<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<C> <S>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CALIFORNIA MICROWAVE, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
<TABLE>
<C> <S>
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3).
[ ] 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:
*
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(2) Aggregate number of securities to which transaction applies:
*
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:1(1)
*
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(4) Proposed maximum aggregate value of transaction:
*
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* Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and
</TABLE>
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.
<TABLE>
<C> <S>
(1) Amount previously paid:
*
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(2) Form, Schedule or Registration Statement No.:
*
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(3) Filing Party:
*
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(4) Date Filed:
*
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
October 3, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at 11:00 a.m. on Tuesday, October 28, 1997, at the Sunnyvale Hilton Inn,
located at 1250 Lakeside Drive (at the Lawrence Expressway exit off US 101),
Sunnyvale, California. Detailed information as to the business to be transacted
at the meeting is contained in the accompanying Notice of Annual Meeting and
Proxy Statement.
Regardless of whether you plan to attend the meeting, it is important that your
shares be voted. Accordingly, we ask that you sign and return your proxy as soon
as possible in the envelope provided. If you do plan to attend the meeting,
please mark the appropriate box on the proxy.
You are invited to call our TOLL-FREE INFORMATION LINE AT 1-800-CAL-6789 for
current information about your company or to be connected free-of-charge to our
Investor Relations department or to our Transfer Agent. Also, come and visit us
at our Web site for more information about our markets and products:
HTTP://WWW.CALMIKE.COM.
Sincerely,
Frederick D. Lawrence
Chairman and Chief Executive Officer
<PAGE> 3
LOGO
CALIFORNIA MICROWAVE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 28, 1997
The Annual Meeting of Shareholders of CALIFORNIA MICROWAVE, INC. will be
held at the Sunnyvale Hilton Inn, located at 1250 Lakeside Drive, Sunnyvale, CA
94086, on October 28, 1997, at 11:00 A.M., for the following purposes.
1. To elect six Directors.
2. To ratify the selection of Ernst & Young LLP as independent public
accountants for the Company.
3. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on September 8, 1997,
are entitled to notice of and to vote at the meeting and any adjournment or
postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ GEORGE L. SPILLANE
GEORGE L. SPILLANE
Secretary
Redwood City, California
October 3, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTPAID ENVELOPE. IF YOU
ARE ABLE TO ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY
DO SO AT ANY TIME BEFORE THE PROXY IS EXERCISED.
<PAGE> 4
CALIFORNIA MICROWAVE, INC.
555 TWIN DOLPHIN DRIVE
REDWOOD CITY, CALIFORNIA 94065
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
CALIFORNIA MICROWAVE, INC., a Delaware corporation (the "Company"), for use at
the Annual Meeting of Shareholders to be held at the Sunnyvale Hilton Inn,
located at 1250 Lakeside Drive, Sunnyvale, CA 94086, at 11:00 AM, on October 28,
1997, and at any adjournment or postponement thereof.
Any proxy given may be revoked by a shareholder at any time before it is
voted by filing with the Secretary of the Company a notice in writing revoking
it, or by duly executing a proxy bearing a later date. Proxies may also be
revoked by any shareholder present at the meeting who votes his or her shares in
person. Subject to any such revocation and the provisions under "Voting" below,
all shares represented by properly executed proxies which are received prior to
the meeting will be voted in accordance with the specifications on the proxy and
if no specification is made with regard to a proposal set forth on the proxy,
the shares will be voted for all listed nominees for director and in favor of
the proposal.
A copy of the Annual Report of the Company for its fiscal year ended June
30, 1997, is being mailed to shareholders with this proxy statement. The
approximate date on which this proxy statement and the accompanying proxy are
being sent to shareholders is October 3, 1997.
VOTING
Only shareholders of record on September 8, 1997, will be entitled to
notice of and to vote at the meeting. At the close of business on that date, the
Company had 16,496,811 shares of common stock outstanding. A majority of all
shares represented in person or by proxy at the Annual Meeting constitutes a
quorum for the transaction of business at the meeting. Abstentions are
considered as shares present and entitled to vote and therefore will have the
same effect as a vote against a matter presented at the meeting. Brokers who
hold shares in street name for customers have the authority to vote on the
election of directors. With respect to all matters other than the election of
directors, broker non-votes (shares as to which brokers do not have
discretionary authority to vote on the particular matter and have not received
voting instructions from their customers), if any, will have no effect on the
outcome of the vote. Broker nonvotes are counted towards the establishment of a
quorum.
Holders of common stock are entitled to one vote for each share held. As
described below, in the election of directors all shareholders may cumulate
their votes for candidates placed in nomination. Cumulative voting rights
entitle a shareholder to as many votes as shall equal the number of votes
represented by shares of common stock held by such shareholder multiplied by the
number of directors to be elected, and all such votes may be cast for a single
candidate or may be distributed among any or all of the candidates. A
shareholder intending to cumulate votes for the election of directors must
notify the Company of such intention prior to the commencement of the voting for
directors. If any shareholder has given such notice, every shareholder may
cumulate votes for candidates placed in nomination prior to the voting. A vote
for nominees of the Board of Directors will give the persons named in the proxy
discretionary authority to cumulate all votes as to which the shareholder is
entitled and allocate such votes in favor of one or more nominees of the Board
voted for by the shareholder, as the proxyholders may determine. The persons
named in the proxy will exercise such
<PAGE> 5
discretion in order to assure the election of as many of the nominees of the
Board of Directors as possible. In such event, the specific nominees for whom
such votes will be cumulated will be decided by the proxyholders.
ELECTION OF DIRECTORS
Directors are elected to hold office until the next Annual Meeting of
Shareholders or until their successors have been elected. Unless otherwise
instructed by the shareholder, it is intended that the shares represented by the
enclosed proxy will be voted for the nominees named below. Although management
anticipates that all of the nominees will be able to serve, if any nominee is
unable or unwilling to serve at the time of the meeting, the proxy will be voted
for a substitute nominee chosen by management. Directors will be elected by a
plurality of the votes of the shares represented in person or by proxy at the
meeting.
David B. Leeson and Edward E. David, Jr. are not standing for reelection
and in September 1997, the Board of Directors pursuant to the Company's Bylaws
decreased the authorized number of directors to six, effective immediately prior
to the vote for directors at the Annual Meeting of Shareholders.
