[DESCRIPTION] 1994 DEFINITIVE PROXY
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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 Rule 14a-11(c) or Rule 14a-12
Tellabs, Inc.
(Name of Registrant as Specified in Its Charter)
Carol Coghlan Gavin
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
( ) $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(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 transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-111:
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(4) Proposed maximum aggregate value of transaction:
(X) 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:
$125.00
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(2) Form, schedule or registration statement no.:
DEF 14A
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(3) Filing party:
Tellabs, Inc.
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(4) Date filed:
March 21, 1995
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1. Set forth the amount on which the filing fee is calculated and state
how it was determined.
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Tellabs, Inc.
4951 Indiana Avenue
Lisle, Illinois 60532
Notice of Annual Meeting of Stockholders
To Be Held April 25, 1995
The Annual Meeting of Stockholders of Tellabs, Inc., a Delaware
corporation, will be held on Tuesday, April 25, 1995, at 2:00 p.m. local
time, in the Grand Ballroom of the Holiday Inn Naperville, 1801 Naper
Boulevard, Naperville, Illinois 60563, for the following purposes:
1. To elect two directors to serve until the 1998 Annual Meeting of
Stockholders;
2. To consider and vote upon a proposed amendment to the Tellabs,
Inc. Restated Certificate of Incorporation to increase the
authorized shares of common stock from 100,000,000 to
200,000,000; and,
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on February
27, 1995, as the record date for the meeting, and only stockholders
of record at that time are entitled to notice of and to vote at the
meeting.
All stockholders are cordially invited to attend the meeting.
Whether or not you expect to attend the meeting, please fill in,
date and sign the accompanying proxy and mail it promptly in the
enclosed envelope.
By Order of the Board of Directors,
Carol Coghlan Gavin
Secretary
March 21, 1995
tli tellabs (R)
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Tellabs, Inc., 4951 Indiana Avenue, Lisle, Illinois 60532
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Proxy Statement
Tellabs, Inc.
4951 Indiana Avenue
Lisle, Illinois 60532
The enclosed proxy is solicited by the Board of Directors of
Tellabs, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held at 2:00 p.m. on Tuesday,
April 25, 1995.
Only stockholders of record as of the close of business on February
27, 1995, will be entitled to notice of and to vote at the meeting.
At the close of business on that date, the Company had 43,834,127
shares of common stock outstanding.
Stockholders are entitled to one vote for each share held. Any
proxy given may be revoked by a stockholder at any time before it is
voted by filing a written revocation notice with the Secretary of
the Company or by duly executing a proxy bearing a later date.
Proxies may also be revoked by any stockholder present at the
meeting who expresses a desire to vote his or her shares in person.
Subject to any such revocation, all shares represented by properly
executed proxies that are received prior to the meeting will be voted in
accordance with the directions on the proxy. If no direction is made,
the proxy will be voted (i) FOR the election of directors; and (ii) FOR
the approval of the amendment to the Restated Certificate of
Incorporation to increase the authorized shares of common stock from
100,000,000 to 200,000,000.
Votes cast in person or by proxy at the Annual Meeting of
Stockholders will be tabulated by the inspectors of election appointed
for the meeting who will determine whether a quorum, a majority of the
shares entitled to be voted, is present. Abstentions will be treated as
shares present and entitled to vote for purposes of determining whether
a quorum is present, but not voted for purposes of the election of
directors and the other proposal. If a proxy returned by a broker
indicates that the broker does not have discretionary authority to vote
some or all of the shares covered thereby with respect to the election
of directors or with respect to the other proposal and does not
otherwise authorize the voting of such shares, such shares, or
"non-votes," will be considered to be present for the purpose of
determining whether a quorum is present, but will not be considered to
be present and entitled to vote with respect to the election of
directors or the other proposal. Assuming a quorum is present, the
favorable vote of a plurality of the shares present and entitled to vote
at the Annual Meeting will be necessary for a nominee to be elected as a
director; abstentions and shares for which authority to vote is not
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given will thus have no effect on the election of directors. Shares
cannot be voted for more than two nominees; there is no right to
cumulative voting. Approval of the proposed amendment to the Company's
Restated Certificate of Incorporation requires the affirmative vote of
the holders of a majority of the outstanding shares of the Company's
common stock; therefore, abstentions and non-votes will be taken into
account as if such shares were voted against the proposal.
