<PAGE>
for purposes of such determination that there is no change in the record
ownership of the Corporation's securities from the record date for such
approval until such reorganization and that such record owners hold no
securities of the other parties to such reorganization); or
(3) Approval by the shareholders of the Corporation of the sale of
substantially all of the Corporation's business and/or assets to a person
or entity which is not a Subsidiary; or
(4) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act but excluding any person described in and satisfying the
conditions of Rule 13d-1(b)(1) thereunder) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 15% or more of
the combined voting power of the Corporation's then outstanding securities;
or
(5) During any period of two consecutive years, individuals who at the
beginning of such period constituted the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the
nomination for election by the Corporation's shareholders, of each new
Board member was approved by a vote of at least three-fourths of the Board
members then still in office who were Board members at the beginning of
such period (including for these purposes, new members whose election or
nomination was so approved).
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(m) "Fair Market Value" shall mean the closing price of the Common Stock on
the New York Stock Exchange as reported on the Composite Tape and published in
the Western Edition of The Wall Street Journal, or, if there is no trading of
the Common Stock on the date in question, then the closing price of the Common
Stock so reported on the next preceding date on which there was trading in the
Common Stock.
(n) "Option" shall mean a nonqualified stock option to purchase Common Stock
authorized and granted under this Plan, and related rights.
(o) "Option Agreement" shall mean a written agreement setting forth the
terms of an Option in substantially the form as Exhibit A attached hereto,
completed in the manner required by this Plan and executed on behalf of the
Corporation by an executive officer of the Corporation.
(p) "Option Date" shall mean the applicable date set forth in Article 2.
(q) "Participant" shall mean an Eligible Director who has been granted an
Option under the provisions of this Plan.
(r) "Personal Representative" shall mean the person or persons who, upon the
disability or incompetence of a Participant, shall have acquired on behalf of
the Participant, by legal proceeding or otherwise, the power to exercise the
rights or receive benefits under this Plan and who shall have become the legal
representative of the Participant.
(s) "Plan" shall mean this 1996 Eligible Directors' Stock Option Plan.
(t) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the Commission
pursuant to the Exchange Act, as amended from time to time.
(u) "Subsidiary" shall mean any corporation or other entity a majority of
whose outstanding voting stock or voting power is beneficially owned directly
or indirectly by the Corporation.
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<PAGE>
EXHIBIT A
WYLE ELECTRONICS
ELIGIBLE DIRECTOR
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the day of , 19 , between
Wyle Electronics, a California corporation (the "Corporation"), and
(the "Director").
W I T N E S S E T H
WHEREAS, the Corporation has adopted the Wyle Electronics 1996 Eligible
Directors' Stock Option Plan (the "Plan"); and
WHEREAS, pursuant to Section 2.1 of the Plan, the Corporation has granted an
option (the "Option") to the Director upon the terms and conditions evidenced
hereby, as required by the Plan, which Option is not intended as and shall not
be deemed to be an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the services rendered and to be rendered
by the Director, the Corporation and the Director agree to the terms and
conditions set forth herein as required by the terms of the Plan.
1. Option Grant. This Agreement evidences the grant to the Director, as of
(the "Option Date"), of an Option to purchase an aggregate
of shares of Common Stock under Section 2.1 of the Plan, subject to
the terms and conditions of and to adjustments provided in or pursuant to the
Plan.
2. Exercise Price. The Option entitles the Director to purchase all or any
part of the Option shares at a price per share of $ , which represents
the Fair Market Value of the shares on the Option Date.
3. Option Term. The Option shall terminate ten years after the Option Date
unless earlier terminated in accordance with the terms of the Plan.
4. Exercisability of Option. The Option shall become fully vested and
exercisable as of the date which is six months immediately after the Option
Date.
5. Service. The Director agrees to serve as a director in accordance with
the provisions of the Corporation's Articles of Incorporation, Bylaws and
applicable law.
6. General Terms. The Option and this Agreement are subject to, and the
Corporation and the Director agree to be bound by, the provisions of the Plan.
Such provisions are incorporated herein by this reference. The Director
acknowledges receiving a copy of the Plan and reading its applicable
provisions. Capitalized terms not otherwise defined herein shall have the
meaning assigned to such terms in the Plan.
7. Conditional Grant. The terms of the Plan and the grant of this Option are
subject to the approval of the Plan by the Corporation's shareholders.
Notwithstanding anything else contained herein or in the Plan to the contrary,
this Option shall not become exercisable and shall be null and void if
shareholder approval of the Plan is not obtained.
8
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WYLE ELECTRONICS
(a California corporation)
By
----------------------------------
Title
--------------------------------
Director
-------------------------------------
(Signature)
-------------------------------------
(Print Name)
-------------------------------------
(Address)
-------------------------------------
(City, State, Zip Code)
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DIRECTIONS TO
WYLE ELECTRONICS
ANNUAL MEETING OF SHAREHOLDERS
[MAP]
<PAGE>
WYLE ELECTRONICS
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR ANNUAL MEETING MAY 13, 1997
The undersigned, a shareholder of WYLE ELECTRONICS, a California
corporation, acknowledges receipt of a Notice of Annual Meeting of Shareholders,
the accompanying Proxy Statement and the Annual Report to Shareholders for the
year ended December 31, 1996; and, revoking any proxy previously given, hereby
constitutes and appoints R. Van Ness Holland, Jr. and Stephen D. Natcher, and
each of them, the true and lawful agents and proxies of the undersigned with
full power of substitution in each, to vote the shares of Common Stock of WYLE
ELECTRONICS standing in the name of the undersigned at the Annual Meeting of
Shareholders of WYLE ELECTRONICS, on Tuesday, May 13, 1997 at 10:30 a.m. local
time, and at any adjournment or postponement thereof with respect to the
proposals listed on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREBY BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE NOMINEES LISTED ON THE REVERSE (PROPOSAL 1); FOR PROPOSAL 2;
FOR PROPOSAL 3; AND FOR PROPOSAL 4.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
* FOLD AND DETACH HERE *
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THIS SHEET
AND RETURNING IT IN THE ENCLOSED POSTPAID ENVELOPE
<PAGE>
Please mark
your votes [X]
as indicated
This Proxy will be voted as directed. Unless otherwise directed, this proxy will
be voted FOR the election of the two named nominees in proposal 1; and FOR
proposals 2,3 and 4. The Board of Directors recommends that you vote FOR the
two named nominees in proposal 1; and FOR proposals 2, 3 and 4.
1. Election of Directors WITHHELD
Michael R. Corboy; and FOR FOR ALL
Stanley A. Wainer. [_] [_]
2. Approval of 1996
Eligible Director's Stock FOR AGAINST ABSTAIN
Option Plan. [_] [_] [_]
3. Approval of
Amendments to 1992
Stock Incentive Plan and
1978 and 1988 Stock FOR AGAINST ABSTAIN
Option Plans [_] [_] [_]
4. Ratification of the
appointment of Arthur
Andersen LLP as auditors FOR AGAINST ABSTAIN
for 1997. [_] [_] [_]
5. In their discretion the Proxies are authorized to vote
upon such other business as may properly come before
the meeting and any and all postponements or
adjournments thereof. FOR AGAINST ABSTAIN
[_] [_] [_]
SIGNATURE(S)_________________________________________________DATED____________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
Executors, administrators, trustees, guardians and attorneys should so indicate
when signing. Corporations and partnerships should sign in the corporate or
partnership name by an authorized officer.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
* FOLD AND DETACH HERE *
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THIS SHEET
AND RETURNING IT IN THE ENCLOSED POSTPAID ENVELOPE
