<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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
</TABLE>
DUCOMMUN INCORPORATED
-------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 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]
DUCOMMUN INCORPORATED
23301 SOUTH WILMINGTON AVENUE
CARSON, CALIFORNIA 90745
(310) 513-7200
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 3, 1995
------------------------
To the Shareholders of
Ducommun Incorporated:
Notice is hereby given that the Annual Meeting of Shareholders of Ducommun
Incorporated, a Delaware corporation (the "Corporation"), will be held at the
Radisson Hotel, Two Civic Center Plaza Drive, Carson, California, on Wednesday,
May 3, 1995, at the hour of 9:00 o'clock A.M. for the following purposes:
1. To elect three directors to serve for three-year terms ending in
1998.
2. To transact any other business that may properly be brought before
the meeting or any adjournments or postponements thereof.
March 13, 1995 has been established as the record date for the
determination of shareholders entitled to notice of, and to vote at, the Annual
Meeting. All shareholders are cordially invited to attend the meeting in person.
To insure your representation at the meeting, please complete and mail your
Proxy Card in the return envelope provided, as soon as possible. This will not
prevent you from voting in person, should you so desire, but will help to secure
a quorum and will avoid added solicitation costs.
By Order of the Board of Directors
James S. Heiser
Secretary
Carson, California
March 27, 1995
<PAGE> 3
DUCOMMUN INCORPORATED
23301 SOUTH WILMINGTON AVENUE
CARSON, CALIFORNIA 90745
(310) 513-7200
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is being mailed on or about March 27, 1995 to
shareholders of Ducommun Incorporated (the "Corporation") who are such of record
on March 13, 1995, in connection with the solicitation of proxies for use at the
Corporation's Annual Meeting of Shareholders to be held at 9:00 o'clock A.M. on
May 3, 1995, or at any adjournments or postponements thereof, for the purposes
set forth herein and in the accompanying Notice of Annual Meeting. The
accompanying Proxy is solicited by the Board of Directors of the Corporation.
Solicitation will be by mail, interview, telephone and telegraph. D. F. King &
Co., Inc. has been retained to assist in the solicitation of proxies for which
it will be paid a fee of $4,000 plus reimbursement of out-of-pocket expenses.
Brokers, nominees, banks and other custodians will be reimbursed for their costs
incurred in forwarding solicitation material to beneficial owners. All expenses
incident to the proxy solicitation will be paid by the Corporation.
Proxies in the accompanying form will be voted in accordance with the
instructions given therein. If no instructions are given, the Proxies will be
voted for the election as directors of the management nominees. Any shareholder
may revoke his Proxy at any time prior to its use by filing with the Secretary
of the Corporation a written notice of revocation or a duly executed Proxy
bearing a later date or by voting in person at the Annual Meeting.
The close of business on March 13, 1995 has been fixed as the record date
(the "Record Date") for the determination of holders of shares of Common Stock
entitled to notice of, and to vote at, the Annual Meeting. At the close of
business on the Record Date, the Corporation had outstanding 4,465,799 shares of
Common Stock, $.01 par value per share (the "Common Stock"). In the election of
directors, each holder of Common Stock will be entitled to a number of votes
equal to the number of directors to be elected multiplied by the number of
shares held. The votes so determined may be cast for one candidate or
distributed among two or more candidates. On all other matters to come before
the Annual Meeting, each holder of Common Stock will be entitled to one vote for
each share owned.
A majority of the outstanding shares of Common Stock will constitute a
quorum at the Annual Meeting. Abstentions and broker non-votes will be counted
for purposes of determining whether a quorum has been obtained. In the election
of directors, abstentions and broker non-votes will not be counted. On all other
matters, abstentions will be counted, but broker non-votes will not be counted,
for purposes of determining whether a proposal has been approved.
The Corporation's 1994 Annual Report to Shareholders is being mailed to
shareholders with this Proxy Statement.
