<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
[X] Definitive Proxy Statement Only (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):
[X] Fee not required.
[ ] 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
DUCOMMUN INCORPORATED
111 WEST OCEAN BOULEVARD, SUITE 900
LONG BEACH, CALIFORNIA 90802
(562) 624-0800
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 1998
------------------------
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 6, 1998, 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
2001.
2. To consider and act upon a proposed amendment to the Restated
Certificate of Incorporation of the Corporation to increase the number of
authorized shares of Common Stock from 12,500,000 shares to 35,000,000
shares.
3. To transact any other business that may properly be brought before
the meeting or any adjournments or postponements thereof.
March 16, 1998 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
Long Beach, California Secretary
March 30, 1998
<PAGE> 3
DUCOMMUN INCORPORATED
111 WEST OCEAN BOULEVARD, SUITE 900
LONG BEACH, CALIFORNIA 90802
(562) 624-0800
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is being mailed on or about March 30, 1998 to
shareholders of Ducommun Incorporated (the "Corporation") who are such of record
on March 16, 1998, 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 6, 1998, 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 $4,500 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 16, 1998 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 7,469,668 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 and with respect to the amendment of the Restated Certificate of
Incorporation of the Corporation, 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 1997 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 2001 and thereafter until their successors are elected and qualified.
The nominees for such positions are Norman A. Barkeley, H. Frederick Christie
and Kevin S. Moore. 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 1998 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 16, 1998, 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 1998 Annual Meeting.
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME, PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS AGE SINCE EXPIRES
-------------------------------------------------- --- -------- -------
<S> <C> <C> <C>
Norman A. Barkeley 68 1987 2001
Chairman of the Board of the Corporation; Director, Kaynar
Technologies, Inc.
Joseph C. Berenato 51 1997 2000
Chief Executive Officer and President of the Corporation.
H. Frederick Christie 64 1985 2001
Consultant; Retired President and Chief Executive Officer,
The Mission Group (subsidiary of SCEcorp); Director,
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 46 1985 1999
Management Consultant; Director, American Metal Bearing
Company and Inventa Corporation.
Kevin S. Moore 43 1994 2001
Senior Vice President, The Clark Estates, Inc. (private
investment firm); Director, Hitox Corporation of America,
Snake Eyes Golf Clubs, Inc. and National Baseball Hall of
Fame & Museum, Inc.
Thomas P. Mullaney 64 1987 1999
General Partner, Matthews, Mullaney & Company (private
investment firm); Director, Merisel, Inc., Brenner's Home
Furnishings Corporation, 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 72 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 76 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 1997 and has and is
expected to continue to render legal services to the Corporation during 1998.
Mr. Schmutz was previously a director of the Corporation from 1985 to 1987.
The Board of Directors met five times in 1997. 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 1997. Each of the
persons named above 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 $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"). In 1997, accrual of additional retirement
benefits under the Directors Deferred Income and Retirement Plan was terminated,
but existing directors remain eligible for retirement benefits accrued to such
date. Directors are also eligible to participate in the Corporation's 1994 Stock
Incentive Plan. Directors who are not employees of the Corporation or a
subsidiary, following each annual meeting of shareholders, are granted stock
options to purchase 1,500 shares of Common Stock of the Corporation at an
exercise price equal to 100% of the closing price of the Corporation's Common
Stock on the New York Stock Exchange on the date of grant.
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).
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,
Berenato, Mullaney and Schmutz. The Executive Committee, which did not formally
meet during 1997, 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, Pearson and Schmutz. The
Audit Committee, which met formally three times during 1997, 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 one
time during 1997, reviews and recommends compensation for officers, grants stock
options and administers stock option programs. The members of the Nominating
Committee were Messrs. Barkeley, Christie, Ducommun and Moore until May 7, 1997,
and thereafter were Messrs. Berenato, Ducommun and Pearson. The Nominating
Committee, which did not formally meet during 1997, 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 16, 1998. 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 16, 1998. 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.
