<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
/X/ Filed by the Registrant
/ / 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
DREXLER TECHNOLOGY CORPORATION
________________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________________
(5) Total fee paid:
______________________________________________________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
______________________________________________________________________
(2) Form, schedule, or registration statement no.:
______________________________________________________________________
(3) Filing party:
______________________________________________________________________
(4) Date filed:
______________________________________________________________________
<PAGE> 2
[LOGO OF DREXLER TECHNOLOGY CORPORATION]
1077 Independence Avenue
Mountain View, California 94043-1601
------------------
NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
Friday, September 20, 1996
2:00 p.m.
To the Stockholders:
The 1996 Annual Meeting of Stockholders of Drexler Technology Corporation
will be held in the Edwards Room at Hyatt Rickeys in Palo Alto, 4219 El Camino
Real, Palo Alto, California, on Friday, September 20, 1996, at 2:00 p.m., for
the following purposes:
1. to elect directors;
2. to approve a 250,000 share increase in the number of shares reserved for
issuance under the 1991 Stock Option Plan; and
3. to transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on Tuesday, July 23,
1996, are entitled to vote at this meeting and at any continuation or
adjournment thereof.
By Order of the Board of Directors
JERALD E. ROSENBLUM
Secretary
Mountain View, California
August 21, 1996
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD, AS PROMPTLY AS POSSIBLE, IN THE ENCLOSED ENVELOPE. IF A
QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE ADDED EXPENSE OF RE-ISSUING
THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING, AND SO DESIRE, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
THANK YOU FOR ACTING PROMPTLY.
- --------------------------------------------------------------------------------
<PAGE> 3
DREXLER TECHNOLOGY CORPORATION
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held September 20, 1996
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Drexler Technology Corporation, a Delaware corporation (the "Company"), for use
at the 1996 Annual Meeting of Stockholders of the Company to be held at 2:00
p.m. on Friday, September 20, 1996. Only stockholders of record on Tuesday, July
23, 1996, will be entitled to vote. At the close of business on that date, the
Company had outstanding 8,900,624 shares of Common Stock.
Stockholders are entitled to one vote for each share held. In the election
of directors, votes can be cast only for persons whose names have been placed in
nomination prior to the voting. Any stockholder giving a proxy in the form
accompanying this Proxy Statement has the power to revoke it prior to its
exercise. A proxy may be revoked by filing with the Secretary of the Company,
prior to the meeting, an instrument revoking it, by duly executing a proxy
bearing a later date which is presented to the meeting, or by attending the
meeting and electing to vote in person. The shares represented by a duly
executed and unrevoked proxy in the form accompanying this Proxy Statement will
be voted in accordance with the instructions contained therein, and in the
absence of instructions, will be voted for the nominees for directors, for
Proposal No. 2, and according to the discretion of the proxy holder(s) on any
other matters that properly come before the meeting or any adjournment thereof.
The address of the Company's principal executive offices and the
approximate date on which this Proxy Statement is being mailed to stockholders
are shown on the accompanying Notice of Annual Meeting of Stockholders.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Nominees
The authorized number of directors to be elected at this meeting is three.
Management's nominees are Messrs. Jerome Drexler, Arthur H. Hausman, and William
E. McKenna, all of whom are presently directors of the Company. Each director
will hold office until the next annual meeting of stockholders and until his
successor is elected and qualified. As explained above, all proxies solicited
hereby will be voted for the election of the three nominees unless authority to
vote for one or more nominees is withheld in accordance with the instructions on
the proxy card. If any nominee should unexpectedly become unavailable to act as
a director, the proxies may be voted for a substitute nominee to be designated
by the Board of Directors.
No nominations for director of the Company by any person other than the
Board of Directors shall be presented at the meeting unless the person making
the nomination is a stockholder as of the record date and shall have given
timely notice to the Secretary. In order to be timely, a stockholder's notice
shall be delivered to or mailed and received at the principal offices of the
Company no later than the close of business on Wednesday, September 4, 1996.