ELECTION OF DIRECTORS
Three directors (out of a total of seven) are to be elected at the
forthcoming Annual Meeting. The three nominees, Norman A. Barkeley, H. Frederick
Christie and Kevin S. Moore, are nominated to serve for three-
1
<PAGE> 4
year terms expiring at the Annual Meeting in 1998 and thereafter until their
successors are elected and qualified. In the absence of a contrary direction,
Proxies in the accompanying form will be voted for the election of the foregoing
nominees. Management does not contemplate that any of the nominees will be
unable to serve as directors, but if that should occur the persons designated in
the Proxies will cast votes for other persons in accordance with their best
judgment. In the event that any person other than the nominees named herein
should be nominated for election as a director, the Proxy holders may vote for
less than all of the nominees and in their discretion may cumulate votes. Should
any of the directors whose terms continue past the 1995 Annual Meeting cease to
serve as directors prior to the Annual Meeting, the authorized number of
directors will be reduced accordingly.
The following information is furnished as of March 13, 1995, with respect
to each of the three persons who are nominees for election to the Board of
Directors, as well as for the other four directors of the Corporation whose
terms of office will continue after the 1995 Annual Meeting.
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME, PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS AGE SINCE EXPIRES
-------------------------------------------------- --- --------- --------
<S> <C> <C> <C>
Norman A. Barkeley 65 1987 1998
Chairman of the Board, Chief Executive Officer and President of the
Corporation; Director, Dames & Moore, Inc., RHR International
Company and Technetics Corp.
H. Frederick Christie 61 1985 1998
Consultant; Retired President and Chief Executive Officer, The
Mission Group (subsidiary of SCEcorp); Director, Great Western
Financial Corporation, Great Western Bank, Ultramar Corp., A.E. Com
Technology, IHOP Corp., Capital Income Builder, Inc., Small Cap
World Fund, Capital World Growth and Income Fund, Inc., and
American Mutual Fund, Inc.; Trustee, American Variable Insurance
and New Economy Fund; and Director or Trustee of twelve fixed
income funds of the Capital Research & Management Company.
Robert C. Ducommun 43 1985 1996
Management Consultant;
Director, American Metal Bearing Company and Inventa Corporation.
Kevin S. Moore 40 1994 1998
Vice President and Chief Financial Officer, The Clark Estates, Inc.
(private investment firm); Director, Hitox Corporation of America.
Thomas P. Mullaney 61 1987 1996
General Partner, Matthews, Mullaney & Company (private investment
firm); Director, The Santa Anita Companies, Lucas Arts
Entertainment Company, and Lucas Digital Ltd.
Richard J. Pearson 69 1978 1997
Retired President and Chief Operating Officer, Avery Dennison
Corporation (adhesive products); Director, Ameron, Inc., Escorp, M
& R Printing Equipment and Seidler Capital; Trustee, Pomona
College.
Arthur W. Schmutz 73 1988 1997
Advisory Counsel, Gibson, Dunn & Crutcher; Director, H. F.
Ahmanson & Company and Home Savings of America.
</TABLE>
Mr. Mullaney was previously a director of the Corporation in 1984 and 1985.
Mr. Schmutz is advisory counsel to the law firm of Gibson, Dunn & Crutcher,
which rendered legal services to the Corporation during 1994 and is expected to
render legal services to the Corporation during 1995. Mr. Schmutz was previously
a director of the Corporation from 1985 to 1987. Mr. Barkeley is related by
marriage to Mr. Borlet, President of
2
<PAGE> 5
Jay-El Products, Inc., a subsidiary of the Corporation. Mr. Moore was elected as
a director in 1994 and has been nominated for election as a director at the
Annual Meeting of Shareholders pursuant to the Conversion Agreement dated July
22, 1992 between the Corporation and certain Clark family accounts, for which
The Clark Estates, Inc. provides administrative and investment services as
described under "Security Ownership of Certain Beneficial Owners."
The Board of Directors met five times in 1994. All incumbent directors
attended seventy-five percent or more of the meetings of the Board of Directors
and Committees of the Board on which they served during 1994. Each of the
persons named above, except Mr. Moore, was elected by the shareholders at a
prior annual meeting.
