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
COMARCO, Inc.
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(Name of Registrant as Specified In Its Charter)
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(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 O-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 O-11:*
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule O-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:
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<PAGE>
COMARCO, INC.
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------
To Be Held
July 9, 1997
To the Shareholders of COMARCO, Inc.:
The Annual Meeting of the Shareholders of COMARCO, Inc., a California
corporation (the "Company") will be held at the Company's offices, 167
Technology Drive, Irvine, California 92618, on July 9, 1997 at 10:00 A.M. for
the following purposes:
1. To elect five Directors; and
2. To transact such other business as may properly come before the meeting,
or any adjournment thereof.
Only holders of record of the Company's Common Stock at the close of
business on May 16, 1997 are entitled to notice of and to vote at the Annual
Meeting.
The Board of Directors of the Company intends to present Don M. Bailey,
Gen. Wilbur L. Creech, Gerald D. Griffin, Adm. Wesley L. McDonald and Paul G.
Yovovich as nominees for election as Directors at the Annual Meeting.
Each shareholder is cordially invited to be present and to vote in person
at the meeting. TO ASSURE REPRESENTATION AT THE MEETING, HOWEVER, SHAREHOLDERS
ARE URGED TO SIGN AND RETURN THE PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE. Shareholders who attend the meeting may still vote in person, even if
they have previously mailed a proxy, by notifying the Secretary of their
intention to do so.
BY ORDER OF THE BOARD OF DIRECTORS
EVELYN M. EVANS, Secretary
Yorba Linda, California
May 20, 1997
<PAGE>
COMARCO, INC.
PROXY STATEMENT
For Annual Meeting of Shareholders
To Be Held
July 9, 1997
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of COMARCO, Inc., a California corporation,
("COMARCO" or the "Company") for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on Wednesday July 9, 1997 at 10:00 A.M. at the
Company's offices, 167 Technology Drive, Irvine, California 92618, or any
adjournment thereof, for the purposes set forth in the accompanying notice of
meeting. This Proxy Statement and the accompanying form of proxy were first
mailed to shareholders on or about May 20, 1997.
A shareholder giving a proxy has the power to revoke it at any time before
it is exercised by (1) filing with the Secretary of the Company a notice of
revocation; (2) filing with the Secretary of the Company a duly executed proxy
bearing a later date; or (3) attending the Annual Meeting and expressing his
intention to vote the shares in person. In the absence of such revocation, all
shares represented by a properly executed proxy received in time for the Annual
Meeting will be voted as specified therein.
The cost of preparing, assembling, printing and mailing this Proxy
Statement and the accompanying form of proxy and the cost of soliciting proxies
will be borne by the Company. The Company may make arrangements with various
brokerage houses or other nominees to send proxy materials to the beneficial
owners of stock and may reimburse them for their reasonable expenses in
connection therewith.
VOTING RIGHTS
The only voting securities of the Company consist of Common Stock. Only
shareholders of record at the close of business on May 16, 1997 will be entitled
to vote at the Annual Meeting. As of said date there were outstanding 4,757,959
shares of Common Stock, which are entitled to one vote per share except that
each shareholder is entitled to cumulate his shares in the election of
Directors, provided that at least one shareholder has given notice, prior to the
voting, of his intention to do so. If cumulative voting is in effect, each
shareholder may give one candidate a number of votes equal to the number of
Directors to be elected multiplied by the number of shares held by him, or he
may distribute his votes on the same principle among as many candidates as he
thinks fit.
The five nominees receiving the greatest number of votes at the Annual Meeting
shall be elected Director. Shareholders may cumulate their votes for one or more
candidates in the manner and upon satisfaction of the conditions described
above. Abstentions shall have no effect on voting for the election of Directors.
With respect to shares of Common Stock held by brokers in street name for the
beneficial owners thereof, the election of Directors is a "routine" matter upon
which the brokers, as the holders of record, may vote these shares for which the
beneficial owners have not provided them specific instructions.
<PAGE>
Item 1 on Proxy Card
ELECTION OF DIRECTORS
Five Directors will be elected at the Annual Meeting. Each Director elected
at the Annual Meeting will hold office until the next annual meeting of
shareholders and until his successor is duly elected and qualified. It is
intended that the shares represented by the enclosed proxy will be voted, unless
otherwise instructed, for the election of the five nominees named below. While
the Company has no reason to believe that any of the nominees will be unable to
serve as Director, it is intended that if such an event should occur, such
shares will be voted for the remainder of the nominees and for such substitute
nominee or nominees as may be selected by the Board of Directors. Subject to the
foregoing, and unless a shareholder withholds authority to vote his shares (i)
for all of the nominees by so indicating on the enclosed proxy card or (ii) for
any one or more of the nominees by checking their names in the space provided on
such card, in which case his shares will not be voted for such nominee or
nominees, the proxies will have the discretion to cumulate votes as provided by
California law (see "VOTING RIGHTS") and to distribute such votes among all the
nominees (or, if authority to vote for any nominee or nominees has been
withheld) among the remaining nominees in whatever manner they deem appropriate.
All the nominees are currently serving as Directors of the Company. The
term of office of each of the current Directors expires on the date of the
Annual Meeting. All the Directors were elected at the last annual meeting.
The table immediately below contains pertinent information concerning the
nominees and is followed by a brief biography of each nominee.
