CTS CORPORATION
905 WEST BOULEVARD NORTH - ELKHART, INDIANA 46514
Notice of Annual Meeting of Stockholders
To Be Held April 29, 1994
To CTS Stockholders:
The Annual Meeting of Stockholders of CTS Corporation will
be held at 9:00 a.m. Eastern Standard Time, Friday, April 29,
1994, at the Quality Inn City Centre (formerly the Midway Motor
Lodge), 300 South Main Street, Elkhart, Indiana 46516, for the
following purposes:
1. To elect five directors to serve for one year and
until their successors are elected and qualified;
2. To transact other business properly presented at
the meeting.
Only stockholders of record at the close of business on
March 11, 1994 are entitled to notice of, and to vote at, the
meeting or any adjournment thereof.
Accompanying this Notice of Annual Meeting are a Proxy
Statement, a proxy and the Annual Report for the fiscal year
ended December 31, 1993.
By Order of the Board of Directors,
Jeannine M. Davis
Secretary
Elkhart, Indiana
March 18, 1994
It is important that your stock be represented at this meeting.
We urge you to date, sign and return your proxy promptly in the
enclosed envelope, which requires no postage if mailed in the
United States.
<PAGE>
CTS CORPORATION
905 WEST BOULEVARD NORTH - ELKHART, INDIANA 46514
PROXY STATEMENT
VOTING INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of CTS
Corporation for the Annual Meeting of Stockholders to be held
April 29, 1994. If the enclosed proxy is signed and returned, it
may, nevertheless, be revoked by you at any time prior to being
voted, by written notice delivered to the Secretary. The Proxy
Statement and proxy were first mailed to stockholders about
March 18, 1994.
The Corporation had outstanding 5,169,354 shares of Common
Stock as of the close of business on March 11, 1994, the record
date for the Annual Meeting as set by the Board of Directors. As
a result of stockholder action taken at the 1987 Annual Meeting,
1,020,000 shares of Common Stock owned by Dynamics Corporation of
America are not votable at the meeting. With the exception of
those shares, each stockholder is entitled to one vote in person
or by proxy for each share of Common Stock owned on the record
date. There are no other voting securities. If the enclosed
proxy is signed and returned, the shares represented will be
voted in the manner indicated except that if any nominee for
director is unable to serve at the time of the Annual Meeting,
the proxy will be voted in accordance with the judgment on such
matters of the person or persons acting as proxy.
Proxy solicitation will be principally by mail, but proxies
may also be solicited in person or by telephone. The expense of
this solicitation will be paid by the Corporation. Brokers and
certain other holders for beneficial owners will be reimbursed
for out-of-pocket expenses incurred in the solicitation of
proxies from the beneficial owners of shares held in their names.
The Corporation has retained Georgeson & Co., Inc. to assist in
the solicitation of proxies at an estimated cost of $5,000, plus
reasonable out-of-pocket expenses.
The Board of Directors is not aware of any business to be
acted upon at the Annual Meeting other than for which notice is
given, but in the event other business is properly presented at
the meeting, requiring a vote of the stockholders, the proxy will
be voted in accordance with the judgment on such matters of the
person or persons acting as proxy.
Stockholders are requested to exercise their right to vote
by completing and signing the enclosed proxy and returning it
promptly in the enclosed envelope. Unless otherwise specified by
the stockholder, all shares represented by valid proxies will be
voted in favor of the election of all director-nominees.
<PAGE>
SECURITIES BENEFICIALLY OWNED BY PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table includes information with respect to all
persons and groups known to the Corporation to be beneficial
owners of more than five percent of the Common Stock of the
Corporation on March 1, 1994. The number of shares and the
percent of class held by each director and director-nominee is
also stated. Addi- tionally, the number of shares and the
percent of class held by each executive officer of the
Corporation included in the Summary Compensation Table set forth
under the caption "Executive Compensa-tion" below is included,
together with the total number of shares and percent of class
held by all directors and officers as a group.
Amount and Nature of
Beneficial Ownership On Percent
Beneficial Owner March 1, 1994<F1> of Class
Dynamics Corporation of 1,920,900<F2> 37.16
America
475 Steamboat Road
Greenwich, CT 06830
The Gabelli Group, Inc. 1,504,100<F3> 29.10
GAMCO Investors, Inc.,
and Gabelli Funds, Inc.