Directors who are not employees of the Corporation or a subsidiary are paid
an annual retainer of $10,000 and receive $1,000 for each Board of Directors
meeting, Shareholders meeting or Committee meeting they attend. Under the
Directors Deferred Income and Retirement Plan, a director may elect to defer
payment of all or part of his fees for service as a director until he retires as
a director, at which time the deferred fees will be paid to him with interest. A
retiring director will also receive the annual retainer fee in effect at the
time of retirement or at the time of payment, whichever is higher, for life or
for a period of years equal to his service as a director, whichever is shorter,
provided that the director retires between the ages of 65 and 75, has served as
a director for at least five years and is not an employee of the Corporation
when he retires.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's officers and directors, and persons
who own more than 10% of the Corporation's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and to furnish copies of such forms to the Corporation. Based solely on
a review of the copies of such forms furnished to the Corporation, and on
written representations that no Forms 5 were required, the Corporation believes
that during its past fiscal year all of its officers, directors and greater than
10% owners complied with the filing requirements of Section 16(a) except that
Mr. Moore reported his initial statement of beneficial ownership late on a
subsequently filed Form 3.
COMMITTEES OF THE BOARD OF DIRECTORS
The Corporation has standing Executive, Audit, Compensation and Nominating
Committees. The members of the Executive Committee are Messrs. Barkeley,
Mullaney and Schmutz. The Executive Committee, which met formally two times
during 1994, performs the same function as the Board of Directors, subject to
certain limitations, including limitations on the power to amend or repeal the
Certificate of Incorporation or Bylaws, adopt an agreement of merger or
consolidation, or recommend to the shareholders the sale, lease or exchange of
substantially all of the property and assets of the Corporation. The members of
the Audit Committee are Messrs. Christie, Ducommun and Pearson. The Audit
Committee, which met formally three times during 1994, reviews the scope of
audits, audit procedures and the results of audits with the corporate staff and
the independent accountants, and approves all non-audit services by the
independent accountants. The members of the Compensation Committee are Messrs.
Mullaney, Pearson and Schmutz. The Compensation Committee, which met formally
three times during 1994, reviews and recommends compensation for officers,
grants stock options and administers stock option programs. The members of the
Nominating Committee are Messrs. Ducommun, Mullaney, Pearson and Schmutz. The
Nominating Committee, which met formally one time during 1994, reviews and
recommends to the Board of Directors the nominees for election as directors of
the Corporation at the Annual Meeting of Shareholders or otherwise by the Board
of Directors.
3
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The tables below show the name and address of the beneficial owners, amount
and nature of beneficial ownership and percentage ownership of persons or groups
known by the Corporation to be the beneficial owners of 5% or more of the
outstanding shares of Common Stock as of March 13, 1995. The tables below also
show the name, amount and nature of beneficial ownership and percentage
ownership of each director and nominee for director, each executive officer
named in the Summary Compensation Table contained in this Proxy Statement, and
all directors and executive officers as a group as of March 13, 1995. Unless
otherwise indicated, such shareholders have sole voting and investment power (or
share such power with their spouse) with respect to the shares set forth in the
tables. The Corporation knows of no contractual arrangements which may at a
subsequent date result in a change in control of the Corporation.
For the purposes of the tables, beneficial ownership of shares has been
determined in accordance with Rule 13d-3 of the SEC, under which a person is
deemed to be the beneficial owner of securities if he or she has or shares
voting or investment power with respect to such securities or has the right to
acquire ownership thereof within 60 days. Accordingly, the amounts shown in the
tables do not purport to represent beneficial ownership for any purpose other
than compliance with SEC reporting requirements.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF PERCENTAGE
OF SHAREHOLDERS SHARES OF CLASS
---------------- ------------ ----------
<S> <C> <C>
Robert C. Ducommun 524,343(1) 11.4%
1155 Park Avenue
New York, NY 10128
Norman A. Barkeley 326,250(2) 6.9%
23301 S. Wilmington Avenue
Carson, CA 90745
The Clark Estates, Inc. 1,119,811(3) 25.1%
30 Wall Street
New York, NY 10005
The Clark Foundation 390,702(3) 8.7%
30 Wall Street
New York, NY 10005
Kevin S. Moore 1,119,811(3) 25.1%
30 Wall Street
New York, NY 10005
Ingalls & Snyder 340,756(4) 7.4%
61 Broadway
New York, NY 10006
The Killen Group, Inc. 340,800(5) 7.6%
1189 Lancaster Avenue
Berwyn, PA 19312
ZPR Investment Management, Inc. 641,612(6) 13.6%
1642 N. Volusia Avenue
Orange City, FL 32763
</TABLE>
---------------
(1) The number of shares includes (i) 77,655 shares issuable upon conversion of
$775,000 of the Corporation's 7 3/4% convertible subordinated debentures
(the "Debentures"), (ii) 50,100 shares issuable upon conversion of $500,000
of Debentures held by a foundation of which Mr. Ducommun is an officer,
4
<PAGE> 7
and (iii) 159,212 shares as to which Mr. Ducommun has been granted a proxy
to exercise voting power by his sister, Electra D. de Peyster. Mr. Ducommun
has sole voting and sole investment power as to 315,021 shares, shared
voting power as to 209,322 shares and shared investment power as to 50,110
shares.