Such notice shall (i) set forth the name and address of the person making the
nomination and of the nominee, together with such information concerning the
nomination and the nominee as is required by the appropriate rules and
regulations of the Securities and Exchange Commission to be included in a proxy
statement soliciting proxies for the election of the nominee, and (ii) include
the duly executed written consent of the nominee to serve as a director if
elected.
-1-
<PAGE> 4
The table below contains information respecting the number of shares and
percentage of the Company's Common Stock beneficially owned by each director of
the Company, by each executive officer of the Company, and by all executive
officers and directors as a group, as of July 10, 1996. The beneficial owners of
the shares have full voting and investment power, except as indicated in the
table, and have addresses in care of the Company. As of the close of business on
July 10, 1996, the Company had outstanding 8,900,624 shares of Common Stock.
STOCK OWNERSHIP TABLE
<TABLE>
<CAPTION>
Director Common Percentage
Name, Principal Occupation, and Other Directorships Age Since Shares of Class
--------------------------------------------------- --- ----- ------ --------
<S> <C> <C> <C> <C>
JEROME DREXLER . . . . . . . . . . . . . . . . . . . . . . . . . 68 1968 1,463,798(1) 16.4%
Chairman of the Board of Directors and President of the Company.
ARTHUR H. HAUSMAN . . . . . . . . . . . . . . . . . . . . . . . . 72 1981 37,500(2) .4%
Director; private investor. Retired Chairman, President, and
Chief Executive Officer of Ampex Corporation (manufacturer of
professional audio-video systems, data/memory products, and
magnetic tape); Director of California Amplifier, Inc. (low-noise
amplifiers); Director of California Microwave, Inc. (commercial
telecommunications and defense electronics); and Director
Emeritus of Technology for Communications International
(high-frequency antenna systems and electronic reconnaissance
systems).
WILLIAM E. McKENNA . . . . . . . . . . . . . . . . . . . . . . . 76 1970 56,000(2) .6%
Director; private investor. Director of California Amplifier,
Inc. (low- noise amplifiers); Safeguard Health Enterprises, Inc.
(healthcare services); WMS Industries, Inc. (amusement games);
Williams Hospitality Management Group, Inc. (resort hotels); and
Calprop Corporation (real estate).
CHRISTOPHER J. DYBALL . . . . . . . . . . . . . . . . . . . . . . 45 N/A 110,747(3) 1.2%
Executive Vice President and General Manager, Card Manufacturing.
STEVEN G. LARSON . . . . . . . . . . . . . . . . . . . . . . . . . 46 N/A 90,046(4) 1.0%
Vice President of Finance and Treasurer.
All executive officers and directors as a group (the five persons
named above) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,758,091(5) 19.8%
</TABLE>
- -------------------------------
(1) Includes 192,000 shares purchasable by exercise of option within 60 days.
Does not include 187,100 shares owned by Mr. Drexler's wife and 15,800
shares held indirectly by his wife as custodian, as to all of which shares
Mr. Drexler disclaims any beneficial ownership. Does not include 6,500
shares held by The Drexler Foundation, the assets of which are perpetually
dedicated to charity. The power to vote and to dispose of the shares held
by The Drexler Foundation is shared by the Foundation's directors,
consisting of Mr. Drexler and his wife.
(2) Includes 18,000 shares purchasable by exercise of option within 60 days.
(3) Includes 110,000 shares purchasable by exercise of option within 60 days.
(4) Includes 89,900 shares purchasable by exercise of option within 60 days.
(5) Includes 427,900 shares purchasable by exercise of option within 60 days.
-2-
<PAGE> 5
Board Committees and Meetings
The Board of Directors held nine meetings during the 1996 fiscal year,
which ended March 31, 1996. The Board has standing Audit, Compensation, and
Stock Option Committees. There is no Nomination Committee. The Audit Committee
is composed of Messrs. McKenna and Hausman. The Compensation Committee is
composed of Messrs. McKenna and Drexler. The Stock Option Committee is composed
of Messrs. McKenna and Hausman. During the 1996 fiscal year, the Compensation
Committee held no meetings, the Stock Option Committee held seven meetings, and
the Audit Committee held three meetings. During the 1996 fiscal year, all Board
and committee meetings were attended by all members.