A copy of the Annual Report of the Company for the fiscal year ended
December 30, 1994, accompanies this proxy statement. The approximate
date on which this proxy statement and the accompanying form of proxy
are first being sent to stockholders is March 21, 1995.
ELECTION OF DIRECTORS
The Company has three classes of directors, with staggered terms,
with the members of each class serving a three-year term. At this
Annual Meeting, the terms of the Class III directors will expire.
The two nominees for Class III director are Michael J. Birck and
Frederick A. Krehbiel. Each of the nominees is currently a Class
III director of the Company. These persons have been nominated for
election to three-year terms expiring in 1998 or until their
successors are elected and qualified. Unless otherwise instructed
by the stockholder, it is intended that the shares represented by
the enclosed proxy will be voted for the nominees named below, each
of whom has been selected by the Board of Directors. Class I and Class
II directors will continue in office for the remainder of their terms.
Management is not aware of any other proposed nominees for
directors. Although management anticipates that all of the nominees
will be able to serve, if any nominee is unable to serve at the time
of the meeting, the proxy will be voted for a substitute nominee
chosen by management.
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<TABLE>
<CAPTION>
Principal Occupation or Employment Director
Name Age for Past Five Years Since
- ---- --- ---------------------------------- --------
Nominees For Election Whose Terms Will Expire In 1998
<S> <C> <C> <C>
Michael J. Birck 57 President and Chief Executive Officer, 1975
Tellabs, Inc.
Frederick A. Krehbiel 53 Chairman of the Board, since 1993, Vice Chairman, 1985
1988-1993, Chief Executive Officer, since 1988,
Molex Incorporated (electrical components
manufacturer)
Class II Directors Continuing in Office Until 1997
John D. Foulkes, Ph.D. 70 Director of Engineering Studies (retired), 1988
University of Puget Sound; Professor (retired),
University of Washington
Peter A. Guglielmi 52 President, since 1993, Tellabs International, Inc.; 1993
Executive Vice President, Chief Financial Officer,
1990-present, Secretary, 1988-1993, Treasurer,
1988-present, Senior Vice President, Chief
Financial Officer, 1988-1989, Tellabs, Inc.
Thomas H. ("Tommy") Thompson 67 Chairman of the Board, 1990-1991, President and 1987
Chief Executive Officer, 1989-1991 (retired),
Bio-Recovery Systems, Inc. (industrial waste water
treatment systems); President, 1986-1989, Rio Grande
Technology Foundation (educational and economic
development research); Vice President, 1979-1986,
AT&T Information Systems, Inc. (telecommunications)
Class I Directors Continuing in Office Until 1996
Brian J. Jackman 53 President, since 1993, Tellabs Operations, Inc. 1993
Executive Vice President, 1990-present, Senior Vice
President and General Manager, Data Communications
Division, 1989, Senior Vice President, Marketing and
Sales, 1986-1989, Tellabs, Inc.
Robert P. Reuss 77 Business Consultant, since 1988; Chairman of the Board, 1985
1977-1988, and Chief Executive Officer, 1972-1987,
Centel Corporation (telecommunications and cable
television operator)
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William F. Souders 66 Chairman and Chief Executive Officer, 1988-1989 1990
(retired), Emery Air Freight Corporation (air freight
carrier); 1985-1987 retired; Executive Vice President,
1977-1985, Xerox Corporation (business machines and
systems)
</TABLE>
Mr. Birck is currently also a director of USF&G Corporation, Duplex
Products, Inc. and Professional Training Centers, Inc. Mr. Krehbiel is
a director of Molex Incorporated, A. M. Castle & Co., Northern Trust
Corporation and Nalco Chemical Company. Mr. Foulkes is a director
of Dantel, Inc. Mr. Souders is a director of Science Management
Corporation. Mr. Guglielmi is a director of The Cherry Corporation.
Mr. Jackman is a director of Universal Electronics Inc. and Advanced
Fibre Communications. No director has any family relationship with any
other director.