<TABLE>
Year First
Principal Elected Other
Name Age Occupation Director Directorships
---- --- ------------------ ------------ -------------
<S> <C> <C> <C> <C>
Don M. Bailey 51 President and Chief 1991 None
Executive Officer of the
Company
Gen. Wilbur L. Creech 70 Executive Consultant 1985 Tech-Sym Corporation
(Ret.) (1) (3) and ESEA Corporation
Gerald D. Griffin 62 Executive Consultant 1986 None
(1) (3)
Adm. Wesley L. McDonald 73 Executive Consultant 1986 Precision Standard, Inc.
(Ret.) (2) (3)
Paul G. Yovovich 43 Private Investor and 1995 US Robotics, Inc.,
(1) (2) Corporate Director APAC TeleServices, Inc. and
Illinois Superconductor
Corporation Inc.
</TABLE>
(1) Member of Compensation Committee
(2) Member of Audit Committee
(3) Member of Nominating Committee
Mr. Bailey has been President and Chief Executive Officer of the Company
since June 1990. Prior to that, since November of 1988, he served as Senior Vice
President of the Company and, since January 1986, as Vice President, Corporate
Development. He has been employed by COMARCO since May 1980.
Since 1984, General Creech has been an executive consultant. General Creech
was Commander of the Tactical Air Command headquartered at Langley Air Force
Base, Virginia from 1978 until his retirement in November 1984.
Mr. Griffin has been an executive consultant since 1992. Previously he was
Managing Director of the Houston Office of Korn/Ferry International. From 1986
to 1988 he was President and Chief Executive Officer of the Houston Chamber of
Commerce. Between 1982 and 1986 he was Director of NASA's Johnson Space Center
in Houston, Texas.
Since 1985, Admiral McDonald has been an executive consultant. Admiral
McDonald served in various capacities with the United States Navy from 1946
until his retirement in December 1985. In his last assignment he served for more
than three years as Supreme Allied Commander, Atlantic; US Commander in Chief,
Atlantic; and Commander in Chief, US Atlantic Fleet.
Mr. Yovovich is a private investor and corporate director. Mr. Yovovich
served as President of Advance Ross Corporation from 1993 to 1996. He served in
a variety of executive positions with Centel Corporation from 1982 through 1992,
most recently as President of its Central Telephone Company unit from 1990
through 1992.
BOARD ORGANIZATION AND COMMITTEE MEETINGS
During the fiscal year ended January 31, 1997, the Company's Board of Directors
met seven times and various committees of the Board met a total of six times.
Each of the Company's Directors attended at least 75% of the total number of
meetings of the Board of Directors and meetings of the Committees on which he
served (during the periods within which he was a Director or Member of such
Committee) during the Company's last fiscal year.
Standing committees of the Board of Directors include the following:
The Audit Committee's primary purpose is to aid the Directors in undertaking and
fulfilling their responsibilities for financial reporting to the shareholders;
to support and encourage efforts to improve the financial controls exercised by
management and to ensure their adequacy for purposes of public reporting; and to
review the engagement of the Company's independent auditors and review with such
accountants the scope and results of their annual audit of the Company. The
Audit Committee met twice during the last fiscal year in conjunction with
regular Board meetings, and had one telephonic meeting.
The Compensation Committee reviews the compensation of officers and key
employees, and makes awards under the Company's 1982 and 1995 Employee Stock
Option Plans and the Stock Option Plan for the Company's subsidiary, Comarco
Wireless Technologies, Inc. The Compensation Committee met three times during
the last fiscal year.
The Nominating Committee's responsibilities include reviewing the qualifications
of candidates for Board membership, reviewing the status of Directors when his
principal position and/or primary affiliation changes, recommending to the Board
of Directors, new candidates for election by shareholders at annual meetings,
recommending candidates to fill vacancies in directorships, and making
recommendations to the Board of Directors concerning selection, tenure,
retirement, and composition of the Board of Directors. Shareholders of COMARCO
may recommend persons to be nominated for election as directors of COMARCO at
the Meeting. To be considered by the Nominating Committee and to have their
names placed in the proxy statement, such recommendations must be submitted in
writing to the secretary of the Company and received no later than 90 days
before the date in the current year which corresponds to the date on which the
Meeting was held during the immediate prior year. The Nominating Committee did
not meet during the year, but the Board nominees were approved by the entire
Board.
DIRECTORS COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
Cash Compensation(1) (2) Security Grants
---------------------------------------------- -----------------------------------------
Annual Meeting Consulting Fees/ Number of Number of Securities
Name Retainer Fees Fees Other Fees Shares Underlying Options/SARs(3)
- ----- ------------- --------- ----------------- ----------- ---------------------------
<S> <C> <C> <C> <C> <C>
Wilbur L. Creech $21,300 $12,700 $0 0 5,000 shares
Gerald D. Griffin $85,000 $0 $47,000 0 5,000 shares
(Chairman) (bonus)
Wesley L. McDonald $21,300 $14,750 $0 0 5,000 shares
Paul G. Yovovich $21,000 $9,116 $0 0 5,000 shares
</TABLE>
Notes:
(1) Each member of the Board other than Mr. Griffin and Mr. Bailey (who also
serves as an officer) received a daily Director's fee of $1,800 per meeting,
$900 per telephone meeting, and a monthly retainer of $1,800. Mr. Griffin
received a monthly payment of $7,083 in lieu of meeting fees and retainers.
Members of the various committees received a $750 meeting fee, and the Committee
Chairman received an additional $750 per meeting. Each Director was reimbursed
for reasonable lodging and expenses incurred to attend Board and Committee
meetings.