The Audit Committee has functions both as to the Company's independent
public accountants and internal accounting. Its functions as to the Company's
independent public accountants are to (1) recommend engagement and discharge,
(2) review the plan and results of the auditing engagement, (3) approve
additional professional services, (4) review the accountants' independence, and
(5) consider the range of audit and nonaudit fees. Its functions as to the
Company's internal accounting are to (1) review the scope and results of
procedures for internal auditing and (2) consider comments from the independent
public accountants with respect to internal accounting controls. The function of
the Compensation Committee is to approve the salaries of executive officers
(other than the President) and certain other management employees. The function
of the Stock Option Committee is to administer the Company's Employee Stock
Purchase Plan and 1991 Stock Option Plan.
Director Compensation
Each of the three directors receives a fee of $1,200 per month for serving
as a director, the standard fee in effect since July of 1995. From February of
1985 through June of 1995, the fee paid for serving as a director was $750 per
month. The Company also reimburses reasonable out-of-pocket expenses incurred by
directors performing services for the Company.
The Company's 1991 Stock Option Plan provides for the automatic grant of a
five-year option to purchase 15,000 shares of the Company's Common Stock on the
date any person first becomes a director. These grants to newly elected
directors become exercisable in cumulative increments of one-third each at the
end of 24 months, 36 months, and 48 months from the date of grant. The 1991
Stock Option Plan further provides that on the date of the Company's annual
meeting of stockholders, each director who has served as a director of the
Company for the preceding nine-month period, who is also a member of the Stock
Option Committee, and who is re-elected at such annual meeting, is automatically
granted a five-year option to purchase 6,000 shares of the Company's Common
Stock. The option share grants to such re-elected directors are exercisable in
full at the time of grant. The exercise price for options granted to newly
elected directors and re-elected directors is the fair market value of the
Company's Common Stock on the effective date of the grant of the option.
Required Vote for Approval of Proposal No. 1
The election of each nominee to the Board of Directors requires the
affirmative vote of the holders of a majority of the shares of the Company's
Common Stock present in person or represented by proxy at the meeting. While
there is no definitive statutory or case law in Delaware as to the proper
treatment of abstentions in the counting of votes with respect to election of
directors, the Company believes that abstentions should be counted for purposes
of determining both the presence or absence of a quorum for the transaction of
business and in determining the total number of shares present or represented
and
-3-
<PAGE> 6
entitled to vote for the election of directors. In light of the absence of
controlling precedent to the contrary, the Company intends to treat abstentions
in this manner. In accordance with applicable rules, brokers vote shares in
accordance with instructions received from the beneficial owners of the shares;
in the absence of specific voting instructions from the beneficial owners,
brokers vote such shares in accordance with their own discretion.
Management recommends a vote FOR election of the nominees
listed in Proposal No. 1.
PROPOSAL NO. 2: AMENDMENT TO 1991 STOCK OPTION PLAN
Amendment to Increase Authorized Number of Shares under 1991 Stock Option Plan
Proposal No. 2 seeks shareholder approval of an amendment to the Company's
1991 Stock Option Plan (the "1991 Option Plan") to increase the number of shares
reserved for issuance thereunder by 250,000, from 1,670,000 to 1,920,000 shares.
On May 28, 1996, the Board of Directors approved, subject to stockholder
approval, an amendment to the 1991 Option Plan to increase the aggregate number
of shares available thereunder by 250,000 shares in order to have an adequate
number of shares available for future option grants. On that date, of the
1,670,000 shares of the Company's Common Stock reserved for issuance under the
1991 Option Plan, 289,920 shares remained available for future grants, prior to
giving effect to the proposed increase.
The Board of Directors believes that it is in the best interest of the
Company to be able to continue to create equity incentives to assist in
attracting, retaining, and motivating the key employees and consultants of the
Company and its subsidiaries. Although in September of 1995, the Company's
stockholders approved an amendment to the 1991 Stock Option Plan to increase the
number of shares reserved thereunder by 400,000 shares, the Board of Directors
believes that the number of shares remaining available for granting options
pursuant to the 1991 Option Plan are insufficient for that purpose. The 250,000
share increase sought under Proposal No. 2 represents less than 3 percent of the
Company's 8,900,624 total outstanding shares as of its proxy solicitation record
date of July 23, 1996.