(2) The number of shares includes 246,250 shares that may be purchased within 60
days after March 13, 1995 by exercise of outstanding stock options.
(3) The information is based on a Schedule 13D filed with the SEC dated July 29,
1992 and other information provided by The Clark Estates, Inc. The Clark
Estates, Inc. provides administrative and investment services to a number of
Clark family accounts which beneficially own an aggregate of 1,119,811
shares, including The Clark Foundation which owns 390,702 shares. Kevin S.
Moore, Vice President and Chief Financial Officer of The Clark Estates,
Inc., has been granted powers of attorney to exercise voting and investment
power as to 1,119,811 shares. The Clark Estates, Inc. and Mr. Moore have
shared voting and investment power as to 1,119,811 shares and The Clark
Foundation has shared voting and investment power as to 390,702 shares.
(4) The information is based on a Schedule 13G filed with the SEC dated January
13, 1995. The number of shares includes 128,456 shares issuable upon
conversion of $1,282,000 of Debentures. Ingalls & Snyder has sole voting
power as to 7,605 shares and sole investment power as to 340,756 shares.
(5) The information is based on a Schedule 13G filed with the SEC dated January
31, 1995. The Killen Group, Inc. has sole voting power as to 99,800 shares
and sole investment power as to 340,800 shares.
(6) The information is based on two Schedules 13G filed with the SEC dated
January 6, 1995. The number of shares includes 256,012 shares issuable upon
conversion of $2,555,000 of Debentures. ZPR Investment Management, Inc. has
sole voting power as to all shares.
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME SHARES OF CLASS
---- --------- ----------
<S> <C> <C>
Norman A. Barkeley 326,250(1) 6.9%
H. Frederick Christie 1,000 *
Robert C. Ducommun 524,343(2) 11.4%
Kevin S. Moore 1,119,811(3) 25.1%
Thomas P. Mullaney 1,000 *
Richard J. Pearson 340 *
Arthur W. Schmutz 1,000(4) *
Joseph C. Berenato 33,000(5) *
Robert A. Borlet 55,831(5) 1.2%
Robert B. Hahn 52,125(5) 1.2%
Robert L. Hansen 32,437(5) *
All Directors and Executive Officers as a Group
(15 persons) 2,246,512(5) 44.1%
</TABLE>
---------------
* Less than one percent.
(1) See the information set forth in Note 2 to the table under "Security
Ownership of Certain Beneficial Owners."
(2) See the information set forth in Note 1 to the table under "Security
Ownership of Certain Beneficial Owners."
5
<PAGE> 8
(3) See the information set forth in Note 3 to the table under "Security
Ownership of Certain Beneficial Owners."
(4) The shares are held in a trust in which Mr. Schmutz has investment power
only.