The Board of Directors has a standing Audit Committee, the members
of which, during 1994, were Messrs. Krehbiel and Souders. The
Audit Committee is responsible for reviewing the auditor's
examination and reporting to the Board with respect thereto. In
addition, the Board has a standing Compensation Committee, the
members of which are Messrs. Foulkes, Krehbiel, Thompson, Souders
and Reuss. The Compensation Committee is responsible for
determining compensation for the executive officers of the Company and
for administering the Company's stock option plans. During 1994, four
meetings of the Board of Directors, one meeting of the Audit Committee
and three meetings of the Compensation Committee were held. Each of the
directors attended at least 75 percent of the aggregate of the total
number of Board meetings and the meetings of the committees on which he
served during fiscal 1994.
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SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN OTHER BENEFICIAL OWNERS
The table below sets forth certain information as of February 27,
1995, with respect to each person known by the Company to be the
beneficial owner of more than five percent of its outstanding shares of
common stock, each director, each Named Executive Officer (as
hereinafter defined), and all current executive officers and directors
as a group.
<TABLE>
<CAPTION>
Amount of
Name Beneficial Ownership Percent (1)
- ---- -------------------- -------
<S> <C> <C>
Michael J. Birck (2) 5,162,884 (3) 11.4%
FMR Corp. (2) 3,902,300 8.6%
Twentieth Century Companies, Inc. (2) 2,593,000 5.7%
Kopp Investment Advisors, Inc. (2) 2,346,061 5.2%
Charles C. Cooney 569,036 (4) 1.3%
Peter A. Guglielmi 171,474 (5) *
Brian J. Jackman 72,627 (6) *
Frederick A. Krehbiel 42,000 (7) *
Robert P. Reuss 19,650 (8) *
William F. Souders 15,000 (9) *
John D. Foulkes, Ph.D. 7,600 (10) *
Thomas H. ("Tommy") Thompson 6,550 (11) *
Jon C. Grimes 488 *
All current executive officers
and directors as a group
(18 persons) (12) 6,253,918 (13) 13.8%
</TABLE>
(1) Based on 43,834,127 shares of common stock outstanding as of
February 27, 1995, and 1,496,617 shares which may be acquired
under stock options exercisable within 60 days of such date. All
figures reported herein reflect the effect of the 2-for-1 stock
split in the form of a stock dividend, effective May 20, 1994.
(2) The address of Mr. Birck is 4951 Indiana Avenue, Lisle, Illinois
60532; that of FMR Corp. is 82 Devonshire Street, Boston,
Massachusetts 02109-3614; that of Twentieth Century Companies, Inc.
is 4500 Main Street, P.O. Box 418210, Kansas City, Missouri
64141-9210; and that of Kopp Investment Advisors, Inc. is 6600
France Avenue South, Suite 672, Edina, Minnesota 55435.
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(3) Includes 396,000 shares held by Mr. Birck's wife. Mr. Birck
disclaims beneficial ownership of said shares.
(4) Includes 20,000 shares held by Mr. Cooney's wife. Mr. Cooney
disclaims beneficial ownership of such shares. Also includes
521,456 shares held by Mr. Cooney as trustee of a trust and 27,500
shares which Mr. Cooney has rights to acquire under currently
exercisable stock options.
(5) Includes 169,500 shares which Mr. Guglielmi has rights to acquire
under currently exercisable stock options.
(6) Includes 62,500 shares which Mr. Jackman has rights to acquire
under currently exercisable stock options.
(7) Includes 3,000 shares which Mr. Krehbiel has rights to acquire
under currently exercisable stock options.
(8) Includes 9,000 shares which Mr. Reuss has rights to acquire
under currently exercisable stock options.
(9) Includes 12,000 shares which Mr. Souders has rights to acquire
under currently exercisable stock options.
(10) Includes 1,600 shares held by Mr. Foulkes as trustee of a trust
for the benefit of his minor grandchildren. Mr. Foulkes disclaims
beneficial ownership of such shares. Also includes 3,000 shares
which Mr. Foulkes has rights to acquire under currently
exercisable stock options.
(11) Includes 3,000 shares which Mr. Thompson has rights to acquire
under currently exercisable stock options.
(12) All such persons filed on a timely basis all reports required
by Section 16(a) of the Securities Exchange Act of 1934 during the
most recent fiscal year.
