<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
/X/ Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2)
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.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):
/ / $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 7, 1997
------------------------
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
Long Beach Airport Marriott Hotel, 4700 Airport Plaza Drive, Long Beach,
California, on Wednesday, May 7, 1997, 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
2000.
2. To consider and act upon a proposed amendment of the 1994 Stock
Incentive Plan to increase by 350,000 the number of shares of Common Stock
available thereunder.
3. To consider and act upon a proposed amendment of the 1994 Stock
Incentive Plan to include nonemployee directors of the Corporation as
eligible participants therein.
4. To transact any other business that may properly be brought before
the meeting or any adjournments or postponements thereof.
March 17, 1997 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
Carson, California Secretary
March 26, 1997
<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 26, 1997 to
shareholders of Ducommun Incorporated (the "Corporation") who are such of record
on March 17, 1997, 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 7, 1997, or at any adjournments or postponements thereof (the "Annual
Meeting"), 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, and in favor of
each of the proposals described herein. 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 17, 1997 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 7,316,652 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.
In the election of directors, the three candidates receiving the highest
number of votes will be elected to fill the vacancies on the Board of Directors.
The Corporation's 1996 Annual Report to Shareholders is being mailed to
shareholders with this Proxy Statement.
1
<PAGE> 4
ELECTION OF DIRECTORS
Three directors (out of a total of eight) are to be elected at the
forthcoming Annual Meeting to serve for three-year terms expiring at the Annual
Meeting in 2000 and thereafter until their successors are elected and qualified.
The nominees for such positions are Joseph C. Berenato, Richard J. Pearson and
Arthur W. Schmutz. 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 1997 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 17, 1997, with respect
to each of the three persons who are nominees for election to the Board of
Directors, as well as for the other five directors of the Corporation whose
terms of office will continue after the 1997 Annual Meeting.
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME, PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS AGE SINCE EXPIRES
- ------------------------------------------------------------------- ---- --------- --------
<S> <C> <C> <C>
Norman A. Barkeley 67 1987 1998
Chairman of the Board of the Corporation; Director, Dames &
Moore, Inc., and Golden Systems, Inc.
Joseph C. Berenato 50 1997 2000
Chief Executive Officer and President of the Corporation.
H. Frederick Christie 63 1985 1998
Consultant; Retired President and Chief Executive Officer, The
Mission Group (subsidiary of SCEcorp); Director, Great Western
Financial Corporation, Great Western Bank, Ultramar Diamond
Shamrock Corp., AECOM Technology Corp., IHOP Corp., Southwest
Water Company, 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 45 1985 1999
Management Consultant; Director, American Metal Bearing Company
and Inventa Corporation.
Kevin S. Moore 42 1994 1998
Senior Vice President, The Clark Estates, Inc. (private
investment firm); Director, Hitox Corporation of America,
PremiumWear, Inc., Golf-Technology Holding, Inc. and National
Baseball Hall of Fame
& Museum, Inc.
Thomas P. Mullaney 63 1987 1999
General Partner, Matthews, Mullaney & Company (private investment
firm); Director, The Santa Anita Companies, Lucas Arts
Entertainment Company and Lucas Digital Ltd.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME, PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS AGE SINCE EXPIRES
- ------------------------------------------------------------------- ---- --------- --------
<S> <C> <C> <C>
Richard J. Pearson 71 1978 2000
Retired President and Chief Operating Officer, Avery Dennison
Corporation; Chairman, Chachies Foods; Director, Ameron
International, Atol Holdings, M & R Printing Equipment, Inc.,
Magnet Inc. and Seidler Capital, Inc.; Trustee, Pomona College.
Arthur W. Schmutz 75 1988 2000
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 1996 and has and is
expected to continue to render legal services to the Corporation during 1997.
Mr. Schmutz was previously a director of the Corporation from 1985 to 1987.
The Board of Directors met five times in 1996. 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 1996. Each of the
persons named above was elected by the shareholders at a prior annual meeting
except for Mr. Berenato who was elected by the Board of Directors.
Directors who are not employees of the Corporation or a subsidiary are paid
an annual retainer of $12,500 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 after the age of 65, has served as a director
for at least five years and is not an employee of the Corporation when he
retires (the "retirement benefits"). Effective as of the 1997 Annual Meeting,
accrual of additional retirement benefits under the Directors Deferred Income
and Retirement Plan has been terminated, but existing directors will remain
eligible for retirement benefits accrued to such date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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
Robert B. Hahn, President of the Corporation's Aerochem, Inc., subsidiary, filed
one Form 5 late.
3
<PAGE> 6
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 1996, 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 1996, 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.
