<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240-14a-11(c) or
Section 240.14a-12
[COBRA ELECTRONICS CORPORATION]
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
[BOWNE OF DETROIT]
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $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 transactions applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
[ ] 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:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 1994
To the Shareholders:
The Annual Meeting of Shareholders of Cobra Electronics Corporation (the
"Company") will be held at the offices of Sidley & Austin, One First National
Plaza, 55th Floor, Room 5-6 C, Chicago, Illinois on Tuesday, May 10, 1994 at
11:00 a.m. for the following purposes:
1. To elect two Class II directors of the Company to hold office
until the 1997 Annual Meeting of Shareholders; and
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record at the close of business on April 4, 1994 are
entitled to notice of and to vote at the meeting or any adjournments thereof. A
complete, alphabetic list of such shareholders showing their addresses and the
number of shares registered for each will be kept open at the offices of the
Company, 6500 West Cortland Street, Chicago, Illinois 60635, for examination by
any shareholder during ordinary business hours for a period of ten days prior to
the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
A copy of the Annual Report for the year ended December 31, 1993, a Proxy
Statement and Proxy Card accompany this notice.
By order of the Board of Directors,
GERALD M. LAURES
Secretary
Chicago, Illinois
April 15, 1994
<PAGE> 3
COBRA ELECTRONICS CORPORATION
6500 WEST CORTLAND STREET
CHICAGO, ILLINOIS 60635
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 1994
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with a solicitation of
proxies by the Board of Directors of Cobra Electronics Corporation (the
"Company") to be voted at the Company's 1994 Annual Meeting of Shareholders to
be held on Tuesday, May 10, 1994 at the offices of Sidley & Austin, One First
National Plaza, 55th Floor, Room 5-6 C, Chicago, Illinois at 11:00 a.m. The
principal executive offices of the Company are located at 6500 West Cortland
Street, Chicago, Illinois 60635. This Proxy Statement, the accompanying Proxy
Card and the 1993 Annual Report were first mailed to shareholders on or about
April 15, 1994.
RECORD DATE AND OUTSTANDING VOTING SECURITIES
Only shareholders of record at the close of business on April 4, 1994 are
entitled to notice of and to vote at the meeting. On that date the Company had
outstanding 6,226,648 shares of Common Stock, par value $.33 1/3 per share.
Owners of Common Stock are entitled to one vote for each share held. The Company
has no other outstanding voting securities.
REVOCATION OF PROXIES AND OTHER VOTING INFORMATION
Proxies given pursuant to this solicitation may be revoked at any time
prior to the voting thereof (by written notice to the Secretary of the Company,
execution of a proxy bearing a later date or attending the 1994 Annual Meeting
of Shareholders and voting in person); once voted, however, proxies may not be
retroactively revoked.
A shareholder may (i) vote for the election of both nominees designated
below as Class II directors, (ii) withhold authority to vote for both director
nominees or (iii) vote for the election of such director nominees other than a
nominee with respect to whom the shareholder withholds authority to vote by
striking a line through the nominee's name on the proxy. All outstanding shares
of Common Stock represented by properly executed and unrevoked proxies received
in time for the meeting will be voted as instructed in the accompanying proxy.
If no instructions are given, the shares will be voted for the election of both
nominees designated below to serve as Class II directors.
A proxy submitted by a shareholder may indicate that all or a portion of
the shares represented by such proxy are not being voted by such shareholder
with respect to the election of directors (the "non-voted shares"). Non-voted
shares will be considered shares not present and entitled to vote for the
election of directors, although such shares will count for purposes of
determining the presence of a quorum. The affirmative vote of a plurality of the
shares of Common Stock present in person or by proxy at the meeting and entitled
to vote on the election of directors is required to elect the nominees
designated below to serve as Class II directors. Thus, if a quorum is present,
the two persons receiving the greatest number of votes will be elected to serve
as directors. Accordingly, non-voted shares and withholding authority to vote
for a director nominee will not affect the outcome of the election of directors.
1
<PAGE> 4
DIRECTORS AND NOMINEES
The Company's Certificate of Incorporation classifies the Board of
Directors into three classes, as nearly equal in number as possible, each of
whom serves for three years. The term of office of one class of directors
expires each year in rotation so that one class is elected at each annual
meeting for a full three-year term. The terms of two of the present directors
will expire at the 1994 Annual Meeting of Shareholders. Mr. James L. Marovitz,
first elected a director in 1977, has chosen to not stand for reelection. Mr.