4
<PAGE> 7
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 533,011(1) 7.1%
1155 Park Avenue
New York, NY 10128
The Clark Estates, Inc. 1,119,811(2) 15.0%
One Rockefeller Plaza, 31st Floor
New York, NY 10020
Kevin S. Moore 1,121,311(2) 15.0%
One Rockefeller Plaza, 31st Floor
New York, NY 10020
FMR Corporation 440,900(3) 5.9%
82 Devonshire Street
Boston, MA 02109
Neuberger & Berman, LLC 620,800(4) 8.3%
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, (iii) 1,500 shares owned by Mr. Ducommun's wife and
step daughters and 500 shares owned by his nephews, as to which he disclaims
any beneficial interest, and (iv) 1,500 shares issuable upon exercise of
stock options. Mr. Ducommun has sole voting and sole investment power as to
320,200 shares, shared voting power as to 159,212 shares and shared
investment power as to 52,099 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. Mr. Moore's shares include 1,500
shares issuable upon exercise of stock options.
(3) The information is based on a Schedule 13G filed with the SEC dated February
14, 1998. FMR Corp. has sole investment power as to 440,900 shares.
(4) The information is based on a Schedule 13G filed with the SEC dated February
11, 1998. Neuberger & Berman, LLC has sole voting power as to 410,200
shares, shared voting power as to 199,900 shares, and shared investment
power as to 620,800 shares.
5
<PAGE> 8
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME SHARES(1) OF CLASS
---- --------- ----------
<S> <C> <C>
Norman A. Barkeley 245,595 3.2%
Joseph C. Berenato 77,502 1.0%
H. Frederick Christie 4,500 *
Robert C. Ducommun 533,011(2) 7.1%
Kevin S. Moore 1,121,311(3) 15.0%
Thomas P. Mullaney 2,500 *
Richard J. Pearson 1,840 *
Arthur W. Schmutz 11,500 *
Robert B. Hahn 53,668 *
Robert L. Hansen 42,500 *
James S. Heiser 41,795 *
All Directors and Executive Officers as a Group
(16 persons) 2,246,987 28.6%
</TABLE>
- ---------------
* Less than one percent.
(1) The number of shares includes the following shares that may be purchased
within 60 days after March 16, 1998 by exercise of outstanding stock
options: 159,750 by Mr. Barkeley, 53,750 by Mr. Berenato, 47,000 by Mr.
Hahn, 42,500 by Mr. Hansen, 20,000 by Mr. Heiser, 1,500 by each of Messrs.
Christie, Ducommun, Moore, Mullaney, Pearson and Schmutz, and 387,833 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. Mr. Schmutz has investment power
only as to 10,000 shares held in a trust.
(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."