As discussed below, the Board has recently adopted a set of corporate
governance guidelines which will be fully implemented as soon as possible. Some
of the guidelines have not been fully implemented, as they will require further
consideration as to the best form of implementation. For example, the Board has
renominated Mr. Hausman even though his age exceeds the retirement guideline,
based upon the desirability of retaining on the Board a director who has
experience as a former Chief Executive Officer of a large corporation.
All of the nominees are presently directors of the Company. No nominee or
executive officer has any family relationship with any other nominee or
executive officer. The beneficial ownership of the Company's stock by the
nominees is set forth under "Certain Shareholders."
The following table and biographical paragraphs set forth the names and
ages of the nominees, their principal occupations at present, the positions and
offices held by each with California Microwave, Inc. in
2
<PAGE> 6
addition to the position as a director, and the period during which each has
served as a director of the Company.
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY
NOMINEE AGE OCCUPATION SINCE
- ------------------------------------- --- ------------------------------------- ------------
<S> <C> <C> <C>
Frederick D. Lawrence................ 49 Chairman of the Board, President and 1997
Chief Executive Officer
Arthur H. Hausman(2)(3).............. 73 Chairman of the Board Emeritus of 1990
Ampex Corporation, a video systems
manufacturer, and business consultant
and private investor
Alfred M. Gray(1).................... 69 Retired Commandant of the U.S. Marine 1993
Corps and consultant to industry and
government
William B. Marx, Jr.(3).............. 58 Retired as Senior Executive Vice 1996
President of Lucent Technologies,
Inc., a communications systems and
technology company
Terry W. Ward(1)(3).................. 48 Vice President and Chief Financial 1996
Officer of W.S. Farish & Company, a
private trust company
Frederick W. Whitridge, Jr.(2)....... 42 President of Archipelago Corporation, 1996
a private investment company and a
managing member of Providence
Investors, L.L.C., an investment
partnership
</TABLE>
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(1) Member of Nominating Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
FREDERICK D. LAWRENCE joined the Company as Chairman of the Board,
President and Chief Executive Officer in July 1997. From May 1996 to July 1997,
Mr. Lawrence served as Chief Executive Officer of ComStream, Inc., an
international supplier of satellite communications networks and products and
from February 1994 to April 1996, he served as President of the Transmission
Group for ADC Telecommunications, which included five independent business units
producing products for high speed video, voice, data and wireless
communications. From 1982 to 1994, Mr. Lawrence held executive positions in
networks operations and engineering at Sprint Corporation and its operating
companies, dealing in local telephone, cellular and long distance. Prior to
this, Mr. Lawrence worked at AT&T from 1970 to 1982 in a variety of positions.
He holds a B.S.E.E. degree from Western Michigan University.
ARTHUR H. HAUSMAN served as President and Chief Executive Officer of Ampex
Corporation from 1971 through 1980, as its Chairman of the Board, President and
Chief Executive Officer from 1981 through 1982, and Chairman of the Board from
1983 through 1987 when he became Chairman of the Board Emeritus. Mr. Hausman
received his Bachelor's Degree in Electrical Engineering from the University of
Texas and his Master's Degree in Engineering Science and Applied Physics from
Harvard University. He is a Director of Drexler Technology, Inc. and California
Amplifier, Inc. and Director Emeritus of TCI International, Inc. Mr. Hausman is
a senior member of the IEEE.
3
<PAGE> 7
GENERAL ALFRED M. GRAY, USMC (RET.) served as the Commandant of the U.S.
Marine Corps and was a member of the Joint Chiefs of Staff from 1987 to 1991. He
holds a Bachelor's Degree in Science from the State University of New York and
is a member of the National Security Agency Science Advisory Board.
WILLIAM B. MARX, JR. served as Senior Executive Vice President of Lucent
Technologies, the communication systems and technology company created as a
result of AT&T's restructuring, from 1995 until he retired from Lucent
Technologies on October 1, 1996. From 1994 to 1995, he served as Executive Vice
President of AT&T and as Chief Executive Officer of its Multimedia Products
Group and from 1989 to 1994 he served as an Executive Vice President of AT&T and
as Chief Executive Officer of its Network Systems Group. Prior to 1989, he held
a number of key executive positions within the AT&T organization. Mr. Marx
received his Bachelor of Mechanical Engineering degree from Union College and
his Master of Science Degree in Management from Stanford University. He is a
Director of the Massachusetts Mutual Life Insurance Company, is Chairman of the
Executive Committee of the National Minority Supplier Development Council, and
is a member of the Stanford University Graduate School of Business Advisory
Council and of the National Board of Directors of Junior Achievement.
TERRY W. WARD has served since 1979 as the Vice President, Chief Financial
Officer and Chairman of the Investment Policy Committee of W.S. Farish &
Company, a private trust company, and as Treasurer of the William Stamps Farish
Fund, one of the ten largest private foundations in Texas. He served as a
Director of Microwave Networks, Inc. from 1986 to 1995 and is presently serving
as the Chairman of the Board of Aprogenex, Inc., a medical diagnostic company,
and as a Director of the Forefront Group, Inc., an internet application software
provider. He graduated cum laude from Rice University, holds a Bachelor's Degree
in economics from Rice University and is a certified public accountant.
FREDERICK W. WHITRIDGE, JR. is the President, founder and majority
shareholder of Archipelago Corporation, which is in the business of making
investments in other companies and providing merger and acquisition services. He
is also a managing member of Providence Investors, L.L.C., an investment
partnership. From 1988 to 1993, he held various positions with Investor
International (U.S., Inc.), the North American office for Sweden's Wallenberg
Group, Inc., including the positions of President and Chief Investment Officer.
Mr. Whitridge holds a Bachelor's Degree from Yale University and a M.P.P.M.
degree from the Yale School of Management. He is a director of Ladish Co., Inc.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The total number of meetings of the Board of Directors (including regularly
scheduled and special meetings) during fiscal 1997 was 18. Each of the incumbent
directors attended at least 75% of the aggregate of (1) the total number of
meetings of the Board during the year, and (2) the total number of meetings of
all committees of the Board on which he served. The Company has an Audit
Committee, Compensation Committee, and Nominating Committee (which will be
reconstituted as the Governance Committee at the meeting of the Board of
Directors to be held immediately following the Annual Meeting of Shareholders).