Moore, Mullaney and Pearson. The Compensation Committee, which met formally four
times during 1996, reviews and recommends compensation for officers, grants
stock options and administers stock option programs. The members of the
Nominating Committee were Messrs. Barkeley, Christie, Moore and Schmutz until
May 1, 1996, and thereafter were Messrs. Barkeley, Christie, Ducommun and Moore.
The Nominating Committee, which met formally one time during 1996, 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. The Nominating Committee may, in its discretion, consider nominees
recommended by Shareholders.
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 17, 1997. 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 17, 1997. 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.
4
<PAGE> 7
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 529,011(1) 7.2%
1155 Park Avenue
New York, NY 10128
The Clark Estates, Inc. 1,119,811(2) 15.3%
30 Wall Street
New York, NY 10005
The Clark Foundation 390,702(2) 5.3%
30 Wall Street
New York, NY 10005
Kevin S. Moore 1,119,811(2) 15.3%
30 Wall Street
New York, NY 10005
Neuberger & Berman, LLC 480,900(3) 6.6%
605 Third Avenue
New York, NY 10158
</TABLE>
- ---------------
(1) The number of shares includes (i) 50,099 shares held by a foundation of
which Mr. Ducommun is an officer, (ii) 159,212 shares as to which Mr.
Ducommun has been granted a proxy to exercise voting power by his sister,
Electra D. de Peyster, and (iii) 1,500 shares owned by Mr. Ducommun's wife
and step daughters, as to which he disclaims any beneficial interest. Mr.
Ducommun has sole voting and sole investment power as to 318,200 shares,
shared voting power as to 209,311 shares and shared investment power as to
50,099 shares.
(2) 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, Senior Vice President 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.
(3) The information is based on a Schedule 13G filed with the SEC dated February
10, 1997. Neuberger & Berman, LLC has sole voting power as to 231,202
shares, shared voting power as to 144,300 shares, and sole investment power
as to 480,900 shares.
5
<PAGE> 8
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME SHARES OF CLASS
-------------------------------------------------- --------- ----------
<S> <C> <C>
Norman A. Barkeley 338,850(1) 4.5%
Joseph C. Berenato 61,751(1) *
H. Frederick Christie 3,000 *
Robert C. Ducommun 529,011(2) 7.2%
Kevin S. Moore 1,119,811(3) 15.3%
Thomas P. Mullaney 1,000 *
Richard J. Pearson 340 *
Arthur W. Schmutz 10,000(4) *
Robert A. Borlet 63,493(1) *
Robert L. Hansen 43,312(1) *
James S. Heiser 57,686(1) *
All Directors and Executive Officers as a Group
(17 persons) 2,356,490(1) 29.9%
</TABLE>
- ---------------
* Less than one percent.
(1) The number of shares includes the following shares that may be purchased
within 60 days after March 17, 1997 by exercise of outstanding stock
options: 258,750 by Mr. Barkeley, 44,750 by Mr. Berenato, 59,993 by Mr.
Borlet, 43,312 by Mr. Hansen, 48,625 by Mr. Heiser, and 563,054 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, 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.
(2) See the information set forth in Note 1 to the table under "Security
Ownership of Certain Beneficial Owners."
(3) See the information set forth in Note 2 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.
6
<PAGE> 9
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, 1996. 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 1996 $325,000 $325,000 0 $ 22,416
Chairman of the Board and Chief 1995 325,000 250,000 0 2,124
Executive Officer 1994 325,000 200,000 0 1,963
Joseph C. Berenato 1996 220,000 220,000 30,000 0
President, Chief Operating Officer 1995 185,000 135,000 0 0
and Chief Financial Officer 1994 165,000 105,000 0 0
Robert A. Borlet 1996 159,865 120,000 10,000 0
President 1995 153,000 80,000 0 0
Jay-El Products, Inc. 1994 146,269 50,000 0 0
Robert L. Hansen 1996 160,877 125,000 20,000 0
President, AHF-Ducommun 1995 154,003 82,000 0 0
Incorporated 1994 142,385 70,000 0 0
James S. Heiser 1996 149,174 120,000 10,000 0
Vice President, Chief 1995 131,123 80,000 0 0
Financial Officer, General 1994 126,500 55,000 0 0
Counsel, Secretary and
Treasurer
</TABLE>
- ---------------
(1) All other compensation for Mr. Barkeley in 1996 consisted of insurance
premiums paid by the Corporation with respect to term life insurance for the
benefit of Mr. Barkeley.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------------------- ANNUAL RATES OF
PERCENT OF STOCK PRICE
NUMBER OF SECURITIES TOTAL OPTIONS/ APPRECIATION FOR
UNDERLYING SARS GRANTED EXERCISE OR OPTION TERM(3)
OPTIONS/SARS TO EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
- ------------------- --------------------- ----------------- ----------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Norman A. Barkeley 0 N/A N/A N/A N/A N/A
Joseph C. Berenato 30,000 16.6% $13.625 4/30/01 $112,930 $249,546
Robert A. Borlet 10,000 5.5% 13.625 4/30/01 37,643 83,182
Robert L. Hansen 20,000 11.0% 13.625 4/30/01 75,287 166,364
James S. Heiser 10,000 5.5% 13.625 4/30/01 37,643 83,182
</TABLE>
7
<PAGE> 10
- ---------------
(1) The stock options granted become exercisable in increments of 25% of the
number of shares granted on the anniversary date of the date of grant so
that the option is fully exercisable on and after May 1, 2000. However, the
stock options become fully exercisable immediately in the event of a change
of control of the Corporation. A change of control of the Corporation is
defined in the stock option agreement 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.