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, 1997. 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
ANNUAL COMPENSATION COMPENSATION
-------------------------- ----------------
AWARDS
----------------
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS(#) ($)(1)
--------------------------- ---- --------- -------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Norman A. Barkeley 1997 $203,365 $200,000 32,000 $22,416
Chairman of the Board 1996 325,000 325,000 0 22,416
1995 325,000 250,000 0 2,124
Joseph C. Berenato 1997 297,860 300,000 15,000 0
President and Chief Executive Officer 1996 220,000 220,000 30,000 0
1995 185,000 135,000 0 0
Robert B. Hahn 1997 164,382 135,000 0 0
President, MechTronics of Arizona 1996 165,143 95,000 8,000 0
Corp. and Aerochem, Inc. 1995 159,000 105,000 0 0
Robert L. Hansen 1997 169,465 140,000 0 0
President, AHF-Ducommun 1996 160,877 125,000 20,000 0
Incorporated 1995 154,003 82,000 0 0
James S. Heiser 1997 160,000 112,000 0 0
Vice President, Chief Financial 1996 149,174 120,000 10,000 0
Officer, General Counsel, 1995 131,123 80,000 0 0
Secretary and Treasurer
</TABLE>
- ---------------
(1) All other compensation for Mr. Barkeley in 1997 consisted of insurance
premiums paid by the Corporation with respect to term life insurance for the
benefit of Mr. Barkeley.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------------------- ANNUAL RATES OF
PERCENT OF STOCK PRICE
NUMBER OF SECURITIES TOTAL OPTIONS/ APPRECIATION FOR
UNDERLYING SARS GRANTED OPTION TERM(3)
OPTIONS/SARS TO EMPLOYEES IN EXERCISE OR EXPIRATION ---------------------
NAME GRANTED(#)(1) FISCAL YEAR BASE PRICE DATE 5%($) 10%($)
---- -------------------- --------------- ($/SH)(2)-- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Norman A. Barkeley 32,000 57.1% $21.00 1/2/02 $185,661 $410,263
Joseph C. Berenato 15,000 26.8% 21.00 1/2/02 87,029 192,311
Robert B. Hahn 0 N/A N/A N/A N/A N/A
Robert L. Hansen 0 N/A N/A N/A N/A N/A
James S. Heiser 0 N/A N/A N/A N/A N/A
</TABLE>
7
<PAGE> 10
- ---------------
(1) The stock option granted to Mr. Barkeley becomes exercisable in increments
of 50% of the number of shares granted on December 31, 1997 and 1998 so that
the option is fully exercisable on and after December 31, 1998. The stock
option granted to Mr. Berenato becomes 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 January 2, 2001. 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 1997 by
the named executive officers and the value of such executive officers'
unexercised options/SARs at December 31, 1997.
<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 115,000 $3,985,018 159,750 16,000 $4,650,734 $223,000
Joseph C. Berenato 14,000 417,407 42,500 37,500 1,260,156 688,594
Robert B. Hahn 0 0 55,000 6,000 1,699,750 127,875
Robert L. Hansen 7,500 216,516 37,500 15,000 1,108,594 319,688
James S. Heiser 23,000 669,079 27,500 7,500 842,031 159,844
</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 $7,448. 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.
8
<PAGE> 11
KEY EXECUTIVE SEVERANCE AGREEMENTS
Messrs. Barkeley, Berenato, Hahn, 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 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
9
<PAGE> 12
"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. Except
for the Corporation's Chairman, 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, 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 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 1997 generally were awarded in amounts substantially above the
targeted bonus levels for executive officers. The bonuses awarded for 1997 were
based on the Corporation significantly exceeding the targeted levels for sales,
net income and return on assets under the Corporation's bonus plan. Although the
Corporation did not exceed the targeted level for cash flow under the
Corporation's bonus plan in 1997, the Compensation Committee considered that the
slight decline in cash flow was necessary to support the Corporation's 33%
increase in sales in 1997 over the prior year. In making the bonus
determinations, the Compensation Committee also considered the Corporation's
successful integration during 1997 of a business acquired in 1996 that
contributed to the substantial increase in sales.
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 1997 to Mr. Barkeley in
order to provide him with an incentive to remain in the employment of the
Corporation at least until December 31, 1998, and to Mr. Berenato in connection
with his promotion to Chief Executive Officer of the Corporation.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Berenato 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. Stock options were granted in 1997 to Mr. Berenato in connection with
his promotion to Chief Executive Officer of the Corporation.
Mr. Berenato's base salary was increased to $300,000 effective January 1,
1997, when he was promoted to Chief Executive Officer of the Corporation. The
Compensation Committee established Mr. Berenato's base salary at a level that it
believed to be competitive with companies of similar size in the Los Angeles
area and within the aerospace industry generally.
10
<PAGE> 13
Mr. Berenato's annual bonus is awarded on a discretionary basis by the
Compensation Committee based on the Corporation achieving specified levels of
sales, net income, return on assets and cash flow and on Mr. Berenato's
individual performance. The bonus awarded to Mr. Berenato for 1997 was
substantially above the targeted bonus level under the Corporation's bonus plan.