The responsibilities of the Audit Committee include (1) reviewing and
consulting with the auditors concerning the Company's financial statements,
accounting and financial policies, and internal controls; (2) reviewing the
scope of the independent auditors' activities and the fees of the independent
auditors; (3) maintaining good communications on accounting matters among the
Committee, the Company's independent accountants and the Company's management;
and (4) reviewing the activities of the Company's
4
<PAGE> 8
internal auditor. The present members of the Audit Committee, which met five
times during fiscal 1997, are Messrs. Hausman (Chair) and Whitridge.
The functions of the Compensation Committee are to review the Company's
compensation philosophy; to recommend to the Board of Directors the total
compensation to be paid to the Chief Executive Officer and the Company's other
officers; to approve the form and terms of all incentive and stock plans and
awards thereunder and to consider the dilutive impact of the stock plans; and to
prepare the Compensation Committee Report and approve the peer groups and stock
valuation methods for the Company's annual Proxy Statement. The present members
of the Compensation Committee, which met seven times during fiscal 1997, are
Messrs. Ward (Chair), Hausman and Marx.
The function of the Nominating Committee has been to recommend to the Board
a slate of director candidates to be nominated for election to the Board and to
fill vacancies that occur on the Board. Nominees recommended by stockholders
will be considered, provided such recommendations are submitted in writing to
the Secretary of the Company, are timely, and contain sufficient background
information concerning the nominee to enable a proper judgment to be made as to
the proposed nominee's qualifications, and include a written consent of the
proposed nominee to stand for election if nominated and to serve if elected. The
present members of the Nominating Committee, which met once during fiscal 1997,
are Messrs. Leeson (Chair), David, Gray and Ward.
CORPORATE GOVERNANCE
In September 1997, the Board of Directors of the Company adopted corporate
governance guidelines, which will be reviewed at least annually and will be
monitored by a Governance Committee that will be established by the Board at its
organizational meeting following the Annual Meeting of Shareholders. The
guidelines establish corporate governance standards, outline the respective
responsibilities of management and the Board and provide a process for
evaluating the performance of the Board, all as set forth below. The Board has
the discretion to change the guidelines and also to make exceptions to the
guidelines when it is deemed to be in the best interests of the Company and its
shareholders to do so.
CORPORATE GOVERNANCE STANDARDS
The corporate governance standards established by the Board are as follows:
1. The Board will approve the necessary policies to implement
corporate strategies.
2. The Board will operate in accordance with the requirements set
forth below under Requirements of Management and Directors.
3. The performance of the Chief Executive Officer will be evaluated at
least annually in meetings of independent directors that are not attended
by the Chief Executive Officer. For this purpose, an "independent director"
is a director who has not been a present or former employee of the Company
and has no significant financial or personal tie to the Company other than
share ownership and entitlement to director compensation.
4. When the Chief Executive Officer also holds the position of
Chairperson of the Board, the Board will elect a non-executive Vice Chair
or lead director.
5. Every year the Board will review and approve a three-year strategic
plan and an annual operating plan for the Company, and conduct periodic
reviews of progress.
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<PAGE> 9
6. All directors will stand for election every year.
7. As a general rule, former executives of the Company will not serve
on the Board.
8. The Audit Committee, Compensation Committee and Governance
Committee (which will also have the responsibilities of the present
Nominating Committee) will consist entirely of independent directors.
9. Committee members will be appointed by the Board.
10. The Governance Committee will annually assess Board and Committee
effectiveness and the results will be reported to the shareholders in the
proxy statement, with the first such report to be given in 1998.
11. Whenever feasible, directors will receive materials well in
advance of meetings for items to be acted upon.
12. Interlocking directorships will not be allowed, except with
respect to joint ventures. (An interlocking directorship would occur if an
officer or director of the Company served on the Board of Company X and an
officer or director of Company X served on the Company's Board, or if a
major supplier or customer served on the Company's Board.)
13. Directors are required to own at least 2,000 shares of the
Company's stock within one year of election and 5,000 shares within three
years of election.
14. No director shall stand for re-election after the attainment of
age 70.
15. Succession planning and management development will be reported
annually by the Chief Executive Officer to the Board.
16. No director shall be a potential or actual representative of, or
hold an executive position or directorship with, interests that may have
reason to make an unsolicited or hostile attempt to acquire a controlling
interest in the Company or its subsidiaries. Neither shall any director
have vested interests in benefits from external intervention in the
Company's affairs.
17. The Company will adopt policies to allow for confidentiality of
voting by its shareholders and assure those policies are administered.
18. The Governance Committee will establish a director's questionnaire
designed to assure that Board members have the requisite qualifications and
have no conflicts of interests. In addition, each director will be required
to adopt and support the company's ethics policy.
19. All executives (approximately 74 persons) must, over periods to be
specified, buy and hold outright (which would not include options and
unvested restricted stock) stock of the Company valued at one-half to two
times base salary, depending on their positions. Executives are defined for
this purpose as corporate officers, division presidents and their direct
reports (excluding secretaries).
20. Incentive compensation plans will link pay directly and
objectively to measured financial goals set in advance by the Compensation
Committee.
21. Stock options will not be repriced (the exercise price for options
will not be lowered even if the current market price of the stock is below
the exercise price), and will be primarily performance based.