Samuel B. Horberg, a director since 1961, along with a new nominee, Mr. Gerald
M. Laures, Vice President--Finance and Secretary of the Company, have been
nominated for election as Class II directors for three-year terms expiring at
the 1997 Annual Meeting of Shareholders and until their successors are elected
and qualified. The terms of the other three directors will continue as indicated
below.
Unless otherwise specified in the proxy, it is the present intention of the
persons named in the accompanying proxy to vote such proxy for the election of
Samuel B. Horberg and Gerald M. Laures, the two nominees designated below, to
serve as Class II directors. Management is not aware of any nominee for director
to be proposed by others. If on account of death or unforeseen contingencies,
either of Messrs. Horberg or Laures should not be available for election, the
persons named in the accompanying proxy reserve the right to vote such proxy for
such other person or persons as may be nominated to serve as a Class II director
by the management of the Company. Management has no reason to believe that any
Class II nominee will be unable to serve if elected.
The names of the Company's directors and director nominees, their principal
occupations and certain biographical information relating to such persons are
set forth below.
<TABLE>
<CAPTION>
NOMINEES AND DIRECTORS AGE PRINCIPAL OCCUPATION
- ---------------------- --- --------------------
<S> <C> <C>
Samuel B. Horberg, Class II 67 Vice President, Secretary and Treasurer of the
(Nominee, term, if elected, Company, 1985-1986; retired 1986; Vice
expiring in 1997) President-Finance, Secretary and Treasurer of the
Company, 1961-1985. Director since 1961.
Jerry Kalov, Class I 58 President and Chief Executive Officer of the
(Term expiring in 1996) Company, August 1986 to present; President and
Chief Operating Officer of the Company, April 1985
to August 1986; President, Kalov & Associates,
Inc., management consultants, 1983-1985;
President, Harman International Industries, Inc.,
1980-1983. Director since 1985.
Carl Korn, Class III 72 Chairman of the Board of the Company, 1961 to
(Term expiring in 1995) present; President and Chief Executive Officer of
the Company, 1961-1985. Director since 1961.
Gerald M. Laures, Class II 46 Vice President-Finance of the Company, since
(Nominee, term, if elected, March, 1994; Corporate Secretary of the Company,
expiring in 1997) 1989 to present; Corporate Controller of the
Company 1988-1994.
James L. Marovitz, Class II 55 Member of the firm, Sidley & Austin, Attorneys,
(To serve until May 10, Chicago, Illinois, 1970 to present. Director since
1994) 1977.
Harold D. Schwartz, Class I 68 President, Chez & Schwartz, Inc., marketing and
(Term expiring in 1996) sales consultants, 1973 to present. Director since
1983.
</TABLE>
2
<PAGE> 5
BOARD OF DIRECTORS
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company held 5 meetings during fiscal year
1993. Each member of the Board of Directors attended at least 75% of all
meetings of the Board of Directors and committees of which they are members. The
Board of Directors has two committees: the Audit and Finance Committee and the
Compensation Committee. During fiscal year 1993, these committees met four times
and twice, respectively.
The members of the Audit and Finance Committee are: Harold D. Schwartz
(Chairman), Samuel B. Horberg and James L. Marovitz. The Audit and Finance
Committee assists the Board of Directors in fulfilling its responsibility for
the accounting practices of the Company, reviews the selection of, and
recommendations by, the Company's independent auditors and reviews and
recommends financing plans and agreements.
The members of the Compensation Committee are: Samuel B. Horberg
(Chairman), Jerry Kalov, Carl Korn and Harold D. Schwartz. The Compensation
Committee reviews the salaries of the Company's executive officers.
The Company has no nominating or similar committee.