655 Third Avenue
New York, NY 10017
CTS Corporation Employee 276,717<F4> 5.35
Benefit Plans Master Trust
Harris Trust and Savings
Bank, Trustee
111 West Monroe
Chicago, IL 60603
The TCW Group, Inc. 260,474 5.04
865 South Figueroa Street
Los Angeles, CA 90017
Lawrence J. Ciancia 277,217<F4> 5.36
Gerald H. Frieling, Jr. 277,217<F4> 5.36
Andrew Lozyniak 276,717<F4,8> 5.35
Patrick J. Dorme 276,717<F4,8> 5.35
Joseph P. Walker 23,404<F5> *
Philip T. Christ 5,592<F6> *
Stanley J. Aris 4,800<F7> *
11 Directors and Officers 314,835<F4,9> 6.09
as a Group
___________________________
*Less than 1%
<PAGE>
<FN1>Information with respect to beneficial ownership is based upon
information furnished by each stockholder or contained in filings
made with the Securities and Exchange Commission. Except where
otherwise indicated, the stockholders listed in the table have
sole voting and investment authority with respect to the shares
owned by them.
<FN2>Includes 1,020,000 shares for which voting authority was not
granted by a vote of the independent stockholders of the Corpora-
tion at the 1987 Annual Meeting of Stockholders, pursuant to the
Control Share Acquisition Chapter of the Indiana Business Corpo-
ration Law.
<FN3>Includes 237,100 shares held by Gabelli Funds, Inc., 1,236,710
shares held by GAMCO Investors, Inc. and 1,900 shares held by
Gabelli & Company, Inc., which were reported on a joint Schedule
13D filed October 19, 1992, the most recent filing by such
Reporting Person. According to the Schedule 13D, each of the
Reporting Persons and Covered Persons has the sole power to vote
or direct the vote and sole power to dispose or to direct the
disposition of the Securities reported for it, either for its own
benefit or for the benefit of its investment clients or its
partners, as the case may be, except that GAMCO Investors, Inc.
does not have authority to vote 97,500 of the reported shares,
and except that Gabelli Funds, Inc. shares with the Board of
Directors of The Gabelli Growth Fund, The Gabelli Convertible
Securities Fund and The Gabelli Equity Income Fund voting power
with respect to any shares which may be held from time to time by
such funds, so long as the aggregate voting interest of all joint
filers does not exceed 25% of the issuer's total voting interest
and, in that event, the respective Proxy Voting Committee of each
fund (other than The Gabelli Growth Fund) will vote the shares
held by that Fund; except that, since the aggregate voting
interest of all joint filers exceeds 25% of the issuer's total
voting interest, the sole voting power with respect to the
100,000 shares held by The Gabelli Asset Fund, the 112,100 shares
held by The Gabelli Equity Trust Inc. and the 25,000 shares held
by The Gabelli Small Cap Growth Fund is exercised by the respec-
tive Proxy Voting Committee of each such fund; except that
Gabelli & Company, Inc. shares with the clients for whose ac-
counts such Securities were purchased the voting and dispositive
power with respect to the 1,900 shares purchased for such ac-
counts; and except that the power of Mr. Gabelli and GFI is
indirect with respect to Securities beneficially owned directly
by other Reporting Persons.
<FN4>276,717 of the shares shown as owned beneficially by each of Mr.
Ciancia, Mr. Dorme, Mr. Frieling, Mr. Lozyniak, the CTS Corpora-
tion Benefit Plans Master Trust and 11 Directors and Officers as
a Group are the same shares, which shares are held by Harris
Trust and Savings Bank as Trustee of the CTS Corporation Employee
Benefit Plans Master Trust (the "Trust"). The Compensation
Committee of the Board of Directors has voting and investment
authority over said shares, except for shares held in partici-
pant-directed accounts under the CTS Corporation Retirement
Savings Plan, over which individual participants hold investment
authority. The present members of the Compensation Committee are
<PAGE>
Lawrence J. Ciancia, Patrick J. Dorme, Gerald H. Frieling, Jr.,
and Andrew Lozyniak, who were appointed by the Board of Directors
of CTS Corporation.
The 276,717 shares held by the Master Trust include, in addition
to the shares attributed to the accounts of Joseph P. Walker,
Philip T. Christ and Stanley J. Aris in the CTS Corporation
Retirement Savings Plan as set forth in footnote numbers five,
six and seven below, respectively, 420 shares attributed to the
accounts of other officers of the Corporation in the CTS Corpora-
tion Retirement Savings Plan, as shown as of December 31, 1993,
the most recent annual report of the Plan. The number of shares
attributed to the accounts of such other officers may not reflect
shares that have accrued to such accounts since the filing of the
Plan's last report.