6
<PAGE> 10
REQUIREMENTS OF MANAGEMENT AND DIRECTORS
The respective responsibilities of management and the Board are as follows:
<TABLE>
<CAPTION>
MANAGEMENT REQUIREMENTS OF DIRECTORS
---------------------------------------- ----------------------------------------
<S> <C>
Develop strategies to deliver strong Act in the best interest of all
market franchises and build shareholder shareholders and fulfill fiduciary and
wealth over the long term legal responsibilities
Recommend appropriate strategic and Critique and approve strategic and
operating plans operating plans
Maintain effective control of operations Select, motivate, evaluate and
compensate the Chief Executive Officer
Measure performance against peers Develop a good understanding of
strategies and the businesses
Provide strong, principled and ethical Review succession planning and
leadership management development
Care for employees, customers and Advise and consult on key organizational
shareholders changes
Assure sound succession planning and Carefully study Board materials and
management development issues
Maintain sound organizational structure Participate actively, objectively and
constructively at Board and committee
meetings
Inform the Board regularly regarding the Assist in representing the Company to
status of key initiatives the outside world
Avoid surprises Counsel on corporate issues
Be responsible for Board meetings which Maintain confidentiality of Board
are well-planned, allow meaningful proceedings and company proprietary data
participation and provide for timely
resolution of issues
Furnish Board with materials which Maintain a good understanding of general
contain the right amount of information economic trends and corporate governance
and are delivered sufficiently in
advance of meetings
</TABLE>
BOARD EVALUATION
The Board's Governance Committee will lead a process of evaluation of Board
performance and effectiveness. As a first step, all directors will complete a
Board Evaluation questionnaire. Each director will enter a number grade from 1
to 5 and, in most cases, written comments addressing each of the following
standards.
1. The Board knows and understands the Company's vision, strategic
precepts, strategic plan and operating plan and understands the
corresponding corporate policies.
2. The Board reflects its understanding of the Company's vision,
strategic precepts, strategic plan and operating plan in its discussion and
actions on key issues throughout the year.
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<PAGE> 11
3. Board meetings are conducted in a manner which ensures open
communication, meaningful participation, and timely resolution of issues.
The proceedings of meetings are held in strict confidence and not divulged
to outsiders.
4. Board materials contain the right amount of information.
5. Board members receive their materials sufficiently in advance of
meetings.
6. Board members are diligent in preparing for meetings and have
adequate time available to perform their duties as directors.
7. The Board reviews and approves an annual operating plan and
regularly monitors performance against it throughout the year.
8. The Board regularly monitors the Company's income statement,
balance sheet and cash flow.
9. The Board reviews and approves an annual capital budget and
receives regular written or oral reports of performance against it
throughout the year.
10. In tracking Company performance, the Board regularly considers the
performance of peer companies.
11. The Board regularly reviews the performance of the Chief Executive
Officer.
12. The Board and/or the Compensation Committee regularly reviews the
performance and ethics of the senior officers.
13. The correlation between executive pay and Company performance is
considered annually by the Board and/or the Compensation Committee.
14. The Board reviews the succession plan for the Chief Executive
Officer.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for their service as directors. During the fiscal year ended June
30, 1997, directors who were not employees of the Company, other than David B.
Leeson and Alfred M. Gray, received compensation at the rate of $20,000 per year
for their services as Board members, $750 per Committee meeting attended for the
Chair of a Committee and $500 per meeting attended for other members of the
Committee, and reimbursement for expenses incurred in attending meetings of the
Board or any Committee of the Board. David B. Leeson and Alfred M. Gray, each of
whom served as Chairman of the Board during a portion of the fiscal year,
received $132,250 and $143,531, respectively, for their services during the year
in that capacity and as directors and Committee members.
In fiscal 1997, as automatic grants under the Company's 1992 Stock Option
Plan, (i) Messrs. David, Hausman and Leeson, as the Chairs of Committees, each
received an option to purchase 5,000 shares of Common Stock, (ii) Messrs. Gray
and Adorjan (who stepped down as a director in September 1997) each received an
option to purchase 3,000 shares of Common Stock, and (iii) Messrs. Marx, Ward
and Whitridge each received as his initial option grant an option to purchase
10,000 shares of Common Stock.
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<PAGE> 12
Following his stepping down as Chairman of the Board in March 1997, Dr.
Leeson has received $5,000 per month for consulting with the Company regarding
its business, technology and strategy and will continue to receive such monthly
amount through December 31, 1997.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows specific compensation information, for the fiscal
years ending June 30, 1997, 1996 and 1995, for the Company's Chief Executive
Officer and the next four most highly compensated executive officers as of June
30, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
----------------------
SECURITIES
ANNUAL COMPENSATION OTHER RESTRICTED UNDERLYING
-------------------------- ANNUAL STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(1) (NUMBER) COMPENSATION(2)
- ------------------------------ ---- -------- -------- ------------ --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Philip F. Otto................ 1997 $259,554 $ 0 $204,341 $ 0 0 $ 4,870
Chairman, President 1996 368,808 0 46,716 0 40,000 4,156
and Chief Executive 1995 323,019 0 34,704 0 30,000 3,791
Officer(3)
Leon F. Blachowicz............ 1997 260,000 38,044 29,550 5,000 5,388
Executive Vice 1996 242,598 60,000 27,000 431,250 40,000 4,098
President-Operations(4) 1995 108,180 100,000 0 102,750 60,000 0
Gilbert F. Johnson,........... 1997 278,787 125,000 32,701 0 5,000 13,717
President and Chief 1996 233,789 60,000 27,360 0 10,000 7,934
Operating Officer(5) 1995 222,755 0 12,056 0 10,000 6,327
George L. Spillane............ 1997 223,077 25,000 13,473 0 1,500 8,050
Vice President, Chief 1996 187,348 0 15,850 0 2,000 6,355
Financial Officer and 1995 177,000 0 13,054 0 0 5,068
Secretary(6)
Michael L. Foster............. 1997 168,654 20,728 19,397 0 3,500 4,982
Vice President and 1996 158,944 0 15,743 0 3,000 2,988
Treasurer 1995 146,226 0 16,259 0 5,000 1,627
</TABLE>
- ---------------
(1) At June 30, 1997, the number and aggregate value of unvested restricted
stock holdings for the named executive officers were: Messrs. Otto -- -0-
shares, $0, Blachowicz -- 21,800 shares, $406,650, Johnson -- 800 shares,
$9,200, Spillane -- 600 shares, $6,900 and Foster -- 400 shares, $4,600. The
aggregate values shown above were computed by multiplying the number of
unvested restricted shares granted by the closing market price of the
Company's common stock on the date of grant.