(5) The number of shares includes the following shares that may be purchased
within 60 days after March 13, 1995 by exercise of outstanding stock
options: 27,500 by Mr. Berenato, 52,331 by Mr. Borlet, 52,125 by Mr. Hahn,
32,437 by Mr. Hansen and 462,500 by all directors and executive officers as
a group. The number of shares for Mr. Berenato includes 3,500 held in an IRA
for the benefit of himself, 500 held in a Keough for the benefit of his
wife, and 1,500 held in trust for the benefit of his son. The number of
shares for Mr. Borlet includes 500 held in an IRA for the benefit of
himself.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table discloses compensation received by the Corporation's
chief executive officer and the other four most highly-paid executive officers
of the Corporation (including subsidiary presidents) for the three fiscal years
ended December 31, 1994. Columns have been omitted from the table when there has
been no compensation awarded to, earned by or paid to any of the named executive
officers required to be reported in that column in any fiscal year covered by
the table.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------
AWARDS
----------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
-------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS(#) ($)(1)
--------------------------- ----- -------- -------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Norman A. Barkeley 1994 $325,000 $200,000 0 $1,963
Chairman of the Board, Chief 1993 325,000 175,000 0 877
Executive Officer and President 1992 325,000 200,000 50,000 0
Joseph C. Berenato 1994 165,000 105,000 0 0
Vice President, Chief Financial 1993 152,308 60,000 35,000 0
Officer and Treasurer 1992 150,000 55,000 0 0
Robert A. Borlet 1994 146,269 50,000 0 0
President, 1993 143,000 35,000 5,325 0
Jay-El Products, Inc. 1992 136,700 32,000 10,000 0
Robert B. Hahn 1994 160,130 100,000 0 0
President, 1993 148,502 25,000 5,500 0
Aerochem, Inc. 1992 142,213 0 15,000 0
Robert L. Hansen 1994 142,385 70,000 0 0
President, AHF-Ducommun 1993 128,654 50,000 6,750 0
Incorporated 1992 122,308 40,000 10,000 0
</TABLE>
---------------
(1) All other compensation for Mr. Barkeley in 1994 consisted of $55 for the
above-market interest accrued on deferred compensation under the
Corporation's Executive Compensation Deferral Plan and $1,908 for insurance
premiums paid by the Corporation with respect to term life insurance for the
benefit of Mr. Barkeley.
6
<PAGE> 9
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
No stock options or stock appreciation rights were granted in 1994 to the
named executive officers of the Corporation.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information on option/SAR exercises in 1994 by
the named executive officers and the value of such executive officers'
unexercised options/SARs at December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS
SHARES FISCAL YEAR-END(#) FISCAL YEAR-END($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Norman A. Barkeley 0 $0 233,750 25,000 $319,219 $ 9,375
Joseph C. Berenato 0 0 27,500 32,500 15,469 40,156
Robert A. Borlet 0 0 49,831 8,994 112,808 7,866
Robert B. Hahn 0 0 48,375 11,625 83,312 9,000
Robert L. Hansen 0 0 29,937 10,063 32,062 9,470
</TABLE>
EMPLOYMENT AGREEMENT
Mr. Barkeley is a party to an employment agreement with the Corporation
providing for a term of employment until December 31, 1996 at a salary of
$325,000 per year. Mr. Barkeley is eligible to participate in the Corporation's
bonus plan, Executive Retirement Plan and Executive Compensation Deferral Plan
and to receive other ordinary benefits, subject to the right of the Corporation
to amend or terminate such plans and benefits. The benefits Mr. Barkeley is
entitled to receive under the Executive Retirement Plan are described below. The
Executive Compensation Deferral Plan allows Mr. Barkeley to defer a portion of
his annual salary and bonus, with interest credited at a rate tied to the
Corporation's expected return on the investment of the deferred amounts. The
Employment Agreement also requires the Company to provide Mr. Barkeley with a
post-retirement life insurance benefit in the amount of $325,000 for life.
During the term of employment, the employment agreement obligates the
Corporation to use its best efforts to include Mr. Barkeley among management's
nominees for election to the Board of Directors, and to have Mr. Barkeley
elected by the Board of Directors as the Chairman, Chief Executive Officer and
President of the Corporation. If the Board of Directors of the Corporation fails
to elect Mr. Barkeley to these offices or materially changes the relative duties
and responsibilities of these offices, then Mr. Barkeley shall have the right to
treat such event as a termination of his employment by the Corporation without
cause. In the event that Mr. Barkeley's employment is terminated by the
Corporation without cause (as defined in the employment agreement), except for
disability, then Mr. Barkeley shall have the right to receive from the
Corporation until the ending date of the period of employment provided by the
employment agreement, the salary in effect at the date of such termination of
employment.
7
<PAGE> 10
EXECUTIVE RETIREMENT PLAN
The Corporation maintains an Executive Retirement Plan under which Mr.