<FN5>Includes 2,854 shares attributed to Joseph P. Walker's account
in the CTS Corporation Retirement Savings Plan, as shown as of
December 31, 1993, the most recent annual report of the Plan.
The number of shares attributed to Mr. Walker's account may not
reflect shares that have accrued to his account since the filing
of the Plan's last annual report.
<FN6>Includes 1,092 shares attributed to Philip T. Christ's account
in the CTS Corporation Retirement Savings Plan, as shown as of
December 31, 1993, the most recent annual report of the Plan.
The number of shares attributed to Mr. Christ's account may not
reflect shares that have accrued to his account since the filing
of the Plan's last annual report. Also includes 500 shares
subject to options exercisable on March 1, 1994 or which become
exercisable within 60 days thereafter.
<FN7>Includes 300 shares attributed to Stanley J. Aris' account in
the CTS Corporation Retirement Savings Plan, as shown as of
December 31, 1993, the most recent annual report of the Plan.
The number of shares attributed to Mr. Aris' account may not
reflect shares that have accrued to his account since the filing
of the Plan's last annual report. Also includes 500 shares
subject to options exercisable on March 1, 1994 or which become
exercisable within 60 days thereafter.
<FN8>Messrs. Lozyniak and Dorme are directors of Dynamics Corporation
of America.
<FN9>Includes 5,700 shares subject to options exercisable on March 1,
1994 and options which will become exercisable within 60 days
thereafter.
ELECTION OF DIRECTORS
At the Annual Meeting, five directors are to be elected for
terms of one year. Each director will hold office until the next
Annual Meeting of Stockholders and until his successor has been
elected and qualified. Each person listed below has been nomi-
nated by the Board of Directors and has agreed to serve as a
director, if elected.
<PAGE>
Year First
Elected
Director
GERALD H. FRIELING, JR. 1982
Chairman of the Board of Tokheim Corporation (a
manufacturer of petroleum dispensing equipment,
systems and control devices); Chairman of the Audit
Committee and Member of the Executive and
Compensation Committees of CTS Corporation. During
the past five years, Mr. Frieling, age 64, served as
Chief Executive Officer of Tokheim Corporation, and
Chairman of the Board, President and Chief Executive
Officer of National-Standard Company. Mr. Frieling
serves as a director of Tokheim Corporation.
ANDREW LOZYNIAK 1987
Chairman of the Board and President of Dynamics
Corporation of America (a manufacturer of electrical
appliances and electronic devices, fabricated metal
products and equipment, and power and controlled
environmental systems); Chairman of the Compensation
Committee and Member of the Executive and Audit
Committees of CTS Corporation. During the past five
years, Mr. Lozyniak, age 62, has served in his
present capacities at Dynamics Corporation of
America. Mr. Lozyniak serves as a director of
Dynamics Corporation of America.
JOSEPH P. WALKER 1987
Chairman of the Board, President and Chief Executive
Officer of CTS Corporation; Chairman of the Executive
Committee of CTS Corporation. During the past five
years, Mr. Walker, age 55, has served in his present
capacities at CTS. Mr. Walker is a director of NBD
Bank and NBD Bank, N.A.
LAWRENCE J. CIANCIA 1990
Chief Executive Officer and Chief Operating Officer
of Concorde Industries, Inc. (a supplier of PVC pipe
products, specialty chemicals and PVC compounds);
Member of the Audit and Compensation Committees of
CTS Corporation. During the past five years, Mr.
Ciancia, age 51, has served in his present capacities
at Concorde Industries, Inc.
<PAGE>
Year First
Elected
Director
PATRICK J. DORME 1993
Vice President and Chief Financial Officer of
Dynamics Corporation of America (a manufacturer of
electrical appliances and electronic devices,
fabricated metal products and equipment, and power
and controlled environmental systems); Member of the
Audit and Compensation Committees of CTS Corporation.
During the past five years, Mr. Dorme, age 58, has
served in his present capacities at Dynamics
Corporation of America. Mr. Dorme serves as a
director of Dynamics Corporation of America.
The affirmative vote of the holders of a plurality of the shares
represented in person or by proxy at the meeting is required to
elect the nominees.