(2) The exercise price may be paid by delivery of already owned shares.
(3) These amounts represent certain assumed rates of annual appreciation
specified in the regulations adopted by the SEC. The actual value, if any,
on stock option exercises will be dependent on a number of factors,
including the price performance of the Corporation's Common Stock. There can
be no assurance that the rates of appreciation presented in the table will
be achieved.
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 1996 by
the named executive officers and the value of such executive officers'
unexercised options/SARs at December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
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 $ 0 258,750 0 $ 4,630,312 $ 0
Joseph C. Berenato 5,000 40,625 37,250 38,750 342,469 715,781
Robert A. Borlet 0 0 57,493 11,332 1,074,498 104,124
Robert L. Hansen 0 0 38,312 21,688 675,944 190,586
James S. Heiser 2,000 20,500 46,125 11,875 805,828 113,984
</TABLE>
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 $89,375. 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. Barkeley, Berenato, Borlet, Hansen and Heiser 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
8
<PAGE> 11
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.
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 growth in sales, 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.
9
<PAGE> 12
Except for 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 sales, profit
before taxes, 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 30%-50% of base salary depending on the particular executive
officer involved, with an upper range of annual bonus eligibility of twice the
targeted amount.
Bonuses for 1996 generally were awarded in amounts substantially above the
targeted bonus levels for executive officers. The bonuses awarded for 1996 were
based on the Corporation substantially exceeding the targeted levels for sales,
profit before taxes, return on assets and cash flow under the Corporation's
bonus plan. In making the bonus determinations, the Compensation Committee also
considered the Corporation's success in acquiring a business during 1996 that
contributed to the substantial increase in sales in 1996.
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 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. Stock options were granted in 1996 to the named
executive officers based on their respective positions and past history of stock
option grants.
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. No stock options were awarded to Mr. Barkeley during 1996.
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
established Mr. Barkeley's base salary at a level designed to reflect his
substantial aerospace industry experience and expertise.
Mr. Barkeley's annual bonus is awarded on a discretionary basis by the
Compensation Committee based on the Corporation achieving specified levels of
sales, profit before taxes, return on assets and cash flow and on Mr. Barkeley's
individual performance. The bonus awarded to Mr. Barkeley for 1996 was
substantially above the targeted bonus level under the Corporation's bonus plan.
The bonus awarded for 1996 was based on the Corporation substantially exceeding
the targeted levels for sales, profit before taxes, return on assets and cash
flow under the Corporation's bonus plan. In making the bonus determination, the
Compensation Committee also considered the Corporation's success in acquiring a
business during 1996 that contributed to the substantial increase in sales in
1996, and Mr. Barkeley's outstanding personal performance in 1996 in positioning
the Corporation for future growth.
Compensation Committee
Richard J. Pearson, Chairman
Thomas P. Mullaney
Kevin S. Moore
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<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>
1991 100.00 100.00 100.00
1992 91.89 118.41 92.07
1993 72.97 140.80 104.64
1994 108.11 138.24 102.31
1995 213.51 177.55 163.31
1996 467.57 206.83 220.90
</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 which had the lowest market capitalization on
December 31, 1992. These companies are: AAR Corp., EDO Corporation, Hexcel
Corporation, Hi-Shear Industries, Inc., Logicon, Inc., M/A-COM Inc., Moog
Inc., Nichols Research Corporation, Rohr, Inc., Sparton Corp.,
TransTechnology Corporation, UNC Inc., United Industrial Corp., Watkins-
Johnson Company and Wyman-Gordon Company. M/A-COM Inc. was acquired by AMP
Incorporated in June 1995 and its performance has been omitted from the
Aerospace/Defense Industry Peer Group performance results since 1995.