(2) "Cash compensation" includes compensation deferred during the current year
and earnings on compensation deferred from prior years.
(3) Represents a stock option award made on 4/30/96 at an exercise price of
$15.00 per share, the then current market price of a share of the Company's
Common Stock.
OPTION GRANTS FOR FISCAL YEAR ENDED 1/31/97
<TABLE>
Percent of Total
Options Options Granted Exercise Expiration Potential Value(5)
Name Granted(1) to Directors(2) Price(3) Date(4) @ 5% @10%
- ---- ---------- ------------------ -------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Wilbur L. Creech 5,000 20% $15.00 5/07/06 $47,167 $119,531
Gerald D. Griffin 5,000 20% $15.00 5/07/06 $47,167 $119,531
(Chairman)
Wesley L. McDonald 5,000 20% $15.00 5/07/06 $47,167 $119,531
Paul G. Yovovich 5,000 20% $15.00 5/07/06 $47,167 $119,531
</TABLE>
Notes:
(1) The options vest in equal annual increments of 25% over the four year
period following their date of grant, April 30, 1996.
(2) Options are awarded each April 30 in accordance with the plan document.
(3) Represents the fair market value of an underlying share of Common Stock on
the date of grant.
(4) All options, vested and unvested, terminate ninety days after termination
of directorship.
(5) Represents the value of the shares of Common Stock issuable upon the
exercise of the options, assuming the stated rates of price appreciation
for ten years, compounded annually, with the aggregate exercise price
deducted from the final appreciated value. Such annual rates of
appreciation are for illustrative purposes only, are based on requirements
of the Securities and Exchange Commission, and do not reflect the Company's
estimate of future stock appreciation. No assurance can be given that such
rates of appreciation, or any appreciation, will be achieved.
OPTION EXERCISES FOR FISCAL YEAR ENDED 1/31/97
<TABLE>
Number of Unexercised Value of Unexercised(1)
Shares Acquired Value Options at Fiscal Year End Options at Fiscal Year End
Name on Exercise Realized Vested Unvested Vested Unvested
- ---- --------------- -------- --------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Wilbur L. Creech 0 0 6,000 12,000 $ 71,988 $87,113
Gerald D. Griffin 20,000 $349,275 41,000 12,000 $653,688 $87,113
(Chairman)
Wesley L. McDonald 0 0 38,500 12,000 $612,138 $87,113
Paul G. Yovovich 0 0 0 5,000 0 $17,500
</TABLE>
Notes:
(1) These values are calculated using the January 31, 1997 closing price of
Common Stock on the Nasdaq National Market of $18.50 per share, less the
exercise price of the options, multiplied by the number of shares to which
the options relate.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
Rules issued thereunder, the Company's executive officers, Directors and persons
that own more than 10% of the Company's Common Stock are required to file with
the Securities and Exchange Commission reports of ownership and changes in
ownership of Common Stock. Based solely on its review of the copies of such
reports furnished to the Company, or written representations that no reports
were required, the Company believes that, during the fiscal year ended January
31, 1997, its executive officers, Directors and persons that own more than 10%
of the Company's Common Stock complied with the Section 16(a) reporting
requirements on a timely basis, except for Mr. Richard C. Loomis, who had one
delinquent filing for one transaction.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of the Company's outstanding Common Stock as of February 1, 1997,
except as otherwise noted, by persons who are Directors, executive officers, or
persons known to the Company to be beneficial owners of more than five percent
of its outstanding Common Stock. The table also includes the stock ownership of
all Directors and executive officers of the Company as a group. Unless otherwise
indicated, the Company believes that each of the persons listed in the table
(subject to applicable community property laws) has the sole power to vote and
to dispose of the shares listed opposite their name.
<TABLE>
Name and Address Office, Number of Shares Percent
of Beneficial Owner If Any Beneficially Owned Of Class Notes
------------------- ------- ------------------ --------- -----
<S> <C> <C> <C> <C>
Don M. Bailey Director, President and 159,504 3.3% (1)
Chief Executive Officer
Gen. Wilbur L. Creech (Ret.) Director 9,000 * (2)
Gerald D. Griffin Chairman of 43,500 * (3)
the Board
Adm. Wesley L. McDonald (Ret.) Director 39,500 * (4)
Paul G. Yovovich Director 6,500 *
Thomas A. Franza Executive Vice President 15,571 * (5)
Richard C. Loomis Sr. Vice President 6,125 * (6)
Robert A. Lovingood Vice President 0 *
Thomas P. Baird Vice President, 24,141 * (7)
Chief Financial Officer
Evelyn M. Evans Vice President, Secretary 26,543 * (8)
John C. Hillis Sr. Vice President 22,033 * (9)
Directors and Officers 352,417 7.3% (10)
As a Group (11 persons)
COMARCO, Inc. 204,695 4.2% (11)
Employee Savings and Retirement
Trust
Parsow Partnership, Ltd. 271,400 5.7% (12)
222 Skyline Drive
Elkhorn, NE 68022
T. Rowe Price Associates 294,400 6.1% (13)
100 East Pratt Street
Baltimore, MD 21202
Okabena Partnership K 379,300 7.9% (14)
5140 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Wanger Asset Management, L.P. 678,000 14.1% (15)
227 West Monroe St., Ste 3000
Chicago, Illinois 60606
Storie Partners, L.P. 464,300 9.7% (16)
One Bush Street
Suite 1350
San Francisco, CA 94104
</TABLE>
* Indicates less than one percent
(1) Includes 137,500 shares which Mr. Bailey has the right to acquire within
60 days after February 1, 1997, by stock option exercise. Mr. Bailey
shares dispositive and voting rights of all such securities (except for
stock options) with his spouse.