The Board of Directors unanimously recommends a vote in favor of
each of the Director-Nominees named above.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who
own more than ten percent of a registered class of the
Corporation's equity securities, to file with the Securities and
Exchange Commission and the New York Stock Exchange initial
reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Corporation.
Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Corporation with copies
of all Section 16(a) forms they file.
To the Corporation's knowledge, based solely on its review of the
copies of such reports furnished to the Corporation and written
representations that no other reports were required during the
year ended December 31, 1993, all Section 16(a) filing
requirements applicable to its officers, directors and greater
than ten-percent beneficial owners were complied with.
BOARD OF DIRECTORS AND STANDING COMMITTEES
During 1993, the Board of Directors held six meetings. The
standing committees of the Board of Directors include an Audit
Committee, an Executive Committee and a Compensation Committee.
<PAGE>
The Audit Committee, consisting of Lawrence J. Ciancia,
Patrick J. Dorme, Gerald H. Frieling, Jr., and Andrew Lozyniak,
held two meetings in 1993. The Committee performs the following
principal functions: recommendation of the engagement or
discharge of the Corporation's independent accountants; review of
the plan and results of the auditing engagement with the
independent accountants; review of the adequacy of the
Corporation's internal accounting controls; and review of the
independence of the independent accountants and the audit fees of
the independent accountants.
The Executive Committee, consisting of Gerald H. Frieling,
Jr., Andrew Lozyniak and Joseph P. Walker, held five meetings in
1993. The Committee reviews and advises management on financial
and operational matters between meetings of the Board of
Directors.
The Compensation Committee, consisting of Lawrence J.
Ciancia, Patrick J. Dorme, Gerald H. Frieling, Jr., and Andrew
Lozyniak, held three meetings in 1993. The Committee performs
the function of recommending officer compensation arrangements
and amounts to the Board of Directors and administers the CTS
Corporation 1986 Stock Option Plan, the CTS Corporation 1988
Restricted Stock and Cash Bonus Plan, and the CTS Corporation
Management Incentive Plan.
Each director-nominee attended at least 92% of the aggregate
of the meetings of the board and the committees to which he was
assigned during 1993.
EXECUTIVE COMPENSATION
The following table sets forth annual and long-term
compensation information for each of the last three fiscal years
of the Chief Executive Officer and the other Executive Officers
whose salary and bonus for fiscal year 1993 exceeded the
disclosure threshold established by the Securities and Exchange
Commission.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION> ANNUAL LONG TERM
COMPENSATION COMPENSATION
RESTRICTED
NAME AND STOCK ALL OTHER<F4>
PRINCIPAL SALARY BONUS<F1> OTHER<F2> AWARD(S)<F3> COMPENSATION
POSITION YEAR ($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Walker,<F5,6> 1993 297,083 0 0 0 6,426
Chairman of the Board, 1992 283,075 0 0 0 5,695
President and Chief 1991 269,325 17,000 0 0 -----
Executive Officer
Philip T. Christ<F6> 1993 158,442 80,000 0 0 7,023
Group Vice 1992 150,983 0 0 41,000 6,080
President 1991 143,650 9,800 0 0 -----
Stanley J. Aris<F6> 1993 153,663 20,250 5,555 0 4,813
Vice President Finance 1992 92,308 0 0 0 2,077
and Chief Financial 1991 N/A N/A N/A N/A N/A
Officer
<PAGE>
<FN1>Includes bonuses paid pursuant to the CTS Corporation Management
Incentive Plan, as described in the Report of the Compensation
Committee below, and for Stanley J. Aris for 1993 includes the
market value of a CTS Common Stock bonus paid pursuant to the
Corporation's offer of employment to Mr. Aris.
<FN2>Includes only a tax reimbursement payment. The value of other
personal benefits received from the Corporation by the named
Executive Officers is below the reporting threshold for
perquisites.
<FN3>At the end of fiscal year 1993, Joseph P. Walker held 2,000
restricted shares on which the transfer restrictions had not
lapsed, the market value of which at December 31, 1993 was
$39,500. At the time that such restrictions lapse, a cash bonus
is paid in an amount equal to the market value of the shares on
the date the restriction lapses. For Joseph P. Walker, the cash
payments made pursuant to the CTS Corporation 1988 Restricted
Stock and Cash Bonus Plan for the three identified years were:
1993 - $39,250; 1992 - $46,250; and 1991 - $43,250.