Required Vote for Approval of Proposal No. 2
Approval of the foregoing amendment to the 1991 Option Plan requires the
affirmative vote of the holders of a majority of the shares of the Company's
Common Stock present in person or represented by proxy at the meeting. Votes
against are counted for the purposes of determining the presence or absence of a
quorum for the transaction of business. Votes against are also counted for
purposes of determining the total number of votes required to pass the proposal
and whether such number of votes has been obtained. Refer to the discussion on
pages 5 and 6 with respect to the effect of abstentions. In accordance with
applicable rules, brokers vote shares in accordance with instructions received
from the beneficial owners of the shares; in the absence of specific voting
instructions from the beneficial owners, brokers vote such shares in accordance
with their own discretion.
Management recommends a vote FOR approval of Proposal No. 2 --
Amendment to the 1991 Option Plan.
-4-
<PAGE> 7
Summary of 1991 Option Plan
The 1991 Option Plan provides for the granting to key employees, officers,
directors, and consultants to the Company and its subsidiaries (38 persons as of
May 28, 1996) of options to purchase shares of the Company's $0.01 par value
Common Stock.
The purpose of the 1991 Option Plan is to enhance the concern of the
Company's key employees and consultants (including officers and directors) in
the success of the Company by giving them an ownership interest in the Company
and to give such persons an incentive to continue their service to the Company.
The plan also affords a means for providing additional recognition for services
previously rendered. With the exception of options to be granted to themselves,
the Stock Option Committee determines in its sole discretion which of the
eligible persons are granted options and the number of shares subject to such
options. Members of the Stock Option Committee and newly elected directors are
automatically granted options as more particularly described on page 3 of this
document.
Options granted to employees may be designated as incentive stock options
(ISOs) or as non-statutory stock options (NSOs), whereas only NSOs may be
granted to consultants. The Internal Revenue Code, as presently in effect,
limits the number of ISOs which can become exercisable by any employee in any
one year and provides that the Company and optionees receive different tax
treatment upon exercise of NSOs and ISOs. No tax consequences result to the
Company or an ISO grantee upon the issuance and exercise of an ISO. No tax
consequences result to the Company or an NSO grantee upon the issuance of an NSO
pursuant to the 1991 Option Plan having an exercise price equal to the fair
market value of the Company's Common Stock on the date of grant of the NSO. Upon
the exercise of the NSO, a grantee realizes income in an amount equal to the
difference between the option exercise price and the fair market value of the
Company's Common Stock on the date of exercise of the NSO, and the Company is
entitled to a compensation deduction for the same amount.
All ISOs granted to employees can be exercised only if the optionee is
still an employee of the Company and its subsidiaries, except that ISOs are
exercisable for a limited time period after termination of employment and for
one year after the death or disability of the optionee. The restriction does not
apply to NSOs or to ISOs granted to officers. All of the presently outstanding
options under the 1991 Option Plan have five-year terms, with the exception of
three ten-year options. In general, portions of each option granted are
exercisable only after the passage of time or upon the occurrence of certain
events, rather than the entire option being immediately exercisable upon grant.
However, under the terms of the 1991 Stock Option Plan, the Board of Directors
and/or Stock Option Committee retains discretion, subject to certain limits, to
modify the terms of outstanding options. In January of 1993, the Company's Stock
Option Committee accelerated the vesting of all then unvested and outstanding
options. Certain option grants specify that the options are immediately
exercisable upon grant. One NSO granted in June of 1996 is exercisable in
installments of 20 percent each after six, 18, 30, 42, and 54 months from the
date of grant. All other options granted under the 1991 Option Plan have been
exercisable in one year or in installments of one-third each after two, three,
and four years from the date of grant.
All options granted under the 1991 Option Plan must have an exercise price
not less than the fair market value of the Company's Common Stock on the date
the option is granted. Fair market value per shares is the average of the high
and low trading prices as reported by The Nasdaq Stock Market on the date of
grant. Payment for the shares upon the exercise of options is in cash unless
payment by promissory note is directed by the full Board of Directors or payment
by utilization of outstanding Company stock owned by the optionee is directed by
the Stock Option Committee or by the full Board
-5-
<PAGE> 8
of Directors. The Company receives no cash consideration upon the granting of
options. The number of shares remaining available in the 1991 Option Plan is
proportionately adjusted in the case of a stock split or dividend, as is the
number of shares subject to outstanding options and the exercise price of such
options.