(2) Includes 6,000 shares which General Creech has a right to acquire within 60
days after February 1, 1997, by stock option exercise.
(3) Includes 41,000 shares which Mr. Griffin has the right to acquire
within 60 days after February 1, 1997, by stock option exercise.
(4) Includes 38,500 shares which Admiral McDonald has the right to acquire
within 60 days after February 1, 1997, by stock option exercise.
(5) Includes 12,500 shares which Mr. Franza has the right to acquire within
60 days after February 1, 1997, by stock option exercise. Does not
include options to acquire shares in the Company's subsidiary Comarco
Wireless Technologies, Inc. See section entitled "Stock Options".
(6) Includes 5,125 shares which Mr. Loomis has the right to acquire within
60 days after February 1, 1997, by stock option exercise.
(7) Includes 23,125 shares which Mr. Baird has the right to acquire within
60 days after February 1, 1997, by stock option exercise.
(8) Includes 25,625 shares which Ms. Evans has the right to acquire within
60 days after February 1, 1997, by stock option exercise.
(9) Includes 21,900 shares which Mr. Hillis has the right to acquire within
60 days after February 1, 1997, by stock option exercise.
(10) Includes an aggregate of 311,275 shares held by all current executive
officers and Directors that are subject to options exercisable within 60
days after February 1, 1997.
(11) Represents shares held in the Employee Savings and Retirement Trust, of
which the Company is the administrator. Under the beneficial ownership
rules promulgated by the Securities and Exchange Commission, the Company
could be deemed to be a beneficial owner of such shares. All such shares
are allocated to the accounts of Plan participants and are subject to and
voted in accordance with the direction of the participants. The assets of
the trust are under the trusteeship of Smith Barney Corporate Trust
Company. The number of shares listed is as of March 31, 1997.
(12) Taken from Amendment No. 12 to Schedule 13D filed with the Securities and
Exchange Commission on February 27, 1997. Alan Parsow is the sole general
partner of Parsow Partnership, Ltd.
(13) Taken from Schedule 13G filed with the Securities and Exchange Commission
on February 14, 1997. These securities are owned by various individual and
institutional investors for which T. Rowe Price Associates, Inc. and T.
Rowe Price Small Cap Value Fund, Inc. ("Price Associates") serve as
investment adviser with power to direct investments and/or sole power to
vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims beneficial ownership of such securities.
(14) Taken from Amendment No. 7 to Schedule 13D filed with the Securities and
Exchange Commission on behalf of Okabena Partnership K, on April 14, 1997.
Okabena Investment Services, Inc. is the corporate managing partner of the
reporting Person.
(15) Taken from Amendment 1 to Schedule 13G filed with the Securities and
Exchange Commission on February 4, 1997 on behalf of Wanger Asset
Management, L.P. ("WAM"), Wanger Asset Management, Ltd. ("WAM LTD"), and
Ralph Wanger ("Wanger"), and updated via letter to COMARCO dated April 4,
1997. WAM is an investment adviser registered under section 203 of the
Investment Advisers Act of 1940. WAM LTD is the general partner of the
investment adviser. Wanger is the principal stockholder of the general
partner. Included are COMARCO shares held in Acorn Fund, a series of Acorn
Investment Trust, for which WAM is deemed to be a beneficial owner.
(16) Taken from Schedule 13D filed with the Securities and Exchange Commission
on behalf of Storie Partners, L.P. ("Storie") on August 30, 1996 and
updated via letter to COMARCO dated April 4, 1997. The management of Storie
is vested exclusively in its general partner, Storie Advisors, Inc. Richard
E. Dirickson, Jr. and Steven A. Ledger make investment decisions for
Storie, and either may be deemed to have shared voting and dispositive
powers.
EXECUTIVE COMPENSATION
The Company's executive compensation structure consists of salaries, cash
incentive awards and stock option awards. This structure is administered by a
committee of the Board of Directors (the "Compensation Committee") consisting
solely of outside Directors who are "disinterested" within the meaning of the
rules and regulations of the Securities and Exchange Commission. The Company's
CEO recommends compensation levels for the Company's officers, except for
himself, to the Compensation Committee. The Committee adjusts these
recommendations and approves final compensation levels for these officers. In
addition the Committee sets the compensation level for the CEO and the Chairman
of the Board. Incentive compensation is based upon pre-established quantitative
goals, typically stock price, profitability and new business bookings and
qualitative goals, such as customer satisfaction.