(2) Includes matching employer contributions to the California Microwave
Tax-Deferred Savings Plan (a 401(k) plan) in the amount of $1,200 for the
benefit of each of Messrs. Blachowicz, Johnson, Spillane and Foster;
matching employer contributions to the Tax-Deferred Savings Plan have been
increased to a maximum of $1,400 for fiscal 1998. Also includes amounts paid
by the Company for profit sharing as contributions to the California
Microwave Deferred Profit Sharing Plan as follows: Messrs. Otto -- $1,720,
Blachowicz -- $1,038, Johnson -- $2,194, Spillane -- $1,936 and
Foster -- $1,991, and for life insurance premiums, as follows: Messrs.
Otto -- $3,150, Blachowicz -- $3,150, Johnson -- $10,323, Spillane -- $4,914
and Foster -- $1,791.
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<PAGE> 13
(3) Mr. Otto resigned as Chairman, President and Chief Executive Officer in
December 1996. He received $152,085 of severance compensation from the
Company for fiscal 1997 which is reflected under Other Annual Compensation.
(4) Mr. Blachowicz joined the Company in January 1995 and served as President of
the Satellite Communications Group until March 1996, when he also became
President of the combined Wireless and Satellite Communications Group. He
became Executive Vice President--Operations in September 1997.
(5) Mr. Johnson became President and Chief Operating Officer in October 1996. He
also served as President of the Government Group. He stepped down as
President of the Company when Frederick D. Lawrence became Chairman, Chief
Executive Officer and President in July 1997. Mr. Johnson resigned as an
officer of the Company on October 1, 1997.
(6) Mr. Spillane became Chief Financial Officer in February 1997 when Dennis R.
Raney resigned from that position.
STOCK OPTION TABLES
The following table shows information concerning stock options granted to
the individuals named in the Summary Compensation Table above during the fiscal
year ended June 30, 1997.
OPTION GRANTS IN FISCAL 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT
SECURITIES % OF TOTAL ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS STOCK PRICE APPRECIATION
OPTIONS GRANTED TO FOR OPTION TERM (2)(3)
GRANTED EMPLOYEES EXERCISE EXPIRATION ----------------------------
NAME (NUMBER)(1) IN FISCAL YEAR PRICE ($/SH) DATE 0% 5% 10%
- ---------------------- ----------- -------------- ------------ ---------- --- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Philip F. Otto........ 0 0 % 0 0 $ 0 $ 0 $ 0
Leon F. Blachowicz.... 5,000 0.9% $14.25 10/24/06 0 44,816 113,573
Gilbert F. Johnson.... 5,000 0.9% $14.25 10/24/06 0 44,816 113,573
George L. Spillane.... 1,500 0.3% $14.25 10/24/06 0 13,445 34,072
Michael L. Foster..... 3,500 0.6% $14.25 10/24/06 0 31,371 79,501
</TABLE>
- ---------------
(1) All options granted in fiscal 1997 were pursuant to the 1992 Stock Option
Plan. The options are incentive or nonqualified stock options that were
granted at 100% of the fair market value of the Common Stock on the date of
grant. The options expire ten years from the date of grant, unless otherwise
earlier terminated as a result of certain events related to termination of
employment. The options vest 25% per year on each of the first four
anniversaries of the option grant date. Additional vesting of the right to
exercise the options ceases when the optionee's employment terminates.
(2) The 5% and 10% assumed rates of appreciation applied to the option exercise
price over the ten-year option term are prescribed by the rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future price of Common Stock. The named
executive officers will receive benefit from the options only to the extent
that the Company's stock appreciates in value over the exercise price of the
options.
10
<PAGE> 14
(3) At assumed annual rates of appreciation of 0%, 5% and 10%, the aggregate
potential realizable increase in value for shares held by all stockholders
as of June 30, 1997, for the ten-year period from July 1996 to July 2006,
would be $0, $144,475,390 and $366,126,830, respectively.
The following table shows information concerning the value of unexercised
stock options held by the individuals named in the Summary Compensation Table
above as of June 30, 1997.
AGGREGATED OPTION EXERCISES (1) IN FISCAL 1997
AND JUNE 30, 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT 6/30/97 OPTIONS AT 6/30/97 (2)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------------------- ------------------------------- ---------------------------------
<S> <C> <C>
Philip F. Otto........................ 0 / 0 0 / 0
Leon F. Blachowicz.................... 40,000 / 65,000 0 / 0
Gilbert F. Johnson.................... 53,750 / 21,250 $ 175,000 / 0
George L. Spillane.................... 44,224 / 5,250 $ 115,345 / 0
Michael L. Foster..................... 27,438 / 12,000 $ 2,245 / 0
</TABLE>
- ---------------
(1) During fiscal 1997, options covering 100,000 shares were exercised by Mr.
Otto.
(2) The value of unexercised options is calculated by multiplying the number of
options outstanding by the difference between the option exercise price and
the closing price of $14 per share of the Company's common stock as reported
on the Nasdaq National Market on June 30, 1997, the last trading day in the
month. Options with an exercise price in excess of the June 30, 1997 closing
price were not included in this calculation.
EMPLOYMENT ARRANGEMENTS
The Company's employment agreement with Mr. Otto provided for a payment to
Mr. Otto in the event his employment terminated, other than for cause, of an
amount equal to 300% of his then-current base salary, and for continued health
benefits for two years or, if earlier, the date on which he obtains health
benefits from a new employer. Upon termination of his employment in December
1996, Mr. Otto became entitled to such health benefits and to severance payments
in the aggregate amount of $1,112,226, payable over a three year period.
Under an agreement between the Company and Gilbert F. Johnson that became
effective as of October 1, 1996, Mr. Johnson received a salary at the annual
rate of $300,000 from October 1, 1996 to October 1, 1997, a minimum bonus for
the fiscal year ended June 30, 1997 of $125,000 and an option under the 1992
Incentive Stock Plan of the Company covering 5,000 shares of common stock,
exercisable at a price of $14.25 per share. Pursuant to the terms of the
Agreement, Mr. Johnson resigned as an officer effective as of October 1, 1997,
and will continue as an employee of the Company through September 30, 1999.
During the period October 1, 1997 through September 30, 1999, Mr. Johnson will
receive a salary at the annual rate of $50,000 per year and will participate in
all employee benefit plans that are in effect for the Company's non-officer
employees.