In the event of a merger or sale of assets or like event, the Board of
Directors is empowered to make appropriate adjustments to options under the 1991
Option Plan. The Board of Directors has adopted guidelines specifying the
following as adjustments that it would consider appropriate upon the occurrence
of such an event:
(1) permitting optionees no less than thirty days to exercise the vested
portion of their options;
(2) having the successor corporation either (a) issue to optionees
replacement options for the unvested portions of options, or else (b)
pay deferred compensation on the spread between the value of Company
stock upon the occurrence of such event and the option exercise price
at the time such unvested portion would have vested; and
(3) providing for vesting of 100 percent of the unvested portion for
optionees employed by the Company for at least two years prior to such
event if their employment is terminated within one year of such event
by the successor corporation other than by resignation or for acts of
moral turpitude.
The Company cannot now determine the number of options to be received in
the future by all current executive officers as a group, all current directors
who are not also executive officers as a group, or all employees including
current officers who are not executive officers as a group.
Executive Officers
The table below lists the names and ages of the Company's current executive
officers, the position held, and the year when first appointed. It is
anticipated that each such executive officer will continue in his position,
although there is no understanding or arrangement to that effect. Any executive
officer could resign or be replaced or removed by the Board of Directors at any
time.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Officer
Name Age Position with Company Since
---- --- --------------------- -----
<S> <C> <C> <C>
Jerome Drexler.................... 68 Chairman of the Board of Directors and President 1968
Christopher J. Dyball............. 45 Executive Vice President and 1992
General Manager, Card Manufacturing
Steven G. Larson.................. 46 Vice President of Finance and Treasurer 1987
</TABLE>
Executive Compensation
The table on the following page discloses the total compensation paid to
the Company's President and Executive Vice President for the three fiscal years
ended March 31, 1996, for services rendered in all capacities to the Company and
its subsidiaries. No other executive officer of the Company earned $100,000 or
more in aggregate salary and bonuses for the 1996 fiscal year.
-6-
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Fiscal Shares Underlying
Name and Principal Position Year Salary($) Bonus($) Option Grants(#)
- --------------------------- ------ --------- -------- -----------------
<S> <C> <C> <C> <C>
Jerome Drexler, 1996 $158,014 $0 30,000
Chairman of the Board 1995 $146,956 $0 17,000
and President 1994 $122,308 $0 72,000(1)
Christopher Dyball,
Executive Vice President 1996 $107,206 $0 75,000
and General Manager, 1995 $102,979 $0 17,000
Card Manufacturing 1994 $ 87,218 $0 15,000
</TABLE>
- -----------------
(1) This option was granted in January of 1993 (fiscal 1993) subject to
stockholder approval of certain amendments to the 1991 Stock Option Plan,
which approval was obtained in September of 1993 (fiscal 1994).
Stock Option Grants to Executive Officers
The table below sets forth the stock options granted to the Company's
President and Executive Vice President under the Company's 1991 Option Plan
during the 1996 fiscal year ended March 31, 1996. No other executive officer of
the Company earned $100,000 or more in salary and bonuses for the 1996 fiscal
year. The table sets forth hypothetical dollar gains or "option spreads" for the
options at the end of their respective terms, as calculated in accordance with
the rules of the Securities and Exchange Commission. Each gain is based on
arbitrarily assumed annualized rates of compounded appreciation of the market
price at the date of grant of 5 percent and 10 percent from the date the option
was granted to the end of the option term. However, no gain to the optionee is
possible without an increase in stock price, which will benefit all stockholders
commensurately. A zero percent gain in stock price appreciation will result in
zero dollars for the optionee. Actual gains, if any, on option exercises are
dependent on the future performance of the Company's Common Stock.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------- Potential Realizable Value at
Percent of Assumed Annual Rates of
Shares Total Options Exercise Stock Price Appreciation for
Underlying Granted to Price 5- or 10-Year Option Term
Options Employees ($/Share) Expiration ------------------------------
Name Granted(#) in Fiscal Year (1) Date(2) 5% 10%
---- ---------- -------------- --------- ------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Jerome Drexler 30,000 5.7% $8.563 Aug 24, 2005 $161,547 $409,393
Christopher 20,000 3.8% $7.00 June 7, 2000 $ 38,679 $ 85,471
Dyball 10,000 1.9% $8.563 Aug 24, 2000 $ 23,657 $ 52,275
45,000 8.5% $9.063 Sep 15, 2000 $112,671 $248,974
</TABLE>
- ------------------
(1) At the discretion of the Board of Directors and/or Stock Option Committee,
the optionee may pay the exercise price to the Company in cash, by
promissory note, or by delivering already owned shares, subject to certain
conditions.