<PAGE>
The information on compensation set forth below is furnished for the fiscal year
ended January 31, 1997 for the Chief Executive Officer and the four most highly
compensated executive officers whose cash compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation Long Term Compensation
------------------------------------------------ ---------------------------------------------------------
Name and Other Restricted Long Term
Principal Fiscal Annual Stock Options Incentive All Other
Position Year Salary ($)(1) Bonus ($) Compensation(2) Number Options # Payouts ($) Compensation ($)
- -------- ---- ---------- --------- --------------- ------ --------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Don M. Bailey(3) 1997 241,838 275,000 0 0 25,000 0 15,352(4)
President & CEO 1996 211,894 235,000 0 0 25,000 0 8,811(5)
1995 191,797 150,000 0 0 0 0 14,441(6)
Thomas P. Franza 1997 201,521 265,000 0 0 20,000 0 15,256(7)
Executive 1996 176,031 225,000 0 0 10,000 0 6,587(8)
Vice President 1995 131,000 150,000 0 0 0 0 9,875(9)
Richard C. Loomis 1997 139,900 33,000 0 0 0 0 6,833(10)
Sr. Vice President 1996 137,569 42,000 0 0 10,000 0 6,256(11)
1995 132,764 40,000 0 0 0 0 6,314(12)
Thomas P. Baird 1997 125,370 50,000 0 0 5,000 0 7,037(13)
Vice President & 1996 120,516 30,000 0 0 5,000 0 5,901(14)
Chief Financial 1995 117,280 28,000 0 0 0 0 9,027(15)
Officer
Evelyn M. Evans 1997 120,939 34,000 0 0 5,000 0 9,037(16)
Vice President 1996 115,484 45,000 0 0 5,000 0 8,991(17)
Secretary 1995 111,242 28,000 0 0 0 0 6,894(18)
</TABLE>
Notes:
(1) "Salary" includes compensation deferred during the current year, earnings
on compensation deferred from prior years, and cashed out vested vacation
payments.
(2) "Other Annual Compensation" amounts were below reporting thresholds.
(3) Mr. Bailey has an agreement with the Company providing that, if he is
terminated or constructively terminated following a change in control of
the Company, then he is entitled to two years of base salary and incentive
compensation of the planned level for that year or the amount paid in the
year before the change of control, whichever is greater.
(4) Of this amount, (i) $1,267 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $9,585 represents
premium and other payments made in connection with the Company's medical
plan.
(5) Of this amount, (i) $766 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $3,545 represents
premium and other payments made in connection with the Company's medical
plan.
(6) Of this amount, (I) $478 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $9,463 represents
premium and other payments made in connection with the Company's medical
plan.
(7) Of this amount, (i) $1,267 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $9,489 represents
premium and other payments made in connection with the Company's medical
plan.
(8) Of this amount, (I) $1,074 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $1,013 represents
premium and other payments made in connection with the Company's medical
plan.
(9) Of this amount, (i) $456 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $4,919 represents
premium and other payments made in connection with the Company's medical
plan.
(10) Of this amount, (I) $401 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $1,932 represents
premium and other payments made in connection with the Company's medical
plan.
(11) Of this amount, (i) $430 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $1,326 represents
premium and other payments made in connection with the Company's medical
plan.
(12) Of this amount, (I) $239 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,011 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $2,064 represents
premium and other payments made in connection with the Company's medical
plan.
(13) Of this amount, (i) $210 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $2,327 represents
premium and other payments made in connection with the Company's medical
plan.
(14) Of this amount, (i) $188 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) 1,213 represents
premium and other payments made in connection with the Company's medical
plan.
(15) Of this amount, (i) $115 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $4,412 represents
premium and other payments made in connection with the Company's medical
plan.
(16) Of this amount, (i) $212 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,500 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $4,325 represents
premium and other payments made in connection with the Company's medical
plan.
(17) Of this amount, (i) $138 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,273 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $4,580 represents
premium and other payments made in connection with the Company's medical
plan.
(18) Of this amount, (i) $75 represents life insurance premium of which the
officer is the beneficiary, (ii) $4,177 represents Company contributions to
the Company's Savings and Retirement Plan, and (iii) $2,642 represents
premium and other payments made in connection with the Company's medical
plan.
STOCK OPTIONS
The following tables set forth for each person named in the executive
compensation table above, information concerning (i) options granted by the
Company during the fiscal year ended January 31, 1997 and (ii) options exercised
during such period.
OPTION GRANTS FOR FISCAL YEAR ENDED 1/31/97
<TABLE>
Percent of Total
Options Options Granted Exercise Expiration Potential Value(4)
Name Granted(1) to Employees Price(2) Date(3) @ 5% @10%
- ---- ---------- ---------------- -------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Don M. Bailey 25,000 33.3% $14.50 2/20/06 $227,974 $577,732
Thomas A. Franza 20,000 26.7% $14.50 2/27/06 $182,379 $462,185
Richard C. Loomis 0 0%
Thomas P. Baird 5,000 6.7% $14.50 2/27/06 $45,595 $115,546
Evelyn M. Evans 5,000 6.7% $14.50 2/27/06 $45,595 $115,546
</TABLE>
Notes:
(1) The options vest in equal annual increments of 25% over the four-year
period following their date of grant, February 13, 1996.
(2) Represents the fair market value of an underlying share of Common Stock on
the date of grant.
(3) All options, vested and unvested, terminate ninety days after termination
of employment.
(4) Represents the value of shares of Common Stock issuable upon the exercise
of the option, assuming the stated rates of price appreciation for ten
years, compounded annually, with the aggregate exercise price deducted from
the final appreciated value. Such annual rates of appreciation are for
illustrative purposes only, are based on requirements of the Securities and
Exchange Commission, and do not reflect the Company's estimate of future
stock appreciation. No assurance can be given that such rates of
appreciation, or any appreciation, will be achieved.
OPTION EXERCISES FOR FISCAL YEAR ENDED 1/31/97
<TABLE>
Shares Acquired Value Number of Unexercised Value of Unexercised(2)
Name on Exercise Realized(1) Vested Unvested Vested Unvested
- ---- --------------- ----------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Don M. Bailey 0 0 137,500 62,500 $1,869,975 $310,500
Thomas A. Franza(3) 0 0 12,500 35,000 $102,150 $124,350
Richard C. Loomis 2,500 $14,673 5,125 8,000 $59,115 $52,350
Thomas P. Baird 0 0 23,125 12,125 $334,963 $69,813
Evelyn M. Evans 0 0 25,625 12,125 $359,313 $69,813
</TABLE>
Notes:
(1) Market value on the date of exercise, net of the exercise price.