11
<PAGE> 14
APPROVAL OF AMENDMENT
OF 1994 STOCK INCENTIVE PLAN TO INCREASE SHARES
INTRODUCTION
In 1994, the Corporation adopted the 1994 Stock Incentive Plan (the "Stock
Plan") to provide stock awards of up to 220,000 shares of Common Stock of the
Corporation. Because only 21,726 shares remain available under the Stock Plan as
of the Record Date, the Board of Directors has adopted an amendment to the Stock
Plan, subject to shareholder approval, to increase the number of shares that may
be awarded under the Stock Plan by 350,000 shares. The following is a
description of the material features of the Stock Plan. The term "participants"
in the following discussion is used to refer to officers and directors
(including nonemployee directors) and other employees of the corporation and its
subsidiaries.
The purpose of the Stock Plan is to enable the Corporation and its
subsidiaries to attract, retain and motivate participants by providing for or
increasing their proprietary interests in the Corporation. Employees of the
Corporation and its subsidiaries will be eligible to be considered for grants of
awards under the Stock Plan. Subject to shareholder approval of the subsequent
proposal, nonemployee directors of the Corporation also will be eligible to be
considered for grants of awards under the Stock Plan. As of March 17, 1997,
approximately 50 employees and six nonemployee directors were so eligible.
The maximum number of shares of Common Stock that may be issued pursuant to
awards granted under the Stock Plan is 570,000, subject to adjustments to
prevent dilution. Such maximum number does not include the number of shares of
Common Stock issued pursuant to awards under the Stock Plan and subsequently
reacquired by the Corporation pursuant to the terms and conditions of such
awards.
ADMINISTRATION
The Stock Plan will be administered by the Board of Directors and/or by the
Compensation Committee, which will be a committee of two or more nonemployee
directors appointed by the Board of Directors of the Corporation. The Board of
Directors and Compensation Committee are collectively referred to as the
"Board." The Board has full and final authority to select the participants to
receive awards and to grant such awards. Subject to the provisions of the Stock
Plan, the Board has a wide degree of flexibility in determining the terms and
conditions of awards and the number of shares to be issued pursuant thereto,
including conditioning the receipt or vesting of awards upon achievement by the
Corporation of specified performance criteria. The expenses of administering the
Stock Plan will be borne by the Corporation.
AWARDS
The Stock Plan authorizes the Board to enter into any type of arrangement
with an eligible participant that, by its terms, involves or might involve the
issuance of Common Stock or any other security or benefit with an exercise or
conversion privilege at a price related to Common Stock or with a value derived
from the value of Common Stock. Awards to participants are not restricted to any
specified form or structure and may include, without limitation, sales or
bonuses of stock, restricted stock, stock options, reload stock options, stock
purchase warrants, other rights to acquire stock, securities convertible into or
redeemable for stock, stock appreciation rights, limited stock appreciation
rights, phantom stock, dividend equivalents, performance units or performance
shares. Any stock option granted to a participant may be a tax-benefited
incentive stock option (an "Incentive Option") or a nonqualified stock option
that is not tax-benefited (a "Nonqualified Option"). An award to a participant
may consist of one such security or benefit or two or more of them in tandem or
in
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<PAGE> 15
the alternative. Common Stock may be issued pursuant to awards under the Stock
Plan for any lawful consideration as determined by the Board, including, without
limitation, services rendered by a recipient of an award under the Stock Plan.
On March 17, 1997, the closing sales price of the Common Stock on the New York
Stock Exchange was $23.50.
An award to a participant may permit the participant to pay all or part of
the purchase price of the shares or other property issuable pursuant thereto,
and/or to pay all or part of such participant's tax withholding obligation with
respect to such issuance, by (i) delivering previously owned shares of capital
stock of the Corporation or other property, (ii) reducing the amount of shares
or other property otherwise issuable pursuant to the award, or (iii) delivering
a promissory note, the terms and conditions of which will be determined by the
Board. If an option granted to a participant permitted the participant to pay
for the shares issuable pursuant thereto with previously owned shares, the
participant would be able to exercise the option in successive transactions,
starting with a relatively small number of shares and, by a series of exercises
using shares acquired from each such transaction to pay the purchase price of
the shares acquired in the following transaction, to exercise an option for a
large number of shares with no more investment than the original share or shares
delivered.
ACCELERATION
An award granted under the Stock Plan to a participant may include a
provision accelerating the receipt of benefits upon the occurrence of specified
events, such as a change of control of the Corporation or a dissolution,
liquidation, merger, reclassification, sale of substantially all of the property
and assets of the Corporation or other significant corporate transaction.