(13) Includes 417,600 shares of which Messrs. Birck, Cooney and
Foulkes disclaim beneficial ownership as noted above. Also
includes 430,200 shares which certain officers have rights to
acquire under stock options either currently exercisable or
exercisable within 60 days of February 27, 1995. Also includes
30,000 shares which certain directors have rights to acquire under
stock options, as noted above.
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* Less than 1%.
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EXECUTIVE COMPENSATION
The table below sets forth certain information for fiscal years 1994,
1993 and 1992 with respect to the annual and other compensation paid by
the Company to (i) the chief executive officer and (ii) the other four
executive officers of the Company who were most highly compensated in
fiscal 1994 (collectively, the "Named Executive Officers") for services
in all capacities to the Company and its subsidiaries.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
Long Term
Compensation
Annual Compensation Awards
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Name Other Securities
and Annual Underlying All Other
Principal Compen- Options Compen-
Position Year Salary Bonus sation(1) SARs #(2) sation(1)
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<S> <C> <C> <C> <C> <C> <C>
Michael J. Birck 1994 $371,304 $165,000 $13,036 0 $110,429
President
and Chief Executive Officer 1993 $291,339 $90,000 $10,250 0 $98,131
1992 $268,847 $62,500 $7,691 0 $93,585
Peter A. Guglielmi 1994 $220,385 $115,000 $8,463 0 $40,066
President,
Tellabs International, Inc. 1993 $204,808 $63,000 $7,348 40,000 $24,328
and Chief Financial Officer
1992 $190,577 $50,000 $7,302 60,000 $16,786
Brian J. Jackman 1994 $220,385 $115,000 $10,908 0 $48,414
President,
Tellabs Operations, Inc. 1993 $204,808 $63,000 $7,484 40,000 $26,159
1992 $190,577 $50,000 $5,392 60,000 $17,978
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Charles C. Cooney 1994 $153,462 $80,000 $5,370 0 $18,819
Vice President,
Sales and Service, 1993 $148,269 $70,000 $6,332 20,000 $17,863
Tellabs Operations, Inc.
1992 $142,885 $27,500 $6,640 22,500 $15,318
Jon C. Grimes 1994 $158,154 $56,000 $4,570 0 $23,585
Vice President and General Manager,
Network Access Systems Division, 1993 $151,231 $46,200 $4,751 20,000 $17,952
Tellabs Operations, Inc.
1992 $143,576 $32,500 $3,747 30,000 $12,069
</TABLE>
1. Amounts of Other Annual Compensation are amounts paid as
reimbursement to the Named Executive Officers for taxes paid on
certain medical and life insurance benefits. All Other Compensation
includes amounts accrued as preferential above-market interest on
deferred compensation, contributions to the deferred compensation
plan to provide benefits in excess of applicable tax law limitations,
premiums paid for life insurance policies owned by the Named Executive
Officers, matching contributions under the Company's Profit Sharing and
Savings Plan and contributions under the Company's Retirement Plan in
the respective amounts of $9,981, $13,047, $13,254, $4,500 and $6,000
for Mr. Birck; $16,232, $5,886, $7,448, $4,500 and $6,000 for Mr.
Guglielmi; $21,091, $7,425, $9,398, $4,500 and $6,000 for Mr. Jackman;
$0, $0, $8,319, $4,500 and $6,000 for Mr. Cooney; and $6,670, $1,322,
$5,093, $4,500 and $6,000 for Mr. Grimes. All Other Compensation for
Mr. Birck also includes $63,647, which represents the present value to
Mr. Birck of premiums paid by the Company with respect to a split dollar
life insurance arrangement between the Company and Mr. Birck. The
present value was calculated as an interest-free loan of the whole life
portion of the premium over the maturation of the policy. Mr. Birck
pays the term portion of the premium.
2. Figures reflect the effect of the 2-for-1 stock split in the form of
a stock dividend, effective May 20, 1994.