COMPENSATION OF DIRECTORS
Messrs. Horberg and Schwartz, who are not employees of the Company,
currently receive annual retainers of $10,000 and a fee of $1,000 for each Board
meeting and $500 for each Committee meeting attended, not to exceed one Board
meeting and one Committee meeting or two Committee meetings on any one day. When
a Committee meeting occurs on the same day as a Board meeting or another
Committee meeting, the fee for the Committee meeting or meetings is reduced to
$400 for each such meeting. In addition, Messrs. Horberg and Schwartz, each of
whom serves as a chairman of a Committee of the Board, receives a $1,000 annual
retainer. Mr. Marovitz is a member of a law firm which the Company retained
during the last fiscal year and proposes to retain during the current fiscal
year. The Company pays Mr. Marovitz's firm for the time that he spends on
business of the Company's Board. At the present time, the other directors of the
Company who serve on the Board or any Committee thereof receive no compensation
for doing so.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As indicated above, the members of the Compensation Committee are: Samuel
B. Horberg (Chairman), Harold D. Schwartz, Jerry Kalov and Carl Korn. Mr.
Horberg served as Vice President, Secretary and Treasurer of the Company from
1961 until his retirement in 1986. Mr. Kalov is the President and Chief
Executive Officer of the Company. Mr. Korn is Chairman of the Board of the
Company.
During fiscal year 1993, accrued interest of $125,080 was added to the
outstanding amount of a loan the Company made to Jerry Kalov in fiscal 1990,
pursuant to Mr. Kalov's employment agreement. The Company made a loan to Mr.
Kalov at 8 1/2 percent per annum for the exercise of options on 375,000 shares
of Common Stock. Mr. Kalov signed a promissory note with recourse, which is
secured by the shares of Common Stock, and is due December 30, 1995. During
fiscal 1993, the largest amount outstanding under the loan was $1,596,611 and,
as of March 31, 1994, the amount outstanding was approximately $1,631,000.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as to the beneficial ownership
of Common Stock, as of February 26, 1994, of each of the Company's directors,
director nominees, and each executive officer of the
3
<PAGE> 6
Company who is not a director and whose annual salary and bonus exceeded
$100,000 during fiscal year 1993 and the Company's directors and executive
officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OUTSTANDING
NAME OWNERSHIP(1) COMMON STOCK
---- ----------------- ------------
<S> <C> <C>
Samuel B. Horberg.......................... 16,500 *
Jerry Kalov................................ 646,800(2) 10.0%
Carl Korn.................................. 267,183(3) 4.3%
Gerald M. Laures........................... 9,275(4) *
James L. Marovitz.......................... 6,470 *
Harold D. Schwartz......................... 32,354(5) *
Fred Hackendahl............................ 79,125(6) 1.3%
Jeffry Weiner.............................. 11,250(7) *
All directors, director nominees and
executive officers as a group (9
persons)................................. 1,068,957(8) 16.3%
</TABLE>
- ------------
* Less than 1% of the outstanding Common Stock.
(1) Except as otherwise disclosed, beneficial ownership includes both sole
investment and voting power with respect to the shares indicated.
(2) The amount includes 256,800 shares, which Mr. Kalov may acquire pursuant to
the exercise of stock options.
(3) The amount shown includes 57,785 shares held by the Carl and Frances Korn
Foundation with respect to which Mr. Korn has sole investment and voting
power.
(4) The amount includes 7,875 shares, which Mr. Laures may acquire pursuant to
the exercise of stock options.
(5) The amount shown represents 30,195 shares owned by Chez & Schwartz, Inc.
Profit Sharing Trust and 2,000 shares held by the Chez & Schwartz Pension
Plan, as to both of which Mr. Schwartz is the sole beneficiary, and 159
shares owned by Chez & Schwartz, Inc., of which Mr. Schwartz is President
and sole shareholder.
(6) The amount includes 64,125 shares, which Mr. Hackendahl may acquire pursuant
to the exercise of stock options.
(7) The amount includes 11,250 shares, which Mr. Weiner may acquire pursuant to
the exercise of stock options. Effective January 8, 1994, Mr. Weiner left
the employ of the Company. Gerald M. Laures, who assumed responsibilities
previously handled by Mr. Weiner, was elected Vice President-Finance of the
Company in March 1994.
(8) The amount includes 340,050 shares, which such directors, director nominees
and executive officers may acquire pursuant to the exercise of stock
options.