DURATION OF THE STOCK PLAN
Awards may not be granted under the Stock Plan after the tenth anniversary
of the adoption of the Stock Plan. Although any award that was duly granted on
or prior to such date may thereafter be exercised or settled in accordance with
its terms, no shares of Common Stock may be issued pursuant to any award after
the twentieth anniversary of the adoption of the Stock Plan.
AMENDMENT AND TERMINATION
Subject to limitations imposed by law, the Board of Directors of the
Corporation may amend or terminate the Stock Plan at any time and in any manner.
However, no such amendment or termination may deprive the recipient of an award
previously granted under the Stock Plan of any rights thereunder without his or
her consent.
CERTAIN FEDERAL LAWS
Federal Securities Laws
Pursuant to Section 16(b) of the Exchange Act, directors, certain officers
and 10% stockholders of the Corporation ("Insiders") are generally liable to the
Corporation for repayment of any "short-swing" profits realized from any
nonexempt purchase and sale of Common Stock occurring within a six-month period.
Rule 16b-3, promulgated under the Exchange Act, provides an exemption from
Section 16(b) liability for certain transactions by an officer or director
pursuant to an employee benefit plan that complies with such Rule. The Plan is
designed to comply with Rule 16b-3.
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<PAGE> 16
Federal Income Tax Treatment
The following is a brief description of the federal income tax treatment
which will generally apply to options granted under the Stock Plan, based on
federal income tax laws in effect on the date of this Proxy Statement. The exact
federal income tax treatment of options will depend on the specific
circumstances of the optionee. No information is provided herein with respect to
estate, inheritance, gift, state or local tax laws, although there may be
certain tax consequences upon the receipt or exercise of an option or the
disposition of any acquired shares under those laws. Optionees are advised to
consult their personal tax advisors with regard to all consequences arising from
the grant or exercise of options, and the disposition of any acquired shares.
Incentive Options
Pursuant to the Stock Plan, employees may be granted options which are
intended to qualify as Incentive Options under the provisions of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"). Generally, the
optionee is not taxed and the Corporation is not entitled to a deduction on the
grant or the exercise of an Incentive Option. However, if the optionee sells the
shares acquired upon the exercise of an Incentive Option ("Incentive Option
Shares") at any time after the later of (a) one year after the date of transfer
of shares to the optionee pursuant to the exercise of such Incentive Option and
(b) two years after the date of grant of such Incentive Option (the "Incentive
Option holding period"), then the optionee will recognize capital gain or loss
equal to the difference between the sales price and the exercise price paid for
the Incentive Option Shares, and the Corporation will not be entitled to any
deduction. If the optionee disposes of the Incentive Option Shares at any time
during the Incentive Option holding period, then (1) the optionee will recognize
capital gain in an amount equal to the excess, if any, of the sales price over
the fair market value of the Incentive Option Shares on the date of exercise,
(2) the optionee will recognize ordinary income equal to the excess, if any, of
the lesser of the sales price or the fair market value of the Incentive Option
Shares on the date of exercise, over the exercise price paid for the Incentive
Option Shares, (3) the optionee will recognize capital loss equal to the excess,
if any, of the exercise price paid for the Incentive Option Shares over the
sales price of the Incentive Option Shares, and (4) the Corporation will
generally be entitled to a deduction in an amount equal to the amount of
ordinary income recognized by the optionee.
For purposes of computing an optionee's "alternative minimum tax," an
Incentive Option is treated as a Nonqualified Option, as discussed below. Thus,
the amount by which the fair market value of Incentive Option Shares on the date
of exercise (or such later date as discussed below under "Special Rules for
Insiders") exceeds the exercise price will be included as a positive adjustment
in the calculation of an optionee's "alternative minimum taxable income"
("AMTI"). The "alternative minimum tax" imposed on individual taxpayers is
generally equal to the amount by which 26% or 28% (depending on the optionee's
AMTI) of the individual's AMTI (reduced by certain exemption amounts) exceeds
his or her regular income tax liability for the year. Insiders should consult
their tax advisors concerning the possibility of making an 83(b) Election (as
defined below) upon the exercise of an Incentive Option.
Nonqualified Options
The grant of a Nonqualified Option is generally not a taxable event for the
optionee. Upon exercise of the option, the optionee will generally recognize
ordinary income in an amount equal to the excess of the fair market value of the
stock acquired upon exercise of the Nonqualified Option ("Nonqualified Option
Shares") (determined as of the date of the exercise) over the exercise price of
such option, and the Corporation will be entitled to a deduction equal to such
amount. See "Special Rules for Insiders," below. A subsequent sale of the
Nonqualified Option Shares generally will give rise to capital gain or loss
equal to the difference between
14
<PAGE> 17
the sales price and the sum of the exercise price paid for such shares plus the
ordinary income recognized with respect to such shares. If an optionee receives
a Nonqualified Option having an exercise price that is only a small fraction of
the value of the underlying Nonqualified Option Shares on the date of grant,
such optionee may be required to include the value of the option in taxable
income at the time of grant.