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The table below sets forth certain information with respect to
options and SARs exercised by the Named Executive Officers during fiscal
1994 and with respect to options and SARs held by the Named Executive
Officers at the end of fiscal 1994.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
---------------------------------------------------
AND FISCAL YEAR-END OPTION/SAR VALUE
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Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#)(1) FY-End ($)(2)
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Number of Securities
Underlying Options/ Value Realized
Name SARs Exericsed(#)(1) ($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Birck 20,000 $555,000 25,000 0 $1,318,750 $0
Peter A. Guglielmi 43,000 $1,333,168 177,000 75,000 $8,826,525 $3,306,251
Brian J. Jackman 50,000 $1,317,084 75,000 65,000 $3,306,251 $3,087,918
Charles C. Cooney 0 $0 38,750 33,750 $1,854,532 $1,467,032
Jon C. Grimes 22,500 $409,531 20,000 37,500 $923,438 $1,653,125
</TABLE>
1. All figures have been adjusted to reflect the effect of the 2-for-1
stock split in the form of a stock dividend, effective May 20, 1994.
2. The value of unexercised options and SARs at the end of fiscal 1994
is based on the closing price of $55.75 reported on the Nasdaq
National Market System ("NASDAQ/NMS") on December 30, 1994, the last
trading day of fiscal 1994.
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Employment Agreements
The Company has entered into Employment Agreements (the "Agreements")
with each of the Named Executive Officers. These Agreements become
effective upon the occurrence of a change in control of the Company (as
defined in the Agreements). The Agreements provide for (i) an
employment term of three years, in the event of a change in control not
approved in advance by the Board of Directors, or one year, in the event
of a change in control approved in advance by the Board of Directors, in
either case commencing on the date of the change in control; and (ii)
compensation, including annual salary, incentive bonuses and employee
benefits, no less favorable than those in effect on such date. In
addition, if an individual's employment is terminated within such
employment term, he will be entitled to receive (i) a lump sum cash
payment equal to the sum of salary payments for 36 months (or 12
months, if the change in control is approved in advance by the Board of
Directors) plus a pro rata share of the estimated amount of any target
bonus which would have been payable for the bonus period that includes
the termination date; (ii) an amount equal to 36 months (or 12 months,
if the change in control is approved in advance by the Board of
Directors) of bonus at the greater of (A) the monthly rate of the
target bonus payment for the bonus period immediately prior to his
termination date, or (B) the estimated amount of the target bonus for
the period which includes his termination date; and (iii) the value of
the incentive compensation, if any, to which he would have been entitled
had he remained in the employ of the Company for 36 calendar months (or
12 months, if the change in control is approved in advance by the Board
of Directors). In addition, the Company will be obligated to continue
to maintain the individual's employee benefits for such 36-month period
(or 12-month period, if the change in control is approved in advance by
the Board of Directors) and to pay to the individual the amount of any
excise taxes, together with the additional income tax related thereto,
imposed upon the payments and benefits provided under the Agreements.
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Director Compensation
During 1994, each director who is not an officer of the Company was
paid an annual retainer of $10,000 plus a fee of $1,000 and expenses for
each Board of Directors meeting attended. Effective January 1, 1995,
the annual retainer was increased to $15,000 and the meeting fee was
increased to $1,500. No fees are paid for attendance at Audit Committee
and Compensation Committee meetings.
The Company's 1987 Stock Option Plan for Non-Employee Corporate
Directors (the "1987 Plan") provides for the non-discretionary grant of
options to non-employee directors of the Company. The 1987 Plan
provides that each non-employee director, on the date such person
becomes a non-employee director, will be granted options to purchase
15,000 of the Company's stock shares and, provided such person is still
serving as a non-employee director, automatically will be granted
options to purchase 3,000 additional shares each year thereafter on the
anniversary of the last day of the month in which the initial options
were granted. Under the terms of the 1987 Plan, all figures were
automatically adjusted to reflect the effect of the 3-for-2 stock split
in the form of a stock dividend, effective November 19, 1993, and the
2-for-1 stock split in the form of a stock dividend, effective May 20,
1994.
The options for the initial 15,000 shares become exercisable in
cumulative annual installments equal to one-third of the total number of
shares covered. Annual options granted on the anniversaries of the
initial grants become exercisable in full six months from the date of
grant.
Options granted under the 1987 Plan may not be assigned and, during
the lifetime of the director, may be exercised only by him. If a director
ceases to be a director of the Company for any reason other than death
or disability, the option may be exercised, subject to the expiration
date of the option, for three months after such termination, but only to
the extent it was exercisable on the date of termination. If a
directorship is terminated because of death or disability, the option
may be exercised subject to the expiration date of the option, for up to
one year after such termination, but only to the extent it was
exercisable on the date of death or disability.