Barkeley presently is the only executive eligible to participate. Pursuant to
the Executive Retirement Plan, Mr. Barkeley or his designee will receive, upon
Mr. Barkeley's retirement or other termination of employment, a monthly benefit
payment for a period of 15 years in the amount of 4 1/2% of his Final Average
Salary, plus the percentage of his Final Average Salary which is the product of
5 3/4% times the number of full and fractional years of his employment that are
completed after December 31, 1992 and before January 1, 1997. Mr. Barkeley's
"Final Average Salary" is defined under the Executive Retirement Plan as the
average of his base salary for the 60 months of employment immediately prior to
his retirement or other termination of employment. The estimated annual benefit
under the Executive Retirement Plan, upon Mr. Barkeley's expected retirement on
December 31, 1996, is $89,375 per year for 15 years. Mr. Barkeley also may elect
to receive such benefit in the form of an actuarially equivalent single-life
annuity or an actuarially equivalent joint and survivor annuity. The Executive
Retirement Plan also provides for the payment of such benefit in a single lump
sum at the election of Mr. Barkeley or upon a change in control of the
Corporation, in each instance subject to certain penalties and reductions of
benefits.
KEY EXECUTIVE SEVERANCE AGREEMENTS
Messrs. Berenato, Borlet, Hahn and Hansen are parties to key executive
severance agreements entered with the Corporation. The key executive severance
agreements provide that if the employment of an executive officer is terminated
without cause (as defined in the agreements), except in the event of disability
or retirement, he shall be entitled to receive the following: (i) if the
employment of the executive is terminated within two years following a change in
control of the Corporation, then the executive shall be entitled to receive
payment of his full base salary for a period of two years, payment of the amount
of any bonus for a past fiscal year which has not yet been awarded or paid, and
continuation of benefits for a period of two years, or (ii) if the employment of
the executive is terminated other than within two years following a change in
control of the Corporation, then the executive shall be entitled to receive
payment of his full base salary for a period of one year, payment of the amount
of any bonus for a past fiscal year which has not yet been awarded or paid, and
continuation of benefits for a period of one year. A change in control of the
Corporation is defined in the key executive severance agreements to mean a
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange
Act. Such a change in control is deemed conclusively to have occurred in the
event of certain tender offers, mergers or consolidations, the sale, lease,
exchange or transfer of substantially all of the assets of the Corporation, the
acquisition by a person or group of 25% (or in the case of The Clark Estates,
Inc., 30%) or more of the outstanding voting securities of the Corporation, the
approval by the shareholders of a plan of liquidation or dissolution of the
Corporation, or certain changes in the members of the Board of Directors of the
Corporation. In the event of a change in the executive's position or duties, a
reduction in the executive's base salary as increased from time to time, a
removal from eligibility to participate in the Corporation's bonus plan and
other events as described in the agreements, then the executive shall have the
right to treat such event as a termination of his employment by the Corporation
without cause and to receive the payments and benefits described above.
8
<PAGE> 11
Notwithstanding anything to the contrary set forth in any of the
Corporation's filings under the Securities Act of 1933, as amended, or the
Exchange Act that incorporate future filings, including this Proxy Statement, in
whole or in part, the following Compensation Committee Report on Executive
Compensation and the Performance Graph shall not be incorporated by reference
into any such filings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions relating to compensation of the Corporation's executive officers
generally are made by the Compensation Committee of the Board of Directors. Each
member of the Compensation Committee is a nonemployee director of the
Corporation.
COMPENSATION POLICIES APPLICABLE TO EXECUTIVE OFFICERS
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that relate pay to the achievement
of the Corporation's financial goals, recognize individual initiative and
performance, and assist the Corporation in attracting and retaining qualified
executives. Overall compensation of executive officers is set at levels that the
Compensation Committee believes to be competitive with other companies of
similar size in the Los Angeles area. The Compensation Committee believes that
the geographic area of Los Angeles provides the best indication of the market in
which the Corporation competes for executive talent and, as a result, the
Compensation Committee does not specifically consider the compensation levels of
companies in the Peer Group appearing under the caption "Performance Graph" in
this Proxy Statement. In evaluating competitive compensation information with
respect to other companies of similar size in the Los Angeles area, the
Compensation Committee does not target any percentile or level of compensation
for executive officers of the Corporation but uses such information on a
subjective basis to determine the appropriate level of executive officer
compensation based on the position, experience and past performance of each
individual executive officer.
In addition, executive officer compensation reflects the importance to the
Corporation of achieving consistently positive net income and cash flow. As a
result, executive officer compensation emphasizes cash compensation consisting
of a base salary and an annual bonus, and long-term noncash stock option awards.