(2) These values are calculated using the January 31, 1997 closing price of
Common Stock on the Nasdaq National Market of $18.50 per share, less the
exercise price of the options, multiplied by the number of shares to which
the options relate.
(3) Mr. Franza has been granted options to purchase a total of 9,500 shares of
common stock of one of the Company's subsidiaries under its stock option
plan. Of the 9,500 options, 4,375 are vested and 5,125 are unvested. As of
May 1, 1997, the subsidiary had 300,000 shares of common stock outstanding.
Based on current valuation, which is done by the Compensation Committee of
the COMARCO Board of Directors, the shares underlying the vested options
are valued at $606,899, and those underlying the unvested options are
valued at $649,236.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
To: The Board of Directors
As members of the Compensation Committee, it is our duty to establish the salary
and incentive compensation of the President and Chief Executive Officer and to
review, to revise as appropriate, and to approve the Chief Executive Officer's
recommendations for the salaries and incentive compensation of the Company's
executive officers. Since 1985, the Committee, composed exclusively of Directors
who are not employees of the Company, has received a comprehensive written and
oral corporate performance report from the Company's Chief Executive Officer.
This report presents corporate performance against predetermined quantitative
and qualitative performance objectives. The report summarizes the results for
each of the Company's operations and provides an explanation for each
compensation recommendation made by the Chief Executive Officer. The Committee,
after appropriate inquiry and modification, approves compensation
recommendations and establishes appropriate compensation for the Chief Executive
Officer and for the Chairman of the Board. (The Compensation Committee meets
without Mr. Griffin on all matters relating to the compensation of the Chairman
of the Board.)
Performance objectives and incentive goals are established at the outset of each
fiscal year, together with salary levels. Incentive awards are made after the
close of each fiscal year. Incentive compensation is based on quantitative
performance factors (stock price, profit and new business) as well as a number
of qualitative factors related to long-term performance. For fiscal year 1997,
quantitative factors were considered by the Committee to be more important than
qualitative factors in establishing compensation levels.
The Committee adheres to the following philosophy regarding compensation of the
Company's executive officers:
o to provide competitive total pay opportunities in order to attract, retain,
and motivate high quality executive talent critical to the Company's
success;
o to pay for performance through a compensation mix that emphasizes
competitive cash incentives and merit-based salary increases and
de-emphasizes entitlements and perquisites;
o to create a mutuality of interest between executives and shareholders
through a stock option program; and
o to focus the executive's attention on overall corporate objectives as well
as the executive's specific operational objectives.
The key elements of the Company's executive compensation program are base
salary, annual incentive compensation, and stock options. The Committee's
policies with respect to each of these elements, including the basis for the
compensation paid and awarded to Mr. Bailey, the Company's President and CEO,
are described below. While the elements of compensation are considered
separately, the Committee takes into account the total compensation package
afforded by the Company to the individual.
Base Salaries
Base salaries for executive officers are initially determined by evaluating
responsibilities of the position held and the experience of the individual and
by comparing the salaries paid to persons holding similar positions at other
companies. Each year, the Company uses data compiled from a nationwide
compensation survey of approximately 200 small to medium size private and
publicly traded companies. Comparisons are made based on like-sized companies
and those in similar industries. The Committee uses this information to assist
in establishing base salaries. In general, base salaries and total compensation
are targeted to be consistent with these data.
Annual salary adjustments are determined by evaluating the performance of the
Company and of each executive officer and reviewing base salaries for comparable
positions contained in the survey data mentioned above. In addition, the
Committee takes into account any new responsibilities that such officer may have
assumed. The Committee, where appropriate, also considers non-financial
performance measures, such areas as any increase in market share, customer
service, working capital management, employee relations, and leadership
development.
Concerning Mr. Bailey, The Company's President and CEO, the Committee took into
account a comparison of base salaries of chief executive officers of the other
companies contained in the national salary survey mentioned above, the Company's
success in meeting several financial goals, including return on investment and
earnings per share; the performance of the Company's stock; and the assessment
of Mr. Bailey's individual performance, including his development of long-term
strategies for the continued diversification of the Company away from government
contracting toward wireless communications. Consistent with these criteria, Mr.
Bailey received a salary of $241,838 (an increase of 14.1%) in the fiscal year
ended January 31, 1997.
Incentive Compensation
The Company's officers and other key employees are eligible for annual cash
incentive compensation, based upon individual and corporate performance goals
which are established at the beginning of each fiscal year. Corporate
performance is measured primarily by the financial results and new business
development achieved by the Company for such fiscal year.
The Committee takes into account a number of criteria in determining Mr.
Bailey's annual incentive compensation, the most important of which are
financial indicators such as net income, earnings per share and stock price.
Goals for determining Mr. Bailey's annual incentive compensation are set at the
beginning of each fiscal year. The Committee determined to award Mr. Bailey
annual incentive compensation of $275,000 for the last fiscal year, $40,000 more
than the previous fiscal year, based, in part, upon the approximately 43%
increase in average price of the Company's Common Stock during the last fiscal
year from its average price during the prior fiscal year as well as the
Company's improved performance and operating results in such areas as
diversifying its business base and decreasing its dependence on government
contract work.