Special Rules for Insiders
If an optionee is an Insider subject to Section 16 of the Exchange Act and
exercises an option within six months of the date of grant, the timing of the
recognition of any ordinary income should be deferred until and the amount of
ordinary income should be determined based on the fair market value (or sales
price in the case of a disposition) of the Common Stock upon the earlier of the
following two dates: (i) six months after the date of grant, or (ii) a
disposition of the Common Stock, unless the Insider makes an election under
Section 83(b) of the Code (an "83(b) Election") within 30 days after exercise to
recognize ordinary income based on the value of the Common Stock on the date of
exercise. In addition, special rules apply to an Insider who exercises an option
having an exercise price greater than the fair market value of the underlying
Common Stock on the date of exercise. Insiders should consult their tax advisors
to determine the tax consequences to them of exercising options granted to them
pursuant to the Stock Plan.
Miscellaneous Tax Issues
Awards may be granted under the Stock Plan which do not fall clearly into
the categories described above. The federal income tax treatment of these awards
will depend upon the specific terms of such awards. Generally, the Corporation
will be required to make arrangements for withholding applicable taxes with
respect to any ordinary income recognized by a participant in connection with
awards made under the Stock Plan.
With certain exceptions, an individual may not deduct investment-related
interest to the extent such interest exceeds the individual's net investment
income for the year. Investment interest generally includes interest paid on
indebtedness incurred to purchase Common Stock. Interest disallowed under this
rule may be carried forward to and deducted in later years, subject to the same
limitations.
Special rules will apply in cases where an optionee pays the exercise or
purchase price of the option or applicable withholding tax obligations under the
Stock Plan by delivering previously owned Common Stock or by reducing the amount
of Common Stock otherwise issuable pursuant to the option. The surrender or
withholding of such shares will in certain circumstances result in the
recognition of income with respect to such shares or a carryover basis in the
shares acquired.
The Stock Plan provides that, in the event of certain changes in ownership
or control of the Corporation, the right to exercise options otherwise subject
to a vesting schedule may be accelerated. In the event such acceleration occurs
and depending upon the individual circumstances of the recipient, certain
amounts with respect to such options may constitute "excess parachute payments"
under the "golden parachute" provisions of the Code. Pursuant to these
provisions, a recipient will be subject to a 20% excise tax on any "excess
parachute payments" and the Corporation will be denied any deduction with
respect to such payment. Optionees should consult their tax advisors as to
whether accelerated vesting of an option in connection with a change in
ownership or control of the Corporation would give rise to an excess parachute
payment.
15
<PAGE> 18
In certain instances the Corporation may be denied a deduction for
compensation (including compensation attributable to options) to certain
officers of the Corporation to the extent the compensation exceeds $1 million in
a given year.
The affirmative vote of a majority of the shares of the Corporation's
Common Stock represented in person or by proxy and entitled to vote at a duly
held stockholders meeting is required for the approval of the amendment of the
Stock Plan. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF
THE AMENDMENT OF THE STOCK PLAN TO INCREASE THE NUMBER OF SHARES THEREUNDER.
APPROVAL OF AMENDMENT OF 1994 STOCK INCENTIVE PLAN
TO INCLUDE NONEMPLOYEE DIRECTORS
Nonemployee Directors were not eligible to participate in the Stock Plan as
originally adopted in 1994. On January 22, 1997, the Board of Directors of the
Corporation adopted an amendment to the Stock Plan, subject to shareholder
approval, to provide that nonemployee directors are eligible to participate in
the Stock Plan.
The purpose of the amendment of the Stock Plan to include nonemployee
directors is to enable the Corporation to attract and retain nonemployee
directors by providing for or increasing their proprietary interests in the
Corporation. Nonemployee directors will not be eligible to be considered for
Incentive Options, but will be eligible to be considered for Nonqualified
Options under the Stock Plan. As of March 17, 1997, six nonemployee directors
were so eligible.
On January 22, 1997, the Board of Directors also terminated the accrual of
additional retirement benefits under the Directors' Deferred Income and
Retirement Plan effective as of the 1997 Annual Meeting.
The affirmative vote of a majority of the shares of the Corporation's
Common Stock represented in person or by proxy and entitled to vote at a
duly-held stockholders meeting is required for approval of the Stock Plan. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT
OF THE STOCK PLAN TO INCLUDE NONEMPLOYEE DIRECTORS AS ELIGIBLE PARTICIPANTS
THEREIN.