(2) Mr. Drexler's option has a ten-year term, and Dr. Dyball's options have
five-year terms. These options are subject to earlier termination in
certain events.
-7-
<PAGE> 10
Aggregated Option Exercises and Options Held by Executive Officers
The following table sets forth the value of options exercised by the
Company's President and Executive Vice President during the 1996 fiscal year and
remaining unexercised at fiscal year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money Options at
Acquired on Value Fiscal Year-End (#) Fiscal Year-End ($)(2)
Exercise Realized ------------------------------- ----------------------
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerome Drexler 0 0 192,000 0 $1,062,938 0
Christopher Dyball 46,000 $171,671 110,000 45,000 $ 613,725 $132,187
</TABLE>
- ---------------------
(1) Market value of underlying securities (based on the fair market value of
the Company's Common Stock on The Nasdaq Stock Market) at the time of
their exercise, minus the exercise price.
(2) Market value of securities underlying in-the-money options at fiscal year
end (based on $12.00 per share, the average of the high and low trading
prices of the Company's Common Stock on The Nasdaq Stock Market as of
March 31, 1996), minus the exercise price.
Principal Stockholder
The table below shows the name, address, number of shares held, nature of
ownership, and percentage of shares held as of July 10, 1996, by the only person
or entity known to the Company to be the beneficial owner of more than 5 percent
of the Company's Common Stock.
<TABLE>
<CAPTION>
Number of Shares and Percentage
Name and Address Nature of Ownership of Class
---------------- ------------------- --------
<S> <C> <C>
Jerome Drexler 1,463,798(1) 16.4%
c/o Drexler Technology Corporation Full dispositive
1077 Independence Avenue and voting power
Mountain View, CA 94043
</TABLE>
- ------------------
(1) Includes 192,000 shares purchasable by exercise of option within 60 days.
Does not include 187,100 shares owned by Mr. Drexler's wife and 15,800
shares held indirectly by his wife as custodian, as to all of which shares
Mr. Drexler disclaims any beneficial ownership. Does not include 6,500
shares held by The Drexler Foundation, the assets of which are perpetually
dedicated to charity. The power to vote and to dispose of the shares held
by The Drexler Foundation is shared by the Foundation's directors,
consisting of Mr. Drexler and his wife.
Compensation Committee Interlocks and Insider Participation
Jerome Drexler, the Company's President, is a member of the Compensation
Committee. The Compensation Committee is responsible for setting the salaries of
the Company's executive officers, other than the President, and for certain
other management employees of the Company and its subsidiaries.
-8-
<PAGE> 11
Employment Contracts, Termination of Employment, and Change of Control
Arrangements
None of the Company's executive officers has employment or severance
arrangements with the Company. Under the terms of the 1991 Stock Option Plan,
the Board of Directors and/or Stock Option Committee retains discretion, subject
to certain limits, to modify the terms of outstanding options. In the event of a
merger or sale of assets or like event, the Board of Directors is empowered to
make appropriate adjustments to options under the 1991 Option Plan. See the
summary of the 1991 Option Plan on pages 5 and 6 of this Proxy Statement.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers, and beneficial owners of more than
10 percent of the Company's Common Stock to file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. The Company believes these requirements
were satisfied for the fiscal year ended March 31, 1996, except that due to
administrative errors in the Company's stock administration function, certain
Form 4s were filed seven to 14 days late for the following executive officers
and directors: Dr. Dyball, three reports covering a total of ten transactions;
Mr. Larson, two reports covering a total of seven transactions; Messrs. Hausman
and McKenna, two reports covering a total of eight transactions each.