At the end of fiscal year 1993, Philip T. Christ held 2,400
restricted shares on which the transfer restrictions had not
lapsed, the market value of which on December 31, 1993 was
$47,400. For Philip T. Christ, the cash payments made pursuant
to the CTS Corporation 1988 Restricted Stock and Cash Bonus Plan
for the three identified years were: 1993 - $15,500; 1992 -
$9,400; and 1991 - $8,900.
The restrictions on 20% of the shares awarded under this Plan
lapse at the end of each of the five years following acquisition
of the shares. Regular dividends are paid to holders of
restricted stock awarded under this Plan. This Plan includes a
change of control provision which provides that, upon a change of
control of the Corporation, as defined in the Plan, all
restrictions on shares awarded under the Plan will lapse and cash
bonuses will be paid relative to those shares.
<FN4>Includes (i) the Corporation's matching contributions to the CTS
Corporation Retirement Savings Plan on behalf of the named
Executive Officers as follows: for Joseph P. Walker, 1993 -
$3,373 and 1992 - $3,273; for Philip T. Christ, 1993 - $3,373 and
1992 - $3,204; and for Stanley J. Aris, 1993 - $3,373 and 1992 -
$2,077 and (ii) the premiums paid by the Corporation on the term
life insurance policies with face values greater than $50,000
provided to each of the named Executive Officers as follows: for
Joseph P. Walker, 1993 - $3,053 and 1992 - $2,422; for Philip T.
Christ, 1993 - $3,650 and 1992 - $2,876; and for Stanley J. Aris,
1993 - $1,440 and 1992 - $.00.
<FN5>Joseph P. Walker has executed an employment agreement with the
Corporation, which provides that for a period of three years,
beginning June 28, 1991, Mr. Walker will be employed by the
Corporation as Chairman of the Board, President and Chief
Executive Officer, at an initial annual salary of $276,150.
Termination of Mr. Walker's employment agreement by the
Corporation, for reasons other than cause as defined in the
agreement, entitles Mr. Walker to receive his then current annual
<PAGE>
salary for the number of months remaining under his agreement,
the same to be paid in equal monthly payments.
<FN6>The Corporation has entered into Indemnification Agreements with
each of the named Executive Officers and all other Executive
Officers of the Corporation which provides that the Corporation
agrees to indemnify the officer, to the fullest extent allowed by
the bylaws of the Corporation and the Indiana Business
Corporation Law, in the event that he was or is made a party or
threatened to be made a party to any action, suit or proceeding
by reason of the fact that he is an officer of the Corporation.
The indemnification agreements provide indemnification for acts
occurring prior to the execution of the agreements.
</TABLE>
STOCK OPTIONS
Shown below is information on grants of options for CTS
Corporation Common Stock awarded pursuant to the CTS Corporation
1986 Stock Option Plan to the named Executive Officers in 1993.
<TABLE>
OPTION GRANTS IN 1993
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM<F1>
% OF TOTAL
OPTIONS
GRANTED EXERCISE
OPTIONS TO EMPLOYEES PRICE EXPIRATION
NAME GRANTED IN 1993 ($/SHARE) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph P. Walker -0- -0- N/A N/A N/A N/A
Philip T. Christ 2,000 18% 19.125 4-29-98 10,550 23,350
Stanley J. Aris 2,000 18% 19.125 4-29-98 10,550 23,350
<FN1>Potential realizable value is determined by assuming an initial
value of $19.125 per share, the market closing price for CTS
Corporation Common Stock on the date of grant and applying the
stated annual appreciation rate compounded annually for the
remaining term of the option (five years), subtracting the
exercise price and multiplying the remaining number by the number
of options granted. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common
Stock and overall stock market condition.
<FN2>All options become exercisable over a four-year period at the
rate of 25% per year commencing on the first anniversary of the
option grant.
</TABLE>
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors,
comprised of Lawrence J. Ciancia, Patrick J. Dorme, Gerald H.
Frieling, Jr., and Andrew Lozyniak, submits this report of
Executive Compensation to the Corporation's stockholders.