REPORTS
The Annual Report of the Corporation for the fiscal year ended December 31,
1996, 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, 1996, 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.
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<PAGE> 19
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, 1997, in order to be
considered for inclusion in the Corporation's 1998 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
Carson, California Secretary
March 26, 1997
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<PAGE> 20
APPENDIX A
DUCOMMUN INCORPORATED
1994 STOCK INCENTIVE PLAN
(AS AMENDED MAY 7, 1997)
SECTION 1. PURPOSE OF PLAN
The purpose of the 1994 Stock Incentive Plan (the "Plan") of Ducommun
Incorporated, a Delaware corporation (the "Company"), is to enable the Company
and its subsidiaries to attract, retain and motivate their employees and
nonemployee directors by providing for or increasing the proprietary interests
of such persons in the Company.
SECTION 2. PERSONS ELIGIBLE UNDER PLAN
Any person who is an employee or a nonemployee director of the Company or
any of its subsidiaries (a "Participant") shall be eligible to be considered for
the grant of Awards (as hereinafter defined) hereunder.
SECTION 3. AWARDS
(a) The Board of Directors of the Company and/or the Committee (as
hereinafter defined), on behalf of the Company, is authorized under this Plan to
enter into any type of arrangement with a Participant that is not inconsistent
with the provisions of this Plan and that, by its terms, involves or might
involve the issuance of (i) shares of common stock, par value $.01 per share, of
the Company ("Common Shares"), or (ii) a Derivative Security (as such term is
defined in Rule 16a-1 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as such Rule may be amended from time to time)
with an exercise or conversion privilege at a price related to the Common Shares
or with a value derived from the value of the Common Shares. The entering into
of any such arrangement is referred to herein as the "grant" of an "Award."
(b) Awards are not restricted to any specified form or structure and may
include, without limitation, sales or bonuses of stock, restricted stock, stock
options, reload stock options, stock purchase warrants, other rights to acquire
stock, securities convertible into or redeemable for stock, stock appreciation
rights, limited stock appreciation rights, phantom stock, dividend equivalents,
performance units or performance shares, and an Award may consist of one such
security or benefit, or two or more of them in tandem or in the alternative.
(c) Common Shares may be issued pursuant to an Award for any lawful
consideration as determined by the Board of Directors and/or the Committee,
including, without limitation, services rendered by the recipient of such Award.
(d) Subject to the provisions of this Plan, the Board of Directors and/or
the Committee, in its sole and absolute discretion, shall determine all of the
terms and conditions of each Award granted under this Plan, which terms and
conditions may include, among other things:
(i) a provision permitting the recipient of such Award, including any
recipient who is a director or officer of the Company, to pay the purchase
price of the Common Shares or other property issuable
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<PAGE> 21
pursuant to such Award, or such recipient's tax withholding obligation with
respect to such issuance, in whole or in part, by any one or more of the
following:
(A) the delivery of previously owned shares of capital stock of the
Company (including "pyramiding") or other property, provided that the
Company is not then prohibited from purchasing or acquiring shares of
its capital stock or such other property,
(B) a reduction in the amount of Common Shares or other property
otherwise issuable pursuant to such Award, or
(C) the delivery of a promissory note, the terms and conditions of
which shall be determined by the Board of Directors and/or the
Committee;
(ii) a provision conditioning or accelerating the receipt of benefits
pursuant to such Award, either automatically or in the discretion of the
Board of Directors and/or the Committee, upon the occurrence of specified
events, including, without limitation, a change of control of the Company,
an acquisition of a specified percentage of the voting power of the
Company, the dissolution or liquidation of the Company, a sale of
substantially all of the property and assets of the Company or an event of
the type described in Section 7 hereof; or
(iii) a provision required in order for such Award to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code (an
"Incentive Stock Option"), provided that the recipient of such Award is
eligible under the Internal Revenue Code to receive an Incentive Stock
Option.
SECTION 4. STOCK SUBJECT TO PLAN
(a) The aggregate number of Common Shares issued and issuable pursuant to
all Awards granted under this Plan shall not exceed 570,000, subject to
adjustment as provided in Section 7 hereof.
(b) For purposes of Section 4(a) hereof, the aggregate number of Common
Shares issued and issuable pursuant to all Awards granted under this Plan shall
at any time be deemed to be equal to the sum of the following:
(i) the number of Common Shares which were issued prior to such time
pursuant to Awards granted under this Plan, other than Common Shares which
were subsequently reacquired by the Company pursuant to the terms and
conditions of such Awards and with respect to which the holder thereof
received no benefits of ownership such as dividends; plus
(ii) the number of Common Shares which were otherwise issuable prior
to such time pursuant to Awards granted under this Plan, but which were
withheld by the Company as payment of the purchase price of the Common
Shares issued pursuant to such Awards or as payment of the recipient's tax
withholding obligation with respect to such issuance; plus
(iii) the maximum number of Common Shares issuable at or after such
time pursuant to Awards granted under this Plan prior to such time.