Other than Mr. Kalov, 6500 West Cortland Street, Chicago, Illinois 60635,
to the knowledge of the Company, as of December 31, 1993, the only beneficial
owners of more than 5% of the outstanding shares of Common Stock are as follows:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
BENEFICIAL OUTSTANDING
NAME AND ADDRESS OWNERSHIP(1) COMMON STOCK
---------------- ----------------- ------------
<S> <C> <C>
Dimensional Fund Advisors..... 442,050 7.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Brinson Partners, Inc......... 667,400 10.7%
Three First National Plaza
Chicago, IL 60602
</TABLE>
- ------------
(1) Beneficial ownership includes both sole investment and voting power with
respect to the shares indicated.
4
<PAGE> 7
EXECUTIVE COMPENSATION
ANNUAL AND LONG-TERM COMPENSATION
The following table sets forth the annual and long-term compensation for
services in all capacities to the Company for the fiscal years ended December
31, 1993, 1992 and 1991 for (i) the chief executive officer of the Company and
(ii) each other executive officer of the Company whose annual salary and bonus
exceeded $100,000 during fiscal year 1993 (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
-------------------------------- COMPENSATION
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
SALARY BONUS (2)(3) OPTIONS/SARS (2)(4)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- --------------------------- ---- ------- ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Carl Korn......................... 1993 102,503 -0- 2,827 -0- 1,127
Chairman 1992 210,800 -0- 5,500 -0- 11,179
1991 210,800 -0- -0-
Jerry Kalov....................... 1993 311,519 -0- 5,500 -0- 2,312
President and Chief 1992 345,074 -0- 169,443 -0- 11,616
Executive Officer 1991 345,074 -0- -0-
Fred Hackendahl................... 1993 175,210 -0- 5,500 29,500 1,541
Vice President 1992 190,000 -0- 5,500 15,000 9,422
1991 190,000 -0- -0-
Jeffry Weiner..................... 1993 112,865 -0- 3,100 42,500 1,263
Senior Vice President- 1992 123,991 7,500 -0- -0- 5,120
Finance and Administration (1) 1991 93,874 5,000 -0-
</TABLE>
- ------------
(1) Effective January 8, 1994, Mr. Weiner left the employ of the Company.
(2) Pursuant to the rules of the Securities and Exchange Commission, the
information for fiscal year 1991 is excluded.
(3) All amounts indicated for each Named Officer, other than Mr. Kalov, relate
to reimbursements for taxes owed for certain perquisites. For Mr. Kalov, in
addition to such similar tax reimbursements in 1993 and 1992, 1992's figure
also includes a reimbursement of $163,943 for taxes owed by him resulting
from the vesting and exercise of options to purchase 375,000 shares of
Common Stock granted to him as a part of his employment agreement when he
joined the Company in April 1985. Under the terms of this grant, the Company
was obligated to pay any taxes owed by him resulting from the vesting and
exercise of the options.
(4) The amounts represent the Company's contributions under The Cobra
Electronics Corporation Profit Sharing and 401(k) Incentive Savings Plan.
5
<PAGE> 8
STOCK OPTION/SAR GRANTS IN 1993
Shown below is information with respect to grants during fiscal year 1993
to the Named Officers of options to purchase Common Stock of the Company. No
stock appreciation rights ("SARs") were granted in 1993.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE OF ASSUMED
PERCENTAGE OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS/ PRICE APPRECIATION
UNDERLYING SARS GRANTED TO EXERCISE OR FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#)(2) 1993 ($/SHARE) DATE 5% ($) 10% ($)
---- ------------- --------------- ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Carl Korn............... -- -- $ -- -- $ -- $ --
Jerry Kalov............. -- -- -- -- -- --
Fred Hackendahl......... 14,500 7.1% 3.00 5/10/98 12,018 26,557
15,000 7.4% 2.50 8/11/98 10,361 22,894
Jeffry Weiner(1)........ 35,000 17.2% 3.00 5/10/98 29,010 64,104
7,500 3.7% 2.50 8/11/98 5,180 11,447
</TABLE>
- ------------
(1) Effective January 8, 1994, Mr. Weiner left the employ of the Company. The
indicated options all terminated upon Mr. Weiner's cessation of employment.
(2) Options granted in fiscal year 1993 are exercisable in part from time to
time commencing twelve months after the date they are granted, in an amount
equal to 25% of the total number of shares covered during each successive
twelve-month period. Each such option, to the extent not exercised, expires
five years from the date of grant.