Stock Options
Stock options are designed to align the interests of executives with those of
the shareholders. The sizes of the option awards are entirely at the discretion
of the Committee. The Committee takes into account the total compensation
offered to its executives when considering the number of options awarded each
year.
Stock option awards to officers and employees were made in the last fiscal year
based upon the criteria described above. The awards to the CEO and the other
four most highly compensated executive officers are shown in the preceding
section entitled "Stock Options".
The Compensation Committee continuously reviews the Company's executive
compensation policies and plans to determine if revisions may be necessary due
to Section 162 of the Internal Revenue Code of 1986 which limits the
deductibility of compensation paid to certain executives to $1 million. It is
the current policy of the Compensation Committee to preserve, to the extent
reasonably possible, the Company's ability to obtain a corporate tax deduction
for compensation paid to executive officers of the Company to the extent
consistent with the best interests of the Company and its shareholders.
Submitted by the Committee:
General Wilbur L. Creech, Chairman
Gerald D. Griffin
Paul G. Yovovich
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following Directors served on the Company's Compensation Committee for the
awards and decisions discussed above.
Gen. Wilbur L. Creech, Chairman
Gerald D. Griffin
Paul G. Yovovich
None of the members of the Compensation Committee served as an officer or
employee of the Company or its subsidiaries during the last fiscal year, except
for Mr. Griffin, the Company's Chairman of the Board (a statutory office under
California law).
The Company did not engage in any transactions that required disclosure under
Item 404 of the Securities and Exchange Commission's Regulation S-K during the
last fiscal year.
There were no compensation committee interlocks with other companies within the
meaning of the Securities and Exchange Commission's rules during the last fiscal
year.
PERFORMANCE COMPARISON
The following graphical presentation provides an indication of total shareholder
returns for COMARCO as compared to the Russell 2000 Composite Stock Index and a
peer group of companies (the "Peer Group"). The presentation assumes $100
invested on January 31, 1992 in COMARCO Common Stock, the Russell 2000 Composite
Stock Index, and the Common Stock of the Peer Group. The Russell 2000 Composite
Stock Index is a broad index of 2000 small capitalization common stocks (the
1001st through 3000th largest public companies). While investors cannot invest
in the Russell 2000 Stock Index directly, they may construct a synthetic
position equivalent to an investment in the index using derivative securities
traded on the Chicago Board Options Exchange. The Peer Group consists of nine
companies of similar size (in terms of assets and revenue) and business focus as
COMARCO. While none of the selected peers offer a fully comparable range of
products and services to COMARCO, they are recognized as providers of high
technology electronic, computer, and communications systems engineering services
primarily in US government markets with a presence outside of the government
sector. The returns of each company within the Peer Group have been weighted
according to their respective stock market capitalization for the purposes of
arriving at a peer group average. Dividends paid by those peer companies that
pay dividends are assumed to be reinvested at the end of the ex-dividend month
without any transaction cost. The members of the Peer Group are as follows:
Analysis & Technology, Inc. (AATI), CACI International, Inc. (CACI), Dynamics
Research Corp (DRCO), ECC International Corp (ECC), GeoDynamics (GDYN), Halifax
Corp (HX), Nichols Research Corp (NRES), National Technical Systems, Inc. (NTSC)
and VSE Corp (VSEC). This is the same group of peer companies which was used for
a comparison in the previous year.
As shown on the following graph, an investment of $100 in COMARCO Common Stock
on January 31, 1992 would have grown in value to $296 as of January 31, 1997.
For the five-year period ending January 31, 1997, the total cumulative return
for holders of COMARCO Common Stock amounted to 196%, or the equivalent of 24.2%
per year compounded annually. By comparison, $100 invested in the peer group
composite would have grown in value to $300 as of January 31, 1997, assuming the
reinvestment of dividends from those companies which paid dividends. For the
five-year period ending January 31, 1997, the total cumulative return for the
Peer Group composite was 200%, or the equivalent of 24.6% per year compounded
annually. The returns of COMARCO and the Peer Group exceeded the comparable
return of the Russell 2000 Composite Stock Index.
The accompanying graph depicts the relative performance of COMARCO in relation
to the Peer Group and to the Russell 2000 Stock Index for the periods indicated.
[graph omitted: Comparison of Cumulative Return]
<TABLE>
1/31/92 1/31/93 1/31/94 1/31/95 1/31/96 1/31/97
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
COMARCO $100 $86 $78 $140 $252 $296
Peer Group $100 $119 $142 $161 $197 $300
Russell 2000 Composite
Stock Index $100 $113 $134 $126 $164 $195
</TABLE>
EXECUTIVE OFFICERS
The following table sets forth pertinent information concerning the persons
who are the current executive officers (who are not Directors) of the Company.
<TABLE>
Name Age Capacity
---- --- --------
<S> <C> <C>
Thomas P. Baird 43 Vice President, Chief Financial Officer and Assistant Secretary
Evelyn M. Evans 41 Vice President, Administration and Secretary
Thomas A. Franza 54 Executive Vice President
John C. Hillis 51 Sr. Vice President
Richard C. Loomis 48 Sr. Vice President
Robert A. Lovingood 39 Vice President
</TABLE>
Mr. Baird has served as Chief Financial Officer of the Company since
September 1992, and Vice President and Controller of the Company since November
1988. He became Assistant Secretary in 1996. He currently holds various
executive positions at a number of the Company's subsidiaries. From December
1987 to November 1988 he served as Vice President, Treasurer and Assistant
Secretary of International Business Services, Inc., a wholly-owned subsidiary of
the Company. From September to December 1987 he served as Assistant to the
Company's Chief Financial Officer. Prior to joining the Company, he was a
Division Controller for Western Gear Corporation from November 1985 to September
1987. Prior to that time, he served in various financial and accounting
positions at Becor Western, Inc.