COMPENSATION PRINCIPLES AND PHILOSOPHY
The Compensation Committee of the Board of Directors has
implemented executive compensation policies and programs designed
to achieve the following objectives:
*Attract and retain key executives and managers
*Align the financial interests of key executives and managers
with those of the stockholders of the Corporation
*Reward individual performance
*Reward Corporate performance
These objectives are achieved through a combination of
annual and longer term compensation arrangements including base
salary, annual cash incentive compensation, and long-term
incentive compensation through stock options and restricted stock
awards, in addition to medical, pension and other benefits
available to employees in general.
The four principal components of the Executive Officer
Compensation package at CTS Corporation are: base salary, the
CTS Corporation Management Incentive Plan, the CTS Corporation
1986 Stock Option Plan and the CTS Corporation 1988 Restricted
Stock and Cash Bonus Plan.
Base Salary
The base salary of the Executive Officers of CTS Corporation
is determined in the same manner as the salaries of all exempt
salaried employees of the Corporation. A job classification
system is utilized to determine appropriate salary ranges for
each Executive Officer position, based on qualifications, job
responsibilities and market factors. The goal of CTS Corporatio-
n's job classification system is that Executive Officers, and
employees in general, are paid a salary which is commensurate
with their qualifications, duties and responsibilities and which
is competitive in the market place. The Corporation recently
retained Towers Perrin to assess the current salaries and classi-
fications of the Executive Officers compared with market data for
similar positions at similar companies. The report from Towers
Perrin indicated that the salaries of the Corporation's Executive
Officers are generally below competitive median salaries. When
the financial performance of the Corporation permits, salary
adjustments above a cost-of-living level are considered for those
in the lower portion of their salary range, if individual perfor-
mance warrants such consideration.
<PAGE>
During each of the past three years, the Compensation
Committee has determined that the financial performance of the
Corporation did not permit the granting of salary adjustments
above a cost-of-living level. As a result, the named Executive
Officers have been granted salary increases during these years in
the cost-of-living range established for all exempt salaried
employees of the Corporation.
CTS Corporation Management Incentive Plan
All Executive Officers of the Corporation are participants
in the CTS Corporation Management Incentive Plan, which provides
cash compensation incentives, based on the financial performance
of the Corporation. Currently, financial performance is measured
on the basis of achieving target levels of return on assets
(ROA). If plan financial objectives are met at the 100% level,
each of the named Executive Officers would be eligible for a
bonus in an amount equal to 40% of his base salary for the
subject year. Maximum incentive payments under this Plan range
from 10% to 60% of the annual salary of the Plan participants.
Prior to 1993, the Plan also contained a non-financial
objective measurement. Because targeted ROA levels were not
achieved, the bonuses paid to the named Executive Officers under
the Plan for 1991 were limited to the non-financial objective
based portion of the Plan formula. For 1992, no bonuses were
paid to the named Executive Officers because the Corporation's
financial performance fell below the threshold award level. When
bonuses were payable for the non-financial objective based
segment of the bonus, as they were in 1991, the Compensation
Committee evaluated the performance of each Executive Officer
against the individual non-financial objectives established at
the beginning of the year.
The named Executive Officers received awards relative to
performance against their non-financial objectives for 1991 at
levels ranging from 74% to 85% of the possible award under that
20% segment of the Plan. No formula awards were made to the
named Executive Officers under the Plan for 1992. In 1993, a
formula award under the Plan was made to Philip T. Christ in the
amount of $40,550.
This Plan also authorizes the Compensation Committee to
grant discretionary bonuses when the Committee deems it
appropriate to do so. No discretionary bonuses have been paid to
the named Executive Officers during any of the three years for
which compensation is disclosed, except that for 1993 a
discretionary award of $39,450 was made to Philip T. Christ,
based on his direct and substantial contribution to the success
of the Corporation's Automotive Products business unit.
CTS Corporation 1986 Stock Option Plan
The Compensation Committee administers the corporation's
stock option plan and determines to whom options will be granted,
the dates of such option grants, the number of shares subject to
<PAGE>
option, the option price, option periods and option terms. Stock
options were granted to Philip T. Christ and Stanley J. Aris
during 1993 in order to establish a direct link between these two
key Executive Officers and long-term Corporate performance, as
reflected in stock price appreciation.
CTS Corporation 1988 Restricted Stock and Cash Bonus Plan
The CTS Corporation 1988 Restricted Stock and Cash Bonus
Plan was adopted by the stockholders in 1989 for the purpose of
providing incentives to selected key employees who contribute or
are expected to contribute materially to the success of the
Corporation, and to closely align the financial interests of
these key employees with those of the Corporation's stockholders.