FISCAL YEAR-END OPTION/SAR VALUES
Shown below is information with respect to unexercised options to purchase
Common Stock of the Company held by the Named Officers. None of the Named
Officers exercised any stock options during fiscal year 1993.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT DECEMBER 31, IN-THE-MONEY OPTIONS/SARS AT
1993 (#) DECEMBER 31, 1993 ($)(2)
------------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Carl Korn................................. -- -- $ -- $ --
Jerry Kalov............................... 256,800 64,200 -- --
Fred Hackendahl........................... 64,125 60,875 -- 1,875
Jeffry Weiner(1).......................... 11,250 46,250 -- 938
</TABLE>
- ------------
(1) Effective January 8, 1994, Mr. Weiner left the employ of the Company. All
unexercisable options terminated upon Mr. Weiner's cessation of employment.
(2) Based on the closing price on The Nasdaq Stock Market on that date.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
As members of the Compensation Committee, it is our duty to administer the
Company's various incentive plans, including its stock incentive plans and
annual bonus plan. In addition, the Committee reviews with the Board of
Directors in detail all aspects of compensation for the Named Officers.
The compensation policy of the Company, which is endorsed by the Committee,
is designed to align the interests of the Company's executive officers and key
employees with that of the Company's shareholders and
6
<PAGE> 9
to advance the interests of the Company and its shareholders by attracting and
retaining well-qualified executive officers and key employees. Therefore, it is
the Company's policy that a substantial portion of the incentive compensation of
each Named Officer, except for Mr. Korn who is not eligible to receive incentive
bonus or stock option awards, relates to and must be contingent upon the
performance of the Company, as well as the individual contribution of each
officer. When considering the compensation of the Company's executive officers,
the Committee considers the following factors: (a) Company performance; (b) the
individual performance of each executive officer; (c) compensation levels for
similar positions at comparable companies; (d) the recommendations of the Chief
Executive Officer; and (e) in the case of Mr. Kalov, the terms of his ten-year
employment agreement with the Company dated January 1, 1988 (the "Employment
Agreement").
For the Named Officers, other than Mr. Kalov because of his Employment
Agreement described below, base salaries are set at competitive levels. Salary
increases and bonuses, except for Mr. Korn who is not eligible for bonuses, are
paid based upon both the performance of the entire Company and individual
performance. For 1993, performance objectives were based primarily on the
Company's 1993 net income. As part of the Company's 1993 restructuring, all
Named Officers received salary reductions. In addition, no bonuses were awarded
to the Named Officers for 1993.
Also, from time to time, the Committee may recommend to the Board of
Directors that certain key employees be granted options to purchase the
Company's Common Stock. The exercise price of each option granted is generally
equal to 100 percent of the fair market value of the shares on the date of grant
and options granted are generally exercisable in part from time to time
commencing twelve months after the grant date, generally in an amount equal to
25 percent of the total number of shares covered during each successive
twelve-month period. The Committee believes that such grants are an important
way to link directly the financial interests of key employees with those of the
Company's shareholders. In fiscal year 1993, Mr. Hackendahl received options to
purchase 14,500 shares of Common Stock at the exercise price of $3.00 per share
and options to purchase 15,000 shares of Common Stock at the exercise price of
$2.50 per share. Mr. Weiner received options to purchase 35,000 shares of Common
Stock at the exercise price of $3.00 per share and options to purchase 7,500
shares of Common Stock at the exercise price of $2.50 per share. All of Mr.
Weiner's 1993 options granted terminated upon his departure from the Company on
January 8, 1994.
Mr. Kalov's base salary and bonus is based on his rights under the
Employment Agreement. Under the terms of the Employment Agreement, Mr. Kalov is
entitled to an increase in his annual salary equal to the annual percentage
increase for the prior year in the Consumer Price Index For All Items For All
Urban Consumers Respecting Chicago, Illinois. In addition to accepting the
aforementioned salary reduction, Mr. Kalov also chose to waive his rights to the
January 1, 1993 increase, which amounted to 2.99 percent. With respect to bonus
awards, the Employment Agreement requires that Mr. Kalov be paid an annual bonus
equal to 1.5 percent of the Company's consolidated pretax accounting income, if
any.