The bonus awarded for 1997 was based on the Corporation significantly exceeding
the targeted levels for sales, net income and return on assets under the
Corporation's bonus plan. Although the Corporation did not exceed the targeted
level for cash flow under the Corporation's bonus plan in 1997, the Compensation
Committee considered that the slight decline in cash flow was necessary to
support the Corporation's 33% increase in sales in 1997 over the prior year. In
making the bonus determination, the Compensation Committee also considered the
Corporation's successful integration during 1997 of a business acquired in 1996
that contributed to the substantial increase in sales, and Mr. Berenato's
outstanding personal performance in 1997 in managing the Corporation's business
during a period of strong growth.
Compensation Committee
Richard J. Pearson, Chairman
Thomas P. Mullaney
Kevin S. Moore
11
<PAGE> 14
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>
1992 100.00 100.00 100.00
1993 79.41 118.91 113.66
1994 117.65 116.74 111.13
1995 232.35 149.94 117.07
1996 508.82 174.67 239.94
1997 822.06 213.73 274.53
</TABLE>
- ---------------
(1) The Aerospace/Defense Industry Peer Group used in the Performance Graph was
developed in 1993 to comply with SEC regulations and 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. Since
1993, several of these companies have been acquired and their performance
has been omitted from the Aerospace/Defense Industry Peer Group performance
results since the year of acquisition: M/A-COM Inc. in 1995, and Logicon,
Inc., Rohr, Inc., and UNC Inc. in 1997.
12
<PAGE> 15
APPROVAL OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
The Corporation is currently authorized to issue 12,500,000 shares of
Common Stock. At the Record Date, the Corporation had outstanding 7,469,668
shares of Common Stock. The Board of Directors believes that the 12,500,000
authorized shares of Common Stock are insufficient to support the Corporation's
long-range corporate growth strategy over the next several years. Accordingly,
the Board of Directors has adopted a resolution proposing to amend the Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock to 35,000,000 in order to support the Corporation's long-range
growth strategy. The increase in authorized shares of Common Stock will have no
effect on the rights of shares presently outstanding. There is no specific
acquisition or other transaction presently pending that would require the
increase in the number of authorized shares of Common Stock described herein.
The affirmative vote of a majority of the shares of the Corporation's
Common Stock entitled to vote at a duly-held stockholders' meeting is required
for the approval of the amendment of the Restated Certificate of Incorporation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK.
REPORTS
The Annual Report of the Corporation for the fiscal year ended December 31,
1997, 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, 111 West Ocean Boulevard, Suite 900, Long
Beach, California 90802, 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, 1997, are Price Waterhouse LLP. 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, 1998, in order to be
considered for inclusion in the Corporation's 1999 proxy materials.
13
<PAGE> 16
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
Long Beach, California Secretary
March 30, 1998
14
<PAGE> 17
PROXY
DUCOMMUN INCORPORATED
111 West Ocean Boulevard, Suite 900, Long Beach, California 90802
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS ON MAY 6, 1998
The undersigned hereby appoints KENNETH R. PEARSON 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 16, 1998, at the Annual Meeting of Shareholders to be held on May 6,
1998, and at any adjournments or postponements thereof.
(Continued on other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 18
Please mark
your vote as [X]
indicated in
this example.
1. ELECTION OF DIRECTORS
Nominees: Norman A. Barkeley, H. Frederick Christie and Kevin S. Moore
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.)
- --------------------------------------------------------------------------------
2. Amendment to Restated Certificate of Incorporation of the corporation to
increase the number of authorized shares of Common Stock from 12,500,000
shares to 35,000,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. 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 PROPOSALS 1 AND 2.
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.
Signature(s)___________________________________________ Dated:____________, 1998
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.
FOLD AND DETACH HERE