The participants are selected and their level of participation
determined by the Compensation Committee.
Shares acquired by participants pursuant to the Plan are
subject to restriction that, during the period of five years
after the date of acquisition, the participant may not sell,
transfer or otherwise dispose of such shares as to which the
restrictions shall not have lapsed. The restrictions lapse as to
20% of the shares acquired pursuant to the Plan at the end of
each year following the acquisition of the shares. When the
restrictions lapse, a cash bonus is paid to the participant equal
to the fair market value of such shares as of the date of such
lapse. In no event may the cash bonuses payable to any
participant be greater than twice the fair market value of such
shares on the date they were originally acquired.
Dividends are paid to participants in this Plan on all
shares awarded to them under the Plan. The Plan also provides
for appropriate adjustment to the number of shares awarded in the
event of a stock dividend, stock split, recapitalization, merger,
combination or exchange of shares for other securities.
No awards were made to the named Executive Officers under
this Plan in 1993. The number of shares previously awarded to
the named Executive Officers, their market value, vesting
schedules, and bonuses paid relative thereto, are set forth in
the Summary Compensation Table above and the footnotes thereto.
Respectfully Submitted,
CTS CORPORATION COMPENSATION COMMITTEE
Lawrence J. Ciancia, Patrick J. Dorme,
Gerald H. Frieling, Jr. and Andrew Lozyniak
<PAGE>
STOCK PERFORMANCE CHART
The following graph compares the cumulative total
stockholder return on the Corporation's common stock for the last
five fiscal years with the cumulative total return on the S & P
500 Index and an index of peer companies over the same period.
<TABLE>
VALUE OF $100 INVESTED DECEMBER 1988
COMPARATIVE OF FIVE YEAR TOTAL CUMULATIVE RETURN
<CAPTIONS>
December 31... 1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C>
S&P 500 $100.00 $131.69 $127.60 $166.47 $179.15 $197.21
Peer Group $100.00 $ 98.63 $100.72 $114.90 $119.64 $147.17
CTS Corp. $100.00 $106.14 $ 85.86 $ 96.40 $ 89.89 $103.52
</TABLE>
CTS Corporation Salaried Employees' Pension Plan
The CTS Corporation Salaried Employees' Pension Plan is a
retirement plan for exempt salaried employees of some CTS Corpo-
ration divisions and subsidiaries. The benefit formula is
calculated as 1% of a participant's highest average monthly pay
during any three calendar years of a participant's last ten
calendar years of service, multiplied by a participant's credited
service. The credited service for the named Executive Officers
as of December 31, 1993, is as follows: Joseph P. Walker, 5.52
years, Philip T. Christ, 3.78 years and Stanley J. Aris, .78
years. Covered compensation for the named Executive Officers is
essentially equivalent to the amount reported in the Annual
Compensation Section of the Summary Compensation Table above. No
benefit under this plan is subject to Social Security or other
offsets.
The following table shows the annual benefits payable under
the plan to persons in specified compensation and credited
service classifications at normal retirement age of 65:
<PAGE>
<TABLE>
PENSION TABLE*
Years of Participation
Compensation 15 Years 20 Years 25 Years 30 Years 35 Years
<S> <C> <C> <C> <C> <C> <C>
$125,000 $18,750 $25,000 $31,250 $37,500 $50,000
150,000 22,500 30,000 37,500 45,000 60,000
175,000 26,250 35,000 43,750 52,500 70,000
200,000 30,000 40,000 50,000 60,000 80,000
225,000 33,750 45,000 56,250 67,500 90,000
250,000 37,500 50,000 62,500 75,000 100,000
300,000 45,000 60,000 75,000 90,000 120,000
400,000 60,000 80,000 100,000 120,000 160,000
*The benefit limitation under the Internal Revenue Code of 1986,
as amended, for 1994 is $118,800. Effective July 1, 1994, no
more than $150,000 (as adjusted from time to time for cost of
</TABLE>
living increases of $10,000 or more) of cash compensation may be
taken into account in calculating benefits under this plan.
DIRECTOR COMPENSATION
Each member of the Board of Directors, who is not an
employee or an officer of the Corporation, is paid an annual
retainer of $12,000 per year for service on the Board of
Directors, a meeting fee of $800 for each meeting of the Board of
Directors attended in person, and $400 for each meeting of the
Board of Directors attended by telephone. In addition, each
member of the Executive Committee and each member of the
Compensation Committee is entitled to receive an annual retainer
of $500, and each member of the Audit Committee is entitled to
receive an annual retainer of $1,000, together with a meeting fee
of $800 for attending each meeting of a committee of which he is
a member, except that he is entitled to receive $400 per meeting
for a second or subsequent meeting held on the same day and for
any such meetings attended by telephone.