11
<PAGE> 15
In March 1997, Leon F. Blackowicz, George L. Spillane and Michael L. Foster
entered into one year agreements with the Company which provide that in the
event of the termination of their employment other than for cause or death or
disability within specified time periods after a change of control or a change
in their status, pay, work location or job responsibilities following a change
of control, each of them would receive a continuation of salary and benefits and
immediate vesting of all unvested options and restricted stock; such payments
would cease upon their reemployment by another company. A change in control
would occur (a) if any person were to acquire 30% or more of the combined voting
power of the outstanding shares of capital stock of the Company, (b) if the
Company were to merge with another Company in a transaction pursuant to which
the shareholders of the Company immediately before the merger would own less
than 50% of the voting power of the surviving or acquiring party, (c) upon the
sale of 50% or more of the assets of the Company, (d) upon the sale or other
disposition of business units within a 12-month period that contributed for that
period more than 45% of the Company's revenues, or (e) if the continuing
directors of the Company (as defined in the agreements) ceased to constitute at
least a majority of the Board. The continuation of salary and other benefits
would be for one year with respect to the events described in (a), (b), (c) and
(e) of the preceding sentence and six months with respect to the event described
in subparagraph (d).
The Company entered into a four-year employment agreement with Frederick D.
Lawrence in July 1997, pursuant to which Mr. Lawrence will receive a base salary
at the annual rate of $450,000 and a bonus targeted at 67% of base salary, with
multipliers up to 2.7 times the target bonus amount based upon meeting or
exceeding objectives approved by the Board of Directors; a minimum bonus of
$200,000 will be paid for the 1998 fiscal year. Mr. Lawrence was granted options
to purchase 500,000 shares of the Company's Common Stock that will vest over a
period of four years at the rate of 25% at the end of each year and will be
exercisable at a price equal to the fair market value of the Company's Common
Stock on July 16, 1997, namely, $16.25 per share; only 200,000 of the shares are
covered by options under the Company's 1992 Stock Option Plan, but all of the
options are subject to the same terms and conditions as are set forth in that
Plan. In the event Mr. Lawrence's employment terminates by reason of a change in
control of the Company (as described in the preceding paragraph, with the
exception that the assets and revenues of the Microwave Networks and Satellite
Transmission Systems divisions of the Company are excluded for the purposes of
the events described in (c) and (d) of that paragraph) or is terminated by the
Company without cause, Mr. Lawrence would be entitled to receive three years of
his initial base salary payable over the three years immediately following
termination. Mr. Lawrence will receive loans in an aggregate amount of $466,667
to replace loans of his former employer and a portion of those loans, as was
true of the loans given by his former employer, will be forgiven subject to his
remaining in the employ of the Company for the periods specified in his
agreement. The employment agreement with Mr. Lawrence provides for tax
reimbursement of taxes incurred by him in connection with loan forgiveness and
certain relocation assistance benefits.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All of the members of the Compensation Committee are outside directors.
None of the members of the Committee is or was an officer of the Company.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Compensation Committee (the "Committee") of the Board of Directors is
composed entirely of outside directors, none of whom is or was an officer or
employee of the Company or any of its subsidiaries. The
12
<PAGE> 16
Committee is responsible for developing and making recommendations to the Board
with respect to the Company's executive compensation policies and has the sole
responsibility for determining the recipients of equity participation
awards/grants, such as stock options and restricted stock grants, and the number
of options and restricted shares to be granted to each recipient. In addition,
the Committee is responsible for making annual recommendations to the Board for
the compensation to be paid to the Chief Executive Officer and each of the other
executive officers of the Company. The Committee has engaged a nationally
recognized compensation and benefits consulting firm to assist the Committee and
the Company in reviewing the compensation program for the Company's executive
officers, gathering information on competitive compensation levels, trends and
practices and developing more effective methods of compensating the executive
officers of the Company.
The objectives of the Company's executive compensation program are to
provide the following:
- Levels of total compensation that are competitive with those provided in
the various markets in which the Company competes for its executive
resources;
- Annual cash incentive compensation that varies with the financial
performance of the Company, and rewards corporate, business unit and
individual performance; and
- Long-term (equity participation) incentives which align the interests of
management with those of the shareholders.
The executive compensation program provides an overall level of
compensation competitive relative to the Company's industry peer group. The
Committee develops its executive compensation program with reference to that of
a group of companies in the communications equipment industry. Actual
compensation levels may be greater or less than average levels in surveyed
companies depending upon annual and long-term Company, business unit and
individual performance. The Committee uses its discretion in recommending to the
Board executive compensation at levels that in its judgment are warranted by
external, internal or individual circumstances.
EXECUTIVE OFFICER TOTAL COMPENSATION PROGRAM
The Company's executive officer total compensation program is comprised of
base salary, annual cash incentive compensation, long-term incentive
compensation principally in the form of stock options, and various other common
employee benefits. In July 1992, the Company initiated the Executive Incentive
Plan, a formal pay-for-performance program. The annual incentive compensation
opportunity portion of the executive officers' compensation, which is based upon
the Company's financial performance, has been increased relative to what it was
prior to fiscal 1992. Fiscal 1996 base salary rates of the current executive
officers, excluding the President, were on average 4.7% higher than their base
salary rates in fiscal 1995, and fiscal 1997 base salary rates of the current
executive officers, excluding the President and those officers who had changes
in responsibilities, were on average 6.7% higher than their base salary rates in
fiscal 1996.
The Committee has reviewed the total compensation of the five highest paid
executive officers in fiscal 1997 and has concluded that their compensation is
or was reasonable and consistent with the Company's compensation philosophy and
industry practice.
BASE SALARY
Base salary levels for the Company's executive officers are competitively
set relative to the Company's industry peer group and with reference to
published industry surveys and rates reported in peer group company
13
<PAGE> 17
proxy filings. In determining particular executives' salaries, the Committee
also takes into account individual experience and performance and specific
factors particular to the Company.
ANNUAL INCENTIVE COMPENSATION
The Executive Incentive Plan is the Company's annual incentive program for
selected executive officers and other senior managers. The purpose of the plan
is to provide a direct financial incentive to executives (in the form of an
annual cash bonus) to achieve the Company's and their respective business units'
annual profit goals. Target, threshold and maximum bonus goals are set at the
beginning of each fiscal year and target goals are set for the Company and
business unit profit performance. For fiscal 1995 and 1996, corporate earnings
per share ("EPS") and business unit operating income (as defined), including a
capital charge for assets employed, were selected as the measures of Company and
business unit performance, respectively, against which actual performance was
measured, and in fiscal 1997, certain other criteria were also included.