The foregoing report has been furnished by:
Mr. Horberg (Chairman) Mr. Kalov
Mr. Korn Mr. Schwartz
7
<PAGE> 10
PERFORMANCE GRAPH
The following Performance Graph compares the yearly percentage change in
the Company's cumulative total shareholder return on the Company's Common Stock
for the five-year period, December 31, 1988 to December 31, 1993, with the
percentage change in the cumulative total return for The Nasdaq Stock Market
(U.S. Companies), which includes the Company, and a peer group of companies
selected by the Company (the "Peer Group").
Companies used to construct the Peer Group index include the following:
Cincinnati Microwave, Inc., Code Alarm, Koss Corporation and Zenith Electronics
Corporation. In selecting companies for the Peer Group, the Company focused on
publicly traded companies that design and market electronics products, which
have characteristics similar to that of the Company's in terms of one or more of
the following: type of product, end market, distribution channels, sourcing or
sales volume. The Peer Group does not reflect the shareholder return of Emerson
Radio Corp., which was included in the Company's 1993 Performance Graph, because
the common stock of such company is no longer publicly traded.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) COBRA NASDAQ PEER GROUP
<S> <C> <C> <C>
1988 100.000 100.000 100.000
1989 79.750 121.244 83.420
1990 32.913 102.958 34.995
1991 34.180 165.206 39.499
1992 44.308 192.104 36.422
1993 26.585 219.214 57.951
</TABLE>
The graph assumes $100 invested on December 31, 1988 in each of the
Company's Common Stock, The Nasdaq Stock Market (U.S. Companies) and the Peer
Group. Reinvestment of dividends, if any, has been assumed and, with respect to
each company in the Peer Group, the returns of such company have been weighted
to reflect stock market capitalization at the beginning of each period indicated
on the Performance Graph. The graph was plotted using the following data:
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Cobra................................. $100.00 $ 79.75 $ 32.91 $ 34.18 $ 44.30 $ 26.58
NASDAQ................................ 100.00 121.24 102.95 165.20 192.10 219.21
Peer Group............................ 100.00 83.42 34.99 39.49 36.42 57.95
</TABLE>
Note: Sources include the Nasdaq Stock Market, CDA Investment Technologies,
Inc. and Standard & Poors, Corp.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of the Named
Officers with the exception of Mr. Weiner.
Pursuant to the employment agreement with Carl Korn, in the event Mr.
Korn's employment with the Company terminates for any reason, other than as a
consequence of his death, disability or retirement, within
8
<PAGE> 11
three years after a change of control of the Company, Mr. Korn will be entitled
to a lump sum payment equal to three times the highest compensation paid or
payable to him by the Company with respect to any period of twelve consecutive
months during the three-year period ending on the date of his termination. In
addition, Mr. Korn will receive all other benefits he would have received had he
continued in the employ of the Company for the three-year period following his
termination.
The Company's employment agreement with Jerry Kalov provides that, subject
to certain conditions, Mr. Kalov will be entitled to a lump sum payment equal to
450% of Mr. Kalov's base salary for the calendar year immediately preceding a
change of control of the Company in addition to certain provisions with respect
to the performance of the Company. In addition, under the terms of Mr. Kalov's
agreement, the Company is obligated to make payments to him or his designated
beneficiary beginning at the earlier of the date on which Mr. Kalov reaches age
62 or his employment with the Company is terminated. In either such event, the
Company is to make payments for a period of 15 years in an amount equal to 60%
of the average of Mr. Kalov's salary (including bonus) for the five years during
which he received the highest compensation within the ten-year period preceding
the earlier of Mr. Kalov's attaining age 62 or termination of employment. The
obligation of the Company to make such payments is irrevocable in the case of
death, permanent disability or termination following a change of control of the
Company. Otherwise, Mr. Kalov's interest in such payments is not fully vested
until 1997. Mr. Kalov's agreement also requires the Company to grant him an
annual increase equal to the change in the prior year's Consumer Price Index For
All Items For All Urban Consumers Respecting Chicago, Illinois and to pay him an
annual bonus equal to 1.5 percent of the Company's pretax accounting income.