Ms. Evans joined the Company in January 1986 in the field of contracts
administration. Subsequently, she designed budget models for the Company in her
capacity as Manager of Plans and Analysis. Ms. Evans was promoted to Vice
President in March 1989 and became Secretary of the Company in May 1996. She
currently serves in various executive positions at a number of the Company's
subsidiaries. Prior to joining the Company, Ms. Evans served for six years as an
officer in the United States Army.
Mr. Franza has served as Executive Vice President of the Company since July
1995. He is also currently President of Comarco Wireless Technologies, Inc. and
Comarco Wireless Europe, Inc. From October 1992 until July 1995, he was a Sr.
Vice President of the Company and before then, served as a Vice President from
July 1990 until October 1992. Prior to then, Mr. Franza was the General Manager
of the Company's Advanced Technologies Division. He joined the Company in 1985.
Mr. Hillis has served as Sr. Vice President of the Company since December
1994. He is also currently the President and Chief Executive Officer of Comarco
Systems, Inc. as well as President of International Business Services, Inc. and
LCTI, Inc., each a subsidiary of the Company. Mr. Hillis became a Vice President
in August 1991 and served in such position until December 1994. Before then, he
was the Manager of Engineering Services Business Development and a Vice
President of International Business Services, Inc.
Mr. Loomis has been a Sr. Vice President of the Company since October 1992.
He is also General Manager of the Company's Airport Management Services
Division, as well as a Vice President of International Business Services, Inc.
From November 1989 until October 1992, he served as a Vice President of the
Company. Since joining the Company in April 1986, he has held various management
positions with the Company including Project Manager and Division Manager at the
Facilities Management Division.
Mr. Lovingood has been a Vice President of the Company since August 1996.
He is also President of Comarco Staffing, Inc. From October 1989 until joining
the Company, Mr. Lovingood was President and sole owner of RAL Consulting
Services, Inc. He then incorporated RAL Leasing Consultants, Inc. in June 1991.
SELECTION OF AUDITORS
KPMG Peat Marwick, LLP has been selected as the Company's independent
certified public accountants for the fiscal year ending January 31, 1998.
Representatives of KPMG Peat Marwick, LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they so
desire and to respond to appropriate questions from shareholders.
PROPOSALS FOR SUBMISSION AT NEXT ANNUAL MEETING
If a shareholder desires to submit a proposal at the Company's 1998 Annual
Meeting, such proposal must be received in writing by the Company at its
corporate office no later than January 21, 1998 and otherwise comply with
applicable regulations in order to be included in the Proxy Statement for that
meeting.
OTHER MATTERS
The Board of Directors of the Company does not know of any matter to be
acted upon at the meeting other than the matters described above. If other
matters properly come before the meeting, the holders of the proxies will vote
on such matters in accordance with their judgment.
The Company's 1997 Annual Report to Shareholders is enclosed with this
Proxy Statement.
IN ORDER TO AVOID ADDED EXPENSE OR ADDITIONAL SOLICITATION OF PROXIES, YOU
ARE URGED TO DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED, TO WHICH NO POSTAGE NEED BE AFFIXED.
By ORDER OF THE BOARD OF DIRECTORS
Evelyn M. Evans, Secretary
May 20, 1997
<PAGE>
PROXY COMARCO, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREHOLDERS CALLED FOR JULY 9, 1997
The undersigned shareholder(s) of COMARCO, Inc. a California corporation,
having received the Notice of Annual Meeting of Shareholders and Proxy Statement
dated May 16, 1997, hereby appoints Gerald D. Griffin and Evelyn M. Evans as
Proxies, each with the power to appoint a substitute, and hereby authorizes them
to represent the undersigned at the Annual Meeting of Shareholders of COMARCO,
Inc. to be held on July 9, 1997 at 10:00 AM at the Company's Offices at 167
Technology Drive; Irvine California, 92618 and at any adjournments thereof, and
to vote all shares of Common Stock which the undersigned would be entitled to
vote thereat on all matters set forth below, as described in the accompanying
Proxy Statement:
1.ELECTION OF DIRECTORS: [] FOR all nominees listed below [] WITHHELD AUTHORITY
to vote for
any nominees
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark the
box next to the nominee's name below. Names not marked will receive a vote FOR)
[] Wilbur L. Creech [] Wesley L. McDonald [] Paul G. Yovovich
[] Gerald D. Griffin [] Don M. Bailey
IMPORTANT - PLEASE SIGN ON THE OTHER SIDE
<PAGE>
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
In the event the Directors are to be elected by cumulative voting, the
Proxies will have the discretion to cumulate votes and to distribute such votes
among all nominees (or if authority to vote for any nominee or nominees has been
withheld, among the remaining nominees, if any) in whatever manner they deem
appropriate.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR ALL OF THE DIRECTORS NOMINATED BY THE BOARD.
Dated: -----------------------------------, 1997
------------------------------------------------
(Signature)
------------------------------------------------
(Signature)
(Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator
trustee or guardian, please set forth your full title. If signer is a
corporation, please sign the full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING
PREPAID ENVELOPE.