Individual performance may also be taken into account in determining bonuses,
but no bonus generally is paid unless the predetermined threshold profit
performance level has been reached. Target bonus awards are set at competitive
levels relative to the Company's industry peer group.
STOCK OPTION PROGRAM/PERFORMANCE VESTING FEATURE
The stock option program is the Company's principal long-term incentive
plan for executive officers and key managers. The objectives of the program are
to align executive and shareholder long-term interests by creating a strong and
direct link between executive compensation and shareholder return, and to enable
executives to develop and maintain a significant, long-term ownership position
in the Company's common stock. The Compensation Committee believes that stock
options, better than other long-term incentives, create a mutuality of interest
between the management and shareholders because stock options provide value to
the optionees only if the stock price increases.
Stock options are granted at an option price equal to the fair market value
of the Company's common stock on the date of grant and have ten-year terms. In
determining the size of option grants for individual executive officers, the
Committee compared the assumed potential gain under unvested options outstanding
with a target gain objective set at a level the Company believes is competitive
within its industry peer group.
Options granted in fiscal 1997 and in prior periods vest ratably over a
four-year period. To further align management's compensation with shareholder
interests, the Company has initiated a new vesting philosophy under which
certain key employees will receive options that vest based upon future stock
price performance.
BENEFITS
The Company provides benefits to the executive officers that are generally
available to Company employees.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Otto's base salary rate for fiscal 1997 was fixed at $365,000, the same
rate paid for fiscal 1996. His bonus was to be determined in accordance with the
Executive Incentive Plan; specifically, a threshold earnings per share target
was to have been obtained prior to any bonus being paid. Based upon the
Company's results for fiscal 1997, and the termination of his employment in
December 1996, Mr. Otto did not become entitled to a bonus under the Plan for
fiscal 1997.
14
<PAGE> 18
The employment arrangement with Frederick D. Lawrence, the Company's new
Chief Executive Officer, was the result of negotiations with Mr. Lawrence
conducted with the assistance of the Company's outside compensation consultants
and other advisors.
Section 162(m) of the Internal Revenue Code, enacted in 1993, limits the
amount of compensation a corporation may deduct as a business expense. Section
162(m) generally disallows deductions for compensation in excess of $1 million
to a company's Chief Executive Officer or to any of its four other most highly
compensated executive officers. Compensation that is "performance-based" is not
subject to that limit if certain requirements are met. Based on fiscal 1997
compensation levels, no such levels on the deductibility of compensation applied
to any officer of the Company. The Company has not adopted a policy prohibiting
compensation at a level that would limit deductions.
The foregoing report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
the Proxy Statement into any filing under the Securities Act of 1993 or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under the Acts.
COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS
TERRY W. WARD, Chairman
ARTHUR H. HAUSMAN
WILLIAM B. MARX, JR.
15
<PAGE> 19
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
returns for the Company's common stock, the Nasdaq Stock Market (US) Index and
the Nasdaq Communications Equipment Index, each of which assumes reinvestment of
dividends.
<TABLE>
<CAPTION>
NASDAQ
California Communica-
Measurement Period Microwave, Nasdaq (US) tions Equip-
(Fiscal Year Covered) Inc. Index ment Index
<S> <C> <C> <C>
1992 100.0 100.0 100.0
1993 182.5 125.8 180.7
1994 227.5 127.0 176.5
1995 250.6 169.5 348.0
1996 152.5 217.6 517.6
1997 140.0 264.6 450.5
</TABLE>
RATIFICATION OF SELECTION OF AUDITORS
Ernst & Young LLP has served as independent public accountants for the
Company since 1968. Representatives of Ernst & Young LLP are expected to be
present at the shareholders' meeting with the opportunity to make a statement if
they desire to do so and are expected to be available to respond to appropriate
questions.
This matter is not required to be submitted for shareholder approval but
the Board of Directors has elected to seek ratification of its selection of
independent public accountants by the affirmative vote of the holders of a
majority of the shares present and voting at the meeting. Management has not
determined what action it will take in the event the shareholders do not ratify
the selection of Ernst & Young LLP.
CERTAIN SHAREHOLDERS
The following table sets forth information as of September 8, 1997 (except
as otherwise noted), regarding securities ownership by (i) each person who is
known by the Company to own beneficially more than 5% of any class of the
Company's common stock, (ii) each executive officer named in the Summary
16
<PAGE> 20
Compensation Table, (iii) the directors and nominees individually, and (iv) all
executive officers and directors as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
---------------------
NUMBER PERCENT
--------- -------
<S> <C> <C>
The Travelers Group Inc.(2).............................................. 2,356,835 14.3%
388 Greenwich Street New York, NY 10013
Clover Capital Management, Inc.(3)....................................... 1,042,000 6.3%
11 Tobey Village Office Park Pittsford, NY 14534
David L. Babson & Co., Inc............................................... 924,700 5.6%
One Memorial Drive Cambridge, MA 02142
Frederick D. Lawrence.................................................... 15,150 *
David B. Leeson(4)....................................................... 79,586 *
Gilbert F. Johnson(5).................................................... 73,196 *
Arthur H. Hausman(6)..................................................... 25,000 *
Edward E. David, Jr.(7).................................................. 19,000 *
Alfred M. Gray(8)........................................................ 18,000 *
William B. Marx, Jr.(9).................................................. 10,000 *
Terry W. Ward(10)........................................................ 24,212 *
Frederick W. Whitridge, Jr.(11).......................................... 40,000 *
Philip F. Otto........................................................... 36,729
Leon F. Blachowicz(12)................................................... 76,637 *
George L. Spillane(13)................................................... 78,849 *
Michael L. Foster(14).................................................... 56,423 *
All Executive Officers and Directors as a Group (12 persons)(15)......... 516,053 3.1%
</TABLE>
- ---------------
* Owns less than 1% of shares of common stock outstanding as of September 8,
1997.