---------------------------------------
With reference to the next two sections, headed "Compensation Policy" and
"Stock Performance Graph," and notwithstanding anything to the contrary set
forth in any of the Company's previous filings under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, that might
incorporate future filings, including this Proxy Statement, in whole or part,
the Compensation Policy and the Stock Performance Graph shall not be
incorporated by reference in any such filings, nor shall they be deemed to be
soliciting material or deemed filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, or under the Securities Exchange
Act of 1934, as amended.
---------------------------------------
Compensation Policy
The Board of Directors, in coordination with the Compensation Committee
and Stock Option Committee, establishes the general compensation policies of the
Company and specific compensation levels for the Company's President and other
executive officers. The Company's compensation policy, as adopted and revised
from time to time, is to provide total compensation opportunities that are
competitive with the pay practices of other companies and thereby enable the
Company to attract and retain superior performing managers. This is accomplished
through a combination of cash incentives and equity incentives which are granted
to the Company's executive officers as well as to a broad range of the Company's
employees. The Company believes that this closely aligns employee interests with
those of its stockholders.
The Board considered a total package for the Company's President in the
context of the Company's objectives and business strategy. The analysis included
reviewing compensation of chief executive officers of comparable companies
within similar industries. The Company's overall financial performance was
considered by the Board in determining the President's compensation; however,
the specific performance of the Company's Common Stock was not a factor. In
addition, the Board considered factors such as the individual's past performance
and future potential. The same factors and considerations were used in
determining the compensation of the Company's other executive officers as were
used in setting the compensation of the President.
-9-
<PAGE> 12
The Company also maintains a Management Bonus Plan for its management
employees. The Board determines the Company contribution to a bonus pool. This
contribution is usually related to performance criteria such as pre-tax,
pre-bonus Company earnings and licensing revenues, with various adjustments. The
President then has sole discretion to allocate this bonus pool among the
employees of the Company, excluding himself. The Company made no contribution to
the bonus pool during fiscal 1996.
<TABLE>
<CAPTION>
Compensation Committee Stock Option Committee
---------------------- ----------------------
<S> <C>
Jerome Drexler Arthur H. Hausman
William E. McKenna William E. McKenna
</TABLE>
Stock Performance Graph
The following stock performance graph compares the Company's total stockholder
returns over the last five fiscal years to the Standard & Poor's 500 Stock Index
("S&P 500") and the University of Chicago Center for Research in Security Prices
(CRSP) Total Return Index for The Nasdaq Stock Market Computer Manufacturing
Companies industry group, which includes manufacturers of computer storage
devices.
The graph assumes that the value of the investment in the Company and each index
was $100 on March 31, 1991, and that any dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
*Total Return Assumes Reinvestment of Dividends
[STOCK PERFORMANCE GRAPH APPEARS HERE]
The stock performance graph was plotted using the following data:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING MARCH 31,
----------------------------------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Drexler Technology Corporation.......... $100 $135 $115 $138 $138 $285
S&P 500................................. $100 $111 $128 $130 $150 $193
CRSP Nasdaq Computer Manufacturers...... $100 $105 $119 $116 $138 $213
</TABLE>
-10-
<PAGE> 13
Independent Public Accountants
Arthur Andersen LLP are the Company's independent public accountants for
the current fiscal year and first held this position for the fiscal year ended
March 27, 1981. The independent public accountants are appointed by the Board of
Directors. During the fiscal year ended March 31, 1996, Arthur Andersen LLP
performed audit services including examination of annual financial statements,
assistance on accounting and financial reporting matters, and performed tax
services including the preparation of returns and the rendering of planning
advice. Representatives of Arthur Andersen LLP are expected to be present at the
stockholders' meeting. The representatives will have an opportunity to make a
statement, if they so desire, and will be available to respond to appropriate
questions by stockholders.