Except as described below with respect to the Corporation's chief executive
officer, the Corporation does not provide any long-term cash incentive plans,
pension, profit-sharing or other retirement benefits, or many of the executive
perquisites typically provided by other companies to their senior executives.
Annual bonuses are awarded on a discretionary basis by the Compensation
Committee based on the Corporation achieving specified levels of net income,
return on assets and cash flow and on the individual performance of executive
officers. The Corporation's subsidiary presidents are also measured based upon
the financial performance of their operating units. Annual bonuses are targeted
at 25%-40% of base salary depending on the particular executive officer
involved, with a maximum annual bonus eligibility of twice the targeted amount.
Bonuses for 1994 generally were awarded in amounts above the targeted bonus
levels for executive officers. The bonuses awarded for 1994 were based on the
Corporation exceeding the targeted levels for net income and return on assets
and substantially exceeding the targeted and maximum levels for cash flow under
the Corporation's bonus plan. In making the bonus determinations, the
Compensation Committee also considered the Corporation's success in 1994 and
early 1995 in acquiring three complementary businesses that are expected to lead
to a substantial increase in sales in 1995.
Stock option awards are made periodically to provide management with an
ownership interest in the Corporation and significant stock-based performance
compensation. Stock option awards are made based on
9
<PAGE> 12
the responsibilities and performance of the particular executive officers, and
are designed to provide a substantial portion, which could range up to 50%, of
total compensation in a form tied directly to the Corporation's stock
performance. All stock options are granted at the market price of the
Corporation's common stock on the date of grant and, as such, will have value
only in the event of an increase in the Corporation's stock price. No stock
options were granted to executive officers in 1994.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Barkeley receives a base salary and is eligible to receive an annual
bonus on the same basis as described above with respect to executive officers
generally. However, as described below, Mr. Barkeley generally is not expected
to be eligible to receive further stock option awards and, as a result, no stock
options were awarded to Mr. Barkeley during 1994.
Mr. Barkeley's base salary was established in 1988 when he was recruited to
join the Corporation, and was last increased in 1990. The Compensation Committee
has established Mr. Barkeley's base salary at a level designed to reflect his
substantial aerospace industry experience and expertise.
During 1993, the Corporation and Mr. Barkeley entered into a new employment
agreement providing for a term of employment until December 31, 1996. In
connection with establishing Mr. Barkeley's compensation under the employment
agreement, the Compensation Committee retained the Management Compensation Group
as its executive compensation consultant. In reviewing Mr. Barkeley's
compensation, the Management Compensation Group determined that the level of Mr.
Barkeley's compensation with respect to retirement and post-retirement benefits
was not competitive with other companies of similar size in the Los Angeles
area. Accordingly, the Compensation Committee determined that it would be
appropriate to provide Mr. Barkeley with competitive retirement, deferred
compensation and post-retirement life insurance benefits. In connection with
these changes in Mr. Barkeley's retirement benefits, the Compensation Committee
also determined that it would be appropriate at the present time to freeze Mr.
Barkeley's base salary, reduce the range of his bonus eligibility under the
Corporation's bonus plan and eliminate further stock option awards for the term
of the employment agreement. The general philosophy governing the Compensation
Committee's decision in establishing Mr. Barkeley's level of compensation under
the new employment agreement was to provide Mr. Barkeley with a total
compensation package sufficient to retain his services through the end of 1996,
without significantly increasing the after-tax cost to the Corporation.
Mr. Barkeley's annual bonus is awarded on a discretionary basis by the
Compensation Committee based on the Corporation achieving specified levels of
net income, return on assets and cash flow and on Mr. Barkeley's individual
performance. The bonus awarded to Mr. Barkeley for 1994 was above the targeted
bonus level, but below the maximum bonus level, under the Corporation's bonus
plan. The bonus awarded for 1994 was based on the Corporation exceeding the
targeted levels for net income and return on assets and substantially exceeding
the targeted and maximum levels for cash flow under the Corporation's bonus
plan. In making the bonus determination, the Compensation Committee also
considered the Corporation's success in 1994 and early 1995 in acquiring three
complementary businesses that are expected to substantially increase sales in
1995, and Mr. Barkeley's outstanding personal performance in 1994 in positioning
the Corporation for future growth.