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<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
All decisions regarding the compensation of the executive officers
were made by the Compensation Committee, which is comprised entirely of
non-employee, independent members of the Board of Directors. Although
Mr. Birck made recommendations to the Committee with regard to the
compensation of the other executive officers, including the other Named
Executive Officers, he did not participate in the Committee's
deliberations with respect to his own compensation.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished
the following report on executive compensation:
The Compensation Committee follows a compensation philosophy
that utilizes as a significant determinant the financial performance
of the Company, along with the achievement of executive team
objectives and the individual performance of the executive officers.
By doing so, it is the belief of the Compensation Committee that the
Company's management will focus on meeting both financial and
executive team goals which, in turn, should enhance stockholder
values. The Company's compensation package for executive officers
is a combination of base annual compensation, in the form of salary
and other benefits, annual incentives in the form of fiscal year-end
bonuses, and long-term compensation consisting of options and SARs
awarded under the Company's stock option plans.
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<PAGE> 15
In determining base salaries for the executive officers, including
the Named Executive Officers, for 1994, the Compensation Committee
considered the performance of each executive officer and the Company
during the preceding fiscal year, such executive officer's salary
history and, to a lesser extent, market survey data for comparable
positions. Mr. Birck's 1994 base salary was set based upon a
consideration of the same factors.
Annual bonus payments are awarded to the executive officers
following an assessment by the Compensation Committee of the
Company's financial performance relative to that year's plan, the
achievement of executive team objectives, and the individual
performance of each executive officer. Achievement of the financial
objective is a prerequisite to the funding of a bonus pool. Once
that financial objective is met, each of the team objectives
accounts for a percentage of the target pool. Individual
performance and overachievement of the financial objective are
considered in determining whether bonuses in excess of the target
will be granted.
For 1994, individual pay-outs were targeted at 30 percent of annual
salary and were contingent on achievement of both financial and team
performance objectives. The financial objective was set as
achievement of a predetermined level of earnings per share. The team
performance objectives, and their respective percentage weight were
(i) the achievement of substantial progress toward becoming a more
global organization (50 percent); (ii) the achievement of
substantial progress toward ISO 9001 certification for the Company's
Illinois facilities (25 percent); and (iii) the establishment of
certain people management programs (25 percent).
Because the financial objective was exceeded, and the team
objectives were achieved, the Compensation Committee awarded bonuses
in excess of 30 percent to each of the Named Executive Officers,
including Mr. Birck.
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<PAGE> 16
The final piece of the compensation package for executive
officers is awards under the Company's stock option plans. In
general, the Company has used stock options and SARs as an integral
part of its compensation program for executive officers and for
employees throughout the Company with a view toward giving the
executive officers and employees a stake in the Company's future and
compensation opportunities directly aligned with the creation of
stockholder value. The Compensation Committee did not grant options
to any of the executive officers, including Mr. Birck, during fiscal
1994, because the Compensation Committee decided to defer the
granting of options until 1995 in connection with the consideration
of the adoption of executive stock ownership guidelines. The
Compensation Committee did grant options to certain other employees
during 1994.
The Compensation Committee does not believe that the provisions
of Internal Revenue Code Section 162(m) relating to the
deductibility of compensation paid to the Named Executive Officers
will limit the deductibility of such compensation expected to be
paid by the Company. The Compensation Committee will continue to
evaluate the impact of such provisions and take such actions as it
deems appropriate.
March 21, 1995 John D. Foulkes, Ph.D.,
Frederick A. Krehbiel,
Robert P. Reuss,
William F. Souders and
Thomas H. Thompson
Members of the Compensation Committee
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<PAGE> 17
PERFORMANCE GRAPH
The graph below sets forth a comparison of the yearly percentage change
in the cumulative total stockholder return on the Company's common stock
against the cumulative total return of the NASDAQ/NMS Market Index, a
broad-based market index, and the Dow Jones Communications Technology
Group, a peer group of common stocks of 82 communications technology
manufacturers, for the five-year period beginning January 1, 1990.