Proxy Cost and Solicitation
The Company will bear the entire cost of preparing, assembling, printing,
and mailing proxy materials furnished by the Board of Directors to the
stockholders. Copies of proxy materials will be furnished to brokers, dealers,
banks, voting trustees, and their nominees for forwarding to the beneficial
owners. The Company has retained Corporate Investor Communications, Inc.
("CICI") to assist, if necessary, in the solicitation of proxies from banks,
brokers and nominees at an approximate cost of $5,500 plus out-of-pocket
expenses. In addition to the solicitation of proxies by use of the mails and by
CICI, some of the officers, directors, and regular employees of the Company may
(without additional compensation) solicit proxies by telephone or personal
interview, the cost of which the Company will bear.
Other Matters; Stockholder Proposals for 1997 Annual Meeting
The Board of Directors knows of no other matters which will be brought
before the meeting, but if any such matters are properly presented, the proxies
solicited hereby will be voted in accordance with the judgment of the proxy
holders.
Subject to Securities and Exchange Commission regulations, stockholder
proposals intended to be presented at the 1997 Annual Meeting of Stockholders
must be received by the Company not later than April 24, 1997, in order to be
included in the 1997 Proxy Statement.
Financial Statements
The Company's Annual Report for the 1996 fiscal year ended March 31, 1996,
is being sent concurrently to the Company's stockholders. If you have not
received or had access to the fiscal 1996 Annual Report, please notify the
Corporate Office, Drexler Technology Corporation, 1077 Independence Avenue,
Mountain View, California 94043-1601, and a copy will be sent to you.
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD, AS PROMPTLY AS POSSIBLE, IN THE ENCLOSED ENVELOPE. IF A
QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE ADDED EXPENSE OF RE-ISSUING
THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING, AND SO DESIRE, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
THANK YOU FOR ACTING PROMPTLY.
- --------------------------------------------------------------------------------
This Proxy Statement was printed on recycled paper.
-11-
<PAGE> 14
PROXY
DREXLER TECHNOLOGY CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS -
FOR ANNUAL MEETING SEPTEMBER 20, 1996
The undersigned hereby appoints Jerome Drexler and Jerald E. Rosenblum, or
either of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated on the reverse
side, all the shares of Common Stock of Drexler Technology Corporation held of
record by the undersigned on Tuesday, July 23, 1996, at the Annual Meeting of
Stockholders to be held on Friday, September 20, 1996, or any continuation or
adjournment thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
YOUR VOTE IS IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD
IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE.
IF A QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE
ADDED EXPENSE OF RE-ISSUING THESE PROXY MATERIALS.
IF YOU ATTEND THE MEETING, AND SO DESIRE, YOU MAY
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE> 15
Please mark
your votes as
indicated in
this example./X/
ITEM 1 -- ELECTION OF DIRECTORS.
Nominees: Jerome Drexler
Arthur H. Hausman
William E. McKenna
WITHHELD
FOR FOR ALL
/ / / /
WITHHELD FOR: (Write that nominee's name in the space provided below):
______________________________________________________________________
ITEM 2 -- APPROVAL OF AN AMENDMENT TO 1991 STOCK OPTION PLAN.
FOR AGAINST ABSTAIN
/ / / / / /
ITEM 3 -- OTHER MATTERS. In their discretion, the Proxies are authorized to vote
upon such other matters as may properly come before the meeting or any
adjournment or continuation thereof.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF THIS PROXY IS SIGNED AND RETURNED WITHOUT
VOTING INSTRUCTIONS, THE SHARES WILL BE VOTED FOR ELECTION OF DIRECTORS, FOR
PROPOSAL 2, AND ACCORDING TO THE DISCRETION OF THE PROXY HOLDER(S) ON ANY OTHER
MATTERS THAT PROPERLY COME BEFORE THE MEETING.
Signature(s) ______________________________ Date _________________________, 1996
Please sign exactly as your name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give the full title as such. If a corporation,
please sign in full corporate name by the president or other authorized officer.
If a partnership, please sign the partnership name by the authorized person.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING,
PLEASE MARK, SIGN, DATE, AND RETURN
THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
THANK YOU.