Compensation Committee
Richard J. Pearson, Chairman
Thomas P. Mullaney
Arthur W. Schmutz
10
<PAGE> 13
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
Corporation's cumulative total shareholder return with the cumulative total
return of the Russell 2000 Index and an Aerospace/Defense Industry Peer Group
for the periods indicated. The graph is not necessarily indicative of future
price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN AMONG DUCOMMUN INCORPORATED,
RUSSELL 2000 INDEX AND
AEROSPACE/DEFENSE INDUSTRY PEER GROUP(1)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) DCO RUSSELL 2000 PEER GROUP
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 103.33 80.49 62.16
1991 123.33 117.56 76.86
1992 113.33 139.21 70.76
1993 90.00 165.53 80.43
1994 133.33 162.51 78.64
</TABLE>
(1) The Aerospace/Defense Industry Peer Group used in the Performance Graph
consists of the one-half of the companies in the Value Line
Aerospace/Defense Index with the lowest market capitalization as of December
31, 1992. These companies are: AAR Corp., EDO Corp., Hexcel Corp., Hi-Shear
Industries, Inc., Logicon Inc., M/A-COM Inc., Moog Inc., Nichols Research
Corp., Rohr Inc., Sparton Corp., TransTechnology Corporation, UNC Inc.,
United Industrial Corp., Watkins-Johnson Company and Wyman-Gordon Company.
11
<PAGE> 14
REPORTS
The Annual Report of the Corporation for the fiscal year ended December 31,
1994, describing the Corporation's operations and including audited financial
statements, has been mailed prior to or concurrently with this Proxy Statement.
The Corporation will provide a copy of its most recent report to the SEC on Form
10-K upon the written request of any beneficial owner of the Corporation's
securities as of the Record Date for the Annual Meeting of Shareholders without
charge except for the cost of reproducing Exhibits. Such request should be
addressed to Ducommun Incorporated, 23301 S. Wilmington Avenue, Carson,
California 90745, Attn: James S. Heiser, Secretary.
INDEPENDENT ACCOUNTANTS
The Corporation's independent accountants for the current fiscal year, as
well as for the fiscal year ended December 31, 1994, are Price Waterhouse. A
representative of such firm will be afforded the opportunity to make a statement
if he desires and will be available to respond to appropriate questions from
shareholders in attendance.
SHAREHOLDER PROPOSALS
From time to time individual shareholders of the Corporation may submit
proposals which they believe should be voted upon by the shareholders. The SEC
has adopted regulations which govern the inclusion of such proposals in the
Corporation's annual proxy materials. All such proposals must be submitted to
the Secretary of the Corporation no later than December 1, 1995, in order to be
considered for inclusion in the Corporation's 1996 proxy materials.
OTHER BUSINESS
The Board of Directors does not know of any other business which will be
presented for consideration at the Annual Meeting. If any other business
properly comes before the Annual Meeting or any adjournment or postponement
thereof, the proxy holders will vote in regard thereto according to their
discretion insofar as such proxies are not limited to the contrary.
By Order of the Board of Directors
James S. Heiser
Secretary
Carson, California
March 27, 1995
12
<PAGE> 15
PRELIMINARY COPY
DUCOMMUN INCORPORATED
23301 S. WILMINGTON AVENUE - CARSON, CALIFORNIA 90745
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON MAY 3, 1995
The undersigned hereby appoints JOSEPH C. BERENATO and JAMES S. HEISER, and
each of them (with full power to act without the other), the agents and proxies
of the undersigned, each with full power of substitution, to represent and to
vote, as specified below, all of the shares of Common Stock of Ducommun
Incorporated, a Delaware corporation, held of record by the undersigned on March
13, 1995, at the Annual Meeting of Shareholders to be held on May 3, 1995, and
at any adjournments or postponements thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF / / FOR all nominees listed / / WITHHOLD AUTHORITY to vote
DIRECTORS below (except as marked to the for all nominees listed
contrary below) below
</TABLE>
Norman A. Barkeley, H. Frederick Christie and Kevin S. Moore
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
-------------------------------------------------------------------------------
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued on other side)
(Continued from other side)
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 PROPOSAL 1.
This proxy may be revoked at any time prior to the voting thereof. All other
proxies heretofore given by the undersigned are hereby expressly revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Dated: ____________, 1995
-------------------------
Signature
-------------------------
Signature if held jointly
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.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