<TABLE>
<CAPTION>
5 YEAR CUMULATIVE TOTAL RETURN COMPARISON
TELLABS, INC. PEER GROUP INDEX AND NASDAQ MARKET INDEX
FISCAL YEAR ENDING
- ----------------------------------------------------------------------------
Company 1989 1990 1991 1992 1993 1994
- ------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Tellabs, Inc. 100 160.00 230.67 264.00 755.61 1,783.09
Peer Group Index 100 81.12 104.14 105.16 126.14 132.44
NASDAQ Market Index 100 81.11 106.23 134.57 171.42 174.83
</TABLE>
Assumes $100 invested on January 1, 1990, dividends reinvested,
fiscal year ending December 30, 1994
<PAGE>
<PAGE> 18
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
By resolution adopted on January 26, 1995, the Board of Directors of the
Company proposed the adoption by the stockholders of an amendment to the
Restated Certificate of Incorporation of the Company pursuant to which
the number of authorized shares of common stock of the Company, $.01 par
value, would be increased from 100,000,000 shares to 200,000,000 shares,
and the Board of Directors directed that the proposed amendment be
submitted to a vote by the stockholders at the Annual Meeting of
Stockholders.
If the stockholders approve the amendment as proposed by the Board
of Directors, the Restated Certificate of Incorporation of the Company
will be amended and the number of authorized shares of common stock will
be increased to 200,000,000. Pursuant to the proposed amendment, the
first paragraph of Article Fourth of the Restated Certificate of
Incorporation of the Company will be amended to read as follows:
"1. Authorized Capital Stock.
------------------------
The aggregate number of shares of stock which the Corporation
has authority to issue is 205,000,000 shares, of which
200,000,000 shall be shares of common stock, $.01 par value per
share (hereinafter "Common Stock"), and of which 5,000,000
shares shall be shares of preferred stock, $.01 par value per
share (hereinafter "Preferred Stock")."
<PAGE>
<PAGE> 19
Of the 100,000,000 currently authorized shares of common stock, as of
February 27, 1995, 43,834,127 shares were outstanding. As of December
30, 1994, on a post-split basis, 1,789,325 shares were reserved for
issuance under the Company's employee stock option plans. Of the
5,000,000 currently authorized shares of preferred stock, as of February
27, 1995, none were outstanding or reserved for issuance.
The Board of Directors believes that the authorization of additional
shares of common stock will enable the Company to meet possible future
developments without the expense and delay of holding a meeting of
stockholders to secure their authorization when a specific need for the
shares may arise. In addition, the Board of Directors believes that it
is desirable that the Company have the flexibility to issue a
substantial number of shares of common stock without further stockholder
action, except as otherwise provided by law. The availability of
additional shares will enhance the Company's flexibility in connection
with possible future actions, such as stock dividends, stock splits,
financings, employee benefit programs, corporate mergers, acquisitions
of property, the possible funding of new product programs or businesses
or for other corporate purposes. The Board of Directors will determine
whether, when and on what terms the issuance of shares of common stock
may be warranted in connection with any of the foregoing purposes.
The availability for issuance of additional shares of common stock
or rights to purchase such shares could enable the Board of Directors to
render more difficult or discourage an attempt to obtain control of the
Company. For example, the issuance of shares of common stock in a
public or private sale, merger or similar transaction would increase the
number of outstanding shares, thereby possibly diluting the interest of
a party attempting to obtain control of the Company. The Company is not
aware of any pending or threatened efforts to obtain control of the
Company and the Board of Directors has no present intent to authorize
the issuance of additional shares of common stock to discourage such
efforts.
<PAGE>
<PAGE> 20
If the proposed amendment is approved, all or any of the authorized
shares of common stock or preferred stock may be issued without further
action by the stockholders and without first offering such shares to the
stockholders for subscription. The issuance of common stock otherwise
than on a pro rata basis to all current stockholders could have the
effect of diluting the earnings per share, book value per share and
voting power of current stockholders.
Approval by Stockholders
The affirmative vote of a majority of the outstanding shares of
common stock of the Company entitled to vote at the Annual Meeting of
Stockholders is required for approval of the proposed amendment. If the
proposed amendment is adopted by the stockholders, it will become
effective upon filing and recording a Certificate of Amendment as
required by the General Corporation Law of Delaware.
Approval of the Amendment
The Board of Directors recommends a vote for approval of the
proposed amendment to the Restated Certificate of Incorporation. Unless
otherwise instructed by the stockholder, it is intended that the shares
represented by the enclosed proxy will be voted for the amendment.