On April 27, 1990 the Corporation adopted the CTS
Corporation Stock Retirement Plan for Non-Employee Directors of
the Corporation (the "Plan"). Under the Plan, separate accounts
are opened by the Corporation in the names of non-employee
directors. On January 1 of each year, starting in 1991, a
Deferred Stock Account in the name of each non-employee director
is credited with 100 Common Stock Units if said director was a
non-employee director of the Corporation on the last day of the
immediately preceding calendar year or ceased to be a director
during such preceding calendar year by reason of his retirement,
disability or death. In addition, on May 1, 1990, the
Corporation credited to the Deferred Stock Account of each such
director 50 Common Stock Units for each complete calendar year of
his service to the Corporation as a non-employee director prior
to May 1, 1990. Each Deferred Stock Account will also be
credited with Common Stock Units when credits equivalent to cash
dividends on the shares in an account aggregate an amount equal
to the value of a share of Common Stock on a dividend payment
date. All Deferred Stock Units in a director's account will be
distributed in Common Stock as of January 1st after the director
leaves the Board of Directors. Until such time, the
Corporation's obligation under the Plan is an unsecured promise
to deliver shares of Common Stock. No Common Stock will be held
in trust or as a segregated fund because of the adoption of the
Plan. Six members of the Board of Directors have been eligible
to participate in the Plan. The Corporation expensed $7,900 in
1993 in respect of Common Stock Units credited to the accounts of
the eligible directors as a group pursuant to the Plan.
CORPORATION'S INDEPENDENT ACCOUNTANTS
The Corporation's independent accountants are Price Water-
house. Representatives of the independent accountants will
attend the Annual Meeting, to be available to respond to appro-
priate questions by stockholders and to have the opportunity to
make statements, if they so desire.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the 1995 proxy
solicitation material and proxy, stockholder proposals must be
received by the Corporation at its Corporate offices no later
than November 25, 1994.
1993 ANNUAL REPORT ON S.E.C. FORM 10-K
Upon the written request of a CTS stockholder owning shares
of Common Stock on the record date, to Jeannine M. Davis,
Secretary of CTS Corporation, 905 West Boulevard North, Elkhart,
Indiana 46514, the Corporation will provide to such stockholder,
without charge, a copy of its 1993 annual report on S.E.C. Form
10-K, including the financial statements and financial statement
schedules.
Jeannine M. Davis
Secretary
Elkhart, Indiana
March 18, 1994
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C> <S> <C>
CTS CORPORATION PROXY
905 West Boulevard North, Elkhart, Indiana 46514
This Proxy is Solicited on Behalf of
the Board of Directors
Annual Meeting of Stockholders The undersigned, having received the
April 29, 1994 Notice of Annual Meeting of Stock-
holders and the Proxy Statement hereby
appoints Joseph P. Walker and Andrew
Lozyniak as Proxies, each with the
power to appoint his substitute, and
hereby authorizes them to represent
and to vote, as designated below, all
of the shares of Common Stock of CTS
Corporation held of record by the
undersigned on March 11, 1994, at the
Annual Meeting of Stockholders to be
held on April 29, 1994 and at any
adjournment thereof.
1. ELECTION OF DIRECTORS // FOR ALL nominees listed below // WITHHOLD AUTHORITY
to vote for all
nominees listed below
// FOR SOME of the nominees listed
below (See INSTRUCTION)
L. J. Ciancia, P.J. Dorme, Gerald H. Frieling, Jr., A. Lozyniak, J. P. Walker
INSTRUCTION: To withhold authority to vote on any individual nominee, write
that nominee's name in the space provided below. This proxy will be voted
for all nominees listed above except:
_______________________________________________________________________________________
If not otherwise marked, this Proxy will be voted for the election of all nominees.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting, or any adjournment
thereof.
<PAGE>
This Proxy, when properly executed, will be voted in the manner directed herein by the
undersigned stockholder.
Please sign exactly as name appears below. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
Signature______________________________
Signature______________________________
If Held Jointly
Dated_____________________________,1994
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
</TABLE>