(1) The shareholders named in the table have sole voting power and dispositive
power with respect to all shares of stock shown as beneficially owned by
them, except as otherwise indicated in the footnotes to this table. Amounts
indicated for shares which a person has an option to acquire are issuable
upon exercise of outstanding options which were exercisable on September 8,
1997, or within 60 days thereafter.
(2) As of June 30, 1997, these shares were beneficially owned either directly
or through certain wholly owned subsidiaries of The Travelers Group Inc.
The Travelers Group Inc. and its subsidiaries reported shared voting and
dispositive power with respect to all of such shares.
(3) As of September 18, 1997, Clover Capital Management, Inc. reported shared
voting power and shared dispositive power with respect to all of such
shares.
(4) Includes 22,000 shares of common stock which Dr. Leeson has an option to
acquire.
(5) Includes 63,750 shares of common stock which Mr. Johnson has an option to
acquire.
17
<PAGE> 21
(6) Includes 1,000 shares held by Mr. Hausman and his wife as Trustees of the
Hausman Family Trust and 24,000 shares of common stock which Mr. Hausman
has an option to acquire.
(7) Includes 19,000 shares of common stock which Dr. David has an option to
acquire.
(8) Includes 18,000 shares of common stock which Mr. Gray has an option to
acquire.
(9) Includes 10,000 shares of common stock which Mr. Marx has an option to
acquire. Mr. Marx is a director of Massachusetts Mutual Life Insurance
Company, which owns David L. Babson & Co., Inc.
(10) Includes 10,183 shares of common stock which Mr. Ward has an option to
acquire.
(11) Includes 10,000 shares of common stock which Mr. Whitridge has an option to
acquire and 15,000 shares owned by Providence Investors, L.L.C. with
respect to which Mr. Whitridge shares voting and dispositive power but
disclaims beneficial ownership except to the extent of his pecuniary
interest therein.
(12) Includes 48,438 shares of common stock which Mr. Blachowicz has an option
to acquire.
(13) Includes 47,349 shares of common stock which Mr. Spillane has an option to
acquire.
(14) Includes 34,063 shares of common stock which Mr. Foster has an option to
acquire.
(15) Includes 306,783 shares of common stock which all officers and directors as
a group have an option to acquire.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors and
executive officers, and any persons holding more than ten percent of the
Company's common stock, are required to report their initial ownership of the
Company's common stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established and the Company is required to disclose in this proxy statement
any failure to file by such dates of which it becomes aware during the fiscal
year. The Company believes that during the last fiscal year its directors and
officers filed on a timely basis all such reports required to be filed.
PROPOSALS BY SHAREHOLDERS
Proposals by shareholders of the Company intended to be presented at the
next annual meeting must be received by the Company for inclusion in the
Company's proxy statement and form of proxy relating to that meeting by May 30,
1998.
EXPENSES OF SOLICITATION
The expense of preparing, assembling, printing and mailing the forms of
proxy and the material used in the solicitation of proxies will be paid by the
Company. Arrangements will be made for the forwarding of soliciting materials by
nominees, custodians and fiduciaries to their principals. Corporate Investor
Communications, Inc. will assist the Company in obtaining the return of proxies
at an estimated cost to the Company of $4,500.
18
<PAGE> 22
OTHER MATTERS
Management knows of no other matters which will be brought before the
meeting, but if such matters are properly presented the proxies solicited hereby
will be voted in accordance with the judgment of the persons holding such
proxies.
BY THE BOARD OF DIRECTORS
/s/ GEORGE L. SPILLANE
GEORGE L. SPILLANE
Secretary
Redwood City, California
October 3, 1997
19
<PAGE> 23
3250-PS-97
<PAGE> 24
CALIFORNIA MICROWAVE, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Frederick D. Lawrence and George L.
Spillane, or either of them, each with power of substitution and revocation, as
the proxy or proxies of the undersigned to represent the undersigned and vote
all shares of the Common Stock, $.10 par value, of CALIFORNIA MICROWAVE, INC.
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Shareholders, to be held at the Sunnyvale Hilton Inn, located
at 1250 Lakeside Drive, Sunnyvale, California, at 11:00 a.m. on Tuesday, October
28, 1997, and at any adjournments or postponements thereof, upon the matters set
forth on the reverse side of this card.
The Annual Meeting may be held as scheduled only if a majority of the
shares outstanding are represented at the meeting by attendance or proxy.
Accordingly, please complete this proxy and return it promptly in the enclosed
envelope. Please date and sign exactly as your name(s) appears on your shares.
If signing for estates, trusts or corporations, title or capacity should be
stated. If shares are held jointly, each holder should sign.
The shares covered by this proxy will be voted in accordance with the choices
made. When no choice is made, this proxy will be voted for all listed nominees
for directors and for proposal 2. In the event of cumulative voting, a vote for
nominees of the Board of Directors will give the persons named in the proxy
discretionary authority to cumulate all votes as to which the shareholder is
entitled and allocate such votes in favor of one or more nominees of the Board
voted for by the shareholder, as the proxyholders may determine. If additional
persons are nominated for election as directors, the proxyholders may vote this
proxy in such manner on a cumulative voting basis as will ensure the election of
as many of the directors voted for by the shareholder as possible. In such
event, the specific nominees for whom such votes will be cumulated will be
determined by the proxyholders.
<PAGE> 25
/ X / PLEASE MARK VOTES AS IN
THIS EXAMPLE
1. Election of Directors
Nominees: Frederick D. Lawrence, Arthur H. Hausman, Alfred M. Gray,
William B. Marx, Jr., Terry W. Ward and Frederick W. Whitridge, Jr.
FOR WITHHELD
/ / / /
/ /_____________________________________________________________________________
For all nominees except as noted above.
2. To ratify the selection of Ernst & Young LLP as independent public
accountants for the Company.
FOR AGAINST ABSTAIN
/ / / / / /
3. With discretionary authority on such other matters as may properly come
before the meeting.
MARK HERE FOR ADDRESS MARK HERE IF YOU
CHANGE AND NOTE AT LEFT / / PLAN TO ATTEND / /
THE MEETING
NOTE: Please sign as your name(s) appear hereon. If more than one name appears,
all must sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature ______________ Date ______ Signature ______________ Date ______