The Company also has an employment agreement with Fred Hackendahl, which
contains provisions in the event of a change of control of the Company. This
agreement provides for a payment of one year's compensation paid or payable to
Mr. Hackendahl upon a change of control of the Company, and provides for full
vesting of certain nonqualified, supplemental retirement payments in the event
of retirement, death or a change of control of the Company. The agreement also
contains a deferred compensation arrangement with terms similar to those for Mr.
Kalov except the proposed payments for Mr. Hackendahl are for a period of 10
years and based on 50% of average base salary and bonus, full vesting at age 55
and partial vesting until he reaches age 55.
Under the terms of the deferred compensation arrangements described above
and based upon actual compensation paid through fiscal year 1993, Mr. Kalov and
Mr. Hackendahl would be entitled to annual payments of approximately $226,000
and $101,000, respectively, upon attaining age 62.
CERTAIN TRANSACTIONS
During 1993, the Company sold the assets of its Professional Products Group
to Mr. Fred Hackendahl, an executive officer. The purchase price, which exceeded
the net book value of the assets sold, amounted to $1.3 million and consisted of
$867,000 of cash at closing and the assumption of certain liabilities.
AUDITORS
Arthur Andersen & Co. served as the Company's independent public
accountants for 1993. A representative of Arthur Andersen & Co. will be present
at the 1994 Annual Meeting of Shareholders and will be given an opportunity to
make a statement and to respond to appropriate questions from shareholders. The
services performed by Arthur Andersen & Co. during 1993 were approved by the
Board of Directors. The Board of Directors has not yet considered the selection
of an independent public accountant for fiscal year 1994.
SECTION 16(A) REPORTS
Based solely on a review of copies of reports of ownership, reports of
changes of ownership and written representations under Section 16(a) of the
Securities Exchange Act of 1934 which were furnished to the Company by persons
who were, at any time during 1993, directors or executive officers of the
Company or
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beneficial owners of more than 10% of the outstanding shares of Common Stock, no
such persons failed to file on a timely basis reports required by such Section
16 during or with respect to 1993, except that Gerald M. Laures and Jeffry
Weiner failed to file on a timely basis an Annual Statement of Beneficial
Ownership of Securities on Form 5 reporting a grant of options to purchase
Common Stock under a Company stock option plan.
SHAREHOLDER PROPOSALS FOR THE 1994 ANNUAL MEETING
Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders, currently scheduled for May 9, 1995, must be received
by the Secretary of the Company not later than December 12, 1994, in order to be
considered for inclusion in the proxy statement and proxy relating to that
meeting.
REQUEST TO VOTE, SIGN AND RETURN PROXIES
Whether or not you plan to attend the meeting, please mark, sign, date and
return the enclosed proxy as soon as possible in the enclosed postage-paid
envelope.
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors is not aware of
any matters, other than the election of Class II directors, that may be brought
before the 1994 Annual Meeting. However, if any other matters properly come
before the Meeting, it is the intention of the persons named in the enclosed
proxy to vote such proxy in accordance with their judgment on such matters. In
addition to use of the mails, the Company may also solicit proxies by telephone,
telegraph or similar means. The Company's registrar and transfer agent, American
Stock Transfer & Trust Company, will assist the Company in its solicitation of
proxies and will not receive any additional fee for its services. Other than
American Stock Transfer & Trust Company, no specially engaged employees or paid
solicitors will be used in this solicitation, the expenses of which will be paid
by the Company (such expenses are not expected to exceed the amount normally
expended for an uncontested solicitation in connection with an election of
directors). Officers and other regular employees of the Company will not receive
any additional compensation in connection with this solicitation.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1993 AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE REQUIRED FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULES AND INFORMATION CONCERNING
EXECUTIVE OFFICERS OF THE COMPANY, WILL BE FURNISHED WITHOUT CHARGE, BY FIRST
CLASS MAIL, UPON THE WRITTEN OR ORAL REQUEST OF ANY SHAREHOLDER, INCLUDING ANY
BENEFICIAL OWNER ENTITLED TO VOTE AT THE MEETING DIRECTED TO THE ATTENTION OF
GERALD M. LAURES, THE COMPANY'S SECRETARY, 6500 WEST CORTLAND STREET, CHICAGO,
ILLINOIS 60635, TELEPHONE: (312) 889-8870.
By order of the Board of Directors,
GERALD M. LAURES
Secretary
Cobra Electronics Corporation
Chicago, Illinois
April 15, 1994
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