SECTION 5. DURATION OF PLAN
Awards shall not be granted under this Plan after March 17, 2004. Although
Common Shares may be issued after March 17, 2004 pursuant to Awards granted
prior to such date, no Common Shares shall be issued under this Plan after March
17, 2014.
A-2
<PAGE> 22
SECTION 6. ADMINISTRATION OF PLAN
(a) This Plan shall be administered by the Board of Directors of the
Company or a committee of the Board of Directors (the "Committee") consisting of
two or more directors, each of whom is a "nonemployee director" (as such term is
defined in rule 16b-3 promulgated under the Exchange Act, as such Rule may be
amended from time to time).
(b) Subject to the provisions of this Plan, the Board of Directors and/or
the Committee shall be authorized and empowered to do all things necessary or
desirable in connection with the administration of this Plan, including, without
limitation, the following:
(i) adopt, amend and rescind rules and regulations relating to this
Plan;
(ii) determine which persons are Participants and to which of such
Participants, if any, Awards shall be granted hereunder;
(iii) grant Awards to Participants and determine the terms and
conditions thereof, including the number of Common Shares issuable pursuant
thereto;
(iv) determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof; and
(v) interpret and construe this Plan and the terms and conditions of
all Awards granted hereunder.
SECTION 7. ADJUSTMENTS
If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of securities, or if cash, property or securities are
distributed in respect of such outstanding securities, in either case as a
result of a reorganization, merger, consolidation, recapitalization,
restructuring, reclassification, dividend (other than a regular, quarterly cash
dividend) or other distribution, stock split, reverse stock split or the like,
or if substantially all of the property and assets of the Company are sold,
then, unless the terms of such transaction shall provide otherwise, the Board of
Directors and/or the Committee shall make appropriate and proportionate
adjustments in (a) the number and type of, and exercise price for, shares or
other securities or cash or other property that may be acquired pursuant to
Incentive Stock Options and other Awards theretofore granted under this Plan,
and (b) the maximum number and type of shares or other securities that may be
issued pursuant to Incentive Stock Options and other Awards thereafter granted
under this Plan.
SECTION 8. AMENDMENT AND TERMINATION OF PLAN
The Board of Directors may amend or terminate this Plan at any time and in
any manner, provided, however, that no such amendment or termination shall
deprive the recipient of any Award theretofore granted under this Plan, without
the consent of such recipient, of any of his or her rights thereunder or with
respect thereto.
SECTION 9. EFFECTIVE DATE OF PLAN
This Plan shall be effective as of March 17, 1994, provided, however, that
no Common Shares may be issued under this Plan until it has been approved,
directly or indirectly, by the affirmative votes of the holders of a majority of
the securities of the Company present, or represented, and entitled to vote at a
meeting duly held in accordance with the laws of the State of Delaware.
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<PAGE> 23
SECTION 10. LEGAL REQUIREMENTS
No Common Shares issuable pursuant to an Award shall be issued or delivered
unless and until, in the opinion of counsel for the Company, all applicable
requirements of federal, state and other securities laws, and the regulations
promulgated thereunder, and any applicable listing requirements of any stock
exchange on which shares of the same class are then listed, shall have been
fully complied with. It is the Company's intent that the Plan shall comply in
all respects with Rule 16b-3 promulgated under the Exchange Act, as such Rule
may be amended from time to time. If any provision of the Plan is found not to
be in compliance with Rule 16b-3 of the Exchange Act, such provision shall be
null and void.
A-4
<PAGE> 24
PROXY
DUCOMMUN INCORPORATED
23301 S. WILMINGTON AVENUE * CARSON, CALIFORNIA 90745
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON MAY 1, 1996
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 11, 1996, at the Annual Meeting of Shareholders to be held on May 1,
1996, and at any adjournments or postponements thereof.
(Continued on other side)
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<PAGE> 25
Please mark
your vote as [X]
indicated in
this example.
1. ELECTION OF DIRECTORS
Nominees: Robert C. Ducommun and Thomas P. Mullaney
FOR WITHHOLD
all nominees AUTHORITY
listed below (except to vote for
as marked to the all nominees
contrary below) listed below
[ ] [ ]
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
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2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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: , 1996
-----------------------------------
------------------------------------------------
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.
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FOLD AND DETACH HERE