<PAGE>
<PAGE> 21
SELECTION OF AUDITORS
The Company has selected Grant Thornton LLP independent public
accountants, as the Company's independent auditors in 1995, as it did
for 1994 and prior years. A representative of Grant Thornton LLP is
expected to be present at the meeting to answer appropriate questions
and, if the representative so desires, to make a statement.
OTHER MATTERS
Management knows of no other matters which will be brought before the
meeting, but if such matters are properly presented, the proxies
solicited hereby will be voted in accordance with the judgment of the
persons holding such proxies.
COST OF SOLICITATION
This proxy is solicited by the Board of Directors, and the cost of
solicitation will be paid by the Company. Additional solicitation may
be made by mail, personal interview, telephone and/or facsimile by
Company personnel, who will not be additionally compensated therefor.
The cost of any such additional solicitation will be borne by the
Company.
<PAGE>
<PAGE> 22
STOCKHOLDER PROPOSALS
For inclusion in the Company's proxy statement and form of proxy with
respect to the 1996 Annual Meeting of Stockholders, any proposals of
stockholders must be received by the Secretary of the Company no later
than November 22, 1995.
To nominate one or more directors for consideration at the 1996 Annual
Meeting of Stockholders, a stockholder must provide notice of the intent
to make such nomination or nominations by personal delivery or by mail
to the Secretary of the Company not later than November 22, 1995. The
Company's by-laws set specific requirements which such written notice
must satisfy. Copies of those requirements will be sent to any
stockholder upon written request.
By Order of the Board of Directors,
Carol Coghlan Gavin
Secretary
March 21, 1995
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"tellabs" and "tli tellabs" are registered trademarks of Tellabs
Operations, Inc. (C) 1995, Tellabs Operations, Inc.
All rights reserved.
<PAGE>
<PAGE> 23
APPENDIX
--------
Appendix 1. Proxy Card
<PAGE>
<PAGE> 24
Appendix 1
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PROXY
4951 Indiana Avenue, Lisle, Illinois 60532
This Proxy is Solicited By the Board of Directors
The undersigned stockholder(s) of Tellabs, Inc., a Delaware corporation,
does (do) hereby constitute and appoint Carol Coghlan Gavin and Peter A.
Guglielmi, and each of them, the true and lawful attorney(s) of the
undersigned with full power of substitution, to appear and act as the proxy
or proxies of the undersigned at the Annual Meeting of Stockholders of said
corporation to be held at the Grand Ballroom, Holiday Inn Naperville, 1801
Naper Boulevard, Naperville, Illinois 60563, on Tuesday, April 25, 1995, at
2:00 p.m., and at any adjournment thereof, and to vote all the shares of said
corporation standing in the name of the undersigned, or which the
undersigned may be entitled to vote, as fully as the undersigned might or
could do if personally present, as set forth herein.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder(s). If no direction is
made, this proxy will be voted for the election of directors and for the
approval of the amendment to the Tellabs, Inc. Restated Certificate of
Incorporation to increase the authorized shares of common stock of the
Company from 100,000,000 to 200,000,000.
(Please mark this proxy, date and sign it on the reverse
side hereof and return it in the enclosed envelope.)
<PAGE>
<PAGE> 25
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
EACH OF THE LISTED PROPOSALS.
PLEASE MARK VOTE IN SQUARE IN THE FOLLOWING MANNER
USING DARK INK ONLY. (X)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Election of Two Directors ( ) FOR all nominees listed ( ) WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below). listed below.
</TABLE>
Michael J. Birck and Frederick A. Krehbiel
(To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.)
------------------------------------------------------
2. Approval of the amendment to the Tellabs, Inc. Restated Certificate of
Incorporation to increase the authorized shares of common stock of the
Company from 100,000,000 to 200,000,000.
( ) FOR
( ) AGAINST
( ) ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
<PAGE>
<PAGE> 28
DATED ______________________, 1995
-------------------------------------------------
-------------------------------------------------
Signature of Stockholder(s)
Please sign name exactly as imprinted (do not print).
Please indicate any change in address.
NOTE: Executors, administrators, trustees and other
signing in a representative capacity should indicate
the capacity in which they sign. If shares are held
jointly, EACH stockholder should sign.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY.
